Wednesday, October 29, 2008

IT outsourcing giant to set up new center
By Wang Xing (China Daily)
Updated: 2008-10-29 10:34

US software outsourcing company CSC, one of the world's largest IT outsourcing firms, said yesterday it will launch a new delivery center in China as the global financial crisis may force more Western companies to outsource their business to the country.

Michael Laphen, chairman and chief executive officer of CSC, said the financial turbulence would force more companies to outsource their business in pursuit of lower operating costs, thus creating more opportunities for outsourcing companies.

"Outsourcing will increase in difficult times as the financial crisis pushes companies to become more cost effective," said Laphen. "We expect further robust growth from China."

CSC's new delivery center, located in Tianjin, will open next spring.

It will serve both CSC's domestic and multinational clients in China and will have 500 employees within the next three years.

But Laphen declined to say how big its investment is in the new China facility.

Although the financial crisis has had a major impact on most of the world's economy, CSC remains optimistic about economic prospects in China.

It said the country's manufacturing and financial companies, which are two major customers for CSC in China, will continue to grow at a rapid speed.

During the past decades, multinational have been transferring non-core business to countries like India and China to reduce costs.

But as labor costs continue to rise in China, outsourcing companies in the country have been striving to go up the supply chain and earn money with more value-added services.

Lin Zheying, deputy director of foreign investment administration department under the Ministry of Commerce, said at an industry forum on Monday that the economic turmoil provided a good opportunity for China to develop outsourcing in service sectors, as many US financial institutions may have to outsource their business.

According to the ministry, the value of foreign contracts of Chinese outsourcing companies reached $1.9 billion in the first eight months, up 17 percent from the same period last year.

CSC entered the Chinese market in 1991 and now has around 300 employees in the country.

It has offices in Beijing, Tianjin, Shanghai and Guangzhou.

Globally, CSC has approximately 90,000 employees and reported revenue of $17.1 billion for the 12 months ended July 4, 2008.

Monday, October 27, 2008


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Pfleiderer AG, IBM reach 7-Yr outsourcing contract - Quick Facts

10/27/2008 10:17 AM ET
International Business Machines Corp. (IBM) said the company and German Pfleiderer reached a seven-year outsourcing contract. The agreement was signed in September of 2008. The company said the IBM SAP Application Delivery Center Model would enable Pfleiderer to use and pay for services according to its needs.

As part of the agreement, IBM would provide application hosting and management services out of Germany and Canada for all SAP Systems in Pfleiderer's worldwide locations.

Copyright © 2008 RealTimeTraders.com, Inc. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without prior written consent of RTTNews.

Hangzhou Opens 1,200-seat Software Outsourcing Base

Xinhuanet, 10/25/08

Stage one of construction on the Hangzhou Symbio international outsourcing base was completed recently. The base is a joint project of Hangzhou Data Technologies, the Symbio Group, and eOn Communications, and measures 10,000 square meters with 1,200 seats following the first phase of construction. It will focus primarily on software and call center outsourcing, with software outsourcing (overseas) to account for 70% of business.

Among the jobs already landed by the outsourcing base are the Symbio Group's US-targeted game software outsourcing and financial software outsourcing services, Market 168's bank card services, eOn Communications Corporation's Korean international call center services, and Zhejiang Netcom's customer center call services, as well as Alibaba's Taobao call center. Revenues from the base are projected to total RMB 100 mln for 2008.
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In India, Global Crisis Is Not All Bad News
One Industry Sees Opportunities, Lessons

By Rama Lakshmi
Washington Post Foreign Service
Sunday, October 26, 2008; A22

GURGAON, India -- In the mortgage crisis that has enveloped much of the Western world in recent weeks, Manoj Malhotra's outsourcing company sees an enhanced business opportunity.

As lenders in the United States and Europe move to firm up loans, sharpening quality control and fraud verification, the Gurgaon-based company that Malhotra heads has designed a Web program to help them do just that.

"The loan processing industry needs less of manual intervention and subjectivity and more of technology-based solutions, especially in the current climate," said Malhotra, who launched the program at a mortgage industry conference in San Francisco last week.

His company, Salient Business Solutions, is not the only one in this country to see opportunities and lessons in the global financial meltdown.

Indians working in information technology and outsourcing have long shared a joke: "When America sneezes, our industry will catch a cold here in India."

But as the credit crisis drags down the U.S. economy, India's booming technology and outsourcing industry is taking steps to boost its resistance to infection. Taking the crisis as a warning, it is hastening efforts to reduce dependence on U.S. and European companies, scale up high-end products and services, find new ways of billing and move beyond merely leveraging the low-cost, English-speaker advantage.

About 60 percent of India's outsourcing business comes from the United States, and 40 percent of the work is in the banking, insurance and financial services sectors.

"We now have to look at other regions of the world, like Japan, the Middle East and the Nordic countries," said Som Mittal, president of the National Association of Software and Services Companies, or Nasscom. "The current crisis has sharpened our realization that we cannot put all our eggs in the U.S. basket."

The industry revised an estimate of 30 percent annual growth to 24 percent this year. But it has undergone a transformation in the past five years, and many observers say that will help provide a cushion in the U.S. crisis. Besides trying to diversify into other parts of the world, India's outsourcing industry has tried to wean itself from the banking and finance industries, attracting work from American health-care, aviation and utilities companies.

Perhaps the biggest and most sustaining change has been its climb up the value chain of services in recent years -- from back-office support functions to what the industry calls "knowledge process outsourcing," which includes legal services, hardware network management and engineering design.

