Outsourcing Times

Welsh Water to revamp IT systems in multi-outsourcing contract

CapGemini, LogicaCMG, and TCS will seek to transform the business processes and IT systems at UK utility Welsh Water in a £100 million outsourcing contract. The outsourcing partners will bring about comprehensive hardware replacements and implement the fully integrated SAP enterprise resource planning system.

The outsourcing move is expected to bring Welsh Water on par with state-of-the-art water technology, and the next three years will see the utility train 2,500 employees so that the new system is put to its optimum use. Vnunet quotes head of IT Fraser Nairn:

In the past, we have not invested a great deal in IT, and we want to update all our systems to give much better services to our customers and bring big efficiencies into the business.

Outsourcing your insurance

Do not be surprised if your insurer is looking to outsource services to a third party to improve operational efficiency and enhance growth opportunities. According to a report by Dublin-based consultants Research and Markets (R&M), outsourcing among insurance companies is a growing trend.

R&M based its conclusions on interviews conducted with insurers from the American continent, the Asia Pacific region, and EMEA. More than 50% of the interviews use BPO-based insurers.

The bulletin released by R&M, and quoted by Insurance Journal, goes on to say:

The horizontal processes such as HRO, F&A and CRM continue to grow significantly despite their dominance in terms of absolute usage. However, the fastest growth going forward will be in the industry specific processes such as claims processing and policy administration.

IT heavyweights discuss the outsourcing flight path

As we have seen in an older post titled "Western European IT outsourcing bounds ahead through mega deals", it is least surprising that IT continues to be the one industry that is making rapid strides, attracting many offshore mega deals. India is very much a part of this world phenomenon. 

This was reflected at the IT conclave organized by the Industrial Interaction Committee of the MBA program at IIT Kanpur, where several of the top IT heavyweights traced the development of outsourcing in India from its days of infancy to its present mature state.

Mr. Ramakanth Desai, Senior Vice President, Business Strategy and Innovation at Wipro, reflected on the initial phase when cost arbitrage was the key attraction that Indian IT players had, and looked at the status today when big deals are being struck by service providers in India. The BPO industry obviously continues to play a major role in the paradigm shift, with a growth rate of about 50% per annum.

Other speakers focused on issues such as the global mindset of Indian managers for a vibrant outsourcing industry, project management as a key to the success of the IT industry, the utilization of IT as a strategic tool for increasing business competitiveness, and the rather sordid tale of corruption in the IT industry.

For more details on each of these subjects, click here.

Fiserv Inc. to provide core banking services to Denmark State Bank

In an older post, I mentioned the high dependence of investment banks on outsourcing. In fact, outsourcing in the banking sector has been on a steady growth path across the globe.

When the time came to have a relook at its outsourcing partner, Denmark State Bank in Wisconsin opted to go for Fiserv Inc., rather than renew the contract with its existing service provider.

It's really the requirement for change that has prompted Denmark State Bank to opt for Fiserv Inc in the place of its current service provider. The Bank officials assert that the Premier core capability of Fiserv is a better option that enables the bank to access all customer data from a single application without giving up functionality requirements.

The Fiserv clearing network will posit the bank pretty well to create substitute checks as and when required and extract more mileage from the deal. Finextra reports on Fiserv's Information Technology Inc. (ITI) business unit:

Available for both outsourced and in-house environments, ITI's openly integrated software suite offers products for virtually every function, including Internet banking, enterprise content management, executive intelligence, relationship management, branch automation and core accounting, all available on the industry's most popular hardware platforms.

Fuel, food, and outsourcing come together at Shell

When you visit a gas station, it is no more a mere matter of filling up your vehicle. The modern marketing technique has taken over, and you should not be surprised if you get several fringe services to go with the fuel.

For instance, you could walk into the food outlet that is invariably a part of fuel stations these days, and bite into an appetizing snack.Thus, fuel and food go hand in hand these days. However, managing the food outlets at fuel stations is an important cog in the wheel.

In Bulgaria, Shell has 85 filling stations, and the company has now decided to outsource the management of the food outlets in at least 60 of these stations to the ice cream company Jimmy's. Under a five-year contract, Jimmy's will add the jest for food at the select Shell outlets across the country. According to a news report:

The management of the Select outlets, the brand under which Shell operates its food service stations, would represent a new business experience for Jimmy's. The company has so far operated as an ice cream producer and owner of a chain of ice cream parlours.

