Outsourcing

These days, there is certainly no shortage of debate on the relative merits or evils of Offshore outsourcing. One thing's for sure: Offshore outsourcing will continue to increase over the next several years. Close to 500,000 American IT jobs have already been lost since 2001, many of them to Offshore outsourcing.

An unspoken corporate lemming behavior will continue to fuel this growth for years to come. When industry leaders such as GE, DuPont, Citibank, GM or Procter & Gamble do something, others take notice and many will follow. CIOs cannot single-handedly reverse the forces moving U.S. jobs overseas. While I'd love to see thousands of CIOs come together as a united bloc to influence IT-related policy matters, the sad reality is we don't have a clear, unified voice right now. Therefore, I strongly encourage CIOs to rise above the "religious fervor" and focus on the things they can control in order to ensure the best possible outcomes for their companies, their IT organizations and the U.S. IT industry.

Outsourcing

These days, there is certainly no shortage of debate on the relative merits or evils of Offshore outsourcing. One thing's for sure: Offshore outsourcing will continue to increase over the next several years. Close to 500,000 American IT jobs have already been lost since 2001, many of them to Offshore outsourcing.

An unspoken corporate lemming behavior will continue to fuel this growth for years to come. When industry leaders such as GE, DuPont, Citibank, GM or Procter & Gamble do something, others take notice and many will follow. CIOs cannot single-handedly reverse the forces moving U.S. jobs overseas. While I'd love to see thousands of CIOs come together as a united bloc to influence IT-related policy matters, the sad reality is we don't have a clear, unified voice right now. Therefore, I strongly encourage CIOs to rise above the "religious fervor" and focus on the things they can control in order to ensure the best possible outcomes for their companies, their IT organizations and the U.S. IT industry.

HR Outsourcing Perils

The past: HRO has long been the leading unit of BPO and is by far the most outsourced business process. Gartner Dataquest believes 85% of US enterprises will outsource at least one component of their HR functions.
The present: The demonstrated growth is the core payroll and benefits business. But the strongest growth sector is in recruiting, the integrated front end to the employee life cycle.
HRO is experiencing the greatest margin pressure. These include three types of companies. Telecommunications firms dealing with pricing pressure from competition and heavy debt loads from past infrastructure investments. Retail companies with reduced sales and increased price competition for their products. Government organizations with declining tax revenues that are now forced to do more with less rather than increase taxes.
Three Types of HRO Suppliers
Suppliers can be divided into three types.
First, there are the suppliers that specialize in discrete sub processes of HR like payroll, benefits, hiring and recruiting, and training and education. Then there are the one-stop-shop suppliers that aggregate multiple HR functions like payroll and benefits into one HRO offering.
Overlapping with the second type is a new breed of super-suppliers that offer full service at lower cost.
These companies will take advantage of economies of scale because they already have significant processing facilities worldwide they can use for HRO. It's a relatively simple transformation process to take their existing service offerings and add an HR dimension to them.
A Better Alternative: Offshore Outsourcing
Offshore outsourcing is a major trend driving HRO. Offshore HRO concentrates on processing services that involve manual operations with little added value such as generation of employment contracts. India, the Philippines, China, South America, and Eastern Europe as the leading regions for offshore HRO.
Tougher to outsource offshore, processes like benefits where workers have to understand employment issues unique to individual countries. For instance, a US buyer may want to outsource benefits to a supplier with offshore facilities in China, but the average Chinese worker may not understand what the plan is.
Advanced expertise and multinational scope are where the super-suppliers enjoy a distinct advantage. They have multipurpose processing centers around the world that can offer these services to multiple nationalities and partner with local suppliers where they don't have a presence. The supplier retains a client account management team geographically close to the buyer -- these people interface with the buyer, while the supplier farms out the work to its offshore operations.
The author of the article is John Parker, A-1 Technology, Inc, an offshore outsourcing company

Four Big Lies About Offshore Outsourcing

Offshore outsourcing -- 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 Offshore outsourcing 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: Offshore outsourcing 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.
Offshore outsourcing 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 Offshore outsourcing 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.
Offshore outsourcing 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: Offshore outsourcing 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 Offshore outsourcing 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: Offshore outsourcing 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."

source: --BUSINESS WIRE

offshore Outsourcing training and documentation - making the decision to offshore outsourcing

