Saturday, November 27, 2004

The HR BPO Opportunity

Financial Express reports outsourcing of human resource services or HR BPO was emerging as the next big opportunity for Indian BPOs with the global market in this segment estimated at $40-60 billion per annum, experts said on Monday.

"Sensing the potential, global BPO players including Fidelity, Exult and Hewitt have begun setting up operations in India. However, most HR BPO players had not leveraged the offshore advantage as yet, he told PTI. Research firm Gartner has forecast HR BPO to reach $51 billion and represent 39% of all BPO revenue by 2004-end."

“HR opportunity is absolutely new. It is a sunrise opportunity with huge potential,” Mr Chandrasekaran, who formed Secova eServices to tap this potential, said. “Our initial focus will be only on HR administration, benefits and payroll, in the mid-market which accounts for $13.2 billion.”

Canada Nearshoring

International Herald Tribune reports Canada is gaining favour as an outsourcing partner due to its stability, proximity and cultural similarities. Some are refer to this as 'nearshoring' or 'remote contracting'.

"Companies are willing to pay a premium for a destination that is close to home. The customer on the end of the phone will be able to relate much better to a representative in Canada than one in the Philippines."

Best estimated that Canada had 26,300 call-center "agent positions," or work stations, serving the United States. The actual number of workers is probably much higher, since each position is basically a phone line and a cubicle. At some call centers, three employees working separate shifts will staff a single phone during each 24-hour period. The figure, however, looks almost insignificant when compared to the 2.85 million call-agent posts that remain in the United States.

Thursday, November 25, 2004

Europeans Working for India Outsourcers

BBC News reports entry and mid-level employees are being recruited from European countries to work in India.

"Prashant Sahni, chief executive officer of Tecnovate, says the way it works is simple. 'We hire people from various parts of Europe to work for us on Indian salaries and it's been very successful.'"

"Mr Sahni says the European employees are recruited for a minimum period of a year, but many extend their stay. And although the employees are paid local salaries, they receive other compensation in the form of free housing, a furnishing allowance and subsidised meals."

Tuesday, November 23, 2004

CTG Wins Outsourcing Award

Yahoo Finance press release reports CTG, an international IT solutions company was named the "Best Outsourcing Solution" winner at TechX New York 2004.

"During the 10 years that CTG has been Lone Star's IT provider, the company has transformed itself," said Curt Montgomery, CTG Director of Outsourcing Solutions. "As Lone Star's partner, CTG helped it through its business transformation by supporting its information technology infrastructure, applications, and staff; aligning these components with Lone Star's business needs; and ensuring that Lone Star achieved its goals. We worked very closely with the business to provide the right support and the right resources to leverage IT as a business enabler."

Sunday, November 21, 2004

Outsourcing Accelerating

International Herald Tribune reports a new report commissioned by a bipartisan congressional commission said 406,000 U.S. jobs would migrate overseas this year, double the conventional wisdom. This trend is expected to continue for several years.

Job movement overseas "is absolutely accelerating, and it's changing in its nature," said Kate Bronfenbrenner, a professor in Cornell University's School of Industrial and Labor Relations, who prepared the report for the U.S.-China Economic and Security Review Commission. "Whereas in 2001 it was almost all in manufacturing, now we see an increase in information technology, communications, financial services, and white-collar work, from research and design to back office." The report will be presented at public hearings in Seattle in January.

Thursday, November 18, 2004

Training Phillipines Outsourcing Firms

ABS-CBNNEWS.COM reports the latest trend among medical transcription companies in the Phillipines is to provide Technical Education and Skills Development Authority or TESDA-certified medical transcription courses to enhance the quality of experts in the country and improve its competitiveness in securing more outsourcing opportunities from the call center industry.

“TESDA certification gives a benchmark or standard level of excellence. Certification is the first step of ensuring quality and assures the people enrolled in the courses that they have the facilities available to them and that the company is not a fly-by-night operation. After all, people will spend five months of training on these courses and they would spend money,” said e-Scribir president Johnny Garcia during the inauguration of the company’s TESDA-certified medical transcription course.

