Archive for May, 2010

Top education IT Outsourcing vendors released

May 31st, 2010

According to a press release, Research and Markets has released the “2009 Top Education ITO Vendors, Black Book Survey 2009 Results” report.
In the last year, the Black Book IT outsourcing education sector user survey has looked at more than 38 agreements by 455 education agencies as well as companies. In total, eighteen key performance indicators (KPIs) were utilized and scores were given to each vendor and ranked on a scale of 0-10.

Some of the major findings in the report include the following: The most significant attributes affecting education ITO customer satisfaction with outsourcing providers are KPIs vertical expertise, trust, customization, client relationships and reliability. It was also found that vendor dissatisfaction is not very common in the education ITO sector particularly with top notch suppliers. Strong satisfaction has been expressed by 25.4% of global clients. Incidentally, U.S. and U.K. clients are the most satisfied among all clients. Approximately 65.8% said they approved of their vendors.

In contrast, dissatisfaction with outsourcing vendors were present among 13% of those who were polled in 2009. Meanwhile, only 7% of companies in the U.S. and Europe were dissatisfied.

Companies mentioned in the survey include SunGard, Verizon Business, Infosys, IBM Global, Hewlett-Packard, Unisys, Capgemini, Accenture, Mahindra Satyam, Tata Consultancy Services and Wipro Infocrossing.

Incidentally, outsourcing to India has dominated the offshoring scene for the last ten to twenty years with outsourcing giants like Infosy, Wipro and TCS. And education is not the only sector to use offshoring as a means for cost savings. The best seo companies, mobile application companies, and game development firms are other firms involved in the outsourcing landscape.

The Top Education ITO Vendor report comes on the heels of a bill that was passed by the House to prevent outsourcing. Though much of the outsourcing is offshored to faraway destinations, unemployment in the U.S. has led to calls for restricting outsourcing. Should the bill be passed in the Senate, the bill will close loopholes for taxation for multinational firms outsourcing to other countries. This is done largely to keep American jobs at home and to prevent outsourcing.

It will be interesting to see how the Top Education ITO vendors will manage to get around this bill and create a market in the U.S.


Key European IT Outsourcing trends and challenges of 2010 highlighted

May 31st, 2010

IT Sourcing Europe announced today the completion of its “European IT Outsourcing (ITO) Intelligence Report 2010: Central and Eastern Europe”. This is a comprehensive study of the prospective Central and Eastern European (CEE) destinations for cost effective, yet highest quality outsourced development, and the factual capability of the CEE ITO providers to satisfy the rapidly changing business needs of their Western European clients.

Overall, IT Sourcing Europe’s Report shows that:

• Outsourcing to Central and Eastern Europe is expected to grow exponentially over the next 10 years;
• Investors and management anticipate 30% revenue growth in 2010;
• CEE, above all regions, is expected to leverage its competitive advantage in the high-growth areas of offshoring and nearshoring and possibly move ahead as the most attractive labour arbitrage alternative for Western European clients;
• Low labour costs are not necessarily the solution that Western companies are seeking in Outsourcing. The technological potential of young graduates in Ukraine or Poland is one of the primary reasons why Western companies choose to outsource to CEE.

Regarding the major ITO trends benchmarked in the Report, 2010 anticipates a significant change in the European IT Outsourcing landscape:

• More small and mid-sized organizations (SMOs) are expected to outsource their software/web development nearshore, compared to pre-crisis times.
• Additionally, buyers become more demanding and challenge their ITO partners to differentiate their position and value.
• Today’s Western European companies are seeking a combination of speed, cost management and growth supported by business agility and unprecedented technological innovation.
• Striving to evolve strategic long-term Outsourcing relationships, Western clients express readiness to move from project-based services and staff augmentation to more effective business models, able to handle core software development.

According to the Report, the following challenges will be facing Europe’s ITO industry in 2010:

• ITO suppliers in Central and Eastern Europe should be ready to respond to transformations caused by SaaS and Cloud Computing, adjust costs, upgrade delivery models etc;
• ITO suppliers will be forced to respond to client’s business demands through building capabilities to solve technical problems, expand services, build consultative front ends and customized solutions for client’s differentiation.

There are more thought-provoking findings presented in the Report.

IT Sourcing Europe believes that its European ITO research will help Western European companies to make the right Outsourcing decisions and CEE ITO suppliers to better understand the ITO landscape of 2010 and to be better prepared for upcoming challenges.


IT outsourcing – Is it on your IT agenda?

May 31st, 2010

This is the age of specialization; companies are building on their strengths. Having in-house IT expertise is not essential when it is not part of the core business. The companies are looking for solutions outside their own organization and acquiring whatever makes sense of their businesses. Companies coming out of recession have two main objectives; reduce IT support costs, and invest in IT technology to create efficiencies. At times like this IT outsourcing has become a key business strategy irrespective of organization size and IT budget.