The ubiquitous tech-support and customer-service call centers and software coding services are, in fact, considered the low-end level of the industry, although they still constitute about 60 percent of India's offshoring business.

One of the country's biggest technology companies, Bangalore-based Infosys, has been making a deliberate effort to scale back assembly-line software development and ramp up more technically complex services such as engineering design.

"It is a strategic shift we began making some years ago," said S. Gopalakrishnan, the company's chief executive officer. "Our efforts to expand our services to include high-end consulting, systems management and product engineering and design work may help weather the storm."

Infosys's fastest-growing business is in product and machine design for American aerospace, automobile and construction firms, but the company has also set up consulting businesses in China, the Middle East and Mexico.

Meanwhile, the legal services branch of India's outsourcing industry is experiencing a boost as a direct result of the global crisis, as bankruptcies, mergers and acquisitions proliferate and demand grows for help with litigation.

"It is difficult to find lawyers now -- there is a shortage," said Anand Maheshwari, director of Intrust Global eServices. "This wasn't the case three months ago. The litigation work is booming in this chaos and crisis."

Still, the industry has not escaped ill effects of the crisis. Gopalakrishnan cut back Infosys's revenue estimate for the year by about 4 percent. He said his clients have slowed launching new projects and investments. Infosys is offering a pay-as-you-use business model to clients faced with a cash crunch. Under this model, the client will pay only for the software service and not for hardware and maintenance of the program.

To cut costs for their clients, many in the industry are thinking of shifting away from the seven big, booming and expensive Indian cities where 90 percent of offices are located. The industry forum, Nasscom, has urged its member businesses to go deeper into the hinterlands and identified 43 second-tier cities they might consider.

Fresh hiring by the industry has slowed in the past three months, although there have been no layoffs yet.

"There is already a drop of 20 percent in hiring from engineering campuses. Nobody is making big hiring commitments," said Pratik Kumar, executive vice president for human resources at Wipro, a large information technology and outsourcing company. "Companies will no longer maintain large benches," he said, referring to the practice of keeping engineers on standby for anticipated offshoring work.

Many new graduates are being told to wait longer before they can step into their first jobs.

For engineering graduate Pooja Shetty, 22, the wait will be almost a year. She was offered a job, but now the software company wants her to report for work in April.

"The company said there is no immediate requirement," Shetty said. "There are very few jobs now. I have no choice but to wait. This is the only thing we talk about in our Yahoo friends group these days."

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Thursday, October 23, 2008

October 23rd, 2008

After the layoffs: Increased workloads stress out those left behind

Posted by Sam Diaz @ 12:13 pm

Jobcuts are never easy - and finding your name on the layoff list can be traumatic, especially this time of year. There's no disputing that.

But what about the folks whose names are not on the list, the ones who get left behind to pick up the workload slack? They certainly don't want to be complainers when the boss comes walking over to hand off the work that Mary or Joe was doing, before they were laid off. But, they were barely keeping up with their own workload before - and now there's more?

An increased workload - followed by the pace of new technology and office politics - are the leading causes of stress for IT workers today, according to a survey released by Robert Half Technologies. OK, I know what you're thinking: Too much work can be a good thing in today's economic climate. But it can also take a toll on productivity. Overstressed workers don't usually perform at their best and stressed-out workplaces can quickly erode morale, as well.

Robert Half Technologies, which asked the question as part of a larger survey that helps shape hiring forecasts, said some companies are bringing in IT folks on a contract basis to help with the workload. Many are also looking at training and professional development programs to help employees keep pace with technology. Most importantly, though, good managers open the lines of communication to keep employees motivated and ensure that priority projects stay on track.

The survey asked the question: Which of the following do you think is the greatest source of workplace stress for IT professionals? The responses were:

Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of

India's Tech Firms Unlikely to Elude Global Crisis

Lackluster Profits From Flagship Companies Suggest Sector Won't Dodge Global Crisis

India's leading technology companies -- the flagships of the country's economy -- doused hopes that they could escape from a spreading global financial crisis anytime soon.

"Our outlook is cautious in the near term given the extent of strain on the global economy," said Azim Premji, chairman of Wipro Ltd.. That pessimism comes despite a sharp weakening of the Indian rupee, which helps tech companies that earn most of their revenue overseas.

Under Indian accounting standards, Bangalore-based Wipro said net profit for the July-September period rose to 9.78 billion rupees ($200.2 million) from 8.24 billion rupees in the year-earlier quarter. ...


Monday, October 20, 2008

ob recruiting racketeers make a kill on no-go ban to Iraq

By Leon Berenger and Chandani Kirinde

Hundreds of Sri Lankans are risking their lives and making their way into war-torn Iraq to secure lucrative employment inside US military facilities while a helpless officialdom say there is little they can do as unscrupulous recruiting agents make millions of rupees out of this illegal operation.

Although almost daily groups of Sri Lankans are leaving these shores and heading for Iraq there is very little the authorities can do to stop it since their departure is done through legitimate channels.

While there are many who have found safe passage to Iraq, The Sunday Times spoke to several youth who were stranded at the Dubai International Airport in late September for more than two weeks since arriving there from Colombo. An agent of the local travel agency had promised they would be met on arrival by one of their agents in Dubai who would ensure their passage to Iraq. But for one week they were left all alone at the airport with no idea as to what would happen to them. When the agent finally met them, they were told it would take a few more days to travel to Iraq.