Outsourcing Consolidation Wave

Forbes.com reports the business-process outsourcing sector is in the midst of a consolidation wave.

"The most important factor in a BPO acquisition is scale," says Brad Smith, vice president of research at Kennedy Information. Because BPO is a low-margin, process-driven business, transaction volume is a crucial determinant of profitability--particularly in the finance, accounting and human resource spaces, which Smith says are likely to see the most consolidation activity.

"Unless you're a fantastic niche player, you're going to have a tough time surviving in today's BPO market," says Atul Vashistha, chief executive of NeoIT, an offshore advisory firm. "Customers have a lot of choices so they can say they won't trust a small startup company."

Offshore Outsourcing Healthcare

InfoWorld reports healthcare organizations not considering offshore outsourcing are missing out on significant cost savings, but administrators need to be aware of potential risks, including lax handling of data security by some vendors and the effect on employee morale.

"Offshore outsourcing of some functions not directly related to patient care can deliver savings of 20 percent or more, said John Lovelock, a health care analyst with Gartner Inc. Gartner estimates health care organizations save an average of about 23 percent on outsourcing contracts, including IT and non-IT outsourcing, with some organizations seeing savings up to 45 percent on some outsourcing contracts, said Lovelock, who spoke at the Gartner Healthcare IT Summit in Baltimore."

"We are moving toward this simply because healthcare is under a lot of pressure," Lovelock said during a forum on healthcare outsourcing. "Healthcare needs to focus on its core business. We need to do what we do well, and stop focusing on what we don't do well." Lovelock listed a number of functions that could be outsourced, including IT jobs, claims administration, Web-enabled customer self-care, medical call centers and even radiology.

Monday, November 15, 2004

Microsoft Goes to India

Times Online reports Microsoft dramatically increased its presence in India, opening a major new campus on the subcontinent and unveiling a key joint venture with Infosys Technologies to provide software and consulting services.

In a bid to capture a greater share of the lucrative and expending market, Microsoft and Infosys will initially invest $8 million to develop a portfolio of services for companies worldwide, Microsoft's chief executive Steve Ballmer said.

The Indian outsourcing market, which includes services such as call centres, back office operations and IT services is forecast to grow from $2.3 billion in 2002 to $8.5 billion in 2008, according to NASSCOM, the Indian lobbying organisation. The global market is forecast to grow to between $200 billion and $250 billion in 2008.

Bangalore, India's leading "offshoring" city, recently claimed it was on the verge overtaking Silicon Valley as the leading IT employment centre in the world, such is the volume of work being outsourced from overseas there.

Thursday, November 11, 2004

GE Sells India Outsourcing Unit

INDOlink reports General Electric sold a majority stake in its Indian outsourcing arm for $500m to two private equity firms. The deal gives US-based General Atlantic Partners and Oak Hill Capital Partners a 60% stake in GE Capital International Services (GECIS).

GECIS is a pioneer in the lucrative global outsourcing industry. GE was one of the first American companies to outsource back-office work to India in an effort to save costs. GECIS employs 17,000 people, some 12,000 of whom are in India.

Tuesday, November 09, 2004

China Competing For India Outsourcing

Yahoo Sigapore reports some companies are looking to China for their offshore software applications as rates rise in India.

"China's structural cost advantage over India is massive, and I think it's long term," said Freeboarders Chief Executive John Cestar.

"We don't have any wage inflation in China and we haven't for the last year and a half, and the number of really high-quality graduates coming out of this system is stunning."

Freeborders China, one of the largest foreign-owned IT outsourcing centers in south China, has 225 employees in their development laboratory in Shenzhen working for over 400 companies. While this number pales in comparison with some Indian firms with thousands of employees, Cestar sees potential for growth.

More UK Firms Outsourcing

Gulf Daily News reports British companies are under pressure to outsource parts of their business to remain competitive.

