Friday, March 31, 2006

20 Questions To See If You Are Ready To Outsource

Some software development companies are jumping into software outsourcing before they are ready. They hire a team, sometimes the wrong one, and then expect them to start producing software right away. In their rush, they skip the planning, goal setting and careful evaluation of how outsourcing fits into their organization.

What does it mean to be ready for outsourcing? Is there a way to measure your readiness? Now you can answer a set of twenty questions on-line to get an idea of where you stand. The results will tell you if you are ready to go, if should proceed cautiously, or that you should seek immediate help. Here is the link to this free, no obligation, outsourcing readiness test:

One company I met with recently is already doing outsourced software development from their engineering group. "How is it going?" I asked. "It depends on who you talk to," I was told. The executives of the company thought it was going great. The company was paying less for engineering talent. Board members seemed satisfied.

But after further conversation, I learned the engineering department had never really bought into the concept of outsourcing. They resisted working with the outsourced team. Their results were actually less than spectacular. Clearly this was a company not completely ready for outsourcing.

And look at this email I received the other day:

We are looking to get started soon. I would like to get a quote from your firm for its services. I need an auction style web site to be built that could withstand up to 10 million hits per day. I need to know how fast it can be built and how much it will cost. I look forward to hearing from you...

I replied asking for more information about what was needed. At least a few additional details or some sort of specification are required to give any meaningful answer. If you do not have these details prepared, you are probably not ready to outsource.

And if you are not ready to outsource, you face the risks of extra costs, huge delays and the complete failure of your outsourced software development.

Why do people start outsourcing without planning? There are different reasons. Sometimes it is ignorance. Other times it is an intense desire to get the software developed as quickly as possible.

Before you jump into outsourcing make sure you are ready. Take this free test and think about your answers. Be honest. Then seek out advice and other resources to help in areas where you need improvement.

The on-line readiness test divides the questions into four areas - Your Previous Outsourcing Experience, Technology, Business, and Management Approach.

Even if you are not completely ready for outsourcing, you can get help to compensate for areas of weakness. That is the other benefit of the readiness test - just by answering the questions honestly, you can focus on areas where you may need help to minimize your outsourcing risks.

The help you need in these areas can come from several different sources. It might be books and articles that describe proven methods for outsourcing. It might be software tools to help you manage outsourcing. Or it might mean hiring additional resources that have outsourcing experience.

Don't get discouraged if you get a low score on the readiness test. Remember that one of the seven deadly dangers of outsourcing is not taking advantage of outsourcing at all. Learn from your test results and make the changes needed to make your outsourcing risk-free.

For details read here.

Thursday, March 30, 2006

SEO And The Outsourcing Of Inbound Link Building

Search Engine Optimization now adays has a lot to do with building inbound links to your website. Building inbound links is a cumbersome tasks and webmasters have always been looking for shortcuts to do this. Webmasters buy links (as advertising as an example) or contact other webmasters to exchange links with them. The need for inbound links has created a new business opportunity in the search engine optimization industry. The outsourcing of link building emerged from the fact that many inbound links mean a high search engine ranking and/or a high Google PageRank.

There are many different ways of building inbound links. Outsourcing this tasks can save the webmaster a lot of time but it comes with a price tag. Businesses offering to take over the link building process often maintain and operate a large network of domains and websites and just add 'your' link to their sites. These sites are often referred to as link farms.

Others buy links on 3rd party websites for you. They often have build up a portfolio of websites/webmasters they work with. The quality of these links is often questionable and a long-term benefit does not exist. It either continues to cost the webmaster money to keep the links alive or his website might get punished by Google and other search engines if the linking websites are recognized as part of commercial search engine spamming. Punished means that either the link to a site does not have any value at all or depending on the situation the site linked to gets removed from the search engine index (worse case scenario) if other factors are involved that lead to the conclusion that search engine spamming is going on.

Outsourcing of link building also takes away the control of who is linking to a website from the webmaster. The webmaster usually just pays for X number of links but there is no option to have industry related websites link to his site (= increased value of a link). It is also difficult to verify how many links to a website have really been established from the service provider. Another difficulty is to verify how long the established links are staying in place. The danger of being over-charged is very high.

Since link building has become a profitable business opportunity search engines are aware of what is going on and are putting countermeasures in place. These are not things visible to the webmaster or explained on the search engines website. These are factors that are worked into the algorithm. Search engines use the human control factor more and more often to increase the value of the search index. Chances are that if a webmaster uses an outsourced link building strategy that at one point the campaign value goes south (turns sour).

Inbound link building should be an organic process that shows a slowly increasing number of links pointing to a certain website. Getting a high number of inbound links within a very short period will raise a warning flag at search engines. Honest webmasters will stay away from these tactics to avoid putting the success of a website at risk when there are better ways of building inbound links.

For details read here.

Saturday, March 25, 2006

Outsourcing Is Picking Pace

BPO or Business Process Outsourcing is a very common and mushrooming phenomenon these days. BPO can be defined as the accomplishment of a business task from some outside agency. For instance a software development company can ask or hire an external agency to maintain its old records and accounts. The phenomenon of outsourcing was not so well established before a decade. Initially some of the relatively small and low grade jobs like old storage record of the company were outsourced in United States. Gradually with the budding success and confidence, valuable and crucial jobs like payroll accounting, human resource tasks – recruitment, training and development of software consultants joined the fray.

Outsourced jobs most often involve the ones, which need to be performed on a regular or daily basis. The companies now no more perform such tasks which they used to perform themselves. Like hiring of a consultant company for training of new employees, getting advertisements made from an advertising firm across the seas.