U.S. soldiers stand near the Swords of Qadisiyah monument in Baghdad. Many Lankans are employed in various US military facilities as janitors,
cleaners, mess boys, storekeepers, laundry hands and construction workers

As the men had run out of money they had to rely on the hospitality extended by the many Sri Lankan who work at the airport and those who pass through it to get their daily meals. There were 13 men in this group.

They had each paid Rs. 250,000 to a job agent in Armour Street, Colombo and were told they would be employed at US bases in Iraq and paid a monthly remuneration of US $550 but their dreams of finding lucrative employment had become a nightmare just two weeks after leaving the country. One of the men had been sent to Afghanistan, also to a US military base but after two months due to the poor working conditions, he had managed to find his passage back to Dubai and was awaiting a ticket to return home
The Government has banned sending Sri Lankans to Iraq for employment due to the security situation there and two agencies were raided earlier this year for doing so. But many registered travel agencies in the country continue to recruit persons but give no security guarantees.

"We have had many cases of Sri Lankans stranded in Iraq who have sought assistance from our missions in Jordan and Lebanon. But as we have almost no diplomatic representation in Baghdad now and no consular representation at all, it is difficult to assist them," an official of the Foreign Ministry who served till recently in the Sri Lanka Mission in Lebanon said.

The International Organization for Migration (IOM) had also reportedly helped more than 30 Sri Lankan workers flee Iraq since February 2007 after finding that they were being exploited and were living in deplorable conditions.

The lack of any records on how many Sri Lankans are employed in Iraq also makes it more difficult to trace their whereabouts when the need arises. Sri Lankans who had been stranded there and who had managed to contact Sri Lankan missions in neighboring countries had been repatriated with the assistance of the US military and the Iraqi government, the official said.

The bulk of Sri Lankans destined for Iraq first land in the United Arab Emirates (UAE) on so-called transit visas that are easily obtained and which are issued mainly to intended shoppers and tourists entering the desert nation. On arrival in the UAE the Sri Lankan workers are picked up by handlers, taken to a transit house where they are fed, given shelter and later taken to Iraq by road over the Kuwaiti border.

Thereafter they are found employment in various US military facilities as janitors, cleaners, mess boys, storekeepers, laundry hands and construction workers.

An average worker earns around $600 to 700 a month inclusive of food, accommodation, medical and even liquor and tobacco rations, something they will never get in any other West Asian country.
However, the workers are not allowed to leave the military base owing to the security situation and insurgents show no mercy for foreigners caught working for American interests. On completion of their contracts which vary from one to two years they are brought back to the UAE crossing the same desert borders from where they board a flight back to Colombo.

The passports do not contain immigration endorsements of Iraq or any other country except that of the UAE, their first landing point which indicates that they have not left the country at any time. Hence the UAE authorities have no objection in allowing them to exit the country.

US Embassy spokesman in Colombo Jeff Anderson when asked to comment on the employment of Sri Lankans in US military bases in Iraq declined to do so.

A Sunday Times investigation found that the main culprits behind this racket are the registered recruiting agencies who cleverly conduct their operations using middlemen/brokers who are paid a commission for their services.

Persons seeking employment in Iraq are charged anything between Rs. 200,000 to 250,000. This includes the airline ticket and other local expenses such as medicals, bureau taxes etc, the investigation revealed.

The agencies do not advertise or in any way publicise vacancies in Iraq, since the recruitment of workers for that country is outlawed. However, they use other means of getting their message across.
For example a long-time established recruiting agency operating in Colombo has put up a long list of vacancies in the UAE, but in fact the jobs are actually available in Iraq.

The agency it is alleged discloses this to a prospective job hunter only once they are satisfied that the person is genuine and is seeking to work in Iraq. Thereafter the two parties discuss the other details such as payments, day of departure etc.

The Sri Lanka Bureau for Foreign Employment (SLFEB) is fully aware of the Iraqi operations, but for reasons perhaps known only to them have opted to maintain a lukewarm attitude if not ignoring the errant agents altogether.

SLFEB Deputy General Manager L.K. Ruhunuge said although they were aware of the recruitment for Iraq it was difficult to carry out a crackdown since the persons were leaving the country through legitimate channels and posessed valid visas-transit, visit or any other.

He said that two agencies that were found to be involved in the illegal recruitment have had their operations suspended, but apart from that there have been no complaints from people who have taken up employment in Iraq.

Another frightening aspect is that no one is prepared to take responsibility for those taking up work in Iraq and in the event of a tragedy, matters could become complicated, admits Mr. Ruhunuge.

So far there have been two deaths of Lankans in Iraq. In one a worker was killed when a missile hit an oil storage dump and the other was caused by an industrial accident, Mr. Ruhunuge said.

He added that investigations into an errant recruitment agency could commence only if there has been a complaint, but apart from that there was little the Bureau could do.

These words will no doubt be music to the ears of the recruitment agencies, their so-called brokers, handlers and every one involved in this racket.

Big promises but empty pockets

Driven by economic hardship, S.V.Gamini of Kalutara was among a group of 21 Sri Lankans who left for Iraq in December last year with the prospect of coming home with enough money to lead a more comfortable life than the present one.

He borrowed money to pay a job agency in Borella Rs. 230, 000 to secure a job and left on December 14 last year for Dubai along with several others. On their arrival, they were met by a contact of the Sri Lankan agent and put on a flight to Iraq. The group was split into two and put to work in two US military bases, mainly as labourers. There were 16 Sri Lankans working with Gamini.

