12/31/2006

Have a vision for 2020, an action plan for 2010

A transformation with clearly defined milestones and commitments to the industry and the public is needed to fulfill our tryst with global destiny

Ganesh Natarajan

Pune has truly arrived – on the global map of IT and business process outsourcing. Thanks to the efforts of the chieftains of manufacturing and IT and the support of the powers that be in the government, at city as well as state level, the city has become one of the most talked about destinations for the knowledge industry. And as one worthy American President once said, “you aint seen nothing yet!”

With the right vision and robust implementation, the best is yet to come. The industry after lagging behind superstar destinations like Bangalore, Cyberabad and Gurgaon for a decade has discovered its true destiny in the last few years. Exports revenues clocked in excess of a billion dollars last year and every player worth the name from IBM, Symantec and Accenture to Wipro, Infosys and Satyam and WNS, Zensar and HSBC have set up or doubled their capacity in the city. The morphing of a provincial regional town to a bustling multicultural city with education, entertainment and cultural diversity that compares with the best in the world is nearly complete and with the manufacturing industry now keeping pace with IT, this city can look forward to many years of stupendous growth.

Advertisement
If that’s the good news, urban planners would do well to look at the issues that plague the city as well, not just to continue the growth story but even to sustain the success that we have already attained. The three major ills are infrastructure, education and vision. The clogging of roads, the pathetic state of public transportation and the delays at the airport are well publicised, but are we fooling ourselves that we are a major education centre? The quality of much of the engineering and fine arts output is so appalling that for companies like Zensar over 60 per cent of the fresh talent and 80 per cent of the lateral hiring has to come from outside the city and even the state. A major overhaul of curriculum, content and pedagogy and rapid replication of the industry-academia partnerships that institutions like Vishwakarma , Symbiosis and Sinhagad have embraced, is essential to provide the talent pool the industry needs.

And what about a better vision than the often repeated McKinsey plan that we hear in various circles? A corporation that has taken forever to do the widening of Nagar Road and talks of elevated road systems along the entire length Mula-Mutha river without a clear calendar for implementation would do well to remember the words of management expert Joel Barker: “Vision without action is just a dream, action without vision just passes the time and its only vision with action that changes the world.” The knowledge sector has the ability to quadruple by the end of the decade and the Bajajs,Tatas and Kalyanis will ensure that the manufacturing sector matches this scorching pace. A vision for 2020 and an action plan for 2010 with clearly defined milestones and commitments to the industry and the public will be a major step in ensuring that all the good work done so far does not get frittered away. Pune needs a transformation if it has to fulfill its tryst with a global destiny that is there for the taking

(The author is Chairman of NASSCOM’s Innovation Forum and Deputy CMD of Zensar Technologies Ltd)

12/30/2006

Outsourcing IT Development: Advantages and Disadvantages

You can outsource almost anything. Maybe you don't know it yet, but it's true. A couple of days ago, when I was drinking coffee in the kitchen, my wife pointed at the faucet that was leaking big time. The good ole faucet was there when we moved in about ten years ago, and trying to fix it again didn't make sense any more. Since I religiously believe in DIY, I bought a new faucet and set about working. When the old faucet was gone, I found out the metal pipe under the sink had to be replaced, too. There was no way I could do it without recourse to welding. I realized I was ready to outsource that part of the project, so I called the plumber.


If your experience and budget allow you to cope with a task, you should do it yourself. Otherwise, it's about time to consider the advantages and disadvantages of outsourcing.

IT development outsourcing isn't much different than any other kind of outsourcing. When you face an insistent need to start a new IT development project, you have to weigh your current in-house capacity first. If your experience and budget allow you to cope with the task without resorting to any outside expertise, you should probably take full advantage of your potential and do it yourself. However, if there's danger that you'll bite off more than you can chew, it's about time to consider the advantages and disadvantages of outsourcing.

Advantages

Basically, outsource service providers offer you higher quality services at a lower cost. This makes the advantages of IT development outsourcing obvious, so let's have a look at just a few of them.

Outsourcing IT development is a most effective way to stretch your budget. When managers plan IT development outsourcing, they usually make it their aim to cut down the company's expenditures by 30%. This is a figure that speaks for itself. Of course, there's always the risk of failure, but if you outsource prudently, you'll afford to implement projects of such a scale that would be impossible for you to reach on your own.

Outsource service providers offer you higher quality services at a lower cost. Cutting your costs and upgrading the quality of your services will expand the competitive capacity of your business.

If you need to have state-of-the-art IT solutions worked out and innovations implemented with small losses, outsourcing may be the only way out. It will save you from the nightmare of retraining your employees (or even hiring new ones) and/or paying for re-equipment.

Cutting your costs and upgrading the quality of the services you offer will allow you to expand the competitive capacity of your business. I suppose the state the IT market is in today makes this simple argument a crucial one.

When you outsource IT development to an outside company, you can concentrate on your core activities. You won't be able to completely forget all about the project or its part that you have chosen to outsource as soon as you sign a contract with an outsource service provider, but you won't have to get scattered, either.

If you deal with an experienced and highly qualified vendor, you'll be able to gain valuable expertise in support of your IT capacity. Almost any vendor will surely try to set a dependency trap for you, but it doesn't mean you have to acquire the dependency pattern instead of learning everything you can derive from the vendor's expertise.

Disadvantages

So, you have finally decided in favor of outsourcing. Will it automatically make you wealthy and happy? This is far from true. Various studies show that 20% to 35% of IT outsourcing contracts are not revived after they expire. Needless to say that most customers in these cases are not satisfied with the quality and/or price of the services. Outsourcing as a nightmare was eloquently illustrated by Beth Cohen, president of Luth Computer Specialists, Inc., "There was a company in Dayton that decided to outsource much of its IT and production to a foreign company about five years ago. After about nine months of outsourcing, the company realized that there was a huge loss in quality for both production and IT support. The company decided to cancel the contract and rehire their old employees. They ended up getting most of their old employees back but at a higher wage than before. Most people would think that the story ends there. However, as hard as it is to believe, the company is actually considering outsourcing again. They think it will be different this time. It will be interesting to see what happens."

You will partially lose control over the project you have chosen to outsource. Try to make the whole process of the project implementation as transparent for you as possible.

If you need to have state-of-the-art IT solutions worked out and innovations implemented with small losses, outsourcing may be the only way out. It will save you from the nightmare of retraining your employees (or even hiring new ones) and/or paying for re-equipment.

Cutting your costs and upgrading the quality of the services you offer will allow you to expand the competitive capacity of your business. I suppose the state the IT market is in today makes this simple argument a crucial one.

Forewarned is forearmed. This is why I suggest we discuss the pitfalls expecting a business that puts out to the sea of outsourcing.

You will lose control over the project or at least over the part that you have chosen to outsource. This is the problem that frightens almost any manager who has little or no experience in outsourcing. This is the challenge any business involved in outsourcing faces. This is the risk you have to take. It is inevitable that outsource service providers should take control - at least in part - over outsourcing projects. However, they are not supposed to abuse the confidence reposed in them by their customers. In order to minimize the risk, you have to be extremely careful studying the background of your potential vendor. Once you decide in favor of this or that company and begin negotiating the contract, you should try to make the whole process of the project implementation as transparent for you as it is possible.

It's usually difficult to avoid the inherent problems of communication.

* Telephone conversations are bad enough, but email and communicating via some instant messaging program online takes even more time. You'll have to put up with an endless amount of emails to be sent and received. Besides, if you are dealing with an overseas vendor, the time zone problem will surely arise - the difference between your vendor and you may be seven hours or more. Just imagine: you arrive at the office at the same time when your vendor's employees are going to leave. The best way around this problem is to set the mutually acceptable time for online meetings and to require that your vendor should stick to the schedule. In fact, you can even benefit from the difference in time zones between your overseas vendor and you. For instance, you transmit a rush order to the vendor at the end of your working day, the vendor receives it in the morning (their morning) having those seven or more hours behind, and by the time you arrive at the office, a considerable amount of work will have been done.
* Standards of correspondence may be different to the extent of misunderstanding. If you are having any problems like that while corresponding with your potential outsource service provider, you should try to work out some standards that both of you will find easy to follow, or you'd better start looking for another vendor.
* Language and/or cultural problems might contribute to all kinds of mix-up. For instance, a lot of people knowing some fundamentals of English are sure that when they ask your opinion about something and you say, "It's okay," it means you like it a lot. Don't waste your time on foreign vendors communicating in something like "Pidgin English," and even if the person you're contacting has a fairly good command of English, ask for the resumes of those employees who are going to be responsible for each part/stage of the project to make sure they are fluent in English.

