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Research agency Gartner estimates that in 2002 the total BPO business worldwide was worth US$110 billion and of this amount only US$1.2 billion, or just 1 per cent, was sent offshore to other countries. By 2007, predicts Gartner, the total BPO business will grow to US$173 billion of which US$24 billion or about 14 per cent will be sent to other countries.

11,000 jobs may go: ACS

05.31.04 (7:59 pm) [edit]

[b]Simon Hayes and James Riley[/b]

UP to 11,000 IT jobs will head offshore in the next five years as the trend towards shifting technology work overseas gathers steam, but Australia's peak body for IT workers has decided not to support proscriptive legislation, calling instead for a "responsible approach" to offshoring.

In a detailed report and policy statement on offshoring, the Australian Computer Society has demanded tougher hurdles for government departments that want to offshore, and additional support for the local industry.

The ACS commissioned the report from analyst Whitehorse Strategic.

The leadership of the ACS - which changed between the report being commissioned and its release - has cautioned that the job loss numbers are "not endorsed by the ACS".

The report argues net job losses - after taking into account 7000 jobs created by overseas ICT work performed in Australia - could be as high as 4000 over five years.

"Whitehorse has put a number of, I think, 4000 over the next five years," president Edward Mandla said. "It's an estimate. It's probably fair to say that thousands of jobs may well be lost."

Mr Mandla said a "feeling of absolute panic" that had hit the industry would not be enough to drive policy changes.

"My change of thinking, and you can see this in everything that we do, is that the IT perspective is fantastic, but we are not going to get anywhere politically or gain any ground for our members unless we start talking in language that politicians understand, and we are arguing economically."

The organisation has effectively dismissed Labor moves to legislate on the issue, calling instead for more support for the local industry.

"We know from experience protectionism doesn't work," Mr Mandla said in launching the report. "We know that in the short term tariffs may protect jobs, but in the medium and long term you're not more competitive.

"We are arguing that if you jump into a fad, the risk is that you may not get the cost savings you want."

The report warns that offshoring will end up costing Australia $450 million in lost economic activity and $135 million in lost tax revenue over five years unless it is balanced by IT services exports.

"Unless Australia can increase IT services exports at a faster rate than it loses economic value through outsourced repatriated profits and exported jobs, Australia goes backwards economically," the report finds.

To help improve that capability - and hold offshoring in check -- the ACS is asking the Federal Government to endorse a list of recommendations.

Top of the list is making departments and agencies comply with an offshoring cost-benefit checklist, designed to add "vigour" to the decision-making process.

The checklist requires departments to examine issues such as cost-benefit, effect on reputation, risk and national security before offshoring. The ACS wants the Government to promote the checklist among corporates.

The ACS also wants more support for laid-off IT workers, stronger industry development policies and an agency dedicated to marketing Australia's IT industry.

Companies selling offshoring services into Australia were bypassing chief information officers and "going straight to the board of directors", Mr Mandla said. "CIOs need to have at their fingertips benchmarks on their own workforce, and they need to have done some trial programs so they know what is possible," he said.

The danger was that organisations could send certain IT roles offshore, only to be forced to bear the expense of bringing that work back in-house if offshoring falls short of expectations, he said.

Government departments and agencies would almost certainly follow the private sector in sending jobs overseas -- either directly or through third-party outsourcing partners, Mr Mandla said.

While the ACS leadership was adamant it did not want protectionism, one member was not convinced.

Ana Govan, a government IT worker from the Northern Territory, said legislative action was essential.

"It should be embodied in legislation -- it's the only way to circumnavigate the decisions of large organisations," she said.

Ms Govan said "a level playing field never really exists", and the industry needed protection to compete effectively.

Sydney IT consultant Chris Abood said companies had a right to cut costs to become more efficient, but there was a lack of "long-term thinking" at executive level.

"A lot of offshoring will hit problems in call centres, where customers will get frustrated trying to deal with people who don't have local knowledge," he said.

The ACS report has been welcomed by both sides of politics.

"Contrary to the emotive claims of some critics -- many of whom are using the issue to push their own political agendas -- outsourcing services to other countries does not spell doom for the Australian or any other workforce," IT Minister Daryl Williams said.

"There is evidence that globalisation is presenting opportunities for Australian industry and that those opportunities are being seized by our local industry with gusto."

Mr Williams said the Government would consider the ACS recommendations on offshoring -- including its cost-benefit checklist -- and it generally supported industry best-practice guides.

Opposition IT spokeswoman Kate Lundy was supportive of the ACS recommendations as a "first step", and called on the Government to immediately adopt the checklist.

