Saturday, August 30, 2008

Innovating Software Development Through Outsourcing

Marketing Services industry news provided by Financial News USA (OTC: FNWU). In the newly released benchmark report, "Software Development and Innovation: Speeding 'Time-to-Market,'" Aberdeen Group, a Harte-Hanks Company (HHS), found that Best-in-Class organizations realized an 18% decrease in time-to-market as a result of their R&D / Engineering Outsourcing engagement -- a rate that is over 26x greater than Industry Average organizations. To obtain a complimentary copy of the report, visit: This report examined and analyzed organizations' planning, deployment, use, and management of Research and Development (R&D) and Engineering Outsourcing to provide a roadmap for constructing the internal framework necessary for a successful outsourcing relationship. As part of their outsourcing strategy, Best-in-Class organizations determined and allocated the proper amount of internal resources, incorporated clearly defined Service Level Agreements (SLAs), utilized a variety of analysis and measuring tools, and essentially viewed their outsourcing partner as an extension of their internal R&D team to achieve product differentiation and expedited time-to-market. In fact, Best-in-Class organizations are 123% more likely than Laggards to ensure their outsourcing provider has "skin in the game." By viewing the outsourcing engagement as a value partnership rather than merely and employee-contractor relationship, most often accomplished by contractually stipulating that both the outsourcer and outsourcing provider have a financial stake in meeting and exceeding project objectives, Best-in-Class organizations experienced an 18% increase in research productivity / efficiency, as well as a 13% increase in customer satisfaction.

Harte-Hanks, Inc. (NYSE:HHS) recently announced that Don Aicklen has been promoted to corporate Vice President, with responsibility for leading the company’s National Markets Organization within its Direct Marketing segment. In his 27-year tenure with the company Aicklen has served in a variety of general management, sales management and national sales leadership roles. He most recently served as Group Managing Director for the company’s Select Markets vertical. Gary Skidmore, President of Harte-Hanks Direct Marketing, said, "Don is well-respected for his leadership abilities and deep knowledge of the markets we serve. He has been instrumental in launching new vertical market segments in automotive, government, and consumer brands, along with recently supporting our European sales team.

A recent survey of more than 200 IT and business decision-makers found them planning to expand deployments of Radio Frequency Identification (RFID) technologies beyond traditional applications. When asked what they are tagging or planning to tag with RFID technologies, IT assets were cited by the highest percentage of respondents (43%), ahead of more traditional manufacturing work in process, or WIP (35%), and inventory (30%). This demonstrates the growing use and business value of RFID technologies, according to a new study by Aberdeen, a Harte-Hanks Company (HHS). Surveyed users are also taking specific steps to maximize the business value of their RFID investments. Companies were divided into Best-in-Class, Industry Average and Laggard performers, based on criteria such as year-over-year changes in compliance with external Service Level Agreements (SLAs), unplanned downtime, and "time to information," or the time required to make raw data accessible and actionable for business users. Nearly two-thirds (62%) of Best-in-Class companies surveyed are proactively and regularly testing and measuring performance of their Radio Frequency Identification (RFID) and IT infrastructure deployments. These efforts helped those companies enjoy significant business benefits, including increased performance of their infrastructures and business value and ROI of their RFID investments, according to the new study.

Petel Incorporated (OTC: PTEI), the Broadband TV and Digital Media specialists, recently announce continued growth in revenue with an increase of 131% for Quarter 2 2008 over Quarter 1 2008. Further to Quarter 1 2008 closing with an increase in revenue of 82% over Quarter 4 2007, the board is pleased to announce the group has achieved a 131% increase in Quarter 2 revenue compared to the previous quarter. "We are pleased to register continued growth in revenues for the group from albeit a modest start to first quarter revenues of some $30,000. We now report quarter two revenues of $69,045," comments CEO David Morton.

Source :

IT workers hit hardest by offshore outsourcing, survey finds

As many as 8% of IT workers have been displaced by offshore outsourcing, either through job loss or an involuntary transfer to a new job by their employer, which is twice the rate of workers in other occupations, according to a study based on data collected from some 10,000 people, which may be the largest survey of its kind.

The survey, conducted by researchers at the New York University Stern School of Business and the Wharton School of the University of Pennsylvania, also backs up the long-standing view that IT employees in purely technical jobs -- computer programmers and software developers who have little customer interaction -- are at the most risk from offshore outsourcing.

The broad conclusions are unlikely to surprise many high-tech workers, but what may make this offshore outsourcing study unique is its breadth: some 6,700 workers across a variety of occupations and more than 3,000 hiring managers and human resources professionals were surveyed.

There has been a dearth of data about the impact of offshore outsourcing on U.S. workers, and its authors, Prasanna Tambe of the Stern School and Lorin Hitt of Wharton, said their work is the first to pin down offshore outsourcing's impact by occupation.

The job site funded the research, which looked at a spectrum of occupations, including technology, and published initial data from the survey in April. But the 44-page paper, posted this week on the Social Science Research Network (registration required) analyzes what the data is saying about the fate of high-tech workers who have been directly affected by offshore outsourcing.

Tambe, an assistant professor of information, operations and management sciences at NYU, said the data isn't a forecast of how extensive offshore outsourcing will be, but instead tries to fill in the gaps of the theoretical work on offshore outsourcing and address the dearth of data on this topic.

But the impact of offshore outsourcing on IT jobs may just be a sign of how this trend will unfold across a broad range of occupations. "I think [IT] is definitely ahead of the curve, but I think that gap will probably close in the future," Tambe said.

The base rate of offshoring across all industries is just over 15%, but some 40% of all tech and telecommunications companies are doing some type of offshore work, according to the research.

By occupation, more than 30% of the survey respondents said they are offshoring computer programming and software development jobs, but only about half, or 15.5%, reported offshoring systems analysts, who typically interact more with others in a business.

Among employees, across all occupations, slightly more than 4% of workers were displaced because of offshore outsourcing, half the rate of IT workers. The survey's 8% figure for IT displacement represents the percentage of workers who have ever been affected by offshore outsourcing, a rate that implies an annual offshoring-related displacement of 1% to 2% per year for IT workers, according to the study.

