The Outsource Blog

Four Big Lies About Offshoring

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
-------------------------------------

Offshoring -- it's a hot issue -- and everyone, from our late night talk show hosts to politicians in Washington, has something to say. But what do we really know about offshoring? Are American jobs at stake? Is the shift in economic power tilting towards China and India? How will it actually affect the American economy in the long run?

"There's a global supply chain emerging beneath our feet, and there are a set of widely-held 'misconceptions' about offshoring that will hurt American business over the long run," said Mark Wesker, who founded portal technology company Sequoia Software, now a part of Citrix Systems, and is now Chief Executive Officer of Artifact, which provides software outsourcing project management solutions.

"Once we better understand the offshoring opportunity and ways to bring visibility and control to projects taking place thousands of miles away, we'll all benefit," suggests Wesker. Here's his take on four big lies about offshoring:

Lie Number One: Offshoring is a Threat to American Economic Prosperity

China, Russia and India may be gaining jobs, but is America losing out? The fact is that companies that have outsourced work abroad have created efficiencies that led them to hire twice as many workers here in America as their non-outsourcing counterparts. According to a recent Dartmouth study, outsourcers are job creators here in America. Since 1992, the U.S. lost 361 million jobs, but gained 380 million jobs back, for a net increase of 19 million jobs.

Offshoring is becoming an increasingly important part of competing in today's global economy, and if start-up companies don't have an offshoring strategy in their two year plan, there's less chance that they'll secure venture funding. Even if companies aren't doing it now, META Group, now a part of market research firm Gartner, says that 88% of firms are moving to establish an enterprise-wide offshore strategy.

"There are strategic advantages to offshoring, perhaps the most important being the ability to offload less strategic tasks, and help American companies to focus where they shine -- innovation," notes Artifact CEO Wesker. "This makes us more competitive within the global economy."

Lie Number Two: Offshoring is a Recent Phenomenon

Opportunistic politicians and naysayers have tried to make the American public believe that offshoring is a new practice. History tells us otherwise. The United Kingdom once outsourced it's basket-weaving to India, when it was still a British colony. American companies have outsourced manufacturing for decades. And today, as many of the business processes of America's companies are commoditized and easily delivered through technology, India and many other nations are again playing a supporting role, from customer service, to back-office support and even news-headline writing.

"As lower level functions in manufacturing, from cars to software, are commoditized, American companies must move from assembly to architecture, design, and general contracting of the global supply chain," says Wesker.

Offshoring helps developing countries to build stronger economies, while consumption of less expensive products and services in more established markets continue to fuel global economic growth.

Lie Number Three: Offshoring is Only About Cost-Cutting and Compromises Quality

Some Americans are convinced that companies engaged in offshoring are just trying to save a few bucks instead of paying an American worker what he or she is worth. While there are industries where the primary driver is cost, and where working conditions should be thoroughly investigated for mistreatment of workers, this isn't the case across the board.

In fact, some of the software supply chain's greatest producers now reside in India and Russia, where the workforce is as highly educated, talented and motivated as American developers. In some cases, they're better.

But today's accelerated rate of offshoring has created a new business model that's more complex in every way and at all levels. Big providers of offshore services, such as Bangalore's Infosys Technologies Ltd., have the resources to create project management tools that bridge the gap created by this new reality. But for smaller customers and providers, the options for delivering world class projects and services haven't kept up. This can translate into major cost, quality and time overruns that can kill a business.

However, "a new breed of solutions have been designed to help companies flourish," according to Wesker, whose company offers a service that addresses these challenges. "What companies need is a greater level of visibility and control over their projects and service partners. Today, we can deliver services on-demand over the Internet that give customers a minute-by-minute view of where the projects stands, how its progressing on its stated goals and the ability to change course in real-time."

Lie Number Four: Offshoring is Optional

Many people view offshoring as optional. Again, another myth. It's a matter of survival. American firms need to outsource processes where they can't compete, and to focus where they can -- on innovation. Those businesses that do not -- will face certain and aggressive price competition from domestic or foreign firms who can perform the commoditized tasks more cheaply.

Global sourcing creates greater opportunity for all parties and countries involved by allowing more developed economies to innovate, while allowing developing countries to get into the game and begin growing themselves. In essence, offshoring is essential for global business growth. And the U.S. steel industry is a good example of the fate awaiting U.S. companies that turn a blind eye.

" Outsourcing and offshoring aren't optional, and they pose as many opportunities as they do risks," says Wesker. "Innovative companies need to get over the fear factor and implement new processes to manage offshoring's risks in order to stay competitive and prosper."

