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U.S. Customer Experiences and Best Practices When Going OffshoreProduct Type: Market Research ReportPublished by: IDC Published: May 2004 Product Code: R104-15604 Description This IDC study provides an in-depth look at the offshore experiences of 30 U.S. enterprises. In addition to providing detailed information on the magnitude of current and future customer expenditures, as well as types of services procured from offshore locations and associated geographic preferences, this study provides insight into the best practices customers are looking to utilize in leveraging offshore as part of a service delivery model. The purpose of this document is to help players looking to provide offshore services as part of sets of service offerings with a better understanding of what it will take to compete successfully while using this type of service delivery and business model. Key areas analyzed include building an optimal investment strategy, managing key challenges, leveraging emerging opportunities, and supporting customer requirements. "While an offshore business strategy is looked toward in today's competitive marketplace to meet the primary customer need to lower costs, it also brings with it a broad array of opportunities and challenges that will likely affect not only the makeup of the competitor landscape, but also the structure of how services will be delivered in the future," said David Tapper, director, Outsourcing, Utility, and Offshore Services. "For players to compete successfully they will need to develop robust investment strategies across infrastructure, geographies, capital equipment, and operational skill sets, as well as take advantage of revenue opportunities emerging from utilizing offshore locations with particular focus on emerging services involving utility computing and ASP." Table of Contents Table of Contents IDC Opinion In This Study Methodology Profile of Surveyed Customers By Vertical Industry Figure: Respondents by Vertical Industry By Size of Organization Figure: Respondents by Company Size By Job Title Figure: Respondents by Title By Size of IT Budget By Business Model Figure: Respondents by Captive and Sourced Offshore Services Executive Summary Situation Overview Trend Toward Offshore Trends in the United States Figure: Key U.S. Market Trends Sourcing Selections Figure: Offshore Service Business Models Business Model Country Preference Figure: Primary Current Offshore Service Centers Figure: Emerging Offshore Service Centers Services Offshored Phase 1: Historical Services Offshored Figure: Services Historically Offshored Phase 2: Services Currently Moving Offshore Figure: Services Currently Moving Offshore Phase 3: Future Services Offshored Figure: Services Likely to Be Offshored in the Future Services with Limited Offshore Potential Figure: Services with Limited Potential to Be Offshored Players Figure: Key Offshore Players and Strategies Pure-Play Offshore Providers Regional and Local Players Global Players Customer Experience with Offshore Years Offshoring Budget Expenditures Figure: Offshore Services Procurement Share of IT Budget Now and in the Next 12?24 Months Figure: Drivers of Offshore Services Budget Change in the Next 12?24 Months Services Offshored Figure: Initial Services Moved Offshore Drivers to Leveraging Offshore Figure: Business Drivers of Initial Offshore Outsourcing Highest-Risk Offshore Factors Figure: Top Risk Factors Considered When Moving Offshore Selection Factors Figure: Important Diligent Selection Factors for Offshore Outsourcing Business Model Figure: Offshore and Onshore Mean Share of Resources Implications in Customer Offshore Experience Management Organization Figure: Skills Required for Managing Offshore Services Figure: Job Title Best-Suited to Manage Offshore Vendors Figure: Management Position with Most Influence over Outsourcing Contracts Implications in Management Organization Management Processes Communications Figure: Top Communication Priorities for Offshore Process Information Figure: Preferred Method of Offshore Service Communication Figure: Ideal Frequency of Offshore Service Communication Intracountry Integration Figure: Processes Used to Overcome Intracountry Integration Issues Organizational Adjustments Figure: Most Difficult Offshore Adjustments Figure: Method of Mitigating Internal Employee Reaction to Offshoring Implications in Management Processes Offshore Benefits Figure: Benefits of Offshoring Figure: Time to Benefits from Offshoring Implications of Offshore Benefits Vendor and Country Selection Vendor Selection Figure: Types of Offshore Vendors Considered Figure: Top Selection Criteria for Offshore Vendors Figure: Top Sources for Finding Offshore Service Vendors Figure: Basis for Selection of Offshore Vendors Country Selection Figure: Preferred Countries for Offshore Outsourcing Figure: Top Criteria for Determining Offshore Country Attractiveness Implications of Country and Vendor Selection Contract Management and Pricing Figure: Top Offshore Service Contract Management Issues Figure: Pricing Methodology for Offshore Service Contracts Implications of Contract Management and Pricing Moving Up the Value Chain Figure: Offshore Company Attributes Figure: Offshore Vendor Recognition Implications of Moving Up the Value Chain Future Outlook Market and Industry Implications Impact of Changing Patterns in Spending Brand Equity and Value Proposition Figure: Changing Patterns in Offshore Service Spending Core Competency Business Risk Degree of Investment Figure: Investment Requirements Need for Domain Expertise ? Regulations Opportunities Figure: Key Short-Term and Long-Term Offshore Opportunities Short Term Long Term Challenges Mitigating Offshore Risk Factors and Backlash Effects of Emerging Technologies and Services, OTS Software, and "Improved" Products on Offshore Internal Organization Resistance to "Traditional" Outsourcing Service Provider Stability Offshore Player Brand Limiting Opportunity Expansion of Global Players Forcing Offshore Player Expansion Supporting Key Regulatory and Compliance Factors Essential Guidance Actions to Consider Managing the Backlash Targeting Key Influencers and Buyers Ensuring Key Customer Contract Management Requirements Leveraging Emerging Opportunities Branding "Higher, Value-Added" Sets of Capabilities Ensuring Appropriate Value Proposition Figure: Annual Reinvestment Cycle for Offshore Services Aligning Investment Strategy with Key Trends Ensuring Cost Control Through Fixed Time/Fixed Price Contracts Learn More Related Research Appendix: IDC Survey Instrument Offshore Outsourcing Profile and Demographics Offshore Experience Challenges and Adjustments Benefits and Gains T&Cs in Offshore Outsourcing Budget Table: Share of Overall Offshore Budget Country and Vendor Perceptions Criteria Moving Up the Value Chain Words of Advice Definitions Business Models Service Options Synopsis |
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