IT Outsourcing India

The $50-billion IT services industry is in for tough days. And this time, it’s not just a slowdown in spending that’s worrying, but increasing competition from multinational service providers who have ramped up significantly.

With a robust low-cost delivery model in place, MNC IT services companies like IBM, Accenture, HP-EDS and CSC have bagged quite a few new offshoring contracts in recent times. New IT deals offshored to India and other low-cost destinations from firms like United Healthcare, Universal Music Group, Hartford Insurance, Bristol Myers Smith, ICAP, BHP Billiton, Bombardier, P&G , Ericsson and Banco Fondo Comun (a Venezuela bank) have gone to MNCs. Incidentally, in many of these contracts—multi-year $50-500-million deals—Indian IT and BPO companies were already providing services for the clients. And in most cases, MNCs bagged the new offshored work beating Indian service providers.

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ARECENT study predicted that the contracted-out information technology sector would grow by 8% during the course of 2008 – further demonstration, if it were needed, that “getting someone in to do your IT” is becoming increasingly big business.

No matter what industry they operate in or services they offer, every company wants to spend as much time as possible focusing on their main business activities, meaning that non-core activities such as IT are therefore obvious candidates for outsourcing.

The main reason for a firm appointing an outside organisation to do some, or all, of its IT work is often to reduce staff numbers and/or costs, or the desire to concentrate on the core competencies of the business and bring in expertise as required for more complex tasks involving the latest technologies.

The media has carried stories about UK banks outsourcing call-centre operations to places such as India. The same bank could also decide to hand over the management of its entire IT infrastructure, or even its application development, to an outside IT partner.

Similarly, a local council could put the management of its contact database in the hands of a third-party expert, while an SME could decide to outsource its IT security function to keep up with rapidly changing threats or its help desk and support function to reduce costs and tap into the wider pool of resources provided by an outsourced IT specialist.

So with the number of organisations seeking outsourced IT services predicted to increase and competition for outsourced contracts growing all the time, how do companies supplying third-party IT experience and expertise stand out from the crowd?

North-east-based IT specialist First eBusiness Solutions says good management is the key to ensuring a long-term outsourced relationship.

The company’s operations director, Gordon Murray, said: “Any outsourced agreement must be based on concrete, measurable specifics on targets, service level agreements and methodologies – as well as good, old-fashioned regular communication, which helps build a trusting relationship.”

Source : http://www.pressandjournal.co.uk/