Outsourcing Times

Are BPO Employees Over-stressed?

There has been a debate over the stressful life living by BPO employees in India. This is a sensitive issue and requires proper attention. A few days ago, I came across a news article titled " BPO firm employee held on charge of killing colleague". It immediately caught my attention, as I believe it is somehow related to the stressful BPO lifestyle.

The incident occurred in Bangalore, where an employee of Aviva 24/7 BPO unit, murdered his female colleague and dumped the body on a different location. According to the police sources, the murder was the result of a love-hate relationship between the duo.

If an argument or a conflict results in a brutal murder, then we have every reason to believe that the accused was not living a healthy life and he was not a stable frame of mind. Can it be attributed to the burnout in BPOs? It seems that the concerned BPO and the police are dubbing the incident as a fatal attraction that ended in a tragedy. However, nobody bothers to see the other side of the incident. It's high time we wake up to such incidents and find out the exact reason why our well-qualified employees go brutal and violent in small matters.

Role of Enterprise Risk Management in Outsourcing

It has been noticed that companies import risk from external organizations via links through enterprise resource planning (ERP) and supply chain management (SCM) systems. However, the fastest growing source of importable risk is from your outsourcing partners. Evidences suggest that the quantity and scope of enterprise risk from outsourcing is expanding rapidly. Many small and medium sized companies are now relying on outsourcing through their IT systems.

Although outsourcing brings efficiency and cost saving, a poorly managed outsourcing relationship may put your entire IT system at risk. When you have options, why take a risk? It is strongly recommended that ERM must be extended to your outsourcing partners. That will definitely negate the strategic and market risks associated with your organization.

Is The KPO Boom Over?

Until recently, the Knowledge Process Outsourcing (KPO) boom was hyped in the industry and in media. It was touted as the future of thousands of professionals. However, if we are to believe the recent reports, the much-hyped KPO boom may be over soon. A huge supply gap is all set to cripple the growth of KPO industry.

The evidence gathered by RocSearch, suggests that the KPO market may just reach $5 billion by 2010 instead of the earlier projection of $12 billion. What could be the possible reason for the downward trend in KPO industry? Do you believe that there is a knowledge crunch, which is affecting the KPO growth?

According to The Times of India -

Assuming an average revenue per person of $55,000 over the next four years, 100,000 knowledge workers point to a $5 billion market. This size, though based on a CAGR of 32%, is still 60% less than the $12 billion potential projected by big KPOs, like Evalueserve, last year.

Now It's the Turn of Mortgage Lenders to Join Outsourcing

In the past couple of years, we have been receiving news on how industries one after another are outsourcing their jobs to low-wage destinations. Now it's the turn of mortgage lenders to join outsourcing wave. According to NelsonHall, the leading independent BPO analyst firm, mortgage lenders in the United States are outsourcing their work to India and other countries. In the recent months, mortgage industry has emerged as a strong force in the US and elsewhere in the world.

The high demand in mortgage products and services has forced the lenders to choose third party companies that can manage their work efficiently and effectively. Now customers want their mortgage BPO providers to add cost of processing to volume processing so that costs can be better matched to business volumes. It forced mortgage organizations to look for an improved process compared to their in-house capability. According to NelsonHall report, the global mortgage BPO market will double in size over the next five years.

Data Security Tightened in India

Recently, I had written a post on how offshore clients were losing trust on Indian BPOs because of cases of security breach. The post was titled, “Is the Future of BPO Industry Secure in India?” Now it seems that India outsourcing industry has woken up to the gravity of the situation.

After the recent incidents of data theft at call centers, finally the Indian outsourcing industry joined forces to implement a number of security measures. The industry acknowledged that such incidents would undermine the outsourcing expansion in India. The BPO firms in India have initiated a voluntary registry for call center employees. That will help employers to perform background checks on prospective employees.

In a major development, an independent self-regulatory body under the aegis of the National Association of Software and Services Companies (NASSCOM) was created. The body will look after the problems facing by BPO industry and find solutions to resolve those.

Data security and privacy have been seen as major barriers to global trade. Outsourcing companies in India are aware of this. Hence, they are trying to improve the security in their organizations. What do you think about the security measures taken by Indian outsourcing industry? Will it help the industry to restore the faith of offshore clients?

Outsourcing storm brewing in schools

Controversy and outsourcing have almost gone hand-in-hand, but in most industries the logistics have worked in favor of outsourcing. In schools, too, considerations of saving money and releasing in-house resources for core school requisites are beginning to work their way through controversial roadblocks.

School authorities in Michigan want to concentrate on their main business of educating students, and are happy to push the management of ancillary services—such as food, custodial, and bus services—off their plate. Private companies are willing to step in, offering these services at competitive rates.

The school authorities might be happy, but people who are losing their jobs to private companies are certainly outraged. For example, 29 custodians and 4 food service workers have lost their jobs in Garden City alone. Yes, some of these workers will get absorbed by the private service providers, but at much lower wages.

Quite naturally, jobless workers are spearheading the move to recall board members in several schools, including Garden City Board of Education and Lakeview Public Schools in St. Clair Shores.

Detroit Free Press has much more on this controversy.

$88 billion in outsourcing contracts up for grabs: new suppliers, line up!

All outsourcing contracts are time bound. As an outsourcing deal meanders toward its logical conclusion, it is a jittery time for the outsource vendor: will the outsourcer renew the contract, or simply dump the vendor in favor of another? It is certainly a time to retrospect and redefine outsourcing relationships.

The time is also one of opportunities for new suppliers. A show of one-upmanship can help them snatch a juicy outsourcing deal. According to a report by Everest Research Institute, outsourcing contracts worth $118 billion are due to expire between 2006 and 2008. While some existing relationships have firmed up and a quarter of this amount has been pushed back to status-quo relationships, contracts worth $88 billion are yet to be decided.

Some of the large existing IT contracts are likely to give way to multiple smaller contracts, and this leaves the door open for new players to flaunt their wares. In this situation, the big global suppliers such as CSC, EDS, and IBM are entirely justified in feeling the pinch of competition.

