Archive for the Global Work Category
Posted on August 25, 2010 by Atul
“Global Sourcing in the New Normal: Adapting to Economic Uncertainty, Changing Markets and Competitive Dynamics”
by Atul Vashistha
Staffing augmentation. Labor arbitrage. India.
For many out there, outsourcing seems to be defined only by the above – people working for low compensation in locations such as India helping the client save significant monies. That is outsourcing to them. However, the recent and continuing downturn in 2009 and 2010, has upset many notions and models that have been in place for over a decade. What was considered to be the norm or the normal as far as outsourcing is concerned, is now in flux and so requires different responses. The recent downturn has fundamentally changed how firms look at outsourcing. This period also revealed the challenges with current models and practices.
Over the next ten or so articles, I will touch on a topic each time and explore it in more detail. This blog’s topic is
Trend: Location
Take for instance, the call center business. There was a time when India was the only market given due consideration, as far as setting up call center operations was concerned. That notion has been dispelled by other markets such as the Philippines and Costa Rica, which have showcased themselves in exemplary fashion as far as the provision of voice-based customer support services is concerned.
In similar manner, we see the rise of engineering services and local players in Brazil and Russia, increasingly emerging as a premier destination for the outsourcing of complex engineering and applications activities.
The above instances are just some of the many shifts and changes we are likely to continue to witness. In particular, they point towards an endeavor to be on the lookout for markets with newer skill sets, and not just go by established norms wherein predestinated markets such as India have long been considered to be the haven for any and every kind of outsourcing. In the same breath, it is vital that markets with access to equal or better technology processes are also identified. The situation is akin to the age old maxim wherein stock diversification is key to a healthy nest egg; depending on just one or more markets for all of one’s outsourcing needs is really not a very good idea. Increased attrition and competition for resources point to the need for geographic diversification.
Besides skill sets and technology, there are other reasons for which alternate markets also need to be actively considered. Take for instance the aspect of time zone. Many of the Latin American locations lie at the same time zones as the US. There are various outsourcing opportunities that may be tapped here, especially if we are to look at the large Spanish speaking population of the region and juxtapose it with the equally large Hispanic population of the US.
We see the following clusters developing:
Asia Pacific: The key locations in this cluster are India, Philippines, China, Malaysia and Vietnam. Others such as Thailand, Sri Lanka and Indonesia are expected to contribute too.
Europe: The key locations in this cluster are Czech Republic, Poland, Russia, Hungary, Ireland and Romania.
Middle East/Africa: The key locations in this cluster are Egypt, South Africa, Jordan and Ghana. Other locations such as Kenya, Nigeria and Morocco can contribute too.
North America/South America: The key locations are USA, Canada, Mexico, Brazil, Colombia, Chile, Costa Rica and Argentina. Panama and Guatemala can contribute too.
I will be doing a key note at the Global Sourcing Forum in NYC on the 13th of October. Join me in NYC and learn from an industry expert and I on the trends, traps and emerging opportunities that will be the “New Normal” and what you can do to leverage it to your benefit. Learn about rising destinations, new pricing models, leading engagement models, governance technologies and knowledge management models. This keynote is led by Former J&J business unit CIO and Head of eJNJ, John Hammitt and I.
Posted on August 12, 2010 by Atul
Posted on August 12, 2010 by Atul
WoW! I am starting to see “Cloud Computing” being put forth as the “Internet Boom” of the late 90s. Think it has tremendous potential and just like the internet will take its time to mature…. Let’s make sure we “Look Before We Leap”.
FROM COMPUTER WORLD
Arjun Sethi doesn’t equivocate. “In the next five years, outsourcing as we know it will have disappeared,” says the partner and head of the outsourcing practice at consultancy A.T. Kearney. “New players, which have yet to enter the market, will soon rule the industry.”
At the heart of Sethi's prediction of a “massive reconfiguration of the outsourcing industry” is the rise of cloud computing. Most existing providers simply won't adapt quickly enough. As a result, Sethi says, Amazon, Google or a vendor we've not yet heard of will become the market leaders. Meanwhile, traditional infrastructure providers like HP, Dell and Xerox may struggle to keep up, and many Indian providers will disappear completely.
CIO.com talked to Sethi about his vision of the next generation of IT outsourcing.
via The End of IT Outsourcing As We Know It – Computerworld.
