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Outsourcing is fast being accepted by Singapore companies as a mainstream business practice.
According to IT consultants Gartner, some 15 percent of local firms engage in outsourcing IT services to lower cost countries such as India.
This is much higher that the 7 to 8 percent seen in Australia but comparable to Hong Kong.
Gartner says Singapore firms typically outsource business processing and application development services offshore.
With outsourcing on the rise, another trend is slowly emerging and that is multi-sourcing.
This refers to the practice in which companies outsource services to multiple providers rather than just one.
James Longwood, Vice President - Research, Gartner, said: "The key reason is that clients realised that one service provider might be good at everything, but not quite good enough for particular things. If you have a look at the defence arena, it's critical to have someone very good at managed network services - there's a security element to that for example. If you're in banking, the desktop and ATM, you need someone very good in that kind of area."
By 2007, Gartner expects 70 percent of deals to be multi-sourced and, in a typical case, four service providers will be involved.
Gartner estimates that right now, only one-third of firms worldwide are prepared for multi-sourcing as they lack the required organisational structure and processes to handle multiple service providers. - CNA /ch
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