IT Outsourcing India

The global healthcare industry is under pressure to reduce research and administrative costs and meet tighter compliance and security mandates in Europe and in the US. The market has thus begun to represent an outsourcing opportunity for IT players. The global healthcare IT outsourcing market is estimated at around USD80 billion and is growing by 12 percent every year. Automation in the industry is equally low. As pressure from consumers increases, players will need to outsource an increasing share of their IT budget. With costs six to seven times lower than in the US, Indian IT companies stand to benefit from this opportunity, he said.

As margins remain a concern, most of the pharma companies, health insurance players and health maintenance organisations are looking at alternatives to cut costs and meet the rules mandated by US Food and Drug Administration. Healthcare organisations outsource less than 10 percent of their IT budget, said K Muralikrishna, managing director of Helios and Matheson, a Chennai-based information technology company.

The pharmaceutical and healthcare industries in the US are going through a period of turbulence. The attempt is to replace the traditional blockbuster model of drug development with a new one that enables it to develop safer, more efficacious drugs. There is a huge struggle to cope with rapidly rising costs, inconsistent delivery and inadequate access in many countries.

These pressures have often lead the two industries to work closer, to realise the value of the information they collect and provide better products and services. New technologies could play a major role in enabling this convergence. Common data standards and security-rich systems capable of preserving the confidentiality of personal data will be essential to achieve this, say industry analysts.

To build a strong customer base, Helios and Matheson has completed four acquisitions in the last five years. Last year, it bought a controlling 43 percent stake in The A Consulting Team Inc., NY, USA in an all cash deal at USD8.75 million. The cash deal had an additional earn-out component to the promoter. This acquisition has allowed companies to improve margins by sending out activities to India.

However, most jobs sent out to India are still mainly low-end jobs. Employees in the US were very apprehensive initially as most people believed that India remains that of a poor country. But mentalities are changing, and employees feel that by improving overall margins this could also mean better bonuses for higher end jobs.

Source : http://www.offshoringtimes.com/

The US economy is vastly involved in most of the world economies, and any major slow down might lead to a global recession. Slowing down of US economy means that companies ,industries and organizations in US that outsource are evaluating the recessionary trends. This might automatically translate into more interest in offshore outsourcing. Outsourcing could be is a strong business proposition in good times, and it’s an even stronger proposition when bad times last. Offshoring will grow over the long term, since it drives cost savings. However, this might not be quite so in the short term.

With advert of the outsourcing boom, many IT/ITES companies have been riding the wave of outsourcing, growing by leaps and bounds. Major low-cost outsourcing destinations like India, Ireland, South Africa, Philippines have benefited from outsourcing, especially by companies from the USA. It was like the outsourcing industry around the world was run as a subsidiary of the US/European economy. However, since last 6 months, the US economy has undergone major changes. There has been a severe sub prime crisis hitting the economy, with the US dollar value has depreciated to record levels.

The credit crunch might have a positive or negative effect on the outsourcing industry. Downturn in the US economy plus possible recession means technology and outsourcing as solutions to the need to slash overheads and minimize any negative impact on the bottom line. The truth is that the US economy is at an unpredictable tipping point. If a very serious recession hits, then companies might actually scale back on outsourcing this would be the result of service companies having less customers, therefore needing less service provision and therefore believing that a scaled-down internal team would suffice as opposed to an outsourced department.

In the IT Industry, operations that will inevitably be scaled down in a time of recession could be the outsourced operations just as easily as the internal processes. The nature of outsourcing deals might change too. Before, the mega-deal has been consigned by many to the outsourcing scrap heap, in favor of multi-shoring and choosing separate suppliers for each process.

A recession will focus back on to cost as a more decisive factor in outsourcing (it has been argued that service levels and quality are now more important) and therefore having one outsourcing supplier will minimize management, due diligence and supplier selection costs. Having one supplier should also provide the end user with the outsourcing equivalent of savings achieved by buying in bulk.

There might be reduction in the number of fixed price contracts in favor of cost per unit, as end-users want to link the cost of supply with volumes (or reduction in volumes of course!).

According to Forrester group, companies are now holding back their IT budgets to cut expenses. However, after some time, the companies may outsource more of their processes when cutting costs pressurizes them, in case the present recession settles to become a mild one. The research group also mentioned that the outsourcing market will rise by 4% in 2008 to $162billion compared to a growth of 6% last year. This is a marginal fall in growth rate for outsourcing. There is a general assumption is that outsourcing is likely to benefit from the credit crunch, but at the moment things are highly unpredictable.

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Companies can reduce the cost of their call centres, while improving their revenue, through outsourcing or offshoring work, according to a discussion paper by management consulting firm AT Kearney.

The key is to get the right mix of in-house and outsourced calls, and then work with those outsourced providers to increase their revenue performance, argues the paper, Call Centres Can be Profit Centres.

A disproportionately small number of calls are high-value and should therefore be kept in house, said AT Kearney in a statement.

"The key is identifying these thigh-value calls, because the remainder are candidates for onshore and offshore outsourcing," said AT Kearney principal Adam Dixon."Sales calls generate profits while service calls can be costly."

Companies can also ensure the work that is outsourced generates more revenue by negotiating the right contracts under which the vendor will hire people, said AT Kearney. "If you want sales, you must hire sales people," said Mr Dixon.

One of the key advantages with an offshore call centre in a low-cost region, is that money spent on direct incentives to vendor agents goes a lot further than at home, said AT Kearney.

"Offshore agents’ salaries are five to six times lower than for those onshore, so a relatively small investment in direct payments can positively influence their behaviour," said Mr Dixon.

Source : http://www.businessspectator.com.au/

The pay and prospects of junior IT support staff in the UK have stagnated as services have been relocated to India, research has suggested.

Annual salaries at the lowest end of the industry have not risen in five years, according to the Association of Technology Staffing Companies (ATSCO).

The "offshoring" of low-skilled jobs to cheaper locations in Asia has deterred people from entering the industry.

This risked leaving a shortage of candidates for UK managerial positions.

Less experience

According to ATSCO’s annual skills survey, which compares salaries across more than 75% of the industry, average pay for low-skilled front-line staff has stalled at £18,000 for five years.

By contrast, pay for managers has risen by more than 20% over the period.

The offshoring trend is threatening to deprive the UK IT industry of entry-level staff with the potential, one day, to become managers, the report said.

This is a particular worry, ATSCO said, because senior project management and advisory positions have remained in the UK even when operational roles have been transferred.

Despite concerns about poor customer service and data security lapses in offshore operations, few UK firms have repatriated their technical support teams, it added.

The report predicted that the teams would only be brought back to the UK when the salaries of Indian workers start to match those of their UK counterparts.

‘Bottom rung’

Despite growing wage inflation in India for skilled workers, this is unlikely to happen for some time.

"It is like removing the bottom rung of the ladder," said Ann Swain, ATSCO’s chief executive, of the drift of jobs out of the UK.

"The shortage now is of candidates with a few years experience looking for second and third jobs. But how do you get that experience if entry-level jobs are being sent offshore?"

India is expected to have earned up to $40bn (£19.9bn) from IT outsourcing in the past year, the National Association of Software and Service Companies has said.

Source : http://news.bbc.co.uk/

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