Top 5 Emerging Outsourcing Destinations
The $400 billion outsourcing industry is going places. Recent years have witnessed the emergence of a number of big outsourcing destinations, including India, China, Philippines, Russia, and Hungary. However, India consistently maintains its supremacy in outsourcing.
Outsourcing, which has become $400 billion industry, is growing at a compound annualized growth rate of four percent. Gartner, which is a leading global IT research and advisory company, has predicted that the revenue of the outsourcing sector will be reaching $450 billion by 2015. As outsourcing is going places, five big outsourcing destinations have emerged, including India, China, The Philippines, Russia, and Hungary.
Let's find out how these top outsourcing destinations fare in the industry:
China
China's Dalian city has a software park with 400 businesses, which have the potential to boost a sale of 20 billion Yuan per annum. Encompassing IT, BPO, and KPO, China's outsourcing sector has big investors, such as Convergys, Accenture, IBM, HP, and AT&T. Some of China's indigenous companies, such as Neusoft, Dextrys, Bleum, and Agumentum, have made a presence in the global market.
The Philippines
The Philippines has emerged as a big business process outsourcing (BPO) destination. BPO has grown 46% per annum since 2006. According to the Business Processing Association of the Philippines (BPAP), revenues of the IT-BPO industry will reach $16 billion this year. Call centers include 80 percent of the total BPO industry in the country. Philippines have high literacy rate and a large talent pool. Being a former US colony, it has English as the medium of instruction in schools and colleges. That is why big US companies are shipping BPO, especially call center, jobs to Philippines.
Russia
Russia is the third leading country after India and China for outsourcing software. It controls three percent of the software outsourcing market. Government's support in the form of creation of special zones and presence of global technology firms, such as Intel, Google, Motorola, Sun Microsystems, Boeing, Nortel, Hewlett-Packard, SAP AG, are the reasons why Russia is a leading software exporter.
Hungary
Hungary has carved a niche in outsourcing by catering to the market of IT and IT-enabled services. Global firms such as SAP, Ericsson, Siemens, and HP-Compaq are investing in Hungary. Software and IT services research firm Pierre Audoin Consultants (PAC) estimates that Hungary's IT sector represents 24% in total IT expenditure vis- -vis a median level of 34% in Western Europe. Considering the total IT expenditure of 24% in 2009, PAC has estimated that Hungary's share in IT sector will reach around 27% in 2013.
India
India has emerged as the number one choice of around 85 percent of US firms. In early 2000s, India was moving at an annual growth rate of 40-50 percent. India's vertical sectors are comprised of financial services (41%), high-tech/telecom (20%), manufacturing (17%), and retail (8%). As per an estimate, 2.2 million Indian professionals were working in IT and BPO sectors in 2009.
Let's understand what makes India tick. India provides the Western firms with high-quality professionals whose economic cost is relatively cheaper than their competitors in other countries. India has Information Technology Act 2011 in place to ensure transparency in the dealings of vendors. India's modern infrastructure includes special economic zones (SEZs) and software technology parks for the development and export of software. Unlike China and Russia, Indian professionals are capable of writing and speaking English just like native speakers of the US and the UK. India, which is a highly diversified economy, provides a range of expertise - from IT and aerospace to LPO and legal services - to its worldwide clientele. Indian government has a pro-outsourcing stance. It has 12-hour time zone difference, which enables it to offer quick turnaround and to launch products and provide services swiftly.
Looking at the latest trends in outsourcing, we can conclude that outsourcing has a long way to go.
Outsourcing, which has become $400 billion industry, is growing at a compound annualized growth rate of four percent. Gartner, which is a leading global IT research and advisory company, has predicted that the revenue of the outsourcing sector will be reaching $450 billion by 2015. As outsourcing is going places, five big outsourcing destinations have emerged, including India, China, The Philippines, Russia, and Hungary.
Let's find out how these top outsourcing destinations fare in the industry:
China
China's Dalian city has a software park with 400 businesses, which have the potential to boost a sale of 20 billion Yuan per annum. Encompassing IT, BPO, and KPO, China's outsourcing sector has big investors, such as Convergys, Accenture, IBM, HP, and AT&T. Some of China's indigenous companies, such as Neusoft, Dextrys, Bleum, and Agumentum, have made a presence in the global market.
The Philippines
The Philippines has emerged as a big business process outsourcing (BPO) destination. BPO has grown 46% per annum since 2006. According to the Business Processing Association of the Philippines (BPAP), revenues of the IT-BPO industry will reach $16 billion this year. Call centers include 80 percent of the total BPO industry in the country. Philippines have high literacy rate and a large talent pool. Being a former US colony, it has English as the medium of instruction in schools and colleges. That is why big US companies are shipping BPO, especially call center, jobs to Philippines.
Russia
Russia is the third leading country after India and China for outsourcing software. It controls three percent of the software outsourcing market. Government's support in the form of creation of special zones and presence of global technology firms, such as Intel, Google, Motorola, Sun Microsystems, Boeing, Nortel, Hewlett-Packard, SAP AG, are the reasons why Russia is a leading software exporter.
Hungary
Hungary has carved a niche in outsourcing by catering to the market of IT and IT-enabled services. Global firms such as SAP, Ericsson, Siemens, and HP-Compaq are investing in Hungary. Software and IT services research firm Pierre Audoin Consultants (PAC) estimates that Hungary's IT sector represents 24% in total IT expenditure vis- -vis a median level of 34% in Western Europe. Considering the total IT expenditure of 24% in 2009, PAC has estimated that Hungary's share in IT sector will reach around 27% in 2013.
India
India has emerged as the number one choice of around 85 percent of US firms. In early 2000s, India was moving at an annual growth rate of 40-50 percent. India's vertical sectors are comprised of financial services (41%), high-tech/telecom (20%), manufacturing (17%), and retail (8%). As per an estimate, 2.2 million Indian professionals were working in IT and BPO sectors in 2009.
Let's understand what makes India tick. India provides the Western firms with high-quality professionals whose economic cost is relatively cheaper than their competitors in other countries. India has Information Technology Act 2011 in place to ensure transparency in the dealings of vendors. India's modern infrastructure includes special economic zones (SEZs) and software technology parks for the development and export of software. Unlike China and Russia, Indian professionals are capable of writing and speaking English just like native speakers of the US and the UK. India, which is a highly diversified economy, provides a range of expertise - from IT and aerospace to LPO and legal services - to its worldwide clientele. Indian government has a pro-outsourcing stance. It has 12-hour time zone difference, which enables it to offer quick turnaround and to launch products and provide services swiftly.
Looking at the latest trends in outsourcing, we can conclude that outsourcing has a long way to go.
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