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Global Outsourcing: a 30,000 feet overview

by Madanmohan Rao (madan@techsparks.com)

What are the key trends in outsourcing practices worldwide? How important is outsourcing as a component of business strategy? What technology and delivery capabilities must enterprises look for in vendors, and which companies and countries are strong players in this regard? Opinions and projections differ, but here are some major trends outlined by market research firm Gartner during their recent summit in Asia.

1. Despite geo-political uncertainty, offshore sourcing and global delivery will become an integral part of any enterprise's sourcing strategy. The "offshore advantage" in strengthening the enterprise nervous system is becoming increasingly apparent. Cross-border collaboration is becoming more important. At the same time, concern is emerging over business continuity and risk mitigation. RoI and competitive pricing are becoming key focus factors as well. Outsourcing benefits lie not just in infrastructure efficiency but business effectiveness as well, and vendors are expanding across the services value chain from basic access and infrastructure management services to business optimisation and innovation services.

2. Companies -- especially in the US -- may have been affected by the "dot.bomb," IT upgrade fatigue, and telco sector crash -- but IT spending and outsourcing continues in areas like CRM, SCM, KM, integration, enterprise portals, security, and converged networks.

3. The model is evolving and maturing from body-shopping to end-to-end services, and covers a wide spectrum of business processes. Popular services outsourced (with matured services first) include application migration, application maintenance, legacy application development, packaged applications, enterprise application integration, and business process outsourcing.

4. Countries like India will maintain their lead as outsourcing destinations for IT and business services, though contenders will appear in some niches. The Indian outsourcing market grew by 53 per cent between 1999 and 2001 in the export segment, reflecting growing market maturity, human capital, and expansion to new verticals. Outsourcing is shifting to larger and more stable vendors, and consolidation may be imminent. Leading players here in consulting and systems integration include US-headquartered companies (eg. EDS, IBM) and India-headquartered players (eg. Mastek, i-Flex).

5. On the productive technology front, maturity is picking up in speech recognition technologies, smart interfaces, analytics, VPNs, and VoIP. Web services and the wireless Web are hot emerging areas to watch, and vendor capabilities in these areas are important selection criteria in the outsourcing process.

Software Outsourcing | Offshore Software Testing | Business Process Management

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