INTRODUCTION
CHANGING BUSINESS PARADIGM
The International Data Corporation (IDC) predicted that the worldwide outsourcing market would grow from $100 billion in 1998 to $151 billion in 2003, with a compound annual growth rate (CAGR) of 12.2 percent.
The 1990s witnessed a massive spurt in service outsourcing, particularly in the IT services sector.
Over 60% of the Fortune 500 companies, located in Europe and America are outsourcing their IT operations offshore to developing economies like Asia, Africa, the Carribean and Latin America with a view to achieve cost reduction. The primary contributor to cost reduction was the wage disparity between outsourcing companies and the service providers. This first phase of outsourcing leveraging wage arbitrage is towards completion with a large chunk of cost reduction potential being realized.
Today, outsourcing companies, have identified quality and productivity as the key differentiators in evaluating service providers. These parameters are of prime importance since most software solutions have relatively small payback periods. Service providers also bring complementary knowledge, ideas, and business...
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