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Online Information 2010 London, 30 Nov – 2 Dec
Outsourcing of Information Services to India: Challenges and Chances for Western Information Professionals
www.bauerbusinessresearch.com
Birgit Bauer
Bauer Business Reserach, Marktanalyse, Marktinformationen, market research, Recherchetraining, Internettraining,
Page 2 © 2010 Bauer Business Research
Knowledge Process Outsourcing (KPO) =
outsourcing of complex, judgment intensive, information-related work
Services
* Depending on definition
Financial, Investment and Insurance Research & Analytics Business and Marketing Research & Analytics Legal & Intellectual Property Research & Analytics Human Resources Research & Analytics Writing & Content Development and Publishing Services Others* Data Management & Analytics, Education & Training, Pharma R&D,
Game Design & Animation, Marketing & Sales Support, Engineering Services, ….
Page 3 © 2010 Bauer Business Research
1995
2000
2005
2010
2015
Early KPO captives
Rise Indian KPO vendors
Source: BBR analysis, including information from CGGC, NASSCOM, IDC, EVS, TPI, KPMG, KPO vendors
KPO follows ITO with 10-year time lag
Page 4 © 2010 Bauer Business Research
Integrated Vendors
Indian KPO Companies
Focused KPO Players Captives
BPO
BPO
and others … and others …
BPO
and others …
Page 5 © 2010 Bauer Business Research
Offshoring Models
SMEs Large companies
Captives KPO Vendors
Dual Sourcing Multi Sourcing
Spin Off
Dual Sourcing
Source: BBR, EVS, TPI
Page 6 © 2010 Bauer Business Research
Global Delivery – Offshore, Nearshore, Onshore
India Demand for offshore services
Page 7 © 2010 Bauer Business Research
Global Delivery – Interlinked Global Delivery Centers
India Demand for offshore services
Page 8 © 2010 Bauer Business Research
Other/Emerging KPO Countries
Source: BBR analysis including information from Datamonitor, Everest, KPMG, Gartner, AT Kearney, Tholons, Brown-Wilson, KPO vendors
Demand for offshore services India, KPO leader Other/emerging KPO countries Other top offshoring countries Demand and offshoring countries
Page 9 © 2010 Bauer Business Research
Overview – Current Trends
1995
2000
2005
2010
2015
India still preferred location + global competition SMEs become clients Multi shoring, multi sourcing Consolidation Captives remain, third-party providers scale up Growth continues
Early KPO captives
Rise Indian KPO vendors
Globalization + specialization of Indian vendors KPO market maturing
Source: BBR analysis, including information from CGGC, NASSCOM, IDC, EVS, TPI, KPMG, KPO vendors
Page 10 © 2010 Bauer Business Research
Offshoring to India – Strengths and Weaknesses
STRENGTHS Cost advantages Offshoring experience Strong technical + language skills Huge educated labor pool Political and social stability Cultural compatibility with UK and US Vendor maturity + specialisation
OPPORTUNITIES
WEAKNESSES Distance (‚black box‘) Cultural differences Attrition Time difference Lacking experience + domain/geographic expertise Language (English, accent/sound quality)
THREATS
Page 11 © 2010 Bauer Business Research
Offshoring to India – Opportunities and Threats
STRENGTHS OPPORTUNITIES Increased efficency, focus on core competency Peak load absorption Additional offerings or better quality Cost advantage Minimized delivery time Global partners (geographic/language expertise)
WEAKNESSES THREATS Risk of losing control and transparency Risk of inconsistent quality Risk of losing core competency or intellectual
property Risk of lower flexibility Competition
Page 12 © 2010 Bauer Business Research
Info Pros Survey: +40% source out, majority gets value
Outsourcing > 1 year26 %
Outsourcing < 1 year15 %
Never considered17 %
Currently not outsourcing42+17= 59 %
Graphs: BBR Source: FreePint and Everest, 2009
Research main outsourced knowledge service Very satisfied with results
and relationships Majority would choose
outsourcing again Most work done in house
Outsourcing Organisations:
Quality and cost concerns But: majority had no poor
past experience
Not Outsourcing:
US32%
UK39%
EU11%
Other18%
Senior management actively interested, teams less
Page 13 © 2010 Bauer Business Research
Develop outsourcing strategy (evaluate provider/industry/country factors, projects/single set-
up/team, global delivery, milestones, communication structure)
Have realistic expectations (saving estimates, set-up time, productivity gains)
Start small (pilot, low-risk work)
Define and monitor deliverables, quality parameters, schedules
Be aware of cultural differences (politeness, diwali, calls, …)
Put everything into writing
Look at the offshore company as a partner!
Tipps for Offshoring to India
Page 14 © 2010 Bauer Business Research
‚The best companies outsource to win, not to shrink‘ … ‚to innovate faster‘ … ‚to grow larger, gain market share‘ … ‘not to save money by firing more people.‘
T. L. Friedman ‚The World is Flat‘
Page 15 © 2010 Bauer Business Research
Birgit Bauer Bauer Business Research e.U. Mariahilfer Straße 89/17 1060 Vienna / Austria [email protected] www.bauerbusinessresearch.com
Contact
Bauer Business Reserach, Marktanalyse, Marktinformationen, market research, Recherchetraining, Internettraining, Suchmaschinen, Gründung, Businessplan