Source: Reuters

India's revenue from back-office outsourcing is expected to surge nearly five-fold to $50 billion by 2012 despite a possible recession in the key United States market, an industry report said on Tuesday.

But a skills shortage, creaky infrastructure in smaller towns and cities and rapidly rising wages are major challenges.

The sector has logged 35 percent annual growth over the last five years to hit annual revenues of about $11 billion, with the bulk coming from exports, said the study by leading IT lobby group Nasscom and consulting firm Everest.

"We have seen that when there are recessions and when there are costs pressures that come in, the companies still want to cut costs," Som Mittal, president of the National Association of Software and Service Companies, or Nasscom, told reporters. India's back-office firms like Infosys BPO, a unit of No. 2 software firm Infosys Technologies (INFY.BO: Quote, Profile, Research), have thrived by providing Western firms with services such as processing insurance claims, managing payrolls and customer support. The boom in business process outsourcing, or BPO, is built on a large, skilled and cheap English-speaking workforce.

The sector employs 700,000 people and is expected to provide direct employment to about 2 million by 2012.

"In spite of all the wage inflation and so on, (India) has still a fairly large cost advantage. I think we are still ahead of the curve, while competition is emerging," Mittal said.

The study said while the United States would continue to be the largest BPO opportunity for India up to 2012, there were significant untapped opportunities in Britain, Europe and Asia Pacific. The domestic market also offers huge potential for BPO companies as banks, retail, insurance, telecom and government departments look to cut costs and boost efficiency, it said.

Source: Processingtalk

According to Stockport based AV Technology, Predictive Maintenance (PM) is far more than just a programme for identifying problems with equipment and machinery before they fail.

AV Technology maintains that PM should be seen as an integral part of plant management and, moreover, part of an all encompassing asset management function. It should certainly not be seen as a necessary or costly evil. A well implemented PM programme engenders a Measure-Assess-Improve regime within a plant, establishing the basis for improving reliability, reducing downtime, improving productivity, meeting relevant legislation and ultimately reducing costs.

The PM techniques employed are well established and include Lubrication Management; vibration analysis and Fault Finding; Thermography; Remote Visual Inspection; Ultrasonic Leak Detection; and Acoustic Emission Monitoring.

However in isolation these techniques may have limited effectiveness and therefore a full plant wide PM programme should be adopted, utilising the technologies as appropriate to provide comprehensive data from plant and machinery.

Exploiting the maximum potential of individual PM techniques is an important factor.

For example, a lubrication management programme can provide a wealth of useful information and can cover aspects including lubrication selection, change out periods and debris analysis, lubricant cleaning as well as lubricant procurement and recycling.

All industries can benefit from predictive maintenance, but in particular the fast paced food and beverage sector is rapidly realising the benefits of structured out-sourced PM programmes.

Outsourcing the predictive maintenance function via an experienced industrial consultancy such as AV Technology (AVT) has a number of clear advantages.

Firstly companies do not have to invest in additional personnel or expensive equipment.

That however is just the start.

Outsourcing gives companies access to a broad range of experience and capabilities and the PM programme should be seen as a working partnership.

Typically the consultancy sets up the PM programme in collaboration with the customer and then day to day measurements can be carried out by either using suitably trained internal capacity or by the outsourcing company.

AVT have extensive hands-on experience in all disciplines relating to outsourced PM.

They recognise that gathering inspection data has traditionally been very laborious and time consuming, with engineers transferring information from trusty clipboards to spread sheets or log books.

However the data needs to be used to its maximum potential and made available to all parties concerned.

To address these important issues they have adopted an integrated Asset Maintenance System known as MAINtelligence.

This powerful plant tool fully integrates asset and maintenance management, condition based maintenance, equipment and basic care inspections and intelligent diagnostic agents using one system and one database.

Source: Transworldnews

The tsunami of sourcing has only just begun, says outsourcing industry visionary Ben Trowbridge, CEO of outsourcing advisory firm Alsbridge. In his 2008 predictions released this week, Trowbridge believes landslide economic drivers will continue the global redistribution of labor to its natural location and push offshoring and outsourcing to new heights. The speed of this move will be driven by continued high energy costs, the restriction of capital access driven by the sub prime meltdown and low unemployment in technology and accounting.