In the last year over 60% of the businesses outsourced at least a portion of their IT. Some used IT outsourcing as a key strategy to trim their IT budget, which is often expected during recession period. Others took a more strategic approach; focusing on creating long term efficiencies using IT outsourcing. What is IT outsourcing and why are so many companies looking into IT outsourcing? IT outsourcing has been around for some time. Rapid growth in technology has triggered its acceptance among wide range of organizations.

It is impossible to acquire enough in house talent to deal with issues across multiple problem domains. This is why organizations maintain IT staff focused on core-competencies of the business. Most of the tedious and mundane functions are generally first to get on the IT outsourcing list. The major categories of IT outsourcing include:

1) Software development
This is probably the most talked about outsourcing strategy for IT. Large to mid-sized companies that develop software as part of ongoing software development, and deployment strategy mostly use this approach to create efficiencies at lower costs. The approach allows businesses to gain access to a greater pool of talent and at a relatively lower cost.

2) Application support
The most commonly used among small and mid-sized organizations, this is highly effective way to manage some of the IT functions. Two prime example of software support strategy at work is subcontracting email and web hosting. Organizations benefit a lot by not having to build and support infrastructure required for supporting such applications.

3) Infrastructure management
This area of outsourcing works for all types of organization. This is an effective strategy when you are trying to access a specific skill set, or when you would like to repurpose employee away from a tedious task. This approach allows you to maximize cost saving and dramatically reduce the management overhead. Generally, organizations may end up gaining some additional services that they didn’t have prior to outsourcing.

4) Service Desk support
Large growing companies can benefit greatly form service desk outsourcing. It is important strategy when your organization cannot meet the user needs in an effective way. The quality of services can be greatly improved using this strategy.

Depending on the size of the organization, each of the categories can result in major IT savings. In many cases organization outsource few or all of these. Of course organization must exercise caution when using any of these strategies however; a well executed strategy can not only save in the short-term but also be very effective in creating organization level efficiencies. In addition, by choosing the right partner, IT outsourcing allows sharing of responsibilities and opportunities available to the business manager to improve what is, in most organizations one of the key contributing services to business efficiency and effectiveness.
The main benefits of IT outsourcing are as follows:

1) It allows organization to maintain Reliability, Maintainability, Serviceability, Resilience, and Security in their IT infrastructure and applications.

2) It allows organizations to quickly acquire right skill sets.

3) It allows organizations to transfers project responsibility to the outsourcers.

4) It frees up resources within the organization to concentrate in key areas.

5) Outsourcing IT can be used as tool to bring new knowledge into the company.

6) It can help organizations cut IT budget.

Even though IT outsourcing is an effective business strategy, it must be evaluated carefully and managed by experts. It can represent a large change and it can have an adverse effect on IT performance. It is also important to set realistic goals and expectations. When engaging in such activity ensure that you treat your vendors are you partners and involve them in the overall IT strategy. It is often seen that vendors go through a natural staff turnover; if that happens, try not to get too involved in the vendors day-to-day activities. Maintain high level management of the vendor relying on weekly/monthly review processes.

IT outsourcing must be on the top of your IT agenda. Almost all companies can benefit from it. The cost savings strategies will allow companies to free up resources, and to focus in areas that require greater


Outsourcing can cost competitive advantage.

May 31st, 2010

Technology firms should be wary of outsourcing manufacturing overseas en masse, says the author of an annual IT industry report. Firms looking to cut costs could lose something more valuable. If you divest manufacturing out of your value proposition and don’t have that close integration between manufacturing and design and development … you potentially abdicate a competitive advantage,” says Technology Investment Network director Greg Shanahan.

A lot of the time it’s that close collaboration that’s made these companies competitive in the first place. Hamilton-firm Pacific Aerospace, which makes aircraft designed to fly from rough and remote locations with very short landing strips and earned $39 million last year, carries out its manufacturing locally and is a leader in its field, he says.

China is not just a manufacturing monolith and has begun to invest heavily in research and development, meaning New Zealand firms can’t rest on their R&D laurels. “If they have both an innovative edge and a low-cost advantage, where does that put New Zealand.New Zealand has its software success stories, but software development can be a cottage industry as the barriers to entry are so low.

The sector’s “sweet spot” is where it can combine software with hardware – as Fisher and Paykel Healthcare and Compac Sorting Equipment have done, he says. Both firms were among the top 10 highest-earning technology companies for 2009 and pulled in $458.7 million and $75m respectively, according to the network’s annual tech sector report.

The old argument that New Zealand’s distance from major markets is a barrier to growth is wearing thin, Mr Shanahan says. International companies expect to do business with companies from exotic locations including New Zealand.

