The top public global manufacturing firms spent $8 billion in the first six months of 2011 on contracts for information technology and business process services, according to the 2Q11 Global TPI Index. The index measures commercial outsourcing contracts valued at $25 million or more among the Forbes Global 2000 companies. TPI, a sourcing data and advisory firm, expects manufacturing outsourcing to pick up in the second half of the year and the outsourcing market as a whole to be in line with 2010 results.

The overall global market for outsourcing was down 18% in the second quarter of 2011. TPI officials said the market was weak in the Americas and also reflected fewer large contracts. TPI said there was a continued movement away from large contracts because of increased use of multisourcing by corporations and a general reluctance to commit to large investments.
In contrast to the Americas region, there was strong year-to-year growth in the Asia Pacific area (55%) and in Europe, the Middle East and Africa (13%).

“While manufacturers haven’t lost their focus on cost control, they are focusing more on using outsourcing to introduce flexibility in their cost structure so that they can keep costs in line with revenue as it rises or sinks,” says Dave Lewis, TPI’s partner for manufacturing and automotive.

They are also using outsourced services when expanding into new markets and as a way to get access to skilled workers. “Manufacturing companies tend to have older workforces,” Lewis notes. “As they need to get access to new skills and new technologies, instead of trying to grow that internally, often they will look to the sourcing marketplace.”

Aging Assets
Lewis said manufacturers cut back on IT-related expenses during the recession, but now face having aging assets that they must replace or risk an adverse impact to their manufacturing processes. “I have talked to a number of companies that think they are now spending too little on IT,” Lewis related. “They may not have refreshed their laptops for 5 years, or their networking or computer equipment.”

Lewis identified a trend from highly customized outsourcing contracts to more standardized solutions. He said standardization keeps costs down for both service firms and their customers. “It is very difficult in the infrastructure space, with computers and networks, to get a strategic advantage so you really want to drive those costs as low as possible through the use of standardized solutions.”

Many companies focus almost exclusively on cost reduction in their first outsourcing contracts. Lewis said that as these contracts expire, manufacturers have the opportunity to examine how their outsourcing providers can help them build their businesses. “One of the biggest sources of dissatisfaction with clients and outsourcing agreements is the lack of innovation and new technology they get from service providers. A lot of times, that is because the first time they do an outsourcing agreement, they are so focused on cost reduction that they don’t leave the service provider enough latitude through margins to be able to invest in the relationship.” Lewis said a “sign of a maturing outsourcing relationship” is where the parties focus not just on cost but also how new technologies such as cloud computing can help build the client’s business.

Source:http://www.industryweek.com/articles/manufacturers_spend_on_outsourcing_to_add_capabilities_lower_costs_25193.aspx

Mecom Group, a London-listed media company with operations in the Netherlands, Denmark, Norway and Poland, has awarded a €90 million, five-year IT outsourcing deal to Indian company HCL.

HCL will provide IT infrastructure management services, as well as some application management services, starting in the first half of next year.

The company expects to incur €19 million in up front cash costs and €12 million in “outsourcing-related capital costs” as a result of the deal, but predicts it will provide an annual profit improvement of €12 million.

Mecom’s chief operating officer Keith Allen commented that the deal will support the company’s transition from a publisher focused on paper-based products to a “multi-platform consumer content business”.

“This agreement will not just be financially attractive but it will also provide us with consistent IT development across our different divisions,” he said.

In its latest financial year, Mecom reported a 2% decline in overall revenues to €1.4 billion, as advertising sales dropped 4%.

HCL claims to have four of the world’s five biggest publishing companies among its customers. News International counts among its media customers, a connection that lead to the HCL’s name being mentioned during a recent emergency debate on the phone hacking scandal in the House of Commons.

“I believe that the police should ask [News International chariman] Mr James Murdoch and [former News of the World editor] Rebekah Brooks whether they know of the attempted destruction of data at the HCL storage facility in Chennai, India,” remarked MP Tom Watson.

However, HCL denied any involvement in the incident, saying that it does not store any of its customers’ data, anywhere in the world.

Source:http://www.information-age.com/channels/it-services/news/1643058/mecom-signs-90m-outsourcing-deal-with-hcl.thtml

Winnipegger Ashoke Dasgupta is on the reverse end of an international phenomenon.

Dasgupta, who came to Canada in 1997, works two jobs. The first is as a security guard in Winnipeg.

The other puts an interesting twist on international outsourcing — copy editor for Compassionate Friend, a magazine published in Pune, India by animal rights organization Beauty Without Cruelty.

Dasgupta said the reasons behind the international outsourcing are simple.

“Entrepreneurs see a chance to turn around dying businesses through outsourcing,” he said. “(They can) speed up their pace of innovation or fund development projects that otherwise would have been unaffordable.”

He said though outsourcing can be viewed negatively, it is changing the way people do business.

“Aggressive outsourcers are aiming to create radical business models that can give them an edge and change the game in their industries,” he said. “Old multinationals see offshoring as a catalyst for a broader plan to overhaul outdated office operations and prepare for new competitive battles.”

