In this era of pervasive globalization companies need to remain competitive not only on their own turfs but must handle challenges of global competition. Reduction in operating costs, ability to mobilize additional skilled resource on short notice and relentless focus on core competencies are some of the key strategies to achieve sustainable global competitiveness. Effective outsourcing, i.e., offloading some of the work to other companies in order to gain better cost advantage and access to skilled labor, has emerged as one of the options to achieve competitiveness that is now widely followed in many of the industrialized countries.

Two predominant non-manufacturing outsourcing tracks involve work related to information technology outsourcing (ITO) and business process outsourcing (BPO). Examples of ITO are: application development, application maintenance, software testing, etc. Similarly, some examples of BPO are: human resources (HR) activities, accounting, transaction processing, etc. According to Michael F. Corbett & Associates Ltd., global outsourcing market in 2003 was estimated at 5100 billion USD, with US having the lion’s share (62%) and European markets following in the second place. Due to enormous pressures of global competition, Michael Corbett predicts that outsourcing will grow quite rapidly (40% CGR) in the European markets in the forthcoming years.

Successful outsourcing projects can often deliver very high return-on-investment (ROI). Cost savings in the range of 50%-200% are not uncommon. However, in order to ensure such gains while keeping the risks and the total-cost-of-ownership (TCO) of the projects, companies must regard outsourcing itself as a strategic activity and must adequately invest in planning and execution monitoring of outsourcing activities. Depending on the nature of an outsourced project, a combination of local, near-shore or offshore resourced may be engaged in the service delivery process. As the number of participants increase or the delivery teams become non-local, activities like proper project scoping, vendor selection, creation of effective and flexible service contracts and service-level agreements (SLAs) and their management, and continual process improvements turn out to be highly critical to the success of the outsourcing projects. Many companies considering outsourcing projects lack either the necessary expertise or the bandwidth to undertake fine-detail planning and adequate execution monitoring so as to sufficiently lower project risks and to ensure target returns. In such cases, appropriate engagement of value-added, and preferably local, ITO/BPO consulting organizations can be of immense help.