$5 billion in outsourcing awaits India in 2003-04

Outsourcing deals worth a $5 billion wait to engulf India. Despite strong protests going on in U.S., global giants are looking for opportunities to outsource to India in the period 2003-04.

Global managers are looking at strategic outsourcingpartners, acquisitions and captive development centers to outsource to India, according to outsourcing advisory firm neoIT. According to industry sources, leading Indian software services companies are vying for these orders.

Cliff Justice, senior vice-president, neoIT, said, ‘We are helping some of the top Fortune 500 companies to outsource software and business processes to India. Indian companies will get some of the biggest orders this year’.

According to Justice, the software development and business process outsourcing work coming to India will involve 400-2,000 people initially. "Many of these projects may ramp up in the second stage," he said. Companies, which are planning to outsource to India, include financial institutions, business conglomerates and technology majors.

In business process outsourcing, companies outsource their business operations like accounting, human resource management, sales and marketing assistance to other companies to reduce the cost of managing these functions. The Indian business process outsourcing sector is still in its nascent stage. This year, companies will be looking at consolidation to handle major projects," he said

India stands tall in global majors' outsourcing plan

Fortune 500 companies are coming in left and right into India to outsource their business process. Every firm wants to take advantage of what India has to offer. At least 20 global majors, including 12 Fortune 500 companies, are planning to outsource software services worth $3 billion within a year. Many of which are currently undertaking pilot projects with Indian firms.

The companies planning to outsource from India include a credit card firm, a US-based insurance company and a multi-product technology company. They have floated requests for information to outsource software development worth $700 million.

Warren Gallant, president and vice-chairman of Technology Partners International, a leading global outsourcing advisory firm, said, 'We are helping seven Fortune 100 companies to outsource from India. Last year, we helped outsource around $120 million. We expect this to grow five times'. The firms are not just looking at outsourcing software services. Some plan to go in for business process outsourcing as well. 'Global companies are impressed with Indian firms in the area of business process outsourcing. We are expecting many projects in this area to come to India,' Gallant said.

The most significant event in the global outsourcing business this year is India's emergence as the most favoured destination for information technology services outsourcing and the fact that India can offer world class service.

Companies in favor of outsourcing

Outsourcing certain in-house departments such as payroll is a growing trend among small businesses. Barbara Zulick saves herself two to three hours each pay period by outsourcing payroll for 23 employees of Abbott's Audio Video in Las Vegas and there are other such examples that are indicative of this trend.

The fifth-annual Outsourcing Index published by The Outsourcing Institute in Jericho, N.Y., says, that sixty percent of companies with fewer than 500 employees expect to spend $1 million to $5 million on outsourcing in the next 12 months, and another 20 percent have budgeted up to $1 million for outsourcing. It obviously saves them time that can be better spent on their core service or business.

The problem with most small businesses is they don't have a benefit analysis on the hard or soft costs for human resource services, said Mr. John Polhill, chief executive officer of Avant Sourcing, a Las Vegas-based business process outsourcing firm.

With most of them the idea of BPO (business process outsourcing) is daunting, because they are afraid that after going for BPO they will lose control, which is not at all true. He said, outsourcing 'human resources can improve small businesses by helping them understand their costs and realizing they must still manage the process'.

Another advantage of outsourcing payroll is the confidentiality of the process. "It tightens up issues about raises, how much people make and how much time they take off," Ahola said. Even other services can be outsourced like accounts payable and receivables. So there is no limit as to how much work and what kind you can outsource.

Managing Outsourced Bill Pay Processes For Banks

Electronic bill payment mechanisms are gaining currency, and rate as one of the key services that banks wish to pursue aggressively .A very large bill paying population, inefficient bill delivery systems, inconvenient payment collection mechanisms and high costs of collections, makes the bill payment and collections processes very cumbersome. So that is why most leading banks in India today, see bill payments as an integral part of their online suite of services.

However, offering an efficient and robust bill payment service is a fairly complex affair.
This is where outsourcing has proved to be an effective solution. Instead of attempting to do it all, banks have been better served by pursuing partnerships and collaborative outsourcing - with this they have a full-service line without the extra expense of investing into related technology or developing a capability in an area that is not core to their focus. A single outsourcing arrangement with any bill management service bureau smoothens the entire process and eliminates the complexity for the bank.

