Outsourcing Times

The Newest M.B.A. Class: Outsourcing

Courtesy of the New York Times:

"Under the auspices of the M.B.A. program, Ms. Dvorak and her classmates spent 10 days learning about outsourcing from local and international companies in cities like Bangalore, New Delhi and Mumbai...

"Outsourcing has become a prime subject for business students. Thousands of white-collar jobs are moving overseas every year, and at least 3.3 million jobs in service industries, accounting for $136 billion in wages, will leave the United States by 2015 for lower-cost countries, according to Forrester Research."

Outsourcing a Necessity for Small Businesses to be Competitive

Courtesy of The Miami Herald:

"Small firms, perhaps even more than large corporations, are finding that sending work overseas can mean staying in business.

"Despite fears that offshoring leads to a net loss in U.S. jobs, some small business owners say the cost-cutting move may make local hiring possible.

"'I was going to have to shut my doors, because we weren't making ends meet,' said Enrique Rangel, whose Austin, Texas company, LocalCatering.com, connects caterers with customers in cities from coast to coast, including Denver."

IBM Wins IT Outsourcing Deal From India

From Yahoo! News:

"Turning the tables on the outsourcing controversy in the United States, India's largest private telecoms firm, Bharti Televentures, awarded an in-house IT services contract to US computer giant IBM worth up to 750 million dollars.

"The move by Bharti, one of the most aggressive Indian telecoms players, to outsource its IT needs to the US firm comes amid a raging controversy in the United States about jobs being shifted to India and other developing nations where labour is cheaper.

"'Arrangements like this will take the sting out of outsourcing,' said Sunil Bharti Mittal, chairman of Bharti Televentures."

Talk about a twist of fate! A large American firm steals jobs from a developing country. Still, it reeks of politics. And I doubt it will "take the sting out of outsourcing."

Kerry Calls for Change to Tax Code: 'No Jobs Overseas'

From Reuters:

"Democratic presidential candidate John Kerry will propose a broad change in international tax laws on Friday designed to discourage companies from shifting jobs to foreign countries.

"In a speech in Detroit, Michigan, Kerry will propose ending a tax provision that lets companies defer paying U.S. taxes on income earned by foreign subsidiaries....

"'Today we have a tax code that does more to reward companies for moving overseas than it does to reward them for creating jobs here in America,' Kerry said in remarks prepared for delivery at Wayne State University in Detroit."

So Kerry's going for the votes of the unemployed.

Minnesota Governer Issues Orders 'Against' Outsourcing

The Minneapolis/St. Paul Business Journal reports:

"Gov. Tim Pawlenty on Wednesday issued executive orders directing state agencies to consider where companies make their products before awarding contracts.

"The executive orders, which don't need approval by the legislature, tell state agencies to include the value of work performed in the United States when they determine the "best value" of a company's bid...

"'Given the current job climate in this country, it just makes sense to include 'American made' as a best value determinate when other factors are equal,' the governor said in a statement."

He is ordering state agencies to 'consider' Americans for the work? Don't they consider them already (and then bypass them)? This was a public relations move, not a policy move.

India Leads in Auto Outsourcing

The Economic Times reports:

"Despite all the anti-outsourcing noise in the US, India is far and away the top outsourcing destination for Motown.

According to an online survey of American automotive executives conducted by AT Kearney, India is right on top of the auto outsourcing heap with 24% of the respondents giving it the thumbs up. Bigger automotive markets like China and Mexico lag behind at 15% and 13% respectively while auto hubs like Brazil, Thailand and the Phillipines corner just 10%, 2% and 3% of the votes."

Surprised? I am... all you ever hear about is IT. Why don't the Japanese whine about the Honda plants in the States? Isn't that outsourcing? Dirty, stinking Americans are stealing our God-given Japanese jobs!

High-Tech Organization Does Not Blame Offshore Outsourcing

Oregon Live reports:

"The national trade association for the high-tech industry released a report today saying that the effects of offshore outsourcing on U.S. joblessness have been exaggerated and that attempts to legislate a solution would backfire because foreign retaliation would curb U.S exports.

'Offshoring' has become a hot topic in the presidential campaign and in states nationwide as the U.S economic recovery has failed to produce a corresponding recovery in hiring."

Productivity. Productivity. Productivity.

Why don't they discuss that in the election debates?

General Motors to Increase Outsourcing: "GM Offshore"

ChannelNewsAsia reports:

"General Motors Corp. is planning to ship 48 million dollars' worth of white-collar work abroad this year as part of a broad cost-savings program, officials confirmed.

"...The sum represents less than one percent of the company's multi-billion dollar annual manufacturing budget, but is sharply up from last year, when GM outsourced 3.5 million dollars of work to lower-cost locations."

Life After Marc Gordon: Best Buy IT, Outsourcing And Accenture

ExecutiveTechnology.com reports:

"...sources confirmed late Friday that a contract with Accenture, Bermuda, is being drafted and could be signed by June 1... the company will evaluate which areas of IT will remain with Best Buy and which will be handed off to Accenture...

"Best Buy has been pushing forward on what it terms Customer Centricity initiatives, 'and that will cost money,' one source said."

It appears that new investments in 'Customer Centricity' dictate that costs be cut in other areas to maintain price levels and profit margins.

ComputerWorld: Avoid Outsourcing Mistakes

ComputerWorld reports on common outsourcing mistakes.

"To a CIO, outsourcing contracts may look like other procurement and service agreements, but they're much riskier. 'You're writing a contract for a service that's impossible to describe, that will change over time and need to be renegotiated, that will make you dependent on the service provider and for which termination is not an option,' says Paul Roy, a partner at Mayer, Brown, Rowe & Maw LLP in Chicago, who has put together some of the largest outsourcing deals in history. 'That's not an ideal negotiating position,' he adds."