A monster opportunity

The IT industry body that led India’s business process outsourcing (BPO) industry to the forefront globally, Nasscom (National Association of Software and Services Companies), says South Africa must learn to sell itself as a country if it wants to get its rightful slice of the global pie. Speaking at a conference hosted by South Africa’s call centre industry association, Sacccom (the SA Contact Centre Community), via videoconference, Nasscom president Kiran Karnik said as part of marketing the country as an outsourcing destination in the early days, it had attended selected international roadshows, presenting India, not the individual companies themselves. BPO is moving back office administration functions like data capturing and call centres to offshore destinations where it can be done cheaper and better. Part of India’s recipe for success was getting government support, for example Nasscom was able to lobby for a ten-year window in which export profits would not be taxed. But, the industry got together and led its own development, and advocated for government help where necessary. Shuray Bux, the deputy director of BPO and IT-enabled skills at the Department of Trade and Industry (dti) said the BPO sector represented one of South Africa’s best opportunities for growth and job creation over the next five years. He said government envisaged playing a supporting role to the sector. The government and private sector have been working together for some time to promote South Africa as an international BPO destination. But, although SA’s call centre industry is a mature one, it is estimated that only 5% of call centres here are outsourced from international companies, the bulk are domestic. Bux said the country was aiming at being a Tier Two player in the global BPO market. Research conducted earlier this year by the McKinsey & Company estimated that the industry could create at least 100 000 new jobs in the next five years, with between $90-m and $175-m (R600-m to R1,1-bn) in foreign direct investment flowing into the country as a result.Bux said all the players ranging from industry to industry bodies and government, were close to finalising a sector strategy. This included positioning South Africa as a preferred destination with a significant skills pool (but which must be deepened), and putting together an industry accreditation framework for quality purposes. It is also considering certain incentives for the industry. Karnik said India had initially been seen as a cheap BPO destination, in the sense that it was inexpensive, but also perceived as offering a low quality product. So Nasscom encouraged international certification, which raised the bar for players in the sector and led to the Indian ICT industry being one of the highest certified in the world. The high cost of telecommunications in South Africa comes up time and again as a barrier to the growth of the industry. Karnik said telecoms was a critical factor, which also initially represented a barrier for India. But, the industry was able to lobby government and a state arm was created to allow the industry to effectively by-pass the incumbent monopoly provider. Later, competition and deregulation had led to multiple players and lower costs. Sacccom chairman Eddie Funde said, while in South Africa, Nasscom had met with government, Icasa and a number of consultants to discuss ways of increasing the availability of broadband in South Africa, which had been “extremely useful” and would be followed up on. But, Karnik also says the cost of outsourcing to an offshore location was less important than the quality and value add of the offering. For example, the loss of one customer could be more expensive than the savings that a company is making by outsourcing offshore, Karnik said. Peter Ryan, an analyst at international research house Datamonitor in Montreal who analyses BPO and has visited call centres all over the world, said South Africa’s BPO industry was on a growth curve. Drivers for companies to use SA for BPO included the cultural fit of SA call centre agents with the UK and US, that the industry is already well developed and the country has numerous urban centres and first world telecoms infrastructure. On the downside, Ryan said there was loads of competition from other markets, the perception of high levels of crime and some corruption, a fluctuating currency, and the country was quite some distance from the major international centres. But, Ryan said he was very impressed with what he’d seen in SA. “Keep up the good work, you’ve got no where to go but up.”Arapam Prakash from global human resources consulting practice Hewitt Associates said South Africa had a lot going for itself, including a robust domestic industry, no geographic problems and low risk. Prakash said he believed South Africa was one of “the offshore industry’s best kept secrets”. Apart from being in South Africa to share some of India’s experiences with the South African industry, Nasscom was also looking at ways in which Indian call centre companies can work with South African ones. Speaking on the Moneyweb Power Hour, Mohammed Shahabuddin, the assistant vice president of Nasscom, said India had the challenge of how to serve the European market, “And we believe South Africa has an abundance of talent and innovativeness to work with.” Shahab said India did not really consider South Africa to be a competitor, given the abundant labour pool of mostly graduates that it has to draw from. But, we could work together for example if a big multinational like American Express outsourced its back office to India; it could place the English-language call centre in South Africa.Shahab said there was a “huge opportunity” for such a partnership between the Indian and South African call centre industries. Absa economist Chris Hart said it was clear from what Shahab was saying that South Africa was a very suitable BPO destination, and could achieve good growth in the industry by attracting offshore business here. But, any blockages, like high telecoms costs, had to be removed: “Its really a decision that needs to be taken. And it’s not a case of debate or have a committee or whatever. You either do it or you don’t. We either want the business or we don’t.

India, cockpit of global airline biz

India, cockpit of global airline biz

BANGALORE: Aviation is set to become a high flying vertical in the entire Indian outsourcing market, on par with banking, financial services and insurance (BFSI) space. The world's 150 top airlines share an annual revenue of $500 billion, while another over $100 billion comes from small operators. These global players outsource 12% of total services to third parties. Of this, India gets a share of 50% while the rest is shared between Ireland, south America and Philippines. By 2007, this share is likely to double. Currently, WNS, InterGlobe Technologies, Intelenet Global Services are the leading aviation outsourcing providers while leading buyers include United Airlines, British Airways, Canadian Air, Virgin Atlantic, Delta Air, KLM Airlines, Singapore Airlines, Korean Air, China Air, Luffthansa, South African Airways. India is fast emerging as the cockpit of the global airline industry, with almost all leading carriers willing to outsource a wide range of services to the country to ease out the pressures and the squeeze the industry faces on its revenues, margins and market share. Ravindra S Datar, principal analyst, IT services & BPO (Asia Pacific) Gartner India says the airline BPO opens up huge opportunities for India. "A large number of international carriers are already outsourcing to India. Being a highly competitive industry with very thin margins, aviation becomes a natural target for BPO service providers. Even huge global airline companies are not making enough profit," he added. Airline servicing is the fastest growing segment in outsourcing. Challenged by high operational costs, ever increasing fuel costs and external factors like 9/11, terror attacks airline/tour segment is a low margin game.

Small-Scale Offshoring

July 25, 2005

............................"Among other things, using an offshore services provider has forced the company to become a more disciplined operation. "The benefit of a small company is that I can just turn around and ask someone a question," Franchina says. "Now, we're going to need a lot more formal documentation, but it's an opportunity to strengthen our practices."
That management discipline is where many offshore projects fail. Many smaller companies are used to operating in an ad hoc style or don't have training in effectively dealing with contracted parties. Rudzinsky says he's learned that a good offshoring partner must "have a strong local presence that can effectively communicate my needs to the offshore team." At the same time, it's wise for smaller companies to try to bring on board more staff experienced in working in collaborative, outsourced environments so that they can directly handle more of those communications. "It's the new model, and not just in software," says Commendo's Gil, whose company was built from the ground up to operate largely as a virtual organization.
And as interest in offshore outsourcing grows among software startups and other small businesses, more service providers are springing up to cash in. There's a void to fill as most of the large, well-known offshore vendors such as Infosys Technologies, Tata Consultancy Services, and Wipro aren't aggressively courting smaller business. "They can barely keep up with demand from the Fortune 500 customers so they don't yet need to tap smaller markets," says Stan Lepeak, managing director at outsourcing advisory firm EquaTerra. ".....................

........"Born from the ashes of a former dot-com, Denver Web-hosting and design-services company Ixion Inc. is one of the new breed catering to the offshore-services needs of the small and midsize business community. It's simply a matter of following the money, Ixion president Daryn Harpaz says. "We have customers contacting us from a number of industries, and they're only interested in offshore services," Harpaz says. "It's in- creasingly on the radar of smaller companies." "..............

.........."Beyond matching buyers and sellers, Elance, which is funded by Kleiner, Perkins and chaired by tech luminary Ray Lane, collects and publishes user feedback on the service providers registered with its site. That's important given the risks of offshore outsourcing for small and midsize businesses. They typically don't have the time or resources to carefully screen vendors and vet contracts, so any advice about a provider before they sign on can be a big help, Cognizant's Gordon notes. "We see big banks and insurance companies that literally take years before signing off on an offshore deal," Gordon says. "That's not going to happen in the small- and midsize-businesses space." ".............