Swaziland government urged to outsource advertisement campaigns

The Swaziland International Trade Fair (SITF) is a mega event for the country. However, a meeting of exhibitors recently highlighted the need to advertise and market the event through outsourcing.

According to event coordinators, the business aspect of the fair needs to be emphasized, and this can be done by outsourcing the marketing of the event to subject matter experts.
According to the Swazi Observer, proper advertising can shift the focus of the trade fair from soccer and fun games to more serious business opportunities for the exhibitors.

Malaysia: Vehicular traffic in outsourcing

This is not the first time we are talking about outsourcing in Malaysia. In an older post titled “Malaysian Government appoints Outsourcing agents”, I mentioned the Malaysian government’s urge to stand strong in the Asian outsourcing market after India and China. The good sign is that the Malaysian government is taking the initiative in establishing the thread of outsourcing in the country.

For instance, look at the recent proposal of the government to outsource ambulance services to the private sector. At present, the ambulance fleet consists of 1000 vehicles, and this is likely to be expanded by another 800 in Ninth Malaysia Plan phase.

The move is to tackle the twin problems of a paucity of trained hands and the task of maintaining the vehicles. The success of the privatization move rides on the availability of appropriate rates that do not burden the government overmuch.

The Star has more details.

Epic Games goes on the outsourcing hunt

Outsourcing in the gaming industry has already been the subject of a couple of our earlier posts. While one of the posts stressed the emergence of India as a leading destination for gaming outsourcing, the other post brought out the fiscal benefits of outsourcing in this sector.

The outsourcing phenomenon is also catching up with Epic Games, which has come up with an outsourcing division based in Shanghai to build assets for its games and also to identify and pursue third-party developers. The justification for the move is the advantage of utilizing cheaper labor for making assets.

Click here for more information.

Millstone Medical Outsourcing expands customer base

In an older post titled "Medical outsourcing catches on", I mentioned the growth of medical outsourcing. Here is a somewhat related news story.

Millstone's continuum of start-up solutions, integrated services, and contract packaging services have made the company one of the top outsourcing partners for orthopedic companies. Its wide range of services has recently attracted five medical device companies, which include Doctors Research Group, Inc., DVO Extremity Solutions, and Aesculap Implant Systems, Inc.

Joyce Ludwig, a Quality and Regulatory Consultant for Aesculap, sums up the advantages of tying up with Millstone:

Finding an outsourcing partner who has top-of-the-line operating space and the necessary experience to handle a function as critical as sterile packaging is not an easy task. We were impressed by Millstone's clean room facility and packaging capabilities and are pleased to have found a partner we can trust.

Yahoo Finance has more on the story.

Alsbridge in line for twin National Outsourcing Association awards

If all goes well, representatives of Alsbridge—the independent advisors on outsourcing, shared services, and offshoring—could be walking away with the Advisor of the Year and Outsourcing Professional of the Year awards on October 12 at the NOA award ceremony in London.

The award for Outstanding Advisor could go to Alsbridge because of its four-volume Practitioners Guide to Shared Services and BPO, the highly acclaimed Tripartite Charter for successful deal negotiation, and the recognition by the OGC for the Catalist Framework Agreement for Outsourcing Advisory.

The other award for the Outsourcing Professional of the Year could go to Howard Spode, Principal with Alsbridge Europe. Spode has played a key role in new business delivery and client-side advice for outsourcing/offshoring strategies.

For more on the achievements of Alsbridge, click here.

AT&T boosts U.S. workers

I mentioned in an older post about the sustained outsourcing phenomenon among telecom companies. The benefits of outsourcing in this sector are there for all to see, and it is little wonder that telecom players are riding high on the outsourcing wave.

However, in a significant reversal of its earlier decision, telecom giant AT&T has decided to bring about 2,000 unionized customer service jobs back to the U.S. Thus, contrary to the popular belief that offshoring is inevitable and a one-way ticket, the AT&T move gives an added credence to the workforce in the U.S.

