Wednesday, November 16, 2005

India could get 79,000 jobs in legal outsourcing by 2015: Study

India has huge potential in legal outsourcing, with the number of jobs in the field increasing to 79,000 by 2015, a study by an American research firm has said. Though India had earned over over $6.7 billion in US-based outsourcing services such as software and call centres till March 2005, the field of legal outsourcing was largely untapped, the study conducted by Forrester said. The study estimated that jobs in the field which was poised to increase dramatically from about $80 million annually to approximately $4 billion, would grow to 29,000 in 2008, 35,000 by 2010, and 79,000 by 2015.
Outsourcing would reduce costs for US customers as the the rates for Indian legal workers were about 10 to 20 per cent of their American counterparts. "Indian outsourcing offers the following economic advantages: A significant wage differential with Indian firms report paying legal researchers around $12,000 per year. There are also savings in perks, overhead, and working conditions," the study said adding time zone differences allowed for overnight and 24x7 operations. So far, the legal services work consisted of paralegal, secretarial, and litigation support. However, according to the financial consulting firm, Fulcrum Financial Inquiry, Indian firms now offered more valuable services, including contract review and monitoring, document review for due diligence, patent drafting, simple filings and legal research. However, the study said these advantages were not without challenges, but none insurmountable. The most important challenges to legal outsourcing to India included concerns about data security, conflict of interest rules, and the need for Indian lawyers to pass US bar examinations. Interestingly, the need for India-based lawyers was being addressed through American law schools and immigration policies. Legal talent was being schooled in the US, but American education visas allowed these students to stay in the country for only a short time after graduation. Many who studied in the US came back to work for legal outsourcers, the study said. It said more than 200,000 Indians graduate from law schools each year, five times more than in the US. Participants in the study included law firms, in-house law departments of multinational firms like GE, Bayer and outsourcers having a legal group. At present the number of jobs in legal outsourcing in India stood less than 12,000, it said.

The article sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development

Wednesday, November 09, 2005

IBM moves toward software outsourcing

IBM is in news as "IBM Launched software-outsourcing base, located in China's Optical Valley in Wuhan, the capital city of China's central Hubei Province.
The first phase of the base is the software outsourcing management center for IBM’s international purchasing department, which is also IBM’s first software outsourcing center in China. At present, local companies such as Wuhan KM Soft and Wistron have received orders for software from the center.
The second phase for the base will be a software factory with a budget investment of US$20 million and construction will start at the end of 2005.

The article sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development

Tuesday, November 08, 2005

India-China Cross-Border Trade on the Rise

When we think of offshore outsourcing, we tend to think of it in terms of a developed country trading with a developing country, mostly on the basis of cost considerations. However, as China and India benefit from the offshoring boom -- the former in manufactures, the latter in computer-based services -- cross-border trade between the two countries is starting to boom. India-China trade reached $13.6 billion last year, which is a sevenfold increase from 1998. Writes Howard French of the International Herald Tribune/New York Times: "Companies in each country have explained their new investments as critical strategic moves aimed at profiting from each other's rapid rise." As wages in the Indian IT services sector continue to rise and top-notch talent is getting scarce (or at least scarcer than before), companies like Infosys, Tata Consultancy Services, Wipro, Satyam Computer Services have all begun to invest heavily in China. Infosys, for one, recently announced "plans to invest $65 million to expand its business in China, where it will hire 2,000 computer experts over the next two years and build large new corporate campuses in Shanghai and Hangzhou able to accommodate thousands more workers." Huawei Technologies, on the Chinese side, recently hired 700 software experts in Bangalore. "Chinese officials have also been beating a path to India in search of training and investment opportunities there. Infosys, for one, has recently accepted 100 Chinese interns at a corporate campus it maintains in the Indian city of Mysore. The Chinese province of Jiangsu also recently announced plans to recruit as many as 400 Indian software engineers to help it energize its provincial information technology sector."And the trend show no sign of abating. The full article is available here.

