Friday, August 31, 2007

A new front in outsourcing

Families in the developed countries struggling to pay the spiralling costs of care for their elderly relatives could soon have a new cheaper option: outsourcing to India.

Extreme though the idea may sound, one man has already made the move successfully with his parents, and the concept is being regarded with interest by care charities.

Steve Herzfeld, a 56-year-old American, was caring for his elderly parents for three years when, at his wit’s end over finances, he decided to relocate them to India in November 2006.

The three of them rented a house in Puducherry. With the help of a friend, Mr. Herzfeld organised a team of six to nurse, massage and care for his parents.

They pay £1,000 a month for the house, bills and medication — leaving them with money to put aside for a rainy day. Had they stayed in the U.S., they would have faced nursing-home fees three times that amount. Mr. Herzfeld’s parents would not have been able to afford such charges — and, anyway, he could not face the prospect of putting them in a home.

Frances Herzfeld, 89, was suffering from advanced Parkinson’s disease and Ernest Herzfeld, 93, has Alzheimer’s. Mr. (Steve) Herzfeld had retrained as a nursing assistant, not so much to nurse them himself but to know enough to manage their care. However, by late 2006, he knew they were so fragile they could not continue as they were. In the Florida nursing home he found for his mother, he knew she would spend her time “in a wheelchair, with four or five others in a room, while a nurse read the paper all day.”

Mr. Herzfeld is a disciple of Maharishi Mahesh Yogi, founder of the Transcendental Meditation programme, and since 1982 has been taking part in a long-term research project using advanced yoga techniques. The Maharishi encourages disciples to care for their family, so Mr. Herzfeld has taken time out to do this.

When a friend suggested the idea of relocating to India — for its far lower nursing costs and the promise of some quality of life for his parents — Mr. Herzfeld could see a lot of merit in the apparently outlandish idea. He had spent five years in India before, knew the country well and also could count on considerable help from his friend. So they moved to Puducherry.

Frances died in May, but Mr. Herzfeld still feels the move was worthwhile. “The big benefit was seeing my parents still had some dignity in their life,” he says.

However, he would only recommend that others took the same route if they had family or friends there or had lived in India before. “I don’t want to encourage people to do it when they could be very unhappy,” he says. “This is an environment that some Westerners thrive in and others don’t like particularly.”

Finding English-speaking staff has been difficult, as most of them can get better-paid jobs abroad.

Nonetheless, wages for a nurse amount to about £125 a month and drugs cost a fifth of what they do in the U.S. Instead of using every cent to pay for care, the father and son are now actually able to put some away.

Despite his own reservations, Mr. Herzfeld is clearly a pioneer and others — potentially millions — may want to follow him to warmer climes and more affordable care.

Nevertheless, there may be more pressure soon from a demanding baby-boomer generation of pensioners that is prepared to question authority and traditional stances.

U.K. property consultant King Sturge advises on the nursing home sector and senior associate Anthony Oldfield says: “There is scope in the next five years or so for British nursing home companies whose names are well-known in the U.K. to expand abroad.”

When the issue starts being debated, it will have to be an international discussion, not a national one. Within Europe, pensioners are tending to move from northern countries — such as the U.K. and Germany — to the south, to Spain, Greece and Italy.

The Norwegian Ministry of Health already organises “health trips” for people with rheumatism and skin problems to Spain, Turkey and Montenegro. Sooner or later, this will need to be addressed on a European or global level. The world population of 80-plus-year-olds is set to soar from 90 million now to 400 million by 2050, according to the World Demographic Association.

In Puducherry, Mr. Herzfeld has been surprised to receive e-mails from people who want to pack their ageing spouses off to India on their own.

But while there is no infrastructure for that now, Mr. Steve (who has studied accountancy) says: “It appears to me that there is a potential industry here — in areas that are nice and quiet, with less pollution. You could staff them, even build rooms for family members to live in and provide Western comfort levels.”

First Offshore IT Outsourcing Center in Ethiopia Opened by eVentive

eVentive, LLC, a Chicago-based IT consulting and outsourcing firm, has announced the opening of its offshore IT outsourcing center in Addis Ababa, Ethiopia. The outsourcing center, the first of its kind in the region, became operational with the graduation of the first class of Ethiopian consultants from eVentive's exclusive training program.

Addis Ababa, a thriving metropolis of nearly 3 million, offers a large workforce of English-speaking IT professionals. One major advantage that Addis Ababa offers over other outsourcing destinations is its 8 hour time difference with US Central time. This provides a significant daily window for live communications. At the national level, the government of the Federal Democratic Republic of Ethiopia has targeted Information Technology and Communications (ITC) as one of its top 5 priorities for development, which has resulted in significant investments in ITC infrastructure. As an emerging economy, Ethiopia offers cost advantages that cannot be matched by many countries that provide offshore IT outsourcing services.

eVentive's outsourcing center is poised to contribute to the rapidly growing Ethiopian economy by offering IT consulting and outsourcing services to U.S. and Ethiopian companies. eVentive's BlueNile(TM) offshoring methodology ensures project success by combining U.S.-based project management with highly trained Ethiopian resources. eVentive's Ethiopian consultants undergo a rigorous training program, BlueNile SED(TM). The 5-week program has been adapted for Ethiopia, and develops a balance of high-level technical and business skills.

eVentive, with its local partner United Systems Integrators, commenced Ethiopian operations with projects for both Ethiopian and US Fortune 500 customers. "eVentive's introduction of U.S.-style consulting and outsourcing services will be a key to technology growth in the region, as well as a great advantage to its US customers," says Michael Shebelle, President of United System Integrators in Ethiopia. "eVentive's expertise in process and technology, coupled with the local talent, offers great value for US customers seeking the advantages of offshore outsourcing."

eVentive, LLC is an established consulting and outsourcing firm based in Chicago, Illinois. Its customers include McKesson, Volkswagen of America, and The Northern Trust Company. United Systems Integrators, Plc. is a highly-regarded hardware systems integrator in Addis Ababa, and has delivered hardware and networking products and services to some of the largest companies in the region.

Thursday, August 30, 2007

SMEs are biggest outsourcers, says expert

Small firms are generally the biggest users of outsourcing services, according to one expert.

Martyn Hart, chairman of the National Outsourcing Association, said that while small businesses are unlikely to look into offshore outsourcing, they are increasingly using local firms for IT maintenance and upgrades.

He noted that more businesses are using IT outsourcing processes as standard, rather than as 'extras' to a basic IT strategy.

'What we would call IT outsourcing is just becoming the way you actually run your IT,' Mr Hart commented.

'That is, of course, unless the small business is involved in IT - which a lot are - they will just take it as normal that's the way we do it. If you're actually involved in IT you'll do a lot more yourself.'

Research carried out by the Irish Computer Society earlier this year found that small IT departments are less likely to outsource their IT processes than larger departments.

The survey also revealed that the main reason for undertaking IT outsourcing among Irish organisations is cost savings.ADNFCR-8000120-ID-18261307-ADNFCR

SMEs are biggest outsourcers, says expert

Small firms are generally the biggest users of outsourcing services, according to one expert.

Martyn Hart, chairman of the National Outsourcing Association, said that while small businesses are unlikely to look into offshore outsourcing, they are increasingly using local firms for IT maintenance and upgrades.

He noted that more businesses are using IT outsourcing processes as standard, rather than as 'extras' to a basic IT strategy.

'What we would call IT outsourcing is just becoming the way you actually run your IT,' Mr Hart commented.

'That is, of course, unless the small business is involved in IT - which a lot are - they will just take it as normal that's the way we do it. If you're actually involved in IT you'll do a lot more yourself.'

Research carried out by the Irish Computer Society earlier this year found that small IT departments are less likely to outsource their IT processes than larger departments.

The survey also revealed that the main reason for undertaking IT outsourcing among Irish organisations is cost savings.ADNFCR-8000120-ID-18261307-ADNFCR

The Benefits of Outsourcing

Handling a business portfolio is a very serious task to consider. It is not just the matter of making your business sellable to the public, but it is also the matter of handling every detail and making it profitable for your business. Thus, starting a business is not for everyone, but exclusive for individuals who have the mind and talent to run a successful business portfolio.

You may have already achieved success at running a small business. With fluctuations in the economy as well as the tight competition with other businesses offering similar products or services you offer, it is indeed an achievement to have your small business staying alive for several years. However, as part of your commitment to make your business portfolio more profitable, you must be regularly updated with regards to the latest strategies in handling businesses. Keep in mind that you must conform to the changing standards of the industry in order for your portfolio to last for the long haul.

Probably, you have heard about outsourcing and its benefits to small businesses. You might also consider outsourcing your business portfolio, but it is important that you understand the meaning of outsourcing and the reasons why many companies outsource some or majority of the functions of their business.

To start with, let us define outsourcing. It is the designation of several non-core functions of a business to an independent entity which has the specialization over a particular non-core function. In other words, outsourcing means giving away some of your business tasks that could be managed by an independent entity, such that the entity has the specialization over that certain task.

