Thursday, April 30, 2009

Daily news

Amway Extends Outsourcing Contract with IBM Germany
PR 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 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.

--- ---

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.

--- ---

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 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 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.

--- --- ---

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 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. 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

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 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 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 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 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 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

Monday, April 20, 2009

Newsworthy Items

Delta No Longer Sending Reservation Calls to India
The Associated Press announced that Delta Air Lines Inc. no longer is outsourcing reservation calls to India after years of complaints from customers who preferred to speak to someone in the United States. Delta's Chief Executive Richard Anderson told employees in a recorded message that the world's biggest airline operator is in the process of bringing all customer calls back in-house in the U.S.

Weighing the Benefits of Onshore Outsourcing
Computer posted an article that discusses the rationale behind the decision process of whether a company should adopt an onshore or offshore strategy.

Infosys Sees Projects Worth $1 Billion Coming up in India explains that Infosys Technologies sees over $1 billion worth of outsourcing contracts coming from the Indian market over next few years, as country’s government and state-owned organisations seek to become more efficient by outsourcing their IT needs. This announcement comes at a time when customers in its top markets of US and Europe are slashing their IT budgets.

Friday, April 17, 2009

Today's News

Saving Money by Outsourcing
Office Industry Resource posted an article discussing the details and benefits of outsourcing work to virtual offices and the cost savings that can be realized by taking advantage of their services.

Managed IT Outsourcing Remains Robust reported that the value of managed IT outsourcing deals increased last year despite the difficult economic climate. Gartner research results indicate the average total contact value (TCV) for such deals was $17 billion in 2008, compared with $12 billion in 2007.
Despite the rise, the group predicts that trend will be toward a greater number of managed IT outsourcing deals, but with smaller TCVs.

Thursday, April 16, 2009

Book Review Posted

Remi Vespa, a noted software development expert and author reviewed Bob's book. An excerpt from the review is noted below.

"I just finished Robert Kennedy’s ”The Services Shift”, a book on the globalization of services, with an emphasis on Information Technology. Kennedy is a Professor at Michigan’s Ross School of Business. He also runs the William Davidson Institute — a fairly prominent think-tank that focuses on business and policy issues in developing countries."

"This book is a goldmine:
    IT managers will find very detailed and clear information on what, when, where and how to offshore.

    Outsourcing vendors will find relevant and not-so-well-known information on industry trends.
But hold on, there is more. Because the book goes far beyond the technicalities of services offshoring, literally everybody would benefit tremendously from reading its sections 1, 2, 6, and 7."

Click here to read the entire review.

Wednesday, April 15, 2009

Today's News

Call Center Outsourcing Becomes more of a Strategic Imperative and the US Receives Renewed Consideration ran a story about call center work being sourced to US companies. As the United States economy experiences its most severe economic downturn since the Great Depression, an increasing number of companies are recognizing the benefits of outsourcing all, or at least some of their call center operations. In addition the article indicates that while it is not a monumental shift, domestic options are gaining traction not only for political reasons, but more notably because of evolving applications and business process integration requirements.

Tuesday, April 14, 2009

Key Insights

As previously noted, I just returned from two weeks on India. Most of the time was spent with various MBA student teams, working on a variety of projects with interesting organizations.

A second task was to do a bunch of PR for the book (to be released in India in late April). Perot Systems was great -- setting me up with about a dozen leading newspapers that led to good coverage.

Finally, I did events for Ross alums in Delhi and Mumbai (Bombay). The core of the presentation was an update on the school, but about half was key insights from the book. I will take the next week to run through the insights one at a time. But to give you some foreshadowing, I identified and discussed nine "Key Lessons." Expect a discussion of one of these each day over the next week or two:

  1. The move toward offshoring is not reversing anytime soon.

  2. Much confusion is caused by the fact that commentators use one word ("outsourcing") to describe two distinct phenomena.

  3. As firms gain experience, their offshore capabilities increase and the range of possibilities expands.

  4. We are seeing a shift from “India” to global sourcing

  5. We are witnessing a convergence of business models for "global" and "India" firms.

  6. There is a dramatic shift taking place from cost-focused offshoring to business enhancement offshoring.

  7. The fastest growth is in high value activities.

  8. Firms that move toward global sourcing require new skills to manage their organizations.

  9. There are few options for developed countries to respond to this trend.

--- --- ---

I hope you'll check back, and join the discussion.

News of the Day

Indian Joint Venture Makes Highest Bid for Satyam Computer Services
The New York Times reported that Tech Mahindra, a joint venture between the BY Group and the Indian conglomerate Mahindra & Mahindra, was the high bidder for Satyam Computer Services with an offer of $1.2 billion. Satyam has been losing clients, investors and employees since its chairman admitted to accounting fraud in January.