Weavers in south India: Weaving an outsourcing network

Outsourcing is usually practiced across cross-country borders. However, there is a smaller play alive and kicking within India. Weavers formerly engaged in the production of the famed Mangalagiri sari in south India are facing the crunch of rising production costs and excessive trade unionism, and are now outsourcing production.

Between Srikakulam in the north and Prakasam in the south, a network of weavers produces the Mangalagiri handloom. No longer confined to Mangalagiri, the "Mangalagiri handloom" product has developed as a brand, and this “grassroots-level” outsourcing will continue to thrive so long as the outsourced products maintain the same quality and finesse.

Read more.

Just how real are outsourcing fears?

I recently came across an article that cast a number of doubts over the outsourcing model. According to the article, outsourcers focus the entire offshoring business toward cutting costs, and neglect the quality aspects. If you take the article at face value, it is natural that you will think twice before outsourcing your business processes.

However, let us see just how real this fear is.

Think of an outsourced business. Yes, the basic objective is to cut costs, but with so many vendors vying for a place in the market, the outsourcer has plenty of options in selecting the outsourcing partner who is most suitable to the specific project and has the infrastructure and capability to execute it with finesse. So the onus is really with the outsourcer to find a capable partner. Every market has a few rotten apples, and this is true for outsourcing as much as for any other market.

The article cites the example of a call center that doesn’t handle client responses well enough. But hey, there are a number of checks and balances in an outsourcing deal which can ensure correct practices. There is talk of closing down a call center based in Bangalore (India). But what is the guarantee that the same situation will not arise even in-house?

The other fear raised about outsourcing is that an outsourcing vendor will not be able to adapt to changing practices and market requirements. But again, it is really upto the outsourcer to be foresighted enough and build such possible changes into the outsourcing arrangement from time to time.

Outsourcing ultimately boils down to a marriage of convenience between the outsourcer and the vendor. It is a sword that cuts both ways. A strong future-oriented relationship can trigger a long relationship. Believe me, outsourcing works—it is  not for nothing that a hoard of outsourcers are making a beeline toward countries like India and China. You don’t have to take my word for it; in an older post, I mentioned research findings that back up this fact, and more recent articles continue to point to a growth in the outsourcing business.

$112 million BTO outsourcing contract in the kitty for IBM Japan

Japanese consumer finance company ACOM has outsourced its loan, credit card, and installment sales finance business to IBM under a 10-year BTO contract. While IBM extends its BTO portal and money resources with this contract, ACOM has signed the deal to computerize the data on 34 million pages, which was hitherto maintained in paper format.

After computerization, IBM will help ACOM store the documents and make them more accessible for the front-office network.

Global Services Media has more.

Banks "strike" out at outsourcing!

In an older post titled Outsourcing opposed by RBI employees in India, I had mentioned the strong reaction by RBI employees against outsourcing. This fire of opposition is now spreading across almost all public sector banks in India.

On July 28, all public sector banks—with the exception of the State Bank of India—went on a flash strike, drawing banking services to a screeching halt across the country. But the buck didn't stop there. The country's politicians painted an even more sinister picture of outsourcing.

Take the statement of the Communist Party of India, which looks at outsourcing as a threat to the political stability of the country. In the midst of this opposition, the government attempted to diffuse the situation with a statement that outsourcing in the RBI was only limited to "non-core activities.”

However, as The Hindu reports, the left parties refused to bite on this statement. While the political tussle goes on, we wait and watch which way outsourcing is going to go in the Indian banking sector.

Gaming in outsourcing: No longer a child's play

Gaming in outsourcing is serious business. A few years back, the trend to outsource production in the gaming industry had caught up like a whirlwind, and I have drawn attention to the phenomenon in an earlier post. As in so many industries, India is emerging as a leading destination for outsourcing in gaming as well.

But what do outsourcers say on the success—or lack of success—of outsourcing gaming requirements? The recent Amritt Venture Report has specific answers. Out of 317 gaming professionals from the U.S who participated in the survey, 58% believe that outsourcing in the gaming industry is played on a rough turf; the process is not as smooth as they expected in the beginning.

Quite a few respondents say that they are disappointed with the quality and delivery schedule churned out by the vendors. Some respondents had to turn to new vendors, while others had to opt for a second vendor. These reactions notwithstanding, 94% of the respondents are committed to tread the outsourcing path; according to them, it is a rough, but must-traverse path.

Game Daily has more on the fiscal benefits achieved by gaming companies through the outsourcing model.

It takes two to tango: Wipro and Motorola in joint telecom venture

When two leading and highly successful companies form a common front to offer a service, it makes you stop and ponder, However, you must keep in mind that every company has its business focus and strongpoints, and when the strongpoints of two companies are complementary to each other, there lies a potential team-up of resources and expertise.

Wipro has excelled in delivering managed services, while Motorola has its expertise in mobility. The new venture, called WMNetServ, is a strategic move to combine their forces and provide viable telecom services to public and private network customers. Hindustan Times reports:

The joint venture will host a global network operation centre platform in India to integrate seamlessly with Motorola's network operating centers in North America and Europe to provide 24/7 network monitoring capabilities to customers.

Hard times, outsourcing times: Can outsourcing bail out San Diego?

A decade back, authorities in the county of San Diego were faced with a financial crisis, and saw privatization as a way out. But it obviously hasn't worked, because San Diego is in an even worse financial crisis than before. The resources are drying up, and "job hunt" is the keyword among its employees.

The Mayor is talking about opting for the outsourcing model to save up to $10 million per annum, but the picture is totally blurred about the specifics: what is going to be outsourced? According to Mayor Jerry Sanders:

We've not looked at any one area. Right now, we're more interested in getting the ballot proposition passed. . . . It's our goal to make sure each function we have in this city is as effective and streamlined as it could possibly be.

It is a guessing game right now, but whatever City Hall decides ultimately, it has to be substantial. The memory of the failure of outsourcing street repairs in San Diego is still fresh in the minds of the people, and the Mayor will have to spell out the areas clearly in order to ensure a positive response this time round.

BPO-focused Indian firm debuts at the NYSE

If you are keen to invest in an out-and-out BPO company that handles the entire gamut of business functions, the opportunity is going to come knocking later this week. India-based WNS Holdings is slated to go public soon at the New York Stock Exchange.

