Outsourcing giants China and India take the lead in this revolution. According to findings by the BDO 2010 Technology Outlook Survey, China ranks as the number one preferred outsourcing destination for both current and future markets. After China are Southeast Asia and India. According to Dell Services (NASDAQ: DELL) estimates and a KPMG report, Asia would be starting the reversal of the IT outsourcing trend as more western companies have found it cheaper and better to invest in eastern markets such as China and India. Even countries in the east have started to outsource their IT needs, and according to some analysts Asia will account for 26.3 percent of the global consumption of IT and business process outsourcing services in the next decade, up from nearly 20 percent currently. In fact, with the expected rise of the outsourcing industry, Asia’s chip makers are also expected to see improvement in their earnings.

Not to be outdone, companies in the US have also have taken steps to bolster cost savings by local outsourcing such as Qwest Communications International Inc. (NYSE:Q) which recently opened its new Washington area facility; Staples, Inc. (NYSE: SPLS) who recently expanded to provide IT outsourcing services along with its tech supplies and equipments for small services; and Ryla, Inc. who will be providing call center support for the U.S. 2010 Census.

The community has taken time to recognize leaders in the field with the recent awarding of IT Leaders, such as Family Dollar Stores, Inc. (NYSE:FDO) from the US, Luxoft from Eastern Europe and NASSCOM from India, have all been inducted into the International Association of Outsourcing Professionals (IAOP) Outsourcing Hall of Fame for their contributions to the industry and society. Convergys (NYSE: CVG) also won two awards for its innovative solutions for performance and operations.

With the recovery improving the economic environment, IT projects that have been held back are getting funded but many are still very mindful of cost savings. This is evident in markets like the U.K. where a recent survey showed that half of U.K.’s IT firms plans to offshore jobs with 10% of the respondents preferring India. U.K.’s Department for Work and Pensions awarded an outsourcing contract to Fujitsu (OTC:FJTSY) to provide them 140,000 desktop devices.

U.S. Chief Financial Officers for technology companies see competition and government regulation as important factors in defining the landscape of the industry. While it’s getting to be more cutthroat out there largely due to tighter budgets, this is not an impediment for availing of the best services and products they can afford.

Author: John V.

Last year, the news came out that Satyam had voluntarily reneged on their contract with Punjab & Sind Bank.  The contract was supposed to be for a term of 10 years and was signed in 2006.  The original deal was for the implementation and maintenance of the banks Core Banking System (CBS).   In 2007, Satyam was unable to meet their agreed deadline, incurring a penalty fee that they paid to Punjab & Sind.  Unfortunately for the company, when they next failed to meet the deadline, this time on January 2008, the company had already gone bust, forcing Punjab & Sind to reassess their contract and consider other options.

It was when beleaguered company Satyam was acquired by company Tech Mahindra (NSE:TECHM) on April of the following year, that the decision was made to finally end the contract with Punjab & Sind bank, a decision that was made voluntarily by Satyam and resulted in the company paying for damages resulting from the twice-delayed project.

Lucky now for Punjab & Sind Bank that they have been able to start anew once again with a new ten year contract, this time awarded to Wipro, who interestingly enough, was the second highest bidder back in 2006 after Satyam.  As of now, Punjab & Sind Bank is the only other public sector bank that has not begun the process of implementing CBS, which just goes to show that the bank must have a lot of areas lined up for improvement.

The New Wipro-Punjab & Sind Bank contract was signed last 24th of February, 2010, with the contract emphasizing the significance of the bank’s objective to become an RS 100,000 crore bank by 2011.  As the press release states, “Wipro will be responsible for System Integration, provisioning and management of Finacle core banking solution and enterprise applications.”  Finacle is the core banking, e-banking, Islamic banking, treasury, wealth management and CRM software provided by Infosys (NASDAQ:INFY).

It was lucky for Punjab & Sind that they’ve now been able to rise from the experience and focus on their own company’s improvement.  It’s tough luck for Satyam that the new deal has shifted the focus back to them, calling attention to how they dropped the ball, so to speak, on the supposedly very lucrative deal.  As I said, outsourcing companies are a dime a dozen, but then, if you’re the one who made a mistake, then you can expect all eyes are going to be on you, even now, almost half a year later, and Satyam must still feel the heat.

Author: Audrey B.

Offshore service providers who made significant investments in technology-related matters may have made the right move at the right time. As firms are already taking steps to outsource some information technology functions. One of them is U.S.-based commercial aircraft equipment manufacturer, Spirit AeroSystems (NYSE: SPR), where some of its employees affected by the outsourcing plan will be offered jobs with International Business Machines Corporation (NYSE: IBM) or Hewlett-Packard (NYSE:HPQ) –the providers taking over Spirit’s I.T. work, both of which have operations in Asia. Spirit spokesperson Ken Evans admits to not ruling out additional work that may be sourced out to offshore providers in the future.

A report from KPMG and the Asian-Oceanian Computing Industry forecasts that Asia will account for 26.3% of the total consumption of I.T. and BPO services in the next 10 years. In the last quarter of 2009, Accenture (NYSE: ACN) and Capgemini (Euronext: CAP) expanded their presence in Asia particularly in their I.T. services segment. This proves that clients and partners remain attracted to the abundance of technical skills at a low cost.

KPMG’s forecast may happen in the long-run but for the time being service providers are feeling the recovery at smaller proportions but at a higher volume of job requests. According to IBM and Accenture executives, “IT consultants are probably already feeling it: the start of a rebound in business. But there’s a difference this time. The rebound is coming mostly in smaller deals rather than in gigantic ones… customers are contracting for a higher volume of smaller jobs”.