Outsourcing Not the Big Savings Firms Expect.
Business ran an article that discusses a study performed by Compass Management Consulting. The report says that companies rushing to outsource software development for quick savings actually risk significant losses in productivity because developers do not fully understand business requirements, according to the consultants. This situation holds true for any company planning to outsource a business processes. Failure to plan properly can lead to wasted time and effort.

Monday, April 13, 2009

Good discussion unfolding on Policy issues

The guest blog on Horses for Sources is generating some interesting discussion (read from the bottom up) -- almost all positive.

I hope you'll join in.

Policy discussion on Horses for Sources blog

I did a guest post over on Phil Fersht's Horses for Sources blog.

Phil's blog is one of the hubs for outsourcing.offshoring discussion on the Internet. It will be interesting to see what reaction we get.

The post, titled The Politics of Offshoring: All Talk, No Action, should generate a good discussion. I encourage you to check out the blog and participate in the discussion.

Todays' News

Tech Recruiting Clashes with Immigration Rules
The New York Times ran an article today that discusses the impact visa restrictions are expected to have on the American economy and competitiveness of US firms. The article explains that the debate has only sharpened as the country’s economic downturn has deepened. Advocates for American-born workers are criticizing companies that lay off employees even as they retain engineers living here on visas. But the technology industry counters that innovations from highly skilled workers are central to American long-term growth

Outsourcing your call center? Nicaragua is tops for location and convenience

The posted an article on how Nicaragua, has opened its doors generating excitement across the industry. With CAFTA (Central American Free Trade Agreement) in place, a short 2 ½ hour flight from the U.S. allowing execs to conduct same-day business, operating in the central time zone, and an eager workforce -- Nicaragua is growing in popularity as an easy, convenient and cost-effective near shore/offshore location for U.S. companies. One reader posted a comment to this article with a proposal for an anti-OFFSHORING "PER BYTE TAX"

Is bringing the jobs back home a serious strategy?
Talking Outsourcing discussed the news that US student loan firm Sallie Mae has decided to cancel its Indian offshore operations, a back office that employs around 2,000 people. Why? The recession. The troubled economic climate means that jobs are being lost in the US and Sallie Mae has decided to hire locally back in the States as a response. I

Offshoring Affecting Alternative Industries

France a Hub for Outsourcing Clinical Trials
Global ran a story today that shows offshoring is reaching out to fields of study that are far outside the manufacturing sector. Companies are emerging all over the world to handle specific tasks at lower costs and with higher expertise. This phenomenon has extended to the health care field. France is benefiting from its success as a destination for outsourcing in a specialized biotechnology field.

Sunday, April 12, 2009

Blog coverage of The Services Shift

Blogging has been slow because of travel. I will have much more time in the coming weeks.

A couple pointers to interesting discussions elsewhere:

1. Stan Lepeak over at the EquaSiis blog provides a nice review of the book.

2. Mark Robinson at Provocations and Cogitations blog also provides a strong review.

3. Remi Vespa at the About IT Outsourcing blog also reviews the book.

Thanks to all. Now to translate this into sales. I hope you'll check out the book at Amazon and consider purchasing.

Friday, April 10, 2009

A Couple of Sites to Visit

While performing a web search for information on offshoring I came across two additional resources for information on the topic.

Today's News

Transparency in Outsourcing:
This article in E-Commerce Times discusses the laws governing the disclosure of layoffs and the state of the outsourcing market.

Legal Process Outsourcing (LPO) Adds Value to the Role of Intellectual Property:
IP Review Online ran an article on LPO stating that it can be helpful to patent or trademark attorneys where the emphasis is on record keeping. The author explains that the problem most companies have is that record keeping is time-consuming. LPOs can provide the training and resources required.

Porsche Finds Fortune from Unlikely Outsourcing
Helsinki Times ran an article on how Porsche has been able to utilize outsourcing in Finland to their financial advantage. While many companies have moved work to India, China and Taiwan Porsche has taken a different approach.

IBM Targets India to Beat Rivals at Their Own Game reported that IBM has hired more than 70,000 employees in India, taking advantage of the “hyper-growth” there by helping domestic companies develop infrastructure. IBM also may attract new customers from India’s Satyam which is still involved in the nation’s largest accounting scandal.

New Findings Highlight Economic Impact on Recruitment Process Outsourcing reported that organizations that outsource their recruitment activities are achieving significant gains.

Wednesday, April 8, 2009

"Buy Amercian Does Not Come Free"

During his visit to India Bob was interviewed on the widely debated issue of offshoring of service activities and its profound impact on businesses and governments in both developed and developing countries. Pragati Verma caught up with Bob to understand the drivers and implications of the globalisation of service activities. The question and answer session is covered in full and can be reviewed by using the following link.

Tuesday, April 7, 2009

News of the Day

Outsourcing Is Not a Cure-All
An article posted in Smart Brief advises that “Outsourcing can bring rapid balance sheet results, but that doesn’t automatically translate into long-term business value. There’s a vast difference between externalizing for financial re-engineering versus business transformation.”