"This is a practical first step to stem the tide of ill-informed offshoring, and the ACS is to be congratulated for the work it has done," Senator Lundy said.

"The report highlights the nature of the threat and that a trend is there, but that offshoring hype could adversely affect Australian jobs," she said.

Companies that send work offshore said where the work was performed was not relevant to a customer's decision on purchasing services.

Infosys Australia managing director Gary Ebeyan said: "It's a myth that we just throw everything offshore.

"Whether Infosys Australia chooses to leverage its global network should not influence the buying decisions of the customer.

"Protectionism translates into not being competitive in the global market."

Mr Ebeyan said guidelines such as those proposed by the ACS could be useful, but would vary from company to company.

The economic impact of offshoring should be seen in the context of the entire economy, he said. "We can't look at the industry in isolation. If some jobs are lost in IT, what would the impact have been if we didn't offshore?"

Local companies welcomed the findings, warning that the benefits of offshoring were often exaggerated.

Volante Group managing director Allan Brackin said quality could be an issue and offshoring didn't always deliver the goods. "The ACS guidelines are a start. The Government needs to look closely at what they do when they go offshore."

Mr Brackin said many smaller deals were being done in Australia because the benefits of having them done overseas "aren't that great".

The ACS has had some support from unions, with the Community and Public Sector Union - which represents employees at Telstra and IBM - welcoming the report,

"Offshoring could profoundly affect hundreds of thousands of workers in Australia," national secretary Adrian O'Connell said.

"Our major concern is that the Government doesn't seem to be taking it seriously."

The Australian Services Union - which represents workers at companies such as IBM, Equant and Logica - said government in particular should introduce guidelines.

"The Government has an absolute obligation to think of the public interest," said executive president Sally McManus.

Meanwhile, the ACS has sharpened its political representation in Canberra, appointing lobbyist Allan King Consulting to represent it.

The company was engaged six months ago to improve the society's access to policy-makers.

Edward Mandla met Mr Williams a month ago to discuss the ACS position on offshoring and education.

Yesterday, Mr Mandla met Brendan Nelson at Parliament House to put the ACS view on minimum computer literacy levels for school-leavers, and re-skilling initiatives for IT workers displaced by offshoring.

Allan King said he hoped to set up meetings for Mr Mandla with Industry Minister Ian Macfarlane and Employment and Workplace Relations Minister Kevin Andrews in the next few months.

[i]The Australian[/i]

Wipro named among top 10 outsourcing vendors in US

05.31.04 (7:56 pm) [edit]

[b]Business Standard[/b]

Wipro Technologies, the global information technology (IT) services division of Wipro Ltd, has been listed as the leading Indian company in the top 10 leading outsourcing vendors in META Group’s recently released North American list of leading outsourcing vendors.

The other Indian companies who were rated include Infosys and TCS. According to analysts, Wipro has been rated higher than peers like Infosys and TCS because of its ability to provide a wider bouquet of IT services and solutions than any other Indian software service provider.

Wipro has been bunched in the ‘challenger’ segment alongwith Hewlett-Packard, ACS, Unisys, Perot Systems, TCS and Infosys. The Meta report has classifised the leaders in the North American market as Accenture, IBM Global Services, CSC and EDS.

“This is clear proof that Wipro is now being considered in the same league as the bigger multinational players and vinidcates its efforts at trying to be an end-to-end player,” a Wipro official told Business Standard.

Wipro Technologies was acknowledged for its leadership in quality practices, its cost structure and higher growth rates relative to other offshore and domestic vendors.

“We are pleased by our favourable rating in the METAspectrum based on our global presence and delivery excellence in providing quality IT, BPO and Product Design services to our clients, across the globe,” said Sudip Banerjee, president - enterprise solutions, Wipro Technologies.

“This rating validates our approach in achieving the vision of being amongst the top 10 global IT service providers and inspires us to work towards providing yet better value to our customers.”

Wipro Technologies serves more than 300 customers across the US, Europe and Japan (50 of these are Fortune 500 companies), offering software application development and maintenance, IT consulting, business process outsourcing, product design, system integration and remote infrastructure management services.

It operates in 30 offices worldwide and has about 25,000 IT practitioners and domain consultants. It is part of the TMT (Technology-Media-Telecom ) Index of the New York Stock Exchange.

“We developed METAspectrum to enable IT professionals to quickly evaluate vendors based on their ability to deliver on the presence and performance criteria that matter most in a given market,” said Dean Davison, Vice President & Director, META Group.

Recently Wipro has been positioned as a strong contender by a rash of research reports from leading analyst houses like Meta, Gartner and Forrester.