The timings couldn't have been more in sync with the times; market research firm International Data Corporation has predicted that the global outsourcing market will grow to $641 billion by 2009. Other major Indian players in the BPO industry have recorded outstanding success rates—I have already recorded the growth rate of Infosys in an older post—WNS becomes the first solely BPO-based firm to go public. CNN Money reports:

While WNS serves a diverse group of clients—including Virgin Atlantic Airways, insurer Marsh and British grocer Tesco—its five largest clients accounted for a staggering 41 percent of its revenue in the most recent fiscal year.

India: The new-age design board for global players

There was a time when Indians looked to the West, more particularly Paris, for fashion and design. However, India is now riding on the outsourcing wave, and this has more or less reversed the trend. Now, global brands are turning to Indian designers to sketch for their latest product lines.

In fact, global players such as Whirlpool, GE, LG, Philips, and Bosch have already initiated steps to set up design centers in India. Some others, like Reckitt Benckiser, are offshoring their design work to Indian designers. In its India Business report, The Times of India quotes Anuj Prasad, chief designer at Delhi-based Desmania Design:

Outsourcing design jobs to India started in a small way, but is going to be big. This is the latest trend in the world of manufacturing. A product is today conceived in the US, designed in India, manufactured in China and sold in markets across the globe.

Indian designers are now part of the global phenomenon, and are set to cater to diverse fields, including 3D modeling and plant engineering in aerospace, automotive, and industrial design for clients in Europe and America.

China to Promote Outsourcing Business

China has become one of the major outsourcing destinations for the companies that are doing off shore business. Although China is still lagging behind India on outsourcing, it has made significant progress over the past few years. In order to give a boost to its outsourcing industry, the Chinese government has decided to prioritize service outsourcing in the coming years. The government will establish specific policies to encourage service outsourcing in China.

For long, the Chinese government has been seen opposed to outsourcing. However, the situation has changed to a great extent. The government will also provide enterprises with financial support such as low-interest loans and insurance of credit for large-scale offshore projects. The government has also decided to persuade 100 multinational corporations to transfer their outsourcing businesses to China. If everything goes as per the schedule, China will definitely become a major hub for outsourcing activities.

Official Certification for Outsourcing Experts

Quality and security issues have forced companies to hire skilled and experienced professionals who can make significant contribution to their outsourcing business. The International Association of Outsourcing Professionals says that companies will look to establish relationship with professionals who have earned official certification on outsourcing. This may look strange, but true. Ask yourself, won't you feel confident about your company's outsourcing relationship if they were overseen by some outsourcing experts with professional certification? Certainly, your answer would be 'YES'.

The International Association of Outsourcing Professionals (IAOP) has the mission of building outsourcing as a profession and an industry. It has recently graduated its first group of certified outsourcing professionals. The IAOP's move is seen as revolutionary for the outsourcing industry. More organizations are expected to follow suit. However, it is yet to be seen whether the certified outsourcing professionals really provide an added advantage to the outsourcing business or not.

Is the Future of BPO Industry Secure in India?

The issue seems to be controversial, yet sensitive. Answer to this question will determine the fate of millions of youngsters in India who opt call center jobs as their career. The arrest of Nadeem Kashmiri in the HSBC call center fraud has raised a big question mark on the reliability and security of Indian BPO industry. Sadly, this is not the single incident of security breach in call centers. In the past couple of years, several cases of data fraud have been reported in call center facilities in Pune, Mumbai, Gurgaon and Bangalore.

We admit or not, such incidents are bound to affect the booming BPO industry in India. Experts believe that cases of security breach in India are minimal as compared to that abroad. However, here the question is why should not we provide hundred percent secure services to our foreign clients who heavily rely on us for the efficiency and effectiveness of their processes?

Outsourcing in Gaming Industry

Gaming industry has been in the news for some time now. Although outsourcing has become a buzzword in the industry, the outsourcing of gaming industry grabbed special attention of the consumers worldwide. According to a report prepared by Amritt Venture, offshore outsourcing has witnessed a sharp increase in the gaming industry. However, inconsistency of the service providers forced the companies frequently change their vendors. Several companies have expressed disappointment over the results from outsourcing. It is difficult to say whether the gaming industry benefited from outsourcing or incurred losses. Only the concerned companies can reveal the truth.

Indian Outsourcing Company's Move to Buy Botnia

Here is a great news for the Indian outsourcing companies! Now Indian companies have begun thinking big in terms of business acquisitions. Indian outsourcing company Sasken Communication Technologies Ltd. has finalized a deal to buy Finland-based Botnia Hightech Oy for 35.5 million euros. Saken's move will boost its capabilities in wireless services. With this acquisition, Sasken will set up its first European research development center. The company will also enhance its capabilities as a provider of telecommunication software and related services. This acquisition may set a good precedent for other Indian companies. Do you think that it is time for other Indian companies to make a move?

Chron reports that -

The deal is the latest in a string of overseas acquisitions by top Indian companies, which are trying to increase global visibility after surviving for decades on domestic sales and government protection. Sasken will pay euro35.5 million (US$45 million) for Botnia Hightech in an all-cash deal, the statement said.

Corporex Begins Outsourcing

Corporex has outsourced its leasing and property management operations to two area commercial real estate firms. The company now began to focus on development and investment opportunities. While Corporex used to deal directly with most of its tenants, now 90 percent of them employ tenant brokers.

Colliers Turley Martin Tucker and Grubb & Ellis/West Shell Commercial are the two firms that will manage Corporex's operations. According to Corporex sources, the decision was taken to focus on development and investment and to leave day-to-day leasing and management of its properties. The outsourcing arrangements will affect 22 Corporex employees. In addition, a few jobs have been abolished.

According to The Inquirer -

Banta said the deals are based on short-term contracts, but that Corporex hopes the relationships are long term. The operations of Corporex-owned hotels and its Five Seasons Country Clubs have not been affected.

Outsourcing of Newspaper Industry?

While the entire corporate world is into outsourcing, a debate has emerged whether the newspaper industry should join the fray or not. Recently, a new report published by the World Association of Newspapers examines the factors to be considered when deciding whether or not to outsource advertising, printing, human resources, editorial, accounting and other operations. The newspaper industry has now begun taking initiative to move into outsourcing their core operations such as editorial, advertising and circulation. The report also included case studies, performance measures and a benchmarking model. The debate still continues over this issue. Is it advisable to outsource the core functions of newspaper industry? The question remains unanswered.

