Earthquake off Taiwan hits cables, BPOs unhurt

An earthquake off Taiwan last night, measuring 6.7-7.1 on the Richter scale, knocked out Internet links to India for 20-25 minutes and affected Reliance Communications’ FLAG and VSNL’s SEA-ME-WE-3 under-sea cable systems, even as telecommunications around Asia was severely disrupted, with Internet services slowing and financial transactions being hindered, particularly in the currency market. However, BPO and IT services across India remained largely unaffected.

Spokespersons for companies like 24/7Customer, Infosys BPO, Wipro BPO, Intellinet, WNS and Tech Mahindra said their operations remained unaffected.

The damage was contained to some extent since the disruption took place at a time when data and voice traffic had not peaked in Europe and the US, which accounted for a major part of their businesses. The other reason was that all Indian players had accounted for such natural disasters and built in two levels of redundancies.

These companies have coverage across the Pacific and the Atlantic and if one of these links snaps, the other one takes over seamlessly.

The FLAG cable links India, Thailand, Hong Kong, China, Korea and Japan. SEA-ME-WE 3 includes 39 landing points in 33 countries across four continents — from Western Europe to the Far East and Australia.

Other cables damaged in the quake included those of Asia-Pacific Cable Network, Asia Pacific Cable Network 2, Cable 2 Cable, China US Cable Network, and East Asia Cable.

A VSNL spokesperson said: “VSNL’s traffic has not been significantly affected by the earthquake in Taiwan since we do not have cable systems going there directly. SEA-ME-WE 3 interconnects with other cable systems in the region that has been affected, and hence the disruption. The company is taking action to re-route its affected traffic to other cable systems and normalcy is expected in about 24 hours.”

Meanwhile, Sify customers received an SMS stating, “You may experience slow browsing.” A Sify spokesperson said, “We have five under-sea cables and hence the overall effect is marginal. The SMS was a proactive measure on our part.”

South Korea’s top fixed-line and broadband service provider, KT Corp, said six submarine cables were knocked out by Tuesday night’s earthquakes. “Twenty-seven of our customers were hit, including banks and churches,” a KT spokesperson said. “It is not known yet when we can fully restore services.”

The foreign exchange market suffered in Seoul. “Trading of the Korean won has mostly halted due to the communication problem,” said a dealer at one domestic bank. Some disruption was also reported in the important Tokyo currency market, but the EBS system that handled much dollar/yen trading appeared to be working.

Global information company Reuters Group said users of its services in Japan, South Korea and Taiwan had been affected, although dealing services were restored in Tokyo in the afternoon.

The main quake, measured by Taiwan’s Central Weather Bureau at magnitude 6.7 and at magnitude 7.1 by the US Geological Survey, struck off Taiwan’s southern coast on Tuesday. Two people were killed.

In China, financial markets worked normally, but China Telecommunications Group, the country’s biggest fixed-line telephone operator and parent of China Telecom Corp, said Internet had been badly disrupted.

Phone links and dedicated business lines had also been affected to some degree, it said. Officials declined to give details. “Undersea communication cables fall in the area of state secrets,” said a ministry of communications official in Beijing.

Chunghwa Telecom, Taiwan’s biggest telecom carrier, said two of the four major under-sea cables out of Taiwan had been affected, initially cutting more than half of its international telecommunications capacity. Calls to Southeast Asia were the worst affected, with less than 10 per cent going through — an improvement since the morning, when less than 2 per cent succeeded.

KDDI Corp, Japan’s second-largest telecom company, said communication along submarine cables out of Japan went through Taiwan before reaching Southeast Asian countries, which was leading to disruption, but there were alternative lines.

PCCW, Hong Kong’s main fixed-line telecom provider, said several under-sea cables it part-owned had been damaged. “Data transfer is down by half,” a spokesperson said.

Both Singapore Telecommunications (SingTel), Southeast Asia’s top phone company, and local rival StarHub Ltd said Internet services were slow. But SingTel said traffic was being diverted and repair work was in progress, adding, “Our submarine cables linking to Europe and the US have not been affected.”

Philippine Long Distance Telephone Co said its Internet service was intermittent and international phone calls had been disrupted but domestic calls and its Smart mobile phone service were working normally.

Earthquake off Taiwan hits cables, BPOs unhurt

An earthquake off Taiwan last night, measuring 6.7-7.1 on the Richter scale, knocked out Internet links to India for 20-25 minutes and affected Reliance Communications’ FLAG and VSNL’s SEA-ME-WE-3 under-sea cable systems, even as telecommunications around Asia was severely disrupted, with Internet services slowing and financial transactions being hindered, particularly in the currency market. However, BPO and IT services across India remained largely unaffected.