Of those displaced by offshore outsourcing, 70% lost their jobs, with older workers more likely to be displaced.

The researchers don't predict what future displacement rates may be, but they say that as offshoring grows, tech workers without jobs that don't require interpersonal skills, are being replaced more rapidly.

IT workers concerned about displacement "can focus on further developing these interpersonal skills, or may find more robust long-term careers in IT professions that involve significant face-to-face interaction such as those involving cross-organizational process change or hands-on support functions," the report's authors wrote.

Since IT workers have been more severely affected than other types of workers, Tambe and Hitt argue that policy-makers could focus on tech workers to provide help, including job training and government compensation to offset wage losses. Educational institutions will have to react as well, with "increased emphasis on the development of interpersonal and management skills within the IT curriculum."

Source :

Thursday, August 28, 2008

India's FXLabs Opens New Outsourcing Division

India development studio FXLabs says it's moving into outsourcing services, adding a new division to support publishers and developers who want to use their development and art teams.

Hyderabad-based FXLabs will provide outsourcing services for PC and Flash games, and also offer 3D modeling, characters, props and environment models, rigging, texturing and animation.

The studio staffs over 100 artists and game programmers, and claims to be the only team in India to develop a complete game entirely within the country. FXLabs says it is experienced in using the Unreal and Torque engines, as well as other programming tools.

FXLabs' current development slate includes Inferno, a game based on Dante's Inferno, a game based on Dhoom 2, which it calls "the most valuable property in Bollywood," and a game based on Archie Comics.

"The outsourcing division was created to address and support the challenges faced by today's publishers and developers in their internal production capacity," says FXLabs founder and chairman Sashi Reddi. "Through this new service offering, we extend our expertise to achieving our partners' goals."

Source :

Wednesday, August 27, 2008

13 best practices for IT outsourcing

While reading outsourcing horror stories may be somewhat entertaining, especially if it hasn't happened to you, it's even better to learn from the mistakes of others.

That's why InfoWorld talked to industry experts to summarize their best advice, based on their own experience and their clients' experiences. Those industry experts are Larry Harding, founder and president of High Street Partners, a global consultancy that advises company on how to expand overseas; Steve Martin, a consultant and partner at Pace Harmon, half of whose business is focused on helping companies repair the damage from an outsourcing deal gone bad; Peter Geisheker, CEO of the Geisheker Group marketing firm; and Patrick Dolan, CEO of BPO Management Services.

1. Establish clear objectives. It's not that the best-laid plans oft times go astray; it's that they often aren't the best-laid plans in the first place.

There is a lack of experience in what outsourcing entails. Going global with a sales and marketing initiative, for example, has implications in finance as well as most of the company's other departments.

2. Get a compatible provider. Make sure your service provider understands more than just how to code or implement. An outsourcer needs to be compatible with your company's culture and business objectives, with the right experience, communications skills, and working style. Remember, they will become part of your organization and need to fit in as well as actual employees would.

3. Don't go in shortsighted. Stakeholders often get lost in the deal itself. In the attempt to save the company lots of money, the emphasis shifts to documenting the benefits of the deal and locking prices down, savings, terms, and conditions. Often missing is a focus on the long-term result desired to justify such a fundamental switch in business operations.

4. Never confuse sales and delivery. Focus on getting a good delivery it's the ultimate point of the deal, but it's frequently overlooked once the papers are signed. It is those delivery details that get lost in transition from the deal guys to the execution team.

5. Change your attitude toward IT. Don't think of IT as a cost center; instead, consider it a value center. Such a switch clarifies what is key to the business and what is in fact generic, and thus what should be a candidate for outsourcing in the first place.

6. Get the communications right. Make sure the service provider understands the project specifications. Be as detailed and precise as possible. When you distribute IT functions outside your organization, you need a great deal of coordination and back-and-forth communications even more than when you distribute across your internal organization.

7. Expect to get what you pay for. If you put the outsourcer under too much cost pressure, it will cut corners too, such as using junior resources.

8. Stay on-site. If possible, budget to keep on-site presence at the service provider. You need to see what is actually happening, and have your ambassador there so that the outsourcer can stay connected with you as well.

9. Retain responsibility. Outsourcing shouldn't mean that you are abdicating responsibility. You still own the overall results, so you need to be actively involved in working with and managing the outsourcer.

10. Get C-level sign-offs. Make sure you have senior-level stakeholders such as the CIO on the client side and CEO on the vendor side. Don't delegate everything to middle management.

11. Pick the right projects to outsource. In many cases, the outsourcing decision is made for the wrong reasons. IT tends to unload the stuff it doesn't want, as opposed to figuring out what makes sense to outsource. What to outsource depends on the company's objectives. If the primary goal is to save money, then start with the applications that cost you the most money.

12. Clean up before you outsource. Companies tend to dump their problems on outsourcers, then are surprised a bad result ensues. If the company couldn't get the systems right, how it can it expect the outsourcer to do it? It's actually harder for the outsourcer because they don't have your history, culture, and business context when trying to decide what is "right." Likewise, deploy new systems yourself, then outsource to someone else to operate and maintain.

13. Get the SLA metrics right. Because IT organizations are not typically good about collecting metrics, they make several mistakes, the biggest of which may be to accept the outsourcers' SLAs (service-level agreements). If the vendor sets the baselines, you can be sure it was done in such a way to minimize risk and penalties and maximize incentives.

And always pair SLA performance metrics with customer satisfaction survey. This will tell you whether you have the right SLA. Otherwise, the vendor may be hitting all of the SLA levels yet have unhappy customers. That should tell you that you're measuring the wrong thing.

Source :

Monday, August 25, 2008

Indian Outsourcer Infosys Posts Big Third Quarter Gains

Indian tech services provider Infosys Technologies continues to ride the outsourcing boom, as the company on Thursday posted a 47% increase in third quarter revenue and a 50% increase in earnings.