Dasgupta credited technology for the rapid growth in outsourcing, adding he believes it is here to stay, for matter what it means for Canada.

“This is the way the world is going,” said Dasgupta.

Dasgupta said he was initially offered the position and an apartment in India with a monthly salary, but agreed to work from Canada for an honorarium that is paid out per issue instead.

Source:http://www.metronews.ca/winnipeg/local/article/925402–winnipeger-s-case-of-reverse-outsourcing

How America gets people and stuff into orbit is about to be outsourced in an out-of-this-world way.

With the space shuttle’s retirement Thursday, no longer will flying people and cargo up to the International Space Station be a government program where costs balloon. NASA is turning to private industry with fixed prices, contracts and profit margins. The space agency will be the customer, not the boss.

At least when it comes to the routine part of going to and from the space station, NASA hopes to rely on companies that will be the space version of FedEx and Yellow Cab.

The company that has been leading the commercial space race is hoping to launch its privately built rocket and capsule to the space station late this year. It won’t carry astronauts, but if all goes well the unmanned ship will dock with the station and deliver food, water and clothing. And its major private cargo competitor may only be a month or two on its heels.

Getting people to orbit on a new American ship is a different story. Some ambitious companies hope to launch astronauts that way in three years, maybe four. Until then, the Russians will fly astronauts on a pay-for-play basis. Some space veterans like John Glenn, the first American in orbit, think five to 10 years is more realistic.

But two of the major players have surprised people before — the tech tycoons who founded PayPal and Amazon.

NASA has hired two companies — Space Exploration Technologies Corp. of Hawthorne, Calif., and Orbital Sciences of Dulles, Va. — to deliver 40 tons of supplies to the space station in 20 flights. The cost is $3.5 billion, about the same price per pound as it was during the space shuttle’s 30-year history.

“It’s time. Once NASA blazes the trail, creates the technology and it’s available for private companies to take advantage of, this is the time” for the private firms to take over, said NASA commercial cargo chief Alan Lindenmoyer.

NASA met on Wednesday with companies wanting to taxi astronauts to the station. The agency hopes the money it saves by not flying the shuttle can be spent on new deep-space missions that will send astronauts to an asteroid and on to Mars.

Six private companies are working with NASA to send ships to the space station — either remotely-operated cargo ships or eventually astronauts in crew capsules.

For well more than a decade, boosters of commercial space have said they are ready to take over the job of going into low-Earth orbit on their own nongovernment ships, but hadn’t done it.

Now one has: Space Exploration Technologies, which often goes by the name SpaceX and is run by risk-embracing PayPal founder Elon Musk, launched his unmanned Dragon capsule into orbit last December. Now his company is lining up for the first private visit to the space station. The lower and upper stages of the rocket are at Cape Canaveral, Fla. The capsule is almost finished.

“What we want to do is get back into space as quickly as possible and as sustainably as possible,” said former astronaut Garrett Reisman, who now runs SpaceX’s “Dragon Rider” program.

And maybe a month or two later, Orbital hopes to have its first test flight to the station. First, it has to finish building its launch site at Wallops Island, Va., which should be done in just a few weeks. Then, later this year, it will have a test launch of its new rocket, the Taurus II, and finally, it will use that new rocket to launch its capsule, Cygnus, to the space station, said company spokesman Barron Beneski.

“Just like a person hires FedEx to deliver a package across the country and you pay him 50 bucks, we’re delivering a 2,000-kilogram package to space, a few hundred miles above Earth, for a fixed price,” Beneski said.

Four companies are building spaceships to take astronauts to the space station on a pay-per-seat basis. They are all constructing ships that would be launched on top of private rockets.

SpaceX appears to be leading the pack. Right behind it is Boeing, a giant in aerospace, which hopes to launch astronauts using its capsule as early as 2014. A third company, Sierra Nevada Corp., is taking a different route, proposing a shuttle-like spaceplane instead of a capsule. It is hoping to launch around 2015. And Amazon’s Jeff Bezos is heading a fourth company, Blue Origin, that is much more circumspect about its plans for a gumdrop-shaped ship.

A fifth company, United Launch Alliance, just signed an agreement with NASA. It hopes to get its Atlas V rockets eventually approved for use in launching humans. Normally, Atlas rockets are used to put satellites in orbit. SpaceX is building its own private rockets, the Falcon series.

The crew of the final shuttle flight, Atlantis, left on the space station a small U.S. flag that flew on the inaugural shuttle voyage in 1981. The flag is the prize for the first rocket maker that brings Americans back to the station on a mission launched from the U.S.

NASA is hoping these companies are ready.

Just minutes after Atlantis lifted off on the final space shuttle mission, NASA spokesman Bob Jacobs turned to his counterpart from SpaceX and told him, “It’s your turn now.”

Source:http://www.greenbaypressgazette.com/article/20110724/GPG06/107240587/1269/gpg06/Outsourcing-space-NASA-ends-shuttle-program