Spokespersons for companies like 24/7Customer, Infosys BPO, Wipro BPO, Intellinet, WNS and Tech Mahindra said their operations remained unaffected.

The damage was contained to some extent since the disruption took place at a time when data and voice traffic had not peaked in Europe and the US, which accounted for a major part of their businesses. The other reason was that all Indian players had accounted for such natural disasters and built in two levels of redundancies.

These companies have coverage across the Pacific and the Atlantic and if one of these links snaps, the other one takes over seamlessly.

The FLAG cable links India, Thailand, Hong Kong, China, Korea and Japan. SEA-ME-WE 3 includes 39 landing points in 33 countries across four continents — from Western Europe to the Far East and Australia.

Other cables damaged in the quake included those of Asia-Pacific Cable Network, Asia Pacific Cable Network 2, Cable 2 Cable, China US Cable Network, and East Asia Cable.

A VSNL spokesperson said: “VSNL’s traffic has not been significantly affected by the earthquake in Taiwan since we do not have cable systems going there directly. SEA-ME-WE 3 interconnects with other cable systems in the region that has been affected, and hence the disruption. The company is taking action to re-route its affected traffic to other cable systems and normalcy is expected in about 24 hours.”

Meanwhile, Sify customers received an SMS stating, “You may experience slow browsing.” A Sify spokesperson said, “We have five under-sea cables and hence the overall effect is marginal. The SMS was a proactive measure on our part.”

South Korea’s top fixed-line and broadband service provider, KT Corp, said six submarine cables were knocked out by Tuesday night’s earthquakes. “Twenty-seven of our customers were hit, including banks and churches,” a KT spokesperson said. “It is not known yet when we can fully restore services.”

The foreign exchange market suffered in Seoul. “Trading of the Korean won has mostly halted due to the communication problem,” said a dealer at one domestic bank. Some disruption was also reported in the important Tokyo currency market, but the EBS system that handled much dollar/yen trading appeared to be working.

Global information company Reuters Group said users of its services in Japan, South Korea and Taiwan had been affected, although dealing services were restored in Tokyo in the afternoon.

The main quake, measured by Taiwan’s Central Weather Bureau at magnitude 6.7 and at magnitude 7.1 by the US Geological Survey, struck off Taiwan’s southern coast on Tuesday. Two people were killed.

In China, financial markets worked normally, but China Telecommunications Group, the country’s biggest fixed-line telephone operator and parent of China Telecom Corp, said Internet had been badly disrupted.

Phone links and dedicated business lines had also been affected to some degree, it said. Officials declined to give details. “Undersea communication cables fall in the area of state secrets,” said a ministry of communications official in Beijing.

Chunghwa Telecom, Taiwan’s biggest telecom carrier, said two of the four major under-sea cables out of Taiwan had been affected, initially cutting more than half of its international telecommunications capacity. Calls to Southeast Asia were the worst affected, with less than 10 per cent going through — an improvement since the morning, when less than 2 per cent succeeded.

KDDI Corp, Japan’s second-largest telecom company, said communication along submarine cables out of Japan went through Taiwan before reaching Southeast Asian countries, which was leading to disruption, but there were alternative lines.

PCCW, Hong Kong’s main fixed-line telecom provider, said several under-sea cables it part-owned had been damaged. “Data transfer is down by half,” a spokesperson said.

Both Singapore Telecommunications (SingTel), Southeast Asia’s top phone company, and local rival StarHub Ltd said Internet services were slow. But SingTel said traffic was being diverted and repair work was in progress, adding, “Our submarine cables linking to Europe and the US have not been affected.”

Philippine Long Distance Telephone Co said its Internet service was intermittent and international phone calls had been disrupted but domestic calls and its Smart mobile phone service were working normally.

USA Outsourcing Marketing Overview

The range of activities being outsourced from USA to countries like India is no longer a passing trend. It is an increasingly viable option being taken by more and more public and private organizations, with even the little jump start-ups hopping on to the outsourcing bandwagon, eager to make a quick buck. This leaves a question hanging in the air, whether, it is just the cost factor driving US companies to outsource, just almost everything that can be outsourced. However, A.T. Kearney in its Making Offshore Decisions says: “…labour arbitrage is far from the only factor in the decision to outsource. Companies cite greater productivity, improved service and superior technical skills as other reasons to move operations offshore.