These forces will drive providers and buyers to evaluate more clearly their options based on the emerging economic facts of 2008. Trowbridge says outsourcing providers and buyers will make strategic decisions in 2008 based on how their business is affected by the sub prime market, oil price increases, offshore wage inflation and the falling value of the U.S. dollar.

“Even though the last few years have seen a strong economy, outsourcing has continued to be a major strategic driver for the top 1000 U.S. companies,” says Trowbridge. “The slowing and changing direction of the economy has caused the boardroom to evaluate yet again steps to control costs and an even greater interest in outsourcing to offshore locations.

Trowbridge predicts the following outsourcing trends for 2008:

Currency issues will plague the entire outsourcing community, lengthening sales cycles and increasing legal debate about price increases. This will drive the need for expanded benchmarking to define the real issues. The weakening dollar will drive companies to evaluate regions that are closer or that have fewer fluctuations in their currency against the dollar. The uniformed that rely on Google facts will worry about labor cost inflation not understanding the true issue.

Access to capital driven by the distress in the sub prime mortgage industry will continue to ripple through business, driving a need to reduce SG&A and improve financial performance.

Outsourcing will increase dramatically in the mid-market which will cause the outsourcing providers to re-think their cost of sale.

Source: Indiainfoline

Diligenta has been working with SLF UK as a preferred supplier since October, following a competitive tender which came towards the natural end of SLF UK’s existing outsourcing agreement.

Diligenta, a subsidiary of Tata Consultancy Services (TCS), has won a contract to deliver Business Process Outsourcing (BPO) services to support Sun Life Financial of Canada's UK operations (SLF UK). The services, expected to commence in May are estimated to be worth £100mn (over US$200mn) over the life of the contract.

Diligenta has been working with SLF UK as a preferred supplier since October, following a competitive tender which came towards the natural end of SLF UK’s existing outsourcing agreement. Diligenta will continue to run the operation in Basinystoke where SLF UK's Head Office is based.

“Diligenta and TCS will ensure that Sun Life Financial of Canada continues to receive market leading standards of customer service," said Phiroz Vandrevala, Chairman of Diligenta. "This contract win adds significantly to Diligenta’s reputation as a leading player in the UK Life and Pensions outsourcing market and is proof that the TCS promise of certainty can be translated In the UK life and Pensions market."

"The deal with SLE UK underlines the strength of its’ Diligenta strategy, launched in 2006. Our vision was to establish a centre of excellence in the UK to capitailse on the growing SPO trend and to cultivate new opportunities in this sector," said A.S. Lakshminarayanan, Vice-President and Country Head, TCS UK & Ireland. "With the Sun Life Financial deal, Diligenta is moving into the second phase of its history, expanding Its client base and UK market share and we are confident It heralds further growth for Diligenta."

"We have successfully outsourced Our customer services operations for over five years. In preparation for the natural end of our existing outsourcing agreement, we undertook a detailed and thorough review of the BPO market in the UK and selected Diligenta for its cost guarantees, risk transfer capability and its commitment to match or exceed our service requirements," said Janet Fuller, CEO of SLF UK.

We have confidence that Diligenta will work closely with us and our current provider to transition the services during the second quarter of 2008 — a process which we expect to be transparent to our customers. We are p!eased that IDiligenta will continue to run the services from Basingstoke as we are very happy with the quality of people and services provided from the current site," Fuller added.

Dillgenta is a UK-based, FSA regulated subsidiary of TCS. Since 2006, Diligenta has provided BPO services for the Pearl Group under a 12-year, £486 million contract to consolidate 11 financial and administrative systems onto a single platform.

Source: Consultant-news.com

IT Major emerges as top global outsourcer delivering "Quality" and "Flexibility" in IT outsourcing contracts in a study by leading independent sourcing advisory firm, Equaterra incorporating Morgan Chambers.