Offshore Outsourcing is not just about saving money. It's about:
1. Doing things efficiently and effectively
2. Getting to market faster than the competition and having maximum flexibility with the workforce
3. Focusing on the core business
4. Implementing a long-term, strategic business tool
So, before you decide to outsource, we should define our strategy for outsourcing training and documentation, and we analyze potential returns. The strategy considers a balanced relationship between your goals for outsourcing, your customers' requirements, the needs of your internal stakeholders, and your available resources and capabilities.
Key factors to consider when outsourcing training and documentation groups include
Þ Improved focus - Will Offshore Outsourcing allow your company to focus on what it does best?
Þ Streamlined processes - Will your offshore outsourcing partner implement efficient processes in information design, development and delivery, supported by appropriate systems and motivated people?
Þ Access to skilled, specialized resources - Will Offshore Outsourcing give you access to a partner whose long-standing core business is working with information in all its forms?
Þ Cost - Will Offshore Outsourcing reduce capital costs on infrastructure and resources?
Þ Scalability - Do you need global scalability for your internal or external training and technical documentation?
Þ Access to new technology - Is single sourcing and repurposing of your key information important to you? Would implementing the tools and technologies to develop and manage your information be better done by an established specialist like Kudos?
Þ Improved service - Do you want to work with a partner who brings proven quality, flexibility and professionalism to the table as part of its standard service delivery?
Þ Consistency - Will using an independent specialist help you establish consistent processes and deliverables across business units and localities?

Offshore outsourcing

Offshore outsourcing -- 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 offshore outsourcing 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:
1. Lie Number One: Offshore Outsourcing 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: Offshore Outsourcing 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.
3. Lie Number Three: Offshore Outsourcing 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."
4. Lie Number Four: Offshore Outsourcing 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."

Why Outsource to India?

Why Outsource Data processing and Offshore Software development to India? The reason is that India's natural resource lie in its abundant technically skilled manpower. India is the world's second largest exporter of software (after the U.S.), and is the source of management and technical talent in Silicon Valley. Thanks to its low costs of software talent, India has more software companies with ISO 9000 certification than any other country in the world. The impact of India's success abroad is also being felt. The stars of the Indian Internet industry are the Web solutions and Web ware companies who have made transition to e-commerce service providers and offshore outsourcing services.
Benefits of Offshore Outsourcing in India
· India offers many advantages that make it the favorite of 82 percent of US software export market.
· Increasing number of computer literate and English speaking professionals
· Well recognized Information technology skills
· India exports software to more than 95 countries.
· India has a stable political environment and pro-IT government.
· Reliable satellite and submarine communication links facilitate good broadband connectivity with the rest of the world. According to the National Association of Software & Service Companies, the Indian software industry, almost half the Fortune 500 companies now use Indian Software services. With over 4 million highly trained English speaking technical personnel the figures are second only to the USA and leading world class software companies, India is set to become the software giant of the new Millennium. To add a feather to the cap, a World Bank funded study in the United States confirmed that vendors rated India as their number one choice for offshore outsourcing.
India offers several advantages such as:
Cost savings factor. Costs for offshore outsourcing work in India are 30-50 percent lower than those in the U.S. after factoring in increased expenses for telecommunication, and infrastructure. Many ISVs have captured sizeable savings in offshore software development for mature products and executing custom software projects.
Time to market: Indian offshore software development allows companies to reduce the time required for conceptualization through marketing of the product.
High quality. Most IT services companies in India have a successfully tested methodology and have in-built quality standards for their development processes.
Large number of professional/technical talent: India has the largest english speaking IT talent pool in the world. Over 120,000 trained IT professionals are being added to the Indian talent pool yearly compared to 25,000 in the US. 62 percent of this Indian technical workforce has more than four years of experience and over 70 percent has an engineering degree. IT ---- major thrust area for the Government of India
· IT occupies an important place in the Indian Government’s opinion and is one of the Government of India's top five priorities.
· The National IT Task Force (ITTF) submitted its 108 point Action Plan to promote IT in the country. The Government of India has approved the plan and is in the process of implementing it.
· A separate Ministry of Information Technology was set up for the implementation of IT projects and to streamline the regulatory process.
· Information Technology Act 2000: The Information Technology Bill that was passed in the Indian Parliament in May 2000, has now been notified as the IT Act 2000. The IT Bill brings E-commerce within the purview of law and accords stringent punishments to cyber criminals.