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
-------------------------------------

-------------------------------------- Blog Sponsored by: http://www.OffshoreITStaffing.com http://www.IndianSoftwareDevelopmentcompany.com http://www.YourIndianBpo.com http://www.TheOutSourcingExperts.com http://www.vConvert.com -------------------------------------

Report: outsourcing worries Indian union leaders too

U.S. techies aren't the only ones anxious about outsourcing. Union leaders in India also worry about the trend of farming out tasks to other companies, according to a report Friday on the Web site of the Union Network International Graphical organization.

At a union-organized seminar in Pune, India earlier this month, outsourcing was identified as one of the five major problems facing printing and newspaper employees in the country, according to the report. "[T]his was resulting in loss of employment of the existing workers in a company (and the) employer was paying a fraction for the outsourced work," the report said.

Perhaps surprisingly, the report indicated Indian union leaders feel empathy for European and American workers stung by offshore outsourcing. "As union members, we must understand that for every job that we get in India, a job is lost in the outsourcing country," the report said. "And the beneficiary is always the employer because in India he has to pay only a fraction of the wages that he pays in his own country."

Outsourcing eyes smaller cities for better lifestyle

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
-------------------------------------

Bangalore may be better known to people outside India as the place that handles customer calls from around the world, but this small Punjab town is the future for those answering. In the past five years, more than 100,000 young Indian graduates have made the move to Bangalore, or the suburban New Delhi city of Gurgaon, to answer calls from credit card holders, make sales pitches or maintain records.

The jobs are eagerly sought with good pay. But late hours far from home led to high staff turnover and companies found that a good salary was not enough to attract employees who were increasingly eager to return to small-town India. Discuss: Moving call centres to smaller cities will pollute and ruin them So companies such as Texas-based Dell Computers and India's second largest software firm Infosys Technologies are now moving out to where the staff are, rather than luring staff to the big cities, building state-of-the-art offices in remote parts India .

"I was hating every minute of my call centre job in New Delhi," says Sanjeev Rana, 22-year-old employee at US publishing software firm Quark's call centre at Mohali, close to Punjab and Haryana state capital Chandigarh.

"I barely got four hours sleep between shifts and meals were at dingy roadside restaurants. So when I got a job opportunity in my hometown, I grabbed it," he adds.

Now Mohali, a city of 200,000 people, is sprouting glass and chrome buildings -- filled with workers, including 300 people handling calls for Dell. Only a few miles away in Chandigarh, a city of one million, Infosys is building a new centre for 10,000 employees, while global firms IBM and Convergys are also eyeing bases in what was once a sleepy city of mostly retired people.

"Companies are beginning to see that it's getting more and more difficult to recruit talent in the established cities. So instead of getting the talent to come to you, why not go where they are?" says Kiran Karnik, president of the industry lobby group, the National Association of Software and Services Companies.

India's outsourcing and software industry earned $28 billion in the last financial year and is expected to grow by 30 percent for the next several years, Karnik says. "A substantial part of this will go to the smaller cities," he adds. Companies like Quark take extra steps to keep people happy in small towns by providing swimming pools and movies to attract staff from nearby as well as from the big cities. "We not only have a zero attrition rate, but we are reversing the migration trend. Graduates from Delhi are coming here. Our compensation package is not just about money, but a better lifestyle," Atul Gupta, vice president of Global Support Services, Quark India, tells AFP.

He says the company opened the centre after it realised thousands of students were graduating from technical and other colleges from nearby Chandigarh, capital of the northern states of Haryana and Punjab, and heading off to Delhi or Bangalore for work. Industry officials say the trend of outsourcing to smaller cities has eased the stress among employees and reduced turnover for employees who work through the night dealing with clients in Britain or the United States.

Vivek Atray, Chandigarh's director of information technology, says the town is hoping to see a five-fold increase in call centre employment to 25,000 people in the next two years alone. "The biggest requirement for the IT outsourcing industry is human resources. So we have included soft skills such as languages in the curriculum of schools and colleges," he adds. Such ventures are being replicated in a string of small states across India such as the university city of Pune in the west, the tourist hub of Jaipur in the northwest, and the coastal cities of Kochi and Vizag in the south. Companies such as Wipro and Infosys based in the technology hub Bangalore, have repeatedly criticised sporadic electricity supply and traffic jams as a deterrent to foreign clients.

In Gurgaon, adjacent to New Delhi's 15 million people, an explosion of new offices, shopping malls and apartments has created traffic bottlenecks that stretch work commute times to more than an hour. In both cities house rentals have shot up 30 percent. Jamie Popkins, head of Asia-Pacific research at IT analyst firm Gartner tells AFP that the trend will deepen "as the demand for outsourcing work continues to grow".

