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Tuesday, January 24, 2006

Software Outsourcing Market

Undoubtedly India is one of the major providers in Software Outsourcing. The abundant skilled manpower has made India a target destination for multinationals to BPO, Software Outsourcing and other back end operations in India. India ranks high in areas such as qualifications, capabilities, quality of work, linguistic capabilities and work ethics, and thus is ahead of competitors such as China, Philippines, Ireland, Australia, Canada etc. Indian companies have unique capabilities and systems to set measure and monitor quality targets.

In specific Software Outsourcing and BPO categories, Indian centers have achieved higher productivity levels-for example, the number of transactions per hour for back office processing, than their Western counterparts. Also, India is able to offer a 24x7 services and reduction in turnaround times by leveraging time zone differences. India's unique geographic positioning makes this possible. Many state governments in India are offering incentives and infrastructure to set up Software Outsourcing, BPO and other IT enabled services. About 100,000 engineers graduate from India every year. Many of these engineers are employed with Software Outsourcing companies and call centers for troubleshooting and providing technical support at salaries that are dramatically lower compared to the pay scales in the US. The average monthly salary in India is $400-700 compared to $2,700-2,800 in the US.

Another most promising market is China. Japan has become a major market for China's Software Outsourcing firms, and a substantial part of China's USD 3.6 billion software outsourcing profit came from Japan, according to statistics from the Ministry of Information Industry (MII).

Approximately 10% of China's Software Outsourcing profits last year were generated by firms located in northern China's Liaoning Province, which is geographically near Japan, and most Software Outsourcing firms in the province are targeting the Japan market. In Beijing, Software Outsourcing revenue soared by 67.6% year on year to USD 13.319 million in the first two months of this year, accounting for one third of the country's total. Major business of the city's biggest software outsourcing firm, SinoCom, is also located in Japan.

The comparatively low technical requirements in software exported to Japan, similar culture backgrounds, and more willingness for technical disclosure by Japanese software firms to Chinese counterparts, are believed to be three major reasons behind the booming Software Outsourcing business to Japan, industry insiders were quoted by a southern China newspaper, Nanfang Dushi Bao, as saying. Western software firms are less willing to disclose technical secrets to Chinese counterparts.

Software Outsourcing firms are required to have the capability to develop total solutions and complete application systems if they want to enter the European and North American markets. In addition, they will have to meet the qualifications on management and maintenance capabilities as well as internationalized business and legal practices. But in China, the current market is dominated by numerous small Software Outsourcing firms, and few of them can meet these requirements.

The attractiveness of the Japanese market is also leading to a price competition among Chinese outsourcing firms. In a bid to get Japanese orders away from Dalian-based firms some firms located in western China's Lanzhou and Kunming even cut their prices below their cost to secure deals. (Source: Interfax)

Problems from Outsourcing

The concept of outsourcing is actually ancient. Apart from cost considerations and required expertise, we understand that nobody can execute all tasks by himself. Outsourcing to others what they do more efficiently is a successful management strategy. However, it doesn’t mean that outsourcing is 100% foolproof and doesn’t have any drawbacks. Indeed there are also certain Problems from Outsourcing which exists, but if we see the trade-offs, we find it useful in many sense.

Let’s see some Problems from Outsourcing, how they crept in and what should we do to overcome them. Offering web development services has been problematic to many advertising agencies and design firms. Offering web development services has been problematic to many advertising agencies and design firms. Technical difficulties have certainly created Problems from Outsourcing, but there have also been barriers with regard to design, strategy, and making money on these projects. In some cases these Problems from Outsourcing have been so severe that the agency has made a conscious decision to avoid web work altogether. Due to these Problems from Outsourcing some agencies have not given up and continue to include web design services among their capabilities. In these cases, technical complexities have forced agencies to limit themselves to creating simple static HTML sites, Flash sites, or limited database driven sites. Agencies are tough; they will usually find a way to get things done despite of Problems from Outsourcing. They are used to solving problems, and managing their clients’ needs. Nevertheless, web projects are typically among the most problematic and ultimately least fun projects for most agencies, and they often lose money. As a result of these Problems from Outsourcing the web is usually not an area where agencies aggressively solicit their client's business. At best it is a service they’re willing to provide, but on a limited and cautious basis.

Caution is always called for when discussing a client’s web needs due to these Problems from Outsourcing. It’s certainly better to under promise and over deliver than to promise capabilities that end up being impossible or too costly to build. Such failures can be costly not only financially, but also to the very delicate agency - client relationship itself. I have heard more than one story where a very bad web experience contributed to, if not caused, the loss of an agency’s client.

On top of all these issues and Problems from Outsourcing, many agencies have found it difficult to compete for their existing clients’ web business. They often find themselves pitching against other specialized web development firms who offer design as well as the advanced development services that the agency doesn’t provide. Sometimes the agency can keep the design piece, sometimes not. The irony of competing for the Problems from Outsourcing, risk, potential danger, and limited if not negative financial gain associated with web projects is hardly lost on the agency. What’s the point? And so, most agencies and design firms struggle to keep their hand in the game. They have become passive with regard to their client's web endeavors, or simply avoid it altogether.

Call Centre Outsourcing

Today Call Centre Outsourcing is at the forefront of every organization's agenda. But new FTC regulations in the U.S., and similar legislation pending in other countries, are turning the teleservices outsourcing industry upside down. New IP-based Call Centre Outsourcing technology options enhance the ability of outsourcers to comply with the new regulations. In addition, questions and doubts about whether a company's invaluable customer contacts could be successfully handled by Call Centre Outsourcing Company often halt the process of considering outsourcing in the first place. In some opportunities, persuasion alone cannot overcome the objection. New technology also helps outsourcers to develop business models that address these concerns in new ways. In addition, the software-intensive nature of these platforms is opening up ways of doing business with their suppliers that are especially attractive to the Call Centre Outsourcing industry.

Although Call Centre Outsourcing services are increasing day by day with respect to nature and scope but some of the main Call Centre Outsourcing Services are:

Sales Calls
Web Support
Customer Service & Care
Web-based Customer Service
Customer Retention
New Customer Acquisition
Market Research
Welcome Calls
List Management & Data Washing
Order Processing
Catalog Orders
Consumer Response
Help Desk
Toll-free Response
Direct Mail/TV Response
Print Media Response
Seminar/ Trade Show Registration
Inquiry Handling
Email Management

Thursday, January 19, 2006

BPO versus BTO? Not exactly

There are major differences between Business Process Outsourcing and Business Transformation Outsourcing so the best thing to do is define both and analyze the differences:

BPO - Business Process Outsourcing:
Business process outsourcing means examining the processes that compose the business and its functional units, and then working with focused service providers to both re-engineer and outsource these at the same time. BPO involves the full transfer of responsibility for functions such as transaction processing, policy servicing, claims management, HR, finance, and compliance to the outsourcing company. The outsourcing provider then administers these functions on their own systems to agreed service standards and at a guaranteed cost. Some of the BPO contracts call for performance-based payouts, tying vendor payments to business performance or overall cost savings.

