According to the online survey of 145 executives from various industries, more than 30% of the respondents were planning to offshore their IT infrastructure in the next 12 months and another 30% were researching or evaluating the same with active interest. Interest in offshore BPO was also gaining more ground with 34% of the respondents planning to offshore some of their business processes in the next 12 months. Traditional application development and management will continue to lead in organizations' offshore outsourcing plans with more than two third of the respondents planning to offshore them in the next 12 months.

The study found that offshore outsourcing was increasingly becoming a strategic initiative at global organizations. At 38% of the organizations, offshore outsourcing was a now a CxO led initiative. An overwhelming majority of executives (87%) polled said that their offshore outsourcing spends would increase this year. On an average, organizations were likely to increase their offshore outsourcing spends by 34%.

"The findings confirm that offshore outsourcing has now become mainstream, there is a clear indication that various global organizations have gained confidence to offshore new and complex service lines like IT Infrastructure management and critical business processes" said Sudip Banerjee, President - Enterprise Solutions at Wipro Technologies. "And Wipro, being the largest offshore provider of IT infrastructure management and BPO services, is best placed to capitalize on this new wave".

In the offshore outsourcing space, entry barriers were falling and customers were ready to add new vendors. A sizeable number of respondents (40%) were keen on evaluating/initiating relationships with new vendors. Organizations with higher maturity in offshore outsourcing or those planning to offshore newer service lines like IT infrastructure management / BPO were more likely to do so.

Wipro has been recognized by IDC and Forrester Research as the leader in the offshore outsourcing space for its service breadth, partnerships, processes, technical depth and ability to move up the value chain, is best positioned to leverage the increased interest by organizations worldwide in strategic outsourcing.  

On Monday, as the California Senate passed a bill that would ban state agencies from contracting services out to companies that use overseas labour, opponents and proponents of offshore outsourcing clashed during a conference at Stanford University.

In a panel of two venture investors, a scholar, a software engineer and two chip industry chief executives most came out in favour of moving jobs overseas, to the dismay of many visitors to the Hot Chips event, which is sponsored by the Institute of Electrical and Electronics Engineers (IEEE).

"I think outsourcing is good for Americans, it creates jobs in America," said T J Rodgers, founder, president and chief executive of Cypress Semiconductor.

Rodgers disputed the notion that offshore outsourcing is rampant. "We are not going at a tremendous speed outsourcing jobs; it is simply not true," he said.

If critics of outsourcing were to look at publicly available statistics, they would find that "there is no catastrophe", Rodgers said.

But Ron Hira, an assistant professor of public policy at Rochester Institute of Technology and member of the IEEE Career and Workforce Policy Committee, took issue with those statistics.

There have only been self-interested, industry-sponsored studies that do not tell us much, he said.

"How much work has actually moved offshore? No one knows, because nobody has collected data on it. This is a major failing of government policy," Hira said.

The Department of Commerce is conducting a study, but is unlikely to bring up new information because it is underfunded, he said.

Despite his criticism of the research, Hira said it is clear that offshore outsourcing is accelerating. "It is a really bad deal for workers," he said.

Carl Everett, a partner at Silicon Valley venture capital firm Accel Partners, argued that outsourcing offers an opportunity companies should take advantage of.

By using offshore capabilities, they can bring a product to market faster and at a lower cost, which will increase profitability and ultimately generate jobs, he said.

Natasha Humphries was laid off last year from PalmOne after having trained workers in India to do her job as a software quality assurance engineer.

"Increased profit margins will create new jobs, but they may not be in the US and they may not pay as well," she said.

Humphries also noted wage depression as an effect of offshore outsourcing.

Salaries of between $75,000 (£41,700) and $125,000 a year for individuals with her skills are no longer the norm. "My skills are still marketable, yet I cannot market them at the same price," she said.

Some audience members appeared anxious about the prospect of losing their jobs to outsourcing. They called on panel members to pressure the government to take action against outsourcing.

Questions were also asked about how to motivate students to study engineering when the job outlook is grim.

Rodgers said taking a protectionist stance would ultimately cost more jobs than it would save because of a backlash by trade partners. "We will be a big loser and there will be a lot more people on the streets if you start attacking outsourcing," he said.