Outsourced management enables banks to launch their bill payment services, fully operational with best-market capabilities in weeks rather than months. Outsourcing the bill payment service management to service bureaus offer banks - established alliances, leading edge technology, operational efficiencies, control of processes and assurance of service delivery.

A key advantage to banks from outsourcing is the cost advantage factor. Not only do banks not have to make large technology investments that would otherwise have been required, but they are also able bring down their fixed costs of operating by leveraging the cost structure of the vendor.

Outsourcing helps banks to drive down their costs and match up on competitive ability. Choosing the right outsource-partner is of strategic importance to banks. The largest and the best banks in India, today - including State Bank of India, Bank of Baroda, Corporation Bank, ABN Amro Bank, Union Bank of India IDBI Bank, ING Vysya Bank, etc - all have outsourced their bill payment businesses.

In the end, outsourcing of the bill payment business process by banks is a marriage between the advantage of their a long standing trusted brand and the advantage of the flexibility of service bureaus, to rapidly reconfigure to match the market. Banks that best combine and leverage this will prevail.

SRF logs out of Infotech

At a time when every firm is jumping on to the business process outsourcing bandwagon, SRF Infotech takes a u-turn and holds a contrarian view about it. The company has decided to sell its IT venture and focus on its core business of industrial synthetics, chemicals and industrial fabrics.
Four years ago, SRF was equally bullish about the prospects for the BPO business. Its website said: 'If you are looking to outsource your Business Processes to boost your bottom line. SRF - is the company that can to deliver high quality, cost effective, timely solutions to overseas customers. SRF has since made a turnabout.
Mr.Arun Bharat Ram, vice-chairman and senior managing director of SRF Ltd, said that ,'we have decided to get out of the IT business which was primarily a BPO venture. It needed a huge investment and we felt that such an amount cannot be allocated for this venture since other businesses need more attention'. 'We are in advanced stage of negotiations with a company in the BPO business and it will absorb employees with the venture,' Mr. Bharat Ram added.
SRF Infotel had planned to leverage its business management expertise, process orientation and total quality management capabilities, combined with its IT skills, to offer high quality BPO services to international clients. However, its dream to rake in moolah from the venture hit a roadblock with not many business clients using its BPO. SRF Infotel solicited consulting service from PricewaterhouseCoopers to help it identify the best focus areas within BPO.

Outsourcing: A sure way to cut costs

Should a company outsource or not? This depends on whether an organization has a strong integration within the entire organization. Outsourcing is on constant rise. Multinationals are resorting to outsourcing as it helps them reduce costs considerably and lets them focus on the core areas of their strength. They are allowed the liberty to work on leveraging the areas where they are comfortable. Outsourcing also becomes important if company wants to compete globally.

India is a very hot destination for outsourcing and keeps getting better. More and more multinationals are pouring in large numbers. India is at a certain advantage, because India has a huge populace of English speaking, literate, low- cost manpower, which puts it ahead of all the other Asian countries. Outsourcing is happening and its happening in a big way, and India has certainly benefited from this strong gust of opportunity.

India's call center industry is killing a country

Call centers give a totally new meaning to the term nightlife. At a time when the rest of the country is getting ready to hit the sack, call center executives gear themselves up for a grueling 8-hour shift .

With five figure salaries, pay hikes of as much as 30 per cent a year and almost no qualifications required, fresh graduates here have a good thing going. Or so it seems. Despite the hefty pay packets, the burn-out rates are beyond explanation.
In one Delhi call center
as many as 200 people quit in a month alone. And, as of now, there are some 50 court cases pending against call center owners filed by frustrated former employees, according to a senior call center executive. So why this unhappiness, this frustration? Disgruntled former employees - victims of burnout - complain HR departments were so busy hiring more graduates to feed rising demand that they ignored the ones already working for them.
The social life goes haywire, with working culture of seven days a week for 8 strenuous hours. Even though employers have been trying their best to compensate by creating a friendly environment for their employees, it has its limitations. Salaries might be hiked periodically but the work remains monotonous and seems like a drag after sometime.
The BPO and call center industry in India currently employs some 180,000 of these people, mostly under 25 years old. It will require at least 80,000 more each year for the foreseeable future as business booms and an estimated 35,000 make the choice to reclaim themselves from their work.
Even the most vocal call center critics agree that the herds of young people working night shifts will keep on increasing regardless of the warning from their older and wiser counterparts.
Unless something is done to curb the country's revolving door scenario of fresh-faced graduates in and bitter, frustrated, red-eyed, burned out ex-call center executives out, India's race for business dominance could be the start of a never-ending social crisis just waiting to happen.

