Offshore outsourcing is expected to reach dizzying new heights, according to a report by analysts at Ovum.

It expects revenues will be as high as $93.4 billion in 2015, thanks to emerging superpowers like India and China waking up to the money in the business. Ovum expects a compound annual growth rate of 5.4 percent from $71.92 billion in 2010.

Although it calls it business process outsourcing, make no mistake – it means big manufacturing contracting. The reason for the growth is thanks to the looming threat of that double-dip buzzword and the grim spectre of recession refusing to leave the building. Businesses have noticed that, in order to keep competitive, they have to lower costs at every level, and outsourcing means a lot less pressure on a company’s workforce.

Outsourcing is not just popular in manufacturing, but gaining grounds in human resources, engineering design and R&D. It’s just like ARM says – outsourcing is penned in as the way forward for companies to cut costs as well as being able to pick and choose exactly how their company is run. If a contractor doesn’t please, onto the next one.

The analyst house reckons the enterprise has found tying itself into single-vendor deals is a bit like shooting itself in the foot, and is instead spreading investments across the sectors. The small and medium sized enterprise, in particular, is driving a lot of demand because there are very scalable options available for a relatively low price.

Ovum believes there is a market, too, in North America and the UK and Ireland which will see some growth. The compound annual growth rate is a little slower but it is there, at 2.7 percent and 4.1 percent respectively. North America’s slow growth is because of how long it has been in the market, with enterprises starting their offshoring projects decades ago, Ovum says.

Source:http://news.techeye.net/business/offshore-outsourcing-ready-for-boom

The President’s recent focus on job creation is on target with 15-20 million Americans currently out of work. His bus tour earlier this month was well timed and the President said a great many powerful and logical things to an important group of voters. He has finally latched on to the single most important topic facing America today. Unemployment. However his job creation efforts are facing some very strong headwinds. Case in point: Thousands of federal, state, and local governments are shedding jobs because of budget shortfalls and the private sector continues to expand the practice of offshore outsourcing. In essence, while President Obama helps to promote jobs coming in the front-door, the private sector continues to outsource jobs through the back-door.

Job Losses: Government & Information Technology

By most estimates America lost over 1 million IT jobs since 2000, which was due in a large part to offshore outsourcing. In addition, federal state, and local entities have reduced their payrolls by approximately 500,000 to 750,000 since the start of the financial crisis. With a Federal deficit projected to be around 1.3 trillion dollars for 2012, it is not likely that Washington will go on a hiring spree any time soon. In addition, the states are projected to have a 125 billion shortfall over this time period and expected to hemorrhage 15,000-25,000 jobs per-month over the next 12-24 months.

IT Jobs & India

The sad fact remains that American companies are accelerating their use of offshore outsourcing to places like India while millions of Americans remain unemployed. However, Washington can make important changes by imposing a tax on companies who fire American workers and replace them with foreign hires. Washington could impose a tax on the company outsourcing an American job, which carries with it a one-time charge of one year’s salary of the employee. For example, if a Java programmer on Wall Street making $55,000 was replaced by a person in Mumbai, then the company would be required to pay an up-front fee of $55,000 to the Federal government. The new tax would help to slow down this practice, while adding needed dollars to the Federal coffer. Why should Washington continue to allow private companies to give domestic jobs to foreign workers, or move them to foreign nations? There is little question that a strong lobby group hired by the outsourcing companies has had a great deal to do with it, but now with the 2012 Presidential Election coming up, it could be an excellent political topic to run with.

Presidential candidates from both parties have an excellent opportunity to bring the outsourcing topic into focus from now until November 6, 2012. While many consider it a political football, it will no doubt spark voter interest. Bottom line, it is time for Washington, both Democrats & Republicans to act and not turn a blind eye to this unfortunate practice.

Source:http://www.examiner.com/jobs-in-washington-dc/washington-conflict-creating-jobs-offshore-outsourcing

Dispute resolution is always an important consideration when outsourcing IT. If that fails, however, you can always sue if your provider has breached the contract.

“Yes, you can litigate,” says Edward Hansen, partner with law firm Baker & McKenzie. “But you probably shouldn’t.”

Outsourcing lawsuits are notoriously difficult to prosecute, can create such a distraction that it puts the organization at operational risk, and rarely benefits either party in the long term. Offshore outsourcing litigation is even more complicated.

“Sometimes, however, litigation is necessary to resolve outsourcing disputes when all other reasonable or contractually obligated means of solving the problems in the business relationship have been exhausted,” says Shawn C. Helms, attorney in the technology transactions and outsourcing practice at Jones Day.

How do you know if it’s time to take your offshore outsourcing provider to court? Ask these six questions first.

