What is Outsourcing?
Virtual relationships becoming key for outsourcing projects
by: Carlo Abadilla
Monday, December 07, 2009 | Comments (0)
Category: Outsourcing Research / Trends
As more and more people turn to social networking sites and other online communications tools, the concept of project management is fast evolving with it. From a business perspective, the value proposition of free utilities is enormous, and companies are realizing that having an online presence is not merely a marketing tool but also an effective way of managing your relationships.
This trend is best illustrated by the outsourcing process. As companies find that it is cheaper and more cost effective to outsource non-core functions, new media tools are stepping up to fill that last mental barrier keeping companies from fully embracing an outsourcing strategy for growth: the absence of tactile, face to face communications. Now, with Twitter, Facebook, Skype, and Base Camp, collaborators from all over the world can converge on one project and do it more efficiently than shuttling between airports or burning the phone lines.
The beauty of the emergence of new media is that it gives companies who outsource non core functions control over how a project proceeds; in fact, it can be argued that new media gives people the ability to affect changes mid stream and in real time, a luxury that was absent a mere decade ago. For outsourcing companies, it also gives them access to a whole new set of potential customers, companies that have seen the wisdom of maintaining an online presence themselves.
Having said this, the increased reliance on new media to facilitate outsourced operations means companies and individuals must now forge and maintain relationships in the digital world. With the increased use of social networks, this 'virtual life' can also be fully harnessed for business purposes as catch basins for increased interaction between team members. With these new tools, no longer will a manager in the US constantly worry about not getting through to his foreign outsourced partner; new media has made communications a mere mouse click away, and this bodes well for the outsourcing industry because it gives potential customers a new comfort level when dealing with people they have never personally met.
Web Design Offshoring
by: Carlo Abadilla
Friday, June 11, 2010 | Comments (0)
Category: Outsourcing Research / Trends
Whether it's a large or a small business, offshoring web designing work has been a long-standing practice that has proven to hold many benefits – particularly among Internet-based enterprises. Outsourcing web design work in general is particularly effective for smaller business owners who now realize the importance of an online identity for success.
An online corporate identity needs to reflect the core values of the organization as well as project standards of excellence and professionalism. These are typically the characteristics of websites that are produced by experts in the field. Users often judge a website based on the quality of its design and a good balance between eye-candy and effectiveness. By effectiveness, this means navigability and its ability to draw traffic and achieve its purpose. Outsourcing web design work offshore requires choosing a service provider that is experienced in delivering such results.
The field of website creation and design is a challenging one that is constantly changing and developing new technologies. Creating your own website requires that you know the skills necessary to create them. Often, hiring your own staff will prove not only costly, but difficult in terms of finding experienced and skilled professionals who are up-to-date on the latest web design trends. Outsourcing website creation to professional web design providers will allow you to gain access to a high degree of expertise at much lower costs. This would have been much more costly and time-consuming to achieve in-house.
Offshoring your website needs means acquiring the assistance of a web design organizaion that has the resources and expertise necessary to deliver outsanding results. It is for this main reason that offshoring web design work has become common among small companies as well as start-ups that otherwise would not have been able to create such a powerful online presence domestically. Many small firms and start-ups that create corporate websites online feel the need to communicate to their customers that they are not as small as they seem – even though in many cases, there are only a handful of employees involved in the enterprise. A professional and cutting-edge website will serve this purpose perfectly.
Statistics show that web-based commerce moves seven times faster than the rest of the business world. As such, it is always something that one should consider investing in as the returns are well worth it. Outsourcing to an offshore service provider that will give you maximum returns on investment has proven for many businesses as the ideal move to capitalize on this trend.
Outsourcing Market Trends Signalling Global Recovery
by: Carlo Abadilla
Saturday, June 12, 2010 | Comments (0)
Category: Outsourcing Research / Trends
A recent report by global consulting and research firm, Everest, proves an ongoing theory that the growth of the global sourcing market is indicative of a recovering global economy. The IT outsourcing and offshoring industry has experienced particularly high growth – climbing 43 percent from the last quarter of 2009 to the first quarter of this year. In addition to that, transaction volumes are valued at US $3.9 billion, maintaining its stride for its third straight quarter.
According to Everest's quarterly report on the outsourcing and offshoring industry, activity in North America for Q1 of 2010 is up 18% while the ACV increased 36% in the fourth quarter of last year. Also reported was a 6% climb in transaction volumes in Q1 2010 from Q4 2009. The quarter featured four more mega deals of contract values over US $1 billion compared to last quarter.
With 35 new captive centers officially announced in Q1, the captive market remained on a steady growth path - a quarter of the 35 located in Asia and the remaining 11 in India. Outsourcing and offshoring suppliers in India revealed plans of aggressive hiring in order to meet the rise in demand, with leading IT providers Infosys, Cognizant, and TCS already annoucing a 50-60 thousand increase in staff throughout this year. Similar plans were announced by global-centric providers Capgemini, IBM, and CSC. The trend has begun affecting attrition rates as well as wage inflation in India, the leading offshore services location.