In addition, it is also stated in the definition that outsourcing is more of delegation of non-core business functions. Simply put, non-core functions are certain tasks that are commonly handled by a separate department. For instance, as the business owner, your primary concern is the general management and financing of your business. Such aspect is referred to as the core functions, whereas the non-core functions include human resource recruitment and training and information technology (IT) support.

Now, why outsource such non-core functions of your business? At this point, the benefits would now be derived based on the reasons of outsourcing. Read on and learn the benefits that you can enjoy in outsourcing some of your business’ functions.

1.It reduces your expenses. It is cheaper to outsource your business’ non-core functions to independent entities. You do not need to hire additional workers, thus decreasing overhead expenses in terms of employment. In addition, offshore outsourcing offers cheaper rate, thus decreasing further your expenditures.

2.It also allows you to concentrate further on the core functions of your business. Since you have designated some of your tasks to other groups, you can now concentrate on providing better quality of products and services to the public. It leads to increased overall productivity of your business.

3.You are assured that the tasks are handled by professionals. In advertising, for instance, it is important that you have a professional who will propose viable ideas to make your products or services sellable to the public. Since they have specialization on such fields, you are assured that they can manage the task effectively.

Although there is a limited access to the tasks you will outsource to outsourcing firms, it is a viable option that can make your business more profitable. It may even provide you with new ideas to integrate into your business.

Wednesday, August 29, 2007

IBM In $17 Million Outsourcing Deal With Danish Government

The pact extends an existing contract that IBM inked with the Danish government in 2003 to support its Agricultural Advisory Service.

IBM said Monday that it has won a contract worth $17.7 million to provide tech support to Denmark's Agricultural Advisory Service.

Under the seven-year deal, IBM will support and maintain an online accounting and bookkeeping system that the Danish government agency operates on behalf of the country's farmers. The system, called 090, helps farmers maintain income statements and balance sheets and track their value-added tax payments.

The pact extends an existing contract that IBM inked with the Danish government in 2003 to support 090. More than 90% of farmers in Denmark use the system, according to IBM. It's used to maintain more than 40,000 VAT -- or value added tax -- accounts.

Under the new agreement, 090 will be moved off Sun servers and ported to a virtualized environment hosted by IBM. "We will achieve greater flexibility because we will be able to quickly adjust our use of capacity up or down according to demand," said Niels Peter Skrubbeltrang, department manager at the Agricultural Advisory Service, in a statement.

IBM's Global Technology Services outsourcing unit has been building momentum of late. Last week, IBM said it had won a $330 million services contract from insurance giant Allianz. Earlier this month, Canada's Canadian Pacific railway handed IBM a five-year contract to provide it with application development and support services. Financial details were not disclosed.

IBM's Global Technology Services unit posted a 10% gain in year-over-year revenue in IBM's most recent quarter, to $8.8 billion. It also signed new services contracts totaling $11.7 billion during the period, up 22% over the previous year.

India's Wipro to Open Center in Atlanta

Wipro Technologies, the global services arm of Indian outsourcing company Wipro Ltd., plans to open a software development center in Atlanta, the company said.

Wipro (nyse: WIT - news - people ) will initially employ 200 people and anticipates about 500 positions within three years, mostly graduates from state universities, the company said in a statement.

"The center is part of Wipro's strategy to build global delivery capabilities and will significantly increase the company's presence and base of local hires in the United States," the Monday statement said.

Western companies routinely shift information technology jobs to countries such as India, where wages are low and skilled workers are plentiful.

The practice has benefited Indian software companies, some of which are now setting up centers outside India to compete with IBM Corp. (nyse: IBM - news - people ), Accenture (nyse: ACN - news - people ) and other global computer services companies.

"The work we're doing requires more and more knowledge of the customers' businesses, and you want local people to do that," said P.R Chandrasekar, President, Wipro Technologies Ltd. "The Atlanta center is an investment that will help Wipro's existing customers as well as help address new business opportunities."

Wipro already operates software development centers in Brazil, Eastern and Western Europe, China, Mexico and Canada. The company said it chose Atlanta because of its proximity to key universities.

The University System of Georgia has already provided Wipro with "a comprehensive work force development program," Wipro's statement quoted chancellor Erroll B. Davis Jr. as saying.

"We tapped into the resources of Georgia's 35 public colleges and universities to find the best solution for this company," said Davis.

Also, Kennesaw State University and Southern Polytechnic State University are collaborating with Wipro to create an innovative curriculum development and delivery system, he said.

Earlier this month, Wipro Ltd. said it would buy Infocrossing Inc. (nasdaq: IFOX - news - people ) for about $600 million. The New Jersey-based company provides outsourcing services to mid-sized companies in the United States.

Tuesday, August 28, 2007

Reduce Cost by Using Outsourcing Software

India is home to some of the largest IT Outsourcing organizations of the world; everything from software development organizations to manufacturing products and global banks, to the world of BPO or information technology, Offshore outsourcing is simply flourishing in India. Cities like Bangalore, Mumbai, Delhi, and Hyderabad are the key players in this sector.

The World Wide Web plays a vital role in the global business paradigm. This enables the workers to get in touch with the outsourcing software development workers in distant nations or with professionals in cities of India. The use of outsourcing software lets your overhead charges come to nearly zero letting you reduce your costs drastically.
Offshore outsourcing reduces costs, as you can find significantly lower rates from offshore vendors. Rates are only one component of costs, and in any case you have to look at the entire return on investment. Most people in the software industry know that productivity differences between developers are far greater than salary differences - and even the rate differentials offered by offshore aren't necessarily greater than that. Offshore work also introduces extra costs and risks that may offset the rate differential.
With the variety of web-sites, internet marketing is made easier. These sites make outsourcing software very easy. It's simple to navigate, enrollment costs that are cheaper and there are a variety of value-added services that come with membership.
The outsourcing software trend and other services will continue to increase with the continuous extending of internet’s reach for further with the policies of U.S corporations. Currently it is the age of information that is expected to grow both in size and scope.
There are so many resourceful website that acts as another entry for the outsourcing software virtual marketplace. In fact, these sites have various categories of web to choose from. Instead of just software and computer related projects, these enable one to find editing, photography, writing, and broadcasting of business consulting, legal, sales, marketing, and other software projects making it beneficial for both the customers and the providers.

Wipro Technologies to Open New Software Development Center

Georgia Governor Sonny Perdue announced today that Wipro Technologies, the global IT services business of Wipro Limited, will open its new global software development center in Atlanta.

“We are proud that Georgia can offer the top-notch technology, workforce and other business assets Wipro is looking for to grow its presence in the United States,” said Governor Sonny Perdue. “I’m especially pleased about the partnership between Wipro and the University System of Georgia to train and educate more than 500 employees.”

Wipro is in the process of choosing a location in metro Atlanta for its first development center in Georgia. The center will help Wipro hire skilled workers and domain experts who will be critical to Wipro’s business growth plans in the U.S. The new center will also allow Wipro to move forward with its business growth strategy to invest and recruit skilled talent within the U.S. in order to provide localized and closer-to-customer service for its expanding technology services business in the Americas.

“The work we’re doing requires more and more knowledge of the customers’ businesses, and you want local people to do that,” said Wipro President and CEO Americas P.R Chandrasekar. “The Atlanta center is an investment that will help Wipro’s existing customers as well as help address new business opportunities.”

Wipro chose to establish its presence in Atlanta because of the technical talent pool available in the region, given its proximity to key universities. For the first year, the Atlanta facility will hire more than 200 positions. By its third year of operation, the facility is expected to employ more than 500 employees. Wipro will also set up a training center in Atlanta to provide both technical and soft-skills training to its employees in Georgia, and plans to sponsor higher education degrees for up to 40 percent of its employees for training and development.

“Wipro told us what they needed, and the University System of Georgia responded with a comprehensive workforce development program,” said Erroll B. Davis, Jr., Chancellor. “Through ICAPP (Georgia’s Intellectual Capital Partnership Program), we tapped into the resources of Georgia’s 35 public colleges and universities to find the best solution for this company. Kennesaw State University and Southern Polytechnic State University are collaborating with Wipro to create an innovative curriculum development and delivery system.”

The center is part of Wipro’s strategy to build global delivery capabilities and will significantly increase the company’s presence and base of local hires in the United States. Wipro has over 12 offices in the United States, and the Atlanta center will strengthen the company’s growing global delivery capabilities, which include development centers in Brazil, Eastern and Western Europe, China, Mexico and Canada.

Georgia Department of Economic Development (GDEcD) Statewide Project Manager Mary Z. Douglass assisted the company with its location, as did the Metro Atlanta Chamber of Commerce (MACOC).

“The Wipro investment is significant for metro Atlanta, and will create additional quality jobs coming from India,” said Hans Gant, senior vice president of Economic Development for MACOC. “Metro Atlanta continues to expand its global connections, and attract companies half a world away because we’ve got everything they need—a home base located in the heart of the nation’s fastest-growing metro area, a low cost of doing business, access to the world through our international airport and world class universities.”

Monday, August 27, 2007

Virtual outsourcing

Late last year, business coach Cheryl Cook was struggling to keep up with e-mails and phone calls while trying to build her business.