The WAN Press reports that -

The case studies include examinations of the BBC, which outsourced human resources; the Vorarlberg Nachrichten, which outsourced editorial functions; Switzerland’s newspapers, which outsourced advertising sales; Italy’s Il Sole 24 ORE, which outsourced circulation and distribution management; The New York Times, which outsourced printing; Independent Newspapers, which outsourced finance, circulation services and telephone sales; and more.

Zsoft Launches New Software Outsourcing Platform

Zhongguancun Software Association (Zsoft) announced the launch of a China-Japan software outsourcing platform in order to boost China's software outsourcing business for Japanese markets. Zsoft is a Beijing-based non-profit software industry association. The platform will offer eight categories of service including project, talent, communication, business travel and financing. The new platform will be a creative one. It will bring profits and latest technologies to software companies in Zhongguancun, which is the Sillicon Valley of China.

PR NewsWire reports that -

After the Second 2006 Zhongguancun Software Outsourcing Summit, Zsoft launched the China-US Software Outsourcing Platform to facilitate software-outsourcing business flowing from the US to China.

Healthcare IT Outsourcing in Europe

European healthcare organizations are planning to outsource more IT operation because of tremendous financial burdens. They are unable to maintain their IT operations with the limited resources. Hence, they find it necessary and useful to outsource the entire operation to third parties. Most hospitals in Europe lack the resources and skills to build IT infrastructure and maintain them efficiently. They are also unable to train their staff to handle complex software packages. Under such circumstances, outsourcing the function remains the only viable solution. The trend towards IT outsourcing is also being encouraged by many governments in Europe, as they want to modernize and improve their IT systems.

According to Outsourcing-Russia -

"Healthcare IT outsourcing is now a proven business model in Europe due to highly visible contracts such as those between Britain's National Health Service (NHS) and British Telecom (BT), as well as many smaller contracts in different countries in Western Europe," said the Frost & Sullivan analyst, Siddharth Saha.

PSU Banks in India Planning Outsourcing

Different segments of the industry have acknowledged the benefits of outsourcing their businesses in order to register higher growth as well as reduce costs. Financial companies, Software companies, Legal firms and Pharmaceutical companies are leading the outsourcing business. In a significant development, two public sector banks in India received the green signal from the finance ministry to outsource non-core work like salary payments and recruitment.

According to finance ministry sources, outsourcing of non-core functions could help the nationalized banks in using their workforce for sanctioning loans and recovery of bad debts. The private banks had used direct sales agents for a series of activities ranging from giving loans to issuing credit cards and accepting deposits. However, they had to stop depending on outsourced staff following a directive from the Reserve Bank of India. Outsourcing of core services is not permitted. However, outsourcing of non-core services will definitely open more options before public sector and nationalized banks.

The Times of India reports that -

The issue is going to be discussed by finance minister P Chidambaram when he meets bank chiefs on Friday. But officials said that the government did not want to force any bank to embrace the outsourcing culture and was merely trying to create the environment for those who want to exercise the option.

Offshore Outsourcing is Set for a Huge Growth

There is no denying that offshoring has become a growing phenomenon. However, it has received more criticism than positive responses. Critics say that it disrupts distribution of communication paths and violates human rights. However, the supporters argue that offshoring is a free international trade that is positive for global economies. Despite the controversies, a large number of outsourcing deals involving outsourcing are currently under negotiation.

Indian companies still dominate the outsourcing industry. Although outsourcing demand in Europe has fallen drastically, the UK's demand for outsourcing is growing steadily. The strength of the UK market has been demonstrated by the growth in BPO by the UK companies. The UK accounts for more than 25 percent of the total value of business process contracts signed worldwide in 2006.

Importance of Customer Retention for the IT outsourcing in Europe

According to a recent survey made by Patni Computer Systems, top decision-makers in Europe have identified 'customer retention' to be one of the most important drivers for outsourcing companies. The survey revealed that outsourcing strategies adopted by the companies focus on this. In the recent years, Western Europe has emerged as a preferred outsourcing destination for companies in Europe.

European companies directly correlate outsourcing efficiencies to customer satisfaction. Companies believe that outsourcing would help them utilize internal resources to focus on their core functions. Financial Services organizations in Europe are now catching onto the outsourcing wave. Industry expertise, flexibility in partnership and resource skills are the key criteria for the European Organization to select an outsourcing partner.

According to domain-b.com -

Financial Insights is the specialist end-user research and consulting subsidiary of IDC that focuses on challenges facing financial organizations and how technology can provide solutions. It has a team of over 30 analysts based in the main global financial centers.

BBC's Goof-up in the Outsourcing Deal

According to the National Audit Office (NAO) has revealed that the BBC miscalculated the savings it would make through its outsourcing deal with Siemens Business Services (SBS). The BBC had originally projected that the deal would generate savings of £35.2 million. It has now admitted its mistake in the projection. It was found that the BBC overestimated the cost of running its IT in-house by £7.7 million, which resulted in the error.

The BBC Management acknowledged that the saving figure should have been updated. It also regrets that the mistake could not be identified earlier. Otherwise, it would have been reported to the executive and the governors. The management has assured that appropriate processes are in place to ensure that it does not occur again.

Silicon.com reports that -

The Broadcasting Entertainment Cinematograph and Theatre Union (Bectu), which represented approximately 370 of the IT staff the BBC sold to Siemens, fiercely criticised the BBC for its miscalculation of cost savings.

Is IT Outsourcing Boom is Over in India?

It seems that the IT outsourcing boom is over in India and elsewhere in the world. This is because the companies have learnt to be strategic and selective. However, it is too early to say that the It outsourcing is at the fag end of its growth. In India, outsourcers are now looking to China to reduce their growing labor shortage.

Major IT and BPO hubs are reaching labor saturation and are desperately looking for educated resources in other parts of the world. The current situation in India will drive both buyers and service providers to expand their list of possible locations for operations. It will provide an opportunity to other countries to grow in outsourcing business.

