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.