Posted on July 16, 2010 by Atul
Tata Consultancy Services: Investors.
Yesterday, TCS announced a strong performance in the first quarter of the fiscal year. Is the market really improving dramatically or is this the pre-summer bump?
Revenues at $1,794 million
up 6.4% sequentially; up
21.2% Y-o-Y
Financial Highlights for Quarter Ended June 30, 2010:
- Operating Profits at $487 million; Growth 32.5% Y-o-Y and 5.1% Q-o-Q
- Profit After Tax at $403 million; Growth of 29.3% Y-o-Y and (4.9) % Q-o-Q
- Earnings Per Share at $0.21
Business Highlights for Quarter Ended June 30, 2010:
- Gross Addition of 10,849 Employees (Net Addition of 3,271 employees)
- 36 New Clients added
Please use the link below to view the entire press release.
http://www.tcs.com/news_events/press_releases/Pages/Q1-2011-Revenues-USD-1794-million-up-6.4-percent-sequentially-up-21.2-Y-o-Y.aspx <http://www.tcs.com/news_events/press_releases/Pages/Q1-2011-Revenues-USD-1794-million-up-6.4-percent-sequentially-up-21.2-Y-o-Y.aspx>
Posted on July 9, 2010 by Atul
I served on the board of Rural Sourcing Inc., which was founded by Kathy White, Former CIO – Cardinal Health, until this firm was acquired by Clarkson Consulting. A very viable alternative!
I was very impressed by the quality of resources in rural locations such as Jonesboro, Greenville etc. in states such as Arkansas, New Mexico and North Carolina.
Forget India, Outsource To Arkansas.
By CNN at July 08, 2010
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Looking for skilled, low-cost labor? Forget about India and China. How about Jonesboro, Ark.?
As the national unemployment rate hovers near 10%, some companies are starting to eye job-hungry areas of the country as prime candidates for the kind of outsourced work that once would have gone overseas.
Dubbed “ruralsourcing,” “rural outsourcing” and “onshoring,” the practice relies on two simple premises: Smaller towns need jobs, and they offer a cheaper cost of living than urban centers. So businesses that outsource work to these areas can expect to pay less — rates are often as much as 25% to 50% lower — than if they were hiring urbanites with comparable skills. More>>
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Tags: arkansas, india, outsourcing
Posted on July 5, 2010 by Atul
Danville Express : McNerney introduces bill to fight outsourcing.
Here we go again! Another politician working on making America less competitive and forcing American companies to have more disadvantages as they compete globally.
Jobs are not created by putting more hurdles in front of companies. Jobs are created by providing incentives for companies to invest in communities and new opportunities.
Has anyone done a study of how many jobs are being created by foreign outsourcing companies in the U.S.A.? Has anyone done a study to see what impact outsourcing is having on the fortunes of the buyers? Are they competing better and thus creating more jobs and better futures for their employees?
We are lot more connected than when most of these politicians started their careers. They need to spend more time understanding the connectedness of our world and how one needs to compete NOW!
Posted on June 30, 2010 by Atul
Leading Virtual Teams to Real Results – The Conversation – Harvard Business Review. 11:23 AM Wednesday June 30, 2010
by Jeanne C Meister and Karie Willyerd |
If a leader is like a conductor, as Peter Drucker said, then are virtual leaders like virtual conductors? In this video, Eric Whitacre conducts a virtual choir in a performance of “Lux Aurumque.” This moving virtual symphony, a collaboration between more than 185 singers from 12 countries, has been viewed more than a million times since it was uploaded in March.
As Whitacre describes in his blog, “I made my own conductor track, filming it in complete silence, hearing the music only in my head. Then I watched the video and played in the piano accompaniment part to my conductor track. Then I offered the sheet music as a free download. As singers began posting their individual tracks, I called for ‘auditions’ for the soprano solo.” Whitacre had already created a different video, called“Sleep,” where he cut different tracks of remote singers together. The goal with “Lux Aurumque” was to have the singers — none of whom could hear each other, of course — actually responding to his direction.
“There is a lot of rubato in my conducting (slowing down, speeding up) and some very specific dynamic gestures. And the singers responded beautifully… When I saw the finished video for the first time I actually teared up. The intimacy of all the faces, the sound of the singing, the obvious poetic symbolism about our shared humanity and our need to connect; all of it completely overwhelmed me.”
