Monday, October 11, 2004

Five Ways To Offshore Proof Yourself

Offshore proofing yourself need not involve radical shifts in Careers away from IT. Those drastic steps may not be needed if you understand what works and what does not in IT Offshoring!
Notwithstanding all the insanity with offshoring that is going right now, If you are in IT, I would not move away from it. You may just need to make sure you are in environments where offshoring does not work! Here are five simple ways to do it:

1. Positions Dependent Upon Constant Communication - Offshoring is not suitable for IT positions that are dependent upon constant communication - Business Intelligence and Reporting is one such area. Constant communication and changes are the norm rather than exceptions. This may not be because the business users are fickle. It's just the nature of Business Intelligence and Reporting.

2. Positions That Involve Lots of Internal and External Touchpoints - A good example might be IT careers in Consulting Companies that require interactions with customers here. More touchpoints mean bodies that are in the same time zones as yourself. They may try offshoring those positions but they will not work in the longer run.

3. Positions where Requirements are Changing Fast all the time - Fast growing businesses do these to you. Requirements cannot be frozen long enough for them to follow any process. That may also mean you need to be nimble on your feet, be familiar with Rapid Prototyping and faster release cycles if you are in software development. Good examples might be fast growing online companies.

4. Positions where Technology is the Core Set of Products - For Intellectual Property reasons as well as speed with which you need to do things (not very mature companies but younger ones) IT positions within such companies cannot be outsourced easily without pain. If you join a Retailer in their IT department, IT is a support process. It is subject more to outsourcing as it is not a core competency.

5. IT Careers that involve fast changing technologies - RFID, Wireless are all examples of fast changing technologies that cannot step outside the U.S simply for availability reasons. Wireless standards (Wide-area, telecom not local area) vary from country to country and is resistant to outsourcing simply for the reason that it cannot be done elsewhere. Fast changing technologies like RFID may require resources - people, knowledge, access to information, capital, etc that are very localized. They cannot be simply outsourced.

That said, already Computer Science enrollments are shrinking in schools. This may drastically alter the demand-supply equation in local IT workers favor soon. Hang in there, hide out for a while and the sun will come out. Hype machines work both ways, very optimistic and very pessimistic. Currently it is painting an unwarranted pessimistic picture. I don't believe it at all, if not for any reason other than simply what experience teaches you.

Thursday, October 07, 2004

IT outsourcing to India saves 60% costs
Companies outsourcing back-office work to India save as much as 60 per cent of their cost every year, points out the National Association of Software and Service Companies.

"The differential in wages between the parent location in the US or UK and India is more that 70-80 per cent for offshorable processes.

"However, interaction costs increase by 10-20 per cent because India is a remote location, which result in net savings of 40-60 per cent for the offshored processes," a Nasscom report says.

What stands in India's advantage is the fact that this labor cost advantage, the main reason for the cost savings is likely to exist for the next 20 to 30 years.

Pointing out that the savings are directly related to the amount of work moved to India, the Nasscom points out that, insurance and banking generates the bulk of savings because of the high proportion of processes that can come offshore.

It estimates that the banking and financial services sector in the US has made savings to the tune of $ 8 billion in the last four years by outsourcing to India.

The Nasscom report also points out today the wage of an Indian call centre operators is about 15 per cent cheaper than a call centre agent in the US.

"Even in the extreme scenario, where wages grow at 9 per cent, India will still have an 70 per cent advantage in 2008. In a more realistic case, if wages increase at 3 per cent, Indian operators will be 80 per cent cheaper than their US counterparts in 2008," Nasscom report said.

Nasscom also points out that, Indian call centres attract people who are more skilled and talented that those who work in the US and UK.

Indian call centres have a higher productivity compared to the call centre operators in the US or UK.

For example, according to Nasscom, Indian call centre agent makes on an average 98 correct transactions compared to 95 by an agent in the UK.

Besides, Indian call centre agent make 120 transaction an hour, an agent in UK makes only 100 calls.Besides, the Nasscom report also points out that the average speed of answer by an Indian call centre agent is about 8 seconds, the average speed of answer by a call centre agent in the US is 20 seconds.