Source: Edn.com

In research results that will likely be of little surprise to semiconductor industry watchers, analysts from market research firm Gartner Inc. have reported that outsourcing is on the rise as specialization becomes more prevalent within the chip industry's operations.

The worldwide semiconductor contract assembly and test services (SATS) market experienced double-digit growth in 2006 as revenue totaled $19.2 billion, a 26.5 percent increase from 2005, according to Gartner. Outsourcing's share rose to 43.5 percent of the total semiconductor packaging market.

"SATS market growth was greater than overall semiconductor growth again in 2006, reflecting the ongoing increased used of outsourcing services resulting from the dynamic expansion in chip scale packages (CSP), flip-chip packages, system-in-package (SiP) and 3-D assembly," Jim Walker, research VP for Gartner's semiconductor manufacturing and design research group, said in a statement.

On a company-by-company basis, Advanced Semiconductor Engineering (ASE) Group remained the number one provider of assembly and test services and became the first SATS provider to exceed $3 billion in a calendar year, Gartner said. ASE held 15.8 percent of the market's share with $3.02 in revenues for 2006.

Second-ranked Amkor Technology grew the fastest among the top three companies, growing more than 30 percent and grabbing $2.72 billion sales and 14.2 percent market share in 2006, while third-ranked Siliconware Precision Industries Co. Ltd. (SPIL) saw $1.7 billion in 2006 revenues, controlling 8.9 percent of the market.

Fourth-ranked STATS ChipPAC Ltd. had $1.6 billion in sales and 8.4 percent market share. Rounding out the top-five SATS providers was United Test and Assembly Center Ltd. (UTAC), which made $638 in revenues and controlled 3.3 percent of the market.

Source: Banktechnews.com

Doing more with less is the mantra for all financial services executives today. Continually improving operational excellence may seem like an impossible goal in a world where the volume of transactions increases exponentially, customer expectations rise daily, regulatory requirements abound, and the margin for error is zero.

Outsourcing has increasingly become a mandatory and highly successful strategy within market-leading banks around the globe. A recent survey of industry executives conducted by Deloitte Research revealed that the majority believe more than 20 percent of the industry's global cost base will have shifted offshore by 2010. The Outsourcing Journal predicts that between 20 to 30 percent of a bank's staff will either be an offshore captive or employed by a third party outsourcer.

Banks have already realized substantial savings from offshoring, from $8 to 12 billion in the last four years, up to 37 percent savings per process outsourced. The ability to reduce costs, increase market agility and improve business focus, response time and speed time to market will be significantly impaired by keeping functions in-house that can be efficiently provided by a third party.

BPO companies now offer a way to bridge the gap between the reality of today and the vision of tomorrow for financial services: a way to achieve the cost and quality advantages of strategic global outsourcing without the risks of losing control of the operation and without the investment costs of setting up their own offshore centers.

Achieving cost savings from wage differentials and tax incentives of 45-55 percent is just the beginning of a successful outsourcing relationship. Productivity and consolidation gains from a less expensive but very skilled workforce increase the value derived from the outsourced services. Finally, re-engineering processes can further increase the savings to a total of 60-70 percent less than the initial costs.

Perhaps the most significant benefit from global outsourcing is an intangible: once the headaches of routine, high volume transactions are moved out of the bank's offices, management and staff can devote their energies and resources to the tasks of realizing business goals and building competitive advantage.

However, outsourcing and offshoring can be a daunting prospect to many managers, especially those in mid-size banks which lack the resources to follow in the larger banks' footsteps and set up their own captive operations offshore. Potential drawbacks include increased concerns of risk around security and privacy; losing control over their businesses during the outsourcing process given that this could have a serious impact on their reputation and competitive position; and accountability for that outsourced function, even if a contractor fails to comply.

Banks should create an enterprise strategy for outsourcing rather than the more traditional functional approach run by functional or business unit leads. The resulting master plan will help the bank evaluate which processes could be outsourced and which ones could or should go offshore in logical groups sequenced to maximize value as well as prepare for the challenges of managing a bank in 2010 and beyond.

Processes that are easiest to outsource are those that are labor intensive, well defined, have few possible outcomes, are standardized with clear rules, and stand alone with minimal linkages to other processes. The mapping process is an integral part of successful outsourcing. Analyzing each step of the process and determining the most efficient way to execute it on the front end will ensure that the outsource map will be most effective. The BPO partner should clearly define the steps, which involves identifying the selected services migration phases and ranking them in order.

To ensure that outsourcing remains a source of competitive advantage, not a risk to business, banks must be proactive in creating a risk-aware culture and implementing a risk-management architecture that integrates risks of all types across the enterprise. A successful risk management program must have a long-term planning horizon, yet be structured carefully to yield concrete value in the near term.

Source: Hindustantimes

About 400 Indians are at work off the expressway that connects Noida with Greater Noida near Delhi, to make next generation Boeing aircraft get faster on to runways.

That might seem like an exaggeration, when you learn that all they are doing is to reduce the cost and assure the timely delivery of the nuts and bolts that would go into the new Boeing jets. There hangs the tale of procurement outsourcing. This is one of the newer stories in the larger theme of business process outsourcing (BPO). The simple fact is that virtually anything that can be done by using a combination of skilled workers, telecommunication links and involves high costs can now be offshored to India. Companies like Corbus LLC, based in Dayton, Ohio and founded by former Delhi College of Engineering student Raj Soin, are trying to unlock value for Fortune 500 giants by trying to manage complex tasks involving dealing with a global network of suppliers.

Corbus has a $100 million 10-year contract from General Electric Co (GE) to manage supplies for customers like Boeing for which GE makes aircraft engines. Increasingly, giants source as much supplies as possible from the best and the cheapest wherever they are on the earth—and procurement is a complex puzzle in the game. An offshore-based procurement outsourcing company promises to cut costs by as much as 20 per cent a year.

Business-to-business (B2B) was a favourite theme in the late 1990s but often, the headaches to be resolved lie in coordination and delivery, with an eye for detail on specifications, schedule and efficiency. In the twenty-first century version, procurement outsourcing involves a nitty-gritty management service done from a corner of the globe, very much resembling the supply of components it coordinates.

Players in the procurement service game include giants like Accenture and IBM, and have been joined by Gurgaon-based Genpact, which was spun off from GE’s own international services arm that ran call centres, and also Scandent Solutions in Bangalore. Unlike call centres, procurement outsourcing involves management and often, engineering skills.

Engineering companies like GE spends 60 per cent of direct spending on parts like nuts, bolts and other small items that cost under $1,500 per unit, supplied by various manufacturers dotted across the globe.

For an outsourcing partner to make sense, it must achieve what is called the “QCDC” formula—covering quality, cost, delivery and compliance. Indirect spending can be as much as $100 million per year in a company with annual revenues of $1 billion, says Mittal. Earlier this year, the National Association of Software and Service Companies (Nasscom) said that offshore services were expected to boom, driven by offshoring of “large white spaces in major industries.” Procurement is one of them. Telecommunication and automobile sectors are among those that offer strong promise in procurement outsourcing.

Nasscom says the current size of the global BPO industry is about $14 billion (India accounts for nearly half of it) but the addressable offshore market that could slowly be ripped off from its origins in advanced markets to low-cost countries like India estimated to be as high as $120-150 billion a year.

If the business grows, demand would grow for engineers, certified purchase managers and other agents whose skills are qualitatively different from the smooth-talking, fake-accented post-teen women who started the BPO revolution about a decade ago.

Source: Zdnet

The BBC's £1.5bn IT outsourcing deal with Siemens Business Services has come under fire from MPs for over-estimating cost savings and for key projects running late and over budget.

The BBC signed the 10-year deal with Siemens Business Services (SBS) in 2004 to replace the services previously supplied by BBC Technology, which include desktop computers, specialist technology projects and support for programme production and broadcast functions. SBS acquired BBC Technology for an undisclosed sum as part of the deal.

When BBC managers sought approval for the SBS deal they told BBC governors that cost savings were guaranteed at £35.2m a year. In a report by parliamentary spending watchdog the Public Accounts Committee (PAC), it has now emerged the savings for the first year fell 38 percent short of that figure at just £22m.

The deal does not allow the BBC a share of SBS's profits on the contract if they exceed a specified level — a clause that is now standard in many outsourcing contracts today. SBS's forecast profit margins for the contract are 12.25 percent for commodity work and 23 percent for special projects.

The BBC has also been criticised for not exercising its rights of open-book access to check how profitable the contract is for SBS. The BBC argues that benchmarking provisions keep the contract competitive, but these do not apply to one-third of the services provided by SBS. The BBC is now due to examine the SBS profits on the deal this year.

Performance management by the BBC also comes under fire from MPs in the PAC report. In the first year of the contract, SBS reported 95 percent of key service targets were met, but the BBC has now acknowledged that the validation of performance data provided by SBS was not sufficiently robust.

Despite the £1.5bn framework agreement, substantial amounts of money are still being spent on other IT suppliers for services. In the financial year 2005/06, £190m was spent by the BBC through the SBS contract, but a further £260m was spent on technology services from other suppliers. Around £50m of this was spent by BBC units procuring their own technology services that could have been bought through the SBS contract.

The BBC claims the contract will still hit the projected cost savings target over 10 years and is now forecasting average savings of £40m a year for the rest of the contract.

The PAC report, however, expresses doubt over whether this will be achieved and recommends a BBC internal audit to confirm the accuracy of the latest savings estimate and regular updates to the BBC Trust on progress against that target.

Source: Business-standard.com

Person-to-person outsourcing gains currency with small offices and individuals. You have heard about BPO & KPO, but it’s time now to add a new word to your vocabulary: PPO.

Coined by Alok Aggarwal, chairman of Evalueserve Inc, PPO means person-to-person outsourcing. The US-based Aggarwal, who is the co-founder of the global research and analytics services firm, says offshoring is now beginning to go mainstream and is touching the upper class and working class alike. “This is very reminiscent of 1991-92 when manufacturing in China and other low-wage countries began to impact the lives of the rich and the not-so-rich in developed countries,” he says.

Here’s how: small offices, home businesses and even individuals are utilizing PPO services everyday through various means such as online tutoring and home & landscape design services. Even invitation cards for weddings and other parties, personal assistant secretarial services like scheduling appointments and maintaining calendars are now being outsourced.

Many of these professionals work from their homes with a broadband connection and given the low overhead, vendors and freelancers can charge fairly low rates.

A few companies, such as Future Net (a subsidiary of the Alaphuza, India-based Future Groups) are also experimenting with providing ancillary and concierge services from low-wage countries. In their model, the end-client registers on their website and agrees on a price. Future Net then provides property deals for customers or for their family members and friends. Other services would include payments made to utility service agencies, educational or other institutions; and purchase of simple items such as movie tickets, personal computers, and electronics equipment.

Apart from online tutoring, for instance, companies such as Transtutors, Career Launcher, Educomp Datamatics, and Tutor Vista also offer one-on-one “live” homework assistance over the web and provide essay-writing guidance and help with educational content. Most Indian tutors charge between $8 and $40 per hour — a pittance by US standards.

Individual contracts are often of low value – between $100 and $5,000 – but since the number of end consumers and small businesses is enormous, the total addressable market in the US alone easily exceeds $20 billion. Evalueserve’s research and analysis shows that between April 2006 and March 2007, the revenue from this sector was more than $250 million and it is likely to grow to over $2 billion by 2015 — a cumulative annual growth rate of around 26 per cent. The growth rate, is likely to be much more in the future as many of these PPO offshoring trends are at the beginning of their lifecycles.

According to Evalueserve, PPO services follow two business models: the direct interaction model where the individual client signs a contract directly with a vendor in a low-wage country, whose employees (tutors, admin etc) work on a full-time or a part-time basis, or as sub-contractors. Since these contracts are of low monetary value, the individual client cannot usually travel to the offshore location or perform a costly due-diligence process, and is therefore exposed to some risk.

The second is the online marketplace model where the vendors providing PPO services enrol in an online marketplace by paying a monthly subscription fee plus a fixed percentage of the revenue if they win the project through this marketplace. So, when an individual client posts requirements for a new project to be conducted on the online marketplace, the marketplace communicates these opportunities to the selected vendors and freelancers and requests proposals to be delivered to the client. The client then awards the work to the appropriate vendor depending on price (which may be on a per hour or a fixed cost basis), delivery time and a quality score provided by other clients who have been served by this vendor.

Some of the prominent online marketplaces are Guru.com (the largest marketplace with more than 625,000 registered vendors and freelance professionals), California-based Elance.com, Florida-based RentACoder.com and GetAFreeelancer.com, owned by Sweden-based Innovateit.

PPO is indeed a silent revolution and one that goes beyond just a few big companies. It’s difficult therefore to doubt Aggarwal when he says PPO signifies how outsourcing is slowly, but steadily, becoming a people’s project by reaching small businesses and homes directly.

Source: Rediff

The ethical guidelines proposed by three US bar associations for their attorneys will not have any adverse impact on the legal outsourcing services industry in India.