"We were given the promised monthly salary of US $ 550 and had enough food and adequate accommodation," he said. Gamini worked there for ten months and decided to leave when he felt that the security situation was getting dangerous." A few days before we left, a mortar fell into an adjoining room where we were working It was frightening," he said.

Gamini was also in poor health by now and said he wanted to leave prior to the end of his one year contract. He and four others were allowed to go but their two months salary was deducted to pay for their air ticket which cost around Rs100, 000. When they arrived at the Sharjah airport, they had to pay an additional US $ 100 as visa fee and although they were promised free transport from Shajarh to Dubai, the men had to pay another US $ 80 to travel by taxi to the Dubai airport from where they boarded a flight to Colombo.

However, two of the men were detained in Shajarh as their passports had expired. "Although I went there with high hopes, I was not able to save any money. Job agencies charge us so much to send us to Iraq but they don't keep to their side of the bargain," he lamented.

 


Iconic Irish company Waterford Crystal (WATFF) will lay off most of its workforce and shift production elsewhere, having already contracted most of its production to Slovenia.

At its height in 2002, Waterford employed 3,200 people, but that number will soon drop to approximately 125.

The company's plant will remain in Dublin, though it will become primarily a tourist attraction, rather than a manufacturing plant. Waterford, which manufactures the ball dropped each New Year's Eve in Times Square, draws about 300,000 tourists each year.

The decline of the dollar is partially to blame, as about half of the company's revenue comes from American consumers. Also to blame are the living wages paid Western European workers; Eastern European laborers can produce high-quality goods for far less pay.

Much as the newly-unemployed workers dislike being jobless, investors seem to like the new direction, bidding Waterford stock up 50% to 0.3 euro cents. (The company's market cap remains less than a tenth of its debt.)

A union representative had this to say: "That [employees] will now seemingly be cast aside and production moved to just another factory overseas is devastating."

Outsourcing is already de rigueur here in America, as companies from Procter & Gamble (PG) to DuPont (DD) to Cisco Systems (CSCO) have sent jobs overseas. Atul Vashistha, CEO of outsourcing consultant neoIT and co-author of the book The Offshore Nation, told BusinessWeek: "Many CEOs are saying, 'Don't tell me how much I can save. Show me how we can grow by 40% without increasing our capacity in the U.S."

Eli Lilly (LLY) is a good example. For each new drug it releases, it estimates the cost to be somewhere around a billion dollars. However, according to the same BusinessWeek article, outsourcing lowers those costs to about $800 million. Lilly now does 20% of its chemistry work in China at a 75% savings; it's also trying to cut costs on clinical trials by conducting them in Brazil, Russia, China and India. When most people think of outsourcing in this country, they think of India. General Electric's (GE ) John F. Welch Technology Center -- named for their famed ex-CEO -- isn't located anywhere near GE's headquarters in Fairfield, Connecticut. It's in Bangalore, India.

A quarter of the Welch center's engineers have Ph.Ds. They design turbine-engine blades for jet aircraft; they study the molecular structure of materials used in short-term-use DVDs, which automatically erase after a certain period of time. Workers at the center have filed for 95 US patents since 2000.

Morgan Stanley (MS), JPMorgan (JPM), and Goldman Sachs (GS) employ Indian analysts and back-office workers. (Though someone working in Madras may be better-described as back-back-back office.)

But something interesting is now happening: India is outsourcing outsourcing.

To Mexico, because Indian workers are just too expensive these days.

Tata Consultancy Services (TCS) opened a software development center in Guadalajara, providing about 5,000 jobs to Mexicans over the next 5 years.

New Delhi-based IT firm Genpact (G), self-described as "a world-class" alternative to India for IT outsourcing, opened a 125,000-square-foot facility in Ciudad Juárez, employing 2,500 people.

Bangalore's Infosys (INFY) set up shop in Monterrey last year - 150 miles south of the United States border.

This is the new paradigm: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican engineers who work within driving distance of America.

It's what happens when a country's companies are trying to cope with wage inflation hovering around 15% annually.

So, the next time you boot up your PC, remember: the software you're using could well have been dreamt up by someone in San Jose, developed by someone in Matamoros, tweaked by someone in Mumbai, manufactured in Hermosillo... And if you need tech support? Expect it to come full circle to Bangalore.

Adios!


No positions in stocks mentioned.

Justin Rohrlich welcomes your comments and feedback at jrohrlich@minyanville.com

Minyanville staff and contributors may trade or hold securities that are discussed in an article. Staff and contributors will indicate whether they have a position in any security discussed, but will not indicate size or direction. The information on this site is not intended as individualized investment advice and all investment decisions by a reader must in all cases be made by the reader either individually or together with his/her investment professional. The views expressed in articles appearing on this site are solely those of the staff and contributors and should not be attributed to any other person or entity except where expressly stated. Minyanville staff and contributors will not respond to requests for investment advice.

Copyright 2008 Minyanville Publishing and Multimedia, LLC. All Rights Reserved.

Thursday, October 16, 2008

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HP signs 10-yr outsourcing pact with Godrej, to take over IT staff
16 Oct, 2008, 0113 hrs IST, ET Bureau

MUMBAI: In a major domestic outsourcing deal, Godrej Industries and Godrej Consumer Products have signed a 10-year outsourcing contract with Hewle

tt Packard (HP). The value of the contract was not disclosed, but would include application development and maintenance, infrastructure management and transformational initiatives. As part of the agreement between the firms, HP will also take over the staff working in the IT operations of the two companies.