Offshore Outsourcing ---- Hidden Benefits

Offshore outsourcing is falling into 4 major categories:Software development and supportCall CentresData entry/cleansingBPO (Business Process Outsourcing)The basic principal is that any work, can be easily transferred and can deliver benefits or cost savings very quickly. However there are many pitfalls. Let us look at each category of activity in a detailed mannerl.SOFTWARE DEVELOPMENT AND SUPPORT: This works best when you have strong and structured methodologies. However it becomes vital that your chosen partner understands your industry sector.Some of the major threats that were faced by retail business is that the programmers /developers do not understand the processes such as range planning or category management, which led to real problems in getting good designs for user interfaces or getting teams to generate test data. With experience, many of those limitations are disappearing. Their programming skills are excellent, they know the technologies and they have good project management. Some of the companies also provide an invaluable service at low cost.
CALL CENTRE OPERATIONS: Call Centres have been one of the fastest growth sectors in offshore outsourcing recently. This is one activity, which can impact the brand or image of a company. The quality of communication skill and accents can matter .Good quality and integrity of the product become important values.Call Centres work well where outcomes are very predictable. The area becomes problematic where operators need to have knowledge, expertise, or need to apply judgement. It takes a lot of investment and time management to bring call centre staff up to speed on product knowledge.
ACTIVITIES WE KNOW CAN BE OUTSOURCED VERY EFFECTIVELY:Incoming calls- Customer order capture
Customer complaints recording- Taking appointments- Taking reservations on fixed assets (theatres or airplanes)Outgoing calls- Ringing customers to book delivery slots- Calling hotels to check availability, etc.DATA ENTRY: With the advent of cheap scanners and the internet, why any data entry is done onshore. Provided you have browser based data entry systems, you can send it electronically and have somebody key it into your format offshore.It is easy: particularly for coding of data, that require a modicum of knowledge, with large volumes and repetition, operators become experienced very quickly.
BPO (BUSINESS PROCESS OUTSOURCING): This technique is the mother of all processes. It is also the hardest to get right.You have to have very structured and well defined processes: data interfaces have to be excellent; quality of data going into the process has to be excellent, clearly articulated organizational roles and skills are needed at each step of the process. The biggest problem for companies is to decide which processes should be outsourced and to make sure that they are clearly documented.
CONCLUSION: One of the hidden benefits of offshore outsourcing is that your outsourcing partner ends up investing the capital expenditure. It's not just that labor rates are lower; you are leveraging other people's capital. It's a form of capital financing. Thus, in a world where markets are rewarding those companies that are efficient capital users, it is no surprise we are seeing such a high growth in offshore outsourcing.

UK leads global outsourcing market

The UK has overtaken the US to become the leading national market for new outsourcing contracts. Sourcing advisory firm TPI says the UK represented over 37% of the €11 billion market for major outsourcing contracts awarded worldwide so far this year.
TPI reports that the US won only 25% of major outsourcing deals (those worth over €40 million), with Asia Pacific at 4%. But the firm notes that the UK's position is largely the result of a massive outsourcing deal between Reuters and BT, and it is unlikely that its lead will be sustainable in the long term.
Without the Reuters/BT deal the UK would have been the second largest national market with 16% of new contracts worldwide, says TPI.
However, Europe does dominate the global outsourcing market. Its share of the total value of new outsourcing deals more than doubled in the first three months of this year, accounting for 70% of the contracts awarded, compared with a share of just 34% in the same period last year.

source:http://www.out-law.com

Outsourcing - racing towards end

The primary reason for offshore outsourcing is cheap labor and comparatively higher quality. The negative side is lack of direct client interactions and premium customer support. As the Western world is struggling fighting with deflation and cost cutting frenzy to show better results from quarter to quarter, the outsourcing boom continues.
But here is a problem that can kill outsourcing from India and China. The cost and availability of energy sources will determine the price of outsourcing in the future. If a company plans to offshore certain portion of its operations, it will be asked to pay much higher prices in the future as inflation is catching up in India and China. The salaries in these countries will have to go higher as these economies are well dependent on crude oil prices and availability. India and China may experience hyperinflation because of higher energy prices. China and India will have to eventually compete with the West in obtaining energy in the form of crude oil and natural gas. It can become real expensive.
With much higher prices and lack of reliable operation sue to shortage of energy sources, the outsourcing boom may eventually end abruptly. The next phase will be that of migrating outsourcing into total automation in America and Europe. According to this concept, Robots and automated software generation and maintenance systems will replace the cheap labor of China and India.
According to some think tanks by 2015, outsourcing may not exist, as we know of it today. Alternative energy will be abundant but not outsourcing. The immediate energy scarcity and resulting hyperinflation in India and China will trigger the craze of automation among Western companies. Those who cannot automate and depend on India and China to provide cheap goods and services will fail miserably. The automation will neutralize the need to offshore.
Later as alternative energy is available, the offshore outsourcing will not come back because automation will prove much more customer friendly, reliable and even more cost effective.