While, the US Department of Commerce quotes the value of US exports of legal work, computer programming, telecommunications, banking, engineering, management consulting, and other private services jumping to $131.01-billion in 2003, up $8.42 billion from 2002, imports of services, a category that encompasses US outsourcing of call centres and data entry, hit $77.38-billion for the year, up $7.94 billion from 2002.

That was in 2002 and 2003, but now USA’s outsourcing market has become much larger, and is growing by leaps and bounds. Clearly, it is more than evident that the Americans are off-shoring / outsourcing everything that can be, as the success of off-shored projects, coupled with all kinks being ironed out, and a smooth relationship developed with off-shore service providers, the smooth delivery of future projects is ensured. The comfort zone American firms have found in the outsourcing market confirms Information Technology Services (Computer and Related Services), Business Process Outsourcing (Customer Interaction Services, Back-Office Operations, More Independent Professional or Business Services) outsourcing segment will continue to outperform, and grow yearly by 8% in 2007.

Moreover, as a result of the global outsourcing trend, Gartner predicts that up to 25% of traditional IT jobs in many developed countries, including USA will be situated in emerging markets by the year 2010. “Analysts predict that as many as 2 million US white-collar jobs, such as programmers, software engineers and application designers will shift to low-cost centres by 2014.” That even as, a Forrester Research report predicts: “...at least 3.3-million white-collar jobs and $136-billion in wages will shift from the United States to low cost countries by 2015. In the past 3-years, off-shore programming jobs have nearly tripled, from 27,000 to an estimated 80,000.”

Already, 40% if not more of America’s Fortune 500 firms have outsourced / off-shored to countries like India, according to research firm, Gartner Inc. This is, because the pros and cons of off-shoring / outsourcing have finally been understood, and the cons can be avoided as pros far outbalance the cons, pros such as:

• Competition.
• Productivity.
• Improves local knowledge and access to local markets.
• Access to and availability of skilled human resources.

According to Hackett-Group, a strategic advisory firm, Fortune 500 companies could potentially save $58-billion annually, or some $116-million per company, by off-shoring general and administrative jobs. The study estimates that increased use of cheaper overseas labour could affect up to 1.47-million back-office jobs over the next decade, or nearly 3,000 at a typical Fortune 500 company. And, the jobs under review will go far beyond call centres.

“People have become more confident in the analytical capabilities of the overseas staff, and that is expanding the profile of the kinds of jobs that are under consideration,” Wayne Mincey, President of the Hackett Group confided in Reuters from Atlanta, USA.

Some of the jobs that can now more readily be shipped overseas than they could several years ago include those in information technology, finance, human resources and procurement.

The Hackett study stresses the education base and skill set, and with it the potential savings on labour costs, are on the rise in India, and other emerging countries. Sending certain jobs off-shore results in typical savings in salaries of about 70% compared to savings of 10 to 20% by moving jobs to lower-cost US locations, according to Mincey. “Executives have to take a much closer look because the savings are so large it becomes a competitive issue,” he added. The Hackett study suggests that many companies are relying on outdated analysis to assess the benefits of outsourcing and risk "under-scoping" such initiatives. But, once they get up to speed, it could be: “Katie bar the (office) door.”

And, as the classrooms of America’s higher education institutions feature the world, with Indians leading, and only a small scattering of Americans, the lack of requisite skills is telling across the length and breadth of America. With firms unable to find employees with the required skill set, the only way out is to off-shore / outsource to countries like India, with not only sufficient human resources, but resources that have the right set of skills. Annually, churning out millions of graduates in almost every field, it has a steady supply of skilled human resources to meet American shortfall.

The allure of off-shoring / outsourcing that promises a gleam of money in the fist, has fast caught the fancy of America’s business industry, and its ensuing success is seeing a wide gamut of services from IT, retail, manufacturing, pharmacy, engineering, finance, HR, R&D, legal services, etc. being off-shored / outsourced. As the baby boomers retire or reach retirement age, an aging population means that American will not be able to function without off-shoring / outsourcing.

So much so, Reuter’s financial news agency has announced its decision to outsource journalism jobs. It plans to hire journalists in India to report on 3,000 small to mid-sized companies in the States, in order to free up Western journalists for value-added work, such as, interviewing.

