Source:www.hindu.com

Notwithstanding the continued gains posted by Rupee vis-à-vis the American currency in the past few months, the urge to offshore work to India remains strong.

Asserting this in an interaction with The Hindu, Shiva Ramani, Co-Founder and Chief Executive Officer (CEO), Cybernet-SlashSupport (CSS), said “the macro picture of wanting to offshore to India is still there.”

At the moment, cost benefits for India still remained. However, those moving away from pure cost arbitrage to value arbitrage would be the ones who would survive in the long run, he pointed out.

“The outsourcing market is very hot,” he said. “We (his group) are in the middle of several tech support and infrastructure management deals currently. So much so, we have had to walk away from a few prospects. We are also getting into larger and bigger deals,” he added. He said he was very bullish on the customer acquisition front even while being cautiously optimistic on the delivery front.

CSS is a technology operations management company, providing tech support, remote infrastructure management services, software testing and IT services to technology providers and enterprises. It has around 5,000 employees working out of its offshore facilities in Chennai and Coimbatore.

Rupee appreciation had, no doubt, put margins under pressure. “But the business has not become unviable,” he said. The strengthening Rupee had put the focus firmly on increasing efficiencies in the system. “If there is no threat to margins, how will you innovate?” he asked. Half of the erosion in margins caused by currency rise could be recouped by a combination of efficiency-improving measures such as cutting down cycle time in the system, going in for automation wherever possible and the like.

“We are doing it in 3-4 ways. We are consciously putting in efforts to manage costs and focusing on improvement in employee productivity through better bench and resource utilisation. We are also doing foreign exchange hedging to manage the rupee appreciation,” Mr. Ramani said.

He predicted that corportes would opt for permanent currency management teams within the organisations in the wake of Rupee appreciation. In the medium term i.e. over the next 1-2 years, he expected some of the extravagant perks that the employees were currently enjoying to come down. “I expect the IT and ITES companies to tighten belt. One cannot also rule out the possibility of 5 ½ -6 day working week in the IT industry,” he said.

“Of late, CCS has seen tremendous savings thanks to `go green initiatives’ and power management,” he said. Mr. Ramani said computing power and bandwidth costs were cheaper in the US Hence, moving non-labour-related works outside the country could prove a good idea. “Labour related stuff will continue to remain in India. However, computing power-related jobs may be done out of the US in the future,” he added.

Source:www.informationweek.com

West Coast-based 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 American-based 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 Russia-based outsourcing firm.

Of the 200-plus U.S.-based independent software developers that took part in the survey, 94% say they’re outsourcing project work, either domestically, offshore, or near-shore, or in some combination of all three. India is the leading offshore destination of those companies outsourcing, followed by Singapore, Russia, and China.

However, Canadian cities, including Vancouver and Toronto, win out over India for future outsourcing strategies by American independent software vendors, particularly among those that use a mix of offshore, domestic, and near-shore work.

West Coast-based American companies were more likely to choose Canadian cities, namely Vancouver, over India for outsourcing work.

Although cost savings was the key consideration fueling offshoring to India and other countries, near-shoring to Canada, and to a lesser extent Mexico, was chosen for a number of reasons, including closer proximity and being in the same or similar time zones. Also driving near-shoring to Canada by U.S based software companies is similarity in language, culture, security, and perceived quality of work.

“This clearly shows what roles other factors play in addition to cost in outsourcing,” said Michael Vax, CEO of Luxoft Canada.

But that doesn’t mean that cost-related issues aren’t also drivers for Canadian outsourcing, he said. “The exchange rate is good,” plus it can be easier to find talent since Canada isn’t faced with the sort of H-1B visa caps the U.S. faces in hiring foreign-born tech talent, he said.

In fact, American-based developers, most recently Microsoft (NSDQ: MSFT), have been expanding their own development staffs in Canada, he said. In July, Microsoft announced plans for a Vancouver development center that would initially staff 200 but could grow to 800.

So, what work are U.S. ISVs more likely to outsource? Some 53% said they outsource software development; 46%, software maintenance; quality assurance, 43%; performance testing, 35%; and software architecture, 32%.