It's not just infotech jobs that are heading towards India.
A Deloitte Touche survey of 42 global telecommunications operators shows that over 275,000 telecom jobs may move to India, China and other low-wage nations by the year 2008, reported Telecomweb.com.
According to Deloitte, telecom firms are using the offshoring more and more to cut operational costs and enhance services.
Global telecom giants will move about 5 per cent of the communications industry's 5.5 million-member workforce -- or 275,000 positions -- to low-cost countries.
Telecomweb.com said that India is the destination of choice for offshoring, but Estonia and Argentina too are coming online as offshoring sites.
Although the telecommunications industry is way behind the IT and financial services sectors in terms of outsourcing, it is quickly catching up in following the business trends, said Telecomweb.com.
Of the operators surveyed who are either offshoring or have definite plans to offshore, benefits cited included:
Cost reduction of 20- 30 per cent by 2008; enhanced quality of staff supporting more technically advanced broadband and wireless data services; and accelerated time-to-market for advanced data services and applications, said Telecomweb.com.
"Offshoring can be one of an operator's most complex business decisions. For most companies, it's not a question of whether to offshore, but what functions to offshore, and how. Additionally, operators with more experience are reviewing what operations they should offshore next," Telecomweb.com quoted Phil Asmundson, deputy managing director of Deloitte & Touche's technology, media and telecommunications in the US, as saying.
Telecomweb.com the benefits of outsourcing include:
Cost savings for early adopters are expected to range between 20 per cent and 30 per cent, with additional savings expected.
The telecom industry's move toward advanced data-oriented services will fuel the off-shoring trend by increasing the need for affordable support staff with strong technical skills.
Enhanced competitiveness, as multiple time zones allow teams to work around the clock to reduce time-to-market for application development.
Top processes being off-shored include IT services, call centers, accounting and finance, operations and application service development.
The report also identified several risks to consider:
- Operational complexity and loss of control means that companies must develop new business processes for ensuring the quality and control of development and customer support activities.
- Language barriers, cultural differences and the protection of intellectual property can increase the risk of miscommunication, including legal commitments, leading to inefficiencies or misunderstandings that impede progress.
- Objections from home country groups, such as trade unions, as well as anti-globalists and internal employee resistance can impede the success of offshoring.
Business disruption and security, driven by political instability or immature operations, can put off-shoring investment at risk.
The seven rules of thumb
The Deloitte & Touche survey identified seven 'rules of thumb' for operators to consider as they choose their offshoring strategy:
Don't get left behind. Be an early mover, but not a first mover.
- Choose the right partner in the host country. Unwinding a sub-optimal decision can be costly.
- Think big, but start small. Initial success creates future momentum. Start with areas that well understood.
- Do not limit the focus solely to cost reduction. Offshoring can create enhanced value through high quality, accelerated application development, and enhanced customer service.
- Set realistic expectations and time horizons for benefits.
Be ready to revert to on-shore if the business case or macro economic/political environment changes.
Develop offshore expertise and know your options.