Tuesday, June 30, 2009

I am Moving On...

I would like to thank all of our visitors, readers and contributors for their continued support and input. Effective June 30, 2009 I am moving to another project and will no longer manage this blog site. I have enjoyed the time and effort put into this initiative. We are proud of the fact that we were named as one of the Top 100 Blog Spot for Outsourcing and Offshoring in 2009 by O-desk.com. I wish everyone the best in this dynamic and challenging economy. The blog will remain active for the foreseeable future.


Lou LaFrate

Monday, June 29, 2009

Offshoring News

IT Companies Expanding in Latin America
Driven by customer demand, Indian IT firms such as TCS, Infosys, and Patni are enhancing their ‘near-shore’ delivery capabilities in Latin America. This would also help them explore the emerging markets in the region. Last week, TCS opened its seventh Latam delivery centre at Queretaro, Mexico, where Patni Computers also chose to locate its first centre that was launched on Monday.
Source: Offshore Outsourcing World Blog.com

Acquiring Outsourcing Companies: Not for the Squeamish
This article was posted by E-Commerce Times. com a while ago but the content is still very relevant for any company looking to offshore business processes. The author explains that the effects of the recession on outsourcing companies have made them attractive targets for acquisition, but with opportunity comes risk. There are distinct differences between the way things are done in India vs. the United States, and they can impact the true value of a company.

Friday, June 26, 2009

Special Effects Outsourcing Grows in India

News Max.com reported that outsourcing to India, long dominated by software engineering and back-office work, is expanding in new terrain: special effects for movies. India's rise comes at a difficult time for U.S. special effects outfits, some of which have buckled as the 2008 L.A. writers strike cut productions and the financial crisis curtailed financing. Executives in India say cost pressures are pushing studios to send more work to India, where special effects projects are up to 40 percent cheaper than in the U.S. This is limited in nature bu shows that many processes cn be outsourced given the right circumstances,

Thursday, June 25, 2009

Indian Firms Acquire 143 US Companies, Create 30,000 Jobs

Offshore Outsourcing World Blog.com ran a story about acquisitions made by Indian companies across various sectors over the last two years. In 2007-08 alone, 94 deals between the range of $0.8 million and $1,005 million were concluded with the disclosed value in 55 deals totaling $4,432 million, according to the joint study released by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst and Young.

Wednesday, June 24, 2009

News of the Day

Indian CEO Warns White House on Proposed Visa Curbs
The Wall Street Journal reported that one of India's most powerful businessmen is warning U.S. government and business leaders that proposed curbs on U.S. work visas are protectionist measures that could spark a major trade dispute with India. During a visit to the U.S. last week, Azim Premji, chief executive of Bangalore outsourcing giant Wipro Ltd., met with officials including White House economic adviser Lawrence Summers. The visa issue threatens to increase trade frictions between the U.S. and India, which are already trying to resolve disputes over agriculture and other sectors.

Tuesday, June 23, 2009

News of the Day

Hewlett-Packard Acquires HR Business-Process Outsourcer
Global CIO blog reported that Hewlett-Packard has acquired full interest in an HR business-process outsourcing firm formed as a joint venture between EDS and Towers Perrin in 2005 and called Excellerate HRO. Now that HP's wholly owned services unit, EDS, has full control over the venture, HP is likely to become more aggressive in courting outsourcing deals in the HR sector.

Horses for Sources Interviews Cognizant's CEO
One of our favorite blogs "Horses for Sources" posted an interview with the youngest IT and BPO industry leaders, Francisco D'Souza. Please use the attached link to read the first in a series of interviews.

Monday, June 22, 2009

Globalization and Outsourcing news

Is Offshoring Helping the US Economy?
Information Week posted an article that discusses the impact of offshore operations on the US economy. It's an interesting read where the author provides information supporting the premise that it does and has solicited feedback.

Globalization has Helped Redefine "Experience"
Mass High Tech.com explains, in an article posted last Friday that due to the nature of today's economy employees who have a global perspective and an understanding of business issues will fare better than those with only technological mastery.

A Unique Perspective on Managing Through the Offshoring Trend

Facing Tomorrow's Challenges Calls for Right-brain Thinking
An article published by Wharton.edu brings up an interesting point about the education process and how it needs to be modified to help students manage in today's environment. The author explains that today's pace and nature of change call for a shift in the way we think about education. Daniel Pink, author of A Whole New Mind and The Adventures of Johnny Bunko, discussed this fact in a keynote speech at a recent Wharton Evolution of Learning Symposium. In a world where jobs can be sent overseas, tasks can be automated and the feverish pace of technology can render even last year's innovation obsolete, students will have to learn how to think differently than their parents in order to survive and prosper.Hide all

Friday, June 19, 2009

Today's News Updates

Rio's Indian Deal is a Wake-up Call for City Firms.
Times Online.com advised that Rio Tinto's decision to recruit Indian lawyers to handle a significant portion of its legal work is a wake-up call to Britain's big law firms. The move will be closely watched by other big companies, some of which spend upwards of £50 million a year on legal costs and have been grumbling for years about whether they get value for money from their outside lawyers.

Significant increase' predicted for legal outsourcing
IP Review On-Line announced that offshore legal support services will see a major increase in their work volumes as they mature. This prediction comes from a new report titled: Legal Services Outsourcing: What Do Law Firms Think? Conducted by business intelligence provider ValueNotes – one of only two quoted sources on legal process outsourcing (LPO) market size – the study indicates that law firms are becoming more familiar with the sector as they work to offset costs.

Recession Drives Retailers to Outsourcing
VNUNET.com posted a story advising that the retail sector is investigating third party suppliers to ease financial pressures. IT and business process outsourcing will become an increasing trend in retail as firms in the sector struggle to survive in the downturn, according to research from analyst Datamonitor. According to Datamonitor retail technology analyst Christine Bardwell, retail businesses are cutting down on staff and inventory – the two key focus areas for the sector – to mitigate efficiency and cost pressures. “Many retailers are looking to technology and services to help cut the cost of managing inventory, non-critical business processes and store operations,” said Bardwell.

Thursday, June 18, 2009

Outsourcing News of the Day

RComm Awards Huge Outsourcing Deal to Alcatel-Lucent
BPOVoice.com announced that Reliance Communications (RCom) has awarded a $500 million (Rs 2,500 crore) operations and maintenance contract to French telecom infrastructure provider Alactel-Lucent. Last year, Reliance and Alcatel formed a joint venture for network management services, with the Indian company holding 33 percent and the French company owning the rest.

Gartner: Don't Sign Long-term Outsourcing Deals
Computer World UK.com posted a story advising that organizations renegotiating their outsourcing contracts should avoid long-term deals and look at cloud computing. This comes from the analyst firm Gartner. The next two years will be a “critical period” for the outsourcing and IT services market,” said Claudio Da Rold, vice president and distinguished analyst at Gartner.