Financial Express reports that -

The latest Diamondcluster study reveals some troubling signs for onshore service providers. For example, less than one in three buyers of onshore services reported that all their expectations are being met, compared to 47 per cent of the buyers of offshore services.

HR Outsourcing Ensures Quality Service

Outsourcing of HR activities has become a trend in the world. For more than two decades now, there has been emphasis on the role of the HR function in the organizations. It is driven by the fact that HR departments in organizations are seen as the administration departments. They manage pay-roll administration, applicant tracking, training and other developmental work. Hence, HR becomes the most important part of any organization.

To improve the quality and enhance the performance of the organizations, most companies prefer outsourcing their HR services. The outsourcing relationship offers cost-savings, standardization of processes, increased speed and quality of service. Outsourcing of HR function has become an integrated business strategy for the organizations. However, its success depends on the senior management and HR professionals to identify the core HR processes and non-core processes that can be outsourced.

Going beyond the expected: Infosys net profit scales up to $173 million

Arguably one of the top three software companies in India along with TCS and WIPRO, Infosys is riding high on the wave of outsourcing to bring in the big bucks. Its outsourcing services have seen a 50% rise in demand over the last quarter alone, pushing sales to a new high that is well beyond the projected figure. This has led Infosys to push its targets even higher for the next quarter.

In terms of numbers, the company added 38 clients and 5,700 staff during the previous quarter. The trend has also led to an annual increase of 15% in salaries, and brought in the tough question of holding on to its employees. BBC news reports:

India's National Association of Software and Service Companies (NASSCOM) has estimated that contracts worth a combined $100bn will come up for grabs over the next two years.

Outsourcing marches on, but at a slower rate

Outsourcing continues to grow; make no mistake about that. The only change from previous years is that it is growing at a slower rate. This trend is revealed by DiamondCluster International Inc.'s annual Global IT Outsourcing Study.

But is this at all surprising? Not really, because any phenomenon starts with a dramatic upward graph, but sobers down after the pros and cons cancel each other out. This makes the market settle down to a more "real" level. This is exactly what's happening in the outsourcing market. After the initial frantic activity when outsourcers went at breakneck speed and signed contracts with vendors left, right, and center, the outsourcing community has now realized that thy need to tread more cautiously and avoid the mistakes of that initial phase.

So we are now looking at a more selective approach to outsourcing, usually preceded by a verification of the capabilities of the vendor. Besides, some outsourcing contracts have gone sour, leading to premature closures and projects being pulled back from the vendors.

Regardless of this development, however, outsourcing will not only survive, but also continue to attract additional business every year. According to Tom Weakland of DiamondCluster, the growth of outsourcing might no longer be the boom of 2004, but it is still big growth.

Computerworld has more.

The Prison BPO: A waiting-to-happen industry

The question of outsourcing has always been linked to unemployment or under-employment. This has made India the volatile market that it is today. India had a large educated workforce that needed a financial incentive, and outsource vendors were able to capitalize on this workforce and convert it into an effective tool to attract outsourcing business from the West.

Now think of another potentially large workforce that is underutilized at the moment, but can contribute effectively to the outsourcing wagonwheel. Yes, you've got it: the prison labor. Across the US, the many prisons house about 7 million people; in other words, this means 1 in every 100 US adults is a potential worker for the BPO industry. The process has already started in the form of Unicor, the brand name for the U.S. government's prison industries. Unicor has recorded a very positive production rate, and this encourages one to expand prison BPO well beyond this small start.

Because of the transparency of the prison force, data security is a non-issue, and business can go on as usual in a prison just as well as in a BPO in India. It remains to be seen how this idea is exploited in the future; with the right initiatives, we can certainly see a new forum brewing for the BPO industry. Line 56 reports:

Until now, the use of prisoners to perform business process outsourcing (BPO) functions like marketing and customer care has been considered something of a novelty. Certainly, this kind of economic activity isn't yet substantial, but it seems inevitable that it will grow in volume.

Cross-cultural communication training increases productivity: Accenture study

When work travels offshore, you can imagine the inherent complications. Perhaps the cornerstone of any offshore understanding is an effective channel of communication. If you attempt to take your work overseas, the temptation of cutting costs is the highest on the agenda. However, you must also cross cultural barriers to be able to extract the most out of your outsourcing partner. But how do you go about surmounting, say, language barriers?

According to Accenture, you must set up a training procedure so that your executives are in sync with outsource service providers beyond your borders. If you implement this, you can increase your productivity by about 26%. On the other hand, if you do not train your personnel to communicate, your turnover can drop phenomenally, and even lead to a premature closure of the outsourcing deal. As Management Resources reports:

Two-thirds of those polled said they had experienced miscommunication issues within their global sourcing operations, compared with six out of 10 among executives at companies that offered cross-cultural training to their employees.

In this new age of a telecom revolution, it is no longer the physical obstacles to outsourcing that will hold you back on engaging in a project overseas. However, you must overcome cultural differences—not only the language, but differences in approach as well—for your outsourcing project to yield maximum productivity.

IT Security Outsourcing

The US companies that outsource their IT security functions, has significantly contributed to the volume of off-shoring business. A survey conducted on the US companies indicated that they allocate their security functions to third party companies. The amount of work sent overseas in some cases have doubled in recent years.

It has been reported that companies with an average revenue of less than $10 million outsourced 8 percent of their security functions overseas. Last year, it was only 4 percent. Large companies have witnessed a sharp increase in outsourcing. They send 15 percent of their security functions offshore. Even though the volume of security functions sent overseas moved up, the number of US companies that use outsourcing has remained stable.

According to ZNet News -

This year, 39 percent of the companies surveyed indicated they farm out varying degrees of their security work, compared with 37 percent last year. In a preview of the survey last month, Robert Richardson, editorial director at the CSI, also noted that there was a decline in financial losses due to cyber crime in 2006 and fewer security incidents than in previous years.

Shocking News: Terror Outsourcing

Several countries including India have been the victims of terrorism. The recent serial bomb blasts in Mumbai have unmasked the ugly face of terror in India. According to sources, terrorists have now adopted a new strategy in the form of terror outsourcing. They have adopted this tactics to leave the security personnel guessing about their moves. The major terrorist organizations are now outsourcing the terror task, according to Indian intelligence sources. Such organizations pick up highly motivated boys and provide them training and other support to carry out the operations. They boys work for a specific price.