"IT outsourcing work will spread to smaller cities because they will develop high bandwidth, reliable Internet access, skilled labour pools, entrepreneurs with viable business models and comfortable work environments," he adds. But he cautions that the country as a whole needs to work on developing infrastructure to maintain global leadership, including steady electricity supplies.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
-------------------------------------

Outsourcing Teaching

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
-------------------------------------

Outsourcing hasn't gone far enough: the U.S. should start using Indian-based teachers. Smart, inexpensive, English-speaking Indians already help Americans with software design, computer support and tax preparation. Through satellites and the Internet workers in India can be connected, with mere millisecond delays, to Americans in need. Outsourcing jobs to India has saved Americans billions while actually increasing the quality and competitiveness of many of our industries. We should now apply outsourcing to education, the American industry most in need of improvement.

Like most teachers, I find grading to be the least interesting aspect of my job. I would gladly teach extra classes if I could in return be freed from the drudgery of grading. My employer, Smith College, should hire a few score smart Indians to grade for their faculty and in return Smith should expect its professors to spend more time in the classroom.

High schools should similarly outsource their grading to Indians. Because U.S. teachers find grading so mind-numbingly boring, outsourcing grading would make teaching a far more attractive profession, thereby allowing high schools to recruit better teachers without necessarily having to increase salaries.

I suspect that Indians would do a far better job grading than U.S. teachers currently do. Because of their much lower average standard of living, earning a few dollars an hour grading American school assignments would be a fantastic job for many talented Indians. Indians would therefore bring an enthusiasm to grading that most American teachers, including myself, lack.

Indians, moreover, could do more than just grade papers. They could run entire classes. Online college courses such as those offered by the University of Phoenix show the possibility of teaching via the Internet, and teenagers' love of video games proves that students are capable of long-term thoughtful interactions with their computer. High schools and colleges should use the Internet to have some of their classes remotely taught. The teachers would have audio and video connections with their American students. It would be prohibitively expensive to hire one American teacher for every five students. But because wages in India are so much lower than in the U.S., schools could afford, say, 5:1 student: teacher ratios if they outsourced education.

Of course, teachers in India wouldn't be able to discipline their American students, so the outsourcing would only work for well-behaved students. But students with Indian teachers could benefit from large amounts of individual "face" time with their instructors. Low student / teacher ratios would also allow schools to offer a diversity of classes that they couldn't afford without using outsourcing.

High school math and science programs would greatly benefit from outsourcing. Because American adults with strong math and science skills have very good job prospects, it's difficult for high schools to attract strong teachers in these fields. But for wages far below what even high school food service workers make, very talented and technically proficient Indians would love to become teachers.

If Indians weren't permitted to teach entire classes, they could at least act as tutors or teaching assistants. Every high school math teacher, for example, could be given an Indian helper who would be available from 5-10 pm each night to help students with their homework. To prevent any child from being left behind, schools could give students in danger of failing two hours of individual tutoring time with an Indian teacher each weeknight. And at the other end of achievement gifted students could be assigned tutors who would facilitate their exploration of advanced topics.

Outsourcing wouldn't have to be limited to hiring Indians, and indeed foreign language classes could greatly benefit from outsourcing teaching to non-English speaking countries. For example, given the large number of poor people in the world who speak and write Spanish, there is no reason every American taking Spanish shouldn't have his own private instructor. Even earning just $2 an hour would be a fantastic life-changing wage for many Spanish speakers, yet at this low wage schools could afford to hire private teachers for each of their students.

Ironically, outsourcing education would make it easier for parents to home school their children. While staying at home, children could use the Internet to connect with teachers across the world. Parents, furthermore, would have many possible classes and teachers to choose from and so could insure that their children's education reflected their parental values.

Having U.S. students taught by foreigners would increase Americans' knowledge of other cultures. Rather than merely reading about other peoples, our students would get to talk with people throughout the world. Similarly, outsourcing education would allow many foreigners to interact directly with Americans and not base their judgments of us on how Americans are depicted in Hollywood movies.

Some of the best minds on the planet are trapped in poor countries, currently doomed to a miserable standard of living. But through educational outsourcing U.S. schools could directly tap these minds employing them to teach our children. Such outsourcing would not only lift many third world people out of poverty but also help the U.S. grow her 21st century knowledge economy.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
-------------------------------------

Tesco extends Indian outsourcing deal

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com

-------------------------------------

Tesco has extended its outsourcing deal with IT provider Xansa for another three years. The deal extends the companies’ existing relationship, which dates back more than 15 years, guaranteeing Xansa a minimum income from Tesco until 2008.

The deal is aimed at reducing the money Tesco spends on its core IT functions, by using Xansa’s offshore facilities in India. It will handle application management, software development and project management, and encompass distribution, stock replenishment, products and pricing.

