Report Finds Outsourcing to be Key to Lowering Capital Outlay While Driving Growth

There is much debate over the dominating forces in the communications, media, and technology (CMT) markets as to whether the top performing companies are produced only by developed nations, or if emerging markets are proving to be a formidable force.

Oliver Wyman’s first annual State of the Industry Report analyzes the performance of CMT companies as measured by the Shareholder Performance Index (SPI).

The calculation of the SPI allows for consistent comparison of shareholder returns by adjusting for the volatility of returns, differences in local interest rates, and mergers and acquisitions.

“Overall, the CMT industry expanded by an impressive 20 percent in 2007,” said Robert C. Fox, head of Oliver Wyman’s Communications, Media, and Technology practice. “Patterns of growth differ markedly across sub-sectors and geographies, yet there are some common attributes that distinguish all of the top performers from merely ordinary players.”

Emerging markets have enjoyed the flourish of both customer demand and business innovation. China, in particular, showed CMT companies growing at 34 percent annually between 2002 and 2007.

Overall, the value of emerging market firms grew at more than twice the rate of developed economy firms — at 38 percent and 15 percent, respectively.

It is evidence such as this that is encouraging companies to consider offshoring their contact center operations. This report found that companies experiencing slow growth in their mature home markets can rely on emerging markets as a source of revenue and earnings growth.

In fact, several of the top 60 domestic firms made operational improvements to help drive growth, both traditional moves such as offshoring and restructuring IT/network operations. Newer moves include network outsourcing.

Bharti Airtel (News - Alert), a company expanding from an emerging market, built its successful organization on a lean foundation, outsourcing its network deployment, IT services, and customer contact centers. Creative outsourcing techniques have enabled the company to save on capital expenditures.

Effective outsourcing has allowed this firm and others to reap the benefits of lower operational expense sooner to effectively lower overall costs and increase flexibility to handle changes in customer demand.

While it is true that not all companies will effectively reduce their overhead and drive customer satisfaction with strategic outsourcing, the reality is that companies both in developed and emerging markets have successfully done so.

An internal examination in light of external forces will help in driving this decision, but the proof of effective contact center outsourcing is in the bottom line.