In fact, the opinions delivered by the associations legitimise the outsourcing of legal services to other countries and will lead to the market in India getting larger, according to Ram Vasudevan, president of SQ Global Solutions.

New York-based SQ Global Solutions is a joint venture between Strategic Legal Solutions, a 12-year-old US domestic legal staffing company and Quislex, a provider of offshore legal services in India. The company employs around 300 professionals, of which about 150 work out of India.

It may be recalled that three US bar associations -- New York, California and Los Angeles -- had in 2006 and early 2007 delivered opinions stating that offshoring of legal support work by lawyers in the US to other countries was ethical provided certain conditions are met.

"The guidelines state that US lawyers who are contemplating outsourcing legal services to other countries should inform their client that the work is being outsourced, besides protecting the client's confidences. The US law firm should also be closely involved in the supervision of the outsourced work. In addition, the entity performing the work must perform conflict checks to avoid any unpleasant surprises," said Vasudevan.

"Companies in India directly deal with the legal departments of US corporations and law firms for outsourcing work to avoid any issues of unauthorised practice and usually have several quality control metrics in place," he said. For instance, SQ follows the Six Sigma process.

At present, there are around 15 companies in India that provide legal outsourcing services, with the prominent among them being SQ Global Solutions, Pangea and Mindcrest.

Though not mandatory, many US law firms and attorneys have been adopting the ethical guidelines and client demand too has been picking up.

This is expected to accelerate the growth of the legal outsourcing services industry in India in the years to come. The Indian legal outsourcing industry is currently pegged at $130 million, and is expected to touch the $4-billion mark by 2015, according to Forrester Research, he added.

Currently, there are around 1,000 such professionals, both lawyers and non-lawyers, delivering high-end legal outsourcing services in India.

Source: Themanufacturer.com

The worldwide market for Offshore Product Design Services (PDS) is expected to grow at a compounded annual growth rate (CAGR) of 28.0% over the next five years. According to a new ARC Advisory Group study, “Offshore Product Design Services Worldwide Outlook”, the market was $1.2 billion in 2006 and is forecasted to be over $4.1 billion in 2011.

According to ARC Advisory Group Service Director Steve Banker, Ph.D., “When you have forecasted growth of over 25% for a market that is already larger than a billion dollars, you are looking at an extraordinary market. One explanation for this is the power of the Global Service Delivery business model.”

Global Service Delivery Model

Global Service Delivery (GSD) is the practice of outsourcing work to low cost regions. Labor for a particular client task is divided between service people located in the client’s office or a nearby office (nearshore), and a low cost offshore facility. A typical ratio in PDS is 80% offshore to 20% onshore.

The GSD model has proven itself across areas such as custom software development, IT infrastructure support, call center services (and other similar business process outsourcing [BPO] services), application implementations, and now PDS. The value proposition is simple; knowledge workers from low cost regions are paid about 25% of the level of their counterparts in the West. The Internet infrastructure and mature business models among leading offshore IT companies support the GSD model.

The Flat World Comes to Engineering Services

The top five suppliers of offshore PDS are large Indian IT companies that provide a broad range of BPO and IT services. Each has revenues of over $100 million in the offshore PDS market, and cumulatively these four suppliers account for more than 60% of the market.

Each of the market leaders has strong market recognition as a company that has perfected the offshore model. Each has developed strong processes and systems to manage offshore projects across their diverse service areas and each has extremely robust processes for hiring new personnel and training them.

All of these companies are challenged by their extremely high growth rates, which for some of them means hiring and training tens of thousands of new employees per year, high attrition (though it is typically much lower in PDS than in other service areas), and growing wage pressures which lead to a gradually decreasing labor arbitrage value proposition.

There is considerable work surrounding 3D to 2D conversions, using Product Data Management systems to create documentation, and design of simpler components. To the extent that service providers can engage in more complex forms of engineering, they improve their ability to help clients speed their products to market.

Source: Oobp.org

Outsourcing a part or complete IT department frees up a company's valued IT personnel so they can support their mission critical business processes. In addition many companies today are finding that they cannot take the risk or endure the financial burden of running their whole IT department in-house.

Outsourcing a part or complete IT department can make financial and business sense to companies of all sizes. In many organisations, users demand the highest level of service - both from a technical and a customer care perspective. This can be challenging for smaller in-house teams to achieve as they are often so busy tackling the day-to-day issues, making it difficult to implement any IT improvements.

Outsourcing IT department – What are the drivers?

Growing pains: - Is your company growing so rapidly or making acquisitions? What impact is this growth on your IT staff and resources? Outsourcing either a part or the whole of your IT department is now an accepted mainstream solution.

Downsizing: Is your organisation downsizing? What are the impacts of this on your IT service delivery? IT department outsourcing is an option worth evaluating to save costs and improve efficiencies.

Infrastructure refresh: Are you coming to the end of your IT systems lifecycle? (Servers, laptops, PCs). This is usually a 3 year cycle. This event is the right time to consider the options of IT department outsourcing.

Outsourcing a part or complete IT department may provide the following benefits:

# Quick deployment
# Flexibility in the choice of technology and modules
# Improvement of cash flow management
# Reduce the burden on internal IT staff
# Efficient use of internal resources
# Strong skills sets at lower costs - access to a mix of technicians with unique skills
# Better risk management, especially those risks associated with unscheduled downtime due to major disruptions.
# Avoids expensive recruitment

Risks & Costs of IT Department Outsourcing

IT department outsourcing can expose the company with associated risks that potentially have a higher costs than benefits for the company. Some of those associated risks could be:

# Loss of control over service quality
# Possibility of service disruption due to instability of vendors

Outsourcing IT services to a third party potentially puts a company’s reputation at risk - if suppliers or partners let it down. Organisations in both public and private sectors need a process of regular assurance from their external partners.

With a rigorous system in place, businesses can manage their external relationships and reputation more effectively, while allowing legal and working arrangements to be adjusted as the partnership evolves.

Source: Outsourcing-pharma

A number of outsourcing misconceptions are luring companies into viewing offshoring as an easy process, new research reveals.

The outsourcing market is booming and more and more companies are relying on external firms to save on costs and improve efficiency.

Indeed, outsourced pharmaceutical R&D spending is set to increase at twice the expected rate of general R&D expenditure for the next five years, according to recent data, and in particular outsourcing clinical trials is seen by many pharma companies as a means to make the process cheaper, quicker and more efficient.

However, companies that think transferring an operation to an overseas provider is a trouble-free, straightforward task can get a rude awakening, warns new research , and companies often find that their high hopes about cost savings and greater efficiency don't pan out.

The study based on an industry survey found seven common myths that outsourcing vendors and clients cling to about offshore outsourcing - false assumptions about how the process should work - and gave some advice on how to overcome them.

The first common myth is the idea that the three main objectives of outsourcing a development stage - cost reductions, improvement in service, and flexibility - can be achieved at the same time.

"The kind of skills you need to achieve cost reductions, production flexibility or enhancement, are usually different. Even when you offshore, where in principle you can get low cost and quality, it is better to begin with just one objective." , Phanish Puranam, one of the researchers, told the WSJ.

The second most common myth was to see outsourcing services as simple as buying commodities, such as stationery.

In reality, the process does involve significant transaction costs, starting with finding a vendor and negotiating a contract, and followed by the costs of moving operations from one location to another while maintaining the connection with the rest of the company.

A third false assumption, according to the survey, was relating to negotiation of the contract. The outsourcing process should not be seen as a one-off deal, but instead as a relationship that keeps evolving and needs constant updating. The researchers found that writing a highly complex contract, trying to include clauses covering all possible situations, usually proves to be a waste of time.

On the other hand, there is another mistaken belief that a company does not need a contract because the deal with the vendor is seen as a partnership rather than a simple procurement relationship.

Furthermore, the number five on the list of common misconceptions that clients and services providers accept as true is to view the vendor as an insurance company who should bear greater liability in case of problem.

"The sharing of risk between client and vendor is one of the most contentious issues in outsourcing, leading to acrimonious negotiations and poor relationships," said the research.

Moreover, the survey found that sometimes companies think once they have outsourced an operation, they can just forget about it and rely completely on the service provider. The researchers explained that it was crucial for the client firm to retain the knowledge of the process outsourced to avoid difficulties down the road.

Finally, the seventh most common myth in outsourcing is to think that the first attempt will automatically be a success and relinquish at the first failure.

"Very few companies report great success with their very first outsourcing project but that doesn't mean they should give up," the researchers said.

Source: Crn.com

At a recent government event in Washington, D.C., the president of Panasonic Computer Solutions made a big statement: "All our competitors moved engineering and manufacturing to third-party partners." More specifically, he mentioned locations like Taiwan and other countries in Asia.

Why is that a big statement? Beyond the fact that he made a sweeping generalization that some of those competitors might take exception to, the significance of that statement by Panasonic's Rance Poehler lies in the fact that, in a considerable number of cases at least, it's exactly true. And for government customers and the solution providers that sell to them, that's something to seriously consider when making purchasing and partnering decisions.

Two reasons exist for why this trend is happening. The first is simple cost-cutting. Manufacturers can save a lot of money by relying on original design manufacturers, or ODMs, that can make their products for much less, thanks to cheap skilled labor. This is nothing new, of course. The second reason for the trend that's more specific to the federal market is the need to comply with the Trade Agreement Act (TAA). Vendors based in countries that aren't authorized to sell to the U.S. government have to find an alternative, which often leads them to the very same ODMs that others rely on to cut costs.

But with manufacturers removed from the process, issues can arise. Beyond quality concerns, duplicate products are made and sold to the gray market or, worse yet, originals are reverse-engineered for the purpose of counterfeiting them across Asia. The experience of American Data & Computer Products is a perfect example.

Original equipment manufacturers (OEMs) aren't intentionally turning around counterfeit goods when they filter manufacturing to Asia. They don't want to see fakes any more than the government does. But the strategy opens the door for that to happen, which introduces the very risk many of these OEMs were trying to avoid in the first place: violation of the TAA.

Plenty of people lump this issue together with the politics of offshoring, arguing that vendors cause the problems when they decide to manufacture outside U.S. borders. Outsourcing serves a very real purpose, and, frankly, it's inevitable in a global economy.

Obviously, in a market that depends more on the channel than most any other, partnering is an essential way to keep everyone in business and meet customer demands. But the decision to partner for the actual engineering and manufacturing of products that could land in the hands of federal customers carries with it a degree of irresponsibility. Offshore to save costs and enable TAA compliance, yes, but not at the risk of sacrificing control over processes, intellectual property and, subsequently, security. Simply put, those that deal in government contracting have to be more responsible.

So what exactly are the alternatives? Vendors have to hold offshore locations to the same standards as the government headquarters, which is difficult to do if they're not in complete control of how things are run.

Or maybe they should handle the manufacturing of products for federal customers differently than they handle it for the commercial sector. That's perhaps an expensive option, but it's one that would alleviate some of the risk. Another alternative for vendors is to follow Panasonic's lead, avoiding these issues altogether by keeping product design, engineering and manufacturing in-house.

Source: Ohio.com

Offshore firms aiming to offer work that isn't just cheaper, but better

Businessmen's collective memory doesn't go that far back. When chief executives decide to move jobs to India, they draw intellectual sustenance from something more recent. When you apply the model of core competence to business processes, outsourcing is all about companies parceling out activities that they aren't best equipped to undertake.

If you sell computers, you shouldn't run your own help desk. If you are an airline, you mustn't waste your time juggling cash collected in different currencies. No company needs to tie up resources in managing accounts receivable, or preparing payroll, in-house.

You can buy all these services from third parties, which will either automate them or manage them with cheaper staff in India, Latin America or eastern Europe.

This offloading of noncore work to specialists has been the main driver for the business-process outsourcing industry, projected to grow 10 percent a year to $618 billion by 2010.

As these services add depth to their own organizations by hiring engineers, doctors and statisticians, they are now able to do things that a client company has always considered to be integral to its main business.

Nipuna Services Ltd., a Hyderabad, India, business-process outsourcing company, manages the shop-floor inventory for an automaker in Detroit, creates graphics for an animation studio in the United Kingdom and handles artwork changes on labels and cartons of GlaxoSmithKline Plc medicines to satisfy regulators in various countries.

Most economists believe that outsourcing is only about getting things done ``cheaper.'' They think it is transient and self-adjusting: A rise in the inflation-adjusted exchange rate of the exporting nation will make its cost advantage disappear; the same relative-price mechanism will also increase developed-country exports to places such as India and China. New jobs will be created to replace the ones that are being lost.

What this argument misses is that the third-party services that are winning ownership of business processes will move them from one developing country to another. Profits will be repatriated to developed-nation companies by the truckload. But the jobs won't go back. Not for a long time.

If outsourcing becomes as widespread in services as it already is in manufacturing, Western economies may still grow strongly, thanks to surging corporate profits. However, the falling share of wages in economies across the developed world will keep offshoring a hot issue for decades to come.

