India’s IT and BPO industry generates around $40 billion annually, though the current financial crisis will slow down their growth targets, they hope to see more opportunities in the long run as the western companies want to cut cost by sending work to India. Indian outsource body Nasscom predicts that there might be slow growth for a period of one year for the Indian IT companies. Already the Indian IT companies are slowing their hiring and expansion plans due to credit crunch in the global market and Nasscom reduced the outsource market growth target for the next year.
In the past US companies outsourced IT and BPO work to lower wage countries like India, China, Philippians, etc. With the rising cost in lower wage countries companies started outsourcing to nearshore countries like Mexico, Canada, etc. For the US companies nearshore gave the labor arbitrage and other benefits like same time-zone, cultural, and language, etc. Now Indian IT majors started opening their own centers in these countries, the distinction is blurring between offshore vs nearshore. Companies must pay close attention to Total cost of ownership (TCO) before making their decision between offshore vs nearshore.
For comparison between offshore and nearshore visit
The Everst Research institute published a research report that projects the financial BPO market to grow $145-165 in the next five years. The report also discusses various sourcing models buyers are interested and explains the future growth targets for the financial BPO providers. In addition, the report discusses two case studies of global sourcing strategies used by the leading financial institutions.
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Atlanta based Hackett research group conducted a study and found companies planning to increase their use of offshore outsourcing BPO vendors by 50% in the next three years. Specifically companies want to move bulk of their financial work to lower-wage countries like India, China, etc. Hackett also conducted a study comparing the benefits of using offshore BPO vendors vs. using their own captive centers in lower wage countries and found following similarities and differences:
1. Both BPO vendors and captive centers save cost by 50%.
2. BPO vendors can increase their staff level more quickly than captive centers
3. Captive centers generate more innovative ides in their outsourced business processes than BPO vendors
For the detailed report vist
From the beginning of summer 2008 there has been a slew of bad news in US that caused ripple effects across the globe. It all started with the housing subprime mortgage and now it trickled into the entire financial market. The US unemployment rate hits 6.1% and the industrial production fell to 1.1%, its largest decline in the past three years. The Indian IT and BPO companies get more than 60% business from US and 20% from UK, the rest comes from other European countries, Australia etc. With US already in recession and European economy edging towards recession, all these will affect the global economy.
The bankruptcy of Lehman has a widespread impact and effect on Indian BPO market and the staff of these centers. Like me, you can also imagine that the employees of these centers are facing the utmost and acute problem of being jobless and in the consequential financial crunch. The running costs of living a life in major cities of any country could be high and similar is the case with India. Now that the employees have lost their job without any security of the finance or salary payments, they are on the cliffhanger of being swallowed by the financial requirements.
After the success of Business Process Outsourcing (BPO) in big corporations, BPO trend is slowly picking up in mid-sized and small businesses. Nelson Hall, BPO research firm predicts the global BPO market will reach by $450 Billion over the next four years. However, the BPO adoption in mid-sized and small businesses is very low compared to big corporations due to following reasons: Read more
New Delhi based NIIT Technologies announced that they have won the outsource contract from US based American Safety Insurance Service (ASI), which provides customized insurance solutions to small and mid-sized companies. As the part of the agreement NIIT will provide support for ASI’s internal applications using onshore and offshore model. In this arrangement ASI can tap into the NIIT resources to mange their rating and quoting applications.
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Tata Consultancy Services (TCS) signed five year application maintenance contract with Sweden based Ericsson. TCS will be responsible for providing supprot for Ericsson’s internal applications.
Amit Bajaj, Director – Nordic Region, TCS said: “This engagement with Ericsson clearly demonstrates TCS’ unique value proposition as we drive more value for our European clients through increased service quality and greater alignment to their business needs. Nordic companies are increasingly looking to service providers like TCS to create a compelling value and deliver consulting, IT services & product engineering synergistically through a single global service standard using TCS’ Global Network Delivery Model (GNDMTM).”
BPO industry all over the world is struggling to sustain the demand of quality workforce both in executive and managerial sector. BPO giants like India and Philippines are struggling to produce the managers that can give a sustainable lead to this industry and can also withstand the demands of the growth. In this issue, a report published by a firm, Development Dimensions International (DDI), gives an insight as to what Philippines is feeling: the report states that local BPO industry in Philippines has leadership issues.