The outsourcer will support payroll for the UK and Ireland, as well as general sales information.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
-------------------------------------

Outsourcing Helping Some US Companies Operate Efficiently

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
-------------------------------------

Many Americans fear that the transfer of jobs to overseas workers, often called "outsourcing", is eroding employment opportunities in the United States. And they worry that once these jobs move offshore they will never return.

Others - including some economists - argue that the global efficiencies of job outsourcing will, over the long run, strengthen the world economy and eventually provide benefits to the U.S. economy as well.

In either case, outsourcing seems here to stay. Hasnain Aslam talks to his virtual receptionist, Saada: "Hi Saadia, did Suja talk to you about making a reservation for dinner tonight?" Saada replies, "Excuse me I have a phone call. Good afternoon, The Resource Group, how can I help you."

Saadia Musa is a 'virtual receptionist,' answering phones in Karachi, Pakistan for a call center firm in Washington, D.C.

The staff Saadia serves occupies the offices of The Resource Group, a Washington D.C.-based call-center company founded in 2002 to provide "Business Process Outsourcing" solutions for companies looking to cut costs.

Hasnain Aslam is head of investment for the firm, "because we are in the business of making our companies more profitable by doing a lot of the work offshore we thought that it's best for us to practice what we preach, and we looked internally and said what are the things that we could ourselves do offshore and we started with the receptionist. We said, well, there's no need to have a receptionist sitting here, why don't we have somebody sitting in Pakistan, connect her through real time live video and have her do all the work."

The use of outsourced labor for services such as call center assistance - this center is in India - and forms processing has grown rapidly in recent years, fueled by advancements in communications technology. Revenues at the Resource Group now top $170 million, and the firm employs 4,000 people worldwide.

Saadia Musa works from Pakistan for a call center firm in Washington, DC . Saadia is one of more than a dozen "virtual receptionists" in that group. "Some people who have come to the office before are kind of used to it but a lot of them don't see me. They don't think I'm real."

Hasnain talks about the benefits of the arrangement. "She does all the work that you would expect a typical U.S. receptionist to do with the exception of serving you coffee, or a cup of tea or a glass of water. She not only opens the door for you but she also does all our administrative work, our restaurant reservation our meeting planning our event planning and so on and so forth. Anything that you would expect a typical receptionist to do."

Saadia showed us her office space using a camera she controls -- she sees her visitors through a similar camera set-up in Washington. "The whole thing about handling everything in D.C. from sitting in Karachi seems so amazing. I mean, that's technology for you."

It's 4 pm in Washington - the day is almost done for the actual workers here. But for their virtual receptionist, sitting 12,000 kilometers away tomorrow has already arrived.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Outsourcing Industry Growth Seen From Finance & Accounting, Sales & Marketing Functions

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Healthcare, Utilities Among Sectors Poised for Overall Growth

PETERBOROUGH, NH -- 05/26/2005 -- The global outsourcing market is expected to grow at a compound annual growth rate (CAGR) of 6% through 2008, according to a new report from Kennedy Information titled The Global Outsourcing Marketplace: Key Data, Forecasts & Trends. In an assessment of 15 market sectors, analysts spotlight the finance and accounting and sales/marketing functions as among the immediate opportunities, both of which will grow at or near double-digit rates.

This very comprehensive report on the full market for outsourcing services provides precise market size and forecasts growth rates across the three major market segments: traditional IT Outsourcing (ITO), Business Process Outsourcing (BPO), and Transaction Processing (TP).

The report projects spending through 2008 in the three segments for each of 15 industry sectors including banking, discrete manufacturing, process manufacturing, insurance, financial services/real estate, healthcare, transportation, utilities, retail, services, federal government, state/local government, education, communication and media, and wholesale. Global market sizing and forecasts by region cover Europe, Middle East/Africa, Japan, Asia Pacific, Latin America, Canada, and the United States.

The future of the market will be defined by shifts in the application of outsourcing by vertical industry and the ability of outsourcing providers to combine aggregate competencies to deliver one-to-many solutions to that industry," said Brad Smith, Kennedy Information's Vice President of Research.

"Businesses in all industry segments are finding that limited internal resources make outsourcing an attractive, cost effective and prudent option, allowing them to focus on their core competencies," said William P. DiMartini, Sr. Vice President at SunGard Availability Services. "SunGard continues to see a growing market for outsourcing selected information technology services, both in Europe, where outsourcing of back-up services has grown, and in North America, where both security and healthcare markets are demonstrating continued advances."

