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Business Wire, Feb 14, 2005

Effective Offshore Staff Management Essential for Successful Outsourcing

PALO ALTO, Calif. -- Efficient co-ordination and communication of outsourcing activities hinges on the company commitment and discipline in ensuring that offshore staff and the home office work toward common goals.

New analysis from Frost & Sullivan, Global Offshore Outsourcing and Offshoring of IT Jobs, reveals that the value of IT jobs exported totaled $51.6 billion in 2004.

"Outsourcing is a continuous process where a conducive environment having a free-flow of information between the home office and offshore staff is critical to avoid cost overruns and project delays," says Frost & Sullivan IT Consulting Analyst Jarad Carleton.

Multiple time zones complicate the issues surrounding successful completion of outsourcing projects, especially while struggling to meet important project deadlines.

Establishing realistic timelines and performance metrics would allow companies to monitor progress at regular intervals and ensure on-schedule project completion. Additionally, stringent service-level agreements ensure compulsory adherence to projected cost savings.

Selection of an appropriate offshore outsourcing company is important for successful outsourcing. Companies can match their needs to the services offered through a complete analysis of cost differentials, standards, service levels, certifications, and risk mitigation.

Companies in higher cost countries can also benefit from the tax incentives offered by many offshore outsourcing countries. For example, India provides 100 percent tax deduction on all foreign export profits and a five-year tax holiday for offices that are set up to service the hardware and software industries.

Using a combination of qualitative information based on primary research in 14 countries together with quantitative data obtained from end-user surveys among IT decision-makers in France, Germany, Hong Kong, Japan, the United States and the United Kingdom, Frost & Sullivan analysts tracked global offshore outsourcing and off-shoring of IT jobs for the period 2002-2004.

"Our study proves that India is not the only place to obtain IT talent and it may not be the cheapest with China emerging as a close competitor," reiterates Carleton.

China has created very specific incentives to attract IT jobs from developed countries. A new incentive program called "Five Exception and Five Reduction" will allow companies to get tax breaks as well as free first year rent.

Chinese governmental bodies are also actively promoting specific regions, devoting financial resources to increase the size of the IT labor pool and creating offices that assist foreign businesses in finding qualified IT staff.

Malaysia's Vision 2020 program is a longer lasting focused program to encourage foreign direct investment by high technology industries. Benefits ranging from partial exemption of income tax to government grants for building facilities.

There are also legitimate business reasons for utilizing the Mexican or Brazilian IT labor pools that are frequently overlooked. Romania and Poland are also ideal low cost locations with highly skilled IT labor that are better able to meet the business needs of Western Europe than countries such as Malaysia, China, and India.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. While serving clientele including Global 1000 companies, emerging companies, and the investment community, Frost & Sullivan's comprehensive industry coverage includes a unique global perspective that combines ongoing analysis of markets, technologies, econometrics, and demographics.

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