Executive Briefings

Companies Stick with Indian Outsourcing, But Sell Captive Operations

A monumental shift in how Western corporations tap into Indian talent is taking place. Companies are moving away from running their own offshoring operations and handing at least some of those jobs to Indian tech-services specialists. The most recent sign of the sea change came July 10, when British insurance giant Aviva said it sold a 5,000-strong South Asian outsourcing operation to WNS Global Services of Mumbai. WNS will handle Aviva's customer service, account setup, accounting, and claims processing.
There has been a steady drumbeat of similar large deals in recent years, but industry executives and analysts say the pace is quickening--driven by currency swings, the increased costs of doing business in India, and the need for some Western financial services to raise cash to handle shortfalls elsewhere. "The writing is on the wall," says Sudin Apte, an analyst at market researcher Forrester Research. "This is not working anymore."
Apte estimates more than 150 companies have shifted in the past few years from running captive operations to using a mix of internally run and outsourced operations. He expects another 80 to 100 companies will make the move in the next year or so. In an April report, his survey of 59 corporate information technology executives showed 22 percent of them plan to stick with captive operations while 66 percent will use outsourcing companies in whole or part. That's a huge shift from the results of a survey at the end of 2005, when 55 percent of respondents said they'd run their own offshore operations.
Source: CIO, http://www.cio-today.com

A monumental shift in how Western corporations tap into Indian talent is taking place. Companies are moving away from running their own offshoring operations and handing at least some of those jobs to Indian tech-services specialists. The most recent sign of the sea change came July 10, when British insurance giant Aviva said it sold a 5,000-strong South Asian outsourcing operation to WNS Global Services of Mumbai. WNS will handle Aviva's customer service, account setup, accounting, and claims processing.
There has been a steady drumbeat of similar large deals in recent years, but industry executives and analysts say the pace is quickening--driven by currency swings, the increased costs of doing business in India, and the need for some Western financial services to raise cash to handle shortfalls elsewhere. "The writing is on the wall," says Sudin Apte, an analyst at market researcher Forrester Research. "This is not working anymore."
Apte estimates more than 150 companies have shifted in the past few years from running captive operations to using a mix of internally run and outsourced operations. He expects another 80 to 100 companies will make the move in the next year or so. In an April report, his survey of 59 corporate information technology executives showed 22 percent of them plan to stick with captive operations while 66 percent will use outsourcing companies in whole or part. That's a huge shift from the results of a survey at the end of 2005, when 55 percent of respondents said they'd run their own offshore operations.
Source: CIO, http://www.cio-today.com