Source: News.independent.co.uk

The issue of poor service does seem a real deal-breaker

The preliminaries to the US presidential election took a bizarre turn last week when a leaked document from the Barack Obama camp referred to Hillary Clinton as the "Democratic Senator for the Punjab". This clumsy jibe at a rival Democrat candidate, immediately retracted, was a reference to Mrs Clinton's supposed close connections to US corporations which have outsourced jobs. This subject, in particular offshore call centres, is in danger of becoming a hot potato in the election. But the politicians need not worry, for there is every sign that what was once believed to be an unstoppable trend is losing momentum.

The conceptual thinking behind BPO (business process outsourcing) is simple: companies stick to what they do best and spend their dollars on human capital in the most efficient way. Back-office outsourcing began in the US in the 1960s (payroll processing etc) and gathered pace along with the rapid advances in IT. The last decade's revolution in telesales and customer support propelled BPO into a new dimension.

A casual glance at any selection of Dow Jones annual reports will tell you that at least some outsourcing is virtually universal. In India, it is thought that call centres alone now employ in excess of a million people (compared to just 300,000 at the start of this decade) and pro- viders have sprung up in all elements of the BPO spectrum - from the lowest level of data processing, to functions that require customer interaction, to the transfer of intellectual capital.

Prices range from an estimated $10-$12 (£5-£6) per hour outsourced at the bottom, to around $14 for call services and much more at the top end. Workers in call centres see a much-reduced portion of this - albeit general opinion is that working conditions far exceed the local manufacturing equivalent.

At the sophisticated end, there have been many reports of New York investment banks outsourcing research functions to the highly educated and relatively poorly paid labour force of southern Asia. Similarly, in a recent report, McKinsey estimated that large US pharmaceutical groups were reducing the cost of new drug development (estimated at between $600m and $900m) by as much as $200m through outsourcing. Even at the bottom end, data-processing outsourcing at US retail banks is thought to save at least $18m in costs per 1,000 jobs transferred.

It is this angle, US job losses, that makes BPO such a political issue. The Communication Workers of America union has been particularly active and sought to influence the policies of individual states. At the start of this year, politicians in Minnesota pushed for legislation to give customers an automatic right to request an alternative, American, call centre, if they were dealing with personal or financial information.

The CWA's campaign has cleverly focused as much on the customer as the displaced worker. Three issues are cited: a generally poor level of customer service, data fraud and, this being modern America, terrorist risks.

Source: Asiamedia

Is there anything out there that can't be outsourced to a cheaper part of the world? Probably, but reporting on city council meetings for the local news "paper" is not one of them. Online community news site Pasadena Now (http://www.pasadenanow.com), in California, found this out last month when it hired two reporters in India to cover the weekly council meeting.

The only problem is, the response to the decision was so heated that the editor has been too busy fielding media enquiries to train the new staff. There was a mixed reaction to the story, with the predictable backlash but also comments that it's something people better get used to.

The thinking behind the move was that the time difference allowed for the Indian reporters to sit through the evening council meeting and write up a report in time for Pasadena Now's readers first thing in the morning. As these meetings could drag on well into the night, it made sense. And needless to say the Indian writers would be a lot cheaper than having a US journalist sit through the meeting and then stay up another hour or so to write it up.

Many people questioned whether the quality of reporting would suffer if the writer was not physically present, suggesting they would not get reactions or comments from other sources. Perhaps, but it's still valuable to get a record of the proceedings for an early morning news piece, which can then be updated throughout the day by the local reporters who can "add value" to the story.

It's also not such a novel idea, either -- Reuters has been using Indian reporters to do some of the "grunt" reporting for a few years now, while headlines and copy editing for the South China Morning Post gets done by cheaper editors right here in the same building that produces the Bangkok Post.

The press pack, the security risk that we are, was shunted off into a special media room where they had a couple of large screens set up to relay what was happening in the main hall. The strange thing was that it was more convenient to sit and take notes this way -- coffee supply on tap, fellow journalists to chat with without annoying the delegates and easy access to the exit once you had the story.

Increasingly these days there are a lot of major events, particularly technology pow-wows, that are streamed live over the web. So if you were a budding reporter, blogger or Indian looking for overseas work, you could start to tune in and make a name for yourself by churning out reports quicker and better than everyone else. A young guy by the name of Charles Dickens made his name by being able to attend court hearings and churning out a story quickly and accurately, and who knows, if he was around today he might do the same from webcasts to get his start.

Source: Maltastar.com

HSBC Bank Malta might be relocating a number of jobs, which had always been carried by Maltese workers since the time when the bank was state-owned, to cheaper markets such as India – where workers are paid less, maltastar.com is informed.

Investigations by this e-newspaper found that HSBC UK started outsourcing particular jobs to countries where the workers are paid less to maximise the banks profits. This practice might now shift to Malta’s HSBC arm.

The HSBC jobs touted to start being carried out in India are related to accounting and payments, while security at the bank will be outsourced to a Maltese company.

The outsourcing of certain jobs within HSBC Malta will not affect the present workforce at HSBC no staff will be made redundant by virtue of an agreement which the international bank had signed as part of the deal to take over Mid-Med Bank, sources confirmed.

But at the same time, the redeployment exercise in the bank will freeze the intake of new staff for a period of time since the openings will be taken over by the workers who will have their present job outsourced.

The idea behind outsourcing certain jobs to cheaper markets is to maximise profits, particularly when the work is done by workers who are paid less than in our country for every hour of work. At the same time, work outsourced to local companies contributes to an increase in precarious jobs and exploitation of local staff.

HSBC deployed at least one staff member solely for the purpose of identifying the jobs that HSBC Malta can outsource to foreign companies in the coming weeks and months.

Maltese banks have always offered services of high quality and assured a large contribution towards Malta’s economy. But excessive competition and globalisation seem to be taking their toll also in the banking sector.

Source: Computing.co.uk

Research released last week from sector skills body e-Skills UK echoes the common observation that UK IT graduates need more business skills, because lower-level technology jobs that do not require such expertise are being offshored, mostly to India.

But as the global market matures, the Indian IT industry is starting to face some of the same issues as its UK counterpart.

There are already warnings that the subcontinent will face a talent shortfall in its technology workforce by 2010, although Indian IT trade association Nasscom says there is still time to avert a crisis.

Unlike in the UK, where technology degree numbers halved between 2001 and 2005, recruitment is not a problem in India. The country produces more than three million IT graduates a year, and the current workforce stands at 1.6 million.

But as market requirements change, the industry is starting to question whether degree courses are producing the right skills, says Nasscom spokesman Ameet Nivsarkar.

‘The cause for concern is that the three million graduates are not all ready and competent to enter the workforce,’ said Nivsarkar.

Like e-Skills UK, Nasscom is working on initiatives to bring graduate training in line with private sector requirements. One current scheme, for example, aims to create finishing schools that offer three short courses to bridge the gap for graduates between academic learning and the kind of business skills required in the real world.

"The training shortfall is largely in communication and the ability to present oneself before a customer," said Nivsarkar.

Skills issues are part of wider changes in the offshore market. Until now India has been the undisputed leader, generating about $48bn (£24.2bn) in annual IT services exports last year.

One of the biggest threats to India’s dominance is China. Its vast pool of cheap labour is increasingly attractive to suppliers catering for growing demand, including Indian firms such as Wipro and Infosys.

Ironically, the sub-continent’s economic success is also presenting new problems. Indian supplier TCS announced earlier this month that it is moving 5,000 jobs to Mexico because of wage inflation at home.

Global currency fluctuations can have a major impact on the economics of offshoring deals, according to Mark Kobayashi-Hillary, director of the National Outsourcing Association.

"Margins are being eroded as the Indian rupee becomes stronger against the dollar, so hiring elsewhere has become a more attractive proposition," he said.

But there are also changes in the shape of the global outsourcing market that may play out to India’s benefit.

As offshoring becomes a more established practice, the supply market is fragmenting and specialising. Ukraine and Russia, for example, are making major in-roads into the high-end scientific software niche.

Growing specialisation could help India offset the business it has lost to cheaper rivals.

The country is still the dominant player in the business process outsourcing (BPO) sector, which is expected to grow by another 32 per cent to £4.2bn this year. And while better educated staff may be pushing up Indian prices, customers’ selection criteria are also likely to change, says Kobayashi-Hillary.

For Indian firms, the decision to hire staff from abroad reflects their emergence as truly global companies.

"They are no longer just Indian firms. They are deliverers of IT services and need skills from all over the world," said Ovum analyst Phil Codling.

The difficulty for suppliers, regardless of their country of origin, is that requirements can change so quickly.

Source: Publications.mediapost.com

Pharma Companies are outsourcing more R&D to free up cash for marketing, according to a new study from Cutting Edge Information.

"Uniting R&D and Marketing for Integrated Early-Stage Market Preparation" is Cutting Edge Information's latest study. The report reveals that pharmaceutical companies are looking to the biotech sector to outsource development of new drugs. In doing so, the company can free up resources to market drugs currently in their pipelines.

"I think there are two things driving this," says Elio Evangelista, research team leader at the North Carolina-based business intelligence firm. "The first is more spending and more overall focus on marketing. With fewer blockbuster products available in companies' portfolios, those brand teams are finding newer and more innovative ways to market their products."

One of those methods is to work more closely with R&D to develop more competitive labels, Evangelista says. The more a company can accomplish in clinical testing during launch, the more competitive it can be on the market. So R&D begins to play a much larger role in product lifecycle management.

"The second factor driving this increased communication is, in part, the external pressure for companies to reinvest their profits in more R&D," Evangelista tells Marketing Daily. "In doing so, R&D teams need to work with marketing teams more closely to begin developing products that the market will accept. It's no use spending hundreds of millions of dollars developing a drug that will never reach the market. Therefore, working more closely with marketing teams to develop viable products will go a long way to reducing the costs of health care."

The report includes strategies and tactics from 15 top pharma companies including Pfizer, Novartis, Merck, and Sanofi-Aventis.

One profiled company is in favor of shrinking business unit departments and creating small internal teams to handle deals with small biotechs to outsource most of the early-stage pre-clinical work. The idea is based on the biotech industry's capability to develop innovative products more quickly than slow-moving, large pharmaceutical companies.

The company invests almost as much in early-stage research as it would for an in-house compound, but it outsources the work to smaller, faster-moving biotechs, which assume some of the risk that the company would otherwise retain.

Source: Pr.com

This is the actual picture of success of online tutorials from which many American families are reaping the benefits. Outsourcing to India has gained much popularity in the education business.

Nick Adams is just another high school student from Austin who always has had problem scoring good grades in exams. Nick used to get upset every time he saw his repeated failures of doing very poor in all his exams. His parents were quite worried about the repeated failure of their son and his inability to perform well in exams. After a lot of thought and consultations with Nick’s teachers they decided to try out providing nick the help and guidance of a private tutor. Like any other high scholar in America the main subjects that Nick lagged in were Maths, Science and English. However the Adams soon realized the exorbitantly high rates a private tutor charges in the US. The charges range from about $80-100. This is one of the main problems being faced by most American families like the Adams family that they cannot afford the luxury of providing their children private tuitions.

Not any more. The problem of cost has again been solved by a phenomenon that has helped America in reducing its costs for some time now. It’s called outsourcing. In this case it is called online tutorial outsourcing. To start of with online tutorial it involves a teacher and students who chat and interact with each other over a high speed internet connection and the teacher helps the student in grasping the basics of the subject being taught. So then what is online tutorial outsourcing? It means the online tutorials are outsourced to a company which may be locate miles away in India, which employs teachers, trains them according to American curriculum and accents and provides a platform for the teachers and students to associate with each other.

So what’s the use of online tutoring outsourcing? The foremost reason for its evolution is simply cost reduction. Another very important reason for its development has been flexibility. Take for example the case of Judy Duke. Judy had not been doing well in her exams. Her parents want her to get extra tuitions in the evening to cope up with the studies she doesn’t want to leave her passion for her studies. So what to do? She is helped by a teacher from India who teaches her in the night time. Moreover it costs her about ¼ of what she would have spent on private tuitions from her area. Makes sense, doesn't it?

"I had almost lost all hope of finding my son a good tutor until one day I came across a friend of mine who apprised me about online tutoring” says an elated Mr. Smith who’s ninth grade son has been taking online tuitions for about 6 months now. “At first I did not know that it was some person teaching him sitting in India but when I did I was a little worried. But no more worries as my son has improved a lot and it has not created a hole in my pocket. As long the person is giving good results and my son is happy I am least bothered about whether he is sitting at India or china or Bermuda.” exclaims Mr. Smith.

This is the actual picture of success of online tutorials from which many American families are reaping the benefits. Outsourcing to India has gained much popularity in the education business.

The No Child Left Behind act has acted as gasoline in the fire for the outsourcing of educational services to countries like India. The act was formulated to advise parents to provide private tuitions to many students in America who were underperforming in their school. Many companies like Trans tutors (www.transtutors.com), growing stars, etc. are based at India and are doing well in this business of educational services outsourcing. These companies like Trans tutors have established offices in India and operate online tutorial sites catering to students of America and Britain. They have well trained tutors and offer tremendous cost advantage to the companies which are already into online tutorials and are based at America. Many companies in the business and based at America have outsourced their business to companies like Trans tutors and are reaping the benefits.

