CEO of Atlanta-based Rural Sourcing Inc, Monty Hamilton, is a staunch supporter of the advantages of rural sourcing. However, Hamilton also recognizes how Ghana and other underdeveloped countries have labored tirelessly to position themselves as players on the offshore outsourcing scene. Additionally, he recognizes hat talent from abroad has its place in manning a shortage of IT skills within the U.S.

Yet, another CEO with a similar voice is the chief executive of Macon, MO-based Onshore Technology Services, Shane Mayes. According to Mayes, rural outsourcing needs to be understood from the perspective that it makes good business sense. He also emphasized that it is important that the media focus on the benefits of rural outsourcing as a risk averse, yet cost effective, domestic supplement to the offshoring portfolio. He added that it is also important to recognize how some communities in rural areas are committed to workforce development and education.

Mayes noted that proponents of rural outsourcing need not necessarily reject the innovation opportunities offered by cultural diversity and the offshoring model. Many companies are inclined to forsake offshoring to the best outsourcing countries by proceeding with the status quo and the familiar.

He commented, “Our customers choose us because we filling a role in their outsourcing portfolio, not out of patriotic sentiments. This is the message that must be brought forward concerning rural outsourcing.”

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But these advantages have been in a sense milked to the maximum and a new strategy has to be arrived at if India is to continue to rule in the industry in the foreseeable future. Rather than rest on its laurels, India needs to redefine its outsourcing industry to the world. For instance India could try and tap the cloud computing technology which holds paradigm defining potential.

On an immediate basis Indian outsourcing firms need a global makeover to enable them to participate effectively in markets where IT has a dominating presence, the US healthcare industry being a case in point. Another huge market is business contracts offered by the US government.

The Indian BPO market will in all probability continue to grow at a blistering pace in the time to come (by some estimates it shall touch $225 billion by 2020. It would however auger well for the industry if it did not become complacent and factored in the challenges. The demand from the 1st world countries like New Zealand, Japan and Australia is expected to fall. At the same time there is likely to be greater competition from SAARC countries like Sri Lanka, Pakistan and Bangladesh.

India also needs to ensure that there is a great deal of innovation in the industry so as to maintain its cost competitiveness as well high levels of technical expertise. Augmenting its hardware capabilities for example would be a good way of showcasing a diversified portfolio of products and services.

In recent times the growth and penetration of broadband in India has grown substantially, and as this trend continues more and more skilled people will be able to offer their skills to markets around the world. Outsourcing itself will acquire a paradigm shift in people’s perception, as it will no longer be associated only with humongous transnational corporation. When people with skills as varied as that of schoolteacher or an architect can offer their services to far corners of the world, outsourcing would have well and truly become irretrievably entrenched in India. With the greatest number of young people in the world, accounting for a huge number of well educated and trained people India would be absolutely geared to accept all kinds of outsourced work from across the globe.

Thus we see that India is well poised to continue its dominance on the global outsourcing industry for a long time to come, provided it continues to innovate, hone its traditional skills and push for greater broadband connectivity. Sure there will be serious challenges, but India has it to rise to the occasion. The coming decade and beyond will continue to belong to India, in so far as Business Processes Outsourcing is concerned.

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That this has been well appreciated by many small scale companies. Estimates suggest that about 47% such companies are actively considering outsourcing administration, 44% are looking at IT and another 23% at distribution and logistics. Rising costs and vendor pricing are the primary reason for even smaller companies to be favorably disposed towards outsourcing.

There are in fact a number of advantages that accrue to a small business when it decides to outsource. For one there is a marked decrease in your capital costs as your fixed costs get converted to variable costs. At the same time it enables more efficient use of scarce capital.

Outsourcing frees up time and resources which can be better utilized in providing value to customer. Moreover new projects can be taken up far more easily. That apart it enables small firms to benefit from technology and economies of scale which would otherwise be unavailable to them. Not only that, the companies that one outsources to are far more adept and managing the risks involved in their areas expertise, a great relief for harried small firm owners.