An outsource service provider might be trying to diversify the business so zealously that achieving progress in one particular area becomes questionable. The solution to this problem lies in the company's portfolio. Examine the relevant case studies and success stories, ask the vendor for references, and, if you are still uncertain, do not hesitate to check these references.

Some vendors advertise services and even take up projects having little or no experience in the corresponding areas. Apparently, they intend to farm out at least some parts of such projects to subcontractors - which certainly doesn't look very attractive to the customer. This problem resembles the previous one, and the recommended solution is the same.

Almost all outsource service providers place the highest emphasis on the most advantageous projects. It's only natural, but it surely doesn't make the life of the customers with lower profit potential easy. In order not to become a neglected customer, you should:

* insist on appending to the contract a project implementation schedule that includes as many milestones and deadlines as you find it necessary;
* stipulate for tough financial sanctions in case the vendor fails to meet any of the deadlines;
* agree on some incentive payments for completing the project on schedule (or even ahead of schedule);
* last but not least, build partnership relations with the vendor whose work you are satisfied with and whose high-value customer you want to become.

Most vendors try to accumulate as many projects as they can. It's also easy to understand. However, the burden might appear to be beyond the vendor's strength, and this will most likely wreck the project schedule, if not the whole project. If you don't want it to happen to you, you can:

* find out the scale of the vendor's operations including the approximate number of employees and customers - of course, if it's possible;
* request the resumes of all the vendor's employees that are going to be involved in the project implementation;
* ask the vendor to describe in detail these employees' responsibilities;
* follow the advice given in the previous paragraph.

An unscrupulous vendor may be simply unqualified for the project that an imprudent customer have chosen to outsource. One of the ways to solve this problem is to focus your attention on the expertise of your potential outsource service provider at the selection stage.

A number of problems may arise due to the incompetence of a customer who is a novice in outsourcing. That's right, you don't have to think that an outsource service provider is the root of all evil. Incompetent customers tend to make modifications in standards and procedures that have been long established. A vendor who knows that the customer is always right tries to implement the project the way the customer wants it, which finally leads to a total mess-up. In order to avoid this kind of situation, try to find out as much as you can about IT development outsourcing from your contacts and… from articles like this.

Conclusion

If you are discreet selecting the outsource service provider, negotiating the contract, and monitoring the project implementation, the return on investment might be the greatest you have ever had.


Will outsourcing IT development really profit your business? Uh, maybe yes, or maybe no. In other words, it depends.

If you don't possess in-house expertise and/or budget necessary to implement a vital IT development project, outsourcing it - in full or in part - to an outside company seems to be the best solution you can find.

However, you should be discreet selecting the vendor, examining the vendor's expertise, negotiating the contract, and monitoring the project implementation. In this case, outsourcing IT development will be rewarding, and the return on investment might be the greatest you have ever had.

The great expectations for 2007

The year 2006 closes today with a number of milestones achieved in the Information and Communication Technology (ICT) front but also not without challenges standing in the way of development of the sector.

The new year is expected to take off on a high ICT note, what with plans that are underway to connect Kenya to an optic fibre cable from the port of Sudan via Ethiopia by February.

The cable, which is just 100 kilometres from Moyale town, will be linked to Nairobi through Telkom Kenya’s digital microwave link.

The connection is expected to reduce transaction costs of telecommunication players now utilising satellite technology to link with outside world.

This is expected to be a major boost to the business process outsourcing industry, which is now in its infancy in the country. Kenya is likely to see the emergence of call centres and data processing outfits once the fibre optic cable is in place, and once the Communications Commission of Kenya tackles touchy issues relating to licensing.

The cost of telecommunication has come down this year following the launch of the Voice Internet Protocol (VoIP) services and award of International Gateway licences to the two mobile networks, Sataricom and Celtel.

Mobile service provider Safaricom is expected to introduce a cash transfer service, Mpesa in the new year.

The service will enable subscribers to send and receive from 130 Postal Corporation of Kenya branches countrywide.

The service will enable network’s clients to send and receive modest sums of money (up to Sh10, 000 per transaction) and is meant to be a convenient and much simpler method of making such transactions.

Initially, the service is going to be restricted to local transactions and will be confined to Safaricom subscribers only.

Celtel, the country’s other mobile network is also expected to roll out the service, since it has applied for a licence to offer money transfer services.

As the world strives to move from the industrial age to the Information age, the local ICT sector in 2006 saw new entrants introducing new products, which in many ways took competition a notch higher.

The most recent and laudable move was the going online of Parliament, a step towards creating a knowledge based parliamentary system and an effort to make the House paperless. More interestingly, the new parliamentary web site offers information on parliament’s legislative calendar, programme of parliamentary business, Bill tracker for every year as well as information on every Member of Parliament. It is hoped that all parliamentary activities would be conducted online from 2008.

The year also saw the entry of WiMax, a new standards-based technology which stands for World-wide interoperability for Microwave Access. WiMax is an infrastructure enabling the delivery of wireless broadband access as an alternative to traditional wired service.

Corporates such as Uunet Kenya, Access Kenya and Kenya Data Networks joined the WiMax scene and intend to invest up to Sh45 million in this infrastructure to enable them deploy an Internet Protocol (IP) based network for its clients.

This technology threatens to replace a number of existing telecommunications infrastructures. For instance in a fixed wired configuration, it can replace a telephone company’s copper wire networks, cable television coaxial cable infrastructure while offering Internet Service Providers (ISP) services.

In September, Nairobi hosted the United Nations e-government forum for local authorities. The workshop took stock on the achievements so far made at the local authorities’ level in terms of adoption of e-governance and enabled the sharing of knowledge and experiences and also development of co-operation channels.

The launch of digital wireless television by Oxygen Television Network set the stage for Kenyans to enjoy affordable international entertainment programmes. Being the first wireless digital terrestrial in the east and central Africa region, Oxygen TV network went on air on September 1 after successful trials, which showed that 89 per cent of the viewers were happy with the extra channels and were most captivated by the crystal clear picture reception and sound.

The rise in electronic waste was a concern that topped the government agenda in the year, causing it to seek for ways to control the entry of obsolete electronic gadgets especially computers. The government grappled with what to do with the obsolete computers currently in use in many public and private institutions. This issue arose as reality dawned that the latest Windows XP 2007 could not be installed on Pentium 2 or 3 computers. This latest version of Microsoft’s Windows series can only be installed in Pentium 4 computers and above.

Fixed line telephone operator, Telkom Kenya launched a wireless telephony service to compete with mobile telephone operators Celtel and Safaricom. Unlike Safaricom and Celtel that use GSM cards, the Telkom wireless service uses a RUIM card. A RUIM card is a removable ID chip. Telkom Wireless was launched at a cost of Sh1,000 while SMS services cost Sh2.50 within the Telkom Network.

Popote Wireless, a firm offering wireless internet and telephony services also made its entry into the local market, rivalling Internet Service Providers (ISP) and mobile telephone service operators and fixed line telephone operators.

The firm provides superior services such that they allow people to connect to the Internet using radio waves instead of phone lines. Popote fixed wireless service gives a connection that is far more superior than ordinary landlines. Being wireless, the connection remains unaffected by cable cuts and rains.

A wireless phone installed at your location is connected to a transmitter mounted at an appropriate location on your house or building. The transmitter sends signals to one of its towers which is then sent out to the Internet.

The information from the Internet is then sent back to the tower and sent back to your transmitter and then to your radio and finally to your computer. Sounds like a long and slow process? Wireless Internet is very fast and can transmit information hundreds of times faster than a normal dialup account.

At the end of the year, ICT was clearly in the picture as the results for the Kenya Certificate of Primary Education were released.

Instead of the bulky documents that hitherto used to be delivered to the Minister for Education at Jogoo House by the examinations council, this time everything was reduced to a CD.

At the same time, a faster way for parents to check results was inaugurated via SMS and the web portal of the exams council.

