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Outsourcing to Indian
BPOs to rise to rationalize cost: D&B
Outsourcing and offshoring to Indian
BPOs is more likely to become an even more important part of companies
overall strategy as they focus on cost rationalisation in the current
global meltdown, according to a report on Indian and IT and ITeS industry
by Dun and Bradstreet.
The report said that though certain
issues have caught the industry off-guard, India is still expected to
remain the preferred choice for outsourcing services and outsourcing
would remain strong in 2009 too.
However, North America and Europe
-key markets for ITeS-BPO companies - are experiencing an economic
slowdown and that is bound to have some impact on the ITeS and BPO
industry as a whole, the report stated.
The Indian ITeS and BPO industry is
export driven and the US constitutes more than 66 per cent of its
billing. The BFSI sector's share of the overall pie of services offered
by the surveyed ITeS-BPO companies dropped to 28% in FY08 from 31% in
FY07 and this trend is set to continue, the report added.
Over the next two years, a high
proportion of companies (45.7%) expect revenues for the ITeS-BPO sector
to grow by 20-35% annually. The 2008 edition of 'India's Top ITeS and BPO
Companies' by Dun and Bradstreet profiled 228 ITeS-BPO organisations,
including 20 captive outsourcing organizations.
The study also shows that Tier II
cities are making their presence felt in the ITeS-BPO industry. Pune and
Gurgaon were placed at fourth and fifth place respectively as compared to
sixth and seventh last year.
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Financial Services Outsourcing
Slowdown Will Regain Momentum in Early 2009
Outsourcing in the banking and
financial services sector is showing short-term signs of a slowdown for
the remainder of the year due to the economic crisis, but the market will
likely regain momentum in early 2009, according to the Market Vista: Q3
2008 report on global outsourcing and offshoring activity by the Everest
Research Institute.
'Despite a 40 percent increase in
transactions by financial services firms during the third quarter, a
slowdown is emerging due to delays in initiatives and managements' keen
focus on the economic crisis,' said Eric Simonson, Managing Principal,
Everest Research Institute. 'In the medium-term, restructuring,
integration, and redefinition of sourcing strategies by large financial
firms will lead to an increase in project-based work for suppliers and
increased pressures on captives.'
The Institute's quarterly Market
Vista reports provide data and analysis of deal trends in the outsourcing
and offshoring market, captive model landscape, current and emerging
locations, key supplier developments, and key developments across the top
20 financial services companies globally. The report also includes a
special section on the Asian market.
Other insights for the third quarter
activity include:
-- Overall outsourcing transactions
increased 15 percent over the previous quarter, valued at about US $3.2
billion in ACV.
-- Banking, financial services and insurance
firms signed 81 transactions, up from 54 in Q2.
-- Momentum from Europe continued to
grow with a 10 percent increase in transaction activity.
-- Captives saw significant momentum
- 24 new announcements, compared to 18 in Q2 and 16 in Q1.
-- Indian suppliers are experiencing
slowdown pressures; hiring by the leading Indian suppliers dropped 22
percent quarter-on-quarter and 49 percent compared to 2007.
-- Central American countries
(especially Guatemala, El Salvador, Panama and Costa Rica) are taking
active measures to improve their near-shore proposition.
-- A key development was the
inclusion of Unisys Corporation to the list of key suppliers tracked.
Overall, supplier investment led to 100 percent increase in new centre
setup, while M&A activity was 68 percent lower than Q2.
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