IT Firms Face Delay in Payments from Foreign Clients
Offshore Outsourcing World Blog.com reported that a number of Indian outsourcing companies are facing difficulties as their foreign clients are delaying their payments. The firms are finding it hard to recover their money, as most of these firms are from the U.S. and Europe, which are largely hit by the recession, the Business Standard reports. Except Infosys, all the major Indian IT firms have shown a rise in the receivable income from the last three quarters.

Wednesday, June 17, 2009

Offshoring News

Why It's Time to Look at the Inflation Clause in Your Outsourcing Contract
Outsourcing-Journal.com explains that given current market conditions it may be time to revisit your outsourcing contract. Outsourcing agreements work best when there are no winners or losers. Win/lose deals often degrade into lose/lose deals. Bilateral inflation price adjustment clauses are arguably the fairest and therefore the best way to avoid creating winners and losers. The bad news is that most contracts are not written with bilateral inflation price adjustment clauses.

Tuesday, June 16, 2009

Update of the Day

Global Sourcing and Delivery Models in Practice
The blog SASIDAR.info posted an article on the three major models of off shoring: a Captive, a Third Party Provider (TPP) or a Build-Operate-Transfer (BOT) . It is a very good article and worth reading.

Monday, June 15, 2009

News of the Day

IT Firms Investigating Japan for Outsourcing Opportunities
According to a report in BPOVOICE.com Indian IT companies are looking to Japan for new business due to the slow down in the European and US economies. The Indian IT companies currently depend on the US and European markets. Between 80% and 90% of revenues is typically accounted for by just these two regions. According to industry experts Japan will drive the next phase of growth for the Indian offshoring industry.

Outlook Brightens for Indian Vendors
The Wall Street Journal announced that spending on outsourcing is set to come out of a slump and return to pre-recession levels by the end of the year, bringing a much-needed boon to technology companies in India and elsewhere. The information comes from a closely-watched survey of the industry. More than half of companies surveyed that outsource say they expect their spending on technology to come back to levels before they made cutbacks.

Indian Outsourcer, Infosys Outsources Work to Brazil
The new Brazilian software-development and back-office center is expected start operations within next the three to four months, with about 100 employees, the Economic Times reported, citing its interview with Infosys Chief Financial Officer V. Balakrishnan.

Thursday, June 11, 2009

Offshoring News

Research Agencies to Boost Outsourcing in the next 3 to 5 years
Source: Outsourcing Insider: Market research Outsourcing (MRO) is relatively new compared to other outsourcing segments. It has all the potential elements to grow into unprecedented levels, as current market conditions forced research cycles to be shortened in order to be more cost efficient. Data collection, processing and panel services are the top outsourced activities due their high offshorability. While project management, report writing and research design were determined to be the most difficult areas to offshore.

Research agencies are expected to boost outsourcing of non-core activities in the next 3 to 5 years, as shown in the data above. Industry experts estimate the potential for offshoring research services to be in the range of $8 billion to $10 billion in 2010. “This growth will be primarily driven by ‘rapidly growing’ and other ‘untapped’ opportunities”

Newsworthy Items

Mexico Edges in on China's Manufacturing Turf
The Dallas Morning News ran a story about Mexico vying for manufacturing jobs currently located in China. The author notes that China has consistently won the sourcing game with scores of manufacturers ready to produce products to customer specifications, pack and ship them in containers. Now Mexico is making a play for this work, with custom-made products and overnight delivery – a time frame that China can't touch.

Recession Sparks a Sharp Drop in Outsourcing in Britain
Outsourcing101.com reported that even though offshoring to locations such India and China offers cost reductions the initial cost of setting up these relationships can be significant. As a result many companies aren’t willing to invest in offshoring in the current economic climate.

Investors Predict Globalization of Industry, Especially to China
The Wall Street Journal reported that Venture capitalists expect their industry to grow increasingly global, as firms shift more attention to Asia and as institutional investors around the world seek to add venture funds to their portfolios.

Wednesday, June 10, 2009

Offshoring News

Infosys Plans to Set Up Unit in Brazil
Economic Times.India Times.com announced that India’s second biggest software exporter Infosys Technologies plans to open a software development and back office center in Brazil
later this year, as the company seeks to serve its US customers better by establishing a near-shore presence.

Wal-Mart to Invest $500 Million in India
www.CXO Today posted a story announcing that Wal-Mart is expected to offshore its business and back office operations to India. The company has shortlisted Wipro, Infosys and TCS for its $500 million contract for a five-year term. Through this initiative, Wal-Mart may also serve its customers worldwide with online product sourcing.

Tuesday, June 9, 2009

News of the Day

Retailing in a Recession - The Opportunities for Outsourcing
Research and Markets has announced the addition of the "Retailing in a Recession - The Opportunities for Outsourcing" report to their offering. The increasing economic pressures affecting the retail industry means that companies will increasingly look to outsource technology and business processes to cut costs and focus on core skills. This report provides a detailed analysis of service providers capabilities in selling to the retail sector through the current recession.

Lenexa Outsourcing Facility Adding 725 Jobs
DB Digitalburg.com advised that a Pennsylvania outsourcing company is nearing the end of an expansion at a customer call center in suburban Kansas City that will ultimately employ 725 new workers. NCO Group began the $5.6 million expansion in Lenexa, Kan., last year. The facility originally employed about 400 people and will ultimately employ 1,100. The company provides outsourcing services for businesses, including accounts receivable management, customer management and other administrative functions.

Significant Increase Predicted for Legal Outsourcing
IP Review Online reported that offshore legal support services will see a major increase in their work volumes as they mature. A new study indicates that law firms are becoming more familiar with the sector as they work to offset costs.

Monday, June 8, 2009

Today's News

Smart Balance Keeps Tight Focus on Creativity
The Wall Street Journal reported that the heart-health food developer outsourced manufacturing and distribution to target in-house strengths on new products.

Industry Expert Believes India Needs to Overhaul it's Education System
A leading outsourcing director in India believes that in order to maintain a competitive edge in the industry they need to review their education system. He shares his thoughts on the situation in the article posted yesterday.

Offshoring News

India Feels Less Vulnerable as Outsourcing Presses On
The New York Times reported that even though the global downturn has slowed the rapid growth in India’s outsourcing business many outsourcing businesses are booming- because of the pressure on companies, and even governments, to reduce costs is still ever present. Unemployment has risen to 8.9 percent in the United States, a 26-year high, increasing longstanding pressures to “keep jobs in America.” But managers of companies big and small, squeezed between political pressures and the necessity of slimming down to survive, are choosing the bottom line.

