Archive for October, 2009

BPOs expect slower 23 percent growth

October 19th, 2009

A slower growth of 23 percent is expected by the outsourcing industry with revenues of $7.5 billion as the industry admitted that its 2010 roadmap growth targets can only be realized in 2011 even as the foreign players forecast the country’s sunrise industry to reach $100 billion by 2020.

Business Processing Association of the Philippines president Oscar Sanez said at the media launch for the International Outsourcing Summit: Global Market Leaders Addressing Global Issue, which opens today, the growth targets under the Roadmap 2010 cannot be met next year following the global financial crisis.

“We will be delayed by one year,” Sanez said noting that under the Roadmap the $12 billion revenue target is expected to be reached in 2010 but at the growth the industry is going the target can only be attained by 2011.

The delay is attributed to slower growth. The industry was supposed to grow by 30 percent annually until 2010 but last year the industry grew only 26 percent that resulted in revenue generation of only $6.1 billion.

“We are expecting growth this year between 20 to 23 percent and revenue generation of between $7.2 billion to $7.5 billion,” Sanez said.

Likewise, employment target has been revised as the industry expects between 450,000 to 460,000 jobs this year only. Under the Roadmap, the industry is supposed to employ between 760,000 by 2010.

So far, the voice still accounts for two-thirds of the total outsourcing industry while the non-voice accounts for about 15 percent and the rest are into animation and software.

The hope is that the non-voice would continue its robust growth. This segment has been growing double for the last two years with revenues hitting $1 billion last year.

“The non-voice is expected to grow 50 percent annually,” while the voice is expected to grow between 10 to 15 percent given its already high base.

Meanwhile, Dr. Ganesh Natarajan, chairman of NASSCOM, said that based on their study the Philippine outsourcing industry is expected to hit $100 billion by 2020.

Natarajan said that based on their study, the global BPO potential is placed at $300 billion and the IT sector at $300 billion but by 2020, the total outsourcing industry is expected to reach $1.5 trillion.

Of that figure, the study points out to India as the number one country in outsourcing accounting for $250 billion of the total from the current $47 billion.

“As we grow, the Philippines is clearly the number one in terms of partnership,”he said.

The projected $100 billion revenue Philippine outsourcing industry would not just be in contact center but other BPO services like information management outsourcing, applications support in terms of technology updates and other knowledge process outsourcing services.

Natarajan said the study also said that based on this growth this Philippine industry is going to employ 4.5 million jobs and opens more outsourcing sites in the provinces.

Source: http://www.mb.com.ph/articles/225473/bpos-expect-slower-23-percent-growth

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Krakow ranks 2nd on Emerging Global Outsourcing Cities list

October 19th, 2009

In the latest Tholons ranking indicating the top 50 emerging global outsourcing cities the Polish city of Kraków classified 2nd and Poland, as a country, ranked 10th. The most numerous group of the best outsourcing destinations is located in the Central and Eastern Europe (26%).

This year Kraków was came first from among cities situated in the CEE region. The city improved its position from last year’s ranking (in 2008 it ranked 5th, in 2007 16th) and outperformed Prague and Budapest (on the 12th and 22nd position respectively).

In the ranking of BPO friendly-countries Poland classified on the 10th position. Authors of the report emphasised that Poland is a perfect place for service companies which plan to target clients in the West of Europe and in Scandinavia. Due to well-developed net of good office space, the wide spectrum of service types provided in a number of languages, Poland became the strongest BPO centre in the Central and Eastern Europe. Moreover, the report highlights the world-class quality of the Polish educational system.

This year Tholons published its 4th edition of the ranking. (PAIiIZ)

Source: http://www.polishmarket.com.pl/document/:21382?p=%2FMONITOR+GOSPODARCZY%2F

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Call to outsource more state services

October 19th, 2009

Every service run by the state other than the most sensitive, such as military operations, would be opened up to some form of market-based competition in a radical vision of public sector reform set out by the CBI’s recently appointed outsourcing czar.

Private provision of public services forms a key plank of the employer group’s recommendations for the pre-Budget report – but Adrian Ringrose, who chairs the body behind the proposals, would like to see future governments go significantly further.

The chairman of the CBI’s public service strategy board says contractors and voluntary groups could be involved in areas of the public sector that have hitherto been regarded as politically unpalatable – possibly even frontline policing.

“In implementation, there’s very little, if anything – perhaps other than soldiering – that the state should have an exclusive right to,” Mr Ringrose says in an interview with the Financial Times.

But even though public spending budgets are under historic pressure, policymakers will take some convincing that further outsourcing is necessarily the solution to their woes.

As one of the most developed in the world, the UK’s public service industry already does a lot more than mere back office administration: FTSE 100 stalwarts such as Capita, Serco and G4S do key jobs for central and local government.

According to a study last year by economist DeAnne Julius, the market is worth £79bn (€86.64bn, $128.83bn), employs almost as many people as the NHS and accounts for 6 per cent of gross domestic product.

The industry manages prisons, provides airport security and guards Ministry of Defence sites.