Wireless interception aftermath Mumbai serial blasts have indicated that operatives of these blasts were not dedicated members of any organizations. The intelligence sources also revealed that most terrorist attacks in the recent days were performed by operatives who were paid by the terrorist organizations. This is a dangerous trend, as it is not easy for the security agencies to check such activities. Security agencies generally keep a tab on the activities of the militant organizations. However, they have succeeded in fooling the security agencies by outsourcing their tasks.

The Statesman reports that -

Intelligence inputs reaching here reveal that terrorist organisations pick up “hardliner, alienated Muslim boys” in the age group of 18 to 26, impart them training and then ask them to do “any terror operation of their choice” and pay them accordingly, said a senior intelligence official.

Outsourcing in North America Driven by IT Outsourcing

According to a research made by an independent BPO analyst firm, outsourcing activity is stronger in North America than Europe. The report also revealed that North America outsourcing activity was primarily driven by IT Outsourcing. In North America, BPO contract activity declined by 20%, whereas it grew steadily in Europe. On the contrary, IT outsourcing has witnessed a sharp growth in North America. BPO still has the potential to become a much larger market than outsourcing. However, in the current scenario, IT has dominated the outsourcing market share.

According to Tekrati -

The NelsonHall report observed that new sector patterns are emerging. For example, manufacturing and retail combined to account for 28% of BPO contract value in the past 12 months, compared to 12% in the prior equivalent period.

Top Indian Companies in Outsourcing Business

Some Indian companies are leading the global outsourcing vendors list. Recently, the Brown-Wilson Group has published a list of "50 Best Managed Global Outsourcing Vendors for 2006". Not surprisingly, Indian companies Satyam, Cognizant and Infosys figure among the top five outsourcing vendors. While Satyam is ranked second, Cognizant is at third position. Infosys has occupied the fifth position in the list. Patni, TCS, HCL and Genpact took sixth, seventh, eighth and ninth positions respectively. The annual survey analyzed over 870 outsourcing vendors in 63 countries to find the factual figures. The survey focused on the key areas such as human capital performance, corporate direction, leadership, customer satisfaction and employee satisfaction.

Indian Companies Dominate the Global Outsourcing Deals

Outsourcing business has become an integral part of Indian industry in the recent years. According to reports, Indian companies have bagged the biggest outsourcing deals in 2005-06 made their presence in the global arena. Indian companies have received the lion's share in the global outsourcing industry. Despite the controversies surrounding off shoring in Britain and elsewhere, outsourcing deals are being signed on a constant pace.

Some British firms such as Powergen and Abbey have withdrawn their call centers in India. However, that did not deter others from outsourcing their work to India. The economic compulsion of outsourcing of back office operations holds the edge here. The current trend shows that there is hardly any dissatisfaction with offshore outsourcing.

Daily India reports that -

The analysis reveals that this growth in offshore outsourcing is further evidenced by impressive gains for the Indian service providers, whose market share has risen to 5.2 percent of the total value of contracts signed so far this year - up from less than 3 percent in 2005 and just over 1 percent in 2004.

Nasscom on Outsourcing

The National Association of Software Companies (Nasscom) has hired managed consultant Booz Allen Hamilton to make an analysis on the potential outsourcing business in Indian IT companies. The Nasscom intends to intensify its thrust on the engineering services domain. Nasscom President, Kiran Karnik announced this on the first executive committee of Nasscom in Pune. The gathering has witnessed a huge turnout. Karnik stressed that the study will act as a catalyst. It will display the potential of India as an attractive destination for outsourcing of engineering services by global IT players.

Wiltshire Signs £12m Outsourcing Deal

Wiltshire County Council has outsourced the management of its IT infrastructure to services provider Steria in a £12m five-year contract. Steria will take over the operations of the Wiltshire County Council's IT infrastructure at the beginning of October 2006. It will manage systems used by 3,500 council workers. About 900 workers are now based at County Hall in Trowbridge. Other workers are based at 200 other sites across Wiltshire. This contract will provide the flexible framework to deliver improved services. Developing a new infrastructure and improving technology are part of the business change process.

According to VNU Net -

Tim Gregory, head of IT at Wiltshire said: 'We are enabling major changes across the authority, and we wanted to be able to try and drive that change by providing technical facilities and a good IT service to ensure that we can make the changes in HR practices and Financial management that we need to make.'

Centrica's HR outsourcing Deal with Hewitt Associates

British Gas Company Centrica has signed a seven-and-a-half year HR business process outsourcing contract that will cover its 30,000 strong staff in the UK. The deal has been signed with HR services firm Hewitt Associates. It includes workforce administration, payroll, reward management, performance management, succession planning, customer services and HR related information services. The value of the deal has not been disclosed yet. The HR transformation program at Centrica is well underway and the company's new partnership with Hewitt will accelerate and support the delivery of technology for Centrica's line managers.

Euronet to Provide Outsource Business

Euronet has decided to provide a range of day-to-day ATM outsourcing services and value-added network services. Euronet is an electronic payments provider. It has expanded its ATM outsourcing agreement with Centurion Bank of Punjab. As per the new outsourcing deal, Euronet will manage 408 ATMs of the Centurion Bank of Punjab (CBOP). Currently, Euronet operates 164 ATMs of the former Centurion Bank. Under the expanded agreement, CBOP will outsource the remaining 244 ATMs from its current network to Euronet India within the next 30 to 60 days. Euronet India will also provide value-added network services to the bank in the form of mobile phone recharge through ATM, SMS and the Internet channels.

According to EFY Times -

Commenting on the alliance, Anil Jaggia, chief operating officer, Centurion Bank of Punjab, said, "By outsourcing our ATM network services to Euronet, we are able to focus more resources on establishing a full-service commercial bank with strong retail and SME presence across the country."