Outsourcing has many benefits. It allows a company to identify and focus on its core competencies. The company can outsource every other task that can be taken up by outside agencies and that requires significant time and energy (like training of new employees, making recruitments, marketing and manufacturing of products etc.). This lends the opportunity to the company to fully concentrate on its core competency.

Along with this the low cost factor is equally important. The companies in US and Europe by outsourcing their jobs in countries like India, Japan and China accrue huge profits in terms of cost saving. Such savings in cost are in the form of cheap and skilled labor, manufacturing or production of the goods etc. This in turn is a result of variation in salary structure across the globe.

Outsourcing proves quite worthwhile and beneficial during the period of slump in a country’s economy. When profits are under threat and it becomes imperative to reduce the costs, outsourcing is perhaps the best way to mutilate the costs without compromising on the good quality of work. Besides this BPO also liberates big companies of labor oriented problems or issues, thereby enabling them to be more focused and streamlined to enhance their work.

There are various sectors in which outsourcing is holding grips. These are Financial sector, IT, Telecommunications, Advertising, Courier Services and Customer Support Services. A case in point can be Spectra mind that undertakes many of the crucial tasks (insurance, telecom etc.) for clients in US and Europe.

But the outsourcing process is not acceptable to everyone due to its complementary disadvantages. People often believe that outsourcing leads to drainage of jobs. It is believed to create an acute unemployment for the qualified professionals of that very nation. Moreover there the threat of delayed work failing to meet the deadlines and targets and most importantly that of leakage of confidential information is always lurking in overseas outsourcing. The companies also do not get to confront or communicate directly with their key clients which makes them all the more dependent on their offshore agencies.

Like every other phenomenon, outsourcing in business too has tail of ethics attached to it. However, the truth is that it is one of the best ways for a company to expand, enhance its growth and minimize the costs. But a company should not be just enchanted by the merits of outsourcing but should also be considerate of its pitfalls.

For details read here.

Friday, March 24, 2006

Strategic Outsourcing: Testing the Outsourcing Waters and Staying Afloat

Before Gertrude Ederle began her historic swim off of Cape Griz-Nez, France, she underwent extensive training for endurance and technique—even though she was already an accomplished record-breaking swimmer with Olympic medals to her name. Outsourcing IT may not garner the same attention as being the first woman to swim the English Channel, but it is no less important to gather as much experience and knowledge as possible on a small scale before diving in for the big swim.

The trend toward IT outsourcing is increasing dramatically. According to a report by Foote Partners, as much as 45% of North American IT work will be outsourced by 2005. And there are good reasons behind this trend. Bruce Caldwell, principal Gartner analyst believes companies can generate 20-30% savings through outsourcing. This substantial savings potential isn't easily overlooked, yet it isn't the number one reason companies are choosing to outsource right now. In a recent survey by The Outsourcing Institute, the primary reason behind outsourcing is to improve company focus. Other motives include freeing up internal resources, accessing top-notch capabilities, and accelerating time to market. The survey also indicated that 55% of firms who outsource do so within IT—more than any other area.

As more companies begin outsourcing some or all of their IT function, it becomes difficult to ignore the competitive pressure. With competitors achieving their IT needs at 20-30% less cost, and getting ahead in the market because of increased focus within the company, those who ignore the outsourcing trend could potentially lose ground very quickly.

At the same time, outsourcing horror stories abound. According to Gartner research firm, half of the current outsourcing projects will not meet the company's expectations and will be considered failures. While the vast majority of these failures are only minor disappointments where the company decides to outsource to another vendor, certainly a few are major catastrophes. An anonymous case study in IT Metrics Strategies discusses a CIO who chose to outsource to beat competitors to market. The outsourcer had promised to meet a deadline his staff had said was impossible. When the outsourcer failed, the CIO couldn't rebuild his team fast enough to finish the job. In the end, the product never got to market at all.

So how do you secure all the benefits of this outsourcing wave without getting dragged into the undertow? The key is strategic, selective outsourcing. According to Corey Ferengul, VP of the IT research firm META Group, an increasing number of companies are choosing to outsource non-core IT tasks. Common responsibilities going to third-party providers include Web hosting, call centers, data storage, and database administration.

"There's a learning curve and a life cycle to outsourcing," said Caldwell, "and it can be expensive finding the right vendor, as well as going through the transitions of taking your operations to that vendor." Stable, yet customizable IT functions provide an excellent training ground for outsourcing. Any function with known benchmarks for performance and results, as well as available, reliable outsourcing partners is a good place to start.

Ultimately you may want to outsource your entire IT department, but first you need to get a handle on managing an outsourced process. Some companies may discover they don't need to incur the risks and organizational chaos of switching to total IT outsourcing. By nimbly carving out and outsourcing small pieces of the IT function that deliver the most cost and quality benefit, companies may find they are already receiving maximum savings at minimal risk. However, they will have done some carefully planned and executed experimentation before making that decision.

For details read here.

Thursday, March 23, 2006

Offshore Outsourcing to India

Offshore Outsourcing to India uses offshore resources and creates additional jobs, increases efficiency, reduces costs, reduces inflation, lowers interest rates, and increases spending. Software Outsourcing challenge is to help transition of displaced workers to other productive activities. It is difficult to ignore the benefits of the IT offshore outsourcing trend, market researchers are predicting a substantial jump in number of companies that outsource work, mainly to India. India keeps its top position in terms of attractiveness in the Software Development India. There is a decrease in the difference with improvements in the infrastructure and the qualification of the labor force, China occupies the second place.

