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Outsourcing
Helps in More Ways than One, finds Study
With the
sensitivities surrounding Business Process Outsourcing (BPO) and its
delivery offshore displacing employment opportunities from the local
economic system, IDC examines
and dispels some popular myths associated with this contentious issue in
its recent report, 'Does Business Process Outsourcing Reduce IT Jobs in
Asia/Pacific (Excluding Japan)?'
'As with any
contentious issue, the rise of global delivery has been used and abused by
vested interests for several years now. Clearly, whilst there are cases of
poor management, it is a reality of business that global delivery also
provides significant benefits,' says Phil Hassey, Research Director for
IDC's Asia Pacific Services
Research.
The study
answers the question of whether or not BPOs reduce jobs locally. It said because everything gets moved offshore, it is inevitable that not every
individual will benefit directly or immediately as economies and
industries change. This is
also akin to higher-cost countries in APEJ that need to look at new ways
of operating more efficiently and competitively in a global economy. In the realm of BPO, operating on
a global basis is a means to ensure that services like finance, HR, or IT
are delivered in the most cost-effective and efficient manner. As a result, a group of
individuals may need assistance to find alternative employment
opportunities and not feel like a 'sacrificial lamb' for the broader
economy. While it is
unfortunate that some people do become retrenched, the reality is, more
people also are employed and more opportunities
exist than before as the economy grows.
According to
the study, the BPO industry is often accused of
running sweat shops in low-cost countries and exploiting labour in these
countries to derive maximum benefits. One may compare the large salary
difference between a call centre agent in
India versus a call
centre agent in Australia. However, the salaries paid to
offshore workers in low-cost countries are often many times higher than
what a worker in these countries would earn in other traditional
sectors. Many gain the
opportunity to own more consumer goods, live a middle-class life, and
break out of the poverty cycle.
Therein also lies the risk of
exploitation, which needs to be addressed by the appropriate authorities
to ensure that the BPO industry does not suffer an image perception, which
has befallen other industries such as the apparel
industry.
When it comes
to outsourcing, will the companies choose to offshore everything if they
could? IDC researchers replied saying that offshoring
is not necessarily a panacea for all of a company's cost issues and
strategies. It boils down to
whether the offshoring model aligns with the company's business objectives
and meeting their customers' needs.
It also depends on whether companies are ready to take on
offshoring as part of their operating model. It is important to note that not
every business function can be offshored, and often times, strategic areas
such as corporate strategies, sales, governance, and policies still need
to be retained in-house. Rather, BPO presents companies
with the option to outsource non-core business activities so that efforts
are focused on their core business. Offshoring, in fact, does not
necessarily mean outsourcing and many companies do maintain shared
services in another location, yet still have that service retained
in-house.
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U.S.
Managed-services Market to Reach $23 Billion in
2006
The total ICT
outsourcing and services has reached $10.9 billion in 1H 2006, and is further expected to reach $23 billion by the
year-end, according to IDC, a
market-research firm. The ICT
market is growing at a rate of 12% over 2005, says the research firm. The Value Added Managed Services
(VAMS) market is likely to grow at a rate of about 20%, while the
enterprise-wide outsourcing is projected to grow
at a rate of five to six percent.
The managed-connectivity services of the region will grow in
between nine percent and 11%.
IDC has
identified three emerging managed services, which will provide the next
level of growth. The services
consist of managed-converged networks, managed security, and mobile
services. According to the
market-research firm, there have been various activities, such as new
partnerships among the service providers of the ICT market in the
established markets of Australia and Singapore. |
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‘We
beat outsourcers on efficiency gains,’ says
HSBC
Global bank HSBC says it
is beating outsourcing suppliers at their own game by driving operational
efficiencies internally and regularly benchmarking to ensure the
competitiveness of its internal IT function. With a £2.6bn annual IT budget,
half of HSBC’s software development work is
conducted offshore, with 4,000 engineers in India, 1,000 in China and an operation getting underway in
Brazil by end of 2006. Ken Harvey, chief information officer said
although salary inflation in India is running at 14%, IT engineering
costs were still 60% lower than the UK. And, overall, Harvey said he had been
able to reduce the cost base for IT programming by 2% by growing offshore
operations while incentivising onshore team leaders for successfully
integrating the bank’s multicultural, multinational
teams.