Quite obviously, the build up of domestic pressure led to the reversal of its outsourcing policy. The major chunk of the pressure came from the Communications Workers of America (CWA), which was particularly aggressive about pushing for U.S. jobs.

However, CWA doesn’t stop its campaign only at the offshore factor. As Line56 reports:

AT&T had promised that CWAers would have opportunity and access to the jobs of the future, but union members are pointing out that much of this work—running video hubs, installing and maintaining Internet routers and hubs and other jobs—is being performed by managers and contractors.

Schools before, Universities now: On with the outsourcing bandwagon

Outsourcing administrative processes by educational institutions is nothing new. On this very forum, I reported on the practice of outsourcing food and transport components by school authorities. Although the outsourcing efforts in schools have met with roadblocks, the idea now appears to be appealing to higher educational institutions, such as universities like California Coast University.

Indiana University officials are debating whether to invite a private operator to look after the 600-odd school vehicles that are used on the Bloomington campus. While a decision is expected by the year-end, the outsourcing wave is also likely to spread to the operation of campus bookstores as well. At least eight other support areas are also being targeted for outsourcing.

The move toward outsourcing can swing one way or another, based on the raging debate now on between board members: Should the university be accountable for its spending, or should it decide to turn out people to save a nickel?

For more on the debate, click here.

Rationale behind the IT Outsourcing to India

Outsourcing work to developing countries like India is becoming the order of the day.

Apprehensions apart, as individuals have we analysed the factors that add fuel to this fire of outsourcing to India, lets get a deeper into this and analyse the situation.

As per the reports from itoutsourcingindia, the factors that re-iterate the essentiality of outsourcing to india can be summarized as follows:

• Abundance of human resources with the required technical expertise and excellent communication skills.
• Economic factors are another add-on.
• Highly reliable communication lines provided by VoIP service providers pave way to uninterrupted communication between countries.
• The time zone provides a helping hand for getting our things done at India during our late night hours.
• Adherence of Indian IT firms to global quality standards like SEI CMM, PCMM and Six Sigma Practices
• Tax deduction offered by Indian government to pioneering ventures in the field of Information Technology.

And lots more......

Click here to know more on IT outsourcing to India.

Walter Reed Outsourcing Blocked

Recently, a bill was produced in the Senate that sought to block spending on a contract for operations support services at Walter Reed. However, the bill fell through in the Senate. The House already passed language to keep the Army from moving forward with a plan to transfer work that is being done at Walter Reed. Had the Senate passed the bill, all the spending on the contract would have been blocked. However, it would not have prevented the Army from carrying out a new public-private competition for the same work.

Read my previous post titled "Outsourcing Tips for Small Businesses" to get outsourcing tips for small businesses.

Privacy Concerns on Legal Outsourcing

In a recent post titled "Law Firms to Benefit from Outsourcing", I had mentioned about the benefits of legal outsourcing. Now there are some concerns over the legal process outsourcing. Outsourcing certain types of legal work to offshore destinations has become a common practice in the United States. However, there are already concerns about how it would affect issues such as privacy. By outsourcing legal work, law firms are dealing with people in another country who are not subject to the US or Canadian law. That might create many problems in future.

The overseas lawyers are not very close to the work produced. However, they remain responsible for it. Outsourcing has serious limitations, as there are several limits imposed by privacy legislation and solicitors. Another concern is regarding the authority of the client company over the offshore workers. Since they are contractual workers, the company may not be able to dictate its terms and finally end up with heavy losses.

Bio-outsourcing is Booming

The bio-outsourcing market is booming, thanks to the benefits of outsourcing for the biomanufacturing organizations. Many biomanufacturing companies are outsourcing their operations to offshore destinations. According to estimates, over 50 percent of biopharma companies will outsource at least some aspect of their biomanufacturing activities. The reason is clear. Biomanufacturing is a complex, costly and labor-intensive process. Ongoing labor shortages and increasing costs of building biomanufacturing facilities have forced many biopharma firms to turn to outsourcing for help.

Read my previous post titled "Are You Looking to Outsource?" to get some tips on outsourcing.

Hospital Outsourcing

Bangalore-based research BPO firm BrickWork has taken a project that is entirely a new concept in India. The project is outsourcing of hospital management and administration. The company has signed a contract for a 300-bed hospital project called the Cauvery Medical Center in Bangalore.

