India Is By Far No. 1 for Outsourcing
More than three-quarters of the top providers of offshore services to U.S. companies have their operations in India, according to a new study from the International Association of Outsourcing Professionals (IAOP). The study also states that China, Eastern Europe, and Russia, while lagging far behind India, are starting to show up more often on the worldwide outsourcing map.
"This reemphasizes how strong India is in terms of offshore services," says Michael Corbett, executive director of the IAOP. He adds that although areas like Africa and the Philippines have shown growth as outsource destinations, few companies operating there are ready to step up on a worldwide basis, unless they are already part of a global operation.
The top-five companies--24/7 Customer, Ajuba International, Bleum, Cognizant Technologies, and EPAM Systems--are among the IAOP's "rising stars," firms with strong growth performance but significantly less public awareness than Genpact, Wipro, or Equinox.
"The leading offshore providers are driving considerable business process invention and innovation," Corbett adds. "From Mumbai to Moscow, and from Shanghai to the Philippines, American business is finding ways to do things faster, better, and more efficiently offshore. And the leading offshore providers are taking the challenge and creating a feedback loop to insure continuous process improvements." Among those improvements are "blended solutions" offering integrated outsourcing solutions across more than one country, which helps meet the needs for different time zone coverage and different skill sets, according to Corbett.
Among the leading functions moving from the U.S. to offshore locations are IT support, toll-free call and email responses, consumer transaction processing, and financial and document management. Most are tasks that are labor intensive, require significant attention to detail, and demand real-time digital resolution.
Many of the top offshore providers have carved out business niches by providing specialized services, according to Corbett. Others have taken the specialized services model and created specialized business processes, often aimed at a specific industry or even industry segments. In some cases, multinational companies have spun off internal organizations (e.g., GE and Genpact, British Airways and WNS North America) to transform themselves from cost centers into profit centers, according to Corbett.
"You don't go offshore just to chase low labor rates. You look for companies [with] proven methodologies, people, and technologies, then you look at the financials," Corbett says. "You don't just pick a location and look for which companies are good. You look for a good company, then you look at where they have operations."
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