Outsourcing Times

Outsourcing As A Slur

I knew outsourcing was a touchy subject with most Americans. But I didn’t expect it to sound like a slur for some. What else do you make of a Michigan company that recently asked U.S. Sen. Debbie Stabenow to retract her statements that it outsourced jobs overseas?

Last week, Jackson National Life Insurance Co. sent a letter to Stabenow asking her to apologize for stating that the company outsourced jobs to India and China. She is said to have made this comment during a campaign TV commercial and public talks. Not one to retract on her word, the Stabenow campaign still stands by its statements.

Stabenow is supposed to have said that her Republican opponent, Mike Bouchard, supports Bush administration policies. She claims that these policies have led to the outsourcing of Michigan jobs. Company president Clark Manning Jr. wrote to Stabenow saying that she “falsely denigrating the excellent organization they have worked to create." Wow! Now what do you make of that?

Any company that wishes to improve its profits and thereby shareholders’ revenues will look for means to reduce costs. I’m not commenting on the present situation but I think it’s high time we behaved like we mature people. Yes, it is a bit difficult to think about that when you are the person losing a job. But then throughout history, there’ve been upheavals, which may have seemed unbearable at that point. However, these events always led to something good. So also is the case with outsourcing.

'Education Stays Home'

Outsourcing doesn’t work every time, everywhere. Recently, the New York City Department of Education virtually prohibited US companies from hiring teachers from other countries. The main reason cited was that it was not possible to undertake their background checks in foreign states. For quite some time now, a controversy had been raging about whether US companies can employ teachers in other countries to tutor American children.

Given the huge shortage of teachers in the country, it seemed like a logical next step. The companies planning distant learning had argued that since the student and teacher do not come into contact, do not talk with each other and as everything is done on computers, the background checks are unnecessary. Dnaindia.com reports:

But the officials did not agree as the rules provided that teachers must give their finger prints and social security numbers, the latter which only American educators can give. As a result, the New York authorities cancelled the $2 million a year contract of a Texas-based Indian American owned company Socratic Learning Inc, which, the Educations Department said had employed 250 teachers in India and was expected to tutor some 2,000 children.

Read more: NY dept prohibits US firms from outsourcing teaching

Offshoring Has Benefits Beyond Saving Labor Cost

Offshoring delivers more than just labor cost savings and a good offshore strategy generates new revenues, increase capital productivity, and manage risk. But in many sectors, relatively few executives are acting on this knowledge. This, despite leading companies showing where the gains can be made. Mckinseyquarterly.com reports:

One reason for the lag is that many executives don't fully recognize the potential for generating revenues and cutting costs through offshoring—or through broader strategies that combine it holistically with other restructuring initiatives.

Read more: Taking offshoring beyond labor cost savings

Now, Pharm Offshore

Executives across industries are now exploring ways of tapping their offshore workforce to generate additional revenue, improve core business processes, and offer more value to customers. While pharmaceutical companies came late to offshoring, they are making up for this delay by moving quickly to capture gains beyond labor cost savings in back-office operations. Mckinseyquarterly.com reports:

Most of the industry, however, has been more cautious. Some pharma companies are outsourcing selected functions (such as certain IT activities) only for cost savings rather than looking more broadly at the development of new processes that would improve business productivity or generate revenues.

Read more: Pharma leaps offshore

CRM In The Time Of Outsourcing

Outsourcing is here to stay… at least for some time. And the sooner we accept it, the better. That sounds like conventional wisdom. But can we blindly follow this advice and outsource our operations, especially our CRM (customer relationship management) services? I don’t think that is such a good idea.

Outsourcing, like any other business plan, isn’t a one-size-fits-all kind of thing. Agreed that when you outsource, you can get the benefits of qualified talent pools and cheaper infrastructure in offshore locations. But customer satisfaction is a very tricky thing and once you lose a customer thanks to bad management, it is very difficult to get them back.