It is expected that ICT will again come to the fore later in 2007, when elections are expected to be conducted mostly on the latest technology platform.

The great expectations for 2007

The year 2006 closes today with a number of milestones achieved in the Information and Communication Technology (ICT) front but also not without challenges standing in the way of development of the sector.

The new year is expected to take off on a high ICT note, what with plans that are underway to connect Kenya to an optic fibre cable from the port of Sudan via Ethiopia by February.

The cable, which is just 100 kilometres from Moyale town, will be linked to Nairobi through Telkom Kenya’s digital microwave link.

The connection is expected to reduce transaction costs of telecommunication players now utilising satellite technology to link with outside world.

This is expected to be a major boost to the business process outsourcing industry, which is now in its infancy in the country. Kenya is likely to see the emergence of call centres and data processing outfits once the fibre optic cable is in place, and once the Communications Commission of Kenya tackles touchy issues relating to licensing.

The cost of telecommunication has come down this year following the launch of the Voice Internet Protocol (VoIP) services and award of International Gateway licences to the two mobile networks, Sataricom and Celtel.

Mobile service provider Safaricom is expected to introduce a cash transfer service, Mpesa in the new year.

The service will enable subscribers to send and receive from 130 Postal Corporation of Kenya branches countrywide.

The service will enable network’s clients to send and receive modest sums of money (up to Sh10, 000 per transaction) and is meant to be a convenient and much simpler method of making such transactions.

Initially, the service is going to be restricted to local transactions and will be confined to Safaricom subscribers only.

Celtel, the country’s other mobile network is also expected to roll out the service, since it has applied for a licence to offer money transfer services.

As the world strives to move from the industrial age to the Information age, the local ICT sector in 2006 saw new entrants introducing new products, which in many ways took competition a notch higher.

The most recent and laudable move was the going online of Parliament, a step towards creating a knowledge based parliamentary system and an effort to make the House paperless. More interestingly, the new parliamentary web site offers information on parliament’s legislative calendar, programme of parliamentary business, Bill tracker for every year as well as information on every Member of Parliament. It is hoped that all parliamentary activities would be conducted online from 2008.

The year also saw the entry of WiMax, a new standards-based technology which stands for World-wide interoperability for Microwave Access. WiMax is an infrastructure enabling the delivery of wireless broadband access as an alternative to traditional wired service.

Corporates such as Uunet Kenya, Access Kenya and Kenya Data Networks joined the WiMax scene and intend to invest up to Sh45 million in this infrastructure to enable them deploy an Internet Protocol (IP) based network for its clients.

This technology threatens to replace a number of existing telecommunications infrastructures. For instance in a fixed wired configuration, it can replace a telephone company’s copper wire networks, cable television coaxial cable infrastructure while offering Internet Service Providers (ISP) services.

In September, Nairobi hosted the United Nations e-government forum for local authorities. The workshop took stock on the achievements so far made at the local authorities’ level in terms of adoption of e-governance and enabled the sharing of knowledge and experiences and also development of co-operation channels.

The launch of digital wireless television by Oxygen Television Network set the stage for Kenyans to enjoy affordable international entertainment programmes. Being the first wireless digital terrestrial in the east and central Africa region, Oxygen TV network went on air on September 1 after successful trials, which showed that 89 per cent of the viewers were happy with the extra channels and were most captivated by the crystal clear picture reception and sound.

The rise in electronic waste was a concern that topped the government agenda in the year, causing it to seek for ways to control the entry of obsolete electronic gadgets especially computers. The government grappled with what to do with the obsolete computers currently in use in many public and private institutions. This issue arose as reality dawned that the latest Windows XP 2007 could not be installed on Pentium 2 or 3 computers. This latest version of Microsoft’s Windows series can only be installed in Pentium 4 computers and above.

Fixed line telephone operator, Telkom Kenya launched a wireless telephony service to compete with mobile telephone operators Celtel and Safaricom. Unlike Safaricom and Celtel that use GSM cards, the Telkom wireless service uses a RUIM card. A RUIM card is a removable ID chip. Telkom Wireless was launched at a cost of Sh1,000 while SMS services cost Sh2.50 within the Telkom Network.

Popote Wireless, a firm offering wireless internet and telephony services also made its entry into the local market, rivalling Internet Service Providers (ISP) and mobile telephone service operators and fixed line telephone operators.

The firm provides superior services such that they allow people to connect to the Internet using radio waves instead of phone lines. Popote fixed wireless service gives a connection that is far more superior than ordinary landlines. Being wireless, the connection remains unaffected by cable cuts and rains.

A wireless phone installed at your location is connected to a transmitter mounted at an appropriate location on your house or building. The transmitter sends signals to one of its towers which is then sent out to the Internet.

The information from the Internet is then sent back to the tower and sent back to your transmitter and then to your radio and finally to your computer. Sounds like a long and slow process? Wireless Internet is very fast and can transmit information hundreds of times faster than a normal dialup account.

At the end of the year, ICT was clearly in the picture as the results for the Kenya Certificate of Primary Education were released.

Instead of the bulky documents that hitherto used to be delivered to the Minister for Education at Jogoo House by the examinations council, this time everything was reduced to a CD.

At the same time, a faster way for parents to check results was inaugurated via SMS and the web portal of the exams council.

It is expected that ICT will again come to the fore later in 2007, when elections are expected to be conducted mostly on the latest technology platform.

The great expectations for 2007

The year 2006 closes today with a number of milestones achieved in the Information and Communication Technology (ICT) front but also not without challenges standing in the way of development of the sector.

The new year is expected to take off on a high ICT note, what with plans that are underway to connect Kenya to an optic fibre cable from the port of Sudan via Ethiopia by February.

The cable, which is just 100 kilometres from Moyale town, will be linked to Nairobi through Telkom Kenya’s digital microwave link.

The connection is expected to reduce transaction costs of telecommunication players now utilising satellite technology to link with outside world.

This is expected to be a major boost to the business process outsourcing industry, which is now in its infancy in the country. Kenya is likely to see the emergence of call centres and data processing outfits once the fibre optic cable is in place, and once the Communications Commission of Kenya tackles touchy issues relating to licensing.

The cost of telecommunication has come down this year following the launch of the Voice Internet Protocol (VoIP) services and award of International Gateway licences to the two mobile networks, Sataricom and Celtel.

Mobile service provider Safaricom is expected to introduce a cash transfer service, Mpesa in the new year.

The service will enable subscribers to send and receive from 130 Postal Corporation of Kenya branches countrywide.

The service will enable network’s clients to send and receive modest sums of money (up to Sh10, 000 per transaction) and is meant to be a convenient and much simpler method of making such transactions.

Initially, the service is going to be restricted to local transactions and will be confined to Safaricom subscribers only.

Celtel, the country’s other mobile network is also expected to roll out the service, since it has applied for a licence to offer money transfer services.

As the world strives to move from the industrial age to the Information age, the local ICT sector in 2006 saw new entrants introducing new products, which in many ways took competition a notch higher.

The most recent and laudable move was the going online of Parliament, a step towards creating a knowledge based parliamentary system and an effort to make the House paperless. More interestingly, the new parliamentary web site offers information on parliament’s legislative calendar, programme of parliamentary business, Bill tracker for every year as well as information on every Member of Parliament. It is hoped that all parliamentary activities would be conducted online from 2008.

The year also saw the entry of WiMax, a new standards-based technology which stands for World-wide interoperability for Microwave Access. WiMax is an infrastructure enabling the delivery of wireless broadband access as an alternative to traditional wired service.

Corporates such as Uunet Kenya, Access Kenya and Kenya Data Networks joined the WiMax scene and intend to invest up to Sh45 million in this infrastructure to enable them deploy an Internet Protocol (IP) based network for its clients.

This technology threatens to replace a number of existing telecommunications infrastructures. For instance in a fixed wired configuration, it can replace a telephone company’s copper wire networks, cable television coaxial cable infrastructure while offering Internet Service Providers (ISP) services.

In September, Nairobi hosted the United Nations e-government forum for local authorities. The workshop took stock on the achievements so far made at the local authorities’ level in terms of adoption of e-governance and enabled the sharing of knowledge and experiences and also development of co-operation channels.

