Outsourcing Solutions

Software development follows a distinct lifecycle that follows a step by step process in order to leverage industry best practices at lowest possible cost, adhere to international standards and industry norms. Competition in the world of business has increased manifold. Every individual and organization wants to stay on top as the leader. Simply getting to the top is not the only objective now, maintaining that position is of chief importance. Offshore software application development outsourcing has led to quantum industry growth.

The growth of offshore software development can be credited to the increasing number of sources present in the present IT edge, fast turnaround time, lack of technically skilled professionals in-house, discrete communication and inefficient management of various modules within a large organization. In order to remain competitive these organization’s looked to third party vendors for better management and lower costs. Other factors that led large organizations to outsource software development to other countries include favorable time zone difference from eastern countries, human capital at lower costs, vast pool of resources, quick turnaround times, skilled technical professionals and lower processes cost. Market analysis shows increased entry of investors in Indian markets and other developing countries.

40% of the Fortune 500 companies including GE, Lucent, Oracle, Microsoft, and Motorola are leveraging the outsourcing model. Depending on the availability of onsite and offshore resources, the list keeps growing. Offshore Software development outsourcing is the leading area of outsourcing. Cost saving by adopting this model can vary from 40% to 70%. Offshore software service outsourcing campaigns on an overall basis seem to lead to success while manipulating overall strategy and taking into consideration failure and success. Objective is to maximize the ROI, remain competitive, and reduce upbringing cost.

The best way to approach software development outsourcing is to first consider the niche requirements and then find solutions for the basic problem. Sometimes, offshore software development outsourcing is not the solution. But it does offer significant benefits such as better synchronization between onsite and offshore teams, efficient processes, improved time management and growth opportunities for both the organizations involved in the offshore software development outsourcing scenario.

India has emerged as a prime location for offshore software development outsourcing. Some services that India provides are custom software development, web development, web design, database development, application software development services India and many more.

Outsourcing involves an organization handing over functions, projects, or tasks to an external company. India’s favorable government policies, substantial export industry, and large pool of technically competent work force secure its place as a leading offshore player. Software development service providers in India have consistently performed to produce faster, more efficient and better quality results at lower costs. A software outsourcing company in India is faithful to provide high quality in outsourcing software development India. Outsourcing software development in India is rapidly growing industry, mostly software development outsourcing services are outsourced to Indian software development outsourcing companies, Indian software services outsourcing companies are greatly admired for their work and quality.

India's flagship outsourcing industry expects some pain from the latest global financial turmoil but insists it could emerge a winner with companies shifting more work to the country.

The sector, an economic mainstay that generates 40 billion dollars in annual export revenues, traditionally views bad times as offering potential as Western companies cut costs by moving work to cheaper destinations offshore.

Industry body Nasscom believes the trend will be the same this time, though it could take longer.

"There will be a short- to medium-term impact which we define as three to four quarters," Nasscom chief Som Mittal said.

Some of the pain from the bankruptcy of Wall Street giant Lehman Brothers, the sale of Merrill Lynch and the US government's bailout of insurance giant AIG -- all ravaged by credit woes -- is already being felt.

IT companies are cutting hiring plans and share prices of India's IT companies are under pressure. But there's some positive fallout as Indian legal process outsourcing firms doing bankruptcy work report a rise in business.

Companies are seeking to outsource to India, where legal work costs a tenth of what US lawyers charge, said Sirisha Gummaregula, chief operating officer of legal support firm Quislex.

Over time, the financial crisis should lead to much stiffer controls that "will all be IT- and systems-driven," said Mittal.

This should lead to more business for India's "tech titans" like Infosys, Wipro and Tata Consultancy Services whose skilled, English-speaking, low-cost work force planted the nation on the global business map, Mittal said.

"We have a fairly deep understanding of our customers' operations now. This would be the time to help partner them," he told AFP.

Still, the latest financial crisis has come at a bad time for the sector.

The US-led credit crunch, rising pay costs and currency fluctuations had already hit profits, along with competition from outsourcing rivals like Malaysia, the Philippines, Vietnam and Mexico.

Earlier this year, Nasscom forecast the sector's revenues would grow by 21-24 percent to 50 billion dollars in the year to March 2009 -- strong but not the scorching 30-percent-plus growth seen earlier in the decade.

