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Competition grows for global offshoring
Date: 02/11/05 (IT Management) Keywords: offshoring
India and China will be the main winners from an increase in offshoring but Eastern Europe is also set to benefit, according to a report.
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L'offshore programming dans les marchés du test et du consulting ?
Date: 12/07/04 (Offshore Programming) Keywords: software, offshore, technology, offshoring
Consulting and application testing are among the newer services moving overseas as offshore IT services look to more than double over the next five years.
Offshore I.T. firms will enjoy double-digit gains in sales over the next several years as vendors from India and other emerging markets boost their capabilities and U.S. and European businesses continue to seek ways to cut technology-related costs, new research suggests.
The worldwide market for offshore IT services will grow to $17 billion in 2008 from $7 billion in 2003, achieving a compound annual growth rate of 20%, according to a study released last week by market researcher IDC. The study tracks only those IT-services sales won by offshore companies such as India's Wipro Technologies and Infosys Technologies. It doesn't include the value of work being placed offshore by U.S. service providers such as IBM and EDS.
The growth is driven in part by the fact that some IT-related work that has been relatively immune to offshoring is starting to move overseas, says Barry Mason, a senior analyst at IDC. "We're starting to see offshore firms move up the value chain," Mason says. IT consulting, he adds, represents one new market that offshore firms are aggressively pursuing.
The good news for some U.S. IT professionals: As offshore companies expand, they're opening offices in the United States and hiring locally, albeit in modest numbers and at very senior levels. Cognizant Technology Solutions Corp., an IT-services company with headquarters in Teaneck, N.J., and operational centers throughout India, has hired five senior-level consultants in the United States this year and expects to add another five next year, says Kaushik Bhaumik, VP for Cognizant's Business Technology Consulting Practice.
Bhaumik, formerly an associate principal with McKinsey & Co., says there's little reason why the same economies that offshore companies provide for basic services such as application development and mainten- ance can't be applied to consulting. "A lot of the number crunching that backs up the engagement can be done overseas," Bhaumik says. As a result, he says, Cognizant can sell a project that would typically cost about $300,000 for about $100,000. Among the company's offerings: application portfolio analysis.
Some U.S. vendors, however, are skeptical about the extent to which the offshore model can be applied to consulting. "It's not a market that's driven by low cost. It's more about how you can successfully transform a customer's business, and that requires a lot of local knowledge," says a spokesman for IBM Business Consulting Services.
But offshore companies are building out their capabilities in other ways, too. A bellwether of the application-outsourcing market, Wipro has built a software test center at its Bangalore, India, development campus. With the center, Wipro will be able to add application software testing for both function and performance to its outsourcing services. It will also be able to test apps its teams develop before shipping them to U.S. and European businesses. "Testing used to be done on an ad hoc basis as the client requested it, was done by the client, or wasn't done at all," says Chris Lochhead, chief marketing officer of Mercury Interactive Corp., whose testing tools will be used in the Wipro Center of Excellence.
Most outsourcing companies don't yet offer testing as a standard service, Lochhead says. Wipro's test center is a sign of the growing sophistication of offshore-outsourcing companies, he adds. Having competed successfully on price, he says, now they're better equipped to guarantee performance and "compete on quality as well."
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Les sociétés indiennes s'intéressent à l'offshore en europe de l'est
Date: 11/26/04 (Offshore Programming) Keywords: offshoring
The leading Indian IT service companies are preparing to set up operations in the new low-cost 'nearshore' locations of Central and Eastern Europe as businesses look beyond India for offshoring.
At an industry event hosted by LogicaCMG in Prague last week a spokeswoman for a Czech government-backed investment body, Czech Invest, told ZDNet UK sister site silicon.com that two of the big Indian firms are currently in negotiations to locate new facilities there.
She declined to name the companies until the deals have been finalised.
Prague's competitiveness has been hit by a rise in property prices, which are as high as €19 per square metre a month but IT salaries are still low, with average monthly wage around €570. This has led to other Czech cities such as Brno challenging for foreign investment.
Satyam, India's fourth largest IT services company, is also set to launch its new European hub in Hungary early next month, which will support both its European and global customers.
Eastern Europe and the new EU countries are pushing to be taken seriously as viable low-cost 'nearshore' alternatives for firms who do not want to move parts of their IT infrastructure as far away as India.
