IT outsourcing is always on topic for business owners looking for an inexpensive way to get IT services done. CIO.com discusses the newest topics surrounding the offshore outsourcing issues. Check out some of the article below.
Setting up offshore IT services and business services subsidiaries has once again become a preferred route for multinational companies wanting to tap talent in low-cost locations, analysts said. The subsidiaries are known in the outsourcing industry as “captive centers” because they meet the in-house services requirements of companies.
The focus of these centers has shifted from mere cost-cutting to innovative development and building deep business expertise which local outsourcers are not always able to provide, according to a report this week by Forrester Research (FORR). Companies are adopting a hybrid model for offshoring that combines captive centers with outsourcing to local service providers, it added.
Captive centers continue to be a key element of the global sourcing strategy of organizations, according to Everest Group. Some 62 new captive centers were set up and 70 existing facilities were expanded in 2010, up from 47 new centers and 67 expansions in 2009, Everest said. These centers came up mainly in Asia, it said.
When companies like Citigroup (C) and UBS started selling off their BPO and IT services operations in India in 2008 and 2009, it appeared that companies were increasingly going to pull out of offshore IT and BPO operations, and outsource their work to third-party providers, as they focused on their core business.
In 2008 and 2009, 25 services subsidiaries were sold off, according to Everest.
Forrester said in a report in 2007 that the majority of the reasons firms cite for building their own facility offshore instead of outsourcing to a third party are flawed. As a result of lack of management support, spiraling costs, skyrocketing staff attrition, and a lack of integration, more than 60 percent of the captive centers in India alone were struggling, it added.
In 2007, the analyst predicted that some captive operations would close down or sell out, while others would enter into agreements with service providers to take over their staff in return for work. Some companies with captive centers would however look at a hybrid model that included both captive centers and outsourcing to third-party providers.
Go to CIO.com for more information. How do you feel about outsourcing IT support? Does the work come back well and effective? Would you rather IT support be done in cities such as Boston?