Gartner had rated Wipro ahead of Infosys, TCS, Deloitte Consulting, and EDS in the emerging web services consulting and system integrators quadrant report.

Offshore outsourcing rockets in 2004

05.28.04 (3:30 am) [edit]

By Robert Jaques
[b]Business process outsourcing set for bumper year, predicts Gartner[/b]

Offshore business process outsourcing (BPO) will generate revenues of $3bn in 2004, a 65 per cent increase from the 2003 total of $1.3bn, industry watchers have predicted.

But the research note from Gartner warns that the industry will not sustain such high revenue increases in the future, even though offshore BPO has enjoyed high growth rates recently, and is predicted to accelerate through 2004.

The analyst firm estimated that this year, offshore BPO would represent 2.3 per cent of the total BPO market.

"Offshore BPO is an emerging, but immature, opportunity. There will be slower adoption of offshore BPO through 2007," said Robert H Brown, principal analyst at Gartner, in a statement.

"As the service delivery matures, and as users and service providers overcome various operational, cultural and socio-political issues, growth will resume toward the end of the decade and will synchronise more with overall BPO growth."

Gartner found that the majority of offshore BPO business involves contact centres, including voice, email and chat, while the remainder is for back-office transaction processing services.

The analyst advised organisations to map the entire customer process, particularly the intersection between the parts that are outsourced and the functions that are retained.

"The recommended plan for a successful outsourcing relationship is careful planning, integration, and management of outsourced channels, functions or processes where they remain part of the enterprise-wide strategy for customer service," said Brown.

"To build successful service delivery, clients and outsourcers must understand the entire process and clearly articulate who is responsible for which piece to ensure that nothing falls through the cracks."

Telstra finally admits jobs going offshore

05.27.04 (3:18 am) [edit]

Telstra is sending 450 software jobs to India as part of its outsourcing agreement with IBM Global Services.

As part of the deal with IBM, which manages and develops software applications for the telco, Telstra said yesterday it expects to save hundreds of millions of dollars.

Telstra's regulatory, corporate and human relations managing director Bill Scales outlined details of the savings, when appearing before a Senate committee.

"It has delivered some benefits to us; our estimates are certainly in the hundreds of millions of dollars," he said, adding that the savings will occur over five years.

"We are simply responding to the highly competitive marketplace in which we operate; we are committed to the IT sector in this country." Telstra's offshoring moves have come under severe criticism from the Opposition and the union movement both of which want the government to put a stop to any jobs going offshore as part of its 50.1 percent stake in the telco.

Before the hearing, Telstra repeatedly denied jobs were going offshore.

Telstra CEO Ziggy Switkowski also came under fire for not fronting at the parliamentary hearing.

Labor Senator Sue Mackay said Dr Switkowski failed to attend despite repeated requests from the ICT committee. Senator Mackay asked Scales if the public should feel miffed by Dr Switkowski's no-show, as the head of Australia's biggest publicly owned company.

Scales said the CEO was heavily involved in a major review of Telstra's operations and was unable to attend.

[b]Sandra Rossi, Computerworld[/b]

A thumping vote

05.23.04 (8:04 pm) [edit]

Krishnan Thiagarajan

The latest report from Forrester sees jobs moving out of the US faster.

IN a striking vote of confidence for the offshore outsourcing trend, Forrester Research, in its latest report, has increased the projections of the near-term number of jobs to be offshored to low cost countries such as India. In a study titled, "Near-Term Growth of Offshoring Accelerating," John McCarthy, the lead author of this report with his team, has updated the widely quoted November 2002 report that had projected 3.3 million US service economy jobs to move offshore by 2015.

The key highlights of the Forrester report are:

[b]Near-term optimism[/b]

Based on an intensive study conducted, Forrester has increased the near-term offshoring numbers by 2.4 lakh for 2005. On a cumulative basis, the earlier projection of about 5.9 lakh has now been raised to 8.3 lakh for 2005. On a cumulative basis, the number of jobs projected to move offshore is likely to rise to 5.4 lakh and 8.3 lakh respectively, up from 3.15 lakh at the end of 2003. Going by these revised projections, nearly 2.3 lakh and 2.9 lakh additional US service jobs will move offshore in 2004 and 2005.

Forrester expects that the political backlash in an election year in the US will never go so far as to result in an outright ban on offshoring. However, it feels geopolitical risk (such as escalation of tensions between India and Pakistan or souring of US-China relations) may affect the offshoring trend.