For the period ended Dec. 31, revenue was $821 million while per share earnings rose to 39 cents. The company also added 43 new customers and more than 6,000 employees during the period. "By almost every measure, it was a very solid quarter for us," said Infosys CFO V. Balakrishnan, in an interview.
For the full fiscal year 2007, ending March 31, Infosys expects revenue of $3.09 billion, which would represent a 43.6% gain from the previous year's revenue.

As an offshore outsourcing pioneer, Infosys is benefiting from U.S. corporations' desire to cut costs by sending tech work to low-cost India. India-based service providers captured 11% of all outsourcing revenue generated last year, up from 8% in 2005 and 2% in 2004, according to a survey released Wednesday by market watcher Technology Partners International.

The downside facing Indian outsourcers, including Infosys, is rising labor costs as more companies compete for the services of the country's young tech pros. Balakrishnan says wages for Indian programmers are rising at roughly 13% to 15% annually. "We expect this will continue for the foreseeable future," he says. Still, Balakrishnan doesn't expect the situation to significantly affect the company's profit margins in the near future. "We have many ways to control costs," he says.

Infosys will be on the hunt for acquisitions this year, Balakrishnan says. The company will look to add capabilities in markets where outsourcing is gaining steam, including Japan, Germany and France. Infosys may also look to buy out service providers specializing in hot, vertical markets such as health care, life sciences, and entertainment. "These will be smaller, highly focused companies that will not be difficult to integrate," says Balakrishnan.

Infosys ADRs (NasdaqGS: INFY) were trading up more than 3% on Thursday afternoon.

Source :

Saturday, August 23, 2008

Outsourcing master class set for Madrid

From 17-20 November, Madrid's branch of Quint Wellington Redwood management consultants will play host to a master class that is bound to attract the vanguard of the European outsourcing industry. Staged by the International Association of Outsourcing Professionals (IAOP) as part of its Certified Outsourcing Professional (COP) program, the master class will offer details on contracts, financial models and relationship management.

The package follows the logic of a typical outsourcing deal, from early consideration to outcome and evaluation. Focusing on the initial decision to use outsourcing within a corporate strategy, Day One draws upon C-level executive experience for ideas on how to approach outsourcing both onshore and offshore. Day Two investigates how a project is established, plus the many decision variables that help a team to ensure that the relationship is right for each partner. Setting up that project for success is the subject of Day Three, then Day Four reviews the process via best-in-class governance practices, which are so pivotal to building strong outsourcing relationships.

'Tremendous growth in outsourcing has caused businesses worldwide to recognise that there is an exploding demand for outsourcing professionals who can effectively lead these initiatives from beginning to end,' said the IAOP in a statement. 'The COP Master Class employs classroom lecture and team discussion focused on industry recognised standards, proven to ensure deployment of successful outsourcing programs. Current and relevant executive speakers from various industries and professional disciplines join the class and share their insights – honed from years of first-hand experience conceiving and leading outsourcing projects.'

Source :

Friday, August 22, 2008

Adverse US impact on Indian outsourcing not for long

"A lot of our exports go actually to America, both commodity export but even more importantly our services they import. And these have slackened," Sen, who was in India to deliver a lecture in parliament, said in an interview.

"There are some indications, clear indications, that the American growth-slack would hit India too. And, you know, our growth rate has come down a bit, and we have to see how much further it comes down," he said.

"On the other hand, we are not thoroughly dependent on it. We should try to see what we can do to overcome that," Sen told senior journalist Kalyani Shankar in the interview to All India Radio.

He said while there was nothing wrong in inter-country links in an increasingly globalising world, India had to make sure that the ill-effects of slackening growth in America - or elsewhere - are reduced.

But how long would the US recession last? "I have never been a crystal gazer. Well, I think, it goes away in less than two or three years. I will be very surprised if it goes on for more than four-five years."

Sen also spoke at length about India's growth rate, which has averaged around nine percent in recent years and the impact that a democratic system can have on making it sustainable and inclusive.

"If you want to make democracy work, you have to make sure that not only the government but the opposition also concentrates on identified major issues," said the Nobel laureate.

"The growth is a non-thought. Growth is not a formula," he said, and added that a democracy needed collaborations to make people and the unions responsible, while also getting them to deliver health, education and other services better.

He said the pressures of a democracy often come from the events of the day like hiking fuel prices or the India-US nuclear pact and to what extent they crowd out solving problems like under-nourishment or lack of schooling and medical care.

"So the issue of democracy is quite central to issue of growth," he said, while emphasising that both the government and the opposition parties had to examine if they were harming the cause of removing some long-standing ills in society.

He said a growth of 6-9 percent in India had seen a growth of 8-12 percent in the incomes of state-run companies. "This puts a lot of money in government hand. So the question is what its priority should be."

Sen also said that growth must be widely shared, but that depended on adequate employment, the educational background of the masses and their health so that they could take up the jobs and do the rigours that are needed.

"All these relate to each other. This is one way of increasing the sharing of growth. The other way is growth generates income. In fact, it generates more than proportionate income for the public sector, for the government revenue."

Source :

Passive customer service lends itself to outsourcing

In Ending the Whining I lamented the lack of basic customer service skills that sometimes gives IT a black eye. A friendly word or focus on presenting IT discussions in terms of business phraseology can go a long way in assuaging this divide. However, and perhaps paradoxically, taking the customer service concept too far has crippled many IT organizations.

In some IT shops, you will hear repeated references to “the customer,” as in “the customer is looking for this to be completed in three months,” or “I have a meeting with my customer on this project.” Rather than referring to the ultimate buyer of the company’s goods or services, these misguided souls are referring to their non-IT colleagues. While long advocated as the ideal for IT organizations to aspire to, reflecting on the ultimate expression of customer service shows why this might not be such a good model for IT after all.