So you have to be exceptionally careful, since even today, quite a few American customers are still quite prickly about the outsourcing of a company’s CRM activities. There are good reasons for U.S. companies to select large, relatively expensive U.S. providers…Customer service and some back-office operations can be so critical to a company's image and brand integrity that it is worth paying premium rates in order to minimize risks. The best choice for risk minimization is usually made by trusting an experienced market leader, despite the higher prices levied by the major firms.

IBM, US lay off 400 employees

Are you aware of the recent lay-off of the employees of IBM? Do you know that their headquarters for procurement in going overseas to china from the current one at New York?

The shocking news about the lay-off of 400 employees from IBM came up at the wake of this month! The company has accounted the unavailability of suitable position within the company for a period of a month as the reason for this lay-off.

Informationweek reports that the employees suspect the lay-off to have taken place with the Bladecenter team while an IBM spokesperson has denied saying that this suspicion was untrue.

Read one of our previous post titled 'IBM Outsourcing More Jobs' to know the details of work being outsourced by IBM!

IBM records inexplicable profit in the third quarter!

By Priya Venkatesh, Staff Writer

Have you heard of the third quarter results from IBM, the software giant? With the outsourcing boom on the move, IBM has reported a 4% increase in net earnings when compared to the previous year.

As per the reports from informationweek, the hottest global service Business of IBM that amounts to 50% of its total revenue has reported 3% increase in sales.  As per the report from Information week, Net value of the innumerous deals with IBM has accounted to around $10.5 billion this year. IBM promulgates a 9% increase in hardware sales and another 9% in software sales.

Click here to know the details of the major outsourcing contract signed between Disney and IBM.

IBM chosen to develop a centralized Indian Web Portal

By Priya Venkatesh, Staff Writer

Do you know the latest initiative taken by India, to keep its huge population connected over the Internet?  With growing competition in outsourcing, do you know that India has taken measures that could supersede the performance of its competitors very soon? Go ahead & read to know the details!

The software giant, IBM has bagged a project to develop a national web portal for India, which is expected to connect every nook and corner of the nation. This portal is expected to give information on innumerous services like permits to start business, tax tips and more! The portal is expected to use the middleware from IBM to get linked to the state and central government sites.

IBM on the other hand expects to yield maximum profits through such projects, which has given rise to reverse subcontracting processes within the nation!

Read one of my previous post on 'IBM Calcutta increases employee strength' to know the extent of establishment of IBM in India.

CSC – Global Crossing initiate the real time implementation of IPv6

By Priya Venkatesh, Staff Writer

Have you upgraded your network to be compatible with IPv6? You and I may be thinking on the necessity to do so! We may not be aware of the need to make this move!

But CSC & Global Crossing together started an initiative towards real-time implementation of IPv6 Network in 2001. They took advantage of the enormous experience of CSC In IT services and the inexplicable expertise of global crossing in IP based network.

Targeting the federal customers, the joint venture expects the successful implementation of IPv6 Network by June 2008!

Read more on 'CSC renews seven-year outsourcing contract with Schroders' to know the details of CSC's another venture with Schroders.

Profits recorded point to continuing IT boom!

By Priya Venkatesh, Staff Writer

Do you know the details of the continuing IT boom in India?  Are you aware of the profit data that the pioneers in outsourcing have recorded this year? Read on to know the details!

Infosys, one of the pioneering IT giant in India has recorded a profit of 42.4% amounting to a total income of $746 Million. As per the reports from informationweek, 7700 employees have been added to the payrolls of Company this quarter. Wipro, another outsourcing giant has recorded a profit of $589 million which accounts to 46% growth in this quarter that ended on September 30 2006. The results of the last 2 quarters of the outsourcing pioneers clearly indicate an ongoing boom in the field of IT!

Read more on 'Indian IT stocks creep incredible heights amidst tight competition' in one of my previous post to know the consequences of this growth in Indian IT stocks!