.............On the risk-versus-reward scale, smaller companies increasingly see the value on the reward side. Commendo Software probably wouldn't even exist if it weren't for offshore outsourcing, Gil says. But it does, he says, and "now we're out there creating jobs, we're hiring marketing and back-office people, and we're delivering a product to the market." There's nothing small about that." .......

Now, medical visas for foreign tourists

July 20, 2005 19:02 IST
The India government will introduce special medical visas for foreign tourists who come to India for specialised medical treatment.
The medical visa will be helpful for those who come for long-term complicated procedures like knee replacement, cardiac surgery, organ transplant and plastic surgery. The visa will also be helpful for those coming to India for ophthalmic care and treatment of congenital diseases.
Until now, such patients had to enter the country on a tourist visa, valid for six months and subject to extension after the Union home ministry's permission alone. This caused inconvenience to the patients if long-drawn treatment was needed.
The medical visa will initially be valid for a year or the duration of treatment, whichever is less, and can be extended for another year.
For the third year, a prior permission would be required from the Foreign Regional Registration Office.
Under the medical visa rules, patients will have the facility to bring two attendants -- spouse and blood relations. They will be allowed two entries in a year, which means patients can change attendants.
The visa will even be applicable for countries like China, Pakistan, Bangladesh and Sri Lanka.
This visa will enable international patients to have access to finest medical care in the most recognised and specialised hospitals of the country.
Says Dr Ramakanta Panda, CEO, Asian Heart Institute & Research Centre: "Introduction of the medical visa has been an offshoot of rising medical tourism in our country. Asian Heart Institute is fortunate to be the hub of medical tourists in western India and I am sure this step by the government will boost the influx of international patients by offering them greater convenience."
Low cost, specialised medical treatment with state-of-the art infrastructure has been the primary reason for the rise in medical tourism over the past one year. It is estimated that in India medical tourism will become a $2 billion industry by 2012.
Asian Heart Institute itself gets five to seven foreign patients per week. The introduction of the medical visa will thus be beneficial in encouraging this industry and this in turn will result in a big boom for foreign exchange of India as medical treatment in India is considered to be of high quality at a reasonable cost.

Is Off-Shore Outsourcing A "Bane" Or A "Boon"?

An article in CIOInsight, http://www.cioinsight.com/article2/0,3959,940251,00.asp Quoted some interesting survey results from companies that have gone offshore."Of those companies that have gone offshore, 88 percent said they had gotten better "value for the money" with U.S. firms. That isn't too surprising. What is surprising, and what has to be worrying U.S. IT services firms, are some other results of the survey: - 71 percent said the "quality of the deliverable" was better than U.S. firms provided, and - 67 percent said "on-time delivery" was better. In other words, India's IT services firms are outperforming their U.S. counterparts in three key areas: they're producing better products and services; they're doing it faster; and they're charging less. That's good news for CIOs, but bad news for U.S. firms." - I know that there has been and continues to be "heated" discussions and debates about off-shore outsourcing in many forums. Is off-shore outsourcing a "bane" or a "boon" for Virtual Consulting? IMHO, the fact that at least some of these companies are able to successfully employ off-shore resources to produce quality products in an cost effective and timely manner, is proof tha Virtual Consulting really works! Wouldn't you agree? In other related articles, they specifically note that India is experiencing a boom due to IT outsourcing: Ref: "Growing trend toward IT outsourcing is a boon for India By Scott Leith sle-@ajc.com The Atlanta Journal-Constitution Sunday, May 4, 2003" Don't you think that as companies see that they are able to allow work to be performed remotely / virtually, even half way around the world in India, that this type of Virtual Consulting is not only viable, but beneficial? Granted I have also seen and heard of companies of all sizes and (supposed) levels of maturity (SEI CMM) fail when trying to outsource projects. But, IMHO, the cases I have heard about appear to be attributed to a lack of understanding of how to plan and/or manage these types of outsources / virtual / remote projects. What have you heard about the success and/or failures of companies to successfully outsource projects? and why did they succeed or fail? What do you see as the Risks, Issues, Opportunities, and/or Rewards of off-shore outsourcing relative to Virtual Consulting? How might we turn this ongoing trend to our mutual benefit? Again, IMHO, I actually see this trend of off-shore outsourcing as an opportunity for Virtual Consultants / Consulting. Just think, if companies believe that you can design, manage, test, etc. a product / project being developed remotely and possibly off-shore, than why can't you also perform your consulting, design, management, testing, etc. tasks remotely / virtually relative to the physical location(s) of the company? Further, doesn't this lead us in the direction where the objectives are to use the best, highest quality, most cost effective and time efficient resources for a task / project no matter where in the world they are performing the work? Doesn't this tell us that we are starting to really deal in a true "Global Economy"? And isn't this what Virtual Consulting is all about? You tell me?!

Staffing firm to expand BPO work in Bangalore

July 20, 2005

Compusystems, a Michigan, US-based recruitment services firm is getting ready to become a software-cum-BPO outfit. Towards this, it plans to ramp up its business process outsourcing services from its centres in Bangalore and Thiruvananthapuram, senior company executives told reporters here on Tuesday.

The startup will also soon market a proprietory software product Emaximm that breaks down the recruitment process into steps, many of which can be done at an offshore centre in India, Mathew Verghese, president of the firm, said. Varghese, who started the firm 10 years ago with his wife, aims at $40 million in sales two years from now.

Compusystems aims to become an application service provider, selling recruitment service built around its product Emaximm. The firm aims to sell this service to enterprises in America seeking to outsource their recruitment tasks, Varghese said.

Anurag Gupta, a vice president with the firm, said, Compusystems had set up a “global marketing and support centre” in Bangalore where some 150 staff will provide business process outsourcing work by the end of this year. The firm has a contract, for instance, from the State of Indiana, to process medical expense claims.

So far, helping customers recruit staff has been the main revenue earner for Compusystems, which had done so for Delloite and Touche, Texas Instruments, Dell, Motorola, Philips, Lucent, General Electric and soon, Robert Bosch. Varghese said, “We have placed staff with most of these companies and are in talks with others.”

A third line of business, which the firm wants to grow is offshore delivery of “niche IT engineering services,” he said.

Presently, the company is targetting the small and medium businesses in the US and the UK, a company release said.

It had some 15 customers for different BPO tasks in HR, accounting, transaction services, front-end support and contact management with support.

Unravelling the outsourcing puzzle

Financial Daily from THE HINDU group of publicationsTuesday, Jul 19, 2005

........."To start with, it does suggest that onsite delivery is still an extremely important component of India's software success. Further, it speaks for the nature of the software services provided by Indian firms. .........."