Outsourcing Problems

A company can save a lot by outsourcing in terms of money and human resources. But the key point above all this is management of the resources. The resources if not managed properly can lead to expensive mistakes, unmet expectation and even project failure.
It has been found that only few outsourcing projects are problem free. There are a lot of things which can go wrong and there is a need to tackle the project carefully to keep companies from becoming mired in some any management issue.
If we try to find out what can go wrong there is a complete list which can be prepared. These issues are summarized as below:
The outsourcing company should ensure that the vendor should not rise up will the issue of owning the source code.
Also there should be flexibility in the relationship that will it not be affected by the changes in the business processes
Also there must be a common link between the two parties.
As confusing and complicated as it is, managing outsourcing projects is something that IT managers better master because there's no sign of outsourcing slowing down.

Outsourcing Web Site Testing

Offshore Outsourcing must be considered for several reasons:
The company may be launching a new site, or a redesigned version of an older site, and may feel that most testing tasks can be delegated to the third party.
The available company resources may not be enough -- people, skills, software, hardware or time -- to perform the testing themselves.
The average life span of the project may be of short-term and the company doesn't need any long-term investment in testing processes for the project.
The company may be outsourcing the development and coding for the site, making the offshore outsourcing of the testing a reasonable decision.
Make certain assumptions about how will businesses be done. Quality control is a system for testing all output against a standard of quality; this is an ongoing process, because in a proper quality control environment all output has to be tested.
Issues to Consider When Outsourcing Testing
Some of the points below are important to address when making the decision to outsource testing for a commerce site.
Understand the scope of services/products to be outsourced.
Learn about the importance of concepts like testing, quality control and quality assurance for your business success. You can manage the tasks well when you understand the scope of the task Look beyond the buzzwords and learn what testing, quality control and quality assurance really mean and involve.
Testing and quality assurance are different aspects
Testing is a methodology used within the quality assurance process, and if it is correctly managed, offshore outsourcing some testing tasks makes some sense.
Make a point to test every change
The process of quality control measures the success of all products to verify they meet a standard of quality; If a company outsourced testing, then plans must be made considering long term decisions on how to handle all published output.
Processes form the basis of quality assurance
Because QA focuses on processes, the company requires constant and deep involvement in the planning, design, and development phases of a major project. Getting QA involved up front will save money.
Audience identification
Quality assurance is deeply involved in the definition of the site's audience, including identification of the target browsers and platforms used by the audience.
Who will set and maintain the standards?
When outsourcing a process or elements of a process that is by its nature ongoing, all parties involved must be clear on who sets the standards and who maintains the standards.
The management of quality assurance shouldn't be outsourced.
When a company outsources any part of the testing process, the company should create a full-time position in the company for somebody to manage quality assurance; this person should liaise with and set the direction for any testing contractors. A wide range of tasks fall under the umbrella of quality assurance, including testing -- usability, compatibility, integration, regression, etc. – as well as requirements management, design reviews, and reviewing customer complaints.
Advantages of Outsourcing Testing
Outsourcing testing can have definite advantages.
Getting the work done
Even the best team/company runs out of the time to get certain tests accomplished. If hiring a test firm to perform certain tests takes care of some test goals, then offshore outsourcing is a great idea.
Expertise hiring
Some tests are best performed by experienced professionals, either because the necessary knowledge requires specialize education or backgrounds. As some tests require a specialized understanding in order to interpret and analyze the results
Authority hiring
Some kinds of test firm -- have an authority that an in-house test team may not be able to compete with. Thus it becomes relatively important that the official executives hire third party professionals for the work.
Maintain a central point-of-view
Sometimes having an independent team perform testing tasks can provide an objective point-of-view about quality issues like usability or compatibility. Outsourcing some testing may provide the company with more data.
Hiring fresher
Involve a new team in testing so as to expose the code to new test tools and methods; a test firm may find defects the tools were unable to find.

Expectation From Outsourcing

Do not expect immediate financial savings from outsourcing customer service and technical support work. In most cases, you will be supporting duplicate efforts until the transition is complete.
In Offshore outsourcing we must understand that our offshore facility might not have much expertise in or familiarity with the business ethics and code of conduct. We should try to make a healthy relationship and not allow this relationship to become acrimonious, since it is to be expected that offshore staff will need time to become proficient in their client's operations.
One should be patient and expect initial mistakes, and be ready to correct them in a way that does not poison the working relationships that you have with your outsourcing contractor. Don't leave your people skills or professionalism behind when you go offshore.
Some offshore facilities have live call-monitoring capabilities, whereby U.S. clients can listen in and monitor calls. This enables people in the U.S. to participate in quality assurance without having to go overseas. Such real time monitoring also discourages fraud and improper agent conduct.
Also the offshore facility might not be proficient enough to handle the project independently and may require some assistance from the outsourcing partner. This can be very helpful to avoid pitfalls and get a good output from the business process.

