Outsourcing Times

Japan Finds Potential Outsourcing Hub in India

At the India-Japan Initiative conference held this week in Kolkata, Japanese manufacturing leaders spoke about the potential for India as a manufacturing outsourcing hub.  India appeals to Japanese manufacturers because of the current stocks of underutilized skilled labor and organizations like the IJI which can help facilitate the process.  Hindustan Times Reports:

Kirloskar said in today's competitive world, manufacturing success is all about productivity prowess and capital-for-labour substitution strategies which were central to achieve such efficiencies.

Read More: 'India can be outsourcing hub for Jap auto firms'

P.S.: Was Japan really this far ahead of the game in online education even in 1996? No wonder they're getting out of that slump...

Firm Focuses on Small Business Outsourcing

The Toronto-based data management and processing company SwiftThink is offering products designed for small accounting firms, allowing them to increase efficiency and growth.  The move signials part of a larger trend amongst outsourcers, who are beginning to concentrate on smaller firms after years of focusing solely on large corporations.  The Toronto Star Reports:

"The current business model of outsourcing involves developing close relationships with large companies in North America, understanding their needs, and then arranging for a system in India to meet their needs," D'Cruz says. "The basic challenge (of going after small- and medium-sized clients) is how do you amortize the fixed cost? You can't do it over one customer at a time, but you could amortize it over a group of customers."

Read More: Firm bets small business will outsource

Rising Indian Wages May Diminish Benefits of Offshoring

India's recent success in attracting foreign investors has been due in large part to the potential for high margins in industries like IT, because of low domestic wages.  A Recent survey by Global Human Resources Firm Hewitt Associates indicates, however, that the rapid increase in wages, especially within the IT industry are quickly shrinking margins and the attractiveness of the region.  NCM Reports:

According to the report, India showed the highest average salary increase in Asia followed by China, Philippines and Korea. While India reported an 11.6 percent overall pay hike, in China salaries grew by 6.4-8.4 percent, 7.4-7.7 percent in Philippines and 6.4-6.8 percent in Korea for the year 2004, the survey said.

Read More: Could Rising Wages Diminish India's Outsourcing Edge

More ATM Services to be Outsourced

Under pressure from competition to cut costs and improve services, ATM manufacturers are increasingly outsourcing services to third party companies.  Third-party providers like Efmark, Premium Armored Services and Bantek look set to take over even more of the market as individual banks and independent ATM's try to increase efficiency by farming out the maintenance and repair of ATM's to the full-service firms.  ATMmarketplace.com Reports:

“From a maintenance standpoint, a third-party company knows the ATMs (better than the bank),” Malik said. “From an accountability standpoint, you have one company that’s accountable when the ATM goes down, rather than different companies pointing fingers.”

Read More: Experts expect more ATM services outsourcing

Study Touts Economic Benefits of Offshoring

A recent study by ICICI Onesource, an outsourcing agency of India's ICICI Bank, indicates that British companies save at least 10 million pounds per 1,000 jobs offshored.  The study points to India as a leader in profitability for its relatively high college graduate ratio among other cultural reasons.  Express India Reports:

"The work ethic is tremendous. It is partly cultural and reinforced by the education system and values," he said. "They have a high competitive attitude and status is much more important. Everyone knows what everyone earns."

Read More: UK saves 10 mn pnds a year for every 1,000 offshored jobs

Xansa adds to Indian Workforce

The UK based IT Services company plans to add 7,000 new employees to its facilities in India.  The move, which will more than double the number of Indians employed, is a testament to the success of the company's facilities in the region. Silicon India Reports:

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

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

Mid-sized Firms Lead Outsourcing in 2004

In past years outsourcing has been dominated by very large companies with more than 25,000 employees. By contrast, 2004 saw more deals done by mid-sized companies with between 5,000 to 25,000 employees than by larger firms. According to some business analysts, this statistic indicates that in 2005 outsourcing will become completely mainstream.  PersonnelToday.com Reports:

Commenting on the research, Michel Janssen, president of supplier solutions at outsourcing specialist Everest Group, said: "In 2005 business process outsourcing will go mainstream, and it will be driven by mid-sized client organisations."

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

EDS and Towers Perrin Form Collaborative HR Outsourcing Firm

Responding to the growing market for human resources outsourcing, Electronic Data Systems Corp. has sought out human resources consultancy firm Towers Perrin.  The yet to be named company will utilize Towers Perrin's pension, health, and welfare administration services, and Electronic Data Services'payroll and human resource outsourcing business.  With stiff competition coming from firms such as Accenture, Wipro, and Infosys in the HR business process outsourcing, this move may give EDS the edge it needs to compete. EWeek Reports:

"Our clients want us to be their HR advocates, listen to their challenges and deliver results that matter to the bottom line," said EDS Chairman and CEO Mike Jordan in a statement. The new company will have about $600 million in annual revenue, about half contributed by each company, and more than 400 clients in the United States, Canada, Europe, and Central and South America, with about 33 million active and retired HR plan participants.

Read More: EDS, Towers Perrin Spin Off HR Outsourcing Firm

Accenture Canada to Add 550 to Payroll

The New York based consulting firm Accenture Canada plans to add 550 consultants in 2005.  The move, which will increase Accenture Canada's workforce by over 10%, is based largely upon an anticipated increase in their federal contract.  Toronto Star reports:

Bill Morris, Accenture's country managing director, said the company is looking to increase revenues in Canada to about $1 billion from $600 million a year. Morris said expected new business from the federal government could fuel future growth at the company, which wants to grow its core consulting operations as well as its newer outsourcing business.

Read More: Accenture consultants planning big expansion

IT Outsourcing Falls in Sweden

According to IDC, large outsourcing deals in Sweden fell during 2004; this descrease was however offset by gains in small business outsourcing contracts. Tekrati reports:

A December 2004 IDC study shows that Sweden's outsourcing market grew 12 percent in 2003 and around 10.5 percent in 2004. IDC forecasts a drop to 7.4% in 2005, with a particular slowdown in IS outsourcing growth. Average annual growth is expected to be 8% between 2003 and 2008.

Read more: Number of Large IT Outsourcing Deals Fell in Sweden in 2004, Says IDC