The launch of digital wireless television by Oxygen Television Network set the stage for Kenyans to enjoy affordable international entertainment programmes. Being the first wireless digital terrestrial in the east and central Africa region, Oxygen TV network went on air on September 1 after successful trials, which showed that 89 per cent of the viewers were happy with the extra channels and were most captivated by the crystal clear picture reception and sound.

The rise in electronic waste was a concern that topped the government agenda in the year, causing it to seek for ways to control the entry of obsolete electronic gadgets especially computers. The government grappled with what to do with the obsolete computers currently in use in many public and private institutions. This issue arose as reality dawned that the latest Windows XP 2007 could not be installed on Pentium 2 or 3 computers. This latest version of Microsoft’s Windows series can only be installed in Pentium 4 computers and above.

Fixed line telephone operator, Telkom Kenya launched a wireless telephony service to compete with mobile telephone operators Celtel and Safaricom. Unlike Safaricom and Celtel that use GSM cards, the Telkom wireless service uses a RUIM card. A RUIM card is a removable ID chip. Telkom Wireless was launched at a cost of Sh1,000 while SMS services cost Sh2.50 within the Telkom Network.

Popote Wireless, a firm offering wireless internet and telephony services also made its entry into the local market, rivalling Internet Service Providers (ISP) and mobile telephone service operators and fixed line telephone operators.

The firm provides superior services such that they allow people to connect to the Internet using radio waves instead of phone lines. Popote fixed wireless service gives a connection that is far more superior than ordinary landlines. Being wireless, the connection remains unaffected by cable cuts and rains.

A wireless phone installed at your location is connected to a transmitter mounted at an appropriate location on your house or building. The transmitter sends signals to one of its towers which is then sent out to the Internet.

The information from the Internet is then sent back to the tower and sent back to your transmitter and then to your radio and finally to your computer. Sounds like a long and slow process? Wireless Internet is very fast and can transmit information hundreds of times faster than a normal dialup account.

At the end of the year, ICT was clearly in the picture as the results for the Kenya Certificate of Primary Education were released.

Instead of the bulky documents that hitherto used to be delivered to the Minister for Education at Jogoo House by the examinations council, this time everything was reduced to a CD.

At the same time, a faster way for parents to check results was inaugurated via SMS and the web portal of the exams council.

It is expected that ICT will again come to the fore later in 2007, when elections are expected to be conducted mostly on the latest technology platform.

How to outsource business processes

Cutting hair is a tricky thing. I know many people who wouldn’t trust just anybody to take a pair of scissors to their head. Even me.

If that’s true for you, it could explain why you probably frequent the same stylist. You built a relationship with that person and you know you’ll always get the look you want. Initially price may have been a factor, but results based on experience are likely the key to your long-term selection.

When it comes to business process outsourcing (BPO), the same applies. You need to be careful to pick your partners based on their track record of performance and your needs.

Let me explain by drawing a parallel to the electronics manufacturing services (EMS) business. I’ve been in this business a long time, and the BPO industry today looks very similar to where EMS was 10 years ago.

In the early days of EMS, the model was rather innovative—allowing OEMs to outsource non-core functions like volume production to firms dedicated to manufacturing. The success of the model attracted a lot of competitors —many of them with little expertise. If an EMS provider claimed to perform a feat once, suddenly they were advertising themselves as an expert in the service.

Fortunately, in the mid-1990s the EMS industry began to alter its value proposition focused on business outcomes, and BPO firms are beginning to do the same. At Solectron, we realized we could add greater value to OEMs as a collaborative strategic partner by optimizing the supply chain for competitive advantage.

Before you hire a BPO provider, you need to determine your readiness for outsourcing.

* Will a certain function currently insourced better serve my customers, shareholders and employees if it’s outsourced? If so, outsource it.
* Is my business ready to outsource? If the infrastructure (people, processes, procedures) is not in place to support an outsourcing model, get your house in order before outsourcing.
* Is the executive team on board? Moving forward with an outsourcing relationship without the full support from senior executives won’t succeed.

If you have these pieces figured out, the next step requires creating a strategic roadmap for success supported with clear goals and responsibilities. Once you’ve mapped out the business strategy for outsourcing, you will be in a position to identify the right partner to achieve your goals—one with the proven expertise to deliver results.

When looking for a BPO partner, think of it like hiring an employee. You hire based on competence, not price. Certainly price—or salary—is a consideration but a candidate’s ability to generate results and who has the ability to grow and develop are paramount. Three other suggestions:

1. Hire based on a long-term commitment. You don’t hire with intent of firing.
2. Hire those with the right attributes and potential. With mutual investment from both parties, their value will only increase.
3. Have a roadmap with a long-term view of how to develop over time.

#
#

Apply the same filter in choosing a BPO partner as you do when choosing a hair stylist. As you can see from my picture, my requirements for a good haircut are going to be dramatically different than my wife’s. Know the result you want in your new 'do’ and find someone with the ability to deliver (match skill-set to desired outcome). Next, establish metrics for achievement (longer in the front, shorter bangs, keep the sideburns). Make adjustments as needed (a little more off the top). Stay involved (this is a symbiotic relationship). But by all means let the stylist do the job. In the end, you’ll both be happier.

The future of outsourcing

Datamonitor examines what lessons from the past the new wave of
outsourcing can learn from and what will drive its success going
forward, in its report, "The Future of Outsourcing". The report
examines outsourcing in Automotive, Energy, Healthcare, Technology, and
Financial Services markets.

Datmonitor research highlights include:

Sales force outsourcing in the pharma industry: Sales force outsourcing
is common practice within the pharmaceutical industry. Sales force
outsourcing is being used as a tactical maneuver by pharmaceutical
companies, using the services provided by contract sales organizations
(CSOs) to meet their short-term and longer-term. The benefits:

* Speed and efficiencies - CSOs can quickly a build sales forces or
provide additional sales representatives. This is useful for
pharmaceutical companies to adapt to sudden changes in their sales
force needs.
* Expertise - Using a CSO can provide pharmaceutical firms with
sales force expertise in new geographic or therapeutic areas they wish
to expand into, but do not have the expertise in.
* Avoiding capital outlay - For some pharmaceutical companies,
particularly smaller ones, such an investment may be too risky or they
may not have the upfront capital required. Outsourcing the function to
a CSO offers a viable alternative.

BestShoring in Western domestic contact centers: Outsourcing is slowing
while BestShoring is emerging. Outsourcing is continuing to grow across
all vertical markets, and contact centers are no exception. However,
western domestic contact center outsourcing is slowing in the wake of
new business realities and offshore locations providing high levels of
customer service at a lower cost.

Many investors in the US and Western Europe have adopted to nearshore
model as a way of moving their operations to cheaper locations. Simply
put, they locate their facilities in relatively close proximity to the
markets they service (e.g. from the standpoint of US investors, Canada
and Mexico).

However to derive maximum profits from outsourcing, many are now using
the BestShoring strategy -- tailoring specific customer care needs to
locations that are best suited for these functions. BestShoring allows
the investor to save on the cost of domestically sourcing the work,
while at the same time removing the inflexibility of using only one
offshore location.

For example, many outsourcers are now locating administrative-to-mid
level customer care in offshore locations including India, Argentina
and the Philippines (which may account for 60% to 70% of total call
volume), while locating the high-end/value add work in nearshore
locations such as the Czech Republic or Egypt.

Europe's payment card market and outsourced card processing solutions:
The result of the changing market conditions and the improved approach
of US third party players mean that Europe's map of card processors is
starting to look very different than it did two years ago. One only has
to look at the number of new outsourced processing relationships that
have been signed over the last year. These include, First Data's
merchant acquiring alliances with ICS in the Netherlands and BNL in
Italy; Sociiti Ginirale's relationship with eFunds for international
card processing and euroConex's acquisition of Citibank Card Acceptance
in Europe.

In considering these recent, new relationships, as well as some of the
acquisitions that have been made over the last year (largely by First
Data International), it is clear that Europe is witnessing a second
wave of outsourced card processing solutions.

Energy Sector infrastructure and Business Process Outsourcing (BPO):
The most successful approach taken by mass market customer service
providers towards outsourcing has been to optimize systems in advance
of relocating specific tasks. This recognizes that there are economies
of scale from outsourcing a single entity rather than a number of
disparate systems. With the systems fully in place and functioning
effectively, this allows for a further round of cost savings beyond
those efficiencies that naturally fall out of a process optimization
process.

