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Our Bureau

Hyderabad , May 27

A NASSCOM research finding has shown that offshoring of processes is becoming a significant business trend within the global communications industry.

There are pointers that the communications operators are expected to save around $14.5 billion from offshoring by 2008.

This is being driven by key operators setting up captive operations in countries such as India and China to take advantage of the cost reductions and skilled and high quality manpower availability offered by the offshore destinations.

A Deloitte Research study on offshoring practices among global communications operators in the segments such as fixed, mobile and cable, pioneering companies in this vertical are offshoring their routine business processes to overseas geographies and achieving savings of the order of 20-30 per cent.

The findings show additional savings are expected as the operations increase in efficiency and scale.

The offshoring within the communications industry has been driven by offshoring success stories of pioneering companies, breakthroughs in communications technologies in developing countries, improved education levels and global adoption of English.

The survey indicates that 53 per cent of surveyed companies (43 operators) stated cost reduction as the key motivator for offshoring and expected cost reductions of around 20 per cent labour costs accounted for the largest chunk of savings, with wage rates in developing countries as low as one-tenth the rate of an equivalent resource back home.

For early adopters, the savings translate into bottomline gains, with profit margins increasing.

This is expected to be driven by large operators compelled to offshore processes in order to remain competitive in their market.

The scale and financial strengths of the larger players also make them capable of absorbing potential challenges and risks.

Areas such as contact functions, operations, data processing and administration and project management are expected to be the next line of growth for communications operators.

More Stories on : Off-shore Development | Industry Associations

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