Market crisis = more outsourcing

Because of current market crunch more and more companies are now thinking of outsourcing. Companies are doing this to improve the cash flow, this will also help them in increasing liquidity in crunch time. According to a survey more than 3500 companies thinking of oursourcing.

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OpenOffice Could Soon Become Web-Based Apps

Via Linuxtoday.com, a message from the OpenOffice Dev mailing list in which a new company is introducing the GravityZoo OpenOffice porting project. The unusually named group aims to bring OpenOffice to the Internet as a series of online apps. 'When OpenOffice.org is GravityZood, it will become a suite of productivity applications that are always available, online, via a broad range of devices. It will be possible to share and collaborate in real-time, to switch from one device (e.g. a PC) to another (Mobile) device. There will also be no need to save data, because everything you produce is saved automatically on the network. There is no need to download, install or update, the latest version is just available and accessible from any GravityZoo enabled client.

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Failed outsourcing deals blamed on people, not SLAs

February 07, 2007 (Computerworld Australia) -- Successful outsourcing isn't about tight contracts and meeting service-level agreements (SLA). It is strictly a people business and is based on relationships between provider and customer, according to the first global outsourcing survey to be undertaken by KPMG LLC.

And when these relationships go bad, the result is spiraling costs.

Overall, some 60% of respondents claimed that problems with their outsourcing provider are almost always people-related.

Head of KPMG's IT advisory, Egidio Zarella, said this is because sourcing arrangements are not managed correctly; 79% of survey respondents did not even know the cost of selecting an outsourcing provider.

Zarella said 50% of respondents take longer than six months to complete the request for proposals (RFP) part of the process, while 30% take longer than nine months. During that time, the market shifts.

He said organizations are in the dark when it came to measuring the value of outsourcing deals, although 89% of respondents plan to increase their current level of outsourcing.

In fact, 42% of outsourcing arrangements are not supported by a formal strategic measurement framework.

More than 650 organizations in 32 countries participated in the survey, with over 60% of respondents C-level executives. Nearly half of respondents have an annual turnover of more than $1 billion.

"Sourcing is completely a people's business; only 13% blamed technology when the contract went bad," he said.

"It's not about contracts but having the right people; the worst offenders are those with massive SLAs; they fail to keep it simple.

"Typically, costs will initially go down when organizations outsource, but two years later, costs are higher than they were before outsourcing."

Zarella says it takes time and effort to manage an outsourcing provider. He said deals should be monitored every quarter with a 10-point checklist, and companies should check all change requests that go to the vendor.

He believes organizations need to appoint a full-time "relationship manager" to remove dependencies on consultants.

"Because this is a new title, there is a serious shortage of people with vendor management skills. The days of a contract manager working in accounts payable is long gone. Also the person that does the deal and develops the contract should not be the person managing it afterwards," Zarella explained.

The study supports earlier Gartner Inc. research that claims IT departments are shrinking as IT professionals move into specialist roles such as vendor management. In the future, an IT career will not be about technology but rather about managing a range of service providers.

By 2010, IT organizations in large and midsize companies will be 30% smaller, according to Diane Morello, vice president of research at Gartner.

"Partly driving this trend is outsourcing and IT automation," she said.

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EU Software Patent War Ignites Again

"ZDNet UK has a detailed article on the heating-up of the software patent debate in Europe. A new motion before the European Parliament calls for a harmonised patent court (EPLA) that would be able to enforce software patents across Europe. This comes just 15 months after the EP rejected the infamous Computer Implemented Inventions directive." From the article: "Patents on software are formally disallowed under the European patent system, but are routinely granted by the European patent office, according to critics. They are currently difficult to enforce in many EU member states, something critics say would be changed by the failed software patent directive, and now by the EPLA. Software patents are generally considered to add to the legal costs of large enterprises, as well as creating a hostile legal environment for smaller software businesses and open source projects."

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Just how real are outsourcing fears?

I recently came across an article that cast a number of doubts over the outsourcing model. According to the article, outsourcers focus the entire offshoring business toward cutting costs, and neglect the quality aspects. If you take the article at face value, it is natural that you will think twice before outsourcing your business processes.

However, let us see just how real this fear is.

Think of an outsourced business. Yes, the basic objective is to cut costs, but with so many vendors vying for a place in the market, the outsourcer has plenty of options in selecting the outsourcing partner who is most suitable to the specific project and has the infrastructure and capability to execute it with finesse. So the onus is really with the outsourcer to find a capable partner. Every market has a few rotten apples, and this is true for outsourcing as much as for any other market.

The article cites the example of a call center that doesn’t handle client responses well enough. But hey, there are a number of checks and balances in an outsourcing deal which can ensure correct practices. There is talk of closing down a call center based in Bangalore (India). But what is the guarantee that the same situation will not arise even in-house?

The other fear raised about outsourcing is that an outsourcing vendor will not be able to adapt to changing practices and market requirements. But again, it is really upto the outsourcer to be foresighted enough and build such possible changes into the outsourcing arrangement from time to time.

