Monday, January 31, 2005

Xansa to Hire 7000 in India

Silicon India reports UK based IT services company Xansa will expand its workforce by 7000 in India.

"At present we have about 3,000 employed in our outsourcing centers in Pune, Noida and Chennai and the strength will go up to 10,000 in about five years as the Business Process Outsourcing in India is doing extremely well," Cox said.

Read more: Xansa to hike workforce by 7,000 in India

Medium Size Companies Lead HR Outsourcing

Medium-sized companies are set to lead the way in signing HR outsourcing deals during 2005, after a large rise in contracts last year. In 2004, for the first time, 'mid-to-large' businesses - as opposed to 'large to very large' businesses - dominated HR outsourcing, according to analyst firm Datamonitor.

Companies with between 5,000-25,000 employees did more broad-based business processing outsourcing deals including HR functions, according to Datamonitor. In the past, companies with more than 25,000 employees were the ones signing HR outsourcing deals.

Read more: Mid-sized companies to lead outsourcing into the mainstream

Wednesday, January 19, 2005

Outsourcing Works For Beauty China

Yahoo Finance reports Beauty China Holdings, a small Hong Kong-based, Singapore-listed cosmetics concern, has quietly doubled its sales and profits in China during the past two years by tapping into a global strategy: outsourcing.

Sam Wong, Beauty China's founder and controlling shareholder, sets the strategy and develops ideas for makeup, packaging and marketing campaigns. He farms out production to a handful of Chinese manufacturers and sells products directly to about 90 independent distributors who get them sold at 700 outlets in China. Beauty China doesn't own any outlets, but as part of its arrangements with distributors, the company can specify how retail displays are designed and decorated.

EDS, Towers Perrin Form Outsourcing Company reports Electronic Data Systems Corp. has agreed to pay about $420 million to create a personnel-services company with consulting firm Towers Perrin.

The new firm, still unnamed, will sell services in benefits, payroll, recruitment and other areas. Towers Perrin will provide consulting services to clients of the new firm, the companies said. EDS has been trying to expand from its roots as an IT-outsourcer _ running other companies' computers _ into so-called business process outsourcing, in which it runs functions such as payroll, benefits, finance and accounting for clients.

Bryan Doyle, the leader of Lincolnshire, Ill.-based Hewitt's outsourcing business, said he wasn't surprised that EDS would strike a deal with Towers to expand in business-process outsourcing, or BPO. "We see HR BPO as an attractive market," he said. "We know the IT outsourcers are interested because of the growth potential."

Thursday, January 13, 2005

Employees Can Benefit From Outsourcing

Computerworld reports a company's move to outsourcing can sometimes strike fear in employees who see their jobs as endangered, if done right workers may find that the process provides them with an opportunity to advance their careers and hone their skills, according to the findings of a poll out this week.

"There is a lot of confusion surrounding outsourcing, when in fact people often improve their positions and get to work for a specialist operation," said LogicaCMG management consultant Paul Dunn.

"Outsourcing is often confused with offshoring, Dunn said, which involves moving jobs to lower-cost markets such as India, while outsourcing involves a company's decision to move a particular operation or function out-of-house. When companies outsource, European regulations stipulate that affected employees retain the same conditions they had in their previous positions."

Monday, January 10, 2005

New Head of Outsourcing Operations at HP

ZDNet reports Hewlett-Packard has named Steve Smith as its new senior vice president of managed services, a division of HP Services that runs clients' computing infrastructure and elements of their businesses such as human resources. He replaces Uli Holdenried, who took over as managing director of HP Germany.

Russia Outsourcing Challenges

CRM News reports Russia needs new infrastructure. Russia lacks the wealth of basic Internet "backbone" infrastructure already in place in the United States and India; that has kept inexpensive, high-bandwidth Internet capacity out of reach for many.

"The biggest problem," Sukharev said, "is finding skilled workers who not only specialize in theory but in practice. Many still need English-language training." Still, that figure for programmers is growing. In 2004 the number of Russian graduates with master's degrees in computer science or majors in software engineering was 68,126, up 6.9 percent from 2003, according to the Russian State Statistics Committee.