Wipro Technologies has topped key areas in the UK Outsourcing Service Provider Performance Study 2007 undertaken by Equaterra, an independent sourcing advisory firm. According to the study, quality and flexibility emerged as the two most important attributes influencing customer satisfaction in IT outsourcing, and the study shows the Wipro Technologies top the rankings in both these parameters, ahead of other global and Indian counterparts.

Wipro has also shown the highest level of quality improvement and greater flexibility in contracts as compared to 2006. Wipro also ranks second in overall satisfaction levels, ahead of industry peers.

The survey also mentions that more than 90% of Wipro's customers would recommend Wipro as a partner for outsourcing, based on their current experience with the IT major.

The study, undertaken annually, evaluates £34 billion worth of UK IT sourcing contracts. This is equivalent to three -- quarters of the total current UK IT sourcing market and covers more than 110 unique client-provider relationships and twenty service providers.

The Outsourcing Service Provider Performance Study 2007, researched 320 of the top IT spending organizations in the UK and explored their perceptions of their outsourcing providers, their satisfaction with performance and their plans for future contracts. Study participants were senior level representatives (CFO, CIO or their direct report) within client companies, who outsource all or part of their IT functions and processes.

Though the study does indicate that the proportion of budget spent on outsourcing remain consistent with 2006, Equaterra predicts the market has major growth potential with 54% of organizations indicating that they are looking to outsource more in future and 13% of organizations indicating they will start outsourcing.

This report further supports the 2006-07 survey findings by Equaterra, which indicated that Indian Service Providers are steadily increasing their profile and popularity amongst UK IT decision makers. The latest research shows that they have made even greater strides in the past twelve months, establishing themselves as very serious competitors for the major US and European Outsourcing providers, with four out of the top five service providers ranked in client satisfaction, being Indian-based companies.

Source: Idm.net

IT consultancy firm, LogicaCMG has announced plans to create a new outsourcing division in the aftermath of an executive shakeup.

LogicaCMG has been facing some tougher times of late, with falling profits and a change of its executive lineup to compensate. Despite this, the company has announced the opening of a brand new outsourcing division, which will be lead by the outgoing chief operating officer, Jim Mckenna.

“This is the first result of LogicaCMG taking a long, hard look at its business with the arrival of its new CEO, Andy Green. Around a third of LogicaCMG's revenues come from outsourcing and under the previous regime the vendor had a target of '30-40 percent' of revenues from outsourcing. While it achieved its target, there were some discrepancies between the achievements in different countries, ranging from the low teens in the Netherlands to 40% of revenue in the UK.” said Ian Brown, senior analyst, Ovum.

Brown believes that LogicaCMG wants to boost outsourcing revenues across Europe to match the level of those in the UK. This could be brought about by increased scaling, such as hauling more business out of Germany. There’s also the fact that several of the company’s recent acquisitions are yet to be fully integrated, such as Unilog and WM-Data, which will now doubt provide a substantial boost once they’re completely brought into the fold.

“There are numerous synergies that can come from sharing expertise, skills and go-to-market capabilities across geographies. LogicaCMG already manages its vertical-industry lines of business 'internationally' so that it can identify similar opportunities across geographies and ensure that knowledge and skills are shared rather than duplicated. It seems to us to make a lot of sense to run the outsourcing business in a similar fashion.” said Brown.

According to Ovum, LogicaCMG’s competitors are thinking along the same lines, with major threats such as Capgemini already co-ordinating their outsourcing business on a global basis.

“To some extent, LogicaCMG's move could be seen as falling in line with industry norms. Lastly, an international Outsourcing Services division should enable LogicaCMG to go after more pan-European and international outsourcing deals. All in all, then, we see this as a positive move.” said Brown.

Source: Hindustantimes.com

Infosys BPO, a subsidiary of IT major Infosys, on Wednesday said the company expects to bag around four outsourcing deals worth 50-150 million dollar each, across various sectors in the next 3-6 months.

The deals would range from various sectors such as telecom, banking and others, Infosys BPO Chief Executive Officer and MD Amitabh Chaudhry told reporters declining to divulge further details.

"We have recently signed small deals worth 5-7 million dollar each and are hopeful of signing 3-4 more deals worth 50-150 dollar in the next 3-6 months," he said.