BTO - Business Transformation Outsourcing:
Business transformation outsourcing (BTO) is a natural extension of the more tactical BPO model and involves the transfer of responsibility for all back-office functions, as well as a comprehensive business change management process to an external vendor. The objective is to maximize the long-term benefits of the BPO operations, resulting in a comprehensive business transformation (or overhaul). Transformation outsourcing is not a tactical issue but a forward-looking strategic tool for change. The logic: big gains in performance only come about through business transformation.

Wednesday, January 18, 2006

BPO: The road ahead…

Although countries like Australia, China, Philippines and Ireland have emerged as the close competitors in the ITES/BPO sector, India is still the favored market for BPO companies. As for 2005, NASSCOM predicts that there would be a considerable expansion in the captive operations of global organizations and MNCs in the BPO sector. Another key development would be the rapid growth in offshore outsourcing, especially in the sectors of Automatic data management, Human Resources (HR), Finance and Accounting and Healthcare.

The rating agency ICRA reports that by 2006, India is expected to capture 56 per cent share of offshore business process outsourcing business, with the demand for BPO services increasing at an annual growth rate of 50 per cent during 2004-06. The size of the Indian BPO market is likely to be around $9-12 billion by 2006 and it will employ around 400,000 people.

While figures are a source of comfort for the BPO segment, there is much to be done to smooth the edges. We might have a multitude of issues to take care of, but at the end of it all India will be shining even brighter

Monday, January 16, 2006

Report: 2005 A Record Year for Outsourcing

By Paul McDougall

Workers loathe it, politicians rail against it, and one TV newsman vilifies it almost nightly. Despite it all, corporations are outsourcing work at record levels, according to new data released Wednesday.
The number of outsourcing contracts—through which businesses hand off routine IT and back office work to a third party, often operating from a low-wage foreign country--increased 9% in 2005 to 293. It's the most deals seen in a single year, according to consulting firm Technology Partners International, which published the data.

But while the number of deals is up, businesses are actually spending less on outsourcing. That's because an increasing amount of the work is performed in India or other places where labor is cheap. Indian service providers grabbed 6% of all outsourcing contracts worth more than $50 million in 2005, compared to 2% the previous year, TPI reports.

Meanwhile, big U.S. outsourcers like IBM and EDS are opening their own facilities offshore to stay competitive. Also driving down contract values is the growing tendency among businesses to parcel out work in smaller chunks and for a shorter duration. The total value of contracts let in 2005 dropped 5% to $75 billion, says TPI.

Outsourcing is controversial because critics say American workers pay the price for businesses' desire to use labor in countries with questionable employment practices. Democratic Presidential challenger John Kerry famously called executives who outsource "Benedict Arnold CEOs." CNN anchor Lou Dobbs often devotes entire programs to the issue under the banner "Exporting America." To date, however, most legislative efforts aimed at curtailing offshore outsourcing have failed to pass Congress or state legislatures.
Not all work that's outsourced is bound for foreign shores. The vast majority is still performed domestically, despite popular perceptions. In fact, outsourcers are beefing up their workforces in the U.S. According to the Labor Department, payrolls among IT services firms grew by nearly 32,000 workers in 2005, a 2.7% gain for the year.
Source: http://informationweek.com

BPO Market Trends

Attitudes towards BPO
Companies Outsourcing Finance and Accounting
All Companies
BPO allows companies to focus on core competencies
BPO allows companies greater efficiencies without having to invest in people and technology
BPO helps companies become more profitable, leading to increase in shareholder value
BPO will lead to better service levels than internal service departments can provide

Satisfaction with BPO
Companies Outsourcing Finance and Accounting
All Outsourcers

More than 8 out of 10 executives (84%) outsourcing Finance and Accounting services are satisfied with their initiatives. One third of these executives report that BPO initiatives are in their company's current business plans.

Top 3 Strategic
Benefits of BPO
Companies Outsourcing Finance and Accounting
All Companies
Maintain competitive edge
Focus on company's core business
Improve service quality

What benefits can an inbound call center in India offer?

An inbound call center in India can offer

Skilled, professional, customer support and technical service representatives
Improved market coverage
Faster ramp-up, launch, and roll-out of new campaigns
Experience with programs similar to yours
Rapid response to market conditions
Account management expertise
Enhanced reporting capabilities
Market testing capabilities
Remote call monitoring

ITES exports surge 41 pc: ESC

Exports of computer software and services together with IT-enabled services touched Rs 77,300 crore in 2004-05, reflecting a growth of 33 per cent, according to the provisional figures released by the Electronics and Computer Software Export Promotion Council (ESC), reports The Hindu Business Line.
Mr D.K. Sareen, Executive Director of ESC, said: "The rate of growth in export of computer software and ITES works out to be 33 per cent (37 per cent in dollar terms) for 2004-05, which is quite impressive.

More significant in the growth paradigm is the 41 per cent (45 per cent in dollar terms) leap in exports in the ITES segment."

Indian IT market to touch $65 billion by 2009: IDC

The Indian IT market is estimated to touch $65 billion by 2009, posting a compounded annual growth rate of 21 per cent, according to research firm IDC, says The Hindu Business Line.

The IT exports grew by 32 per cent in 2004 (in rupee terms) touching Rs 75,477 crore in revenue. Services exports clocked Rs 51,047 crore whereas ITES and hardware exports clocked Rs 24,430 crore. The growth came primarily from BPO services, which grew by 42 per cent (in rupee terms) in 2004.

The domestic market grew by 22.9 per cent over 2003 and the growth primarily came from IT services (26 per cent), PCs (25 per cent), datacom products (32 per cent) and multi-function devices (48 per cent).

The high growth categories for the five-year period identified by IDC are hardware comprising notebook PCs, digital cameras, smart handheld devices, wireless LAN equipment and other new kinds of peripheral devices; software comprising security software, business intelligence software, system management software, information and data management software and storage software; and services including enterprise-wide outsourcing, network consulting and integration, software support, and system integration.