Russia also needs new infrastructure , something on which India has made more headway. Russia lacks the wealth of basic Internet "backbone" infrastructure already in place in the United States and India; that has kept inexpensive, high-bandwidth Internet capacity out of reach for many here, Sukharev says. A T-1 line, or fast, dedicated phone and data line, with high capacity might cost $500 a month in the United States. In Russia, it costs $50,000 a month. "That is something only the Russian government can build," he said.

Friday, January 07, 2005

Offshore Outsourcing Spending Creeps reports spending on information technology projects farmed out to low-cost places like India should grow by 1 percent this year, according to a report Thursday from investment firm Merrill Lynch.

"The report, based on a December survey of 50 United States-based chief information officers, also found that spending on offshore IT services represents a small but growing chunk of budgets allocated to IT services. In 2004, offshore IT services accounted for 1 percent of the budgets, but CIOs indicated that that figure will increase to 1.4 percent in coming years."

"We expect U.S. companies to increase jobs sent offshore in the next two to three years as they try to drive costs down and improve operating margins," the report said.

"Merrill's survey is the latest data point in an as-yet-incomplete picture about the scope and effect of so-called offshore outsourcing. Comprehensive data about the controversial trend has been lacking, but a $2 million government study is in the works."

Sunday, January 02, 2005

India BPO is Ready for 2005 reports India outsourcing companies and BPO companies are poised for a good year as outsourcing fears subside in the US.

NASSCOM estimated that the industry, including domestic, will see revenues cross $20 billion in 2004-05 with services and software exports growing at 30-32 per cent to record revenues of over $16.3 billion.

The first two quarters of 2004-05 have been extremely good for the top three software exporters - TCS, Wipro and Infosys. Their topline started growing handsomely reminding of the heady days of 1999-2001. In fact, all of them have projected liberal growth for 2004-05 .

With the topline, the number of employees of the IT companies also grew. Many unveiled plans to hire thousands in the coming quarters.

Wednesday, December 29, 2004


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.

Monday, December 27, 2004

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.

Tuesday, December 21, 2004

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.

Sunday, December 19, 2004

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%.

Friday, December 17, 2004

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.

Sunday, December 12, 2004

Outsourcing Custom Car Design 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.

Friday, December 10, 2004

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."

Wednesday, December 08, 2004

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 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.

Tuesday, December 07, 2004

Outsourcing Growth Predicted at 5.9% 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."

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 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.

Thursday, October 28, 2004

10 Facts You Should Know About Outsourcing reports on the 10 facts you should know about outsourcing. This is a good summary about the issues related to offshore outsourcing and provides some interesting facts and figures. Some of the more compelling facts include...

2. The Department of Labor expects demand for software engineers to grow 50 percent by 2012.
4. In recent years, Finland and Japan invested more than the United States in technology research.
7. Miscommunication, mismanagement and other problems can cut into labor cost savings.
8. Some researchers estimate a return of $1.12 to $1.14 for every dollar spent on outsourcing.

Firms See Mixed Results in Outsourcing reports a survey of US and European companies has found that less than half consider outsourcing financial functions to be cost-effective.

About 44 percent of companies that have outsourced financial functions say they have saved a moderate amount, according to a new study from PricewaterhouseCoopers. Another 3 percent say they have saved a great deal.

Nearly 75 percent of American and European corporations that use outsourcing to support their financial functions will continue to do so over the next two years, according to the survey. About 29 percent of these companies expect to increase their use of outsourcing of financial functions, with spending likely to be 16 percent higher than present levels, the survey found.

A PwC representative said the disconnect between the outsourcing push and the financial results is mostly due to lack of planning on the companies' part.

India Uses Canada as Back-Door to US

Metro reports Indian companies are opening back doors into the United States by setting up shop in Canada.

The idea is to offer alternatives to U.S.-based Fortune 500 companies that are eager to get some benefit from the cost savings of outsourcing. By moving work to a "near-shore" destination such as Canada, U.S. companies can mitigate the domestic backlash that may come with the "off-shoring" of jobs.

He said people shouldn’t be surprised that Canada is an ideal near-shore destination for U.S. computer services jobs. It happened in the automotive sector in the 1960s, with the film and television industry and with call centres.