[b]Unchanged long-term trend:[/b] Forrester has also claimed that its previous projection of 3.3 million jobs moving offshore by 2015 remains accurate. For that matter, it has revised the 2015 estimates upwards marginally from 3.3 to 3.4 million, an increase of about 1 lakh.
The positive triggers for this growth in 2004 and in 2005 (post US elections) and up to 2008 are expected to come from at least two areas:

[b]Commitment from `experimenters': [/b]The unrelenting media attention focussed on offshoring and its beneficial impact on US companies has encouraged several companies to experiment with this concept for the first time over the past 18 months.
Quite a few of them are likely to get hooked and over the next 18-24 months scale up towards greater commitment. This is also evident from two related trends:

One, the experimenters who are dabbling with offshore (typically Fortune 1000 companies) are the ones who are coming from different verticals such as retail, specialised manufacturing (such as product lifecycle management solutions) or healthcare.

Forrester calls it the second wave of outsourcing. Clearly, opportunities for offshoring are emerging outside the traditional verticals such as BFSI (banking, financial services and insurance), telecom, energy and utilities and airlines.

Two, over the past year, offshore vendors (particularly, the top Indian vendors) have been consciously enhancing the portfolio of service offerings to include package implementation, systems integration and remote infrastructure management.

This is expected to enhance the `share of the wallet' for Indian vendors, especially the top rung ones over the next few years.

While these two factors will definitely work on the positive side, there is a possibility of greater segmentation emerging in the software services industry over the next couple of years.

While the top rung companies will grow in line with or outperform the average industry growth, second and third-rung companies will have to carefully chart out their future course. Only a few of the second-rung players will be successful in replicating the strategy of the top-rung companies. Others will have to examine the possibility of a niche-based focus and work progressively in that direction.

[b]Tussle between MNC and Indian vendors:[/b]
The competition in offshoring will no longer be confined to the top 10 Indian vendors alone. MNC vendors such as IBM, Accenture or Cap Gemini have managed to considerably bolster their offshore capabilities and are already a force to reckon with. Secondly, both Indian and MNC vendors have recognised the importance of business process outsourcing (or BPO) and are stepping that up in a big way. IBM's acquisition of Daksh recently to acquire an Indian presence and the BPO subsidiaries set up by practically all Indian vendors show that greater integration of software services and BPO offerings may not be far away.

Obviously, the stage is set for the battle of attrition to begin between these two sets of players in the foreseeable future. Over the next year or two, both the Indian and MNC vendors will encounter several challenges.

As John McCarthy told eWorld at the Nasscom 2004 Summit in Febuary, "The challenge for IBM (or any MNC vendor) is going to be changing their culture around costs. The challenge for Wipro and Infosys (or other topline Indian vendor) is going to be how do we build the domain expertise into their culture.

So, both the parties need to make physical investments, process investments and cultural changes. And let me tell you, it is the cultural changes that are going to kill some of these guys. Not everybody is going to survive." As this battle takes shape, it will continue to provide ample fodder for the investment community and media in the coming months.

Offshore outsourcing rockets in 2004

05.20.04 (4:06 am) [edit]

[u]Business process outsourcing set for bumper year, predicts Gartner[/u]
[b]By Robert Jaques[/b]

Offshore business process outsourcing (BPO) will generate revenues of $3bn in 2004, a 65 per cent increase from the 2003 total of $1.3bn, industry watchers have predicted.

But the research note from Gartner warns that the industry will not sustain such high revenue increases in the future, even though offshore BPO has enjoyed high growth rates recently, and is predicted to accelerate through 2004.

The analyst firm estimated that this year, offshore BPO would represent 2.3 per cent of the total BPO market.

"Offshore BPO is an emerging, but immature, opportunity. There will be slower adoption of offshore BPO through 2007," said Robert H Brown, principal analyst at Gartner, in a statement.

"As the service delivery matures, and as users and service providers overcome various operational, cultural and socio-political issues, growth will resume toward the end of the decade and will synchronise more with overall BPO growth."

Gartner found that the majority of offshore BPO business involves contact centres, including voice, email and chat, while the remainder is for back-office transaction processing services.

The analyst advised organisations to map the entire customer process, particularly the intersection between the parts that are outsourced and the functions that are retained.

"The recommended plan for a successful outsourcing relationship is careful planning, integration, and management of outsourced channels, functions or processes where they remain part of the enterprise-wide strategy for customer service," said Brown.

"To build successful service delivery, clients and outsourcers must understand the entire process and clearly articulate who is responsible for which piece to ensure that nothing falls through the cracks."

Tennessee Bill May Curb Offshore Outsourcing

05.16.04 (9:46 pm) [edit]

[b]NASHVILLE, Tennessee[/b]

[i]Governor Phil Bredesen[/i] has signed a law that may have made [i]Tennessee the first state to give businesses an incentive for not outsourcing data-entry and call-center work to cheaper offshore locales[/i]. The new law asks state procurement officials to give preference in bids for such services to contractors employing workers only in the United States. It was approved overwhelmingly by lawmakers last month and signed into law last week.

