Outsourcing Industry Update

by: Outsourcing Insider

The IT Industry is riding the wave of change in all fronts from operations upgrades and expansions to more adverse developments.

Outsourcing giants China and India take the lead in this revolution. According to findings by the BDO 2010 Technology Outlook Survey, China ranks as the number one preferred outsourcing destination for both current and future markets. After China are Southeast Asia and India. According to Dell Services (NASDAQ: DELL) estimates and a KPMG report, Asia would be starting the reversal of the IT outsourcing trend as more western companies have found it cheaper and better to invest in eastern markets such as China and India. Even countries in the east have started to outsource their IT needs, and according to some analysts Asia will account for 26.3 percent of the global consumption of IT and business process outsourcing services in the next decade, up from nearly 20 percent currently. In fact, with the expected rise of the outsourcing industry, Asia’s chip makers are also expected to see improvement in their earnings.

Not to be outdone, companies in the US have also have taken steps to bolster cost savings by local outsourcing such as Qwest Communications International Inc. (NYSE:Q) which recently opened its new Washington area facility; Staples, Inc. (NYSE: SPLS) who recently expanded to provide IT outsourcing services along with its tech supplies and equipments for small services; and Ryla, Inc. who will be providing call center support for the U.S. 2010 Census.

The community has taken time to recognize leaders in the field with the recent awarding of IT Leaders, such as Family Dollar Stores, Inc. (NYSE:FDO) from the US, Luxoft from Eastern Europe and NASSCOM from India, have all been inducted into the International Association of Outsourcing Professionals (IAOP) Outsourcing Hall of Fame for their contributions to the industry and society. Convergys (NYSE: CVG) also won two awards for its innovative solutions for performance and operations.

With the recovery improving the economic environment, IT projects that have been held back are getting funded but many are still very mindful of cost savings. This is evident in markets like the U.K. where a recent survey showed that half of U.K.’s IT firms plans to offshore jobs with 10% of the respondents preferring India. U.K.’s Department for Work and Pensions awarded an outsourcing contract to Fujitsu (OTCPK:FJTSY) to provide them 140,000 desktop devices.

U.S. Chief Financial Officers for technology companies see competition and government regulation as important factors in defining the landscape of the industry. While it’s getting to be more cutthroat out there largely due to tighter budgets, this is not an impediment for availing of the best services and products they can afford.

Disclosure: No position