Posts Tagged ‘Outsourcing’

Vietnam tops global outsourcing market for first time

March 26th, 2015

Vietnam has capitalised on increasing labour costs in China to take first place in the ranking while India remains the world’s largest business process outsourcing market.Outsourcing16

Vietnam established its presence in the sector thanks to numerous government reform policies to promote the country as a key outsourcing destination. C&W predicts the service segment will expand rapidly given the average age of the country’s workforce is under 30 and 1-1.5 million people enter the labour market every year.

The software industry has increased rapidly in recent years with over 1,000 operating companies recruiting 80,000 labourers. Vietnam has become one of the world’s biggest software exporters and the second biggest outsourcing country for Japan.

C&W Vietnam’s Director of Valuation and Research Department Jonathan Tizzard said the ranking reflects the Government’s ability to create a stable business environment and introduce policies to improve education quality and professional skills for the younger generation.

Additionally, foreign direct investment to Vietnam is expected to increase with the signing of the Trans-Pacific-Partnership Agreement, possibly this year or in 2016, and once the two revised Laws on Housing and Real Estate officially take effect in July 2015, making room for foreign investors to operate in the country, he added.

C&W’s Head of occupier services for the Asia-Pacific and the Middle East and Africa Richard Middleton said that while Vietnam is not the cheapest outsourcing destination, it is still very competitive globally.

Wage increases in India and China have pushed Vietnam to top the rankings in 2015, he added.

Infosys, Wipro, TCS caught in outsourcing price war

March 26th, 2015

Top software service exporters are under pressure to drop prices to retain contracts with marquee customers such as American Express and Home Depot that are up for renewal this year, according to executives and experts involved in the contract negotiations.Outsourcing17

Rates have fallen by double digits for some of the biggest customer accounts in the past six months, with companies such as Infosys and Wipro sacrificing profit margins to gain market share and incremental revenue from these key accounts, they said.

Retaining strategic outsourcing contracts — that generate at least $100 million annually — is crucial to top IT firms such as TCS, Infosys and Wipro.

“We’re definitely feeling the heat in some of our key accounts — and there’s no way we can afford to lose a top customer since gaining new logos to make up for the shortfall is not an option,” said a Wipro executive, who requested anonymity.

An executive at another top IT firm, also declining to be identified, said as traditional businesses have become commoditised, no company could afford to charge a premium.

“Top customers are more aware now of the changing dynamics in the market and are taking the opportunity to negotiate multi-million dollar contracts at lower prices,” this person said.

Experts tracking the contract negotiations said prices could drop further over the next 3-4 quarters.

“It’s become a dog-eat-dog business more than ever,” said Phil Fersht, chief executive of outsourcing advisory firm HfS Research. “There is a clear downward pressure on all IT services pricing. We estimate this is a 3% price decrease per FTE (full time equivalent) per deal, on average, over the last 6 months.”

TCS, Cognizant and Infosys declined to comment for the story.

Infosys, TCS and Wipro are increasingly automating commoditized businesses like infrastructure management to improve margins but are forced to pass on a majority of the benefits to key customers such as Bank of America and Citigroup.

“We are seeing big price movement, some of it betting on increased maturity of autonomics. TCS, Wipro and Infosys have all signaled their move away from (automation company) IPSoft and towards internally developed autonomics solutions. I assume that this will give them more pricing flexibility than they were getting with third-party software,” said Bill Huber, a former IBM executive and managing director at outsourcing advisory firm Alsbridge.

For Infosys and Wipro, which have lagged average industry growth rates over the past three to four years, gaining market share at the cost of margins seems to be their best option in the near term to revive double-digit growth rates.


Here are 10+1 ways to build a better business with outsourcing in 2015

March 24th, 2015

The term BPO stands for “Business Process Outsourcing”. Also known as outsourcing, it involves entrusting an outside organization with some non-critical functions of the business which they carry out in an efficient and time-economical manner. BPO services industry seems to be soaring high with more and more companies establishing and jumping on the bandwagon and following suit. This has become conducive to positive growth in the BPO industry.Outsourcing16

Business Process Outsourcing occupies a major segment of the Information Technology Enabled Services (ITES) industry and is making rapid strides with each passing day. The BPO enables organizations to focus attention on the business-critical activities and pass the buck for everything else to outsource providers. In this way, BPO saves valuable time and resources of the company and shed a good deal of load off their shoulders so that they can build upon their core competencies.

Here are some of the ways to build a better business with outsourcing in 2015

Do Not Focus Much Attention on Cost: Although candidate available at relatively cheap rates may seem inviting to others but still the results in the long-run may make you rue your choice in hindsight. You can stay within your allotted budget while assessing the quality of results that you seek to procure. You should not fret about your budgeted constraints as there exist a number of reliable companies which deliver goods in quality services at affordable prices.

Incorporate Interview Techniques: You need not subject the company to grilling while sizing up a qualified outsourced vendor. Instead, you can lay out a checklist of questionnaire that is critical to the scope of your project.

References and Feedbacks: You can also draw out feedbacks from the former clients’ of the company by contacting them. This will have a significant bearing on your decision. You should lay thrust on whether the BPO provider in question is filled with gumption to deliver to the expectations of clients while checking for references.