Then she took a friend's advice and contracted to have a virtual assistant in Tampa, Fla. — a woman she had never met — weed through the hundreds of e-mails she gets daily. Her "VA" Kathy Hadzibajric charged $30 an hour to find and to sort the useful messages into separate, topic folders.

And Cook was free to pursue and meet with even more clients.

Virtual assistants are a growing way for small-business owners to have administrative tasks taken care of without hiring additional employees. Military spouses, a large share of the VA community because of the flexibility of the business, performed more than $30 million in services last year, according to Christine Durst, chief executive officer of Staffcentrix and founder of the International Virtual Assistants Association.

The specialty arose in the mid-1990s as the Internet made it easier to share documents across long distances. Real estate agents and business coaches were among the first to use VAs. Now, virtual assistants provide a broad range of administrative and creative services, including graphic design, Web site management, grant writing, payroll processing, transcription and marketing campaigns., and have searchable online databases for finding virtual assistants by specialty.

Downsized executives increasingly turn to VAs as a way to give their new businesses the amenities that are commonplace in larger competitors, without the labor, rent and benefits costs of employees.

Like Cook, they often find it a great value. Hadzibajric sends Cook detailed bills and never has charged more than $150 a month — even after Cook began having her also schedule appointments, answer mail and build an online records archive. Soon, Cook plans to have her VA start submitting her articles to online magazines.

"There's no way I could have someone sitting here — even part-time — and pay them what I pay her," Cook said.

VAs frequently are professionals who have worked in corporate America before deciding to offer their back-office services from home via the Internet. So clients often use them as sounding boards for business plans, Hadzibajric said.

She was a program manager for nonprofits in Washington, D.C., for 13 years before moving to Florida and launching Virtually Solved. Hadzibajric has had clients in Vancouver, Canada; Brazil; Wisconsin; and across the Southeast.

"I have a lot of clients who call just to run ideas by me because they don't have anyone else they can talk to who are not colleagues or competitors," she said.

VAs provide their own software, materials and supplies and tend to have more flexible work hours than employees.

Business owners have the flexibility to use them on a project-by-project basis. In many cases, one VA can provide a network to many other experts that the business owner may not be able to access.

"With a VA, it is possible to have an entire team," said Beryl Powell, a San Antonio-based virtual assistant and owner of Completely Virtual Group, which designs and implements marketing campaigns using public relations and telemarketing specialists for clients in New York, New Jersey, Florida and Massachusetts.

But the services-on-demand come with legal limitations. Business owners can prepay for a set number of hours of service but cannot contract to be a VA's sole client nor dictate when the work gets done.

"Based on IRS guidelines, you can give them a due date, but you cannot limit where they do the work and how they do it," said Candy Beauchamp, an Austin-based virtual assistant who is president of an industry association. "You can request to check in online to see how the work is progressing."

Mike Forsyth, a San Antonio-based managing director and business consultant at Holland & Davis, also recommends that business owners and VAs decide in advance how they will interact via phone and online to minimize conflict. Forsyth uses a VA in Houston to edit his documents and to answer phone calls. They meet weekly online at to review documents in real time and to chat via instant messages.

"Sometimes they are assisting as many as a dozen people, and so you want to work out how you will get worked into their schedule," Forsyth said.

Hold your offshore investment course

Now is definitely not the time to abandon your offshore investments. If anything, there are good opportunities to be had in foreign markets.

Global market turbulence arising from the sub-prime home loan debacle in the United States appeared to be abating this week, although many commentators say investors are still nervous about the prospect of further volatility.

Jeremy Gardiner, a director at Investec Asset Management, says since the noise began earlier this month most world markets have fallen somewhere between 10 and 15 percent from their highs.

If the events of the past month made you panic about your offshore investments or if you patted yourself on the back for not having any of these investments, your investment strategy is probably off course, asset managers and financial advisers say.

You should, they say, have a properly diversified offshore portfolio, which forms part of an overall investment portfolio that is determinedin accordance with your investment needs, investment time horizon and your appetite for risk.

If that is the case, when the trouble started some three weeks ago, you should have battened down the hatches and gone to sleep in your cabin, leaving your asset manager to do his or her job of steering the boat, Debbie Netto-Jonker, a leading financial planner with Netto Financial Services, says.

Netto-Jonker says investors who are in general managed or balanced funds that have a sensible blend of bonds, cash and equities did not see their funds shoot the lights out with high returns during the bull market. Butin the current market turbulence they should see the benefits of being well diversified.

Stay the course
If you were panicking as news of the market declines emerged, it is to be hoped that you didn't make any rash decisions.

Gardiner says "making fundamental changes to your portfolio during extreme turbulence is tantamount to trying to change the sails during a gale".

He says you first need to get your risk profile right (by looking at your needs, time horizon and appetite for risk), and then you can select an appropriate investment portfolio. If you do this, you will be able to sail through whatever conditions the markets experience.

Netto-Jonker says the real question long-term investors should be asking themselves is whether the fundamentals influencing the marketsin which they have invested have changed.

Only if the fundamentals have changed, should you consider changing your investment.

Most asset managers say the fundamentals of offshore markets haven't changed.

Gardiner says the world economy remains healthy, and global equity markets are still reasonably priced. He says over the long term, the current adjustments to the US credit markets will be healthy.

Netto-Jonker says you must remain focused on your long-term investment objectives and avoid any temptation to overreact to recent market movements.

In the long run, investment markets perform very well, but most investors fail to earn good returns, she says. The main reason for this is that investors allow their emotions to drive their investment decisions. This often resultsin investors withdrawing from the markets during periods of volatility, and in most cases this has negative long-term consequences, Netto-Jonker says.

It is in times like this that staying the course with your investment strategy will be rewarded in the long run, she says.

Kokkie Kooyman, the head of Sanlam Investment Management (SIM) Global who operates the Sanlam Global Best Ideas Fund and the rand-denominated fund that feeds into this offshore fund, agrees that a disciplined approach of investing onlyin undervalued equities - especially when those companies have above-average growth and have good, ethical and rational management - will generate superior returns over time.

Don't wait to get in
If you missed the recent offshore market turbulence because you are not invested in offshore markets, you may be pleased this time around, but it's not a good strategy to have all your eggs in one South African basket.

You should be exposed to offshore markets because it is a way of diversifying your risk: different markets often perform well or badly at different times.

Exposure to offshore markets also enables you to invest in sectors and companies that are not available in South Africa.

Investment gurus say you should buy into markets when they are low, rather than when they are delivering high returns and are about to peak before the next downturn.

This, together with the rand's relative strength against the major currencies, seems to indicate that if you don't have enough exposure to offshore markets, or if you need to rebalance your investments following good growthon local investments, now is an opportune time to move into offshore markets.

Kooyman says if you need to get into offshore markets, you shouldn't wait. He quotes First Rand Banking chief executive officer Paul Harris as saying: "'Wait and see' is the dumbest advice I have ever heard."

To generate excess returns, you have to take some risk, Kooyman says. You could wait until the crisis is over, but you'll forgo considerable upside, he adds.

You can always find undervalued, superior companies in any market, Kooyman says. However, at times investors push up (or down) certain sectors or geographies more than others as they (for a while) fallin or out of love with them.

Kooyman says over the past eight months the most undervalued markets have been South Korea and Taiwan, and they remain undervalued. Smaller cap stocksin China (listed in Hong Kong or Singapore) also still offer good value.

But, he says, SIM Global is increasingly finding good value in France, Germany, the United Kingdom and the US.

"At the moment the 'vision' on the future earnings of US banks is clouded by the uncertain outlook for loan growth and fee income, and the risk of increasing bad debts.

"But as surely as day follows night, the current sub-prime woes and feared US consumer spending slowdown will pass. When that happens, US banks will offer extremely good value."

Where the value lies
Kooyman says when investment banks, hedge funds and other investors that have been selling their shares in offshore markets go back into the market, they will initially avoid companies that are operating on borrowed money and ones with riskier strategies.

The preference will be for com-panies with proven track records that generate cash.Kooyman says the Sanlam Global Best Ideas Fund has been investingin these shares - the likes of US information technology companies Dell and Cisco, European media company Vivendi, German professional services company Deutsche Post, and US gas-drilling and exploration company Chesapeake - since January 2007.

He says his fund has also been invested in undervalued Chinese and Indian smaller companies, such as Great Wall Motors (a motor manufacturer in China), Global Green Tech (a beauty product manufacturer in China), Chaoda Modern Agriculture (a food manufacturer in China) and China Essence (a potato starch manufacturer in China).

These companies are unlikely to be affected by a global slowdown following the US sub-prime mortgage problems, Kooyman says.

Anil Thakersee, the managing director of Old Mutual Unit Trusts, agrees that current economic conditions and the relative valuations of local and offshore markets favour increasing offshore exposurein a portfolio with no or low exposure.

Offshore equity market valuations are at their most attractive levels relative to the JSE in several years, he says. For example, the historic price:earnings ratio of the US Standard & Poor's index is now at roughly the same level as the JSE, at 15 times.

At the same time, global interest rates have risen, and even offshore money market funds are offering relatively attractive returns.

"Should the local equity market become increasingly volatile in the next 12 months, it is likely that an offshore diversified portfolio will demonstrate lower volatility than one that is not. So when it comes to offshore investing, it is certainly more about managing risk than chasing returns," Thakersee says.