It’s like profits minus the costs. Online tutoring outsourcing is working wonders for American students not just for school students but students in college, pre college and exam preparation levels. It is the destiny of tomorrows’ education industry.

Source: Marketwire.com

Comprehensive Offerings Help US Corporations and Law Firms Reduce Costs and Increase Efficiency

Aptara, Inc., a global leader in integrated content transformation solutions, today announced the addition of an advanced Legal Process Outsourcing (LPO) solution to its expanding stable of content services. The new LPO solution enables law firms and General Counsels within corporations to effectively manage their costs and resources. Aptara will provide pre-established service level agreement (SLA) offerings to ensure delivery of the highest performance and quality.

As part of this advanced solution, Aptara has expanded its offerings to include coding, indexing, tagging and advanced Collection, Forensic and Electronic Discovery (eDiscovery) services. Leveraging state-of-the-art software and certified ISO:9000 facilities, Aptara offers the outsourced advantage of bringing together a worldwide network of high quality professionals and resources resulting in reduced costs and administrative time for legal customers so they can focus on the intricacies of each case. In the U.S. alone, the demand for content related legal services is projected to rise from $1.2B in 2005 to $5.0B in 2010.

Aptara's LPO solution includes both discovery and non-discovery services. Discovery services will provide corporate and law firm customers with access to both paper and electronic document processing capabilities. Services include scanning and optical character recognition to provide customers with the ability to transform paper documents into electronic images.

Non-discovery services include consulting and analysis support such as, case management, coding and indexing services, and subpoena services. These services provide litigators with a dedicated, certified offshore paralegal so that they are able to refocus their in-house resources. Additionally, legal research staff can be provided for document analysis, e-filing capabilities and other case support activities. Finally, Aptara will provide support for attorney re-certification by leveraging its renowned eLearning capabilities.

Building on its legacy of success in the pre-print publishing industry developing the most sophisticated academic and corporate print materials, Aptara is well positioned to provide its litigation customers with the most advanced software and project management expertise.

Aptara will be exhibiting its full LPO services at booth 117 during LegalTech West Coast, being held at the Los Angeles Convention Center.

Source: Hindustantimes

Seven Indian cities have emerged as the most favoured outsourcing destinations globally, beating out rivals such as Manila, Shanghai and Moscow, according to a report by a US-based consultancy.

And India looks set to remain the outsourcing leader in the long term, according to the consultancy neoIT, which advises global companies on offshore operations.

New Delhi headed the seven Indian cities that topped the list of 24 from around the world vying for the tag of favourite offshore sites, said neoIT in a report entitled: "Offshore Insights: Global City Competitiveness."

"A lot has been said about India's eroding cost advantage and supply constraints," senior neoIT consultant Sabyasachi Satyaprasad said on Saturday.

"But the fact remains that in terms of talent supply and cost arbitrage, India is still the leader," said Satyaprasad, whose company is headquartered in San Ramon, California, with offices in India and the Philippines.

New Delhi, Bangalore, Hyderabad, Mumbai, Pune, Chennai and Kolkata were the seven most favoured sites worldwide to locate offshore, said the report assembled from feedback from over 60 clients. The Indian cities rated higher than Ho Chi Minh City, Manila, Shanghai and Moscow.

India, which already holds at least 50 per cent of the global outsourcing market, appeared set to maintain its dominance, said Satyaprasad.

"India will dominate the global outsourcing scenario for the long-term," said Satyaprasad.

"That's because of its skilled and broad labour pool, overall maturity of delivery services in term of breadth and quality and the easiness of scaling up manpower numbers because of India's big population advantage," he said.

To assess the cities, neoIT used such criteria as human capital — the existence of a large, qualified pool of workers; costs — salaries, real estate; infrastructure – good telecommunications, transport; and living environment factors such as quality of life.

Manila, which ranked ninth, is popular with BPO companies serving US clients.

"The people are well versed with the American accent and culture and a large talent supply thanks to universities in the region, but costwise it's slightly more expensive than Indian cities," Satyaprasad said.

Shanghai, which is 10th on the list, has excellent infrastructure and a good talent supply but is held back by the lack of English-language fluency, the report said.

"China has similar advantages (to India) in terms of labour skills. But its major disadvantage is lack of English skills although it's making big efforts to change this," Satyaprasad said.

Source: Cio.com

A three-part approach to maximizing the value of an IT outsourcing deal.

How often do IT outsourcing deals fail? The numbers vary depending on which study is cited and what definition of failure is used. But executives initiating or tending to an IT outsourcing relationship must be constantly sobered by the fact that, from a purely statistical viewpoint, their deal stands about as much chance of failing as of succeeding.

Millions of dollars are often in play in an IT outsourcing deal, along with the hopes of management and investors in the business transformation that outsourcing can deliver. So it is to everyone’s benefit to have the means in place to deal with the problems which, perhaps inevitably, will occur.

However, what IT decision makers really need is not just better triage but better preventive medicine along the entire lifecycle of their outsourcing deals. Issues and challenges can appear quite different depending on where they occur in the course of a relationship. What might be a catastrophic problem in year two or three of a deal might have been only a small issue when the seeds of the problem were sown at the contract or transition stage.

A three-part approach to maximizing the value of IT outsourcing deal:

* Prevention. Focus on the risk mitigation capabilities and governance structures that anticipate problems before they occur and that keep an outsourcing relationship on track.
* Quick response. Develop the diagnostics and "early warning systems" that identify problems quickly and then address them before they mushroom into deal-killing catastrophes.
* Retooling. If things go badly wrong, have the mechanisms at the ready to bring the parties together, reexamine the original deal intent and retool or refresh the relationship where possible.

Contracting Phase Issues

When we conduct our realignment and remediation services for IT outsourcing relationships, our diagnostics frequently find that the root cause of the problem goes back to the deal itself. Outsourcing selection processes tend to focus both the company and the service provider primarily on financial terms, obscuring the fact that the real work comes only after the signatures on the contract are dry.

And the contract itself may be the root cause of the problem. If getting to the signature stage is a battle, forcing a provider to negotiate away its margin and reasonable operational assumptions, outsourcing buyers may win the pricing battle only to lose the delivery war. Performance, quality and flexibility inevitably suffer. More intangibly, the outsourcing buyer loses out on important opportunities for innovation and continuous improvement, as the provider pulls back from any activities beyond the bare essentials. When we evaluate the situation of companies that are either vaguely or overtly dissatisfied with the collegiality and quality of their outsourcing relationship, we often find that the buyer engaged in aggressive deal-making behavior that created the problem.

Source: Offshoringtimes

Rising printing costs and short of technology understanding are forcing firms to look for alternative solutions to cut costs in document production.

It has been viewed that most companies spend around 10 percent of their revenues on document production. Analysts believe the typical return by outsourcing document management to vendors is in the range of 30 percent across sectors.

Major printing vendors like HP, Canon and Xerox are offering services that allow firms to outsource their printing requirements. For example Xerox India, has already initiated Document Outsourcing service targeting companies Finance, insurance, banking, advertising and retail business. On the other hand Xerox Global Services, provides consulting and managed services to minimize costs.

Xerox introduced Intranet DOCS, software to provide access and distribution for engineering and enterprise documents via corporate intranets or the Internet. This enables enterprises to manage costs and increase returns by about 20 percent, and Xerox is expecting to raise the productivity levels by 40 per cent,"Ravi Venkatraman, director, Xerox Global Services, said.

Looking at the nature of the printing materials, Xerox offers a service called Document Advisory Office, wherein a customer can get the printed documents delivered by Xerox Global Service on a real-time basis.

While printing devices are often owned by customers, HP (Hewlett-Packard) has gone a step ahead with a contract-based model for its multi-function printers. Under this, the printers will be actually owned by HP.

HP says they targets high-volume users who need not have to pay for the printer. Its a pay-per-use-system, where the devices,and consumables like ink and print head will be taken care of by HP. The company offers managed print services so customer can outsource their document management works, including copying, printing and faxing to HP.

Document outsourcing also makes sense to customers. Most of the companies feel that if their printing work is outsourced they can very well concentrate on their core areas. Apart from that, companies will be able to utilize their manpower more effectively in productive activities.

Xerox Global Services claims to have 10,000 contracts under their belt. Their customer lists some of the leading institution and company like Karnataka High court and Airtel.

UTI Bank in Mumbai started outsourcing its printing operations to Xerox almost three years ago. They say with over 30 lakh printing work, with centralised printing, the bank reduced printing and mailing of cheques from front office thus saving time.

Most printing solution providers are introducing consulting services. HP claims to have over 15,000 of consultants worldwide and that one-third of their revenue comes from this service.

Next to follow the footstep is Canon India, who till now were providing document management contract services. Now they have geared up to provide a whole lot of services including software, hardware, training, consumables and manpower.

Canon, as part of this drive has a colour specialist in place under their business imaging solutions channel. The role of colour specialist is to provide expert advice and guidance to customers.

Source: Sourcingmag.com

Capgemini, one of the world's foremost providers of Consulting, Technology and Outsourcing services, today announced significant enhancements and new services as part of its expanded Business Process Outsourcing (BPO) solution portfolio. Capgemini is leading the development of 3rd Generation BPO services delivering value to the top–line – by combining unique Business Insight processes with the innovative use of business intelligence tools and deep industry knowledge, Capgemini unlocks the hidden value–add in basic BPO workflow. Capgemini is first–to–market delivering BPO with Business Insight, which enables clients to make better, more informed decisions that drive measurable business outcomes that contribute to the top line.

Delivering BPO with Business Insight

By combining its unique processes with sector–specific skills and ensuring that these innovations are embedded into day–to–day operations through Delivery Excellence Teams, Capgemini makes innovation part of the service. Clients can benefit from Business Insight processes such as: customer analysis; spend intelligence; audit forensics; revenue recovery and leakage prevention; ethical fraud testing and contract compliance.

3rd Generation BPO – The New Wave in Business Process Outsourcing

Capgemini has been innovating in BPO since the ‘90s. This 1st wave was largely driven by labor arbitrage and economies of scale. Through the end of the ‘90s and into the ‘00s, 2nd Generation BPO has added continuous improvement and the ability to deliver in increasingly complex project environments involving multiple processes, multiple ERPs and multi–language services. These two generations delivered strong benefit to the bottom line. Capgemini is first–to–market delivering BPO with Business Insight, which enables clients to make better, more informed decisions that drive measurable business outcomes that contribute to the top line.

“Capgemini leveraged innovative processes and economies of scale to deliver more efficient and standardized processes. Outsourcing our F&A services to Capgemini has resulted in improved quality, business agility, and risk management,” said Phil Cox, Director Shared Services, Unilever Asia & Africa, based in Singapore.

Capgemini is broadening its scope of service offerings to target additional opportunities in the growing North American BPO market. This builds on a strong foundation of BPO horizontal services for F&A and Customer Care & Intelligence and BPO–vertical services such as SmartTrack™ and Revenue Management for Utilities, and Technical Content Management for complex manufacturing clients. Capgemini is bringing to the market two new services:

1. BPO Procurement Services to include: Outsourced Operational Procurement Centre (OPC) Services and Outsourced Spend and Category Management. and

2. Assurance Services for SOX Compliance.

Investing in North American Leadership

Capgemini's enhanced solution set supports the Corporation’s strategy of increasing its presence in and share of the North American BPO market. Capgemini’s North American initiative is a part of its long–term growth strategy fueled by the lucrative market potential for BPO in the U.S. and Canada, which represents 64 percent of the global US$152 billion BPO market.¹ The company is leveraging its success as a leader in BPO in Europe, combined with a solid foundation in North America, to grow in North America’s manufacturing, utilities and financial sectors.

To support this initiative, Capgemini has created a new BPO business unit and has put in place a new, highly experienced executive management team. Deputy Global BPO Leader, David Poole, has also assumed the role of North American BPO leader and has relocated to North America.

Source: Hindustantimes

India's engineering process outsourcing (EPO) business would grow 10-fold over the next seven years to touch $30 billion and make the country a major hub in this area.

"The estimated demand for engineering process outsourcing to India has grown at 30-35 per cent since 2004-06," said the study released in New Delhi by Commerce Minister Kamal Nath, adding the momentum would be sustained in the ensuing years.

The global EPO market, on the other hand, will grow to around $110-$140 billion by 2015, taking India's share to 20-27 per cent, said the study conducted by the state-run Engineering Export Promotion Council (EEPC).

According to EEPC Chairman Rakesh Shah, engineering exports from India touched $26 billion in 2006-07 but expressed concern over the decision to do away with the duty entitlement passbook scheme, an export incentive programme, next year.

But Kamal Nath assured that the government was working to develop an alternative duty neutralisation scheme that would replace the current scheme to be in tune with the norms set by the World Trade Organisation.

The minister asked the engineering exporters to use the focus market scheme to their advantage in promoting exports to the identified markets, especially to the Commonwealth of Independent States (CIS).

As many as 16 new destinations, including CIS, had been included this year in the focus market list and exporters will find it useful to concentrate on developing the markets in these countries, Kamal Nath added.

