The Outsource Blog

General discussion, news & views about Outsourcing and Offshoring

Archive for November, 2011

Outsourcing teaching jobs won’t improve education

November 21st, 2011

After reading your recent story about the new bill to privatize public teaching jobs, I was outraged. Our hardworking teachers are struggling enough as it is, thanks to the $1 billion cut to K-12 schools that was passed this spring, and this flawed legislation will only make things worse.

We certainly need to reform and strengthen our education system to help kids succeed, but I fail to see how outsourcing teaching jobs to for-profit corporations will do anything to improve public education. If anything, it’ll mean less rigorous classroom standards, and more money from taxpayers so greedy CEOs can pocket more profits at our kids’ expense.

I would strongly encourage state Sen. Joe Hune to vote no on this short-sighted plan, and start focusing on real solutions that invest in education and help our kids compete for jobs of the future.

Source:http://www.livingstondaily.com/article/20111121/OPINION03/111210301/Outsourcing-teaching-jobs-won-t-improve-education

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FONG’S EUROPE opts for IT outsourcing with the sds

November 21st, 2011

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FONG’S EUROPE, experience with the outsourcing of its IT specialists to chose from Mülheim an der Ruhr. Crucial to the decision on the one hand was the proximity to the regional headquarters in Schwäbisch Hall by sds-office in Leonberg and in the future depending on local needs, the availability of the IT Services site. Ensures the service is provided by a Germany-wide and global network of locations in the sds affiliation with ACS and Xerox.

The sds takes over the operation of the entire IT infrastructure in Schwäbisch Hall and courtyard and the first step, the network provides rehabilitation and future upgrades of the system environment reliably.

The framework agreement includes the operation of the central server systems with all file storage, printing, mailing, and management options. The software update for all clients is done automatically using the sds and is operated via remote maintenance. In the initial phase, a sds CompactCenter as “mobile server room” for the Schwäbisch Hall is provided to enable the server room renovation planned at the headquarters of the company.

The portable, compact, plug and play system offers the highest level of performance capacity in a small space. The standard rack system also allows a quick start by delivery of a ready installed and configured system while maintaining the highest safety standards and a redundant design.

The outsourcing of IT operations at FONG’S EUROPE in significant cost and flexibility advantages for the company. With a flat-rate pricing model per month for the IT operation and clear cost structures, the company has future planning. Also the connection of new sales office is always fast and uncomplicated. Christoph Boettcher, manager of IT at FONG’S EUROPE provides significant benefits by outsourcing to the sds:

“We can focus on our core business and have significant cost advantages as opposed to running the systems. We remain highly flexible in the integration of future sites and jobs. At the same time we work in a standardized environment on the cutting edge of technology. “Michael Balzer, Sales Manager, is pleased about the decision:” We, the decision of FONG’S EUROPE seen as confirmation of our flexible performance concept, customize to the specific customer situation can.

Source:http://www.pressebox.de/pressemeldungen/sds-business-services-gmbh/boxid/464307

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Mitie benefits from outsourcing trend

November 21st, 2011

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High quality global journalism requires investment. Mitie, the UK outsourcing company that manages everything from baggage screening at Heathrow to shop design for Primark, said it is benefiting from the growing trend towards larger outsourcing contracts.

Ruby McGregor-Smith, chief executive of the FTSE 250 company, said existing public and private sector clients were asking Mitie to provide extra services at the same time as new contract wins were coming through.

High quality global journalism requires investment. “Many of our clients still rely on us for single services, and that means there’s huge opportunity for growth as they move towards a more integrated model, in line with market trends, and ask us to take on extra responsibilities,” Ms McGregor-Smith said, recently named as one of the FT’s top 50 women in world business.

The group, which has 61,000 employees, won 66 contracts in the six months to September 30, including 20 worth more than £3m a year. These include a new 10-year partnership with Essex county council to service 350 sites, a deal with the Ministry of Justice to provide facilities management at English courts and expanded contracts with Diageo, BT Group and Channel Four.

With the order book growing 17.6 per cent to £8bn during the period, total group revenues increased by 5.8 per cent to £971.7m, pushing pretax profits from £36.9m to £43.3m. Operating margins remained stable at 5.3 per cent.