"Our plan is to hire about 2,000 engineers over the next five years," Rodgers said. However, there is a caveat. "We will go wherever we need to go to find those engineers."

US companies should create jobs in new areas such as biotechnology, nanotechnology and fuel cell technology, said Vinod Dham, co-founder of NewPath Ventures, which invests in companies that do most of their work overseas. "Where is the next event that will create a boom in the market for jobs?" he asked.

Meanwhile, the California bill banning outsourcing for government agencies is expected to pass the state assembly, according to local news reports. It will then land on the desk of governor Arnold Schwarzenneger, who has yet to express a view.

Joris Evers 

IBM Philippines president and general manager Joaquin Quintos IV urged high school graduates eyeing courses in nursing and medicine to think again and consider computer-related courses instead.

Quintos said employment prospects in the global information and communications technology industry were beginning to look promising with Western companies increasingly outsourcing information and communications technology (ICT) jobs overseas.

Despite a recent US backlash against offshore outsourcing, top global ICT and services firm still consider the country the top destination for outsourced jobs due to the availability of a "flexible" workforce that can speak and understand English, Quintos said at a gathering of Department of Science and Technology scholar-graduates.

Quintos said the ICT industry was not dead, as many perceived it to be following the dot-com bust in 2000.

The IBM executive said the ICT industry had recently been growing at a sustainable rate, which meant jobs  and more opportunities for businesses.

The global outsourcing phenomenon, however, required more just purely technical skills, he said.

"What is important today is not knowing the technology per se, although this is still critical for those that are in pure IT profession[s], say, [as a] software developer or a microchip designer, but rather knowing how to apply or use that technology," he added.

The ICT outsourcing opportunities encompass other fields including business management, accounting, and customer service, Quintos added. Case in point, he said, is the booming call center industry, where the Philippines is a leading contender.

The IBM executive acknowledged, though, that not all ICT graduates of local schools ended up working in the high-tech industry due to a mismatch between school curriculums and industry demands.

Various Sources

Moving customer data out of the European Economic Area could contravene Data Protection Act

An unnamed Lloyds TSB customer, back by the bank's internal union, yesterday launched a legal challenge against the firm's plans to outsource call centre jobs to India, on the grounds that it breaches the data protection act (DPA).

The Lloyds TSB Union (LTU) claims the bank is breaching the DPA by transferring customer's financial data outside the European Economic Area (EEA) without their written consent.

Richard Thomas, the Information Commissioner, is expected to rule on the case in the next few weeks - in what will be a key ruling for the industry.

Last October, the bank announced that it was closing its Newcastle-based call centre, with the loss of near 1,000 jobs, and moving the operation to India.

If the LTU's challenge is successful, it could have serious ramifications for the rest of the financial services industry.

A spokesman for the bank says it is confident that its actions are in line with the DPA and that it has adequate measures in place to protect customer data.

James Watson

London
Reporters of a British newspaper conducted a survey on the performance of insurance major Norwich Union's call centres in India and found them not only to be satisfactory but also cost-effective.

The snapshot survey was done by reporters of the Eastern Daily Press, and involved calling up numbers of the Norwich Union and its main competitor Churchill, a part of the Royal Bank of Scotland group.

Morwich had sparked controversy when it transferred thousands of Britain's jobs to new call centres in Bangalore and New Delhi. Customers said Indian staff were hard to understand and did not have enough knowledge of the UK motor industry.

In letters to the newspaper, customers had complained of being left hanging on the phone, of impenetrable accents and having trouble with straightforward queries.

For its part, Norwich said the performance of its Indian operations has been as good as its British sites.

For the survey, the newspaper's team of reporters dialled NU Direct to get a car insurance quote, followed by another to either Churchill - which has all its call centres in Britain - or a similar insurance provider.

Some calls were directed to Norwich's call centre staff in India and others to Glasgow or Liverpool.

All the reporters succeeded in getting quotes without much trouble, although the costs sometimes varied wildly - in one case from £555 to £1,068 for the same level of cover.