Since the first such outsourcing deal between Bharti and IBM, a number of similar deals have been announced by Indian business groups. In February this year, the Future group had signed a similar outsourcing deal for $150 million with Wipro, in which about 265 employees of Pantaloon Retail had moved to the IT firm. In this case, the IT management staff will be retained by Godrej, while the IT operations staff will move to Hewlett Packard.

These contracts help domestic firms to cut IT costs and bring in greater efficiencies. For multinationals, this represents a new and growing business opportunity when most of them are facing growth pressures in their home markets. The Godrej group had appointed Ernst & Young to help them identify the most suitable IT partner.

The Godrej win is significant for HP because it is in segment outside of financial services, which has traditionally been its strongest segment. Sometime back, it had also won a transformation engagement from Britannia.







More high-end American jobs being outsourced to India


CHENNAI, India — The sari-clad graphics designer knows nothing about American football. But there she was, putting the finishing touches on an automobile dealership ad tied to the kickoff of the NFL season for a New York newspaper.

She goes by only one name, Vijayalakshmi, and she is the face of the new global worker. She and her colleagues at 2AdPro Media Solutions, a two-year-old start-up, create ads for scores of U.S. newspapers at assembly-line speed in this steamy, sun-beaten coastal city that aims to be a global publishing hub.

Across India, a new, sophisticated outsourcing industry is emerging, one that requires skills well beyond those needed for traditional call-centers. And it extends well beyond publishing work.

"Anything that can be outsourced is being outsourced today in India," said Rajdeep Sahrawat, vice president of Nasscom, or the National Association of Software Service Companies, an Indian software industry trade organization that closely monitors trends in outsourcing.

The emergence of this new outsourcing industry is a cause for anxiety among some American workers. The liberal think tank Economic Policy Institute said as many as 18 percent of all California jobs — mostly white-collar work — are candidates for offshoring.

The labor-backed California Fair Trade Coalition said virtually any job that uses a computer could be outsourced, and it argues that U.S. trade laws should be changed


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to make it more difficult for companies to send work overseas.

Imelda Abarca, director of the coalition, said the Internet increasingly enables near-seamless outsourcing of professional work to India, China, Eastern Europe and other regions, putting more and more high-paying American jobs at risk. "Those countries have large and rapidly growing pools of talented people with much lower incomes than people with similar skills in the United States."

But some experts say the threat to high-end American jobs is overstated.

India remains "an undergraduate factory," said Raffiq Dossani, a Stanford University researcher who studies higher education in the South Asian country. "This limits the kind of work that can be outsourced to India."

Whatever its ultimate impact, this next-generation of offshore work — some call it KPO for "knowledge process outsourcing'' — is drawing business from across professional sectors in the United States. These new companies link the legions of highly trained graduates that India's vast college system produces every year to U.S. companies eager to cut costs.

"A majority of Americans are not even aware of the type of high-end work being done in India — tax filing preparations, medical diagnoses, legal work, financial portfolio analysis." said Pervez Sikora, a former U.S. newspaper executive who is now chief operating officer for 2AdPro Media Solutions. "The types of services being offered here are mind-boggling."

While these highly skilled professionals currently represent only a thin slice of India's 2 million tech and business outsourcing workers, their ranks are growing rapidly, industry experts say. Nasscom's Sahrawat said the category is too recent for his organization to track. But Sikora, who said he's been approached by Silicon Valley companies that want to outsource their marketing work, believes this new type of outsourcing will eventually grow to a multibillion-dollar industry.

"There is a talent pool in India beyond engineering," said Vani Kola, a Silicon Valley entrepreneur who is managing director of Santa Clara-based NEA-IndoUS Ventures, which invests in high-end outsourcing companies in India. "And this talent pool has never been tapped."

Increasingly, Western companies must turn to countries like India, where 50 percent of the population is under 25, added Kola, now based in Bangalore. "The world's workforce will come from these countries because they have the masses. They are going to fill the gaps. Knowledge process outsourcing will change the role Indians play in the global economy."

Kola sees growth in many directions. "Disney and DreamWorks have large animation studios in India," she noted. ''Nobody is saying create the movie concept here, but part of the process is being done here."

One company Kola backs is PreMedia Global, a start-up that provides research, writing and editing services to publishers of U.S. textbooks. In two-and-a-half-years, PreMedia has grown from a brother-and-sister operation to a company with 900 employees, 600 of whom are based in Chennai.

Initially, the siblings considered launching a call-center operation, said co-founder Kapil Viswanathan, who studied engineering at Stanford University. However, they quickly saw that the nature of outsourcing was changing.

"High-end, knowledge-based services — that's where the growth is coming from," he said. "We think this is just the tip of the iceberg."

In short order, Viswanathan and his sister lined up clients that produce textbooks for schools across the United States, including California.

"A publisher gives us the detail of the content — what they submitted to each state — and says, 'You guys develop this into a book," he said. "It could be math, it could be science, it could be reading."

Not everything is easily transferred to India, though.

Employees at 2AdPro receive regular training in American culture, from Thanksgiving Day to the popularity of Harley-Davidson. Nevertheless, glitches occur, such as using a photo of a dancer from India for an ad calling for an American Indian, or placing a Philadelphia Eagles football player in an ad associated with bitter rival the Miami Dolphins.

"You get push back from some people, 'Those ads from India, they don't look right,'" said Austin Ryan, vice president of production for Gannett, the nation's largest newspaper publisher and a 2AdPro client.