BPO India : News


BPO goes to B towns

BPO guys! Callers hate scripted talks

3,500 more BPO jobs coming

Red flags may fly high on BPO firms

Click for more details

Govt urged to amend I-T laws relating to BPOs

BPO work is not low-value: Karnik

BPO rape, murder clouds Bangalore

Indian BPO sector faces dragonfire

Women call centre workers in India satisfied

Murder shocks BPO City: Bangalore!!

Click for more details

Extending India's leadership in the global IT and BPO industries: NASSCOM-Mckinsey Report 2005

NASSCOM-Mckinsey Report 2005
Extending India's leadership in the global IT and BPO industries

study reiterates the fact that IT and BPO industry is the growth driver of the Indian economy
defines winning strategies & imperatives for extending India's leadership in the global IT and BPO industries
highlights that significant untapped potential exists in global IT and BPO market
for BPO players, NASSCOM and McKinsey have jointly developed a benchmarking framework called Process360o to help providers identify key operational gaps
NASSCOM, the premier trade body and voice of the software and services industry in India, and McKinsey & Company, the leading management consulting firm, released the findings of'NASSCOM-McKinsey Report 2005- Extending India's leadership in the global IT and BPO industries.'

Based on the industry's experience over the last three years and the changing nature of customer needs, the report underlines the fact that a new approach needs to be followed by Indian IT companies in the coming years, to extend their global leadership position. NASSCOM-McKinsey Report 2005, like the previous reports (NASSCOM-McKinsey Report 2002 and NASSCOM-McKinsey Report 1999), will help set the agenda for the IT and BPO industry.

The NASSCOM-McKinsey Report 2005 assesses the evolving landscape, lays out the strategic and competitive factors that will influence India's global standing in the IT and BPO industries, and describes the growth opportunities that companies should explore.

Elaborating on the report, Mr. S. Ramadorai, CEO, TCS and Chairman, NASSCOM said, "Today the Indian IT and BPO industry is estimated to be USD 22 billion. The industry is in a strong position to leverage the global software opportunity and establish India as the premier IT destination in the world. Extensive innovation by various industry stakeholders could accelerate the growth in export revenues and increase India's share in the global market substantially in the near future. In order to achieve this, we will require breakthrough collaboration by industry players, central and state governments and NASSCOM."

"Sustaining industry leadership will also require Indian players to continue driving the frontiers of operational excellence. For BPO players, NASSCOM and McKinsey have jointly developed a benchmarking framework called Process360o to help providers identify key operational gaps. The Process360 framework enables tangible improvements in cost, quality and speed/flexibility by analysing 14 different operational areas," he added.

Said Noshir Kaka, Partner, McKinsey & Company, "Our research suggests that the total addressable market for global offshoring is approximately $300 billion, of which $110 billion will be offshored by 2010. India has the potential to capture more than 50 per cent of this opportunity and generate export revenues of approximately $60 billion by growing at 25 per cent year-on-year till 2010. Inherent advantages like abundant talent supply, strong cost- and-leadership oriented companies, regulatory support, scaleable high-quality infrastructure, and a growing domestic market have been instrumental in driving the growth of this sector."

This could contribute 1 per cent per year to GDP growth, directly employ approximately 2.3 million people, provide indirect employment to another 6.5 million workers and pay for a massive infrastructure build-out by 2010. The industry could alone account for over 44 percent of export growth over the next five years.

Added Ramalinga Raju, Vice-Chairman, NASSCOM, and Chairman, Satyam Computer Services, "India has the potential to further accelerate export growth and achieve an additional $15-20 billion in export revenues. However, achieving this growth will require innovation across multiple dimensions like, business model innovation and knowledge innovation. It is also important for companies to focus on innovation since traditional growth engines such as call-centers and application development and management (ADM) are likely to face increasing price and competitive pressures."

"But, sustaining India's leadership is going to be no easy task," stated Jayant Sinha Partner, McKinsey & Company. He reasoned that three key issues could prove to be stumbling blocks if not systematically addressed. "First, the skills and quality of the workforce need to be improved, since only 25 per cent of technical graduates and 10-15 per cent of general college graduates are suitable for employment in the offshore IT and BPO industries respectively. Second, as margins come under pressure, companies must be able to continuously improve operational excellence, in addition to innovating and developing new service lines. And lastly, urban infrastructure needs immediate attention, as offshoring companies' deal with bottlenecks ranging from power to cafeterias. Further growth will have come to from entirely new business districts outside of Tier I and Tier II cities," he affirmed.

Furthermore, sustaining India's leadership will require breakthrough collaboration between the industry, central and state governments, and NASSCOM. A few imperatives that need to be addressed by the central and states governments include: (i) deregulating higher education and setting-up focused-education-zones to improve the country's educational system, (ii) drawing-up master plans to build 10-12 integrated townships with associated urban infrastructure like roads, international airports, and land development through public-private partnerships and innovative financing. And finally, ensuring free trade in services through the Mode 4 negotiations at WTO and establishing select agreements with countries.

Industry dynamics suggest at least four possiblewinning approaches for the next five years:

Global Champion: Full-service global IT and BPO provider offering multiple service lines and integrated solutions to large global companies
IT specialist: A focused IT-oriented service provider with a top five position in at least three or four major industry verticals and cross-industry service lines (such as infrastructure management services)
ADM (Applications Development & Maintenance) factory: One of the top three global low-cost providers of applications development and maintenance services through a "lean" operating environment built on a manufacturing mindset and superior scalability of operations
Specialist BPO providers: Three types of specialised BPO providers appear possible:
An operator of industry-standard transaction or platform-based services e.g., card processing;
A top three custom BPO services provider with distinctive capabilities in transition, process automation and re-engineering of customer processes;
A top three global player providing highly skilled services such as chip design, aerospace engineering, or chemical plant engineering
These four winning approaches will emerge over the next 3 to 5 years requiring companies to make deliberate choices about investing in specific horizontal and vertical IT and BPO capabilities and rewiring sales, solutioning and delivery accordingly. Companies that expect to earn superior returns over a sustained period will adopt one or more of these winning approaches and focus relentlessly on creating a recognized world-class platform.

Source: Nasscom

Sunday, January 15, 2006

IT Outsourcing Categories

Software and Application Development
This service spans designing, developing, and installing software for a variety of IT systems. Our applications range from single-platform, single-site systems to multi-platform, multiple-site systems. A project may involve the development of new applications or new functions for existing software applications. Each development project typically involves all aspects of the software development process, including definition, prototyping, design, pilots, programming, testing, installation, and maintenance.