Outsourcing ultimately boils down to a marriage of convenience between the outsourcer and the vendor. It is a sword that cuts both ways. A strong future-oriented relationship can trigger a long relationship. Believe me, outsourcing works—it is not for nothing that a hoard of outsourcers are making a beeline toward countries like India and China. You don’t have to take my word for it; in an older post, I mentioned research findings that back up this fact, and more recent articles continue to point to a growth in the outsourcing business.

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Outsourcing storm brewing in schools

Controversy and outsourcing have almost gone hand-in-hand, but in most industries the logistics have worked in favor of outsourcing. In schools, too, considerations of saving money and releasing in-house resources for core school requisites are beginning to work their way through controversial roadblocks.

School authorities in Michigan want to concentrate on their main business of educating students, and are happy to push the management of ancillary services—such as food, custodial, and bus services—off their plate. Private companies are willing to step in, offering these services at competitive rates.

The school authorities might be happy, but people who are losing their jobs to private companies are certainly outraged. For example, 29 custodians and 4 food service workers have lost their jobs in Garden City alone. Yes, some of these workers will get absorbed by the private service providers, but at much lower wages.

Quite naturally, jobless workers are spearheading the move to recall board members in several schools, including Garden City Board of Education and Lakeview Public Schools in St. Clair Shores.

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IBM Daksh - Marching Ahead

There is no doubt that outsourcing business in India is on a new high. Many companies are now leading the BPO operations in India and IBM is one of them. With the acquisition of Daksh in 2004, IBM started its full-fledged BPO operations in India. Over the last 12 months, IBM-Daksh added over 10,000 employees and expanded its contact centers across India. Now it has become the second largest BPO in India after Genpact. The BPO operations have become one of IBM's key growth drivers in India. Some of its key clients include Amazon, Paypal, Sprint, HP, Yahoo, Citibank and Bharti Televentures.
IBM-Daksh provides a variety of services to its clients. Its main operations include call handling, email processing and technology support. These services are related to customer care activities. Now IBM-Daksh has decided to focus on CRM, HR and other important operations. Over the past couple of years, employee base of IBM-Daksh has grown by 234%. When IBM acquired Daksh, its employee strength was around 6,000. Now it has 20,000 employees and is expected to add more staff in the coming years.

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Bill Gates expects Vietnam to raise its head as an outsourcing center

On his recent visit to Vietnam, Bill Gates has seen huge potential for Vietnam to make a mark similar to India in the outsourcing sphere. The country is drawing the attention of global technology companies despite its shortcomings.

Vietnam is growing and growing fast economically and its literacy rate is something for the nation to boast about. The 90% literacy rate is a major advantage for the country and will be a variable that other nations cannot afford to ignore. Gates further said that Vietnam should not restrict itself to manufacturing activities alone, but widen its horizons into the world of software development and outsourcing. The figure relating to the growth of Software and IT-related services industry reflects the optimism of Gates with a 40% annual growth rate

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IAOP places Equinox in World's top 100 outsourcing service providers

International Association of Outsourcing Professionals (IAOP) has placed Equinox, the BPO arm of i-flex in the Leadership Category of the global Top 100 outsourcing service providers, thereby proving its mettle in the outsourcing sphere. The selection process itself is very intense which makes this achievement all the more important as it reflects excellence in all respects when it comes to outsourcing.

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Outsourcing Leaders Fuse IT and Business Skills

APRIL 10, 2006 (COMPUTERWORLD) - ORLANDO -- Ron Jensen began his IT career as a self-professed "propeller head." But now he is the purchasing manager for IT professional services at construction equipment manufacturing giant Caterpillar Inc.
"I did the bits and bytes," Jensen said at Gartner's outsourcing conference here last week. He wrote assembly code, programmed in other languages and managed technical units at Peoria, Ill.-based Caterpillar. Then, in his mid-40s, Jensen decided he wanted to take advantage of other opportunities available at the company and earned an MBA.
For those interested in following a similar career path, Jensen's top piece of advice is to learn some business skills. "That's absolutely most important," the 34-year IT veteran said. "Beyond that, it's communication skills [and] interpersonal skills."
Mack Murrell, senior director of enterprise IT operations and services at The Dow Chemical Co., also moved from a technical background to a high-level management post. Murrell, who is part of a three-person IT leadership team at Dow, was trained as an electrical engineer. But, he said, "I didn't want to be a senior electrical engineer at a chemical company."
He was moved into IT management more than a decade ago after he suggested a more standardized approach for some of Dow's IT operations. Like Jensen, he also got an MBA degree along the way.
Midland, Mich.-based Dow has outsourced most of its IT operations to IBM, Hewlett-Packard Co. and Accenture Ltd., but it still has a 600-worker IT staff. Employees who are being groomed for IT leadership positions need to understand the company's business requirements and have "a strong sense of vision" as well as the ability to "blossom where [they] are planted," Murrell said. "We direct their path so they get specific experiences."
Pamela Carreon, who manages offshore outsourcing and enterprise vendor services at Wells Fargo & Co. in San Francisco, said she needs to fill three jobs on her staff and wants people who are good communicators, listeners and problem-solvers. Finance and business management experience are also high on Carreon's skills wish list.
Although Carreon manages Wells Fargo's IT outsourcing relationships, she doesn't have a formal IT background herself: Her major in college was Spanish.
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