Accenture and Financial Service Solutions LLC Join Forces to Provide Mortgage Origination Services on an Outsourced Basis.

When two big companies plan to join hands, the result is ought to be good. Accenture and financial service solutions have decided to come together to provide mortgage origination and fulfillment business process outsourcing (BPO) in the United States. According to the terms and conditions of the agreement, Accenture will act as a primary sales and marketing channel and the preferred integrator for Financial Service Solutions and FSS will become Accenture's exclusive mortgage originations BPO offering in the United States.

Mr.Tom Brydon, a partner in Accenture's Banking industry group, said that, "we see great potential for clients and prospects to benefit from Financial Service Solutions's capabilities, as well as for Accenture to play a larger role in the mortgage business process outsourcing landscape," He also said that "FSS captures the essence of business process outsourcing -- helping lenders migrate from fixed to variable costs, improving service levels, keeping affordable access to leading technology and processes, and strengthening their customer relationships."

While Accenture is a global management consulting, technology services and outsourcing company, Financial Services Solutions LCC is the mortgage industry's first robust, integrated, end-to-end loan origination and fulfillment platform. The collaboration is all set to create some benchmarks in the industry, while the customers are the ones who will be benefited the most

Lehmann not to curb outsourcing

The firm is winding up only its IT help desk, a very small call center.

There is no effort to hold back or put a stop to outsourcing by Lehmann Brothers. Charlie Cortese, its managing director for information technology, asserted that “In fact the overall numbers involved in outsourcing will go up next year”. Closing up of IT help desk did give rise to certain speculations after it ended its engagement with Wipro. But company sources said that, what it is winding up is a relatively small call center, which accounts for a mere 5% of the total work outsourced by it. Of the 450 people involved with the outsourced work, only 26 or 27 will be affected by the decision, Cortese clarified.
The deal involves not just this one, but several other projects. Lehmann is not content with only the BPO project. “We are new to outsourcing. This one didn’t work for many reasons. Perhaps we tried to do too much too quickly.” We need to do a re-analysis and find out why the project fared so badly.
Cortese sought to make himself clear on the stories referring to quality problems. The remark was made “out of context,”. What the person concerned (the source for the US stories) should have said was “we were unhappy with the performance of the project, not the quality.
Sometimes few projects simply don’t work well. There are lots of reasons for that. One could be that, maybe they were trying to outsource without good processes being in place and also that for the project to perform well, more training was needed.
Cortese did clarify that the decision was not influenced by any trade union. In fact Lehmann had no such trade unions. When the deal was struck, it was anticipated to result in up to $70 million worth of business in a year for the two partners (Wipro and Tata Consultancy Services).
“We are happy with what we have with Wipro; our overall work with them is going up”, he added. The deal covers the entire range of services offered by Wipro – right from applications development and management, to infrastructure services, BPO and consulting.

Business process & IT sourcing

Business Process Outsourcing is quickly becoming the name of the game for companies. Its infact all a part of a well thought out strategy for companies who are looking to reduce their costs. Many companies are, outsourcing a growing list of functions that includes purchasing and disbursement, order entry, billing and collection, human resources administration, cash and investment management, tax compliance, internal audit, payroll, and customer relations. Business process outsourcing, or BPO, has already become popular among companies of all sizes for a variety of reasons, and will likely gain steam in the coming years.

Saving money is a prime motivator, of course, but that’s not the only reason. Outsourcing is becoming more of a management tool, freeing companies to build upon their core competencies by leaving the non-core stuff to specialized providers. And this in turn is helpful, particularly in the areas of improving quality and service, and instilling best
Practices. There's no question that outsourcing noncore business functions is a successful strategy, because by reducing the utilization of assets and sub-contracting of process, a company obtains more controllable costs. Offloading tedious functions may enable a company to focus on more important things, saving both time and money.