Outsourcing of education is India's new catch

Indo-Asian News ServiceNew Delhi, July 18, 2005

Capitalising on the shortage of teachers in the US, especially in subjects like mathematics, Indian tutors are finding online education a good revenue spinner in this emerging segment in outsourcing.
An offshoot of business process outsourcing (BPO), education process outsourcing (EPO) is India's new emerging service offering and is getting wide support from both students and clients in the US, experts said.
Sitting in small cubicles, fitted with a headset and pen mouse, these tutors are teaching students subjects like mathematics from course curriculum specified in the US - that, too, in an accent familiar to Americans.
According to one estimate, about 40 per cent of the students in America fail in their mathematics examination and the country needs close to one million teachers over the next 10 years.
Currently, private tutoring is an $8 billion industry in the US and growing at 12 per cent a year. Of that, $3 billion is accounted for by tutoring through the Internet.
By the end of 2005, an estimated 77 million students under the age of 18 will have access to Internet, and thus to the e-tutoring format, official estimates reveal.
Two New Delhi-based Indian companies - Educomp Datamatics and Career Launcher - are early entrants to this new outsourcing business. Many more are expected to join the race, industry experts said.
Career Launcher has imparted tuition to more than 800 students in the US since it began operations 10 months ago and Educomp - which started around the same time - has taught about 600 students.
"While the US faces a severe shortage of quality mathematics teachers, in India we have surplus skilled manpower. We just took the advantage of the available market," said Santanu Prakash, chief executive officer of Educomp.
At present there are two platforms of imparting tuition through the Net - direct interaction with students and working as backhand office for some tutoring companies in US, industry experts explained.
The service is given through a software called "White Board" in both voice and text platforms. The student and teacher can see each other over the computer and talk on the headphone.
These companies provide their high-end technology driven education service and charge 20 to 35 dollar per hour to students ranging from kindergarten to the graduation level.
All the payments are made through Internet and there is no fear of security problem in the mind of the Indian companies, industry officials said.
In spite of a few US players in this market, Indian companies with their price advantage and huge pool of qualified teachers are on a strong footing and do not feel the competition or enmity from their US counterparts.
"We are not taking away jobs of Americans. It's just a matter of filling the gap and teaching their students to be efficient workers," said Anirudh Phadke, head of the EPO section of Career Launcher.
While Educomp is targeting one million students by 2010, Career Launcher has its eyes set on 1,000 more students by the end of this year.
The process began in 2002 when legislation called the No Child Left Behind Act was passed after the US administration expressed alarm over the increasing failure rate of US students. Its goal is to improve teaching standards and results.
Under the act, American schools have to meet the 100 per cent proficiency goal by 2014.

Integrate Data From Business Process Outsourcing

August 1, 2005

Over the last five years, corporate America has increasingly turned to outsourcing and offshoring to gain efficiency. Companies assumed that outsourcers could integrate people, processes and systems more efficiently and cost-effectively than they could achieve this integration on their own. In retrospect, however, many of these companies discovered that they didn't fully consider the risks of these relationships, even if they put stringent service-level agreements (SLAs) in place.
Perhaps processes were outsourced because the management and execution activities were viewed as undifferentiating. Yet as mundane or complex as they may seem, your business processes are often directly connected to the brand value and reputation of your company. Many seemingly isolated processes actually touch crucial business relationships or can impair your ability to live up to corporate legal responsibilities. In some cases, processes can actually define your position in an industry.
Outsourcing can damage shareholder value and your business reputation because it shifts responsibility to a third party and introduces risk. Commonly outsourced processes and functions include accounts payable and receivables, outbound call centers, return merchandise authorization, service activation and service, and new product sales, to name just a few. Once these roles and tasks are no longer under your control, you may have a problem long before you realize it. Accountability is far more difficult to achieve when outsourcing is in place—SLAs notwithstanding.
In an example that points to a potential impact on brand value, Dell—which has one of the most efficient supply chains in the world—has outsourced aspects of its account management and purchase requisition processes to an offshore service provider. The simplest tasks of consolidating accounts and invoices and processing address changes are now sent overseas to India. These seemingly innocuous changes have introduced delays and made it more difficult for Dell to maintain its reputation for high-quality customer service.
In some cases, regulation makes outsourcing particularly risky. Laws such as HIPAA, for example, require greater process oversight to protect medical information. Health care providers are outsourcing tasks such as medical transcription, and insurers are outsourcing claims processing, predominately to India, yet there are no requirements for these service providers to comply with U.S. regulations under Indian law. How can this data be monitored and securely integrated into a single enterprise view if the underlying processes are outsourced?
Most organizations that outsource don't have visibility into and don't require notification of critical events within their outsourced business processes. Nor do most outsourcers offer BI systems with performance metrics that can be shared. Worse still, data management and integration activities required for business or regulatory reasons are often inefficient or missing. In fact, in most cases, the data provided from an outsourcer is manually assembled and transmitted or shipped as an extract. Sometimes the data is copied, pasted and manipulated in spreadsheets. This, of course, is a significant problem because there's no insight into where the data originated or what happened to it once it was placed in the spreadsheet. This is a common problem in order fulfillment, customer service resolution and even accounting processes that are outsourced.
Business process outsourcing is here to stay, so we can only focus on improving its performance and on understanding related risks. How can you ensure that you've considered and addressed the risks? Start by committing more time and resources to gaining direct insight into your outsourced business processes. Reassess SLAs and technology infrastructures to ensure visibility, and reexamine the outsourcers themselves to identify financial and business risks. Your efforts will be well worth it.
Use an independent consultant to assess your service provider's systems, your own systems and your data integration practices. In particular, determine your current service level and whether your operational data and metrics are accurate and secure. Lastly, take more direct responsibility for your business processes and for the secure integration of data back into your information systems. The ability to monitor and measure processes inside and outside the enterprise is strategic—and vital—to your business and its reputation.

‘Developed countries will outsource 4.1m jobs by ’08’

AGENCIES[ FRIDAY, JULY 15, 2005 01:51:35 AM]

WASHINGTON: The number of service jobs outsourced from the industrialised world to low-wage countries is expected to surge to 4.1m by ’08, according to a study. But the authors of the report argue the trend will have only a small effect on workers in wealthy nations because it will affect a relatively modest percentage of the workforce. “Labour markets in developed economies are experiencing and will continue to experience the trend toward offshoring as a slow, evolutionary change,” said the report by the Mckinsey Global Institute released at the Institute for International Economics. “It will have less impact on patterns of employment than the decline in manufacturing employment developed economies have experienced recently.” Still, the study underscored the inexorable shift of many jobs — especially in sectors like engineering and computer jobs — from the US and Europe to countries like India, China and the Philippines. “These are very profound changes that will alter the (global) labour market dramatically,” said McKinsey’s Diana Farrell, main author of the report. “But they will not happen overnight.” McKinsey estimated that about 1.5m service jobs were outsourced from rich countries to the developing world by the end of ’03. Still, this is only a fraction of the ‘potential’ 160m jobs that ‘could be done by people located anywhere in the world’ — about 11% of the global service workforce. The main factors holding down the use of outsourcing are the lack of suitable skills in developing countries, and companies reluctant to shift jobs for cultural or other reasons

McKinsey calculated some 33m young professionals with university degrees and work experience in 28 low-wage countries. But it said only a fraction of these people have the language, cultural skills and other capacities to work at a multinational corporation. Ms Farrell acknowledged that there is ‘high anxiety’ in the wealthy countries about the future of jobs in engineering and software, the sectors most affected by outsourcing. But she said there are already signs of possible shortages of engineers in some locations like the Indian high-tech centres of Bangalore and Hyderabad. “This is one area where demand is going to outpace supply,” she said. Overall, Ms Farrell said the ability to shift jobs to take advantage of cost savings “is a good thing for economic prosperity,” but added, “it does leave a lot of fallout.” “The moderate impact and generally slow pace of offshoring will not soften the blow for those individuals in developed countries who do lose their jobs as a result,” the report said. “However, most are college graduates, and therefore likely to be more amenable to retraining than manufacturing workers. And in the US, growth rates in both wages and jobs in the computer and data processing services sector, where offshoring is prevalent, are higher than in the economy as a whole.”

Accenture all set to hire 30,000 pros

TIMES NEWS NETWORK[ FRIDAY, JULY 15, 2005 12:08:54 AM]

NEW DELHI: The global technology and outsourcing major, Accenture , will be hiring big time in India. It plans to hire 30,000 - 50,000 people in India, China and Phillipines over the next 3 years. The company has already hired 1,600 people in May. While a large percentage of hiring will be in India, the company officials did not specify the numbers. Chennai will be the next big hub for Accenture, with plans to move to a facility with a capacity of 5,000 seats in the city. Currently, it has less than 1,000 people operating out of an incubation facility. “India will be the flagship of our offshore network. It’s a part of our strategy to build strong and diversified network of offshore capabilities. And now that we have more clarity on our Offshore project, we hire aggressively,” says Rueda Basilio, managing partner, Accenture’s Global Delivery Network. Accenture has more than 13,000 people in India currently and is hiring aggressively. According to Basilio, other offshore locations that the firm is looking at hiring are Philippines in Asia, the Czech Republic and Latvia in Eastern and Central Europe and Sao Paolo in Brazil. In Manila, its other delivery centre in Asia, Accenture currently employs about 4,600 people. While 4,000 are in IT Services, 600 people are in the BPO. Overall, there are about 35,000 people in Accenture’s global delivery network across 40 delivery centres and out of that about 24,000 are in India, China, Phillipines, Riga, Bratislava, Malaga, Sao Paulo and Brazil.

