Over the last few years, global IT sourcing has grown tremendously, as more and more companies are looking for ways to cut costs.  For many organizations, global IT sourcing provides a way to save money on labor expenses and other costs associated with IT development.  In addition to the savings, companies have found that partnerships with global IT providers also reduce the amount of time-to-market, increase productivity and focus more time and resources to core business services.  However, there are necessary steps that need to be taken to ensure that a company is getting the most out of global sourcing.

Before a company decides to outsource, the potential cost savings should be evaluated.  Often times, organizations do not include all of the costs of outsourcing when determining the total amount that will be saved by the arrangement.  For example, initial transition costs, travel expenses, license agreements and other expenditures associated with global IT outsourcing are often overlooked.  To realize the full cost savings of global IT sourcing, it is important to consider all expenses, including the initial “one time” costs.

A successful outsourcing arrangement will depend heavily on the vendor’s capabilities.  The global sourcing provider can make the difference of whether a project succeeds or fails.  Some of the criteria that should be considered when choosing an IT vendor include the location, employee qualifications, established security measures, industry expertise and communication infrastructure.  The global sourcing IT strategists at A&E Consulting have the knowledge and experience to help organizations choose the right vendor. 

Once a global IT provider is chosen, the contract should be carefully and thoughtfully drafted.  Most outsourcing engagements last for several years, which makes it crucial to obtain terms and conditions that are fair to both parties.  Expectations and requirements should be clearly defined in the agreement, along with key metrics to evaluate vendor performance.  Some companies like to include a risk and reward mechanism in the contract, which would also incorporate penalties if the vendor fails to perform the required tasks.  The final contract should include all of the agreed upon terms and conditions, so there is no room for ambiguity.

By taking these necessary steps, companies can work towards getting the most value out of global IT sourcing.  A&E Consulting is a full service consulting firm that has been successfully helping clients with their global needs.  For more information, call 661-200-3612 or email info@AandEConsulting.com.

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Indian service providers are gaining their share of the global IT market, according to Gartner Research.  Gartner believes that this increase in market share is the result of buyers breaking down large, multibillion orders into smaller ones that can be handled by Indian suppliers and growing customer confidence.

The top six Indian global sourcing providers, which include Satyam, Wipro, Infosys, Tata Consultancy Services, Congizant and HCL Technologies, made up approximately 2.4 percent of the total global IT services market in 2007.  There was a 0.5 percent increase in market share from 2006 and there has been exponential growth over the last few years.  Many experts speculate that India’s market share will continue to grow.

India has become a top destination for global IT sourcing for many reasons.  The country boasts low labor costs, highly skilled professionals and strong government support.  Indian suppliers have continued to provide buyers with high quality work at reasonable prices.  A large majority of IT employees in India are fluent in the English language, which makes communication easier between the buyer and supplier.

India’s growth in market share has also been the result of the vendors’ strength in application development and maintenance.  Global IT sourcing providers have been able to obtain larger orders for application development and maintenance and it is estimated that they have about 40 percent of the market.

Some challenges exist for Indian service providers, such as growing staff expenses, staff attrition, the weakening dollar against the Indian rupee and the country’s dependence on the U.S. market, which makes up approximately 60 percent of their sales.  Also, large companies like IBM and Accenture have set up offices in India to benefit from the country’s lower labor costs.

Many of the Indian global IT sourcing providers are looking to buyers in other countries as possible sources of revenue.  These suppliers are trying to lessen the dependency on the United States.  Attempts to tap other markets have already been successful as the Indian service providers’ share of the total Western European IT services market has increased.   The top Indian global sourcing providers have also been adding services to boost revenue, such as remote infrastructure management.

While India is a great destination for global IT sourcing, there are many other countries that offer benefits to buyers.  A&E Consulting offers insight into choosing the right location for global outsourcing and will oversee the first outsourced project.

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