Outsourcing Times

The south shines in outsourcing armour

First, it was the turn of the southern Indian city of Bangalore to be promoted as the tech-city in India, housing numerous outsourcing "merchants,” as it were. Now, it is Chennai, just a few hundred kilometers to the east of Bangalore that is being catapulted into the status of an outsourcing hub. Throw in the third southern city of Hyderabad, and you have a city-trio that has the potential to outshine north and west India as the business epicenter in India.

I can try counting the number of multinational outsourcing companies based in these three southern cities, but I know it will be a hopeless task. Any attempt to draw a list of the who's-who in the outsourcing industry is doomed to become obsolete in a few days time, so rapidly are the outsourcing vendors spreading their roots in this region.

However, let's talk about Chennai. Global software solutions and integration services provider Mastek has recently bought a 17-acre plot in the city, and this could turn out to be the most well managed outsourcing delivery center in India. The stakes are high, but so are the credentials of Mastek, as My Iris reports:

Mastek is a USD 156 million, publicly held company, with more than 2,800 employees and 7,200 man-years of experience. The company has implemented more than 1,000 projects worldwide.   

In a couple of years at the most, we'll know if the Mastek dream comes true in Chennai.

Crunch in tech-savvy resource pool leads to aviation outsourcing

You might be surprised to hear this, but India, China, and Mexico produce more engineering graduates than the US. So you have a limited resource pool in the US to absorb all aspects in the aviation industry. In this scenario, aviation companies in the US cannot be blamed if they look toward other countries for subassembly help.

It is the age of partnerships, and the aviation industry is not lagging behind in this respect. A major criterion for this trend is the quintessential benefit of outsourcing—it reduces the cost of production and cuts out unnecessary chains in the production cycle

At the General Aviation Technology Conference and Exhibition at Century II sponsored by the Society of Automotive Engineers, a panel of leading executives in the industry confirmed to engineers that the time is ideal for more partnerships and outsourcing contracts. However, the panel is well aware of the downside of outsourcing:

The devil is always in the details.... Companies must have the digital technology needed to transfer large files. And there must be good communication among engineers in U.S. companies working with those in other places.

The worrying factor for educationalists and aviation industrialists in the US is that there is a perceptible drop in interest in the engineering disciple. The aviation industry can hope to keep engineering jobs within the US only if students get rid of this apathy toward the subject. If this doesn't happen, the specter of outsourcing is bound to cast its spell even darker and deeper in the future.

GrandForks Herald has more.

Privatization in schools: It pays to outsource

In July last year, I mentioned about the outsourcing storm brewing in schools. More than a year down the line, the controversy seems to have taken epic proportions, but paradoxically, the concept of privatization in schools is also gaining credence.

The pressure of working with smaller budgets has led to widespread privatization in non-instructional areas such as janitorial, food, and busing services. This has also stirred superintending authorities to investigate privatization in schools.

The statistical figures are there for all to see:

Officials at Muskegon Reeths-Puffer expect to save about $480,000 a year with private custodians over the life of the contract. That works out to about $114 per student. In Auburn Hills, a new contract may save the Avondale School District up to $490,000 — $128 per student — in fiscal 2007. In Jackson, a new custodial contract is expected to annually save $1.3 million, or about $193 per student.

Outsourcing or contractual agreements with third-party service providers are here to stay in school management. Private vendors increasingly provide services like transport and food. The school authorities are happy because it gives them an efficient management  technique, and then there is the "small matter" of budgetary savings.

Make no mistake, the benefits of privatization in schools are real and touches lives across different districts in the US.

Mackinac Center, which contacted all 552 schools listed in the Michigan Education Directory, has more details on the growing trend of privatization in schools.

Loyalty counts: National Australia Bank widens outsourcing deal with Accenture

Perform well, and you will be rewarded with a bigger piece of the cake—that's what NAB seems to be telling Accenture. To begin with, NAB's agreement with Accenture was limited to a finance and accounting arrangement; by April 2007, Accenture will be awarded 81 back-office finance-processing roles, where Accenture will validate and convert data into reports, and look after procurement administration.

However, NAB has not taken this step out of the blue. A pilot project was completed some months back with encouraging results, and this helped in sealing the final deal for Accenture. As Global Services reports, the NAB outsourcing venture will not lead to job layoffs:

It is expected that many of the affected employees will be re-deployed to other roles within the bank.... The plans do not involve customer-contact roles, and all customer data will remain stored in Australia. 

HR outsourcing: Building blocks

As I mentioned in an older post titled Where is HR Outsourcing headed? HR outsourcing comes third in the list of potentially high paybacks, after IT and the telecomm industry. However, many companies wrap up their HR functionalities as something that happens in the back office, and do not give enough attention to the infrastructure that essentially props up its employees. Over the years, this has bred neglect, leading to antiquated HR management systems. If you're interested in earning an HR management degree, consider California Coast University's MBA in HR management degree program.

Now, it is time for this mindset to change, because companies are suddenly waking up to the fact that their HR policies are not in step with the times, and a major overhaul is called for to keep pace with company acquisitions and mergers. A few companies have tried mending their HR management system on their own, but they soon discovered that it is like opening Pandora's Box; more you inquire into the state of HR policies, you keep unearthing more anomalies.

That's where outsourcing can step in. If you have a problem managing your HR and bringing the existing system up to scratch, why not let a third party worry about it? What comes with HR outsourcing is better management at a lower cost

An article in Morning Star names some big performers in HR outsourcing: Paychex, which provides payroll processing; AMN Healthcare, which looks after health-care staffing; Administaff, which provides all HR functions and caters to the small businesses; and Hewitt, a consultant firm for companies that need employee benefit programs. 