Mitie’s expansion comes as outsourcers increasingly gain in scale, driven by clients keen to save costs and focus on core business by agreeing integrated facilities management contracts – where one provider handles everything from building maintenance and refurbishment to cleaning, catering and security services.

Compass, the catering company, recently expanded into security, for example, while Rentokil, the pest control group, has increased its facilities management business with a £6.5m acquisition last week.

A recognition that companies were shifting away from single service contracts was also the driver behind the failed attempt by G4S, the security group, to strike a transformational deal with the Danish cleaning company ISS, which would have created the second-biggest private sector employer in the world.

Despite the troubled UK economy and the uncertainties in the eurozone, Ms McGregor-Smith said the group was benefiting from pressure on companies and government to save costs.

“We are mindful of the challenging economic environment. However, the search for greater cost and energy efficiency is central to the strategies of governments and businesses in all our markets – and delivering better quality services, innovation and efficiency lies at the heart of what we do.”

Mitie is seeking to expand its international business. In the past year it has supported UK clients such as Rolls-Royce overseas and acquired an Irish facilities management business. Under Ms McGregor-Smith’s direction it has also been expanding its energy services division, helping NHS Trusts to upgrade their infrastructure and companies including Waitrose to develop biomass centres.

The group, whose shares have risen 20 per cent over the past 12 months, said it would pay an interim dividend of 4.4p, an increase of 7.3 per cent on last year.

Source:http://www.ft.com/intl/cms/s/0/3de00bd2-1412-11e1-b07b-00144feabdc0.html#axzz1eNuYZ3Z8

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ASEAN needs to fine-tune its FDI strategies

November 21st, 2011

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The Association of Southeast Asian Nations, according to the 2011 ASEAN Investment Report, has to focus on luring funding for sectors such as services and outsourcing to supplement traditional manufacturing inflows.

While investments going to the region nearly doubled to $75.8 billion last year, “ASEAN still accounts for a small share of FDI in developing world (on average 10% in the last decade).”

The funds’ contribution to the region’s GDP was only at 4.2% last year, the report added, indicating a stagnation over the last 15 years. Last year’s ratio was also below 2007’s peak of 5.8%.

“Given the continued internationalization of transnational production and intense competition for FDI, policies aimed at attracting transnational operations within the region should go beyond the traditional manufacturing FDI,” the report states.

“Instead, ASEAN should continue to leverage on its competitive strength by capitalizing, for example, on other non-equity forms of FDI like services outsourcing, and deepening its economic integration. This is crucial if greater FDI flows are to be sustained in the region,” it adds.

The share of FDI for services rose to 64.2% or some $47.8 billion last year from 49.3% in 2010. Between 2000 and 2010, the sector was said to have grown by 26% on average in spite of trade restrictions.

“[S]ervices FDI is now increasingly an integral part of competitiveness around the world and can give rise to a new international division of labor in the production of services… Since manufacturing FDI is already dominated by BRIC (Brazil, Rusisia, India, and China) countries, services FDI can be a source of additional competitiveness for the region,” the report states.

The bloc, in this regard, was urged to progressively liberalize the services sector through ASEAN Economic Community commitments. The report noted how the Philippines was expected to earn $10.7 billion this year thanks to its focus on outsourcing.

Malaysia and Singapore were also considered as potential sites for contact centers and other leading-edge or high value-added offshore services.

Local production bases, however, still need to be further enhanced if Southeast Asian economies are to sustain FDI inflows in manufacturing.

“While investment decisions are often influenced by investment climate, they also crucially depend on whether there are enough local capabilities that can help integrate foreign companies’ operations into the local business,” the report states.

“With increased competition in the world, it is important that ASEAN continues to enhance the international competitiveness of its local production. This implies the ability of member states to build up local capabilities to attract FDI and maximize the spillovers and positive effects associated with FDI.”

Source:http://www.bworldonline.com/content.php?section=TopStory&title=ASEAN-needs-to-fine-tune-its-FDI-strategies&id=41953

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Offshoring in China to hit $10 billion by 2015

November 21st, 2011

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Outsourcing of business services to China will more than double in value by 2015, research has predicted.