Getting their software research and development done in India, they are receiving top quality work at a fraction of what it cost to have it done at home. IT offshore outsourcing getting done in India is very effective due to its higher labor force. Software Development India has become cheaper and more reliable, not only multinationals organizations are off-shoring / outsourcing, even small companies with lesser budgets are jumping at the opportunity to build up profit by joining the off-shoring / outsourcing software trend.

IT managers across the country continue to find they can cut their budgets by as much as 40%, simply by sending work to an Information Technology service provider in India. High savings for top quality work, the IT manager gets further incentive for off-shore / outsource IT-related work to a service provider.

According to the research, cost savings from outsourcing software are much too persuasive to ignore. There are many, highly aggressive software outsourcing firms which is helping companies to dramatically cut costs and show a significant growth in company profits by effective performance.

Offshore Outsourcing Software is saving money and large profits are lure from the business. As well, advanced technological like secure networks, line / storage leasing all contributing to make it painlessly possible for IT managers, to transition work to overseas software development service provider.

The researcher has found out the sob stories circulating about off-shoring / outsourcing are often due to bad processes followed at home rather than the result of off-shoring / outsourcing work. The trend of offshore / outsourcing payroll, HR and benefits work has proved to be extremely successful, shows a clear indication that the process works, and can only gets better and better.

Software Outsourcing firms, are entirely responsible for the outsourced task and enables its clients to focus their time and energy and resources on the core business by increasing sales and market share and by expanding the new markets into the Software Industry. Software Development also takes care about the Quality Assurance, by presenting outsourcing models with total reduction in the costs for its clients. Software Outsourcing accesses to cutting-edge Technologies by extensive skills and practices in technologies and on-hand experiences. The provision of confidentiality and security is also supervised between the clients and the Offshore Outsourcing India for mutual benefits.

For details read here.

Wednesday, March 22, 2006

Outsourcing - Is it for my business?

There are definitely advantages, but make sure you make an informed decision!

There are a lot of advantages to outsourcing , however, there are also some disadvantages. Since this is such a huge issue, and such a large decision for you to make regarding your software development company , you should make sure that you take a good look at both sides of the issue before you make your decision. Make sure you know exactly what you stand to gain or lose by outsourcing your work.

First of all, the advantages of outsourcing for your business are that you'll be able to get some of the less important jobs done for cheaper. For instance, if you're finding that you do not have enough money in your budget to make necessary changes in order to keep your business afloat, then you should probably find a way to reduce the amount of money that you're spending.

Another advantage of outsourcing is that there are actually other companies and places where you can get the work done better than you are already in your own company. Not only that, but if you have a company that requires a large number of different products or services in order to function, it might take less time for you to find a good outsourcer than it would take you to train new people.

There are a few disadvantages to outsourcing, however, and you should definitely take those into account as well. For one thing, if you outsource, it means that you're going to have to work very closely with the company that you outsource your work to. Otherwise, you won't get the finished work as soon as you need it. Having another company involved in your business might get tiresome after a while.

Another thing that you should consider is that depending on where you outsource to, it might hurt your business. This is generally only a big deal if who your customers are really matters, or if you're a very small business. Some people shop at small businesses because they're local - and if you're a business like that, then outsourcing might be to your disadvantage.

In the end, however, the question of whether or not outsourcing is right for your business can only be answered by you.

For details read here.

Tuesday, March 21, 2006

Outsourcing CAD Offshore: Stop Waiting!

Outsourcing of a service occurs when a client buys a service from a service provider, rather than source it from inside the client’s own organisation.

The primary reason for you to consider offshore CAD outsourcing is economic benefit. The data says this benefit is more or less a sure thing. For instance: "Offshore business process outsourcing (BPO) is expected to reach $3 billion in 2004, a 65 percent increase from 2003 total of $1.3 billion." --- Gartner Inc, Stamford, CT

"Offshore outsourcing is growing 20%-25% per annum, with little evidence of slowing. Indeed, while most enterprises experience initial resistance, most technical issues are readily resolved and geopolitical risk is deemed insignificant after careful evaluation." --- Meta Group, Stamford, CT .

The flood of software development companies outsourcing CAD offshore can be likened to the migration of the wildebeests. They're doing it to survive. Don't be a solitary wildebeest watching stupefied as the others move to lush pastures. Move that tail NOW!

Move it confidently because there is significantly less risk in outsourcing CAD offshore than there is in outsourcing IT development or IT services offshore. My comments on the risks:

Data Security: A major worry for IT clients, since data security measures are often porous in developing countries (to whom much work is outsourced). However, generally speaking, CAD information is less sensitive than credit card databases, employee payroll information, prison muster rolls or a bank's accounting ledgers. Insource highly sensitive CAD; if warranted, fragment what you outsource and farm the pieces out to different service providers (aka ‘outsourcers’).

Cultural Differences: Read this as accents, comprehension of idioms, voice intonations and knowledge of your culture. This issue is of special concern to clients that outsource telephone help desks or other voice services offshore, since the service provider speaks to the client's customers. Fortunately, CAD drawings haven't started talking yet; you only have to bother about whether you and your service provider’s key personnel can understand each another.

Effect on In-House Morale: Outsourcing anywhere will erode trust between you and your workforce. It will also be hard for you to let go of employees who have become good friends. I suggest training them to perform other functions; if not, provide them with comprehensive outplacement services. Service Provider

Reliability: Unlike the factors mentioned above, this one does pose a significant risk. Occasionally an offshore service provider can completely disappear or fall silent; possible reasons are bankruptcy, mass departure of personnel or loss of confidence in completing the task. The good news is that the risk can be reduced to insignificance by careful selection of the service provider.

