Monthly Archives: March 2012

IT Outsourcing: A Problem or Just Par for the Course?

If there’s one word that is commonly associated with greed (apart, maybe, from corporations and capitalism), it’s outsourcing. The very mention of outsourcing—particularly when it involves hiring workers outside the U.S.—is enough to throw some people (particularly politicians) into a conniption fit. Outsourcing of manufacturing jobs is probably the most recognizable case; IT jobs, however, have also been outsourced extensively. But when you get down to brass tacks, is outsourcing really a problem? And if so, what are the potential, and desirable, solutions?

Outsourcing Overseas, Outsourcing at Home

Many companies have outsourced in recent years, sending U.S.-based jobs overseas. We’ll skip the numbers, which are usually estimates that have a number of built-in assumptions, and simply assume that indeed, many jobs have been outsourced, and the trend will continue. Let’s instead try to break down exactly what the problem with outsourcing is. Although the focus here is primarily outsourcing of IT jobs, the same reasoning can apply to any industry.

Outsourcing generally has the connotation of involving a transfer of jobs from one country to another: in particular, from the U.S. to other nations (often, China or another Asian nation). But consider more “local” outsourcing. First, note that one of the driving forces behind today’s economy is the division of labor: individuals specialize in particular tasks, and the efforts of these individuals are aggregated to create products. Thus, some people or companies create software, others create microchips, yet others design display screens and still others create plastic cases and other parts. When all these efforts are combined, the result is a mobile phone. One company (or individual) could conceivably perform all these tasks, but this would be extremely inefficient and expensive. Furthermore, a single individual (person or company) would probably lack all the requisite talent to do all these jobs well. So, let’s say a company wants to make cell phones—that company will outsource certain tasks (probably most of the ones listed above), and will just combine the parts into a product to sell.

Source: http://www.datacenterjournal.com/dcj-magazine/it-outsourcing-a-problem-or-just-par-for-the-course/

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How to Select the Right Outsourcing Employee Provider

For many organizations, outsourcing to freelancers, that can be picked up from the popular freelancing websites, is sometimes not enough. Either the work is not suitable for freelancers because of the complexities involved in it or else the information is too sensitive to be handed over to a virtual stranger who cannot promise any sort of credible security measures.

Luckily, such dilemmas can now easily be resolved, thanks to many far-sighted outsourcing companies who are providing a far more reliable resource known as the ‘virtual employee’ or the ‘remote employee’ . The question is, how to find them? And, more importantly, what are the criteria that they need to fulfill?

It helps to have some sort of a checklist handy before finalizing on any outsourcing service provider which can provide you with remote employees as opposed to mere offshore freelancers.

1.Credentials of the service provider. Obviously, this cannot be stressed enough. The companies that have survived the longest in this highly competitive industry have done so for a good reason. Go through the history of the outsourcing company on its website, its client list, and specifically, its past client testimonials. That gives a good indication of what employers have to say about the particular vendor whose services you are keen on hiring. Additionally, it is also advisable to scan through the ‘complaints/ grievances’ section. A reputed vendor would not hesitate to have this tab on its website to build a further proof of its credibility.

2.The infrastructure of the service provider. A well-established outsourcing company would have world-class infrastructure in place, including spacious workstations, latest hardware and software, computer peripherals like webcams, headphones, printer, fax machine etc. A well-maintained office is essential for extracting the optimum benefits from your virtual employee.

3.Measures for data security. Obviously, no company would want to outsource with a provider whose security measures are like a sieve. Data security is a very real and justified concern among the companies who outsource work that contains important company information or tasks that are aligned to the core segments of the business. Any service provider can lose credibility fast if security measures are amiss or wanting. Go for a vendor that requires its employees to sign Non-Disclosure Agreements, has closely monitored employee computer traffic and allows a client to work in a virtual work environment, with all data being stored on the client’s server back home.

4.Facilities for communication. Communicating with a remote employee is crucial for ensuring the success of any outsourced work. Has the vendor provided for advanced communication technology such as video conferencing, telephone with a local number from your country of residence, Skype, email, instant messenger etc?

5.Control over outsourced work and access to the employee. Do you enjoy total control over how the work will be done? Are you the one who sets targets and deadlines for your remote employee, who is accountable to you?

6.Handling non-work related issues. All non-work related issues can severely cramp a working relationship, especially a long-distance one at that. Established vendors will take care of all employee-related issues, leaving the client and their remote resource free to concentrate only on the work at hand.