Analysts are also predicting the rise of countries such as the Ukraine as the first wave of nearshore countries such as the Czech Republic become more expensive.
Vladimir Kroa, programme manager of IT and business services at IDC, said: "Membership of the EU is very important in the [offshoring] decision-making criteria. People are also looking at the likes of Belarus as nearshore countries."
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Offshore programming, outsourcing: meilleur pour tout le monde ?
Date: 11/22/04 (Offshore Programming) Keywords: software, technology, offshoring
Offshoring: It's better for everybody
Offshoring is benefiting companies, countries and economies on both sides of the debate, according to attendees at the Better Management Live Conference in Las Vegas this week.
Technology companies in Europe and the US claim the offshoring 'kick-back' is the creation of new jobs in their domestic market which are "higher up the economic value scale" than those jobs which they have sent to countries such as India.While on an individual-by-individual basis there are clearly those who will be worse off, in general this is having a positive effect on Western economies and workforces, according to Nigel Holloway, director of executive services at the Economist Intelligence Unit, who quoted McKinsey figures.
Chip Greenley, VP marketing and solutions at HP, said: "From a generic perspective it has to be good for the global economy."
Greenley and representatives from other vendors, said cost savings associated with offshoring are being reinvested in the creation of more high-value roles in the domestic market.
"We have taken large chunks of our business and moved them overseas," said Greenley. "If we know that by offshoring our accounts payable handling we will create the budget to hire 200 new hardware and software engineers then I can tell you it is going to happen."
Art Cooke, president of SAS International, agreed with such a strategy.
"We try to do the sensible things and do what is best for us," said Cooke, who said that may include outsourcing some "background work" but warned against outsourcing any development of core business or handing over the reins on any project linked to the growth of the company.
Cooke added that those who are currently getting heated about a large number of less skilled jobs going overseas are guilty to some degree of a lack of ambition and expressed surprise that in "a knowledge economy" there is such anger over the loss of back-office jobs.
"Would people really rather their son or daughter was studying how to programme some small part of an ERP system or working towards something genuinely innovative and cutting edge?" he said.
Cooke believes the fright of the offshoring phenomenon should encourage Western economies to remember to keep innovating and generating invaluable new skills sets.
"If an economy isn't going to innovate it deserves everything it gets," he said.
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L'offshore programming dans les marchés du test et du consulting ?
Date: 12/07/04 (Offshore Programming) Keywords: software, offshore, technology, offshoring
Consulting and application testing are among the newer services moving overseas as offshore IT services look to more than double over the next five years.
Offshore I.T. firms will enjoy double-digit gains in sales over the next several years as vendors from India and other emerging markets boost their capabilities and U.S. and European businesses continue to seek ways to cut technology-related costs, new research suggests.
The worldwide market for offshore IT services will grow to $17 billion in 2008 from $7 billion in 2003, achieving a compound annual growth rate of 20%, according to a study released last week by market researcher IDC. The study tracks only those IT-services sales won by offshore companies such as India's Wipro Technologies and Infosys Technologies. It doesn't include the value of work being placed offshore by U.S. service providers such as IBM and EDS.
The growth is driven in part by the fact that some IT-related work that has been relatively immune to offshoring is starting to move overseas, says Barry Mason, a senior analyst at IDC. "We're starting to see offshore firms move up the value chain," Mason says. IT consulting, he adds, represents one new market that offshore firms are aggressively pursuing.
The good news for some U.S. IT professionals: As offshore companies expand, they're opening offices in the United States and hiring locally, albeit in modest numbers and at very senior levels. Cognizant Technology Solutions Corp., an IT-services company with headquarters in Teaneck, N.J., and operational centers throughout India, has hired five senior-level consultants in the United States this year and expects to add another five next year, says Kaushik Bhaumik, VP for Cognizant's Business Technology Consulting Practice.
Bhaumik, formerly an associate principal with McKinsey & Co., says there's little reason why the same economies that offshore companies provide for basic services such as application development and mainten- ance can't be applied to consulting. "A lot of the number crunching that backs up the engagement can be done overseas," Bhaumik says. As a result, he says, Cognizant can sell a project that would typically cost about $300,000 for about $100,000. Among the company's offerings: application portfolio analysis.
