Growing business services is a key agenda under the nation s Economic Transformation Programme (ETP). Identified to become a catalyst in Malaysia’s transformation into a high income economy; the business services sector has a unique role to play in driving the competitiveness of a wide range of industries by offering differentiated world-class IT outsourcing, accounting and other related services.
Source:http://www.bernama.com/bernama/v5/newsindex.php?id=615265
Chetan Dube, a former associate professor of mathematics at New York University, thinks he can teach IT services providers a lesson. Using artificial intelligence and humanoids, he is revolutionising the way computer networks are managed and making the low-cost business model of Infosys, Wipro and IBM look like relics of the past.
Dube, 42, and his company IPSoft operate in the area of IT infrastructure management, a fast-growing and lucrative part of the outsourcing business that Indian companies are keen to make deep inroads into. IPSoft stands in the way. “The last decade belonged to labour arbitrage; this decade belongs to advanced automation arbitrage,” Dube told ET in a telephone interview from New York, where IPSoft is headquartered.
A testament to this claim is the fact that IPSoft employs only 1,400 people for revenues of $700 million (Rs 3,400 crore). In comparison, Indian IT services companies typically employ at least 15,000 staff for each $1 billion in revenue.
IPSoft, founded in 1998 by Dube and his colleagues from New York University, pulls this off by relying heavily on expert systems that mimic the human brain. They are capable of self-healing, self-learning and autonomously solving a majority of the problems that arise on computer networks. And IPSoft’s correlation engines do what the human brain just cannot: pick trends by analysing hundreds of pieces of information all at once to diagnose and solve problems. Nearly two-thirds of all problems on computer networks are being solved by IPSoft with no human intervention at all, said Dube who studied electrical engineering at IIT Delhi.
The global market for managing computer servers, desktops and communication networks is worth around $25 billion at present and expected to grow to $45 billion in the next four years, according to research firm Gartner.
India’s export of remote infrastructure management services was worth $4.3 billion in 2010 and the segment employed nearly 1 lakh people, data from Nasscom show.
Humanoid Vs Humans
Humanoid Eliza can identify problems, have natural conversations with users and solve them in few seconds compared with a few hours taken by human engineers
At current rate, IPSoft will reach a billion dollar in revenues with just 2000 staff while Indian outsourcing fi rms typically employ at least 15000 staff for every billion dollar in revenues
What’s at Stake
$25 billion
Current global market for IT infrastructure management
$45billion Likely size of this market in the next four years
Business can Grow Seven-fold by 2020
The software industry grouping estimates that by 2020, this business can grow seven-fold and contribute to more than a third of the total IT services revenues for India. For Wipro and HCL, the remote infrastructure management business makes up about a fifth of revenue. And all this is in IPSoft’s domain. Indian tech firms and multinational companies such as IBM and HP have been developing common platforms to serve multiple customers with fewer staff. But none of them, analysts say, have made any significant progress in bringing real automation and intelligence to machines that move away from people-based support systems.
Eric Goodness of Gartner said Indian and other outsourcing vendors’ view of automation is confined to just the workflow and not true services automation where there is no human intervention. “When you have a hammer, everything looks like a nail,” the Boston-based analyst said. “During my visit (to India), automation has been the centre point of discussions and there were some uncomfortable pauses I noticed in Indian boardrooms.”
Over the past few months, companies such as ING, Morgan Stanley and BT have shifted an increasing proportion of their IT management projects to IPSoft. At ING, the biggest Dutch financial services firm, IPSoft replaced TCS engineers with its platform to manage the trading desk across nine central European countries. Within the last year, IPSoft has acquired 500 customers. “Ninety-two per cent of the opportunities we have walked into, we have won,” Dube said.
Source:http://economictimes.indiatimes.com/tech/ites/using-humanoids-ipsoft-making-the-low-cost-business-model-of-infosys-wipro-and-ibm-look-like-relics-of-the-past/articleshow/10084453.cms
The Social Security Administration’s (SSA) Office of Inspector General this month published a report citing incidents of misuse of the H-1B visa among sponsoring employers and visa holders.
Specifically, the Inspector General’s Office found that as many as 18 percent of H-1B visa holders may have used their social security numbers for purposes other than to work for their approved employers. Examining a sample of 200 records to assess H-1B workers’ use of social security numbers, the report says that 11 percent of the visa holders reported wages from companies other than the employer that sponsored them, and seven percent reported no U.S. wages at all.