System Maintenance
The system maintenance service is usually for large software systems that need modifications and enhancements as well as product support. This would include assisting customers in migrating to new technologies while extending the useful life of existing systems. Projects may involve re-engineering software to migrate applications from mainframe to client/server architectures or to migrate from existing operating systems to UNIX or Windows NT. For companies with extensive proprietary software applications, implementing such technologies may require rewriting and testing millions of lines of software code. In the case of IT offshoring, this includes performing most of the maintenance work at offshore facilities using satellite links to the customer's system. In addition, the offshore firm maintains a small team on the customer's premises to coordinate support functions.

Packaged Application Outsourcing
Application outsourcing is the practice of renting or "paying as you use" access to centrally managed business applications, made available to multiple users from a shared facility over the Internet or other networks via browser-enabled devices. Application outsourcing allows customers to receive business applications as a service. The Internet is the delivery channel. The pricing model tends to vary from a cost per single seat to a flat price per site model. Application outsourcing vendors are responsible for maintaining client applications and technology infrastructure. The external vendor hosts and maintains the applications, delivers application help desk support, and provides the technology infrastructure needed, all under a service level agreement.

Packaged Application Installation and Integration
This service involves working with providers of packaged enterprise resource planning, customer relationship management, and supply chain management software to install and integrate the software packages with customers' existing computer systems. The external vendor customizes the software to meet the specific needs of customers and provides ongoing maintenance and support services.

Architecture Design Services
Engineering design services include Web Services design, product and process analysis, and simulations and range from basic changes to complex designs. In addition, the services may involve customizing the latest object-oriented design, modeling, and engineering software to specific user requirements.

Network Services
Managing the network remotely is becoming a popular outsourcing function. Most organizations want the different elements of the network - routers, firewalls, intrusion detection and prevention, and security policies - managed according to best practice. The pressure to reach a best practice level is forcing many firms to outsource to network management specialists.

Self-Assessment: Are You Ready for BPO

In your industry, are margins getting slimmer and have you had to make up the difference through cost reduction? If you said yes, then you are a candidate for outsourcing.

Although there are numerous benefits to outsourcing, BPO is not for everyone. It is critical to conduct an upfront assessment to evaluate the positives and negatives of outsourcing. Understanding and articulating what you want to do and what you need from a potential outsourcing partner is the first step.

Outsourcing resembles marriage. Everything is great when you are dating, but once the marriage begins and the honeymoon is over, problems arise. Finding the right partner in an outsourcing arrangement is critical. Just like marriage, no one wants to see the relationship end in divorce.

Contract negotiations are an important step for avoiding problems downstream. All services and costs must be clearly defined so that both parties have the same expectation about what services will and will not be included in the outsourced agreement. In defining the service level agreement (SLA), it is important to discuss objectives for the project and measurements of success. Without defining SLAs and key metrics up-front, confusion could arise about responsibilities.

Some of the expected risks from outsourcing are less contact with your customer, lowered service quality, the possibility of valuable data falling into competitors' hands, the potential for the cost of outsourcing to exceed expectations, and the erosion of in-house knowledge.

The bottom line:
BPO is a strategic business decision that has long-term implications. Most outsourcing contracts tend to be multi-year agreements. Companies that take a knee jerk approach to BPO will not see the benefits that they were expecting.

Creating a BPO Strategy: Why and Why Now?

The importance of business process outsourcing (BPO) on every organization's bottom line cannot be ignored; however, it is imperative to base outsourcing decisions on more than just cost savings. Business strategy should also be included in the decision process.

The business rationale behind BPO is that outsourcing saves money and focuses scarce management time and resources on a few core competencies. The list of outsourced functions grows daily and includes call centers, order entry, billing and collection, human resources administration, cash and investment management, tax compliance, internal audit, and payroll.

The real reason behind the surge in BPO is that companies are becoming more demanding. Cost-cutting and improved service levels are no longer the only result expected from outsourcing. These days, CEOs are demanding value. They want to see, and have come to expect, transformational change from their outsourcing efforts - from changing how human resources is managed to changing the way the supply chain operates. The ultimate goal is to link business performance to increased business value.

In BPO, the metrics that matter are business metrics. For example, the key metric for a bank is the cost to administer a mortgage every month. In the insurance marketplace, it is the cost per beneficiary per month that matters. For healthcare firms, the issue is the cost per member per month. These are the crucial business metrics for which the provider is measured and rewarded.

Some of the expected benefits from outsourcing are:

Cost reductions
Improved service quality
Superior competency
Access to leading technology
More freedom to focus on strategic activities
Increased shareholder value
Economy of scale
Shared risk
Our research tells us that the biggest cost gains and efficiency improvements from outsourcing tend to come from re-engineering organizational processes and implementing best practices.

Spreading the benefits of BPO growth

India’s BPO industry has grown at phenomenal rates in the past few years. BPO exports grew from a mere $565 million in 1999-2000 to $3.6 billion in 2003-04. Despite emerging constraints, the industry is expected to grow rapidly, given cost pressures and demographic shortages in developed countries and India’s comparative advantage based on its labour endowment and skill base. BPO exports are projected to rise to $20 billion by 2007 and employment in this sector is projected to rise from its current level of around 300,000 to one million by 2012. Given this, the BPO industry has far-reaching socio-economic and cultural implications, beyond the employment and foreign exchange earning effects.

One important contribution is the sector’s enabling role in the accumulation of human capital. High-end and specialised outsourcing projects enable the development of knowledge and capabilities in areas like engineering design, finance and accounting, and provide exposure to cutting edge technology and practices. Productivity gains can, in turn, result from specialisation and adoption of new technologies and processes. This industry also enables the development of generic skills, such as customer relationship management, pattern identification, and inference-based analysis.

The constant focus on performance metrics such as quality, timeliness, and accountability, helps improve work discipline and professionalism. Such attributes can, in turn, help firms in improving organisational systems and in adopting more globally competitive and strategic management approaches. Moreover, as such generic skills are portable, they can potentially benefit other sectors of the economy.

The growth of the BPO industry also creates demand for ancillary services, such as housekeeping, security, catering, transport, language and culture training, telecom and computer equipment provision and maintenance, and real estate. Caterers are required for shift catering services. Support staff are required for maintenance of world-class premises. Fleets of vehicles are hired along with shift drivers for call centre employees, to maintain on-time delivery schedules in the absence of reliable public transport. Hence, the industry creates indirect employment opportunities for the less skilled and less educated.

Indian outsourcing: an alternative view

Every day one sees a fresh headline - X moving to India, X hiring 100 staff in India, X being just about any reasonably sized software or telecommunications company in the West.

Bangalore, in India's south, has come to be known as the Silicon Valley of India. Little is said about Hyderabad but there is plenty of software activity going on there as well.

