Tuesday, June 29, 2004

Offshoring Q & A with Winpro CEO

News.com posts an Q and A with Winpro CEO Vivek Paul. One particularly interesting, and somewhat embarassing, quote about U.S. graduates I have included below.

"That has a built-in assumption (that) there will not be enough jobs left in the U.S. to fulfill the indigenous graduating engineering base. That is not true. If anything, the number of engineers graduating in the United States is dropping. As (General Electric CEO) Jeff Immelt said, the U.S. graduates more sports therapists than engineers. In some sense, the U.S. is filling that gap with imports of people. In other words, people are flowing to where the work is--immigration."

OffshoreXperts.com - The Outsourcing Marketplace™

Monday, June 28, 2004

The Micro-Multinational

Wired reports on the new trend for startups in america that outsource labor termed the micro-multinational by Silicon Valley venture capitalists.

"Outsourcing is change. As ever, change will be harrowing for a few; there will be "dislocations," to use the jargon of labor economists. Some people will be too old, too inflexible, or otherwise unable to find new work. But most Americans can relax. Cheap overseas labor means more jobs in the US, not fewer. And working for a company that's both global and small might just be the best of both worlds."

OffshoreXperts.com - The Outsourcing Marketplace™

Sunday, June 27, 2004

Smarter Computers Threaten Jobs

Information Week article say that technology adding intelligence to computers is a bigger threat to jobs than offshore outsourcing.

"In the manufacturing sector in the 90s, companies sold $100 billion worth of software and hardware for robotics, said Harvey Cohen, president of Strategy Analytics. While the technology increased productivity and added to companies' bottom lines, it also eliminated 10 million jobs worldwide."

"So the anger expressed by politicians and workers over high-tech jobs lost to India and other low-wage countries is really a distraction from the real threat, according to Strategy Analytics. 'Looking forward, we don't really see the big threat in the long run being outsourcing to India,' Cohen said. 'We see the real threat from outsourcing to intelligent capital.'"

OffshoreXperts.com - The Outsourcing Marketplace™

Saturday, June 26, 2004

The Art of Offshore Outsourcing

InfoWorld reports on how to outsource more successfully.

"offshore project success requires self-examination on the part of the client company to clarify goals and expectations, rigorous project-management discipline, and an understanding of how best to manage communications with everyone involved."

"'This may sound obvious, but probably the biggest stumbling block to offshore outsourcing is that after all the contracts have been signed, companies abdicate responsibility for projects to the outsourcer,' Deepak Khandelwal, analyst of business process outsourcing at McKinsey, said during a forum at the CeBIT America show in May."

OffshoreXperts.com - The Outsourcing Marketplace™

Thursday, June 24, 2004

Enter The Dubai Zone

CPIreports Dubai Internet City has announced the Dubai Outsource Zone (DOZ) as the world first "free zone" dedicated to the outsourcing industry. It sounds great for business, wonder if it will catch on in America, hint, hint, wink, wink. The announcement was made last week at the Outsource World held in London.

"Dubai Outsource Zone will provide a comprehensive infrastructure and environment for outsourcing companies to set up global or regional hubs servicing the worldwide market. DOZ’s offering includes 100% exemption from taxes, arguably the world’s most reliable technology and communications infrastructure, a one-stop shop of support services and the best possible working environment."

"DOZ also offers a host of business incentives and support services that incorporate global best practices. These incentives and services seek to eliminate problems faced by outsourcing companies in other offshore locations. Business incentives include 100% exemption from taxes, 100 % ownership of their business, 100% Repatriation of Capital and Profits and no Currency Restrictions."

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Accenture Lands Barclays Outsourcing Deal

Vnunet.com reports financial giant Barclays has signed a £400m outsourcing deal with Accenture for development of its UK banking systems.

"Barclays hopes that the deal will enable it to lower the costs of developing applications, and to respond more quickly to market demands."

"Barclays handed over its desktop management to IT services firm EDS in a £210m deal last year."