"Indian exports including engineering exports are likely to face increased non-tariff barriers, considering that average tariffs for industrial products in all countries is headed southwards," he warned.

"This process has already begun for engineering products and is likely to gain greater momentum as India's share in the world exports increases in the coming years."

Source: Mb.com

Whether in the Philippines or India, global companies don’t really care where their business processes are being done. As long as it improves their business performance and reduces their cost, the jobs could be outsourced anywhere in the world.

This favorable trend is not enough, however. Outsourcing power Accenture said establishing a global footprint that can deliver relevant solutions is a crucial step that outsourcing firms are doing now to take advantage of the boom.

In a recent visit to the Philippines, Accenture’s group chief executive for outsourcing Kevin Campbell said one of the advantages of maintaining global locations is the ability to conduct "load balancing."

This is done, according to Campbell, to distribute tasks among its various sites to attain productivity and efficiency. "Offshoring is already a given. But global companies want consistent global solutions," said the official.

Accenture, one of the earliest outsourcing firms to set up shop in the Philippines, maintains some 10,000 employees in the country. It is ramping up this figure to about 15,000 this year with the opening of its call center in Cebu.

Contrary to popular perception, Campbell said companies are being pushed to outsource not because they simply want to cut cost. "Outsourcing engagements need to be designed and measured to achieve business outcomes."

He repeated: "Outsourcers must help clients drive value into their businesses while simultaneously pushing cost out. [But] outsourcers need to have an established global delivery capability and footprint now."

Also, one good trait of an effective outsourcer, Campbell said, is its ability to attract and maintain the best talent. For Accenture, achieving this means "accelerating its people agenda by growing the number of existing people, surgically adding talent, and rewarding performance."

Recently, it partnered with the Massachusetts Institute of Technology (MIT) to develop the Accenture Solutions delivery Academy, a new training and certification program based on the company’s application delivery curriculum.

Accenture’s two-year collaboration with MIT includes ongoing review of the academy’s educational content, student assessments, and overall program design by several MIT School of Engineering faculty who are experts in related subject areas, including Java, SAP, C++, and Microsoft technologies and the software development lifecycle.

Source: 4hoteliers.com

In the last few years the hospitality space has seen a rapid transformation. Much has been said and written about how emerging markets such as India and China are becoming the new centre of gravity for the hospitality world.

The global hospitality playing field has been levelled and the resulting impact on growth and profitability continues to push leading hotel companies to explore more efficient business models and raises the following key questions for the industry:-

Cost

* Are the cost structures better than industry averages?
* Is there a clear view on core vs. non-core functions?
* Is there scope for converting a large portion of the business support cost to variable cost?

Focus & Stakeholder Alignment

* Are processes within each strategic business unit and within geographical regions structured appropriately?
* Have shared service centers given the expected returns?

Growth Alignment

* Is the company ‘acquisition ready’ operationally?
* Is the company operationally ready to expand into growing markets and geographies?

Controllership

* Does the executive level have a consistent and standard view of information across businesses and geographies?

It will be safe to assume that in today’s world no corporate strategy is complete unless it addresses the impact of global off-shoring on the organization’s bottom line. Derivation of enhanced value through cost optimisation, efficiency and transformation of processes, functions, products and various businesses is imperative.

Traditionally organizations have aligned their back offices to a functional productivity model that is constituted around the existing structure within the company. While these models have worked for some, there are common themes of inefficiencies that run across captive back-office operations of organizations and these inefficiencies impede the ability to optimize business performance.

The initial business case for outsourcing emerges by way of significant opportunities in labor cost arbitrage. Organizations have realized this potential and are beginning to move their non-critical, people intensive segments to third party vendors or establishing captive units and shared service centres. Typical services that can be off-shored would include functions such as 24/7 global reservation centres, customer helpdesk, outbound sales support, frequent guest program management, RFP response centre and other similar services.

People, Processes and Technology Alignment

Through technology enablement and operational effectiveness of the service provider, a greater degree of integration can be achieved. Having analysed a prototype organisation we understand that often high end resources are involved in low value activities and processes are not aligned to the right stakeholders.

Operational Effectiveness and Productivity Improvements

Service providers are capable of providing customised real-time asset, brand and enterprise level information through automated reporting and statistical consolidation. Assessment of development and investment risk to validate entry strategy in key global markets through economic research and functions such as development and tracking of performance indicators, trend based forecasting, budget reviews, compliance audits and statutory reporting can be also be outsourced, thereby resulting in committed operational efficiencies, enhanced productivity and better knowledge management.

At HVS, global hospitality outsourcing was an opportunity we spotted early and have formed a global strategic alliance with Infosys BPO Ltd. The alliance seeks to combine the outsourcing capabilities of Infosys and the hospitality consulting expertise of HVS to design specific solutions for the hospitality industry. Our outsourcing solutions will be tailor made to enable your operations work more efficiently and, at the same time optimize costs.

Source: Computerworld

SMBs are increasingly turning to eBay-like IT services brokers

Increasingly, small and midsize businesses are turning to eBay-like IT services brokers to hire technical talent for projects -- both within the U.S. and offshore.

Such users are seeking the same advantages that large companies hope to get through IT services deals: flexible workforces, lower-cost labor and access to the right skill sets for particular projects.

Using an online job marketplace was the direction that Giancarlo Fiorarancio took Betsey Johnson, a New York-based chain of women's designer clothing stores with nearly 50 outlets, after he was hired as its IT director about nine months ago.

The kinds of services offered by vendors such as OnForce "have a disruptive potential" for U.S.-based temporary employment agencies and IT services providers that charge higher labor fees, said Gard Little, an analyst at market research firm IDC.

But the job marketplaces may have their largest impact because of their ability to connect IT managers with offshore help. While Congress debates whether it should raise the annual cap on H-1B visas, global job-matching services such as one offered by oDesk are showing that companies of any size can hire offshore IT talent to work on projects.

The shift of technology work to offshore locations, free of any H-1B constraints, is an economic reality that the Committee on Science and Technology in the U.S. House of Representatives began examining this week.

Many of the firms offering to do work via oDesk are small software development outfits that are spread among about 60 countries, Swart said. The largest concentrations are in India and eastern Europe, which both account for about 30% of the total. But oDesk said it also lists many services providers that are based in North America.

Pay rates vary by skill as well as geographic location, the type of project involved and recommendations from earlier customers. For instance, on a worldwide basis, AJAX developers currently are being paid hourly rates of between US$15 and US$83, according to oDesk.

Development work and the number of hours spent on it can be monitored and evaluated on an ongoing basis through a central project management repository and the use of tools for tracking technical issues and different versions of software programs. In addition, oDesk provides screenshots of a programmer's work so IT managers can do spot checks of code.

As with eBay's online auction site, recommendations from customers give service providers on both the oDesk and OnForce sites evidence of a successful track record, which can help them earn higher fees. As a result, developers have to deliver more than good technical services, said Shane Bell, whose Midland, Texas-based company, ITechWest Solutions, runs on orders he gets via OnForce.

"Ninety percent of it is relationship, and that willingness to go the extra mile," said Bell, who had a full-time job at a telecommunications company when he started doing some extra work through OnForce about two years ago. Now ITechWest is a full-time occupation for him. The firm employs five other people as well, and Bell projects that it will gross about US$1 million in revenue next year.

A dependable technician with good people skills can earn between US$35,000 and US$50,000 per year through sites like OnForce and oDesk, said Crisantos Hajibrahim, who started doing IT work after being discharged from the Marines several years ago.

TopCoder uses another approach to connect employers to overseas tech workers. Users of TopCoder's Web site submit development projects that are used as the basis of coding competitions between developers. The top developers are paid by the customers, while TopCoder officials assess the work of other programmers and give them feedback on it.

Tiffani Bova, an analyst at Gartner, said demand for services such as OnForce, oDesk and TopCoder is increasing -- especially as smaller companies become more reliant on technology. "It absolutely fills a need for a specific type of customer," Bova said. "And with the number of small businesses in North America under 100 employees, I expect it to continue to gain momentum."

Source: Bloomberg.com

Outsourcing, when you apply the model of core competence to business processes, is all about companies parceling out activities that they aren't best equipped to undertake.

If you sell computers, you shouldn't run your own helpdesk. If you are an airline, you mustn't waste your time juggling cash collected in different countries and currencies.

No company needs to tie up resources in managing accounts receivable, or preparing payroll, in-house.

You can buy all these services from third parties, which will either automate them or manage them with cheaper manpower in India, Latin America or eastern Europe.

This offloading of non-core work to specialists has been the main driver for the business-process outsourcing industry, projected to grow 10 percent a year to $618 billion by 2010.

Now outsourcing companies are pushing the frontier, forcing global CEOs to define their core competence more sharply. It's difficult to predict how it will all pan out, though it looks like Western companies may finally be left with processes with minimal labor content. And that will be one of the biggest political challenges developed-country governments will face.

Nipuna Services Ltd., a Hyderabad, India-based business- process outsourcing company, manages the shop-floor inventory for an automaker in Detroit, creates graphics for an animation studio in the U.K., and handles artwork changes on labels and cartons of GlaxoSmithKline Plc medicines so as to satisfy regulators in various countries.

Most economists believe that services outsourcing is only about getting things done ``cheaper.'' They think it is transient and self-adjusting: A rise in the inflation-adjusted exchange rate of the exporting nation will make its cost advantage disappear; the same relative-price mechanism will also increase developed-country exports to places such as India and China. New jobs will be created to replace the ones that are now being lost.

Nascent Industry

From contacting a potential customer to making him sign the outsourcing agreement takes 18 months to two years. The rarity value of the companies that provide such services is evident in their valuations.

Answering questions such as these for Fortune 100 companies recently fetched investors in Marketics Technologies, a Bangalore-based analytics company started by former Procter & Gamble Co. employees, about $65 million in payouts from acquirer WNS (Holdings) Ltd. That translates into $325,000 per employee, more than double the going rate, according to a report by J.P. Morgan Securities Inc. analyst Christine Pezino.

Wages Versus Profits

The manufacturing economy may serve as an example. Apple Inc. had fewer than 18,000 employees as of Sept. 30, 2006. Revenue per worker was in excess of $1 million. That's 10 times the value an average worker produced last year at Taiwan's Hon Hai Precision Industry Co., a contract manufacturer -- among other things -- of Apple iPod music players.

If outsourcing becomes as widespread in services as it already is in manufacturing, Western economies may still grow strongly, thanks to surging corporate profits. However, the falling share of wages in economies across the developed world will keep offshoring a hot political issue for decades to come.

Source: Australianit.news

A SHORTAGE of Siebel skills has led AMP Financial Services to look offshore to complete an upgrade of a customer relationship management system used by more than 1500 financial planners and call-centre staff.

The move comes as organisations around the country, including the Australian Taxation Office and Department of Immigration and Citizenship, struggle to find sufficient numbers of technology workers with Siebel expertise. The shortage has contributed to spiralling contractor prices in Canberra and forced federal agencies to send work interstate.

It is also adding to the momentum towards offshore outsourcing in the private sector.

The company has now awarded Infosys a contract to carry out the upgrade after it decided last October to proceed with the project.

An AMP spokeswoman said plans for the project, including the decision to appoint Infosys to provide software services, were signed off by April this year and that the upgrade had commenced.

The spokeswoman said the project was being led by AMP's IT@AMP technology division and that Infosys was providing services both onshore and in India. The upgrade is expected to be completed by the middle of next year.

"Most of the work is being done in Australia. Infosys is doing some work in India, mainly software development and testing," the spokeswoman said. The decision to appoint Infosys to the project and send some development and testing work offshore follows a visit to India by Ms Barnett early last year.

Infosys now boasts a number of blue-chip Australian customers, including AMP, miner Rio Tinto and Telstra. Confidentiality agreements, however, prevent Infosys and compatriots such as Wipro, Tata Consultancy Services and Satyam, from talking about most of their customers.

Infosys notes in statutory accounts for its last financial year, filed with the Australian Securities and Investments Commission in May, that it had won a Siebel contract with "a leading Australian insurance company".

Many private sector firms are reluctant to disclose their involvement in offshore IT and business process outsourcing despite growing investment in offshore services.

Research firm Frost and Sullivan reported last month that more than a third of Australian financial services firms were on the way to embracing offshore IT and business processing outsourcing by mid-2008.

Financial services firms that have openly admitted to offshoring include the National Australia Bank, Westpac and AMP.

The growing move towards offshore outsourcing was reflected in Infosys Australia's financial accounts for the year to March 31.

Mr Ebeyan said about half of Infosys's Australian work was carried out offshore with the revenue booked through its international operations.

He said the company generated more than $200 million all up in revenue from Australian contracts during its most recent financial year.

Source: Silicon.com

When PA Consulting wanted to build an extra wing for its offices, it hired the best man for the job.

Unusually, perhaps, it turned out that the best man for the job was an enormous rabbit, and one which wanted to be paid in an electronic currency that didn't exist a few years ago.

