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New services are being added to the outsourcing kitty almost everyday. Companies now have a vast array of outsourcing options available to them: definition of geographic perimeters and functions, outsourcing contracts, the take over of assets and personnel, creating joint ventures.
The growth of out-sourcing, first generated by IT infrastructures, now involves more and more business functions. Faced with the decline of their core business area telcos are revamping their service portfolios, turning to telecom outsourcing, IT services and even BPO solutions. But competition coming from integrators, consultants and business process outsourcers is fierce.
The IT outsourcing market has been enjoying substantial growth for several years now. This growth is the result of a combination of factors:
Companies refocusing on their core business area: companies are electing to concentrate their efforts on their core business area, pulling out of more peripheral activities. This means that, more and more, they are delegating non-strategic functions to outside specialists.
Reduced and variable costs: out-sourcing allows businesses to convert a portion of their assets' into current expenses, and to rid themselves of assets whose rate of return is below their other assets average rate. In addition, outsourcing contracts allow companies to transfer economic demands to the outside provider, which they themselves cannot achieve in-house with so low a volume.
Expanding the company's scope: outsourcing is stimulated by mergers and takeovers which leave the new management juggling with dozens of contracts with a host of service providers around the globe.
Increasing complexity of IT and telecommunications systems: companies are having to assimilate new technologies on an ongoing basis, a process which requires expertise that they do not necessarily have in-house. It should also be said that calling on outside experts often al-lows companies to enjoy the advantages of offshoring (i.e. qualified cheaper foreign labour).
IT and telecom service providers' strategy: now faced with shrinking margins on their core business areas. As a result, for the past several years they have been rolling out out-sourcing services that enable them to manage longer term contracts, to mount entry barriers against the competition, and to maintain their margins.
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