OffshoreXperts.com - The Outsourcing Marketplace

Africa as an Outsourcing Destination

Daily Times reports Africa is becoming a player in the new world economy as a viable outsourcing destination. But the question is, will natural and political barriers prevent outsourcing to continue there.

"Ghana is best known for producing cocoa and gold, but today Affiliated Computer Services (ACS), a Texas company that runs the outsourcing operation, is the country’s largest private employer. African ‘key punchers’ earn $4 to $5 a day — four times the legal minimum wage — and receive health insurance, meals, and subsidized transport. A small number of African engineers and professionals earn much more, and receive periodic training in advanced technologies."

"African governments also must be willing to start small: expend a lot of effort to attract pilot projects in the hope of larger employment in the future. With sensible reforms, many barriers can be removed or at least eased."

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Outsourcing Driving IT Growth

ZDNet reports worldwide spending on IT services is up 6.2 percent from 2002 according to a recent report published by research firm Gartner.

"IT services range from hardware support contracts to systems integration work to outsourcing--which is when a company farms out jobs such as application development or help desk support. Outsourcing, which can be done within the same country or involve sending work to another nation, is the main engine for IT services right now, said Gartner analyst Kathryn Hale."

"Through 2004, outsourcing will continue to drive the growth in the worldwide IT services market, with IT management and process management growing faster than consulting services and development and integration services,"

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Monday, June 21, 2004

Japan Giant Is Outsourcing Offshore

Money reports the parent company of Panasonic, Matsushita Electric Industrial Co. Ltd., is cutting jobs and moving them offshore to China and Malaysia. Outsourcing and Offshoring is not limited to the US, it's a truly global process.

"After two years of losses, Matsushita swung to profit in the past business year ended March 31, helped in part by cost-cutting efforts from a restructuring programme started three years ago that included plant closures and around 13,000 job cuts."

OffshoreXperts.com - The Offshore Outsourcing Marketplace

Friday, June 18, 2004

Offshoring Threatening Commercial Real Estate?

Reuters.com reports offshoring may be a threat to the commercial real estate recovery. This is based on the speculation of property academic and consultant Leanne Lachman.

I'm not sure I agree with her logic.

"I argue the slope of the line will steepen more dramatically. Media coverage of outsourcing has triggered growing awareness of the issue among chief executives who realize they have to cut their costs too... These emerging markets are also rapidly moving up the value chain in office jobs"

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7 Myths of Offshore Outsourcing

Computerworld lists 7 common myths of offshore outsourcing.

"However, the greater benefit of outsourcing is the migration from a fixed-cost IT environment to a variable pricing model that allows firms to gain better control over operating costs."

"It's no coincidence that 260 of Fortune 1,000 companies have selected India as their nation of choice for outsourcing. Indians tend to have excellent English-language skills and a highly trained technical workforce due to the first-class education system."

"Today, the question is not if you will outsource, but when and how."

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Outsourcing Backlash Won't Last

Although offshore outsourcing is an emotional sore spot for some, research by Gartner estimates it will heal for most by the end of 2005.

Business Line reports:

"Global sourcing of IT services is an irreversible megatrend although its true impact is yet to be felt, Gartner Global Tech Industries Group Vice President Mr Craig Baty said.

By 2006, we will see a reliable global sourcing market, he said at the Third Regional Infocomm Conference here."

"By the time the offshoring market has matured, significant consolidation will have occurred. About 60 per cent of offshore outsourcing companies will fail within three years, he added."

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Thursday, June 17, 2004

Companies Underestimate True Cost of Outsourcing

Companies are not considering the real cost of offshore outsourcing according to a survey of 150 senior IT executives across Europe.

IT World reports:

"The research showed that 80 percent of organizations have suffered problems ranging from time and cost overruns, to non-adherence to specifications and requirements, when outsourcing ADM projects."

"He thought that too many companies believed the hype and thought they could achieve 40 percent cost savings when the real figure might be closer to 15 percent."