Compared to the fourth quarter of 2009, Business Process Outsourcing (BPO) accounted for 32% of deals signed with transaction volume increases of as much as 30%. Transaction activity in Europe experienced a marginal volume largely owed to a 33% growth in transaction volumes in the United Kingdom.
The Philippines joins Brazil, China, and India as locations that saw a notable increase in offshore activity, with 44 new delivery centers having been created. A significant amount of activity was recorded in Asia in Q1 2010 with its Tier 1 cities reporting more activity than its Tier 2 cities. Supplier transaction activity volumes remained steady overall.
“Outsourcing market activity during the last quarter was largely led by renewals and restructuring of existing contracts”, stated Everest Group Principal and Country Head India, Gaurav Gupta. Amneet Singh, Vice-President-Global Sourcing, Everest Group commented, “It is encouraging to see demand side momentum translate into 44 new supplier delivery centers in Q1 with activity continuing to be concentrated in Asia.”
Offshoring's New Threat: The Schumer Bill
by: Carlo Abadilla
Friday, June 04, 2010 | Comments (0)
Category: Outsourcing Research / Trends
For all the cost savings that it still promises, the offshore outsourcing industry has braved much opposition this year - beginning with the cease in tax breaks to offshoring companies promised by President Obama in his State of the Union Address. The threat has recently been embodied in the form of a new legislative attack proposed by Sen. Charles Schumer on the offshore call center industry.
Schumer announced that the plans are to introduce legislation that will require firms to publicly disclose available reports of their offshore call center operations. In addition to that, said firms will be required to pay a tax on every call sent offshore. A closer look reveals that this new legislation has three main clauses:
Firstly, a 25-cent excise tax will be imposed on any customer service call that orignates in the US and is transferred to a customer service personnel in a foreign location (commonly known as contact center outsourcing).
Secondly, companies will have to inform their customers of where their call is answered.
Finally, the bill requires companies to publicly disclose quarterly and annually the amount of customer calls received and how many of which were sent offshore - submitted to the Securities and Exchange Commission.
Schumer said that he plans to introduce legislation requiring that firms disclose in publicly available reports their offshore call center practices, and to pay a tax on every call sent offshore.
“If we want to put a stop to the outsourcing of American jobs, then we need to provide incentives for American companies to keep American jobs here,” stated Schumer. “This bill will not only serve to maintain call center jobs currently in the United States, but also provide a reason for companies that have already outsourced jobs to bring them back.”
It is certain that large outsourcing organizations that utilize offshore call centers will oppose the bill – as was the case with a bill that threatened to keep multinationals from keeping profits offshore in low-tax jurisdictions and delay paying taxes on overseas earnings. It was clear then that elimination of tax breaks for outsourcing companies was not enough to halt the offshore outsourcing freight train. Should Schumer's bill come into law, it may just mark a significant step in the direction of ceasing the transfer of jobs to offshore locations – at least in the contact center sector. Where other bills have failed in the past, this one may just succeed and speed up the growth of a recovering US economy.
Trends Shaping the Offshoring Industry Today
by: Carlo Abadilla
Wednesday, July 07, 2010 | Comments (0)
Category: Outsourcing Research / Trends
A continuously maturing global sourcing arena has caused the creation of a dynamic marketplace with changes in buyers’ needs and demands. These changes can have a severe impact on the need for next generation characteristics in today’s global service delivery models. These are furthermore marked by globalized approaches, industrialized delivery, and a growing global talent pool, reported Everest Group, a major global outsourcing and offshoring research firm.
Companies that have invested in offshoring have, over the years, realized that actual savings were not as high as initially projected. Costs can come great from cultural gaps and communication issues that directly impact the turnaround time as well as the quality of the end products. Furthermore, the synergy between the offshore team and the company can be lost due to management deficiencies.
Following the evolution of the offshoring industry into a more complex and sophisticated space, its service providers are required to look for a means of servicing the progressively higher professional needs of buyers that have gone far beyond mere labor arbitrage. Emerging as key factors on offshoring delivery redesigns worldwide are things such as operating model, talent management, and a good location portfolio.
These are the topics of a new global outsourcing and offshoring study conducted by research giant Everest, entitled Global Sourcing 2.0 - Evolving Global Delivery Imperatives for Outsourcing Service Providers.
The research group’s report on global sourcing gathers analyses on global delivery trends of all leading global service providers involved in offshoring. This is further supplemented with discussions with India’s buyers, services providers, and the group’s experience in serving the global sourcing industry.
“The evolution of the supplier delivery models is evident; more so with the industry dynamics to remain high on growth requirements, even when faced with an extreme competitive environment. As the buyers’ sourcing strategies and engagements mature, service providers are re-thinking their global delivery models to meet evolving buyer requirements related to location risk diversification, location-agnostic & consistent delivery experience, faster and lower cost transitions and deep domain expertise,” commented Everest Group Vice President of Research Amneet Signh.
Meanwhile, Guarav Gupta, Principal & Country Head of Everst Group, believes that understanding such trends “holds importance for service providers and buyers alike”.
“While it is critical for service providers to be aware of these imperatives and prepare to compete with the changing market paradigm, buyers need to incorporate and leverage these next-generation global delivery characteristics in their decision making to drive improved value from their sourcing programs”, said Gupta.