The consulting firm will be using the Indian operations to get big time into the space of application development and maintenance, an area where Indian IT firms are well trenched. “It’s a very competitive space, and our offshore centres will allow us to do it successfully. And we will be very aggressive in this space,” says Mr Basilio. He believes that a strong offshore presence will allow Accenture to bundle its services better. Interestingly, most of the big Indian firms garner more than 60% of their revenues from application development and maintenance kind of work. Outsourcing is a growing area for Accenture. In the recently announced third quarter results, the revenue from outsourcing amounted to 39% of revenues and grew by 16%. In the last three quarters, outsourcing has been 39% of the revenues and registered a growth of 17%, a faster growth rate than the firm’s overall growth rate. According to Mr Basilio, the reason why Accenture has decided to move into the offshore space is to increase its competitiveness. “If we are competitive, we win more, and we will get more revenues. Also the margins will be healthier with the cost arbitrage factor coming into play. And finally, the company feels it wants to take advantage of the good quality skill sets of the manpower in these geographies,” he said.

What makes a great BPO company

July 14, 2005

For any services industry it is important to seamlessly integrate with its customers. To do this it is essential for a company to design its technology keeping in mind customer requirements. Otherwise technology can become a hindrance instead of an advantage.
The thing about technology is that while it is often the cornerstone of the customer service experience, the end user rarely comes face to face with it. It is the puppeteer behind the scene, an intangible.
In the BPO industry, where technology is the bedrock on which all other components of the business rest, it is no different. So while the customer demands quick, efficient, always-on service, they have no interest in the network that makes it possible, in the firewalls that protect their data or in the multiple redundancies that have been implemented to ensure uninterrupted service.
At ICICI OneSource we provide business process solutions to Fortune 500 and FTSE 100 companies. Offering a customer service experience that is at par with the best in the world, is not just a choice, it is a business goal. And technology provides the framework that allows processes and people to guarantee this customer service experience.
So what exactly does a global customer experience mean?
Take, for example, the requirement of being able to get through to your helpline the first time you try. Translating those into service level deliverables in terms of technology would mean capacity and bandwidth.
High availability of the network with minimal call drops from a technological perspective would mean network resilience, while good voice quality would be dependent on a well-tuned and well-configured network.
Lastly, as a customer you would like your query resolved in the least possible time, which transcribed would mean low latency networks. All of this, while ensuring sanctity of the data would mean network security.
When we started operations more than three years ago, the objective was clear -- to be India's leading BPO. The fact that our domain expertise (banking) necessitated processes with the maximum security meant that the company adopted a strategy of creating an 'always available' secure operating environment.
Ground reality though, of keeping the network up and running 24 X 7 was a challenge in itself for starters. To add to that each client (at any given time our company has an average of fifteen clients) had specific requirements wherein their technology infrastructure remained unchanged. So it meant ours had to adapt and yet provide seamless services from day one.
This is when we determined that we had to put in place a robust, cutting edge technology framework and architecture that ensured Confidentiality, Integrity, Availability (CIA) and Security to all clients and their customers at all times.

Customer confidentiality
We provide customer acquisition, customer retention and customer service solutions for global companies in the banking and financial services, utilities, telecom and media industries. That means we process credit card numbers, social security details, loan information, status of receivables to mortgage companies, etc.
This involves authentication of customer information like home telephone numbers, addresses and other data at the simplest level to verification of encrypted data at the high end.
All of this means that unless our technology provides the highest level of data security and confidentiality, companies and their customers will not trust us.
So how does our technology ensure this? As a safeguard, this personal information is split into separate databases so that sensitive data and customer names are not linked on the same table. This linking happens only through a software programme.
In most cases, this type of information doesn't even pass through our system. Instead, it remains on the client's own database servers, where we use 'thin client technology' to access it remotely.
The computer keys we press in India are treated as input by our client's system, and the output from that application can be redirected to our monitors here in India. Currently, a majority of our clients operate on the thin client technology, in which actual customer data never goes offshore.

Safeguarding the customer
We have a full time security team dedicated to the task of monitoring hacker sites, scanning the horizon, collecting and analysing intelligence and taking preventative action. Having this in-house security team that conducts much of its own detective work is unique in itself.
In addition to gathering intelligence, this team regularly tests our internal procedures by mounting simulated attacks and seeing how our systems respond. The internal safeguards aside, our InfoSec team also audits client security at installations to verify their effectiveness of controls.
This is done as part of our systematic Plan, Do, Check, Act, template to ensure security of data at all times and we have discovered that even the most experienced and vigilant systems can be improved upon.
Intrusion management in most companies including clients is limited to detection. But we have taken our Intrusion Detection Systems (IDS) a step further with the deployment of Intrusion Prevention Systems (IPS). We also maintain a thorough audit trail for forensic purposes.
Every time we log an event into our database, a timestamp is created, and a chronology of events is stored in a database. In the event of a suspected security breach, our team can go back to this database and derive the timeline of activities with great precision. We can then use this data as electronic evidence for forensic purposes, should it be required.

Availability to customers 24 X 7
Continuity plans form an integral part of the business strategy and are inherent to all our service offerings to clients. We have taken a three-tiered approach to our business continuity planning (BCP) strategy. At the core of our BCP solution is the Center BCP approach.
A thorough risk assessment using CRAMM (a state-of-the-art risk assessment tool recommended by NATO) forms the basis for developing our Center BCP. The plan addresses all possible threats to physical assets under the CIA.
An example of this would be a four level power redundancy plan to ensure continual power supply even, if there were to be a power blackout. The Center BCP ensures that our infrastructure is up and running 24X7
The second tier of our BCP solution is the Enterprise BCP wherein as a service provider we have taken a provisioning approach with investments in additional bandwidth and the decision to invest in a self-healing network.
What this essentially means is that the network can independently and judiciously take care of re-routing traffic from higher points of congestion to lower points of congestion and counter the threat of link failures and point-of-presence failures.
This is possible; given the virtual clouds the company has formed to link multiple points of presence in the United States and the Untied Kingdom and the multiple delivery centers in India (Figure 01).
The last tier of our BCP strategy is the Client BCP -- wherein the client undertakes a business impact analysis for each process assigning criticality to each process and specifies the RTO's & RPO's. For the uninitiated, RTO's are Recovery Time Objectives, while RPO's are Recovery Point Objectives, outlined, prioritised and specified for each process by our clients.
For example the client would specify that in the case of a denial of premise scenario, due to a natural disaster or fire a particular process would need to be recovered within 'x' hours. Sometimes the client RTO's require zero downtime in which case the same process would need to be run from two parallel locations. The RPO's would similarly refer to data retention requirements.
Based on the RTO's & RPO's we customise the BCP for each client. We have always managed to execute these BCP's for our client's faultlessly on demand and at the time of the internal audits.
To quote an actual example, one of our clients had specified an RTO of four hours and then surprised us one day with a request to execute. He actually traveled from the operational site to the BCP site with our employees and was pleasantly surprised to note that we had managed to recover operations of the processes within an hour of his request, effectively meeting the client RTO outlined in the his business continuity plan.
Another strategic technology initiative that ensures a high degree of availability across the end-to-end network is our Network Operations Centre (NOC). A centralised monitoring and control system, the NOC reduces the involvement of multiple contact points for problem resolution and ensures seamless integration and 24/7 monitoring of all critical WAN devices and links.

Customer security
We were India's first BPO organisation to attain BS7799 certification. Our policy therefore ensures that information systems are protected against unauthorised access and confidentiality of information is assured.
Our comprehensive security practice covers physical security, network security, applications, desktop and voice & data security. What it means is that clients are ensured of global standards of information security and data protection.
Security for us is a continuous process -- the framework incorporates the global standard from the Deming's Cycle, of a systematic Plan, Do, Check, Act, template that is based on a clearly crafted security calendar. Essential elements of this calendar are audit surveys conducted by both external auditors as well as internal auditors.
The audit reports are then shared with all our clients. Security briefings at induction, regular refresher courses, and customised briefing updates for our specialist staff such as guards and system administrators - also form an integral part of the calendar.