Raju compared the outsourcing trend to the advent of disruptive technologies such as the computer or cellphones. They are innovations that can’t be ignored, he said, because they represent such a dramatic change in how companies do business and remain competitive.

"The benefits of global outsourcing are not incremental," he said. "If they’re incremental, they can be ignored."

Ignoring these changes is what got many U.S. companies in trouble, which is why Satyam is planting seeds in China, a market expected to be the next global outsourcing opportunity after India has run its course.

Monday, October 25, 2004

Is Outsourcing Worth IT Job Loss?

CIO News asks what is happening in respect to technology jobs in the current environment. Is the global environment a drain on technology jobs here in the U.S.? A group of outsourcing experts gathered last month at the Emerging Technologies Conference at MIT to discuss the effect of globalization and offshore outsourcing on IT jobs in the U.S.

The reality is that offshore outsourcing is a growing trend. According to a recent study from Meta Group, the worldwide offshore outsourcing market is worth $10 billion today and will grow 20% annually through 2008. Meta also claims that offshoring growth will outpace outsourcing in general and predicts that the average enterprise will offshore 60% of application work by 2008 or 2009.

Regarding job loss, a study from the U.S.-China Economic and Security Review Commission, found that up to 406,000 U.S. jobs will be moved overseas this year. The offshore job tracker on reports that more than 259,000 jobs have been sent offshore from Jan. 1, 2000 through Oct. 12, 2004. The site also claims that 142,500 jobs have been lost as a result of offshore outsourcing during this same time frame.

"You have three choices: remain competitive, choose a new industry or go down a misguided path of tariffs and closed markets," he said. "We rightly chose to have a minimum wage in this country and not to allow sweatshops. By doing so, we accept that we may not be able to compete in some industries where cheaper labor and lower costs of living can produce the same products at a fraction of the cost."

Skills Shortage Threaten Indian Outsourcing

Gulf Daily News reports India's outsourcing industry faces a major 'talent challenge' as a lack of skilled employees threatens it's global success according to company officials and analysts.

While call centres are flourishing in India, they represent only a small portion of the global outsourcing market and nearly 97 per cent of future work will involve high-end analytical processes such as banking and marketing applications.

Avinash Vashistha, managing director of NeoIT, an outsourcing advisory and consulting firm, said India is not ready to meet new demands and the industry could be badly hurt if supply shortages are not overcome soon.

Gartner, a top global IT consultancy, last month said emerging nations in southeast Asia and central Europe could eat up nearly half India's 80pc share of the booming outsourcing market if the nation fails to draft a longterm strategy to stay ahead.

Friday, October 22, 2004

Outsourcing Medical Treatment

MSNBC reports a story of man who outsourced his heart surgery to India for a fraction of what it would have cost him in the US.

Taking his cue from cost-cutting U.S. businesses, Staab last month flew about 7,500 miles to the Indian capital, where doctors at the Escorts Heart Institute and Research Centre -- a sleek aluminum-colored building across the street from a bicycle-rickshaw stand -- replaced his balky heart valve with one harvested from a pig. Total bill: about $10,000, including roundtrip airfare and a planned side trip to the Taj Mahal.

Staab is one of a growing number of people known as "medical tourists" who are traveling to India in search of First World health care at Third World prices. Last year, an estimated 150,000 foreigners visited India for medical procedures, and the number is increasing at the rate of about 15 percent a year, according to Zakariah Ahmed, a health care specialist at the Confederation of Indian Industries.

Outsourcing Continues in US reports the practice of moving American jobs overseas continues and should pick up after the presidential election.

''Some customers were waiting for the elections to be over to place outsourcing orders,'' The Wall Street Journal quoted Wipro Chief Financial Officer Suresh Senapaty in yesterday's editions as saying. He acknowledged that outsourcing has become a political issue in the United States.

Some said American politicians were missing the point in saying more education as a solution for outsourcing, since the jobs moving overseas increasingly are affecting highly educated professionals, particularly in the technology sector.