However there is a great deal of apprehension among small firms particularly those that outsource to countries like India about quality control. The way to deal with this is to check if certain things are in place. For instance one should work with firms, which have a presence in the United States, get a background check done and ask for the prospective employees to have top notch qualification.

An important reason why outsourcing has become the new mantra for many small firms is that the spread of internet and broadband has led to a proliferation of small firms employing fewer than 100 people. The fact that they are strapped for time makes outsourcing almost a matter of no choice for them. However it is the small companies that employ between 500 to 1000 employees that are the most aggressive outsourcers, particularly when it comes to HR outsourcing.

The prime mover in small companies having a serious look at outsourcing is the fact that technology has brought the price of outsourcing down and the sheer convenience and consequently economy that it offers have convinced the most tightly managed firms to wake up and smell the coffee. Outsourcing as a matter of fact is getting intertwined in everybody’s life. You want to start up an IT consulting business in South Africa, and you want to get a SWOT analysis done. What do you do? Perhaps outsource the work to a marketing research firm in India that specializes on doing South Africa centric work. Truly the global village is here and outsourcing is fast becoming a way of life.

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Infosys received a leadership ranking by Consumer Goods Technology Opens in a new window Consumer Goods Technology readers by offering a winning combination of end-to-end solutions, deep industry expertise, and flexible, scalable pricing and delivery models. Recognition as a breakout winner for customer experience underscores Infosys’ focus on meeting customer demands against the backdrop of a highly-competitive marketplace and difficult economic climate. Infosys counts Diageo, Hallmark, Kraft Foods, and Reckitt Benckiser among its Retail and Consumer Packaged Goods Opens in a new window Consumer Packaged Goods clients.

This is the tenth year that Consumer Goods Technology readers have recognized their top solution providers. Consumer Goods Technology polled consumer goods executives to identify their most valued solution and service provider in ten technology and services categories. The executives rate their customer experience with each provider on a scale of one to five. The final ranking lists are determined by a combined score.

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Sybase and SAP are jointly delivering co-developed solutions for extending SAP CRM and SAP Business Suite to mobile devices. SAP customers will now be able to leverage Wipro’s SAP implementation skills to customize these Sybase® Mobile Solutions for SAP, in addition to developing custom mobile applications for other SAP modules such as SRM SCM, PLM, etc. that will be directed towards areas like mobile services, mobile sales, time and travel approvals, workflows, warehouse management, asset management, etc. Wipro’s solutions will be based on Sybase® Unwired Platform (SUP), a mobile enterprise application platform that provides systems integrators, independent software vendors, and enterprise developers with the ability to easily develop, deploy and manage mobile applications. This comprehensive, yet flexible mobility infrastructure will enable enterprises to implement, manage and expand their mobile computing initiatives in a coherent, streamlined and cost-effective manner. Mobile solutions created using the Unwired Platform enable mobile workers to access business critical data anytime, from anywhere, leading to a positive impact on productivity and revenue.

Mr. Sunil Jose, Managing Director, India & Sub-continent, Sybase Software (India) Pvt. Ltd. said, “The Sybase & Wipro partnership will offer Wipro’s SAP customers, applications on the go. SUP supports a wide variety of popular mobile platforms. This enables true mobility for a large section of employees and not just top or middle management. Through this, SAP’s customers will be able to create an information edge by optimizing and enhancing the infrastructure they already own, linking valuable data resources in place, and securely delivering information anytime, anywhere.”

Commenting on the partnership, Sairaman Jagannathan, Vice President, Business Solutions Division,Wipro said, “ Building on our SAP partnership, this partnership with Sybase demonstrates a strong synergy between our companies as we share a common goal of providing businesses easy access to valuable information contained within enterprise applications. As Sybase’s implementation partner, we will bring in tight integration with a wide range of mobile environments to ensure secure and real-time access to information. Wipro chose Sybase as a strategic partner based on the strength of its mobile enterprise application platform and rich expertise and proven leadership in the enterprise mobility space.”