Your Management Capability: Outsourcing offshore will not work if it is not carefully managed by the client. Not getting this right is one of the major reasons that a lesser portion of all offshore outsourcing programs fail. An expert opinion on this: "This may sound obvious, but probably the biggest stumbling block to offshore outsourcing is that after all the contracts have been signed, companies abdicate responsibility for projects to the outsourcer...' --- Deepak Khandelwal, McKinsey, Worldwide (Minimizing each of the last two risks entails a large volume of information and will be the subject of future articles).

To conclude, there is manageable risk in outsourcing CAD offshore; you should go ahead and make outsourcing CAD one of your objectives. But don't do anything until you have carefully planned how to handle the last two risk factors, for which I will provide comprehensive information... SOON!

For details read here.

Monday, March 20, 2006

President of India Addresses Parliament on Software Outsourcing Development Industry

The Indian President, Mr. A.P.J. Abdul Kalam addressed to the joint session of Parliament for Software Outsourcing Development industry, he said a comprehensive civil aviation policy is on the anvil, while efforts would be on to attract massive investments in ports, roads, power, telecom and railway., he also said that the UPA- United Progressive Alliance Government will be continuing to accord top priority and best effort for Software Outsourcing Development and infrastructure while policy initiatives with foreign direct investment - FDI will keep the national interest in mind.

Besides labor-intensive sectors like textiles or garments, leather and leather goods and food processing, he said that the Government is planning to launch a 10-year National Manufacturing Initiative to step up investments; and the focus would be on "dynamic services sector" including software outsourcing, tourism, education and healthcare.

The requirement for greater, private initiative and reduction by Government role in areas where it can afford to stand by aside is underscored by MR. Abdul Kalam. The good governance today implements more efficient use of public money or finances in sectors which Government must have invest and less Government intervention in areas where individual initiative can be achieved more, he said.

Mr. Abdul Kalam said that Government was also keen to create world-class airports by doing that we will have better infrastructure than at present. He also said that an action plan for developing highways involving sum of investments by Rs 1, 75,000-crore in next seven years is under way. Another Rs 20,000-crore would be aside to develop two dedicated high capacity freight corridors that is the eastern corridor from Ludhiana to Sonanagar and second is the Western corridors from Jawaharlal Nehru Port Trust to Dadri.

With the increasing by FDI or its flows, the President of India said that the current UPA Government has already taken steps to remove outdated restrictions. We will make a policy framework that attracts Foreign Direct Investment, that keeping in view our overall country interest. “With a view by removing unnecessary hurdles and outdated restrictions the Government has taken appropriate decisions to rationalize the FDI policy," Mr. Kalam said.

Mr. Kalam said that private initiatives should be encouraged in developing infrastructure facilities like Software Outsourcing industry. "Government is committed to develop world-class infrastructure. With the continuing to play an important role by the public sector, it will be necessary to create a policy and regulatory environment that attracts long-term private investment in infrastructure especially for Software Outsourcing development," the President said.

For details read here.

Saturday, March 18, 2006

Software Outsourcing demands IT professionals with management skills

It has been noticed that in last few years Software Outsourcing in software development companies demands IT professionals with management skills. IT skills are ok but management skills in the professionals would be an added advantage for them to survive. More the requirement is for senior IT employees with the talents and experience required to take over the running of major deals of the IT Outsourcing Company. Organizations are searching for people with professional qualifications, manpower with a very strong program management skills and background. Employee who have worked and managed related sized projects, with strong client relationship management skills, and obviously people management services are now demanded more for Software Outsourcing.

It is marked that traditional technical jobs and services have been replaced by jobs that demand both the technical knowledge and management abilities. The major overseas service providers are demanding related technical skills like - a mixture of UNIX, Windows and mainframe expertise, developing pressure that is pushing up pay scales also. Even big branded IT Organizations are also looking for the same talents from the market. It has climbed the price range of the individual and it has become quite a momentary market place. People are being headhunted and proposed 10,000 or 15,000 more than their present salaries. Such talents are demanded more and more as the competitions are also on the hike.

Software Outsourcing Market

Now Software Outsourcing companies are seeking for the experienced project managers who have achieved additional qualifications. Big brand names are hiring such talents with more than their expected pay scales. Now such organizations are looking for the best possible mix for IT Outsourcing and services. Responsibilities of the project managers are now increasing as they combine the duties like project management and project control management jobs. Organizations have also been the business-focused rather than only be the technology-focused. Such positions are demanded a lot in the Software Outsourcing market. It is also marked that for such IT Outsourcing the demanded of the mixed skills staffs have increased to 5%.

For details read here.

Friday, March 17, 2006

IBM Signs IT Infrastructure Outsourcing Deal with Nissan

IBM has concluded an IT infrastructure outsourcing agreement to manage Nissan's IT assets in the US and Canada. This agreement extends the existing relationship between the two companies that began in 1999.

Under the terms of this agreement, IBM will provide comprehensive IT system and network services support for Nissan across North America. This will include data center, help desk, dealer systems and desktop services.

As part of this agreement, Nissan will migrate to new IBM server and equipment platforms. IBM will leverage its global network of delivery centers on this project, providing services from both its San Paulo, Brazil, and Bangalore, India, locations. Thsi is among IBM's first initiatives to deploy global resources from multiple locations for managed infrastructure services.

For details read here.

Monday, March 13, 2006

Defense outsourcing – New business

Apart from its rich culture, tradition and heritage – what else is India known for? Well, certainly for the 21st century Indians, India is known for its outsourcing prowess. The country is all set to give a new dimension to the outsourcing business. The Indian Air Force is recruiting foreign trainees from friendly countries in huge numbers.

The Indian Air Force is the fourth largest in the world and one of the best. This is primarily attributable to the comprehensive and sound training that goes into making one an officer. The presence of many foreign students in the campuses of air force academy is evidence for the same.

