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| Newsletter | March,
2005 | Issue Six |
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Offshoring
to accelerate in 2005
Business Standard |
According
to a survey conducted by Accenture, the value of contracts
outsourced to low-cost countries is set to almost double over
the next three years, reaching $130B by 2008.
Similarly, a survey by Hewitt, confirms
that global offshoring is likely to see steady growth throughout
2005. The study covered more than 100 companies, of which
nearly 53 percent reportedly are already offshoring services
to low-cost high quality hubs, while 11 percent intend to
do so this year.
Nearly 84 percent of the respondents expressed
optimism about the growth of offshoring and 23 percent termed
their outsourcing experience to have exceeded their expectations,
while 62 percent found it to be satisfactory.
Challenges
faced while outsourcing, as per the report, include identifying
potential suppliers, defining tasks to offshore, selecting
the right strategy and negotiating and placing contracts
with suppliers. Many of these concerns are being addressed
by the emerging outsourcing
consulting market populated by a variety of firms ranging
from specialized niche advisory firms to global management
consultancies. |
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ACS
acquires Mellon’s HR outsourcing business for $445M.
ACS
(Edited Press Release) |
Affiliated Computer Services (ACS) has signed a definitive
agreement to acquire the HR consulting and outsourcing business
of Mellon Financial Corporation for close to $445M. With
this purchase, ACS has staked a strong claim on the rapidly
expanding HR outsourcing market by countering similar moves
by EDS and Hewitt.
The acquired business provides HR consulting services,
benefit plan administration, and multi-scope HR outsourcing
services to approximately 3,000 clients. With a strong presence
in the US and growth in Canada and the UK, Mellon’s
HR business recorded revenues of approximately $660M in
2004.
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Indian
outsourcing markets to diversify in 2005.
Financial
Express |
A report
by NASSCOM suggests that the Indian BPO and ITeS sectors
will experience growth in areas, such as HR, Financial and
Accounting (F&A), CRM, and procurement and global trade
in 2005.
HR outsourcing
will also become a priority for small and mid-sized companies
with employees between 1,000 and 10,000, and a significant
portion of the market share will go to providers who address
the needs of this market. In addition, public sector organizations
and state and central governments are expected to stimulate
the HR outsourcing trend as well.
A better
understanding of US regulatory requirements, such as Sarbanes-Oxley
compliance, by Indian outsourcing providers will also give
impetus to F&A outsourcing.
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Chinese
IT outsourcing market surging ahead rapidly.
China
Daily |
According to research by IDC, the Chinese
IT outsourcing market is expected to grow at a CAGR of 36.5
percent from 2003 to 2008, when it will reach $1.69B.
Although still in an “infancy” stage, the Chinese
IT outsourcing market was valued at $433.7M last year and
accounted for roughly 10 percent of the total IT services
market. According to Grace Han, Research Manager, Software
and Services, IDC China, "The country is the fastest-growing
outsourcing market in the Asia-Pacific region."
The research also predicts that the outsourcing market
would see consolidation in the coming years, with the key
driver being an improvement in service levels.
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Outsourcing
to exceed Captive Centers in India by 2009.
The
Economic Times |
According to a study performed by Datamonitor, the contact
center market in India will be undergoing a major change
in the next two years.
At the end of 2004, only 36 percent of contact center agents
were working for outsourcing providers, with the remainder
located primarily in captive centers owned by MNCs. However,
by 2007, new outsourced agents will outnumber captive ones
by ten to one.
According to the study, only 12,000 net new captive seats
will be added between 2004 and 2009. Meanwhile, more firms
are likely to follow in the footsteps of companies like
British Airways, Citibank, and GE by selling off a part
or all of their captive operations in India.
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