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HR
outsourcing, the next big thing
HR outsourcing
continues to be a major component of the overall worldwide outsourcing
market, with an 18.7% share and is expected to be worth $24.6bn (£12.9bn)
in 2006 - an increase of 4.7% on last year, according to a study by
Gartner. HR outsourcing
revenues in Western Europe are expected
to reach $4bn (£2.1bn) in 2006, an increase of 6.5% from 2005, it
said. The Yankee Group, a US
research and consulting firm, estimates that the worldwide HRO market will
grow to $80bn by 2008, at a compounded annual growth of 12%, with non-core
transactional duties such as payroll and benefits administration
increasingly outsourced (particularly in the US) rather than conducted
in-house. Within the HRO
market, payroll services and benefits administration comprise the largest
segment, together covering nearly three-quarters of the market in
2006. The remainder is made
up of education and training, hiring and recruiting, and personnel
administration services
Kelly HRfirst, the staffing
alternatives business unit of employment services firm Kelly Services,
reckons that about 85% of all US businesses outsource at
least a portion of their HR functions. Cost savings and efficiency gains
reaped through HRO services, Kelly HR first points out in a report, have
paved the way for businesses to increase their use of recruitment process
outsourcing (RPO), a 'rapidly emerging and high-demand subset of
HRO.’ The RPO subset--
comprising the entire recruitment cycle, from needs assessment to
sourcing, screening, and interviewing candidates, and hiring-- will
account for $30bn of the HRO market by 2008 says industry
analysts.
How much of
this business has come India's way, and how much of it can
India expect to win in the
years ahead, given the scale on which offshoring is taking place? Of the $3.6bn in revenues that
Indian companies earned from IT-enabled services in 2004, only 2%, or some
$70M were from HRO services.
But the potential is indicated by several factors: large global
players such as Fidelity, Exult and Hewitt have set up operations in
India, a Nasscom-McKinsey report has projected that Indian firms' revenues
from HRO will increase to $3.5bn by 2008, while Gartner thinks India can
expect to win 10-15% of the US HRO services market; and finally, only 6%
of US HR spend is offshored, a figure that is certain to rise. Raghuvir Sakuru, managing director of the
US-owned Kenexa India
who has recently set up shop in Hyderabad,
says 20-30% of the non-customer interface functions segment of the HRO pie
can be offshored, and India can hope to win a
substantial share of this.
India arm of
Kennexa, he says, accounts for 10-15% of the RPO business done by its
US parent
company.
Many
organisations that consider using HR outsourcing have created
shared-service centres. Many
companies seek an outsourcer that can provide the next level of leverage to cut costs and continue to innovate on
service delivery, the Kelly's
report said. Lack of domain
knowledge, data security, data privacy, and quality could be the critical
issues hampering the growth of HR outsourcing to the offshore
locations.
But, the
domestic HR outsourcing market is not gathering momentum, though,
significantly, these very changes are rapidly taking place in Indian
companies too. However, two
unique problems associated with Indian companies outsourcing HR, which act
as obstacles are; First, outsourcing is associated with layoffs-- which
Indian society is not yet ready for, because of the stigma associated with
being laid off. Second,
people who are in the system should be comfortable with the idea of not
having direct control over the HR process. This is not yet happening in
India, because individuals tend
to measure their professional prowess by the number of people who report
to them. |
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Boston
Consulting Group says insurers need to revamp
operations
'Operational cost
reductions of around 30 percent through outsourcing, lower claims payouts,
and higher revenues through higher customer satisfaction are possible in
the medium term. In the long
term, operating for value enables strong and sustainable growth and
prepares insurers for a future in which cross-border synergies will be
more important than they are today.'
Patent
outsourcing hot in the LPO industry
Patent
outsourcing includes technical research, proof reading, prior article
search, drafting patent application, and patent amendments among
others. This includes a huge
amount of research for patents being filed in US
courts. While major firms in
the US quote up to
$15,000 for preparing and filing a patent application, companies based in
India deliver the same
work for $2,500-3,500 in India.
Aviva to shift 1000 jobs to
India.
Aviva said about 1,000 of
the jobs will be offshored to India; while a further 500 IT roles will be outsourced to external
contractors. The offshoring
move is a part of the announcement by the company, under which it will
reduce about 4,000 positions by 2008 at its subsidiary, Norwich
Union.
Telstra
outsources to IBM
TELSTRA has ramped up its
cost-cutting activities, handing a huge contract to IBM - which the Telco hopes will save it $500M
over seven years. Under the
deal, IBM will provide
Telstra with contract management and reporting systems, as well as
operating an integrated supply chain for a range of indirect procurement
services such as travel, office products, energy and utilities and
industrial supplies.