The consensus was that calls to Norwich's Indian centres could take a long time, with several misunderstandings over language and accents proving hard to decipher at times, but information did come by.

Indian call centre staff seemed eager to please by offering cut-price rates and free products thrown in, and had a parrot-like obsession with the Norwich Direct catchphrase "Quote Me Happy".

The reporters found that young graduates, keen to sell large numbers of policies to new and existing customers, mainly staffed Norwich's Indian call centres.

NU customer service director Simon Machell said the company had not seen a noticeable rise in complaints since the Indian call centres came on line. The staff was working hard to combat difficulties with language, he said.

"We receive around 1,000 complaints a month at our executive complaints department in Norwich, covering a huge range of issues from pricing to difficulties with call centres. The level of complaints tends to vary and the issues being complained about vary as well.

"In our experience it takes a little bit longer to talk to our Indian call centres, but our customers are, on the whole, not finding the language issue is getting in the way.

"As our Indian workers are getting more experienced, they are getting better at handling the calls, although we do not let them on the phones unless they can have an acceptable conversation with the customer. We're very happy with how the Indian centres are performing."

Source: Business Standard

With 5,000 agents employed at call centres throughout the island, Jamaica had the lion's share of the 13,000 agents that Datamonitor, an independent research group, estimates are employed in the region, including the Dominican Republic and Puerto Rico.

But while Datamonitor expects Jamaica's employment level to increase to 8,000 by 2008 - in line with the projected regional growth trends - Michael McMorris, executive director of markets at Jampro believes that far more individuals will be absorbed by the industry within four years.

"The independent assessment from Datamonitor is consistent with our historical rate of growth," says McMorris. "However, based on the surging interest we have seen from the US market, Jamaica may be able to grow at an even faster rate."

Puerto Rico, Trinidad & Tobago, and the Dominican Republic account for a combined 6,000 workers in the field; the other 2,000 are spread throughout Barbados, St Kitts, Grenada, St Lucia, Guyana, Antigua and St Vincent.

The research group estimates that offshore outsourcing primarily from the United States, and to a much lesser extent, from Spain, will grow from 13,500 agent positions in 2003 to 34,000 agent positions by 2008.

McMorris believes that Jamaica's expansion will have to be preceded by infrastructure development and human training.

"If we do not get these right now we will miss this opportunity," he cautions.

In comparing call centres at the major jurisdictions globally, Datamonitor pointed out that Jamaica shared a similarity with India - with both markets dominated by outsourcing from the United States.

While the Jamaican centres provide a variety of services - areas including financial services, communications, technology, distribution and wholesale and travel and tourism - the call centres in Latin America are dominated by financial and telecommunications services. These are primarily inbound services, complaints handling and payment authorisation calls.

In pointing to the possible constraint on growth posed by Jamaica's relatively small population, the research agency recommended that Jamaica be used by outsourcers looking for a nearshore alternative to Canada, for English (language) calls originating in the US and Central America.

American outsourcers are attached to the Caribbean by geographic proximity, comparable time zones, the availability of English speakers and the overall satisfaction with the quality of the labour in the Caribbean, the report concluded.

Observer Business Reporter

Nearly 40% of IT departments have an outsourcing policy that is out of synch with the strategy of the business they are supporting, according to research by GARTNER.

And despite the importance of IT outsourcing deals to the success of the business, 21% of IT directors questioned by the analyst firm said their outsourcing policy was "not at all aligned" with the business.

The snapshot of IT outsourcing emerged from a Gartner survey of 68 executives in large companies during its annual European Outsourcing and IT Services Summit in April.

The survey revealed widespread dissatisfaction with the performance of suppliers. More than 50% of those questioned, most of whom were IT directors, said they were in the process of changing suppliers.

The survey also underlined the rise of offshore outsourcing - 57% of respondents said they were considering outsourcing some IT to offshore locations.

IT directors' top priorities when outsourcing were: cost efficiency, service quality, adaptability and relationship management.

Few of those surveyed listed how to build a business case and disaster recovery as among their top priorities when outsourcing.

Wide area networks were the most popular part of IT to outsource, followed by voice and video networks and the IT helpdesk.

