Posts Tagged ‘IT’

Business Process Outsourcing Services in the US Industry Market Research Report from IBISWorld Has Been Updated

April 15th, 2014

Business Process Outsourcing (BPO) is a form of subcontracting that involves the delegation of specific business functions to third-party service providers. “It is the process of hiring another company to handle certain business activities in order to achieve maximum savings, increased efficiency and a greater return on investment,” according to IBISWorld Industry Analyst Stephen Morea. BPO services is distinct from information technology (IT) outsourcing, which hires a third party business to conduct IT- related activities, such as application management and data center operations. Moreover, BPO is often divided into two main categories: back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services like marketing or tech support.outsourcing56

The Business Process Outsourcing Services industry fared well over the five years to 2014, supported by an improving overall economy and rising revenue in the human resource, finance and accounting, customer relations management and insurance sectors, which provide a large portion of BPO business. “Additionally, rising wages and increased operating costs associated with the passage of Patient Protection and Affordable Care Act (PPACA) helped drive employers to BPO companies as a method of cost control,” says Morea. As a result, in the five years through 2014, BPO Services industry revenue is expected to increase at an annualized 4.1% to reach $127.4 billion and includes a 4.5% increase in 2014 alone.

In the next five years, wages will continue to rise with federal legislation presently in the pipeline to increase the federal minimum wage to $10.10 per hour. Also, the healthcare industry will encounter an upsurge in costs due to the burgeoning number of new individuals slated to receive health insurance. In response, companies will continue to pursue outsourcing to reduce personnel expenditures and offset escalating back office costs.
For more information, visit IBISWorld’s Business Process Outsourcing Services in the US industry report page.


IT captains hail Nilekani & Balakrishnan’s political foray

April 14th, 2014

As IT poster boys Nandan Nilekani and V Balakrishnan face electoral test next week, captains of their industry have hailed their plunge into the murky waters of politics, saying it will strengthen democracy.outsourcing51

Interestingly, both Balakrishnan and Nilekani, who was the Chairman of Unique Identification Authority of India and the face of UPA government’s flagship ‘Aadhar’ programme, are former Infoscians. It is also their first attempt at entering the lower house of Parliament.

While Nilekani, a co-founder and former CEO of Infosys, is in the poll fray from Bangalore South on Congress ticket. He is pitted against five-time and sitting BJP MP Ananth Kumar and Aam Aadmi Party’s (AAP) Nina Nayak, among others.

Balakrishnan, a former Infosys Board member, is fighting on AAP ticket against BJP’s sitting MP P C Mohan and Congress’ youth wing chief Rizwan Arshad from Bangalore Central.

Polling in both constituencies is scheduled on April 17.

“Excellent, I’m really happy that engineers and others are participating in the initiative to strengthen our democracy,” Infosys Executive Chairman NR Narayana Murthy told PTI.

The co-founder of India’s second largest software services exporter stressed that there is a need to work ethically and honestly with the state and central governments to make public governance strong, robust and enduring.

iGate President and CEO Ashok Vemuri said: “I think especially for India there is a need for competent professionals who have a proven track record to enter into public space.”

Vemuri, who before joining the US-based outsourcing firm last September was Infosys’s head of North America, added that it is not a new trend in any part of the world for successful people to get into public life.

“I actually salute the two of them (Nilekani and Balakrishnan) and that they are willing to translate their professionalism, their competencies, their desires to help people into something as constructive as what they are doing,” he said.


HCL sharpens focus on mobility solutions

April 14th, 2014

HCL Technologies Ltd , India’s fourth largest information technology (IT) firm, plans to sharpen its focus on mobility solutions to drive its next phase of growth in a bid to earn more revenue from the so-called SMAC (social, mobility, cloud and analytics) technologies.outsourcing50

“These mobile applications will put control in the hands of the consumer,” said Steve Cardell, president of enterprise services and diversified industries at HCL Tech, in a phone interview from the UK.