The Global Outsourcing Marketplace: Key Data, Forecasts & Trends report examines these and other outsourcing market developments, including opportunities and risks, purchasing trends, vendor offerings, client needs, competitive dynamics, and leading outsourcers approach to and position in the market. The study is an exhaustive 200-page report, supported by 124 tables and charts.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Outsourcing Center Studies Outsourcing Relationships and Selects the Six Best for Awards

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

DALLAS, TX (May 26, 2005) -- Outsourcing Center, the world's premier source of information on all aspects of outsourcing, announced the six 2005 winners in the Outsourcing Excellence Awards at an Oscars-like ceremony May 25 in Scottsdale, Arizona, in conjunction with Sourcing Interests Group's conference.

A panel of industry experts selected winners of the prestigious 2005 awards sponsored by Outsourcing Center, Everest Group, and Forbes after a rigorous review of all components of relationships among nominations from a wide range of companies across the globe.

Remarked John Funk, Esq., Partner at Jones Day, "This year's group of finalists reflects the rich and growing diversity of functions and processes -- from traditional IT functions to innovative business processes -- where outsourcing can reduce costs and create value. Funk added, "I was impressed this year by the number of finalists whose partnerships are well into the second half of long-term contracts. These relationships have withstood the test of time and epitomize the best of what outsourcing offers."

Stories of the winning and runner-up relationships will be published in the June 1 issue of Outsourcing Journal (www.outsourcing-journal.com) and mentioned in the June 20 issue of Forbes. Jerry Bowles, Producer/Writer for Forbes eBusinessSections, said, "The nominated outsourcing relationships were uniformly outstanding, so picking a winner was extremely difficult this year. Both customers and service providers have become much more adept and sophisticated in forming partnerships that are built to last."

The six winning relationships are:

Best First Steps: Bank of India and HP
Best Governance: Westpac and EDS
Most Transformational: KeyBank and ABN AMRO
Most Innovative: Fairmont Hotels and Avendra LLC
Best Partnership - Government: QinetiQ and Accenture
Best Partnership: Johnson & Johnson and Hewitt Associates

Said Barry Wiegler, Founder and CEO of Sourcing Interests Group, "The Outsourcing Center is to be commended for its continued service to the outsourcing industry by conducting this awards program. The quality with which the team conducted the Outsourcing Excellence Awards is at the very top. It is clearly evident that a tremendous amount of time and significant funds are invested in this program."

The Center discovered six prominent trends in today's outsourcing relationships:

1. Cost is no longer the only key driver; an important emerging driver is
the need for process expertise.
2. Full-service human resources outsourcing is gaining acceptance.
3. Offshoring is here to stay, but still only has a small presence.
4. The deal sizes are getting smaller; there were significantly more
small deals than mega-deals.
5. Few buyers want a mid-term contract of seven or eight years; most
buyers prefer less than five years or more than ten.
6. Companies are moving away from complex service level agreements;
fewer, more effective metrics are becoming more popular.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

First outsourcing forum for Dubai

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Dubai Outsource Zone will host the first World Outsourcing Forum in September during Gitex. The forum will debate outsourcing issues such as global sourcing, international standards and corporate social responsibility. Dubai was selected as the forum's first location because of its reputation as a hub for outsourcing organisations, according to organisers.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

India hot destination for engineering outsourcing

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Outsourcing in the product engineering sector is all set to be next in line in the Business Process Outsourcing (BPO) wave as its market is expanding globally, especially in India, according to US market research analysts.

According to AMR Research's 2004 BPO survey, 15 per cent of manufacturing companies hired outside companies to handle parts of their research and engineering activities and another 10 per cent of manufacturing companies had plans to do the same by the end of 2005.

Thirteen per cent of the outsourced engineering work was being done in India while 19 per cent was being accounted for by other Asian countries including China, it said.

Source Hindu Business Lline

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Outsourcing Gains Momentum

External service providers apply pressure on businesses to shrink their in-house staffs.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Pressures from external service providers will soon force changes in business technology employment, according to two independent reports issued Wednesday.

The reports, released by Gartner and The Yankee Group, suggest that competition from external service providers is forcing business managers to make tough decisions about their internal business departments.

Gartner warned that competition from outsourced IT providers will offer higher standards of service and price, and predicts that by 2015 the number of IT staff in business technology will decrease by 15 percent.

The research firm predicts that six out of 10 people in information systems (IS) will assume business-facing roles by 2010, resulting in a one-third decrease in IT departments within large and mid-size companies.

John Mahoney, chief of research for IT services and management at Gartner, advises managers either to focus on the reinvention of business management processes or to shift their focus to the outsourcing of IT services.

“Our advice to IS leaders is that, although they have some very difficult decisions to make over the fate of their department, they need to act now as the transition will take a number of years,” Mr. Mahoney said at the Symposium ITxpo in Barcelona.