Asked how happy they were with different kinds of IT service - whether run in-house or from a supplier - respondents to the survey said they were most satisfied with distributed systems (Lans and PCs) and application support. They were least satisfied with IT helpdesks.
Nick Huber - ComputerWeekly.com

THE HUNDU BUSINESS LINE

Indian companies benefiting from the offshoring wave are doing a bit of sleuthing. They are making sure their US clients' data is safe by screening potential employees. 

GOOD things don't always come free of trouble, it seems. Take, for instance, the offshore outsourcing wave favouring Indian shores.

As US companies send more business to Indian companies here, a significant chunk of data that is critical in nature is getting offloaded here for processing.

The responsibility of making sure that this data is not misused lies with the Indian companies, or the vendors in this instance. In the absence of proper data-protection laws, these vendors have started taking steps to prevent leaks in manpower-related security.

As a first step, companies have begun background checks on their potential employees. Employee screening, considered critical in emerging markets due to lack of criminal databases, involves hiring an external agency to conduct personal and background checks.

As the industry witnesses a significant churn in employees because of high attrition rates, screening the background of potential employees becomes imperative considering the fact that quite a chunk of potential employees lie about their education, experience, and so on to gain jobs.

A study of 3,000 screenings by risk management consultancy firm Hill & Associates (India) Pvt Ltd has revealed that 30 per cent of the candidates had falsified their resumes.

Pre-employment screening has started gaining ground with Indian vendors too, says Ashish Sonal, country manager, Hill & Associates. "At present, about 30 per cent of the requests we receive for pre-employment screening are from Indian firms," says Sonal. Global firms that carry out pre-employment screening and that have been operating in India include Kroll, ChoicePoint and Intelysis.

Indian firms such as Globe Detective Agency also carry out pre-employment screening. The monthly volumes of all the players operating in the pre-employment screening could be in the range of 8,000-10,000 screenings, says Sonal.

Hill & Associates says it is the market leader in pre-employment screening but declines to comment on the volume of its operations.

Says Rahul Verma, director, HR, Accenture "People are clearly our most important asset. We partner with our employees during their entire lifecycle with the organisation, this includes the recruitment process too."

"We undertake stringent due diligence to ensure that we hire the right people for the right job," Verma says, adding Accenture has an in-depth and rigorous pre-employment screening process which has proved to be useful in multiple instances.

"For example, one of the pre-screening initiatives we undertake includes verification of the candidates' qualification and experience.

This physical verification ensures that only candidates who are appropriately qualified join Accenture. We invest in this process as it reflects on our values of high ethics and integrity," says Verma.

Vishwanath Kulkarni
Mail Vishwanath at vishwa@thehindu.co.in

Call Centre Offshoring: Not Viable to Australian CEO's  

While Australia's largest banks are busy reviewing their call centre operations to identify areas that can be moved offshore, Suncorp has hit out at the local financial services industry accusing it of disregarding customer service levels in favour of profits.

Suncorp general manager for personal customer sales and service, Andrew Mulvogue, said offshoring a call centre tears the heart out of a company and distances both the organization, and ultimately their call centre from the people they wish to serve.

Mulvogue said the business just wouldn't work if a call centre was offshored and questioned how other banks expect to maintain a high level of service.

"Suncorp's contact centre is too important to entrust to an offshore vendor, and that's particularly true for our insurance business," Mulvogue said.

"Outsourcing call centre services offshore is not an option. As Australia's third-largest insurance company, sixth-largest bank and one of the nation's top 25 companies, we're all-Australian.

"Why would you go offshore if you're an Australian-based company wanting to look after Australians when they are making a claim and in a time of need?

"For example, how is someone in another country going to relate to someone in Australia whose house has just burnt down?"

While Mulvogue has taken a strong stance in the debate, his passionate view is not shared by the rest of Australia's financial services industry which is moving toward an onshore/offshore mix to remain competitive.

As reported in Computerworld last week, Banks cover up offshoring moves, (August 2, p1) wages for an agent in Australia are estimated to be $3000 per month compared to $3000 per year in India.

