Outsourcing - The Next Phase

Industry analysts have been predicting for months that India's capacity for taking in American outsourcing work is starting to stretch its limits. The government has always taken steps to restrain continuing growth, but now we're seeing the American companies taking action. They are deliberately moving some of their outsourcing capacity to the next-step destinations, such as the Philippines, China and Vietnam.

India's government was right to try to restrict growth, because the resulting rise in costs is now being realized and passed on to the American companies.

Sykes is a large US-based contract center and IT support organization with operations in both India and the Philippines. It has recently announced it will move much of its capacity from India to the Philippines. For a company of this size to make this drastic of a move means the price differential is substantial.

GXS is another global business-to-business service provider who is moving operations with strong customer service components to the Philippines. They have found better economics and results there. They're leaving their product development operations in India. Overall, they feel that this arrangement minimizes risks.

A recent investment decision is further evidence of the growing interest in the Philippines as an outsourcing destination. Ambergins Solutions, a large call center operation, just received an investment of $43.5 million from a Canadian-based global IT solutions provider. A company source said the Asian Pacific region appeared to be the best long-term opportunity of anywhere, including India.

RCG Information Technology is another large IT service provider. They have stated clearly that they do not intend to make India a part of their strategy for the foreseeable future. Instead they have targeted the Asia Pacific region for further expansion and already have a presence in the Philippines. Their analysis revealed that India's prices are rising, due to the overcrowding of clients there. Employees are jumping from one firm to another to get better pay. This is causing overall prices to increase, while skill levels sink. They have found English communications skills to be superior in the Philippines.

Hewitt has begun hiring for its new BPO facility in the Philippines. So has HSBC, the international banking concern. On the flip side it has been reported that Indian nationals working here in the United States are being wooed to go back to India, where demand for their work is high. They are having trouble doing so, however, because their salaries are traditionally so much lower than in the U.S. This, too, is contributing to India's increasing rates, as they start to face the downside of fiscal globalization.

But don't count India out yet. India created the offshore outsourcing model and its continued managerial competency will drive it forward. It still dominates and enjoys a fine reputation and attractiveness worldwide. Its current growth slow-down does not indicate weakness but, rather, great success. If places like the Philippines and Vietnam have not been quite as successful, they are learning from India how to attract their share of quality and sizable outsourcing employers.

Michael Russell Your Independent guide to Outsourcing Article Source: http://EzineArticles.com/?expert=Michael_Russell