"It is significant because it is the first time for a state to do preferences for data-entry and call-center work through legislation," said Justin Marks, a policy analyst for the National Conference of State Legislatures.

The bill was filed in response to the growing controversy over outsourcing of white-collar jobs to India and other countries with large populations of educated English speakers willing to work for significantly less money.

Legislatures in 35 states have introduced bills seeking to address the issue, usually by banning the state from contracting with companies planning to employ offshore workers. Intense lobbying by business groups has helped prevent passage of those bills in other states.

Business groups say a ban would be illegal and could prompt other countries to retaliate by preventing U.S. companies from doing business with foreign governments.

The original bill in Tennessee sought to ban the state from contracting with companies employing foreign workers, but it was watered down.

The legislation doesn't affect existing contracts and is vague about how much preference should be given to bidders who hire only U.S. workers, leaving that task to the state's commissioner of finance and administration.

Lola Potter, a spokeswoman for the department, said the most likely answer would be granting extra points to contractors under the scoring system used to determine bid winners.

"We'll have to try to find a way to make that happen," she said.

[b]Associated Press[/b]

NEWSLINE

05.13.04 (9:25 pm) [edit]

Forrester To Updated Offshore Outsourcing Projections

Eighteen months ago Forrester Research, Inc. predicted that 3.3 million US services jobs would go offshore by 2015. These numbers have been widely quoted as part of the ongoing national dialogue around job growth and economic trends. Constant movement on- and offshore by both vendors and end-user companies are cause for further analysis.

During a press conference at the GigaWorld IT Forum, Forrester will update its offshore outsourcing projections. In addition to a closer look at the data behind the 3.3 million jobs,analysts John McCarthy, Stephanie Moore, and William Martorelli will present an analysis of what is hype and what is actually happening, and what has changed during the last 18 months. The briefing will also address the specific factors and jobs that are driving the offshore shift.

[b]Moreover.....[/b]

Gov't change not likely to affect IT in India

The fall of Atal Bihari Vajpayee's government in India surprised the IT industry there, particularly because most exit polls predicted that the prime minister's Bharatiya Janata Party (BJP) and its allies would cobble together a majority in parliament.

However, Vajpayee's resignation Thursday as the prime minister of the country and the likelihood of a coalition led by the Congress party coming to power with support from leftist parties, is not expected to dramatically change the business landscape in India or the IT industry, according to analysts.

"We are certain that the new government at the center will continue the excellent support to this sector that we have received in the past, both in terms of infrastructure and favorable policies," said Kiran Karnik, president of the Delhi-based National Association of Software and Service Companies (NASSCOM)

India has emerged as a leading offshore location for outsourced software development and business process outsourcing (BPO) by multinational companies, and in the year to March 31, 2003, BPO revenue was $9.5 billion. Some multinational companies have set up software development and BPO subsidiaries in the country.

"Although the results are contrary to what the exit polls suggested, I am confident that the next government will continue the good reforms and policies that are in force now," said Mike Weston, chief executive for offshore services of LogicaCMG PLC in London. "LogicaCMG is extremely bullish on India and will continue to invest and expand our Indian operations, and we see no slackening in our growth rate." LogicaCMG has a software development subsidiary in Bangalore.

Vajpayee's six-year tenure as prime minister witnessed significant reforms in India's economy, which helped the outsourcing industry. "The Vajpayee government gave a lot of push and motivation to the IT industry," said Girish Paranjpe, president of the financial services sector business of the Wipro Technologies division of Wipro Ltd., a Bangalore-based software services and business process outsourcing company.

During the Vajpayee government's tenure, there was a focus on improving the physical and social infrastructure, and the government took a number of measures that helped the IT industry, such as easing rules for companies wanting to list on stock exchanges abroad, liberalizing foreign exchange regulations, and allowing companies to invest abroad including in acquiring companies, Paranjpe added.

"The Vajpayee government also built a good image for India, which made customers comfortable about doing business in India," he said.

The folly of Vajpayee's government was that its economic policies did not trickle down to India's poor. "The reality is that 70 percent of India's population is in the rural areas, and they didn't see any dramatic changes in their condition," said Prakash Gurbaxani, chief executive officer of TransWorks Information Services Pvt. Ltd., a Mumbai-based BPO company.

The confidence in the Indian IT industry that a change in government will not affect business comes from the size to which the business has grown over the last decade or so.

