IT Outsourcing India

US software outsourcing company CSC, one of the world’s largest IT outsourcing firms, said yesterday it will launch a new delivery center in China as the global financial crisis may force more Western companies to outsource their business to the country.

Michael Laphen, chairman and chief executive officer of CSC, said the financial turbulence would force more companies to outsource their business in pursuit of lower operating costs, thus creating more opportunities for outsourcing companies.

"Outsourcing will increase in difficult times as the financial crisis pushes companies to become more cost effective," said Laphen. "We expect further robust growth from China."

CSC’s new delivery center, located in Tianjin, will open next spring.

It will serve both CSC’s domestic and multinational clients in China and will have 500 employees within the next three years.

But Laphen declined to say how big its investment is in the new China facility.

Although the financial crisis has had a major impact on most of the world’s economy, CSC remains optimistic about economic prospects in China.

It said the country’s manufacturing and financial companies, which are two major customers for CSC in China, will continue to grow at a rapid speed.

During the past decades, multinational have been transferring non-core business to countries like India and China to reduce costs.

But as labor costs continue to rise in China, outsourcing companies in the country have been striving to go up the supply chain and earn money with more value-added services.

Lin Zheying, deputy director of foreign investment administration department under the Ministry of Commerce, said at an industry forum on Monday that the economic turmoil provided a good opportunity for China to develop outsourcing in service sectors, as many US financial institutions may have to outsource their business.

According to the ministry, the value of foreign contracts of Chinese outsourcing companies reached $1.9 billion in the first eight months, up 17 percent from the same period last year.

CSC entered the Chinese market in 1991 and now has around 300 employees in the country.

It has offices in Beijing, Tianjin, Shanghai and Guangzhou.

Globally, CSC has approximately 90,000 employees and reported revenue of $17.1 billion for the 12 months ended July 4, 2008.

Source : http://www.chinadaily.com.cn/ 

Though global recession is giving sleepless nights to professionals in the country, NASSCOM chairman and Global CEO Zensar Technologies Ganesh Natarajan is unperturbed by the prevailing economic slowdown and has assured that IT-BPO sector will meet its growth target of 20 per cent this year.

“I don’t think there should be any major cause for worry over global recession. This year we were expecting to add 2,80,000 workforce. Instead we may hire 2,00,000 people,” Natarajan told Sakaal Times.

He said that majority of companies had performed well and he saw no problem in their future performance as well. “The growth may be slow but companies are certainly not shutting down, unless they are non-performers,” he said.

The NASSCOM chief dispelled fears on the anti-outsourcing sentiments that may be generated if Senator Barack Obama is elected US president and decides to end tax breaks for companies that ship US jobs overseas.

“We must not read too much into his statement. His emphasis is on rewarding companies generating employment in the US,” he said.

Natarajan voiced concern over the “knee-jerk reaction” of companies to adverse environment.

“I don’t agree with Jet Airways’ retrenching 2,000 employees overnight. I am a strong supporter of capitalism but we ought to be socially responsible. When there is a visible slowdown, we should be more watchful; reduce employee intake, cut wasteful expenditure,” the Zensar chief said.

 Source : http://www.sakaaltimes.com/

Nasscom, the premier trade body and voice of the Indian IT BPO industry, and Pricewaterhouse Coopers, the leading professional services firm in India, today released a report on Japan titled Opportunities for Indian IT Industry: Japan. This is the second report in the Country Report series that focuses on specific countries , regions that are alternate markets, competitive destinations and or potential partners for India.

Speaking at the launch, Som Mittal, President, Nasscom, said, The Indian IT-BPO companies are fast diversifying into near territories and opening up new opportunities for growth. Currently, 90 per cent of the exports happen to the US and Europe, with rest of the world contributing just 10 per cent. These markets are investing in Information Technology IT offering huge opportunity. To facilitate this, Nasscom has launched the emerging market series.

Japan, as a second largest country economy and highly dependent on technology, currently constitutes only 2 per cent of our exports. With shortage of technical skills in Japan, and urgent need for business transformation, Japan would be a large market. While Indian companies have been targeting this market, a new concerted approach needs to be taken by both sides.