Under the terms of the contract, BrickWork will manage the hospital, recruit doctors and nurses, put in IT systems, procure medical equipment and run the hospital for five years. The US-based investors are putting in Rs 150 crore into the project. BrickWork is expecting that its network of 175 medical professionals can refer the patients to this hospital in Bangalore.

To know more about mid pharma outsourcing, read my previous post titled "Mid pharma Outsourcing Pipeline".

Future of Outsourcing

Outsourcing is expanding its reach in terms if industry and geography. Companies that invest in outsourcing are growing in large numbers. Their individual needs are all similar. They just need to reduce overheads as much as possible. Outsourcing in automotive, energy, healthcare, technology and financial services markets is gaining momentum. Outsourcing brings multiple benefits to the firms. It enhances speed and efficiency. Outsourcing experience also enables the companies to gain expertise in new geographic areas into which they wish to expand. If the current trend will continue, outsourcing industry will have a great future.

Read my previous post titled "Offshoring Risks" to know more about risks associated with outsourcing.

Dell's Outsourcing Initiatives

Dell is planning to change its business strategy by outsourcing most of its services in order to expand its operation across the globe. Traditionally, Dell has been US-centric. However, now it wants to focus on other countries that have emerged as top IT and Software hubs. The company will reduce the number of services it currently provides in-house. Dell is expanding into growth markets by building new plants in countries like Brazil, China, India and Central Europe.

My previous post titled "Reducing Cost Adjustments in Outsourcing Contracts" gives useful information about cost adjustments in outsourcing.

Jazz Semiconductor to Increase Foundry Outsourcing

Jazz Semiconductor will increase the proportion of its outsourcing to China-based foundries to 60% of the company's total output in the future. Jazz has taken a cautious approach to expand its own capacity. It will widen its collaboration with China-based foundries Advanced Semiconductor Manufacturing Corporation (ASMC) and Hua Hong NEC. About 80% of Jazz's output is from its own facilities and 20% from China. However, in future, the proportion of outsourcing to China will increase to 60%.

Read my previous post titled “China into Service Outsourcing”

Outsourcing of Professional Blogging

Recently, I have gone through an article by Wayne Hurlbert that highlighted the benefits of professional blogging. Professional blogging has a bright future. It is usually done by a paid writer. Most companies depend on blogs to increase their revenue and make their presence felt on the global arena. However, blog owners may not have the required knowledge, research skills or expertise to write blogs on a regular basis. Hence, they prefer to hire freelance writers or bloggers to do the work on a lesser pay.

Freelancers who stay at different locations do such work for a meager amount as compared to the revenue generated by the companies from these blogs. Business blogs have become more common on the blogging sphere. A business blog increases company revenue over time through marketing and relationship building. Even the task of blog writing is challenging for writers. In today's competitive market, only attractive and informative blogs can make the cut. Therefore, companies are outsourcing the entire blog writing operation to experienced freelance writers or bloggers.

Read our previous post titled "Growth in Contact Center Outsourcing Market" to know more about outsourcing market.

Employees in Los Angeles Protest against Outsourcing

Recently, I had written a post titled "Did Outsourcing Raise Level of Wages? where I mentioned about the impact of outsourcing on wages. It seems that the debate has been intensified. Thousands of county employees gathered outside the Kenneth Hahn Hall of Administration to protest against low wages and outsourcing of work. They believe that outsourcing has affected their wage structure.

Members of Service Employees International Union Local 660 marched up and down Temple Street with slogans and posters. The union represents about 46,000 county employees. The union's contract is set to expire at the end of the month. However, the employees expect that both sides will agree to a new contract before the expiry of existing contract.

Outsourcing of Analytical Laboratories

According to research studies, outsourcing of analytical laboratory market is growing at a rapid pace. It is expected to grow further over the next seven years. However, small laboratories are in danger of declining. According to a report published by Frost & Sullivan, the revenue generated by the analytical services market in the US was $603.1 million. It registered a significant increase of 2.9 percent in the first two quarters of 2006. The market is expected to reach $743.3 million by 2012. This boost in the analytical market is driven by steady demand from pharmaceutical companies.

