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IDC Study - Offshoring boom to accelerate in 2005 (23rd January 2005) |
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| Outsourcing
Services |
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Accounting
& Finance |
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Financial Accounting |
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General Ledger |
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Accounts Payable |
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Accounts Receivable |
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Billing |
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Payroll |
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Bank Reconciliation |
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Financial Analysis |
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Budgeting & Forecasting |
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Tax
Preparation Services |
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According to a study by research firm IDC (New
Delhi), offshore activity will accelerate during 2005 as large service
providers will expand offshore presence in India through ''cross-border''
acquisitions and organic investments in cities like Hyderabad, Pune,
and Chennai, which offer suitable infrastructure.
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| Main Highlights of the Study: |
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| 1. |
Expansion
will be via organic investments in key locations, including India,
China, and Latin America, as well as through cross-border acquisitions
that can support BPO or IT outsourcing opportunities. |
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| 2. |
Regarding India, cities
that can offer suitable infrastructure and workforce, such as Hyderabad,
Pune, and Chennai, will attract an increasing share of
investment at the expense of the established centres, such as Bangalore
and Delhi, which will need to be bypassed due to stresses from rapid
growth, such as attrition, infrastructural challenges and overhyped
conditions. |
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| 3. |
Offshoring
will increase as the industry races to lower its cost structure
and improve its efficiency. The industry will continue to shift its
capabilities and offerings closer to business process and value through
greater focus on business process outsourcing (BPO). |
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| 4. |
The focus
of offshore will be increasingly placed on BPO processes.
These include call centre, finance and accounting as well as remote
infrastructure and application management. |
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| 5. |
Among key offshore locations,
Dalian in China, will face growing pains,
particularly for voice-related services as the pool of linguistically
qualified (English, Japanese, and Mandarin) speakers is soaked up,
pushing costs up and resulting in searches for alternatives in Northern
China. Additionally, in China, Shanghai is experiencing significant
pressure, leading to increased investments in centres such as Hangzhou.
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| 6. |
The United
States will continue to dominate in the magnitude of leveraging
offshore, while in Western Europe, offshore sourcing will remain a
small proportion of service delivery in 2005. |
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| 7. |
Independent
Software Vendors (ISVs), particularly midsize, will look
to increase partnership activity with offshore players. Through these
partnerships, ISVs will gain access to lower-cost delivery models
and potential new markets. |
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| 8. |
The study also notes that
the declining growth rate of Indian
software exports was attributed to the growing share of offshore development
as compared to on-site services. |
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