Seek out a Candidate for a la carte category: This includes breaking a single project into diverse categories. Subsequently, you can integrate similar tasks that require same set of skills. This will facilitate decision-making related to selection of a team with extensive years of experience in the specific areas that suit the needs of the project.

All Scheduling and Scope is Clear and Understood: It becomes rather difficult to accomplish the expected results if the details you have given, carry an element of ambiguity. In many instances, project managers get stuck in a dilemma since they were not able to enlist their goals and needs in the clear manner. In order to steer clear of the problem, you need to scrutinize the assignment in the light of your needs and resources of the organization.

Realistic and Practical Expectations: It is not the case that you can elude the pressure related to project, especially in case of business process outsourcing. Since the thrust is laid on expectations, it becomes necessary that you do not encounter shift of focus and remain decisive about your requirements.

Focus on primary Areas of Competencies: It is factors of reallocation of accountability and control costs that press the company to outsource processes. This ensures that management focuses on core sphere of activities without dividing attention towards other areas.

Cut Down on Capital Expenditure: Outsourcing also comes in handy for the companies to avert capital expenditure which should rather be shelled out in pivotal areas of operations. This becomes imperative when you are in the face of shortage of funds and do not want to bear the brunt with overhead of procuring new systems and their subsequent maintenance. I recently hired a virtual assistant from this company and it worked great.

Specialized Skills and Cutting-edge Technology: BPO services employ specialized skills and employ cutting-edge technology in order to yields benefits with enhanced efficiencies, small capital investments, and reduced overheads. Other benefits of BPO include best practices while employing specialized skills and technology.

Well-Organized Mechanism: BPO allows access to proprietary workflow systems, delivery models, and innovative staffing, and process reengineering skills, integrated with state-of-the-art technology delivered by experts.

Proven Implement for Improved Efficiency in a Process: BPO services present a strategic management tool leveraged by organizations for the enhanced efficiency and effectiveness of a process, in addition to cutting down costs.

In the end, it is worth concluding that business process outsourcing can propel the growth of both larger and smaller businesses. You can easily locate the right BPO company for your business needs provided a good outsourcing strategy is in place.


Number of US Tech Firms Outsourcing IT Services Doubles since 2013

March 23rd, 2015

BDO’s 2015 Technology Outlook Survey has revealed that the number of tech firms that either offshore or outsource their IT services has doubled in the past two years. Furthermore, the number of firms who say they are likely to outsource either IT or manufacturing processes to offshore locations has tripled, from 5 per cent to 14 per cent.Outsourcing15

Amongst those firms that do currently outsource, the percentage that are outsourcing IT services and programming stands at 70 per cent, an increase from the 54 per cent of firms that answered similarly last year.

Aftab Jamil, partner at BDO, attributes this rise to the decreasing pool of skilled labour in the domestic market, remarking that “Locations like India and China are producing more engineers than the United States at this point in time, so given the talent pool that is available in the locations it is easier – even it’s no longer much more cost effective – to find the talent that you need.”

The survey found that 23 per cent of CFOs consider a lack of skilled workers as the greatest challenge to industry growth.


IT Staff at Scottish Borders Council Oppose Outsourcing

March 23rd, 2015

Information technology staff at the Scottish Borders Council (SBC) have reacted furiously to the news that the SBC plans to outsource 80 of their roles.Outsourcing14

The SBC is entering into a joint arrangement with Edinburgh’s City Council which will result in 80 public sector IT staff being outsourced to a supplier in October.

Over 60 of those staff, along with Unite union officials, orchestrated a mass meeting to oppose the decision.

Tony Trench, Unite’s regional industrial officer, said: ‘it’s not just IT staff at the council who should be worried about their jobs, IT staff at places like NHS Borders should also be concerned.

‘We disagree totally with plans to outsource any jobs and want to see the figures they have used to justify this.’

Another meeting will be held in the week beginning 23rd March 2015, accompanied by the launch of a petition to oppose the planned outsourcing.


Learn About Software Outsourcing Options in Costa Rica

March 23rd, 2015

Costa Rica is not only popular for her tourism attractions; the country is gaining popularity for professional software development services asOutsourcing12 well. Many businesses from across the Americas decide to opt for software outsourcing in Costa Rica services. If you are operating from a neighbouring country and thinking whether software development can be done inhouse or whether it can be outsourced to the best company operating in this country, here are some reasons why you should opt for Software development in Costa Rica, rather than carrying out the task inhouse:

Reduce and control operating costs: When the work is outsourced, you can eliminate the cost to be spent towards hiring a developer on a full-time basis. This will bring about a considerable reduction in your operating cost. This is because you will have to make only a single-time payment to these service providers as against hiring a full-time employee and paying him on a monthly basis.

Improve company focus: It is neither practical, nor possible to take care of all the operations inhouse. When you opt for software outsourcing in Costa Rica, you can just focus on the core operations of your business, while the service provider is preparing the best application for your business.