The movement of people and machines from the West to the East means one thing for companies - lower costs. Though nobody says it openly the fact that one US dollar is equivalent to around 45 Indian rupees drives this migration. The excuse of plenty of educated staff being available is just incidental.

There is much angst in the West over perceived loss of jobs, with sentiments bordering on racism sometimes driving the concern.

But how does this exercise impact on India? We all know the common perception - what is the reality? When a poverty-stricken nation suddenly finds itself being wooed by every tech company from Microsoft downwards, what happens within the country?

If truth be told, the reality could not be further from the common perception. Bangalore has grown in awkward fashion with the local government handing out huge parcels of land to each and every software outfit and telco that comes looking to employ Indians.

Local outfits, the so-called offshorers, sit among these prominently - Infosys, for example, has 70 acres to itself at the Electronic City some 14km from the centre of Bangalore. Wipro, another one of these outfits that contracts work from abroad and depends on the lowly rupee to keep work flowing in, has even more land.

The land apart, the offices of these companies bear no comparison to any Indian office. They are built like an American office would be, huge halls, empty space, winding paths and little motorised carts for getting about. Meetings are held at the drop of a hat and while some of them have gyms and other recreational equipment around, my suspicion is that neither gets used much.

In Bangalore, the construction of all these offices on the periphery of the city - apart from the Electronic City, there is a Technology Park close to Whitefield, which is about 20km from Bangalore City - has created a traffic rush both ways. Earlier, people would travel from the periphery to the centre to work; now the rush is both ways. The evening traffic jam in the city takes the better part of five hours to dissipate. And it is nothing short of chaotic.

All the roads that have been built in Bangalore have not had even a marginal impact on the traffic problem; the huge salaries being paid out by the IT outfits ensure that more and more vehicle manufacturers bring models to India. And more and more traffic appears on roads which are already stretched far beyond their capacity.

The building of so many offices on the periphery of the city has led to a boom in property prices in places like Whitefield which was once a pensioner's paradise. Now land values are so high that villagers are increasingly tempted to sell out to developers and migrate to the nearest slum close to the city. In a typical scenario, the farmer loses his land, gains a lump sum of cash which he uses to marry off some of his daughters. He then migrates to the nearest slum, becomes a drunkard and finally a beggar.

And now the software companies have begun to put the squeeze on the government in Bangalore - they want better infrastructure (read roads, power) else they will ship out or develop offices in other parts of the country.

But given that the governments of both Karnataka (of which Bangalore is capital) and Andhra Pradesh (capital, the twin cities of Hyderabad and Secunderabad) were both voted out in elections earlier this year, by rural poor who cared little for the techno-focus of these administrations, it is unlikely that the politicians will be over-eager to indulge people like Azim Premji of Wipro, now the richest man in India.

The technology companies have improved India's foreign exchange problem to the point where the government no longer has to bother much about its traditional source of dollars - the myriad workers who toil in regions such as the Arabian Gulf and send their hard-earned money back to loved ones in India.

Software exports now form the biggest source of foreign revenue. And with an increasingly yuppie-oriented media obsessed with the stock market - which incidentally is of little importance to the nearly 400 million who still live below the poverty line - the software companies have come to be accorded a greater degree of importance than they normally would be.

There is little innovation among the software crowd, just mindless drudge work. But while the Indian rupee is 43 to the US dollar, 57 to the euro, 85 to the British pound and 33 to the Australian dollar, foreigners will continue to send work to this impoverished nation.

After BPO and KPO, it is now time for EPO: EEPC chief

Engineering Export Promotion Council (EEPC) Chairman Rakesh Shah today said it is time for India to focus on engineering process outsourcing (EPO), which holds tremendous potential for the country to be a third major world power.
''After business process outsourcing (BPO) and knowledge process outsourcing (KPO), the time for EPO has now arrived and with proper policies, India can lead the world here as well,'' Mr Shah said.

''India's tremendous intellectual capabilities will make the country a big name in this segment and hence, I urge the Centre to extend all support to industry to develop the country as a premier centre for EPO,'' he said.

Delivering the welcome address on the occasion of EEPC's all-India award presentation function here, Mr Shah given the country's strength in research and development (R&D) and human resources, proper development of the EPO business will have a far-reaching beneficial impact on the development of export of engineering goods.

EPO work involves delivering services related to project management, manufacturing process improvement, process simulation study, product design support, product performance testing through virtual simulation and R&D.

Expressing bullishness on the export prospects of the Indian engineering sector, the EEPC chief said while the export target for FY-06 of US dollar 18.3 billion was likely to be exceeded, ''Our engineering sector continued to be on course for doubling our exports by 2009 and carving out a 1.5 per cent share of total world trade.'' Enumerating a few significant promotional programmes taken up by EEPC, Mr Shah revealed that an India engineering meet was being planned in New Delhi where 200 foreign business delegates would be invited.

He also highlighted some of the problems confronting the sector, such as the negative impact of the imposition of service tax, fringe benefits tax (FBT) and uncertainty over issues of DEPB and 80 HHC, which he said have held back the sector's rapid progress.


Call Center Outsourcing - Financial Implications

Call center outsourcing is proving to be one of the most successful ways to increase cost effectiveness. Companies like GE, American Express, Sprint, Dell, AOL, and Amazon illustrate this pattern. After outsourcing call center work to lower cost locations like India, these and many other Fortune 500 companies have improved cost effectiveness by upto 50 percent! In addition they have improved the quality of their customer support and satisfaction.

Many companies after observing the success of these businesses have been encouraged to follow. Global multi nationals are increasingly transferring parts of their business systems to offshore locations since costs are lower. Dramatic results have been observed especially in IT outsourcing where a cost reduction of 50-60 percent has been achieved. Lower labor costs, a plentiful and highly skilled work force, and increasing offshore capabilities by service providers in countries like India are the reasons behind this success. Consider some of these statistics.

In a talk on how the US will actually benefit from outsourcing rather than incur losses, Azim Premji, the chair man of Wipro, said that the US economy was projected to save about $11 billion from outsourcing to India in the current year. · "Indian IT professionals in the US spend $1.2 billion contributing to the domestic economy there. Indian firms paid over $350 million to the US social security in 2002-03 and this amount is expected to cross $1 billion in the next few years," he said.
In a recent report by Inductis, to understand the magnitude of the impact on the US economy of offshore outsourcing, figures showed that 8 billion dollars was saved over the last four years.
The Inductis report also showed that GE which employs 18,000 workers in India has seen a total savings of 350 million dollars a year.
Business Process Outsourcing (BPO) and offshoring is expected to grow substantially in the next five years. Approximately $300-400 billion of services will be moved offshore and/or outsourced. India's share in the outsourcing market is likely to be 2/3rd. Outsourcing reduces costs, increases capacity and enhances capability.