Auckland touchscreen technology firm NextWindow was bought by Canadian company Smart Technologies last month and it is possible more local technology firms could follow suit, but that will depend on their situation and how quickly the northern hemisphere bounces back from the recession, he says.

While overseas acquisitions generally see local firms lose a lot of control, they have not so far devastated the sector. “The rate of growth in New Zealand-owned companies has more than compensated.Volatile exchange rates have become more of a challenge, particularly with the United States dollar, but technology firms are becoming increasingly sophisticated at managing currency.


Outsourcing can hurt a company if not well planned

May 31st, 2010

Companies offering services such as cleaning, security, customer care, auditing and accounting are today making it easier for corporates to acquire these services at a lesser cost than that of hiring permanent employees for the jobs.
Mr Simon Muthiora, the executive director of Skills Geographic Kenya Limited, a local human resource recruitment company, advises companies to plan well for the activity before embarking on it.
Outsourcing companies need careful planning to establish the services they are outsourcing and whether it will be successful in achieving the core goal, which in most cases is cost-cutting,” he says.
Basically, outsourcing will involve letting go a number of permanent employees and acquiring a new lot of employees who have contracts signed with another company.
A well planned outsourcing system considers several factors, among them the type of services being outsourced, the reasons for outsourcing, how best to acquire the right personnel to provide the outsourced services, and dealing with risks associated with outsourcing .
“For most companies, employees are the greatest assets, hence planning for them is crucial. These include maintenance in terms of benefits and salaries which forms the entire cost of retaining employees, and which is then measured against the cost of outsourcing,” says Mr Elijah Theya, a human resource consultant.

Secondly, when planning to outsource, consider the type of services you need.Core responsibilities that require experts are not outsourced. A company cannot outsource the services of a chief accountant. You may choose to retain a permanent employee for this and outsource payroll accountants,” says Mr Muthiora.
Management of the outsourced staff should also be planned before attempts to outsource are made.This means ensuring that the outsourced employees work within the company’s policies and that they are productive. This can be established through constant communication between the two companies.
Routine management of outsourced staff lie with the outsourcing company while issues touching on staff salaries, insurance, leave compensation and other benefits are dealt with by their recruitment agencies/company.Outsourcing if not well planned could hurt a company by compromising performance. This could subsequently hit customer loyalty.
Take an example of front office services where customers have developed a long lasting relationship with the employees.


Senator proposes tax on overseas call centre calls

May 31st, 2010

NEW YORK, May 30 (Reuters) – In a bid to reduce outsourcing of US jobs, a Democratic senator said yesterday he will push legislation to make companies inform customers when their calls were being transferred outside the United States and charge companies for those transferred calls.

This bill will not only serve to maintain call centre jobs currently in the United States, but also provide a reason for companies that have already outsourced jobs to bring them back,” Senator Charles Schumer said in statement.
Customers calling 800 numbers are often transferred overseas, and in such cases the bill would mandate that callers be told where their calls were rerouted.
Companies would also be required to certify to the Federal Trade Commission annually that they were complying with the requirement, and face penalties if they did not certify.
Schumer’s bill would also impose a $0.25 excise tax on any customer service call placed inside the United States which is transferred to an agent in a foreign location. The fee would be assessed on the company that transferred the call.


Small businesses making money outsourcing in China

May 31st, 2010

Today many small to midsize companies are seeing the advantages of “going global” for product or labor. More and more they are seeing this is essential to keep stride with the larger multi national corporations. Up until recently the logistical aspects alone were enough to keep these small to mid sized companies out of the international outsourcing arena.

Traditionally to take advantages of the cheap labor or product available in the devolving nations like China and India companies were either required to establish physical locations in these countries or commit to high volume, long-term contracts.

Recently, small to mid sized companies have found an alternative that has enabled them to take advantage of the cost savings opportunities that come with outsourcing. New companies have begun to pop up, primarily in Asia that specialize in providing outsourcing services for SME’s (Small to Medium Size Enterprises). These companies are often run by expatriates, often from western countries, who work as a bridge between the SME’s and the inexpensive labor and product that they is available in these developing countries. Many of these outsourcing companies who specifically target SME’s don’t provide the labor or manufactured goods to the western companies but only work as the connecting point and communication hub between the two companies.

Smith Monitoring Inc. is a medium sized regional company based in Texas and is one such SME that has recently been able take advantage of these outsourcing bridging companies to help stay more competitive within the security industry. In 2009 they began using Chinese programmer for small graphic and web projects and after having good success have also began outsourcing many of its IT needs as well.

Smith currently boasts an over 50% reduction in costs for all services that they have had outsourced to China and because they have used an outsourcing bridging company that specializes in working with SME in western countries they have had no issues with quality or communication.


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