7.Back-up and support. A 24-hour back-up support from the IT and HR departments is also what sets apart a great service provider from an average one.

Source: http://www.sys-con.com/node/2225863

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Angry Birds Space Version is about to Sweep Across the Globe

According to the latest news, the game Angry Birds Space Version has managed to rank the first in the Apple app store in more than 28 countries and regions within a day. What is more, its ranks also have risen to the first among paid apps and Top Grossing apps in many countries, including the US, China, Germany, France, Indonesia, New Zealand, Russia, Denmark, Columbia, Norway, Mexico, India, Greece, the UK, Spain, Finland and Belgium. In Japan, Taiwan, Sweden and South Korea, the Angry Birds Space Version ranks the first in the paid apps of iPhone and iPad.

It is said that there would be an open beta test of the Angry Birds Space Version, and on 22th, March, Rovio Entertainment Company officially declared that the game went live globally, and releases platforms include iOS, Android, PC and Mac. Besides the game, derivatives, cartoons and books were also released.

The Rovio headquarter lies in Finland, and this company has made a breakthrough as an entertainment company, which successful create the angry birds’ images. At first, the Angry Birds is only a touch-screen smart phone game for entertainment, in just one year after it was released, it soon became a global phenomenon and the most successful paid game app. Successful in mobile games, the Angry Birds entered the entertainment and publishing industry, and became a popular international brand.

The Angry Birds Space Version is another masterpiece of Rovio after making it a global cultural phenomenon. The space version changes the game pattern that we are familiar with to a new level. This new version adapts an entire new physical system, whose settings are in the space, so that the players have to shoot the bird with zero gravity. The planets in the game will attract the birds with gravity to change the path the birds fly. Birds with new abilities will fly between the gravity and non-gravity zones. The mysterious universe and a variety of novel rules will surely bring endless joy to the players.

Deputy CEO in Asia of Rovio, Henri Holm said, “We are looking forward that fans of the Angry Birds will experience the Angry Birds Space Version. It is an extraordinary game. The partners in Asia really support us a lot.”

Since the Angry Birds has been released, it has swept across the world in an inexorable way. The game has been downloaded for more than 700 million times up till now. It is amazing that the Angry Birds Space Version achieved such a record within a day!

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Can China’s IT Services market live up to the hype?

Since 2006, China’s market for the outsourcing of technology services has experienced rapid growth and has been heralded as a challenger to India’s market dominance. According to China’s Ministry of Commerce, the total contract value of executed outsourcing contracts in 2010 with Chinese-based service providers was approximately $19.8 Billion, a 43.1 per cent increase from the prior year.

Nonetheless, this rapid growth represents a mere fraction of the global IT services market and hardly 26 per cent of India’s market volume.

Kevin Parikh China Graphic 1

So how can China rise to compete globally in IT Services?

1. Focus on market share, not on "beating India"

a) Focus on unique markets

The sharp increase in offshore business is closely tied to China’s unique linguistic and demographic advantages in supporting South East Asia. Vast differences in economic development, culture and labour skill-sets have provided Chinese cities and local providers with their own specialised competencies. Below is an independent analysis conducted by Avasant that illustrates the strengths and weaknesses of the key outsourcing cities in China.

Kevin Parikh China Graphic 2

Additionally, the large potential for growth of the domestic market in China (including MNC subsidiaries in China) has only recently been unleashed. These unique markets should continue to be the focal point of entry for all Chinese service providers.

Source: http://www.outsourcemagazine.co.uk/articles/item/4391-can-chinas-it-services-market-live-up-to-the-hype

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The emergence of cloud as a key sourcing option

Cloud sourcing involves sourcing solutions and computing capabilities to run a business through a combination of cloud applications, cloud platforms and cloud infrastructure. Cloud computing leverages the concepts of infrastructure convergence and shared services. The concepts have been around for a long time; however technological advancements and emergence of intranet has now accelerated the trend to leverage these concepts more effectively.

Cloud services can be categorised in different ways

  • Cloud services are typically categorised into three areas:
  • SaaS (Software as a Service) – e.g.: Emails, CRM
  • PaaS (Platform as a Service) – e.g.: Web servers, Middleware
  • IaaS (Infrastructure as a Service) – e.g.: Network, Virtual machines, Servers

Depending on how the access to the service needs to be controlled, cloud services can be public (open to everyone), private (restricted to few users behind a company firewall) or hybrid (combination of private and public permitting some interoperability).

