Now, outsourcing gets personal

Source: Timesofindia

It's the latest buzzword in outsourcing and soon it may touch your life personally. For outsourcing is fast transforming itself from being a multi-people oriented activity to an individual one.

And the new word for it is PPO or person-to-person outsourcing. Already, it's generating revenue worth $250 million annually worldwide, and by 2015, it's expected to be worth $2 billion.

Interestingly, in India, PPO generates revenue worth $65 million annually, but it's expected to touch $500 million by 2015. An eight-fold increase in nine years at a cumulative growth rate of 26%. Although still in its infancy in India, PPO will take another 3-4 years to establish here.

So what's PPO? It consists of those services that are offshored by individual entrepreneurs who are trying to bootstrap their new organisation as efficiently as possible. With technology advances and the growth of the Net, small offices, home businesses and freelancers can utilise PPO services and generate business.

Currently, PPO includes services like online tutoring, website development, graphic designing, software development, writing and translation services, accounting and tax preparation services, architectural services, etc. A paper by Alok Aggarwal, chairman, Evalueserve, a global research and analysis firm, predicts as the trend catches up, more and more consumers will be able to offshore jobs at fairly low cost and deliver on time.

At the moment, there are around five lakh vendors and freelancers from various low-cost countries in the PPO space. Out of these, approximately 30% are from India.

As of now, PPO is being done under two business models worldwide. First, direct interaction model where the individual client signs a contract directly with the vendor, who in turn either hires people on a full-or part-time basis or sub-contracts the job.

Although payments can be made through cheques or wire transfers, as the cost of the project is fairly low, clients usually pay through credit cards.

The second is the online marketplace model. Here, vendors enrol in an online marketplace by paying a monthly subscription fee, plus a fixed percentage of the revenue if they win the project. When an individual posts requirements for a new project in the online marketplace, that's communicated to the selected vendor/freelancer.

The client then awards the work to the appropriate person.

Global IT Spending To Reach $1.48 Trillion In 2010, IDC Says

Source :Informationweek.com

Companies are expected to increase spending on IT services at a compound annual growth rate of 5.8% to reach $587 billion at the end of the decade.

Global IT spending is projected to increase at a compound annual growth rate of 6.3% to reach $1.48 trillion in 2010, a market research firm says.

Broken down by segment, worldwide software spending is expected to reach $327 billion in three years, reflecting a compound annual growth rate of 7.7%, International Data Corp. said Wednesday. The hardware market is projected to reach $562 billion by 2010, driven mainly by "robust" spending from the home business and consumer, communications, and government sectors. Specifically, IDC sees more money spent on volume servers, peripherals, storage, and networking equipment worldwide.

Companies also are expected to increase spending on IT services at a compound annual growth rate of 5.8% to reach $587 billion at the end of the decade, IDC said. Sectors expected to have the highest demand are government, banking, and discrete manufacturing.

The spending projections are contained in an IDC study called Worldwide IT Spending, 2006-2010 Forecast Update by Vertical Market: North America, West Europe, Asia Pacific, and Rest of the World.

Report: Offshoring to Have No Sudden Bad Effects

Source :Eweek.com

While offshore outsourcing is expected to affect wages and employment in developing countries, it won't have any sudden negative impact on developed countries' economies.

The report "Sizing the Emerging Global Labor Market" attempts to find a middle ground between those who argue that nearly all service jobs will eventually move from developed countries to low-wage ones, and those who feel that rising wages in cities such as Bangladore and Prague indicate that supply of offshore talent is already running thin. It attributes these rifts to a confusion surrounding the relatively new global labor market.

In analyzing the potential availability of offshore talent in 28 low-wage nations as well as the likely demand for it in service jobs across eight of the develop world's sectors--IT services, packaged software, retailing, financial services, health care, insurance and pharmaceuticals--the report found that these sectors provided about 23 percent of the nonagricultural jobs in developed country.

Demand for Offshore

The report estimates that 11 percent of these services jobs around the world could be carried out remotely. However, this number can be higher or lower depending on the sector.

The retailing sector, for example, with its large number of customer-facing jobs, only stands to be able to offshore 3 percent of its jobs by 2008, but being such a huge employer, this would be equivalent to 4.9 million positions. The packaged software industry, however, stands to remotely undertake almost half of its jobs in the same time frame, but being a smaller industry, this would be only 340,000 positions.

Offshore Talent Supply

The report argues the developing countries produce far fewer graduates suitable for employment by multinational countries than the raw numbers suggest, though it is quickly growing. The report found 33 million experienced young professionals in developing countries, versus 15 million in developed nations, and 7.7 million in the United States alone. Language gaps, an emphasis on theory versus practical knowledge and a lack of cultural fit are considered hindrances to actually employing much of this offshore talent.

The wave of Pharmaceutical Outsourcing Rocks India

If you've been under the illusion that outsourcing to India is limited only to software development and IT, it's time to sit up and take notice. Outsourcing to India is no longer taking baby steps in the field of Information Technology, but has stepped beyong it's boundaries to encompass various fields, including Pharmaceuticals.

Global Pharmaceutical companies that find themselves in financial need, and wanting in time, to carry out the various functions that make for successful working of a business, have made overtures to India for their research-and-development activities.

The only concern the Indian Government holds is that India must not be turned into a testing ground for other countries. Any opening or initiating move toward negotiations and a new relationship, must be in accordance with the bio-ethical guidelines, while steering clear all vagrant methods.

India is home to as many resources as 16,000 hospitals, 171 medical colleges and a considerable grouping of patients. These together make clinical trials a matter of brief duration, hence saving time and money. Japanese pharmaceutical company Eisai Co Ltd is one of the first to take advantage of the opportunity at hand. An investment of US$2.2 million is devoted to the process of manufacturing and carrying out clinical trials in India.

With companies looking eagerly to India as a busiess cluster that may provide a resolution for their manufacturing and other needs, the new regulations made effective by the Indian Government may stunt the growth of manufacturing in the pharmaceutical sector, in India. Excise duty on all drugs and medicine will now be payable at their retail price. Untill now, pharmaceutical companies saved on excise by getting their products manufactured on contract basis, so that the duty was being paid on the sale price to the company, and not the sale price to the wholesaler, which exceeds the common degree of profit garnered.

This may be a bitter pill for Pharmaceutical outsourcing, but the scope is much larger and the opportunities are vast. The roadbumps will come and go but the outsourcing industry in India with all the benefits it offers to global conglomerates, is here to stay!