Tuesday, October 19, 2004

Outsourcing Europe Gains Acceptance

CIOL reports the practice of outsourcing business, long popular in the United States and Britain, is gaining in acceptance in continental Europe and is diversifying rapidly from technology services to other business processes. In Europe, more outsourcing deals were signed last quarter than in any single quarter since 2000.

In Germany, Europe's biggest economy, banks are leading a trend of handing over entire business processes to third parties, with overall outsourcing revenues in the first nine months of 2004 tripling from the year-ago period, Technology Partners International said.

Driving the latest spurt of outsourcing growth is so-called business process outsourcing (BPO), in which companies contract out entire processes, for example human resources from hiring to pension administration.

Previously, firms tended to outsource only information technology functions such as server management, IT integration or customer relations to call centres.

Outsourcing Lawyers

Money reports attorneys are the latest to see their jobs being outsourced. A number of U.S. companies, including members of the Fortune 500 and some of the country's largest law firms, are now embracing the idea of outsourcing routine legal work to India, South Korea, Australia and other locales with far lower labor costs.

Smelling opportunity, a handful of companies have sprung up in recent years, both in the U.S. and abroad, that sell outsourced legal services.

One of them, a Chicago-based outfit called Mindcrest sells services like document management and research that feed at the bottom of the legal profession's food chain. With rates ranging from $20 an hour at the low end to $70 an hour at the top, the savings can run as high as 70 percent for work traditionally handled by junior U.S. lawyers who command close to $200 an hour.

Offshore IT Outsourcing Growing 20 Percent

InformationWeek reports the worldwide market for offshore IT services will grow to $17 billion in 2008 from $7 billion in 2003.

The worldwide market for offshore IT services will grow to $17 billion in 2008 from $7 billion in 2003, achieving a compound annual growth rate of 20%, according to a study released Monday by market researcher IDC. The study only tracks IT services sales won by offshore-based companies such as India's Wipro Technologies and Infosys Technologies. It does not include the value of work being placed offshore by American service providers such as IBM and EDS.

The growth is being driven in part by the fact that some IT-related work that has been relatively immune to offshoring is starting to move overseas, says Barry Mason, a senior analyst at IDC. "We're starting to see offshore firms move up the value chain," Mason says. IT consulting, Mason says, represents one new market that offshore firms are aggressively pursuing.

The good news for American IT workers: As offshore companies expand, they're opening offices in the United States and hiring locally. Says Mason: "There is still a lot of work that requires a presence close to the client."

Monday, October 18, 2004

Indian Outsourcing Sees Growth

EE Times reports semiannual results of India's top three software services exporting organizations released this week show that growth is back to pre-slump levels in 2000.

Tata Consultancy Services (TCS), Infosys Technologies and Wipro Technologies said they all have recorded strong growth, with more than one posting better-than-expected results. The results confirm that India's software exporting companies are back on track for growth.

"Offshoring has become a megatrend in the industry, as more customers leverage their partnership to increase global competitiveness," said Nandan Nilekani, CEO, president and managing director of Infosys Technologies Ltd. He said Infosys's focus is on scaling its opertions and on market differentiation.

Salaries Up. Outsourcing Overblown?

InformationWeek reports the lid on IT salaries is beginning to lift, and IT specialists should see gains of as much as 10 to 15 percent over the next three years, according to a new IT staff salaries study by the META Group.

Schafer was asked what impact the outsourcing phenomenon will have on IT specialists and their salaries.

While outsourcing has an impact, she believes talk of its impact has been overblown. Schafer cited a recent META Group outsourcing study, which found that 81 percent of some 600 polled IT enterprises don't engage in outsourcing at all.

She pointed to the value of IT specialists with "balanced capabilities"--having a strong technical expertise combined with managerial skills. She said: "These skills aren't going to be outsourced--ever."

Monday, October 11, 2004

UK Insurance Company Outsources

Independent News in the UK reports Royal and Sun Alliance, one of the biggest inurance firms in the country, will outsource more than 1,100 jobs to India over the next few years.

Royal and Sun Alliance said it will save over £10 million a year by switching call centre and customer service work to Bangalore.

The firm, the second biggest general insurer in the UK, already employs 100 workers in India, so the figure will rise to 1,200 by 2006.