The firm is also eyeing a revenue of 250 million dollar for the fiscal year 2007-08, he said. It has already recorded revenues of about 176 million dollar in first nine months of FY08.

He said, the company is securing 15-25 per cent on renewed contracts. The company started working on integrating the IT-BPO solutions for the last 12-18 months, he said.

Infosys BPO is also betting big on the potential of the knowledge services industry in India, which is fast moving up in the value chain. Besides, it has also started legal process outsourcing.

The effect of the sub-prime crisis in the market will be "positive" for Infosys BPO in the long term, Chaudhry said adding, however, for the short term there could be a possibility of a partial delay in outsourcing.

Source: Knowledgebusiness.com

Outsourcing companies, including WNS, Genpact, Cognizant Technology Solutions, and Infosys Technologies, are rapidly moving up the value chain from business process outsourcing (BPO) to knowledge processing outsourcing (KPO).

Most segments in the KPO market space, such as legal, publishing, media services, analytics and engineering services, are growing at anywhere between 30 to 40 percent per annum. Within a few years of takeoff, the KPO industry is rapidly moving towards more innovative business models and showing signs of growing maturity.

The Indian KPO sector has been largely ignored by the investor community due to the lower scale of operations when compared to BPO companies. However, concerns about a less than rewarding exit from the KPO sector have been put to rest over the last few months due to the attractive valuations of firms such as Inductis, Marketics and marketRx.

Recent instances of funding show that the KPO sector is gaining more and more prominence:

- Sequoia Capital invested US $25 million in pharmaceutical and biotech research company GVK Biosciences in November 2007.

- Kubera Cross Border Fund invested US $17 million in Ocimum Biosolutions, a genomics outsourcing company.

- Helion Venture Partners invested US $5.1 million in Hurix Systems, an e-learning solutions, knowledge management, and publishing services company in October 2007.

- Helion also has invested in Mindworks Global, a KPO, which provides media outsourcing and custom publishing services.

- In July 2007, legal KPO Pangea3 completed a US $7 million in Series C funding by Sequoia Capital India. The company plans to utilize the funds towards recruitments, expanding its service offerings and increasing sales and marketing.

Media hype and high returns for industry pioneers have led to an explosion of service providers, and those ready to provide funds to them. Infosys BPO has recently announced its entry in the legal services outsourcing space.

Apart from lending more credibility to the legal services industry, this is likely to provide additional strength to the growth plans of several large, mid-size and small companies. With the acquisition of marketRx, Cognizant looks to strengthen its KPO practice, and increase focus on the life sciences market.

The industry has its set of challenges: rising wages, training and depreciating dollar revenues in India. However, the most important challenge at this point seems to lie in addressing a shortage of trained professionals. In fact, advisory firm TPI suggests that there is reason to be cautious about any growth rate predictions on account of shortage of trained Indian professionals and IP concerns.

Despite the challenges, the race to acquire capabilities and clients will trigger several inorganic growth actions by ambitious vendors. Over time, India will see more of the large multi-service BPOs acquiring capacity and capability, and also international firms looking for India capacity.

Source: Continuityforum.org

Before an organisation decides to follow the outsourcing trend, attention must be paid to the many risks involved in this way of doing business, says Anthony Plewes.

No matter what the reason is for outsourcing key IT processes, there's always an element of risk. Will the supplier deliver? Was the contract appropriately scoped? Are the business objectives truly being fulfilled? These issues shouldn't be left to chance.

Anyone considering the outsourcing route must take deliberate, methodical steps to mitigate the potentially high risks involved.

Here are the areas you should be sure are covered thoroughly.

Due diligence

The first step in risk mitigation is to carry out due diligence on the outsourcing service provider. Amongst other information, this will help identify whether the outsourcer has the capacity to carry out the work and whether it will be sufficiently financially stable to service the contract for its entire length.

The continued importance of offshore outsourcing means the outsourcers' business continuity planning also needs to be robust to cope with any shaky infrastructure and outages.

