Global Outsourcing

Europe has emerged as the largest outsourcing market in the world (Source – TPI).

Key points –
1. Total global outsourcing contracts awarded Jan 2007-Sept 2007 = EUR38.2bn (about RM180bn)
2. Europe’s share of outsourcing market = 56% (up from 37%)

Emerging trends
1. China predicted to overtake India by 2011
2. Major offshore outsourcing providers – Brazil, Russia, India, China, Mexico (the BRICM countries)
3. Small scale person-to-person (P2P) outsourcing industry may also take-off (eg tutoring, translation services, writing/editing, researching, etc)
4. Rising energy prices and environmental concern may impact outsourcing decisions and choice of partners
5. Virtual worlds (eg Second Life) and social networks (eg Facebook) may stimulate market growth
6 According to a McKinskey report, India will face a shortage of 1 million skilled people in the IT and Business Process Outsourcing (BPO) sectors by 2010

Why outsource?
1. Companies can save 30-40 of their cost by outsourcing
2. Most companies are driven to outsourced to offshore centres by rising cost and competitiveness
3. Other drivers include lack of internal skills and expertise, and temporary nature of requirements (eg project based)
4. 1 out of 7 outsourcing jobs are leaving India due to dissatisfaction with quality
5. India is predicted to win only 2% of the global BPO market of EUR200bil


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