How to hire a firm for outsourcing

The author has been working in the IT industry in various capacities and is currently working for a Houston, Texas-based company.

The biggest challenge for any organisation's management team while deciding on outsourcing -- or offshoring or consulting key functions -- is how to hire a company for the initiative. There are many companies who are certified in SEI/CMM levels. SEI/CMM level is a good metric to judge the value add services offered to its clients by a company.

Many Indian companies are certified in various levels of SEI/CMM; at the same time there are lots of small players in the field too, which are willing to travel that extra mile to deliver more than what customers ask for.

Organisations looking to outsource/offshore key functions as part of their macro-management strategy should also look at small- and medium-sized companies. Of course, one of the key quality differentiators here is that with smaller companies, an SEI/CMM level certification might not be available to select from.

With smaller companies, it is a huge investment, effort and requires experience to build upon over the years to get SEI/CMM certification. The purpose of this article is to provide an insight on thekey parameters to evaluate a S-M sized company and still realise high ROI and optimum benefits. At the end of the day, it is all about 'Level Playing Field.'

Key evaluation parameters

In evaluating small and medium companies offering outsourcing/offshore/consulting capabilities, organisations need to ask a few fundamental questions before hiring. Finding an S-M company is not difficult today. However, finding the right one is often challenging and difficult.

Due to a boom for the IT-enabled service sector and for IT workers alike, there are many S-M companies in the United States and in India offering staffing services. Some companies, as they grow along with the economy, would like to transition to a more stable solution-based model or consulting model from a pure play so-called body shoppers.

Better still they would like to participate in the buzzing activity of outsourcing of IT-enabled services. I would consider them as the S-M companies because they have the experience, zeal, knowledge and the business acumen to deliver more than what customer expects.

It is the inherent capability of these company's staff to consistently deliver the highest value service, and this is what differentiates them from the others in this cutthroat business.

The companies are smaller and hence the company as a whole needs to be evaluated. The areas which need to be evaluated, are listed below:

The management's credibility and accomplishments.
Collective experience of the employees working for the company.
Top 5-10 customers who are served, and feedback from key customers.
Supervision process and organisational structure for escalations after awarding the project.
Service-level agreement.
Costs incurred in evaluation and ongoing fee for the project.
Company culture, work ethics, and personality.
Advice to organisations interested in hiring S-M company

Although all the above are important, special emphasis should be made on 'Company culture, work ethics and personality.' No matter how qualified a company is or how glorious the company brochure, the sales presentation, the Web site, etc. appear, if you cannot work closely with them and feel comfortable relying upon their judgment and services, you will not receive the maximum benefits for you're the money you spend.

Key to finding the right firm

The Web site is a good place to start. Often times the Web site's appearance is a direct reflection of the firm's personality, professionalism and approach to a client's needs. If it is easy to use, simple to follow, and 'feels' good, you may want to pursue that company.

If the site seems too flashy or too difficult to follow, then you may want to concentrate on other firms who make you feel more comfortable.

Setting the expectations

Call the company for a sales presentation, brochures and solution offerings: the goal is to get the right message across. Before you decide to hire the company, prepare a list of questions (Request for Proposal or RFP in big organisations). The approach is to ask the company to respond to the preset list of questions, in writing or verbally. This allows you to compare potential firms on a more objective basis. Your list of questions will vary depending upon your needs and your industry.

If questions are framed in the following areas, you can construct an RFP of your own. Your questions should be direct, but not offending. Again, the following are only a guide, but can be used until you have time to frame your own questions.

Remember you are the client and the one who needs to feel comfortable.
Skim, read and understand the background information and methods of the company.
Why should an organisation go with a firm?
Key differentiators, process model, project development, management and delivery methodologies and SLAs. Note: S-M companies are not SEI/CMM certified with no project management office, hence no structured process or project management methodologies exist. But with collective experience, do well than most companies. This is my personal opinion, based on experience over the years.
How does the approach differ from the competition?
Escalation levels, organisational structure, and ownership for key deliverables.
Maintaining timelines, cost and budget.
Kind of support services and duration of the service provided aftermath and during the execution of the project.
Does the company offer a guarantee or warranty of the services?
Key resource personnel involved in the project, profiles of key resources, supervisor credentials, background and experience.
Evaluate the company's domain and technical expertise in its entirety.
In addition, there are questions you should be asking yourself. Does this organisation's value match up those of an S-M company?
Do you feel comfortable accepting advice from the company?
Is there a collaboration, coordination and communication protocol set up and are you comfortable with that?
How will my staff react to the initiative from the management
Were the verbal answers in line with their brochures, sales presentations, Web site, etc.

In essence, to encourage healthy competition and level playing field, organisations can evaluate small and medium companies adopting some of the question areas listed in the article above

It is my personal opinion that the question areas listed above could be adopted to evaluate any company for outsource, offshore/near shore abilities or even to hire individual contractors, consultants or staffing services.

The author thanks Uma Chidambaram from ObjectWin Technology, who provided him with a real world case study and food for thought to develop this article in its entirety.

Source: Rediff

BPOs yet to attain maturity

Over the last few years, the worldwide business process outsourcing (ITeS-BPO) industry has undergone rapid transformation. Maturity of the marketplace, preceding rapid developments in telecommunications and related infrastructure, and setting up of new off shoring destinations have catalysed the growth of the ITeS-BPO industry.
The accelerated pace of industry consolidation and service convergence, has helped stabilise the ITeS-BPO market and strengthen the BPO value proposition. Given the relative infancy of the ITeS-BPO Industry, service providers have not yet reached the levels of maturity displayed by IT services companies. This has resulted in higher risk levels and consequently, there is a greater need for due-diligence. While vendors have succeeded in providing adequate infrastructure and high quality, cost efficient resources, most still lack the process expertise, systems and practices that need to be built to support customer organisations. This often demands for alternative certification frameworks / building blocks, so that clients can be reassured of the quality of service delivery.

For both customers and vendors, offshore relationships impact the formal and informal information systems. It is therefore, important for the management to create policies and practices to support dynamic business requirements. Regulatory compliance and data protection are equally important as service providers need to meet client expectations and examples of failures abound. It is imperative that customer organisations develop governance models with offshore vendors and assure that objectives, contracts, delivery models and measurements are adhered to.