Mittal said the forecast could be "tempered down" from that level by a "minor few percentage points -- if at all."

Over the next few months, analysts do not expect Indian IT firms to sign any big contracts in the so-called BFSI sector -- banking, financial services and insurance -- that represents nearly 50 percent of their income.

"There'll be a period of stocktaking by Western companies where they put their houses in order and where there'll be no really significant decisions," said Partha Iyengar, research head at global consultancy Gartner.

Even before the latest turmoil, the sector was already seeking to diversify to offset reliance on the US, which takes 60 percent of its exports, seeking out new business in Europe, the Middle East and Asia.

The sector has also been aggressively bidding for contracts with the burgeoning Indian corporate sector, earlier dismissed as too small.

"It's a great support in these times having an Indian economy growing by 7.5 to 8.0 percent," said Mittal.

The sector has also been cutting dependence on the financial arena by getting into such areas as retailing, transport, health care and manufacturing.

"There'll be be robust growth surely coming through -- the industry has diversified. There are lots of unpenetrated areas," Mittal said.

Longer term, industry executives see a major role for India's IT sector.

"There'll be a huge restructuring (by Western companies). This will bring a lot of opportunities and there's a big role to play for India's IT sector as it already has a credible reputation," said Ganesh Natarajan, chief executive of Zensar, a leading outsourcing firm

Source From: Economic Times

Adivent, a European sales outsourcing company focused on the telecom market, revealed its full suite of SalesTarget services in North America, says IT News Online.

Adivent aims to streamline the sales and operations process and to allow North American companies to quickly establish a sales presence in Europe at a fraction of the time and cost it typically takes using traditional methods.

Gianni Burzi, managing partner at Adivent, says: "We spent the past year developing a set of process-based services that yield proven results, without large up-front costs, that will dramatically speed time-to-market and deliver increased sales for telecom hardware and software suppliers selling into the European market."

Frost & Sullivan acknowledges Freeborders

Frost & Sullivan has awarded IT solutions provider Freeborders with the 2008 Chinese Company of the Year Award for its delivery of IT solutions and outsourcing services to Fortune 500 companies from China, reports Market Watch.

Freeborders has posted exceptional growth figures which included the doubling of global sourcing revenue in 2007.

The company expects to experience similar success in the near future, and will consider the possibility of an initial public offering in the next few years as well as making the strategic expansion into a third vertical.

NIIT gets IT outsourcing contract

NIIT Technologies has won an outsourcing contract from American Safety Insurance Services (ASI), a programme manager for a US-based specialty property and casualty insurance products provider for SMEs, says India Outsource Watch.

The company will provide migration, configuration and customisation support for ASI's applications portfolio.

NIIT's offshore development centre will initially employ consultants to support ASI's rating and quoting applications as well as document management systems.

The Technology Investment and Outsourcing Outlook is a new report that analyses the results of a proprietary end-user survey of 500 senior IT decision-makers from around the world, who were asked about enterprise technology investment and outsourcing priorities over the two years. It also provides an exclusive global market forecast for outsourcing and managed services to 2012, examined by outsourcing service portfolio, geography and vertical industry.

As the ‘credit crunch’ tightens, this report uses a combination of end-user survey data and proprietary market forecasts to provide an insight into the likely future trends in enterprise IT investment. It identifies the key technology areas that enterprises are planning to invest in over the next two years, as well as the technologies that they are most likely to outsource. Identify and target future outsourcing opportunities by product, geography and industry vertical with the help of this new report.

Key questions answered by this report...

-Which technologies do enterprises already outsource and which are they considering outsourcing over the next two years?

-Is there any enterprise demand for ERP outsourcing over the next two years?

-Which geographies and vertical industries represent the biggest opportunity for outsourcing and managed services providers between now and 2012?

-How likely are enterprises to outsource mobility over the next 24 months?

Some key findings from this report...

-The global market for outsourcing and managed services will grow at a CAGR of 4.7% between 2007 and 2012, to reach US$402bn.

-The outsourcing of technologies only increase slowly over the next two years. Presently, outsourcing services are used on average by 18% of enterprises participating in our end-user survey.

-Financial Services is by far the largest vertical opportunity for outsourcing and managed services. It is forecast to grow at a CAGR of 4.9% from US$79.9 billion in 2007 to US$101.6 billion by 2012. (25.3% of the global market).