Tough Times Give a Boost to Second-gen Outsourcing
The Economic Times ran a story about Second Generation Outsourcing (SGO) that might be worth reading. It discusses the point that rather than looking for simple cost reductions companies are beginning to look for a better overall value proposition.

Outsourcing Agriculture
WNYC.org aired a story about China sending One Million workers to Africa this year as part of a growing trend for countries to outsource their food production. This report is connected to a blog post we made in late May 2009.

Friday, June 5, 2009

Outsourcing Updates

Ford Drives Cost Control with Outsourcing Deal
VNUNET.com announced that Ford has outsourced its payroll and time and attendance service. Ford hopes to see cost savings and increased efficiency through more automation across the business, with its payroll staff focusing less on administration and more on value-added activities.

White House Wouldn't Stop GM from Outsourcing
A story in Real Clear Politics.com yesterday explained that reporters could not get a straight answer when they pressed Robert Gibbs to explain how the White House would react if a new General Motors board wanted to act in a way that might be contrary to the administration's goals. The press secretary was posed with this hypothetical question: What if GM could save money by outsourcing jobs to China? Would President Obama, who promised that the company would make more cars in the United States, allow that as the company's majority shareholder? The answer and entire article can be accessed via the above link.

Cisco Piloting an Outsourcing Channel Program
CRN.com advised that Cisco Systems has offered insight into an outsourcing channel program that is in the works and should be ready for launch in fiscal year 2010. Word of an outsourcing program comes as Cisco readies to relaunch its Managed Services Channel Program, which will occur on Aug. 31. The program builds on one originally established in 2007. Currently, 61 partners are part of the Managed Services Channel Program.

Thursday, June 4, 2009

IBM Slovakia and Soitron experts discuss IT outsourcing in Slovakia
The Slovak Spectator published an article discussing the fact that despite an increase in the level of IT outsourcing, Slovakia is still lagging behind trends in other countries. The Slovak Spectator spoke to Juraj Hupka, global technology services manager at IBM Slovakia, Pavol Németh, director for outsourcing at Soitron about IT outsourcing, and Marek Gešo, marketing and communications director at Accenture its benefits and drawbacks as well as the impact of the global economic downturn on this market segment. To read the entire post click on the above link.

Beware of Minimum Commitments with Offshoring Contracts
IT World.com advises that with the changing landscape of Offshoring companies looking for vendors need to pay attention to the details of minimum requirements. The article offers alternatives that can be considered when negotiating contracts.

US Based LPO Company to Open New Center in India and Hire 1,450 People
Timesofindia.indiatimes.com announced that US-based CPA Global, a Legal process outsourcing will set up its third center in India and hire 1,450 people over the next two years. “Like in the case of BPOs, there is a good level of expertise and costs advantage in India, which offers a good proposition to us…We are looking at setting up our third centre in India and also increase the headcount,” CPA Global Country Head (India) Bhaskar Bhagchi said.The third centre will be set up over the next three quarters and the

Wednesday, June 3, 2009

Today's Offshoring News

Some Harsh Truths about Technology
Mark Kobayashi-Hillary posted a story on his blog about the 850 jobs Hewlett Packard is planning to axe in Erskine. The manufacturing plant is being reduced in size, with more focus on increasing production in the Czech republic.This is a blow for the local economy and an emotional decision for anyone who cares about job creation in the UK. But who is right and wrong in a case like this? Companies such as HP do have to think of all stakeholders when they make these decisions, and clearly they believe that continuing to offer a better deal to their millions of customers is more important than the livelihood of a few hundred people in Scotland.

Top Offshoring Trends to Watch in 2009
PR-Inside.com announced that the 2009 World Outsourcing Summit was held by the International Association of Outsourcing Professionals in Carlsbad, California. A report issues by the summit announced 5 trends for 2009; Enhanced Near shoring, Reliance on Smaller Deals, Importance of Professional Expertise, Enhanced Competition and Enhanced Social Responsibility. The review the entire article use the following link.

The 10 Riskiest Offshoring Locatons
Infotech-India Times.com posted a story that reviews the riskiest offshoring locations with details of each location.

Tuesday, June 2, 2009

Newsworthy Items

IT Outsourcing. The Direction Factor
Outsourcing-Russia.com reported that in order to make the offshoring model work properly it is necessary to consider all the factors that will impact the outcome. The information in this article supports the basis of Bob's book; "The Services Shift".

Novell and ACS Form Outsourcing, Supply Partnership
www.masshightech.com issued a story today on a supply partnership that was established between Novell and ACS. Novell Inc., the Waltham-based open-source IT infrastructure provider, has partnered with Affiliated Computer Services Inc. in a five-year $135 million contract in which Novell will outsource some internal information technology services to ACS (NYSE: ACS). The partnership also entails ACS paying Novell at least $30 million in the first three years for Novell products.

The outsourcing partnership involves shifting service delivery from the 156 employees of Novell Information Services and Technology group in Provo, Utah. A release from both companies does not outline where ACS will then outsource this work, but Novell officials expect “significant cost savings.”

Financial Institutions Perspective on Outsourcing
IBS Publishing.com advised that outsourcing core systems is an area that polarizes opinion. In countries such as the US it is highly popular, but in other regions it is seen as a risk too far. The financial pressures of recent times may have changed this situation.

Monday, June 1, 2009

Offshoring News

International Association of Outsourcing Professionals Releases Global Outsourcing 100 Plus Report
The International Association of Outsourcing Professionals (IAOP) released its premier 2009 Global Outsourcing 100 Plus Report highlighting the qualifications and capabilities of leading outsourcing providers and advisers globally, as well as reporting industry trends.

This newly released industry guide is an additional report available for purchase as a companion to the annual Global Outsourcing 100 ranking of top service providers and advisers. It provides independently researched profiles of an expanded list of companies including their industry focus, service expertise and geography served.

Offshoring is a Value Creation Question (the Dutch are Reviewing their Options)
Contact Center Intelligence posted a story regarding the Dutch markets approach to offshoring. Offshoring Customer Services or Contact Center Services has been a trend over the past decade or so, mostly for English, French and Spanish languages. The dutch have been waiting for quite some time, but over the past few years an increasing number of Service providers offer Offshore services for the Dutch market.

Friday, May 29, 2009

The Future of Outsourcing: Implications

World Press.Com hosts an Offshoring blog (NOVA SPHERE BLOG) that maintains an up to date summary of current Offshoring issues. Their most recent post deals with the topic of what TEBO (turnkey enterprise back office) offers providers, buyers and advisers. You can access their blog via this link.

Today's News

Process Design / Redesign with a Clean Sheet
Sourcing Mag.com reported that quite often, process designs or redesigns are burdened with a lot of legacy ideas! Sometimes, it may be better to start a design or a redesign of a business process with a clean sheet rather than make marginal improvements!Many processes just evolve from nothing, or have a lot of outdated steps that may have been necessary when they were designed for the first time but may be outdated today!