The recruitment runs on a policy framed by India that the country can induct trainees from friendly foreign countries in its training courses at commands ranging from Air Force Academy [AFA] at Hyderabad to technical education commands like the Air Force Technical College
[AFTC] at Jalahalli in Bangalore reports India Daily.

For details read here.

Friday, March 10, 2006

India Not To Be Blamed for US Job Losses

A study conducted by the Organisation for Economic Co-operation and Development (OECD) reports that task automation has had more impact on IT job in software development companies losses than off-shore / outsourcing to low-cost locations such as India. The comprehensive OECD research, The share of employment potentially affected by off-shoring an empirical investigation found that only one in five jobs could be hit by the continued growth of off-shore outsourcing, including those in IT, accounting, consulting, financial services and research and development.

Based on a detailed analysis of occupational data for OECD countries and other business and economic statistics, the study claims in the long term, the benefits of off-shore outsourcing and globalisation of services will outweigh any short-term job losses.

The report says: “In the long run the positive benefits of services off-shoring outweigh the costs, even though the adjustment process may occasionally be difficult in the short run.” Examination of economic data by OECD found no “systematic evidence” that net outward investment of services is associated with significant levels of decline in employment as a result of off-shoring.

The report says: “Exports of business services are found to have a positive statistical association with the share of employment potentially affected by off-shoring, suggesting that increases in demand and production have also raised demand for these types of ICT-using occupations.”

In fact, the report found IT standardisation and automation, not off-shore outsourcing, more likely to be responsible for rendering many jobs and roles redundant. Coming in the same week as the study conducted by the US IT industry body, the Association of Computer Machinery, also claimed off-shore outsourcing has not hit IT jobs, saying there are more jobs now, than there were at the height of the dot-com boom.

Welcoming the report, Mark Kobayashi-Hillary, author of Outsourcing to India: The Off-shoring Advantage declared it to be the most authoritative analysis of the benefits of open free trade regarding export and import of IT services. He said: “Quite often the economic reality is directly opposed to the media perception of off-shoring as a destroyer of jobs and talent.”

For details read here.

Software outsourcing : Excellent firms don't believe in excellence - only in constant improvement and constant change

A crucial challenge for software development cpmpanies - both big and small - in an increasingly globalized economy is to manage corporate changes quickly and successfully. While 9 out of the top 10 barriers to successful corporate change programmes can be traced to people related causes, rapid incorporation of disruptive technology into the mainstream business arena forms a core pre-cursor to a need for change in the first place. Thus the battle of managing change effectively is more than half won by properly managing the technology that drives the enterprise.

A modern enterprise typically consists of hundreds of business processes. Some of these are core to the enterprise's basic sphere of activity. A lot others are just generic processes that have nothing to do with the enterprise's core competences. While the enterprise can remain very agile in it's core competence areas and can respond to changes in technology in a timely fashion, it can become difficult - if not almost impossible - to maintain the same agility and flexibility in all the other non-core areas.

One of the most effective ways to handle this kind of business risk is to outsource certain functions of the business entity to an outside organization that specializes in providing this kind of services to multiple such businesses. This way the business that provides the service becomes a Business Process Provider for that particular business function and this becomes their core competence.

Areas of Change: The areas where disruptive technologies can sow the seed of change can be broadly classified into the following four categories:
-- Non-core business processes that are strictly rule based transaction processing.
-- Non-core processes that require high domain knowledge in the concerned business process area.
-- Core business processes that have low domain knowledge requirements and can be modelled as pure transaction processing.
-- Core processes that require high domain knowledge.

The non-core activities of an organization typically become good candidates for outsourcing to other organizations that are more prepared to handle them properly and insulate the primary organization from the effects of disruptive technological innovations. The core functions are best kept inside for obvious reasons. The core functions are an organization's raison-d-etre and may not really make sense to outsource to another organization.

Changes in Core Areas: As noted above, an organization will be consistently more agile in handling disruptive technologies within their core competence areas than in their non-core areas. For example, consider a printing shop. When digital printing entered the market as a disruptive force, all serious printing shops adapted to the new methods pretty quickly. But, most of these same shops would take months if not years to implement a cutting-edge accounting package. And even if they implement, it will probably be nothing short of a nightmare for them to upgrade to a newer version of the system!

In many cases, even some of the core functions that a business performs can become good candidates for outsourcing. This occurrs when a significant part of the core activity work-flow can be formulated as strict rule based transaction processing steps. Such processes can well be outsourced to another organization to reduce and control low skill level human resource within the organization.

Changes in Non-core Areas: With the global acceptance of internet as a valid means of business communication and with the recent advances in security solutions relating to internet communications, it is becoming increasingly easier for organizations to send out their non-core, IT oriented processes to a shared service provider. A shared service provider will typically be an IT company or an IT Organization within a larger entity who possess core competence in the field of IT and who have acquired key business process expertises either through direct acquisition or partnering with other business process experts.

The IT Organization within the Shared Service Provider company builds and then maintains the IT infrastructure that helps in service delivery by the business process experts group. This IT infrastructure can be dedicated on a per client basis or even could be shared between smaller clients so as to result in significant cost savings for all of them. Either way the client company benefits from the fact that their IT and IT based non-core activities are being handled by people whose core business is IT and the concerned business functions - say, Accounts Receivable (AR) for instance. Hence this organization will be more prepared and agile enough to quickly cope with any disruptive surges in the IT segment and take advantage of any technological advances in the business function areas - say, some new technology that makes AR processing easier.

For details read here.

