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Outsourcing Industry News Weekly Recap: November 3 – 10, 2011

The outsourcing industry is continuously growing, fueled by the increasing number of businesses practice efficiency and practicality. Be enlightened on the hottest issues and the latest scoop on trending topics that are related to the industry with this weekly recap!

Recent Survey Shows Majority of Businesses Send Jobs Offshore

Outsourcing has gone beyond being just a “booming industry.” According to an annual survey by the Society of Information Management, 65% of IT businesses send their jobs offshore. Around two-thirds of the 275 companies surveyed use offshore services for some aspect of their businesses. Almost 25% of these companies use offshore services to run existing applications, and these include customer service and marketing process outsourcing. Around 20% of the companies using offshore services outsource the management of their infrastructure.

Outsourcing Growth Slows in India, Presents More Opportunities to Other Countries

India was once known as an outsourcing powerhouse, but a recent IT outsourcing survey shows otherwise. The annual offshore outsourcing survey done by Duke University’s Center for International Business Education and Research shows that the profits of India-based IT service providers continue to shrink. Outsourcing companies in other countries are now putting pressure on India’s outsourcing industry by stealing market shares and lowering the service prices.

The profit margin for Indian outsourcing companies clearly declined every year. A 25% profit margin in 2007 dropped to 20% in 2009 and to a disappointing 17% in 2010. However, India still has major market shares and remains a global leader in outsourcing. This could be credited to a very slow rate of shift from India to another outsourcing country. Less than five percent of companies move their work from India to another location, and around two percent bring work from India to the United States.

This is still a very big development in the outsourcing industry, because this will allow other upstart countries to take a shot on the countless outsourcing opportunities available. The industry will be more competitive, which is good not only for the service providers , but also for the companies relying on their services.

Communication is Vital in Outsourcing: Lesson Learned from ITO Buyers in Austria

The initial results of the 2011 Austrian IT Outsourcing and In-House Software Development Survey show that poor communication with vendors is the main hurdle facing Austrian companies that outsource to third parties. Good communication with the project teams and management of the vendors is vital for outsourced IT/software development jobs. This problem is reported by more than 40% of the respondents. Other challenges faced by Austrian companies that outsource an aspect of their business include changes in management and lack of appropriate resources on the vendor’s side.

Although the results may be unsettling, this situation holds a lot of promise for the Austrian ITO landscape. Proper adjustments on the part of service providers could bring great changes for their clients. Of all the participants surveyed, more than 55% are still hopeful and happy with their decision to outsource the development/QA functions of their company. On the other hand, less than 10% are not satisfied with their outsourcing decisions.

 

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