The UK domestic energy sector is one example of a deregulated industry
in which the costs involved in serving customers have been cut in
relative terms. Centrica is one example. Having invested in optimizing
systems and with full migration of accounts complete, it is now in a
position to seek to lower its costs of business processing. Centrica
already has 1,000 back office seats in India, with the scope to add
further headcount over time. Datamonitor estimates that the combination
of the systems investment and BPO will see Centrica's Cost-to-Serve
fall from 30.74 per customer to 21.86. At present, Centrica's policy is
to keep customer service operatives in the UK, but it is well placed to
deliver further cost savings should this change in the future.

Outsourcing of fleet management services in Europe: Datamonitor expects
Europe's market for outsourced fleet management services to reach 6.67
million vehicles by 2010 representing a 3.6 % growth over the 5.5
million vehicles in 2005. The 5% growth enjoyed during 2004 is expected
to slow, reaching 3% by 2010. This decline of market growth represents
a restriction in growth potential for fleet management companies.

Traditionally, fleet management companies have targeted outsourcing
services at customer segments where the penetration of outsourcing
services is already high. To maintain the currently high levels of
outsourcing with medium and large size corporate clients, Datamonitor
says companies need to adopt successful customer retention strategies -
costs involved in retaining a customer are far lower than those
incurred trying to expand the client base.

12/29/2006

Outsourcing vs. Establishing Captive Facilities Offshore

The choice between outsourcing or operating a captive facility for call center services, non-voice customer services and back office processing, offers advantages for both approaches. Here we examine the advantages of outsourcing and two principal strategies for outsourcing. In an upcoming article, the advantages of establishing a captive facility will be detailed.

There are two principal strategies being pursued for outsourcing: strategic and market-driven outsourcing. Strategic outsourcing is addressed first because it does not lend itself to the establishment of captive offshore operations as easily as market-driven outsourcing.

Strategic Outsourcing

Strategic outsourcing aims to redirect an organization's resources to focus on its core competencies. Core competencies for some organizations consist largely of strategic planning, brand management and project management.

Strategic outsourcing enables organizations to quickly change course, enter new markets and access new technologies. Strategic outsourcing focuses on results. Market-driven outsourcing is often more process oriented, with greater attention paid to how results are achieved.

Strategic outsourcing often involves large projects or indefinite quantity contracts (ICQs), managed by a primary outsourcing service provider and supported by smaller specialty firms that serve as subcontractors. Administrative fees charged by a prime contractor for passing funds through to subcontractors often range from 25 percent to 35 percent. In comparison, brokers generally charge a 5 percent commission for placing outbound voice work and 10 percent for inbound customer service contracts.
Strategic outsourcing lends itself to process redesign and organizational transformation, but not to the relatively long-term, more capital-intensive tactic of establishing captive offshore facilities. Market-driven outsourcing, in contrast, can serve as a stepping stone to establishing a captive operation offshore.
Market driven outsourcing enables buyers to gain familiarity with a location before deciding whether to commit to setting up their own operations there. Familiarity is no guarantee that a captive operation will be successful, as Apple (Nasdaq: AAPL) demonstrated by pulling the plug on its captive operation in Bangalore on May 29.
Market-Driven Outsourcing
The key variables in market-driven outsourcing are the capabilities and prices of available service providers. The decision to outsource is often based on short-term cost savings from using qualified talent pools and cheaper infrastructure in offshore locations.
The direct costs and levels of effort required for project management of market-driven outsourcing projects are usually greater than for strategic outsourcing ones. Full support of project management activities in market-driven outsourcing projects lowers the risks and total costs of running these programs offshore.
Customer service outsourcing from the U.S. and Europe during the years 2000 through 2006 has often not been highly cost-sensitive for large projects, due in part to the administrative challenges that buyers face in undertaking their first major round of offshore outsourcing. In offshore outsourcing version 1.0, half a buyer's payments for offshore services are often applied to service providers' administrative expenses, profits and marketing costs.
In outsourcing version 2.0, large buyers of outsourcing services are increasingly seeking a multi-source approach that enables their outsourcing efforts to be more market driven. Buyers are building up internal capabilities for managing outsourcing projects executed by smaller, cheaper vendors. Whereas outsourcing 1.0 vendors present themselves as capable of handling anything and everything, the new generation of outsourcing 2.0 firms often need institution-building assistance before launching a program.
In outsourcing 1.0, service providers help buyers with institution building. In outsourcing 2.0, buyers are showing greater sophistication and a stronger interest in achieving better value for money. This makes it more likely that buyers will consider the cost effectiveness of establishing stand-alone operations overseas.
Characteristics of Captive Operations
Whereas outsourcing entails having a third party perform tasks, captive facilities are established by a parent company to perform its own tasks.
• Captive operations can be commercialized, as GE did in India by founding Gecis Global and spinning it off on Dec. 30, 2004. GE retained a 40 percent equity stake in Gecis, subsequently renamed "Genpact."
• Captive operations can utilize service level agreements (SLAs), metrics and reporting systems along the same lines as those used in commercial outsourcing arrangements. The best types of processes to initially send offshore are often those that are the easiest to measure. Once initial successes have been achieved and management systems stabilized, tasks that are unique or less suitable to intensive metrics analysis can be considered, such as research tasks, content generation projects and those associated with knowledge process outsourcing or KPO.
• Cost projections for captive facilities can borrow data from commercial outsourcing facilities. However, in-depth cost analysis at commercial facilities can be difficult in areas where IT and IT-enabled services (ITeS) businesses are given major tax breaks (primarily India). The difficulty emerges because of internal cross-subsidization. The expenses of tax-exempt business units may be inflated or paid by non-exempt units, thereby increasing the amount of income that can be declared tax free.
Reasons to Retain Outsourcing 1.0 Arrangements
Traditional wisdom has held that outsourcing a call center program for longer than three years is more expensive than running a captive operation. This equation does not hold up in India and Pakistan, where locally owned facilities are capable of maintaining lower operating costs and lower profit margins indefinitely. The equation is likely to hold true for Western-owned merchant facilities in India and large Indian-owned call center companies, which charge more than their mid-size domestic offshore counterparts.
There are good reasons for U.S. companies to select large, relatively expensive U.S. providers. The principal reason is the weak offshore project management capacities that large U.S. outsourcing clients are faced with internally. They may not be able to recruit and manage their own staff to build up the institutional capacity of an experienced big-name outsourcing outfit to accept and run a large program properly and quickly.
Customer service and some back-office operations can be so critical to a company's image and brand integrity that it is worth paying premium rates in order to minimize risks. The best choice for risk minimization is usually made by trusting an experienced market leader, despite the higher prices levied by the major firms. Higher prices pay off for many buyers because of both the reduced risks and the reduced level of effort it requires to provide such operations within a buyer's organization.
Large-scale disapproval of outsourcing or offshoring among the majority of a U.S. company's staff can translate into reduced capabilities to implement a project properly, whether or not it results in job losses. Reluctance of U.S. personnel to assist in an outsourcing process can range from open hostility to overt non-cooperation and intentional bungling of an outsourcing project. By bringing in an experienced outside team, an outsourcing client can lower the risks of project failure and help ensure a satisfactory result.
Advantages of Outsourcing
• Outsourcing requires little capital to establish. However, significant spending is needed for onsite training and monitoring -- even in simple programs.
• Outsourcing contracts can include provisions for hiring out local staff in the event that a client decides to establish their own operation. Personal ties and the investments in training that a client makes during an outsourcing project are resources that can be retained once a commitment has been made to establish a captive facility.
• Outsourcing to a facility overseas shifts the risk for site selection, government permits, tax compliance, personnel recruiting, technology deployment and cost control. Establishing a captive facility brings those risks back in-house.
• Western firms in India are often overcharged for non-IT inputs in comparison with local businesses, and are also vulnerable to extortion attempts. The extent of overcharging is often keyed to perceptions of ability to pay. Corruption in India is not limited to the public sector or to Indian nationals, and is not an easy topic to discuss, except to say that outsourcing to a reputable vendor often removes these risks.

Does Outsourcing Pose a Security Risk for Your Company?

n a recent survey of U.S. senior executives, 91% of respondents were 'somewhat' or 'very concerned' about data theft or misuse in outsourced operations. The survey also states that information security is one of the top three most important factors in selecting an outsourcing partner -- higher in ranking than either business stability or reputation. Furthermore, 85% of executives stated that they may be willing to pay an additional 10% - 15% for extra security.