The service providers need to adopt best practices through compliance/certifications in functional areas. Key certifications in the area of quality include ISO9000, COPC and eSCM. Information security practices are benchmarked against ISO27001, BS7799 and COBIT, while IT Service management is benchmarked to ITIL and BS20000. Service providers achieve control maturity through SAS70 and other attest procedures. Ergonomics and OSHA guidelines ensure employee safety. Continuous improvement in quality and productivity are important for long-term sustainability of a service provider’s value proposition. To reinforce the credibility of a process driven culture, on going evidences should be presented to clients through self assessment/ attest reports. It demonstrates the provider’s willingness to live the values and ability to effectively implement issues related to the country, region or industry.

The primary goal of certification is to improve productivity and reinforce customer confidence. Service providers often express dissatisfaction about the costs of multiple certifications. In the short term, various functional certifications may indeed add to the cost.

In the near term, various functional certifications may indeed add to the cost of at least certain types of outsourcing. Therefore, providers must carefully select certifications, ensuring that they have adequate “upfront” investment as well as the relevant skills and capabilities in place to meet the requirements of each functional area. In the long run certifications/attest report may actually reduce the cost of operational oversight, at least if service organisations think clearly and creatively on how to leverage the compliance effort. Evidence of such thinking is already appearing on the scene and it’s only a matter of time before it becomes an industry practice.

The writer is national director, risk and business solutions, Ernst & Young

Call Centers in India

In order to meet the growing international demand for cost-effective, customer-oriented call centers, many organizations worldwide are outsourcing these services from locations like India. India has intrinsic strengths which can make it a major success as an outsource destination:

A booming IT industry, with IT strengths recognized all over the world
The largest English-speaking population after the USA
A vast workforce of educated, English-speaking, tech-savvy personnel: A boon in a high-growth industry faced with a shortage of skilled workers
Cost-effective manpower: In a call center operation, manpower typically accounts for 55 to 60 percent of the total cost. In India, the manpower cost is approximately one-tenth of what it is overseas. Per agent cost in USA is approximately $40,000 while in India it is only $5,000.
Technical support: India graduates about 100,000 engineers each year. These can be used in call centers for troubleshooting/tech support as the salaries are dramatically lower than in Europe or the US.
The Government of India has recognized the potential of IT-enabled services and has taken positive steps by providing numerous incentives.
The presence of most international technology vendors and solutions would enable creation of most advanced set-ups in this technology- intensive segment.
One company in India proposes to harness the high-quality technical support available here by hiring 300 Ph.D.'s to provide very high-end consulting through videoconferencing/telephone. Given these advantages, India could build a $17 billion industry by 2008 according to the NASSCOM McKinsey Report.
How large is the call center industry in India?

There are 25 CTI(Computer Telephony Integration)-enabled call centers and 300-500 non-CTI call centers in India. British Airways' subsidiary employs about 750 people and is expected to hire 800 more, while GE has 1000 personnel at its Gugaon facility.

GE in India: an outsourcing success story par excellence

A large part of GE's business in India is in remote processing centers. Success stories like GE's provide tremendous encouragement to both the Indian entrepreneur as well as potential business partners from overseas.

GE positions its call centers as "productivity enhancers". According to GE, companies could be spending two-thirds or more of their time on things that have to get done but have little to do with what makes their business successful.

GE Business Productivity Solutions offer companies services and software that help them grow revenue faster than expenditures by reducing resources and time devoted to "back office" processes.

GE Capital International is employing over 1,000 people in its Center of Excellence at Gurgaon near New Delhi in India. The Call Center facility at Hyderabad is expected to be ready for use by March. These Centers provide IT-enabled business process outsourcing services to GE and non-GE customers around the world. GE's business objective is to consolidate back office processing into India for client organizations and to deliver quality services at competitive cost.

Business Process Outsourcing (BPO) Methodologies

Outsourcing became a catchphrase in business areas in the 1990s. It was a well appreciated addition to the business lexis This market comprises 9 business functions of human resources, procurement, finance and accounting, customer care, logistics, engineering/R&D, sales and marketing, facilities operations and management and training. Outsourcing is a corporate strategy that companies adopt to enhance competitiveness of the company. By outsourcing non-core part of business operation and only concentrating on the core competence, companies can increase the productivity and efficiency in management.

Outsourcing as strategy is not new. Some examples of Outsourcing, such as GM and EDS, Xerox and EDS, Kodak and IBM, are more than a decade old. Over the years, the scale and scope of Outsourcing has evolved considerably. It has also migrated from primarily Fortune 500 companies to large and midsized companies.

Since the 1970s, many Western companies began manufacturing products in offshore locations such as Japan, Korea, Thailand, and Taiwan. Despite the relatively high cost of transporting the goods by sea and air, it was cheaper to make them in the Far East (and in Mexico after the NAFTA treaty) than to keep manufacturing in the United States or Europe.

Most companies are now adjusted to manufacturing being done offshore. What took place in manufacturing is now occurring in back-room processing and services. Ten years ago, if anyone had boldly predicted that by 2003 we would begin to see back-room service centers and call centers housed in India or the Philippines, they would have been laughed at. How could high-touch customer service agents who interact directly with customers work halfway around the world? The cost would be prohibitive given that monitoring the agents would be impossible and every call would be international.

Manufacturing and service outsourcing have changed over the years. It is a macroeconomic trend to which every company needs to react. If your competitor can make a product and provide associated services for less than you, then you need to follow, or risk being put of out of business.

Although initially low-skilled jobs such as manufacturing, call center, and computer coding were shifted abroad, as more companies expand their offerings into outsourcing, new functions like human resources and knowledge skills like technology are being outsourced. As the worldwide migration continues and the movement overseas matures, more high-skilled jobs such as accounting and engineering will likely be sent abroad.

As functions are outsourced, more standards in processes are created. Just like in ERP where business processes such as finance and manufacturing were standardized, a similar thing will happen in HR, logistics, and accounting processes. Also new technologies such as Business Process Management and self service portals will help accelerate the push to outsourcing.

Friday, January 13, 2006

Top 10 Drivers for Outsourcing

1.Control Costs

2.Improve operational efficiency

3. Abundance of skilled manpower

4.Lack of availability of internal resources

5.Improve speed and time-to-market

6. Optimum utilization of resources

7. Focus on core competence and innovation

8.Greater flexibility and competitiveness

9. Availability of functional expertise and domain knowledge

10.Global Best Practices

How big is the IT infrastructure outsourcing market?

IT infrastructure is critical for firms globally. Organisations invest huge amount of money to build IT infrastructure that support their business goals and objectives, but many fail to set up even the most basic tools to effectively manage their IT resources.