But then again, the office extension PA wanted was a virtual one, built in the rapidly growing Second Life online world.

As well as finding a rabbit to build the extra wing for its Second Life HQ, PA Consulting also found in-world 'residents' willing to work as greeters in its office in exchange for the in-world currency, Linden dollars.

"We've outsourced first-level support to the global labour pool," explained Claus Nehmzow, member of PA Consulting's management team.

But far from being a kooky one-off, a number of companies are looking at how virtual worlds can help them improve the way they create and manage teams in their own businesses - as well as providing a new market.

Depo Consulting is using its Second Life office not just as a showcase but as a means of improving the management of its team - some members of which it has never met in the real world or even spoken to on the telephone.

Peter Dunkley, director of Depo, which develops Second Life buildings for its clients, said: "The most compelling differences between this and existing remote working is the ability to work as a team - and to manage that team."

Virtual worlds offer the ability to provide development capability in new ways, using more flexible and advanced methodologies - and at lower cost than traditional offshore development can deliver, he said.

But this doesn't mean the end of traditional outsourcing, of course - in fact, there's no reason why established outsourcers can't use the same benefits to manage their dispersed teams.

Setting up an office is a good first project to work on, so long as it isn't left to gather virtual dust but has a purpose - such as being a venue for team meetings or recruitment and interviews (particularly effective when looking for IT staff, according to Dunkley). Building the office can be a huge learning experience in terms of how projects work within a virtual environment, he suggests.

But don't leap in with anything too sensitive, such as projects involving personal data of customers.

As Dunkley points out, it's wise to not get too enthusiastic too quickly: "Your compliance department are likely to start spinning like tops if you start having critical meetings with your corporate finance advisors about a hot new deal in your new virtual office located between a beach club and a casino."

Source: Gulf-times.com

Outsourcing of information technology — and to a lesser extent business processes such as finance, administration or human resources — is now so prevalent that it has become the default: companies, and particularly the public sector, have to explain themselves if they don’t outsource, the underlying assumptions being that they are:

(a) missing out on automatic cost reductions attendant on shedding routine operations to specialists

(b) by the same token, handing competitive advantage to those who do.
Yet outsourcing is going through ‘a mid-life crisis’, according to Compass, a management consultancy.

When Compass analysed 240 large outsourcing contracts in Europe and the US, it found that fully two-thirds were unravelling before the contract’s full term. Far from cutting costs, in many cases outsourcing ended up costing more than keeping the services in-house.

Ironically, the inflexibilities are often negotiated into the contract by buyers, whose faith in the existence of large cost advantages is akin to a belief in alchemy, according to Scott Scarrott, Compass’s head of business development.

“There’s no magic,” he says. An outsourcer has to be 20% better than the in-house operation just to cover set-up costs and break even. Factor in a margin for risk, overhead and profit and that rises to 40%.
That’s a handicap that can’t be offset by simple ‘labour arbitrage’ even in low-wage countries such as India, where high labour turnover and low productivity compound the disadvantages.

“For every bad vendor there are at least five bad buyers,” he says. The mistakes are all the bad old management habits, speeded up and updated for an IT-enabled world: short-termism, wrong yardsticks (speed and labour costs rather than anything connected with the business), failure to retain know-how to manage the new relationship, inadequate attention to governance, and an unappealing combination of greed, laziness and cowardice that is manifested in the all-too- common practice of ‘lift and shift’ — simply taking an inefficient operation and handing it over to someone else to deal with, often, in the medium term, by sacking people.

In short, outsourcing has become a classic management fad. Depressingly, the public sector is a serial offender, adding to poor procurement a dogged failure to learn: a contract’s true value can only be evaluated after two or three years, but since those who do the deals are only concerned with procurement, that rarely happens.

Given that IT outsourcing is three generations old, you might expect the lessons to have been learnt by now. A few companies, having found out the hard way, are indeed beginning to take a more selective attitude to the practice: lowering cost-saving expectations, bringing back some operations and retaining much more expertise even in those they outsource.

None of the hi-tech trappings or jargon can disguise the fact that ‘lift and shift’ represents the management equivalent of football’s ‘route one’ — heads down, hack the ball upfield and chase. No wonder customers are unhappy. If they are cynical about customer service with a foreign accent, it’s because they know it’s an accurate reflection of suppliers’ reliance on low-cost and mass- production methods for dealing with them.

Source: Globalservicesmedia

The deals were awarded by German retailer KarstadtQuelle and financial-services group Allianz.

In May Germany proved itself as a potential hub of IT-services buyers. The month's two largest IT outsourcing deals were inked by German companies. The largest one was signed between KarstadtQuelle and EDS. KarstadtQuelle, a German retailer, awarded one billion dollars IT-services contract to EDS.

Under the terms of the eight-year outsourcing deal, EDS will control a 74.9% stake in Itellium Systems & Services, a subsidiary of KarstadtQuelle. The retailer will retain the remaining 25.1%. Itellium makes about $190 million in annual revenue, with the majority coming from supporting KarstadtQuelle and its group of retail and consumer goods companies.

As a part of the contract, EDS will establish a retail-focused service center to support KarstadtQuelle, handling application development and maintenance for KarstadtQuelle's department stores and online businesses, plus managing and supporting desktops, laptops, PDAs and printers. In addition, EDS will manage third-party contracts for KarstadtQuelle's infrastructure, including its retail network.

KarstadtQuelle plans to save approximately $884 million over the course of the contract. The company's outsourcing agreement with Atos Origin is still in place. This agreement was signed in 2004 to handle infrastructure and network operations.

The second largest deal of May was signed by Germany 's financial-services, Allianz. Allianz signed a five-year outsourcing contract with Fujitsu Services. The contract is Fujitsu's biggest-ever contract in Germany .

The $544 million IT-services deal entails managing desktop, network, and telecom services. Under the deal, Fujitsu will supply, install, support and maintain these services for Allianz's internal IT-services division AGIS. The latter will retain overall responsibility for projects, billing and engineering.

This contract gave further justification to Fujitsu's $108 million takeover of German SAP services provider TDS at the end of 2006, which significantly increased its scale in the country. Fujitsu's commitment to grow its German business was a factor for its selection as its main concern was the prospects of the transferred staff, according to Allianz.

Source: Forbes.com

They may be under fire in the U.S. over visas, but India believes its tech companies are poised to capture a bigger slice of the global outsourcing market.

By 2010, the country will have 15% of the outsourcing market for higher-order knowledge processing work, such as research and data management, Commerce and Industry Minister Kamal Nath said Sunday in a speech at the 11th International Economic Forum at St. Petersburg, Russia.

Indian companies had 11% of the market for outsourcing contracts above $50 million in 2006, according to the National Association of Software Services Companies. India’s software and services exports crossed $31 billion in fiscal 2007.

But Indian tech companies, which draw the majority of revenues from the North American markets, have been in the news lately after two senators asked nine companies, including biggies like Wipro (nyse: WIT - news - people ) and Infosys (nasdaq: INFY - news - people ), for details on their U.S. workforces.

In a statement last week, Nath denied the allegations. “Temporary movement of skilled professionals is an essential component of the global services economy and bears no relation to immigration issues,” he said.

The minister linked India’s cooperation on trade issues at the WTO to agreement on the services industry. “Services are an important component of the breakthrough in the current WTO negotiations and any move which vitiates the current progress will only frustrate the progress in bringing the round to a successful completion,” he said.

At the St. Petersburg conference, he waxed eloquent on India’s growing importance on the global stage. “What better example to cite the growing clout of emerging economies than India, which has recorded the fastest GDP growth in 18 years, with the economy growing 9.4% in 2006-07,” Nath said.

India’s high growth has been powered by the manufacturing sector, which grew 12.3% in fiscal 2006-07 as compared to 9.1% a year earlier. But Nath also spoke of investment opportunities in the farm and food-processing sector, which hasn’t grown at the scorching rates of some other sectors and has been identified as a priority area by the government.

He also invited investment in retail, where India doesn’t yet allow foreign players in the multibrand segment. Organized retailing in India is predicted to expand 37% in 2007 and 42% in 2008. At present, small corner stores account for the bulk of the market.

Source: Hindu.com

Indian corporates have told American leaders and the U.S. business community that the outsourcing debate should not become an India-centric as it could hurt cordial relations between the two nations. Indian CEOs have also asked their American counterparts to realise that outsourcing was good for the growth of the U.S. economy, besides highlighting how the reverse outsourcing trend was benefiting major U.S.-based companies.

Skilled manpower

"Though there is strong undercurrent on the outsourcing issue in the U.S., many political and business leaders understand how crucial it is for the growth of the U.S. economy. By 2025, 17 million new jobs will be created in the U.S. and India, with its highly-skilled manpower and knowledge base, will become a good source,'' Confederation of Indian Industry (CII) President Sunil Bharti Mittal said here on Saturday.

Mr. Mittal, who recently returned from the U.S. after successfully leading a business delegation of Indian CEOs, said the Indian delegation told every senior political leader, U.S. government officials and business heads it met how the small issue was being exaggerated.

Conceding that outsourcing might become an issue in the coming U.S. presidential elections, Mr. Mittal said concerted efforts were being made by Indian industry to convince the U.S. leaders not to make it an India debate. "We told them how a reverse outsourcing trend has started with the U.S. companies bagging big orders in many nations. For instance, leading IT company IBM has bagged two major contracts from India's telecom companies, including Bharti Airtel. Moreover, to cope with visa problems, the U.S. companies have started their operations in India. And if this issue is not solved soon, more companies will shift their base, hurting the U.S. interests,'' he added.

Bharti retail venture

The Bharti group Chairman, Sunil Mittal, on Saturday said his company's much-talked-about retail venture would kick-start early next year.

"Talks are on with our back-end partner Wal-Mart regarding branding and other issues,'' Mr. Mittal said while talking to media persons.

"We will open at least half-a-dozen stores early next year. We are already looking for space in different cities. Wal-Mart will provide back-end and logistics support and we will manage the front-end,'' said Mr. Mittal, who recently met Wal-Mart Vice-Chairman Mike Duke in Washington.

The Bharti group Chairman said the company's retail plans, which involved investment of $2.5 billion, were going as per schedule.

Source: Startribune.com

With the world's information technology outsourcing market topping $27 billion, the practice of exporting work to companies based in other countries appears to be here to stay.

But the highly vaunted benefits of global outsourcing -- lower labor costs and higher revenue -- are proving to be somewhat elusive. The main culprit: Unexpected transaction costs that are being driven by communications difficulties, project delays and compromised development quality.

It might seem self-serving for the owner of a locally based IT consulting company to criticize global outsourcing, but experience is proving that our elders (once again) were right when they counseled: "If something seems too good to be true, it probably is."

A recent article by an associate professor at Bowling Green State University, in the technical journal Communications of the ACM, describes how U.S. companies are waking up to the dark underbelly of global outsourcing. They're finding that many IT projects being done offshore are plagued by:

• Poor team cohesion between IT workers in the United States and their offshore counterparts.

• Nonstandardized and incompatible development processes.

• Incompatible project management and business management styles.

In short, "the benefit of low-cost labor must be weighed against the risk of missed deadlines, dissatisfied users and failure to reduce development costs," the journal article said.

Requirements analysis and quality assurance of user requirements are a prime example of how things can go awry when key IT players are operating in different cultural and geographic time zones.

Regardless of the methods and tools employed, the success of requirements analysis depends on how well users and analysts communicate and collaborate. Offshore requirements analysis, even with the best available communication infrastructure and collaborative work tools, has a high risk of producing infeasible, excessive, unrealistic, missing and/or incorrect requirements.

Offshoring in reverse

Global offshoring, ironically, is happening on our own shores now. A recent article in the New York Times reported that the fast-growing H-1B visa program -- which allows a person to work in the United States for up to six years, traditionally a steppingstone to becoming a permanent resident -- is now viewed as "the outsourcing visa".

Source: Tekrati.com

Financial services companies have greater future outsourcing investment plans than do other industries, according to research by EquaTerra. The higher spending reflects, in part, plans for expanding outsourcing into new geographies, business units, and process areas. EquaTerra found that organizations in this industry are among the heaviest users of IT outsourcing (ITO) and business process outsourcing (BPO). New investments areas include knowledge process outsourcing (KPO).

According to EquaTerra research, IT is the back-office process most commonly outsourced by financial services organizations, followed by call centers and then HR. Other industry specific processes commonly outsourced include claims, transaction (e.g., credit card, equity trading) and check processing activities.

The firm’s research also identified emerging trends in financial services outsourcing, including an increase in the outsourcing of content and document management. This is an important issue for financial services organizations since they generate huge amounts of electronic and paper documents particularly when undertaking capital markets and M&A work for their clients, and stringent regulatory requirements around the management of these documents drives up costs. Financial services firms, therefore, are exploring all options, including the use of third party service providers to help support these efforts.