Financial Services Outsource Web Solutions Instead of Buying Software

With Jake Rohn, executive vice president of corporate development at Albridge Solutions, and Stuart Tarmy, the company's vice president of marketing. Albridge Solutions provides enterprise data consolidation and Web-based portfolio accounting and performance reporting solutions to the financial services industry.
Question: The financial services market has been slowly moving more toward using Web-based applications over software. What exactly are companies outsourcing through Web-based solutions, and what are the advantages of outsourcing Web-based solutions over buying software?
Rohn and Tarmy: Financial institutions are outsourcing a wide variety of application and data services across their technology platforms. This is being driven by the growing realization that Web-based applications are simpler to run (data updates can be applied by the host rather than the user), simpler to maintain (upgrades and bug fixes can be applied instantly without users applying new software), easier to access (anywhere with public Internet access), and not prone to personal computer problems. Most importantly, because Web-based solutions are more efficient to build and maintain on a total cost basis, it is more economical.

Question: What issues are financial services firms having with making the switch from software to outsourcing Web-based applications?
Rohn and Tarmy: Among the most prominent concerns are data migration, integration, replication and storage. Migrating to a new solution means that a significant data transfer project must be productively completed first. Successfully integrating data throughout an enterprise is critical to ensuring a seamless transition that enables a firm to maximize its investment and utilize the data more efficiently. As such, it is vital to find a partner that is experienced in managing these transitions and also has a strong commitment to ongoing investment in customer support and technology enhancements.

Question: Albridge Solutions has recently confirmed a number of partnerships that allow it to continue to ramp up its Web-application offerings to financial services companies. What trends do you plan to focus on to remain a top vendor in the financial services Web-application field?
Rohn and Tarmy: Performance reporting is gaining momentum as something that was once a value-added service, but is becoming a competitive "must have" that regulators will increasingly focus more attention on to provide improved transparency to investors. Also, heavily influencing our development strategy is the need for Web services and data replication to drive compliance needs, cross selling and the "virtual office," where an advisor can easily access their portfolio accounting, performance reporting, financial planning and analysis, and CRM solutions on their computer.