Lessons from the call center

The ultimate customer service organization is the inbound call center. Cheery phone representatives stand by, waiting for the next customer request to come in, and attempt to solve the customer’s problem as quickly and efficiently as possible. These call centers are generally managed very closely, using detailed metrics as their central measure of efficacy. The primary metric for success looks at volume: How many customers can we satisfy in a given amount of time at the lowest possible cost? Many call centers use technology to track each reps time per call, the resolution of the call, and in some cases, go down to the detailed level of tracking how much time each rep spends away from his or her telephone. In extreme cases, phone reps must “log off” their telephone with different codes depending on whether they are using the bathroom or going on a lunch break.

What’s most notable about this type of call center is that it’s completely passive. Action is only triggered by a customer ringing the call center, and once they are on the line, the ultimate goal of the call center agent is to get the customer minimally satisfied, and off the phone as quickly as possible. Does this sound like your IT organization? Under the guise of “improved customer service” and “efficiency,” many IT departments are trying to emulate the call center, quietly waiting in the wings until action is prompted by an external force. Project tracking suites track analysts’ time nearly as closely as the call center rep, and the ultimate goal is to deliver each task at the lowest acceptable quality level in the shortest amount of time.

So what’s wrong with this picture?

Shared service dogmatists might be wondering what’s wrong the picture painted above. After all, if IT can knock out acceptably satisfactory projects at or below time and budgetary constraints, all while exemplifying the old bromide of being “seen and not heard,” where’s the problem? The problem is that when administered in this manner, IT is a commodity, pure and simple. Inbound call centers were at the forefront of the outsourcing wave for good reason: They were a commodity and easily seen as a cost to be minimized. A voice on the other end of the phone that struggles to speak the King’s English might annoy a few customers, but if the quality is minimally acceptable enough not to alienate too many of them, the decision to outsource is easy to justify in financial terms. By emulating this model, IT looks increasingly easier to outsource. Paradoxically, the more you excel in the passive customer service role, the more you are perceived as a commodity to be outsourced without a second thought.

Beyond customer service

As you look around the organization, the least passive departments and functions are the most rarely outsourced and most highly prized. Sales and marketing are perhaps the most active functions, determining who to sell to and how to sell to them, and actually executing the sale. Despite many water cooler conversations suggesting otherwise, executive functions are also rarely outsourced. The noisiest and most active functions are also perceived as the most valuable.

While good manners and some social skills can be gleaned from customer service organizations, the active role played by the most valued elements of the company should be the ultimate role models of IT. People in IT often express the frustration that their opinions are not valued, or in many cases, even listened to. This is perhaps the most insidious expression of the spiral into the customer service trap. Just as you would not call a customer service call center looking for complex advice or guidance, the IT organization stuck in the customer service morass is regarded as a group of order takers, not peers who are working in the best interest of the true customer of the organization.

Instead of passively waiting for the call from an internal “customer” demanding a preconceived solution or commodity technology, actively consult with and pursue your peers with new processes and technologies that will further your relationship with the real customer: the person or company that purchases your products or services.

Source :

Thursday, August 21, 2008

Offshoring R&D to India rises

India is the top choice for companies looking to outsource R and D with an offshoring business there expected to grow 23 percent to USD21 billion by 2012 and a talent pool in its largest hub, Bangalore second only to Silicon Valley, according to a study by a management consulting firm. The number of outsourced R and D centers in India has leapt from 180 in 2000 to 594 this year, according to the first report on Indias R and D centers from Zinnov . The huge talent pool in India has been fueling that growth, Zinnov said in its report.

About 140,000 engineers currently work in Indias R andD centers and another 110,000 are working for companies that serve them, a larger group than previously believed, the company reported. The engineering talent pool in Bangalore, Zinnov reported, is second only to that of Silicon Valley.

The India Semiconductor Association released a report in April projecting the design sector there will grow by more than 21 percent during the next three years to USD10.96 billion. It estimated about India employs about 130,000 engineers, the vast majority of them in software.

India is attracting and retaining more of its native technical workforce, according to the Zinnov report. About 30,000 of Indias engineers have returned in recent years from jobs in the U.S. The number of graduates from IIT and other top Indian universities relocating to the U.S. is on the decline, it said.

The maturing talent pool is driving an increase in the sophistication of jobs handled in the India R andD centers. About ten percent of the projects in the centers now involve full souptonuts development of a new product, a slice that is expected to increase to 30 percent by 2012, according to Zinnov.

The report estimates the cost per employee in India grew at 16.2 percent between 2005 and 2007. However, Zinnov expects the cost growth to slow as pay raises and real estate prices moderate in the future.

At the Design Automation Conference earlier this year, the president of one of Indias R andD firms estimated engineers salaries in India could rise to the levels of counterparts in the U.S. within a decade.

Why is such Indian offshoring continuing to rise despite higher costs. One reason, of course, is that despite all the wage inflation, India remains a lot cheaper than the U.S. The total cost of employing a fulltime Indian engineer including wages and benefits, facilities, telecom, travel, and administrative support ranges from USD 35,000 to USD 55,000. The U.S. average is at least three times that. A lead engineer in India still averages just USD 30,000 a year in salary, while a raw recruit classified as an associate engineer draws a mere USD 4,440 a year. The growth of Indian engineering wages, meanwhile, is starting to slow, meaning the gap with the U.S. wont close anytime soon.

But a bigger reason, is that the growing quality and experience of Indias huge technical workforce is offsetting escalating wages. Some of the estimated 250,000 Indian engineers working on global R andD, especially those who have been employed by big Indian softwareservices providers including Infosys INFY, Tata Consulting Services, and Wipro WIT, now have 10 years of experience working for international corporations. Countless others have received heavy training by their Indian employers. The reason to go to India no longer is just about cost, . Its about the quality of talent.

Thats a big reason Bangalore remains by far the most important R andD base. Of the citys 80,500 engineers working in foreignowned R andD centers, according to Zinnovs statistics, about twothirds have four to seven years of experience. Onethird have seven to 15 years, enough to qualify as a lead architect for many products. No other city in India comes close.

An influx of returnees from the U.S., Britain, and Australia, many boasting years of managerial and R andD experience at Western corporations, is supplementing Indias technical workforce.


Is short-termism holding back public sector outsourcing?