You need a “versatilist” to ride the outsourcing storm

IT professionals in America are constantly living in fear of losing their jobs; at least, that's the feeling one gets after reading articles about jobs migrating offshore because of outsourcing. This might be just going over-the-board a bit, but the concern is certainly there, and the fraternity of IT professionals has accepted the fact that outsourcing is here to stay, and is devising ways of getting around the outsourcing storm and keeping IT jobs afloat.

The consensus is that the specialized IT professional will find it difficult to survive, because his or her specialization can lend itself to only a limited number of jobs. A more practical solution is to specialize in a particular area of IT expertise, and then diversify to other related areas of business processes, thus widening the job profile. In other words, if you are a versatilist, you can find favor with company CEOs.

To effectively surf the outsourcing wave, companies are looking for greater maneuverability and agility in their workforce; if one employee can fit into different job portfolios, that employee is much more valuable than the specialist who has a fairly narrow job path to traverse. Datamation quotes Morello of research firm Gartner:

The versatilist can look like many things. While a combination of business and tech is one excellent choice, there are other versatile skill sets a tech professional can acquire to be more marketable.

India marches on with its offshore cost advantage

If you have been following the outsourcing trend in India, you would have definitely felt the gathering storms over India's potency as the leading outsourcing destination. These storm clouds mainly stemmed from the fact that the mushrooming of outsourcing vendors in India directly contributed to major wage inflation in the country, and there was also a perception emerging that the pool of skilled resources in India was drying up.

However, US-based research firm Everest has conclusively dispelled all these storm clouds. In its "2006 Global Sourcing Market Update", Everest clarifies that the concerns related to wage inflation and skill shortages were grossly exaggerated, and India continues to enjoy its offshore advantages.

Maneuvering firmly on its tracks, the Indian BPO industry accounts for half of the global business in this arena, and Nasscom has predicted that the industry will chart a growth rate of 40% over the next fiscal year:

The Indian BPO sector is expected to maintain the current export momentum and grow by 35-40 per cent in this fiscal (FY 07) to achieve $8-8.5 billion as against $6.3 billion in the previous fiscal (2005-06).

Industry analysts feel that India will hold its offshore advantages and continue to rake in the outsourcing bucks for the next thirty years. It's certainly "Advantage India"!

Investor Ideas has more information on the current scenario and the future directions that the market could take.

The outsourcing controversy rears its head in Malaysia

In almost every country, human rights are a major concern, and the guardians of civil rights are ever ready to take to task any violation of individual rights. Look at the outsourcing scenario in Malaysia, for instance. No sooner had the Malaysian government announced its policy of using outsourcing companies to recruit Bangladeshi workers, two human rights organizations—Malaysia-based Tenaganita and the Philippines-based Migrant Forum Asia—were up in arms against the statement.

Both these organizations believe that the Malaysian policy will institutionalize and legalize human trafficking and bonded labor, charges that could prove too hot for the Malaysian government to handle.

But it is not only the policy that is under attack. Both Tenaganita and Migrant Forum Asia have also made scathing remarks against the outsourcing companies, labeling them as arrogant and exploitative enterprises that hold the workers to unjust contracts and treat them as bonded labor. It remains to be seen if the Malaysian government can work its way through this opposition and arrive at a consensus—an unlikely result in the present scenario where both parties are at loggerheads.

For more information on the impasse, click here.

Maryland State Highway Administration goes the outsourcing way

You or I may not realize it, but quite a few arms of the government machinery are also attracted to outsourcing. Outsourcing is attractive because it enables you to "manage more with fewer headaches." This premise has worked well in the corporate environment, and now numerous government departments are queuing up in that belief.

The Maryland State Highway Administration has entered into a five-year $44 million agreement with CSC to enhance the Coordinated Highways Action Response Team (CHART) system.

CSC's part of the deal is to standardize a system where the administration is able to meet current and future IT requirements as stipulated by the Federal Intelligent Transportation System committee. Global Services gives more specifics:

Under the new agreement, CSC will provide systems integration, development testing and deployment of the enhanced CHART system throughout the state. Initially, CSC will assist the Administration in a review of its business area architecture to certify all CHART system requirements.

Legal Process Outsourcing: A $25 billion business waiting to happen

In an older post, I had mentioned a Forrester report, which prophesied that India would absorb 79,000 legal jobs by 2015. This theory is now gaining potency because, by all accounts, legal outsourcing is catching up in a big way and becoming a sizeable part of the total outsourcing business in India.

According to CRISIL Research, Legal process outsourcing is a high-potential value-added service area, and India's vantage position is particularly suited to this business module. There is no dearth of law graduates in the country, and infrastructure facilities also lend positively to legal process outsourcing. India is capable of providing the required legal expertise and infrastructure at a cost far lower than would be required in the US scenario. This has attracted several large to medium-sized law firms and corporates in the US to shift business processes to India.

According to Sudhir Nair who heads CRISIL:

The combined revenues from the private law firms and the corporations are estimated at around $4.7 billion. As the industry matures, we expect a substantial increase in the Indian LPOs targeting US corporations.

The Indian LPOs must now realize that it is possible to capture anything up to $2 billion of the global LPO market, provided the industry is able to ramp up its total lawyer strength.

Click here to read more.

Outsource vendors turn journalists!

How often in the past have you struggled over the composition of a press release to highlight your company profile? How often have you amassed a lot of paper research and didn't know where to turn for fine tuning it? And, how often have you thought of launching fancy newsletter for your organization but kept it in abeyance because of a lack of time and know-how?