With security issues being on the forefront of business leaders concerns, how can companies be sure that their outsourcing providers have the necessary safeguards in place?

Richard Yee, Chief Security Officer, API Outsourcing, discusses possible security risks in using a third-party provider in a recent article entitled "Does Outsourcing Pose a Security Risk for Your Company?" The article states key elements that should be included in any security policy based on established industry standards. It also identifies the type of external review used to obtain third-party verification regarding controls of a service organization. If your provider does not have this type of review, it provides steps that can be taken to evaluate the outsourcing provider's security policy.

Ultimately, the responsibility of security falls to the client. It's up to each company to complete the due diligence needed to ensure that their third-party provider meets their rigorous security requirements. Read this article to learn what steps your company can take to evaluate your providers' security policy to ensure that it meets your organization's standards.

About API Outsourcing

API Outsourcing, Inc. (API) is a leading Business Process Outsourcing (BPO) provider of state-of-the-art invoice automation solutions for mid-size to Fortune 1000 companies. API delivers solutions to transform clients' manual paper-dependent accounts payable, freight payment, billing, and document management processes into innovative automated processes. Clients benefit from the significant increase in process efficiency, profitability and financial control. API uses Six Sigma techniques to deliver high quality, consistent service. API's clients include Rayovac, EDS, Randstad North America, Affinity Plus Credit Union, G&K Services, AMN Healthcare, Jacobson Logistics Company and Lee Enterprises. Headquartered in St. Paul, MN, API manages over 280 million transactions annually.

Different models of Outsourcing

I was thinking earlier today that I have been talking about outsourcing but I have not covered what are the different models of outsourcing that are available to a business when its finally ready to grow. Lets talk about that today.

Basically, when you are thinking about outsourcing, you have two fundamental models i.e. Onsite Outsourcing and Offshore Outsourcing.

Onsite Outsourcing
In this model the design, development and testing teams are allocated on the clients location directly for a particular period of time. This model is particularly useful when:

1. You need access to very specialized skill
2. The nature of the project is very confidential
3. Support is needed on a constant basis
4. Requirements are not defined clearly or they change dynamically

Savings: Low

Offshore Outsourcing
In this model the entire SDLC is executed at suppliers premises which can be located in geographically different location (typically in lower cost countries). In this model the communication is carried out by digital channels such as Phone, Email, Messengers, Video Conferences etc i.e. physical meeting is occasional if at all present. This model is used when:

1. You want to “Follow the Sun“
2. Lower the costs significantly
3. Have adequately defined requirements

Savings: High

Apart from the above fundamental models of outsourcing, there are several hybrid models. They have been discussed below:

Model 1: Offsite Outsourcing
In this model the supplier is located not inside your location but
somewhere near it. This model allows physical interaction with the
supplier when required. This model is ideally suited when:

1. The project is of shorter duration
2. Your office does not have the excess capacity to accommodate the suppliers team
3. The requirements of the project does not change very frequently.

Savings: Low

Model 2: Hybrid Model of Outsourcing
This model offers you the best of both worlds by separating various steps in SDLC into different locations. This model is typically offered by suppliers who have onsite office as well as an offshore development centre. The client is supported locally by a coordinator who in turns interacts with an offshore project manager.

In this model activities like requirement analysis, high level design, acceptance testing and deployment is done onsite where are development, detailed design and testing is done offshore.

The lessons China and India can learn from each other

It is widely acknowledged that India is the largest democracy and China is the largest communist country of the world. When compared to India, China has already emerged as the dominant global player. It is accounting for more than 50% of world’s import and export growth. It can be aptly named the workshop of the world. China’s success and status as an export powerhouse is built on its strengths of low costs and constant flow of capital, something India can learn from.

China’s membership in the World Trade Organisaton has opened its state dominated economy to imports and also increased exports; lower tariffs have made foreign goods more affordable for the Chinese, opening up huge, untapped markets. (India to learn!)

Contradictions abound in the world of modern political economies. We find China's communists busy extolling the advantages of foreign strategic partners investing in their state-owned enterprises with some stakes in management (India to learn!) According to the Financial Times of November 3, 2005, the Chinese Railways have an aggressive plan of modernization and are reportedly offering significant railway assets for sale to foreign investors. (India to learn!) To woo foreign investors, the Chinese are prepared to go to any extent. A case in point – when there was a problem with providing the required power connection to the unit set up by Sundaram group of India, the Chinese authorities profusely apologized and provided a power generator at their cost to facilitate the unit. (India to learn!)

China was the first to recognize the need to marry market capitalism with the framework of a socialist society. ‘It is glorious to be rich’ proclaimed Chinese leader Deng even as India was still struggling with pseudo-radical control measures, which constrained entrepreneurship with a permit licence raj. (India to learn!) It is perhaps pertinent to refer to the historical fact that China's communists have always been more pragmatic than their dogmatic Indian democratic peers. (India to learn!) Chinese acknowledgement, commitment, drive, and execution of infrastructure projects for overall development are well known. They decide today and virtually get it executed yesterday! (India to learn!)

Chinese prefer to think before speaking. They do not brag and are modest. They are aware that life is not easy. Younger generation Chinese managers perceive their role to be to hire competent workers, set objectives, and expect them to perform. They emphasize that strategy is important in business since they believe that there are lots of opportunities for achievement and growth. (India to learn!) The negotiation process used by the Chinese is dramatically different and they put greater emphasis on respect and friendship, saving face, and group goals. Long-term goals are more important to the Chinese than specific current objectives. (India to learn!)

The Chinese are very meticulous and they come prepared for the negotiation. Since Chinese prefer emotional restraint and saving face, aggressive or emotional attempts at persuasion in negotiations are likely to fail. Instead, the Chinese tendency to avoid open conflict will more likely result in negative strategies, such as discontinuing or withdrawing from negotiations. (India to learn!) The Chinese emphasis on social obligations underlies their strong orientation toward collective goals. Therefore, appeals to individual members of the Chinese negotiating team, rather than to benefit the group as a whole, will probably backfire. (India to learn!) The Chinese are among the toughest negotiators in the world. Patience, respect, and experience are necessary pre-requisites for anyone negotiating in China. For the best outcomes, older, well-qualified, and more experienced people are more acceptable to the Chinese in negotiations. (India to learn!)

Large trade surpluses, rapid export growth, significant FDI inflows, and huge reserve increases are not always signs of economic health. Foreign investments tend to be geared towards producing for the external markets and naturally cluster on the coast. Coastal cities have good transportation links to the world and poor linkages with the mainland. Thus these investments and the rapid export growth tend to widen the economic divide between the coastal cities and the mainland.

China’s economic expansion is increasingly unbalanced, with too much investment in already prosperous coastal regions and too little in the central regions. Therefore, tensions prevail internally with the policy that over-emphasizes foreign direct investment and exports. Comparatively, the Indian experience has been exhilarating. In addition to their major and metro cities, many second rank state capitals and other cities are catching up on the development ladder. (China to learn!)

In China, the export sector is booming; so is the real estate/housing sector. Many other and service sectors lag behind. The health of its banking system is far from satisfactory. The legacies of bad loans to the loss making state owned firms are enormous. The Indian performance in the banking sector has been exemplary. They cleaned up their books way back in the early 1990s. The Indian banking sector is presently robust and comparatively very strong. (Chinese to learn!)

The monetary policy followed in China is skewed. Internal distortions created by controlled prices for credit, fuel, and the State’s de facto monopoly on land use do simmer. The next stage of China’s development will need to focus on developing domestic consumption and not just exports and foreign direct investment. Indian domestic consumption for that matter is very strong and is still growing. (China to learn!)

Though a formidable economic power in its own right, China has pegged its currency to U.S. Dollar. India follows a market determined exchange rate management policy. Going by the crises so far, the Indian approach is better than the Chinese. (Chinese to learn!)

A very clear message is emerging – indiscriminate support of exports and foreign capital influx will also create economic problems. It could be conceivable that in the long run the Chinese will be less welcoming to foreign direct investment. They will learn to change the present policies. (Chinese to learn!)