Daimler Plans Accounting Outsourcing

DaimlerChrysler AG has decided to outsource some of its accounting work to lower-wage countries as part of its restructuring program. This move has been opposed by automakers works councils. The company is officially considering locations such as Czech Republic and India for outsourcing some of the company's accounting work. The works' council is against the outsourcing and maintains that the automaker's new plans should not be outsourced. Daimler has been negotiating for the last two months. It is also developing a social and compensation plan for large-scale administrative restructuring. DaimlerChrysler is planning to cut about 6,000 positions worldwide.

According to Forbes -

The automaker wants to begin implementing the restructuring in August with 60 pct of the changes to be made by the end of 2006. But the works council has threatened to veto the plans: 'We are saying without a balance of interest this simply won't fly,' Klemm said.

BCW sells international outsourcing division, but continues to grow

UK's leading credit management group BCW is ready shed its 23-year old outsourcing division for £28 million. Founded by Paul Fraser, MD of BCW, the outsourcing arm had grown over the years through high value employment and investment. Now, it's the turn of its new owners, an MBO team backed by venture capital group Sovereign Capital, to reap the ultimate benefits.

However, the turnover at the remaining units of BCW is expected to touch £20 million this year. With some strategic alliances and acquisitions in the pipeline, BCW is well on its way to multiplying profits. Fraser spells out BCW's success formula:

We have invested hugely in technology - over seven figures per year - and it enables us to manage customer data far more efficiently than would otherwise be possible.

Fraud at HSBC Outsourcing Center

In a shocking incident, the Bangalore police have arrested an employee of HSBC Data Processing Center for allegedly passing the data of the UK customers to others. As a result, the UK customers lost £233,000 pounds from their accounts. The arrest was made after HSBC Electronic Data Processing India Ltd. filed a complaint saying one of its employees Nadeem Kashmiri, accessed personal debit card information of the customers and passed them on to associates involved in the fraud. Unfortunately, this is the second major bank fraud reported by an outsourcing center in India in less than a year. The incident put the outsourcing industry in a tizzy. It might affect the future outsourcing to India. The incident already raised fears and criticism about cyber safety standards in India.

According to IT Business Net -

The HSBC incident was brought to notice by some of its customers in England who complained that money had been money transferred from their accounts between March and May without their knowledge, the Financial Express newspaper reported.

ING Group to Sign Outsourcing Deals

Insurance and investment firm ING Group has roped in four outsourcing service providers to install and maintain its computers and telephones. The four major companies that are all set to enter into partnership with ING are Accenture, Atos Origin, Getronics and KPN. The deals are valued at $1.02 billion that will last for five years. It has been reported that about 500 ING employees will be transferred to the outsourcers. The deal is part of an efficiency drive aimed at reducing operating costs by $584 million. It will run in conjunction with an existing seven-year agreement signed with IBM in 2003. ING currently has 114,000 employees all over the world. The company offers insurance, banking and asset management services in more than 50 countries.

Australian Telecom Outsourcing to India

Despite the protests from unions and public to send back-office and calling center operations to India, a major part of Australia's telecommunication work is being outsourced to India. The government-owned Telstra has recently entered into a major deal with Indian IT giant, Wipro. Another leading Australian company Optus is also negotiating with Indian BPOs to handle its IT development and management operations. Both Telstra and Optus have been under tremendous pressure to cut costs as the telecommunication sector in Australia is showing signs of slowing down.

According to The Hindu -

The inkling of Optus India move has reportedly come from briefing by the management of the Australian Stock Exchange (ASX) listed company to thousands of its call centre staff about increasing the numbers in India from 500 to 800 on immediate basis.

ICICI-OneSource to Set up Second Outsourcing Center in UK

India's leading BPO Company, ICICI-OneSource has decided to establish its second outsourcing center in the UK. The outsourcing center would come up in Londonderry. In the past couple of years, ICICI-OneSource has expanded its business to several parts in the world. The outsourcing boom has helped it to carry out its own ambitious plans. The company started its operation in the UK in June 2006 by setting up the first center in Belfast. The second center will offer a range of outsourcing services and provide over 600 jobs to the local community over the next two years.

HCL Tech to Sign Outsourcing Deal with Old Mutual

HCL Technologies Ltd., India is all set to sign a $400 million outsourcing deal with a unit of South Africa's biggest insurer Old Mutual. It has been noticed that Indian software services companies have been trying to cash on the outsourcing boom. HCL's moves is seen a positive step on this regard. Old Mutual won control of Swedish savings firm Skandia earlier this year after a long battle for takeover. HCL has adopted and articulated multi-million dollar client engagement strategy to provide effective services to its clients. The proposed deal would boost HCL Technologies' profile.

According to Reuters -

Shares in HCL Technologies, India's fifth-ranked software services firm, rose as much as 6.9 percent to 540 rupees in a firm Mumbai market. They later retraced to 526 rupees by 11:40 a.m. (0610 GMT), up 4.2 percent.

The upside and the downside of HR outsourcing

After IT and the BPO industry, HR outsourcing might well be the next big thing in outsourcing. Several top-rung companies—including Unilever, Cable & Wireless, BAE Systems, BT, and BBC—have already taken the outsourcing route for their HR services. In a couple of years, the HR outsourcing wave is expected to touch $75 billion. That's big money!

However, skeptics are beginning to raise an eyebrow or two at this growing trend. According to them, HR is a specialized area where an outsource service provider will not be able to understand the underlying dynamics; in the absence of an “internal re-engineering”, HR management is bound to lose its strategic edge.

Let's look at another downside: the danger of jobs drying out for existing HR employees is beginning to raise its ugly head. For instance, the Unilever move to outsource its HR function might leave its strong employee force of 3,300 executives high and dry. True, some of this force might be absorbed by outsourcing partner Accenture, but it has certainly led to a few faster heartbeats. As a recent article has it, the transformation to outsourcing will be very painful, but it can subsequently lead to insourcing—an even more painful process.

First Belfast, and now Londonderry for Indian BPO I-Onesource

The Indian BPO company I-Onesource is making its presence felt in the UK. Its first service center in the UK was unveiled in Belfast in June this year, and hot on its heels has come the second unit at Londonderry, due to start functioning in a few months' time. Zee News reports:

The Centre will offer a range of outsourcing services and provide over 600 jobs to the local community over the next two years, the company said in a release.

