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Offshore outsourcing picking up after recession: Everest

John Ribeiro | July 12, 2010
Work that was outsourced locally is also now being moved to offshore locations

Malaysia, Brazil and Mexico are other locations that figure in companies plans to expand offshore outsourcing.

Companies are however looking to spread their risks, and may not send all their work to India.

Buyers are increasingly looking at other complementary locations in Asia, Latin and Central America, and Eastern Europe for setting up delivery centers, according to Everest. The drivers of this approach include risk diversification and business continuity, need for specific skills and support in specific languages, regulatory requirements, and time zone coverage requirements, Everest said.

About 60 per cent of Indias outsourcing business comes from the U.S., followed by the U.K. which accounts for about 15 per cent.

Even as companies are planning to expand offshore outsourcing, they are also looking at expanding in near-shore locations, such as Latin America for U.S. companies. The drivers for near-shore outsourcing, such as the need to keep sensitive work closer to home, are different than for off-shore outsourcing which is mainly driven by cost and the ability to scale, Ramesh said. Although it is growing fast, near-shore outsourcing is a smaller market than offshore outsourcing, and will not necessarily compete with the offshore locations for business, he added.

Even as companies expand near-shore and to other locations besides India, they may still turn to Indian service providers to provide services from these new locations, Ramesh said. They may value an existing relationship with an service provider rather than assign the business to a local provider, he added. A number of Indian outsourcers have set up operations in Europe, U.S. and Latin America to target the near-shore and onshore requirements of their customers.

 

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