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.

Sincerely,

Lou LaFrate

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.

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,

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.