Public sector outsourcing may have doubled over the past 10 years to £80bn. But that apparently healthy growth masks some fundamental issues with procurement, says Martyn Hart.

Although the public sector has learnt a lot from previous engagements in the outsourcing market, breakdowns such as those in the NHS show that some aspects of public sector procurement still has a long way to go.
Recent research from Compass Management Consulting found public sector outsourcing contracts are 75 per cent above the going market rate. Although the research found a few cases where government departments have improved their contract costs since 2007, most are still overpaying.

So why are public sector outsourcers getting such a bad deal? Could the main issue lie in the procurement process? Or is it that government outsourcing is done essentially to protect itself against failure or blame, rather than making sure the programme is a success?

The general view is that the public sector procurement process focuses solely on driving costs down rather than maximising the potential benefits the supplier can provide.

If outsourcing providers are pressured into lowering their bid to an unprofitable level, then it should come as no surprise that suppliers attempt to claw back their initial losses as time goes on. No supplier wants to sell like this but such a procurement process leaves them with no alternative other than to withdraw and write off massive bidding costs.

Often, a high number of procurement advisers are engaged to oversee the procurement process. Legal experts, procurement, technical, business and alike are also brought in from throughout the organisation but all with "real jobs" that they go back to.

This process opens public sector organisations up to the "bid it thin and get it in" strategy. The research conducted by Compass Management Consulting found many outsourcing suppliers price their contract up to 18 per cent below the market rate and from the first day of the contract increase the price, with many getting to 30 per cent above the market rate by the third year of the contract.

Even the threat of retendering is often meaningless as the power is embedded with the supplier. Instead, suppliers use constant change requests and other variations to extract extra revenues from the contract without the scrutiny of a procurement process or comparative pricing mechanism.

Organisations would do well to pay heed to a number of considerations:

Define requirements Many organisations, suppliers and end users have discovered once a contract starts the initial requirements change. It is imperative that needs analysis is conducted throughout the programme and certainly before project commencement so the project can be launched accordingly. It is also important the contract is structured in a flexible way, so if requirements do change, the contract can accommodate that.

Judge performance From SLAs and KPIs to benchmarks and regular performance assessment, it is imperative the process is regularly independently reviewed to judge progress. But it is important for end users to bear in mind they shouldn't be trying to nail suppliers to the wall with unrealistic SLAs. Promising too much can be a recipe for disaster. It is important objectives are agreed on both sides before embarking on the project.

Refer to guidelines Although it may seem that the public sector does not understand outsourcing, it has spent considerable sums producing guidelines that are often not followed. The Office of Government Commerce produces a fund of information, especially the Gateway Review process which can be particularly useful if used constructively and not just as a tick in the box.

Retain the team Finally, as the Compass research suggests, organisations must have a team that run and breathe the programme. Most government outsourced contracts are large enough to warrant a dedicated team. Not just procurement, legal or IT, but a team whose first-line responsibility is to make sure it delivers the benefits, works with the users and supplier to achieve the project's objectives.

There is evidence of maturing in certain aspects of public sector outsourcing but there must be an understanding of the need for a deal structure and commercial terms that avoid the 'bid low then increase' situation.

These measures can be achieved by looking beyond the procurement process and understanding the need for a sustainable and predictable deal that ensures the contract is signed, then managed and contained within agreed parameters.

If the public sector continues to undertake poor contract negotiations or rushed deals, ultimately taxpayers will foot the bill.

Source :

Wednesday, August 20, 2008

Indian Mission in South Africa to Banish Visa Delays by Outsourcing

As global mobility develops at a greater pace between nations, the Indian mission in South Africa have announced new process plans in the hope of preventing visa delays for tourists.

Announced by India's Tourism and Culture Minister Ambika Soni, the plans will result in the Indian mission in South Africa outsourcing their visa services.

India is a country which throughout the world is being viewed in a positive and beneficial light. Offering great potential direct investment and housing vast numbers of skilled workers, India wants to expose these assets as it strengthens bonds and relationships with other key countries.

Migration movement to India especially from South Africa has seen an increase in recent years and the announcement to outsource highlights the importance which the government is placing on improving services to allow individuals to do so.

Indian immigration law requires all foreign nationals to apply for an Indian visa in order to enter the country. All candidates who wish to relocate to India for any length of time, whether for a short visit or to emigrate to India on a permanent basis will need to apply for an Indian visa to do so.

Speaking of the outsourcing plans Ambika Soni said "Tourism between India and South Africa is growing, but I want it to grow faster…My vision is that within 48 hours, anyone wanting to visit India must get a visa. Since 2006 there has been a focus on India, resulting in us developing new tourism products, making it more exciting for both types of travellers - the backpacker and the higher end tourist."

At the announcement in South Africa, whilst Soni completed his two day tour he also mentioned further plans for developing India's tourism industry saying, "We now have not only tourists on pilgrimage or who come to India to visit family, like many South Africans do, but also rural tourism, shopping tourism, and Ayurvedic tourism. For the West Asian market, we are even developing monsoon tourism, so we are promoting India as a 365 days tourism destination

Source :

Information Technology and Business Process Outsourcing Company Narrows Loss

Caneum, Inc. (PINKSHEETS: CANM), a global provider of business process and information technology outsourcing services, today announced financial results for the three months ended June 30, 2008.

"Our pro forma loss from operations for the quarter ended June 30, 2008 was $.135M, which is slightly less than the quarterly loss for the prior year period. We are pleased that our cost cutting efforts have started to take effect and I am confident of more significant improvements in results for the rest of the year. It is noteworthy that our revenues also increased slightly in spite of the current economic slowdown," said Suki Mudan, President and Principal Executive Officer of Caneum.

Financial Summary for Three Months Ended June 30, 2008

The Company reports operating income, net income and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables. Non-GAAP operating income, non-GAAP net income and non-GAAP EPS are computed net of stock-based compensation, bad debt allowances, imputed interest, depreciation/amortization, minority interest and foreign exchange charges. Reconciliations of non-GAAP measures to GAAP operating income, net income and EPS are included at the end of this release.