-China and India represent the fastest growing global markets for outsourcing and managed services during the period, with a 2007-2012 CAGR of 26.9% and 22.9%, respectively.

-Voice/data convergence is the most outsourced technology in the US according to our survey, followed by mobile (17%) and security (17%). Business intelligence (at 9%) and IT systems management (at 11%) are the least outsourced technologies at US enterprises.

This new report will enable you to...
-Understand the market challenges facing enterprises in each vertical and how these will impact their technology investment and outsourcing decisions.

-Quantify the size and type of recent major IT projects by industry vertical across the Energy & Utilities, Government, Healthcare, Insurance, Media, Manufacturing and Retail sectors.

-Discover which technologies enterprises already outsource and those they will consider outsourcing over the next two years across Enterprise Applications, Business Intelligence, Security, Content Management, Mobility, IT Systems Management and
Converged Voice/data Networks.

-Forecast the future size of the global outsourcing and managed services market by geography, service portfolio and vertical industry.

Product samples
Chapter 8 Media

Source from:
Researchandmarkets.com/research/80a478/the_technology_inv

A new initiative may soon see Scotland rival Eastern Europe as the UK’s primary near-shore outsourcing destination.

Andrew Rigby, a lawyer who has specialised in IT and outsourcing contracts for nearly 20 years, set up the Outsourcing Hub Initiative six weeks ago.

The plan aims to encourage worldwide firms to outsource high-end business processes to Scotland rather than the low-end services typically contracted out overseas.

“Scotland has become famous for its call centres but this is the wrong end of the value chain to concentrate on,” said Rigby.

Rigby recently met with high-profile Scottish organisations to design ways English firms can be encouraged to outsource processes such as software development to Scotland, rather than locations such as India.

The organisations include the Trade Association for Technology in Scotland, the Scottish Development International, and the Chartered Institute for Bankers in Scotland.

Rigby has also been meeting with major consultancy firms and utility providers.

He said the initiative would mainly target outsourcing buyers in England, followed by Singapore, Hong Kong, Canada and the US.

“Canada provides outsourcing services to the UK so there is no reason why the UK can’t provide outsourcing services to Canada,” he said.

Rigby said marketing of the initiative would focus on the financial services sector. He pointed to the success of JP Morgan’s centre of excellence for software and application development just outside Glasgow.

In response to doubts concerning Scotland’s ability to rival Eastern Europe, Rigby said: “Edinburgh does not rank sixth in the world for asset management for no reason.”

Rigby pointed to the large technology expertise Scotland holds, particularly the skills of its large pool of graduates.
Source from vnunet.com

Despite the global economic slowdown and bad publicity against the industry, India's outsourcing sector would retain its high growth rate, says R. Chandrasekaran, president of Cognizant India, a leading global and business process outsourcing (BPO) company.

The number of foreign companies outsourcing jobs to India is increasing geometrically, the industry leader told IANS in an interview.

According to him, lower salaries, compared to the global standards, is the unique selling proposition (USP) of India. However, he added: "On the global GDP linked purchase power parity grid, India is the fourth country ahead of Germany, the UK, Italy, Canada etc, according to the listings of the International Monetary Fund (IMF) and the World Bank. Doesn't that indicate something?"

Chandrasekaran also expressed confidence that India would catch up with the global pace in the IT industry and technological advancement.

"From mobile telephony that helps us keep track of vehicles that ferry our associates from home to jobs, to application of RFID (Radio Frequency Identification), Nano and virtualisation methods, all in their infancy globally, our research is on a par with the world," he said.

Asked about the computer hardware prices, he said prices would come down further in two years as all "aspects of life will depend on computing per se" by that time.

While he pointed out the crippling shortage of electricity in the country and particularly in Tamil Nadu, where Cognizant has units, Chandrasekaran said: "No matter what the world says, we are happy here. Further, shortages in some form or other are a global phenomenon."

Despite humble beginnings from a Tamil medium school, Chandrasekaran has built an empire whose last balance sheet showed an annual revenue of $2.13 billion.

Cognizant is the second company in India to have been accorded the honour of ringing the Nasdaq (US stock exchange) bell for the start of trade March 5, 2007.