"Both the IT and BPO industries in India generate large employment and foreign exchange for the country, and no government would want to spoil the party," Gurbaxani said.

Although the Vajpayee government did help the industry, India's IT and BPO industry has largely grown on its own strength. "Clearly the core value proposition that our industry can offer, which is high-quality service at a lower cost, continues," Gurbaxani said.

Even before the Vajpayee government came to power, a large number of multinationals like Oracle Corp. in Redwood Shores, California, and Texas Instruments Inc. in Dallas had set up their software and product design operations in India. A number of U.S. and European multinationals were already outsourcing work to Indian software services companies.

"The IT industry in India has been growing on its own steam, many years before the government realized its potential," Paranjpe said. "The IT industry has since then achieved strong momentum and a large base and stability, and there is very little at the government policy level at this point that can affect this industry."

The IT industry however expects the new government to continue the reform process. "There has been consensus on economic policy amongst all political parties in India," Paranjpe said. Even the left parties in India advocate reform. A number of multinationals have their development centers in West Bengal, a state that has been ruled by the leftists. "There is always a wide gap between political rhetoric and action," Paranjpe said.

Welcoming the Congress party's victory in the elections, Karnik added that it is noteworthy "that amongst the important milestones of India's progress in the IT industry was Rajiv Gandhi's enthusiasm and promotion of the sector." Rajiv Gandhi, a Congress prime minister, initiated a number of economic reforms, and tried to reform India's telecom and IT sectors, before his assassination in 1991. His widow, Sonia Gandhi, now heads the Congress party, and is tipped to be the next prime minister of the country.

"What the new government needs to do is to make sure that as a country we remain competitive, by lowering the cost of telecom, introduce data protection legislation that is pending, and project an image of general stability," Gurbaxani said.

"What we have proven by these elections is that we are a mature democracy and we can make a smooth transition from one government to another," Gurbaxani said. "That in itself will send a positive image to the world, including our customers, who are primarily concerned about stability within the country."

[b]By John Ribeiro, IDG News Service[/b]

Australia skeptic on outsourcing to India

05.12.04 (11:31 pm) [edit]

Even as the world goes ga-ga over India�s rise on the BPO horizon, there is one country that refuses to be charmed by the velvety Indian voice.

As the fourth largest democracy emerges a hot location for American and British firms � a la Dell, GE, IBM, Lloyds, who are flocking east to set up shop, Australia, however, is not very excited at crooning Indian tunes.

The former British empire, trying to come out of its colonial past, has been making a conscious attempt to exercise regional influence on the continents of Asia and Australia.

However, broader fears regarding immigration, maintenance of amicable trade relations and countering terror attacks remain pivotal concerns.

In such a scenario, the land of Oz is adopting a cautious approach about outsourcing to Indian shores as protectionist feelings surface in Australian trade circles over the rising trend of jobs moving to India.

Even as experts believe that offshoring results in savings of 15 to 30 per cent in costs to companies, there is a general air of skepticism surrounding the passage of jobs to India. In a dichotomy, the furore over outsourcing of high-tech jobs to India comes at a time when the Australian government is encouraging its companies to venture out to India in search of business opportunities.

A nation conscious of its ethnic identity, Australia has been extremely wary of opening the gates of freedom to migrants. And although recent years has seen a spurt in migration, thanks to students and entrepreneurs, the land of the kangaroos is not yet ready to strike job alliances with India through outsourcing.

Instead, to counter the offshoring trend, Down Under is now goading multinational corporations to set up their Asia-Pacific headquarters for IT support in Australia.

Recently, Telstra had announced offshoring of jobs overseas, including India. The move formed part of Telstra's plan to slash up to A$1 billion (S$1.3 billion) in costs by sending up to 1,500 jobs overseas over the next few years.

Likewise, outsourcing helps cut down costs tremendously for companies as the maintenance costs are much lower in India, when compared to Australia.

However, the move met with resistance as unions put up stiff opposition about jobs moving to India.

Evoking economic nationalist sentiments, the unions gathered public support for the campaign and urged the government to act in support of the local IT industry , before it is undermined completely by offshoring.

India's outsourcing and IT industry players have defied hurdles posed by the outsourcing brouhaha in the US, and have tried to hold fort in the face of numerous legislations, speaking volumes about the never-say-die entrepreneurial spirit of Indians.

Fears of losing jobs occupy the top rung in the minds of the Australians even as critics harp on outsourcing as essentially a method of 'exploiting cheap labour in an under-developed country'.

Moreover, trade pundits also believe that outsourcing does not actually add to cost cutting as there are a number of hidden costs involved.