HCL Technologies in $400 million outsourcing deal with Skandia

It seems like Indian software exporters are in the right place at the right time. India provides them with the necessary technological skill set through an educated and ambitious employee base, while the time is just right for the outsourcing boom to scale even greater heights. No wonder, the last decade or so has seen a tremendous growth in the market for all leading software exporters, including the big three: Tata Consultancy Services Ltd., Infosys Technologies Ltd., and Wipro Ltd. The pressure on companies in the West to cut costs and time has also contributed to the blossoming outsourcing trade in India.

Not far behind the top three service providers is HCL Technologies, which is also making waves in the industry. With its shares rising by 6.9% in the Mumbai market, HCL is now concretizing a $400 million, multi-year outsourcing deal with Skandia, a unit of South Africa's biggest insurer Old Mutual.

While the software exports battle it out for the top spot, the employee base continues to prosper. According to National Association of Software and Service Companies (NASSCOM), the outsourcing industry will see a 25-28 percent rise in business by March 2007.

Read more

Managed security umbrella to shield against data theft

Outsourcing is viable because of costs savings. However, if this cost factor is countered by the danger of data theft in an outsourced environment, the principle of outsourcing will come to a dead end. All the negativity surrounding data security—such as hacking, data loss in transit, and illegal storage of data—can lead to both a material and ideological loss that can easily outweigh the cost savings in an outsourced deal.

But wait, there is a new instrument at hand: managed data security services. In effect, this means handing over security management to a service provider who understands the security needs of the outsourcer and takes on the burden of protecting critical data from pilferage. All this comes at a cost, and outsourcers can opt for a dedicated data security service or the more affordable shared service.

How exactly does the managed security work? Well, the first step is a security audit conducted by experts who understand security regulations and assess security threats. Only then is the service provider able to put a security network in place to counter all threats.

Needless to say, the concept of managed security appeals most to financial institutions such as banks and lending institutions, who have already taken a beating because of theft and loss of critical customer information such as credit card numbers. This image can be cleared by putting a managed security service in place. The entire concept rides on complete trust between the client and the service provider.

Click here for the full story.

Community Dept signs on Unisys West for developing software

Western Australia's Department of Community Development was not finding its existing information systems adequate because there was no integrated management system. To improve the situation, the department has embarked upon project Assist, which will implement a packaged CRM and content management software across its 84 office locations.

According to Global Services Media, the project will be executed by a client solution from Unisys West. Under the three-year outsourcing contract, which is likely to be extended for a further couple of years, Assist will use a mixture of Oracle's PeopleSoft Enterprise CRM and Objective's Enterprise Content Management suite.

Outsourcing prayer requests

As life treads a new course in the Western world, marked by a fast pace and a lack of time and inclination for pursuing spiritual needs, India come to the rescue. The number of practicing priests in the US and the UK is diminishing rapidly, and the churches in these countries are not able to meet the demand for fulfilling all prayer requests.

The solution seems to lie in India, and churches in India are being inundated with requests for prayers from the Western countries. India offers over twenty-five priests who manage resource-crunched churches, and the demand for prayers from the West is a welcome relief.
The requests are routed through the Bishop's office to the most suitable priest for a particular request. The prayer is conducted on behalf of the sponsor, and money reaches the priest conducting the prayer. There is an increasing trend to route prayer requests to the most needy of churches, such as those in north India.

A reverse effect is also beginning to emerge; English-speaking priests from India are migrating to Western countries to fill in for the shortfall there. This might, in the long run, make it difficult for Indian churches to continue servicing the offshore prayer requests. However, the factor that works in favor of India is that there are seventeen million Catholics in India. As the Times of India reports:

[This number is] over four times the number of Catholics in Britain, where the sect is a minority, and an impressive one-third of the total number of Catholics in the US. India's youthfulness and English-speaking talents are fetching it attention in the spiritual world too, though it's still not clear what language the lord speaks in. 

How secure is your outsourced IT data?

The Data Protection Act (DPA) is in force in the UK for eight years now, but its provisions are not yet completely understood. Or at least, the provisions are not enforced. This is clear from a trend among senior IT decision makers to use live data to test applications.

A study conducted by Vanson Bourn reveals this unhealthy practice in the IT outsourcing industry. Nearly half of the IT decision makers are not even clear on the provisions of the act, and 44% use real data for testing purposes.

This obviously runs the risk of data dissemination to a third party. Confidentiality is of utmost importance in the data-driven IT industry, and greater care is a must for IT companies and executives. As the Vanson Bourne research indicates:

By exchanging known values, such as addresses, with other known values, customer data can be transformed so that it is unrecognisable from the original but can still be processed by the systems across the organisation, with important fields, such as postcode, left intact.

ING in a string of outsourcing agreements worth nearly $2 billion

The Dutch market is plagued in recent times by a slow growth rate in the market, and leading financial institutions like ABN Amro and ING are making an effort to cut costs through outsourcing. Since April this year, ING has entered into three separate outsourcing agreements to cater to its various business processes.

It all began in April with the 200 million  euro six-year contract with LogicaCMG for IT maintenance and testing in the banking operations of ING. A month later, Astron came forward to manage processes of banking and insurance documents for ING under a 400 million euro agreement, spread across seven years.

And most recently, the biggest outsourcing deal of 800 million euro came about between ING and four suppliers—Accenture, Atos Origin, Getronics, and KPN—to look after installation and support for desktop and laptop computers, printers, and telephones for ING. The final stamp on the deal is likely to be put in the year-end.

Marketwatch has more details.

India extends "global counsel" role to Canadian lawyers

The US is the most sought after client for Indian outsource vendors, and the typical industries that attract business are the IT and BPO sectors. However, neighboring Canada is also not far behind in outsourcing work to India in the call center, data processing, and accounting sectors. To add to this range, Indian lawyers are offering their services to Canadian lawyers.

The concept is bound to catch on because a lawyer in Canada can save substantially by offshoring work to India, much less than what is paid to a junior lawyer onshore. Indian law practitioners are well equipped to handle requirements from Canada because they are trained in common law, which is practiced in Canada also. No doubt legal outsourcing is still a newborn baby, but it is likely to nurture itself in the coming years, and emerge as a challenge for the Canadian Bar Association. The Hindu reports:

Th