International Business Opportunities

According to Gartner’s IT sourcing group, Indian service providers set their sights on European countries as key areas for growth. […]

To avoid losing out to this new breed of competition, Gartner says that continental European service providers should revamp their strategies to encompass global delivery and service industrialisation. […]

Some issues must be resolved before Indian companies can truly compete on a level playing field: “These Indian offshore providers are recruiting staff in the European markets they sell into; not just sales staff, but consultants, project managers, engagement managers and, in some cases, personnel to staff their new near shore delivery centres” said Ian Marriott, vice president of research for Gartner’s IT sourcing group.
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Indian NASSCOM and Dutch CBI have jointly announced an agreement which would make available to European small and medium-sized enterprises (SMEs) the benefits of business process outsourcing to highly specialised companies in India (BPO).

BPO, covers activities such as call centres, finance and administration, data processing, research, back office processes, human resource management and many others.
As many SMEs are not able to take advantage of BPO, the agreement aims to help them formulate exactly what their outsourcing demand is and to help them locate a perfectly matching partner in India.

CBI - an agency of the Dutch ministry of Foreign Affairs, leading centre of expertise in Europe in the area of trade with developing countries, will help European SMEs recognise the huge advantages of business process outsourcing. It will also assist them in finding reliable partners who understand their needs in India and other outsourcing destinations.

NASSCOM - National Association of Software and Service Companies, the largest and most important trade body for the Indian IT and (more…)

Growing IT services demands from USA and Europe along with shortage of skilled employees, are forcing Indian IT firms to look for outsourcing to China.

“Reoutsourcing” to China, seems a new strategy for leading Indian IT companies, which also try a way to face increasing salaries of high cost workers.
In China, on an average IT-engineer with little bit of experience can be paid 500$ salary per month as compared to over $700 in India.

However, what can be outsourced to China is related to Information Technology services, not BPO segment which requires knowledge of English language.
Poor English skills of its employees, limit China also to become a potential competitor of India in the offshore outsourcing market.

India has currently about 80 % of IT services being outsourced offshore, as reported from Gartner Group,research company. ( source )

According to a survey performed by Deloitte Touche Tohmatsu, increasingly financial institutions are looking to move portions of their investment banking operations abroad.

After outsourcing technology support and other back-office operations to countries like India and China for years, financial institutions got more interested in moving their investment banking and research activities abroad,

JPMorgan Chase plans to have a total of 9,000 employees in India by the end of 2007, with one-third of those employees working for the company’s investment banking unit.

Among the financial institutions have moved their research analysis operations offshore also are: Citigroup, Morgan Stanley, and Lehman Brothers.

A few figures about this trend: the Deloitte Touche Tohmatsu report predicts financial services industry will move 20 percent of its total costs base offshore by the end of 2010, compared to the current average of 3.5 percent; Forrester Research predicts that within 10 years, at least 3.3 million U.S. jobs across industries will be outsourced to developing countries.

The analysts estimate cost savings of up to 60 percent and say banks can also take advantage of offshoring to Asian destinations to better approach emerging markets where there are interesting revenue opportunites for their financial services.

Richard Bove, analyst at Punk Ziegel & Co. said:

“I believe the industry has reached such a level of globalization that it matters less and less where the actual (research) is generated and matters more what the cost of generating those products are. Banks can’t afford not to do anymore.”( Source )

Daniel Marovitz, a top tech executive at Deutsche Bank says:
“The issue is that if you don’t do (offshoring) it, you won’t survive”

The annual report on Global Sourcing released yesterday by Everest Research Institute, as opposed to the current industry thinking, emphasises that labor arbitrage will continue to drive offshore sourcing decisions for the next 30 years.

The survey points out that issues such as growing wages and skills shortages in offshore markets, will eventually work themselves out, as the offshore labor market continues to expand into new locations.

Joe Fernandes, Managing Research Director, Everest Research Institute says:
“Our findings show that wages are rising for a relatively small base of workers and that shortages are cropping up only in certain skill areas”

The key findings from the survey:

• The offshore market will continue to grow at an approximate rate of 33 percent a year for the next three years.
• As a result of skills shortages in an offshore location, jobs outsourced are more likely to move to another offshore market than return to their country of origin, as labor arbitrage is sustained by a increasingly expanding offshore marketplace.
• Non IT-offshoring will represent nearly 45% of the offshore market in three years, with companies will prefer using subsidiary companies that serve the parent company exclusively for offshoring business process outsourcing (BPO) services

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