Looking ahead, he says, it is very difficult to forecast whether a local or an offshore investment will perform better.

Saturday, August 25, 2007

India faces battle for outsourcing

As US and European companies look to cut costs by moving many of their operations abroad, India has stepped in to become a world leader in IT outsourcing.
However, success has attracted imitators and India is facing a fight to keep its position at the top.
India now leads the world in offshore outsourcing - the remote servicing of information technology (IT) or other business processes by staff based in India.
The value of outsourcing to India in 2007 is estimated at $47.8bn (£24bn), ten times what it was worth back in 1998.
Expansion is happening fast, and the IT outsourcing industry is predicted to continue growing at about 28% a year.
The sector has become a very important part of the overall economy of India, creating growth and new wealth in a country that has only enjoyed economic liberalisation since the early 1990s.
IT and business process outsourcing (BPO) services now account for 5.4% of India’s gross domestic product (GDP), and have had a huge impact on cities such as Bangalore, the centre of the industry.
Chasing pack
But India’s success in hi-tech services has not gone unnoticed.
From Mexico to Vietnam, local governments are busy creating investor-friendly tax policies, such as special ‘export-zone’ offices on the model of India, where offshore work is free of domestic taxes.
They are also encouraging the creation of new trade bodies to represent and promote their industry in the same way that India’s National Association of Software and Services Companies (Nasscom) has been doing since the 1980s.
One of main threats to India has been the expansion of the European Union (EU).
In 2004, the EU expanded east to accept ten new member states, and then went on to welcome Romania and Bulgaria into the union earlier this year.

Boeing outsourcing about 150 information technology jobs

Boeing Co. is laying off about 150 employees in a computer network operations unit as it outsources information technology work to Computer Sciences Corp.

The workers, all but about two dozen of them in the Seattle area, received 60-day layoff notices last Friday, Boeing spokeswoman Cathy Rudolph said.

The affected employees are systems analysts, including administrators and design and integration specialists in Boeing's Engineering, Operations and Technology division, which has a work force of about 12,300.

El Segundo, Calif.-based CSC took over computer-systems monitoring, support and administration at Boeing's St. Louis-based defense arm in 2003. CSC will now handle that work for all of Boeing's U.S. locations, Rudolph said Thursday.

Some of the affected workers may find other jobs at Boeing, while others could be hired by CSC, Rudolph said.

As of July 31, Boeing had 157,430 employees worldwide.

© 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.

Friday, August 24, 2007

Offshore Outsourcing or have more, doing less

World market of Software grows by huge rates. The lion's share of this market belongs to Outsourcing or Offshore Programming. It is forecasted that in 2008 the World Outsourcing Market will take up to $500 milliards, European market -$322 milliards, Business Processes Outsourcing -$125 milliards and IT Outsourcing - $150 milliards.

The world market of Outsourcing draws special attention of analysts as it is not a classic consumer market of IT-services. In the world practice Outsourcing as a scheme of cooperating with the external suppliers of IT-services became the acknowledged mean of increasing work efficiency.

Key clients of the Offshore Programming projects are the companies from North America countries. Foreign partners search on Outsourcing projects is also effective in the Western Europe countries. This region has the best prospects in economic development and, consequently, is the most perspective consumer of software.

Here are some figures of Outsourcing Market: USA – 42 %, Europe –50%, Great Britain – 17%, Germany – 13%

Traditionally, speaking about the market of services of Offshore Programming, above all are mentioned India, China, Ireland, Mexico, Philippines. The leader’s of Offshore Software Development (India) turnover is about $7,7 milliards in a year.

Companies that collaborate with the Chinese partners are mainly oriented on product promotion to the market of China.

Ireland today is not the most effective choice with relation to expenses, but it is very successful variant for companies, that choose to create center of software development.

A key barrier in Mexico is insufficient English language proficiency of developers. Other drawback is absence of quality management standards in local IT-companies. Philippines are acknowledged as a good India alternative, if not to take into account the risks of political instability.

Companies from other countries are also ready to offer Offshore Services, for example, East Europe countries. Also should be mentioned Vietnam, where the amount of graduating students of IT-specialties increases more than 10% annually.

Today business customer need to have answers to the practical questions: how to have better outcome for less money; how to win competitive edges in the situation of limited resources; how rightly and effectively conduct the process of Outsourcing.

Chevron to develop offshore project in Canada

Newfoundland and Labrador, Canada's eastern-most province, reached an agreement with San Ramon-based Chevron Corp. and other oil companies to develop the offshore Hebron-Ben Nevis heavy- crude project.

Under the memorandum of understanding, the government will buy a 4.9 percent stake in the Hebron project for $103.6 million, provincial Premier Danny Williams said today.

Negotiations to develop Hebron, which may contain more than 700 million barrels of oil, broke off in April 2006 after Chevron and other companies failed to agree on terms with the provincial government. The talks resumed this month.


Allegiant Air will begin twice-a-week passenger service between Stockton Metropolitan Airport and Phoenix beginning Oct. 26. Allegiant, the only commercial jet airline serving San Joaquin County, currently operates five flights a week between Stockton and Las Vegas.

The announced nonstop service to Williams Gateway Airport, serving Phoenix-Mesa., will start with an introductory fare of $59 one way. Allegiant will use 130-seat MD-87 jet aircraft, slightly smaller than the 150-seat MD-80s it flies to Las Vegas five times a week Friday through Monday and Wednesday. The airport offers free parking.

Con-way Inc., the third-largest U.S. trucking company by market value based in San Mateo, said it will combine its three regional freight hauling units and centralize operations with headquarters in Ann Arbor, Mich. The units have operated with separate management and pricing for 24 years. . . . Scottrade, a leading branch-supported online investment firm, is opening a new branch office in Pleasanton. The branch, located at 6050 Johnson Drive in the Pleasanton Square Shopping Center, opens on Tuesday, Sept. 4. Scottrade's Pleasanton branch office is open Monday through Friday from 6 a.m. to 5 p.m. and can be reached at 925-467-1980

Thursday, August 23, 2007

Offshore deal worth $16-billion to Newfoundland

Newfoundland and Labrador Premier Danny Williams said Wednesday that an offshore deal reached with four major oil companies represents an unprecedented gain for the province.

The agreement to develop the Hebron-Ben Nevis offshore oilfield gives the province an equity stake of 4.9% in the project, estimated to contain 731 million barrels of recoverable oil.

The equity stake came at a cost of $110-million, but the deal will mean total revenue of $16-billion over the 25-year life of the project for the province. The federal government will earn $7-billion in the same period, Mr. Williams said.

The combative premier and the oil companies broke off negotiations on the project -- Newfoundland's fourth major oil development -- in April, 2006, when they couldn't agree to fiscal terms.

The premier came under severe criticism, both in his home province and in the oil community, for refusing to back down on his demands, which involve heavy provincial involvement and for which he was likened to Venezuela strongman Hugo Chavez.

The premier was in a triumphant mood Wednesday, proclaiming the memo of understanding was "historic" and the first step toward Newfoundland and Labrador "Taking real and meaningful ownership of our resources."

There is also an improved royalty regime tied to the price of oil. When oil rises above US$50 a barrel, the province will receive a super royalty of 6.5% of net revenue.

Construction could begin by 2010.

The Hebron negotiations were suspended by the oil companies in April 2006, but resumed last month. One of the main stumbling blocks had been the province's demand for an equity stake in the heavy oil project.

"Our goal was to surpass benefits of previous agreements," said Mr. Williams, who touted the investment in his province's workforce, including the local construction of the new oil platform. "Determination and strength of conviction has been our government's guide."

Strategy, Service Driving Fortune 500 IT Outsourcing Decisions

Reducing costs is no longer the only driving force behind companies offshoring critical IT functions. Today's top performing organizations rank user satisfaction, achieving return on investment goals, and increasing time spent on strategic work higher in determining what to outsource and who they work with.

The findings were highlights of a benchmark study entitled "Who Outsourced The Outsourcers?" by Aberdeen Group of Boston, a leading provider of research and market intelligence. Aberdeen surveyed key IT decision-makers at over 200 enterprises spanning industries, geographies and company sizes. This study was sponsored in part by Software Paradigms International (SPI), a global IT and business applications solution provider headquartered in Atlanta, Georgia.

Findings demonstrate that Best in Class companies that achieve higher ROI develop effective communication procedures, partner with outsourcing providers which possess tailored skill sets, and maintain strong relationships with providers.

"Executives at large companies are developing sophisticated offshoring initiatives, looking for skilled providers with complex capabilities," said Ralph Rodriguez, Research Director, Technology Markets, Aberdeen. "They need providers with true consultative skills and the ability to be an innovative and strategic part of the global development team, not just lowest cost handlers of client requirements."

Increasingly, Fortune 500 companies look at multiple offshore IT outsourcing markets due to pressures beyond lowering costs. These include the need to focus more on strategic work, quicker project turnarounds, demands of 24/7 operations, and growing global competitiveness, notes the report.