Well, we have devoted more space to China and the Chinese. And, yes, they are the leaders of the world as of now. As far as India is concerned, they will have to learn first and foremost to lessen the following frictions, such as the cost and availability of power and other utilities in time and in adequate measure, cost of borrowing, red tape, corruption, heavy taxes, expensive and slow transport, and inflexible labor markets. It is indeed pathetic to observe that in the prevailing business climate India is just above Afghanistan in the entire Asia (World Bank study).

China is presently the workshop of the world (muscle power!). India is leading investments into insourcing (brain power!). Both may have to learn and implement the facilitating factors that provide the competitive advantage to each other in these respective domains. Indians are far ahead of the Chinese in their language proficiency and conduct of business in English. The Indian education system – primary, secondary, and tertiary – may be facilitating this. (Chinese to learn!) The Indian judiciary system provides a level playing field for all, and almost all international laws, convention, and practices are respected and scrupulously followed. Chinese notoriety in the infringement of intellectual property right is well known. In their interest, Chinese will have to set this right at the earliest. (Chinese to learn!)

Politically, Indian politicians will have to take sabbaticals in China to learn the art of modern business acumen to gain superior competitive advantage, and through this, overall economic development, as there is undoubtedly a great deal of ideological difference and distance between the traditional communists in power in China and their Indian comrades wielding power through coalition government. (India to learn!)

It may be easier to list out the lessons for India and China but it may be difficult to learn as they are basically derived from their respective cultural traits. Chinese cannot practice and learn better than Indians, their lessons. And Indians too the Chinese lessons. I am not trying to be pessimistic. But that may well turn out to be a reality.

India vs. China: where to invest?

India's bragging rights were inconceivable just a few years ago. As recently as June, 2003, The Economist magazine ran a cover story “India v China: a tiger, falling behind a dragon.” In that article, the magazine indicated that in 1980, India's GDP was greater than China's and its per capita income was some 60% higher. Yet by 2003 the situation had reversed, as China's economy soared ahead of India’s and its per capita income was around 50% higher. But in recent years India's economy is rising again and the tiger is making a run at the dragon.

Investor confidence
The sudden interest in India has boosted the country's self-confidence. Grant Thornton, a leading international audit and consulting firm, carried out a survey of business confidence of more than 7000 owners of medium-sized businesses from 30 countries. Surprisingly, India was ranked first, ahead of the G8 economies, China, and Europe's ‘Celtic tiger,’ Ireland. India lags China in the hard infrastructure of roads, airports, and real estate, but it leads in the soft infrastructure of democratic institutions, free press, and an independent judiciary. What other factors favor India?

Banking and finance
India's long experiences with free market enable it to gain significant expertise in lending and raising capital. This is not the case with China, where until recently banks were in business to funnel loans to woeful state-run enterprises. There were no incentives for these loans to be repaid, and now banks are crippled with an estimatedU.S.$213 billion of non-performing loans. In contrast, India's major banks are thriving and ICICI Bank, India's second largest, is considered as one of the best run banks in Asia. More than 6,000 firms are listed on the Bombay Stock Exchange, far outnumbering the number in China and even most major global markets. Furthermore, investors in China's two main mainland stock markets, Shanghai and Shenzhen, have experienced poor returns over the past decade as overpriced stocks flooded the markets. In contrast, Bombay's stock market has been booming.

Business relationships
Trust is certainly an important component of any business relationship. However, one aspect of the Chinese culture that is disturbing is the existence of networks of business and social relationships among various parties who are expected to exchange favors regularly and voluntarily, called guanxi. Although it is wrong to interpret this practice as bribery, since these exchanges need not involve money, they can be used to shut out those that do not fit into an approved Chinese social circle. Guanxi, when combined with the corruption that permeates the Chinese economy, could make the creation of a truly competitive economy difficult, if not impossible, to achieve. For India, these social networks and corruption are less of a problem. To be sure, dishonesty still exists in government service, but high level corruption is being vigorously rooted out by a free press, something that is absent in China.

Perhaps the greatest strength of a free market economy is its openness to doing business with anyone who has the qualifications and desire to do a job, regardless of ethnic or social backgrounds. The United States is highly attractive to so many immigrants who have been shut out of opportunities in their own homelands because of its openness. Guanxi combined with the uncertain new laws defining private property and business contracts in a still-Communist China should be a source of concern for investors.

Demography
Perhaps the most positive aspect of India's future is its demography: India is a very young country, while China, because of its one-child policy, is rapidly aging. According to the U.N. demographic Commission, by the middle of this century the most densely populated age group in India will be those aged between the ages of 40 and 50, while in China it will be those aged between 55 and 65. This means that China will soon start to suffer the same problems that Japan, Western Europe, and the United States are experiencing, or about to experience: an excessive number of retirees relative to the working population.

The young have the flexibility to adapt, absorb, conceptualize, and innovate. This is the key ingredient of technological and economic progress. China has a large supply of new workers for private enterprises, but these workers are leaving state-owned enterprises and are older and not as adaptable as the young labor market in India. The late management guru, Peter Drucker, said that demography is the "future that happened." Population trends are not easily reversible, and here the advantage goes to India.

India or China?
With all these points favoring India, the answer to the question, "where should your money go?" may seem like a forgone conclusion: India seems to have the best prospects for investors. As far as the future for investors is concerned, we should bear in mind that there are two issues that an investor needs to take into consideration when deciding where to invest. Firstly, you must size up the prospects of the firm, the sector, or the country. On this point, India scores some high marks. Secondly, you must evaluate the price that you are paying for these prospects. India's investment climate looks ripe for growth, but the markets have recognized this and have pushed stock prices upward. The Sensex 30, India's best-known stock market index and analogous to Dow-Jones Industrial Index, was around the 3300 mark in December 2002 and has now broken through the 10,000 barrier.

A question of value
The price-to-earnings ratio on this index has reached 21, while Chinese stocks on the Hong Kong Stock Exchange are selling for only 15 times earnings, which denotes that India is roaring!

India vs. China: where to invest?

India's bragging rights were inconceivable just a few years ago. As recently as June, 2003, The Economist magazine ran a cover story “India v China: a tiger, falling behind a dragon.” In that article, the magazine indicated that in 1980, India's GDP was greater than China's and its per capita income was some 60% higher. Yet by 2003 the situation had reversed, as China's economy soared ahead of India’s and its per capita income was around 50% higher. But in recent years India's economy is rising again and the tiger is making a run at the dragon.

Investor confidence
The sudden interest in India has boosted the country's self-confidence. Grant Thornton, a leading international audit and consulting firm, carried out a survey of business confidence of more than 7000 owners of medium-sized businesses from 30 countries. Surprisingly, India was ranked first, ahead of the G8 economies, China, and Europe's ‘Celtic tiger,’ Ireland. India lags China in the hard infrastructure of roads, airports, and real estate, but it leads in the soft infrastructure of democratic institutions, free press, and an independent judiciary. What other factors favor India?

Banking and finance
India's long experiences with free market enable it to gain significant expertise in lending and raising capital. This is not the case with China, where until recently banks were in business to funnel loans to woeful state-run enterprises. There were no incentives for these loans to be repaid, and now banks are crippled with an estimatedU.S.$213 billion of non-performing loans. In contrast, India's major banks are thriving and ICICI Bank, India's second largest, is considered as one of the best run banks in Asia. More than 6,000 firms are listed on the Bombay Stock Exchange, far outnumbering the number in China and even most major global markets. Furthermore, investors in China's two main mainland stock markets, Shanghai and Shenzhen, have experienced poor returns over the past decade as overpriced stocks flooded the markets. In contrast, Bombay's stock market has been booming.

Business relationships
Trust is certainly an important component of any business relationship. However, one aspect of the Chinese culture that is disturbing is the existence of networks of business and social relationships among various parties who are expected to exchange favors regularly and voluntarily, called guanxi. Although it is wrong to interpret this practice as bribery, since these exchanges need not involve money, they can be used to shut out those that do not fit into an approved Chinese social circle. Guanxi, when combined with the corruption that permeates the Chinese economy, could make the creation of a truly competitive economy difficult, if not impossible, to achieve. For India, these social networks and corruption are less of a problem. To be sure, dishonesty still exists in government service, but high level corruption is being vigorously rooted out by a free press, something that is absent in China.