This article is sponsored by www.offshoreoutsourcingworld.com

Outsourcing bonanza '06: trends you need to know about

In the outsourcing world, 2006 was a year of change and acceptance. Change in that China and other countries are starting to take some business away from perennial offshoring giant, India, and acceptance in that it's no longer taboo in most circles to talk about outsourcing plans in public. In other words, for better or worse it has become a part of corporate culture. For this report we take a look at some of the driving forces in the outsourcing realm this year. Certainly some of these issues will continue to loom large in 2007 such as H1-B levels, China's rise and outsourced security concerns.

Security problemsThe marriage of security and outsourcing is always a problem, especially if the contract involves offshoring work. This year outsourcing giant, India, took steps to ensure offshored work was secure. The country's National Association of Software and Services Companies set up a watchdog organisation that it says will monitor data security and privacy practices in the country's IT services, call center and business process outsourcing industries. The initiatives were taken in the wake of allegations in the United States and United Kingdom that Indian call centre workers have stolen and sold data processed by Indian outsourcing companies. The issue of security isn't limited to India. Earlier this year, a Government Accountability Office study said US government agencies that use outsourced information services firms for everything from law enforcement to counterterrorism data-gathering do not protect the privacy of the citizen data they use.

China's riseWith everyone from IBM to Unisys directing billions of dollars its way, China certainly got a lion share of investment this year from some of the largest outsourcing players in the world. And even India's outsourcing giants -- Tata, Infosys and WiPro -- have a growing presence in the country. To back that up, a study released by Analysys International earlier this year said China's software outsourcing services market reached $US323 million in the first quarter of 2006, up almost 44 per cent compared with the first quarter of 2005. Still security concerns dog the country's industry fledgling business.

India's growthCan anything slow the offshoring/outsourcing machine that is India? It doesn't seem likely. Despite any inroads China may be making, India's outsourcing numbers keep getting larger. The country's software and services voice, National Association of Software and Service Companies says the country's BPO services will grow 35 per cent - 40 per cent in fiscal year 2007 to achieve between $US8 billion and 8.5 billion vs. $6.3 billion in the previous fiscal year. According to Nasscom estimates, the total revenue for the entire IT sector, domestic and exports, by the end of the current fiscal is estimated to be about $36 billion to $38 billion. And this month Infosys will become the first Indian company to be included in Nasdaq's prestigious list of top-100 companies.

India's turmoilEverything isn't rosy in the 'Truth Alone Triumphs' country however. India isn't immune to the violence and turmoil that exists in the rest of the world. Some of its internal strife spilled into the outsourcing arena this year with bombings, a strike and online threats. Not to mention the ongoing staff shortage. When you're No. 1 the target on your back is a lot bigger.

BlundersWhether or not it's a company's decision to bring work back in-house or a contractual failure, the dumping of an outsourcing contract is never very pretty. A Deloitte study last year said nearly 75 per cent of the 25 large companies surveyed have had negative experiences with their mega-outsourcing projects. It's a wonder more don't flame out.

H-1B visa trialsThe year began with promises that the H1-B levels would be raised by the year-end. But that push got lost in the politics of Washington, DC. The Democratic congress will likely take it up again early next year but most experts agree its scale could be significantly reduced.

Small business outsourcingPerhaps it's a natural outgrowth of the industry's larger outsourcing trend but this year SMB seemed to take a harder look at outsourcing as a way to run their companies. It's a huge opportunity for outsourcers as these small firms begin to recognize that they can achieve the same benefits that large organisations enjoy when they hand over non-core IT functions to outside service providers.

"There is a small but growing legion of SMBs that are considering outsourcing," a research director at Gartner, Robert Brown, said. He notes that the base is small: Companies with 100-499 employees now account for just 7.8 per cent of the $50.5 billion business-process outsourcing market, but that number is expected to grow to more than 8 per cent of a $78.8 billion market by 2009, according to Gartner. Other experts say the growth of specialized service providers including ISPs and local managed service providers for desktop management and other IT functions. These include offerings from the large outsourcers including service desks, desktop management and specialized network offerings. Examples include EDS Agile, HP SMB Services and IBM Express Advantage.

Managed servicesPerhaps epitomised by IBM's Global Services business, managed services have grown by leaps and bounds this year, a market segment that will be worth more than $US630 billion by the end of 2006. But experts say as these services grow users need to be ever-more diligent about contracts and what they expect from their vendors.

China and India set for another banner year

Asia's two rising stars, China and India, will continue to shine in the IT market next year, with GDP growth expected to hit 8.3 percent and 7.7 percent, respectively, predicts IDC.