As part of this joint initiative, Wipro will set up a Center of Excellence at its research Center, Sangam, in Bangalore, where customers will be able to experience the various mobile applications developed by Wipro to mobilize SAP. This Centre of Excellence will also be used to develop newer industry frameworks that can be used across different customer verticals.

Mr. Sunil Jose further added, “Sybase is in the best position to support the movement away from siloed mobile applications to the mass adoption of mobility across the entire enterprise. With the growing number of end users and device types to the demand for real time access to information, our enterprise mobility platform is unrivaled in the industry. We believe our position in Gartner’s leader quadrant is a further validation of the significant advancements made to our Sybase® Unwired Platform and success in building out our partnership ecosystem”.

Recently, Gartner, Inc. positioned Sybase in the Leaders quadrant in its Magic Quadrant for Mobile Enterprise Application Platforms (MEAP) report, authored by William Clark and Michael King (December 2009). “We believe that more than 95% of organizations will be choosing MEAP or packaged mobile application vendors as their primary mobile development platforms through 2012,” states the Gartner report. “From 2010 through 2013, the number of enterprises choosing multichannel MEAP vendors will rise 10% annually.”

In Related News
SAP AG and Sybase today announced today announced two new solutions for mobile workers to carry out key business and customer relationship management (CRM) processes via iPhone and Windows Mobile. Built on the industry-leading Sybase® Unwired Platform, the mobile solutions extend the capabilities of SAP® Business Suite applications, including SAP® Customer Relationship Management (SAP CRM), and also can be customized to tap into a variety of back-end data sources, including databases, Web services, files and any enterprise application that leverages service-oriented architecture (SOA). The announcement was made at the CeBIT trade fair, being held in Hannover, Germany, March 2-6.

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The agreement cites that Wipro is responsible for provisioning, management of the Finacle core banking platform, system integration, and enterprise applications to PSB branches throughout India.

A contract with Satyam in 2006 ended in 2009 after the embattled outsourcing firm failed to meet PSB’s criteria. The deal was affected by the corruption scandal at Satyam in which chairman and founder Ramalinga Raju had inflated Satyam’s books, leaving the company short of $1 billion in its balance sheets.

In the new agreement, Wipro will be involved in management and commissioning of PSB’s deta center, service and support operations and the disaster recovery center.

PSB chairman, Sardar G.S.Vedi, was quoted as saying, “The vision of the bank is to leverage technology to achieve business transformation. We are re-engineering our IT processes and applications to deliver superior quality of service and products to accelerate business growth and achieve operational excellence,” reports finextra.com

He added, “Our customers will be able to access online and mobile banking soon. They will be able to buy and sell shares from online repositories. The first phase will cover 500 branches.”

Incidentally, Wipro had already installed core-banking solutions for UTI Bank, Dena Bank, Vijaya Bank and Oriental Bank of Commerce.

Business chief of India and Middle East, Wipro, Anand Sankaran said in a statement, “The contract includes 24×7 management of the underlying IT infrastructure of the bank,” Adding, “We will also carry out commissioning and management of the data centre and the disaster recovery centre apart from providing service and support,” reports the Economic Times.

The deal sheds light on recent reports that domestic markets will continue to play an important role in shaping the new outsourcing landscape for majors like Wipro, Infosys and Tata Consultancy Services outsourcing in India. With demand in the U.S. weakening, top outsourcing countries are likely to tap domestic markets and new geographies coming out of the recession, say analysts.

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“We were interested in learning more about executives’ opinions regarding outsourcing. The results showed that the majority of executives are considering outsourcing strategies that are closer to home,” explained Paul Angelo, Vice President of Service Delivery, Advans IT Services. “These results will help us refine our services so we can continue to deliver cost-effective solutions that meet the needs of IT executives.” Respondents also revealed the types of outsourcing they have used in the past, which include application development, all areas of IT infrastructure support, and the use of domestic consultants.