The article is sponsored by A-1 Technology Inc which is an established Software Development Company and is one of the best Software Development Companies in the era dealing in offshore outsourcing including services offshore website development and software development.

Thursday, March 09, 2006

Outsourcing seen surging ahead despite political turmoil

AMID recent political troubles, the Philippine outsourcing industry is expected to surge ahead, a Canadian-based information technology research firm said.

"The administration of President [Gloria] Macapagal-Arroyo has seen its share of political instability over the last five years. The most significant of these was the Oakwood Mutiny of July 2003. Like most social movements manifesting unrest towards government policy, the Oakwood Mutiny was originally perceived to have long-term drastic effects in the economy. This was eventually proven to be untrue for the local and offshoring IT industry in this country as the resilience of Philippine society prevailed in succeeding years. Our analysis showed renewed growth for the remainder of 2003 and the event being relegated to being a mere nuisance," said XMG Inc. in a statement.

The IT research firm added that the recent declaration of "state of emergency"--since lifted--and a standoff at the Philippine marine headquarters has "no fundamental negative effects to economic growth" of the country.

Short-term business sentiment, however, will be moderately severe but would recover swiftly in less than a year, barring further political unrest under the Arroyo government, the IT firm said.

XMG noted that some business contracts may be suspended or cancelled in light of the negative sentiment.

"Most significant among these contracts are offshore contracts served by outsourcing and shared service companies. However, the decision to suspend or cancel contracts is more due to insufficient understanding of the real meaning behind events of social unrest in Philippine society," it said.

"Despite fear, uncertainty and doubt becoming top of mind for outside investors during distressing events, the country will continue to surge as one of the top IT offshoring destinations for outsourcing and captive operations," XMG added.

President Gloria Macapagal-Arroyo decided to lift the "state of emergency" on Friday, creating mixed reactions from lawmakers, businessmen, and lawyer groups.

She had declared the emergency to counter what she said was a plot to oust her.

For details read here.

The article is sponsored by A-1 Technology Inc which is an established Software Development Company and is one of the best Software Development Companies in the era dealing in offshore outsourcing including services offshore website development and software development.

Wednesday, March 08, 2006

Outsourcing: NASSCOM 2006 Round Table’s Point of View

At the India Leadership Forum - NASSCOM 2006, Economic Times invited 5-global IT heads for a business discussion. At the round table were Ronan McGrath, CIO, Roger Communications (Canada), Aaron McCormack, Vice President, Network Platforms, British Telecom Global Services (BT), Erik Viens, Vice President and CIO, Invista (USA), Les Dawson CEO, Southern Water (UK), and Richard Gragner, Director-General of IT, National Health Services (NHS) (UK).

With, India clearly on the radar screen of these companies, Economic Times invited the five global IT heads to talk about their IT strategies and spending, competitiveness of Indian software development companies , increasing global competition, and if outsourcing meant handing over or reducing responsibility. And, the five responded as under:

Ronan McGrath: As the biggest cable and wireless Canadian company, Rogers will not outsource telecom infrastructure, but can outsource some non-customer facing areas of business.

From the Indian strength and weakness point of view, it is an opportunity to move as much non-product developmental activity as possible. Once IT moves to product development in the next 3 to 4-years, everything else can be outsourced.

Aaron McCormack: British Telecom was the first to off-shore customer services to India and has been here for quite some time now. We spend 2-billion pounds a year on infrastructure, product development and systems support using Indian companies like MphasiS. They do a great job; they’re the best people at the right rates. As long as, India has companies like that, they’ll do fine but it won’t survive on low cost labour alone.

BT connects successful BPO companies in India and other locations like Philippines, Hungary and Columbia, I think the hardest challenges Indian companies will face in the business is scale, as they move to newer business models. I think they can meet the challenge. If we believe Mr. Friedman, the flat world is tilted towards India for a little while.

Erik Viens: At Invista, we don’t sell gigabytes, we sell giga kilograms. We initially spent $200-million on IT, but we currently spend half of that. We moved a bit of the network to India and got a handsome return on it. The challenge going forward is to make it run cheaper.

Initially focusing on India for cost and speed, we were willing to take potential cost savings on labour arbitrage for faster turnaround time. Surprisingly, we got better quality in REP, specifically in SAP implementation. We were quite pleased with that, or the triples of cost, speed and quality.

Les Dawson: In UK, utility privatisation process saw a huge investment in IT and IT infrastructure. Everyone came to India because it was TINA (there is no alternative) situation.

I think the challenge facing software companies is how to differentiate them selves to add value in terms of domain knowledge. Ten years ago, the first outsourcers looked for cost, quality and speed. Now they want to differentiate in their own business.

Richard Granger: The NHS spends 70-billion pounds a year, out of which 2.5 to 3% is spent on IT. We’ve worked with CSC, Accenture, Fujitsu, BT and let them manage the market around specialist suppliers and hardware vendors. I did not award any large contracts, because then you don’t get value, instead what you get is an exquisitely expensive for of dependency. Global vendors did not have high volumes of healthcare contracts, so domain expertise is a limiting factor, as well.

The non-existence of regulatory frameworks for processing personal data is one of the constraints of outsourcing to India. Organisations processing data by off-shoring to India do so without customer involvement. At the NHS, data will not go outside the European Union, until there is a regulatory framework in place.

Constraints and all, the India IT services industry continues to clock a robust growth rate. Sukant Srivastava, Managing Director of Keane India, a Boston-based IT services and business process outsourcing firm with 2,800 of its 10,000 global employees in India, has plans afoot to ramp up numbers from 10,000 to 15,000 over the next 3 to 5-years.