He said mobility is “one of the key drivers for HCL”, adding that the company expects its global mobile business to grow 40-50% yearly for the next couple of years.
“We can do great work at the back end, but if we can’t develop highly intuitive mobile interfaces, the whole thing falls down. Mobile is…an enabler for the rest of the work we do,” said Cardell.

According to software lobby body Nasscom, companies worldwide are expected to spend about $140 billion on mobility by 2020.

HCL’s mobility innovation lab in London, where the company creates and hosts global mobile solutions, has been particularly focusing on areas such as financial services, retail and telecom.

“We are most focused on financial services, because this is where we see the big demand—mobile apps to get an account, for payments, and for banks to push offerings. Financial services providers roughly account for 40% of the UK economy,” said Cardell.

Cardell said next-generation mobile apps range from utilities that will allow users to control the central heating system in their homes—change and set the temperature and turn lights off or on if the devices are linked with the app when they are out on the road—to telecom solutions such as apps that can link phone bills of users to their contact lists and tell them how much they are spending on each of the contacts.

Retail is another focus area. “A lot of big shops are going online. We have got to make the connect between online stores and actual shops to make it work in our clients’ mind,” said Cardell, adding that HCL Tech’s mobile solution can “help clients buy online and pick up at stores, get vouchers for stores on buying online, or if they go to stores, they can get credit for online account”.

HCL is also partnering companies that develop apps in the heathcare sector. “We have a twofold contract with one of the very large science companies. One is to build a global platform for mobility that will enable mobile apps to be deployed worldwide, and the other is mobile (or app) factory—to build hundred apps a year to go into company specific app store,” said Cardell.

The mobility market, in particular, “is definitely increasing with the advent of cloud, cheaper devices like tabs and the phone itself becoming a powerful device”, said Shree Parthasarathy, senior director, enterprise risk services, at Deloitte in India.

“Most of the IT companies as well as consultancy services are aggressively getting into the mobility space. It can be a game-changer if targeted at the right segment,” he said citing the example of many insurance companies that give their agents mobile devices to provide them with real-time information and increase productivity.
India is the third fastest growing application market in the world, according to a 2013 research report by Edelweiss Securities Ltd. The report added that mobile banking has emerged “as one of the most innovative products in the financial services industry”.

“Therefore, Indian players are expected to build significant scale, in-house or by acquisition, to capture market share. Clients not only need support for growing requirement on mobility-enabled solutions, but also require productivity improvement, transparency in data security, new avenues for revenue streams and expected return on their investments,” the report said.

According to a survey by research firm Offshore Insights, released in February, the top 2,000 firms in the world will spend 15-16% of their IT services/outsourcing budgets on SMAC and India will export $15 billion worth of SMAC software and services in fiscal year 2017.


Vietnam’s FPT Aims to Fill IT Skills Gap

April 14th, 2014

As businesses across the world seek to reduce technology costs by outsourcing, FPT Corp. Chairman Truong Gia Binh believes his company, and Vietnam, are perfectly placed to meet demand for computer scientists.outsourcing49

Mr. Binh says the company’s earnings from outsourcing have increased 31% annually over the past decade and the company sees room for further growth.

Overseas demand for Vietnam’s IT outsourcing remains robust due to rising costs in India and China. Vietnam’s IT workers are cheaper by two-thirds, Mr. Binh said, based on his company’s rates. Vietnam had a $2.4 billion market for software and content products in 2013, and a young population—70% of Vietnam is aged between 15 and 64, according to the Central Population and Housing Census in 2012.

In addition, Hanoi and Ho Chi Minh City are now ranked in the top 10 emerging-market cities with the most developed Internet infrastructure, so demand for IT and Internet products in the country is strong.