Telecom Staffing

Meanwhile, research by The Yankee Group suggests that the big players in telecommunications are starting a growing trend in the outsourcing of their entire human resource departments. While many telecom companies currently outsource several HR services, such as payroll and benefits administration, more are shifting to full-service human resources business process outsourcing (HR BPO).

BT, AT&T, and Motorola are three telecom giants who have outsourced full-service HR processes. BT’s recent renewal of its contract with Accenture verifies the benefits of full outsourcing, and may give justification to other telecom companies to follow suit.

Phil Fersht, research vice president of business process outsourcing at the Yankee Group, is keeping a close eye on SBC. “If SBC chooses the HR BPO path, it will be an emphatic validation of the business benefits of outsourcing HR processes,” said Mr. Fersht.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Analyst: Outsourcing to grow in fresh field

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

The next wave of outsourcing will be in product engineering, according to an AMR Research analyst.

Citing an AMR survey of business processing outsourcing in 2004, analyst Lance Travis said on Tuesday that outsourcing engineering services is "a small but growing offering from outsourcing service providers."

The study found that last year, 15 percent of manufacturing companies hired outside companies to handle parts of their research and engineering activities. Another 10 percent of manufacturing companies had plans to do the same by the end of 2005.

AMR also reported that 13 percent of the outsourced engineering work is being done in India, and 19 percent is being done in other Asian countries, including China.

"The market for outsourced engineering services is expanding globally," Travis wrote in a research note.

The report comes amid growing concern that the United States may be losing its edge when it comes to technological leadership, as countries including China and India ramp up their abilities.

Outsourcing refers to farming out tasks to a separate company, whose operations might be in a lower-wage nation. Product engineering arguably represents a higher level of work than has traditionally been outsourced, as earlier contracts focused on tasks such as running human resources departments or information technology operations.

"Companies considering outsourcing product engineering are looking for benefits similar to companies outsourcing IT functions and other business processes: reduced costs, improved capabilities and added flexibility to their internal workforce," Travis wrote. "To date, outsourcing engineering services is more effective at delivering staffing flexibility."

In AMR's 2004 survey, the companies naming staff flexibility as a benefit outnumbered those reporting cost savings or skills benefits two-to-one.

As evidence that the market for outsourced engineering services will continue to grow at a healthy rate, AMR cited a recent agreement between IBM and Nortel Networks to set up a joint development center.

"This represents one of the first major contracts for IBM's 1,200-person engineering services group," Travis wrote.

He argued that over five years, the deal could save Nortel $2 billion.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Immigrants take advantage of domestic outsourcing

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------
Immigrants take advantage of domestic outsourcing
William Raspberry / Syndicated columnist

WASHINGTON — First my Palm Pilot, then my Internet connection, went bad. And as a result, I spent a depressing number of hours on the telephone, talking to "technical assistance." The overwhelming portion of that time was with technical workers in places like India, Pakistan and the Philippines, who (let it be said) were no better or worse than the tech-help people at the places that sold me the equipment in the first place.

Naturally, I started to grouch about the "outsourcing" of all those jobs that might have gone to Americans.

Then someone said something to me that has me rethinking the whole subject. "We're outsourcing a lot of jobs right here in America — right here in Washington, D.C.," he said. "All our low-skill jobs — from driving taxicabs to house cleaning to construction labor — are increasingly being done by immigrants."

Before I could protest that he was suggesting that jobless Americans ought to be content with poorly paid stoop labor and other work scarcely above the good old days of sharecropping, he noted that it isn't only the dreadful jobs that are subject to domestic outsourcing.

A pair of recent statistics makes the point:

At the end of 1998, the District of Columbia had 613,500 civilian jobs, excluding self-employment. At the end of last year, the number was up to 672,000, putting D.C. among the top job-creating jurisdictions in America. But the unemployment rate for District residents was 7.2 percent for 2003, 8.4 percent for 2004 — and appears to be climbing still.

It's clear that a lot of jobs created in the city are being outsourced to commuters from Maryland, Virginia, West Virginia and Pennsylvania — with under a third of the jobs created in the city held by people who live here. And because Congress won't allow the district to have a commuter tax, revenue is being outsourced along with jobs.

Both kinds of outsourcing hurt Americans, and, at least in the nation's capital, arguably hurt black residents worst. But it doesn't follow that hurting black people is the motivation of those who outsource work — internally or abroad. Indeed, focusing on race may make solutions harder to find.

Overseas outsourcing generally has two explanations. The first is that competent and reliable overseas employees are willing to work for far less than Americans would demand for the same job — less than the minimum wage Americans would have to be paid. The second, which applies to domestic outsourcing as well, is the increasing difficulty of finding competent and reliable workers at home.