In a statement released today which outlines key predictions for the new year, the research house projected that China will maintain its position as the largest IT market in the Asia-Pacific region, excluding Japan--making up 32 percent of the region's IT spending. The Chinese market will be trailed closely by India at 23 percent, IDC said. Both countries are expected to account for the lion's share of the region's IT spending at more than 43 percent.

According to IDC, information and communications technology (ICT) spending and growth for the Asia-Pacific region will be largely driven by "continued economic growth and increasing market demand across the region".

In addition, the IT market in this part of the world will grow at 10 percent over 2006 to reach US$132 billion next year, IDC projected.

Eva Au, managing director at IDC Asia-Pacific, said in the statement "The region's astounding rates of economic and IT market growth have resulted in dynamic and rapidly evolving corporate and consumer markets. This is a role the region has gradually accepted, but the growth is now taking off explosively."

While the major economies are expected to continue to deliver strong results, IDC believes that both China and India will begin "a more serious look internally, focusing on bridging urban-rural divides and developing infrastructure".

"As economic growth rates cool slightly, [China and India] will be pushed to look at domestic markets as recent years of prosperity drive IT infrastructure build-out and the closing of domestic urban-rural gaps" the research company said.

As such, Au noted, vendors will need to have specific knowledge of domestic markets in order for them to successfully compete.

BPO: relationship matters
IDC is also projecting a new model in business process outsourcing (BPO), focusing on vendor-customer relationship to emerge in the coming year.

Companies in Asia planning to outsource their business processes are likely to "test drive" short-term pilot projects first, before taking the plunge into a long-term commitment, IDC said. This will ensure that the vendor is sufficiently capable of meeting the needs of the customers, the analyst noted.

This business model contrasts with the structure typically used to "serve Western clients, who are more willing to transit to BPO based on compelling economics", IDC said.

The researcher also predicted that 75 percent of midsize and large companies in the Asia-Pacific region will plunge into early-stage service oriented architecture (SOA) adoption in 2006, completing the first phases of their projects in 2008.

However, IDC advised organizations to address SOA deployments with caution in terms of internal process assessments and re-engineering--an area in which, vendors and systems integrators could find new business opportunities, it said.

Data Centers: Consolidate or Outsource?

Outsourcing applications also makes sense in cases where you need to quickly fill gaps in your existing applications, in which case you need to make sure the provider can easily integrate with your back-office systems. It can also be an effective way to release I.T. staff from noncore resource intensive functions.

Datacenter consolidation is the mega-solution for bringing I.T. costs, management, and disaster recovery under control, but depending on a company's goals and size, outsourcing can also play a useful complementary role.

"Outsourcing should definitely be part of the decision process," says Michael Bell, research vice president at Gartner. "Once you make the decision to consolidate or relocate, it then becomes a question of whether you should build a new datacenter, buy one, lease one, or outsource it."

There are several outsourcing alternatives: You can collocate your own equipment and applications at a third-party hosting facility and manage it all with your own staff; contract with a complete managed service that provides the equipment, applications, and management staff; or outsource the entire business process, including servers, applications, and bodies to a BPO (business process outsourcing) provider.

Keep in mind, however, that if cost is the main priority, outsourcing is frequently not the answer. "When you're talking about 2,000 or 3,000 square feet or less, collocation makes sense as you get the benefits of scale economics, including the large datacenter and the shared UPS systems and generators," Bell says. "Once you get into the 5,000-to-10,000-square-foot range, it becomes a push as to whether hosting can really compete with doing it yourself. Third-party hosting can often be 30, 40, or 50 percent higher."

Joe Drouin, CIO and vice president of TRW Automotive, agrees. "When we started the consolidation process we assumed we would outsource, so we put out an RFP and had a few vendors come back to us with quotes. It turned out that even if we took the best offer it would be roughly 20 to 30 percent more than doing it all in house."

But if time and agility are the main drivers, outsourcing can make a lot of sense. For example, a department that needs to get up and running fast on a new application may find that I.T. has other priorities and can't devote the necessary resources to move quickly. In that case, contracting with a software service provider can reduce the time to get up and running from months to weeks.

Outsourcing applications also makes sense in cases where you need to quickly fill gaps in your existing applications, in which case you need to make sure the provider can easily integrate with your back-office systems. It can also be an effective way to release I.T. staff from noncore resource intensive functions, such as messaging , so that they can concentrate on more strategic initiatives.

Take outsourcing a step higher and BPO can be the quickest way to completely automate and transform a nonessential or even core business process to bring it up to speed and retain your competitive edge. It's also a fast solution for a spin-off or new organization that lacks a human resources department, for example, and needs one fast. It's all a question of priorities.

