With the United States market still in slump, businesses project difficulties in profit increase in the next 7 years. Job cuts continue in the US and the rate of job creation of 25 per year is not sufficient to offset job losses in the next 5 years. On the other side of the world, Indian outsourcing firms show an opposite trend. Global IT service providers such as Infosys which provides technical consulting, design and development of business solutions have been aggressively increasing their workforce. Last week, the company reported that in the second quarter it has hired 6,069 people offsetting the 4,521 employees it laid off in the same quarter. Tata Consultancy Service is also bullishly hiring with plans of hiring 25,000 people worldwide for this year 2009 and 90%

In an aggressive attempt of major technology manufacturing firms to diversify its markets for more consistent revenue streams, they have been buying and bidding for business process outsourcing services firms.

Last month alone, technology giants Xerox (NYSE:XRX) and Dell Inc. (NASDAQ: DELL) have reported their acquisition of services companies, Affiliated Computer Services Inc. (NYSE:ACS) and Perot Systems Corporation (NYSE:PER).  On September 28, printer and imaging business leader Xerox announced its purchase of business process outsourcing firm Affiliated Computer Services Inc. (NYSE:ACS) for $6.4 billion. A week before that, Wall Street Journal wrote that computer maker Dell Inc. (NASDAQ: DELL) has agreed to purchase information technology services Perot Systems Corporation (NYSE:PER) for $3.9 billion.

With the economic downturn, tech manufacturing firms have found themselves heavily suffering to meet

“Not just a place to take a vacation”- that’s what the Philippines is now becoming with the trend of the BPO sector in the country. Right now the Philippines ranks 2nd in the offshore BPO services globally. The country would be hosting its first Outsourcing summit organized by the Business Processing Association of the Philippines (BPAP) where delegates from around the globe would be able to discuss the direction of the industry. As the hosting country, this provides the Philippines with the golden opportunity to showcase its assets and advantages as a choice for outsourcing needs which includes geographical preference, cost and quality of labor.

Furthermore, three major companies have had major developments to show further interest in the Philippines as a significant base of their operations and services.

First up is the International Business Machines Corporation (NYSE: IBM) which plans to

3 out of 4 executives say that outsourcing is needed to get through this tough economic time.

As we move ever further into the information age, being able to provide the best service becomes a cutthroat competition. The latest and most innovative technology is needed to ensure you are ahead. But unfortunately there is an ever increasing budget constraint due to the global recession, especially on IT, forcing the emergence of new business to cater to the needs that are not being met. This in turn provides for more job opportunities to become available.

Capital investment for equipment is not really the bulk of the expense, its maintenance of the system and asset that takes a bigger slice of the expenses.  Thus having cheaper maintenance costs makes IT outsourcing a better option to remain competitive.

The IT industry was already utilizing off shoring even before the start

Offshoring helped firms stay afloat during the economic downturn by keeping costs within reach until such time the markets improve. Now that the world economy shows signs of recovery, the BPO industry should fear not on losing clients. As clients see them, now more than ever, as a partner.

Currently, with firms feeling less economic pressure it is inevitable that they will get back to the drawing board and identify the business strategies that helped them ride through the crisis. Companies are likely to retain the strategies that worked for them, one of which is outsourcing.

Market conditions are putting much pressure on Chief Information Officers (CIO) to see to it that IT projects deliver value. And one of the areas that continues to receive significant attention is offshoring.

With the improving world economy corporate IT spending in Asia Pacific is increasing in the current

India has long been the dominant country when it comes to Business Process Outsourcing (BPO), however, times have changed.  The National Outsourcing Association (NOA) published a report titled “Best Practice Outsourcing and Offshoring” which pointed the issue Indian offshore providers face –increasing operational costs forcing some providers to relocate their centers to cheaper areas in India in order to compete more effectively, although this move has not hindered a recent surge in emerging outsourcing destinations. “Despite recent optimistic predictions from the NASSCOM conference, India is experiencing the effects of a global slowdown and a reduction in IT spending.  Costs for Indian vendors are also on the up.” –NOA report. Indian BPO providers may not be the only ones experiencing increasing operational costs, other offshore providers experience this as well but at a lesser extent as countries such as the Philippines receive strong government

Analysts continue to project positive growth for the Philippine Outsourcing industry. Growth being measured in terms of business deals signed alone does not provide an accurate picture of what this sunshine industry truly contributes to the Philippine economy and the Filipinos. Businesses for these service providers continue to pour in as the figures show however, Filipino workforce development seems still behind.

More Outsourcing Deals Closed, More Available Jobs for Filipinos

Mainstream news continues to report the expansion of existing outsourcing providers even setting up operations outside Manila to top cities like Cebu, Laguna and Bacolod. Last month, IPVG Corp (PSE:IP) signed an outsourcing deal with Prudential Corp. Vietnam to provide voice and non-voice services. IPVG will be hiring 400 employees for this project. Convergys Corporation (NYSE:CVG) also plans to hire 1,000 employees for its new contact center. In April, BPO company Affiliated Computer

Company leaders are compelled to creatively move their businesses to profitability by unloading excess baggage and looking for new markets. Hence, a growing number of companies are divesting to achieve a leaner structure and at the same time looking for new markets to tap into.

IT Outsourcing Providers Tap into Domestic Market

With the current pressures faced even by Outsourcing Providers especially the IT service providers as the demand for it this year is expected to decline by 1.7 percent according to Gartner, they are continually challenged to develop sharper eyes for new markets to target and new ways to make it more cost competitive.

Infosys Technologies Limited (NASDAQ:INFY) and Wipro (NYSE:WIT) are tying up with rural service providers to be able to create a service offering for India’s domestic market. By recruiting rural talents, Infosys and Wipro will be able to

Outsourcing has come through a lot of changes since its inception. Its evolution depends on a number of factors like how the market reacts, government intervention, partnerships, and geographical positioning to name a few. The industry adapts to changes in the business environment which is crucial to its survival.

Last month, India’s IT-BPO trade body NASSCOM issued the following statement; “Protectionist overtures of the US government has got the Indian business process outsourcing (BPO) firms scurrying to gain its favor by revealing plans to increase their onsite presence in the next few years.”

Infosys Technologies Limited (NASDAQ: INFY) is planning to send about 5% to 10% of its workforce to onsite centers in the next few years. According to Infosys CEO and managing director Amitabh Chaudhary, “while the move is driven mainly by company’s intent to chase the onsite component of their global customer’s

Switzerland-based financial services provider UBS (NYSE: UBS) is reportedly selling its business process outsourcing (BPO) and knowledge process outsourcing (KPO) units. And is said to be in talks with Indian offshoring giants Infosys Technologies Limited (NASDAQ: INFY) and Wipro Limited (NYSE: WIT). The UBS Indian Service Center and UBS Krakow centre has an estimated value of $200 million, reports The Economic Times.

UBS’ decision to sell its BPO and KPO units might not come as a surprise as Citigroup Inc. (NYSE:C) made the same move when it sold its captives in 2008. But the Switzerland-based bank may have made the decision at the wrong time as Tata Consultancy Services (TCS) predicts the decline in global outsourcing demand is over.

According to TCS chief financial officer Seturaman Mahalingam; “The conditions now are little clearer, in a sense decline in terms of demand that was seen earlier appears to have been arrested.”

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