The cloud computing model is growing and gaining rapid acceptance

Cloud sourcing is fast emerging as an alternative sourcing model for companies. New companies with cloud offerings continue to emerging at a rapid pace. At the same time, acceptance from the clients also continues to mature and gain momentum.

The “cloud” model is leading the fundamental change in the way services are delivered and managed. Cloud computing today promises on-demand applications, platforms and infrastructure for companies to address business problems at a much lower price. There seems to be sufficient motivation to use cloud services as clients see the potential to reduce investments in infrastructure, hardware, data centres and licensing costs.

The cloud pricing mechanisms are still evolving but it is more and more common to see models today that are based on utilisation of hardware and software. The concepts of “utility computing” and “pay as you go” could become a reality if cloud computing platforms are established successfully over the next few years. Interestingly, providers have already started embracing the model as they realise the economies of scale and higher volumes potential and another way of delivering services to clients.

Source: http://www.outsourcemagazine.co.uk/articles/item/4379-the-emergence-of-cloud-as-a-key-sourcing-option

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Picture Sharing App Instagram is Coming to Android Platform

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As reported, popular application Instagram of iPhone platform recently has opened for registration and officially login Android platform. It is reported that Instagram is an application running on the iPhone platform, popular with its quick, wonderful and fun way to share the capture pictures on iPhone.

When Instagram blew the “storm” of sharing pictures in iPhone platform, people speculated that Instagram will land Android platform soon. Now, what’s excited is that Instagram application registration has been open to users, which makes them have the opportunity to experience the joy of sharing pictures at any time.

Moreover, now as long as Instagram fans type in their e-mail address, they can experience Instagram Beta version at the first time before Google and Amazon App Store release Instagram application.

Instagram has won great success on iOS device and has accumulated 27 million users so far. Kevin System, Instagram CEO, said that although there is now just two staff to update this Android application (it is reported that there are only eight members of this team), he believes this is a great new market and Instagram users will be doubled.

After registration, Instagram will pop up a window saying that it will soon meet. Though we don’t know when to launch the application exactly, there is at least a UI interface now. Additionally, Instagram will inform registered users by mail at the first time when it is launched officially.

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RIM Recruits iOS Developers for Apple Products

According to the recruitment at LinkedIn, a US professional social networking site, RIM is hiring iOS developers with extensive experience for Apple iPhone and iPad development apps.

Applicants are required to be able to develop the enterprise apps released on iOS platform, and do architecture, design, development and testing of complex iPhone and iPad application.

Currently, it is difficult for RIM to either maintain the market share of the smart machine or keep a foothold in the Tablet PC market, which shows that they may be interested in modifying some proprietary applications for Apple iOS system.

For a long time, people of technology industry have been speculated that RIM will provide its popular BlackBerry Messenger services to its competitors, including Android and iOS, which will bring additional revenue to RIM but will reduce users’ loyalty for BlackBerry as well.

The latest survey shows that only 16% of the developers show “very interested” for BlackBerry development app, and 90% for iOS app and 80% for Android.

In February, RIM upgraded its PlayBook Tablet PC system, making the device able to run Android apps. Last November, RIM launched new software that allows businesses and governments to manage Apple and Android devices as BlackBerry device.

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Three steps to a successful outsourcing relationship launch

Finally reaching agreement on an outsourcing deal after surmounting many negotiation hurdles doesn’t necessarily mean the hardest part is behind you. Many outsourcing relationships run into trouble soon after the contract is signed – in a 2010 Vantage Partners survey, 71 per cent of outsourcing customers and service providers said they began to face challenges within a year of contract signing. Half also reported that the issues they encountered in their arrangement still needed to be addressed, and unfortunately, ineffective resolution of those issues resulted, on average, in a 29 per cent loss of annual contract value.

An effective way to avoid many of the problems that arise in that first year of transition is to make sure the relationship gets off on the right foot with a joint relationship launch, which consists of three core components.

1. Full team briefing and joint relationship planning

When negotiators simply pass off long and complex contracts to the teams responsible for implementation, buyers and providers often enter agreements with different assumptions and understandings about each side’s priorities and goals. Therefore, it is critical to:

  1. Review the contract with the extended team. Don’t just hand off the contract or allow only a few “contract managers” to truly understand the contract.  A formal meeting with negotiators and implementers should be conducted to review and discuss key terms and their underlying intentions, and discuss any outstanding issues and critical scope boundaries.  
  2. Plan the relationship jointly. The type of relationship the parties have influences the challenges they may face – with the appropriate governance model and processes in place, these challenges can be mitigated. The parties should therefore focus during the launch on identifying the key challenges they anticipate and how governance should be modelled to address them. They should also agree on what a healthy relationship looks like (e.g., success factors that parties can regularly measure themselves against) and how and when the relationship should be assessed.