Tuesday, October 05, 2004

Outsourcing to India Helps Prudential

The Times of India reports Prudential saved 60 million pounds by outsourcing call centers and back office operations to India 18 months ago.

"Because of the processing centre we have much higher quality of products and we have effected a cost saving of 60 million pounds, though it resulted in a loss of job of 900 in the UK," said Hugh Davies, Director, Prudential Corporation Asia. "Without moving, my company would have been in dire straits," Davies said, participating in a debate on 'India: Global Trade and Investment: Changing priorities?' organised by the Commonwealth Business Council of India.

Indian Diaspora Helped Outsourcing reports India professionals, venture capitalists and entrepreneurs of Indian origin helped promote India as an outsourcing destination, according to a study conducted for the World Bank Institute in Washington, D.C., by Evalueserve Inc., a business intelligence and research firm.

"While other low-cost destinations are slowly catching up with India in outsourcing, the country will retain its edge because of the growing influence and expertise of the Indian diaspora, particularly in the U.S., Canada and the U.K., the study said. A key factor is the increase in organized networking and mentoring that the diaspora community can provide to businesses engaged in outsourcing, the study said."

"Some VCs in the U.S., particularly those of Indian origin, are actively funding companies that have back-end operations in India to save on research and development (R&D) costs, the study said. As of March this year, more than 150 U.S. startups had some back-end operations in India, and the number is likely to double by March 2006, according to the study."

Friday, October 01, 2004

Schwarzenegger Terminates Outsourcing Bill

The Mercury News reports California Governor Arnold Schwarzenegger vetoed legislation aimed at preventing the outsourcing of California jobs to foreign countries, claiming the measures would erect 'artificial barriers' to economic growth.

"There is a right way and a wrong way to expand economic opportunity in California," he said in a statement on one of the three vetoed bills Wednesday. "The wrong approach is to implement measures that restrict trade, invite retaliation or violate the United States Constitution or our foreign trade agreements."

Good Outsourcing Vietnam!

International Herald Tribune reports Vietnam is making a big push into becoming an outsourcing destination. Mathematics has been a strong suit of Vietnam's educational system and now the government is trying to train people in computer skills.

"Wages remain extremely low: World'Vest Base hires recent graduates with accounting or finance degrees, but no experience, for a starting salary of $100 a month, little more than an unskilled factory worker earns in neighboring China. Very low wages and strong math skills are a combination that has made believers of some experts."

"Atlas Industries has 100 people in Ho Chi Minh City, formerly Saigon, performing the technical tasks of turning architectural drawings from Britain into detailed blueprints that can be used by British construction companies. Joseph Woolf, the company's chief executive and founder, said that he preferred Vietnam to India because Vietnamese employees were more loyal and less inclined to change jobs repeatedly or seek work overseas, two problems some companies have encountered in India."

Wednesday, September 29, 2004

India Ready for Windows XP Lite reports a cut-down version of Windows XP is being released in India and other developing technology markets like Thailand, Malaysia, Indonesia and Russia. This version includes a Hindi interface and will be available early next year.

"This low-cost, customised and localised technology will spur PC usage, creating a new breed of technology-aware citizens to contribute to India's growth as an IT superpower," said Ravi Venkatesan, chairman at Microsoft India, in a statement.

"Technology is a catalyst for economic and social change [but India has] a long way to go in providing access to technology and the related skill."

Tuesday, September 28, 2004

Outsourcing: Transitional Service Agreements reports companies that centralise IT services with an outsourcer or a shared services group need to design deals that can be broken up if part of the company is sold.

Minter Ellison partner Keith Robinson says the increasingly popular shared services model could make it difficult and expensive to break off elements of a company in a merger or acquisition, unless the services deal is structured so it can be separated.

Robinson says corporates need to "think ahead" when negotiating services agreements, and structure such agreements so temporary sub-licences can be developed to deal with sales of parts of the business. Lawyers call these deals "transitional service agreements".

Monday, September 27, 2004

Outsourcing Creates Jobs in Singapore

The Straight Times reports the Singapore unemployment rate is expected to drop as firms restructure and outsource work, according to labour leader Lim Boon Heng.