Travel Companies to Increase Outsourcing in the First Quarter of 2010
Travolution advises that outsourcing company Sitel is predicting one third of travel company call centers will be outsourced by the first quarter of the next financial year.The forecast comes as the company experiences increased demand from travel businesses looking at ways to reduce operating costs while maintaining or bringing back call booking volumes during the current recession.

US Federal Agency Issuing RFP's for $6.6 Billion in Outsourcing Deals
Information Week published an article advising that the Defense Intelligence Agency is moving forward with plans to spend up to $6.6 billion over five years on new outsourcing contracts. They recently issued a request for a proposal that covers development, deployment and management of various Department of Defense systems between now and 2015. The new multi-vendor contract vehicle, Solutions for the Information Technology Enterprise (SITE), will be managed by the DIA, but covers military intelligence technology that will be used by the military branches and other DoD agencies.

Thursday, May 28, 2009

News of the Day

Multi-country Payroll Outsourcing is Growing
According to a report in CXO Today.com multi-country payroll outsourcing (MCPO) is ahead of other, stand alone multi-country process outsourcing markets on the maturity curve. The research said that MCPO has registered a growth of 49%

Data Center Outsourcing Increases; Most are Happy with the Results
Search CIO-Mid Market.com reported that data center outsourcing is on the upswing and a recession economy is only one reason. A recent study from research and advisory firm Computer Economics Inc. shows that more companies plan to increase rather than decrease their data center outsourcing and most are pleased by the results. Another telling sign? Data center providers are expanding facilities and adding services.

Outlook for Sourcing Spending Brightens
The Wall Street Journal posted a story advising that spending on outsourcing is set to come out of a slump and return to pre-recession levels by the end of the year, bringing a much-needed boon to technology companies in India and elsewhere, says a closely-watched survey of the industry.

Wednesday, May 27, 2009

Todays Offshoring News

Romania, an Increasingly Attractive Outsourcing Location
Financiar-ul reported that Romania continues to be an attractive location for outsourcing, climbing 14 spots in the most sought after locations according to a recent study of consultancy A.T.Kearney

Global Economic Situation Drives Outsourcing Firms to Offer New Services
According to GMA News.TV Philippine outsourcing companies have introduced new services, providing additional revenue streams for their businesses. These findings were among those reported by a survey that polled executives of business process outsourcing (BPO) companies in the Philippines.

India Turning into a Hub for Clinical Research
The Financial Chronicle ran a story about India fast turning into a global hub of cost-effective clinical research outsourcing (CRO). This is due to the adaptation of international regulatory standards. The revenue from this sector is expected to reach $1 billion by 2010.

Tuesday, May 26, 2009

Offshoring News

7 Out of 10 Indian Call Centers Fail Turing Test
This article posted in World Press.com highlights the importance of the need to fully investigate an offshoring partner before finalizing the deal.

Firms Shifting Focus
News on layoffs has become a norm nowadays. Some blame it on the economic slowdown, some on political bureaucracy while others blame it on offshore outsourcing. There could be a number of reasons for the job cuts but according to a report in Outsourcing Insider it all boils down to “cost reduction”.

Friday, May 22, 2009

Outsourcing's Third Wave
The Economist.com reported that there is a trend evolving in poorer countries around the world. Stronger countries that export capital but import food are outsourcing farm production to countries that need capital but have land to spare. Instead of buying food on world markets, governments and politically influential companies buy or lease farmland abroad, grow the crops there and ship them back.

Australian Banks Cut back on Indian Outsourcing
Business Week.com announced that several top Australian banks, Westpac and Commonwealth Bank, plan to curb offshoring of back office IT projects to India in an attempt to address local sentiments over a shrinking economy and rising joblessness . The banks are likely to demand that more projects be delivered on site.

HCL Signs Outsourcing Deal with MTV
HCL Technologies announced in Business Standard.com that it is entering into an outsourcing services agreement deal with MTV networks. MTV (or Music Television) is owned by US-based Viacom

Thursday, May 21, 2009

Todays Offshoring News

Sourcing in China Harsher During Economic Downturns:
China Daily ran a story about a survey conducted by Gasgoo.com that revealed "the overall sourcing strategies of China sourcing are not expecting big changes during global economic downturns". The website surveyed over 150 purchasing executives that attended the 2009 Global Automotive Sourcing Summit on April 21. Read more

Bulgaria – Most Attractive European Country for Outsourcing Activities
bgnewsnet.com presented data from the A.T Kearney’s Global Service Location Index. The information shows that Bulgaria is the most popular country in Europe, and 13th out of 50 overall, for locating outsourcing activity. Additional information can be found via the above link.

Speed Sourcing: The New trend

Computer World.com announced that EquaTerra has introduced the concept of "speed sourcing" on its web site. As companies search for new ways to cut costs in challenging times, many are looking to third party IT services providers to trim expenses. Some are moving at a measured pace through the traditional process of selecting an outsourcer and negotiating a contract. But others, EquaTerra says, are jump starting their potential savings by "speed sourcing"--a new approach for choosing a service provider and sealing a deal in three months or less. To review the entire article please use the this link.

Wednesday, May 20, 2009

Nice Book Review on Inside Outsource

Tom Hickman, proprietor of the Inside Outsource blog, has posted a nice review of The Services Shift. Key paragraph is:

I like most about this book the fact that it does a nice job bridging theory and practice. It's an excellent, scholarly book, without being too abstract, and without being overly burdened by the business school jargon and theory-bloat that plagues many business books. Think of it as The World is Flat, for a more analytic and intellectualizing audience.

I suggest reading the whole review, and making Tom's blog a regular stop on your web browsing agenda.

Thanks Tom.

Outsourcing Updates

Green Sourcing the Time has Come
Novasphere blog.com posted an article today that discusses how the environment and its protection has bubbled up to the top of corporate agendas. There are a number of ways buyers and sellers of outsourced services can use this trend to their advantage while doing something that the vast majority of people now agree is worthwhile.

Everest Q1 Report: Outsourcing Market Drops
Global Services Media.com reported that the North American outsourcing market witnessed a 15 percent decrease in transaction volume during the first quarter this year compared to the previous quarter, according to the Market Vista: Q1 2009 report on global outsourcing and offshoring activity by Everest Research Institute.

Tuesday, May 19, 2009

News of the Day

Outsourcing Demand May Revive in Early 2010: Infosys
Live Mint.com reported today that Infosys Technologies Ltd expects outsourcing demand to revive in early 2010. Although 2009 has been sluggish India’s second-largest software services exporter is looking to spend between $200 million to $300 million to acquire firms and is sharpening its focus on newer markets such as Australia, India, and China to boost growth.

