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Which way is the wind blowing in the outsourcing market, Whats looming on the horizon in the next five years. Lets look at five areas which may influence the outsourcing markets. This is necessary in the changed world scenario as more and more companies are resorting to outsourcing.
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The slow down is changing the dynamics of software delivery as it sharpens the focus on reducing costs, and driving higher value for some others. From a bilateral offshoring model, companies are moving towards evaluating different attributes of a location, depending on what their IT and business needs are. For some firms, the need is to cut costs, while for others it is to transform their business, Gartner vicepresident, research, Ian Mariott says. Mariott has been associated with IT services industry for a long period. Organisations will be thinking carefully about which countries they should source from. Some who always chase low costs may opt for Vietnam. This is a sensible move if they are not risk averse, Mr Mariott said.
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Indian offshoring is expected to grow from current USD 1.4 billion to USD 4.2 billion before year end 2010. Zinnov, a management consultancy outfit, forecasts Infrastructure Management Services IMS to be the next big growth Indian offshoring. The banking, financial services and insurance industries are the biggest users of IMS services and will constitute approximately 43 percent of the market. High tech telecom, manufacturing and retail industries will constitute approximately 12 percent each and will be second biggest consumers of offshored IMS services.
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UK firms that offshore their IT functions are increasingly favouring Indian suppliers, a new national study has found. According to independent sourcing advisory firm EquaTerra, Indian IT services firms such as Wipro and TCS are steadily increasing their profile and popularity among UK IT decision makers.EquaTerras Outsourcing Service Provider Performance Study 2007 polled highranking executives at 110 of the UKs top IT spending organisations and evaluated GBP 34bn worth of UK contracts.
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Indias fourth largest software exporter, Satyam Computer Services, is seen as the favourite to win a significant IT outsourcing contract from Indian Railways as the countrys top tech firms intensify efforts in the local market to offset slowing demand overseas. A senior Railways official says that the Hyderbad based company has bid the lowest for a project to provide an asset management solution based on SAP business software for four locomotive sheds. He declined to reveal the value of the bids but said that TCS, Indias largest software exporter, and Wipro, the third largest, were among the bidders.
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With business from the US and Europe expected to decrease due to the ongoing financial turmoil, Indian information technology services IT firms are increasing their focus on the Asia Pacific region, particularly China, in an effort to tap the latters IT market and use it as a strategic base to enter the at least USD100 billion Rs4.76 trillion a year Japanese IT market. Business from the US and Europe together account for between 80 percent and 95 percent of revenues of the top five Indian IT services firms, Tata Consultancy Services Ltd or TCS, Infosys Technologies Ltd, Wipro Ltd, Satyam Computer Services Ltd and HCL Technologies Ltd.
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CorraTech, the leading global open source software services firm, today announced the launch of two new outsourcing solutions for Independent Software Vendors ISVs interested in open source. CorraTech also announced it has expanded its Open Source Center of Excellence OSCOE and open source development and support operations in India.
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IT services major Tata Consultancy Services today announced the inauguration of a 300seat global delivery center in Tianjin, its fourth such center in China after Beijing, Shanghai and Hangzhou.The Tianjin center will support local business opportunities for the Japanese, US and European market. This is in line with Tianjins ambition to becoming a world class hub for global outsourcing operations.
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RIO TINTO has signed off on one of its biggest outsourcing deals, selecting CSC for a five year, USD70 million contract to provide support services for about 25,000 users.Rio appointed global strategic adviser The Hackett Group to audit the bids and decide which would deliver the best return on investment. CSC is understood to have taken on provision of service desk and desktop services across Rios operations in the Asia Pacific region and the Americas, which covers about 25,000 users. The services will be delivered from CSCs local operations.
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With the slowdown gulping down a major portion of their revenues from U.S. the top Indian firms are turning to Europe to grab a share of the regions IT outsourcing budget. The main target for IT service in Europe include UK, which is a USD50 to60 billion market, USD40 to45 billion Germany market and France where the IT service market accounts for USD 35 to 40 billion.
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Leading Indian tech firms including Wipro, Infosys and TCS, apart from several others, plan to acquire captive information technology units of large outsourcers such as Volvo and Bosch in Germany, as they seek to increase their revenues from Europe and also get the most out of these customers total IT outsourcing budgets.
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Indian animation industry is expected to record USD1163 million by 2012, as against USD460 million, reporting a CAGR of 27 per cent,according to a report jointly prepared by NASSCOM and Ernst andYoung. The report, christened Indian Animation and Gaming 2008, divided the animation market into entertainment USD120 million, education USD53 million, custom content development USD187 million and multimedia/web design USD100 million.
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Australian telecom major Telstra has asked Infosys Technologies, Satyam Computer, IBM and EDS to retender for its nondiscretionary IT work. The value of this deal is not known, but analyst guesstimates are this could be around USD100 million or more. The vendor consolidation is part of the telecom behemoths costcutting initiatives, which will involve slashing the number of IT vendors from four to two.
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Egypts outsourcing sector is getting a boost of international recognition. The country was recently awarded the prize for best outsourcing destination by the British National Outsourcing Association NOA.This comes as much needed encouragement, with the government trying to attract more investment to the sector at a time of international economic gloom.Hazem AbdelAzim, CEO of the Information Technology Industry Development Agency ITIDA, who received the prize in the name of the Egyptian government, stated that it was a source of pride for the Egyptian communications and information technology sector.
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KPN and Ordina have concluded a contract whereby the management, maintenance and renewal of KPN websites is outsourced to Ordina. The duration of the contract is five years. In delivering this contract, Ordina as Contract Principal will be working with Satyam, a preferred offshore partner of KPN, based in Hyderabad, India.
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Indias fourth largest software exporter Satyam wants to get its 30 per cent of its total global revenue from Europe by 2010, according to Drs Peter M. Heij, Head of Satyams Continental Europe.Growth from Europe would come from more acquisitions and by venturing into new markets such as the Nordic countries and Eastern Europe, he said.
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Plans of Indian IT bellwether Wipro Ltd to open a software development centre at Atlanta in the US are on hold due to the global melt down and uncertainty in the economic environment.As the Atlanta centre is a new initiative, it is taking more time to draw customers attention due to uncertainty in the environment. We are not shying away from what we plan to do in Atlanta, but it is taking more time than expected given this scenario, the spokesperson said.
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Leading IT Infrastructure Management company, Eureka Technology Partners ETP, announced today that they have signed a major contract and strategic partnership with UST Global, an IT services company headquartered in the U.S. ETP will remotely manage 6,000 desktops in ten countries from their ISO 20000 certified Network Operating Center NOC in Sri Lanka.
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The global economic crisis may reduce information technology outsourcing work for companies in Sri Lanka but at the same time generate new business opportunities, a top Sri Lankan software firm said. Tony Weeresinghe, the Boston based chief executive of Millennium IT, a technology solutions provider serving the global capital market industry, said he expects the international crisis will take a minimum of 12 to 15 months to stabilise. Even though Sri Lanka will not have a direct financial crisis, Sri Lanka will definitely be impacted by the slowdown of the global economy, said Weeresinghe in a statement.
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