Outsourcing Times

Kerry's New Outsourcing Agenda

Senator John Kerry has redefined the Democratic anti-outsourcing agenda with a plan to keep high-paying jobs in America. Many Indian-Americans are torn over the issue, not wanting their own children to grow up in a jobless American, yet on the other hand feeling that India is being targeted by anti-outsourcing politicians.

From newkerala.com:

Apart from the call-centre identification demand that Kerry reiterated, he has included some good news and bad news for the H-1B visa holders, many of whom are of Indian origin.

He has called for capping the H-1B and L-1 visas and for making sure there are no skilled American workers to fill a job before getting people from overseas. On the other hand, if a foreign worker is to be brought in, he or she should be paid the prevailing rate in the US.

Read more: Kerry campaign redefines outsourcing agenda

Is Outsourcing Cost-Effective?

A new study conducted from Pricewaterhouse Coopers indicates that less than half of surveyed American and European companies find outsourcing financial functions to be cost-effective.

According to CNet News:

Nearly 75 percent of American and European corporations that use outsourcing to support their financial functions will continue to do so over the next two years, according to the survey. About 29 percent of these companies expect to increase their use of outsourcing of financial functions, with spending likely to be 16 percent higher than present levels, the survey found.

A PwC representative said the disconnect between the outsourcing push and the financial results is mostly due to lack of planning on the companies' part.

Read more: PwC: Firms see mixed results in outsourcing

Singapore Airlines Outsources IT Operations to IBM

Singapore Airlines and IBM have agreed to a seven-year $180 million deal which will see the latter handle the former's IT help desk and data center.

According to CNet Asia:

Details of SIA's plans to outsource its technology functions were first revealed last month, but the airline did not name the company that won the contract. At that time, SIA said 130 staff in its IT department would be affected by the move.

"SIA staff in the affected areas have been offered the opportunity to join IBM on a package comparable in both remuneration and role," according to the firm's latest statement.

Read more: IBM snags US$180m outsourcing deal with S'pore Airlines

IT Outsourcing Benefits Indian Business

Lance Travis, vice president of AMR Research recognizes that the global trend of enterprises is to outsource their IT infrastructure to Indian vendors, most notably those that can handle business application, network management and database management.

From Express India:

According to him, Indian IT companies follow better processes compared to the US companies. “Indian companies have better global delivery models, which help them offer services at lower costs. In addition, they have a bit of an advantage over other large US companies over quality,” he said.

Read more: 'Outsourcing of IT to benefit Indian companies’

Sainsbury Renegotiates IT Outsourcing Deal with Accenture

Sainsbury, the second-largest UK grocery chain, is in the process of renegotiating the $3.54 billion deal with IT service provider Accenture Ltd.

According to Computerworld:

In an attempt to drive down the price of the Accenture contract, Sainsbury will simplify existing IT systems as well as those in the pipeline, because the implementation effort has "failed to deliver the anticipated increase in productivity," while IT costs continue to eat up more and more of the company's overall budget in proportion to sales, Sainsbury said in a statement.

London-based Sainsbury signed a seven-year deal with Accenture in 2000 to outsource all of its IT operations. The pact led to the transfer of about 800 Sainsbury employees to Accenture.

Read more: Sainsbury, Accenture to Redo Outsourcing Pact

IBM Gets Dun & Bradstreet IT Outsourcing Deal

IBM has signed a seven-year, $180 million deal to handle Dun & Bradstreet's IT outsourcing project.

According to Computerworld:

Under the agreement, IBM expects to transform and manage key business functions and financial operations globally for D&B, according to an IBM spokeswoman.

"IBM will manage customer relationships for D&B, more than 100,000 of them, leveraging new technologies such as real-time analytics, to transform the way customer needs are understood and responded to with greater efficiency and satisfaction," said the spokeswoman. "More importantly, this deal represents a new level of CRM work for IBM."

Read more: IBM signs $180M outsourcing deal with Dun & Bradstreet

Outsourcing: Is Cost Saving Worth IT Job Loss?

American consumers want the best products at the lowest prices. Therefore, it makes sense to outsource jobs offshore to cut costs. But is the loss of American IT jobs worth the cost cutting? Ronil Hira, an assistant professor of public policy for Rochester Institute of Technology, offers one opinion.

According to CIO News:

"There is no way that the cost savings [of offshore outsourcing] make up for the loss in income for those displaced workers," Hira said. "Companies are gaining from this because they get the cost savings, but they have no responsibility for those displaced workers. The displaced workers obviously lose. In the end, America loses because the cost savings for companies don't outweigh the losses for displaced workers."

Read more: Is offshore outsourcing worth the loss of IT jobs?

Business Process Outsourcing Grows in Europe

Outsourcing, especially BPO, has long been a factor in American business, but the trend is beginning to reach Europe in a big way. More outsourcing deals were signed there last quarter than in any single quarter since 2000.

According to CIOL:

Driving the latest spurt of outsourcing growth is so-called business process outsourcing (BPO), in which companies contract out entire processes, for example human resources from hiring to pension administration.

Previously, firms tended to outsource only information technology functions such as server management, IT integration or customer relations to call centres.

IDC expects the global BPO market to almost double from last year's value to $124 billion by 2008 as companies perceive not only cost advantages but added value in contracting out entire processes to third parties.

Read more: Outsourcing gains impetus in Europe

IDC: Outsourcing IT Market Soars

IDC analysis anticipates that the worldwide IT outsourcing market will grow from $7 billion in 2003 to $18 billion by 2008.

From InformationWeek:

The study only tracks IT services sales won by offshore-based companies such as India's Wipro Technologies and Infosys Technologies. It does not include the value of work being placed offshore by American service providers such as IBM and EDS.

The growth is being driven in part by the fact that some IT-related work that has been relatively immune to offshoring is starting to move overseas, says Barry Mason, a senior analyst at IDC.

Read more: Offshore Outsourcing Revenue Soaring At 20%-A-Year Pace

Outsourcing Lawyers

The latest trend of outsourcing white-collar jobs involves sending routine legal work offshore. Many U.S. Fortune 500 companies are outsourcing work performed by attorneys abroad to countries such as India, South Korea, and Australia to lower costs.

According to CNN:

General Electric, the country's fifth-largest corporation, has taken the idea the farthest of any company and set up a subsidiary in India that employs about 30 lawyers.

Smelling opportunity, a handful of companies have sprung up in recent years, both in the U.S. and abroad, that sell outsourced legal services.

One of them, a Chicago-based outfit called Mindcrest sells services like document management and research that feed at the bottom of the legal profession's food chain.

Read more: Outsourcing the lawyers