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Founder and Chief Executive Officer of HfS Research, the leading global research analyst organization covering global sourcing strategies. Acclaimed Industry Analyst and Consultant who scribes the leading blog for the services industry "Horses for Sources".  Previously worked  at AMR Research (Gartner Inc),  Deloitte Consulting’s BPO Advisory Services, the  Everest Group and  IDC .  In 2010, Phil was named “IIAR Analyst of the Year” by the Institute of Industry Analyst Relations (IIAR). This is the most coveted global award for industry analysts in technology and services.

2 responses to “Why offshoring is hotter than ever”

  1. Ashutosh Agarwal

    Interesting validation of the increasing trend in offshoring across business and IT functions. A negative trend could mean a decline from the previous year due to service quality/market trends/business climate or could also be that with a surge in the previous year/s possibly there is not much left to further increase the pace to offshore. Aside of this, in case of IT services (Application Maintenance, IT Infrastructure etc.) clearly CFOs are calling the shots to push more to gain cost efficiencies from offshore and letting their CIO colleagues figure out best ways to ensure quality of service to business is not impacted. While offshoring can bring (and does bring for many) improved process maturity, innovation etc., the first driver is cost efficiency in almost all cases.

    An interesting trend that is peeping ahead is that automation/robotics are seeping into enterprise IT not through investment directly from businesses but from offshore service providers. As the offshore fields continue to be engulfed in dust with the competitive forces kicking in amongst service providers, many are now looking at bringing in automation as a differentiator and also to reduce their cost of operations. In fixed price deals which are increasing (against T&M contracts) these providers are more competitive and are able to insulate themselves from vagaries of increasing labor costs, staff turnover, currency fluctuation etc which otherwise contribute to unhappy clients or fewer clients. The thrust is more from larger players because:
    a. they can afford investment in automation technologies directly or through partnerships
    b. these are dearer to them for survival than smaller players who can still push their lower cost of operations due to lower overheads
    c. they understand that these are long term investments in competing globally in future and have a more robust roadmap

    Notwithstanding all this, enterprises stand a better chance to gain, leverage and ride on these trends and engage better with their service providers in a win-win partnership with a better understanding of the dynamics at offshore based service providers and their cultural context. Much like surfing : know the waves and surf-on, else you will keep wondering how to be on top and have your head not just above water but above your shoulders.

  2. Williamson

    Interesting details emerging from the article, many organizations implement outsourcing strategies to reduce IT costs and increase overall efficiency. However organizations should implement the right outsourcing strategy and choose the appropriate provider to benefit. I work for McGladrey and there is a whitepaper on it offers good information on this subject that readers will find it useful. @ “Three essential IT outsourcing methods every business should know”