Outsourcing bounces back to India, China

“After fizzling out over the past couple years as companies simply slashed jobs rather than move them, outsourcing is back in vogue,” Forbes.com reported ON Monday citing a new PricewaterhouseCoopers study.

“Cost is still the major factor,” Charles Aird, managing director for shared services practices at PWC, was quoted as saying. “But people are also looking for greater efficiency, better quality and access to talent.”

Competition drives
The list of what’s being outsourced is growing, too, with much of the recent growth being driven by competitors playing catch-up to market leaders that slashed their costs prior to the downturn.

Not everything can be outsourced effectively, though, Forbes said suggesting, “Computer customer service that was outsourced to India, for example, was notorious for alienating customers.”

“Dell eventually brought much of its call-centre support back into the US from India, while Apple has made a point of keeping support within the country in which the calls originate,” it said.

In contrast, application development - a much more complicated skill set - that was outsourced to India has proved to be extremely successful, it said.

There also is a risk that outsourcing some core services can cause damage to a company Forbes said citing Aird: “The key is that you’ve got to tie your sourcing strategy to your business strategy.”

Not everything can be outsourced to the same place. India, which was the first big outsourcing centre, is largely bound by the English-speaking world, Forbes said.
Other countries such as China, with an equivalent-size labour pool; Poland, with about 40 million workers, and others, with much smaller pools of trained workers, are stepping up their outsourcing skills training for non-English-speaking countries, it noted.

Most of these operations are fairly fluid for entry-level positions. Clerical-level staff is in an almost constant state of churn, and goes to the lowest-cost region of trained workers.

Programmers are more valuable, and to prevent poaching, the salaries have risen from about $100 a month in 1994 to about $3,000 a month now in India, Forbes noted.

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