"Tomorrow's market leaders are developing increasingly sophisticated offshoring initiatives, partnering with skilled providers offering innovative and strategic contributions to the process, true consultative skills and flawless project management capabilities," noted Sid Mookerji, CEO of Software Paradigms International ( "The stakes are higher, the competition more pronounced, and the requirements of today's customers greater than ever. Organizations which are not CMMi Level 5, ISO 9001:2000 and offering experienced Six Sigma Black Belt certified project managers as SPI does, are finding themselves squeezed out of the consideration set by customers."

"Best in Class performers receiving the most value from their outsourcing relationships place a high degree of importance on communication and relationship management with their service provider. They have carefully researched the global environment to find providers with critical skill-sets such as agile development methods, necessary CMMi certifications, and deep domain expertise," said Carl Chinoy, SPI's Chief Operating Officer.

Wednesday, August 22, 2007

FMC Technologies Signs Contract With Island Offshore to Supply Riserless Light Well Intervention Services to BP

FMC Technologies (NYSE:FTI) announced today that it has signed a three-year contract with Island Offshore Management AS to supply a Riserless Light Well Intervention (RLWI) system for use by BP in the UK North Sea. The contract, which has a value of approximately $25 million in revenue to FMC Technologies, also contains options for two, one-year extensions.

The contract includes a new RLWI system to be manufactured at FMC's facilities in Kongsberg, Norway and will be used by Island Offshore's new vessel, the Island Constructor. This will be FMC's third RLWI system. Expected commencement of the contract will be in the summer of 2008.

"RLWI is an important part of our subsea technology to service the growing population of subsea wells," said Tore Halvorsen, Senior Vice President, FMC Technologies. "We are pleased to support BP with our RLWI technology."

FMC Technologies, Inc. (NYSE:FTI) is a leading global provider of technology solutions for the energy industry and other industrial markets. The Company designs, manufactures and services technologically sophisticated systems and products such as subsea production and processing systems, surface wellhead systems, high pressure fluid control equipment, measurement solutions, and marine loading systems for the oil and gas industry. The Company also produces food processing equipment for the food industry and specialized equipment to service the aviation industry. Twice named as the Most Admired Oil and Gas, Equipment Service Company by FORTUNE magazine, FMC Technologies employs approximately 11,000 people and operates 33 manufacturing facilities in 19 countries. For more information visit

This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond the Company's ability to control. These risks and uncertainties are described under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2006 and may be modified in subsequent quarterly reports filed by the Company with the Securities and Exchange Commission that may be accessed on the Company's website. The Company cautions shareholders and prospective investors that actual results may differ materially from those indicated by the forward-looking statements.

Are Offshore Outsourcers Invading the USA?

One company’s strategic initiative does not equate to an invasion.

Now that Wipro is expanding aggressively into the United States, the conventional wisdom is that India’s other big outsourcers will also pile in. But No. 2 Indian outsourcer Infosys doesn’t appear to be so bullish on U.S. expansion. At least that’s the impression given by CEO Kris Gopalakrishnan, who sat down with me yesterday over lunch in New York.

While Infosys has several U.S. offices, employing 1,200 to 1,300 people, those professionals are mostly in client-facing sales, marketing, and support roles, and most of them are foreign nationals working in the States under H-1B visas. (Infosys received more H-1Bs last year than any other company, foreign or domestic.)

Unlike Wipro, which is acquiring five U.S. data centers as part of its $600 million deal to buy New Jersey-based infrastructure management vendor Infocrossing, Infosys has no immediate plans to own data centers in the States, Gopalakrishnan says. Nor does Infosys intend to build software development centers in the States. In contrast, Wipro, the No. 3 Indian outsourcer, plans to build four such centers in the U.S., the first one in Atlanta, and hire 1,000 or more people in the process.

Infosys won’t be hiring tons of locals in the States. Gopalakrishnan gives two reasons. First, most of the back-end work Infosys does for U.S. clients is still sent to India, so the company wants mostly Indian nationals to maintain “project ownership” from start to finish in order to ensure “continuity,” he says. Second, Infosys’ “brand equity” among U.S. tech pros “is not where it should be,” Gopalakrishnan says, meaning the company still has trouble recruiting the best local people -- though it’s making more headway on such campuses as MIT, Stanford, and the University of Pennsylvania.

As for Infosys making acquisitions in the States, Gopalakrishnan says “they’re something we need to look at,” particularly in consulting. But he’s less than enthusiastic. “They’re risky,” he adds, noting that most acquisitions don’t deliver adequate returns to shareholders.

Infosys is more bullish about setting up “nearshore facilities,” operations that are relatively close to the company’s biggest clients and still offer access to cheap, plentiful talent. For example, Infosys announced today that it’s creating such a facility in Monterrey, Mexico, that will employ 1,000 people within three years and serve clients not just in Latin America but also in North America and Europe. Infosys now has such a facility in Brno, Czech Republic, serving mostly European customers. For the Asian market, India and increasingly China are Infosys’ bases of operation.

The United States, where Infosys generates 62% of its revenue, could “one day” represent 5% to 10% of the company’s global workforce, Gopalakrishnan says, up from less than 2% today. Oh really? How soon—five, 10 years? Gopalakrishnan isn’t saying: “No timeframes.”

Tuesday, August 21, 2007

US retail giant's software outsourcing operations in RP

Catanduanes Rep. Joseph Santiago, chairman of the House information and communications technology committee, has cited Pleasanton, California-based Safeway Inc.'s rapidly growing software development outsourcing operations in the Philippines.

"We are pleased to recognize Safeway for its contributions in building up the Philippines as a global software development hub," Rep. Santiago said.

A Fortune 50 company, Safeway is one of America's largest food and drug retailers, operating about 1,750 stores that generated $40.2 billion in sales in 2006.

Its fast-expanding software development operations in Manila are executed by a wholly owned Philippine subsidiary, Safeway Philtech Inc., backed by more than 300 Filipino software engineers and technicians.

Safeway Philtech serves as a back office technology core providing application support and software development based on specifications from the US firm's in-house information technology (IT) division.

To maintain an edge in a fiercely competitive and low-margin industry, Safeway depends heavily on technology. The company runs more than 470 software-based systems that support mission-critical operations, including logistics, distribution, points-of-sale, retail, marketing and back-end support for human resources and accounting.

Santiago said buoyed by the global IT boom, the Philippines' software development industry is expected to produce $1.28 billion (P60.16 billion) in annual revenues and fully engage 75,000 Filipino workers by 2010.

The country's software developers are projected to yield $374 million in export revenues this year, up 38 percent from the $272 million they posted in 2006. Revenues are expected to hit $561 million in 2008; $850 million in 2009; and $1.28 billion by 2010, he said.

The industry employed 16,000 Filipinos at the end of 2006. This is expected to increase to 22,000 by the end of this year; 33,000 in 2008; 50,000 in 2009; and 75,000 by 2010.

Santiago also renewed his call for increased public and private sector support for the training of software developers. He said even college graduates of non-engineering or non-IT-related courses could be cultivated as skilled software technicians.
With global corporations increasingly relying on new technologies to boost productivity, he cited the need for the country to continuously produce a large pool of software developers not only to attract more foreign investments but also to keep domestic industries competitive.

One of the reasons many multinational firms are off-shoring more IT-enabled services to India is because of its thriving software development industry backed by thousands of highly creative engineers, Santiago pointed out.

Software is a program of written coded commands or instructions that tell a computer what tasks to perform, or to do useful work.

Indian outsourcing firms post 47% revenue growth

Indian outsourcing firms led by Genpact logged 47 percent growth in overseas earnings in the year ended March, a survey released Monday showed.

Export revenue of business process outsourcing, or BPO, firms rose to 209 billion rupees ($4.6 billion) in the year, said the survey by Dataquest, an information-technology industry publication.

New York-listed Genpact remained India’s biggest outsourcing firm, earning 22.22 billion rupees from overseas clients who seek to take advantage of India’s lower labour costs. Dataquest took into account only Indian BPO firms that provide services to foreign customers and excluded the captive India-based units of companies such as HSBC Holdings, Dell and America Online.

The top 20 outsourcing companies contributed 160.94 billion rupees (3.57 billon dollars), or three-fourths of the total export pie, Dataquest said in a statement here on the findings of the survey.

Transworks, IBM Daksh, Tata Consultancy Services BPO, and Cambridge Solutions were the next four in Dataquest’s order of ranking with revenues of 15.1 billion rupees, 12.6 billion rupees, 11.07 billion rupees and 10 billion rupees respectively. The top 20 added 57,784 employees during the year and employed a total of 216,967 people at the end of the financial year in March.

Indian BPO firms are trying to rise up the value chain by diversifying from low-end services such as answering calls from credit-card and banking customers to knowledge-based services that include financial analysis, risk management and equity research. afp

Monday, August 20, 2007

Reuters In $1 Billion Outsourcing Deal With Fujitsu

News agency Reuters said Friday that it is outsourcing its internal computing operations to Fujitsu Services under a deal worth almost $1 billion.

Under the ten-year agreement, Fujitsu will provide a range of IT services to Reuters locations worldwide in more than 100 countries. Reuters said an unspecified number of its tech support workers will transfer to Fujitsu to help the Japanese outsourcer fulfill the deal.