Ambarish Dasgupta, Partner and Head of Consulting practice at PricewaterhouseCoopers India, the Knowledge partner for this report said, Indian companies must change the mindset, and move from being transactional to transformational in their approach, and be ready to invest in strong relationships upfront. The alternative markets to the US and the UK, like Japan, which we are covering in a series of reports, are very relationship focused. The prospects expect the partners to prove themselves in a relationship, building trust and being a trusted advisor rather than a vendor selling them products and services.

As per the report, a key element for Japan to retain its competitiveness in the global market would need the proactive effort by the Japanese Government and industry to break the traditional models and they would have to reach out.

They would need to embrace globalisation, accept the advantages of outsourcing and find ways to open up service businesses with countries like India. Japanese business houses would have to view IT as strategic enabler, rather than a cost centre. They would also have to re-look at their current hierarchical structure of IT service providers to bring in best practices in domain, technology and service delivery.

Nasscom through this paper identifies key opportunities for Indian IT companies as well as potential strategies for this market. It also clearly outlines Nasscoms agenda to facilitate this.

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

Outsourcing is on a huge upwards curve internationally, and locally, with the latest research showing that the SA IT infrastructure outsourcing market notched up revenues of between $2,8bn and $3,5bn (R19,8bn to R24,8bn), says Eric van Heerden, business development executive at UCS Software Manufacturing (UCSSM), the retail-focused software factory in the JSE-listed UCS Group.

Van Heerden says that, according to research from international research group, Frost & Sullivan, local revenues earned by this marketplace by 2012 should reach almost R40bn.

"Although the local economy is facing a downturn due to higher inflation, higher interest rates, and punitive food and oil costs, the outsourcing market is, to a large extent, bucking the trend. Outsourcing, overall, is going through robust times - and there are a lot of advantages for local companies to pick up on."

Van Heerden says that SA’s high bandwidth costs are restricting the country’s competitiveness, but this is "rapidly changing", as companies like Seacom, Neotel and Infraco start "entering the economic mainstream". Thanks to Seacom’s plan to cut international bandwidth costs by as much as 80% - due to its $600m under-sea cable project - and announcements that both Neotel and Infraco are ready to roll out commercial solutions, the local ICT industry should become far more competitive from a ’cost of communications’ perspective.

Infraco is the state-owned broadband entity, which has already concluded a deal to offer its bandwidth at significantly lower prices to Neotel, the country’s first converged communications network operator.

"Our telecommunications costs are still too high; but due to announcements such as these we will see costs coming down during the latter part of 2008 and beyond. This will assist local companies to play more competitively on the global map. The telco industry - and the outsourcing indusry itself - can really provide a lot more employment in the future if opportunities are seized," says Van Heerden.

Currently, IT companies in India - the largest outsourcing destination globally - employ 1,63m people. And that figure is still rising. During 2007 it was expected that Indian-based companies such as Tata Consultancy, Wipro and Infosys were poised to employ 300 000 software engineers.

"India is literally bursting at the seams when it comes to handling business outsourcing projects. Despite claims that it is operating at an optimal level - and is reaching a serious pressure point - it remains a fearsome force. This will not change during the next decade."

As a continent Africa needs to invest more time and money in software development if it "wants to stay a player on the international business map". According to the World Bank (1993) business computer software has become the lifeblood of any business - and this is more true now then it was 15 years ago, says Van Heerden.

"The development of the local software industry is, therefore, of critical importance. Unfortunately, Africa does not even show as a blimp on the radar screen when it comes to software development - and this is unlikely to change in the near future, meaning the continent will ’miss the boat’ from an economic point of view. SA, however, is doing much better - certainly when compared to the rest of Africa. But there are still very few local companies outsourcing software solutions for international companies, or selling home-grown software."

He said UCSSM is currently "the only local outsourced software development company competing in the international retail software market."

India’s software and services exports, meanwhile, are estimated to have grown by 32% to $31.3bn in 2006/7. "I am not saying that SA can become another India, but there are certainly opportunities for us to generate more revenue in the software services industry," concludes Van Heerden.

Source : http://www.computingsa.co.za/