For now, many of the CBI’s specific policy proposals simply involve greater independent involvement in relatively uncontroversial areas such as cleaning and IT. More contracting out of “non-core” public sector functions could save £30bn by 2015/16, the CBI says.

Mr Ringrose, who is chief executive of Interserve – the support services group whose contracts include maintaining mock-up Iraqi towns, where British soldiers do pre-operational training – says there is scope for a lot more.

“Some areas of public service have borders at the moment where the market provides up to there, but not beyond. The market could go beyond and start providing services that are currently reserved to government.”

“You don’t want private armies, no, but … if you look at the American model of military logistics support it is, you know, contractualised virtually up to the finger on the trigger.”

Is that desirable? “If it’s properly structured, yes,” he says.

The government’s role should be to set “what the rules of the game are, what the standards of acceptability are” – not necessarily to deliver.

In spite of the opportunities for support service companies presented by outsourcing, industry executives recognise that cuts to specific government programmes present a significant risk for those exposed to capital spending budgets.

Still, Mr Ringrose says the squeeze in public finances has at the same time made policymakers more receptive to his views. “I think that’s a very constructive environment for a radical redefinition of how public services should be delivered … It’s been driven more by necessity than by an aspirational philosophy.”

Conscious that he represents the interests of private companies that bid for outsourcing contracts, Mr Ringrose is keen to stress that the CBI wants to promote “marketised choice” and not private sector provision per se.

As for chances of success, he says: “You can certainly see instances where our message has stuck.”

Source: http://www.ft.com/cms/s/0/35e5c044-bc20-11de-9426-00144feab49a.html

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Outsourcing: Smaller, Faster, Cheaper

October 19th, 2009

The idea that technology will make companies more competitive has been largely derailed over the past couple decades as acquisitions, differing levels of compatibility between applications and global server sprawl have conspired to turn the corporate enterprise into a giant technological knot.

Companies are beginning to dig out from this complexity for the first time in years, and the questions emerging now are the following: Where are the remaining problems, how do they get solved and where do CIOs go from here? To answer these questions, Forbes caught up with Adam Klaber, IBM’s ( IBM – news – people ) general manager of global consulting for IBM Global Business Services.

Adam Klaber: There are three areas. The first, particularly with the current economy, is all about efficiency and effectiveness. That’s the big area where CIOs need to figure out how to deliver the necessary services so they can move forward in a much more cost-effective way to conserve cash. The second area is around opportunistic business growth. How do they get ready to take on market share and to grow faster as the recovery takes hold? The third area involves globalization of the enterprise.

Some companies are trying to consolidate globally, others say they need local offices to improve performance.

Which is better?

That will forever be a discussion and a debate. Do you move it to the center for efficiency, or do you deploy it as locally as you can for better responsiveness and value. Every large enterprise has that debate. It’s a pendulum swing. Today we see the movement toward centralized processing to gain efficiency. At the same time we’re seeing the movement to localize analytics and optimization of the information for the user.

Source: http://www.forbes.com/2009/10/18/outsourcing-enterprise-integration-technology-cio-network-klaber.html

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Dubai Outsource Zone says crisis has driven 23% growth

October 19th, 2009

Dubai Outsource Zone (DOZ) has revealed that it has seen a 23 percent rise in clients so far in 2009 despite the impact of the global economic crisis.

The first free zone in the world dedicated to the outsourcing industry, DOZ is already running at 100 percent occupancy, but hopes to add another 40 firms to its roster before the end of next year – bringing the total number of companies to 150.

“The crisis has bought a lot of benefit for us as previously companies were growing and outsourcing was not the main focus,” said executive director Ismail Al Naqi.

Source: http://www.arabianbusiness.com/570920-dubai-outsource-zone-says-crisis-has-driven-23-growth

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Medical records sent for computerisation to India up for sale

October 19th, 2009

In a development that is certain to lead to a hardening of stance on the outsourcing industry by the western world, investigations
conducted by a British TV channel have come up with the stunning revelation that confidential medical records sent to India for computerisation are being offered for sale, triggering heightened concerns about breach of data security here.

The revelation has forced police of the two countries to join hands to launch an official investigation into the data pilferage of the records stored by the Indian BPOs. If found true, the allegations could hit the flourishing BPO sector in India hard, fuelling doubts about their integrity and efficiency.

There is already a substantial public opinion building in the western world about the viability of outsourcing jobs to the developing countries, primarily India. In the run-up to the presidential election in the US, Barack Obama had advocated lifting of tax breaks to the American companies who ship jobs abroad.
The health records-for-sale investigation is scheduled to be broadcast on ITV on its Tonight programme on Monday.

Sall Anne Poole, head of investigations at the Information Commissioner’s Office (ICO), confirmed that an official probe had been launched to get to the bottom of things. “We are very concerned that private patients’ medical records are on sale in India. The ICO will establish the full facts and will then decide what action, if any, needs to be taken. Medical records are sensitive personal information and must be held securely,” she said.

The modus-operandi employed to procure the records was simple. Chris Rogers, the programme’s presenter, contacted two Indian salesmen through an internet chat room, and posed as a marketing executive keen on buying medical records to sell insurance and medicines.