Scotland Missing out on Outsourcing Bonanza
Scotland could become the next big outsourcing destination, but is being held back by a lack of enthusiasm according to some Scottish executives. Interviews revealed overwhelmingly that moving back-office operations to Scotland would be a better alternative to destinations such as India and eastern Europe. Posted in

Monday, April 6, 2009

Todays' Offshoring News

Sallie Mae to Create 2,000 US Jobs, Reverse Outsourcing
Biz reported Sallie Mae plans to create 2,000 jobs in the United States by reversing previous outsourcing actions and bringing all of its overseas operations back to America.

Smooth the Path of Outsourcing.

An article written in today's discusses the fact that today's global economic crisis is creating untold challenges for businesses in all industries, in all corners of the world. Business leaders of large and small companies alike are struggling to weather the storm that is affecting the survival of many once solid companies. The author lists several basic steps that companies need to understand when heading into the offshoring arena.

Outsourcing In Game Industry on the Increase
This article in the website shows that offshoring is taking place in many industries. The computer game development industry is starting to see an increase in their outsourcing budgets by nearly twofold, with the proportion of companies planning to spend $2 million or more on outsourcing rising to almost 20% in 2008.

Campbell Soup Signs 65 Month Agreement with IBM for Outsourcing Services
RTT reported that Campbell Soup Company has signed a 65-month agreement for information technology outsourcing services. As part of the agreement, IBM will provide IT infrastructure services, network support, application maintenance services and security services from IBM Internet Security Systems. IBM will offer infrastructure services on demand for enhanced cost efficiency and increased flexibility.

Friday, April 3, 2009

Today's News

Microsoft Applying for Fewer H-1B Visas
The Seattle Times reported that with ongoing layoffs and hiring slowed across the economy. Microsoft this year is applying for "substantially fewer" H-1B visas. But their General Counsel Brad Smith said that Microsoft "still sees the program as an important part of its strategy to hire the best people, regardless of their citizenship. Of the "new applications" the company is filing for the 2010 fiscal year ' a solid majority' are to convert existing employees working on so-called L visas to H-1B visas, rather than to make new hires"

Kaiser Outsourcing Deal Leads to Job Cuts
Kaiser Permanente announced March 16 that it would outsource the management and storage of most of its data to IBM, eliminating about 700 jobs at Kaiser. The same day the seven-year deal was announced, Kaiser said it would eliminate 160 other information technology jobs in more than 30 locations across the country "as part of a realignment of its information technology function," according to a company statement. None of the positions were in areas that would affect patients or physicians, Kaiser spokeswoman Laura Dunn said in an e-mailed statement.

Outsourcing 2.0: What's the new India?
A report was issued by the London School of Economics explaining that the global growth in IT and business process outsourcing (BPO) in various new countries across the globe will allow businesses to gamble on many different off shoring deals. The author states "Off shoring today is a transitionary phase in a much larger movement towards a global division of labor." The predicted growth in the global ITO and BPO markets with outsourcing revenue is set to grow between six and nine per cent each year. The UK is predicted to have a shortfall of more than 14,000 IT specialists by 2010 and the US a shortage of 15 million by 2025. For a full review of the article please use the above link.

Transparency in Outsourcing, Part 1: Silent Shrinkage
Sometimes when companies lay off thousands of workers, they actively publicize the action in order to appease investors. Other times, little to no fanfare is made at all. Often times, at least some of these eliminated positions are actually being outsourced -- are outsourcing firms cleaning up during an overall economic recession? This article posted in E-Commerce Times discusses the premise that concerns about public outcries due to offshoring is NOT inhibiting companies from continuing their efforts.

Bob's Live Interview on Marketplace.Public Radio

Bob was interviewed live on by Ms. Renita Jablonski. The discussion focused on how H-1B visas affect US jobs. To listen to the full interview or read the article please click on the above link.

Wednesday, April 1, 2009

In The Teeth Of The Economic Storm: Globalize!

Bob posted an Op Ed piece in to discuss off shoring and the global economic crisis. Several key points include: The global economic crisis has political and business leaders thinking defensively--increasing trade protection, pushing "buy American" provisions in major legislation, attempting to curtail the use of H-1B visas, the documents that allow highly skilled nonimmigrant workers into the country. The most prominent example of this bad trend is the amendment to the Troubled Asset Relief Program legislation, inserted by Sens. Grassley, Sanders and Durbin, that makes it nearly impossible for financial firms to hire talented foreign nationals--at least to work in the U.S.

The instinct among business leaders during crisis is often to do whatever is necessary to make the politicians and activists happy. This instinct is understandable. It's also wrong and ultimately destructive. This article generated quite a few responses. To investigate further please click on the above link.