"Outsourcing is nothing less than a full-blown mega-trend all around the world"
Outsourcing, going to be more and more of a mainstream phenomenon, is now a business essential. The next wave in globalization is focused on the transplantation of entire IT departments offshore. Recent trends suggest that the outsourcing market will continue to grow. Contracts are awarded incessantly and study indicates that companies are expanding the range of IT services they outsource.
- Offshore outsourcing is increasingly being accomplished as global sourcing or global delivery.
- Cannibalization of work : Earlier work was outsourced to a supplier who stayed at home, but today outsourcing is more prevalent.
- The growth of the captives, organizations owned and operated in a foreign country by a parent firm. Here the offshore workforces are employees of the parent company, not an outsourcing supplier.
- Outsourced ecommerce: Sending ecommerce out of house is an increasingly popular choice for businesses.
The global market
To improve business performance outsourcing of business processes and functional activities is one of the options available. Companies that employ outsourcing are more financially stable than are those that do not.
- 35-55 percent savings in relevant costs for some global companies.
- 23 percent of IT services will be delivered from offshore centers by 2007, compared with only 5 percent this year.
- According to International Data Corporation (IDC), global IT-enabled services market will account for revenues of $1.2 trillion by 2006.
Globalization and de-reguation has changed the entire face of business and the companies are about to receive the new business model, ‘outsourcing'. The new atmosphere speeds up business processes, eliminating administration costs and improving efficiency.
- Cost saving by 40-50%
- Reduce investment risk
- Get access to specialized skills
- Faster development and start up
- Overcome human resource crunch
- Ability to concentrate on core functions
- Creates and expands new markets
- Effectively and efficiently promotes global citizenship
- Recognizes the benefits of a global economy
- Enhances technological creativity and diversity
- Makes good social, financial, and economic sense
Trend setting factors
- Conservative companies to experiment with going offshore to withstand competition.
- Broadening of the IT services offered by the experienced vendors.
- The launching of captive offshore centers by user companies for business process outsourcing (BPO).
- Onshore IT technology and services vendors setting up shop in locations like India and China to widen their services. The main three facets;
- Availability of aptly skilled resources
- Lower costs of manpower
- Ability to create better quality of work , more efficiently