Reports & Surveys

Financial-Services Firms To Double Offshoring In Three Years: Survey

Financial-services firms are expected to double the number of jobs located offshore within the next three years as they attempt to reap cost savings, according to a survey released Thursday By PricewaterhouseCoopers. The report forecasts that the international market for business outsourcing could reach USD 130 billion in 2005. The survey of 156 senior executives in the financial-services industry shows that a quarter of the survey participants now offshore between 10% and 20% of their employee workforce; that's expected to rise to nearly half in three years.

Cost savings was cited by 79% of participants as the most important benefit of offshore outsourcing, followed by strategic flexibility (33%) and greater focus on core competencies (28%).

Lower-value IT activities such as infrastructure management are being sent offshore by 42% of the survey participants, and another 17% plan to offshore such activities within the next three years. Higher-value activities such as applications and services are being sent offshore by 34%, with another 23% planning to send those tasks offshore in the next three years.

The trend is toward transferring more higher-value operations offshore, especially to countries such as India. The offshore operating model of choice is the captive venture -- an operation that's majority-owned by the offshoring institution. This preference is most marked for activities such as financial research and modeling that require a degree of specialist knowledge, involve confidential information, or relate to core activities. Such activities are more than four times more likely to be outsourced to a captive operation than to an independent vendor.

Political stability was the most important factor in choosing an offshore location, followed by low labor costs, high education standards, communications infrastructure and language skills.

According to a survey by Forrester, the demand for outsourced process change/re-engineering work has recorded the highest growth among the services that US-based companies plan to outsource in 2005. Thirty-four percent of the companies surveyed, plan to outsource their business process change/re-engineering work, as compared with just 24 percent in 2004. Industry expertise and domain knowledge are the two most important factors while choosing a vendor for these services with price being the third most important aspect. The survey also found the demand for consulting and systems integration services to increase or remain stable for almost every type of service.

According to a new report from research firm Frost & Sullivan, although call center outsourcing would continue, the boom will see the growth happening outside of familiar outsourcing destinations especially in the number of agent jobs. The report predicts that the contact center agent jobs in Western Europe are reaching a saturation point, despite a predicted AAGR of five percent until 2009. The report found Eastern Europe to be the biggest beneficiary of both expansion in the industry and outsourcing, although areas of Africa, the Middle East and southern Europe are also expected to witness growth. The firm also forecasts a move away from western European locations to areas in EMEA, as they have lower costs for staff and offices, as well as decent infrastructure. In addition to a change in location, the report also predicts a technological shift, with a variety of factors driving contact center managers to switch to IP technology.

IDC Predicts Double Digit Growth in Offshore IT Services
The U.S. offshore IT services market is expected to nearly double in size to an estimated $14.7 billion by 2009, reports IDC. This represents a five-year compound annual growth rate (CAGR) of 14.4%. Discrete manufacturers will continue to generate the largest percentage of overall revenue for offshore services providers, accounting for 17% of spending by 2009

American Contact Centers Losing Ground in the Global Outsourcing Market
Outsourced call center agent positions * in the United States are losing their share of the global market, according to new research by independent market analysis firm Datamonitor. The report, 'Contact Center Outsourcing in the United States,' says that tight profit margins are driving outsourcers to move offshore and automate where viable. Canada, India and the Philippines are expected to be the beneficiaries.

KPO industry to grow 10-fold by 2010
Speaking at a seminar on 'From BPO to KPO and Beyond', organised by the National Association of Software and Service Companies (Nasscom), Sam Balaji, principal, Deloitte Consulting LLP, said, 'The Indian KPO industry is evolving rapidly. The global KPO industry is likely to become worth $17 billion by 2010, with the Indian industry capturing between $12 billion and $14 billion of it.'

GM to demand outsourcing from suppliers
General Motors Corp. is beginning a three-year cost-cutting plan that includes urging U.S. suppliers to ship their work offshore.

Spanish Banco Sabadell has awarded IBM a €107m, ten-year outsourcing contract
Banco Sabadell, which is the fourth largest bank in Spain, it is a purely infrastructure-led deal, and involves the management of mainframes, data centres and business recovery services and Banco is expecting savings of around €42m.

Fortis Picks Mercer
Mercer Human Resource Consulting has been appointed to provide actuarial and administration services for the Fortis Bank U.K. Retirement Benefit Plan. According to Professional Pensions, the plan, which has both defined benefit and defined contribution sections, has over 400 active members and a fund size ofGBP10 million.

787 Dreamliner builders IT support to be provided by Perot Systems.
Vought Aircraft Industries, and Global Aeronautica, LLC, in support of their new manufacturing and integration facilities for the Boeing 787 program has selected Perot Systems as the IT provider

European publishing major to expand BPO presence in India
Springer Science + Business Media, $1 billion European publishing house, which specializes in scientific, technical and medical (STM) publishing has announced its plans to expand its production team in India. The company hopes to have 50% of its overall workforce in India.

EDS pushes banks to offshore IT Services to India
Outsourcing giant EDS has pressed banks to offshore more IT services to destinations like India, with local managing director Chris Mitchell telling top bankers that offshoring more backoffice operations was the answer to remaining competitive. EDS has contracts with a number of the major banks; the most prominent being a AU$5 billion, 10-year technology services sourcing deal signed in 1997 with the Commonwealth Bank.

Ness Technologies Awarded Offshore Contract by Hollywood Media Corp
The Ness team will assist Hollywood Media Corp. with its software development requirements and initiatives. In addition, Ness will support the maintenance of Hollywood Media's information Technology (IT) platform, environment and applications, including providing back-end support for Hollywood Media's various Internet properties.

NCI Awarded $5.6 M in U.S. Air Force Task Orders for Information Technology Services
NCI Information Systems, Inc. information technology, system engineering and integration company, announced today that it has been awarded multiple task orders totaling approximately $5.6 M, through the U.S. Air Force (USAF) Network-Centric Solutions (NETCENTS) contract.

Unisys and Synapsis Partner to Win Infrastructure Outsourcing Contract With Colombia Oil Company
Unisys to Manage IT Infrastructure Through Bogota Managed Services Center, Helping Improve Productivity, Increase Operational Efficiency, Contain Costs and Maximize Return on IT Investments.

Capgemini to set up additional facility in India
After establishing our presence in Mumbai and Bangalore, we have now decided to open up an additional facility in some other location in India,' Baru Rao, CEO of Capgemini India, told IANS in an interview here.

Accenture to up India staff by 50% over 2 years
Technology consulting company plans to hire at least 7,500 engineers in India over the next two years, a news report said on Tuesday.

SAP's new support centre in KL
This million-dollar centre complements SAP's GSC in Austria, Spain, Ireland, India and China as a result of the strong business growth in Asia Pacific and will provide ongoing support from SAP to customers worldwide.