According to John Boyle, EquaTerra’s Managing Director, Financial Services, "The growth in KPO is intriguing because it involves work that was traditionally viewed as too strategic to outsource, or where outsourcing was not viable because candidate services providers lacked the skills or experience required to perform the work. But these perceptions are changing. While in most cases KPO today involves rote work and number crunching, the breadth and depth of work being performed is expanding as buyers gain comfort with the model and suppliers’ skills and levels of context improve. However, KPO work, particularly in the financial services industry, is not always outsourced in the true sense. Larger financial services companies are at the forefront in establishing captive operations to perform KPO and related work."

EquaTerra research studies also found that:

1) 36% of financial services respondents whose firms had outsourced one or more of the defined process areas planned to expand outsourcing into new geographies or business units, as compared to 30% overall.

2) 28% planned to expand outsourcing into new process areas.

3) Plans to continue investing in multiple forms of service delivery models including shared services operations, captive centers and the use of outsourcing providers.

EquaTerra believes the most innovative financial services firms will lead the way by showing innovation in their strategies around service delivery models and balancing that innovation with execution excellence and cost efficiency.

Source: Jconline.com

Products and services that are outsourced from the United States on a daily basis range from X-ray readings to call centers and tax preparation.

And the loss of jobs in the United States because of the work that is leaving the country has widened the gap between wages for skilled and unskilled employees.

That was a message presented Thursday at Purdue University during a breakout session of Global Trade Analysis Project Conference.

"A lot of concern is being expressed by labor (groups) in the United States over jobs being outsourced. Materials outsourcing increased the demand for skilled labor in the 1980s in the manufacturing industry," said Amer Ahmed, who presented a paper titled "Outsourcing and Wages: An Empirical Analysis."

An increase of highly skilled (employee) wages relative to low skilled competitors are making highly skilled workers more productive.

The issues include an economic analysis of poverty in the Americas, China and exchange rates and the impact of increased biofuels production on global trade and agriculture.

Source: Zdnetasia.com

India is to finally get a data privacy watchdog to oversee the country's IT and business process outsourcing (BPO) offshore outsourcing industry and to address international concerns about the security of customer records and data.

India does not have any data protection law equivalent to that in the United Kingdom but has been under increasing international pressure to address this in recent years due to a spate of high-profile security breaches.

The new body, which will be called the Data Security Council of India (DSCI), is a self-regulatory member organization and is being set up by Indian IT industry group National Association of Software and Service Companies (Nasscom).

Shyamal Ghosh, chairman of the DSCI, said the board and structure of the organization should be in place by the end of next month.

He told ZDNet Asia's sister site Silicon.com: "The industry felt it is better to have self-regulation because it moves so fast. It will be an independent organization at arm's length from Nasscom."

The DSCI will develop common minimum standards for privacy and security policies, offer certification, enforce a code of ethics and best practice, and punish any breaches by Indian IT and BPO companies--which could include expelling members or calling in police.

Nandkumar Saravade, director cyber-security and compliance for Nasscom, said the DSCI will help improve security standards across the vast number of companies below the big top-tier outsourcers such as Infosys, Tata Consultancy Services and Wipro.

The data security body is just one of Nasscom's initiatives to address international concerns about India's reputation for data security. Another key strand is the National Skills Registry (NSR), which is a centralized database of third-party verified personal and professional details of IT and BPO employees that allows employers to vet staff they are recruiting.

Nasscom said the NSR is used by 40 of India's IT companies and now has 100,000 employees registered on it, with half of those verified and their biometric details recorded. It has also helped with the setting up of local cybercrime police labs in five of India's tech hotspots.

Source: Moneycontrol.com

The world maybe turning to India for its outsourcing needs, but Indian companies may soon have to look outwards. That is because most of them feel that they get a second rate treatment from IT companies.

A survey by research firm Gartner has found that Indian companies aren't quite happy outsourcing to Indian technology providers. Arup Roy, Senior Research Analyst - IT, Gartner, said, “CIOs in India have highlighted their displeasure with their service providers. They have voiced that they are getting a second rate citizen treatment from their domestic services providers.”

Industry experts say Indian outsourcers focus less on India because the traditional labour arbitrage does not exist here. But with a rising rupee denting the offshore advantage, they may soon have to do a rethink.

Older players, like TCS, say newer IT companies could better margins through high-end work for Indian clients.

S Venkatramani, Head - India Business, TCS, said, “Not many are focused in India. Between TCS and CMC, we have 12.5 % of the market share, which is more than half a billion dollars. So, I think there should be an effort to educate them and move them up the value chain.”

Till that happens, Indian companies will either have to settle for second hand treatment or take their business to similiarly priced foreign IT firms. But that would be a lose-lose solution.

Source: Outsourcing-pharma.com

Sponsors need to ensure they are managing the risk involved in clinical outsourcing, particularly when dealing with multiple contractors.

Leading contract research organisations (CROs) managed nearly 23,000 Phase I-IV studies from 152,000 clinical sites worldwide in 2004, the most recent year for which data are available, according to the Tufts Center for the Study of Drug Development.

This reliance on CROs has only increased since then, both in clinical and pipeline drug development, and manufacturers need to make sure they remain vigilant and involved in any outsourced R&D because ultimately, the responsibility for the ongoing safety evaluation of the investigational products and for reporting any information that could adversely affect the safety of trial subjects, lies on the sponsor's shoulders, stated the report, citing section 5.2 of the International Conference on Harmonisation's (ICH) Guideline for Good Clinical Practice.

Monitoring CRO performance and compliance is crucial to mitigating the potential risks that manufacturers face in any third-party collaboration, from R&D to manufacturing, distribution, and advertising. For CROs, this includes reviewing patient records and medical charts.

The more complex the outsourced task, the greater the risk and this potential for risk may also increase when clinical protocols are developed by several physician-investigators and involve multiple investigational sites and other third parties. As a general rule, "as more people and systems are involved, additional prudence may be needed", the report indicated.

To try and put the extent of these clinical outsourcing relationships into perspective, the report contained a graph giving a snapshot of the ten big pharmaceutical companies who are engaging in this activity. Pfizer was associated with the most relationships, with 340, while Novartis and Merck followed closely behind with 318 and 317 respectively. Trailing the top ten list were Sanofi-Aventis on 119 and Amgen on 115.

"This data is meant to be indicative of the scale that outsourcing is now being done by pharmaceutical companies and raises the question of how the firms that are or have been involved with so many third party companies are making sure they are managing the risk that comes with having so many of these relationships," Andrew Jones, Pharmaceutical analyst from Ernst & Young told Outsourcing-Pharma.com.

Meanwhile, the authors also pointed out that in addition to monitoring ongoing third party activities, sponsors also need to establish a "strong foundation for CRO compliance and integrity", citing again, the ICH guideline, which states that any trial-related duty that is transferred from sponsor to CRO should be specified in writing.

The importance of this is highlighted by the high-profile Phase I drug trial disaster last year in which six volunteer subjects ended up in intensive care, where Parexel was hired to conduct the trial by German developer of the drug TeGenero.

Source: Sys-con.com

A recent Indian auto-component industry report suggested that low cost countries, such as India and China, have the potential to meet the outsourcing needs of 20% of the global electronic auto-components market.

An auto-component that is not a core component of a car and has aftermarket replacement opportunities, such as wiper motors, power window components or dashboard displays, is more likely to be outsourced. Electronic components and their parts are not only manufactured at the tier I level but also at a tier II / III level.

This briefing will benefit component manufacturers at both tier I and tier-II / III levels, distributors, and vehicle manufacturers by discussing emerging trends and providing forward projections for the North American electronic auto-component industry.

Highlights of the briefing include: a discussion of auto-components outsourcing, ramifications of outsourcing on the aftermarket and threats as well as opportunities within the different tiers of the market.

"While over the last 10-15 years the prices of cars have remained 'flat,' stricter regulations and demanding consumers have driven the costs up in the North American automotive market," notes Frost & Sullivan Research Analyst Abhigyan Sengupta.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.

Source: Sdcexec.com

While outsourcing remains a critical element of the corporate strategic mix, success in today's complex outsourcing marketplace is contingent on new dynamics, specifically the customer and service provider relationship, according to a PricewaterhouseCoopers' Global Outsourcing study, "Outsourcing Comes of Age: The Rise of Collaborative Partnering."

The study explores a key issue raised by CEOs in PricewaterhouseCoopers' Annual CEO Survey at Davos and reflects insights garnered from both outsourcing customers and providers representing 19 countries across several continents.

A large majority of customers (87 percent) say today's outsourcing delivers the benefits projected in their original business plan. However, outsourcing is perceived as such an essential business practice that 91 percent of customers, whether completely happy or not, said they will outsource again.

In addition to the continued growth and significance of outsourcing, one clear trend from survey data is the frequent disconnect between the needs and expectations of customers and service providers. A quarter of customers think "many suppliers/providers" work better than "few suppliers/providers," vs. only 10 percent of service providers. While 52 percent of service providers recommend offshore outsourcing, only 20 percent of customers believe this works best in real-life outsourcing.

Success in outsourcing field will heavily hinge on shifting the customer-service provider relationship from adversarial to collaborative; from one based on procurement to one grounded in partnership."

Furthermore, customers who were defined as "high collaborators" (based on rating their providers the highest overall on the key indicators of collaboration such as "business dealings being honest and transparent") experienced the most mutual engagement with their outsourcing providers.

Other characteristics of "high collaborators" include: greater likelihood of being open-minded, enabling them to better manage around barriers to outsourcing; tendency to support the use of multi-sourcing (many suppliers/providers) over limited sourcing (few suppliers/providers) far more than other respondents; and the tendency to support shared risk and reward over traditional commercial terms.

"Outsourcing is growing fast and delivering results," continued McArdle. "High collaboration between customers and providers yields increased confidence in overcoming the challenges of outsourcing, broader business model innovation and expanded outsourcing investment in key areas of the business."

In other findings, while information technology still accounts for a predominant part of outsourced activity, the scope is extending rapidly into inherently strategic areas such as production/delivery of core products/services and innovation/ R&D, both of which are expected to experience growth during the next five years. The expansion into innovation and R&D is particularly visible in the media/telecommunications/IT sector, likely due to competitive pressures to mine every potential source of new ideas and revenue streams.

Source: Canada.com

Canadian manufacturers face a variety of challenges, including a strong dollar, high energy prices, lagging productivity and labour shortages, all of which will lead to increased outsourcing of production to low-cost countries to remain competitive or even survive, a global accounting firm said Tuesday.

"We foresee that global sourcing will continue to rise in popularity as companies seek to compete on a cost basis... ," said the report by PricewaterhouseCoopers.

However, the increasing popularity of outsourcing will itself create supply chain challenges, the report added. "The supply chain world is becoming more complex and ... executives concerned with supply chain management face a number of traditional challenges ... ," it said.

"While Canada has recognized and is addressing our own infrastructure issues, the consequences of infrastructure congestion, particularly that expected in the Asia-Pacific corridor, could be serious," it said, noting that the fastest and most concerning growth in global trade volumes will occur in the Asia-Pacific corridor.

"Security will also continue to be a crucial part of supply chain management," the report said. And based on the expected growth in trade volumes, cross-border wait times will only proliferate in the future, it added.

"This has and will continue to include political, regulatory and consumer pressures to reduce carbon emissions and adopt environmentally friendly practices," noted the report. "Organizations must balance traditional supply chain levers such as cost and service levels with the environmental impact of their manufacturing, distribution and transportation decisions."

Fuel and emissions levels along the supply chain, among other things, need to be analysed, it said, adding that those involved in the supply chain, such as transportation firms, that adopt environmentally friendly practices will grow faster than those that don't.

Meanwhile, freight and fuel surcharges will continue to rise, while a strengthening Canadian dollar will also squeeze manufacturers, the report added.

Radio-frequency identification technology, which increases the speed and accuracy with which inventory can be tracked and managed, will fall short of market hype, the report warned.

Source: Sourcingmag.com

In yet another instance reflecting India's emergence as a major sourcing hub for automobile components, German auto major BMW today announced that it will set up an International Purchasing Office (IPO) in Delhi by August.

The office will cater to its worldwide ancillaries requirement for its production capacities across 23 manufacturing sites and will be headed by an expatriat. "The purchasing office will be directly reporting to our global head-quarters in Munich though there will be co-operation between us," said BMW India president Peter Kronschnabl.

BMW currently has a purchase unit for its manufacturing unit in Chennai and the two offices may approach vendors together. Currently, BMW sources some IT components from India but the new office will see a drastic increase in the volume and value of sourcing. Kronschnabl however did not divulge the quantum of sourcing expected to be generated from India.

"Once the sourcing team comes to India, they will study what kind of components to be sourced from here," he said. With the office here BMW joins the list of global manufacturers like Renault, Volkawagen and Daimler Chrysler. DC has been sourcing components out of India for its global operations in Japan, US and Germany and its quantum of sourcing has been increasing by 20 per cent year on year.

BMW India has also lined up the launch of a slurry of models this year starting with the 5 series next month followed by SUVs X3 and X5, homologation tests for which is on.

Followed by the inauguration of its plant in Chennai, the company has had a good run in the industry with sales well in excess of its targets.

"Initially, we had planned to sell about 1,000 cars in India in the twelve months from the inauguration but now we have scaled it up to 1,200 units for this calendar year," Kronschnabl said.