As the biggest IT company listed on the Hochiminh Stock Exchange, FPT, which has 17,420 employees, is determined to expand locally and overseas while forming new alliances with the world’s top tech companies. Mr. Binh spoke with The Wall Street Journal about the market’s potential, earnings and the homegrown Flappy Bird mobile game. Edited excerpts:

WSJ: What is the position of FPT in Vietnam as well as in other markets with more developed IT sectors?

Mr. Binh: FPT, a listed company not owned by the state [FPT is 6% state-owned], is the biggest IT company and the third-largest Internet Service Provider in Vietnam, behind state-owned Vietnam Post & Telecommunications and military-run Viettel Telecom.

As the leading IT company in Vietnam where the total revenue [of FPT] has grown 25% a year over the last decade, while earnings from IT outsourcing activities from overseas markets have soared more than 31% a year over the same period, FPT Corp. is seeing huge room for its growth, especially in the developed markets like Japan and the U.S.

For the first time, FPT Corp.’s software operations and exports hit $100 million last year, of which Japan accounted for 52%, the U.S. 27%, and Asia-Pacific countries 12%.

Vietnam has a 12% market share in [IT outsourcing] in Japan, behind China and above Indian companies, which have a 9% market share there. FPT saw a 32% rise in revenue in Japan last year, with 130 Japanese institutional clients.

The U.S. is currently our fastest-growing market, recording revenue growth of 62% in 2013. We first entered the U.S. in 2000 and now have five offices there. We have established relations with IBM, IBM -0.25%  Microsoft, MSFT -0.38%  SAP, SAP.XE -2.30%  Oracle, ORCL -2.04%  Cisco CSCO -0.84%  and Apple AAPL -0.74% and have over 40 clients, most of them are in the list of Fortune 500.

Our clients in the global market include Deutsche Bank, DBK.XE -1.90%  Boeing, BA -1.27%  DirecTV, Monsanto, MON -1.46%  Citigroup, C -1.19%  Freescale, Hitachi, 6501.TO +0.84%  Panasonic, 6752.TO +0.19%  Toshiba, 6502.TO -0.72%  Fujitsu. 6702.TO -0.17%

WSJ: What challenges is FPT facing and how can it overcome them?

Mr. Binh: Given that Vietnam has 30.6 million Internet users, including more than 84 million broadband subscribers, and 148 million mobile phone subscribers, demand for IT services is growing very fast in recent years.

Vietnam has gained its high reputation for IT development among the emerging markets thanks to its focus on education. The country has 277 universities and colleges with IT training faculties where there are 59,000 students, but we are still facing difficulties in training skilled IT workers, especially when it comes to training in English and other foreign languages such as Japanese and Chinese.

To help resolve this problem, FPT University has expanded its faculties and is now the country’s biggest IT university, with 16,000 students who will be graduating with competency in at least one foreign language. For many students, becoming an IT technician is a career aspiration because they foresee a stable path to success.

The race to be an attractive supplier of IT workers among emerging markets is expected to last for many years ahead, and to compete in this race requires broader connections among Vietnamese companies, so that together with FPT, we can improve quality of manpower in this sector.

WSJ: Last month, the Vietnamese mobile game Flappy Bird went viral across the world. Did this help raise Vietnam’s profile as a tech hub?

Mr. Binh: The popularity of Flappy Bird will certainly create incentives for Vietnamese youth to pursue an IT career as a means to decent success and wealth.

It also shows the world know that Vietnam has talented young individuals, who are capable of innovating and creating new things, rather than that Vietnam only has cheap labor. I hope that Vietnam will become a more attractive tech hub to the international community.


Indian IT firms making headway in continental Europe where large corporations are turning to them

April 14th, 2014

Indian information technology services firms are making increasing headway in continental Europe, a lucrative market where several large corporations are turning to them for the very first time.outsourcing48

The opportunity to trim costs, especially in the current tight economic situation, seems to have pushed large enterprises in France, Germany and Switzerland to take a closer look at Indian IT companies instead of competing local firms which have dominated so far.

For the Indian companies instead of competing local firms which have dominated so far.