If a conductor can work virtually, bringing over 100 musicians together in a way that recognized the individuals even more than a live performance might, what can virtual managers do to create such excellence of performance while touching our “shared humanity?”
The reality of virtual leadership is apparent. Teams are increasingly spread across space and time, providing the benefit of obtaining talent anywhere in the world and allowing 24-7 work progression. However, virtual workers can feel a sense of isolation, and building bonded teams becomes more difficult when there are few opportunities to meet face-to-face.
Bob Taccini, a 52-year-old vice president of finance at Cisco Systems, has faced this situation personally. Although self-described as one of the last people to adopt a new fad, he says, “When we cut our travel budgets, using social technologies helped meet my need for personalization with my team. Even when I had a travel budget, I could maybe only get to some of our sites once a year. Management now requires spanning distance, even though we can’t span time. Certainly, as we continue to build a multi-generation workspace, social technologies will become more and more the norm.”
For Taccini, the last five years — marked by constantly changing market conditions, the introduction of more distributed leadership throughout Cisco, and the increased availability of virtual meeting technologies — have demanded a change in how he leads. During this time, he has become an adept user of social technologies. Now he conducts virtual offsite meetings, using TelePresence and WebEx, with blogs, discussion groups, and online forums as needed. TelePresence is richer than e-mail or voice mail and feels more real and physical because participants are able to see the other people involved.
One of the most effective tools Taccini has used is a monthly video blog (vlog). “It has been one of the best ways to communicate, supplemented by calls with everyone in my reporting chain,” he said. “Even though it’s not two-way real time, I get more participation from the vlog. My team sends questions, and they also have Web spaces to create collaboration spaces.”
Here are some tips of how leaders are using social technologies to work virtually:
- Rich media, such as live video streams or virtual meetings, can make virtual interactions feel more realistic;
- Frequent contact keeps connections to virtual workers fresh;
- Mixing media, such as the use of forums, vlogs, blogs, and discussion groups allows people to interact in a style most comfortable to them
- Meeting face-to-face at least once helps create a bond that can be connected virtually;
- Simple technologies, such as a personal phone call can help motivate a virtual worker, knowing they are not out of sight, out of mind.
Surely many of you are facing this new world of either working or leading virtually. What has worked for you? What do you wish your manager/team leader would do to help you feel more connected to the rest of the team? Share your experience here so we can learn collectively on how to build a high-performing virtual team.
Jeanne C Meister and Karie Willyerd are cofounders of Future Workplace. Jeanne is the author of two books on corporate universities and hosts the blog newlearningplaybook.com. Karie was formerly the chief learning officer of Sun Microsystems and head of learning and development at HJ Heinz. They are the authors of the HBR article “Mentoring Millennials” and the book The 2020 Workplace: How Innovative Companies Attract, Develop, and Keep Tomorrow’s Employees Today.
Posted on June 5, 2010 by Atul
Global Services -Voice-based BPO Industry is Reviving.
Voice-based services or call center services– the offering that actually started it all for the BPO industry in countries like India and the Philippines, has changed a lot since inception. The very purpose of outsourcing this service has undergone a radical change.
“Initially, clients preferred to turn the work to service providers because the service providers offered a cost advantage or some type of ‘peak volume overflow’ capacity that the clients could not staff themselves,” says Sid Pai, Partner & Managing Director, TPI India.
Offshore call centers offering voice-based services were the perfect answer to this and one saw a massive build up of call centers in the early part of the decade. Very soon, the industry matured. Many call centers reached a point where they couldn’t scale up or they couldn’t retain key clients. This led to a shake-up in the call center industry, especially in India, where many of them were snapped up by IT services companies ( e.g. Infosys-Progeon, Wipro-Spectramind, IBM-Daksh, etc) seeking to enter the BPO industry.
BPO’s addressing the voice market had growth challenges. The way out was to shift the focus to other areas of BPO like finance/ accounting, mortgage, insurance and other niche sectors like KPO and LPO. Says Atul Vashishtha, CEO of Neo Advisory, “The market for non-voice services was expected to grow faster, as the call center sector was more mature and significantly developed .”
Revival and New Hope
The voice-based BPO industry is reviving. “Investments in technology platforms, process improvements, equipment and facilities and acquiring specific vertical capabilities, made by the service providers are outpacing those by the client. Service providers are moving up the value chain,” says Pai.
