Outsourcing Times

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.

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.

Crunch in tech-savvy resource pool leads to aviation outsourcing

You might be surprised to hear this, but India, China, and Mexico produce more engineering graduates than the US. So you have a limited resource pool in the US to absorb all aspects in the aviation industry. In this scenario, aviation companies in the US cannot be blamed if they look toward other countries for subassembly help.

It is the age of partnerships, and the aviation industry is not lagging behind in this respect. A major criterion for this trend is the quintessential benefit of outsourcing—it reduces the cost of production and cuts out unnecessary chains in the production cycle

At the General Aviation Technology Conference and Exhibition at Century II sponsored by the Society of Automotive Engineers, a panel of leading executives in the industry confirmed to engineers that the time is ideal for more partnerships and outsourcing contracts. However, the panel is well aware of the downside of outsourcing:

The devil is always in the details.... Companies must have the digital technology needed to transfer large files. And there must be good communication among engineers in U.S. companies working with those in other places.

The worrying factor for educationalists and aviation industrialists in the US is that there is a perceptible drop in interest in the engineering disciple. The aviation industry can hope to keep engineering jobs within the US only if students get rid of this apathy toward the subject. If this doesn't happen, the specter of outsourcing is bound to cast its spell even darker and deeper in the future.

GrandForks Herald has more.

HR outsourcing: Building blocks

As I mentioned in an older post titled Where is HR Outsourcing headed? HR outsourcing comes third in the list of potentially high paybacks, after IT and the telecomm industry. However, many companies wrap up their HR functionalities as something that happens in the back office, and do not give enough attention to the infrastructure that essentially props up its employees. Over the years, this has bred neglect, leading to antiquated HR management systems. If you're interested in earning an HR management degree, consider California Coast University's MBA in HR management degree program.

Now, it is time for this mindset to change, because companies are suddenly waking up to the fact that their HR policies are not in step with the times, and a major overhaul is called for to keep pace with company acquisitions and mergers. A few companies have tried mending their HR management system on their own, but they soon discovered that it is like opening Pandora's Box; more you inquire into the state of HR policies, you keep unearthing more anomalies.

That's where outsourcing can step in. If you have a problem managing your HR and bringing the existing system up to scratch, why not let a third party worry about it? What comes with HR outsourcing is better management at a lower cost

An article in Morning Star names some big performers in HR outsourcing: Paychex, which provides payroll processing; AMN Healthcare, which looks after health-care staffing; Administaff, which provides all HR functions and caters to the small businesses; and Hewitt, a consultant firm for companies that need employee benefit programs. 

The outsourcing controversy rears its head in Malaysia

In almost every country, human rights are a major concern, and the guardians of civil rights are ever ready to take to task any violation of individual rights. Look at the outsourcing scenario in Malaysia, for instance. No sooner had the Malaysian government announced its policy of using outsourcing companies to recruit Bangladeshi workers, two human rights organizations—Malaysia-based Tenaganita and the Philippines-based Migrant Forum Asia—were up in arms against the statement.

Both these organizations believe that the Malaysian policy will institutionalize and legalize human trafficking and bonded labor, charges that could prove too hot for the Malaysian government to handle.

But it is not only the policy that is under attack. Both Tenaganita and Migrant Forum Asia have also made scathing remarks against the outsourcing companies, labeling them as arrogant and exploitative enterprises that hold the workers to unjust contracts and treat them as bonded labor. It remains to be seen if the Malaysian government can work its way through this opposition and arrive at a consensus—an unlikely result in the present scenario where both parties are at loggerheads.

For more information on the impasse, click here.

Human Resources Outsourcing Conference

Human Resource Outsourcing is no longer an alien word in the outsourcing industry. In an older post titled "HR Outsourcing Ensures Quality Service", I had written how HR outsourcing benefits the organization. Many top functions of Human Resources continue to be outsourced and is expected to increase further over the next few years. These functions include leave management, learning, payroll, recruiting, health & welfare and global mobility.

While some organizations have renewed their contracts, others are considering to take the plunge. They all are focused on enhanced capability. The HR Outsourcing Conference will be held on 19 September 2006 and 20 September 2006 at The Drake Hotel, Chicago, Illinois.

Xansa Gets 5-Year HR Outsourcing Deal

In the recent years, Xansa PLC, has emerged as one of the leading outsourcing and technology company. Xansa recent got the first multi-process HR outsourcing deal within the UK financial services sector. It signed a five-year contract with Lloyds TSB. The contract covers HR functions including administration, recruitment and existing helpdesks for training, advice and guidance. Xansa will work with Lloyds TSB in order to develop, host and support new recruitment and management information platforms.

HR Outsourcing Ensures Quality Service

Outsourcing of HR activities has become a trend in the world. For more than two decades now, there has been emphasis on the role of the HR function in the organizations. It is driven by the fact that HR departments in organizations are seen as the administration departments. They manage pay-roll administration, applicant tracking, training and other developmental work. Hence, HR becomes the most important part of any organization.

To improve the quality and enhance the performance of the organizations, most companies prefer outsourcing their HR services. The outsourcing relationship offers cost-savings, standardization of processes, increased speed and quality of service. Outsourcing of HR function has become an integrated business strategy for the organizations. However, its success depends on the senior management and HR professionals to identify the core HR processes and non-core processes that can be outsourced.

The upside and the downside of HR outsourcing

After IT and the BPO industry, HR outsourcing might well be the next big thing in outsourcing. Several top-rung companies—including Unilever, Cable & Wireless, BAE Systems, BT, and BBC—have already taken the outsourcing route for their HR services. In a couple of years, the HR outsourcing wave is expected to touch $75 billion. That's big money!

However, skeptics are beginning to raise an eyebrow or two at this growing trend. According to them, HR is a specialized area where an outsource service provider will not be able to understand the underlying dynamics; in the absence of an “internal re-engineering”, HR management is bound to lose its strategic edge.

Let's look at another downside: the danger of jobs drying out for existing HR employees is beginning to raise its ugly head. For instance, the Unilever move to outsource its HR function might leave its strong employee force of 3,300 executives high and dry. True, some of this force might be absorbed by outsourcing partner Accenture, but it has certainly led to a few faster heartbeats. As a recent article has it, the transformation to outsourcing will be very painful, but it can subsequently lead to insourcing—an even more painful process.

Expansion of Human Resources BPO in India

Convergys has increased BPO capacity in the Asia-Pacific region by either opening new service centers or expanding existing ones in high-tech locations like Kuala Lumpur, Malaysia, Bangalore, Dalian, and Singapore. Convergys has more than 150 clients globally.

With its highly skilled talent pool, Convergys has already earned a strong reputation for itself. With 16 offices and 17,500 employees in the region, Convergys provides a whole gamut of benefits such as learning and performance management, and staffing and payroll administration for clients from multiple industries.

Sunstar has more on the story.