Our previous post titled "Right Balance for Outsourcing" will give you useful information about outsourcing.

Source your HR outsourcing needs—on the Internet!

We all know that the Internet is a potentially a "high-gain, low-risk" marketing tool. Any company that launches its official website gets unlimited exposure, and has the best chance of showcasing its wares.

The investment is limited and, in most cases, a one-time cost. No wonder, the Internet is increasingly being used as an advertisement forum on the global scale. In this scenario, you can hardly expect the outsourcing vendors to lag behind.

South Florida-based HR consulting firm Employers Rx LLC has launched a website where potential clients can identify and process their HR outsourcing requirements. It's akin to a one-stop shop, where visitors can compare services in key areas, and then request quotes from selected companies that offer the desired solution.

Here's what the company has to say about the venture:

Employers Rx LLC is a national HR Outsourcing consulting firm. Our focus is helping businesses find the right HR outsourcing solution for their needs. We assist companies with 5 to 500 employees to be more profitable by outsourcing their non-productive employee management functions, saving business owners time and money.

Outsourcing goes extra-terrestrial

It's truly the era of outsourcing. After carving a big pie for itself in industry segments catering to the material requirements on the ground, outsourcing is set to cater to requirements in outer space. The Indian Space Research Organization (ISRO) is now turning to the outsourcing way by farming out its satellite and rocket development work to private companies.

If all goes well, private companies will soon be building entire satellites for ISRO. The step has become necessary because of the increasing demand for putting satellites into orbit every year.

It is interesting to note that the recent crash of the GSLV satellite was because of a mechanical fault in an engine built by a private firm. However, this doesn't seem to have deterred ISRO in its outsourcing program.

ISRO has already short listed eight companies—including industry leaders like L&T, Tatas, Mahindra and Godrej—and in the next few months, proposals from these companies will be reviewed and finalized one way or the other.

IBNLive has more on the story.

Government must pitch in to boost EPO

The engineering industry is an important part of India's manufacturing sector, and is poised to attain new heights in the foreseeable future. According to a report, the Engineering Process Outsourcing (EPO) market in India can potentially rise to US$ 40 billion by 2020, which will more than double India's market share in this category.

However, this is all mere target practice. To get the actuals up there, the government needs to come forward with heavy investments in the EPO sector. EEPC Chairperson Rakesh Sharma has struck the right cord by stating that the government needs to address industry deterrents such as taxation issues, so that the Indian EPO sector can sharpen its competitive edge.

For more information, click here.

Outsourcing also creates jobs!

You and I have heard of the eternal complaint that outsourcing kills onshore job opportunities. But here is a bit of news that will be music to the ears of many pro-outsourcing quarters. West Corporation of Omaha is expanding operations to Wausau, where it will generate about 300 full-time jobs with a wage structure starting at $12 an hour.

West Corporation provides outsourced communications solutions to global clients, and the company has kick-started its new operations in Wausau by initiating a training program for the first batch of 130 employees. The following year and half will see other batches being added to the program, in readiness for the outsourcing operations.

According to Associated Press, West Corporation hopes to build its client base by establishing a business-to-business sales pitch with an office supply firm.

Pharma companies turn to Asia for drug discovery outsourcing

In an earlier post, I had mentioned the possibility of the pharma outsourcing market touching $53bn by 2010. Now let's focus on a particular aspect of this outsourcing space—the burgeoning drug discovery marketplace.

The availability of drug discovery services in Asian countries at a fraction of the cost prize operating in the West is propelling pharma companies towards India and China. There is also a growing perception that the quality of CROs and pharma firms in India and China is constantly setting new standards, and this works with the cost factor as a lethal combination against other competitive geo-polities.

The drug discovery requirement is growing at a phenomenal rate of 50% every five to seven years, and most of the business opportunities are coming Asia’s way; Eastern Europe is the only other aspiring playfield that enjoys an increasing patronage of pharma companies for their drug discovery services.

However, India and China are still to overcome hurdles such as IP protection, trust, honesty, and transparency. India enacted the Patent Protection Act in 2005 and conforms to the TRIPS agreement. It is only a matter of time before multinationals based overseas are satisfied that their intellectual property is safe in India; once that is achieved, there is no stopping Asia from bagging the lion's share of the drug discovery trade.