"In 2006, we grew 60 percent but the rising rupee, the global slowdown and competition have trimmed it almost by half. Yet, our revenue guidance index is close to $2.8 billion and we are India's fastest growing services company in IT," Chandrasekaran said.

Asked about the company's efforts to reverse brain drain, Chandrasekaran said he was one of those who started the process successfully. "Roughly 70 percent of our top people are the best examples of reverse brain drain," he said.

Chandrasekaran said Cognizant was against making too many attractive offers to students before graduation as these result in dropouts.

"We invest in R&D in educational institutions, rewarding faculties for cutting-edge results and encourage systems of education like technical writing, content management, e-learning to prepare students for the future. Our collaborative ventures in Manipal have resulted in a new course in pharmacological methods," he said.

Asked about bad publicity against the IT industry, he said: "While our strict controls, sensitisation methods, constant monitoring have prevented any wrongdoing, some sections of the media play up minor aberrations as it's fashionable to titillate underachievers by blaming the smartest guys and girls of India."

Source from:
ibnlive.com/news/outsourcing-industry-will-grow-cognizant-head/71425-11.html

Outsourcing and offshoring are two similar concepts that are often lumped together. By definition, the former is to purchase or subcontract from an outside source; the latter, on the other hand, can be done both within and outside a company.

These two practices, when combined, make up a phenomenon known as offshore outsourcing, a specialised field that has led seven of Forbes' billionaires directly to their fortunes.

In pictures: Seven outsourcing billionaires
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These seven men hail from just two places: Taiwan and India. The Taiwanese billionaires--Terry Gou and Barry Lam--lead companies specialising in contract manufacturing, namely in the production of electronics.

Hon Hai, the maker of Apple's iPod, among other everyday gadgets, is one of the world's largest contract electronics manufacturers. CEO Terry Gou has made billions off the company, which he founded in 1974. Founder and CEO of Quanta Computer Barry Lam has pioneered the design and manufacturing of notebook computers.

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By contrast, India's offshore outsourcers have made their billions through software services. Wipro, Infosys Technologies and HCL Technologies all have C-level executives who have worked their way to 10-plus digits through companies that provide global software and IT services.

Why have companies around the world chosen these Taiwanese and Indian companies to handle aspects of their business?

"The economics behind offshoring are really compelling, and customers usually do it for three reasons--they want specialised firms, (they want) to cut costs, and (they want) access to talent or specialised skills," said Robert Kennedy, a professor at the University of Michigan Business School.

The executive director of the William Davidson Institute, a nonprofit research and educational institute dedicated to the changes affecting companies in transition and in emerging market economies, Kennedy points out that it's often contract manufacturing businesses that offshore. These businesses have a need for specialized companies like Quanta or Hon Hai, and companies looking for software services are generally more focused on reducing costs and finding fresh talent.

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For a company like Quanta to produce the majority of notebook computers is, simply put, more efficient. "The advantage is that Quanta can do all of the research and development themselves," Kennedy says. Quanta can build one factory and produce scores of laptops, and Dell, HP and IBM don't have to waste funds constructing three separate facilities with smaller outputs.

When it comes to cost arbitrage, offshore software services come out on top. "Software engineers in India make about a third as much as software engineers in the US--and even less than that at entry level," Kennedy explains.

And sometimes, America just doesn't cut it when it comes to specialised skills.

"We saw this a few years ago in software with Y2K. Many of the issues surrounding Y2K were that the software platforms were assembled in the '60s and the US engineers didn't remember how to fix them," Kennedy says. Even if companies were willing to equip their staff with these skills, there aren't enough people to learn for that knowledge to make much of a difference.

Meeting a similar demand are companies like Wipro and Infosys, which also have large remote radiology services. If there is a shortage of radiologists in the US, X-rays are sent overseas, where an American-trained radiologist can evaluate them. Although they're paid around $50,000 a year in India, compared with the $300,000 they'd make in the US, the money can go further there, allowing them to live a more luxurious lifestyle than they would have in the US.

There is such a rapid development of capital markets in other countries that even small discrepancies in salary and the cost of labor are significant. These billionaires have capitalised on the fact that developing countries are growing two to three times as quickly as countries like the US, essentially fueling an offshore outsourcing trend whose expansion appears to have few boundaries.