Srivastava strongly believes the next wave is towards emerging outsourcing areas like infrastructure, testing and advanced technologies, with enhanced focus on vertical-based solutions, niche technology areas, including RFID and smart-card solutions. Similar to the way ITeS – BPO functions evolved from outsourcing low-end data-entry activities to more analytic-based processes, the trend in IT is to move from tactical application services to integrated solutions.

Srivastava believes opportunities for Indian IT services abound if they deliver higher value from off-shore by combining technology, domain and programme management expertise. But, infrastructure failing to cope with the high speed growth of the industry could pose a massive threat. As the service providing model matures, more and more global companies are beginning to establish captive centres in India, an interesting dynamic for traditional service providers.

However, increasing competition means only the ‘best of breed’ will succeed, and India has to ensure it maintains its supply of IT / ITeS talent by pro-active collaboration between the Indian industry and academia, including government initiated programmes that allow India to manage its growth in outsourcing. If all of the above are accomplished, NASSCOM’s positive outlook on India being the preferred outsourcing destination will be more than fulfilled.

It will always be Rah Rah time for India!

For details read here.
The article is sponsored by A-1 Technology Inc which is an established Software Development Company and is one of the best Software Development Companies in the era dealing in offshore outsourcing including services offshore website development and software development.

Tuesday, March 07, 2006

The current stampede toward offshore outsourcing should come as no surprise. For months now, the business press has been regurgitating claims from offshore vendors that IT work costing $100 an hour in the United States can be done for $20 an hour in software dvelopment companies in Bangalore or Beijing.

If those figures sound too good to be true, that's because they are.

In fact, such bargain-basement labor rates tell only a fraction of the story about offshore outsourcing costs. The truth is, no one saves 80 percent by shipping IT work to India or any other country. Few can say they save even half that. As just one example, United Technologies, an acknowledged leader in developing offshore best practices, is saving just over 20 percent by outsourcing to India.

That's still substantial savings, to be sure. But it takes years of effort and a huge up-front investment. For many companies, it simply may not be worth it. "Someone working for $10,000 a year in Hyderabad can end up costing an American company four to eight times that amount," says Hank Zupnick, CIO of GE Real Estate. Yet all too often, companies do not make the outlays required to make offshore outsourcing work. And then they are shocked when they wind up not saving a nickel.

In this article, we will explore a new TCO—the total cost of offshoring. We will uncover all the hidden costs of outsourcing—areas in which you'll have to invest more up front than you might think, places where things such as productivity and poor processes can eat away at potential savings, and spots where, if you're not careful, you could wind up spending just as much as you would in the U.S. of A. (For more on how to calculate your own TCO, see the worksheet "Do the Math" on bottom of this page.)

"You can't expect day-one or even month-six gains," Zupnick says. "You have to look at offshore outsourcing as a long-term investment with long-term payback."

For details read here.
The article is sponsored by A-1 Technology Inc which is an established Software Development Company and is one of the best Software Development Companies in the era dealing in offshore outsourcing including services offshore website development and software development.

Monday, March 06, 2006

Outsourcing and Virtual Assistants: Small Business Saviors

Work smarter, not harder

What is one of the best ways to work smarter without working harder in software development companies ? The answer is outsourcing . Whether you need occasional or ongoing assistance, outsourcing can save you money and time. Graphic designers, copywriters, bookkeepers, website programmers, office assistants, and other types of professionals are all readily available.

And, there’s a new way of hiring people – the World Wide Web connects independent professionals and small businesses that don’t need or want full-time help. Try typing “Virtual Assistant” into a search engine. You will find a vast array of online resources. According to the International Virtual Assistants Association,

“A Virtual Assistant (VA) is an independent entrepreneur providing administrative, creative, and/or technical services . Utilizing advanced technological modes of communication and data delivery, a professional VA assists clients in his/her area of expertise from his/her own office on a contractual basis."

This means you can find a virtual assistant for almost any type of work. Are you a plumber who needs accounting? Or a professional speaker who needs help arranging your appointments? Perhaps you would like some help writing proposals, designing a new website, or sending out press releases. You can find someone online for all of these services.

For many “around the office” types of jobs, virtual assistants get paid $20 to $50 an hour. More specialized services such as programming, legal assistance, graphic design, or coaching can cost $75 to $125 an hour. This may sound expensive at first. However, if you are not in need of a person in your office 40 hours every week, it becomes a very cost-effective solution.

While I realize, costs fluctuate widely, let’s look at some sample numbers to compare the typical costs of maintaining an employee versus outsourcing:

Sample costs of a full-time employee Employee Salary: $36,000/ $17.31/hr.

- Two-week paid vacation: $1,385 to cover your employee’s role
(more if a temp is hired)
- Health Insurance (employer portion for 12 mos.@$150): $1,800
- FICA Taxes (7.65%): $2,754
- Worker's Comp. (.61%): $220
- Unemployment (State & Fed): $309
- Misc. costs (Vision, Dental, Disability & 401K Matching, Profit
Sharing & Stock Options): >$3,000
- Office Space, Equipment, and Software (100 sq. Ft. @ applicable
rate): $2500 ($25/sq. ft. is conservative)
- Annual Bonus (1 mo. salary): $3000
- Sick Time (10 days/year): $1385
- Other intangible costs (furniture, testing, training & fees, sick
children, etc.): $1200

Total Typical Costs: $53,553/ $25.75/hr. total effective hourly rate at 100% productivity
At a 75% productivity level, this employee’s cost for actual work becomes $34.33/hour and at a 50% productivity level, it’s $51.50/hour. A full-time staff person is very unlikely to be 100% productive because of idle time, errands, tasks, personal matters, and a learning curve for certain functions. This is combined with an employer’s inability to generate work due to distractions, staff meetings, company functions, lack of time to delegate or supervise, and sales fluctuations.

