Saturday, December 31, 2005

Northrop Grumman wins San Diego County IT outsourcing pact

The seven-year IT offshore outsourcing contract with Northrop Grumman’s IT division, based in McLean, Va., would be worth $667 million, said Michael Moore, CIO for San Diego County. The proposed contract also has one five-year option, which would be priced at about $500 million, Moore said.

The initial contract calls for the county to pay Northrop Grumman $93 million annually, plus about $10 million in start-up costs, which will be spread over the life of the project.

The county currently pays CSC of El Segundo, Calif., about $100 million annually to manage its IT services, under a contract awarded in 1999. CSC officials declined to comment on the loss of the contract.

If the proposed contract is approved by the county board on Jan. 24, the deal would be signed the next day and offshore outsourcing software development services would be phased in over the next year. The first phase would transition help desk services, followed by applications support services, desktop support services, network services and then the takeover of the data center.
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The article is sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development.

Friday, December 30, 2005

ACS Signs IT Outsourcing Contract With Drive Time

It is in news that "Affiliated Computer Services, Inc.”, a premier provider of business process offshore outsourcing and information technology solutions, has announced today that it has been awarded an information technology (IT) outsourcing contract with Drive Time Sales and Finance Corporation, a Drive Time company, who with DT Acceptance Corporation (together, DT) is the nation's largest used automotive sales and financing company for people with credit issues. The five-year contract is valued at $4.8 million.

Buck Consultants will provide actuarial, administrative, and consulting services for all of Genlyte’s U.S. pension and post-retirement medical and life plans. These plans cover more than 4,000 participants. Services range from financial management of the plans to day-to-day benefits administration.

Under the terms of the contract, ACS will be an application service provider for DT, installing and supporting new loan servicing and collection technology. ACS will also convert DT to a new loan accounting system.
For more information read here.

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

Thursday, December 29, 2005

Offshore Outsourcing: India’s IT Revolution Next New Phase

The year 2005 ends on a highly positive note for India’s information technology sector. IT and electronic majors Microsoft, Intel, Cisco, Motorola and Philips have committed themselves to investing billions of dollars in research and development (R&D) including manufacturing in the sub-continent. Eventually, this means more jobs and jobs and jobs, cheaper electronic goods like mobiles, etc., better product branding leading to Made in India a household name in both domestic and international markets.

But, a Gartner survey reports, India has little opportunity to act smug, it must take strong measures to prevent a looming labour crunch and an increase in industry wages losing it its low cost edge. Keeping the case of Ireland’s off-shoring / outsourcing experience in mind, if India does not want to erode 45% of its market share, it must sit up and take adequate measures to plug the gaps in its dominance of the global BPO / IT market.

Emerging countries like Philippines, Malaysia, Vietnam including East European countries from the former Communist Bloc i.e. Poland, Hungary have watched India effectively change it’s world image from a huge begging bowl to that of a proud, self-sufficient nation, and are keen to replicate it’s success story on their own crumbling shores. They are beginning to challenge India’s leadership in the off-shore / outsourcing industry, making it necessary for India to protect itself by stepping up data security, keeping the BPO / KPO / IT industries free from trade unionism and improving its educational infrastructure to ensure every student graduating is a suitable employee for multinational firms.

Similarly, the mobile revolution of the Indian cellular industry according to Cellular Operators Association of India has the potential to top 200-million by year-end 2007. Contributing Rs. 313-billion to the GDP, Indian consumers are spending almost the same proportion of GDP on mobile services as the entire European Union. But, research shows 53% of that GDP is exported as India lacks national network equipment and terminal manufacturing business. With 3.6-million jobs dependent on the mobile services industry and expected to increase by 30% over the next 12-months, it contributes Rs. 145-billion to the Indian government kitty in the form of taxes levied on the service.

The government’s expected introduction of 3G (wireless technology) by 2006 will further serve to enhance India’s competitiveness in the BPO / ITeS sector. And, as the open source movement gains momentum due to big names like IBM, SUN backing it, India stands to gain 20% of the global software market by 2010 with gaming, blogging, virtualisation, robotics, automated management, voice-over-IP, converged devices, integration platforms, composite applications and Web services all contributing to India’s off-shore / outsourcing industry.

As India establishes itself as the market leader in service providing and knowledge industries, McKinsey – NASSCOM report the Indian IT / BPO industry is growing by leaps and bounds and will have grown tenfold by 2010, read TEN BY TEN: India's IT & BPO Outsourcing - Despite, intense competition from other countries, India with its experience and maturity in the services sector will hold on if not double its 46% share of the global BPO market and 65% of the IT off-shoring / outsourcing market. Innovating to retain its leading grip on a highly lucrative off-shoring / outsourcing market, outsourcing Indian talent abroad is a brand new twist to its service providing saga. A brainchild of the managing director of a marketing solutions agency, in his words: “India is one of the major outsourcing capitals of the world, particularly in … IT... We will deal with outsourcing talent in … filmmaking, radio, processing and printing, and formulating corporate identities for publishing houses. For this, we are building a network around the world, particularly places such as Perth, Sydney, Vancouver, Toronto, New York and Dubai.”