Well, thank heavens for outsourcing, you can complete all these tasks through a third-party. Outsourcing is no longer confined to the twin pillars of call centers and IT; there are professional service providers who will write, edit, fine-tune, and produce any literature you require—be it something as simple as a company profile, or as complicated as a book on world religion.

This market segment is still in its infancy, but it is certainly gathering momentum and set to sweep across America, Australia, and Britain into India. Yes, India is likely to be at the center of this media outsourcing stage, as it has been for other outsourcing market areas. Rosemary George, of Bangalore-based Flatworldsolutions notes:

Most of the work we are doing is for American and British clients and which deals with press release writing, making newsletters and article submissions. There is no dearth of skilled manpower in this area. India has a large pool of writers and the work today is being taken both by freelancers and specialised media companies.

As The Hindu reports, marketing of Indian entrepreneurs in this arena is going to be critical in taking this outsourcing business to the next level.

Outsourcing Opportunities for Indian Advertising Industry

Recently, I had written a post titled "Media Outsourcing Services in India" that focused on media outsourcing services in India. today, it is the turn of advertising industry. It seems that opportunity is knocking at the doors of Indian Advertising Industry. Now the Indian Ad agencies can go and grab international business in a more focused and organized manner.

The global advertising outsourcing business is estimated at $280 billion. Of that amount, $50 billion is believed to involve creative work and production. Experts started to believe that Indian would become the next hot destination for Ad outsourcing. The Indian advertising industry is estimated at $2.8 billion. However, it has the skilled personnel who work at low price. That will help it to become a global outsourcing powerhouse.

Dept. of Health Awards Outsourcing Contract to BearingPoint

The US Department of Health and Human Services (HHS) has signed a $13.7 million outsourcing contract with BearingPoint, a Virginia-based management and technology consultancy firm. Under the terms of the four-year contract, BearingPoint will provide various program management services including planning support, contract-management support and portfolio management. The company will also provide its health IT expertise as per the requirements.

Read one of our interesting posts titled "Healthcare IT Outsourcing in Europe".

IRS Outsourcing Controversy

The public and intellectual opinion is divided in the United States over the permission granted to the Internal Revenue Service to hire more agents to collect pending taxes. President George W. Bush and his Republican allies are beginning a broad outsourcing of collection duties to private debt collectors. Some people believe that the president and congressional Republicans have a cultural hostility to government and have sympathy for vested business interests.

Evidences suggest that private debt collectors will generate a paltry return to the US government, while adding new IRS agents would produce huge collections. It is strange that despite having the data, the Bush administration is all set to outsource the service to third party companies.

Read my previous post titled "Data Security Tightened in India" to know about data security in India.

Mobile Phone and PC Industries Outsourcing Webinar

Both PC and mobile phone original equipment manufacturers are making extensive use of contract manufacturers to reduce cost and increase efficiency. However, the outsourcing dynamics in the two industries and the roles of Electronics Manufacturing Services (EMS) providers and Original Design Manufacturers (ODMs) in each supply chain vary dramatically.

It is necessary for the users in the PC and mobile phone industries to understand the difference in outsourcing trends between the two supply chains. To address these concerns, iSuppli Corp. is hosting a free Webinar event on August 30 titled "Apples to Pomegranates? Outsourcing Across the Mobile Phone and PC Industries". Leading giants from PC and mobile phone industries will attend the Webinar.

Read our previous post titled "Offshore Outsourcing is Set for a Huge Growth" for more information on outsourcing.

Software Development Outsourcing Revenue in India Goes up

Recently, I had written a post titled "India’s Outsourcing Revenue Is Growing" that informed you about the rising outsourcing revenue in India. Today, the focus is on software development outsourcing revenue. Software Development outsourcing revenue of India has gone up by almost 32 percent and reached US$ 6.6 in the second quarter of 2006. According to reports, more and more offshore outsourcing companies from the USA and the UK are eyeing India for the overseas development solution.

As India has the best quality and highly qualified IT professionals, it has become the most preferred destination for the Western companies. The financial data suggest that exports of information technology and software development services amounted total US$ 6.57 billion (295 billion Indian rupees) in the first fiscal quarter. A large number of western companies are shifting their back-office and other non-core development work to India to focus more on the core business activities.

Nasdaq to Increase IT Outsourcing to India

The Nasdaq has decided to increase the outsourcing of its IT requirements to Indian firms. Nasdaq has already done a bit of outsourcing through contractual relationship with organizations. It has many listed companies to supply these services.

Nasdaq does not feel the need to develop the IT system itself. Rather it has decided to contract those services to firms such as Infosys and Cognizant. Nasdaq will rely on its outsourcing partners to fuel the trades executed through a sophisticated computer and telecommunications network. The network will transmit timely, critical investment information to all users.

Read our previous post titled "Indian BPOs Are on The Prowl to Acquire Overseas Companies", which is relevant to this post.

Reducing Cost Adjustments in Outsourcing Contracts

Many buyers of outsourced services are approaching the contract negotiation process without a full understanding of the issues that negatively affect their businesses. Companies that fail to implement appropriate price inflation mechanisms in outsourcing contract negotiations face risk of losing millions of dollars during the lifetime of a typical contract.

Buyers of outsourcing services often pay more than the standard price because they do not negotiate the impact of economic factors such as inflation. It is necessary for the corporate buyers to understand how future pricing factors will affect the duration of their outsourcing arrangement. Due to the diverse elements in outsourcing service providers' cost structures, the role of labor costs versus non-labor costs should be based on economic cost adjustment formulas. An accurate price inflator will reflect realistic inflation rates for labor, hardware, facilities and other factors.