A new study by Kalorama Information has more on the growing drug discovery market.

Tech service provider SI International bags $138 million contract

In an outsourcing agreement that will be spread over ten years, the US Patent and Trademark Office has opted to grant its pre-grant publication classification services to Reston, Virginia-based SI International Inc. The deal has pushed the value of SI shares upwards to $28.31 in NASDAQ trade. Reuters reports on how SI plans to execute the deal:

The company said it will recruit and train about 150 staff for the contract, and its new facility will be located in Harrisonburg, Virginia.

Sluggish mood could cost India its outsourcing advantage

The sooner Indian outsourcing vendors emerge from their complacency, the better for the market. Having carved out a sizeable portion of the global outsourcing market, Indian vendors seem to be sitting back on their success, making little or no effort to cover fresh territory. Take the field of HR outsourcing, for example. Out of an estimated $80 billion global HR outsourcing market, India accounts for a miniscule part of the pie.

The biggest fear of HR outsourcing companies in the West is data privacy and data security. However, the security aspect doesn't seem to figure high enough on the priority list of India's outsourcing service providers. As Business Standard reports, the lack of data privacy concerns has kept most of the HR outsourcing bigwigs away from India:

The biggest problem—and this is why the HR outsourcing industry in India is on the back foot—is the government’s and the industry’s failure to tackle issues like data security and data privacy. Most foreign companies insist that their outsourcing agreements contain detailed and precise contractual specifications regarding data privacy and protection. This is where Indian HR outsourcing companies face a major handicap.

Then, there is the other aspect of human resources—Indian salaries are rising at 14% per annum, and this could even out the positive incline that Indian vendors are enjoying at the moment. India's cost advantage might disappear in a few years' time.

Before that happens, Indian companies need to pull up their socks and tighten other business processes, such as the security concerns, so that they stay afloat—and swim—in the global outsourcing market.

Visanet and EDS: Outsourcing deal through decades

Over the next ten years, the Plano-based tech company EDS will continue to provide ITO and BPO services to Visanet, a credit card services provider based in Brazil. The new contract is worth $209 million, and is an extension over the existing agreement between the two parties.

What is interesting to note is that the two companies have been associated over the past ten years; this is certainly turning out to be a long-term association. Global Services reports:

In addition to existing services, EDS also will provide call center support to assist Visanet merchants with point-of-sale equipment-technical support. The call center handles more than 450,000 merchant calls per month.

Outsourcing: Immature past, future perfect?

Outsourcing has almost become a compulsion in every industry. The premise on which outsourcing functions is that it reduces overhead costs and eases the pressure on in-house resources.

However, the experience of outsourcing business processes has not always been a positive one for enterprises. In an effort to reduce overhead costs, companies have been forced to sacrifice quality of service, and sometimes even lost out on customers in the process.

Market analysis firm Datamonitor reports that sales force outsourcing is most common in the pharmaceutical industry, while the concept of BestShoring—a strategy that tailors specific customer care needs to locations that are best suited for these functions—is picking up momentum.

Outsourcing is a constantly evolving process, and the lessons of the past guard against a repetition of the same mistakes in the future. As TMCnet reports:

Outsourcing can offer the company significant benefits in many areas, but the entire picture must be examined and understood before a move toward outsourcing can take place.

The US Gained From Outsourcing

There has been much hue and cry in the United States over the issue of outsourcing. Many people continue to oppose outsourcing saying that it would hurt the domestic workforce. However, according to the head of the US Chamber of Commerce, the United States has prospered by outsourcing its jobs to offshore destinations like India, China and Philippines.

Refer to my previous post titled "Is the Future of BPO Industry Secure in India?", which focuses on the future of BPO industry in India.

Economists in the country believe that the US cannot withdraw from the market and close operations just to protect its workers. The advantages of outsourcing should not be undermined at any cost. The statistics of the Federal Reserve Bank of San Fransisco revealed that out of every dollar of costs the US moves offshore, a net benefit of USD 1.12 to USD 1.14 are brought back.

Offshore IT Outsourcing

You must have heard about risk factors associated with outsourcing. Often companies overlook these risk factors and face problems with the processes in the end. Risk is natural in strategic business initiatives. It increases when it involves two organizations that are involved within different geographical and political boundaries.