Having taken the world by storm, lifted itself out of Third World company, India is a mature player in the global market with a striking lead having what it takes to deliver the best of the best. Reaping the just rewards of hard work, knowing it can take on the world and beat it in any field, has imbued the country and its denizens with a euphoric self-confidence that is hard to shake. From little JumpStartUPs, several Indian IT companies such as Infosys, Wipro, TCS now figure amongst the cream of Fortune 500 firms. Swift on the uptake, they have begun campus recruiting to train according to company standards to ensure their pool of talent does not dry out and they can continue to provide low cost service.

No, India’s off-shoring / outsourcing industry is not a mere storm in a teacup, it is storm that has shaken and will continue to shake the West out of its complacency and racist thinking. Europe and the America did not pull ahead due to greater intelligence and superiority of race, the world’s history as we know it was not moulded by racial superiority but by geography and bio-geography, as Jared Diamond takes pains to explain in his thought provoking book Guns, Germs and Steel.

Low cost is not the only reason that industries are off-shoring / outsourcing to India, the keen capability of its people, educational and technical skills are bringing the world to its doorstep. And, Deloitte Consultancy is predicting that.
For more read here .

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

Wednesday, December 28, 2005

Offshore Outsourcing Fears: Highly Exaggerated

In favour of free trade, the World Trade Organisation (WTO), and more to the point off-shoring / outsourcing clearly upholds the trend. According to it off-shoring / outsourcing computer and information services (CIS) to low cost, high skilled countries like India. Philippines, Ireland and China is neither heralds high employment levels in undeveloped service providing countries nor of massive job losses in developed countries outsourcing to them.

The annual World Trade Report 2005 states the fears related to the dynamics of off-shoring / outsourcing IT-services are highly exaggerated, and the impact of off-shored / outsourced jobs seems stronger in common perception than on employment, production and trade patterns.

The report emphasises comparative advantage as being the thinking rationale behind off-shoring / outsourcing of IT and IT-related services, in much the same manner as for physical goods and merchandise. It, further, brings out the ambiguity and incompatibility in BPO statistics quoted by global consultants, governments, including India’s National Association of Software & Service Companies (NASSCOM).

The WTO report believes the most forceful element of off-shored services “is not within the high-skill-intensive IT (information technology) sector, but, in the generally low-skilled business services sector.” And, even in the “broadly defined IT sector” (namely, IT services and low-end IT-enabled services i.e. call centres, medical transcription, etc.), it offers less than 0.25 per cent employment to the Indian labour force. However, “there are pockets of relatively high-skilled services being off-shored / outsourced to state-of-the-art firms, for example, in India or South Africa.”

The report goes on to say the relatively miniscule number of high skilled jobs being off-shored / outsourced to developing nations will have a negligibly negative impact on white collar jobs in developed countries. It is rising wages and need for personal customer contact in several services that will be responsible for placing a check on off-shoring / outsourcing of certain services. Further, if developed countries increase service import, it will lead to a weakening of domestic currencies, thus countering the unbridled growth of off-shoring / outsourcing. Poor legal frame-work and infrastructure are other risks that drive off-shored / outsourced jobs to middle-income countries like India, Ireland, China, Philippines, rather than least developed nations.

The WTO report states while UK and USA are leading the off-shoring / outsourcing trend, an English-speaking workforce is partially responsible for India and Ireland attracting a major portion of the off-shoring / outsourcing business. Other leading industrial countries off-shore / outsource work to a lesser extent, and restrict the trend to countries geographically and culturally closer to home. For example, a major part of German off-shoring / outsourcing contracts go to Central Europe, while Spain sends the bulk of its contracts to Latin American countries.

Applauding the supportive role played the Indian government in creating Software Technology Parks of India Ltd. (STPI), putting up quality infrastructure, giving tax sops and foreign direct investment (FDI) friendly regulations, WTO says this alone is not the reason for India’s success in IT and IT-enable service industries. It is the ability of service providing Indian companies to provide managerial skills that have helped the country take advantage of low cost labour and new market opportunities.
For more information read here.

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

Tuesday, December 27, 2005

Offshore Outsourcing “not delivering” the benefits: A Survey

Every few days there comes along a survey saying outsourcing is not working. We will continue to faithfully report them, leaving you to make up your mind.

Nearly two-thirds of UK companies believe their outsourcing contracts are "not delivering" the benefits they had hoped for.

A survey of 100 companies by law firm Denton Wilde Sapte has found nine out of 10 outsource some aspect of their business - generally IT support or call centre functions but also business process operations such as human resources or accounting.

But 61 per cent said their outsourcing is not delivering - and nearly three-quarters (72 per cent) are concerned about the flexibility of their current deal.The head of the firm's technology, media and telecoms sector, John Worthy, said: "This should provide a wake up call to outsourcing service providers.
For further details read here.

