Tuesday, August 31, 2004

Will US Collapse Without Outsourcing?

Sify.com reports an interview with N. Sivakumar, author of the book Debugging Indian Computer Programmers: Dude, Did I Steal Your Job? which defends H1-B/L1 visa holders and their contributions to the US economy.

"Globalization is as American as mom and apple pie, and had been the American success formula for so long. But it should be streamlined. You can't ship all the jobs overseas. People tend to forget the human side of the mix. A country is made up of people, not buildings and corporations. But outsourcing is here to stay. No one can stop it. America will collapse if we do that. But it definitely has to be streamlined. My book has a solution. Let them read it."

Outsourcing CEOs Get Big Pay Hikes

Forbes.com reports U.S. companies that outsourced the most jobs in 2003 offered big pay increases to their chief executives.

"The study says that CEOs of the top outsourcing companies earned an average of $10.4 million in 2003, 28% more than the average CEO compensation of $8.1 million."

"The study makes no claim that there is cause and effect between outsourcing jobs and big CEO pay packages. Some of the companies on the list of outsourcers are unusually large or profitable, so their executives may have simply profited the most from stock options, which is how one CEO typically earns more than the next. It may also be the case that companies on the cutting edge of technological change tend to outsource more to India where there is an abundance of highly skilled technology workers, as well as less skilled but eager call center workers. It is also the case that the extent of outsourcing tends to be overstated, something that the study seems to concede."

Thursday, August 26, 2004

India Infosys is Outsourcing in China

InfoWorld reports Indian outsourcing company Infosys Technologies Ltd. is running out of space in it's first location in China and looking for a second facility.

"Infosys is building up its operations in China to tap into demand for IT outsourcing from Japanese and South Korean companies as well as from multinational companies that are doing business in China, Suryaprakash said. In the future, the company also hopes to be well positioned to provide outsourcing services to Chinese companies."

"Infosys' Shanghai office will reach its maximum capacity of 200 people in January, even though the company currently has a staff of 50 in Shanghai and doesn't expect to employ 200 here until March next year. However, the Shanghai office must also accommodate workers from India who are assigned to China on short-term projects, Suryaprakash said."

Outsourcing Media and Publishing

The Times of India reports Reuters move to outsource editorial jobs to India has signaled a new era in global media and publishing.

"New York Times is already outsourcing many components of its publishing tools from a US-based software company, which is offshoring work to India. Digitalisation work of US newspapers are also outsourced to Indian companies."

"Reuters centre in Bangalore will hire 60 people and monitor company announcements made in US and Europe and outsource basic data analysis, compile tables. It admits that main reason for outsourcing is to save money. It employs over 300 non-editorial people who help in crunching market data in Bangalore."

Tuesday, August 24, 2004

Outsourcing Debate Continues at Chip Conference

InfoWorld reports a conference at Stanford University between opponents and proponents of offshore outsourcing resulted in clashing opinions. The debate was held at the Hot Chips event sponsored by the Institute of Electrical and Electronics Engineers (IEEE).

"Carl Everett, a partner at Silicon Valley venture capital firm Accel Partners, argued that outsourcing offers an opportunity companies should take advantage of. By using offshore capabilities, they can bring a product to market faster and at a lower cost, which will increase profitability and ultimately generate jobs, he said."

"Natasha Humphries has a different perspective. Humphries was laid off last year from PalmOne Inc. after having trained workers in Bangalore, India, to do her job as a software quality assurance engineer. 'Increased profit margins will create new jobs, but they may not be in the U.S. and they may not pay as well,' she said."

Monday, August 23, 2004

Barclays Buys 50% Stake In Offshore Outsourcer

ComputerWeekly.com reports Barclays Bank is to acquire a 50% stake in Mumbai, India based Intelent Global Services, the business process outsourcing (BPO) arm of HDFC.

"Indian BPO companies need capital, brand and marketing muscle abroad to scale their businesses, and consolidation is expected to continue, according to Ravindra Datar, principal analyst for IT services and BPO at Gartner India Research and Advisory Services."

"Barclays already outsources some work to Intelenet, but currently that business accounts for about 100 of Intelenet's employees, said Susir Kumar, chief executive officer of Intelenet. Business from Barclays is expected to grow, although Intelenet will operate as an independent third-party service provider, 'rather than as a captive unit for Barclays', he said."

Friday, August 20, 2004

Top IT Firms Threaten to Leave Bangalore

The Inquirer reports some leading IT companies are threatening to pull out of Bangalore, India if conditions do not improve.

