IT Outsourcing India

Despite a backlash against outsourcing, India’s low costs, skilled workforce and business environment make it No. 1, says AT Kearney

India continues to be the most preferred destination for companies looking to offshore their IT and back-office functions, despite the backlash against outsourcing to the country. It also retains its low-cost advantage and is among the most financially attractive locations when viewed in combination with the business environment it offers and the availability of skilled people, according to global management consultancy AT Kearney.

India has retained its numero uno position even as some other well-established outsourcing hubs dropped in their attractiveness to be replaced by new emerging destinations in AT Kearney’s latest ranking of the top outsourcing destinations across the globe. "The top three countries in the 2009 Global Services Location Index (GSLI) remain the same—India, China and Malaysia—but the world’s volatile economic environment is reflected in the rest of the rankings," the consultancy pointed out. The study evaluates 50 top countries.

The economic meltdown and appreciation of the local currency against the dollar has taken its toll on Central and Eastern Europe, which were emerging as important offshoring hubs for Western Europe. Overall, nine countries dropped nine or more rankings in the attractiveness index. While the one-time rising stars such as Poland, Czech Republic and Hungary lost out, others in the Southeast Asia and Middle East scored. Egypt, Jordan and Vietnam made it to the top 10 rankings for the first time. UAE, Tunisia and Morocco have also improved their standing, with the noteworthy trend being the Middle East and North Africa emerging as key offshoring regions given their large and educated population and proximity to Europe.

India and Philippines together account for 50% of the world’s BPO market, but Philippines, often spoken of as threat to India, is only a ‘distant’ second, according to the study. "Philippines is more call-centre oriented and we don’t necessarily see it growing at the same pace as China and some other South Asian countries. Some of the reasons that has made India number one continue and they will help it tide over the economic downturn faster than any other in the world," said AT Kearney senior partner Saurine Doshi.

Significantly, India is also no longer being viewed only as a competitor but also as an enabler to industry growth in other regions. "Indian companies are some of the gorillas and they are increasing their global footprint as clients look for multi-region support," added Mr. Doshi.

Smaller, tier 2 cities in the US, such as San Antonio, have also emerged as important destinations because of the falling dollar. A combination of rising unemployment and political pressure to create jobs is increasing interest in onshoring possibilities among smaller inland locations, according to AT Kearney. "Similar trends are evident in UK, France and Germany," the consultancy said. 

Source: http://www.businessweek.com/
 

Telecommuters who do administrative tasks, usually on a contractual basis, bring specialized skills and don’t receive benefits — or even desks.

Washington — Michael Hanik used to have 12 employees, a warehouse and trucks to run his medical devices catalog company.

But four years ago, he turned to the Internet to look for ways to reduce overhead costs for his Rockville, Md.-based Total Medical Systems. He now has just three employees on the payroll but as many as 50 contractors working for him, some of them known as virtual assistants.

he term, around since the Internet became widely available, encompasses anyone who telecommutes and does administrative tasks for other businesses, usually on a contractual basis. Most do tasks such as document preparation, paperwork and accounting. Some have niche areas, such as bilingual translation or creative services.

In the current economy, Jane Weizmann, a senior consultant at Arlington, Va.-based human resources consultant Watson Wyatt, said she was seeing more businesses with a "part-time cadre or network of people" who telecommute and bring different skills to projects as needed.

"It’s a lot less expensive than having resources on staff, sitting on the bench and waiting," she said.

Virtual assistants enable companies to save on real estate and equipment, as well as on benefits, which can add 35% to a base salary, Weizmann said.

She cautioned, however, against businesses relying entirely on outsourced work and contractors. The high levels of turnover can create an unstable workforce.

"You can supplement your core capability, but you can’t replace it completely with 100% outsourced work," she said.

The numbers are difficult to track because there is no formal certification and not all people doing similar work call themselves virtual assistants. But one small trade group, the International Virtual Assistants Assn., said its number of new members doubled from 2007 to 2008. To date this year, the group has added 160 members, bringing membership to about 900.

Hanik estimates he’s decreased his business costs 65% through outsourcing and using virtual assistants. "It’s a tremendous revolution," he said.

Association officials say the number of virtual assistants is increasing as companies lay off their administrative and executive assistants. Plus, the barrier to entry is low because most people already have the equipment they need, such as computers, printers, fax machines and Internet access.

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