Outsourcing Times

Outsourcing – A Yes or No??

When you contract your business to a third party for sometime, it is called outsourcing. In doing so, you not only save money but also put it in a literal way. Outsourcing partner lets you ‘Mind Your Own Business.’

Once you make up your mind on outsourcing, here are few questions that you need to ask yourself.
• What is your core strength.
• Which process do you want to outsource.
• What is the cost of doing it in-house? Also, calculate the hidden costs that are the space, staff and maintenance.
• Most importantly ask yourself will your business suffer if you do not outsource. Will you be able to afford the cost of outsourcing partner?

Remember outsourcing is like a helping hand. It will let you concentrate on your strengths and weaknesses. In the end, it will help your process to reach the zenith of its growth.

‘Lack Of Skilled US Workers Is Main Cause For Outsourcing’

Azim Premji chairman of Wipro Technologies doesn’t agree with the general belief that outsourcing is stealing high-paying American tech jobs. According to Premji, the United States should be more worried about what is taught in its classrooms -- or, rather, what isn't. Crmbuyer.com reports:

In fact, there is a shortage of information technology engineers in the United States, said Premji, who in four decades has led Wipro from a US$2 million cooking-oil processing company to a $2.4 billion global technology player. In its most recent quarter, the Bangalore-based company reported $765 million in revenue, a 41 percent increase from a year earlier, with profits of $152 million, a 48 percent jump.

Read more: Wipro Chairman: Outsourcing Due to US Skilled Worker Shortage

China Will Lag Other Markets In 2007

As the year ends, it is time to take stock of the past year and find out what can be done to better business in the coming year. One thing outsourcing service providers must place higher priority on is staying cost competitive. They must also try to stay ahead of global trends in the sourcing market if they are to remain viable.

According to Ben Trowbridge, CEO of global advisory firm Alsbridge, US-based companies will accelerate their outsourcing strategies to stay competitive. The main reason for the increased traffic is the tightening U.S. labor supply in technology, accounting and other processes. And contrary to prevailing opinion, cost of labor in India will remain neutral when compared with wage inflation in the U.S. market. Sdcexec.com reports:

Contrary to prevailing opinion, China will still lag other markets, mainly India, as a destination for English-language-driven business process outsourcing (BPO) or shared service centers due to language, low national birthrate, intellectual property and other legal issues. The exception will be those companies who have a market strategy to sell into China market, which will override the former comments.

Read more: Predictions for 2007 Trends in the Outsourcing, Shared Services and Offshoring Market

UK Outsourcing Model Needs Change

Experts in the UK are now trying to encourage local firms to look beyond traditional outsourcing models and embrace new ideas. Nowadays, a growing number of companies are turning to outsourcing in areas such as analytical support, market analysis and financial modeling, sectors that do not have a traditional link with outsourcing. Ihotdesk.com reports:

Neeraj Bhargava, the group chief executive officer at WNS Global Services, told a meeting of leading executives that knowledge-based outsourcing revenues are set to grow to $5 billion within four years, well up from the current figure of $1.2 billion. "Outsourcing offers specialized industry and functional expertise, predictable cost and risk management and increased efficiencies," Mr. Bhargava remarked.

Read more: UK outsourcing model to see shift

Indian Outsourcing Firms Face Chinese And European Challenges

Various problems with the Indian outsourcing industry are now forcing U.K. and European companies to look elsewhere for their offshore provision. The problems that have been cited include big wage rises, skills shortages, and incidents around data security. Enterprisenetworksandservers.com reports:

The way in which business is done in the West is different to India, which again is different to China, and so on. Only when an offshore location can demonstrate that it understands the methods and meanings of its customers will it be able to deliver on requirements. Location suitability is also another important issue - Hong Kong and mainland China are approximately 12 hours flying time away from the U.K., and further for East Coast America, and around eight hours flying time from East Coast Australia.

Read more: Another Worry for Indian Outsourcing Companies

FSSA Outsourcing Plan Hits Turbulence

The FSSA reorganization and outsourcing plan is meeting with a lot of opposition. Recently state caseworkers, their union leaders, social advocates and others accused Gov. Mitch Daniels’ administration of lying, fudging statistics and endangering needy and vulnerable Hoosiers to make its case for outsourcing the application process for food stamps and other public benefits. Fortwayne.com reports:

The Daniels plan envisions improving the delivery of the public safety-net benefits system received by one in six Hoosiers by making it easier to submit and process applications through the Internet, e-mail, telephone call centers, and faxes. It also aims to use computers to drive the process with self-surveys, instead of time-consuming interviews, to ease caseworkers’ paperwork and reduce error and fraud.