H-1B visa holders may only work for sponsoring employers after approval by the Departments of Labor and Homeland Security. Although most of the non-compliant H-1B workers had posted wages from employers in fields associated with technical or specialty occupations, the report noted that one H-1B worker had earnings from a restaurant and janitorial service.
The SSA’s Inspector General’s Office contacted the employers of the H-1B workers who did not receive wages; six acknowledged sponsoring the worker but said the H-1B holder had never worked for the company, and three said they had no record of the H-1B recipients, although Department of Homeland Security (DHS) records indicated they were the sponsoring employers.
Field office personnel responsible for processing the visa holders’ social security number applications said in interviews with the inspector general team that some H-1B workers acknowledged they would not receive wages in the United States because their employers would pay them in their home countries. Others admitted that they planned to work for a company other than their authorized employer, according to the report.
“Unauthorized work by H-1B workers weakens integrity and may require that the [SSA] pay future benefits to individuals who misuse a [social security number] to work in the United States,” concludes the report, which also questions whether H-1B workers need social security numbers if their employers do not report wages.
The SSA’s report is the latest evidence of increased government scrutiny of the nonimmigrant visas—like the H-1B, the L-1 and the B-1—that IT outsourcing companies rely on to perform work in the U.S.
The SSA’s findings generally line up with a 2008 report from the U.S. Citizenship and Immigration Service which found that 21 percent of H-1B petitions it examined involved fraud or technical violations.
The additional attention being paid to nonimmigrant visas could prove problematic for outsourcers and their clients. “We have anecdotal evidence from numerous IT outsourcing suppliers that an increased level of scrutiny on—and rejection rates for—B-1 visas is hindering their ability to conduct internal meetings and training for foreign employees in the U.S.,” says Peter Bendor-Samuel, CEO of outsourcing consultancy Everest Group. “It is highly likely that this same [investigative] approach will be taken throughout the remainder of the election cycle regarding H-1B visas and L-1 visas.”
The B-1 visa—designed to allow foreigners to come to the U.S. for short periods of time to attend, for example, corporate conferences or to conduct contract negotiations—made headlines this year when an Infosys employee sued the Indian IT service provider for misusing the visas in order to increase its profit margins. Recently, two more Infosys workers have come forward with similar allegations.
Meanwhile, H-1B lawsuits are emerging, like one recently filed in California by IT employees alleging that their employer replaced them with H-1B workers in violation of the state’s anti-discrimination laws.
The State Department has confirmed that it is considering changes to the B-1 visa program to prevent abuse. In addition, “the State Department has the option of targeting visa applications for scrutiny based on many factors, to include city, nationality, work type and firm type,” says Bendor-Samuel. “They are not dependent on pending or future changes in law to employ these options.”
The Department of Homeland Security says that it has increased enforcement of nonimmigrant visa regulations over the past two years.
In the short term, increased rejection rates and audits is the biggest risk for IT outsourcers reliant on nonimmigrant visas. “This can lead to long-term suspensions for habitual offenders, potentially causing significant disruptions in the availability of skilled foreign workers even without any major legislative action,” says Bendor-Samuel.
New legislation or policy changes are longer-term risks, and it’s not clear how those will play out. Much depends on the outcome of next year’s elections, the perception of whether suppliers are policing themselves, the outcome of current civil and potential criminal cases, and the state of the economy. “Economic improvement will help remove the spotlight from this topic,” says Bendor-Samuel.
In the meantime, however, outsourcing clients should be wary of public associations with visa issues. Bendor-Samuel says outsourcers could see sudden cancellations of major application development and maintenance projects or a reluctance to go public with new outsourcing deals. “One major ITO firm recently announced a $900 million IT outsourcing contract in which the client requested that its name be withheld,” says Bendor-Samuel.
The report from SSA’s Inspector General Office recommended that the Department of Homeland Security and SSA establish a data match agreement to reduce the number of H-1B workers who may use their social security numbers for purposes other than to work for their approved employer.
Bendor-Samuel says the IT outsourcing community should be prepared for further announcements from the U.S. State Department around policy changes or changes to definitions as they are applied to the screening and approval of visa applications. Such changes may “result in additional delays in the screening process.”
For outsourcing customers, that could translate to longer transitions, reduced quality and higher fees, says Bendor-Samuel, adding that they “could face legal issues if they had reason to be aware of any visa fraud perpetrated by one of their service providers.”