I don't know if there is a non-legislative way to deal with the cost-driven side. If manufacturers, telecommunicators or providers and servicers of technical equipment can save a serious buck by exporting work, they'll do it until they are made to stop.

But to the extent that the local unavailability of competent and reliable workers is the problem, there is something we can do about it. Indeed, that something is being done by thousands upon thousands of immigrants, who are taking every advantage to gain the skills and experience they need to get a toehold in the U.S. economy.

The largely immigrant-driven scramble for technical skills has made Northern Virginia Community College — NOVA — the biggest institution of higher education in Virginia and, with 62,000 enrollees, the second-largest multicampus community college in America. As one young man put it, "This country is heaven for immigrants with a skill."

Meanwhile, the District of Columbia's Washington Technical Institute, which used to provide the same sort of technical skills, is now a stepchild of the University of the District of Columbia.

But it begins even before that. Shameful numbers of young people in Washington and elsewhere leave high school with neither diploma nor marketable skills. They want work, but offer little to make themselves attractive to employers. And after a few years of joblessness and criminal activity into which the jobless are often tempted, they have even less.

Even legitimate self-employment is either unavailable or not considered available, which amounts to the same thing. The mom-and-pop convenience stores that were run by Jews a generation ago, then sold in turn to Chinese, Korean and other Asian entrepreneurs, are now increasingly likely to be run by Ethiopians.

We've outsourced that one, too.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

FCG in $16 m IT outsourcing deal`

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------
FCG will manage and operate RMHP's IT operations, including help desk and desktop support, data center, network operations and telecommunication.

HYDERABAD: US headquartered First Consulting Group, Inc. (FCG) and Rocky Mountain Health Plans (RMHP) have signed an estimated $16 million, long-term information services outsourcing agreement. According to the press release, an integrated team composed of onsite resources, combined with ongoing support from FCG India's Bangalore facility will reduce application development costs and time frames.

FCG will manage and operate RMHP's IT operations, including help desk and desktop support, data center, network operations, and telecommunications. FCG will also be responsible for a substantial portion of existing applications management with RMHP retaining responsibility for the operation of a single third-party application under the agreement, states the release.

�Our dedicated Health Plan resources here in Bangalore are gearing up to provide ongoing project support to RMHP. We are excited to apply our methodologies and quality processes and our skilled IT associates to this important client in an accelerated 24x7 timeframe,� said FCG India founder and chairman Avinash Agrawal.

"FCG India's development life-cycle approach utilizes a RUP-based methodology established to meet CMMI Level 5 Development Standards. This methodology provides the flexibility to adapt to client-specific business requirements while maintaining highly structured �factory� build processes. Using this approach, coupled with FCG's health plan domain expertise in the United States, FCG will be able to significantly reduce the time-frames and overall application development efforts for RMHP,� he added.

RMHP COO Laurel Walters said, �This agreement will allow our organization to focus on our core mission of providing high quality and affordable health care benefits and services to our members statewide."

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

The Importance Of An Outsourcing Prenup

Rift between Sears and CSC shows the need to plan an exit strategy
By: Paul McDougall
InformationWeek

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

A merger can quickly change a company's IT strategy, and in particularstrain relationships with vendors. That was made clear last week when Sears Holding Corp. subsidiary Sears, Roebuck & Co. terminated its 10-year, $1.6 billion IT outsourcing deal with Computer Sciences Corp. less than one year into the agreement.

Sears ended the engagement "due to CSC's failure to perform certain of itsobligations," the retailer said in a Securities and Exchange Commission filing. CSC countered in its own SEC filing that Sears' reasons for ending the deal are "contrived" and that Sears' merger with retailer
Kmart is what's really behind the decision.

Sears wouldn't be the first company to walk away from a major outsourcing deal following a merger. Last year, J.P. Morgan Chase & Co. scrapped a $5 billion services agreement with IBM in the wake of its merger with Bank One Corp. In 2002, Australia's Suncorp-Metway Ltd. acquired AMP General Insurance and terminated that company's outsourcing contract--also with CSC.

Regardless of why a company ends an outsourcing engagement, these examples point to why executives who are considering outsourcing need a detailed road map for bringing IT operations back in-house. "If you wait until a problem arises, it's usually too late," says Cutter Consortium analyst Jeff Kaplan, who last week released a report on "backsourcing." Terms for disengaging should be detailed in the original contract. "You need to know who's going to be responsible for what if you don't want to end up spending a lot of time and money in court," he says.

Sears and CSC won't avoid time in court, it appears. Sears' filing, dated May 13, revealed that CSC sought a federal court injunction to prevent Sears from ending the contract. The court denied the request. Sears and CSC declined to comment.

