Outsourcing – The Inevitable Market Realignment

Author :  S. Sadagopan, Head-Consulting & e-Business, Satyam

The article emphasizes the importance of Outsourcing being basis of all trade and as a mainstream business practice delivering tangible business benefits to enterprises like cost savings, flexibly & scalability.  The article also highlights the multiple approaches to work with offshoring vendors, the maturity of outsourcing and the future measures for value addition. It also focuses on the evolving trends in establishing captive centers outside US and the main drivers to set up would be cost saving and IP Protection but these centers would be short-lived for scalability issues, competitiveness, technology gaps and process deployments.

The article also underlines the issues like job loss in US, los of significant competencies & knowledge edge. The author brings in the findings of Paul Strassmann on the ‘hollow’ economy; states the findings of McKinsey on the profits made by US for every dollar spent, and also interpret Daniel Drezner’s findings on effects of outsourcing to the employed Americans. The author analyzes the reason for evolution of captive centers as to lower their costs and to adopt global delivery models to demonstrate better value for money. He has also compared India head quartered companies and traditional IT services companies.

The author summarizes his views on offshore outsourcing as a tectonic shift, which may affect the western economy and is a market place realignment that cannot be stopped.