Gain access to exceptional capabilities: When you choose for software development in Costa Rica, you are handing over the task to a firm, who is specialized in the areas, wherein you need their help. As against getting benefited from the knowledge of one person, you can be benefited from the collective experience of a team of IT professionals. Generally, these professional service providers, would have employed well-trained professionals to make sure that their customers can get the right kind of output they look for.

Utilize internal resources for other purposes: You might have someone in your company with specialization in software development. But, the particular individual, whom you are thinking about might have been hired by you for some other work. When you suddenly handover the task of software development to that individual, the purpose for which he was appointed will be affected. When you outsource the software development work to a professional firm, you can utilize the particular resource for the purpose for which he was actually appointed.

Other specialization areas: Some of these development organizations in Costa Rica are also specialized in digital marketing in Costa Rica as well. When you handover both software development and digital marketing in Costa Rica to the same firm, you can be rest assured about the best output at the best cost. is a leading open source software development company specializing in agile software development, mobile app development, digital marketing services and Software outsourcing Costa Rica.


Why Companies Opt to Insource for IT Innovation

March 20th, 2015

Companies are increasingly taking a multisourcing approach to IT outsourcing, signing shorter, smaller deals with a mix of providers. At the same time, some are pulling certain pieces of the IT portfolio back in-house.Outsourcing11

“As you get into the second and third generation renewals, each renewal sees a bit more work being sliced off and taken back in-house,” says Mike Slavin, Managing Director of outsourcing consultancy Alsbridge. “And those functions being repatriated are often related to innovation.”
Outsourcing customers seek innovation

Lack of innovation remains one of the top complaints about outsourcing. Outsourcing customers say that providers fail to bring any new ideas to the table. Providers protest that clients don’t know what they mean by innovation and aren’t willing to pay for it. And traditional outsourcing bidding and contractual processes aren’t designed to drive innovation–in fact they thwart it.

“Because of competitive pressures, providers have to do internal cost take-outs to win deals. That squeezes margins and profit expectations, and means that most of the upside for the service providers is during the latter portion of the deal,” says Slavin. “This gives account management teams little room to provide creative ideas and fund innovative pilots and projects.”

In addition, few outsourcing agreements call for a standing innovation committee or an innovation fund, for example.

Traditional IT service providers — like IBM and HP — built their businesses on the transfer of both human capital and physical assets to the supplier, creating an environment that discouraged innovation, says Slavin. Indian vendors developed business models on a foundation of labor arbitrage and price competition, which also obstructed innovation.

Little has changed about either approach in the last decade. “Rather than hiring and training a new style and culture of technical talent to support what IT looks like in 2015, clients often see 20- and 30-year veterans who have survived the many layoffs and workforce reductions being rebranded as cloud or mobility experts,” says Slavin. “But the reality is that these veterans have little grounding in those technologies.”

Innovating for customers vs. supporting in-house customer innovation
Traditional players with significant infrastructure assets are digging in, arguing that their years of experience running those systems makes them best suited to innovate on behalf of their customers, Slavin says. In addition, they employ various “handcuff” strategies that make the process of exiting agreements and moving operations back in-house difficult for a customer, according to Slavin.

Some Indian firms, however, are encouraging their clients to take some services back in-house, even offering their staffing resources to support in the transition to and management of the new model, says Slavin. “These providers do not have the large asset base in fixed assets such as data centers and are happy to provide services to a client in their own data center or perhaps a [co-located center].  Several pitch this strategy as something that mitigates the traditional sourcing risks, allowing the clients to potentially move services more readily if they are not happy.”

Meanwhile, consultancies like Accenture and Deloitte are pitching themselves as sources of IT innovation to companies. “These players have generally stayed out of the highly price-competitive and sometimes asset-heavy infrastructure marketplace,” Slavin says. “These consulting firms have a business model built on human capital, one that focuses on skills and experience and is better-suited to deliver technology relevance and alignment with the client’s business. They’re also committed to ongoing training and are willing to carry out needed trimming of non-performers. Finally, they’re able to avoid the episodic large mass workforce reductions that plague the large outsourcing firms.”

It’s too early to say which approach will win out long term.

“The most challenged players will continue to be firms like IBM, HP and CSC,” says Slavin. While they are trying to reorganize to provide vertical solutions like mobility, cloud and analytics, they remain desperate to hold and serve their big clients to avoid revenue run-off.

“HP and IBM have great hardware, and clients expect innovative solutions that take advantage of that great hardware,” Slavin says. “Unfortunately, the outsourcing organizations seem to be lagging at enabling and accessing the emerging technologies needed to drive innovation.”

Indian providers will continue to grow their market share, says Slavin. “The challenge for this group is to grow into more profitable markets and expand footprints in clients fast enough to stay ahead of aggressive pricing, which is built into their deals as an investment to win.”

In the short-term, IT outsourcing customers will either be looking to providers who can provide real business outcomes or taking their innovation-related business back in-house to run themselves.

“Innovation is always in the eye of beholder. It’s hard to argue with something that aligns with the client’s business and moves that business forward,” Slavin says. “So the winners will be those who can provide applications and the supporting infrastructure and link them together as a product, service, or offering that focuses on and is tied to the business.”


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