People security
But while the CIA model is used to ensure customer satisfaction and security of data at the high end, interestingly enough, the world over most security breaches the world over are attributed to the human factor.
It has been our endeavor to classify all client information as confidential and utilise the triple AAA model to ensure security. As part of the triple AAA model relying on Authentication, Authorization & Accounting we have swipe cards with restricted access.
Given that an employee can walk in today and take pictures of a computer screen with his cellphone -- all employees are required to leave bags, cell phones, PDAs and notebooks outside the workplace area in lockers.
All physical notes of conversations with customers are put through shredders at the end of each shift. Two factor authentications are used to limit and secure remote management access of data and resources.
ICICI OneSource leverages technology to perfect the 'templatisation' of centre resources and has setup a centralised control over enterprise resources, change control, access control and configuration management, allowing for little or no disruption in customer service delivery.
Thus, our goal in every project is to align our technology initiatives with the business processes of our customer's and advance their overall mission. Needless to state -- understanding that mission and how our customers operate, is critical in making technology a tool for customer service and not an end in itself.

The author is Managing Director and CEO of ICICI OneSource.

US accounting work for Indian BPOs

July 14, 2005 19:58 IST

A growing number of US companies are looking to India's outsourcing firms to cut the cost and time needed to comply with a US corporate governance law that calls for timely and accurate reporting of financial accounts.
The Sarbanes-Oxley corporate governance law, passed after a series of abuses by greedy and unscrupulous corporate executives and their advisers, requires US public companies to report on the strength of their internal financial reporting controls to prevent fraud and ensure the accuracy of company filings.
Over a year into the gradual implementation of the law, companies say compliance with Sarbanes-Oxley is costly and complicated, prompting them to outsource the work to India.

Some Indian outsourcing companies said their Sarbanes-Oxley related business is growing more than 50 per cent a year, aided by costs that in some instances are a third of those of the US accounting firms, the Washington Post said in a report on Thursday.
Public companies in the US spent about $5.5 billion last year to comply with the new law and are likely to spend $5.8 billion this year, according to AMR Research, a technology research firm in Boston.
On Tuesday, Infosys Technologies Ltd said Sarbanes-Oxley related orders contributed to its more than 35 per cent profit growth in the quarter ended June 30.
Patni Computer Systems Ltd, another large software and outsourcing company, is helping US clients follow the new rules by building and testing new computer systems that track transactions and approvals, said Bill Benton, the firm's "principal solutions architect."
ExlService Holdings Inc, an outsourcing specialist headquartered in New York, which has operations in India, said 18 large clients of the company had come to it with compliance problems.
It estimated that more than 5 per cent of its revenue is Sarbanes-Oxley related.
That percentage is likely to grow, said Rohit Kapoor, the company's president.
"Doing this kind of business advisory service is becoming an integral part of our growth."
The Post quoted analysts and companies as saying that the compliance projects are often part of broader system upgrades.
More work could be up for grabs over the next few years as smaller and, finally, foreign companies, will be required to comply with the law, first in annual reports and then in quarterly reports.

Flexible Outsourcing Model Keeps India on Tap

3 Questions:
Flexible Outsourcing Model Keeps India on Tap
Outsourcing for Strategic Advantage, July 13, 2005

With Gurvendra Suri, CEO of Optimal Solutions Integration Inc., a Dallas-based enterprise-technology consulting firm. Optimal Solutions offers a flexible delivery model that includes onsite, domestic rural and offshore options.

Question: Recently, the press has reported that India's IT wages are starting to climb. How do you see these rising wages affecting the offshoring industry in India?Suri: There has already been a great deal of debate regarding India vs. the rest of the world. While emerging entrants such as Eastern Europe and countries such as China will certainly gather some interest based on low pricing, we remind our clients that it is not a simple question of the lowest hourly price dictating the best value. While low price is certainly a consideration, it is only one part of the equation that determines total costs. For example, the expense in terms of managing offshore IT relationships — which some put in the range of 8 percent to 10 percent of the contract's value per year — must be considered. Newly emerging offshore suppliers can often exceed this threshold simply because their processes and methodologies are not as well established as those of Indian vendors. They can require more handholding and supervision, and the cost for this should not be overlooked. On the topic of execution, it is well known that the transition phase is the most problematic and costly period in offshore outsourcing. Again, Indian suppliers excel in this area given their experience and the maturity of their processes. While it might take approximately three months for a competent Indian supplier to work through this aspect of an engagement, a firm with limited experience who must learn the transition process in general, while concurrently struggling with the actual transitioning of the client's knowledge, can easily burn twice this amount of time. Adding this extra time and expense to an engagement clearly demonstrates the Indian advantage, even with a higher hourly cost. Legal fees and the costs of arranging contracts also must be considered. The Indian legal system is very similar to the British system and very easy for U.S. companies and their legal counsel to understand and negotiate. This is not always the case with other geographical regions where the legal systems and processes are either unknown at best, or unenforceable in the worst-case scenario. It is our experience that when one considers the overall costs (many elements of which are largely ignored) the decision to tap India is clear and justified.
Question: Will these higher rates affect your clients and your flexible delivery model?Suri: We are not heavily involved in those commoditized areas of pure-play offshoring where profit margins are sustained solely by low hourly wages. The bulk of our work is in developing, implementing and customizing global enterprise systems for large organizations. In this context, the cost savings provided by our offsite development resources are still compelling. We do not anticipate that rising rates in India will significantly impact our ability to deliver secure reliable, competitively priced services.

On-demand ERP player launches India ops

Intacct Corporation is looking at India for development and also to engage the market.

Wednesday, July 13, 2005

US based ERP software provider Intacct Corporation has announced the launch of its Indian operations. With the belief that all software including ERP would be delivered as a service in future, the company looks to deliver ERP software services to ISVs, BPOs and enterprises in India.
Intacct, which is IBM's only ERP on demand partner, focuses on developing and servicing the company's expanding suite of web-based ERP applications. IDC expects the worldwide sales of software as a service to grow 21 percent a year, and touch $10.7 billion in 2009.
Intacct CEO Robert J Jurkowski said, “We already have alliances with Indian BPOs like Outsource Partners International and GHS Holdings. We hope to expand this further so that BPOs can provide ERP support and services for their customers.” Intacct started its operations in India in 2003 through a partnership with Minsu Infosystems Pvt Ltd. Now, it plans to merge with Minsu and double its engineering staff, which stands at 29, by the year-end.
Intacct engineering VP Nagraj Prabhu, who will head the India operations, said that all the innovation and IP at Intacct would be created in India. He also said that the company plans to eventually shift sales and support functions to India.
A privately held company, Intacct is funded by Deloitte&Touche, Goldman Sachs and others

Accenture to hire up to 30,000 in Asia

Accenture, the outsourcing and consulting company, is planning to hire up to 30,000 workers across China, India and the Philippines.
Board members announced their intentions to strengthen offshore business in a conference call last week.
Accenture currently employs 19,000 people in the three countries. The company said that, depending on demand, it could grow that number to between 30,000 and 50,000 over the next three years.
"We have recently made an important decision in our offshore strategy to dramatically expand our global delivery network," said Steve Rohleder, Accenture's chief operating officer. "We're actively recruiting in key locations throughout our global delivery network. Our approach is to defend and extend our position in the marketplace.
Rohleder added that the company is not limited to expanding in those three countries.
"If we get into a situation, for example, in India where a specific city has reached saturation from a salary standpoint and from a cost structure standpoint, we have the flexibility to move and to grow a different location--not only within India or China or the Philippines but also outside, say in eastern Europe or Latin America," he said. "And we have actually started that process as well."
The company made the announcement as it stated that its net revenue for its fiscal third quarter ending May 31 was $4.08 billion, the highest in the company's history.