Two years ago, it was a tough sell to convince newspaper executives that someone sitting halfway across the globe could produce ads that are accurate and on-time, said Todd Brownrout, chief marketing officer at 2AdPro, which expects to expand from 350 employees to 1,000 next year. Now, he added, "We are getting multiple inquires a day."

Sanjiv Gupta, chief executive of Hyderabad-based Pressmart, which provides Internet technology services to publications, argues this outsourcing model can be applied to editorial content. "It's outsourcing of creativity," he said.

Appert and others, though, think that day will never come. No amount of cultural sensitivity classes can compensate for direct understanding of local news, they say.

While debate continues over just which American jobs may be vulnerable to outsourcing, executives like 2AdPro's Sikora acknowledge that the new global economic order is forcing Americans to reposition their careers.

"People have to understand how jobs are changing and start re-inventing themselves,'' he said. "No one will be able to stop this now."

Wednesday, October 15, 2008

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WRAPUP 6-Iceland cuts rates, Russia studies loan request

Wed Oct 15, 2008 4:24pm EDT

* Iceland slashes interests rates

* Russia agrees to consider loan request

* Belgium, EC say ready to help

By Patrick Lannin and Omar Valdimarsson

REYKJAVIK, Oct 15 (Reuters) - Iceland acted to shore up its ravaged economy by slashing borrowing costs on Wednesday and its officials pursued efforts with Russia to get a multi-billion euro loan to help it over its worst financial crisis.

Talks in Moscow ended with Russia agreeing to consider the request for a loan which the North Atlantic island initially put at 4 billion euros ($5.45 billion). No date was set for a new round of discussions.

"We are working thoroughly on the issue to take a final decision", Russian Deputy Finance Minister Dmitry Pankin said in a statement after talks ended.

Russian officials say no details have been agreed although they are looking on the loan request favourably.

Icelandic Prime Minister Geir Haarde said the delegation might stay in Moscow or return to Iceland to continue talks from home as the government grapples with a crisis that has brought down the banking system and made the local currency untradeable.

"But it would be best if this could be resolved now," he told a news conference in Reykjavik.

Importers said on Wednesday the country had food stocks for about three to five weeks but needed quickly to restore a proper foreign exchange market so that importers could get back to normal business and avoid shortages.

Earlier, the central bank cut its main interest rate to 12 percent from 15.5 percent.

In Brussels, European Commission President Jose Manuel Barroso said it was to help Iceland over the financial crisis.

And Belgium offered a lifeline to Kaupthing Bank, where thousands of Belgians have savings, and said Prime Minister Yves Leterme would meet Haarde in Iceland on Friday.

"We are trying to see how we can help through an intervention of the IMF (International Monetary Fund)," Belgian Finance Minister Didier Reynders said on arrival at a European Union summit.

Iceland is due to present a plan to the Washington-based IMF in the coming days and is widely expected to seek funds.

Iceland's crisis is an unusual situtation for the IMF. Its economy of some 300,000 people is highly developed and years of rapid growth have brought it unprecedented prosperity.

Icelandic banks in recent years embarked on a campaign of unbridled expansion, building up operations overseas but taking on huge debts. When global credit markets froze, the banks found themselves unable to meet obligations.

Now, with the economy reeling, people are confused.

"You do not know what is happening, you do not feel informed. Will the IMF come and take control?" said Arni Gudmundsson, a 29-year-old self-employed man.

He said the rate cut was a good idea. "And I think they will have to take them down further simply in order for people to survive."

BORROWING COSTS

Iceland has had high interest rates for several years as the central bank has tried unsuccessfully to rein in inflation.

"The next phase of the banking crisis will be difficult with severe economic contraction," Sedlabanki said in a statement released in Icelandic on its Web site.

The crisis would mean the loss of many jobs, it added.

The rate cut "will help companies that will now have to be financed by Icelandic banks. This will be a big help for them," said Asgeir Jonsson, analyst at Kaupthing. He said inflation would be countered by the sharp fall in the housing market, which accounts for 20 percent of the consumer price index.

Kaupthing, the largest bank in Iceland, was taken over last week by the state along with Landsbanki and Glitnir.

"The main thing is that they have to stabilise the currency and get the payments system going again," Jonsson said.

A NEW SYSTEM

On Tuesday, Iceland drew on swap facilities it had set up with Nordic nations, tapping Denmark and Norway for 200 million euros ($273 million) each to help get its currency market working again.

Sedlabanki said it had set up a temporary trading system to allow for international currency transactions, while it wanted to continue to limit foreign currency outflows from the country.

Haarde said Iceland had approached the NATO council to complain about Britain's use of anti-terrorism laws to take Iceland's largest bank into administration.

President Olafur Ragnar Grimsson told Reuters that Icelanders were still angry with Britain. Icelanders understood that their own banks had created the problems they now faces by overextending themselves.

"We are realistic, we have a strong fighting spirit. We realise this will be an uphill battle, but there is also a strong sense of determination and optimism among everyone I have met," he said." (Additional reporting by Adam Cox, Niklas Pollard and Anna Ringstrom in Stockholm, Lesley Wroughton in Washington, Ingrid Melander in Brussels, Toni Vorobyova and Dmitry Zhdannikov in Moscow; editing by Angus MacSwan)

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Wed, Oct 15, 2008 6:11 EDT

The Key Drivers Behind Knowledge Process Outsourcing

Topic: Enterprise Management

Current Rating: 5 Comments: 0

The shift from business process outsourcing to knowledge process outsourcing did not happen by accident. Instead, the ongoing change is a natural outcome as players in the BPO gain the necessary expertise needed to provide higher-level services.