source:www.itbusinessedge.com

Quality lures software outsourcing

Thursday, May 05, 2005By Nicholas Zamiska, The Wall Street Journal
India became a software outsourcing hub by reassuring multinational clients it could compete on quality as well as on cost. Now that quality movement is rapidly spreading around the globe, as other countries pursue the same strategy.
The emphasis on quality is almost a no-brainer when it comes to outsourcing such demanding work as software development, where a small error can undermine an entire project. No matter the cost savings, turning that work over to strangers would be impractical without some means to control against quality risks.
"You're entering the unknown," says Neil McKearney, a software manager with the Swiss arm of France Telecom SA's cellphone unit, Orange, which recently signed a software-development contract with Tata Consultancy Services, the Bombay outsourcing titan. No one in his group has ever traveled to India to meet the software developers working on the project, and Mr. McKearney says no one needs to, because the quality of Tata's work has been certified.
The gold standard in the quality-certification business is the Capability Maturity Model, or CMM, which sets out specific steps needed for an effective development process to be completed. The CMM was conceived by the Software Engineering Institute at Carnegie Mellon University in Pittsburgh, a group funded by the U.S. government because it wanted a standardized way to assess the work of contractors. CMM certification is awarded by consulting firms that can charge companies to evaluate and train their personnel in CMM methods.
CMM has become so popular in India that a technician on a recent visit there saw the CMM logo stamped on a burlap bag of basmati rice, presumably endorsing the grain.
"If you don't have the quality certification), you're not even considered," says Dion Wiggins, a Hong Kong-based analyst at the Stamford, Conn., consultancy Gartner Inc. "It's a must-have."
But now the same standards that allowed Indian companies to lure business from Europe and the U.S. have begun to migrate, helping upstarts from Chile to Egypt to Vietnam chip away at India's outsourcing empire. Despite a shortage of English speakers and skilled programmers, China is pre-eminent among them.
In 2002, only 18 Chinese companies were CMM-certified, compared with 153 Indian ones, according to the Software Engineering Institute. Now that number has climbed to 243, compared with the 387 Indian companies that are accredited.
One of the companies certified at CMM's highest level is Bamboo Networks, which is based in Hong Kong while most of its employees are in mainland China. Bamboo's client list now includes the likes of Credit Suisse Group's Credit Suisse First Boston and Bank of America Corp.
When Bamboo was founded in 1999, costs were out of control and some projects were unprofitable, says Gene T. Kim, the company's 35-year-old chief executive. So Mr. Kim, who had left a hedge fund in New York to found the software company, asked three of his top managers to spend a month researching what the Indian companies were doing that Bamboo wasn't. They came back to him and said that a quality certification was a must.
"It's the passport to the global market," says Mr. Kim.
As part of its bid to become certified, Bamboo created more than 250 types of forms and checklists that programmers need to fill out as they type code. Some resisted the transition to the regimented process, Mr. Kim says -- and were fired.
Now the company is profitable and looking to expand. When Bamboo began, it found it could bill its customers at only $14 an hour. After accreditation, its rate shot up to $20 an hour. In wooing new clients, Mr. Kim says, CMM is "the first thing we mention and the last thing we mention."
Critics of CMM complain that companies boast of being CMM-rated when perhaps only one or two divisions have earned the distinction. The Software Engineering Institute has received complaints of fraud from corporate clients.
"Is it a perfect answer? No, it's not," says Michael Phillips, a program manager at the institute. "The opportunity for abuse is there." Indeed, the institute says clients themselves must investigate the quality claims that an outsourcing company makes for its work.
A cottage industry of quality watchdogs approved by the institute has cropped up across the region to rank and certify companies. The appraisal process can take anywhere from a week to a few months, depending on the size of the organization being evaluated. But it isn't uncommon for companies to spend a year or more overhauling their entire software development process.

source=http://www.post-gazette.com

Outsourcing

Outsourcing is not new concept, but it is simply buying from outside suppliers. What is new is the amount of services the business are buying from outside. On the other hand it has been seen that these companies could easily and used to provide the services traditionally themselves. The shift is so pronounced – that the words outsourcing, sourcing and in sourcing which were unknown to service arena a couple of years ago, have become standard terminology.
The main focus for the companies is their core competencies where they can provide unique value to their customers and can achieve better results.
It has been well known that an experienced and expert can deliver more worth of task that too at a competitive cost. So the net result comes out to be a product with the minimum costs and with the best of the quality. The Companies are increasingly looking to suppliers that can leverage overseas labor supplies, creating a cost leverage without sacrificing quality, just as the manufacturing sector did decades ago.
This approach - focusing on core activities, selectively outsourcing others - crosses industry boundaries. For example, manufacturers use value-added distributors to increase customer responsiveness and supply-chain agility. Banks increasingly rely on third party partners to invest in new technology and optimize ever-shrinking technology life cycles. Software companies and airlines look to call centers to handle customer service. In all sectors, companies are eliminating outdated and bureaucratic back offices and outsourcing administrative functions to companies that specialize in that work.

Russian Software Outsourcing Industry: a Major Breakthrough

By Prudent Press Agency
Amherst, NH -- “Let’s work together” said Former Soviet Union President and Nobel Laureate Mikhail Gorbachev, presenting the Russian high tech industry to an audience composed of a Massachusetts business elite. The Massachusetts Software Council, the leading technology trade association in the state, held its traditional Spring Membership breakfast. Mikhail Gorbachev, formerly President of the Soviet Union and Nobel Laureate, gave the keynote presentation. Mr. Gorbachev spoke on the “Role of IT in the Global Economy” and introduced Russian software capabilities to the US business audience.

The breakfast brought together more than 900 U.S. technology executives. The key point of Mr.Gorbachev’s presentation was the importance of equality in U.S. – Russian relationships in the areas of business and technology, as well as in the overall geopolitical relationship between the countries. He advocated building new bridges between U.S. and Russia. “Your meeting here is one of these bridges”, he said. Mr. Gorbachev pointed out that Russia seems ready to make a breakthrough economic step into the future. In the past, Russia succeeded in dominating in various fields of science and technology, and now the country seeks to apply these skills to become a worldwide leader in IT outsourcing.