Offshore IT outsourcing involves special emphasis on Information security and risks associated with loss of control over strategic business process. Frequent audits and analysis can help you in maintaining a continuous supervision over your vendor. To ensure better vendor management, you need to influence the communication methodology for offshore software development.

Get some tips on outsourcing by reading my previous post titled "Outsourcing Tips for Small Businesses".

Offshoring Risks

Domestic outsourcing and offshoring share most risk characteristics. A more complicated chain of control incur when offshoring financial services and related data may create new risks when compared to domestic outsourcing. Offshoring introduces an element of country risk to the outsourcing process. Significant offshoring risk areas include:

• Country Risk
• Operations Risk
• Compliance Risk
• Legal Risk
• Credit Risk

Read my previous post titled "Did Outsourcing Raise Level of Wages?" to get more information on outsourcing.

Privacy Concerns in Outsourcing

Last month, I had written an interesting post titled "Data Security Tightened in India" that spoke about data security in India. Today, it's the turn of privacy concerns. Privacy concerns have been raised by the financial service companies while sending customer data to foreign countries.

Financial customers may not opt out of these information transfers to non-affiliated service providers if the transfer is for purpose described in section 502(e) of the Gramm-Leach-Bliley Act (GLBA). The opportunity to opt out does not apply where the information transfer is to service or process a financial product or service that the customer requested or authorized.

The GLBA does provide important protections that cover both domestic and offshore outsourcing. GLBA established affirmative and continuing obligations for financial institutions to respect customer privacy and protect customer personal information against threats to its security, confidentiality and integrity.

Are You Looking to Outsource?

According to industry figures, the global business process outsourcing industry is set to be worth €140bn by 2009. Therefore, many companies are planning to take a share of that market. If your company is planning to outsource, there may be some challenges before it. The key challenges are managing growth while maintaining the high standards of customer service.

You must recruit professionals who will help you in making a right decision on outsourcing. Choosing a right vendor in the offshore destinations is not an easy task. A thorough research is required before you take the plunge.

This is an interesting post titled "Did Outsourcing Raise Level of Wages?", which was written by me a few days ago. You can read the post and give your valuable opinion.

Offshore Outsourcing Reduces U.K. Tech Workforce

It is said that somebody's is gain is other's loss. This is true in this case. You will be surprised to know that the success of offshore outsourcing is causing the number of UK-based technology staff to decline. The job reductions are witnessed in programming, low-level technical roles, call centers, helpdesks and back-office administration.

According to reports, there will be 130,000 offshore workers delivering software and IT services for UK organizations. The number of UK-based staff hired by offshore companies will continue to increase over the years. However, they may not be sufficient to offset the overall decline in the UK.

To know more about IT outsourcing, you can read my post titled "Choosing the Right Time for IT Outsourcing".

Indian and Philippine IT Firms Sign Outsourcing Deal

National Association of Software and Services Companies (NASSCOM) and its Philippines counterpart have signed an agreement to work together to promote outsourcing in the respective countries. The agreement will boost the outsourcing market in Philippines that is currently witnessing an upward trend. According to reports, Philippines could have a million people working in call centers by the end of 2010. Officials of NASSCOM and the Business Processing Associations of the Philippines (BPA-P) signed the agreement in Manila.

Read my previous post titled "UAE: Hot Destination for Outsourcing" to know how outsourcing is rising in the UAE.

Tax Outsourcing

Recently, I have gone through a report that tax collection services in the United States have been outsourced to third party destinations. It is said that the IRS has decided to outsource its tax collections services to private vendors.

More than 12,000 people across the country who owe taxes to the government will be contacted by private collection agencies to pay up. IRS sources believe that the plan will help the agency in recovering a huge amount of unpaid money in the coming years.

Read my previous post titled "Did Outsourcing Raise Level of Wages?" to know about the impact of outsourcing.

China into Service Outsourcing

Recently, I had written a post titled "India: Hot Destination for Outsourcing?". We have discussed a lot about India's rising fortunes in the outsourcing sector. Now, China is all set to challenge India in this field. China has unveiled a plan to enter an area that has been the exclusive domain of India for years. That is service outsourcing.