AUSTRALIA'S
St. George Bank outsource 96 jobs to India
St. George Bank is expected to outsource about 96 jobs to India. The jobs to be outsourced involve
80 positions from the bank's collection division in Sydney and 16
positions from its credit card division in Adelaide. The jobs are expected to be
outsourced to IBM India by 1Q
2007. The bank stated
difficulties in finding the skilled staff in Australia
for loan collections as the main reason behind the
move.
Focused
Investors Selects Mellon for Custody and Back Office
Services
Mellon Financial
Corporation announced that its Asset Servicing group will provide custody
and administer the back office for Focused Investors LLC, an investment
manager based in Beverly
Hills, California. In a separate development, the
company won a contract with California Insurance Guarantee Association to
provide custodian services.
Unity
Life of Canada Announces Administration Agreement With
GeniSys
Unity Life of Canada has
reached an agreement to outsource claims processing and customer services
functions of an acquired segment of business from The Prudential Insurance
Company of America to Toronto-based
GeniSys. GeniSys was recently acquired by Antares Management Solutions
of Westlake, Ohio, a division of Medical Mutual Services.
First
Data to Process Online Foreign Currency Payments for Chase Paymentech
Solutions
First Data International
has won a five-year payment processing contract
with Chase Paymentech Solutions.
The company will leverage its OmniPay processing solution to
provide the services for the contract. The solution will process the
transactions on a single platform.
GE
Selects HCL Technologies to be one of its Partners for Global Development
Centres Program
HCL has
been selected by GE as one of its partners for establishing global
development centres in India and China. As part of the contract, HCL will
also operate the centres. The
company will provide the services to GE for a three-year
period.
Sun
Microsystems Partners with Accenture on ID-Enabled
SOA
Sun Microsystems will
jointly develop with Accenture identity-enabled Service-Oriented
Architecture and composite applications to meet growing client
demands. The expanded
relationship involves a series of initiatives, which initially include the
creation of the Accenture Innovation Centre for Sun Solutions, according
to a Sun statement issued here. |
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Philippines
Service exports rose 27% to P187.3b in 1st half
According to the figures
released by the National Statistical Coordination Board of Philippines,
the 1H 2006 (ended June 30, 2006) services exports of the country
increased 27.1 percent over the corresponding year-ago period to reach PHP
187.21bn. The exports of
miscellaneous services, primarily BPO and call centre services played a
big role in the growth by registering a 67.1 percent growth. The other services included in the
miscellaneous category include medical transcription, animation, software
development, financial services, and computer and information
services.
Pakistan's
software exports grow 50 p.c.
Riding on
Western firms' demand for ITeS, Pakistan's software exports
grew 50% to $72M in 2006-`07, according to news reports. Pakistan has fixed an ambitious
target of $108M for the financial year 2007-`08. The planners in that country are
looking at the IT revenues to cross $9bn in the next four years.
Siemens
Business Services to develop new system for the management of the files of
the Belgian Council of Ministers
The Belgian
federal government has given Siemens Business Services the thumbs up for
the development of the 'e-Premier' application. The order relates to the IT system
for the management of the files of the Council of Ministers and of the
Consultation Committee. This
new innovative solution will form a polyvalent support tool and introduce
an efficient management system based on a reduction of the use of the
paper format. e-Premier will be operational by the autumn of
2007.
Perot
System extends contract with Owens & Minor
Perot Systems has won an
IT contract extension with Owens & Minor for a five-year period. Perot will assist Owens &
Minor to develop a modern technology environment, which will support its
Web-based applications.
Through the contract, Owens & Minor is aiming for an increase
in the self-service options available to its
customers.
CSC unit wins $53M
contract extension from US Air Force
CSC has won a US$627.8 M systems integration
task order with the 554th Electronic Systems Group of the US Air Force's
Materiel Command.
CSC will provide
support for the configuration and deployment of the Expeditionary Combat
Support System (ECSS). In
addition, it will provide training and change management support for the
system.
LogicaCMG
opens offshore BPO centre in the Philippines
The new centre is due to
open later this month in Manila, employing between 200 and 300 staff
specialising in HR, finance and accounting BPO as well as application
maintenance and support services.
webMethods to Acquire SOA
Governance Leader Infravio
webMethods Inc. has entered into a definitive agreement
to acquire privately-held Infravio Inc. for approximately $38M in
cash. The deal is expected to
close during the month of September 2006
Intec completes
acquisition of EUR Systems
Intec has
completed the acquisition of EUR Systems for a consideration of about US$
13.4 M. Intec aims to
leverage EUR's competence in billing and BPO services to augment its
market share in the domain of access billing market. Earlier Intec signed
India's largest telecom and
internet service providers Mahanagar Telephone Nigam LTD to supply its convergent billing
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