Financial Highlights for Three Months ended June 30, 2008

Revenues -- The Company reported revenues of $3.28M for Q2 2008, representing a $0.04M increase over Q2 2007 revenues of $3.24M.
Cost of Revenues -- The Company reported cost of revenues of $2.74M for Q2 2008, representing an $0.20M increase over Q2 2007 cost of revenues of $2.54M.

Operating Expenses -- The Company reported operating expenses of $1.12M for Q2 2008, representing a $0.07M decrease over Q2 2007 operating expenses of $1.19M.

Stock-Based Compensation -- The Company reported stock-based compensation expenses of $0.37M for Q2 2008, representing a $0.09M increase over Q2 2007 stock-based compensation expenses of $0.28M.
Operating Loss -- The Company reported GAAP operating loss of $0.58M for Q2 2008, compared to GAAP operating Loss of $0.49M for Q2 2007.

The Company reported non-GAAP operating loss of $0.135M for Q2 2008, compared to Q2 2007 non-GAAP operating loss of $0.138M.
Net Loss -- The Company reported GAAP net loss of $0.60M for both Q2 2008 and Q2 2007. The Company reported non-GAAP net loss of $0.205M for Q2 2008, Q2 2007 non-GAAP net loss of $0.198M.

EPS -- The Company reported GAAP EPS loss of $0.06 for Q2 2008 compared to Q2 2007 GAAP EPS loss of $0.07. The Company reported non-GAAP EPS loss of $0.02 for both Q2 2008 and Q2 2007.

Source :

Tuesday, August 19, 2008

Engineering Services Outsourcing to Accelerate

The engineering services exports (excluding software product engineering, semiconductor design, and other high tech/telecom engineering) from India grew 25.6 per cent in 2007-08 to reach Rs. 10,110 crore, according to a study published by Dataquest, the flagship IT publication of CyberMedia group.

The Indian third party service providers accounted for 56 per cent of that revenue, while the captives had a share of 41 per cent. The non-Indian third party service providers accounted for the rest.

Aerospace and automotive industries led the engineering design and services outsourcing to India. A few recent developments in these industries have significantly impacted the engineering services outsourcing, says the study.

Some of these include: high oil prices leading to design of newer fuel-efficient cars, India's plans to buy 100 plus fighter aircrafts with significant offset requirements (which stipulates that 50 per cent of the total contract value to any supplier will have to be spent locally), and the launch of Tata Motor's Nano, which has raised the profile of India as an automotive engineering base.

"All these developments have significantly enhanced the action in the engineering services outsourcing area. They have paved the way for the revenues to start flowing in beginning this year when we can expect the growth to accelerate sharply," said Shyamanuja Das, Editor, Dataquest, who led the research.

The study also outlines that India's own market as a major automotive market has drawn many of the automotive manufacturers and their tier one OEM suppliers to India. Most of them have also used the opportunity to tap India's engineering talent.

Car manufacturers such as Ford, GM, Chrysler Honda, and Volkswagen and their suppliers such as Delphi, Eaton, and Visteon have all set up engineering design centers in India.

Top Players

The top 15 firms account for 93 per cent of the total engineering services exported by the India-based engineering services firms. India's top IT services firm, TCS, leads the list, followed by HCL and Satyam.

The list is a mix of three types of players — the broad-based IT services firms such as TCS, HCL, Satyam, Infosys, and Wipro; the specialized players such as Infotech Enterprise, Quest, Geometric and Neilsoft; and the design arms of Indian engineering companies such as Tata Technologies, Mahindra Engineering Services and L&T Infotech, the study said.

Source :

54% of Romanian IT professionals agree on outsourcing IT security

Approximately 54% of IT professionals working with Romanian companies would call on outside specialists to solve their information security problems, shows findings of a recent GecadNet survey conducted May-July 2008 on 300 respondents.

As many as 53.7% of the interviewed say they would call on a specialist IT security company to solve problems related to information infrastructure defence; 35.6% trust their own strengths and did no show readiness to cooperate with any specialist company to mend their IT security problems, while the remaining 10.7% are undecided.
The findings reveal a rising trend in IT services earnings in Romania that outperforms the sales of hardware of software licences.
GecadNet is specialising in trading and implementing software solutions, providing adequate licensing solutions, integrated IT services, and also providing SENTINET IT security solutions, its own brand professional IT security solutions.

With a 16-year tradition in the IT field, GecadNet is the recipient of numerous awards and certifications from the world's most important producers. The company is a Microsoft Gold Certified Partner, an Autodesk Value Added Reseller, an Autodessk Authorised Training Centre, a Trend Micro Authorised Distributor, an IBM Internet Security Systems Distributor and a Kaspersky Distributor.

Source :

Scotland - the next big outsourcing hub?

A new initiative may soon see Scotland rival Eastern Europe as the UK's primary near-shore outsourcing destination.

Andrew Rigby, a lawyer who has specialised in IT and outsourcing contracts for nearly 20 years, set up the Outsourcing Hub Initiative six weeks ago.

The plan aims to encourage worldwide firms to outsource high-end business processes to Scotland rather than the low-end services typically contracted out overseas.

"Scotland has become famous for its call centres but this is the wrong end of the value chain to concentrate on," said Rigby.

Rigby recently met with high-profile Scottish organisations to design ways English firms can be encouraged to outsource processes such as software development to Scotland, rather than locations such as India.

The organisations include the Trade Association for Technology in Scotland, the Scottish Development International, and the Chartered Institute for Bankers in Scotland.

Rigby has also been meeting with major consultancy firms and utility providers.

He said the initiative would mainly target outsourcing buyers in England, followed by Singapore, Hong Kong, Canada and the US.

"Canada provides outsourcing services to the UK so there is no reason why the UK can't provide outsourcing services to Canada," he said.

Rigby said marketing of the initiative would focus on the financial services sector. He pointed to the success of JP Morgan's centre of excellence for software and application development just outside Glasgow.