The $993 million contract will allow Reuters to "accelerate the development of our internal IT services, giving us greater flexibility to respond to the changing needs of our business divisions," said Reuters CIO David Lister, in a statement.

Fujitsu Services chief executive David Courtley, also in a statement, said the pact will "help enable a step-change in Reuters productivity and hence competitiveness."

The contract calls for Fujitsu to create a standardized, globally consistent IT environment for Reuters. Fujitsu's multi-lingual service desks in Lisbon and Kuala Lumpur will support the effort.

In a research note, analysts at U.K.-based advisory group Ovum said the deal is "significant" and estimated about $200 million of its total value will go toward modernizing Reuters' IT infrastructure -- with remainder to be spent on system support and maintenance. "This is not a simple 'lift-and-shift' deal," said Ovum.

The analysts said Fujitsu's global capabilities helped it win the contract. Reuters did not disclose which other outsourcers were considered for the project.

Reuters has been a pioneer in outsourcing. In 2004 it made news with the announcement that it would outsource a number of financial reporting positions to India.

Defense Agency Proposes Outsourcing More Spying

The Defense Intelligence Agency is preparing to pay private contractors up to $1 billion to conduct core intelligence tasks of analysis and collection over the next five years, an amount that would set a record in the outsourcing of such functions by the Pentagon's top spying agency.

The proposed contracts, outlined in a recent early notice of the DIA's plans, reflect a continuing expansion of the Defense Department's intelligence-related work and fit a well-established pattern of Bush administration transfers of government work to private contractors.

Since 2000, the value of federal contracts signed by all agencies each year has more than doubled to reach $412 billion, with the largest growth at the Defense Department, according to a congressional tally in June. Outsourcing particularly accelerated among intelligence agencies after the 2001 terrorist attacks caught many of them unprepared to meet new demands with their existing workforce.

The DIA did not specify exactly what it wants the contractors to do but said it is seeking teams to fulfill "operational and mission requirements" that include intelligence "Gathering and Collection, Analysis, Utilization, and Strategy and Support." It holds out the possibility that five or more contractors may be hired and promised more details on Aug. 27.

The DIA's action comes a few months after CIA Director Michael V. Hayden, acting under pressure from Congress, announced a program to cut the agency's hiring of outside contractors by at least 10 percent. The CIA's effort was partly provoked by managers' frustration that officials with security clearances were frequently resigning to earn higher pay with government contractors while performing the same work -- a phenomenon that led lawmakers to complain that intelligence contract work was wasting money.

"Mind-blowing," was the reaction of Rep. Jan Schakowsky (D-Ill.), a member of the House Permanent Select Committee on Intelligence, when she learned of the DIA proposal. In a telephone interview, she described it as "definitely something to be concerned about."

In its notice, published on a procurement Web site, the DIA said that "the total price of all work to be performed under the contract(s) will exceed $1 billion," adding that the tally "is only an estimate and there is no guarantee that any orders will be placed."

Saturday, August 18, 2007

TCS close to bagging $1.5 bn outsourcing contract

India's leading IT services provider, Tata Consultancy Services [Get Quote], is closer to getting an approximately $1.5 billion (around Rs 6,000 crore) outsourcing contract with the UK-based Prudential Insurance.

If successful, this will the IT major's second biggest win in the insurance space. TCS had earlier bagged a $800 million deal from the UK-based Pearl Group -- considered the single biggest in the Indian financial outsourcing segment. When contacted, a TCS spokesperson declined to comment.

The deal structure is expected to be similar to the Infosys [Get Quote] recent announcement of acquiring three global offshore centres from Philips along with getting an outsourcing deal.

Prudential Insurance is one of the leading life and pensions provider in the UK and services over seven million customers.

The company also owns a subsidiary in the US -- Jackson National Life -- and has over three million policies and contracts in force.
The company has offshore centres in UK, Ireland, Scotland and India

Outsourcing - A Step Towards Success

Outsourcing commonly refers to the transfer of the provision of services previously completed by in-house persons to an external organization, usually under a contract with agreed standards, costs, and conditions. Areas traditionally outsourced include legal services, transport, catering, and security. An increasing variety of activities, like IT services, training, and public relations etc have also stepped into this field.

Outsourcing involves special relationships between IT and external organizations that provide services that critical business processes often depend upon. Successful CIO's must therefore ensure that these special relationships are properly managed and controlled, and need to understand the different types of outsourcing.

The important thing to remember about outsourcing is that it is a part of the bigger picture of working “On” the business rather than “In” the business. Therefore, the goal is always to be working in the highest capacity and to make that shift as quickly as possible. At first, you may have to do everything, but outsourcing can be seen as an incremental process.

Outsourcing giants that permanently provide inspiration by imposing global trends constitute a benefit to the entire outsourcing market. However, clients' needs are very specific to their own organizations; their search for cost optimization or very specific skills generates new outsourcing demands every day. Although India is the main service provider in USA - the biggest outsourcing market, companies are already looking for alternative suppliers in trying to overcome the challenges of today's market offer.

It is important to understand about the fact that the outsourcing process requires some time and investment to find the right vendor, building a working relationship, and allowing your employees to adjust is very important in order to be successful in outsourcing field.

A successful relationship is the one that lowers your costs, increases your service levels and improves satisfaction among your constituency - enables you to have wining feeling for yourself and your most valuable contacts, your customers! Mostly outsourcing is able to take you a step closer to success.

Friday, August 17, 2007

TPI Forecasts Steady Growth in Knowledge Process Offshoring

Interest in knowledge process offshoring (KPO) is growing and steadily accelerating in India, according to a research report by TPI, the leading sourcing advisory firm. The comprehensive report — Knowledge Process Offshoring: A Balanced View of An Emerging Market — was conducted by TPI through primary and secondary research between January and April 2007 based on a review of 73 service providers and 45 captive centers in India performing business process outsourcing (BPO) or KPO activities.

In an effort to understand the growing rate of adoption of KPO and its true potential, TPI executed an extensive research exercise to develop an objective and balanced analysis of the KPO market in India. The report, which focuses on the offshoring of skills-intensive work processes through either outsourcing or captive operations, reveals that the growth rate is likely to yield annual levels of spend of US$10 billion - $12 billion in India by 2010. Factors that most significantly influence the rate of growth include availability of trained workers, complexity of services, intellectual property concerns and security issues. The report also provides a clear definition of the parameters of KPO — addressing the marketplace definitions about what exactly constitutes KPO; critical success factors in offshoring knowledge work; current market dynamics for KPO; KPO service providers; and the key factors affecting the growth of the KPO industry, among other key considerations.

“TPI believes that the demand growth path for KPO services will be similar to that of the outsourcing domains for information technology (IT) and other business processes, fueled by Global 2000 firms that form the bulk of offshoring buyers of outsourcing,” said Indy Banerjee, project director, TPI. “Global corporations are increasingly looking to incorporate offshoring as part of their forward-looking strategies rather than employing it as a reaction to cost pressures, and as such we have seen the rise in interest of KPO as a viable and obtainable sourcing solution.”

Report Conclusions

KPO is distinct from information technology outsourcing (ITO) and business process outsourcing (BPO) as it involves more high-level, value-added work, often relying upon subjective analysis and interpretation for successful performance. Typically, outsourced work processes are highly standardized, dependent upon automation and delivered in quantity. KPO functions, such as investment research and prototype development, are people-intensive, and the end product is arrived at through rigorous methodologies.

Due to the fact that KPO requires a sophisticated level of judgment, subjective analysis and interpretation, the end result can vary for each client, as opposed to BPO, where a similar output is generally garnered each time. Also, unlike BPO, where an entire process is often offshored, KPO entails offshoring part of a larger process such as financial research and analysis, engineering and design services and pharmaceutical research outsourcing.

As organizations determine which of their critical and strategic functions can be performed in an offshore environment, a number of factors will influence their experience with KPO. These factors include the ability to divide knowledge work into smaller, more manageable segments, to locate available talent with domain knowledge, specialized educational background and differentiated skills (that aren’t already being used by their own domestic markets), and to account for security concerns such as legal issues and protecting intellectual property rights (IPR). Traditional barriers to entry employed by professions such as medicine, law and accounting limit the extent of services that can be offshored, as there could be licensing implications to processes being offshored.

The goal of KPO goes beyond simply cost savings – although the projected savings could total a significant 40 percent to 70 percent – to more global implications enabling clients to obtain access to world-class talent around the globe. The research concludes that the triumvirate of cost, quality and capacity are the decision drivers for a KPO strategy.

Currently, India-based workers perform the widest range of KPO activity, especially in the areas of finance and accounting, and this work comprises 80 percent of KPO performed worldwide. The financial services industry is responsible for more than 60 percent of the KPO performed in India, and KPO services, although in the beginning stages, have expanded to other industries such as pharmaceuticals, marketing and research, and legal services. The report reveals that firms in the financial, banking and insurance industries were early adopters of KPO (going back about five years), for high-end analytical work.