China is prioritizing it service outsourcing in a bid to boost the services industry. Experts believe that the global service outsourcing market will reach US$1 trillion by 2008. Hence, China wants to grab a substantial amount of share in that market.

CAD Outsourcing in India

CAD outsourcing services have been a major sector where Indian outsourcing firms have established themselves. Leading firms in the United States, United Kingdom and European countries are utilizing the Indian talent in CAD services. These companies are enjoying the benefits of cost effective production and expertise.

Sectors in India such as building industry, building services, mechanical engineering and architecture are attracting business from foreign countries. In Indian firms, the raster to vector technology is being used for quick production. Hence, the foreign companies are choosing the Indian firms to outsource their business processes. The entire CAD industry is growing with providing more benefits to their Western counterparts.

Refer to my previous post titled "R&D Outsourcing on the Move" to know about the current trend in R&D outsourcing.

Offshore success bites into UK tech workforce

Research analyst firm Ovum has thrown up some alarming facts for the UK job scenario in the technology sector. According to the report, the number of offshore workers delivering work to the UK organizations will double within a period of three years, touching a figure of 130,000 offshore workers. On the flip side of the coin, there is going to be a 6% drop in the number of onshore software and IT services staff.

While there is a steady number of UK-based workers being absorbed by offshore companies, this job channel is not enough to counter the fall in UK-based jobs in the IT and software sector.

Ovum senior analyst Phil Codling makes a frightening statement on Silicon.com:

We face the prospect of a skills time-bomb in IT. It is not clear where the next generation of highly-skilled, experienced programme and project managers will come from.

Collaboration between Philippine and India-based outsourcing organizations: A marriage of convenience?

Even as Asian countries compete among themselves for a larger slice of the global outsourcing market, there is news that the Business Processing Association of the Philippines (BPAP) and India's National Association of Software and Service Companies (NASSCOM) have come to an understanding to collaborate in seven strategic areas.

The areas that have been identified are strategic communications, geographic risk mitigation, shared best practices and adherence to international standards, data security and privacy, workforce collaboration and cooperation, and infrastructure improvement.
The collaboration initiative comes after a detailed process of thrashing out the details so that the agreement is in the best interests of outsourcing vendors in either country.

An immediate outcome of the deal seems to be the interflow of Indian and Philippine companies. There is talk of four Indian firms planting roots in the Philippines, and the positive bells are certainly ringing for more such movements in the future.

INQ7 has more details on the collaboration accord.

Outsourcing in the core service areas in South Africa: Is it working?

Private companies in South Africa now handle essential service sectors, including water, housing, and health. But is this a positive move? The answer is a flat “No”, according to British charity Oxfam. Oxfam believes that privatization has put essential services out of reach of the poor, and is leading to corruption.

However, Social Development Minister Zola Skweyiya has a different theory altogether. According to him, core service delivery is hampered by reluctance on the part of municipal employees to train themselves adequately to deliver access to portable water, electricity, and health amenities to the poorer social strata.

While the two points of view thrash it out among themselves, let us hope that conditions improve soon for the less fortunate in South Africa.

Reuters has more details from Johannesburg.

The Aussie jobs are coming!

Talk about outsourcing in India, and it is quite natural that the first country that comes to your mind is the US. True, most of the outsourcing business for India comes from US-based companies, but quite a few outsourcing agreements are signed between Indian outsourcing vendors and outsourcers from non-US countries, primarily the UK.

But now the Aussies are coming—well, almost. BT Financial Group, a leading Australian investment company, is trying to tap the outsourcing potential in India by offshoring 70 jobs to India to improve customer service.

Owned by Australia's well-known bank Westpac, BT is trying hard to justify the outsourcing move as a genuine effort to improve customer service rather than as a mere cost-cutting adventure. As a clear move to appease sentiments among Australia's workers’ unions, a spokesperson for the company said that the move is based on a redeployment program and is not targeted as a retrenchment exercise. As Rediff News reports:

BT spokeswoman Karen Barrett said the company wanted to redeploy some workers within the company, and also to its parent company, Westpac.

Judging from the reaction of Finance Sector Union spokesperson Paul Schroder, the explanation offered by BT is unlikely to wash with the public.