"On the recent moves by companies such as Singapore Airlines and Singapore Airport Terminal Services (Sats) to outsource jobs, Mr Lim said that it is one outcome of a more competitive environment. The national carrier announced last week that it was outsourcing 130 information technology jobs."

Said Mr Lim: 'It's happened in other countries first, now it's catching up with us... We've seen Singapore come under more intense pressure, because many of our neighbours are doing the same things as we do, and they do so on a lower cost base, including wage cost.'

Asked whether outsourcing would worsen the umemployment rate, he said: 'No, I think the unemployment rate will actually improve in my view, because new opportunities come up for those who're looking for jobs.

Singapore Identifies 12 Outsourcing Services

The Straight Times reports the Singapore government has identified 12 services which can be outsourced to private companies as part of an ongoing economic drive.

"The functions submitted by government ministries and statutory boards are: library and legal services; human resource; training; carpark services; call centres; IT; facilities, document and project management; security; and finance and accounting."

"They will be 'market-tested' - that is, comparing the cost of delivering the functions in-house with what is charged by the private sector. If a private company can deliver a service more cheaply and effectively, it will be hired to do the job."

"The Government calls this process best-sourcing. The idea is for public agencies to get the best value for their money. They will complete their market-testing by next March, said the Finance Ministry."

Wednesday, September 22, 2004

Is Offshoring Slowing Down?

BusinessWeek Online reports the wage gap between the US and Asia is quickly narrowing which could diminish the cost savings of sending work overseas.

"The demand for English-speaking service workers in Bangalore is so high that GE as well as Infosys Technologies (INFY ) and Tata Consultancy Services are now looking outside major Indian cities to set up new call centers and other operations because they can't recruit enough college-educated people. The same is true in China."

"What does that tell you? Most of the best and brightest Indians and Chinese are already fully employed and are negotiating higher wages and benefits for their work."

"This is a significant development offshoring. Honest corporate managers will tell you that to make offshoring work, you need at least a 300% to 400% wage spread between American software writers, engineers, accountants, and call-center employees and their Indian and Chinese counterparts."

Don't Forget Security When Outsourcing

Computerworld reports many companies fail to take into account cultural differences that may affect their security when outsourcing, according to experts attending the Gartner IT Security Summit in London today.

At issue is not so much the security that outsourcing service providers use to protect companies' systems -- such as firewalls and data backup -- as it is the cultural differences, Iyengar said. For instance, standards of privacy are often looser in India because it's a close-knit society where, say, reading someone else's e-mail wouldn't be considered much of an intrusion.

"Fifty percent of companies understand that there are security issues with offshoring, but the real issues are cultural and in compliance and regulation," said Lawrence Lerner, senior technical architect of the Advanced Solutions Group at Cognizant Technology Solutions Corp.

One way of ensuring that security and regulatory compliance concerns are met is by putting the onus on the outsourcing provider and writing it into the contract, he said. "It pays dividends to have the provider responsible for these issues," Balchin said. "For us, it's a distraction from our core business."

Monday, September 20, 2004

India's Outsourcing Faces Skills Shortage

CRM News reporst India's outsourcing industry is expected to face a shortage of 262,000 professionals by 2012. Kiran Karnik, president of the National Association of Software and Service Companies (NASSCOM), said the body had begun talks with IT firms, universities and governments about improving study courses to equip students for outsourcing and IT research jobs.

"There are two-and-a-half million graduates every year in India," Karnik told reporters. "[But] the employable pool in this is very, very small. We are working with the universities to train people better."

"The aim is to have courses meant towards producing graduates with quality. This has to start right from the primary school level," Karnik said.

Lower Telecom Costs Boost Outsourcing to South America reports policy changes announced this month by the communications ministry of South Africa will lead to globally competitive telecommunications prices and ultimately more outsourcing business to South Africa.

One of the country's less attractive features is its high telecommunications costs. But this is set to change following the news that the licensing of the second network operator will take place this month. Also, as of next year it will be legal for more players to carry both voice and data traffic over a single line.