Read my previous post titled “Offshore Outsourcing is Set for a Huge Growth” for more information on offshore outsourcing.

Mid pharma Outsourcing Pipeline

Mid pharma companies are expected to increase their reliance on products discovered outside the in-house pipeline over the next few years in an effort to boost revenues while reducing R&D costs. Mid pharma has traditionally relied less on externalization. It appears that outsourcing of products has become more prevalent in mid pharma. Experts believe that most of mid pharmas' growth will come from outsourced products. The main externalization strategy mid pharma companies will employ is in-licensing, which involves licensing the intellectual property rights to develop and market a product from another company in exchange for an up-front payment and milestones and royalties.

Read our previous post titled "Outsourcing Managed Security Services", which will give you more information about outsourcing.

Did Outsourcing Raise Level of Wages?

According to the economists in the United States, outsourcing has helped raise real wages for low-skilled US workers. It happened despite the negative publicity and political controversies. There has been a view that transferring US jobs abroad has hurt American workers' wellbeing. However, this charge has been countered by the economists. They argue that wages for the least-skilled jobs has been rising for the past few years, as outsourcing boosted productivity in the organizations. Evidences suggest that the productivity effect helped raise real wages for such workers.

Read our pos titled "Is the Future of BPO Industry Secure in India?" to know about BPO operations.

Right Balance for Outsourcing

Before outsourcing your business, reconsider the base on which you are making the decision. You must examine every process, every management policy, every initiative and the complexity of the current product or service. When there is a competition among the companies, design, quality, cost and customer satisfaction come into fore. While outsourcing their business, companies always focus on these factors.

The central issue of outsourcing is the actual cost savings realized by an organization in comparison with its own domestic costs. The most important factor behind outsourcing is the level of commitment made between concerned companies. The basis of the outsourcing decision should be the result of a balance among performance, values and willingness to dedicate organizations to performance excellence.

Read my previous post titled "Choosing the Right Time for IT Outsourcing" to get some tips on IT outsourcing.

IBM to Offer BPO Solutions for Banks

Recently, I had written a post titled "PSU Banks in India Planning Outsourcing" about how Indian banks are contemplating outsourcing. Now IBM has decided to offer BPO solutions to banks in Malaysia. As competition from foreign players intensifies, local banks are planning to become more innovative to boost profitability. According to IBM Malaysia sources, banks need to focus on their core competencies and outsource other functions such as human resource and payroll to remain competitive. Banks are looking to outsource their service centers in order to boost efficiency and reduce costs. Do you think that outsourcing will really help banks to improve the quality?

IT Outsourcing Slowing Down

Recently, we had published a post titled "The security glitch plagues IT outsourcing". Now our fear comes true amidst the reports that IT outsourcing is slowing down. Experts believe that outsourcing firms will now have to tailor their contracts to each opportunity.

They must be able to show that their outsourcing deals are able to make improvements and cost savings on the service. The security glitches and quality issues have slowed down the pace of IT outsourcing, which is not a good sign. Most businesses have started bringing IT and business process outsourcing contracts back. If this trend continues, then IT outsourcing will be reduced to a considerable extent.

Law Firms to Benefit from Outsourcing

Outsourcing in legal sector is no longer a new word. Many companies worldwide are getting huge benefits from legal outsourcing. Indian law firms can earn up to $4.7 billion by 2011 by tapping into the massive $25 billion US legal off-shoring business. The Indian Legal Process Outsourcing industry targets at two big segments of the US legal sector. They are mid-sized private law firms and the US Corporations.

According to the estimates, the combined revenues from the private law firms and corporations could go up to around $4.7 billion by 2011-12. Read our previous post titled "Law Firms Contemplate Outsourcing" to know more about legal process outsourcing.

According to DNA Money -

Crisil Research suggested that Indian firms must tap US mid-sized or large law firms in the first phase and incorporate in the second stage. There could be a substantial increase in Indian LPOs targeting US corporations as the industry matures, the report said.

Growth in Contact Center Outsourcing Market

Offshore outsourcing is a global phenomenon that has driven the growth in the contact center outsourcing market in Asia-Pacific. The trend is expected to continue to be the key growth driver. Since the contact center outsourcing market in Asia Pacific continue to witness strong growth, the demand for skilled workers is increasing day by day.

Market research studies revealed that revenues in the Asia Pacific Contact Center Outsourcing Market industry covering 13 major Asia Pacific economies totaled to USD 7.2 billion in 2005. It is estimated to be worth USD 25.1 billion by 2012. Today, many enterprises from the US and the UK have outsourced significant portions of their customer care operations to countries like India, China, Philippines and Malaysia. Recently, I had written a post titled “China to Promote Outsourcing Business” about how China is emerging as one of the hot outsourcing destinations in Asia-Pacific region.

Outsourcing Tips for Small Businesses

The promise of saving time and money by exploiting technology and inexpensive labor has driven companies to opt for outsourcing. Experts believe that millions of jobs will be outsourced to overseas destinations in near future. Before outsourcing your business, you must know the strengths and weaknesses of your business. Selecting a vendor is tough for large companies with huge budgets. You can browse through several websites to find a reliable partner. The following websites can be helpful on this regard:

Elance
iFreelance
ScriptLance
Rent A Coder
Get A Freelancer

Most companies get nearly 1000 new projects on their site every week. Before choosing a vendor, make sure that they sign a snag-proof contract. They must agree in writing on an arbiter before disagreements crop up. While drafting a contract, clarify not only the specific services you expect to receive, but also the quality of the delivery.

