Are you ready for offshore outsourcing?

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Are you ready for offshore outsourcing?

Nick Huber
The European market for offshore outsourcing will grow by more than 40% in 2003, according to analyst firm Gartner.

Gartner believes that offshore outsourcing is a "must do" for IT directors in 2003 and said it should become a standard strategy for European companies in the drive to reduce costs and maintain a high-quality service.

"Access to high-quality staff with key skills, lower costs and the ability to utilise 24x7 support services, means enterprises can continue to improve service levels while maintaining healthy margins," said Ian Marriott, research director at Gartner.

In the UK blue-chip companies such as Royal & Sun Alliance, Sainsbury's, Asda and British Airways have signed offshore outsourcing deals. Recently, however, offshore outsourcing has become a contentious issue, with unions raising concerns over UK job losses.

Last year insurance company Prudential was forced to water down plans to transfer its call centre operation to India in response to union concerns over the scale of redundancies.

This was followed last month by protests from telecoms workers against BT's plans to open two Indian call centres - in Bangalore and Delhi - employing 2,200 people by 2004.

When devising an offshore outsourcing strategy Gartner advised companies to follow a three step-plan: consider the political stability of the country offering the service; the capability of the supplier; and whether to move the service to an offshore or near-shore location.

Rival analyst group Meta has, meanwhile, urged caution against the temptation for some organisations to seek ever-cheaper locations for offshore outsourcing. In a briefing paper, Offshore Outsourcing: Beware the "China Syndrome", Meta analyst Kip Martin said, "The perception is that Indian outsourcing providers have matured, and prices are going up.

"China has a large population, with a large pool of technology skills and low labour rates. So, the instinctive response is, why not just shift everything to China, and keep prices down?"

Meta suggests users adopt a broader cost-benefit analysis of both price and other factors affecting the probability success.

"Instead of focusing on China, India, Vietnam, the Philippines, or any other specific outsourcing location," Meta said, organisations should "focus on the supplier".

Capabilities vary widely among different offshore service providers, the research organisation noted. "Competitive bidding should always include a mix of offshore providers, domestic providers with offshore delivery capabilities and providers proposing domestic delivery," it advised.

Related Topics: IT outsourcing, VIEW ALL TOPICS

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