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Fortune 500 Companies Outsource to L&T Infotech

The Financial Express reports India based L&T Infotech won $150 million worth of outsourcing orders fro two Fortune 500 companies. They did not mention names but they already have a $100 million deal from Motorola.

"Company officials, when contacted, declined to comment. Sources told eFE that the company has bagged two orders from two Fortune 500 companies. One of the orders is worth $50 million over a three-year period while the other order is worth $100 million for a five-year period."

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Monday, June 14, 2004

Healthcare Outsourcing in India

The healthcard sector of BPO is providing opportunity to India based service providers reports the Kerala News. Key services include imaging, disease management and claims processing.

"The demand for new products and services, increase in competition and a real-time business environment are making BPO an important tool for healthcare majors, says the National Association of Software and Service Companies (Nasscom)."

"According to the report, BPO is enabling healthcare companies to focus on the 'differentiating aspects' of their business while moving 'non-differentiated but necessary tasks' to outsourcing service providers."

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Friday, June 11, 2004

Report: Is Offshoring Overrated?

According to a new report by the Labor Department offshoring is not as widespread as people think. The New York Times article takes a good look at the statistics behind the report. I saw this article again on MSN/Money and made for quite a lengthy discussion on Slashdot.com.

"...the new data covers layoffs only at companies employing at least 50 workers where at least 50 filed for unemployment insurance and the layoffs lasted more than 30 days. Even more important, the report does not account for jobs created by American companies overseas that did not involve a direct layoff in the United States."

"In a speech last March, Ben S. Bernanke, a Federal Reserve governor, noted that estimates of jobs lost to outsourcing were quite small compared with the 15 million jobs lost every year for all reasons."

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India's Outsourcing Faces Challenges

According to The Straits Times Infosys CEO predicts that India's offshore outsouring industry could face problems due to high attrition, poor infrastructure and lack of data protection laws.

"Mr Nandan Nilekani, chief executive officer of Infosys Technologies, India's second-biggest software exporter, said business process outsourcing was based on reputation and urged the industry to deliver quality work."

"Analysts say outsourcing attrition rates vary between 20 and 40 per cent in some companies while averaging at least 15 per cent at top firms.

Nasscom said in a recent report that the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012."

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Microsoft & HP Increase Outsourcing

Sify.com reports Mircosoft and HP will both be expanding their outsourcing operations.

"Microsoft will increase the number of staff at its software development centre in Hyderabad from 200 to around 500 by 2005 while Hewlett-Packard is setting up a back-office accounts processing facility in Bangalore for expanding outsourcing operations in India."

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Wednesday, June 09, 2004

Outsourcing Company Buyout

Yahoo reporting the buyout of India based Hughes Software Systems Ltd. by Singapore based Flextronics International Ltd. is the beginning of a new trend. You can expect more consolidation as the offshore outsourcing industry matures.

"Outsourcing of services and manufacturing is India's fastest-growing industry. For instance, India's call centers now employ an estimated 150,000, only three years after their inception. In 2004 fiscal year alone, India's software and outsourcing industry added 70,000 jobs."

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Indian Outsourcing Backlash Backfires

Sify.com reports the controversy over offshore outsourcing to India is giving them free publicity.

"Rohit Kapoor, chief executive officer of EXL, which provides financial outsourcing services, said the protests have made mid-sized firms more aware of the way big companies are slashing costs and boosting profits through outsourcing."

"Kapoor said the increasing interest shown by foreign small- and medium-sized companies was good news as they were not only likely to seek outsourcing of services, but also consultancy advice on systems."

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Tuesday, June 08, 2004

Ireland Back in the Outsourcing Game

E-Commerce News reports on the current state of outsourcing in Ireland. Seems they are competing based on knowledge or skill rather than price.

"Over the past three years, the attractively low wages found in China, India and Eastern Europe have eclipsed Ireland's financial advantages, spurring many global companies to switch allegiances and scale back or cancel their plans for Irish operations."

"Ireland is clawing back to reclaim its status as a major outsourcing destination by emphasizing its work force's brainpower and flexibility, instead of lower costs. A new government-sponsored marketing campaign touts the Irish labor force's ability to work at all levels of the business process, from factory floor to executive suite."

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Law Firm Outsourcing

The New York Lawyer is reporting a new joint venture will offer American law firms a means of outsourcing their support staffs.

"The joint venture between Hildebrandt and New York-based outsourcing group OfficeTiger will not mark the legal profession's first foray into offshore outsourcing, but the prominence of the Somerset, N.J.-based Hildebrandt, which has advised many of the nation's top law firms, will no doubt lend the issue further momentum among lawyers."

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Is Outsourcing Good or Evil?

Daily Yomiuri On-Line posts a good commentary on the raging debate over offshore outsourcing. This one is worth the read, he makes some very good points.

"Outsourcing of arguably lower tech jobs, such as basic industrial manufacturing, has been a reality for at least three generations. What's different now is that outsourcing is moving up the food chain and threatening the professional middle class."

"India is a natural destination for knowledge-based industries. Education is a high priority for a sizeable portion of the Indian population. Plus knowledge is predominantly language-based, and many educated Indians speak English."

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Monday, June 07, 2004

Outsourcing Motivates Compuware

Crain's Detroit Business reports Detroit based Compuware looks to the trend in outsourcing as motivation to build better products here at home. Competition breeds quality...remember American cars before the imports?

"While some view offshore outsourcing as a way to save money and others as the whipping boy for the destruction of American jobs, Peter Karmanos Jr. looks at it another way: an incentive to get better."

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Sunday, June 06, 2004

The India Outsourcing Boom, Redux

Computer Weekly reports even more data on the India outsourcing boom.

"Despite the challenges such as slow growth of IT spending globally, a jobless recovery in major markets and appreciation of the Indian rupee [against the US dollar], the Indian software and services industry has been able to maintain its growth momentum and consolidate its partnership with overseas customers, adding to their competitiveness," said Jerry Rao, chairman of Nasscom.

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The India Outsourcing Boom

Outsourcing has reached inescapable momentum according to The National Business Review. This is another article reviewing the stats of offshore outsourcing and suggests American jobs lost to outsourcing were lost to the tight economy first.

"The effect is astonishing. AMR said that services companies Infosys and Wipro increased their revenues by 40 per cent and 36 per cent and their staffing by 46 per cent and 35 per cent, respectively, in the past 12 months. IBM -- which is everywhere cited as a leader in offshoring, both in India and the EU -- and Accenture are expected to add 15,000 additional offshore jobs to the Indian economy by the end of next year."

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Bangalore Is Booming

The Bangalore IT sector is booming right now. Australian IT reports a labor shortage in the India state Kamataka, especially Bangalore, due to the increase of American and EU outsourcing.

"The state has a 36 percent share in India's software exports which is much higher than any other centre," Mr Naidu said. "We are expecting to keep the momentum of above 30 percent growth this fiscal (year)."

"Another information technology official, K. M. Shivakumar, said the Karnataka government planned a program to train teachers to groom students for the outsourcing industry which is facing an acute problem of skilled labour."

OffshoreXperts.com - Offshore Outsourcing Marketplace

Thursday, June 03, 2004

Outsourcing Goes Primetime Tonight

Discovery Channel is airing "Thomas L. Friedman Reporting: The Other Side of Outsourcing" tonight at 10pm ET/PT. Also, be sure to check out "Outsourcing: A Chronology".

"India produces about 300,000 college graduates with engineering degrees each year, according to an Indian government Web site. That's approximately six times the number of Americans who earn engineering degrees annually, according to the National Science Foundation."

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Indian BPOs Picking Up More Accents

The Hindu Business Line reports Indian BPO companies are now looking towards non-English speaking markets for business.

"Multi-lingual processes are the natural progression for the successful IT Enabled Services-Business Process Outsourcing (ITES-BPO) players and part of their expansion to new markets."

OffshoreXperts.com - Offshore Outsourcing Marketplace

India Becomming an Animation Destination

TVNZ reports India is gaining favor as an animation center with the likes of Taiwan, Singapore, South Korea and the Philippines. It's a small world afterall.

"India is winning animation contracts for the same reasons it has become such a hot outsourcing destination for other industries: lower costs, a large English-speaking workforce and a track record in meeting Western companies' technology needs."

"But analysts warn the sector could become nothing more than low-cost sweatshops unless Indian companies seek to offer advanced formats and compete to become co-producers and owners of their creations."

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Visit Potential Outsourcing Locations

Vnunet.com article talks about the benefits of visiting any potential offshoring location firsthand. Not to sure how practical this would be for most companies but it would certainly be beneficial. I would think this may give rise for the need of localized and sanctioned offshore clearinghouses or regulatory agencies.

"Before signing any outsourcing deal, firms need to identify and manage security risks, said Kelly Kavanagh, senior analyst at research firm Gartner. He pointed out that offshore outsourcing requires even greater care in several areas, including the degree of control over customer data."

"Rajah predicted that offshore IT outsourcing would increase as the economy improves. "Companies will be picking up on new development spend and running new projects and they won't have enough IT people in-house to do it," he said."

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Sears Outsources to Computer Sciences

ComputerWeekly.com reports Sears awarded a 10 year, $1.6B outsourcing deal to CSC for it's desktops, servers, data networks, data analysis systems and web-related systems.

"Sears expected that CSC will improve the operations of its IT infrastructure by making it more stable, keeping it more updated and running it more efficiently and economically."

"CSC is one of the world's largest providers of IT services with $14.8bn in revenue in its 2004 financial year, which ended on 2 April."

OffshoreXperts.com - Offshore Outsourcing Marketplace

Wednesday, June 02, 2004

Are Malaysians Better at Outsourcing than Singaporeans?

According to The Star Online they are, or at least a recent study by Unisys Corp says so. The study included 101 companies from both regions.

"Malaysian financial services companies have a more sophisticated view of business process outsourcing than their Singaporean counterparts, according to a recent study commissioned by Unisys Corp."

"Malaysian companies were more focused than Singaporean companies on eliminating “points of pain” in their transaction cycle and concentrated on expanding their business, rather than price."

OffshoreXperts.com - Offshore Outsourcing Marketplace

Tuesday, June 01, 2004

CFO.com Spotlights Offshore Outsourcing

CFO.com cover story on offshoring talks about the cost savings, public relations problems and hidden risks involved with outsourcing. A series of in-depth articles cover offshore outsourcing from a variety of perspectives.

"Nothing roils the American body politic like foreign competition for jobs. Today's outcry over offshoring reflects a realization that there is no longer a clear limit to the level of job function that can be outsourced overseas — college degree or the color of one's collar notwithstanding."

Making It Work - How to avoid some common offshoring blunders and what to do when you can't.

Offshoring by the Numbers - Outsourcing survey results of 275 finance executives at a broad range of companies.

The Backlash - The only thing that will make the furor over offshoring worse is hiding from it.

The View from the East - India's upstart IT-services firms face their own challenges from their giant rivals in the West.

Reader Opinions on the Offshoring Backlash - Only 5 percent of those who are offshoring today say public disapproval will cause them to cut back.

OffshoreXperts.com - Offshore Outsourcing Marketplace

Typewriter Manufacturers Lay Off Thousands

Naples Daily News writes a good article of the effects of limiting offshore outsourcing in America. Computers sent typewriter manufacturers into bankruptcy, should we have limited the manufacture of computers just to save jobs?

"Does anyone seriously believe that, if we begin creating international trade restrictions to limit the outsourcing of American jobs, other countries will not pass similar restrictions on the outsourcing of their jobs to America?"

"Anything that increases economic efficiency — whether by outsourcing or a hundred other things — is likely to cost somebody's job. The automobile cost the jobs of people who took care of horses or made saddles, carriages, and horseshoes."

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