You can read our old post titled “Choosing the Right Time for IT Outsourcing” to know more about IT outsourcing.

Politicisation of Outsourcing

There have been a series of controversies surrounding the outsourcing of jobs in the United States. While some argue that the US economy gains from the relocation of labor-intensive tasks to cheaper centers, they are still unable to prove that with conclusive evidences. Outsourcing is becoming an increasingly important element of the Indian economy. India has become one of the hot destinations for the US companies that are all set to outsource their jobs.

According to an estimate, offshore delivery of engineering services from India may become a US$40 billion-a-year business by 2020. Outsourcing to India is not just based on cheap labor and English speaking youth. The sophisticated opportunities opening up in the country are attracting the American companies to offshore their business. To know more about the outsourcing business in India, read our old post titled "India’s Outsourcing Revenue Is Growing".

Malaysia to Boost Shared Services and Outsourcing sector

The Malaysian government has identified the shared services and outsourcing industry as a new growth area and plans to give its attention on a priority basis. Malaysia is currently among the top three most competitive locations for offshore services. The country's infrastructure and administrative support with the availability of the necessary skill and competitive cost structure provided the momentum for strong growth in the shared services and outsourcing business.

Malaysian companies have generated huge revenue and provided an estimated high value-added employment for more than 10,000 people. The Malaysian government has decided to focus on capacity building and skill enhancement, which will improve infrastructure and other support facilities. You can have a look at the post titled "China to Promote Outsourcing Business" to know how China is promoting outsourcing business.

UAE: Hot Destination for Outsourcing

After India, Ireland, Malaysia and Philippines, now it is the turn of UAE to join the outsourcing brigade. The Dubai Outsource Zone (DOZ) development was first announced in 2004. The project was the brainchild of Dubai Holding. During the launch of the project, it was not expected that it would be huge success. However, it happened. Demand for space within the zone from both regional and international companies has already exceeded expectations.

The entire DOZ project is spread over 3,000,000 square feet. DOZ is an ideal outsourcing destination for companies because of its strategic location. It is just 15 minutes drive from Dubai Airport and five minutes from Dubai International City. Read our previous post titled "Official Certification for Outsourcing Experts" for more information on outsourcing.

Human Resources Outsourcing Conference

Human Resource Outsourcing is no longer an alien word in the outsourcing industry. In an older post titled "HR Outsourcing Ensures Quality Service", I had written how HR outsourcing benefits the organization. Many top functions of Human Resources continue to be outsourced and is expected to increase further over the next few years. These functions include leave management, learning, payroll, recruiting, health & welfare and global mobility.

While some organizations have renewed their contracts, others are considering to take the plunge. They all are focused on enhanced capability. The HR Outsourcing Conference will be held on 19 September 2006 and 20 September 2006 at The Drake Hotel, Chicago, Illinois.

Hawaiian Airlines Moots Outsourcing

Outsourcing has become a buzzword in the airline industry. You must have heard about the impact of outsourcing in that industry. According to reports, Hawaiian Airlines is planning to take the help of outside companies for certain jobs. It is planning to downsize departments and transfer employees to save money. Hawaiian Airlines' decision is based on its objective of improving both the service and profits.

The airlines may outsource all or parts of its operations in eight groups. It is important to note that telephone reservation is the largest operation it is having. There are about 300 employees in Hawaiian's reservations department. Recently, I had written a post titled "Aircraft MRO Outsourcing Is On Rise". That will give you more information on Aircraft MRO Outsourcing, which is considered a new revolution for outsourcing industry.

How to Select an Inbound Call Center?

Selecting the right inbound call center is a challenge for any company that is seeking to outsource its business. The outsourcing of inbound calls includes cost saving, process management and better customer service. It is important to know whether the chosen inbound call center possesses the capacity and scheduling to handle your calls. You must have a complete understanding of your requirements before investing time in examining inbound call centers. Once you are clear about your requirements, you will be in a better position to make the right cut.

You have another way of determining whether a particular call center is a useful partner or not. You can find this by visiting the site. A visit to the site will help you understand how the company treats its employees and if its staffers are energetic and positive or not. You can also read sample scripts and listen to phone calls. That will present a clear picture about how the call center handles its customers. The most important thing to be remembered is that your preferred inbound call center must have customer service as first priority.

Zurich Bank Finalizes BPO Deal with Infosys

Zurich Financial Services has recently finalized a BPO deal that would replace its existing legacy systems with a core banking system from Infosys. Infosys's solution will allow the Swiss banking company to standardize processes and systems at Zurich Bank. Zurich Financial Services is hopeful to reduce costs by improving process efficiency. It is also expected to reduce duplication and bring products to market faster.

Indian BPOs Are on The Prowl to Acquire Overseas Companies

Indian IT and BPO companies have been indulging in acquisition talks that might bring huge revenues to the country. Not surprisingly, they are all set to acquire overseas companies with lucrative bids. To begin with, Indian dealers have chosen some companies that spend over $500 million. Experts believe that the valuations for companies abroad are attractive. They average less than 1.5 times the revenue multiples. There is no doubt that the acquisition helps acquire clients and domain expertise in selective areas.

Indian IT giant, Wipro Technologies has acquired four companies and is evaluating a few more. Recently, Bangalore-based Subex Systems made the biggest acquisition by buying UK-based Azure Solutions. Other companies that are eying overseas acquisition are BPO leaders Genpact and Transworks. The current trend suggests that Indian IT and BPO companies have realized the potential of overseas acquisition.