Outsourcing's Five W's
WA Today.com posted a story that correlates the premise of the 5 W's that journalism schools teach novice reporters to offshoring activities. The five W's: who, what, where, when and why should be studied with each venture because the answers to those questions can help minimize costly mistakes.

The Outsourcing Boom Grows for Non-Core Pharmaceutical Activities
Scientist Live.com presented an article that states: "Like their counterparts in other commercial sectors, pharmaceutical organizations are being forced to re-examine their core and non-core activities to determine where new efficiencies can be found, and to drive greater productivity and competitive agility into their operations".

Monday, May 18, 2009

Offshoring Update

Guide to a Perfect Offshore Outsourcing Vendor Deal
An article in Computer World.com discusses the pitfalls many companies encounter due to knee-jerk decisions made during times of economic turmoil. When the pressure to cut costs is most intense, many companies turn to offshore outsourcing. They see it is a quick way to reduce IT and other back-office expenses. The author of this article reviews 8 of these pitfalls and ways to avoid them. Much of the advice provided here is consistent with the information in Bob's book, the Services Shift".

Offshoring to China.
There is a blog dedicated to the practice of outsourcing, mainly to China that can be found by accessing the following link.

Offshoring in Western Europe
Near Shore Outsourcing is a blog focused on Western European countries sourcing services to East Europe. Follow this blog if you want to be up-to-date with the latest developments in this arena.

Thursday, May 14, 2009

Todays Offshoring News

How Outsourcing Benefits Small Legal Firms.
Immigration Daily provided some useful insight on how solo practitioners or smaller firms can benefit from legal process outsourcing.

Outsourcing in the New World Order
Computer Weekly.com explains in a recent article that given the state of the economy outsourcing projects are coming under increased scrutiny. The best service providers will have to adapt to meet the demands of the new world order - marrying the traditional priority of cost reduction with the business transformation required to drive performance in the years ahead.

Bob's Interview in The May 14 Issue of Financial Express

The Financial Express interviewed Bob in an article titled "Tax Saving is a Very Minor Issue when One Considers Offshoring". Bob answers questions regarding the proposed tax law changes and how they may impact US companies and offshoring to Indian companies.

Tuesday, May 12, 2009

Newsworthy Items

Baby Steps to Better Outsourcing
Nova Sphere blog.com published an article that delves into the reasons why innovation is typically not found in most outsourcing contracts. This is due to the fact that most contracts are based upon the FTE mentality. The author offers the following explanation:
  • FTE based contracts encourage all the wrong behaviors for both parties, yet they are by far the most common in the industry
  • You cannot put a Service Level on a person anymore than you can measure a light bulb’s output in liters. An individual’s productivity is but one component of delivering a service, yet it’s the only one companies pay for—no wonder they don’t get the process improvement/transformation/efficiency/fill-in-the-blank-with-appropriate-buzzword. Remember “you get what you pay for”? Paying for people and expecting efficiency doesn’t make a whole lot of sense to me.
  • FTE-based relationships tend towards “how do we do the same thing for less” through labor arbitrage instead of “how do we do it better” through innovation
To read the entire post access the following link.

Obama's First Move
The Blog at World Press.com discussed President Obama's pending decision on the tax codes for companies that are involved with offshoring. He has proposed a tax revision which will mean that US companies, earning income overseas, will have to pay US corporate tax on that money immediately, rather than deferring payment until the income is returned back to US soil.

Update on Globalization

Honeywell Committed to India
BANGALORE -- Honeywell International Inc. said it is committed to India as one of its manufacturing as well as research and development hub despite Washington's plans to change tax rules related to U.S. companies' overseas operations.

A Downer on Globalization
The Wall Street Journal reported that Duetsche Bank AG Chairman and CEO Josef Ackerman did not paint a pretty picture on the future of globalization at a talk at the Atlantic Council in Washington, D.C. “We are running a risk of the disintegration” of the global economic order, he said. Why? The Great Recession is making everyone risk averse.

Maintenance Outsourcing as a Global Strategy
Industry Week.com advised that by outsourcing the global service and support of its manufacturing equipment, Lockheed Martin is building strategic value beyond cost reduction. In addition to enabling lean efficiencies and economies, the outsourcing agreement with MAG Maintenance Technologies enhances the ability of proactive maintenance to further its competitive strategy.

Monday, May 11, 2009

Newsworthy Items

Outsourcing Deals Rising, but Risks Increase as Focus Narrows to Cost Cutting
mcsolutions.co.uk reported that almost 60% of organizations in Western Europe say they will outsource more IT and business process functions this year, compared to last, according to an online survey by analyst Gartner. It's all about cost reduction. More than 70% of respondents rated budget and cost containment as their top concerns in 2009, up 17.5% from 2008.

Are You ready for Transformational Outsourcing?
Gaining better value from an outsourcing relationship also means transforming the organization, not just managing headcount. According to an article published in ittmc.net smart companies adopt outsourcing to transform their processes and strategies not simply to reduce costs. Some of the advantages if this approach is adopted include.; access to additional skill sets and business experience, better resource management and creation of new revenue streams because of available cost-effective expertise.

A Matter of Trust
An article posted by Mark Kobayashi-Hillary in his blog explains a situation that he was involved in regarding trust and credibility in outsourcing arrangements. He offers an eye-opening example of his personal experiences.

Thursday, May 7, 2009

Surprising News: Services Shift Blog Named a Top 100 Offshoring Blog

Somewhat of a surprise, but welcome news. The oDesk. blog has come out with a list of the Top 100 Best Outsourcing and Offshoring Blogs and Resources.

The list is simply presented in alpha order, not as a rank. I was pleasantly surprised to see that the Services Shift Blog was listed as one of the top 43 "general outsourcing" blogs. My impression is that we are just learning to do this, so making any "Top" list is good news.

Thanks for whoever recommended us.

News of the Day

Wipro Bags IT Outsourcing Contract from Unitech
Business Standard.com advised that Unitech Wireless, the newest telecom services player in India, today announced that it had awarded a multi-hundred-million long term outsourcing contract to Wipro for creating the next generation telecom company.

Can Outsourcing Its Network Stem the Bleeding at Sprint?
Gigacom.com posted an update from the Wall Street Journal regarding Sprint, the No. 3 wireless carrier. They are consideringoutsourcing network operations and management duties to Sweden’s Ericsson. The deal, if agreed to, would see Sprint pay Ericsson $2 billion in return for a 20 percent reduction in network costs. Part of those cost savings would likely come from shifting between 5,000 and 7,000 service employees to Ericsson.

