However, currencies, elections remain concerns.

Despite a debt crisis in Greece, Spain, and Portugal, other countries in Europe, such as Germany and France, besides the Nordic region (Sweden, Norway, Finland, Denmark) and Benelux (the Netherlands, Belgium, Luxembourg), are expected to continue and, in some cases, even increase their outsourcing and offshoring work to low-cost countries like India.

“Though Europe is still fragile, we are certainly seeing an uptick in outsourcing, as well as offshoring from European clients. Deals are getting shorter and smaller in duration, but it certainly is increasing. To give you an idea of the 800 inquiries that we received last year from European clients, about 90 per cent asked us about offshoring,” explains Gilbert Van Der Heiden, Gartner’s research director for information technology (IT) sourcing.

The UK, according to Gartner’s forecast on enterprise IT spending for 2010, was expected to witness a growth rate of 3.8 per cent for 2010, while Germany was expected to grow by 3.2 per cent. For France, it was 4.3 per cent and the Nordic regions, 4.2 per cent. While Benelux is expected to clock a 4.6 per cent growth rate.

Sridhar Vedala of Quantum Step, a global sourcing company, concurs. He says earlier European customers started with staff augmentation but as they see the cost advantage, they are looking beyond that and want to partner at a strategic level. “Other than the economic downturn and need to cut cost, European customers use a large number of contractors. Due to the immediate cost savings initiatives, they are looking at replacing expensive contractors with offshoring,” he says.

IT firms also agree that Europe is much more positive to offshoring than it was before the global meltdown hit. “European clients are much more open for discussions now. We have seen some good traction in the government and the healthcare segment,” says a senior executive of a large IT firm. But, he adds, some immediate concerns are the upcoming UK elections and the fluctuation in the currency.

“The Europe crisis will not have much of an impact on Indian IT service providers. The impact will be on valuations due to the currency movement, but this will not impact the deal flow. Similarly in the UK, the incumbent government is under huge pressure to reduce cost,” says Peter Bendor Samuel, Chief Executive Officer, Everest Group.

Currency volatility is indeed a concern. From January 1 till date, the euro has depreciated by almost nine per cent to the rupee. Similarly, the dollar has appreciated by seven per cent to the euro over the same period. As for the pound, it has depreciated against the rupee by almost 9.6 per cent since the beginning of 2010.

And, more than 25-30 per cent of revenues of the Indian IT firms come from Europe, especially the UK. For the top three IT firms, the revenue contribution from Europe is over 25 per cent. A one per cent appreciation (or depreciation) in the currency means a 40-basis points positive or negative benefit on the operating margins of companies. This particular volatility is expected to have a 0.9 to 1.3 per cent cross-currency impact for the quarter, predict analysts.

Another concern is over the upcoming UK elections. A case in point is the recent £600 million, 10-year, outsourcing contract awarded to Tata Consultancy Services from the UK’s Personal Accounts Delivery Authority to administer the National Employee Savings Trust scheme. The Conservative Party has said it’d review the contract if it comes to power.

“Elections in UK are a whole different issue. Depending on who comes to power, there could be some impact on outsourcing. Issues in the UK will be around employment. Offshoring will be an election topic,” agrees Vinu Kartha, Vice President, Tholons, a strategic advisory firm for global outsourcing.

“Europe has some serious challenges. The population is ageing, and they are running out of skills. They will have to look at outsourcing and offshoring. Most of the large players have benefited from this. It iss for the others, the medium-sized players, to adopt this,” remarks Vikram Gulati, Director of Quantum Step.

Source:http://www.business-standard.com/india/news/problems-in-europe-not-to-affect-it-firms/390040/

Major survey of UK businesses reveals growing trend for IT outsourcing to UK-based suppliers.

PeoplePerHour.com Europe’s biggest online business marketplace today revealed the first results from a survey of its 50,000+ business users.

The survey revealed that 60 percent of UK businesses are outsourcing more now than they did two years ago largely due to the recession, which prompted many businesses to outsource in order to cut costs and reduce in-house staff numbers.

More surprising was the revelation that 61 percent of businesses are now choosing to outsource their IT requirements to local suppliers instead of cheaper overseas alternatives.

This survey finding is corroborated by PeoplePerHour.com’s research into the buying behaviour of its users detailed in the PPH Economy which shows that only 6.9 percent of businesses award projects to the lowest bidders.

“You might have expected offshoring to grow through the recession as UK businesses looked to cut costs by outsourcing IT requirements to cheaper overseas suppliers,” says PeoplePerHour.com founder Xenios Thrasyvoulou. “However, responses to our survey and analysis of transactions on the site points to one conclusion: outsourcing is growing and offshoring is falling.”

The fall in offshoring is partly attributable to recent rise of the UK’s ‘freelance economy’ and the growing availability of skilled IT professionals offering their services on a freelance basis.

In the recession, many individuals who were made redundant from an in-house IT role turned to freelancing instead of re-entering the job market. This merely accelerated a trend that was emerging before the recession, however. New technologies like PeoplePerHour.com and widespread broadband have been making freelancing an increasingly viable and attractive option for many years now.

According to PeoplePerHour.com’s survey, 41 percent of respondents currently outsource IT requirements more than any other service category on the site (Marketing & PR is second with 29 percent).

Source:http://www.onrec.com/news/it_outsourcing_grows_but_offshoring_dwin

Outsourcing seems to be the new mantra for the Ahmedabad Municipal Corporation (AMC). Call it an effort to get better results, or neglecting its own parks and garden department by giving work of landscaping to a private contractor.

This is not the sole example of outsourcing. The AMC has also outsourced the work to manage manpower at civic centres and appointed a private company for the purpose. Both the works were sanctioned in the standing committee on Friday.

The AMC has been outsourcing landscaping work for bigger projects like BRTS and Sabarmati Riverfront Development, which is understandable, but landscaping of a smaller patch at the sports complex at Memco by its own parks and gardens department could have saved the AMC Rs31 lakh.

Standing committee chairperson Asit Vora said it was an effort to complete work faster and get the best of landscaping. They say, he said, expertise is needed for landscaping which is not available with the civic body. Interestingly, all gardens managed by the civic body have been developed by its own parks and gardens department.

In another move, the work to manage manpower at the civic body’s civic centres has been outsourced to a private contractor. The move comes after the civic body’s plan to come up with ward-wise civic centres so that citizens can avail service of payment of taxes etc. from their door step.

To manage civic centres the civic body has distributed work to bidders. “Each bidder would take care of two civic centres for a period of one year,” said Vora. It will pay Rs25.4 lakh to each bidder for managing manpower at the civic centres.

Source:http://www.dnaindia.com/india/report_civic-body-in-ahmedabad-on-an-outsourcing-spree_1364739