Primarily, experts say that moving jobs is in itself a costly affair as setting up base in a new land requires substantial initial investment. An Australian trade analyst warns that costs spiral for the firm as they have shell out money to pay vendors� travel expenses, which can amount to four overseas trips a year.

Although a �soft cost�, high turnover in vendor�s headcounts should also be taken into account in terms of retraining and productivity.

There also exists a feeling that in the next decade, India�s human resources will get scarcer, and firms which had shipped jobs will have to make a comeback to their base. This will inevitably lead to an upward pressure on salaries of about 15 per cent in India as the demand for skills booms.

In other words, Australia is apprehensive of the Indian techie image, having successfully mastered great capabilities in terms of skill, using strict methodology and quality approaches to enhance reputation.

It is this fear psychosis that is working in the back of the minds of the Australians, sending jitters down their spine. Clearly indicating that Australia is not ready to say �Hello India!

Australia skeptic on outsourcing to India

05.12.04 (11:30 pm) [edit]

NEARSHORE Versus OFFSHORE

05.11.04 (10:32 pm) [edit]

[i]IDC study shows savings-based tipping point for selecting offshore versus nearshore resources for outsourcing projects[/i]
[b]by Jim Ericson, Line56[/b]

According to a recent report, cost savings is not the most important criteria for deciding to use offshore resources to outsource development projects, but cost benefits play a role in choosing nearshore versus offshore outsourcing partners.
The study was conducted by IDC at the end of 2003, and the results were compiled in a white paper that sampled the opinion of 127 U.S. IT management professionals. The report was sponsored by software and IT service provider Compuware, (which operates a nearshore development center in Montreal).

Availability of experienced professionals and access to specific technical skills were the top two criteria when deciding to engage offsite partners for software development or maintenance projects. These requirements appear to be the table stakes for outsourcing. The more interesting data point was the rise in demand for offshore services as savings increase, and the cost savings tipping point at which respondents said they would choose nearshore (defined here as Canada only) versus offshore (everywhere else) partners.

Respondents were asked separately at which cost savings threshold they would consider offshore and nearshore partners.

For example, when savings would be 25 percent compared to the cost of a U.S. provider, 20 percent said they would consider nearshore, and about 12 percent said they would consider offshore.

With a 50 percent cost savings, more than 35 percent would consider nearshore, and more than 30 percent would consider offshore.

When savings reached 65 percent, the remainder of the sample chose nearshore (about 10 percent) versus offshore (a little under 30 percent). The remainder of the sample, less than 10 percent for both questions, said they would not consider near or offshore partners.

Overall, the interest in offshore increased with realized savings, while the benefits of nearshore would be considered more often at lesser margins because of perceptions of less risk, more control and proximity. The report pointed out the lower Canadian currency value, and comfort factors of strong language and cultural similarities with the U.S. plus comparable technology adoption and skills.

The report examines the meaning of low versus high complexity projects, and value distinctions for local, nearshore, offshore and multishore outsourcing models. It contains some best practices for choosing a provider. It does not however address industry attitudes or the greater outsourcing market dynamic or detail some of the perceived non-cost advantages of offshore over nearshore partners, such as 24/7 development, project experience, and superior or specialized skill sets of some providers. The report is available at no cost at compuware.com.

Tata Consultancy Services Acquires Phoenix Global Solutions

05.10.04 (9:38 pm) [edit]

In a move to strengthen its offerings for the insurance industry, Tata Consultancy Services (TCS), a division of Tata Sons Ltd, has signed a definitive agreement to acquire, subject to regulatory approvals, Phoenix Global Solutions (PGS) from The Phoenix Companies, Inc. (NYSE: PNX). PGS is a provider of technology-business solutions to insurance companies across the globe.

The insurance-domain consulting expertise of PGS, which operates from a 6.6-acre campus in Bangalore, with added value of TCS' insurance practice, presents a unique value proposition for customers.

Commenting on the acquisition, Mr. S. Ramadorai, CEO, Tata Consultancy Services, said, "Our growth strategy has been a combination of organic and inorganic growth. This acquisition is in line with a focus to consolidate on the strengths developed by TCS over a period of time in the financial industry segments. This acquisition will give us an impetus to attract new customers and help grow our existing customers."

"This sale is consistent with our strategy to focus only on our core life, annuity and asset management manufacturing businesses," said Dona D. Young, Phoenix's Chairman, President and Chief Executive Officer. "TCS is a fine organization and is exactly the kind of company we sought to buy our subsidiary. We are pleased that TCS will provide us with similar services to those currently offered by PGS and will offer PGS employees the opportunity to grow with a large and dedicated technology firm."

