Since 2010, Indian BPO companies are in a buying spree. The value of BPO mergers and acquisitions might exceed several billion dollars. The main reason behind BPO industry consolidation is due to the change in customer demand and their business requirements. Read more
Written by Mani Malarvannan · Filed Under BPO Blogs | Leave a Comment
Recent,ly Business Week published an article that predicted that slowly American manufacturing jobs are coming back to US, and that the rate will accelerate in the coming years. The article explained various anecdotal evidences and statistics to prove the point.
Following are some of the evidences for outsourced manufacturing jobs are coming back to US:
The Institute for Supply Management (ISM) reported that manufacturing companies in the US have expanded for the past 24 consecutive months.
The Federal Reserve reported that US manufacturing jobs gained year-over-year 3.8%.
Following are some of the reasons quoted for manufacturing jobs coming back to the US:
The labor cost in China has been growing by 15%-20% on a yearly basis; this is 30% lower than low-cost cities in US. It has been predicted that the manufacturing cost in China will equalize with the American manufacturing cost by 2015.
Similar to manufacturing jobs coming back to the US, ITO and BPO jobs are coming back from India to the US. Several new names are formed to denote this phenomenon, such as onshoring, insourcing, and US rural sourcing. The big question is how it will affect India’s status as the only country for ITO and BPO jobs? At this time no one knows the extent to how much it will affect India. Also, in the US the current unemployment rate in IT is less than 4%. Still, companies are having a tough time finding qualified IT workers in hot technologies like web design, Java, cloud computing, and mobile technology.
McKinsey did a research report on onshoring. In the report they found out that the IT wage in smaller US cities are 30% lower than in bigger US cities. Meanwhile in India both attrition rate and wages are increasing sharply, which puts pressure on big Indian outsource companies like TCS, Wipro, and Infosys to maintain their profit margin. These Indian outsource companies’ business model is to hire more IT workers early and make them work in an outsourced project. So with less quality workers in India, a high attrition rate, and a steep wage rise, it will be difficult to keep the profit-margin without rising their client engagement fee.
American companies are watching the trends in India, and are making wise decisions on their sourcing strategies, choosing from various sourcing strategies like onshoring, ruralsourcing, closeshoring, nearshoring, and offshoring. However, the current demand for IT workers make American companies look to India as their preferred offshore destination for their large-scale IT needs in which cost arbitrage is the main requirement in their projects. This trend will continue until the cost of IT workers India is less than in US. No one knows how long it will take for Indian IT salaries to be comparable to American IT salaries and when cost arbitrage will no longer be possible. Until that day, India can enjoy large scale ITO and BPO projects coming their way.
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As per DataQuest, Indian BPO companies have grown by 15% in 2009-10, compared to 2008-09. In 2008-09 the revenue was Rs. 35,965 crore and in 2009-10 it was Rs. 41, 466 core. Many industries reported that the Indian BPO industry is slowing and the Philippines is stealing the Indian BPO market. But the Dataquest report disputes this notion. Read more
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New reports say that the U.S. Food and Drug Administration is planning to spike its use of third party inspectors after complaints of a lack of oversight in food and drugs being manufactured overseas. Read more
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The importance of outsourcing may be seen as a way of creating sustainability, which has taken a top priority in the corporate agenda. Keeping this in mind, consumers are driving business and maintaining a ‘green’ supply chain is a significant part of an enterprise. Read more
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If you are an international contractor, freelancer or a virtual assistant, then you have experienced the process of setting up a payment system, but have you calculated the cost of the alternatives? Each contractor performing outsource work has different needs and because of this, there are many different options available. It is important to know the best options available, as the cost differences between the services are quite significant. From our research many of the companies hide their charges and make it very difficult to calculate the complete costs. Read more
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A UK industrial union is expected to protest the decision by HP to outsource 200 UK government jobs to India, according to news reports. Read more
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Australia’s biggest department store, Myer, is expected to increase its outsourced merchandise from China by twofold. The merchandise includes fashion and homewares. Read more
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Although the deal is expensive, Britain’s Serco plans to acquire Indian outsourcer, Intelenet, for approximately $634 million. This will be an initiative to drive growth into overseas market that has high-growth. Read more
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More and more people in the U.S. are now asking the question, “Is it possible for my job to be outsourced?” Read more
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