Global Locations Compass: China, published this week by the Everest Group, forecasts that the global services export market in the country will grow by between 20-25 per cent each year until 2015 hitting an overall value of $9.5-$10 billion (£6-£6.3 billion).

The report said the market in the country for IT outsourcing (ITO), which accounts for 65 per cent of its revenues, and business process outsourcing, which accounts for the remaining 35 per cent, has increased from $1.2 billion (£700 million) in 2007 to $3.5 billion (£2.2 billion) in 2010. It contends that the growth rate will continue and lead the value of the industry to hit around $10 billion (£6.3 billion) in 2015. It noted a number of recent developments in the Chinese market that will support continued growth, with the country benefitting from the economic development of the Asia region.

Commenting on the findings, Amneet Singh, vice president of global sourcing at Everest Group, said: “China offers a compelling regional language advantage and cost arbitrage and is thus best leveraged to serve the Asia region, which accounts for 60 per cent of China’s global sourcing revenues.”
The study revealed that more than 15 new delivery centres were established or expanded in the country over the past year and that services delivered by China’s second-tier cities (provincial capitals) have grown at a rapid pace, nearing the quality of service provided by tier-cities (including Shanghai, Beijing and Guangzhou). The report also forecast that cost arbitrage will remain favourable for the next 13-14 years, enabling companies to take a relatively long-term strategy on offshoring.

Singh believes that while competing countries, such as India and the Philippines offer better language skills to European and American businesses, China will continue to attract business from the regions. He said: “While lack of clear cost and language skills translate to a limited competitive advantage over India and the Philippines for work exported to North America and Europe, these regions still account for about 40 per cent of China’s global sourcing exports. China can serve as a risk diversification alternative to serve North America and Europe.”

Source:http://www.supplymanagement.com/news/2011/offshoring-in-china-to-hit-10-billion-by-2015/

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Rockford street-sweeping outsourcing waits on union offer

November 21st, 2011

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A steady stream of Public Works employees has been making its presence known at City Hall in the past few weeks to oppose the outsourcing of street sweepers.

Whether their public display of support for keeping the longtime Public Works function in-house has any effect on the powers that be is yet to be seen.

The proposal to outsource most of the city’s street-sweeping operation passed in committee Oct. 25, but it was pulled back the following week by Finance and Personnel Committee Chairman John Beck, R-12.

Beck wanted to give aldermen more time to consider the union’s arguments against outsourcing as well as alternatives to the idea from members of the city’s American Federation of State, County and Municipal Employees Local 1058.

In the meantime, members and union representatives of Local 1058 are attending City Council meetings, many donning green “Save Our Sweepers” T-shirts.

Street sweeping was one of several city services that aldermen sought to outsource this year. The city has about seven employees who perform street sweeping. None of them would lose their jobs, said Public Works Director Tim Hanson. They would be transferred to other duties.

But union leaders fear layoffs would come in time.

Hanson told aldermen that the city’s out-of-pocket cost for street sweeping is about $750,000. Most of the cost is personnel and equipment maintenance.

The city’s plan is to pay Elgin Sweeping Service of Chicago almost $300,000 to provide street-sweeping services next year, transfer the city’s street-sweeping employees to the forestry division to help address the emerald ash borer crisis and still save about $50,000. The city plans to keep two street-sweeping machines and sell six at auction.

But Local 1058 President Gary Cacciapaglia said the union plans to fight to keep street sweeping.

Cacciapaglia said he has questions about quality. He also thinks city employees should be rewarded for doing a good job and being city residents. The union is about 60 members smaller than it was four years ago because of downsizing, he said, another long-term concern for the union.

“Once we give up this service, it’s not coming back,” Cacciapaglia said. “This is a service city employees have done since the inception of our city. … As part of our contract, we can request more information and present a counteroffer. That’s what we’re going to do. We’re going to fight very hard to keep this.”

Ald. Linda McNeely, D-13, wore a green AFSCME button on the council floor Monday night and spoke in support of the union.

“It’s time for us to stand up,” McNeely said. “We have seen throughout the country the number of cities and states where unions have been attacked by governors and mayors wanting them to step back. … I’m very proud to see our unions here stand up. These are people we live with. These are the people we should be representing.”

