Outsourcing can act as a key enabler and catalyst in the growth of sectors like telecom, retail, insurance, healthcare, hospitality and airlines by facilitating release of scarce capital, quality talent, innovative practices and management bandwidth, says a study by outsourcing research firm the Everest Group.
The study said the domestic retail industry is likely to spend about $1.5-2.5 billion over the next five years on outsourcing their IT operations. The global outsourcing market stands at $400 billion, of which 85% of the work is done onshore and the remaining in offshore. India has about 30-40% share in the $60 billion offshore market.
??So far, India has been seen as a leading supplier destination in the outsourcing arena. It?s potential as a buyer of outsourcing has not yet been explored to the fullest. Today, these sectors are witnessing unprecedented growth, which will further be fuelled by the increasing entry of global players,?? said Gaurav Gupta, country head, Everest Group.
According to the survey, IT outsourcing alone can improve EBITDA margins by 30-50 basis points for the retailers, which is significant considering the retailer’s imperative to expand margins. This saving, apart from improving the bottom-line of companies, can be ploughed back into growth initiatives allowing retailers to drive additional 4-5% growth with the same capital.
“Outsourcing can create growth opportunities by releasing the capital otherwise required for investment in non-core assets and activities thereby reducing the capital investment required per unit of growth. It also reduces operating costs through more efficient and competitive service delivery,” said Punish Mishra, senior consultant, Everest Group.