Knowledge Process Outsourcing in India

In today's competitive environment, there is a growing trend of specialized skill sets. Now companies focus on their core competency areas and outsource the remaining business. Most companies acknowledge that outsourcing not only minimizes the cost, but also propels the growth of the organization. Knowledge process is one such area that requires outsourcing to bring more effectiveness and efficiency in the process. India is witnessing a high growth in terms of knowledge process outsourcing. Following are the main characteristics of knowledge process outsourcing:

• Excellent infrastructure and security system
• Well-qualified professional having in-depth knowledge and experience in respective fields
• Quality work
• Consistency in quality performance
• Adaptability to various data formats
• High productivity

Companies that outsource their knowledge process have the following tasks that are managed by skilled professionals in India:

• Research and Analysis
• Business and Market Research
• Investment Analysis
• Legal Research
• Finance and Accounting Services
• Educational Services
• Medical Services
• Network Management
• Report Writing
• Content Rewriting
• Data Management

There is no dearth of knowledgeable and skilled professionals in India on the above areas. They produce quality work at a lower price. This is the main reason why knowledge process outsourcing is growing in India.

Outsourcing of Check Clearing System Ruled Out

The Indian government finally allayed the fear expressed by Reserve Bank of India (RBI) employees over outsourcing of check clearing work. Recently, there has been uproar over this issue and RBI employees have threatened to go on a long strike if the government outsources the check clearing work to other companies. The government assured the Parliament that there is no proposal to outsource or transfer the work of national clearing cell activities.

The government sources said that the National Payments Corporation of India (NPCI) would be set up by a group of public and private sector banks under the aegis of Indian Bank's Association. The NPCI will have a strong and viable mechanism of payment. Even after setting up of NPCI, the final settlement of transactions would remain with the RBI.

Outsourcing Undermined Military Self-Sufficiency

Recently, the US Army decided to award military contracts to overseas manufacturers. It has been termed as a disturbing short-term policy that marked the country's growing dependence on foreign nations. The US Army announced that it would spend $3 billion to purchase up to 352 UH-145 helicopters from Eurocopter.

Eurocopter has been delivering its products and services to the US government and commercial operators for decades. Finally, it has broken into the US military market. The Pentagon sources argue that the outsourcing deal will help the US Army in getting good quality helicopters at a reduced price. However, it has definitely undermined the military self-sufficiency of the country. Now it's your turn to give your opinion on this issue. Do you think that outsourcing should be allowed in the US military?

R&D Outsourcing on the Move

Many companies are collaborating with outsourcing providers in a bid to get their products to market faster and cut costs on innovation. A recent study revealed that CIOs and IT directors are increasing relying on the global services market for their research and development. R&D outsourcing is giving companies a competitive advantage over their business rivals. Reduced R&D costs are a top driver for outsourcing. Lower cost is the largest benefit of offshore development. There is no doubt that global R&D is one of the most important benefits of outsourcing.

Choosing the Right Time for IT Outsourcing

Outsourcing has become a "buzzword" in the industry today. Many companies are outsourcing their entire IT operations in order to bring more efficiency and effectiveness. Cost saving is also one of the major factors that drive the outsourcing growth. In the past, outsourcing was used to farm out the undesirable jobs. However, situation is completely different today. IT outsourcing has become a common phenomenon in the software industry. It is important to make a perfect analysis before finding out the right time to outsource your business operation.

While considering the hiring of full-time staff, the HR departments pay close attention to whether or not the employees look skillful and efficient or not. If applicants meet the requirements, they are interviewed in person to judge whether they truly fit the positions or not. Companies that offer IT and programming services, advertise their employees' specialized skill. However, the hiring company rarely verifies this. Many strong management teams justify outsourcing as a mean to focus on their staffs' expertise. This is the correct use of outsourcing.

Outsourced operations have been successful, but not without the involvement of skilled management. Constant supervision and guidance can tremendously improve your business initiatives. Without a dedicated project environment, outsourced services may not work for the companies. If you are going for outsource your IT operations, make sure that you are passing your business into right hands.

Xansa Gets 5-Year HR Outsourcing Deal

In the recent years, Xansa PLC, has emerged as one of the leading outsourcing and technology company. Xansa recent got the first multi-process HR outsourcing deal within the UK financial services sector. It signed a five-year contract with Lloyds TSB. The contract covers HR functions including administration, recruitment and existing helpdesks for training, advice and guidance. Xansa will work with Lloyds TSB in order to develop, host and support new recruitment and management information platforms.

Should Senate Eliminate Outsourcing Tax Credit?

Analysts believe that the United States is in the midst of the most serious economic transitions since the industrial age. The dual challenge of technology and globalization are taking their toll on middle and working-class Americans. Although economic changes cannot be revoked, some of the policies made by the government hurt the local workers. The high tax regime forced many companies to look for other destinations abroad in order to cut their costs to a great extent.

In the past five years, nearly 500,000 jobs have been outsourced to other countries. There is little doubt that outsourcing brings more revenue to the concerned companies. However, they badly affect the local people and results in widespread unemployment. There have been protest and dissenting voices in the United States over outsourcing. People, who are opposed to outsourcing, strongly advocate the elimination of outsourcing tax credit to discourage outsourcing. However, here the question arises of it is viable to do so. Only you can answer.

Manage time, outsource email!

In this time and age, we are all familiar with the value of the adage, "Time is money." All ventures are resource-strapped, and the objective is to maximize output from the limited human resources.

Communication plays a big part in maximizing the output; the quicker you are able to communicate, the more is the yield. But what if an external agency is able to manage communication for you and free your in-house resources for core activities of the enterprise?