Sears signed the deal in June for CSC to provide a range of IT services, including support for desktops, servers, and telecommunications systems.

With both sides not talking, speculation is rife about the deal's failure. The fact that Sears is backing away from the agreement in its early stages may suggest that "the transition has failed," says William Bierce, a New York attorney who specializes in outsourcing contract law.

Yet the reasons for ending the deal might merely come down to changed priorities. Former Sears CIO Gerald Kelly authored the outsourcing plan. Kelly left this year following the merger, and Kmart CIO Karen Austin was given the top technology job at the combined company. Kmart chairman Edward Lampert wants to cut costs. "A $1.6 billion outsourcing deal may have looked like an easy target," says Michael Guilbault, a Technology Business Research analyst.

CSC may have to take a charge against earnings to cover costs, including software and equipment, related to the Sears deal, its filing says. Cindy Shaw of Moors & Cabot estimates CSC "may have already dropped more than $100 million on the contract." CSC says it will seek to recover those costs in court, if necessary.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

IT Outsourcing: Satisfaction Isn't Guaranteed

IT Outsourcing: Satisfaction Isn't Guaranteed By eGov monitor Newsdesk

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Research highlights users less satisfied overall with outsourced IT

User satisfaction with local authority ICT services has been seen to fall significantly after outsourcing, according to new research.

The finding comes from the latest in-depth benchmarking survey by Socitm Insight which examined user perceptions of ICT services in 94 local authorities.

On average, satisfaction levels with ICT in outsourced councils were found to be 13 per cent lower than those where services were provided in-house.

Furthermore, the research also found instances where satisfaction across the board declined substantially after councils contracted out their ICT services to external suppliers.

The largest deteroriation in scores after outsourcing was in perceptions of value for money and the management of the ICT unit, the report says.

Significantly, outsourcing also impacted negatively on perceptions of the working relationships between users and service providers, as well as the speed of response and ease of contact of support staff.

However outsourced delivery did outperform in-house services in satisfaction levels for some areas, such as whether users felt that ICT facilities were up-to-date.

English councils which have done well on their Comprehensive Performance Assessment rating tend to get higher levels of user satisfaction, unless they have committed themselves to large-scale outsourcing, the research indicates.

Martin Greenwood of Socitm Insight says that with the Efficiency Review looming large, councils need to take the impact of user satisfaction in account in planning new models of service delivery.

"Efficiency gains through investment in ICT will only be made if the ICT service is credible", he said. "A large slice of that credibility must come from what users think of the service they receive and the degree to which ICT helps them deliver high-quality services."

The report, Benchmarking User Satisfaction, is available from Socitm Insight.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Outsourcing boom shifts IT jobs

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------

Current plans to lead to outsourcing growth?

As new research suggests that public sector IT managers will have to outsource more work regardless of which party wins next month's election, experts predict that many IT professionals will move from government organisations to the private sector.

According to a report released in April by analyst firm Kable, IT and business process outsourcing (BPO) deals involving public sector organisations will grow 19 percent in value over the coming year, to £5.13bn. Kable predicts that this figure will grow a further 19 percent in the 2006/07 tax year.

Kable said the growth would not depend on the result of next month's election, a point supported by Alan Rodger of analyst firm Butler Group. "The approach to outsourcing is an area where there is very little difference between the leading parties," he said.

Kable added that such growth will be driven by an outsourcing element now included as standard in new infrastructure projects.

Peter Foster of analyst company Pierre Audoin Consultants said that current practices, such as making IT services firms responsible for the ongoing management of the new public sector systems that they supply, means that the growth in outsourcing will continue.

Government IT directors are also under pressure to lower costs by outsourcing work, which means the growth will continue even if projects such as Labour's controversial ID card scheme are cancelled with a change of government, according to Foster. "The scale of the savings envisioned by the Gershon review into public sector efficiency cannot be achieved without IT outsourcing ," he said.

Experts warned that the efficiencies promised by outsourcing could result in job losses. Seyi Agboola of Kable cited as an example the anticipated reduction in the number of IT support staff in the NHS once it successfully consolidates multiple databases into a single infrastructure.

"Efficiency means scaling back in certain areas," Agboola said. "The Gershon review plans to remove 80,000 public sector jobs and some of those will be IT positions."

But Nick Kalisperas of trade group Intellect argued that although many public sector IT professionals will be transferred to the private sector, most will be retained by their new employers.

"The sheer size of the projects means [ the outsourcers ] require skilled IT staff with public sector experience," Kalisperas added.

--------------------------------------
Blog Sponsored by - OffshoreITStaffing.com
--------------------------------------