Today's News

Choose IT outsourcing firm with good track record, says guru
ihotdesk.com presented an article that says firms should not go into IT outsourcing deals with their eyes closed and should ensure that the provider has a proven track record in the business. Ross Taylor, marketing manager at Direct Response advises "Ultimately if you outsource key functions of the business to a company that cannot deliver on it, from your customer's point of view, it's not the outsourcer that's failed, as far as they're concerned, you've failed,". Access the full article via this link.

Health Care Services: Potential Opportunity for Outsourcing Growth
Seeking Alpha.com ran a story that discusses the health care situation in the US, rising costs and a need to maintain quality health care at affordable costs. The article explains that outsourcing is one possible solution. Wit the digitization of data many services are now offshored that were not possible in the past.

Obama vs. Outsourcing
Business Week.com ran this article that discusses President Obama's proposed changes to the tax code. It's a lenghty article but worth reading.

Tuesday, May 5, 2009

News of the Day

Outsourcing: Thriving at Home and Abroad
Business Week.com reported that cities from Boise to Gdansk benefit as economic and political pressures prompt companies to outsource work to lower-cost cities at home and overseas. In spite of the troubled global economy—or more likely, because of it—one of the few business sectors that continues to thrive is outsourcing. No wonder: Companies looking to cut expenses in the face of soft demand are keener than ever to hand off parts of their operations to lower-cost providers.

Outsourcing: Obama Tax Plan Unlikely to Prevent Offshoring
CIO.com reported that analysts say it's the low cost of highly skilled labor overseas--not the tax code--that has driven the offshore outsourcing trend. President Obama unveiled tax code changes Monday he said could curb offshoring, but analysts and tax experts believe the plan will have little to no impact on the megatrend that threatens as many as one-in-four IT jobs at large companies.

Friday, May 1, 2009

News of the Day

Document Outsourcing on Growth Path as Manufacturers Cut Costs
MCSolutions.co.uk ran a story that says interest in strategic document outsourcing has surged as companies look for ways to cut expenses and capital cost. A Gartner analyst is advising organizations to ensure that outsourcing print and electronic document publishing improves customer communications without sacrificing quality, efficiency and confidentiality.

Plan an Outsourcing Deal's End at it's Beginning
Computerworld.com ran a story advising that the time to set the groundwork for a termination transition plan is when you negotiate the original contract. How can you mitigate this risk? Start by making sure your contract addresses the minimum requirements for a termination transition plan. The plan should provide a detailed rule book for doing this in an organized way.

Indian IT Firms Abroad Plan to Hire Foreign Hands
www.expressbuzz.com advised that due to increasing sentiments against offshoring jobs from the US in particular and other countries in general, Indian IT majors are planning to hire more non-Indians in foreign countries. The IT companies however, claim that this is not due to pressure from the US or other countries and is in line with their strategy. Read more via this link.

Thursday, April 30, 2009

Daily news

Amway Extends Outsourcing Contract with IBM Germany
PR Newswire.com reported that Amway GmbH and IBM announced that they have renewed and expanded a EUR 3.2 Million outsourcing contract that will run three additional years. The direct selling company has outsourced a part of its information technology (IT) infrastructure ti IBM in Germany since 2004. The expanded agreement provides an on demand model that enables Amway to flexibly adjust its use of IT resources to meet its business requirements.

Is Now a Smart Time to Revisit Outsourcing Contracts?
Supply Chain Digest.com ran a story that asks the question "in now the right time to re-look at outsourcing contracts?" In light of the current economic situation companies are looking to cut costs in many areas, especially the supply chain. It appears that outsourcing contracts in manufacturing and logistics are a smart place to look. The article outlines four areas where savings might be found by reevaluating current contract terms.

Wednesday, April 29, 2009

The politics of offshoring: all talk, no action

Key Insights (9): There are few options for developed countries to respond to this trend.

Continuing with the Key Insights list, but jumping ahead a bit. I did a guest post a week or so ago on Phil Ferst's Horses for Sources blog. Since the post is already written, I will jump ahead to Key Insight #9. Back to numbers 2, 3, and 4 in the coming days.

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Picking up on Phil’s April Fool’s day post, I wanted to share a few thoughts on why we see lots of anti-offshoring rhetoric from politicians, but (thankfully) very little actual policy.

There is certainly a heavy demand from the man on the street to “do something.” It’s easy to understand why. We have become accustomed to trade in manufactured goods and natural resources. But manufacturing accounts for only about 15% of US employment, and developing countries generally enjoy a fully-delivered cost advantage of 10-30%. This is disconcerting for developed country workers, and we frequently observe moves against trade in manufactured goods, such as spurious anti-dumping actions and “buy America” provisions in various pieces of legislation.

Services, by contrast, account for about 78% of U.S. employment, and developing countries enjoy delivered cost savings of 40-70%.

So developing countries’ advantage is much larger in services, and many more people are potentially affected. That explains the political heat and the politicians’ rhetoric, but not the lack of policy.

So, why haven’t we seen offshoring regulations? Because trade in services is incredibly difficult to regulate. Regulating trade effectively requires that two conditions exist:

1. The government can observe what actions firms are taking, and

2. Any proposed policy must be credible and enforceable.

To see why regulating offshoring is so difficult, compare the “offshoring” of auto components with that of IT services.

Auto parts -- Trade displacement in manufacturing is easy to observe. If Delphi closes a component plant in Michigan and opens one in Mexico, it is easy to see what happened. 500 Mexican workers are now doing the same tasks in the same way that the Michigan workers did. Production from the Mexican plant now goes to the customers formerly serviced by the Michigan plant. It is easy and accurate to conclude that the Mexican workers replaced the Michigan workers.

Second, if the Congress chooses to regulate this trade, it is fairly easy to do. Don’t let trucks from the plant cross the U.S. – Mexico border, or slap a tariff on auto components from Mexico. (Note that 99% of economists would recommend that Congress not do this, but most politicians are immune to the logic of comparative advantage).

Offshoring IT services -- IBM has been fairly aggressive about moving software support services offshore. In boom times, IBM is hiring many people in India and a few in the US. So, in 2006 and 2007, IBM hires SAP specialists, software testing, and wireless telecomm engineers in its India operation. These IT specialists work with other IBM teams in Australia, China, Japan, Germany, the UK, and the United States to service global customers.

Then, following the financial crisis in late 2008, IBM decides to lay off systems engineers, maintenance engineers, and COBOL programmers in the United States.

Is it in any way accurate to claim that the SAP specialists hired in India in 2006 displaced the systems engineers laid off in Philadelphia in 2009? Of course not. These are people in different functions, hired at different times.

IBM is a global firm servicing global companies. Except at the most aggregate level, the US government has almost no ability to independently observe whether IBM is “exporting jobs.” They could, of course, require that IBM report on what it’s doing. But there is no chance IBM would report in a way that indicts itself. There is simply no way a regulator could accurately observe what the firm’s 300,000 employees are doing, and who they are servicing.

