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Australia has been slow to openly embrace India as an outsourcing destination but momentum is building and more organisations are saying they have shipped technology and business process work offshore.Not surprisingly, many of the companies that have entered the fray play in the financial services sector, a voracious and aggressive user of information systems and services.
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Indian information technology exports will grow 30 percent annually to 80 billion US DOllar a year by 2011, a federal minister said Wednesday. We are confident that our exports will boom despite the perceived odds against outsourcing and increasing competition, Information Technology and Communications Minister Andimuthu Raja said in New Delhi on Wednesday. From a few million dollars a year in the early 1990s, software service exports have grown to US Dollar 39 billion in the last fiscal year.
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Indias second largest software company, Infosys Technologies, on Friday announced a reorganization that would enable it to separately tap a strengthening domestic outsourcing market, along with emerging market regions like Australia, China, Japan and the Middle East.Bangalore based Infosys Technologies has formed two arms, the New Growth Engines unit that will also look at Canada, South America and Latin America, and an India focused arm.
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Even as large global corporations transition to the second wave of outsourcing, the technology sector is heading towards the Third Wave in the making, according to The Hackett Group. The Third Wave, which would mean a transformation and scale up much different from the labour arbitrage market, would come up much faster than one anticipates and has the potential to challenge labour and cost arbitrage model. Some of the services providers in India and Eastern Europe could potentially find the going tough.
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The UK is outshining its overseas peers in terms of the number of outsourcing deals signed during the second quarter of this year.Appetite for outsourcing shows no sign of abating just yet as the number of deals signed with companies providing such services in Europe, the Middle East and Africa EMEA demonstrated stellar growth at the beginning of this year, according to a new report from Forrester Research.The UK led the charge by closing more than a third 36 per cent of the 84 deals signed during the period of growth, with the total number of deals closed equating to more than 5.4 billion , a rise of 1 billion compared to the same period in 2006.
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Even though the offshoring model remains strong, there are signs that the appreciating rupee and rising wage costs have begun to affect the profitability of offshore firms. While business for large Indian firms is still growing by over 30 percent, the supply of manpower is not keeping pace with that growth. That may lead to a wage war further affecting the already eroding profit margins of companies. What then is the way out for offshoring firms. One way to beat the twin effects of rising salary costs and rupee inflation, says Forrester Researchs Apte, is for firms to improve productivity and move towards repeatable solutions. Indian firms like Wipro, says Apte, have been able to improve productivity number of lines of software code written by engineer every year by 4 to 5 percent.
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Mobile phone retailer Carphone Warehouse has signed a US Dollar 200m five year deal with Indian IT company Patni.The deal is an extension of an existing four year relationship between the two companies and covers a range of services including application development and maintenance and systems integration. Carphone Warehouse CTO, Simon Post, told silicon.com Patni will do offshore support and maintenance and onshore application development.He said, It is quite large systems integration stuff and a broad spectrum of services and architectural work.
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Offshoring can often help companies realize substantial cost savings by sending certain functions overseas, where labor costs are a fraction of those in the United States. However, there is more to consider than just the lower labor costs of employees in India verses their domestic counterparts. In this day and age of heightened security sensitivity, its important to make sure that in addition to going after cheap labor, you are not buying yourself a slew of security exposures as well.The decision on whether or not to outsource should not rest solely with the CFO. The chief security and compliance officers should also be involved because of the many security and regulatoryrelated issues involved with offshore outsourcing.
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Its essential for businesses to understand the cultures and different ways of working of any potential offshore destination before moving their IT services there.Thats according to IT chiefs speaking at silicon.coms CIO Forum as part of the panel debating the question Outsourcing: your shortcut to global talent.. Rob Fraser, exCIO of Boots, said cultural difference is something you have to understand to get the most out of offshoring.
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Outsourcing some or all of your companys IT functions can jumpstart your business, push it to the next level or just get your systems under control. But for outsourcing to work, youll have to manage it carefully. Read the eight signs below before taking the plunge.
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The Information and Communication Technologies Council ICTC announced today the release of two new reports that explore the evolving role of IT outsourcing and offshoring and the impact on Canadian business, human resources and competition. The reports offer important information and guidance to the ICT industry, a key driver of innovation and competition in Canada accounting for over 600,000 jobs and more than 5.9 percent of the GDP.
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Software Off shoring is a reality of the day however there are many projects which fail due to incorrect off shoring. Apart from tremendous advantages, off shoring brings additional complexity, risk and avenues for wastage. This experience report will discuss how we turned off shoring into a successful model based on Toyota manufacturing Process. We call this methodology Lean Agile Off
shoring.
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The last twelve months witnessed record high variations in the dollar,to,rupee conversion as the US dollar fell against most currencies including the Indian rupee. In the quarter ending June 30, 2007, the dollar saw more than a 7 percent fall thereby resulting in a dramatic drop in Indian providers revenue realisation in rupee terms.Given that 60 to 80 percent of income is in dollars and more than 50 percent of providers costs are incurred in rupees, offshore providers are struggling to find ways to cope , including asking clients to bail them out by increasing billing rates or in some cases, renegotiating the master services agreements. But this phenomenon will then gradually endanger the offshore IT services.
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SUNCORP has brought in Satyam Computer Services to build customer analytics software for the bank, increasing the number of Indian technology firms it uses.Suncorp corporate and customer systems general manager Paul Detheridge confirmed that the Queensland financial services company had been working with Satyam since July. The bank has also worked with longtime Satyam rival Infosys, which recently handled a major desktop migration project for it.
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IT outsourcing in India today is a big boom. India is regarded as the most happening place in terms of Offshore Software Development.It is interesting to note that companies in US rank India as their first choice for Outsourcing projects. This is mainly due to the technological quality, the effective cost control, and the flexibility which is required in the competitive IT market. And India provides all these qualities.
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West Coastbased American companies are more likely to choose Canadian cities, namely Vancouver, for outsourcing work, according to a new survey.Could Canada become the next India for Americanbased software companies outsourcing work.Not exactly. However, Canada is becoming an attractive option many American software developers are eyeing for their future outsourcing strategies, according to a new report released on Tuesday by SD Forum and Luxoft, a Russiabased outsourcing firm.
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R and D is becoming a truly global enterprise with all sectors moving within the nottoodistant future to a nearequal distribution of effort, funds and activity as opposed to the domination the U.S. has held onto for the past 50 years. The trend is revealed in the annual Battelle R and D Magazine report released today. The report goes beyond a simple analysis of R and D expenditures and investments, peering into the underlying structure of the global R and D enterprise.The U.S. will continue to dominate for up to the next 10 years or so, but after that decade activity is likely to be split into thirds with North America, the European Union EU and Asia dominated by China and India holding approximately equal shares.
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Australia has been slow to openly embrace India as an outsourcing destination but momentum is building and more organisations are saying they've shipped technology and business process work offshore.Not surprisingly, many of the companies that have entered the fray play in the financial services sector, a voracious and aggressive user of information systems and services.
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Offshoring can cut costs dramatically, extend support and capabilities, and provide hardtofind expertise, but careful management is the only way to ensure success. Outsourcing offers businesses the opportunity to cut costs and boost productivity , if its done right.Offshore locations feature lowcost workers who can cut your labor costs by 50 percent or more. Tapping workers in India or China also affords the possibility of roundtheclock technical or customer support , when domestic staffers sign off in the evening, their Asian counterparts are just waking up.
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