Mr. Satish Bangalore, Managing Director, Phoenix Global Solutions said, "The acquisition by TCS will help PGS's growth plans, market penetration strategies and consolidation of its insurance offerings. Our insurance domain competency combined with the partner strength, will act as value proposition to insurance customers."

Established in 1996, PGS is a wholly owned subsidiary of The Phoenix Companies Inc., a leader in wealth management for more than 150 years with approximately US $47 billion in third party assets under management. PGS is a Total Transaction Service Provider (T2SP), providing Insurance solutions that encompass Information Technology, Business Process Outsourcing & Customer Care services to support business transactions. PGS also provides Transaction Processing support such as New Business Processing, Policy Administration Support and Distribution Administration Solutions. PGS has customization and implementation experience in various leading Insurance-technology products. Over the years, PGS has been providing these solutions to many insurance industry customers.

[b]Business Wire[/b]

Shell Inks Huge IBM-Wipro Offshore-Outsourcing Deal

05.04.04 (10:26 pm) [edit]

[b]Oil giant Shell inks a far-reaching IT services agreement with IBM and Wipro Technologies.[/b]
[i]By Paul McDougall[/i]

[b]European[/b] petroleum giant Royal Dutch/Shell Group has inked a far-reaching IT services agreement with IBM and Wipro Technologies in what media reports in India are describing as the biggest single IT offshore-outsourcing deal yet.
Wipro chief operating officer Rohit Kumar says a deal has been signed. Press reports from India, where most of the work will be performed, indicate the deal is worth more than $1 billion, though Kumar declined to disclose the agreement's value. "The opportunity is tremendous," he says.

Wipro plans to hire new employees as part of the contract and to transfer existing Wipro employees to the Shell contract. Kumar says that while Wipro may work collaboratively with IBM on some aspects of the deal, "it's my understanding that most projects will be handled independently." Wipro maintains virtually all of its IT support centers in India, while IBM has been building its capacity in that country to serve a growing list of customers looking to take advantage of India's low costs and highly skilled IT workforce. An IBM spokesman declined to discuss the deal.

Shell is reportedly looking reduce its IT head count by 30% over the next several years. The company employs about 9,000 IT workers and is hoping to save about $850 million as a result of the moves. Shell officials were not immediately available for comment.

A source close to deal says a disgruntled Shell employee leaked word of the outsourcing plan. As in the United States, the offshoring of IT and services jobs is becoming a contentious issue in Europe as more white-collar jobs move from the United Kingdom, Germany, France, and other European Union countries to low-wage locations such as South Asia and Eastern Europe.

BPO bops up the future

05.02.04 (9:45 pm) [edit]

Call-center operators expanding into the Asian region say the Philippines is seen to benefit from a �lasting� growth in offshore outsourcing, which they say is only just starting.

In their view, business process outsourcing (BPO) will keep growing for years with European and American consumers requiring increasingly complex services from companies. Experts believe outsourcing is not likely to die out as a trend, even with the United States economy emerges out of recession because managers not only find it reduces operating costs, it also raises productivity, thereby fattening profit margins.

In the US, where job growth has recovered slower than the broader economy, outsourcing has emerged as a hot election issue, with critics complaining that Asian workers are stealing American jobs. In reality, though, outsourcing barely makes a dent on the US labor market, experts have said recently.

The implication is that there is still a lot of room for growth in the BPO market -- especially with economies across the globe sparking new business as they gain further ground -- and more and more companies are expected to incorporate outsourcing in their operations since it provides them a cheaper and more flexible business structure and helps spur innovation.

Intellirisk Management Corp. chief executive Vikas Kapoor said BPO is not �a bubble that will burst,� but a global market that will continue expanding as constant product and service innovation by companies drive need for customer services.

Kapoor thinks the market will be large enough for India and the Philippines combined -- two of the hottest sites competing for the offshore outsourcing business. Both countries are high on the priority list for BPO outfits because of their English proficiency (which means no communications barriers with Western customers), cheap high telecommunications infrastructure, and technical skills.

[b]By JOSE VILLANUEVA - abs-cbnnews.com[/b]

The BLOG will keep track of the latest Offshore Outsourcing moves and news! This is an attempt to get closer to the market and verify actually whats happening! SHARE YOUR THOUGHTS AND IDEAS ABOUT THE PRESENT STATUS OF THE INDUSTRY IN DISCUSSION.

"Tax return outsourcing gives the accounting firm the chance to keep its preparation business and remain competitive," said Allan Koltin, president of Practice Development Institute, a practice management consulting firm based in Chicago. "I wouldn't be surprised if this becomes the norm in the next couple of years." - Accounting Today, March 2003