Home-shoring

InformationWeek reports some companies are moving call centers into homes keeping employees production and trimming costs.

"The home-shoring phenomenon comes in part as a result of the significant challenges faced in the customer relationship management (CRM) and customer care space over the last four years," said IDC analyst Stephen Loynd in a statement.

Rather than outsource customer service to foreign firms in places like India, said Loynd, some U.S. corporations are letting call reps work from home. "Compared with traditional outsourcing and offshore, companies utilizing home-based agents can access highly skilled representatives that are closely attuned to the U.S. market at very reasonable cost," said Loynd.

IDC's Loynd sees home-shoring, also called "home-sourcing," as a way to keep the jobs inside U.S. borders.

Is Outsourcing of U.S. Jobs Bad or Good?

Seattle Seattle Post-Intelligencer reports the outsourcing debate continues with a debate between Nobel Prize winner Paul Samuelson and Columbia professor Jagdish Bhagwati. These two "mega" economists disagree whether short-term job losses brought on by outsourcing are mitigated in the long run by gains to American workers from free trade and consumption growth in low-wage countries.

"Data from Forrester Research, a leading IT consulting organization, lends support to Bhagwati's findings with estimates that 400,000 U.S. jobs had moved abroad by 2003 and that the total would hit 3.3 million by 2015. That's just over 200,000 jobs lost each year to global outsourcing, a trivial problem in the context of the normal churn of the U.S. economy, where about 7 million jobs were gained and lost in each of the last four quarters."

"Yes, corporate earnings and investors are benefiting."

"Yes, American consumers are benefiting from cheaper prices because of global outsourcing."

"Yes, American workers are dislocated -- perhaps permanently in the manufacturing sector and significantly among professional and white-collar employees whose jobs won't return unless the country invests substantially in their retraining and education."

Separating Outsourcing Fact from Hysteria

TCS: Tech Central Station reports the debate over outsourcing and its impact on the US economy reached a high level of what can only be described as irrationality, and even hysteria.

Outsourcing is not a new phenomenon, of course. Strictly speaking, the term refers to the subcontracting of any business function to an outside supplier, but in the current debate outsourcing to other companies within the home country is rarely mentioned. It is the offshore component that is controversial.

Estimates of the number of jobs involved vary wildly. The head of strategy at IBM, Bruce Harreld, has estimated that the world's companies now spend $19 trillion per year on sales and other administrative costs, and of this only $1.4 trillion is outsourced. The McKinsey Global Institute suggests that offshore outsourcing may increase by 30-40 per cent a year for the next five years, while Forrester Research predicts that 3.3 million white-collar jobs may be relocated overseas by 2015. The potential cost savings involved are certainly very large. McKinsey has suggested the multinational companies can lower their costs by 50-70 per cent through the reorganization of their production and administrative activities. In the white-collar area, IT services are likely to be the most affected. Already some 16 per cent of such work is done remotely, and perhaps half of such jobs may move overseas in the near future.

Recruiting Overseas

Spokane Journal of Business reports American Industries International Inc., have been in the business of recruiting nurses, pharmacists, and high-tech engineers from foreign countries to work in the U.S. Though the 34-year Spokane resident says he has established business contacts in 35 countries, recruits so far have come solely from The Philippines and India.

“There is a dire shortage of nurses in the U.S.,” says Uddin. “At present, there is a shortage of 250,000 nurses in this country, and by the year 2020, the shortage is expected to jump up to 700,000 nurses. Washington state is currently short 6,000 nurses, and it is a proven fact that the higher the ratio of nurses, the lower the mortality rate.”

The demand for pharmacists in the U.S. also is high, says Uddin. American Industries has recruited 21 pharmacists from The Philippines and India and nine high-technology engineers from India, all of whom are already in the U.S. After passing their test on one trip to the U.S. on a visitor’s visa, they accept jobs and enter the country with professional visas, which are granted pretty rapidly, says Uddin.

Outsource to Arkansas

MSN Money reports an Arkansas woman believes that companies can send jobs to rural areas and save just as much as they could sending them to places like India.

So she left her job, trading the corporate jet for a rental car. With $2 million of her money, she created Rural Sourcing, an information technology contracting company that she claims can do the same work companies are sending overseas, for virtually the same price. White says this isn't a charity project. She already has five companies signed up, including her old employer, Cardinal Health, and another 50 in the pipeline.

Her efforts won't mean the end of so-called off-shoring of jobs by any means. But attorney Robert Zahler, who advises companies on outsourcing, says this will be an alternative for some clients. "Someone like Rural Sourcing should be able to save them somewhere between 30% or 50%, depending on what geographic market they're already in," Zahler says.