Rogers bought 116 files with detailed medical records of British patients , from the two salesmen, whom the programme named as Jayesh Bagchandnani and Kunal Gargatti, the Daily Mail, a prominent British tabloid, reported on Sunday.

Bagchandnani reportedly said they came from staff at an Indian ‘transcription’ centre where medical records are computerised. Bagchandnani told Rogers: “We can do really good business with these leads. These leads will give you diagnose, entire diagnose of all the India’s top 10 BPO customers, what the customer is facing. There are 17 teams or you can say team managers. The floor managers, they are working as freelancers for me and I am telling them to pull the data for me. They work for me.”

Researchers for the programme then met Gargatti, in Mumbai. “You have the doctor’s name, doctor’s address, doctor’s phone number. Each and every thing here. I have 30,000 files to give you today, right now. I’ve around 140 diseases here. You just tell me which disease you’re looking out for — I can give you anything ,” he told them.

The files procured were of patients of London Clinic, one of Britain’s top private hospitals. Several hospitals in the National Health Service have also outsourced their transcription to India, sparking concern over data safety following the latest investigation.

The London Clinic said it dealt with its own files internally and did not send them to private companies. But it advised a group of consultants
to use a specialist Buckingham-based IT company, DGL Information Technologies UK, with which the clinic has a contract, to help turn paper records into computerised files.

DGL itself did not handle the records but recommended that the doctors use a document-scanning service provided by a company it has a contract with, Scanning And Data Solutions, which operates from Hertfordshire.

But Scanning And Data Solutions then sub-contracted further work on the files to a company in Pune. Scanning And Data Solutions admitted it had sent thousands of medical records to India over the past two years and said it ‘had no reason to disbelieve’ that it had scanned the records obtained by ITV in India.

It has now suspended its operations there and requested that its partners delete all the information they hold. It has told both Hertfordshire Police and the Indian police of the theft.

DATA PILFERAGE

The revelation has forced police of the two countries to launch an investigation into the data pilferage of the records stored by the Indian BPOs ‘We are concerned that private patients’ medical records are on sale in India.

The ICO will establish the full facts and will then decide what action, if any, needs to be taken. Medical records are sensitive personal information and must be held securely,’ Poole said There is a substantial public opinion building in the western world against outsourcing

Source: http://economictimes.indiatimes.com/News/Politics/Nation/Medical-records-sent-for-computerisation-to-India-up-for-sale/articleshow/5137528.cms?curpg=1

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Hamilton Plans To Outsource 30 Jobs

October 19th, 2009

Hamilton Sundstrand wants to cut 30 more hourly jobs and farm out work now done at its Windsor Locks headquarters to a subcontractor, according to Mark Hebert, president of Machinists union Local 743.

Company officials notified the union that they plan to outsource to an unnamed third party work on flight safety hardware that goes into the components Hamilton sells to Boeing and other aircraft makers, Hebert said.

Union and company officials today start a 45-day “meet and confer” process to discuss ways to stop the planned cuts or find ways to place the affected workers in other jobs, he said.

Company officials say the work “is not their ‘core’ work at the Windsor locks plant,” Hebert said. “We believe that this work is essentially a part of our core work because it the first step of our assembly and test process for not only the Boeing 787 program but for many other flight safety aerospace assemblies.

The company would lose control of the parts, Hebert said, adding: “Keeping control of critical hardware is a flight safety issue that should be of concern for the flying public.”

If the jobs are eliminated, Hebert said, the union would “make every effort to place those displaced employees in another department.”

Company spokesman Dan Coulom said that the move is necessary, because Hamilton “continues to feel the effects of the economic downturn.” To remain competitive, the company “must continue to reduce cost to position ourselves for future growth when the economy rebounds,” Coulom said.

The job cuts would take place in the second quarter of 2010, he said.

“Outsourcing a portion of our materials logistics function in Windsor Locks allows us to focus on our core work,” he said, which Coulom characterized as “primarily assembling and testing” aerospace parts and equipment.

The work would go to a supplier or suppliers that specialize in these products, likely one in Connecticut or nearby, he said.

Hamilton laid off 19 hourly workers at its Windsor Locks headquarters on Sept. 29. Days later, 10 hourly workers accepted a buyout package.

Those job cuts involved workers in the assembly and test group of the mechanical engines systems and in air management systems, where workers make air conditioning systems for aircraft. Some laid-off employees had worked for the company for as long as 22 years, Hebert said, adding the cuts left the union with 1,015 people in its bargaining unit.

Hamilton on Sept. 2 laid off 45 salaried employees throughout the company’s U.S. operations, 12 of those in Windsor Locks.

At the time of that layoff, Coulom attributed the cuts to “the global economic crisis and poor market conditions.” Affected workers received severance, outplacement services, and continued access to a scholar program that subsidizes employees’ education.

The pending 30 additional hourly layoffs would bring to 553 the total number of jobs lost at Hamilton this year, both salaried and hourly employees combined, through a combination of layoffs and buyouts.

Source: http://www.hartfordbusiness.com/news10625.html

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