Report: India, China most popular

The world's two most populous countries--China and India--were named the most popular outsourcing destinations by companies in Asia, according to a recent study KPMG.

Results of the report, titled Asian outsourcing: the next wave, were released last week and revealed that India and China emerged as the top two most popular destinations by many companies in the region which outsource their business processes. India earned top ranking at 55 percent, followed by China at 36 percent.

At 20 percent, Singapore takes third placing in the survey, which covered a total of 305 senior executives from companies in the Asia-Pacific region. About 43 percent of respondents were based in Singapore, Hong Kong, Malaysia, Japan, Australia and New Zealand. Just under 50 percent of participants were based in India and China.

Singapore was closely trailed by Hong Kong at 16 percent, far ahead of fourth-placed Philippines, at 7 percent, which has been traditionally regarded as a lower cost alternative to India.

Lim Yen Suan, Singapore-based director of risk advisory services at KPMG, said: "While not the lowest priced, Singapore offers strong intellectual property protection, a well-educated talent pool, and overall a more secure and stable pro-business environment."

"This translates to a higher value," Lim said.

Contrary to conventional wisdom which suggests companies that outsource typically come from higher-cost and labor-short places such as Australia, Japan, Hong Kong and Singapore, companies based in China and India--where labor and operational costs are low--are also outsourcing, the KPMG report said.

The survey found that 55 percent of Indian companies currently outsource their business processes, with another 33 percent planning to do so in the next three years.

Lim said: "Companies in Singapore should learn from the Indian experience by focusing their own resources in areas that are business critical, and outsourcing non-core activities elsewhere.

"If done right, [this would] allow a company to focus on its core competencies while accessing skills that are lacking in-house," she said.

Next outsourcing wave
According to the KPMG report, the next wave of business process outsourcing (BPO) will grow far greater than it is now and will "catch up with the levels of IT outsourcing".

"[BPO] will be increasingly pervasive as companies in Asia become more comfortable with entrusting some finance, accounting and human resources functions to outsiders," Lim explained.

Key criteria for companies selecting service providers include language support, as well as country or organizational culture, the report noted.

The survey found that companies in the region outsource a diversity of functions, including IT solutions (54 percent of all respondents), accounting, debt collection and tax processing (35 percent), data collection and report writing (26 percent), human resources (22 percent) and supply chain management (19 percent).

Meanwhile, companies in India are "far more open to outsourcing all kinds of business functions" compared to their peers from the rest of the region, according to the study.

Edge Zarrella, KPMG's global partner in-charge of information risk management noted that "outsourcing is gaining steam and companies with no plans to outsource may soon find themselves at a competitive disadvantage".

However, the report said that even though outsourcing is on the rise, there were certain areas where respondents indicated no plans for outsourcing, including strategic planning, sales and marketing.

Another area that can never be outsourced is accountability, the consulting firm said.

According to Zarrella, "outsourcing business processes doesn't mean [companies] can outsource risk", adding that "in-house executives now, more than ever, need to take responsibility for setting policy, direction and strategy and for seeing that [these are] executed correctly".

The report also predicted that "an explosion in demand may occur if companies start to outsource strategic services such as research and development, engineering and risk management, to remain competitive".

Chengdu looks to working with Singapore to capture global outsourcing market

Chengdu is looking to working with Singapore to capture a larger portion of the lucrative global outsourcing market.

The Chengdu-government backed software services provider TifoSoft Services opened its Singapore representative office on Tuesday.

TifoSoft says the office will serve as a launch pad for collaborations with Singapore companies to jointly explore opportunities in the United States and Europe.

According to an IDC research, IT outsourcing in China is estimated to grow at an annualised rate of nearly 40 percent between 2004 and 2009 - making it the fastest growing sector in the IT services market.

And with global business process outsourcing, or BPO, for offshore contractors estimated to be worth about US$24 billion, TIFOSoft sees great opportunities for growth.

It hopes to combine China's strong IT expertise at competitive cost with the Singapore branding to grow globally.

"We think if we want to expand our business in Europe and US, we need to be here and cooperate with the local companies," says Jade Zhang, Vice Chairman, TifoSoft Services.

Stephen Lim, chairman of Singapore infocomm Technology Federation says: "While we both compete, there are also a lot of space for us to collaborate as well, and that collaboration can improve both sides in terms of our global competitiveness.

"It may be seeking the correct partner in the short term. In the long term, I think it will upgrade both our industries significantly."