Source:http://www.cio.com/article/690278/H_1B_B_1_Visa_Scrutiny_Threatens_IT_Outsourcing_Providers?page=2&taxonomyId=3195
Xerox Co. plans to acquire the Italian customer service firm XL World to boost its outsourcing business in Europe, the printer and copier maker said Wednesday.
Financial terms were not disclosed.
Xerox’s business services division, Affiliated Computer Services, is buying XL World. Xerox acquired ACS in 2010 to boost its services offerings for companies after its traditional office equipment business suffered a steep drop-off during the recession.
Founded in 2000, XL World is focused on the telecommunications sector. Buying it will help Xerox provide clients access to affordable European language services for call center and back-office services, the company said.
The acquisition, which covers XL’s 1,500 workers and facilities in Romania and Albania, will also help Xerox reach its goal of creating a global network of outsourcing centers, the Norwalk, Conn.-based company said.
Source:http://www.businessweek.com/ap/financialnews/D9PSTMR00.htm
Semiconductor inventories are currently at “worrisome levels” according to an analyst, which could spur a rise in the number of firms taking up IT outsourcing.
Gartner has warned that semiconductor days of inventory are due to plateau in the third quarter and that the industry will need an inventory correction towards the end of this year.
Gerald Van Hoy, senior research analyst at Gartner, has warned that firms are entering the third quarter with high levels of inventory.
He highlighted the fact that weakening economic sentiment means that the amount currently held by many firms is too high.
“Industry must rein in production growth and take action to reduce accumulated inventory,” he advised.
These actions are likely to take place within the next few quarters and both production and sell-through are likely to return to their balanced levels by the second quarter of 2012, Mr Van Hoy claimed.
Gartner predicted that the correction will take place at a time where average selling prices will be tracking below trend-levels.
Peter Middleton, a principal analyst at the firm, claimed that the overcapacity in foundry space is due to extend the period that this weakness will be felt.
While high inventory levels managed to cushion the effect of the recent Japanese earthquake, he claimed that it is now necessary to take actions to try and rationalise stock levels following the macroeconomic weakness.
Gartner predicted a fall in semiconductor demand during the second half of this year and the beginning of 2012.
Earlier this month, Gartner warned that worldwide semiconductor sales would fall 0.1 per cent to $299 billion (£189 billion) by the end of this year, which could lead firms to use cloud computing to maximise the use of their existing resources.
This is a downgraded projection from the analyst’s predictions earlier this year, where it held that the sector would expand by 5.1 per cent over the course of 2011.
Source:http://www.ihotdesk.com/article/800736897/Semiconductor-inventories-at-worrying-levels
After Y2K insurers couldn’t wait to replace old operating systems. They thought it was a race for survival. Now that they’ve survived, the jittery economy has upped the urgency for legacy replacement, but carriers struggle to afford these projects. Software acquisition costs are a fraction of their implementation expense. CIO’s need qualified people whose costs won’t overwhelm the benefit. Meanwhile, legacy systems don’t just disappear.
Offshore outsourcing rates can make the price tag of a long project not look so bad, but offshore brings communication and cultural barriers. Dramatic time zone differences make the ever-popular agile project, which needs proximity of teams, impractical. It’s tough to ignore offshore rates, but projects live on spreadsheets only until they begin, and there are nearshore alternatives.
A study published by Global Services ranks Halifax, Nova Scotia second among emerging information technology destinations in North America. Nova Scotia hourly rates for senior programmers, technical architects and other lead resources are significantly lower than nearshore rates in the States.
But if all you know about Nova Scotia is the line in a Carly Simon song, you’re not alone. It’s just an hour from Boston; less than two from New York. Direct flights fly from other locations as well, and you won’t need a Learjet. Its relative anonymity is a challenge for Nova Scotia Business Inc., an organization focused on growing and sustaining the economy of Nova Scotia.
One of NSBI’s goals is “to establish Nova Scotia as a global center for financial services middle and back office operations by leveraging our technology talent with our insurance expertise,” says J.P. Robicheau, director of financial services and nearshore solutions for NSBI, “but we need insurance carriers to understand the outsourcing opportunities we have here.”
Insurance-focused vendors like CGI and Keane. Inc., an NTT Data Company, have operations in Halifax. They provide resources, agile method expertise, and system staging environments to North American carriers. According to Jay MacIsaac, senior vice president for CGI’s Atlantic Canada, “The Halifax operation began as an application development and maintenance effort for Manulife.” As a result, “we have enormous depth in insurance knowledge and cover the spectrum for system related projects, from managers to developers. We crack the language, culture and insurance knowledge barrier and we’re in the same time zone.”