For the Indian companies, contracts from continental Europe-based companies are expected to help them report higher sales growth and establish their presence in these largely untapped markets.

This year, when electrical gear maker Schneider Electric decided to renew a $1-billion (Rs 6,000 crore) technology contract it had given to local software provider Capgemini in 2004, the French company had Indian outsourcers in mind.

Schneider, which has never before outsourced technology to an offshore service provider, recently sent a team of 14 executives to Bangalore to negotiate with India’s top software services companies and outsourcing advisory firms.

“Corporations in France, Germany, Switzerland etc, most of them firsttime outsourcers, are now looking to work with Indian IT firms,” said the chief executive of one of the top 10 Indian tech firms on condition of anonymity as his company is currently in a preearnings silent period. “We get a feeling that it is the beginning of a new shift.”

A Schneider spokesperson confirmed that the company is currently “preparing renewal of the Capgemini outsourcing contracts”, to bring in cost-effective delivery models but said she does not want to comment on vendors “until the end of the re-compete process”. The Rueil-Malmaison, France-based company said it plans to work with a set of suppliers; not one IT exporter.

At least three more such contracts, each valued over $100 million (Rs 600 crore), are in the final stages of negotiations with Indian IT firms, industry sources said. Interest from Continental Europe comes as Indian software services company are wooing enterprises in that market by setting up software delivery centres and hiring local executives who can win deals with local businesses and governments without the help of a translator.

Another company—one of the largest commodity traders in Switzerland-—has never outsourced to an offshore service provider, but is in talks with IT services companies from India as well as the United States, according to industry sources with direct knowledge of the negotiations.

Further, Wallenius Wilhelmsen Logistics (WWL), a Norwaybased logistics company, plans to outsource portions of its IT work and is currently in talks with India’s top software providers. At least two automotive component makers from Germany, which are looking to trim costs, are in talks with outsourcing advisory firms that can help find a technology outsourcing firm. WWL did not respond to an email questionnaire.

Although Europe has been a leading destination for Indian IT services companies for two over two decades, for India’s leading software exporters TCSBSE 1.75 %, InfosysBSE 0.91 % and WiproBSE 1.34 % success in that market has so far been limited to the UK and Nordic countries, such as Denmark, Finland and Sweden. Indian companies say they often face trust issues with large customers in Continental Europe due to language and cultural differences.


BPOs: The road best not taken

April 9th, 2014

If there is one activity that is reshaping the fortunes of a city like Pune, it is Information Technology. All over what is called the “fringes” of the old town with its cantonment and the “native” city, the screech of drills has shattered the tranquillity for which the city was once famous; iron rebars shooting up into a sooty sky obliterate the green cover that almost justified old timers calling Pune a hill station.outsourcing47

Pune has become a vast construction site, the frenetic pace of disruptive construction blotting out its history and re-inventing its geography. Rivers are asphyxiated, old wadas give way to malls, the city yearns to be known as the state’s ‘Bangalore’, a global IT hub.

In every direction are visible the icons of the new economy: glass-fronted facades of angular buildings, cement roads and plastic trees planted at regular distances on sidewalks to give off an aura of de-culturised globalisation as the city’s destiny.

But the economic slowdown has had its impact on the ebullience of construction activity. New townships planned to cater to the “IT sector” exude a sense of listlessness, of fading hopes as demand for new office space wilts.


Not many can clarify what they mean by IT if they do not mean BPO. It is not the arrival of IT global research centres Verizon, Symantec or brick-and-mortar manufacturing that excites local business instincts as much as outsourcing. For this is an employment intensive activity; it carries upscale connotations unlike blue-collar manufacturing. There are “economies of scale”, economic “externalities” that spell profit for ‘lifestyle’ builders peddling an urban dream for first generation home-owners with paychecks fatter than the workers of a previous generation huddled in shantytowns along the old Bombay-Poona highway.