Internal audit

Before assessing the outsourcer's capabilities, you need to work out exactly what is being outsourced. If you cannot accurately identify the current state, it's not possible for you and the outsourcer to agree the scope of the contract, costs and service levels involved. Scoping the current state will help prevent the risk of poor performance, future disagreements and the cost and disruption of renegotiating the contract.

"There is no substitute for doing an internal audit on your organisation," says Kit Burden, partner and outsourcing specialist at law firm DLA Piper. "It is vital to accurately define the outsourcing service scope, because the 'your mess for less' approach is a recipe for disaster. The customer needs to spend enough time with its internal people to find out exactly what it is they do."

A business impact analysis will also identify exactly what processes are important and will help companies set relevant service level agreements (SLA).

Many disputes between customer and outsourcer are sparked by a disconnect between what the client is expecting and what the outsourcer thinks it should be delivering. For example, a 2007 report from outsourcing analysts TPI found unrealistic expectations on behalf of the customer were a problem in more than half of all outsourcing contracts, forcing many companies to restructure their agreements within as little as 18 months.

It is also essential to build flexibility into the contract because it's inevitable that your requirements will change over the lifetime of the relationship. One way of mitigating the risk of change is to have shorter contract lengths but even then it is essential to have a clear governance structure that sets out a procedure to cope with any changes.

The most common change is in volumes of transactions and this can be easily accommodated by having some form of utility pricing that allows them to be scaled up or down.

Ongoing management

Once the contract has been signed, the focus must be shifted to managing the relationship with the supplier. Just because a company is outsourcing a function doesn't mean they can no longer pay attention to the area.

"Outsourcing can be very effective in transferring risk, especially in pricing and operational risk, but supplier management is absolutely crucial to make it a success and some companies don't put enough emphasis on it," warns Susan MacLean, a member of law firm Morrison & Foerster's Global Sourcing group.

Source: Thetimes.co.za

More than 1.3 billion rand was invested in offshore collective investments in the December quarter ahead of the 1 billion rand inflow in the previous quarter, the Association of Collective Investments (ACI) said.

It said that this reflected a heightened interest from both institutional and retail investors.

The chief executive of ACI, Di Turpin, said that retail inflows were 803 million rand while institutions invested 500 million rand offshore.

"There has been more interest in investing offshore which is in line with the local industry figures where foreign rand denominated funds have been attracting more flows than usual. In the past quarter these foreign funds inflows were 14 percent of the total domestic figure," she said.

Turpin added that the bulk of the funds went into fixed interest investments, with 1.3 billion rand from the institutions and 394 million rand from retail investors.

She said that while retail investors channelled 246 million rand to equity funds there were outflows of some 926 million rand by institutions on profit taking.

"In the previous quarter both institutions and retail each invested just over 400 million rand for a 889 million rand total inflow into equity funds," she said, adding that the inflows into asset allocation funds were 293 million rand - as against the previous quarter’s 107 million rand outflow.

ACI figures show that nearly a net 1.5 billion rand was invested offshore last year, which was well down on 2006’s 6.9 billion rand.

Retail investors have 46.4 billion rand offshore while the institutions’ total is 61.5 billion. There were 365 foreign currency denominated funds at the end of December, compared to 343 in the previous quarter.

Source: Networkworld.com

Outsourcing IT jobs to offshore locations doesn't always deliver the cost-savings and management benefits it promises, especially for smaller companies.

About 94% of CIOs polled by the IT staffing and consulting company said they do not outsource jobs to locations outside of the United States, while 5% said they do. Just 7% of the total surveyed reported that they plan to increase the level of offshoring they do in the next two years. Eighty-six percent of all those polled said they expect no change in the amount of offshoring they do and about 4% said they can foresee decreasing the amount of work they outsource to countries such as India, China or Mexico.

The IT staffing and consulting company polled some 1,400 CIOs, many of which worked at companies with less than 500 employees. Katherine Spencer Lee, executive director of Robert Half Technology, explained in a statement that the smaller the firm, the less likely it would reap the promised benefits of outsourcing.

"Smaller companies, in particular may lack the resources to commit to an effective long-term offshoring strategy," Lee said in a statement.