Other key findings include: — Many respondents are interested in the use of Managed Services for supporting all IT functional areas. Other future outsourcing opportunities of interest include Operation/Monitoring Activities, Human Resources, Help Desk, and Business Intelligence.

– Of the people who have used outsourcing in the past, the majority rated their experience as being very favorable.

Advans can configure the optimal outsourcing model, using any desired mixture of onsite, remote domestic and offshore resources to meet your demanding specifications. Our hybrid outsourcing model integrates all team members, regardless of location, to provide cost-effective solutions that will meet your SLA’s. “We strongly believe that this approach ensures not only the highest quality service while saving you money, but allows for enhanced communication to bring you greater control over your environment,” said Peo Nathan, CEO & President of Advans.

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Although new contract signings were lower in 2009 compared to recent years, new FAO spending continued to grow organically through a sharp pick-up in contract extensions, which represented almost 40 percent of 2009 ACV growth.  About 35 percent of all currently active FAO contracts, valued at US$5 billion, are up for renewal during the next three years. This cycle of renewing contracts will continue to fuel organic growth in the market as buyers increasingly focus on expanding the value they generate from FAO.

“As the global economy continues its path towards recovery, we expect to see the FAO market regain traction, driven by new deals and scope expansions, as well as more than 45 contracts up for extension this year,” said Katrina Menzigian, Vice President, Research. “We foresee increased adoption across industries and geographies to continue. Beyond the United States, we expect contract signings in the domestic Asia-Pacific market as well as Rest of Europe to rise.”

Other report findings include:

• FAO market growth continues to see strong adoption across manufacturing, consumer packaged goods, retail and high-tech sectors. Telecom and pharma are emerging sectors with the highest growth rates
• The financial services sector saw stronger activity than expected last year, and pent up demand will contribute to growth in 2010
• Asia Pacific started to emerge last year, capturing 35 percent of new contracts
• Adoption by the mid-market was unable to sustain momentum garnered from 2006 to 2007 primarily due to the economic climate and lack of proven, successful FAO solutions

Established leaders Accenture, ACS-Xerox, Capgemini, Genpact and IBM account for nearly 65 percent of the FAO market’s ACV. Other suppliers included in the analysis include Cognizant, Compass BPO, EXL, HCL, HP, iGate, Infosys BPO, Intelenet, KPIT Cummins Infosystems, Outsource Partners International, Patni, RMS, Steria, TCS, Vengroff Williams & Associates (VWA), Wipro and WNS.

In this year’s report, Everest highlighted five suppliers as ‘2009 FAO Market Star Performers’: Genpact, IBM, Infosys, Wipro and WNS. These suppliers demonstrated the strongest movement forward across the following two dimensions in 2009:

• Market success in 2009 based on ACV growth, number of contract signings, and value of contract signings in 2009
• Capability advancements in 2009 based on expansion of scale, scope, delivery footprint, and technology investments

The Star Performers designation relates to year-on-year performance for a given supplier and does not reflect on overall market leadership positions. Those identified as the 2009 Star Performers include both leading suppliers and major contenders.

“Last year, successful suppliers fine tuned capability mixes and positioned for anticipated growth this year,” said Saurabh Gupta, Research Director. “Moving forward, successful suppliers will continue to identify and refine target buyer segments, meet client needs in terms of global delivery capacity and service, bring technology and process solutions that more closely link process operations with business outcomes, and focus on client relationship management.”

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When advisor and vendor focus on their own revenue

Balancing the benefits (cash for asset transfer, lower prices) with the risk, most companies opted not to engage in high profile, high value deals. To further reduce the risk, many companies outsourcing focused on contracts which used labor arbitrage and increased economies-of-scale to reduce cost. Complex transformations of business and IT which would increase the risk (and potentially reduce flexibility/agility when the economy picked up again) were often left out. This to the dismay of vendors as the hours related to these programs are an important area of margin for the vendor (and potential value for the client if done well).