Many companies have taken that route by outsourcing their email requirements. Apart from cutting operating costs, outsourcing emails also leaves "both hands free" for your IT department to concentrate on day-to-day business requirements.

There are other potent advantages of email outsourcing. Outsourcing can tell you exactly how much it is going to cost to manage email, so you are better prepared when allocating budgetary needs. It also lets you get away with your technical limitations in email management; your service provider will be tech-savvy and have all the updated strappings necessary—POP3, IMAP4, WebMail—for effective email communication. Most important, you will be backed up by 24x7 tech support from your service provider, and this will ultimately boil down to better customer response.

So, what are you waiting for, go the email outsourcing way, and discover a new management tool; your customers—and your IT department—might just thank you for taking that step!

Click here to read more about email outsourcing.

54 million euros are ours, says Siemens

In a time-no-bar outsourcing deal with US-based Talecris Biotherapeutics, Siemens Business Services will provide the entire IT infrastructure requirements of Talecris for 54 million euros. Siemens will support all locations of Talecris for this lump sum figure. EURO2day reports:

SBS will run Talecris servers, operate the company''s network and provide desktop services and helpdesk support. SBS will also provide an application management service for Talecris.

Outsourcing: The double-edge winner!

Outsourcing has led to sharp, and often hysterical, reactions from the West: Governments talk about it, the U.S. President talks about it, people talk about it, and we have even heard reports of people committing suicide against the outsourcing trend. But let's get away from such drastic reports, and turn to the main players in the business—the outsourcers and the vendors.

Obviously, the outsourcers have considerably gained from outsourcing, and the rising graph of outsourcing vouches for that. More and more companies are taking a ride along the outsourcing path, and several are renewing their outsourcing contracts, much like a child at a game show: "I want that ride again!"

The outsourcing vendors in India are also merrily tagging along the path, and busy in ramping up their resources and infrastructure. From one "tech-city" in Bangalore, we hear of outsource service providers diversifying to other metros and even smaller towns, contributing to the infrastructure in those cities. Chennai in southern India is the "happening place,” as I discovered during a recent visit.

Let’s take an example. British insurance major Aviva, the world's fifth largest insurer, has declared an operating profit of £1.699 billion for the first half of 2006. As DNA India reports:

Total Indian sales increased strongly to 173 million pounds from 50 million pounds (Rs 443.47 crore) in 2005, Aviva said in its interim result for six months ended June 30.

In India, Aviva Life Insurance is a 74:26 joint venture with India's Dabur Group. Early in 2006, Aviva went into a partnership with Centurion Bank of Punjab, and now the partners have 22 distribution agreements between them.

Outsourcing in India has many other such success stories, where both the outsourcer and the vendor emerge clear winners.    

Outsourcing from within: Specialized units draw local health outsourcing business

In an older post titled Medical Outsourcing Catches On, I mentioned the rampant outsourcing of health services from U.S. hospitals to India. However, that is only one face of outsourcing. Another facet that is emerging now is local health outsourcing within India to counter lack of specialization.

For instance, when a patient goes to a hospital for a diagnostic test, it is likely that the test will be outsourced by the hospital to another unit, which has a specialized capability to carry out the test. This mode of health outsourcing may be right across the street, or in another city.

For complicated health-checks, hospitals in remote areas in India are particularly benefited by this trend, because they can now outsource the test requirement to a high-end testing laboratory located in a metro.

The patient is ultimately the winner, although —ironically—the patient rarely gets to know that his or her health has been outsourced!

The Financial Express has more.

UK Hospitals Outsourced Patient Notes!

For a long time, we have been advocating patient's rights and the protection of their privacy. However, it seems that some hospitals are aiming to reduce costs at the expense of violation of patients' privacy. Two Birmingham hospitals recently sent patients' notes to India, New Zealand and South Africa for transcription in order to cut costs. The Selly Oak Hospital and Queen Elizabeth NHS Hospital are the two hospitals that outsourced administrative work.

Their move has been severely criticized by health officials across the country. They believe that that besides patients' privacy, outsourcing may lead to errors such as typing errors that may risk patients' lives. What do you think on this? Should the patient noted be outsourced to different countries? What should be the main concern here - patients' well being or cost saving?

Outsourcing of Fire Services Put Off

For a long time, the decision over the future of local fire services outsourcing in Half Moon Bay has been pending. It was expected that finally the voting would take place at the meeting of the Half Moon Bay Fire Protection District board of directors this week. However, it was put off until August 17.

The controversy cropped up after the July release of a San Mateo County Civil Grand Jury report that recommended that the district's administrative, training and fire prevention services to be contracted to another fire department by December 31. There have serious differences over this issue among the board members. In addition, employees of the fire service department are also opposed to such a move. Now, everyone is keeping the fingers crossed until August 17, when the final voting will take place.

Aircraft MRO Outsourcing Is On Rise

The global aircraft maintenance, repair and overhaul (MRO) market is growing at a faster pace. According to reports, the total amount spent on MRO exceeds the value of new aircraft production. The entire MRO outsourcing market is estimated at $49 billion. The North American aircraft MRO market is outsourcing almost 55 percent of commercial aircraft MRO work.

Interestingly, the North American aircraft MRO market covers 41 percent of the global market. There are many investment and growth opportunities in the North American Aircraft MRO market and the companies are cashing on it. It has been predicted that the total revenue in North American MRO market will reach $26.08 billion by 2010. Currently, it stands at $20.09 billion.