Voice- based services continue to expand their domain and tailor their offerings according to the needs of their clients. “Today customers are looking at unified communications to integrate various communication systems with their business applications to improve their business processes. These improved business processes lead to higher productivity for employees and greater customer satisfaction which in turn results in higher revenues and profits,” says Minhaj Zia, National Sales Manager, Unified Communications, Cisco India & SAARC.
Expanding scope of services
Clients today have access to a wide spectrum of services under voice. “Cisco subscribes to a range of services covering the entire gamut from technology services desk for customers and employees, human resources support for employees , escalation options for customers for quick access and marketing access to and from Cisco,” says V.C. Gopalratnam, Vice President (IT) and Chief Information Officer, Globalisation, Cisco, on the internal deployment of voice services in the company.
Providers are also developing expertise in niche areas within voice services. Andrew Kokes, Vice President of The Americas, Sitel, cites an example. “Revenue generation is one of the key metrics that Sitel is measured against for most customer care programs (revenue per month, revenue per call), and is a large part of our core expertise. More than half of all Sitel-managed inbound programs incorporate some form of upsell or cross-sell offer.”
The maturity of this segment allows outsourcing to many more locations as compared to emerging areas of BPO and thus finding price points and capabilities according to the specific needs of the client. “In all cases the services (we subscribe to) have a “follow the sun model” with sufficient geographical spread to cover all time zones effectively,” says Gopalratnam.
Collaboration and integration- the new formulas of growth
Collaboration and integration of communication platforms and capabilities are the new formulas of growth in this sector. “Collaboration is slowly moving towards new forms such as Enterprise Social Software, UC as a Service, TelePresence etc. Cisco’s Unified Contact Center solution…. provides a VoIP contact center solution that enables organizations to integrate inbound and outbound voice applications with Internet applications, including real-time chat, Web collaboration, and email. This integration provides for unified capabilities, helping a single agent support multiple interactions simultaneously, regardless of the communications channel the customer has chosen,” elaborates Zia.
Voice services are set to move to a higher degree of integration at multiple levels. Kokes says, “Voice-based contact center services are rapidly moving beyond traditional “voice” communication to include a blend of voice and live-chat (i.e., text based) engagement. In such arrangements, contact center agents are provided with real-time indicators of a website visitor’s propensity to purchase, and can invite that online consumer to chat via IM before the customer navigates away from the site. Such a model also opens the door to Pay-for-Performance client arrangements, whereby the call center fees for service can be aligned with the program’s overall success in producing incremental online sales.”
Zia also sees integration and improved technology as growth drivers for this sector. He says, “Enterprises will move beyond contact center to a customer interaction network with hosted contact centers for both enterprise customers and service providers. In a central office or data center, service providers will host the contact center infrastructure software, which will be shared by multiple business customers. Subscribing business customers will have IP or time-division multiplexing (TDM) infrastructures or a combination of the two.”
A suite of integrated services can also be introduced, he says, like virtual call centers, network routing with computer telephony integration (CTI), networked interactive voice response (IVR), intelligent call routing (routing calls between contact centers based on call context information, agent availability, and customer information from databases) and multimedia applications such as Web collaboration and e-mail response management.
With so much innovation happening and set to happen in this ‘traditional’ sector of BPO, analysts are optimistic of its transformational capabilities for businesses. “(Its potential to transform) looks evident given the investments made by the service providers on technology and platforms. In addition, leading service providers have built modern global services delivery infrastructures and implemented best practices that allow them to effectively and efficiently leverage their scale, volume, global capacity and technology to better serve their clients.” says Pai. To this, Atul Vashishtha adds that this is a market that will become increasingly global and Tier 2 players will need to specialize to succeed.
Posted on June 4, 2010 by Atul
The Problem with Schumers Plan to Tax Offshore Call Center Use – CIO.com – Business Technology Leadership.
When will we learn? Tax and harass. That’s no way to support America’s competitiveness. We need to continue to promote free trade while working to create jobs in our country in new sectors by supporting innovation not stifling it.
Posted on May 15, 2010 by Atul
I recently did a webinar on Nearshore destination: Costa Rica – Destination for multi-function centers. We have been monitoring this destination since 2000 and continue to be impressed by it. Below is an article published by Global Services magazine.