A total 51 per cent of respondents said pressure to outsource abroad had risen during the past two years, while 29pc said the burden had increased "a lot".

"Off-shoring is now part-and-parcel of doing business in the global economy," CBI director general Digby Jones said.

"Make no mistake, this is a survival issue. Anyone who believes that firms have a great deal of choice are naive."

Friday, November 05, 2004

India Outsourcers Happy

International Herald Tribune reports outsourcing companies in India are jubilant over the re-election of President George W. Bush.

"This is great news for the offshoring industry," said Nandan Nilekani, the chief executive of Infosys Technologies, a software services company. The trend toward outsourcing will now become even more inexorable, Nilekani said.

Some executives said that offshoring would grow even more strongly with Bush's victory. "The elections are over and so is the rhetoric; it will be easier for American corporations to step out with their outsourcing plans," said Vivek Paul, the vice chairman of Wipro, who works in Mountain View, California. The company is based in Bangalore.

Outsourcing Explained

The Cornell Daily Sun reports a thoughtful essay by Benjamin Gruenbaum entitled 'Outsourcing: Bad for the Economy or Misunderstood Phenomenon'. It's a good read for those that are new to the debate.

"The problem with outsourcing isn't that jobs are being lost to overseas competitors. The problem is that we generally understand outsourcing as it is framed by politicians (and therefore the media), not as it's understood by economists. There are certainly costs and drawbacks to Americans when jobs that used to be in California end up in Bangalore, India, but there are smart ways to mitigate those costs. Unfortunately, unwillingness from politicians and unknowingness from many Americans prevents a useful discourse from emerging. First we should know the underlying facts about outsourcing and only then can we attempt to discuss possible ways to address it."

Thursday, November 04, 2004

Managing Outsourcing Contracts

Computerworld reports many companies do not review multiyear outsourcing service contracts until they are completed. It is important to regularly review contracts to be sure they are still relevant to your changing business strategies. They ask 10 questions to ask yourself to help you stay on track.

"Outsourcing has become an integral part of our IT governance strategy," says Pavan Nigam, CEO of Cendura Corp., a Mountain View, Calif.-based application management firm. "Once you accept that, you realize it needs to be reviewed not on an annual but on a quarterly basis."

"Mergers, acquisitions, divestitures, changes in the trading community or governmental regulations -- all of these circumstances should trigger an outsourcing strategy review. With that in mind, here are 10 questions you should ask when updating your company's IT outsourcing strategy..."

Wednesday, November 03, 2004

Outsourcing Continues After Election

Forbes reports Indian business leaders said outsourcing will continue after the election no matter who wins. Now, with president Bush the winner, it appears outsourcing will continue without skipping a beat and has already boosted the software sector on India's stock martket.

"The benchmark Bombay Stock Exchange closed 1.5 percent higher at 5842.54 points, while India's largest National Stock Exchange closed 1.3 percent higher at 1837.40 points. Technology company shares opening higher included Infosys, Satyam and Wipro, all of which have top U.S. clients and have gained from the outsourcing of American business to India. Satyam gained 4.6 percent, Infosys 2.7 percent and Wipro 2.3 percent."

Tuesday, November 02, 2004

Indian Outsourcing Pros Helping China

The Economic Times reports Chinese companies are showing interest in Indian company professionals for their expertise. As the Chinese look to expand into the profitable US and European markets they are seeking the advise of Indian executives and business experience.

China’s ambitions on the software export front are however, very apparent. It has set a target to make English a widely spoken language by 2008. Its IT services exports, according to Gartner — a technology research firm — are expected to reach $5 billion in 2005 and rise fivefold to $27 billion by 2007.

So far the Indian and Chinese software services industries haven’t really gone head-to-head in the market. But as the Chinese target the lucrative American market and as the Indians try to make in-roads into the Japanese and Korean markets, they are bound to collide, probably over the next five to ten years.