For instance, 11% of those companies polled that had more than 1,000 employees and another 11% of those with between 500 and 999 employees currently outsource jobs to other countries -- compared with the total 5% that said they offshore. And of those currently offshoring, 43% said they expect to increase services in the next two years, while 13% expect to cut back on offshoring.

Yet 8% of companies with 250 to 499 employees use offshoring and 3% of companies with between 100 and 249 employees said they send outsourcing jobs outside of the United States. Reasons cited for not offshoring include challenges managing offshore outsourcers and unrealized cost savings.

Source: Mbtmag.com

The electronics manufacturing services (EMS) industry has begun to equip itself to move beyond being a mere outsourced entity of the semiconductor industry. The semiconductor original equipment manufacturers (OEMs) have consistently focused on cost savings, reduced time-to-market, reduced time-to-volume, quality and flexibility in their process of advanced technology evolution. In this manner, EMS providers play a critical role of supporting the semiconductor OEMs in their product development process to perform effectively in all of these aspects through its services and strategic business solutions. Given the changing market scenarios, especially in the consumer electronics sector, original equipment manufacturers (OEMs) increasingly depend on electronics manufacturing service (EMS) providers to deliver high-quality products to their customers at the right time and volume.

While EMS providers have created strong footprints in the consumer electronics, communication and automotive industries, they will gradually penetrate into markets such as medical, industrial, retail stores as well as aerospace and defense by proving their capabilities and creating differentiation. Over the years, EMS providers have specialized in enabling the establishment of manufacturing processes in a most efficient way by supporting technology developers and OEMs to reap the fruits of all their development efforts effectively.

This briefing will benefit electronic contract manufacturers, semiconductor OEMs, original design manufacturers (ODMs), integrated device manufacturers (IDMs) and end-users/application developers, who wish to track the trends in the industry and extend their capabilities.

Highlights of the briefing will include emerging trends in the EMS industry. It highlights the trends in the EMS industry from capabilities to market segment, and also from a geographical perspective, examining the factors that influence the growth and market potential of the EMS industry.

"EMS providers greatly depend on OEMs for outsourcing and the increasing competition in the EMS market is driving the EMS providers to provide distinctive value-added services and portray global competence in terms of being able to adapt to dynamic market characteristics," notesFrost & SullivanAnalyst Kasthuri Jagadeesan.

"EMS providers should also focus on understanding the needs of the customers and the business models of their customers or OEMs in order to achieve profit margins, market share and successful end-products, and when they move towards higher levels of integration, they should offer flexibility in their solutions," addsFrost & Sullivananalyst Krishnakumar Srinivasan.

Source: Searchcio.techtarget.com

New data from outsourcing advisory firm TPI offers more evidence that the economic winds have shifted. The Woodlands, Texas-based firm, which helps companies structure large outsourcing deals, reported Wednesday that the total value of outsourcing contracts declined 5% in 2007 as compared with 2006 -- the lowest level in five years.

In addition, for the first year on record, Europe, the Middle East and Africa (EMEA) outpaced the Americas in outsourcing activity, both in total contract value and in the number of contracts awarded, TPI said in a conference call with reporters and investors.

Indeed, for the first time, the EMEA countries account for more than half the global outsourcing contract value tracked by TPI.

The firm's latest numbers are based on contracts of $25 million or more, as opposed to its previous cutoff of $50 million. The move reflects the growing number of contracts falling in the $25 million to $49 million range.

The numbers

Despite a strong fourth quarter, the total value of outsourcing contracts in 2007 dropped 5% year over year, to $80.4 billion in 2007 from $84.7 billion in 2006.

TPI President Scott Gildner said that for the "first time in a long time," the absolute number of contracts awarded also declined year over year, from 556 contracts in 2006 to 487 contracts in 2007 -- a 12.4% drop.

The firm, however, cautioned market watchers not to read too much into the lower numbers.

On the basis of annualized revenue, 2007 "fared all right," said Peter Allen, chief marketing officer at TPI. Annualized revenue, as measured by TPI, represents the dollars that go into the pockets of service providers from all active contracts, factoring in prior awards and any known terminations of contracts. At the end of 2007, TPI identified about 2,700 active contracts in the marketplace delivering almost $79 billion in revenue to providers. That marked a growth rate of about 7%, "well above" the five-year compound annual growth rate of 5.3%, said Allen, who gave his take on the numbers in his blog.