Call Centre Nucleus marketing director Jonathan Hackner says South Africa competes with about 20 countries for call-centre business and ranks about fifteenth, with India and the Philippines leading the pack. "However, we can rank in the top five once our telecommunications prices come down," says Hackner. He reports that the Department of Trade and Industry is offering R200-million worth of incentives for companies which set up local call centres, a move which can create an additional 100 000 jobs by 2007.

Friday, September 17, 2004

Outsourcing R and D to India

EE Times reports India is attracting research and development outsourcing projects according to a strudy by Research and Markets of Ireland. R&D outsourcing to India is expected to grow from $1.3 billion in 2003 to $8 billion by 2010.

"Growth in R&D outsourcing has been boosted by the outsourcing of services. Now, overseas companies that used India as a low-cost base are beginning to exploit Indian technical expertise."

"The success of Indian R&D centers was attributed to factors such as good management, an emphasis on quality, strong ties to universities and clear roadmaps. The growing number of R&D centers also built on the successes of pioneering companies, the study found."

Offshoring Goes Mainstream reports Unisys chief and others foresee easier outsourcing ahead and indicators suggest offshore outsourcing has entered the mainstream as global organisations gain confidence offshoring new and complex services.

Brian Hadfield, managing director at the IT services firm in the UK, said the future of outsourcing would see a move to packaged offerings and away from one-off, specialist deals. "We believe the ability to take an outsourcing venture and grow it into a utility is important," he said. "You get economies of scale, which can be passed on to the customer."

Hadfield predicted that demand for outsourcing would grow in a number of areas, including supply chain management, logistics and customer relationship management. "You'll see a transition from outsourcing the back office to the middle and front-end. People will start taking a look at outsourcing these activities."

Hadfield also anticipated growth in offshore IT outsourcing. "We do some offshore work and have made investments in this area," he added. "The ability to lower costs by doing work offshore will be attractive to customers and suppliers." However, firms are likely to be selective about the projects and activities sent abroad, he predicted.

Friday, September 10, 2004

Big Growth for India Outsourcing Company reports WNS Global Services, India's largest independent back-office provider, is growing revenue by 50 to 60 percent.

"Revenue grew 84 percent to $103 million in the year to March 2004, helping it unseat Wipro Ltd.'s Spectramind arm from the top of the list of independent Indian providers. The Indian business process outsourcing (BPO) sector has grown to $3.6 billion from nowhere a few years ago, but captive arms of multinationals account for 60 percent of the revenue"

"WNS employs 5,000 people in BPO centers in Bombay, Pune and Nashik in India, Ipswich in the UK, and it is opening one in Sri Lanka soon. Bhargava said it aimed to double headcount to 10,000 by March 2006."

Kerry on Outsourcing

Kansas City Star reports Sen. John Kerry pledged to eliminate a tax break that U.S. companies get for foreign operations. Most likely this would only have a small effect on a limited number of companies and is unlikely to bring jobs back onshore.

"Most experts say that outsourcing isn't to blame for many of the 1.1 million private-sector jobs that have been lost over the past three years. And those jobs that are outsourced aren't driven abroad, as a rule, by the small tax break that Kerry decries, they say. Economists say that most companies that relocate jobs abroad do so to take advantage of lower wages and production costs."

Wednesday, September 08, 2004

Outsourcing's Impact reports on the impact of outsourcing in America and it's effect on jobs.

"What we need is a way of determining whether the gain is worth the pain. Suppose the net benefit to America is the degree to which the average employee's purchasing power increases. The benefit really depends on four factors: the proportion of consumer expenses spent on potentially outsourced goods, the decrease in prices due to outsourcing, the proportion of American jobs that can be outsourced economically, and the wages of jobs that can be outsourced relative to the jobs that cannot"

"In the long term, American workers will be competing with labor elsewhere, pressuring American wages. Though prices should fall, it's unclear whether these benefits will compensate Americans for lower wages. On the other hand, India and China will benefit from both higher wages and falling prices. Consequently, outsourcing will likely narrow America's standard of living lead over other countries."

Tuesday, September 07, 2004

Philippines Joins OutsourceWorld

Philippines newspaper ABS-CBNNEWS.COM reports the Philippines is set to join OutsourceWorld, which will be held in New York City next month, in an effort to find new outsourcing markets.