The pressure to cut cost thus resulted in a decent volume of small to medium sized deals which were closed in record time. Cost were further reduced by shorting the budget and time lines for the outsourcing project itself. Deals were therefore executed with the speed of an formula 1 (or Indy 500) car. Advisory firms put oil on the fire by pitching ‘speed sourcing’ solutions, implying that IT or other financial processes are standardized to a level that a Rfx of contract template used in one company will fit the bill within any other situation. I recently spoke to a member of a large financial institution which wants to outsource their IT infrastructure and they take two weeks for their Rfx (their advisor told them: no problemo, can do).

Yes I agree that generic services like IT infrastructure management have a large common component, but the devil is in the details. And having some nasty details popping up after signing the contract is ok for a bakery, but for companies which business processes rely fully on the correct functioning of their IT, is speed sourcing tricky. The processes and accompanying assets have grown over decades into a landscape which is not easy to unravel. In other words, I expect some serious discussions related to ‘hidden services’ and the ‘sweep clause’ within six months after signing the deal related to the financial institution mentioned before.

Besides advisors steering their sales pitch in the direction of their own short term revenue, do vendors also hit the accelerator. The sales people from the vendor received only one message from their senior management the last 1½ year: sell sell sell. With both advisors and vendors hitting the accelerator there was nobody to apply some adequate steering and/or breaking.

Adjusting contacts to the new reality

The advantage of a formula 1/ Indy 500 driver over an outsourcing race is the race driver seeing the corners and chicanes in the road, and thus knows when to break. The company desiring to outsource does not and trusts the advise it gets from advisors and vendors. Their incentive is however closing the deal as that means revenue and thus prefer to focus on the straight parts of the circuit instead of the corners.

These corners may catch up with the company that outsourced after the contract has been signed and may appear in the form of the previously mentioned hidden services, valuable knowledge and experience disappearing and additional activities assumed by the client to be part of the standard contract (but assumed by the vendor to be non-standard). And last but certainly not least is there the impact of the contract on the agility and flexibility of the business.

Contracts solely aimed at reducing price/cost are typically very rigid and do not leave a lot of room for flexibility. Flexibility is however something the business needs now the economy is picking up again. The market dynamics are slowly moving back into the fast paste from before the crisis. This means the business will want to move quickly on new opportunities for growth and does not want to be confronted with outsource contracts which limit their maneuverability.

As a result I expect there will be quiet some advisors busy helping clients to revamp their contracts this and next year. Renegotiations which are this time not aimed at lowering prices, but removing the straightjacket which came with the sole focus on cost.

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The scope of this five year engagement covers support of workplace services for Electrolux including proactive monitoring and management of network, servers, IT security and end user computing environment in 12 countries in the APAC region including Australia.

“We wanted to offer a standardized service to Electrolux operations in Asia Pacific without increasing costs. In HCL we found a partner that understands standardization of services and has an ability to support the business locally across the region” said Bertil Norberg, Electrolux Group CIO. “We look forward to leveraging HCL’s tools, processes and best practices to reach our business objectives.”

HCL will deliver these services to Electrolux through its Global Delivery Centers in India and Malaysia and onsite services strengthened by a robust partner eco-system. It will be providing multilingual helpdesk services in languages including English, Vietnamese, Thai and Bahasa (Malaysia & Indonesia) to Electrolux end-users across Asia Pacific.

“We are confident that our scalable and localized delivery set-up combined with our focus on reducing operational cost will increase the effectiveness of Electrolux IT spend”, said Pradeep Bindal, Senior Vice President & Worldwide Head of Sales, Infrastructure Management & Transformation Services, HCLT ISD.

HCL has been ranked as World’s No.1 IT Infrastructure Services Provider by Blackbook of Outsourcing Survey 2009. The company has recently announced many landmark global engagements like Nokia, Reader’s Digest Association, Dr. Pepper Snapple Group, Energy Future Holdings and Viacom Inc. For more information, visit: http://www.hcltech.com/

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