Friday, August 29, 2008

Offshore Outsourcing Has Grown Up

Research firm Gartner estimated the size of the market for offshore IT and business process outsourcing at nearly US$35 billion in 2006 and forecasts a market of US$70 billion to US$100 billion by 2011. Companies have expanded their views on which functions can be offshored, from traditional call centre to legal research. They have learned how to better manage the outsourcing process. In short, the industry has grown up!

According to the survey, outsourcing of IT functions leads the pack (57%), followed by finance and manufacturing. Once the companies are comfortable with the offshore partners, they begin to offshore complete end to end processes. For example, in healthcare, the entire claims management process is outsourced.

The vendors too have learned a lot. They are expanding their service offerings. As this industry has matured, the vendors are facing problems like high turnover, double digit annual wages increment, weaker US$ and intense competition. For example, Indian vendors are operating from lower cost locations in Africa!

Malaysia is definitely in the mix due to our abilities to speak multiple languages. Hello, Salam, Ni Hao Ma, Vanakam, Sawadeekap, Nia Mak (ooph!) Happy Merdeka!

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