Help desk management, configuration management, and application packaging and migration services are some of the infrastructure-based activities that are currently being delivered from an offshore location and they may serve as platforms into broader outsourcing deals.

According to a Nasscom report, an estimated that 40-60 per cent of the overall Infrastructure Management Service pie may be efficiently delivered through a global delivery model. This translates to a market potential (for offshore infrastructure management) of approximately $ 55 billion.

Forrester Research, the global business intelligence major, which has estimated the infrastructure outsourcing opportunity at $ 111 billion, has indicated that it can bring almost $1 billion earnings for India, provided Indian outsourcers strengthen their cost, quality and security strengths.

According to Gartner, by 2006, Infrastructure services delivered in a Global Delivery Model from India to US companies will surpass $1 billion (with 80% probability).

How Does Outsourcing / BPO Benefit Both the US and India?

How Does Outsourcing / BPO Benefit Both the US and India?

Despite the anti outsourcing backlash, benefits from outsourcing are very tangibly felt in the US economy. The very fabric of American success lies in opportunity and innovation, making it very difficult for anyone or anything to paralyze its workers or its economy.

"America's pain, India's gain", The Economist, Jan 2003
"Is your job next ?", BusinessWeek, Feb 2003
"Study sees 406,000 U.S. jobs shifted overseas in 2004", Financial Times, Oct 2004

For many people, headlines such as these define offshore outsourcing - an ill wind that 'hollows out' America by taking away dollars, jobs, skills, and experience to foreign shores.

This is an unfair perception and unnecessarily spreads hysteria about a much misunderstood marketing tool

Yes, jobs are going offshore...
A 2003 McKinsey Global Institute study estimates that outsourcing by US companies is likely to increase by 30 to 40 percent over the next five years and this will result in the loss of about 200,000 jobs a year in services over the next decade.

However, these figures must be viewed in perspective. A June 2004 report by the US Department of Labor states that in the first quarter of 2004, less than 2 per cent of job losses in the non-farm private sector were due to outsourcing.

.. but this is good for the economy
Far from being bad for the US, McKinsey finds that outsourcing creates additional net value for the US economy that did not exist before. When $1 of labor cost is outsourced from the US, the total value created globally is $1.45 to $1.47. Out of this, the receiving country, India in this case, captures just 33 cents. The remaining $1.12 to $1.14 is captured by the US in terms of new revenues (the receiving country buys goods and services from the US), repatriated earnings, and redeployed labor.

The study simply quantifies what companies have known years - that outsourcing delivers tangible and significant benefits in the following ways

Reduced capital costs
Increased efficiency
Reduced labor costs
Quicker project starts
Focus on your core business
Level playing field
Reduced risk
…and a growing economy creates new jobs
It is cold comfort to a programmer whose job just got 'Bangalored', that his company benefited from that fact.

But a rise in corporate profits is good for the US economy as a whole. According to a Global Insight study sponsored by the ITAA (Information Technology Association of America), the benefits of offshore IT outsourcing added $33.6 billion to real gross domestic product in the United States in 2003. By 2008, real GDP is expected to be $124.2 billion higher than it would be in an environment without IT software and services offshore outsourcing.

Traditionally, the US economy has been a huge job creating machine. Over the last 10 years, the economy has created an average of 3.5 million new jobs a year, and the vast majority of displaced workers are re-employed within six months.

This has been true even during times of great change. McKinsey estimates that between 1983 and 2003, two million manufacturing jobs were lost in the US. But 36 million new jobs were created in services. Many of these were jobs that people didn't know even existed before.

Despite the present lull in the job market, researchers expect that trend of innovation and job creation to continue.

Forrester estimates that despite the headlines on offshore outsourcing, IT jobs in the US grew in 2003 and will continue to grow at three per cent from 2004 to 2008.

Some industry associations and economists have reacted skeptically to these estimates. They argue that it is dangerous to assume that the US has better trained, harder working or more innovative workers capable of higher value added work than its foreign competitors

True. Workers elsewhere can be as smart, as hard working, and as innovative.

But the US has more opportunities than its competitors. The fallacy is to assume that there are only a fixed number of jobs in the economy and when a job is sent offshore, a US worker is rendered permanently jobless.

Over a 10 year period from 2000-2010, McKinsey expects that while two million service jobs will be lost through offshore outsourcing, 22 million new jobs will be created. Technology and medicine are expected to be major drivers for job creation.

US workers have more opportunities because their economy is growing and new and fresh jobs are being created to more than replace the ones that have gone away. They have more opportunities than anyone else to acquire new skills, and more opportunities for acquiring the jobs that accompany the growth in the economy.

Already, there are intense debates within the US about ways to manage the transition of workers to the new jobs and to insure them against distress in the interim.

There are calls for a sustained push to improve worker retraining and student enrolments in specialized technology courses so that future generations of Americans are adequately prepared for the high-tech jobs of tomorrow.

There are debates on whether the government should provide a safety net to displaced workers or whether corporations should fund this with a part of their profits from outsourcing.

While there are no clear answers yet, what is clear is that reason and logic are beginning to replace the paranoia of the outsourcing debate.

And guess what? Even the media headlines are beginning to change:

"Stop Blaming Bangalore For Our Jobs Problem", Fortune, Apr 2004
"UBS Study Finds Outsourcing Not Big Hit to U.S. Jobs Market", The Wall Street Journal, Oct 2004

Business Values of Outsourcing

Business Values of Outsourcing

Cost Advantages- BPO provides an accounting advantage - financial engineering with regard to assets, staff and infrastructure
Innovation and speed to market- Ability of the outsourcer to do things which an organization cannot do on its own or does not have the domain expertise.

Increased customer satisfaction, more efficient operations by focused effort on customer service by the outsourcer.
Economy of scale - BPO provides the flexibility to respond to a rapidly changing marketplace and scale operations up or down as conditions dictate

Business risk Mitigation by capitalizing on the outsourcer's knowledge of local laws, infrastructure, processes and expertise.

Rapid access to high quality practices at the outsourcer's end.

Availability to skilled personnel also increases the quality of service.

Outsourcing a process also means the buyer no longer has to manage the head count. Recruiting and retaining talent in a tight market is difficult.

The level of difficulty increases with the specialized knowledge required.

The outsourcer, on the other hand, is adept at attracting the best and the
brightest in its field.

Shorter project delivery times due to the expertise of the outsourcer with regard to transition of business processes to the offshore site.

Using the time difference to your favor, especially where the offshore company provides support or maintenance.

Better control over operations. Internal resources can now focus on core customer service processes.

Wednesday, January 11, 2006

Welcome to BPO discuss Blog.