In response to doubts concerning Scotland's ability to rival Eastern Europe, Rigby said: "Edinburgh does not rank sixth in the world for asset management for no reason."

Rigby pointed to the large technology expertise Scotland holds, particularly the skills of its large pool of graduates.

Source :

Sunday, August 17, 2008

Knowledge Process Outsourcing Represents the Next Generation of Outsourcing Services

Knowledge process outsourcing, or KPO -- in which service providers take over high-level tasks requiring professional judgment and industry experience -- looks to be the next frontier for the outsourcing industry. Many expect financial services companies to lead the way in KPO, and there's data to support such a view. For example, 45 percent of financial services executives who participated in a recent InformationWeek Analytics survey said they see the industry knowledge of their business process outsourcing (BPO) providers significantly improving. That's more than any other area of improvement.

Another reason is that there's a notable "strategic minority" of companies, according to the InformationWeek Analytics survey of 372 business technology professionals, including 110 in financial services, that see BPO as a road to competitive advantage, with goals such as transforming processes and increasing revenue, not merely cutting costs and meeting short-term goals. In financial services, that strategic group is about 15 percent (with another 24 percent responding that BPO is "more strategic than tactical").

Yet the top concerns about BPO revealed by the survey will only be magnified as financial services companies consider KPO, which might be used for capital market functions such as equity research in support of domestic analysts. It takes a high degree of trust to transfer custody of customer data, share tacit knowledge and work as a single team. Yet the No. 1 concern financial services companies have about BPO is data security, according to InformationWeek Analytics, a sibling property of Wall Street & Technology. No. 2 is the difficulty of managing BPO, followed by tension between employees and outsourcers, the difficulty in reversing deals, and reduced flexibility to change processes.

Where's the Outsourcing Innovation?

There's also the question of whether outsourcers have the innovation capability needed for KPO. Just 10 percent of financial companies gave providers high marks for innovating process change. Only 16 percent of financial services respondents said they see improvement in vendors assigning quality people for their projects. Companies that aren't getting bright ideas and top people on everyday projects won't likely rush vendors up the knowledge stack.

All signs point to companies' use of BPO continuing to grow. The survey finds 28 percent of companies plan to increase BPO, about four times more than those planning to decrease the use of outsourcing. Yet cost cutting through additional outsourcing only goes so far. Given that outsourcing is mature -- with organizations having made significant investments in offshore BPO capabilities -- any increase in the amount of outsourcing has to press beyond self-imposed limits and barriers with which companies have become comfortable. Market pressures -- including troubles within the financial services industry -- may compel companies to push those limits into areas such as KPO.

For more information visit at

Thursday, August 14, 2008

US outsourcing firm eyes 600 seats, more shifts in Davao

American outsourcing company Western Wats wants to increase its call center seats to 600 by next year as it takes advantage of the increasing number of clients abroad.

Derek Rice, facility director of the company, said the management was looking at adding two more shifts by late next year in addition to the present single shift with 250 seats.

"I want to beat Cebu," Mr. Rice said. The company, which opened here on Wednesday, has 1,800 seats in Cebu, where it opened four years ago. Mr. Rice was among the pioneers then.

To outperform Cebu, he said, the Davao unit must be able to produce more surveys with better quality. He said Davao agents are better than their Cebu counterparts when the latter were just starting.

Mr. Rice said Western Wats has attracted about 1,800 applicants, adding that the hiring rate is high. He declined to provide figures.

The main qualification, he said, is for agents to have above average English communication skills, since the company’s clients are top American and British companies that need surveys for their marketing plans.

Western Wats has invested about P70 million here and it plans to increase that when it hires more for its second phase, Mr. Rice said. He said the company is looking hard for qualified applicants.

Ruel B. Gustilo, NCCC Mall Davao director for malls and entertainment, said Western Wats is the biggest tenant.

He said the management has started allowing food concessionaires to open at 4 a.m., when call center agents start coming in.

He added that the mall, which was recently accredited by the Philippine Economic Zone Authority as an information and communications technology park, would continue to introduce changes especially when Western Wats intensifies operations next year.

For information visit at

Rustons’ MBO supports growing outsourcing demand

To support this change in the market, the company has recently undergone a management buyout and company restructuring. This has bought additional finance into the company, and strengthened the management team.

Most of the existing customer base has looked at overseas outsourcing and found that it is either not appropriate for their specific requirements; is not cost effective or takes too much management time to run successfully.

Rustons offers the possibility to ‘mix and match’ the most cost effective global sources, whilst providing a single point of contact and responsibility within the UK. This is seen as particularly valuable for medium to large volumes, where there is some added value required such as customising by hardware or software.

David Houghton, MD of Ruston Technology said "We have been looking to build the management team and get new investment to help this increasing demand for outsourcing. I am delighted that this has been achieved, and I firmly believe that this move will really strengthen us as a company, and our ability to serve our customers even better in the future.

For more information visit

Wednesday, August 13, 2008

Kloska Group Outsources IT to Logica

Seeking to offer IT support for growth and innovation, Logica, a European IT and business services company, announced today that it will be offering IT Outsourcing contract services for German Kloska Group.

The five-year contract covers the network connection between all of the Kloska Group locations and the provision of all required data center services, company officials say.

The Kloska Group's 24-hour delivery service is used by large corporations as well as small companies, according to the company. The companies are certified according to DIN EN ISO 9001:2000 and 14001:9005 and adhere to high standards of quality. Logica says it's helping the Kloska Group with their high level, innovative work processes. Enabling the company to be mainly driven from Germany, as is the management of the IT required for these logistical processes, the services are provided around the clock on a global basis, according to the company.

Among other things, Kloska Group supplies ships all over the world, according to the company. For the cruise ships of the Aida fleet and for the Arosa river cruise ships, the Kloska Group says it provides high-quality, just-in-time logistics services in this market segment. More than 600 vessels are supplied with provision on all the oceans around the world. Well known ship owners have their ships outfitted by working with Kloska Group, officials say.