Based on prevailing security concerns, many companies prefer to keep knowledge processes that include core intellectual property and sensitive data in-house rather than outsourcing those functions to a third-party provider. Therefore, most knowledge processing leads to captive, or company-owned, offshore operations or the in-house offshore development center of a company, as opposed to utilizing third-party vendors, because they potentially provide enhanced competitive advantage protection and help build institutional knowledge for future expansion. In addition to captives, pure-play KPO firms and established IT/BPO players that are expanding their offerings to include KPO make up the KPO industry today.

Cost keeps firms from outsourcing IT

A potential plan B for IT contractors has arrived in the form of new research showing there is no dominant supplier of IT services to small and medium-sized firms in the UK.

When asked by Datamonitor to name their preferred supplier for network services, 500 small or mid-sized firms with a technology focus listed over 100 different vendors.

Although BT led the pack, satisfaction for the provider’s dominant business – mobile and telecoms services – was low enough to suggest some providers have become ‘complacent.’

The analyst firm added this has come about because the market for small firms’ mobile and telecoms solutions is populated by a narrow band of players, feeling on top of their game.

These findings were part of the analyst house’s wider study into IT outsourcing, which despite the hype, emerged as a business process that only one in four firms had taken up.

If they do opt for external management of their ICT needs, firms are most likely to select e-mail or security – a trend the analyst attributed to owners’ fear of internet-borne threats.

And when shopping around for an IT vendor, firms are most likely to choose a big name brand or ISP, at the expense of local or specialist providers.

Datamonitor said: “This is because they may have less time to research the different options and feel they can trust these national providers to be reliable.”

But 60% of small or mid-sized firms running ICT might not ever take these decisions: they said they can never envisage a day when they will fully outsource their IT function.

When asked why, the two overriding factors were cost, the biggest deterrent, and loss of control over a core business function.

The analyst said that when combined, these two factors explain why the “the majority of SMBs in the UK are reluctant to become reliant on someone else managing their IT issues.”

The opportunity for IT suppliers or solution providers appears, therefore, to be “limited,” Datamonitor said.

But it did add that a “highly targeted marketing” campaign that includes “tailored solutions” for prospective clients may induce a higher uptake of outsourcing IT in the future.

In the study, 17% of small and medium-sized businesses emerged as not knowing that outsourcing the management of their servers is an option.

Study author Aphrodite Brinsmead said it is understandable that the cost of outsourcing their servers deters smaller businesses. Loss of control was the other off-putting factor.

Not only are their budgets finite, Brinsmead said, but they are less aware of how outsourcing can make them more profitable, such as by freeing them up to focus on their core business.

ICT vendors that have previously overlooked the SMB market may be to blame for firms not knowing the outsourcing options available today, the analyst said.

Thursday, August 16, 2007

How Many More Recalls Until We Stop Outsourcing to China?

Recalls are an inevitable byproduct when you're in business, but China's recent rash of export malfunctions in the past few months makes me wonder if doing business in China is worth the hassle, not to mention consumer deaths.

While for decades we've ignored poor work practices and horrendous environmental crimes in the country, we now can't ignore the dangerous products imported from them. How many more recalls need to happen before we realize that the money saved on outsourcing just ain't worth it?

It all started with bad gluten. This March, after family pets started dropping dead after scarfing down their meals, the F.D.A. found a poisonous food additive in millions of cans of popular pet food. The dangerous wheat gluten came from China, along with cyanuric acid, a chemical used in swimming pools, which may have also been added to the foods to increase profits.

In June came a recall of contaminated seafood. According to the New York Times:

The F.D.A. said it decided to take the action after years of warnings and even a visit to Chinese fish ponds that resulted in no signs of improvement. But Dr. David Acheson, the F.D.A.’s assistant commissioner for food protection, stressed that the seafood posed no immediate health threat, though long-term consumption could result in health problems.

Years of warnings?! Shouldn't the food have been temporarily banned once they found a potential problem? Wouldn't a halt in imports of the seafood by the US be the best way to convince these companies to clean up their act?

Then came light-truck tires made in China which were missing or had inadequate gum strips, which help keep tires on the road. The faulty rubber led to two deaths.

And now Mattel, who sent its Chinese manufacturer appropriate lead-free paint, found out their Cars toys were fully leaded, a second blow after recalling lead-tainted toys made in China earlier this month.

Why aren't US companies more involved with what happens once they send out their product schematics? Why are we importing from companies we know aren't producing food up to our regulation standards?

A few weeks ago Business Week ran a cover story on China's vulnerability as a rising superpower as a result of ignoring foreign relations issues regarding the environment and its business practices. I highly recommend it.

We are currently watching a country with so much potential squander opportunities because of greed. It's a lesson the US should take to heart.

Outsourcing puts Asia at greater risk of slowdown, Citigroup says

Investors are overlooking the increasing risk in Asian markets from rising outsourcing and consumer debt, Citigroup said.

Outsourcing of manufacturing by companies in the United States, Europe and Japan to Asia has made the region "more sensitive" to a slowdown in global demand than at any time in the past 15 years, Citigroup analysts said in a research note. Demand could be hurt if central banks raised interest rates, it said.

Consumer debt is also rising, with domestic credit in 6 of 10 Asian countries equal to more than the gross domestic product. China, South Korea and India registered the fastest growth in domestic debt, the analysts said.

"If these concerns regarding credit quality persist, it would be heroic to believe that the consumer would be willing to take up more debt for consumption or that the loan providers would be willing to extend the loans," they said.

In 2006, domestic credit was at 99 percent of the $13.4 trillion U.S. economy. In China, it has risen to 138 percent from 84 percent in 1995. In South Korea, it jumped to 107 percent from 54 percent, while domestic credit in India rose to 64 percent from 44 percent, the report said. In the euro zone, the level is 153 percent.

One of the side effects of outsourcing has been a rise in the operating leverage of companies as fixed costs increase, the report said. Operating leverage is a measure that compares fixed costs to variable costs.

Tuesday, August 14, 2007

HCL Tech's Q4 net jumps, sees more growth

Software services firm HCL Technologies Ltd. on Monday said its June quarter profit more than doubled as it won outsourcing contracts from firms seeking to cut costs, and it saw more growth ahead.

"We are quite optimistic on this year. IT outsourcing deals, engineering-based services and remote infrastructure management will continue to drive the growth," Vineet Nayar, president of HCL Technologies, told reporters.

HCL, India's fifth-largest software services exporter, said consolidated net income in its fiscal fourth quarter rose to 4.9 billion rupees ($121 million) from 2.33 billion rupees in year earlier under U.S. accounting rules.

The profit was bolstered by foreign exchange gains of about 2.5 billion rupees on increased currency hedging, Nayar said, adding the company had hedged $1.2 billion of foreign exchange exposures for the next six months.

HCL's revenue grew 28.6 percent to 16.12 billion rupees as it won more contracts in Europe, which accounted for 30.5 percent of its revenue up from 28.8 percent a year ago.

Ahead of the results, shares in HCL, which offers IT solutions and back-office services, had fallen 0.64 percent to 317.35 rupees in a Mumbai market that rose 1.0 percent.

The company, based on outskirts of New Delhi, added 8 new clients during the quarter, including film and camera maker Konica Minolta Holdings Inc. and New Zealand's biggest company and dairy exporter, Fonterra Co-operative Group Ltd.

India's large pool of English-speaking workers and cheaper wages, at nearly a fifth of western salaries, have helped attract outsourcing by overseas firms.

But the industry faces some obstacles -- a skills shortage and related wage rises of about 10 to 15 percent a year, inadequate infrastructure, and the rise in the rupee of nearly 7 percent against the dollar in the June quarter.

HCL competes with larger rivals such as Tata Consultancy Services Ltd., Infosys Technologies Ltd., Wipro Ltd. and Satyam Computer Services Ltd.

Adecco North America Acquires Recruitment Process Outsourcing Firm TalentTrack

Adecco, the world leader in workforce solutions, has acquired the assets of TalentTrack, LLC, a recruitment process outsourcing (RPO) company based in Toledo, Ohio. This acquisition will further bolster Adecco’s already robust service delivery infrastructure for outsourced recruitment solutions in North America, continuing to enable Adecco to capture additional market share in this burgeoning segment of the HR services industry. The terms of the transaction are not disclosed.

TalentTrack has been a leading RPO service provider with numerous industry awards for service delivery excellence and high customer satisfaction. The company was formed in 2002 by Kim Davis who has more than 25 years of experience in HR services.

TalentTrack’s unique business model is built around its Talent Discovery Center, which is staffed by certified colleagues who deliver comprehensive recruitment solutions including research, sourcing, candidate mining, screening, assessment, selection, offer management and on-boarding. TalentTrack has dramatically reduced the time to fill open vacancies, thereby giving its customers a competitive advantage in their respective marketplaces.

“This is an exciting time for our combined organizations as we look to grow and expand our footprint in the recruitment process outsourcing arena,” said Kim Davis, former president of TalentTrack. “Adecco’s market-leading position and a host of world-class resources will enable us to capture new opportunities and continue delivering best-in-class solutions to our current and future clients.”

Davis will report to Adecco Senior Vice President of Business Development Michael Beygelman.