Read more: 200 protest outsourcing benefit plan

Future Perfect: No More Accents

--By Priya Jestin, Staff Writer

Handling customer calls is a Catch-22 situation for most companies. You have to either lose a major chunk of your resources by continuing with your in-house client handling operations or have the client breathing down your neck when you outsource or have an IVR system in place. Come to think of it, it seems more like a no-win situation. Either you lose money or you lose clients.

Is a call center operation all that simplistic? Actually no. There are a lot of cultural and emotional factors at play here and a company must understand and respect customer sentiment. S/he must also find a cost-effective method of dealing with this problem. First the facts:

Nearly 70 percent of customers would rather deal with an IVR system than talk to an agent with a foreign accent.

Over 92 percent of customers are frustrated with present-day IVR systems. Given these figures, there is probably only one good option left to companies – supercharge their IVR system and avoid outsourcing unless absolutely necessary. Yes, this is a very radical approach. But this is probably the best way to retain clients without losing valuable resources.

In the long term, a strong IVR system can be beneficial to a company. All the system needs to do is provide customers with what they need and when they need it. For instance, an organization could install a personalized automated system that deals with individual needs rather than a generic one. And no, this ideal doesn’t belong to the realm of hi-tech imagination. Software that’s recently been developed helps the IVR become caller-specific; have personalized menus, personalized voices, personalized prompts and even dialogs.

Now, the only problem that may arise is that customers may find this solution too perfect – and to that, probably there is no solution. What’s your opinion?

To Outsource or Not? Know The Answer

--By Priya Jestin, Staff Writer

Many people mistakenly believe that when they decide to outsource IT, they are making a strategic decision. Outsourcing can never be a strategy in itself. What an outsourcing policy does is help the business forward its actual planned strategy. The main reason for the continuing debate between outsourcing and insourcing is the fact that many people are yet to understand that an organization’s nature of business, scope of operations, and growth strategies are some very important determinants for its sourcing policy.

IT sourcing strategy must, therefore, map to business strategy. One very important factor is that a good sourcing strategy must be flexible enough to allow the business to make radical changes to adapt to changing market conditions. This is a reason that most supporters of outsourcing highlight. Outsourcing helps an organization support a business strategy of rapid expansion without time-consuming up scaling of internal IT and the consequent hike in costs. Basically what outsourcing does is allow a corporation to play at a global level.

But that doesn’t mean that outsourcing is not inherently risky. It may be compelling to outsource IT but it is even more important to study the risks and costs that such a move may entail. Outsourcing is not a panacea and just because the industry is gung-ho about it, doesn’t mean it is the best option available.

Moreover there are certain boundaries that you just cannot cross. Certain things like core competences just cannot be outsourced. Also if there is an inherent problem in the method of operation, you cannot wish the problem away by outsourcing it. What you can do is solve the problem at the initial level before it goes on to become an even greater one with worse consequences.

Change Indiana

--By Priya Jestin, Staff Writer

Another bastion falls. The Indiana Family and Social Services Administration recently announced that it would undergo significant changes under a decision to privatize jobs now performed by state workers. The agency provides Medicaid and welfare services to more than 1 million Hoosiers.

This change is based on a recommendation by a committee that was assigned the task of reviewing the agency. So what exactly was the recommendation? Among others, the committee recommended that FSSA's current intake program should be outsourced, its technology upgraded. The committee also sought to make changes that could help FSSA serve its clients better, save taxpayer money and improve working conditions for overburdened workers.

The contract will most probably be awarded to IBM once federal authorities approve the plan. Privatization will cost FSSA $1.6 billion and will take around 10 years for the process to be completed. This works out to be much cheaper than the $2.1 billion it could cost FSSA to modernize on its own.

Indian IT firms queue for Japan's outsourcing pie

--By Priya Jestin, Staff Writer

Having got their fairs share of European and US markets, Indian IT firms are realizing that to maintain their present rate of growth, they need to expand exponentially. So now you have them exploring the Japanese market.

Japan is the world's second-biggest spender on technology after the United States. The total IT outsourcing market in the country grew to $15 billion in 2005 and the market is forecast to grow 5.8 per cent per year through 2010 to 2.34 trillion yen. And this time around, the Indians don’t want to make any mistakes – culturally that is. So now you have Indian software engineers learning the Japanese language, cultural nuances and etiquette.