Source: Echannelline.com

Despite fear of a recession in the U.S., jitters on virtually all major stock exchanges worldwide and widespread cut-backs in corporate spending, EquaTerra's 4Q07 Pulse surveys revealed that outsourcing demand is rebounding, with continued strong growth in EMEA and a substantial increase in North America. In fact, 70 percent of EquaTerra advisors cited increased demand levels for Information Technology (IT) and business process outsourcing in 4Q07, with demand up 19 percent over 3Q07, up 24 percent over 4Q06, and at the highest level recorded since 2Q05. Further, 59 percent of service providers cited new deal pipeline growth in 4Q07, and 57 percent expect demand to increase in 1Q08. EquaTerra attributes the increase in outsourcing demand levels to a variety of factors including: Weak economic indicators: Although expense reduction isn't the only driver for outsourcing, many organizations are reemphasizing outsourcing to increase their bottom line; New functions outsourced: Buyers are focusing on new and growing areas like legal and knowledge process outsourcing, document and electronic records management, industry specific offerings and knowledge intensive services; Service provider readiness: EquaTerra advisors are seeing some improvements in overall service provider capacity, in part driven by improved pricing and contracting terms; Smaller, more numerous deals: The outsourcing market continues to evolve with more but smaller deals spread across a greater number of service providers and delivered on a more global basis.

Said Stan Lepeak, EquaTerra's Managing Director of Research, "While the current state of the economy is forcing Western commercial enterprises to cut budgets for capital investments and many types of discretionary business and IT services, the projection for outsourcing investments remains positive and is improving. This highlights the importance of outsourcing as a tool for cost reduction and avoidance, as well as the ongoing broadening of the outsourcing footprint beyond traditional BPO and ITO areas. Although the outsourcing market will remain choppy over the next two to three quarters at the individual buyer and service provider level, demand growth will increase at the macro level. It is important to note, however, that the outsourcing demand improvements we saw in 4Q07 will for the most part not result in new deal closings until late 2008 and into 2009."

Based on the 4Q07 Pulse Surveys, several EquaTerra research studies and client interaction, following are some anticipated 2008 trends: Outsourcing will continue to be recession-proof; Public sector demand will continue to grow, and shared services and internal transformation in this sector will get stronger; Recent turmoil in credit markets will selectively slow outsourcing in the financial services sector in the short term but drive more ITO in the long term.

Source: Media.www.thepolypost.com

As some universities have begun to use outsource their e-mail providers to hosts such as Goggle, Yahoo and MSN the CSU's may follow their lead.

Cal Poly has kept tabs on the feasibilities of such an opportunity but has held back due to potential issues that can result from using outsourcing e-mails, according to Debra Brum, vice president of Instructional & Information Technology.

"Vendors would sell to advertisers and it's not appropriate to put students at risk," said Brum. "We also have two concerns: whether the product can be accessible to students with disabilities and that teachers or staff can't create groups for courses, majors and/or honor programs."

There are certain concerns on whether it is safe to outsource due to privacy reasons.

Some outsourced e-mails make money by scanning private e-mail for keywords, and making their advertising to users, according to the Brown Daily Herald. Another issue is the possibility of an outside server going out of business and causing users to lose all their stored e-mails.

"I'd rather not outsource for security reasons," said Kristina Nguyen, a second-year computer science student. "I'm pretty content using the school's e-mail for work and archives. It's more personal in my opinion."

However, there are price incentives in switching providers. According to U.S. News and World Report, both Northwestern and the University of Pennsylvania saved about $1 million in technology support costs by outsourcing their e-mail services in the first year alone.

Cal Poly did make e-mail provider changes last year when it switched from Web mail to Microsoft Exchange. In 2006, the Education Center for Applied Research conducted a survey asking the satisfaction and use of Web mail, which did not prove to be meeting expectations.