Is Offshoring Demand Sustainable?

http://www.outsourcing-journal.com/jul2005-everest.html

Offshoring has become a proven business strategy because of its profound effects on both buyers and suppliers. Buyers are seeing dramatic savings by offshoring. Our May 2005 analysis found that buyers typically achieve over 30 percent net savings when they send work to a lower cost location.
At the same time, suppliers of offshore services are gaining dramatically in terms of revenue growth, margins, and cash flow. In a May 2005 report, co-authored by Everest Research Institute and Sanford Bernstein, our analysis showed that revenues of the top six Indian offshore services suppliers had grown at an annual rate of nearly 40 percent in 2004, while the top six traditional outsourcing suppliers registered only a three percent growth in revenue.
The Indian firms also benefited from increased cash flow. The top six Indian players combined generated $953 million in free cash flow last year, which was nearly equal to the aggregate cash flow of the six major players ($992 billion) excluding Accenture, which generated $1.3 billion in free cash flow itself.
Indian suppliers have further managed to maintain their net margins while registering such strong growth - a truly impressive achievement. The top six Indian suppliers averaged a net profit margin of 21.7 percent in 2004, with Infosys reporting the highest net margin at 25.6 percent. On the other hand, the top six major traditional outsourcing suppliers achieved an average net margin of only 4.3 percent, with ACS leading at 9.2 percent.
How Much Demand Can Offshore Suppliers Support?
Today, the question is no longer how much offshore demand can grow. Rather, the relevant query is: How much demand can offshore suppliers support? Our recent analysis showed that the IT offshore market can easily sustain a 30 percent annual growth rate, with the nascent BPO market capable of sustaining even higher growth.
It's time to ask these types of questions because a number of signs are emerging that point to supply-side constraints in offshore markets. We focused on India, one of the most developed offshore locations, as a representative market. But we believe supply-side constraints are showing up in every offshore locale.
In India, suppliers are now talking about new challenges. In June 2005, human resources (HR) issues dominated this year's National Association of Software and Service Companies' (NASSCOM) annual BPO conference. Of the many discussed issues, the two most important ones which are clear indications of the supply side concerns are attrition and wage inflation:
Attrition. Attrition rates are high in India because a growing number of global suppliers are chasing a limited supply of people. We found attrition rates for Indian IT workers range between 15-20 percent per year. For firms doing business process outsourcing, the attrition rates can reach, and even surpass, 60 percent annually.
Wage inflation. A 2004 Hewitt Associates study of IT-services employees found Indian wages rose 14.5 percent in 2004 over 2003. This year the supplier predicts some top managers could receive salary increases of 22.4 percent. Read "India Sees Performance-Linked Salary Hikes for Outsourcing Staffers in 2005."
Indian suppliers have already begun to address these issues. They are considering opening locations in Tier 2 cities instead of expanding in their traditional centers like Bangalore, Delhi, and Mumbai. Many talented workers who live in Tier 2 cities like Chennai, Hyderabad, Kolkata, and Pune do not want to relocate to Tier 1 cities. Suppliers are beginning to open offices in these cities in order to tap these resources, who are both talented and less expensive.
Suppliers will have to take other strong measures to be able to meet the burgeoning demand. They include:
Moving to new locations. This includes new cities within their home country as well as opening offices in other countries.
Tapping new educational pools. Currently Indian suppliers are hiring primarily from the pool of engineering and computer science graduates. They will have to expand their reach to college graduates in other fields to keep up with demand.
Reviewing their overall business models, including markets, pricing, and margins.
Whether suppliers will be able to cope with growing demand will depend on how well they can adapt to and overcome these challenges.
Publish Date: July 2005

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China catches up with India in outsourcing

John Cester thought he had found a big opportunity four years ago when he opened a business in China and hired local programmers to write software for Western companies.

But the initial response was less than enthusiastic, said the Harvard Business School graduate whose company, Freeborders, is in China's southern city of Shenzhen. Western companies seeking to outsource work were focused on India at that time, he said.

"The rest of the world was very skeptical," said Cester. "India was very successful, and people were satisfied that India was perfect, and there was no need to go anywhere else."

But as the number of US companies with operations in India increased, so did India's wages, personnel turnover and delivery problems, prompting clients to seek alternatives.

China, the Philippines, Russia, Poland, and Israel now are seen as growing alternatives for outsourcing.

In 2004, not a single buyer surveyed by Chicago-based management consulting company DiamondCluster International Inc said they were actively outsourcing technology functions to China. This year, 6 per cent of the buyers said that they are already in China.

Interest in moving some operations to China in the next three to five years has quintupled. The percentage of companies who expected to establish outsourcing operations in China in the next three to five years has surged to 40 per cent from 8 per cent just a year ago, according to DiamondCluster's survey.

By comparison, outsourcing to India is not expected to increase much in the next three to five years, it said.

"China is starting to look like India did 10 years ago," Tom Weakland, who leads the outsourcing practice at DiamondCluster said. "Manufacturing firms have been in China for a long time and IT services have just started to ramp up in China right now."

China attracts Western companies with its reliable infrastructure, skilled workers and domestic market. Wage rates in coastal cities such as Shanghai have gone up, but overall remain lower than those in India.

Analysts say China, already a $30 billion software market, has the potential to become the world's next software outsourcing center.

But the country must first overcome several obstacles such as deficiencies in English fluency and intellectual property protection.

Because China does not have as many fluent English speakers as India does, it has focused on other prospects of business process outsourcing rather than call-center work, or taking customer service calls.

"India may have a little big edge because of the language," said Trip Chowdhry, analyst with FTN Midwest Research. "But I have also seen a lot of cooperation as many Indian software companies have opened offices in China."

Freeborders' Cester said better infrastructure is China's biggest draw.

"We ask our clients to go to India first and then fly to Shenzhen, we couldn't have better sales materials than that," Cester said. "Because the minute you land in Shenzhen you can see the environment is much better."

US companies, as well as India's emerging software giants, are busy building operations in China.

Infosys , India's second-largest software exporter, has plans to build a campus close to Shanghai.

Accenture Ltd. started offshoring in India but is now beefing up its center, which employs Japanese speakers to serve clients in Japan, in China's coastal city, Dalian.

U.S. consulting firm BearingPoint started building its outsourcing base first in India but is now pushing aggressively in China. It employs about 1,000 engineers in the world's seventh-largest economy, and the number could rise to 10,000.

"China is coming to the forefront in terms of the demand," Manuel Barbero, vice president with BearingPoint said, adding that quarterly growth rate averages 25 percent there.

Costs of its China centers are about a quarter less than that of India, Barbero said.

China has developed strong expertise in transforming, integrating and implementing enterprise resources planning systems, Barbero said.

It also has more engineers who are familiar with the open source software, which is a free operating system favored in developing countries, he said.

India, instead, tends to focus on call centers and software coding. It moves upstream by handling more consulting work, analysts said.

India will occupy top slot in IT services by 2020

It will capture 6 p.c. of global share in IT software and services, says Assocham "India will be well-poised to double its present market share and capture six per cent share of the global pie in services and IT software by 2008-09," according to the findings of a study on `India's cutting edge in services' conducted by the Associated Chambers of Commerce and Industry of India (Assocham). Surplus professionals Alongside, India will occupy a leading position in providing services to developed economies of the European Union and other nations by 2020. For, by then, it is estimated that the country will have a surplus of 47 million professionals in the services and IT sector to be gainfully used by the recipient countries, the study has said. The Assocham study also reveals that in the export of services and IT software, India will face competition mainly from the smaller countries such as Pakistan, Bangladesh, Indonesia and Egypt, which it will conveniently take on as Indians will be enjoying a competitive edge in providing knowledge-driven services like IT and research and development (R&D). Releasing the study, the Chamber president, Mahendra K. Sanghi, pointed out that with the increase in offshore penetration and hike in the annual growth rate to 45 per cent from the current 30 per cent in export of IT and IT-enabled services (ITeS), the total exports will exceed $50 billion by 2008-09. Software exports Software and services exports, Mr. Sanghi said, touched $17.2 billion in 2004-05 with an annual growth rate of over 30 per cent. From a relatively low share of 10.02 per cent in 1995-96, exports of software services accounted for about 48.9 per cent of the country's total services exports in 2003-04. The trend highlighted the country's growing competitive advantage in production and exports of such services. Working age group By 2020, the study has pointed out, most of the developed countries will have problems in finding people in the working age group owing to the decline in birth rates. The EU is so concerned over the economic impact of the demographic decline and ageing that the European Commission has highlighted the need to review the immigration policies for the longer term. Between 2010 and 2030, at current immigration flows, the decline in the EU-25's working age population will entail a significant fall in the number of employed people and this will have a major impact on the overall economic growth, the functioning of the internal market and the competitiveness of EU enterprises.