Tig Gilliam, CEO of Adecco North America added, “Multinational companies are rapidly adopting RPO as an efficient approach to dealing with global labor shortages, while at the same time improving the effectiveness of their corporate recruitment function and reducing costs. TalentTrack’s highly-successful service delivery model makes it an ideal addition to Adecco’s RPO platform.”


Adecco S.A. is a Global Fortune 500 company and the world leader in workforce solutions. The Adecco Group network connects over 700,000 associates with business clients each day through its network of over 33,000 employees and 6,600 offices in over 70 countries and territories around the world. Registered in Switzerland, and managed by a multinational team with expertise in markets spanning the globe, the Adecco Group delivers an unparalleled range of flexible staffing and career resources to corporate clients and qualified associates.


Adecco is the workforce solutions leader in the United States and Canada, with a comprehensive service offering that includes temporary and contract staffing, permanent recruitment, outplacement and career services, training and consulting. In addition to its core competency in administrative, clerical and light industrial staffing, Adecco operates the following specialty divisions: Engineering & Technical; Finance & Accounting; Information Technology; Medical & Science; Legal; Human Capital Solutions; Government Solutions; and Transportation.

Monday, August 13, 2007

NZ papers outsource editing

The changes mean news editing and layout operations at the nation's biggest daily, The New Zealand Herald, and a string of regional dailies will be done by an outside contractor, he said.

Mr Neville, who has led the editorial production re-engineering project for APN, said he was confident readers would not notice the difference in the papers' editing and design.

He said although there was a lot of international interest in the project, "people will be sitting and making sure we can make it work first".

"I've got no doubt about it being a success," he said.

APN is half-owned by Dublin's Independent News & Media PLC, which publishes 175 newspapers and magazines around the world and operates radio stations and outdoor advertising sites in Australia and New Zealand.

IN&M is owned by Irish businessman Tony O'Reilly, whose Irish newspapers are taking up the same editorial outsourcing strategy.

Mr Neville said 20 full-time sub-editors would work at contractor Pagemasters New Zealand "operating on an extension of APN's Cyber computer editorial production system" at a site 20 minutes from the editorial offices.

Pagemasters is a subsidiary of Australian Associated Press.

After six weeks, when all Herald editing and make-up had been transferred to Pagemasters, "we move to the Aucklander weekly ... the Herald on Sunday ... and in October we will start transferring to regional papers," Mr Neville said.

Wipro and Nortel win Outsourcing Excellence Award

Wipro Technologies, the global IT services arm of Wipro Limited [NYSE:WIT], and Nortel* [NYSE/TSX: NT], a global leader in communications capabilities, have won the “Best Offshore award" in the distinguished 2007 Outsourcing Excellence Awards for its 16 year old relationship.

A pioneer of offshore development in India, Nortel opened India’s first offshore telecom R&D development centre with Wipro in 1991. Wipro currently provides end-to-end design, system integration, consulting, software release management and support for Nortel's carrier and enterprise product lines.

“Receiving this award is an honor for both Nortel and Wipro" said Ravi Chauhan, Managing Director, Nortel, India. "The award recognizes our abilities to work in a complex and competitive environment that expects high value performance on an ongoing basis. Together we have established a winning offshore relationship and a global award such as this goes to prove that we have been successful in creating a benchmark for this industry."

"This joint award highlights the strong collaboration that Wipro and Nortel have enjoyed over the past 16 years,” said Jeff Townley, Chief Procurement Officer, Nortel. “Wipro’s robust processes, extensive knowledge, R&D expertise and product engineering skills have helped Nortel to develop and deliver advanced telecommunications solutions. “Nortel was a pioneer in developing offshore relationships and this partnership has helped Wipro evolve as an integrated service provider and an acknowledged leader in the telecom and product engineering services space” added Jeff Townley

Ramesh Emani, President, Wipro Technologies said, "The Wipro - Nortel partnership is truly unique. Nortel is a pioneer in developing the capabilities of Indian companies in the telecom engineering space. Today we have built a 360-degree engagement model ranging from high-end research and product development to product sustenance, back office services, system integration and services. This award is a tribute to 16 years of partnership in achieving notable business outcomes on a global scale".

The Outsourcing Excellence Awards recognize the world’s most superior outsourcing arrangements, which demonstrate best practices in creating and sustaining competitive advantage and business transformation and achieve value and mutual benefit that increase over time for the client and service provider by Everest Group.

The prestigious award was presented at the 2007 Outsourcing Excellence Awards ceremony, which held in New York on 8th August 2007.

*Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks

Saturday, August 11, 2007

Where the Offshore Outsourcers Offshore Outsource


India has long been the offshore outsourcing hot spot for companies around the world to send parts of their business to cut costs. But where do India's outsourcers outsource?

In the first half of 2007, India outpaced Australia and Japan as the largest market for outsourcing contracts in the Asia Pacific region by awarding a total of $1.68 billion worth of contracts, according to Business Standard. This accounted for 30 percent of the total contracts awarded in the region.

And Indian information technology outsourcing companies are taking advantage of a stronger rupee to launch a record number of cross-border acquisitions this year, The Financial Times reports: “The industry has announced overseas deals worth a total of $1.43 billion in the year to date, nearly double the total for last year, according to figures from Dealogic, the data company.”

“We see this is a one-time phenomenon as this strong growth of India as an outsourcing market may not last long,” Siddharth Pai, partner and managing director at sourcing advisory firm TPI India, told Business Standard.

Yet working on Western contracts in India isn’t enough anymore for Indian outsourcers, Forbes noted not too long ago:

Now, after profiting for years from the outsourcing boom that brought riches to their doorstep from the developed world, they are sending work to locations across the globe in search of specialized skills and new markets.

So where do India’s outsourcers outsource?

China, the Philippines, Malaysia, Vietnam, Brazil, Romania and Morocco — you name it. And Indian information technology majors have already set up base there or bought controlling stakes in local companies.

India’s largest software services company, Tata Consultancy Services (TCS), announced earlier this year that it was adding 250 employees in Uruguay to service 40 clients in the U.S. and Caribbean markets. TCS recently reported a 55 percent increase in earnings to $291 million on a 42 percent increase in sales to $1.3 billion for its first fiscal quarter ended June 30 compared with the similar quarter one year ago.

India’s third-largest IT company is expanding in Curitiba, Brazil, and sites in Finland and China.

As with other Indian offshore firms, India’s second biggest outsourcer is diversifying its development locations by opening facilities worldwide, including offices in China, Vietnam, the Philippines, eastern Europe and Latin America. In January, the Indian outsourcing giant announced plans to expand its operations in the United Kingdom, creating 500 new jobs in the process. And in February, Wipro said it plans to set up a 250-seat call center in Bucharest, Romania.

Last month, reports came that Wipro was “in the advanced stages of finalizing a plan to build a software center in Atlanta, Georgia; the facility, the first of four centers planned for the U.S., is expected to accommodate up to 1,000 employees over the next three years, according to ComputerWorld.

This week it announced its plans to take over its U.S.-based peer Infocrossing for $600 million — the largest overseas acquisition by an IT firm from the subcontinent.

The acquisition is the latest in a wave of foreign merger-and-acquisition deals by Indian companies “aiming to penetrate new markets and access latest technology by buying foreign firms,” Reuters reports, pointing to Wipro’s larger rival, Infosys Technologies, which last month signed a $250 million outsourcing contract with Royal Philips Electronics and bought three of the Dutch firm’s back-office centers to extend its presence in Europe.

Outsourcing becomes critical to competitive advantage


Nearly every international bank is doing some back office work in India these days. We find out why and ask the banks to quantify the benefits.

“Success begets success,” says Dominic Price, senior country officer, India and Sri Lanka for JPMorgan, explaining the philosophy behind his firm’s India outsourcing experiment. “Each group that took the initial bold steps was rewarded, which led to more complex functions being moved.” JPMorgan was probably one of the first to realise the potential in India and started sending work to the country in 2001.

“Our initial goal was 500 offshoring staff in India focused on simple tasks,” says Price. “We now have around 8,000 staff.” The US bank has functions like derivatives operations, security settlements, research and analysis and CFO support done in India.

“Within some industries the realisation is setting in that the opportunity is strategic,” says Noshir Kaka, global leader of the outsourcing practice for McKinsey in Mumbai. “For example in financial services, no mid- or large-sized bank can ignore the trend because the combination of technology and offshoring has become fundamental to competitive advantage.”
nvestment banks seem to be listening. Everyone FinanceAsia spoke to for a recent article on the topic had either set up an India base or is exploring how to do so. The models span the gamut from captive units to hybrid to third party. And banks are hiring or assigning their best and brightest to head this effort.

“The biggest change in the last six years is the legitimising of the industry,” says one supervisory-level IRO employee. “The roadblocks which were earlier put up – compliance issues which were cited and a general ‘cannot do’ attitude – have been removed and now investment banks who are not tapping into India feel left out.”

Citi has grown in three years from 75 people to currently 400 in Mumbai supporting its markets and banking businesses worldwide. The team, all Citi employees, is involved in research, analysis for investment banking, corporate banking, capital markets, credit risk and internal reporting and presentation support.

“Effectively offshoring involves both a great deal of judgement and also changing the existing model of how people function,” explains Credit Suisse’s Nagrani.