Only 21 percent of freshman and 35 percent of seniors preferred using campus e-mail. After the switch to Exchange, student use improved: 66 percent of freshmen and 77 percent of seniors prefer using campus e-mail instead of their personal e-mail for university business.

Source: Computerworld.com

Emerging markets boost IBM, but will they recession-proof other U.S. firms?

IBM's third quarter earning statement wasn't just about numbers. It was also a defense of globalization, with the company describing the opportunities in emerging markets as equivalent to the "California Gold Rush."

And Mark Loughridge, IBM's chief financial officer, made sure that no one missed his point in the company's fourth quarter earnings call Thusday. He used the term "gold rush" three different times, adding in "virtual gold rush" and the "gold rush of the 21st Century" by countires anxious to build out their infrastructures with modern technologies. This is spending from the same countries that have also been getting U.S. tech jobs thanks to offshore outsourcing.

IBM backed its assertions with numbers, showing that 65% of its business is now overseas with emerging markets growing by double digits. In the 2006 calendar year, IBM's non-U.S. operations accounted for 60% of its revenue; IBM signed $1.4 billion in services deals last quarter in India alone. The company's fourth-quarter revenue was $28.9 billion, a 10% increase from the year ago quarter.

But will these emerging markets continue to grow, and will they avoid being dragged down by the U.S. in a downturn here? Based on its forecasts, IBM is confident of their success, and it will exceed analysts' expectation into 2010. That confidence is due to a broad range of countries such as Malaysia, Poland, South Africa, Ecuador "and dozens more around the world, with insatiable demands created by a growing middle class for public and private infrastructures to support explosive economic growth," said Loughridge on the earnings call.

In India last week, Sebastian Teunissen, adjunct professor and executive director of the Clausen Center for International Business and Policy Haas School of Business University of California, Berkeley, saw for himself the economic activity and described it in astonishing terms. Teunissen took a group of students to Bangalore and Mumbai for two weeks to expose them to that country. "I've been doing this for a number of years and I'm still blown away," he said of his annual student trips.

Teunissen visited a number of Indian firms and saw U.S.-branded tech products, PCs in particular. "There are an awful lot of people there who are really, really hungry for technology," he said. IDC numbers seem to back that. One market research firm recently reported that in last year's third quarter, the India PC market grew 25% in that quarter, with 1.8 million shipments total. Worldwide, nearly 270 million PCs were shipped for the entire year of 2007.

Source: Theherald.co.uk

Scottish Widows chief executive Archie Kane has pledged to retain customer service roles in the UK, but signalled that the company could still send more jobs abroad as he oversees continued reform at the Lloyds TSB-owned insurer.

Kane has presided over a turnaround in the fortunes of Widows but is adamant that there will be further improvements at the Edinburgh-based business.

When he took over in October 2003, Widows was reeling from the fall-out from the mis-selling of precipice bonds and, like virtually every other life company, had to devise an alternative product range when customers turned their backs on with-profits after the post-millennium stock market crash.

A measure of Kane's success in streamlining the business is that it has been able to repatriate around £3.6bn of capital to its Lloyds TSB parent company in the last three years.
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This has been aided by a focus on simpler and less capital-intensive products and a move to cut excess costs from the business.

But Kane, 55, who oversaw IT and operations at parent company Lloyds TSB before taking on Widows, continues to style himself as a driver of change. One element of that is an ongoing search for ways to cut costs through outsourcing.

He said: "We look at it from the point of view - does it make commercial sense and does it make operational sense to do these things?"

Among the changes wrought by Kane was the transfer two years ago of some data processing jobs to India. Also, State Street now handles much of the behind-the-scenes work at Scottish Widows Investment Partnership.

Widows employs around 4000 staff in the UK but Kane is adamant that while there could be scope for further outsourcing or offshoring, there will be no repeat of Lloyds TSB's aborted attempt to move some call-centre functions overseas.

"What we will not do is outsource consumer contact," he said. "We own the contact with our customers, we have to stand and communicate face-to-face or via the telephone with our customers.

"But things like medical underwriting or administrative processing that goes on behind the scenes, and if it makes commercial sense to do it, then we will avail ourselves of the opportunity to do so like any sensible firm."

Source: Onrec.com

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