Source from: www.rediff.com/money/2008/jun/04forbes.htm

India’s biggest outsourcing firms Infosys, Tata Consultancy Services, and Wipro are all experiencing poor growth in revenue or income as seen in their just-announced quarterly results for the period that ended June 30, reported ZDNet.

The largest player, Tata Consultancy Services added just 35 clients this quarter, which is its lowest in four quarters. Tata's profit was up just two per cent to US$296 million.

Its rival Infosys, which otherwise saw a rise in client additions, could not hold on to its top client British Telecom. Infosys warned the next quarter may continue to be difficult as companies postpone decisions on outsourcing. Infosys reported revenue of US$1.16 billion, up 24.5 per cent over the same period last year.

Wipro experienced a rise in profits of 15 per cent over the same period last year, growing to US$187.5 million. However, like TCS, Wipro also posted lowest client additions over last four quarters while Satyam just about managed to maintain status quo.

Meanwhile, outsourcing adviser TPI’s index found that companies signed $25.6 billion worth of outsourcing contracts in the second quarter of 2008--the third quarter in a row to break the $20 billion mark and the best recorded performance of three consecutive quarters. TPI says this year is on track to see the highest total contract value for outsourcing deals on record.

“Companies across industry segments are expressing their concerns regarding the uncertain business conditions by taking steps to reduce operational costs, and the outsourcing industry is benefiting,” Peter Allen, partner and managing director of TPI, said in a statement.

Source from Web20.telecomtv.com

Outsourced business in India has not only left an indelible impact on the culture of our nation but is also providing empowerment to women and employment to many 'out of stream' candidates. It also is an added asset to the Indian economy. IMPACTING EC.

THE BUSINESS practice of outsourcing focuses on relocation of labour-intensive service industry functions, to locations remote to the business centre, such as India, Ireland or the Philippines. It has been enabled by two main changes in the business environment. First, the improvement in international telecommunications capacity, and the concomitant step-change of reduction in global telecommunications costs; which, is the fundamental to the economics of outsourcing. Second and just as important, over the past two decades personal computer (PC) has enabled the computerisation and digitisation of most businesses services. As a result of these two changes, information can now be transmitted over long distances at very low cost and with little loss of quality. These changes make organisational boundaries and national borders much less important in deciding the location of service functions. As is commonly realised, the prime motivation for outsourcing is that it reduces labour costs.

There continues to be large differences in the wages paid for equivalent skills between the United States (US) and developing countries such as India and the Philippines. For example, the equivalent of a software developer which costs 60 dollar an hour in the US costs only 25 dollar an hour in India. Similarly, a data entry agent which costs 25 dollar an hour in the US costs only 15 dollar an hour in India. However, there is also a second reason why outsourcing brings economic benefits. While in the US many of the outsourced jobs are seen as relatively undesirable or of low prestige, in the countries they are outsourced to, they are often considered desirable and attractive. As a result, workers in low-wage countries often have higher motivation and outperform their counterparts in developed countries in terms of performance measures such as the number of transactions per agent, or the number of errors per transaction.

The Indian Information Technology (IT) and Information Technology enabled Service (ITES) industry has been one of the great success stories of modern India. An industry that did exist barely two decades ago has today arguably created international benchmarks for quality, proving to the world that Indian companies can compete globally and win on quality. It has also demonstrated what can be achieved by unleashing the power of middle class and first generation entrepreneurship in India. The overwhelming majority of companies in this sector were started by entrepreneurs with modest backgrounds and with very limited access to capital. In many ways, this industry has helped create the brand of ’New India’ and served as an inspiration for everyone else.

The IT/ITES industry’s contribution to the country’s Gross Domestic Product (GDP) has been steadily increasing from a share of 1.2 per cent in Financial Year (FY) 98 to 5.2 per cent in FY07; it has contributed to foreign exchange reserves of the country by increasing exports by almost 36 per cent and its direct employment has grown at a Compound Annual Growth Rate (CAGR) of 26 per cent in the last decade, making it the largest employer in the organised private sector in the country. In addition, The IT/ITES industry has significantly contributed through socially relevant products and services and community initiatives in human resource development, education, employability, health, encouraging women empowerment and employment of ‘out-of-the-mainstream’ candidates.

