Thursday, August 27, 2009

Outsourcing Services back in business

The global outsourcing industry started showing signs of recovery in the second quarter ended June although many companies now prefer
captive operations to third-party outsourcing, shows a recent study.

Outsourcing transaction volumes increased 10% quarter-on-quarter even as third-party BPOs continued to struggle, according to the study by Everest Research Institute, an independent research and analysis organization.

“The paralysis of decision making which had almost crippled the industry late last year is now easing up. More and more pent-up transactions are being announced,” says Gaurav Gupta, principal and country head of Everest Group.

The quarter saw 27 new captive centers coming up around the world, against 21 in the first three months of the year. Nine new centers came up in India including those of Barclays, Boeing, Credit Suisse and Honeywell.

“Companies are being cautious. They are being more thoughtful and strategic as they go in for the captive strategy rather than expand into third party model in the current environment,” Mr Gupta said.

Nearshoring too continued to gain ground with 11 new centers announced in East Europe. Latin America also witnessed significant increase in market activity with eight new centers coming up.

According to the report, annual contract value (ACV) has also increased by 10% from the last quarter. Despite the downturn, BFSI vertical grew 26%. Some of the large deals in this sector are AXA Sun Life’s 15-year contract with Capita worth $805 million and National Bank Financial seven year contract with IBM worth $367 million.

Everest also cites recent geopolitical and macroeconomic events in Argentina and proposed amendments to the US tax code to pose potential medium-term risks and thus require monitoring.

Wednesday, August 26, 2009

Indian offshore call centers

Offshore call centers are expected to continue growing, despite the fact that some companies are bringing their customer care services back home.

Last week, Lloyds TSB became the latest British company to decide to reduce its use of Indian call centers. But earlier this week, Barclaycard announced that it is moving more work to Mumbai, and Data monitor contact center outsourcing analyst Peter Ryan said it is shortsighted to predict the end of customer service outsourcing.

Investment in offshore markets will continue for some time, as companies attempt to capitalize on lower costs and high-quality client care, Ryan said, predicting that more industries "than ever before" will be looking to adopt outsourced customer services.

This year "will be one of the most challenging in contact center outsourcing's history," Ryan said.

Ryan said, however, that call center operations will have to invest in Web-chat, SMS and e-mail technologies if they want to attract new customers. They also must offer systems tailored to specific vertically integrated industries, he said.

Companies will be looking for suppliers that can satisfy demand from multiple contact channels rather than just voice, he added.

Data monitor predicts that outsources will start to focus on higher-value services--such as business-to-employee care and technical support--that are likely to lead to higher revenues and profits over the long term.