There is a recent, but very strong tendency for companies to focus on what they do best, their core business. This follows a previous tendency of vertical and horizontal integration that has led big companies to acquire skills and capabilities distant from their area of specialisation. Sometimes, it has been profitable and has allowed companies to stay on the market and grow, but in most cases there has been an exaggeration that has led to inefficiency, and global costs increase. After a global economic crisis that has led to heavy cost reduction programs in any industry, best practise companies are now returning to focus on their core business externalising peripheral activities. This request for externalised service has led to the empowerment of the outsourcing Industry, that has developed widely its offering. The main driver in favour of the outsourcing of an activity is a cost reduction for the company, that outsource its non-core activities. There are some secondary advantages such as, increase of the quality level, flexibility and scalability and this is explained by the fact that the activity outsourced, is the core business of the outsourcer and there is a service level agreement between the two parties that set the rules of the game.
[...] There's been a great deal of interest in the use of offshoring. Last year, the main focus was on labour arbitrage, ensuring that the same business functions could be done for lower prices in a different geography. Unfortunately, history has shown that labour arbitrage only works for a short period of time. In the early 1990s, it was Ireland and The Netherlands that benefited, but the burgeoning economies of both countries soon drove salaries to a point where cost savings were no longer noticeable. [...]
[...] Revenues from the export of India's BPO services are expected to increase from 19% in 2002 to 27% by 2008, as a proportion of the total revenues from export of IT services from India. Various tax incentives are stimulating India's BPO industry. The Indian government has provided a ten-year tax holiday for IT service companies in 2000. As a result of this tax break, the effective tax rate for most of these companies was reduced from the normal 36%-plus to around 15% currently. For export-oriented firms this rate effectively is 0%. [...]
[...] To counter wage increases, many offshore outsourcers are implementing large team sizes and long-term projects to help maintain utilization levels at above 75 percent. With larger teams comes the ability to include new college graduates in the mix, enabling them to train on the job. Today, countries like India should work on creating an identity for themselves, by creating a brand image of delivering good quality work and not merely as "Low cost labour provider".They should foray into areas where they have an expertise and buid upon it. [...]
[...] It is important to know the proper Indian names of these cities, especially for foreigners who may interact with political leaders and bureaucrats for developing some business in India. Tier these cities make the shortlist of most companies, because they offer the best workforces, infrastructure, access and lifestyle. Tier these cities have most, if not all, of the qualities of the Tier 1 cities; For various reasons, however, they have not achieved the same level of prominence. These cities will likely gain Tier 1 status soon by joining or replacing Tier 1 cities. [...]
[...] This prevents the Indian offshore industry from moving up the value chain quickly enough to continue dominating the global sourcing service market. Fortunately, IT forces are much more involved by the positive trend of education (for example, knowledge in computer systems or call centers, in accountancy, Strategic rationales for business outsourcing 4 DESTINATION INDIA 4.1 What to Outsource in India Evaluation Factors Infrastructure Indian cities' infrastructure is not comparable to most major Western cities. The quality of the roads, power supply and the other infrastructure may vary from district to district. [...]
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