The article sponsored by A-1 Technology Inc, dealing in software outsourcing and application development outsourcing

Monday, November 07, 2005

Product Engineering Services Outsourcing: The Imminent Rumble in KPO

Not a long while back, many companies did not believe in outsourcing their engineering activities as conformist acumen deems engineering to be a core technology that should remain in-house. But today, product engineering is well on its way to becoming a mature industry, akin to civil engineering and architectural services. Biz wizards are naming engineering as “the last frontier of business-process outsourcing” and expect the market to accomplish $19.5 billion mark by 2008, up from $4 billion two years ago. From design to production and maintenance, most engineering functions can be outsourced successfully. It's the hottest trend in business-process outsourcing, and for excellent rationale.
As per a Nasscom study, PES (Product Engineering Services) outsourcing, which encompasses implanted software and offshore product development, is anticipated to be an approximately $8-11 billion industry by 2008. PES is defined as services, which are linked with the creation of a new product, and it helps in optimizing the productivity and duration of a product. PES outsourcing was earlier clubbed with IT services as research and development or with IT-enabled services-business process outsourcing as engineering BPO. However, increasing consumer demand for electronic products, shorter time-to-market cycles and competitive pressures propelled PES, to emerge a standalone segment. So much so that the segment posted $2.3 billion during the last year. The importance of PES can be gauged from the fact that to meet the requirements of this business, Wipro puts over 10,000 employees on its payroll, while PCS boasts of a staff of 1,600 dedicated engineers.
India, extolled as the optimum outsourcing destination of the world, is on the brink of proving its grit in the budding vertical of offshore outsourcing – PES (product engineering services outsourcing). Though in its infancy, PES has jammed the admiration of Indian information technology majors like Patni Computer Services, Tata Consultancy Services and Wipro Ltd, among others. The sector is hovering to scrape in returns of over $11 billion in the next three years.
General enterprise management applications and technology platforms have driven information integration to include engineering of products and production facilities, and efficient management of capital assets and production. "In addition to consumer electronics, which is traditionally known to be a high adopter of embedded technologies, there are significant opportunities in verticals like automotive, medical electronics and computing that are driving the growth of PES outsourcing", believed Ajay Chamania, vice-president and head-embedded technology solutions, PCS, , he further held that the semiconductor chip market, in which software design is playing an increasingly crucial role, is also a sector where PES is set to play an active part. Ravi Gopinath, vice-president and head-engineering and industrial services, TCS, said due to a rise in the digitization levels in enterprises, the domain of engineering has become tightly linked to the territory of business information management.
A major emphasis is laid by Wipro on its innovation programme that helps build intellectual property block and solutions for the above segments. According to a company spokesperson, Wipro owns intellectual properties in many applications and solutions areas, and is rather serious in its approach to PES outsourcing.
India’s advantage lies in its knack to deliver technology services to global customers at enormous value and speed. India also has a inestimable sea of engineering and scientific talents, which can be exploited for the intensification of the sector.

The article sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development

Friday, November 04, 2005

Offshore outsourcing creates jobs

The economic benefits from offshore outsourcing will create more than 337,000 jobs by 2010, on top of jobs lost through outsourcing, according to the study, by economic analyst Global Insight Inc. ITAA called offshore outsourcing a "net positive for American workers and the U.S. economy."
But the Institute of Electrical and Electronics Engineers-USA (IEEE-USA), representing U.S. IT workers, disputed the study, saying Global Insight failed to factor in concerns about outsourcing such as national security and the future IT innovation in the U.S. Both national security and the future of innovation will be at risk if the U.S. continues to export high-tech jobs and lose expertise in creating new defense systems and new IT products, said Ron Hira, chairman of the IEEE-USA's research and development policy committee.
"It should also weigh out the costs and the downside," Hira said of the study. "They ignore national security and technological innovations in these studies."
While the study seems to assume that displaced IT workers will quickly find jobs, that's often not the case, added Hira, a professor of public policy at the Rochester Institute of Technology. A U.S. Bureau of Labor Statistics survey, released in July 2004, found that of the 5.3 million U.S. workers who lost their jobs between January 2001 and December 2003, 35 percent had not found jobs by January 2004, Hira noted.
Combined with a push by the ITAA and many tech vendors for the U.S. to increase the number of foreign workers allowed under H-1B visas, offshore outsourcing hurts many workers, Hira said. "The bottom line result from the simulation is that U.S. software workers are losers," he said. "And ITAA continues to undercut U.S. software workers by arguing for more H-1Bs."
But Global Insight and outsourcing provider Sierra Atlantic Inc. defended the study, saying the economic benefits of offshore outsourcing are real. Large companies outsourcing their IT support and maintenance functions can eventually expect cost savings of 30 to 50 percent, while companies outsourcing portions of their new IT projects can expect savings of up to 40 percent, said G.K. Murthy, vice president of enterprise solutions at Sierra Atlantic.
The study links those savings with benefits to the overall economy. Currently, about a third of Sierra Atlantic customers tell Murthy they plan to hire additional workers with the savings they achieved with outsourcing, Murthy said.
"In some cases, they actually go and hire new people to launch a new initiative," Murthy said.
Offshore outsourcing, or "global sourcing," as the study calls it, helps raise U.S wages and raises the nation's gross domestic product. Offshore outsourcing will contribute to a US$0.06 increase in U.S. hourly wages in 2005, climbing to $0.12 in 2010, the study says.
At the same time, spending on offshore outsourcing of computer software and services will grow from about $15.2 billion in 2005 to $38.2 billion in 2010, according to the study. During the same time period, total cost savings from offshore outsourcing of computer software and services will grow from $8.7 billion in 2005 to $20.4 billion in 2010, with much of those savings reinvested in the U.S., the study said.
Offshore outsourcing can cause lower wages in the outsourced industries, but the cost savings create other economic benefits, said Nariman Behravesh, Global Insight's chief economist. "[Wage increases] don't necessarily occur in the IT sector, but it does happen in other parts of the economy," he said. "You can see the pain; it's a bit tougher to see the gain, but it's there."
Addressing concerns about national security and IT innovation, Behravesh said national security could be a concern in the long term. "We have to be very careful of the national security concern," he said. "Having said that, national security is often the last refuge of protectionists."
IEEE-USA's Hira questioned the objectivity of the study's authors, saying the study is more of an advocacy document than an unbiased research report. This is the second year ITAA has worked with Global Insight on a study about the benefits of offshore outsourcing. "Running a computer simulation is just an exercise when you've set up the exercise to get the results you want," he said.
Behravesh acknowledged that the study makes several policy recommendations, including more assistance for displaced U.S. workers and a bigger government focus on research and development. "We wouldn't do it from an advocacy standpoint unless it makes sense," he said.

