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 World.com 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
Economictimes.indiatimes.com 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.

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
Onestopclick.com 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.

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.

Today's News

Call Center Outsourcing Becomes more of a Strategic Imperative and the US Receives Renewed Consideration
Sourcemag.com 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.

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 Center.com 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.

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 Examiner.com 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 Atlanta.com 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.