Source: computerworld.com

Politec to set up three development centers as part of bid to grow business outside of Brazil

Some offshore outsourcers that want more IT work from companies in the U.S. are expanding their operations here, with the latest example being Brazilian vendor Politec SA.

Brasilia-based Politec, which has about 7,000 employees and $300 million in annual revenue, currently provides outsourcing services primarily to companies in Latin America. The vendor has just 50 employees in the U.S. now. But by 2010, it intends to have as many as 800 people working in development centers in Atlanta, New York and the Miami area, said Dalton Luz, Politec’s vice president of corporate affairs.

In April, Politec received an $80 million investment commitment from Mitsubishi Corp., and Luz said the financial infusion is increasing its ability to expand internationally. He added that most of the people who staff the planned U.S. offices will be hired locally.

Brazil’s total outsourcing market is about $8 billion annually, according to the Everest Group, a Dallas-based outsourcing consulting firm. But the offshore component — meaning services delivered to companies based outside of Brazil — amounts to only about $700 million, Everest said. By comparison, it added, India’s offshore market reached about $40 billion last year. Everest is forecasting that the offshore business in Brazil will increase to $1.25 billion within two years.

Although Portuguese is Brazil’s dominant language, English is also widely spoken there, Luz said. Other factors that may make the country an attractive offshoring location for U.S. companies include the relatively similar time zones and the low cost of IT labor in Brazil. One area that Politec focuses on is SAP development work, and Luz said the average annual wages for developers with SAP skills range from $6,000 to $24,000.

Outsourcing vendors based in India are also moving to expand their presence in the U.S. In March, for instance, Tata Consultancy Services Ltd. said it was opening a development center in Milford, Ohio, that eventually would employ about 1,000 people. And last July, rival Wipro Ltd. announced plans to set up four development facilities in the U.S., starting with one in Atlanta that likewise could have 1,000 employees over time.

Source: dnaindia.com

Local vendors won four of the 39 such deals globally

Human resource outsourcing (HRO) is seen as the next big thing for Indian BPO firms that are looking to expand the scope of their service and reach.

Under such deals, companies can outsource various HR functions such as payroll, recruitment, employee data management etc. A typical deal is of six -seven year duration.

“Of the 39 global enterprise (end-to-end) HRO deals announced last year, Indian vendors won four orders at a cumulative deal size of $350-400 million. This number is impressive, since this was the first year when Indian vendors have won enterprise HRO deals,” Rajesh Ranjan, director, Everest Research, an off shoring advisory firm said.

The four firms are Tata Consultancy, Wipro, Caliber Point (a subsidiary of Hexaware Technologies), and Infosys.

The HRO market can be broadly classified into discreet HRO and enterprise HRO, with the former involving outsourcing of a single process and the latter being end-to-end.

HRO as a concept took life only about a decade ago and is already a $3 billion opportunity, growing at 13-14% annually. Hewitt, Convergys, Accenture and IBM. The discreet HRO market, although several times the enterprise market, is highly fragmented.

Ranjan said many Indian and India-based companies were looking at a partnership model to tap this opportunity. “Ceridian, a US-based HRO firm, has tied up with Gurgaon-based Genpact to have an offshore presence. This is route more and more Indian companies could take,” he said.

Ranjan said an encouraging thing about Indian companies winning HRO deals was that, most of these were in Europe.

“Three of the four deals were signed in Europe. By value, it is 80% of the total contract value. This signifies the kind of risk diversification Indian companies are undertaking. The Indian vendors are not just leveraging India for such deals but are also using their delivery centre in Eastern European countries to service the accounts,” he said.

At 33% compounded annual growth rate (CAGR) over the last two years, the Europe HRO market is growing at twice the rate of US, but on a lower volume.

The fact that India is becoming an important destination for HRO is clear from the fact that the segment has about 7,000 people working for it, against almost nil a few years back. “Thirteen leading global HRO firms have a presence in India. The 7,000 employees they hire in India represents half the total offshore employees of HRO firms,” he said.

Source: manilastandardtoday.com

Bacnotan Consolidated Industries Inc. plans to venture into business process outsourcing this year to take advantage of the rapidly growing sector.

Bacnotan chief executive Ramon del Rosario Jr. told reporters yesterday following the company’s annual stockholders’ meeting that the company was especially interested in a BPO business that would offer financial, engineering and animation services.

Del Rosario said the company was currently developing a strategy on how to enter the BPO industry. He said Bacnotan could either put up its own BPO facility or acquire existing companies.