Chris Donnelly, assistant vice president and chief regulatory counsel for Manulife, agrees. “We’ve continued to grow our resource commitment in Halifax largely due to the quality of staff there, and through our relationship with CGI,” he said. “The Halifax team is highly skilled and dedicated to the company. Our turnover is lower there than most places.”
Keane’s Halifax Solution Center “provides our clients the ability to outsource in stages, so our clients don’t need to go so far away initially,” says John Gillis, director of Canada delivery. “Carriers get used to operating in an outsourced solution. After a few years, they can choose to go offshore for greater savings.”
Keane also hosts Agile Centers of Excellence in Halifax. These are “the gurus of the agile project method,” says Gillis. “They provide training to companies new to distributed agile teams as well as the resources agile requires.”
CGI and Keane’s Halifax operations are competitive with offshore rates. Gillis describes Keane’s as “somewhere in-between the U.S. and offshore.” MacIsaac is quick to caution rate card comparisons and references the difference between senior resources in India vs. Halifax.
“We expect more from a senior for time on the job and insurance understanding,” MacIsaac says, “and we’re skilled in multiple programming languages.” He also believes there is a difference in what an insurer is paying for. “With offshore you’re typically renting a body; with nearshore you’re buying an output,,” he says.
BF&M Limited is the holding company for a group of financial services companies based in Bermuda. John Wight, their CEO, found Nova Scotia accidentally. “In 2004 we needed a backup site to store data. A consultant recommended Nova Scotia. Since that time we’ve grown to 27 employees working from our Halifax office for system support and application development. Our people are highly motivated, understand insurance and hit the ground running.”
BF&M, CGI and Keane worked with NSBI to set up shop in Nova Scotia or to facilitate outsourcing deals. What started small for each company has grown because of the affordability, work ethic and culture of the resource pool. John Wight sums up the opportunity succinctly. “Whenever we need a technology resource we ask ourselves, ‘what about Nova Scotia?’”
Source:http://www.propertycasualty360.com/2011/09/22/nearshore-outsourcing-options-available-for-insure?t=tech-management
Asia-Pacific’s business process outsourcing (BPO) market will reach revenues of US$17.47 billion in 2015, a compound annual growth rate (CAGR) of 9.3 per cent from the US$11.18 billion it hit in 2010, predicts Ovum in a new report.
The independent technology analyst finds that strong growth in emerging economies such as India, Greater China (includes Taiwan and Hong Kong) and South Korea is driving the global market forward, as businesses in these regions wake up to the benefits of BPO.
According to Ovum’s forecast, the BPO market in Greater China will increase at a CAGR of 16.1 per cent from over the forecast period (the end of 2010 to the end of 2015). Meanwhile India and South Korea’s market will increase by 15.7 and 14.6 per cent for the same period, respectively. Among the developed economies in Asia-Pacific, Australia and New-Zealand’s BPO market (ANZ) shows the most traction with a CAGR of 7.4 per cent over the forecast period.
Ovum analyst Hansa Iyengar commented: “In the post-recession business environment, it has become imperative for enterprises to keep costs under tight control to maintain competitiveness. BPO eliminates the need to invest in people and systems to manage non-core processes, potentially reducing costs and increasing efficiency. By outsourcing these processes, enterprises can focus their resources on growing their core business.
“Moreover, BPO is also gaining ground in areas such as HR, engineering design, and research and development outsourcing. Enterprises are realising that outsourcing these areas can also be an effective way to achieve reduced costs, increased efficiencies, and faster go-to-market for new products, much in the same way that outsourcing back office processes can.”
According to Iyengar, it will be developed economies that will exploit these new BPO areas most, with emerging markets newer to the arena adopting first generation outsourcing such as customer care, payroll processing and help desks.
According to Iyengar, to take advantage of the predicted growth in outsourcing, vendors will need to be aware that pricing of contracts is the major issue at the negotiating table in the current scenario. She added: “Enterprises are moving away from multi-billion dollar, single vendor deals, and spreading out their investments and risks.
“Meanwhile, the small-to-medium sized enterprise segment is rapidly opening up to outsourcing and vendors need to be prepared with a game plan to meet this segments demand for low-priced, highly-flexible and scalable solutions, which are accompanied by the option to customise offerings and personalised customer service.”
Source:http://www.mis-asia.com/resource/management-and-careers/asia-pacific-bpo-market-to-reach-revenues-of-us1747-billion-ovum/
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