The article sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development

Thursday, November 03, 2005

To Offshore or Not to Offshore

Offshore outsourcing is a reality of the 21st century; however, the loss of fewer than 200,000 American jobs to India in a presidential election year experiencing low job growth proved to be a highly controversial issue. Yet, more and more service jobs – from stock market analysis to computer software development and troubleshooting – are being off-shored by US companies to India and other low-wage countries. Clearly, it makes economic sense to pay middle-class salaries ranging from $2,000 to $7,000 a year in these countries, opposed to paying the almost five times as much for the same work in the U.S.
In response to a speech by former Secretary of State Colin Powell, in which he encouraged India to open its markets to American goods – a thank-you for the offshored work it receives from American companies, Hari Singh, an Indian student retorted sharply: “Off-shoring / Outsourcing benefits the US as well since $1 outsourced here gives $1.40 back to the U.S. economy. We use U.S. computers to do the work, and we're drinking Coke and Pepsi. Every damn thing comes from the United States.”
In perspective, it is becoming more apparent that offshoring benefits both the outsourcer and the provider. Outsourcing benefits include:
1. Increased productivity
2. Cost reduction without compromising overall benefit goals.
3. Reduced employee headcount.
4. Access to sophisticated technologies, such as the latest call centre facilities without having to buy them.
5. Tailored vendor offerings for client specific needs.
6. Higher service level provisions to their employees.
Increasingly, companies lacking infrastructure and staff with little or no interest in investing time and resources to build in-house capability find offshoring the right choice, a smart choice. The long-term benefits of offshoring are immense provided one has the foresight and patience to invest in future paybacks. All said and done, offshore outsourcing is part of the new wave, the new world order, the sooner one accepts it, the better.

The article sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development

Wednesday, November 02, 2005

Study on outsourcing finds net gains for US economy

The outsourcing of technology jobs to low-wage countries like India will provide a US$68.7billion benefit to the US economy in 2005, said a study, challenging key assumptions about shifting work offshore. The study, updating a report released in 2004 drawing the same conclusion, was commissioned by the Information Technology Association of America, a high-tech industry group, and conducted by research firm Global Insight. The report released yesterday concluded that despite the loss of some jobs to low-wage countries such as India, that worldwide sourcing of IT services and software generated 257,042 net new US jobs in 2005."No one is denying that there are job losses, but the net effect is that you create more jobs than you lose" in the overall economy, said Nariman Behravesh, chief economist at Global Insight.The benefits come from lower inflation, higher productivity and lower interest rates that increase economic activity, the report concludes. The researchers calculated this provided a net benefit to real US gross domestic product of $68.7billion in 2005, and that this would rise by 2010 to $147.4billion compared with a situation without any offshore sourcing.In terms of jobs, the report concluded that offshore outsourcing led to the creation of more than 419,000 jobs, more than offsetting the 162,000 technology jobs displaced by the shift.

The article sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development