The difference in wages alone exaggerates the potential economic benefits. Though the wage-saving is substantial, additional costs are incurred in terms of telecommunication and the management of the offshore facility. Nevertheless, once these costs are taken into account, there is at least 45 to 55 per cent saving in the cost base. Re-engineering the process design can further increase this potential saving to 65 to 70 per cent of initial costs. A simple example is - changing the sequence for processing a customer service call, which would result in a penalty on labour productivity but a substantial improvement in capital productivity and thus a net impact of a 50 per cent increase in profits. In addition to significant cost savings, companies are also using outsourcing as an opportunity to drive revenue growth. For example, by leveraging cost arbitrage, airlines are now able to chase delinquent accounts receivables that they would earlier be forced to ignore. Similarly, computer manufacturers are increasing market penetration by offering customers services they could not afford to offer earlier. As a result, by outsourcing, many companies are creating far more value from increased revenues than from reduced costs.

US businesses dominate the global share of outsourcing, accounting for some 70 per cent of the total market. Europe and Japan account for the remainder of the market, with the United Kingdom (UK) as a dominant player. Both the US and the UK have liberal employment and labour laws that allow companies greater flexibility in reassigning tasks and eliminating jobs. This flexibility is essential to capture outsourcing opportunities effectively.

There is also a supply-side element shaping the current pattern of outsourcing. It has been conducted primarily in countries where English is the main business language. In general, the presence of an English-speaking population is a key factor in the choice of location of offshore services, as the commonality of language helps to ensure that quality and performance criteria can be fulfilled.

Without a shared language, errors are much more likely to occur, thereby undermining the benefits of outsourcing. Canada, India and Ireland have all proved particularly attractive in that they have large English-speaking populations. Other countries with English-speaking populations, such as Australia, South Africa, and the Philippines, are also potentially attractive to a greater or lesser extent. This emphasis on the commonality of language might also explain in part why non-English-speaking countries have not resorted to outsourcing to the same extent.

There is potential to outsource a very wide range of functions. The criteria for successful outsourcing include the requirement that the function can either be digitised or handled by telephone, and that appropriate skills are available or easily developed at the outsourcing centre. Among the functions to be outsourced first are back-end processing, call centres, and accounting. Higher-value work has since been added to this list, particularly in areas where there is an offshore abundance of what are otherwise scarce skills. The prime example of this is software maintenance and development, which continues to attract increased investment in offshore facilities.

The debate about outsourcing is expected to grow at the rate of 30 to 40 per cent a year over the next five years. Forrester, a leading analyst, projects that the number of US jobs outsourced will grow from 400,000 jobs today to roughly 3.3 million jobs by 2015, accounting for some $136 billion in wages. Of this total, Forrester expect 473,000 jobs from the IT industry to go offshore over the next 12 years, representing eight per cent of all current IT jobs in the country. Very few doubt that outsourcing is good for India – India gains a net benefit of at least 33 cents for every dollar spend offshore.

But, is outsourcing really bad for the United States? What is the impact on employment? The evidence suggests that fears about job losses, however reasonable they might be, tend to overplay the likely impact of outsourcing. The vast majority – some 70 per cent – of the economy is composed of services such as retail, restaurants and hotels, personal care services, and the like spanning very broad wage and value added ranges. These services are necessarily produced and consumed locally – and therefore cannot be outsourced.

This is not to say that no jobs will go overseas. They will. And as with any trade related or other industry restructuring, the changes will be painful for many involved. But even if Forrester is right, and 3.3 million jobs do go offshore by 2015, the United States has been there before. It has the world’s most dynamic economy and is fully able to generate new jobs. The argument is that the advantages of outsourcing are:

Reduced costs: Cost savings represent the largest form of economic value capture. For every dollar spent offshore, 58 cents are captured as net cost reduction to businesses even as they often receive an identical (or better) level of service. A more competitive cost position will lead to higher profitability, increased valuations and help keep US companies highly competitive in the world economy. Initially, the savings will flow to investors, or they will be invested in innovations or new business ventures. Eventually, as outsourcing becomes more prevalent, competition will yield the savings to consumers. In either case, outsourcing will contribute significantly to increasing national earnings.

New revenues: For every dollar spent offshore, offshore services providers buy an additional five cents worth of goods and services from the US economy, thereby creating exports and extra revenue for the US economy. Providers in low-wage countries require US computers, telecommunication equipments and other hardware and software. In addition, they also procure legal, financial, and marketing services from the US.