Application
Outsourcers Look Beyond Cost Savings, Says Aberdeen
Group
'While cost savings remain
an important cornerstone of many IT outsourcing strategies, most
companies, especially in the mid-market, look at outsourcing application
work to boost the skills of their internal IT staffs and allow them to
tackle more strategic work,' said Rick Saia, Aberdeen’s Research Analyst
for IT services. Although
India has become a popular
destination for application development outsourcing work, companies in
other nations are ramping up their IT capabilities, affording more options
in choosing providers.
BT
looking to expand in US, India, China
British telecoms operator
BT Group Plc is looking to expand overseas, particularly in the
United States,
India, and China, the chief executive of
its BT Global Services unit said on Thursday. Andy Green added that the company would
still continue to cut costs at the unit, and stick to its guidance for
EBITDA (earnings before interest, tax, depreciation, and amortisation)
margin of 15% at Global Services.
In addition, BT has announced a Joint Venture with the Jubilant
Group to enter the long-distance telephony segment in the country. The company has approached the
Department of Telecom, India, for the domestic and
international long-distance licenses.
Avon
outsources HR to IBM
Avon Products and
IBM have signed a multi-year
business partnership by which IBM Global Services will provide Avon with a portfolio of specialized human resources
services and technologies.
Under the partnership, IBM will provide Avon with support for certain key HR processes,
including compensation, payroll, benefits, and performance
management. IBM also will maintain HR call centre support
for Avon employees in a select number of Avon countries
worldwide.
BNG
Outsources IT services to Ordina
Dutch
IT-services firm, Ordina, has won a deal from the Bank Nederlandse
Gemeente (BNG) as its
outsourcing partner for its payment-transaction process, including
IT-support services. The
outsourcing agreement is expected to represent a
contract value between $102–$109 million.
Laurentian
Bank and CGI extend their IT Outsourcing
Contract
Laurentian Bank of
Canada and CGI Group Inc. today announced the extension
of their existing IT outsourcing contract until 2016.
The contract extension is valued at more than $100 million and
covers the period between June 2011 and June
2016.
Malaysian
Bank CIMB to save RM250m with renewed EDS deal
CIMB Group expects to save
RM7mil in the next 18 months and RM250mil over a period of 10 years with
its renegotiated contract with IT outsourcing partner, Electronic Data
Systems Corp (EDS). The contract has
been signed with EPIC-I Sdn Bhd, a subsidiary of CIMB
Group. EDS will improve the IT systems in order to
better the consumer banking service levels and reduce
costs.
Travelocity
outsourcing 55 jobs to India
Travelocity
has announced its decision to outsource about 55 World Choice Travel sales
jobs to WNS. The jobs are expected to migrate to India by mid-January 2007 and
the outsourcing is likely to be completed by March 2007. WNS has been providing services,
including customer service, clerical processing, and financial services to
Travelocity since 2004.
Merck
to outsource drug discovery work from Advinus
Merck is
expected to outsource some of its drug research work to Advinus
Therapeutics in India. The contract is likely to be
valued at $150 million to Advinus in the first year. Advinus is a subsidiary of Tata
Group. The pharmaceutical
companies are shifting their R&D trials to India to cut costs. Advinus will provide R&D
services for drugs of metabolic disorders, such as diabetes, obesity, and
hypertension. It will provide
the research and preclinical trials on the drugs. The company will receive a payment
of $74.5 million for each assignment from
Merck.
Drug
Giant Eli Lilly Outsources Clinical Data To
India
U.S. pharmaceutical manufacturer Eli Lilly
& Co. is outsourcing a range of clinical data management services to
Tata Consultancy Services, which has built a facility near New Delhi dedicated
to Lilly work. Lilly's deal
with TCS is the latest proof of India's top outsourcers moving
well beyond the basic tech and call centre services for which they're best
known. Other countries also
are stepping up to attract high-level life sciences work. Earlier this month, drug maker
Novartis disclosed plans to build a $100 million research and development
centre in China.