The Russian IT outsourcing industry: Many analysts recognize Russia as one of the principal players in the global IT outsourcing market. Russia has been exporting software services for more than 10 years, and today its average annual growth rate is 40%. Software export volumes are predicted to reach $1 billion in 2005. Low software development costs and highly skilled (especially in R&D) personnel are Russia’s main competitive advantages. Recently the Russian government announced a support program for the industry, including creation of “techno parks”, and legal and tax preferences are being considered. Leader’s opinions: Joseph Feiman, Ph.D., vice president and research director at Gartner, commented that the Boston event might become a turning point in the way the Russian industry markets itself. “Russia's biggest asset is its highly educated and creative workforce”, said Mr.Feiman, Alexis Sukharev, AURIGA President, thanked Mr. Gorbachev for his contribution. “This exceptional event will become one of those mutually beneficial occasions that provides rich business opportunities to all participants and breaks new ground for further cooperation in the area of IT between US and Russian businesses”, he said. George Bell, Massachusetts Software Council Chairman said: “Surely the largest and best attended Massachusetts Software Council event ever".

source:http://www.prudentpressagency.com

outsourcing and management relationship

Importance of outsourcing relationships
Managing the outsourcing relationships is important since they ensure what and how much are we able to get from the investment made and to offer bet services to our customers. Thus the relationship with the software outsourcing service provider becomes the key for a successful outsourcing transaction.

Growing dissatisfaction
Too much pressure on both sides of the business is making a lot of dissatisfaction among the outsourcing partners. This dissatisfaction can be attributed to a number of causes, related to both the parties' to outsourcing.
• Unreachable targets due to over promising during sales process.
• Over expectancy of the clients and the clients.
• Rigidness in the behavior not changing according to the environment.
• Cultural gap.
Outsourcing should not be treated as a contract between the two parties but as a relationship among two partners. Successful outsourcing relationship requires a lot of professionalism and good management.

Managing the relationship right at the start
The step for making the relationship successful among the outsourcing partners starts right by the way the objectives are defined, the requirements are laid and the way the search for a new vendor starts. The people who are selected to manage the relationship are also of prime importance. Continuous improvement should be defined and expected.
Managing successful relationships requires a new breed of managers
The success of outsourcing depends on the managerial skills rather than the technical or operational knowledge. The various skills which are required to be possessed for having a successful outsourcing relationship are as below:
• Negotiation skills: To negotiate on a day-to-day basis to keep the services provided in line with the services required.
• Communication skills: Outsourcing managers are basically a bridge between the organization's business needs and the providers' services. Communication becomes the essence of a successful outsourcing relationship.
• Business skills: To continually understand the changing business needs and aligning the services as per the business objectives.

Involvement of top management
The relationship can be improved if we involve out top management for reviewing the relationship and giving it a proper direction. Senior management should play a vital role in communicating the reasons and results of outsourcing across the company. This can be hard work for the management if it is required to make the relationship do well.

Why Outsourcing is at a Rise

The demand for the quality by the clients for their products to be developed and get the returns for the price paid by them, the software developing companies have to look towards for the specialists. The need for getting higher quality for the product is motivated by the competitors as well to stay in the market. So the companies try to get the best of the resources for themselves at a reasonable price, and in this race they are even ready to go offshore. Availability of highly skilled expertise in development of software coupled with economical labor, India has become the focus of such IT outsourcing.

This can be attributed to the following reasons:

Access the latest technology and the best talent:- Due to the rapid changes in the software industry and with the lightning advances in the field of technology, it is difficult for the companies to keep themselves up to date. Therefore to avoid the cost for upgrading and keep the costs low the companies have to look for the partners. The cost saving in this process is such high that the companies are ready to go for offshore solutions.

Reduce and control costs :- It has been the most important objective for the organizations to get high profits. The cost incurred for hiring of new staff for short-term projects is very high, particularly when there are no subsequent projects that require their services. Therefore the companies are left with the alternative to outsource.
Since the project costs are agreed upon in the beginning so there are no surprises as far as the budget of the project is concerned. Also there is no need for the outsourcing company to invest in technology, software and hardware.

Reducing the Production Time :- If an organization starts for getting a new technology and that too for a real time client project, it can not be doe overnight. Outsourcing the software development helps to get more control over the project time-scale i.e. a well-defined and planned project is delivered within the timeline.
The advancement or the up gradation can be done at the backend but not at the cost of the client project. By outsourcing the software development activities to an experienced and professional software developers, in-house work can be better managed, and day-to-day in-house issues will not affect the completion date of the project.

Improve efficiency of in-house staff allocation :- The in-house professionals can be utilized better if they are given the task of their expertise. By outsourcing of the software projects the in-house personnel can be assigned to current, critical, or ongoing projects since finding time for a new project can be difficult when the in-house resources are being used to their full potential.

