Outsourcing Times

Outsourcing in the Australian telecommunications sector increases customer complaints: John Pinnock

In releasing the annual report for the telecom industry in Australia, telecommunications industry Ombudsman John Pinnock warned that there is a significant increase in the number of customer complaints in this sector. He attributed this to outsourcing of the call center requirements.

According to Pinnock, outsourcing in the telecommunications sector reduces the control of the telecommunication company over call responses. At the same time, the outsource provider lacks the customer knowledge that is essential in dealing with customer requirements. Pinnock identified the companies where most of the complaints were located. PC Advisor reports:

Pinnock said complaints were consistently much higher in the telecoms industry than in banking, insurance and finance. Australian Mobile Telecommunications Association CEO Graham Chalker said the number of mobile phone subscribers in Australia is nearing 19 million, and argued that the report should be looked at in context.

India-based company SlashSupport opens Call Center in San Jose

SlashSupport, a part of the Cybernet Software Systems Group, has established a call center in San Jose, California. It employs 25 people currently, but this figure is expected to increase to 100 in a year's time. The call center, with the four centers in India and another in Singapore, attends to calls of all levels, with the number of inbound calls going up to 5 million every year.

Its success could mark the start of the trend of "reverse outsourcing,” where the requirements of Americans are met within America through a call center. SlashSupport has already built a client base in the US. Hindustantimes.com reports:

With some 30 clients in the US, and 90 per cent of its business with US companies, [SlashSupport Executive Vice President Sanjiva] Singh said these "highly branded" companies got and gave back more to an in-country call centre. As an on-site company, SlashSupport got to have close interaction on product marketing and engineering with its clients, including interacting closely with the customers of that client.   

Product Engineering Services: The new vertical in Outsourcing

The outsourcing industry is gaining new ramifications with its maturity. The latest development is product engineering services (PES), which are connected with the creation of a fresh product and enhancing its output and lifespan. Several IT companies in India have invested in this emerging trend in outsourcing, including Patni Computer Services, Tata Consultancy Services, and Wipro Ltd. Wipro has a 10,000 workforce to meet this trend, while Patni has 1,600 engineers.

PES is likely to build upon the semiconductor chip market, automotive industry, medical electronics, and computing requirements. According to a Nasscom estimate, PES outsourcing will account for a business worth $8-11 billion by 2008. Business Standard reports:

Common enterprise management applications and technology platforms have driven information integration to include engineering of products and production facilities, and efficient management of capital assets and production. The country's advantage lies in its ability to deliver technology services to global customers at great value and speed. India also has a vast pool of engineering and scientific talents, which can be tapped for the growth of the sector. 

Astellas Pharma Inc. outsources information systems to Fujitsu Limited

The pharmaceutical company Astellas Pharma Inc., based in Tokyo, Japan, has decided to outsource its information systems requirements to Fujitsu Limited, a leading service provider of IT and communications solutions for the global marketplace and also based in Tokyo.

Prior to this agreement, Astellas was managing its information systems through its subsidiary company Astellas Systems Co., Ltd. The agreement will provide Astellas with the advantage of Fujitsu's experience as a service provider and is expected to increase revenue through new deals. Japan Corporate News Network reports:

Under this agreement, Fujitsu will take in Astellas Systems' know-how in pharmaceutical-related information systems, which Fujitsu intends to leverage in expanding its business with pharmaceutical companies.

Orrick Herrington & Sutcliffe and Williams Lea in Outsource agreement

The new outsourcing partnership between Orrick Herrington & Sutcliffe and Williams Lea goes live on November 14. Under the arrangement, BPO service provider Williams Lea will take on 35 employees from Orrick, and all word processing, transcription, and document services of Orrick will be operated from the corporate information center of William Lea.

The global operations center of Orrick at Wheeling, West Virginia retains about 100 employees who attend to finance, technology, payroll, benefits, human resources, marketing, and web engineering services. The Lawyer reports:

"For the same reasons Orrick has sought to consolidate its document and transactional processes in Wheeling, Williams Lea envisions the new Corporate Information Center as a strong platform for serving the corporate information needs of many of our global clients," said Williams Lea CEO Tim Griffiths.