Knowledge Process Outsourcing (KPO) has become an offshoot of business process outsourcing over the years. While BPO focuses on basic back-office services, such as data entry, transaction processing, or customer service, KPO requires higher level of specialization in practically all aspects of outsourcing management, such as organizational communication, information analysis, and systems design and integration to name a few.

The shift from business process outsourcing to knowledge process outsourcing did not happen by accident. Instead, the ongoing change is a natural outcome as players in the BPO gain the necessary expertise needed to provide higher-level outsourcing services. The key drivers cover hardware/software advances, human capital, process maturity, and "soft skills" management. Let us look at some of the key drivers of KPO.

Improvements in technology infrastructure
Technology is the backbone of business process outsourcing. Through the years, infrastructure improved and acquisition of hardware and software became more affordable. Fiber optic cables and satellite communication became widely available, allowing vendors and clients to transmit data and enjoy instantaneous communication from different parts of the globe. Clients and service providers no longer have to be in the same location. In most large corporations, people and knowledge are just a few clicks away, no matter the time zone.

BPO experience
KPO is important in the success of an organization for it deals with the management of a large body of critical organizational knowledge. In the era of knowledge economy, companies that take information—in every form—have a competitive advantage over their peers. They exploit the knowledge gained from R&D, customer service, and research and analysis to attain their key business objectives. Over time, the experience and expertise that they earned in these efforts are reinvested to provide more complex services.

Human capital
As the outsourcing industry became more competitive, companies sought to hire only the best talents that vendors could provide. In turn, vendors made sure that the consultants that entered their payrolls had the right tools to provide the services that their clients demanded. Millions of dollars are being spent yearly on updating workers' knowledge in application development, project and team management, business and data analysis, and soft skills. College degree alone is not enough to gauge a candidate's aptitude for the job; post-graduate degrees and certifications are some of the key selling points for talents. At the start of the decade, Eastern Europe's oversupply of engineers fueled its IT outsourcing industry, thanks to its educational and economic model's--and history's--emphasis on courses in the sciences.

Moreover, surveys have often pointed to the fact that "soft skills" are among the top competencies that companies look for, in addition to technical aptitude. Outsource workers eventually graduate from "sweatshop jobs" to highly analytical specializations. This development resulted not only in performing tasks, but delivering results.

Lower Cost
As in BPO, cost is a key driving force behind the growth in KPO. It allowed companies to access more and promising talents located in different territories without having to shell out as much as they would have on onshore knowledge workers. Even with the valuable knowledge they bring on the table, offshore outsource talents still command competitive salaries compared to their onshore counterparts.

By ExecutiveBrief
Technology Management Resource for Business Leaders
www.executivebrief.com

MexicoIT Honored with "Outsourcing Marketing Excellence" Award in the US IT Market


Last update: 2:15 p.m. EDT Oct. 15, 2008
MEXICO CITY, Oct 15, 2008 (BUSINESS WIRE) -- MexicoIT was honored with the "Outsourcing Marketing Excellence" Award at the Midsize Enterprise Summit 2008 recently held in Dallas, Texas, for successfully promoting the Mexican IT industry and helping it to effectively penetrate the US IT market. The Summit was organized by United Business Media (UBM) with the participation of key Gartner Research analysts.
"This award reflects our commitment to the IT industry in Mexico and demonstrates that MexicoIT is achieving its goal of positioning Mexico as the ideal destination for IT outsourcing and investments by US companies," said Rogelio Garza, General Director of the National Chamber of Electronics, Telecommunications, and Information Technologies (CANIETI) and head of Mexico IT. "This award is an achievement shared by the entire MexicoIT family - its companies and member states, industrial chambers, associations, and the Federal Government through PROSOFT. It urges us to continue driving this campaign towards new frontiers," Garza concluded.
The award highlights MexicoIT's effectiveness in creating in a short time a strong awareness in the global marketplace about Mexico's unique advantages as an IT sourcing country. This awareness positions Mexico as the preferred outsourcing destination in the America's for US companies. The advantages include the true nearshoring benefits derived from Mexico's, proximity to the US, cultural affinity, and similar time zones, and also the strong support of the Federal Government to the country's IT industry's growth.
Rogelio Garza received the award from Nancy Hammervick, UBM's Executive Vice-President. In her speech she recognized the efforts of CANIETI and the support of the Mexican Ministry of Economy to the promotion of the Mexican IT industry provided through the Software Industry Development Program (PROSOFT). The award ceremony was attended by executives of Mexican IT firms, UBM, CANIETI and MexicoIT.
About MexicoIT
MexicoIT is the first program in Mexico with the mission to promote the Mexican IT (Information Technology) services industry abroad. MexicoIT is operated by the National Chamber of Electronics, Telecommunications and Information Technologies (CANIETI), an industry association of leading IT companies in Mexico. The Mexican Ministry of Economy supports MexicoIT through the Software Industry Development Program (PROSOFT). The MexicoIT team includes: Monica Senderos, Elisa MuAoz and Horacio Frias. Daniel Tkach, CEO of PartnersMarket Consulting, is MexicoIT's marketing consultant.
SOURCE: MexicoIT
For MexicoIT 
Burson-Marsteller
Sonia Diaz, 305-347-4396
sonia.diaz@bm.com

Copyright Business Wire 2008 End of Story

Tuesday, October 14, 2008

washingtonpost.com
At Indian Call Centers, Another View of U.S.
As Economy Falters, Debt Collectors Hear Sobering Stories From the Land of Plenty

By Emily Wax
Washington Post Foreign Service
Tuesday, October 14, 2008; A08

GURGAON, India -- With her flowing, hot-pink Indian suit, jangly silver bangles and perky voice, Bhumika Chaturvedi, 24, doesn't fit the stereotype of a thuggish, heard-it-all-before debt collector. But lately, she has had no problem making American debtors cry.