Second, even if Congress wanted IBM to stop hiring people in India, what could it do? Would the Congress threaten to cut IBM off from the Internet? Or from communications satellites? Would Congress be willing to impose fines that are massive enough to cause IBM to withdraw from international markets, where it realizes 68% of its revenues? Unlike trucks crossing the US-Mexico border, regulators have no ability to monitor the bits and bytes zipping around the Internet, knitting various work teams together and allowing the firm to service global clients.

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The bottom line is that politicians are nearly helpless in the face of offshoring. Firms have a tremendous incentive to locate service activities in low-cost, good quality locations. Doing so cuts costs, increases capabilities, and creates competitive advantage. Politicians would like to regulate this activity, but they can neither accurately observe what firms are doing, nor come up with regulations that can be credibly enforced.

So, expect lots more rhetoric and, perhaps, some efforts to require new reporting by firms. But the offshore trend will continue unabated, despite politician’s hopes. In the short run, offshoring will cause more dislocation and pushback. In the medium and long-run, it will continue to raise productivity and living standards in both the developing and developed countries.

Today's News

American Axle & Manufacturing Holdings Shifting Production Work to Mexico
Crain's Detroit Business reported today that American Axle has decided to move production from its plant in Michigan to one of their Mexico facilities. The axle program represents about 85 percent of the work currently being done at the Detroit complex. A spokesperson advised that they are idling and consolidating significant portions of the Detroit manufacturing complex to meet the massive production reductions and changes in the market place that the automotive industry is undergoing and that they will continue to operate portions of the American Axle Detroit manufacturing complex.

The Real Cost of Offshore Outsourcing
CIO ran an article that discusses the topic of how offshoring can lead to customer dissatisfaction and losses in efficiencies and productivity. There are also comments regarding the fact that oftentimes outsourced agents are not trained as well as agents who work internally for an organization, and often lack the tools to do a thorough job for customers. While this may be true proper planning and research on the part of the company offshoring the work can prevent a lot of issues. Bob's book provides a very detailed analysis of the process and ways to navigate through the offshoring venture.

Tuesday, April 28, 2009

More Americans Outsourcing (Their) Own Jobs Overseas!

Funny parody over on the Onion News Network (perhaps in bad taste with all the cutbacks at Chrysler and GM these days). But, what the heck -- these are services jobs. And, even though its a parody, it does point out some differences vaguely reflective of reality concerning work culture in many US service operations vs. world class delivery centers in developing countries.

Enjoy. I hope you laugh.

More American Workers Outsourcing Own Jobs Overseas

News of the Day

Critical Questions in Successful Outsourcing
TMC.net posted an item that discusses a change in the focus of what companies need to consider when making outsourcing decisions. Many of the items reviewed in this article are in line with the content of Bob's book.

ATM Outsourcing: a Viable Option for Struggling Banks
istockanalyst.com ran an article that discusses a dilemma banks are having regarding the outsourcing of ATM's. All industries are being affected by the current economic situation and the issue of losing control appears to be a key inhibitor to ATM outsourcing offerings. This can also be the case with smaller banks, notably those that are family-owned and thus have a strongly defined internal culture. Vendor credibility is therefore essential, and the larger institutions in particular will also seek reassurance that both their customer service levels and their overall delivery strategy will not be compromised. The complete article can be accessed via the above link.

A Blogger's Perspective

Bill Detwiler, Head Technology Editor for Tech Republic posted a blog entry that discusses outsourcing and the fact that it does not have to be a sign of mass layoffs. Rather a carefully planned outsourcing strategy can let you use your current personnel more efficiently. The full article can be viewed via the above link.

Monday, April 27, 2009

Key Insights (1): Offshoring is not reversing anytime soon

My post of April 14 laid out nine key insights developed in The Services Shift.

Today, I tackle Key Insight #1: The move toward offshoring is not reversing anytime soon. I will cover the other eight insights as time permits in the next few weeks.

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There has been a fair amount of announcements lately about firms bringing work back from offshore. Examples include:

  • Student Loan firm Sallie Mae will shift around 2,000 positions from its offshore facilities in India to US cities (story)
  • Delta Airlines is no longer sending reservation calls to India (story)
  • Florida stops offshoring call center support for its Food Stamp program to India (story)
  • UC San Diego Medical Center is bringing several activities back in-house (story; registration required)
Sounds like good news for offshoring opponents, and for job creation in the US economy. But does this herald a reversal of the Services Shift? Most likely, no.

To get an accurate view of offshoring prosepcts going forward, it is important to disentangle three distinct phenomena.

  1. There are always some mid-course corrections that occur as firms work to optimize their delivery mix. Recall the famous Dell "reversal" of a few years ago (2005 I believe). At that point, Dell had moved more than 10,000 customer care positions to India. It found that some of its largest customers preferred US-based support and were willing to pay for it. So the company brought 500 positions back. The move was widely covered as a "failure" or offshoring, but it was merely a mid-course correction. The UCSD story sounds a lot like this -- normal adjustments, but why not get some good PR out of it.
  2. Temporary effects from the economic downturn. As anyone who works in this field knows, jobs are a radioactive topic these days. Firms can get some easy PR and political goodwill by making a big announcement about bringing jobs home. The Sallie Mae and Delta Airlines stories have this flavor. Congress is considering whether to change the regulations governing student loans and Sallie Mae is in danger of losing its core business. Delta has big union problems resulting from its merger with NWA. Announcments like this provide some cover for tough decisions elsewhere.
  3. The underlying trends that are driving the Services Shift. As discussed in Chapters 1 and 2 of The Services Shift,there are five fundamental shifts driving the globalization of service activities. These are:
  • Economic liberalization in countries around the world. Since 1985, the share of global population living in countries that are "open" to global trade and investment has risen from 23% to 78%. That doesn't mean all those people in India and China are exporting to the US and EU. But if they want to consume the things we make (airplanes, movies, higher education), they have to export something. And the activity they have the largest advantage in is services.
  • The digitization of business processes. As business data and correspondence becomes digitized, location becomes irrelevant. There has been a tremendous shift toward digital records (think SAP and Oracle ERP systems). This faculitates global sourcing.
  • Improvements in the cost and capabilities of computing and telecom. The relentless progress of technology opens up new opportunities for move work abroad.
  • Growing capabilities around the globe. The number of people receiving both basic and elite educations has skyrocketed in recent years. Many of the top business, technology, and engineering schools are now located in developing countries. Visa restrictions in the US mean that talented young people are staying at home, and serving global markets from there.
  • The rise of a global business culture. 25 years ago, doing business in a developing country meant doing business like the locals. Today, business culture is converging on the western norm (English, lots of MBAs, entrepreneurship and equity market allocation of growth capital). In the old days, sourcing from India, China or Brazil was difficult, today it's a snap. Chances are, there are plenty of graduates from US/EU graduate programs, potential suppliers use the same software packages, and they read the same books and watch the same movies. In short, cultural distance has declined remarkable.
So what does this all mean for the future of offshoring? If we attempt to sort out the transient vs. the structural trends, we see that item 1 above is clear transient. When you look into it, most of the "bringing jobs back" stories have lots of caveats and contingencies. Many are either PR moves or small adjusments.