Source: http://www.outsourcemagazine.co.uk/articles/item/4381-three-steps-to-a-successful-outsourcing-relationship-launch

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Mitigating risk in outsourcing

Most organisations conduct some level of risk assessment, prior to executing an outsourcing transaction. We have observed no common best practice on how the outsourcing risk assessment is conducted, what criteria are used to determine risk exposure or how to sort/implement the risk mitigation strategies. The following article summarises one approach, delivering high value in determining what risks apply to an outsourcing arrangement and where an organisation should focus their efforts to reduce risk.

Here is a simplified approach to outsourcing risk management:

  1. Identify the list of all risks that apply to this outsourcing strategy/initiative
  2. Identify factors that contribute to the risk occurring, due to the outsourcing strategy execution
  3. Score each potential risk based on: a) probability of the risk occurring; b) risk impact if the risk occurs
  4. Create a risk scoring matrix, ranking the risks by "high", "medium" and "low"
  5. Develop risk mitigation strategies
  6. Focus on the "high" risks, implementing risk mitigation strategies: risks can be mitigated by implementing control strategies that minimise the probability and the potential impact; detailed mitigation strategies for every single risk may not add business value and can be quite costly; risk mitigation costs should be built into the business case and tracked during the strategy execution.

Potential outsourcing risks for consideration in the assessment typically include: Project Resourcing, Requirement Definition, Procurement, Transition, Governance, Service Management, Service Tower-specific, Legal, HR, Labour Relations, Tax and IT (Capacity, Architecture, Capacity, Security, etc.) risks.  When transactions consider offshoring as part of the delivery model (as most do today), other risks need to be considered including: Economic (currency exchange and inflation), Cultural, Political, Environmental etc risks.

Source: http://www.outsourcemagazine.co.uk/articles/item/4386-mitigating-risk-in-outsourcing

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Legal Process Outsourcers don’t fall foul of Indian Advocates Act

After almost two years of false starts, adjourned hearings and painfully slow progression through the Indian courts, the Madras High Court finally ruled last month that foreign law firms can advise on international law and take part in international arbitration while physically being located within India. The ruling further confirmed that LPO companies are not engaging in the unlawful practice of Indian law and therefore do not fall foul of the Advocates Act 1961, which limits the practice of Indian law to Indian advocates. On reflection, perhaps I should not be overly critical with regard to the lapse of time prior to achieving a ruling. The issue of the unlawful practice of Indian law is one that raised its head a couple of years earlier. In December 2009, leading law firms Ashurst, Chadbourne & Parke and White & Case lost a long-running and related case against the Lawyers’ Collective, with the Bombay High Court deciding that the practice of law by foreign firms in India was illegal. That decision came 14 years after the initial filings!

The Madras complaint was filed in March 2010 by a group of local lawyers calling themselves the Association of Indian Lawyers, against 31 of the world’s leading law firms (including Linklaters, Freshfields, White & Case, Wilmer Hale, Pillsbury, Allen & Overy, Clayton Utz and Freehills), and one legal process outsourcing provider, namely my employer, Integreon. The petition alleged that these US, UK and Australian law firms were engaging in the unlawful practice of Indian law, which has long been prohibited under the terms of the Advocates Act.  While it is self-evident to many that the practice of law can include not only litigation but corporate practice, the provision of legal advice etc, the complaint itself targeted activities that have become routine among international law firms such as meeting with clients in hotels, sometimes referenced as “fly-in, fly-out” meetings, attending conferences and seminars, and participating in arbitration in India.

So where is the link to LPO, I hear you ask? Well, the petitioner alleged that one of the methodologies that foreign law firms utilise to facilitate their unlawful practice of Indian law is through the medium of LPO, and I quote from the judgment, where the court summarised the petitioner’s assertions, “under the guise of LPO… foreign lawyers are visiting India… earning money from their clients in India".  While Integreon was the only LPO company included in the petition, there were no allegations specifically made against Integreon or in fact against any other LPO provider anywhere in the pleadings. Rather the allegations against the foreign law firms, put simply, were that via their relationships with LPO companies, they were engaging in the unlawful practice of Indian law. 

Source: http://www.outsourcemagazine.co.uk/articles/item/4398-legal-process-outsourcers-dont-fall-foul-of-indian-advocates-act

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