IT Outsourcing India

The news that Computer Science Corporation has received a $391m order from the U.S. Department of Homeland Security is a reminder of outsourcing’s ability to remain buoyant even amid storms. The deal will have CSC running datacenter projects including virtualization and consolidation tasks. Nice work if you can get it, to paraphrase George Gershwin, and, if you’re an outsourcer at least, you can get it every time you try.

Not everybody is a big fan of outsourcing, but for the firms themselves the model is well nigh bullet-proof. In a strong economy, outsourcing does well as companies seek to optimize processes to grow faster. In a weak economy, firms turn to outsourcing to batten down the hatches by extracting costs. In a moderate economy, outsourcing does well for a combination of the two aforementioned reasons.

A few years ago nobody seriously disputed the value of outsourcing: only where it is applicable and how best to do it. From low-cost operations offshore, to specialist experts via business process fools, the outsourcers have business under their spell. Businesses themselves feel pretty comfortable with the various models having watched as the pioneers took the arrows in their back.

This being a human-to-human interaction, there will always be project failures and disputes but outsourcing companies have emerged as the cash cows of technology services, as reliable a commodity as pork bellies (and containing similar amounts of fat).

Source :  http://www.networkworld.com/

Going forward, IBM’s global services unit will face stiff competition from HP, which plans to acquire EDS, and fast-growing Indian outsourcers like Wipro.

IBM (NYSE: IBM)’s key global services outsourcing and consulting unit, which accounts for more than half the company’s total revenue, posted strong growth in the second quarter as sales increased 16% year over year to $15.2 billion, IBM reported Thursday.

IBM said its Global Technology Services outsourcing group saw sales increase 15% to $10.1 billion, while sales at its Global Business Services consulting group rose 18% to $5.1 billion.

The value of services contracts signed in the quarter totaled $14.7 billion, up 12% from the previous year, IBM said. The company’s backlog of services contracts, as of the end of the second quarter, is worth about $117 billion, $1 billion more than at the same time a year ago.
IBM’s services group appears to be benefiting from a strategic change implemented two years ago, under which it moved from providing time-consuming and expensive custom work, to offering more standardized services that can be deployed quickly and which draw from IBM’s vast drove of intellectual property.

"IBM executes better against competitors both from the U.S. and offshore," said Lehman Brothers analyst Ben Reitzes, in a research note published Friday.

Still, the company will face stiff competition going forward. Hewlett-Packard (NYSE: HPQ) recently strengthened its services unit by announcing plans to acquire Dallas-based EDS (NYSE: EDS) for $13.9 billion. The deal would give HP a total services complement of about 210,000 workers — roughly the same head count as IBM’s services unit.

IBM also faces competition from fast-growing outsourcers based in India. Hard-charging Wipro Technologies, for instance, increased revenue 43% year over year in its most recent quarter.

Overall demand for technology outsourcing services remains strong. The value of all contracts signed in the first six months of 2008 totaled $49 billion, up 24% from the comparable period a year ago, according to market watcher TPI.

Source : http://www.informationweek.com/