“We see BPO as an industry with a bright future. We hope to get into the BPO sector within the year,” Del Rosario said.

He said Bacnotan’s entry into the BPO sector would also complement the company’s existing businesses.

“It’s the type of operations that blend itself to our type of skills and strengths. Plus, it is also a good mechanism employment for Filipinos,” Del Rosario said.

Bacnotan is primarily involved in investment holdings, galvanized and pre-painted iron sheets manufacturing, education, real estate development and real and personal property investment.

Its principal subsidiaries are Atlas Holdings Corp., Union Galvasteel Corp., Pamantasan ng Araullo Inc., Cagayan de Oro College Inc., Bacnotan Industrial Park Corp., P&S Holdings Corp. and Asian Plaza Inc.

Subsidiaries and affiliates include Phinma Property Holdings Corp., Trans-Asia Oil and Energy Development Corp., Luzon Bag Corp., AB Capital and Investment Corp. and Asian Coal Corp.

In 2007, the company reported a net income of P330 million, slightly lower than P336 million in 2006, while revenues grew to P2.79 billion, up from a year-ago level of P2.65 billion.

The company said it remained bullish in 2008 despite the market uncertainties. It said it planned to evaluate opportunities in oil exploration and the privatization of the power sector.

Through its newly formed subsidiary, Trans Asia Gold and Mineral Corp., Bacnotan also plans to pursue opportunities in the mining sector. Jenniffer B. Austria

Source:http://www.vnunet.com/itweek/news/2208453/nasscom-blow-offshoring

UK firms could find it more difficult to obtain offshored IT services as the Indian national software body this week advised local firms to shift their focus to the domestic market.

The Roadmap 2012 report from the National Association of Software and Service Companies (Nasscom) and consulting firm Everest Group revealed that India’s domestic industry for business process outsourcing (BPO) has increased by 50 per cent in the last five years. Further predicted growth in this area is likely to have a significant impact on the current offshore model, which places India as the main outsourcing destination of choice.

Outsourcing consultant Richard Sykes said that if India focuses more of its efforts on building up its domestic BPO market, there will be less resources and people skills to devote to the international arena. Although firms supplying the domestic market could hire graduates without English language skills, he added that this is unlikely because graduates trained with language skills tend to be of higher quality.

The report revealed that there is a shortfall of one million skilled graduates in the current Indian BPO market, while it predicts five-fold growth for the industry over the next five years that will require another two million new jobs. Nasscom is also urging stakeholders to encourage the growth of domestic BPO in order to enhance the competitiveness of the Indian industry.

Sykes said until now the country’s domestic BPO market had been largely neglected by Indian providers, and although it might mean a skill shortage, Sykes welcomed the recognition Nasscom is giving to the domestic space.

“The growth of the domestic industry has caught the Indian BPO providers off mark because they were so focused on developing their offshore capabilities. This has meant the industry has been picked up by multi-nationals,” Sykes said.

Eric Simonson, managing principal of Everest’s research institute, supported this view, citing IBM’s dominance in the Indian domestic services market. He added that although some Indian providers such as Wipro and HCL have concentrated their efforts in the domestic space, many others such as Infosys have mainly focused on the export arena.

Source: www.earthtimes.org

Singapore - Developing a strong global sourcing and delivery strategy is the top concern of IT executives in the Asia-Pacific region this year, according to a study published on Monday. Research agency IDC said global delivery includes functions such as business process outsourcing, IT outsourcing and project-based services.

“It’s important for companies because it allows them to benefit from cost arbitrage and economies of scale,” The Business Times quoted IDC’s Philip Carter as saying. “It allows companies to achieve optimal business outcomes without the restriction of geographic boundaries.”

Domestic markets could be slow to gather momentum, particularly in developing nations, said Jenna Griffin, IDC senior analyst.

“Having service providers capable of offering both onshore and offshore services generates a stronger growth trajectory within the domestic market as a whole,” she said.

Some of the key challenges that companies face embarking on global sourcing strategies centre around service levels, and ensuring that the desired business outcomes are met, IDC said.

“This makes the selection of both global delivery players and locations vital to the success of the project,” Carter, IDC’s Asia-Pacific’s associate director, told the newspaper.

“The region represents a pot of gold for innovative vendors, but there are also significant pitfalls to trip those who fail to deliver on customer satisfaction and cost efficiency,” Griffin added.