"Representatives from India's biggest outsourcing companies say fear they will lose customers because of the city's poor infrastructure, irregular power supply and increasing taxes. Already, according to the The Times of India, Infosys and Wipro have threatened to take their business elsewhere unless the local government pulls its finger to sort out the problem."

Is Outsourcing Breaking the Law?

The Straits Times reports a customer of British bank Lloyds TSB claims its plans to outsource work to India could be breaking British Law.

"The unnamed customer, whose action is supported by Lloyds' union, is asking the British Information Commissioner to rule on whether Lloyds is breaching data protection laws by not asking customers for their written consent before transferring sensitive details to call centres in India."

"The Lloyds union believes that many British banks would be reticent about asking for customers' written permission to transfer data because of controversy over moving operations offshore. Lloyds plans to have 1,500 workers in India by the end of this year."

Tuesday, August 17, 2004

Philippines Outsourcing Future

Reuters reports the Philippines economy and it's recent graduates worry about how the United States will approach outsourcing in the near future. The upcoming presidential election and stricter tax steps may threaten the flow of outsourced work there.

With the United States accounting for 90 percent of outsourced work in the Philippines, stricter tax steps being threatened against companies that transfer work abroad could prove disastrous, some industry executives say.

"Outsourcing is the line of hope for this country," said Ramon Dimacali, head of Outsource Philippines, a federation of companies actively promoting a greater foreign presence in the country.

"Companies should respond by retraining within the U.S. instead of putting up barriers," said Outsource Philippines' Dimacali. "Americans should think (outsourcing) can help the companies to grow and create more high-paying jobs in the U.S. while creating jobs in the outsourcing location."

Monday, August 09, 2004

Confusion over Outsourcing

News.com clears the confusion over outsourcing in an interview with John McCarthy, VP, Forrester Research. His orginal study, published in 2002, in large part touched off the heated debate over what's come to be commonly known as "offshoring."

"The reports transformed McCarthy into an offshoring guru who was highly sought after by the media. But news stories have at times mangled his analysis. In a recent interview with CNET News.com, McCarthy discussed his frustration with the press and described why businesses, fearing the potential public relations backlash, have stopped talking about their offshoring plans."

"Surveys that we do show that the No. 1 issue is lack of project management skills from the customer to manage the vendor."

UK likes Nearshoring

News.com reports nearshore outsourcing to Eastern bloc countires by the United Kingdom is favored as opposed to offshore destinations like India.

"The projected growth, however, is still relatively small when compared with the size of the traditional offshore market, particularly in India. Datamonitor forecasts that outsourced call center positions in the European nearshore regions of Central and Eastern Europe and North Africa are set to rise from 4,400 in 2003 to 13,700 by 2008."

"To put this into context, the Indian city of Bangalore alone currently employs around 60,000 people in its business process outsourcing (BPO) call centers."

Saturday, August 07, 2004

IBM Outsourcing to South Africa

ComputerWeekly.com reports IBM is using South Africa as a back-up to India for is outsourcing needs.

"Abdul Mohammed, IBM's business development executive in South Africa, said, 'Although some Eastern European countries may be able to provide cheaper outsourcing solutions, the value of the Rand, the favorable time difference, as well as our proficiency in English, are shifting a considerable amount of work to our shores.'"

"IBM claimed to be positioning itself as a leader in offshore outsourcing through a 'best-shore' policy, where specific sections of accounts awarded to IBM on an international scale are outsourced to countries that fulfill the client's needs in the most cost-effective way."

Tuesday, August 03, 2004

Microsoft Denies Outsourcing Longhorn

Reuters.com reports Microsoft denied reports that is was outsourcing development of its next version of Windows to contractors in India.

"Stacy Drake, a Microsoft spokeswoman, denied that development work on Longhorn was being outsourced to India, saying that only some testing work related to the next generation Windows operating system was being contracted to outside partners in India."

"Other tasks, such as tools for migrating computer systems from the current version of Windows to Longhorn were also being outsourced to partners in India, but core Windows development work would remain in-house, Drake said. 'The development work for Longhorn will be done only by Microsoft employees,' she said."

Outsourcing IT Education

InformationWeek Reports Virginia Tech is teaming with an Indian business school to offer a master's degree in information technology.

"The institute, based in Mumbai--formerly known as Bombay--characterizes the program as offering 'high-class U.S. education' that's customized to address the needs of the IT industry in Asia."

"As their country's economy grows, the Indian educators recognize the need to go beyond providing IT commodity services such as coding and offer more sophisticated business-tech services."