Improved quality :- The outsourcing companies have a good competition among themselves and they constantly try to get keep ahead of others. Offshore outsourcing companies embrace quality standards and software life cycles that are more rigorous than those of their customers thus providing highly efficient software solutions for their clients.

India ahead in software outsourcing

SANJAY JOG
Posted online: Tuesday, April 12, 2005 at 0432 hours IST

April 11: China is unlikely to create a software outsourcing firm that can rival the Indian giants of the industry for some time to come. This is largely due to limited domestic demand, piracy and lack of skilled personnel, the International Finance Corporation, the World Bank's private sector funding arm, has said.
Despite English being a top priority in the Chinese education system, China cannot compete in language-intensive outsourcing areas with countries where English is a native language, such as India and Ireland. On the other hand, growth of Indian firms in China would clearly present a competitive challenge to Chinese outsourcers.
According to an IFC report, titled "The ICT landscape in the PRC: market trends and investment opportunities in China," released in March, given the small size of China's pure-play outsourcers today, it may take years for a company comparable to leading Indian outsourcing firms to develop. Unlike India, where large Indian firms dominate the software outsourcing market, foreign companies moving their own software development operations to China are key drivers in China's outsourcing market.
The report is crucial as the Chinese prime minister Wen Jiabao has called for cooperation and collaboration between India and China to lead the world IT market.

source:http://www.expressindia.com

Managing outsourcing process

Outsourcing the IT services is considered as a measure to cut the costs on resources including the labor, but it can be an expensive affair if not managed properly. Moreover it can lead to unmet expectations and even project failure.
A large number of industry analysts are of the view that there a very few number of projects which are problem free. Outsourcing a project is a very delicate issue and needs to be handled properly. There are a lot many things that can go wrong in the way for the project development.
If we consider the potential flaws in the process of outsourcing, we can get a lot number of things we need to consider before outsourcing. The most important thing for an IT company is to resolve the issue regarding the ownership for the source code. There is a need to check for the vendor if he will be able to adjust with the changes in the market.
Although it is risky as well as complicated but the outsourcing managers have been able to get a lot from this process as there is no sign of IT outsourcing slowing down.
Companies all over the world are able to reduce the cost, access advanced technology, compensate for a lack of skilled IT workers, improve business efficiency... and remain competitive in the global marketplace. Earlier it was assumed that outsourcing is a means to get rid of the problem as it was put on the shoulders of the vender, but this is not the case as there is a constant need for both the parties to communicate and work simultaneously on both the ends.
Another consideration that an outsourcing company should take care of is that it should not ignore the quality for the cost. The relation ship with the vender should but be one with a different party or even partner but, it should be as vendor is a part of the team.

Chinese firms polish skills in outsource competition

It is part of Lisa Pointe's role at Shanghai Wicresoft to stop her Chinese colleagues from writing "I'm deeply sorry for your inconvenience" three times in a two-paragraph e-mail to an American.
For the Chinese, she explains, apologizing repeatedly means they really feel for the other side's pain and trouble, but it can sound very insincere to Americans.
That is just one of the many lessons that Pointe, who hails from Traverse City, Mich., tries to impart in her role as an adviser at Wicresoft, a 400-employee joint venture between Microsoft and Shanghai Municipal Government.
Microsoft has outsourced part of its Web-based technical support to the concern, and Point is one of 10 people who are teaching the Chinese techies how to best provide that support for users of Microsoft products in North America.
Forget about cheap labor and factories churning out shoes and toys. Some Chinese companies now want to become known for developing software programs and providing back-office services for U.S. companies — just like their counterparts in Bangalore, India.
Simon Bell of A.T. Kearney, a Chicago management-consulting firm, thinks it will take five to 10 years before China rises as an equal to India in providing information technology and outsourcing services, at least in the English language.
But if multinational companies look for alternatives to India, he says, China often tops the list. A.T. Kearney ranks China second, after India, in its 2004 global offshore-location attractiveness index, citing the country's large, educated labor pool and cost advantage.
"Language is important, but more broadly, it is accounting skills, financial analyzing, information-technology skills (that matter)," Bell says.
To gain a foothold in the global outsourcing market, Chinese companies have to overcome many inherent difficulties. Among them: poor English skills, weak protection of intellectual-property rights and a shortage of managerial talent — not to mention a fragmented industrial structure less likely to spawn giants like India's Wipro Technologies and Tata Consultancy Services
http://seattletimes.nwsource.com