The global recovery among financial institutions around the world has brought about a significant rise in the outsourcing of financial services such as accounting, bookkeeping, tax preparation etc. As predicted in the Everest Research Report which came out last February, the Finance and Accounting Outsourcing (FAO) market has now reverted to its pre-recession levels.
Successful growth in the FAO sector has witnessed massive deals among large players such as Genpact, Accenture and IBM and a steady growth among new players who are taking advantage of expected growth in the global financial services sector. Speaking about this trend, Saurabh Gupta, Research Director of Everest, says, “The mature FAO market is getting increasingly competitive with players vying to carve out unique value propositions to differentiate themselves.”
A Virtual Assistant (VA) is an independent, self-employed professional offering remote administrative, technical and other specialized support to businesses on an hourly, project-specific or ongoing basis. Though VA services have become popular over the years, some business owners still have apprehensions regarding the effectiveness of a virtual office assistant.
But if you are a business owner seeking to expand your business, choosing to hire a virtual assistant over a conventional or temporary employee will work out to be a better deal in the long run. Here are the reasons why:
When it comes to software development outsourcing, India, with a market share of 80%, is generally considered as the world leader. But with stiff competition form China, Vietnam, South Africa, Eastern Europe and South America, will India have to have a cause for worry? Not so much, for according to reports by the National Association of Software & Services Companies (NASSCOM), India’s export revenue touched the $56-$57 billion mark last February.
Som Mittal, president of NASSCOM, in a statement on this upward trend, said, “Pent-up demand for IT-BPO services, return of discretionary spending, new business models that encouraged first time buyers, and re-invented value proposition for existing ones, were the key drivers for the industry performance.” Furthermore, with India’s share in the global outsourcing market rising from 51 percent in 2009 to 55 percent in 2010, NASSCOM has predicted India’s outsourcing export revenue to be around $68 billion to $70 billion in fiscal year 2012.
India, at present, enjoys a relatively strong position in the automotive and high-tech telecom engineering services market. According to a recent industry report, the total offshore engineering spend is expected to grow to $150-$225 billion by the year 2020, and India with its huge talent pool and existing experience in engineering services, is well suited to take over the global engineering services industry.
India Emerges as a Key Player
By providing a wide range of engineering services across multiple industries including automotive (hybrid technology), aerospace (avionics and structures), telecom (next generation routers), and medical devices (low cost medical devices), India is looking towards tapping into the $750 billion-a-year global engineering services industry.
Recent research by the National Science Foundation stated that a number of US firms ranging from pharmaceuticals to semiconductors are outsourcing R&D and Innovation, with foreign-based Automotive R&D accounting for nearly 40% of the total R&D among all US companies. India and China rank foremost among suppliers of innovative research and development by providing the complex knowledge that only a broad network of specialists can offer. Here are some of the reasons behind the growing demand for R&D and innovation outsourcing.
Availability of a huge talent pool: Countries like India and China continue to be important suppliers of intellectual property, since they have an abundant supply of talented technical and engineering graduates.Jeffrey Phillips, a senior leader at OVO Innovation says, “Soon, countries like India and China will do what Finland has done – match the US in innovation research and output, no longer following our lead but competing with us for the innovation lead.”
The evolution and maturity of the Indian BPO sector has given rise to yet another trend in the global outsourcing scenario: Knowledge Process Outsourcing (KPO). KPO involves the outsourcing of knowledge intensive services that deal with the creating, sharing, maintaining, tracking and disseminating of knowledge. This industry is not restricted to the IT or ITES sectors only, but also includes other sectors like Intellectual Property related services, Business Research and Analytics, Legal Research, Clinical Research, Publishing, Market Research and many more.
India: The Preferred Destination
India, with its large pool of knowledge workers has the capability to cater to the KPO industry by providing specialized domain workers. Furthermore, the talent available in India is much more affordable. In the Indian context, KPO salaries could be 25-50% higher than those offered to the same domain experts such as Engineers, Doctors, CAs, Lawyers, Architects, Biotechnologists, Economists, Statisticians and MBAs.
The global outsourcing market has witnessed major changes during the past few years. Based on these changes, outsourcing professionals and industry leaders have made a few predictions as to what the trends will be in 2011. Here is a quick look at the top 11 outsourcing trends predicted for this year
1. Increased Political Acceptance for Outsourcing
Greater political backing for outsourcing is expected in 2011, especially after US President Barack Obama’s visit to India in Nov 2010.
During the past decade, India has been leading the global outsourcing industry primarily through its huge pool of IT graduates and English-speaking workforce. However, of late there has been tremendous concern about whether India is fast losing its place as the leader in the outsourcing race or not. ValueNotes, an analyst firm focused on outsourcing, has identified two potential “situations”, which give you an idea about the future of the outsourcing industry in India.
According to a survey conducted by the global consultancy firm PricewaterhouseCoopers (PwC) and Duke University’s Offshoring Research Network, the outsourcing industry in India is likely to transform due to the emergence of new providers. Although India remains the outsourcing market leader, stiff competition is expected from China, Philippines, South Africa, Eastern Europe, Latin America and the Middle East.
Outsourcing is a major business decision that has to be taken after much thought and deliberation. Any company deciding to outsource its business services needs to construct an efficient and stable outsourcing plan after the consideration of a number of factors like, the time required to complete a project, the available expertise, the types of services being outsourced, the capability of the offshore vendor to maintain confidentiality and the current market forecast.
To prevent a possible backfire as a result of outsourcing, a few rules are to be followed during the planning of the outsourcing process.
- Never outsource a core business process:
The core business process of a company is vital and should never be outsourced. According to Simon Muthiora, the executive director of Skills Geographic Kenya Limited, a human resource recruitment company, “Core responsibilities that require experts are not outsourced. A company cannot outsource the services of a chief accountant. You may choose to retain a permanent employee for this and outsource payroll accountants.”
High quality work delivered by Indian BPOs has led to the gradual development of another aspect to global outsourcing: Knowledge Process Outsourcing (KPO). Knowledge Process Outsourcing is information driven and a niche industry that is constantly engaged in the process of creating and dispersing business-centric information. According to a report by GlobalSourcing, the Global KPO industry is worth USD 17 billion, of which India is expected to attract as much as USD 12 billion. The Indian KPO industry plans to mop up this money by growing to a 250,000 strong professional sector, probably one of the largest in the world.
What Makes India An Attractive Destination for KPO Services?
Well, India has a huge English speaking population, technically trained and qualified in a diverse number of sectors. Indian companies deliver high value to companies by providing domain specific expertise rather than mere process expertise. These processes demand advanced analytical and specialized skills from knowledge workers who have extensive domain experience to their credit. In hindsight, outsourcing of knowledge process functions is more challenging than Business Process Outsourcing. Knowledge professionals in India have extensive knowledge of domains such as: