Wednesday, July 28, 2004

India Easing Tax on Outsourcing

Sify.com reports India will ease the tax burden on multinationals outsourcing work to units in India.

"The rule change removes a distinction that had meant the outsourcing units of multinationals were taxed more heavily than other parts of their business in India, the Economic Times said in an unsourced report."

"The newspaper said Finance Minister Palaniappan Chidambaram had resolved the issue and a foreign company would now be taxed more heavily only if paid its dependent Indian unit less than the market rates for a service."

Atlanta, Georgia Firms Outsource India

KansasCity.com reports Atlanta, Georgia based First Consulting Group will hire 160 programmers in Bangalore to develop software for Atlanta based Witness Systems.

"He said the Bangalore programmers will develop software that runs call center operations and Internet-based telephony. Witness Systems employs 600 people worldwide and has annual revenues of $110 million. First Consulting group employs more than 2,000 people and has annual revenues of $270 million. Both firms are listed on the Nasdaq stock exchange. First Consulting already has a development center in Bangalore, where it employs 450 engineers."

$1.3 Billion Global Outsourcing Deal

UK based vnunet.com reports Zurich Financial Services has outsourced its global IT applications to Computer Sciences Corporation in a seven-year agreement estimated to cost $1.3bn.

"Zurich's chief information technology officer Michael Paravicini said the deal would improve efficiency of applications service delivery. 'This relationship is an important enabler for Zurich's further evolution from a globally diversified business to a globally leveraged business,' he said in a statement."

Monday, July 26, 2004

Oracle Looking to China

Yahoo! News is reporting Oracle Corp. is looking to increase its research capacity in China.

"California-based Oracle, the world's second most valuable software company after Microsoft Corp., runs two research facilities in China, one in the capital and another in the southern boomtown of Shenzhen."

"It is now considering establishing new research bases in the less prosperous regions of western and northeastern China as well as the booming Yangtze delta region around Shanghai"

Saturday, July 24, 2004

Outsourcing Pushs Wipro Profits

Gulf Daily News reports India's third-largest software exporter, Wipro, profits grew by 83% in the first fiscal quarter from the previous year. This gain is attributed to high demand for outsourcing services and higher prices paid for software development.

"Wipro has added 35 new clients in the last quarter and 23 of them are based in the US, while the company has hired 3,015 programmers in India."

"This will give you a clear indication of what business feels about outsourcing."

Thursday, July 22, 2004

Does Offshore Outsourcing Criticism Matter?

InformationWeek reports the public perceptions of outsourcing will have no impact on decisions to outsource jobs for many companies. Or at least their ability to speak publicly about it. This is based on a survey conducted by Patni Computer Systems of 100 clients.

"The survey Patni conducted of 100 clients reveals that more than half felt that public perceptions of outsourcing will have no impact of their decisions to outsource jobs. Three of 10 admit that the only impact was their ability—or inability, as I see it—to speak publicly about their outsourcing initiatives. Sixteen percent say the debate made them reconsider their outsourcing strategy, but none contend it forced them to postpone outsourcing projects. In fact, nearly six of 10 expect to up their outsourcing budgets by 20% or more in the next 18 months."

Tuesday, July 20, 2004

Big IT Outsoucing

InformationWeek reports big outsourcing deals valued at more than $1 Billion are projected to grow this year. This is according to a survey by Technology Partners International (TPI).

"TPI's survey also indicates that demand is rising sharply for business-process-outsourcing services, under which a vendor takes over the operation of an entire business function within a company. "2004 will be a breakthrough year for BPO," Allen said. Business-process-outsourcing deals also are increasing in size. The average contract awarded so far in 2004 is worth $418 million, compared with an average of $220 million last year. TPI says more businesses are awarding contracts that cover more than one business process."

Friday, July 16, 2004

Business Council of Australia on Offshoring

The Australian reports the Business Council of Australia has release a position paper on offshoring information technology and other services to lower-wage economies.

"While we should not discount the costs involved with adjusting to these changes, we cannot afford to turn our back on offshoring as a new source of opportunity and competitiveness for Australian-based business."

"Furthermore, a recent US study by management consultant McKinsey & Co shows that for every $US1 spent overseas on offshoring, there was a $US1.12 to $US1.14 benefit for the US economy - a net gain of US12c to US14c."

Kerry Changes Mind on Outsourcing

Sify.com reports US presidential candidate John Kerry has changed is position on outsourcing. He vows to maintain good relations with India intiated by former democratic party US president Bill Clinton.

'"We recognise that outsourcing is a reality, but at the same time, we want to develop our jobs and industries more at home too."' But Senator Kerry is an internationalist and I think India should welcome him as an American President, Richardson told reporters when asked about his party’s strident posture against outsourcing."

Wednesday, July 14, 2004

U.S. States are Offshoring Plenty

ZDNet reports U.S. states are offshoring $75 million worth of contract work by at least 18 companies. This is according to a report released by the tech professional advocate group WashTech.

'"We find that foreign information-technology contractors are aggressively poised to capture more state government work," the report concluded. "State policymakers are not well-positioned to respond, since they often lack the most basic information necessary to determine who is actually doing contracted work and where."'

"Without state action, the offshore trend in state contracting is likely to grow, the study indicates. 'At least 18 firms that specialize in offshore outsourcing are positioning themselves in no fewer than 30 states to capture a larger share of the state government market, especially in information technology services,' the report said."

Tuesday, July 13, 2004

Downsides of Offshoring

CRM News reports another article on best practices for offshoring and possible downsides if these practices are not followed. This is a good article and offers many tips on how to get the most out of your outsourcing project whether big or small.

"As a rule, anything that a client can cleanly specify and deliver as a firm requirements document to the offshore team is most effective. Clear, complete specifications are a must-have, Travis says. But that's not always common practice in U.S. companies."

"Almost everybody can save 15% to 20% by sending certain IT work overseas, he says. Those that really understand how to make it work find they save 50% or 55%. 'There's a huge benefit to making outsourcing a core competency.'"

Monday, July 12, 2004

A Fool's Take on Offshore Outsourcing

Fool.com writes about the complexities concerning the offshore outsourcing debate.

"It's a complex issue. Supporters argue that if more American jobs remain here, including manufacturing jobs, Americans will face higher prices for products and services, since American workers are paid much more than those in developing nations and other countries. They make a good point that firms need to do what's best for shareholders, which means maximizing profits."

"But detractors' arguments also have merit, noting that many Americans are losing valuable jobs and not easily finding replacement work. They also say that if Americans are turned off by offshoring, then companies associated with it will lose favor and possibly business."

Offshoring? Not So Much.

destinationCRM.com is reporting offshore outsourcing is not as widespread as once believed. This is according to a recent poll of 275 CFOs and financial executives by CFO magazine. But 64 percent of those surveyed believe that within 2 years they will outsource offshore.

"Even those companies that are offshoring may simply be dipping a collective toe in the pool, having dispatched, on average, just 6 percent of their workforce overseas."

"And the benefits claimed by companies in the survey are underwhelming. Ten percent of the companies that have already outsourced abroad said they saw no cost savings whatsoever, and 38 percent saw savings of less than 15 percent. Only 42 percent of companies said that offshoring had resulted in savings of more than 20 percent."

Friday, July 09, 2004

Sprint Signs $400M Outsourcing Deal with IBM

Computerworld reports Sprint has signed a five year outsourcing deal with IBM worth more than $400 million. 1,000 Sprint IT employees will transfer to IBM to support Sprint applications.

"Under the terms of the deal, which expands the scope of existing IT work between the two companies, IBM Global Services will provide application development and maintenance support for selected Sprint IT software systems."

"IBM will also work to speed up software application delivery services to allow Sprint to save money and more quickly deliver new products to customers."

More Offshoring Dos and Don'ts

Silicon.com has a special report on offshore outsourcing dos and don'ts. The most important tip we frequently see repeated in articles such as this...plan and prepare your project and communicate clearly, frequently and effectively with your service provider.

"Tata Consulting Services and Infosys Technologies Ltd, among India's largest IT services companies, had one million job applicants each in 2003 - and offered jobs to fewer than one percent of them. That's a Darwinian filtering of talent if you've ever seen one. The people working in top IT services companies in India and China aren't just smart - they're super-smart."

"If you only go for low cost (i.e. less experienced and lower skilled workers), you'll end up paying a high price in the end. Choose a partner company and personnel for their quality, not just their price. Offshore companies come in all shapes and sizes. If you pay peanuts, know what to expect."

Thursday, July 08, 2004

US Will Increase Outsourcing Q4

Sify.com reports Silicon Valley investor is predicting Q4 will see an increase in outsourcing after the presidential elections.

"'I think there will be an increase in Q4 spending,' Madhavan Rangaswami, managing director Sand Hill Group, which advises on technology trends and invests in start-ups, told a news conference in Bangalore to announce an industry seminar."

"Despite the row over jobs, India had only a tiny market share in the US information technology market worth hundreds of billion dollars, Rangaswami said."

Wednesday, July 07, 2004

Urged To Offshore

The Arizona Republic reports U.S. companies are being urged to speed up offshoring practices to save money and improve quality. The Boston Consulting Group is warning companies that do not will be facing extinction.

"The largest competitive advantage will lie with those companies that move soonest," the report states. "Companies that wait will be caught in a vicious cycle of uncompetitive costs, lost business, underutilized capacity, and the irreversible destruction of value."

"Despite the report's findings, Mann and other economists said it does not alter their fundamental belief that the U.S. economy will grow, and job opportunities expand, even as offshoring continues to disrupt the lives of many American workers and disproportionately affect people at the lower end of the skill scale."

Offshoring Puts Consumers First

According to MIT Sloan Professor Michael Treacy in an eWeek article, offshore outsourcing is a business model that favors the consumer. Lower costs equal lower prices for consumers.

"Do consumers care? Online lender E-Loan has been giving home equity consumers a choice as to where their loans will be processed. If handled in India, the loan would be processed two days faster than if handled in the United States. Faced with this trade-off, 86 percent of customers choose to have their loan turned around two days faster via India."

Schwarzenegger Considers Outsourcing

AlterNet reports Governor Schwarzenegger is considering outsourcing the way the state of California purchases goods and services with a Canadian company, CGI-AMS.

"Schwarzenegger spokesman Vince Sollitto says that the governor won't hesitate to look overseas if the end result is saving money for California taxpayers. 'The governor's focus is more of a bottom-line focus,' he said. 'At the end of the day, the governor's focus is on the taxpayer.'"

Monday, July 05, 2004

Safe Careers and Outsourcing Fears

SeatlePI.com talks about the fear of outsourcing in America and how it is affecting career planning. Jobs that require a worker's physical presence may be safe but others predict the fears are unfounded and over estimated.

"With all the talk of white-collar jobs moving overseas, it's no wonder that Americans, particularly those just entering the work force, are wondering about the safety of their jobs and reassessing career and educational choices."

"Analysts at Forrester Research Inc. have estimated that 3.4 million jobs will leave the United States by 2015. That figure is dwarfed, however, by the 21.3 million jobs the federal Bureau of Labor Statistics expects the economy to add by 2012."

Friday, July 02, 2004

Dalian, China To Become Outsourcing Hotspot

Oakland Tribune Online reports the Chinese city of Dalian has expanded its software park to become a desirable center for offshore outsourcing. Tax breaks, language centers and bonuses are part of the incentive.

"In short, Dalian aspires to become the Bangalore of northeast Asia as soon as possible."

"Dalian's software industry has managed to grow 50 percent annually in the last five years in terms of export volume and sales revenue, which reached $605 million last year."

Plant Outsourcing?

ABS-CBNNEWS.COM has an interesting, if not humerous, article on outsourcing plants. Yes, the plants in your office building can and probably should be outsourced along with anything that is not part of your core business.

"Money, old folks often say, does not grow on trees. But business partners Antonio Quirino, Joaquin Roces Jr., and Michaelo Palanca have come close to harvesting cash from plants. While their philodendrons have yet to sprout local currency for leaves, these men have been reaping profits from the lush foliage they have been renting out."

Thursday, July 01, 2004

Hidden Costs of Offshoring

IT Manager's Journal talks about some of the problems companies have experienced with offshoring.

"Evan Burks, senior vice president at IT outsourcer Comforce Corp. of Woodbury, New Jersey, hears a lot from the CIOs, project managers, and IT professionals who work for customers such as Microsoft, Boeing, and Amazon.com. Many find themselves far less sanguine about offshore outsourcing than they once were."

"Cultural differences can be significant, and even with intensive training in American-accented English, it's not enough: colloquialisms, by their very nature, elude all but native speakers."

"It's not likely that offshore outsourcing will slow significantly anytime soon. But now that offshore outsourcing -- like the Internet before it -- has matured, smart IT executives and managers will ensure that any offshore initiative supports their company's overall business strategy before making the jump."

Have an Outsourcing Battleplan

ComputerWeekly.com reports:

The head of outsourcing at Lloyds TSB has suggested companies devise a battleplan to minimise the risk associated with offshore outsourcing. This was presented at the Outsource World conference in London a few weeks ago.

"Risks include the financial instability of suppliers, contractual disputes and how you would deal with the failure of a critical customer service, said Sharon Harmer, head of smartsourcing and group outsourcing at Lloyds TSB."

"I would suggest that you automatically review the [financial health of the supplier] and you need to think about how you will get out of an outsourcing arrangement before you enter it."