Some U.S. vendors, however, are skeptical about the extent to which the offshore model can be applied to consulting. "It's not a market that's driven by low cost. It's more about how you can successfully transform a customer's business, and that requires a lot of local knowledge," says a spokesman for IBM Business Consulting Services.
But offshore companies are building out their capabilities in other ways, too. A bellwether of the application-outsourcing market, Wipro has built a software test center at its Bangalore, India, development campus. With the center, Wipro will be able to add application software testing for both function and performance to its outsourcing services. It will also be able to test apps its teams develop before shipping them to U.S. and European businesses. "Testing used to be done on an ad hoc basis as the client requested it, was done by the client, or wasn't done at all," says Chris Lochhead, chief marketing officer of Mercury Interactive Corp., whose testing tools will be used in the Wipro Center of Excellence.
Most outsourcing companies don't yet offer testing as a standard service, Lochhead says. Wipro's test center is a sign of the growing sophistication of offshore-outsourcing companies, he adds. Having competed successfully on price, he says, now they're better equipped to guarantee performance and "compete on quality as well."
-
Les sociétés indiennes s'intéressent à l'offshore en europe de l'est
Date: 11/26/04 (Offshore Programming) Keywords: offshoring
The leading Indian IT service companies are preparing to set up operations in the new low-cost 'nearshore' locations of Central and Eastern Europe as businesses look beyond India for offshoring.
At an industry event hosted by LogicaCMG in Prague last week a spokeswoman for a Czech government-backed investment body, Czech Invest, told ZDNet UK sister site silicon.com that two of the big Indian firms are currently in negotiations to locate new facilities there.
She declined to name the companies until the deals have been finalised.
Prague's competitiveness has been hit by a rise in property prices, which are as high as €19 per square metre a month but IT salaries are still low, with average monthly wage around €570. This has led to other Czech cities such as Brno challenging for foreign investment.
Satyam, India's fourth largest IT services company, is also set to launch its new European hub in Hungary early next month, which will support both its European and global customers.
Eastern Europe and the new EU countries are pushing to be taken seriously as viable low-cost 'nearshore' alternatives for firms who do not want to move parts of their IT infrastructure as far away as India.
Analysts are also predicting the rise of countries such as the Ukraine as the first wave of nearshore countries such as the Czech Republic become more expensive.
Vladimir Kroa, programme manager of IT and business services at IDC, said: "Membership of the EU is very important in the [offshoring] decision-making criteria. People are also looking at the likes of Belarus as nearshore countries."
-
Offshore programming, outsourcing: meilleur pour tout le monde ?
Date: 11/22/04 (Offshore Programming) Keywords: software, technology, offshoring
Offshoring: It's better for everybody
Offshoring is benefiting companies, countries and economies on both sides of the debate, according to attendees at the Better Management Live Conference in Las Vegas this week.
Technology companies in Europe and the US claim the offshoring 'kick-back' is the creation of new jobs in their domestic market which are "higher up the economic value scale" than those jobs which they have sent to countries such as India.While on an individual-by-individual basis there are clearly those who will be worse off, in general this is having a positive effect on Western economies and workforces, according to Nigel Holloway, director of executive services at the Economist Intelligence Unit, who quoted McKinsey figures.
Chip Greenley, VP marketing and solutions at HP, said: "From a generic perspective it has to be good for the global economy."
Greenley and representatives from other vendors, said cost savings associated with offshoring are being reinvested in the creation of more high-value roles in the domestic market.
"We have taken large chunks of our business and moved them overseas," said Greenley. "If we know that by offshoring our accounts payable handling we will create the budget to hire 200 new hardware and software engineers then I can tell you it is going to happen."
Art Cooke, president of SAS International, agreed with such a strategy.
"We try to do the sensible things and do what is best for us," said Cooke, who said that may include outsourcing some "background work" but warned against outsourcing any development of core business or handing over the reins on any project linked to the growth of the company.
Cooke added that those who are currently getting heated about a large number of less skilled jobs going overseas are guilty to some degree of a lack of ambition and expressed surprise that in "a knowledge economy" there is such anger over the loss of back-office jobs.
"Would people really rather their son or daughter was studying how to programme some small part of an ERP system or working towards something genuinely innovative and cutting edge?" he said.
Cooke believes the fright of the offshoring phenomenon should encourage Western economies to remember to keep innovating and generating invaluable new skills sets.
"If an economy isn't going to innovate it deserves everything it gets," he said.