Outsourcing helps smaller businesses too, consultant says

Outsourcing helps smaller businesses too, consultant says
By ALEX PHILIPPIDIS
Smaller businesses could tap into the potential savings that corporate giants have enjoyed in recent years by outsourcing work overseas, according to the head of a Chappaqua market research and intellectual property services firm.
The key for smaller businesses is forming cooperatives that aggregate enough buying power, demand for work and resources to justify shifting operations from the United States to countries with lower labor costs, said Dr. Alok Aggarwal, founder and chairman of Evaluserve.
"You're not just taking one job from the United States to India or somewhere else. You're also reducing your price level. This is where I believe co-ops come into the picture," Aggarwal said.
Among areas where startups could outsource and save, he said, were drafting patent applications and other legal documents, as well as handling business processes, such as customer call centers.
Aggarwal spoke minutes after he and a lawyer specializing in international business discussed outsourcing trends and challenges at "New Trends in Globalization of Services: What's All That Buzz About Global Outsourcing?"
The June 23 panel talk was presented by the World Trade Council of Westchester at Pace University's Lubin Graduate School of Business in White Plains.
Forrester Research has estimated that 3.3 million American jobs would be outsourced overseas by 2015. Aggarwal said many of the jobs outsourced from the United States will go to the world's current outsourcing leader India, which has attracted $17 billion in exported business activity.
Besides enjoying the world's second-largest population with more than 1 billion people, India graduates 2.5 million science and technology majors each year, 85 percent of whom speak English, more than double the number of Americans.
"The kind of reverence for science and technology they have in some of these countries, Russia, India, China, does not exist in the United States. And, it starts very early on in the school system," Aggarwal said.
India's brain gain is reflected at Evaluserve. Of the company's 750 employees, 725 work in India. Of these, half are MBA graduates, 25 percent engineers, 15 percent CPAs, and the remainder MDs, Ph.D.s, lawyers or holders of advanced economics degrees.
Aggarwal said India will face two challenges in coming years –– increasing competition from Canada and Europe and problems within its own borders such as its slow judicial system and the theft of $350,000 from four Citibank customers at an Indian customer-service center. Forrester has predicted a 30 percent drop in India's business-process outsourcing activity as a result.
A second panelist detailed another challenge to the growth of outsourcing: the nation's largest companies are unhappy with the results. A Deloitte Consulting study released last April found that 70 percent of 25 corporate giants surveyed reported negative experiences with outsourcing and one quarter of businesses shifted overseas work back stateside as a result.
The study, "Calling a Change in the Outsourcing Market," also found most businesses intended to continue outsourcing, but of nonstrategic functions like Web hosting and lower-level processes, with an eye to keeping savings rather than sharing them with vendors.
The survey should not prove a comfort to domestic economy watchers since most businesses burned by an outsourcing vendor switch to another one, whether in the same country or in another, said William B. Bierce of the New York City law firm Bierce & Kenerson P.C.
PREVENTING PROBLEMS
Bierce, the publisher of www.outsourcing-law.com and the Outsourcing Law & Business Journal, said businesses of all sizes can prevent many outsourcing problems by nailing down contracts that:
+ Assign an executive to outsourcing issues.
+ Set clear performance standards, and consequences for not meeting them, in contracts with vendors.
+ Define not only the term of the contract but the structure of the relationship: For example, will it be fee-for-services or a license?
+ Spell out upfront, ongoing and termination payments.
Other considerations, Bierce said, include protecting intellectual property and privacy, as well as the need for disaster recovery and business continuity rules.
Bierce urged the United States not to adopt the job-for-life approach to domestic jobs held by the European Union, but acknowledged along with Aggarwal that outsourcing has become a thorny domestic political issue.
Just how thorny, Bierce said, was brought home to him when he e-mailed Lou Dobbs to disagree with the CNN host's stance against U.S. businesses that subcontract work overseas.
"I had the temerity to respond by saying that outsourcing was a response to the necessity to eliminate waste and inefficiency," Bierce said. "Lou Dobbs growled at me for two pages."

Software Outsourcing and India

Software Outsourcing and India

(Date: 2005-07-11 06:59:31)
Topic: IT & Computers

Many global consulting companies and other organizations have studied factors which should be considered while choosing any software outsourcing destination. And all studies show that, there are two main criteria which should be considered while choosing any offshore outsourcing provider. One is local attractiveness of software outsourcing industry and second is the capability of workers. In India, software industry is the high paying industry and that itself makes it most attractive industry. While offshore outsourcing was started in way back 90's, it has grown and matured now to provide quality software development as per any standards. And Indian companies are very much interested in maintaining their quality. Highest numbers of CMM Level 5 companies are in India at present. On the other hand, other countries are not matching above criteria.Majority of fortune 500 companies are considering India as their preferred destination for software outsourcing. India has emerged as a 'value-for-money' destination that has both cost advantage and quality that matches the expectation of global multinational companies. Indian universities are producing above 3 million graduates and around 300,000 post graduates every year. Software outsourcing industry is the highest paying industry in India. So large percentage of these students choose offshore software development company as their destination. But India is not just about number of graduates. Every CEO or CIO wants maximum return on his investment and reduce the cost. So more and more companies in developed countries are sending their software development requirements to low cost software outsourcing companies in India. Although, India has not remained as the lowest cost offshore outsourcing provider, it has based itself on quality of offshore software development at right cost. Advantage India has achieved in software outsourcing is not overnight. Offshore Outsourcing has grown and matured with time. In 90's, companies like GE, Citibank and British Airways started outsourcing to India and till then it has gone through many phases to compete with the best. After Initial phase, companies like Nortel and Lucent started to outsource product development to speed it up and market faster. During this time, Indian majors like Wipro and Infosys also started. In the second phase Y2K bug gave lot of work to Indian companies and gave them enough finance to grow. And with that, they started in service provider section as well as in enterprise application development. Next wave was of BPO Industry which is till going on and supply is not meeting the demand. And along with these, software outsourcing is increasing continuously. According to McKinsey, software outsourcing will increase 30-40% every year for next five years. According to Forrester research, around 3.3 million white collar jobs will be outsourced by 2015. And according to Deloitte research, two million financial sector jobs will be outsourced by 2009. And major chunk of this software outsourcing and other jobs are coming to India. According to Paul Saffo, as told to business week magazine, "Indians have a reputation of being a brilliant educated class and now they are taking a lead in colonizing cyberspace."

TCS to hire 13,000 professionals in FY06

			This article from Rediff.com has been sent to you by ratnakumarc@hotmail.com.
			Click the following to access the sent link: Rediff.com - TCS to hire 13,000 professionals in FY06 TCS and Microsoft were selected as strategic partners by Sino-India Cooperative Office of People's Republic of China among other Chinese investors to provide IT outsourcing services and solutions to both the global market and domestic market.The JV will provide IT outsourcing services and solutions to all major worldwide markets particularly US, Europe, and the Asia Pacific region including China s domestic market. This article can also be accessed if you copy and paste the entire address below into your web browser. http://www.rediff.com/money/2005/jul/11tcs1.htm