Previously, the server systems of Kloska were located in the Group's own data center in Rostock, company officials say. During the course of this project, Logica migrated all these servers to its data center in Bremen. Logica also made available the wide-area-network connections used by Kloska and the required IT services.

By leveraging Logica's Outsourcing services, the Kloska group optimizes the strategic restructuring of its IT infrastructure required as a result of the strong growth of the Kloska Group, according to the company. The company was looking for a long term partner for the provisioning of best in class IT services who would be able to help the Kloska Group to keep on growing while ensuring a cutting edge IT system.

Uwe Kloska, founder and managing director of the Kloska Group, said, "With Logica we have found a service provider who offered us a compelling solution to restructure our IT in the way we wanted the job to be done. We feel that our requirements have been completely understood and that we received excellent consulting services. Logica and its innovative solutions are adding true value to our organisation which enables us to grow further in the future."

For more information visit at

Tuesday, August 12, 2008

India isn't just for outsourcing anymore

India is starting to assert itself as a center of high-tech innovation, according to a study set to be released Monday morning.

A talent pool of engineers working in research and development that barely existed 15 years ago has blossomed to 250,000 people, more than 140,000 just in Bangalore, said Vamsee Tirukkala, co-founder of the consulting company Zinnov, which conducted the study. That's second only to Silicon Valley. And as Indian ex-patriots return home and new college graduates stay home rather than read to regions such as Silicon Valley, as they have in the past, those numbers are only expected to grow, Tirukkala said.

"The brain drain 10 years ago is actually helping the market today," he said. "These are the people going back today...bringing domain expertise with them. The opportunities in India have dramatically increased for them."

If there's a point to be taken for Silicon Valley in Tirukkala's admittedly enthusiastic report it's one that Valley leaders have discussed for years: The next real competitor for high-tech leadership won't be another American tech hub like Massachusetts' Route 128 corridor or North Carolina's Research Triangle Park. It will be in a developing region such as India's Bangalore.

The growth in R&D investment in India, is perhaps the report's most interesting data point. India's high-tech industry may have gotten its start in call center outsourcing, giant services business, and basic "grunt" software coding, but that's beginning to change. R&D offshoring to India is currently worth an estimated $9.35 billion, according to the report, and that's expected to more than double to $21.4 billion within the next four years.

Interestingly, American companies that have been moving more R&D work to India will continue to do so, but for a reason that is perhaps different than the cost-savings that drove them over the last decade: they want to tailor products for the growing local market, and the best way to do that is to have local people who understand cultural and business differences doing the work.

Does that mean Bangalore is going to surpass Silicon Valley for tech industry leadership anytime soon? No. The Valley still receives, by a wide margin, more venture capital investment than any other region in the world, and the big tech companies and universities that call the Bay Area home aren't going anywhere.

For more information visit at

Monday, August 11, 2008

Offshore Outsourcing Provider Artmotion Introduces Line of Offshore Dedicated Servers with Bundled Security Package

Offshore Web host Artmotion Ltd. ( announced today the launch of its Switzerland-based Dedicated Servers, bundled with a hardware firewall and suite of security consulting services. The comprehensive service enables the customer to manage their business and financial affairs offshore securely with a variety of privacy, security and tax advantages.

All servers are hosted in Artmotion's Zug, Switzerland datacenter facility, featuring more than 685 peering points and a fully English-speaking Level 1 technical support team. Each Dedicated Server plan includes a robust security package, offering the protection of a dedicated hardware firewall and personalized security consulting service.

Switzerland, which declared its neutrality in the year 1812, offers international businesses a high level of privacy and is widely recognized for its financial stability, including a secure private banking system and the world's largest offshore financial center. The nation's geographical location in central Europe also makes hosting servers ideal, as the location is immune from major natural disasters.

"When choosing to host servers offshore, a key part of the decision making process has to be guaranteeing adequate security, both physically and within the software environment. By integrating a security package into a Dedicated Server plan, we demonstrate our commitment to making the entire process easier for our clients to manage," said Mr. Meier, CTO of Artmotion.

About Artmotion Ltd

Founded in 2000, Artmotion Ltd. is a privately held offshore Internet Service Provider, offering a full range of Internet-based solutions focused on small and medium businesses. Artmotion has offices in Zug, Switzerland as well as in London, England. Its data center operations are located in a highly secure Swiss offshore location, connected to 17 different backbone providers that enabling the company to offer a 99.9% network uptime guarantee.

To learn more about Artmotion, please visit

Monday, August 04, 2008

EDS Signs IT Outsourcing And Transformation Agreement With CAT Group

Plano, TX - EDS recently said it has signed a seven-year agreement with the CAT Group, a worldwide provider of transport and logistics services, to develop, integrate, deploy and support the company's software applications. Financial terms were not disclosed.

This contract builds upon an information technology (IT) infrastructure agreement CAT Group awarded to EDS in 2005. Under that agreement, which includes network management and governance and continues through 2015, EDS manages the CAT Group's entire IT infrastructure, which includes 2,000 work stations at 131 sites in 19 countries.

"For the past three years, EDS has combined its technical and functional expertise and business knowledge to guarantee our infrastructure delivers innovation and high performance," said Alejandro Forbes, CEO of the CAT Group. "The commitment and professionalism of the team at EDS can clearly be seen every day throughout our projects. It was a logical decision to entrust the management of all our applications to EDS. With this new agreement, we are expecting a high level of IT cost optimisation, valued at about $44M over the next five years."

"As our client's business ally, we are delighted and proud to announce the renewal and extension of our relationship with the CAT Group," said Jim Dullum, vice president, EDS Global Transportation Industry. "This new agreement clearly recognises our ability to manage the application assets of an international enterprise. It represents an important and strategic relationship between CAT Group and EDS."

As a leading transportation IT services provider, EDS' end-to-end capabilities encompass air carriers, airports, cruise lines, hotel companies, logistics and modal providers, and major reservations networks. More than 9,000 EDS employees bring world-class technology solutions and infrastructure to help more than 300 transportation and travel-related clients sustain competitive advantage in a highly dynamic global market.

Source :