Outsourcing Raises Uproar at Bank of Ireland

A recent report raised serious concerns in Bank of Ireland and its trade unions. It has been reported that technology jobs outsourced by Hewlett-Packard (HP) to the bank could be shifted to India and other countries. In 2003, HP signed a contract with the bank to manage its technological needs for a seven-year period. Now it is thinking of shifting some jobs to India. The confidential report was leaked in the media. It triggered a controversy and annoyed Irish Bank Officials Association (IBOA) and the trade unions.

HP Extends IT Outsourcing Deal with Canadian Bank

Hewlett-Packard Co. (HP) has extended the It outsourcing deal with Canadian Imperial Bank of Commerce (CIBC). That means HP will continue to manage IT outsourcing tasks for the bank. The deal was renegotiated recently. The deal will mark another step in HP's effort to compete with its rivals for enterprise information management contracts. The new deal renegotiates that contract to add $700 million and four additional years. It will bring the combined value to $2.2 billion over 11 years.

According to Computer Partner -

HP began managing infrastructure services for CIBC in 1998. Since then, bank users have demanded new technologies such as Internet banking, greater use of bank branches and cash machines instead of main offices and a greater need for security such as fraud detection, he said.

IT Outsourcing Firm Achievo to Merge with Software Developer BBX

IT outsourcing firm Achievo has decided to enter into an agreement to merge with China's software development firm Beijing Beifang Xinyu Information Technology Co Ltd (BBX). The merger will make BBX a wholly owned division of Achievo. With 450 employees, the merger will be Achievo's largest acquisition in terms of headcount. BBX provides software development and IT services to Japanese companies with offshore outsourcing services in China.

Coal Ministry in India Rapped for Outsourcing in CIL

A recent government decision on outsourcing has raised serious controversy in many quarters. Recently, the Indian Coal Ministry has allowed Coal India Ltd (CIL) to outsource certain activities of production. Now a parliamentary committee has questioned the Coal Ministry's rationale in the whole matter. It rejected the ministry's contention that CIL would maximize its profits through the outsourcing of staff and infrastructure.

The committee also expressed its dissatisfaction over the acquisition of land for setting up the outsourcing center. Don't you think that foreign investment and outsourcing activities in India are being halted in India because of political differences? I am sure that the whole issue has become controversial, as political parties in India are into the habit of opposing each other's decision.

Westpac Bank made Security Blunder in Outsourcing Deal

When Westpac Bank made the IT outsourcing deal with IBM GSA in 2000, it was expected that the deal would help the bank in achieving higher quality and productivity. Now it seems that it did not get what it expected. Recently, Westpac Bank admitted that IT security has been breached several times in the IBM center and the bank had to suffer for it.

Although Westpac is not regretting its decision of outsourcing its operation to IBM, it admits that it has made a blunder by outsourcing security as part of the outsourcing contract. According to the bank sources, it has struggled to get security and staffing levels back on track.

CAD Outsourcing Industry in India

Until now, you have heard about several sectors that have outsourced their work to India and other destinations. Now CAD has been added to that long list. CAD outsourcing services have been a major sector where Indian companies have achieved success. Leading firms belonging to documentation design and AEC are utilizing the Indian talent in CAD. Most of these firms are from the United States, the United Kingdom and other European countries. These companies are enjoying the benefits of cost effective production as well as the expertise developed by India in the past two decades.

India’s Outsourcing Revenue Is Growing

In the past few weeks, there have been rumors and speculations about the outsourcing business in India. Many people went to the extent of saying that outsourcing boom was over. However, the latest report suggests that India's outsourcing revenue rose 32 percent to reach US$6.6 billion in the second quarter of 2006. There is no doubt that India remains the most preferred destination for Western companies to shift their back-office work. This report will definitely boost the confidence of Indian outsourcing industry.

The security glitch plagues IT outsourcing

When we talk about IT outsourcing, we essentially talk about huge databases that are confidential and well protected by vendors. However, as I mentioned in an earlier post on this forum, security is emerging as a major concern for outsourcers. In spite of the tacit understanding between vendor and outsourcer that data is confidential, sensitive information has managed to trickle out, beating all security precautions.

The threat to security in outsourcing is a global phenomenon. It has happened in India, and it is happening elsewhere, although the implications are slightly different. Take, for instance, the high-profile outsourcing agreement between Westpac Bank and IBM GSA. Westpac is regretting the fact that it outsourced its security as part of the 10-year, $4.3 billion IT outsourcing pact.

As a result of outsourcing its security management back in 2000, Westpac was left with only one on-house person for information security at the bank. It is only in the last three years that Westpac is beginning to get a grip on the situation. However, it will take much longer for the bank to get rid of the damage to its reputation. As Westpac's chief information security officer and CIO of enterprise services David Backley says:

If cybercrime and other forms of fraud erode trust where will we go? We do not want a loss of confidence in new banking channels.

IBM, your comments, please!

Computerworld has the full story. 

"Engineered in India": India waiting to cash in on global engineering outsourcing

India, already spearheading the IT outsourcing market, is now set to expand services in engineering services. Globally, the highest spend in the engineering industry comes from powerhouses such as the US, Germany, and Japan.

According to Nasscom, the offshoring activities from these and other countries is likely to soar up to $150-225 billion by 2020, and India is well-positioned to grab 25% of this figure:

Engineering services offshoring could help create 150,000 to 200,000 additional jobs, up to 1,000,000 with multiplier effect. India needs to invest now to yield the required number of engineers by 2020, the report said.

The engineering market is a fragmented one with high-tech/telecom occupying 30% of this space, followed by automotive (19%), aerospace (8%) and utilities (3%). India is targeting the high-tech/telecom and automotive sectors, where outsource vendors find themselves on a strong footing in terms of both infrastructure and expertise.

The Financial Express has more details on the Nasscom report.