Item 2, almost by definition, is transitory. The economic downturn makes offshoring polticially radioactive. That means firms don't like to talk about it. But the flip side of that coin is that margins pressures are creating more and more pressure to go offshore -- both to cut costs and as a catalyst for restructuring. So there is a divergence between political and economic logis (what else is new!!).

Finally, the structural drivers (#3 above) are here to stay. The only one of the three with the potential to reverse is policy liberalization (see Zimbabwe, Venezuela, and Bolivia). But those cases are isolated and generally lead to economic downturns. Drivers 2-5 are here to stay.

All this means that the megatrend toward the globalization of services (i.e. offshoring) will continue to move forward. There will be periodic corrections, but I would be willing to bet that offshore sourcing from developing countries will be at least twice as high five years from now as in 2008 (implying a 15% growth rate). My best guess is far higher.

Any takers?

Sunday, April 26, 2009

Services Shift Coverage at Motley Fool Site

The Motley Fool website posted an article reviewing The Services Shift last week.

The Motley Fool is an investing site, and they took a somewhat unexpected path to reviewing the book. They had positive things to say. But if you read the article/review, you might come away thinking the book was an investment tome.

Any press is good press. Please read, and feel free to comment.

Friday, April 24, 2009

Differing Viewpoints

Within the past week reports have been issued by two different publications with opposing projections.
Business Week.com ran a story about a Gartner report stating India's share of the offshoring market is expected to double between 2008 and 2010. "The increase is driven by demand for lower cost options during the global recession." However earlier this week a report issued by IT World reported just the opposite. "The growth rate of offshoring in India is expected to come down considerably, as new clients are increasingly including other countries in their evaluation, according to research firm Gartner." Do you have any thoughts on this? We'd like to hear what you have to say.

Newsworthy Items

Unilever HR Outsourcing Deal Shows Companies Are Willing to Use Multiple Providers.
Workforce.com ran a story about Unilever's recent decision to outsource its HR processes for its Latin America workforce to IBM. This decision signals that employers are now more likely to go to different HR business process outsourcing vendors for different parts of their business.

American Tower to Make India Hub for Asian Ops
Wall Street Journal (sub required): More and more mobile companies in India are outsourcing their passive infrastructure requirements, including telecom towers, to independent companies. American Tower Corp. wants to build its operations in India and make the country its hub to enter other Asian markets. A company rep stated that the company is also looking at "opportunities for growth" in Sri Lanka, Vietnam, Philippines and other South East Asian countries.

BP Looks Outside for Solar Cells to Drive Down Costs - Wall Street Journal

Bank of America Hired Thousands - Abroad - Money News.com

Thursday, April 23, 2009

Offshoring News

City Saves by Outsourcing Construction Technicians, CAD Designers
The Ottawa Business Journal reported that the city of Ottawa has saved significant sums of money by SELECTIVELY outsourcing some of its
computer-aided design (CAD) technicians and construction technicians. However, the city is financially better off using its in-house project managers and senior engineers.

Emerging Offshore Outsourcing Markets You Can't Miss
Computer World.com reported that the London School of Economics Outsourcing Unit ran a study revealing that Egypt has the most market potential among emerging providers of global IT services. The authors, who compared data on costs, infrastructure, skills and other factors among 14 offshoring up-and-comers, say that Egypt has a good cultural connection with the West, strong language skills, good positioning as a partner with other offshore leaders like India, and convenience for European businesses.

TPI Index: Outsourcing Performance Remains Soft
Consulting-News.com posted the results of a study they performed showing that 2009 will be a defining year for outsourcing as companies seek out greater cost savings measures as a result of corporate conservatism evident in the decision-making and the absence of big, transformational deals that usually excites the industry.

Wednesday, April 22, 2009

News of the Day

NASA Outsources Space Station Transport to SpaceX
E-Week.com announced that a contract to design, build and operate a resupply program for the International Space Station was awarded to a new company founded by Elon Musk, co founder of PayPal. Mr. Musk started SpaceX (Space Exploration Technologies) after he sold PayPal to eBay. His goal was to take private enterprise inot space.

Outsourcing Bloggers Provide Their Perspective

Interesting Perspective on the Satyam Purchase
Mark Kobayashi-Hillary has a blog "Talking Outsourcing" that we have been following for some time. He makes an interesting observation in a posting yesterday regarding the bid by Tech Mahindra for controlling interest in Satyam. If you have been following the Satyam situation you can understand why the questions was asked. Please refer to the attached link to view the entire article.

You Say Out-tasking, I Say Outsourcing
Ann Hall, a fellow blogger, posted a story in her blog at ITBusinessEdge.com that discusses an interview she had with one of India's leading outsourcing executives. Her perspective on the terminology used by the executive and their attempt at downplaying what is actually being done. She says: "I can't blame outsourcing companies for being worried about the possible negative impact of political fallout on their bottom lines. But I think the use of "out-tasking" rather than outsourcing is an obvious and ineffective dodge of larger issues".

Tuesday, April 21, 2009

Today's News

When it Makes Sense to Bring Outsourcing Back In-House
Modern Healthcare.com reported that the University of California at San Diego Medical Center made a decision to bring several activities back in-house after a consultant helped the hospital evaluate its outsourcing strategy. The hospital decided to resume operation of its software and food service systems department, which involved, among other things, reestablishing its supply chain. The article says the change helped the hospital save approximately $1.6 million.

Florida Stops Food Stamp Outsourcing to India
CBS Broadcasting reported that Floridians were upset because their calls about food stamps and the government issued debit cards for the program were being answered by operators in India. JPMorgan Chase & Co., which has the contract to handle the program including customer service and administration of the EBT cards, has assured state officials that any calls about the program will be re-routed to operators in the United States. JP Morgan Chase has two U.S. call centers but also uses call centers in India to handle any overflow.

India is Losing its Share of Outsourcing Market
IDG News Service reported that the growth rate of offshoring to India is expected to drop considerably as clients are increasingly including other countries in their decision matrix. According to a Gartner report; "In the past, 80 to 90 percent of clients would automatically source from India, when they decided to go offshore. That number is down to 60 percent."ndia is losing its share of outsourcing market, says Gartner