Global Services -Will Costa Rica Stand the Test of Time?.
Costa Rica emerged on the outsourcing scene with a $300 million investment by Intel in 1996. But it was with the nearshoring wave that this tiny Central American country found its true calling. Since then, it has remained accurate to the literal translation of its name-’Rich Coast’, with many companies choosing it as their preferred destination.
So what is it that has attracted names like IBM, Microsoft, Amazon, Western Union and most recently, WNS in 2009 and Amway in 2010 to it?
“A healthy talent pool with over 60,000 graduates each year with English and Spanish language capabilities, proximity to the US and similar time zones, well-established location for BPO services with over 50 shared services and contact services centers and existing opportunities from clients and prospects that require Spanish language capabilities are some of the reasons why we chose to set up our delivery center there in 2009,” says Steve Reynolds, Managing Director, WNS-North America. “Our delivery center in Costa Rica serves global clients with North American operations that require Spanish language capability.”
According to Irving Soto, Director, Investment Promotion, of the country’s investment promotion board CINDE, “Costa Rica has become an important nearshoring destination for companies in the U.S. as well as strategic offshore locations for European companies. We are also seeing an increasing interest by Indian companies that require nearshore access to North America.”
The increase in the Hispanic population in the United States (estimated to be over 40 million in 2008), coupled with the Latin American region’s language capabilities, large labor pool, lower costs, and geographic proximity has led U.S. corporations to establish contact centers there. But the availability of graduates equipped with English and technical skills, due to the strong emphasis on education there, allows multiple functions of a company to be outsourced to Costa Rica. “Our Costa Rica center provides the complete suite of WNS services including finance and accounting (F&A), customer care, research and analytics, and domain specific processes in both English and Spanish.” says Reynolds.
However, other countries are fast catching up, says Saugata Sengupta, Senior Analyst at Tholons. “Costa Rica has to face stiff competition from larger countries with similar value proposition like Argentina, Chile and Mexico. The country does not have the large scale to compete with these countries which they are trying to counter by providing excellent support from the government and incentives to the companies looking to establish in their country.”
A small labor pool resulting in difficulties in scaling up operations, inflationary pressures and salaries moving upwards at double-digit rates (between 10 – 15%, according to Neo Advisory’s Latin America Contact Center Landscape White Paper) annually is pointed out as the main hurdle for outsourcing to Costa Rica. According to Sengupta, “The primary factor which Costa Rica should monitor is its small labor pool which is limiting what it can offer to lower-end BPO services. With these BPO services (back-office, contact support and shared services) being in high demand in the world market, Costa Rica must look at addressing its labor pool concerns to better capitalize on market opportunity.”
“We are a relatively young country so our labor force is growing at a faster rate (3%) than the general population (1.9%).” explains Soto. Atul Vashistha, Chairman and Founder, Neo Group and Neo Advisory believes that planning is the solution. He says, “One can do a number of scalable things here over a period of time with planning.”
A Tholons research points out that a large population and labor force do not necessarily guarantee scalability – the pivotal point now for labor scalability is quality of labor force and thus employability.
According to CINDE, $21 million were allocated in 2009 to English and IT Training in the four main universities and INA, an autonomous national training institute. Costa Rica Multilingual, a comprehensive program to develop bilingual capabilities in the country’s labor market, was also launched. Besides, a number of language and IT training programs have been started to augment the skilled labor pool.
With regard to infrastructure, Costa Rica has several industrial parks located in the Greater Metropolitan Area. The Free Trade Zone Regime gives a wide range of benefits and incentives to activities directly related to the export of services and/or products from Costa Rica. However the recent change in the Free Trade Zone System has eliminated subsidies on certain exports.
Presently all the talent pool for outsourcing is attracted to San Jose, other cities have not gained prominence since they have much smaller populations.
Says Sengupta,“With the multinationals locating in Costa Rica as well as increasing local investments supporting the outsourcing industry, the government has been quick to augment spending on infrastructure. Though much has been done with the development of Costa Rica’s infrastructure, further improvement is still needed particularly in cities outside San Jose.”
Costa Rica, despite its small labor pool and rising salary levels, has continued to attract companies on the strength of its quality labor force. But with other countries offering larger labor pools, low cost and similar language skills, whether Costa Rica will be able to maintain its dominant position in the Latin American outsourcing scene remains to be seen.
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