"OutsourceWorld NY, which will be co-located with Technology Exchange Week New York, attracted some 43,000 international visitors last year. Over 200 exhibitors are expected to join this year’s event, which organizers said will draw 45,000 visitors. Purisima said the participation of the Philippines in the exhibit is part of the DTI’s efforts to position the Philippines as the preferred outsourcing destination in Asia."

"The Philippines serves as a source of outsourcing services from the US and Europe. US-based companies such as AIG and Procter & Gamble rely on the Philippines for its management, finance and accounting services, while Alitalia and International Red Cross already have established their presence in the country’s outsourcing industry."

Monday, September 06, 2004

Outsourcing Countered by Foreign Firms In US reports foreign companies have created millions of jobs in the United States, far outpacing the amount of work that American businesses have sent abroad, Labor Secretary Elaine Chao said last week.

"In the past year, employers have eliminated about 300,000 jobs in the United States in favor of cheaper labor elsewhere, Chao said. Yet about 9 million Americans currently work for U.S. subsidiaries of foreign-owned companies, she said."

"'We understand the concern and the anxiety on this issue,' Chao said. 'My point also is we live and work in a worldwide economy. ... If we isolate ourselves from this worldwide economy, we will put in jeopardy the 9 million jobs that Americans currently hold' in foreign-owned companies.

Friday, September 03, 2004

Malaysia Emerging as a Top Outsourcing Destination

Space Wire reports Malaysia is competing to become one of Asia's top outsourcing destinations according to Malaysian Prime Minister Abdullah Ahmad Badawi.

"A global survey by US consultancy firm AT Kearney listed Malaysia as the third most attractive offshore location in terms of cost and skills behind India and China."

"Abdullah said the Multimedia Super Corridor (MSC), launched in 1996 as Asia's answer to California's Silicon Valley, has expanded rapidly with new 'cyber-cities' being established in several states."

Thursday, September 02, 2004

More Outsourcing After Elections

Indian published Business Standard reports American firms and independent IT vendors are for the most part marking time, waiting for the US elections to be over. The jobs traveling to India are mainly resulting from the need to take care of growth and attrition and little because of layoffs.

"Avinash Vashistha, CEO of the offshoring consultancy neoIT, predicts that next year IT services offered out of India are likely to grow at 40 per cent. The potential for Indian companies in particular is underlined by the small part of global IT services delivered by them. If this is the optimistic scenario for IT services, for ITES or BPO the potential for growth of offshoring is even greater. So far only a small part of BPO services has migrated to India, dominated mainly by call centre work."

Wednesday, September 01, 2004

Outsourcing is Pruning America

Market Week blog offers a unique view on outsourcing as the pruning of American jobs. In other words, America moves low return business to lower cost labor sources to focus more on higher return businesses.

"In America we 'prune' low return businesses and invest in high return businesses. The textile industry in the USA is another case in point. Over time textile manufacturing moved from Great Britain to the Northeast of the USA, then to the Southeast of the USA in order to keep labor costs down. Now the textile industry is moving overseas to low cost producers. Textiles are a business with a very low return on invested capital and cost advantages quickly turn into price advantages. Price advantages turn into sales as consumers seek to get the most for their dollar."

"As painful as this process can be for individuals and communities the likely outcome is not that all of our jobs move overseas. Who aspires for their children to work in a broom factory, or to make clothespins? The USA will continue to retain high value added jobs and prune low value added jobs."

"We all benefit from pruning from lower cost of goods, a broad array of products in our stores. The Chinese make lamps, toys, consumer appliances and sell them to us, and they buy Boeing Jets, Cisco Routers, Intel Microprocessors, Disney Movies, and Coca-Cola."

"Off shoring or outsourcing of low valued added jobs is how we prune the dangerous dead wood here in the USA. It is why we enjoy one of the highest standards of living in the world. It is necessary. Without it our productivity will falter and our standard of living will fall."

Tuesday, August 31, 2004

Will US Collapse Without Outsourcing? 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 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 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 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, 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 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 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 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."

Wednesday, July 28, 2004

India Easing Tax on Outsourcing 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 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 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 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 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. 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 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 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 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 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."