Repatriated earnings: Several providers serving US outsourcing market are incorporated in the United States. These companies repatriate their earnings back to the US, which amounts to an additional 4 cents out of every dollar spent offshore.

Redeployed labour: As low value-added service is sourced from overseas, US workers previously engaged in providing those services are freed up to take other jobs. If redeployment continues at the rate it has over the past two decades, then for every dollar spent offshore, the economy will capture an additional 45 to 47 cents per dollar outsourcing from the new jobs that are generated. This appears a reasonable assumption given the empirical evidence that services workers find employment more quickly than do manufacturing workers, and job-displacement during the last two decades – when jobs outsourced were primarily in manufacturing was at least as high as the projected job displacement in services. Far from being bad for the United States, outsourcing creates net additional value for the US economy that did not exist before, a full 12-14 cents on every dollar off shored. Indeed, of the full 1.45 dollar to 1.47 dollar of value created globally from outsourcing 1.00 dollar of US labour cost, the US Captures 1.12 dollar to 1.14 dollar, while the receiving country captures, on an average, just 33 cents.

The openness of the US economy and its inherent flexibility, particularly in terms of its labour market, are recognised widely as two of its great strengths. These aspects need to be reinforced, not undermined. The current danger is that policy makers will inadvertently pander to protectionism. To do so would be dangerous for America’s future well being.

Outsourcing of IT / ITES business to India has not just impacted the culture but is today deeply interwoven into the socio economic fabric.

Source from Merinews.com

Indian IT services companies are losing their grip on the global outsourcing ecosystem, a new report has revealed.

Only 10 outsourcers from India made it to this year's 50 best managed global outsourcing vendors for the 2008 Black Book of Outsourcing (PDF version), compared with about half in 2004. Nearly 25,000 outsourcing users participated in the Brown-Wilson Group survey, which ended in May.

The best Indian performers on the list were Wipro, Satyam and GenPact, which were ranked sixth, seventh and eighth, respectively. In 2006, five of the top 10 vendors on the list were Indian outsourcing service providers.

This year's top honors went to Hewlett-Packard, which jumped from eighth spot in 2007. HP also topped the list of top 10 vendors for financial and accounting outsourcing.

Rounding up the rest of the global top five were all U.S.-headquartered companies--Perot Systems, CSC Unisys and EDS. The report indicated that the Black Book survey closed the day before HP announced its acquisition of EDS.

Indian dominance prevailed in the realm of business process outsourcing (BPO), with Genpact, Satyam BPO, Wipro and HCL BPO making up the top four vendors. Satyam also was placed fourth on the list of top 10 knowledge process outsourcing (KPO) vendors.

In a statement Tuesday, Satyam BPO's CEO Venkatesh Roddam noted that the results as an affirmation of the company's strategic perspective. "The categories in which we have been ranked this year--BPO and KPO--are the key growth areas that we have been focusing on and basing our 'Specialty BPO' positioning on," he said.

The 2008 Black Book of Outsourcing report singled out Infosys' fall from the 50 best vendors list as "surprising". At No. 59, this year marks the first in five years that Infosys has failed to enter the top 50. It was ranked No. 10 last year.

Douglas Brown and Scott Wilson, authors of the report, noted that the company's displacement was accompanied by "rising accounts of client discontentment".

They said: "Over a dozen major customers cited the fact that Infosys has not melded their consulting and service delivery well. U.S. clients cite a lack of American front office support with an imbalance of too much delivered from offshore."

Despite their slide, Indian players remain a major force in the outsourcing industry, and outsourcers in China are still nowhere close to replacing them. According to the report, Chinese outsourcing companies have failed to make the cut for the top 50 for a second consecutive year.

Brown and Wilson pointed out that despite highly skilled labor and solid infrastructure, "China is still risky" particularly in the areas of partnerships, business stability and distribution channels.

They said: "Revenues are increasing for China’s technology providers but hardly touch a fraction of the huge global offshoring market share.

"Based on recent client satisfaction outcomes, the majority of those outsourcing decision-makers will not rank China as their first choice for upcoming initiatives anytime soon. [They] currently agree that too many barriers exist for China to take India’s place as offshoring destination of choice."

Source from: zdnetasia.com