The city’s hillsides, once verdant and roads once lined with ancient trees now conjure a meta-reality in giant hoardings promising personalised fantasies at “Euthania” or “Balmoral” or “Capriccio.”

But the wheel is turning. Other nations compete for the same enchantments. BPO centres have been sprouting in other developing countries for years.

For western firms seeking back-end support at the lowest cost, India is becoming high wage country — particularly Bangalore, Pune and Delhi.

The choice now is between the Philippines and Patna, and the lowest wage rate counts.

Losing to neighbours

Outsourcing began in the early part of the new millennium as a novelty and has now become a necessity. Its benefits hinge on locating the lowest cost outsourcing hubs. A study by industry body Assocham and consultancy KPMG on India’s information and communication technology ICT sector felt India could lose 70 per cent of all incremental voice and call business to the Philippines, among other competitors.

English language skills are fairly developed and wages are lower, so far. It’s not surprising that Indian firms too have been making a beeline for lower cost destinations to outsource operations.

As far back as 2007, Indian majors such as Infosys, Wipro and TCS were scouting around in Poland, Romania in east Europe and Mexico and the Philippines to not just exploit the advantages of low cost but also to get closer to their clients.

The study estimates something like $30 billion in revenues could be lost to India in the coming decade unless something is done to retain the outsourcing business.

What can be done?

India enjoys the advantages of backwardness, low employment and a demographic dividend most investors in the BPO space find tempting. Wages are climbing but the spike is the highest in and around Tier-1 cities.

So the study recommends the development of BPO business to small towns and urban spaces that mirror Tier-1 cities at an earlier stage of their growth with high educational levels but low employment. The biggest advantages, of course, are the low levels of wages and cost of living in non-Tier-1 cities.

The logic of this kind of industrialisation is its basic transitoriness. Nothing stays; if wages rise firms look for other areas of low wage to pitch their tents. Perhaps urbanisation is an unintended benefit but if Pune is any example to go by then it is possible that the urbanisation will be hollow within; new glass fronted buildings hiding empty opportunities.

The Assocham-KPMG study’s recommendations of creating opportunities in non-Tier cities appear expedients to a rather dubious employment generating urbanisation.

Outsourcing of voice and call centre operations may sound similar to the subcontracting in manufacturing.

Multinational companies in the pre-digitalised world of manufacturing in the 1950s and 1960s sub-contracted operations to developing countries with an eye on low- cost labour and skills. They still do.

Hidden advantages

But the process of shifting parts of the manufacturing processes over time benefit host countries because of the spin offs in ancillary development. Technologies could be repeated, copied, operations require supply chains, feeder units. A labour force acquires skills that given enabling conditions could create entrepreneurship.

The bulk of outsourced operations — voice and call centres, medical and legal transcriptions other back-end transactions do not carry any such externalities. There is no skill development in transcribing or answering calls in fake accents.

The attrition rate as the Assocham study notes is high among employees because rootlessness is the abiding condition of the work. No job in modern times is as alienating as one at a call centre and the only redeeming quality is the paycheck that, after a while does not compensate enough for the banality of the work.

But the rate of attrition is not high among the workers alone. It is also high among outsourcers that come looking for low cost workers and leave once costs rise.

In this sense, they are not very different from portfolio capital, “fair-weather” friends looking in this case, not for high returns in a host country but low wage levels.


Parliament hit by continued IT errors

April 9th, 2014

The Houses of Parliament have been hit by renewed IT issues following assurances that past IT problems had been resolved.outsourcing1

A report by revealed that workers in Parliament were unable to access systems and had limited internet connectivity.

The IT failures came 90 minutes after a memo was posted assuring that past IT problems had been resolved. The blame for the previous IT disruptions had been laid on unnamed IT contractors.
In 2013, Joan Miller, the head of IT at the houses of Parliament said: “The services we have are secure, they add resilience. We have small applications that sit in the cloud, and it reduces my worry that the services are going to break.”


Protected by تهنئة
Get Adobe Flash player