World retailer Sainsbury decides to end IT outsourcing contract with Accenture

Worldwide retailer giant Sainsbury signed a ten-year IT outsourcing contract with service provider Accenture in 2000 with ambitious plans of saving the company about £35 million per year. However, five years down the line, the company has decided to end the contract prematurely, and aims to bring its IT business processes back within its own fold in 6-12 months' time.

According to a senior analyst at researcher Ovum, the outsourcing relationship did not work out as planned because of various reasons, including poor decision-making, weak outsourcing governance, political conflicts at the retailer’s end, and too many high-risk factors. Silicon.com reports:

Key IT development will continue as planned, the retailer said. It said the priority throughout the migration period will be to make sure customers and staff are unaffected by the change, particularly through the Christmas and Easter trading periods.

Indian legislation proposal might remove accountability of BPOs for security of client data

The threat to client data in a BPO set up is an area of concern to outsourcing companies. The accountability for the security of such data was generally placed on the BPO company. However, the Indian government is considering a new legislation that might remove this accountability. According to this proposal, which is to be presented as an amendment IT Act, BPOs will be excluded from being a network service provider, and will thus not be held responsible for any theft of data.

The significance of this move is emphasized by the fact that India has no data protection law in place, although some countries have been calling for such laws extending over all service providers. Business Standard reports:

Experts said the exclusion of BPOs from the ambit of network service providers would mean that they would not be held responsible for the theft of any confidential information of foreign clients, like credit card or bank account details. 

Call for planning before outsourcing

Outsourcing has won several rounds in the match up to market expectations, and there are many success stories in the business. However, the pro-outsourcing argument is also dented by failures of outsourced projects and premature closure of contracts.

One such experience that is cited in the market is that of Sainsbury’s IT systems that were outsourced to Andersen Consulting, but Sainsbury is now calling for the foreclosure of the deal five years before schedule. The argument of cost savings does not always hold true because extra expenses are encountered under another head. Times Online reports:

Companies, and perhaps those public-sector organizations that are increasingly looking to outsource, may find that they need to take a second opinion before plunging into a multimillion-pound deal which is crucial to the success of their organization. 

IAOP announces code of ethics and business standards for outsourcing partners

With the burgeoning of the outsourcing business in many parts of the world, there is a growing need for a code of ethics for both service providers and their clients. Towards this, the International Association of Outsourcing Professionals (IAOP), based in Lagrangeville, N.Y., has announced a code of ethics and business practice standards that are applicable to both IT and non-IT sectors.

These procedures are expected to enhance the business of awarding and managing outsourced business processes. Some of the guidelines deal with disclosure, candor, and the use of objective metrics mutually decided by the outsource partners. CIO Today reports:

The Lagrangeville, N.Y.-based organization also is calling on companies to invest at least 40 hours annually in training and professional development activities for each employee involved in managing outsourcing contracts. Mike Corbett, executive director of the IAOP, said the group hopes the standards will help outsourcing relationships succeed, partly by making management practices more consistent from company to company.

US auto manufacturers rate South Korea best outsourcing partner

South Korea has been voted as the leading outsourcing destination in the auto parts sector by the three automotive leaders in the US: GM, Ford, and Chrysler. In the auto parts sector, South Korea has been rated second after China.

The factors that work in favor of South Korea are quality service at a competitive price, market access to neighboring countries, a skilled workforce, and high productivity. According to the US-based auto manufacturers, 40 percent of Korean auto parts companies manufacture quality products as compared to only 5-10 percent of Chinese providers. kois.go.kr reports:

For the first nine months of this year, Korean shipments of auto parts to the U.S. stood at $1.46 billion, up 71.9 percent from the same period of last year. From 2002-2004, US imports of auto parts went up 20 percent and have been rising since.