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

Monday, December 26, 2005

Off-shoring / Outsourcing

In a surprising new twist to the off-shoring / outsourcing saga, the impossible has happened with Japan offshore outsourcing to USA companies. In the news recently, California’s Advanced Inter-connect Technologies (AIT) and Japan’s Nakaya Micro-devices Corp, semi-conduction assembly and test house companies announced a joint venture for providing sub-contract assembly and test services that will target the Japanese semi-conductor market and help leverage AIT facilities in Hong Kong and Indonesia. It is the first of moves intended to capitalise on the growing interest in off-shoring / outsourcing by leading Japanese system and semi-conductor manufacturers.

Headquartered in Singapore, AIT VP and general manager of the joint venture confirms: “The software development outsourcing trend has been increasing in Japan.” In the manner of European and North American device and system manufactures before them, the Japanese are seeking to off-shore / outsource production and assembly to lower cost locales. From in-house, to affiliated companies, the Japanese are now hiring independent contractors and showing an increasing willingness to look outside Japan, as they accept the fact quality products can be manufactured outside of their organisations and Japan.

Always ready to take advantage of an opportunistic trend, many American companies such as Amkor Technology have been making considerable inroads with new customers in Japan. And, as Japanese companies begin to off-shore / outsource packaging and testing in a big way, two out of three of Amkor’s packaging and testing customers are from Japan.

AIT Nakaya Singapore PTE Ltd., the new joint venture is gearing to channel Japanese IDMs assembly and test demands to low-cost, high-volume facilities in Indonesia and Hong Kong. Ultimately, that might prove to be the new turning point in the off-shoring / outsourcing trend as America off-shores / outsource to India, China, Canada, Philippines et al while receiving off-shored / outsourced work from other developed nations.

Everyone involved is happy as benefits of off-shoring / outsourcing accrue and there are rich profits for all concerned.
For a detailed study read here.

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

Friday, December 02, 2005

Off-shoring / Outsourcing: Living under India’s Shadow

The newest entrant in the world of off-shore / outsource providers is Dubai, a United Arab Emirates city state. Using the unusual pitch: “India is a tough place to live.” Dubai is pursuing companies to off-shore / outsource work to the region. Kick-starting an operation for landing a slice of the outsourcing pie, it is determined to grab some of the work being off-shored / outsourced to low labour cost countries, mainly India and China. A David facing battle with two Goliaths, the city state is hesitant to compete in a head to head tussle with the two off-shore / outsourcing giants. But, it is subtly positioning itself as the headquarters of senior or more qualified employees who do not wish to live in Mumbai or Bangalore.

Ironically, it is a plan that has managed to appeal to at least one Indian firm. Dubai Outsource Zone (DOZ), the government agency responsible for the free trade zone project, only recently signed a MOU with a large Indian off-shoring / outsourcing company to bring work to DubaiCity.

Employees of the Indian off-shoring / outsourcing firm with a couple of years work time in the company will be qualified for the move to Dubai. Dangling the carrot of a work transfer is bound to scale down employee attrition rates, a major problem faced by Indian off-shoring / outsourcing companies. It, also, ensures continued company loyalty, as quitting the job will result in the loss of their job permit, end result - deportation.

DubaiCity may be 30% more expensive, but it is possible to get more productivity from the employees, and there will be few who will refuse a transfer to the city state. With potential to become a centre for services e.g. tele-medicine, Western doctors will be able to pass on work to doctors in low labour cost countries.

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

Thursday, December 01, 2005

To Off-shore or Not to Outsource

Off-shoring / Outsourcing is an in the face reality of the 21st century, but fewer than 200,000 American jobs lost to India in a presidential election year experiencing a low job growth has proven highly controversial. Yet, more and more stock market analysis to computer software development and troubleshooting service jobs are being off-shored / outsourced by US companies to India and other low-wage countries. Clearly, it makes economic sense to pay middle-class salaries rangingfrom $2,000 to $7,000 a year in these countries, opposed to paying the same amount per month for the same work in USA.

Responding to Colin Powell’s speech pressurisingIndiato open its markets to American goods, a thank-you for the off-shoring / outsourcing 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.” A statement confirmed by the numerous American survey companies hired to find out whether off-shoring / outsourcing was responsible for loss of American jobs and sluggish economy.

In perspective, off-shoring / outsourcing benefits both the outsourcer and the provider. Outsourcing benefits include:
Increased Productivity.
Cost Reduction without compromising overall benefit goals.
Reduced Employee Headcount.
Access to sophisticated technologies, and latest call centre facilities without buying them.
Tailored Vendor Offerings for Client Specific Needs.
Higher service level provisions to their employees.

Companies lacking infrastructure and staff with little or no interest in investing time and resources to build in-house capability find off-shoring / outsourcing is the right choice, a smart choice! The benefits of off-shoring / outsourcing have immense long-term benefits if one has the foresight and patience to invest in future paybacks. All said and done, off-shoring / 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