Small deals comprise a significant fraction of IBM and Accenture’s total revenue stream. So it no longer came as a surprise when Accenture acquired RiskControl, a privately held I.T. consulting company. The acquisition is expected to improve Accenture’s set of risk management services as it tries to get a strong foothold into the I.T.  offshoring market.  Interestingly, technology vendors acquired technology consulting firms at a quick pace in 2009. Others who made a similar acquisition are Affiliated Computer Services or ACS (NYSE:ACS), now a Xerox (NYSE:XRX) company, and Perot Systems (NYSE: PER). I guess they may all be getting ready to get a chunk of the incoming deals.

Author: Kim G.

In the country, we saw a slowdown in the BPO industry which only gained strength during the last part of 2008 and the first half of 2009, before finally kicking off during the second half of the year in anticipation of a full blown recovery. Last year’s revenue grew by 19% and is expected to have increased growth in sales this 2010.

Construction of real estate has also started moving again this year as developers have become increasingly optimistic. Most projects for buildings and offices that were delayed due to financial constraints and cautious decision-making on the parts of the developers are now being revived once again. These projects could open potential office spaces for more outsourcing firms and could lead to further expansion of established companies within the country.

Various companies have already started with their expansions tapping into the RP labor pool. Among these companies are StarTek (NYSE: SRT), Australian BPO firm Salmat (ASX: SLM) and Citigroup (NYSE: C). But the expansions are not only limited to the RP. PricewaterhouseCoopers anticipates more expansions for the global outsourcing market, taking into account potential players that could become valuable outsourcing investments.

… but it isn’t sunny just yet. Although there seems to be the growing trend of expansions and recoveries, there is still caution all around when it comes to business decisions and spending. As one article puts it, ‘The pressure to reduce costs will remain in 2010’. Businesses have begun to implement more stringent measures for monitoring their operations, seeking ways of saving while maximizing the potential of available resources. While being relatively cheaper, companies are trying to streamline costs to make for a more attractive option to costumers on a very tight budget. It forced the drive to achieve increased efficiency, effectiveness and innovation such as inVentiv’s (NASDAQ: VTIV) new model for outsourcing sales. Setting yourself in the upswing of recovery could help you put a firm foot on the global field as regions would be trying to vie for those potential customers. Now more than ever innovation for your business would be important. As I see it, costs, pitch and quality of work would be the deciding factors in trying to get a hold of the lion’s share of the profits.

All in all there was a lesson learned with the crisis, at the end of the day I guess they could say, “We got lost, but we found a better route; and better bring an umbrella just in case.”

Author: JC V.

The company’s release of its Q4 results on the 12th of January of this year was highly anticipated in the market, as many view the results of the company as an indicator of the performance of its peers. Infosys beat analysts expectations in that regard by posting better than expected profits, which many took as a sign of recovery and improvement for outsourcing companies from the impact of the global economic slowdown. From the period of October to December of 2009, the company added 32 new clients to its roster, and for 2010, Infosys was said to be chasing multiple deals in the $100million-$300 million range.

Fast forward to the second week of February and we see a different picture. Since the 12th of January, the company has acquired only one deal. This is with biotech company, Elan Pharmaceuticals a subsidiary of Elan Corporation (NYSE:ELN). And although the financial details of the deal were not disclosed, when compared with Infosys’ performance back in December, the outlook for Infosys’ upcoming quarter results could show a weaker performance for the company. Not only that, but the multiple ‘big deals’ in the $100-$300million range, has yet to materialize.

Rather than focus on client acquisition, Infosys is focusing more on the expansion front, emphasizing on building a bigger workforce in anticipation of more outsourcing orders. Just recently, Infosys has spoken up about hiring expatriates for the company, lamenting India’s visa rulings for foreign workers. Infosys hiring target for this fiscal year is 25,000 people, moved up from its previous target of 16,000 prior to its Q3 results. With this in mind, the company has been staking out universities all over India for future employees.

It’s a gamble for the company to focus efforts on expanding a workforce with fewer than expected new clientele in its roster. It doesn’t help that emerging nearshore rivals are gaining steam, attracting attention from big name clients such as GE (NYSE:GE), Thomson Reuters (NYSE:TRI) and Citigroup (NYSE:C). And even though these companies, Ness Technologies (NASDAQ:NSTC) of Israel for example, has been hurt a bit more than most by the global economic slowdown, it has still managed to score two new contracts for February, first is a $19 million land registry deal for Czech Geodetic and Cadastral Office on the 1st of February, and an $11 million contract with Israel’s Ministry of Immigrant Absorption on the 8th of February, not to mention an extension of contract with Thomson Reuters Israel.

While it is expected that Infosys has its own business goals to pursue, upon evaluation, Infosys’ performance for one and a half months in 2010 is certainly less than stellar when compared with its performance in just one week in December 2009. If business for the company fails to improve before the next quarter ends, then 2010 might not be a good year for Infosys.

Author: Audrey B.

The company calls it a “fine-tuning” of its business, as a form of global restructuring to align the company’s costs with its revenues. This news was imparted to its employees in preparation for the move on Monday, Jan 25. Little did Convergys’ employees know, however, that a very different announcement was being given in another part of the world.

A press conference was held, also on Monday in the Philippines wherein the Convergys country manager announced the company’s plans – not to lay off workers, but actually, to hire 6000 more people to join their team.

With the recent release of Convergys’ 4Q results for 2009, it seems that, although the company achieved better than expected results even with a slight decline in revenue, the company does not wish to take any more chances. Thus, as a ploy, the company has decided on maximizing its revenues by moving jobs from other countries to cheaper outsourcing destinations, case in point, the Philippines. And although it’s likely that this move will certainly foist Convergys to renewed criticism especially from the soon-to-be unemployed workers, this only shows that Convergys is relieved to be ‘back in black’ revenue wise, and it certainly plans to stay there.