Outsourcing trend is good news for Asia Netcom

The offshoring of businesses from Europe and North America to Asia, such as call centers, is proving to be good news for regional data communications network operator Asia Netcom, its president and COO said on Tuesday.

The offshoring of businesses from Europe and North America to Asia, such as call centers, is proving to be good news for regional data communications network operator Asia Netcom, its president and COO said on Tuesday.

Asia Netcom is seeing strong demand from companies offering business process outsourcing (BPO) services, said Bill Barney, in an interview at the International Telecommunication Union (ITU) Telecom Asia 2004 conference and exhibition in Busan, South Korea.

Asia Netcom is working with several companies in the Philippines offering such services, and demand for telecommunications lines is rising fast, Barney said.

“These companies originally had multiple T1s,” Barney said, referring to 1.5M bit/sec leased line connections. “Now there are very few that don’t have at least 45M bit/sec or 150M bit/sec.”

Barney estimated Asia Netcom’s arrival in the Philippine market meant a potential tripling of the country’s BPO market because his company’s services were priced 60% lower than competitors, offering a reduced cost of doing business.

The company’s next challenge is in the Indian market, Barney said.

Asia Netcom is working with India’s Videsh Sanchar Nigam Ltd. (VSNL) to connect India and Singapore. The two companies plan to begin operating an under-sea fiber-optic cable called the Tata Indicom India-Singapore Cable by the end of this year. The 3,175-kilometer cable will connect Chennai and Asia Netcom’s cable landing station in Singapore and have an initial capacity of 320G bit/sec. It will be able to scale up to 5.12T bit/sec.

The company is also looking at expanding its reach in the countries it already serves as the outsourcing industry grows and new players emerge in areas where labor costs are cheaper.

At present, revenue from outsourcing companies make up about 5% of Asia Netcom’s total revenue and are doubling every six months, Barney said. He estimated the portion of revenue coming from outsourcing companies could grow to between 30% and 40% in the next two to three years if demand continues at its current pace.