UBS, Franklin Templeton plans backoffice in Hyderabad

UBS, Franklin Templeton plans backoffice in Hyderabad July 11, 2005 13:33 IST

The state government has roped in the Union Bank of Switzerland and Franklin Templeton for investing in the 20,000-acre Knowledge Corridor.
The two entities will be setting up their backoffice operations at Nanakramguda, on the city outskirts, which the state has earmarked for setting up a financial district.
Attracting these financial entities has been part of the state government's decision with regard to setting up a financial district in the Knowledge Corridor.
While UBS has been given the provisional allotment letter for 11.66 acres of land in that area, Franklin Templeton has been allotted 15 acres of land.
The land has been allotted at the rate of around Rs 80 lakh (Rs 8 million) per acre, amounting to more than Rs 9 crore (Rs 90 million) of investment from UBS and Rs 12 crore (Rs 120 million) from Franklin Templeton, according to Andhra Pradesh Industrial Infrastructure Corporation sources.
Earlier, there were reports about Franklin Templeton's plans to set up its backoffice operations at Banjara Hills in Hyderabad, though nothing emerged out of it later.
However, according to APIIC sources, this time it is confirmed that the financial entity will set up its operations at Nanakramguda as it has already been allotted land for the aforesaid purpose.
Franklin Templeton is one of the largest financial service groups based in the US that has $417.3 billion in assets under management globally.
It started its operations in India in 1996 where it manages Rs 16,254.84 crore (Rs 162.55 billion) of assets and has a presence in 33 locations nationwide.
UBS, one of the largest banking and financial services group in the world, reported net profit attributable to its shareholders of CHF 2,625 million in the first quarter of 2005 with the total operating income for its financial businesses being CHF 10,104 million during the same period.
It operates in over 50 countries and has a branch in Mumbai in India. UBS employs 67,424 people worldwide out of which 38.5 per cent are located in Switzerland, 38.9 per cent in the Americas, 16 per cent in Europe and the remaining 6.6 per cent in Asia.
Besides the international firms, regulatory bodies like the Insurance Regulatory Development Authority have also been allotted five acres of land in the area.
IRDA will also have a neighbour in the area in the form of Institute of Insurance and Risk Management that has been allotted five acres of land as well.Local players including Andhra Bank also seem to be keen on getting 10 acres of land in the area. According to sources, Andhra Bank is likely to get the final allotment in due course of time.

India to double its share of global software and services

"India to double its share of global software and services mktPress Trust of IndiaNew Delhi, July 10, 2005" - Press Trust of India - New Delhi, July 10, 2005

India is poised to double its share of the global IT software and services market to six per cent by 2008-09, a study has found.
"India will be well poised to capture six per cent share of the global market in Services and IT Software by 2008-09 as against its present share of three per cent. In next few years, the growth rate of IT and services will be over 45 per cent," the study 'India's Cutting Edge in Services' conducted by Associated Chambers of Commerce and Industry of India (Assocham) has said.
The study said Indians would occupy a leading position in providing services to developed economies like EU and others by 2020 as by then it is estimated that it would have a surplus of 47 million professionals in services and IT.
It also reveals that in Services and IT software exports, India will have competition only from smaller countries like Pakistan, Bangladesh, Indonesia and Egypt, which it will conveniently take on as Indians will be enjoying a competitive edge when it comes to providing knowledge-driven services.
Releasing the study, Assocham President, Mahendra K Sanghi said with the increase in the offshore penetration and present annual growth rate of 30 per cent in the IT and ITeS service exports, their total exports will exceed $50 billion by the year 2008-09.
Sanghi said, the software and services exports have reached $17.2 billion for the year 2004-05 and the annual growth rate is well over 30 per cent.From a relatively low share of 10.02 per cent in 1995-96, exports of software services occupied 48.9 per cent of India's total services exports in 2003-04.

The Outsourcing Institute - http://www.outsourcing.com

Reality Outsourcing was certainly the appropriate theme for the 2005 Spring RoadShow workshops. These no nonsense, 100% buyer and influencer audiences were ready, willing and able to discuss issues, learn, share and network. Following are key highlights of the San Francisco, Chicago and New York tour.
Most Popular Segments of the Program:• Reality Outsourcing: The Good, The Bad and The Ugly • Buyer/Seller Crossfire Panel • Interactive Breakouts on ITO, BPO, Shoring and Relationship Management• Real Buyer, Real Experiences Presentations
Common Buyer Questions:• How do I select a vendor?• How do you build innovation into an outsourcing solution?• What are the real savings to be realized in an outsourcing engagement?• How do we identify when and why to offshore or nearshore? • How do we help service providers help us? Critical Statistics:• $4.88 Billion in total anticipated outsourcing spend• 100% Buyer and Influencer audience only • 0% Service Providers in attendance • 52% Pre-Decision Buyers
Sample Companies Represented in Attendance: American Express AT&TBaxter Healthcare Caterpillar Inc. Charles Schwab Chevron TexacoCIGNA Deutsche Bank Discover Financial Services Fireman's Fund InsuranceGoldman, Sachs & Co. JP Morgan Chase Johnson & Johnson Kimberly-Clark Motorola Sun Microsystems
Most Common Vendor Selection Criteria:• Price• Reputation• Flexibility• Relationships
Buyers Advice to Service Providers:"Less hype, more substance""Know my business.""Listen""Deliver on your promises or you are toast."
Sample Buyer Commentary:"I liked the real life examples - very valuable." "Excellent - Typically, I don't receive practical and usable tools at a conference." "Good exchange of practical experiences and issues." "We paid consultants for several months to provide the information on dynamic SLA's that was on one slide.""What this conference provides is real dialogue between vendors and buyers.""Excellent Day - well spent time. Invaluable opportunity to learn from others." "Excellent overview about how we can fix a problem with outsourcing.""Great real world examples of the benefits of outsourcing.""This format really allowed for more interaction and networking.""The most qualified audience in the business and the most innovative and interactive format."
Finally, we owe a special thanks to our sponsors Afni, Aon, Baker & McKenzie LLP, Hitachi, Politec, Reed Smith LLP and VMC for helping to make these events possible.
For information on Fall 2005 Roadshow sponsorship opportunities contact your OI representative or Anthony Deuce at adeuce@outsourcing.com or 516-681-0066 ext. 112.

Indian IT services market grows 26.7% in 2004

Indian IT services market grew 26.7 per cent year-on-year in 2004 to touch 2.1 billion US dollars and is poised to rise to 5.3 billion USD by 2009, reports PTI. Indian IT services market grew 26.7 per cent to 2.1 billion USD in 2004 from 1.6 billion USD in 2003. The main drivers for the growth were segments like banking financial services, telecom and government. In 2005 the market is expected to grow 28 per cent as compared to 2004 to 2.7 billion USD. The growth of the Indian IT services market was much higher than the average for the Asia Pacific region. With the increasing integration for Indian economy with the global economy Indian companies are gradually realising the strategic importance of IT.

KPO may garner $16 billion by 2010

PTI[ MONDAY, JULY 04, 2005 01:37:07 AM]

KOLKATA: The size of knowledge process outsourcing (KPO) industry, the high-end services entailed in business process outsourcing (BPO) activities, has the potential to touch $16 billion by 2010 across the globe. In a study carried out by Baring Private Equity Partners (India) Limited, a leading venture capital financing firm, it was found that KPO industry has the potential to attract maximum venture capital (VC) financing in India since by definition, such activities were knowledge-driven and not capital intensive. The Baring report said that it was expected that financing of merger and acquisition (M&A) activity would be the major uses of venture capital in KPO. Comparing between KPO and BPO, the study found that revenue per hour in the former was eight dollar to $11 per hour, while it was $22 in the case of the latter. Capital expenditure per seat in both the activities were more or less the same at $ 6000 to $8000. The study said that higher revenue and better profit per seat would make KPO a compelling investment proposition.

The major KPO activities were financial analysis and equity research, market research, risk management, data mining, business research, R&D outsourcing, animation and simulation. Zeroing in on the locations which were attractive for KPO activities, the Baring report said that Mumbai would be an ideal place for financial analytics, while Kolkata, Gurgaon and Bangalore would provide decent living conditions. While Gurgaon and Kolkata were once again ideal for space economy and connectivity, places like Noida and Hyderabad were attractive for good infrastructure. In this context, the report said that Eastern India was a natural choice for KPO activities since Kolkata had a large pool of educated and skilled people with good English communication skills.

The takers for KPO would be investment banks, industry associations, consulting firms and corporate planning departments of large multinational corporations. As per Nasscom estimates, the KPO industry was expected to grow by 45 per cent by 2010. Out of the $16 billion which the KPO industry was likely to assume by 2010, around $12 billion would be outsourced from India.