BMW has also been expanding its sales network and by the end of this year, it will have 12 dealers across the country. It will have one dealer each in Kolkata, Ahmedabad and Kochi and a second one in Delhi.

Source: Sys-con.com

At the first annual Alsbridge Outsourcing Leadership Provider Forum held in Dallas, representatives of the leading outsourcing providers offered up their concerns over margin pressures, offshore strategies and the need for innovation. The event included a collaborative session following the Alsbridge proprietary Sourcing Alignment Session (TM) methodology and will result in a new report to be available later this month. Participants included ACS, Accenture, IBM, Capgemini, Cognizant, EDS, ExcellerateHRO, EXL Service, Getronics, HCL, Hewlett-Packard, Infosys, Luxoft, Perot Systems, T-Systems, Virtusa and Wipro.

The SAS process is used by Alsbridge in a sourcing engagement to identify issues and gain consensus on decisions. During the event, process was used with the attendees to collaboratively identify significant challenges and issues facing the outsourcing industry at large as impacting both the client business side and providers' profitability.

During the collaborative sessions, the providers said they hear talk about innovation yet the sourcing process and priorities seem to favor decisions based on cost/price and risk mitigation. The buyers push the providers towards commoditization or level playing field approaches that inhibit or prevent innovation. Service levels and performance expectations are not focused enough on business results.

Providers also candidly revealed many of the internal challenges they face and their own contributions to problems in outsourcing. They identified that they struggle to keep pace with technology changes as well as face challenges in meeting global needs for staffing and talent resources, including at the senior account relationship level. Lack of experienced provider-side talent at the client-facing, account level, as well as account leader turnover, contribute to problems.

Within the deal and sourcing process, providers did not identify any positive contribution to innovation coming generally from either advisors or external counsel. The providers made clear that they would like to see sourcing processes with better ways to achieve mutual alignment of realistic expectations, in a collaborative environment allowing open dialogue with their customers, thus creating more trust. Providers hope for a sourcing process that costs less, takes less time, and focuses better on real business issues. They would also like to see a process that does a better job of setting a framework for effective post-contract change management.

During the event, Alsbridge also introduced its new innovation in assessing the viability of outsourcing contracts and relationships. The Alsbridge Market Reality Assessment (TM) or MRA can quickly score either an existing outsourcing contract or one in negotiation on over 150 common terms and elements. Alsbridge Managing Director Steve Kopp explained, "We built the MRA to help our clients bargain for favorable terms, but we can more intelligently focus our efforts on elements having more leverage so that the bargaining process enhances trust rather than strains it."

Source: Domain-b.com

India's engineering process outsourcing (EPO) market is expected to touch $30 billion by 2015, the Engineering Export Promotion Council (EEPC) said in a strategy paper.

The study, `Growth of Engineering Process Outsourcing from India', released by the union minister of commerce and industry, Kamal Nath, said the size of Indian EPO market, which is currently a little over $3 billion, will grow 10-fold to $30 billion by the year 2015.

The demand for India engineering products has grown at 30-35 per cent from 2004 to 2006.

With the global EPO market poised to grow to $110-140 billion by 2015, India should corner at least $30 billion of the market, the paper said.

EEPC chairman Rakesh Shah said that the engineering exports from the country touched $26 billion in 2006-07.

Nath said while the duty entitlement passbook (DEPB) had been extended till March 2008 the government was working on an alternative duty neutralisation scheme to replace the DEPB scheme, which would lapse next year.

He urged the engineering exporters to use the focus market scheme to their utmost advantage as the potential growth for India's engineering exports in focus markets especially the Confederation of Independent States (CIS) was huge.

He, however, warned engineering exports of possible non-tariff barriers, considering that average tariffs for industrial products in all countries has been falling.

He said that the Doha Round of Trade Negotiations under the send this article to a friendauspices of the WTO is a good opportunity for India and other developing countries to leverage such issues.

Source: Santacruzsentinel.com

UC Santa Cruz is tossing around the idea of outsourcing its e-mail services to Google and replacing the university's CruzMail system with the popular Gmail, which would include a variety of glitzy new features already familiar to many college students.

Google says its new offering for colleges, called Google Apps for Education and launched last fall, can provide UCSC students with e-mail, instant messaging, calendars and personalized Web page creation with less of the hassle of installing and maintaining the current software and hardware on campus.

The move to Google could resolve recurring e-mail issues UCSC has faced under its current system, including server overcapacity, non-delivery and slow response time.

"Students are used to larger storage and better Web applications and schools are finding it challenging to meet those expectations," said Jeff Keltner, who oversees the company's Google Apps for Education, which is already being used by several hundred colleges nationwide.

Google is competing with such companies as Yahoo and Microsoft, which also offer campus e-mail services, and hopes to build company loyalty in users at a young age while extending the company's clout beyond its ubiquitous search engine.

Officials at UC headquarters in Oakland are close to finalizing a contract with Google that would allow schools in the 10-campus system to opt for the new service.

Brad Smith, who directs UCSC's computer and telecommunications systems, said the possibility of outsourcing e-mail at UCSC is a major sign of the times. "It's a way of saying that e-mail and messaging is becoming one of those basic infrastructure services needed to run an organization — like telephone service or data networks," he said.

"There are very different opinions on campus whether it is desirable," said Luca De Alfaro, a computer engineering professor who is studying the deal for UCSC.

At first, the service would be available only to students and made optional for faculty. Staff e-mail would continue to run through the old system.

But as long as two e-mail services are running concurrently, one through Google, the other at UCSC, the university won't be able to save much of the cost to run its own e-mail service, said Larry Merkley, vice provost of information technology.

Although Google, under the terms of its standard contract with colleges, promises not to place advertising in student e-mails, alumni are considered prime targets.

Under the new service, students can keep the address that originates from university's domain, meaning it will still end in ucsc.edu. To use it, they would be taken directly into a UCSC Web site that would have the look and feel of Gmail.

Google provides college users with two gigabytes of space, twice as much as CruzMail, which at one megabyte, is already one of the highest limits in the UC system, said Merkley.

Source: Outsourcing-pharma.com

Hyaluron, PPD, Parexel, MDS Pharma Services, Kendle and ClinPhone have all had people on the move in the world of pharmaceutical outsourcing in May.

Hyaluron Contract Manufacturing (HCM), which specialises in aseptic formulation and filling of liquid parenteral drugs, has created a new position of vice president of quality and has chosen Robert Haggerty to fulfil the role.

Under his new position, Haggerty will be responsible for overseeing quality and regulatory compliance at the company's Burlington, Massachusetts facility.

Most recently, Haggerty was the director of quality assurance at Alexion Pharmaceuticals where he was in charge of quality assurance start-up activities at its new biotech facility. Previously, he held positions at Ben Venue, Dupont Merck, and Transkaryotic Therapies (now Shire).

Meanwhile, contract research organization (CRO) Parexel has named Joe Avellone corporate vice president of clinical research operations in North and Latin America.

Avellone will lead operational aspects of the company's Phase II-IV clinical development programmes for clients, including project management, clinical operations, and management of the Americas Medical Affairs group, Parexel said.

Prior to joining the firm, Avellone was the former chief executive officer of Veritas Medicine, a healthcare technology company supporting clinical research trials.

Another big player in the CRO arena has announced new HR changes in the past month. Pennsylvania-based MDS Pharma Services has appointed James Pusey as vice president and general manager of the company's global clinical development business, which manages late-stage clinical drug trials.

Pusey was previously CEO of biotech company OrthoLogic and prior to that role, he was executive vice-president for Neurology at Serono, where he was responsible for late-stage drug development, including co-development projects with Pfizer.

In addition, he has held the positions of vice-president of marketing and therapeutic area leader for central nervous system, pain and infection at AstraZeneca in the US.

Still in the clinical outsourcing space, Kendle has promoted Patricia Steigerwald to vice president of the company's global late phase business. In her new role, Steigerwald's objective will be to drive continued growth of the Late Phase brand globally, with a focus on Phase IIIb and IV trials, health economics and outcomes research.

She has more than 20 years of CRO and clinical experience and was most recently senior director of the segment.

And last but not least, UK eClinical firm ClinPhone has recently appointed Michael Smyth as vice president of product management in its trial management solutions group. The trial management solutions group includes ClinPhone's CTMS, site manager and e-learning products.

Smyth will work from ClinPhone's New Jersey office in the US where he will work with the development and sales team to add functionality to the products, manage client relationships and understand market needs.

He will also be responsible for increasing the overall presence of the company's trial management solutions within the global market.

Before working for ClinPhone, Smyth held a number of senior positions at several organisations, including business development director at Premier Research and most recently, head of global strategic accounts with VivoMetrics.

Source: Efytimes.com

The outsourcing engagement between Unisys Corporation and Illinois Tollway has won a 2007 Outsourcing Excellence Award in the annual Outsourcing Center awards programme sponsored by Everest Group and Forbes magazine. The award for 'Best IT Application' recognises the e-commerce benefits the partners are delivering to the Illinois state government and users of Illinois' I-PASS electronic toll collection system.

"The Illinois Tollway is gratified by this major recognition of our efforts to improve customer service for our 2.8 million I-PASS customers," said John Mitola, chairman, board, Illinois Tollway. "Unisys expertise in the business of government and IT outsourcing have been instrumental in furthering both the Tollway's mission and our governor's initiatives to provide an infrastructure that serves I-PASS users with increasing efficiency."

Alfred G. Binford, vice president and managing partner, North America, Unisys Global Outsourcing and Infrastructure Services, said, "Unisys is proud to be recognised for helping further the Illinois Tollway's mission to make highway travel more convenient for the state's motorists while increasing operational and cost efficiencies that benefit Illinois taxpayers."

The systems support an Oracle database that houses account information of motorists collected through transponders as well as by transactions completed through the system's Web-based interface or interactive voice response (IVR) telephone system.

The integrated system offers numerous benefits to participating and non-participating motorists alike, the company said. A recent enhancement allows cash payers who do not have coins or accidentally drive through an I-PASS-Only lane to pay their missed tolls online and avoid fines. The portal also provides commuters with detailed information, such as construction plans and road delays.

Source: Computerweekly.com

IT outsourcing is a way for companies to pass the day-to-day running of their IT business processes to third-parties.

Although not uniquely a technology concept, outsourcing IT has become a key consideration for all IT directors.

Most business processes rely heavily on technology, thus IT outsourcing became a popular option in the 1990s. Companies identified the capital, time and space-savings associated with reductions in staff, training, equipment and work environments as advantages of outsourcing IT.

An outsourcer has highly trained engineers and consultants with expertise in particular technologies and business processes. Businesses harnessing outsourcing negate the need to invest heavily in the recruitment of qualified staff as well as the training of existing workers. IT outsourcing also addresses the problem of skills shortages which regularly slows the delivery of IT projects.

The avoidance of expensive recruitment activities, and all the costs associated with permanent staff, meant IT outsourcing was seen as a cost cutting measure.

However, businesses are now viewing outsourced IT as an opportunity to create new business through improved performance such as better customer relationships.

IT outsourcing comes in many forms. A bank may outsource its call centre operations to an offshore location such as China or India. The same bank could decide to hand over the management of its entire IT infrastructure or even its application development to a partner. A council could put management of its contact centre in the hands of a third-party specialist, while an SME could decide to outsource its IT security function to keep up with rapidly changing threats.

Major outsourcers include; EDS, Accenture, Unisys, BT, CSC, Capita, PricewaterhouseCoopers, Fujitsu, LogicaCMG and CapGemini.

Source: Computerworld.com

A majority of senior operating executives will continue to outsource IT, HR and R&D functions, survey finds

A recent survey by PricewaterhouseCoopers says a majority of senior operating executives will continue to outsource IT, HR and R&D functions, demonstrating that outsourcing remains a top strategy among companies looking to lower costs and optimize services.

Some 87 percent of the nearly 300 senior operating executives polled worldwide reported that outsourcing delivered on the desired business results. More then 90 percent of those executives said they would outsource again, even if they weren't fully satisfied with previous endeavors, PricewaterhouseCoopers reports. The main drivers for outsourcing include lowering costs, gaining access to talent and increasing business-model flexibility.

More than 40 percent of respondents said they would outsource to improve customer relationships. Another 37 percent said the strategy could help them develop new products or services, and about one-third said outsourcing would be important in the case of geographic expansion.

Although IT remained the most outsourced activity, with about 60 percent sending those duties outside their companies, 70 percent of respondents outsource one or more of what could be considered strategic functions. More than half outsource production or delivery of core products and services, about one-third outsource sales and marketing, and another 32 percent outsource R&D activities.

"It is clear that companies are moving from outer ring of non-core non essential activities toward the second ring of nonessential business activities," the survey concludes.

"Outsourcing is still very much the game, but the rules have changed," said Pat McArdle, global outsourcing partner at the firm, in a press release. "The lightning pace of growth in outsourcing is matched only by the transformation of the market as traditional models are gradually being replaced by multisourcing, joint ventures, and 'best-of-breed' arrangements."