1. What is the nature of the dispute? “There is a huge difference between discussing litigation in the context of a vendor who is underperforming versus one who has been negligent or violated a trust,” says Hansen. “For example, breaching the privacy provisions of an agreement is very different from failing to deliver on transformational savings.”

A well-drafted contract will contain remedies for a privacy violation. Underperformance can be murkier. There may be something about the underlying economics of the deal that encourage bad performance, says Hansen, or you may have chosen the wrong partner. In either case, litigation is unlikely to solve your problems.

2. Do you have informal dispute resolution processes at your disposal? “A good contract will provide many alternatives to a suit,” says Brad Peterson, partner in the business and technology sourcing practice of Mayer Brown. Look for dispute resolution provisions within your deal’s project management or governance mechanisms.

In addition, most contracts will layout “mandatory, mandatory, detailed, multilayered and gradually escalating dispute resolution processes,” says Shawn C. Helms, an associate with law firm Jones Day, starting with informal dispute resolution procedures all the way up through litigation. “Most outsourcing disputes are resolved confidentially through out-of-court settlements so that service providers can protect their business interests and customers can maintain an ongoing relationship with the service provider.”

3. Can you withhold payment? Customers may seek to use financial leverage to right a wrong. Some contracts will contain a provision call “Right of Set-Off” or “Right to Withhold Disputed Payments.” These allow the customer to deduct from payments otherwise owed to the service provider amounts of money representing damages that the customer claims the service provider caused as a result of failing to perform its obligations under the contract.

“If the service provider disputes the amount of the deduction, it may be required by a forum selection clause in the contract to file a lawsuit in the U.S. to have a court resolve the dispute, or it may be required by an arbitration provision to arbitrate the dispute in the U.S.,” explains Robert Kriss, a partner and litigator at Mayer Brown. “In the meantime, the customer holds onto the disputed amount or deposits it in an escrow account, depending upon the terms of the contract.”

4. Do you have a binding arbitration clause in your contract? A well-written deal will contain a provision obligating parties to arbitrate any disagreements through a neutral arbitration body such as the American Arbitration Association or the International Chamber of Commerce. That becomes especially important with offshore outsourcing, says Helms, “because foreign courts are often more likely to enforce an arbitration ruling against a local provider than a ruling by a U.S. court.”

Many countries have agreed by treaty to enforce arbitrated judgments. Just make sure the arbitrating organization is one whose awards are enforceable in the country where the outsourcer’s assets are located.

5. Where is your offshore provider based? “You have to determine first how you would enforce a judgment,” says Kriss. “If the offshore outsourcer’s assets are located in a country that will not enforce judgments rendered by U.S. courts, then you will have to bring suit in the country where the assets are located. Indian courts, for example, will not directly enforce the U.S. judgments because the U.S. is not a “reciprocating territory” under Indian law. And pursuing litigation in India can be painful. “The Indian court system is infamously slow,” says Helms. And bringing a suit against a vendor in its own country may not be worth it anyway. “The outsourcer may have a home court advantage,” adds Peterson.

6. Is there money to collect? Should you decide to sue your provider, a court may decide in your favor, but you remain responsible for collecting your judgment. And there may be little money to chase. A court may decide in your favor, but it won’t collect the judgment for you. “Offshore outsourcing companies often have few assetsthey may be leasing their facilities and equipment and paying out cash to the owners as soon as it is received. The offshore outsourcing companies with assets may have those assets pledged to first-priority lien holders,” says Peterson. “Thus, even if the U.S.-based customer manages to get a judgment against the outsourcing company, there may be little or no cash to collect.”

Make sure your vendor is not what the legal community calls “judgment proof” before you look to the courts for restitution.

Source:http://www.networkworld.com/news/2011/082611-should-you-sue-your-offshore-250160.html?page=1

Companies are increasingly turning their attention towards offshore outsourced IT, recent research revealed.

Some 50 per cent of chief information officers (CIOs) will be boosting their spend on offshore IT support services this year, compared to just 20 per cent last year, according to the latest Harvey Nash and PA Consulting survey, published by ComputerWeekly.

The majority of CIOs will choose to outsource their IT to India, which has seen its popularity as a managed services destination rise over the past year.

However, Brazil, China, Malaysia, the Philippines, Russia and Vietnam are also making their mark on the outsourced IT market now as well, the research showed.

Companies are increasingly under pressure to reduce their costs and they need access to a wider skillbase, which is why outsourced IT is experiencing such a boom, the survey found.

Recent documents obtained by the BBC revealed that the UK government will not be moving as much of its IT services from the public to private sector as was originally planned.

The government reportedly plans to scale back on its outsourcing plans.

Source:http://www.codestone.net/news/story/offshore-outsourcing-is-growing-trend/800547591/