Tenet
Healthcare Hands Perot 10 year outsourcing deal
Under the contract, Perot
will manage information systems at all of Tenet's 66 hospitals throughout
the country. Perot already
manages IT systems at 25 Tenet hospitals under an existing contract that
is extended and broadened under the new
deal. About 400 Tenet
IT staffers will transfer to Perot with comparable benefits and salaries,
Tenet said in a statement. |
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First
Data picks Glasgow for major call centre
FIRST Data International,
a global e-commerce and payments processing firm, is to open a site in
Glasgow, creating 430 jobs over
the next five years. The
financial services sector generates nearly six percent of the Scottish
GDP i.e., approximately £5
billion. The sector has grown
about 36.5% over the last five years. In addition, the company is
planning to launch ATM services in China in the next 6 to 12
months. The company will
provide card issuing and outsourcing services to various banks and
financial institutions in China.
Accenture Beats
IBM as World Leader in Systems Integration
Services
According to
IDC market analysis,
Accenture's rise to the number one position in worldwide SI was due to
customers’ increased investments in SOA, infrastructure improvements and
application services.
IDC defines SI as a
process that includes the planning, design, implementation and project
management of a solution that addresses the specific technical or business
needs of a client, including systems and customer application development
and implementation and integration of enterprise packaged
software.
IBM
to Manage Finibanco Infrastructure for 10 years
Finibanco a player in the
Portuguese private banking and IBM today announced a 10-year services
contract. IBM will manage Finibanco's core banking
information infrastructure, providing the bank with more efficient and
effective IT services, and reducing costs.
Pearson Government
Solutions Wins $440 Million Contract
Pearson
Government Solutions was awarded a $440 million contract by the Centres
for Medicare & Medicaid Services (CMS) to manage the Beneficiary Contact Centre
program. The contract expands and continues
Pearson's work with CMS for an additional two and a half years in
support of the 1-800-MEDICARE Help Line, considered one of the largest
citizen contact management programs in the US Federal
government.
CSC
Signs $180 Million IT Services Agreement With Newmont Mining
...
CSC has won a seven-year, USD 180 million IT
services contract with Newmont Mining Corporation - A leading gold
producer. CSC will manage the IT operations of Newmont's
centres located in Denver, Nevada, Ghana, Peru, and Australia.
In addition, the company will provide helpdesk, desktop, network
and telecom, and security services.
It will also provide server support and applications maintenance
for Newmont.
ITC
Infotech opens dedicated centre for Danish bank
Indian IT company ITC has
opened a dedicated development centre here, which could seat 60 people,
for Danske Bank. This follows
the multi-year, multi-million contract ITC had
signed earlier this year with Danske Bank, the biggest bank in Denmark.
Indian
IT firms on hiring spree.
Domestic IT
firms are continuing their hiring spree, the total headcount of the
fab-five club of Indian IT space - TCS, Infosys, Wipro, Satyam, and HCL
Tech - has increased by nearly 38% with the addition of more than 75,000
employees in the past one year.
But it is their bench strength - reserve employees - that is
growing at a higher rate (48.5% approximately 28,000 employees added) than
the overall pace of recruitments.
Datamatics
Technologies signs 3-year contract with Giant
Eagle
Datamatics Technologies
have announced that Giant Eagle, one of USA's food retailers and food
distributors has signed a contract with Datamatics for indexing 1.2
million invoices over a period of three years starting mid November,
following a highly competitive bid and evaluation
process.
Hexaware
Technologies acquires US firm FocusFrame
IT
and BPO service provider Hexaware Technologies has acquired FocusFrame
Inc, an IT firm in the US, in an all-cash deal of $34.3 million. The company is
expected to double its headcount in three years from its current
5,000 employees. It has
established a delivery centre in Germany with an initial
strength of about 40 employees and is expecting to double the headcount by
the end of 2007 |