So, depending on the productivity level of a full-time employee, you may be paying up to 3 times his or her actual salary! You do the math! What's the wise choice? Does an in-house employee save money? In most small businesses, this method simply is not the most cost effective.

Entreprenuer, get your life back!

Outsourcing will save you money, time, and energy. Virtual assistants and other out-of-office professionals own their own equipment with the latest software, they pay their own taxes and benefits, they are experts in their field, they don’t require morale building or training, and they aren’t going to bring their personal problems into your work space. Virtual assistants and outsourced professionals offer even more advantages: they are loyal to their client companies and will support your goals – they will help you generate ideas and allow you more time to make your business more profitable.

So, if you have employees that you are happy with, then of course that’s perfect for your business. Don't fix what ain't broke. However, if you find you are paying too much overhead or spending too much time managing, try a virtual assistant. If you need a new type of service, but don't have the in-house expertise, outsourcing is a great option. There’s a world of online help available at your fingertips.

For details read here.

The article is sponsored by A-1 Technology Inc which is an established Software Development Company and is one of the best Software Development Companies in the era dealing in offshore outsourcing including services offshore website development and software development.

Saturday, March 04, 2006

Offshore Outsourcing Best Practices Increase Your Profit Margin

When your software development company is forming long-term offshore outsourcing relationships with another company, the foundation of the success of this venture should be laid during the negotiation period itself. The centerpiece of this negotiation period is the Service Level Agreement.

The aim of outsourcing is to gain value for the host organization. There are several contrasting views however regarding how to maximize value and minimize risk by outsourcing. The following best practices can serve as a guide when structuring your SLA, and then implementing and maintaining a relationship with the chosen provider.

Five Golden Rules For Offshore Outsourcing :

1. Develop enduring relationships between key management personnel.

The usefulness of the relationship between the key management personnel of both teams depends on good understanding and strong working ties between them. Studies on outsourcing success stories have demonstrated that working chemistry in management and peer friendships among employees have proved to be important determinants in forming long-term relationships that yield real value.

2. Present a Quantifiable Objective.

A useful performance criterion includes quantifiable objectives and clarifies expectations of the quality of service. If you can get ahold of SLAs for comparable projects, they will serve as reasonable starting pointsóbut remember, these are negotiable. In any event, ensure that exact objectives and expectations are included in the SLA and are understood by both organizations prior to implementation.

3. Pre-determine the Incentives and Penalties Schemes.

The provider should be driven to meet the established customer expectations or even exceed it by adopting the performance based pricing criteria. If performance of the service provider exceeds expectations, then incentives should be given; conversely, appropriate penalties should be imposed if objectives are consistently missed.

4. Review Periodically to Maintain Successful Relationships.

Organize formal review meetings often. During the meetings, both sides can discuss the performance of both teams and determine the future objectives or goals of the company accordingly. They can also discuss product reviews and deliverables during these meetings. Keep in mind that performance objectives may need to be continually revised according to changing market conditions and the opportunity costs of both firms.

5. Communicate Well & Often to Bridge Cultural Differences.

The parties involved in an outsourcing relationship belong to distinct cultures, these differences have to be accepted and bridged. The cultural understanding between the two organizations can be enhanced by organizing social events, educating about company background, participating in each othersí quality programs, etc. Communication really is the key to a healthy relationship. It may be helpful to send a loyal employee to the BPO site for a few months to facilitate understanding in the implementation phase.

For details read here.

The article is sponsored by A-1 Technology Inc which is an established Software Development Company and is one of the best Software Development Companies in the era dealing in offshore outsourcing including services offshore website development and software development.

Friday, March 03, 2006

CSC Signs $235 Million IT Infrastructure Outsourcing Contract Renewal With Schroders

Schroders, a global asset management company, has renewed its existing information technology (IT)outsourcing contract with CSC for an additional seven years and 10 months.
The renewal is valued at approximately $235 million.
The new agreement supersedes a previous seven-year IT outsourcing contract
awarded to CSC in June 2001, under which the software development company provided various
infrastructure and applications services.

Under the terms of the new contract, CSC will provide Schroders with
infrastructure services for midrange, desktops and networks, and support for
key applications.

"The partnership between Schroders and CSC is an integral part of the
provision of IT services within Schroders,"
said Matthew Oakeley, head of
Group IT at Schroders. "This agreement provides an excellent platform for
increasing leverage of CSC's core skills and enhancing the IT support model
for Schroders' business."
"The signing of this renewal represents an important milestone in the evolution of our relationship with Schroders," said Guy Hains, president of CSC's European Group. "It demonstrates CSC's ability to meet client needs and adapt to changing IT and business requirements. Our five years of experience
working with Schroders positions us well to continue delivering operational
results that directly support Schroders' business goals."

About Schroders
Schroders is a global asset management company with 122.5 pounds sterling
($211.0 / 178.2 euros) billion under management as at 31 December 2005. Its
clients are major financial institutions including banks and insurance
companies, local and public authorities, charities, pension funds, high net
worth individuals and retail investors.

Schroders' aim is to apply its specialist asset management skills in
serving the needs of its clients worldwide and in delivering value to its
shareholders. With one of the largest networks of offices of any dedicated
asset management company and over 250 portfolio managers and analysts covering
the world's investment markets, Schroders offers its clients a comprehensive
range of products and services.

For details read here.

The article is sponsored by A-1 Technology Inc which is an established Software Development Company and is one of the best Software Development Companies in the era dealing in offshore outsourcing including services offshore website development and software development.