Outdoing Themselves
Outsourcing internationally is increasing among small and medium-size companies who want better work for less money
Nov 03, 2005
Matthew Franceschini, chief executive of the fast-growing contract management company Entity Solutions, saved $150,000 outsourcing development of a software system. The business, which turned over $84 million in 2004-05, had communication problems with the developers but Franceschini has not regretted the decision. "Our philosophy is that where a company is specialised, they are better equipped to do a job, so we commissioned a software development house [to build our IT system]."
The global market for outsourcing will increase from $US230 billion in 2005 to $US310 billion in 2008, according to estimates in a study by the National Association of Software and Service Companies/McKinsey. Research for the BRW Fast 100 issue (October 13) reveals that international outsourcing is not just for big companies. More small and medium-size businesses are discovering the benefits of sending work overseas. International outsourcing saves money and enables them to take advantage of world-class specialists. Almost 20% of companies on the Fast 100 list are global outsourcers; they are outsourcing IT development, manufacturing and marketing.
Heather Ridout, the chief executive of the Australian Industry Group, says companies are turning to international outsourcing because of the intensity of competition in the Australian market and the high value of the Australian dollar, which buys more in some countries. "Companies are realising they have to be part of global production networks to be competitive. With a very open economy like Australia, it is fundamentally important. It is a really basic need for companies to survive," she says.
The global market for outsourcing will increase from $US230 billion in 2005 to $US310 billion in 2008, according to estimates in a study by the National Association of Software and Service Companies/McKinsey. Research for the BRW Fast 100 issue (October 13) reveals that international outsourcing is not just for big companies. More small and medium-size businesses are discovering the benefits of sending work overseas. International outsourcing saves money and enables them to take advantage of world-class specialists. Almost 20% of companies on the Fast 100 list are global outsourcers; they are outsourcing IT development, manufacturing and marketing.
Heather Ridout, the chief executive of the Australian Industry Group, says companies are turning to international outsourcing because of the intensity of competition in the Australian market and the high value of the Australian dollar, which buys more in some countries. "Companies are realising they have to be part of global production networks to be competitive. With a very open economy like Australia, it is fundamentally important. It is a really basic need for companies to survive," she says.