For the past three years, Chaturvedi has been a top collection agent at her call center, phoning hundreds of Americans a day and politely asking them to pay up. As the U.S. financial crisis plunges Americans into debt, her business is one of the fastest-growing sectors in Indian outsourcing. It is also one of the few sectors of outsourcing in India that is still hiring aggressively.

Sitting in a narrow cubicle, her head-set switched on, Chaturvedi listens every night to increasingly disturbing tales of woe from the other side of the globe.

"My mortgage payments are just too high, honey. I just can't make the payment this month," a weeping woman with a Southern accent recently told her in response to a call for a $200 credit card payment. "I'm sure y'all heard about the credit crunch and gas prices. I'm flat broke."

"Ma'am, I am here to help you," Chaturvedi calmly said. "Ma'am, maybe you could make a small payment, $100 or $50, anything that you can."

Few places in India absorb and imitate American culture as much as call centers, where ambitious young Indians with fake American accents and American noms de phone spend hours calling people in Indiana or Maine to help navigate software glitches, plan vacations or sell products. The subculture of call centers tends to foster a cult of America, an over-the-top fantasy where hopes and dreams are easily accomplished by people who live in a brand-name wonderland of high-paying jobs, big houses and luxury getaways.

But collection agents at this call center outside New Delhi are starting to see the flip side of that vision: a country hobbled by debt and filled with people scared of losing their jobs, their houses and their cars.

"Lately, 25-year-old Americans are telling me that they are declaring themselves bankrupt," said Chaturvedi, raising her eyebrows in shock. "These days the situation is so emotional, so fragile. We have to have so much empathy and patience."

"It's like people are totally drowning," said Omkar Gadgil, 24, who goes by the alias Richard Rudy and was a math major in college. He is brainy and considered the office expert on the intricacies of debt collection. "There has just been years of overspending and now: the crash."

In the past, debt-saddled customers were often annoyed by Chaturvedi's calls from the open-air office at Aegis BPO Services. But now they seem depressed, defeated. Even the men sob into the phone, several agents said.

Under the pseudonym Carol Miller, Chaturvedi's ability to deftly work around the standard line, "The check is in the mail," is now being challenged by clients throwing out new responses: "How do you expect me to pay? This is the worst crisis since the Great Depression."

Chaturvedi said she has never seen it so bad. Many of the young employees say they are flabbergasted at just how widespread the financial ruin appears to be.

Talking to so many anguished Americans has taught these agents an important lesson: Live within your means. Agents with credit cards are vowing to pay them off every month, even during the upcoming holiday shopping season, when malls feature neon signs advertising flat-screen TVs and air conditioners.

Managers of this call center say they have recently added a seminar on the economic crisis, with PowerPoint slides that graph the financial mess as well as updates on other events that could affect the ability of U.S. debtors to pay their bills, including natural disasters such as Hurricane Ike. The presentation is intended to enable collection agents to bond with their clients, and possibly deflect their excuses.

Since the crisis began, agents have seen call times shoot up dramatically because late payers often want to talk more. More callers have moved. More phones have been disconnected. Clients have started bargaining with agents for discounts on their debts "as if they were haggling at an Indian vegetable market," said Rhoit Chug, assistant vice president of training for Aegis.

India handles an estimated $16 billion -- or about 5 percent -- of delinquent U.S. accounts. More complicated health insurance bills and mortgage payments are still largely handled inside the United States, industry executives say.

But the debt collection business will continue to grow as debt rises and companies look to cut costs, industry experts said. Aegis, which handles nearly a fourth of debt collection outsourced from the United States, is undergoing a rapid expansion. The company is erecting a second office building for 5,000 employees, many of them to be hired over the next few years. Most employees are college-educated and in their 20s. They earn about $5,000 a year, a competitive starting salary in India, but less than a fourth of what their American counterparts make.

Inside the Aegis call center, there is a clean, colorful cafeteria with round tables and darts to relieve stress. Because New Delhi is about 10 hours ahead of the eastern United States, there is an espresso machine and candy counter to keep the young workers awake while calling through India's night.

Aparup Sengupta, global chief executive officer and managing director of Aegis, encourages his debt collectors to use a "hospitable Indian touch," meaning less arm-twisting and more emotional therapy.

"This business is a performing art," Sengupta said. "We are part therapists because the core of the issue is that every human being wants to be honorable in life. We don't just push someone into a bad situation. We try to create a real solution."

Decorating the office are dozens of yellow smiley faces with the words, "Happy People. Happy Customers. Happy Investors," along with other posters that read: "Connect and Collect."

"How is the car running?" asked Parul Malhotra, 25, who goes by the alias Michelle Jones.

"It's a real piece of junk," the customer shot back, his voice registering more depression than anger. "It was in the shop. The electric's all messed up. And I have no money now. Plus, we have an illness in the family."

"Times are hard. I wish for everyone a speedy recovery," said Malhotra, trying to be cheerful. After a pause, she got back to business: "But let's try to work out a payment."

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