Source:http://www.rrstar.com/news/x45853584/Union-prepares-counteroffer-to-outsourcing-Rockford-street-sweeping

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BPO committed to Filipino talent

November 21st, 2011

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While many Business Process Outsourcing (BPO) companies continue to expand operations in the Philippines, not one has dared to spend and put up a structure specifically designed for BPO operations. That is, until a month ago, when Aegis Limited inaugurated its 12-storey tower in Cebu’s AsiaTown IT Park, making it the first BPO to purchase land and build its own building.

A green building for Cebuanos

Rajiv Ahuja, Aegis president for ASEAN and ANZ, says that the new building not only conveys Aegis’ leadership in the world BPO market; it also highlights its commitment to its clients, employees and stakeholders, more importantly, to the Philippines.

“It is a proof of our commitment to the Philippines and to the Filipino talent,” Ahuja says. “Cebu,” he adds, “continues to provide an extremely skilled workforce providing great affinity with the right experience for our local and international clients.” Aside from Cebu, the company has centers in Metro Manila and Baguio.

The 3,000-seat building, which is also the first green building in Cebu, was designed to maximize energy efficiency, using sustainable materials sourced from local suppliers. Aegis is aiming to have the tower’s Phase One become the first gold-level purpose-built BPO building in the Philippines certified under the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED).

The green building is also in line with the company’s CSR program, “Happy World,” which constitutes a happier people, a healthier planet and an inclusive project.and training rooms that are named after Philippine festivals. Designed with the company’s process in mind, the building has its own power supply, gen sets, telecommunication facilities, parking lot, and dispatching area facing the street that also serves as the transportation bay for its employees.

Every floor has independent training rooms, the colors of which have been chosen to stimulate healthy working conditions. The fifth floor is the support office, while the remaining sixth to 12th floors are designed for operations. A penthouse is also available for company functions.

Growth of the outsourcing industry

One of the leading outsourcing service providers with more than 150 global clients, Aegis has emerged as one of the fastest-growing outsourcing companies in the world.

Aegis Global Chief People Officer S.M. Gupta shares that the global outsourcing industry is estimated to reach $270 billion in the next five years, growing at an average of 15 percent a year.

“If you specifically look at the Philippines,” Gupta says, “the outsourcing industry has been growing at a larger rate than the global growth rate. The Philippine outsourcing industry has grown by more than 23 percent in the last 10 years.” He adds that the country must take advantage of this growth and continue producing a large talent pool for the BPO and IT industry.

The call center industry is the only industry where the Philippines is the global leader, according to Bong Borja, president of Aegis PeopleSupport, attributing the growth mainly to the talent of the employees. Even so, Borja asserts that the industry must continue to grow. This was reiterated by Ahuja during the third International Outsourcing Summit held recently at the Sofitel Philippine Plaza.

“The Philippines has a skilled and credible workforce; the language skill of Filipinos is the best in the world but there is still a lot of untapped potential,” Ahuja says. “In order to stay ahead, we should know how to synergize our partnerships with companies and shift from just being a support partner to being a balance sheet partner,” he adds.

Gupta adds that the talent pool in metro cities is drying up, that creating enough employable talent pool is important. The company expressed its commitment to go to other provinces, do more business and create employment, in a way giving back to society. The good news, says Gupta, is that the Philippines has a pool of talented college graduates. The challenge, therefore, is to convert this to an IT-oriented talent pool.

Employee engagement

With the BPO industry being cutthroat, it does not come as a surprise that a high level of attrition is one of the challenges of the business. Borja shares that they try to address this by coming up with employee engagement programs that focus on making employees happy.

“We can only do so much in terms of financial benefits,” asserts Borja, “so the issue is not really financial. It’s making sure that that they wake up every morning, excited to go to work; they love the people they work with; they love the environment they work in.”

This is also the reason why they put up the building in Cebu. “Of course there will always be movements,” shares Borja, “but I think we boast of some of the lowest attrition rates anywhere.”

Source:http://www.mb.com.ph/articles/342019/bpo-committed-filipino-talent

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