Domestic Outsourcing Boom in India

Express India reports India based IT outsourcing service providers are now scrambling to provide for the 3.5 million small and medium sized businesses (SMB) scattered throughout India.

“Outsourcing has traditionally been the preserve of large enterprises and the government, but now SMB-level organisations are looking at outsourcing, simply because the cost differentiation between doing the work in-house and outsourcing can be huge,” says a senior official of Hyderabad-based Satyam Computer.

“This appears to be an extension of the domestic outsourcing trend. Competitive pressures and cost pressures are compelling SMBs to focus on their core competencies and look for external help in non-critical business areas, in this case IT operations,” says Nasscom. Outsourcing of non-production-related IT applications enables a company to not only focus on its main business activity but also achieve cost-savings on IT initiatives to the tune of 30%.

US Regulators Eye Indian BPO Firms

CRM News reports auditors from the U.S. could come down to India to check the BPO companies or even conduct them remotely. Expecting audits from the U.S. comptroller of currency early next year, Indian BPO companies and captive units of multinationals are working overtime, holding discussions with consultants and their US counterparts to understand the nuances of these audits.

"These audits are expected early next year. Not only are they likely to check for regulatory compliance, but also for systems and procedures and risk management and confidentiality clauses being followed. We are following up with our U.S. office to get off the ground," said Ram Aggarwal, partner, Ernst & Young. E&Y already conducts quality control reviews for several BPO units in India.

Outsourcing Custom Car Design

Channelnewsasia.com reports India's custom automobile design industry is gaining popularity due to the increasing popularity of companies outsourcing projects.

Custom-car design work has been outsourced to Indian companies like "DC Designs" and "5th Quadrant Designs", due to far lower costs. Apart from design work, they say they are also capable of taking it a step further, by constructing the car according to the technical specifications of the design. It is a concept that's seen as a sunrise sector in the burgeoning outsourcing industry.

Offshore Outsourcing Growth

ZDNet reports research firm Gartner published a study Monday saying "offshore outsourcing isn't as widespread as people think," with lower-cost locales accounting for less than 3 percent of money spent on global information technology services this year.

Gartner projects that figure to grow but remain a relatively small fraction of total spending. By 2008, spending on IT services delivered through "global sourcing" will reach about 7 percent of a $728 billion total market--or roughly $50 billion.

A more bullish view came Thursday from NeoIT, a consulting firm that advises clients about offshore projects. NeoIT "foresees a big year for offshore outsourcing growth in 2005" and predicts that more than "80 percent of the Global 2,000 will have an offshore presence by the end of the year."

Outsourcing Illness Diagnoses

The Seattle Times reports radiologists in Australia, India, Israel and Lebanon are reading scans on U.S. patients spurred by a shortage of U.S. radiologists and an exploding demand for more sophisticated scans to diagnose scores of ailments.

Despite some doctors' fears, advocates say outsourcing radiology is nothing like the nightmarish vision of seedy sweatshops stealing U.S. jobs and replacing them with unqualified cheap labor. Most of the doctors are U.S.-trained and licensed, although there is at least one experiment using radiologists without U.S. training.

Dr. David Turner, chairman of diagnostic radiology and nuclear medicine at Rush University Medical Center in Chicago, believes outsourcing fears are unfounded. With concern about medical errors and malpractice lawsuits, no U.S. hospital would risk hiring poorly trained doctors, he said. "The bottom line is this is not outsourcing in the sense that automobile jobs are going to Mexico and call center jobs are going to India," Turner said. "It's something on a different level."

Outsourcing Debt Collection

Sify.com reports debt collection is becoming another area of outsourcing moving to India. According to a news report, units of General Electric, Citigroup, HSBC Holdings and American Express are using their India-based staff to pursue credit card debt and mortgage payment by calling defaulters.

''Our cost of collection is 40 percent less than operators in the U S,'' Jerry Rao, chief executive of MphasiS, which has hundreds of debt-collection agents in Bangalore and Pune, told The Wall Street Journal. ''We can collect debts (American) firms didn't expect before.'' Outsourcing companies in such nations as the Philippines and Mexico (the latter mainly for U S -based Spanish speakers) are also entering debt-collection business, but India seems to have the largest and fastest-growing operations outside the United States.

Outsourcing Growth Predicted at 5.9%

ComputerWeekly.com reports outsourcing growth is predicted at 5.9% a year.

"IT job exports are forecast to increase by a compound annual growth rate of 5.9% between 2002 and the end of 2004, said Frost and Sullivan. The analyst firm looked at the global outsourcing of IT jobs across 14 countries. It estimated that this year, 826,540 IT jobs will be transferred abroad by the UK and the US, France, Germany, Hong Kong and Japan, amounting a value of UK 26.7bn."