The Commonwealth Bank, Westpac, St George and the National Australia Bank have all admitted to conducting reviews that include offshoring call centres, but no steps have been taken to transition operations to the locations such as India or the Phillipines.

The Australian Banking Association has taken an impartial line towards offshoring, stating it adopts a neutral stance, adding that it is up to individual banks to make their own decisions.

Citibank Australia is the first of the big financial services firms to relocate its call centre operations. Last week the bank announced its call centre is being relocated to the Philippines.

Citibank's current Brisbane-based call centre, established in 1999, employs 120 staff and will be relocated to Manila over the next five months.

The bank said the transfer followed a "rigorous review" of the most efficient and effective way of providing services to customers in what it said was the increasingly competitive Australian financial services market place.

Michael Crawford, Computerworld

In typical doublespeak, even the U.S. government agrees that tech jobs are not likely to stay onshore, despite the growth in demand. The U.S. Department of Labor says tech jobs are expected to be among the fastest-growing occupations through 2012. But it also says that jobs are likely to leave as fast as they appear.

"Any companies experiencing double-digit growth this year are likely to dip to single digits next year," Howard Rubin, executive vice president of Meta Group, told NewsFactor's CIO Today Magazine. "Since double-digit growth won't hold, companies are being very conservative about increasing I.T. jobs and costs; hence, they will continue to outsource."

Seventy percent of companies Meta Group surveyed are offshore outsourcing technical jobs now; that percentage is expected to climb to 90 percent by 2005, according to Rubin. "Outsourcing to (US) consultants still creates jobs; it's offshore outsourcing that's taking jobs away," he says.

Easy Come, Easy Go

Losing that many jobs is bound to hurt. To add insult to injury, analysts say it is an unnecessary pain. "It doesn't make sense. There are U.S. companies and workers who are dead-on competitive -- especially in places with good quality of living and low overhead costs, outside the big city rent districts. But too few U.S. companies look outside New York, Los Angeles, and the like, to see what is really available," says Rubin.

In typical doublespeak, even the U.S. government agrees that tech jobs are not likely to stay onshore, despite the growth in demand. According to the Occupational Outlook Handbook 2004-05 edition produced by the U.S. Department of Labor, tech jobs are expected to be among the fastest-growing occupations through 2012. But the report also shows that jobs are likely to leave as fast as they appear.

"Job growth will continue to be driven by the continued expansion of the computer system design, Internet integration and related services industry, which is projected to remain one of the fastest growing industries in the U.S. economy, despite recent job losses. Job growth will not be as explosive as growth during the previous decade, as these jobs are being increasingly outsourced overseas," the report indicates.

The American Edge

So, where are the tech jobs for U.S. workers likely to be? U.S. workers probably have the best shot at tech jobs requiring a physical presence on American soil and a savvy understanding of business beyond cyberspace and the computer world.

"You still have to have people on site to touch the wires, work the gears, and manage the initiatives -- and even the outsourced work," Jim Poole, vice president and CIO of W.C. Bradley Co. (the producers of Char-Broil Grills, Bradley Direct, and a myriad of other products) told NewsFactor's CIO Today.

The U.S. Labor Department reports that employers are demanding a higher level of skill and expertise from their employees. Employers are looking for a combination of strong technical skills and good interpersonal and business skills. Those who understand the intricacies of the core business and technology will be favored over those who only know hardware and software.

"Employees must understand the core of business, as well as technology, in order to provide these new I.T. functions," says Poole. "But business leaders also have to learn more about technology. The fields are no longer mutually exclusive."

It Wasn't in the Script

Another skill that pushes a U.S. tech worker to the head of the line is mastery of anything new. "America is great at innovation and creation. Any skills close to the seat of innovation will be in high demand until offshore workers can produce a knockoff skill," says Rubin.

Specifically, demand is fastest-growing for these tech jobs: computer systems analysts, database administrators, computer scientists, networking specialists and computer software engineers. But there are other, less noticeable opportunities as well.

"Call centers will be strong since offshore outsourcing isn't working well in that area," says Rubin. "Workers in India following a script, for example, are not as effective as U.S. workers who know how to use the [CRM] technology and how to interact with customers and solve problems."