Perhaps the greatest strength of a free market economy is its openness to doing business with anyone who has the qualifications and desire to do a job, regardless of ethnic or social backgrounds. The United States is highly attractive to so many immigrants who have been shut out of opportunities in their own homelands because of its openness. Guanxi combined with the uncertain new laws defining private property and business contracts in a still-Communist China should be a source of concern for investors.

Demography
Perhaps the most positive aspect of India's future is its demography: India is a very young country, while China, because of its one-child policy, is rapidly aging. According to the U.N. demographic Commission, by the middle of this century the most densely populated age group in India will be those aged between the ages of 40 and 50, while in China it will be those aged between 55 and 65. This means that China will soon start to suffer the same problems that Japan, Western Europe, and the United States are experiencing, or about to experience: an excessive number of retirees relative to the working population.

The young have the flexibility to adapt, absorb, conceptualize, and innovate. This is the key ingredient of technological and economic progress. China has a large supply of new workers for private enterprises, but these workers are leaving state-owned enterprises and are older and not as adaptable as the young labor market in India. The late management guru, Peter Drucker, said that demography is the "future that happened." Population trends are not easily reversible, and here the advantage goes to India.

India or China?
With all these points favoring India, the answer to the question, "where should your money go?" may seem like a forgone conclusion: India seems to have the best prospects for investors. As far as the future for investors is concerned, we should bear in mind that there are two issues that an investor needs to take into consideration when deciding where to invest. Firstly, you must size up the prospects of the firm, the sector, or the country. On this point, India scores some high marks. Secondly, you must evaluate the price that you are paying for these prospects. India's investment climate looks ripe for growth, but the markets have recognized this and have pushed stock prices upward. The Sensex 30, India's best-known stock market index and analogous to Dow-Jones Industrial Index, was around the 3300 mark in December 2002 and has now broken through the 10,000 barrier.

A question of value
The price-to-earnings ratio on this index has reached 21, while Chinese stocks on the Hong Kong Stock Exchange are selling for only 15 times earnings, which denotes that India is roaring!

History of Offshore Software Outsourcing


The history of offshore software outsourcing India is one of the phenomenal growths in a very short duration. The idea of offshore outsourcing and software development has its roots with the competitive edge in the respective industry. During some previous years the meaning of the term Offshore Software Outsourcing has undergone with lots of changes. With starting from the front, the shifting of manufacturing unit to those countries providing significant cheap labor at the era of Industrial Revolution, has taken outsourcing with a new meaning at present world. In today’s world Information Technology has become the backbone of International Businesses.

Offshore Software Outsourcing is the process by which any company hands over part of the work to another organization, and making it responsible for the design and implementation of the enterprise business procedure under obligations of strict guidelines regarding requirements & specifications from the Offshore Outsourcing companies.

One can say that the Business Process Outsourcing is advantageous for both the service buyer and outsourcing service provider, as it help in enabling the offshore outsourcing service buyer to reduce the development costs and increase quality for functional / non core areas with more utilization of the expertise and competencies at maximum length. And now one could see the real advantage for the service organizations from India as the time of maturity, prosper of building core capabilities with certain possibilities by the Offshore Software Outsourcing firms.

Since from the time of globalization in India, exactly from the year 1990 government of India has started programs’ regarding economic reform committed towards liberalization and privatization. Till the starting period of year 1994 Indian telecom sector was under direct control of government and the ownership of units were provided to states with full enjoyment of a monopoly in real market. Further in the year 1999, the New Telecom Policy brought some changes by introduction of Intellectual Property telephony that helped to end monopoly of the state government on international callings. This reduced the heralded of the golden era for the Information Technology Outsourcing, Software Development Outsourcing industry with ushered in a large amount of inbound/outbound call centers & data processing centers.

One year on: BPO security still a concern

It has been just over a year since the murder of Prathibha Srikant Murthy - the Bangalore-based call centre employee who got into a taxi driven by a man she thought had been sent by the company in which she worked.

The crime called into question security measures at call centres, where night shifts and late night pick-ups and drops are common.

While many call centres continue to have strict security, there are others who are still not overtly concerned with the security of employees.

Security guidelines

Within hours of Pratibha Srikant Murthy's murder coming to light in December 2005, BPOs announced immediate changes.

There would be no first pick up or last drop for a female employee and a male colleague or a security guard would always be with her in the vehicle.

Twenty-four hour hotline numbers were started along with background checks of drivers. One year on, Prathibha's employer, HP, says it is still following these guidelines and other BPO majors also say security is still a priority.

"We are paranoid about security and frankly it was a rude wake up call for a large part of the industry. Indirectly we employ more than 1400 drivers, we cover more than 156 000 kilometres - the commute we do on a daily basis. Each one of them go through a police verification. We issue identity cards and reward drivers based on their behaviour," said Romi Malhotra, MD, DELL International Services.

Safety of workers

But while some companies may be taking the issue seriously, security is clearly not a universal concern.

"There is no security provided, I am the last drop. I have to beg the male employees to accompany me to my house. There is no security guard in the van. I have got myself a pepper spray," said an IT Firm employee.

The police say BPOs themselves need to take more responsibility.

"We have been trying our level best to give security and protection and also to brief them about the efforts they have to make from their side," said N Achyuth Rao, Police Commissioner, Bangalore.

The safety of workers in any industry is of vital importance but this perhaps is an industry young and organised enough to actually ensure the safety of its workers.

12/28/2006

Business Process Outsourcing is becoming a part of every business

Business process outsourcing is all about hiring the other businesses to deliver the work to you, so that you can concentrate on the core activities of your business. The core activities have been more important for establishing a particular business in the field. After all, you are spending so much to set up your business and missing out the core activities can cast a bad spell on the growth of your business. It is for this reason that big business house keep on outsourcing their non-core work, so that proper time should be given to the profit generating aspects of the business.

The concept of Business process outsourcing has been spreading its wings everywhere. Business process outsourcing is the outsourcing of back office and front office functions typically performed by white collar and clerical workers. It is like a contract that enables the business person to hire the services of an outsourcing firm that will manage and complete the tasks for them. As far as the contract policies are concerned, it becomes the entire responsibility of the service provider to complete the task well in time. Business process outsourcing is becoming more and more demandable and promising.

Business process outsourcing saves precious management time and resources and allows focus while building upon core competencies. There are various companies in foreign countries that keep on outsourcing their work such as call centre work, accounting work and many others. Outsourcing these forms of tasks also proves to be cost friendly for the big business houses. The company will not only save on the house rent allowances, bonuses, cash advances and various other ad ons, but will also be able to cut down on the huge salaries that a trained staff would demand.

When it comes to small business houses, it becomes difficult for them to outsource. Since the owner of these business houses keep on managing the task on their own; they hardly outsource their work to any other company. Whatever the case may be, business process outsourcing helps to a great extent in saving the money that can be invested in enhancing the progress of other departments. The main aim of this service is to save you from problems that may crop up at any point of time. In fact, business process outsourcing has become an important part of every type of business.

There are various things that have to be tackled in a particular business. If you are running a business house and are getting worried about the increasing load of the work, then outsourcing is the best option for you. Usually, the concept of business process outsourcing has earned a wide acclaim. This service providing division is slowly and slowly entering every business house and is creating a special place for itself. The professionals with outsourcing companies are skilled enough to manage the tasks properly and complete the work on time.

Business Process Outsourcing is becoming a part of every business

Business process outsourcing is all about hiring the other businesses to deliver the work to you, so that you can concentrate on the core activities of your business. The core activities have been more important for establishing a particular business in the field. After all, you are spending so much to set up your business and missing out the core activities can cast a bad spell on the growth of your business. It is for this reason that big business house keep on outsourcing their non-core work, so that proper time should be given to the profit generating aspects of the business.

The concept of Business process outsourcing has been spreading its wings everywhere. Business process outsourcing is the outsourcing of back office and front office functions typically performed by white collar and clerical workers. It is like a contract that enables the business person to hire the services of an outsourcing firm that will manage and complete the tasks for them. As far as the contract policies are concerned, it becomes the entire responsibility of the service provider to complete the task well in time. Business process outsourcing is becoming more and more demandable and promising.

Business process outsourcing saves precious management time and resources and allows focus while building upon core competencies. There are various companies in foreign countries that keep on outsourcing their work such as call centre work, accounting work and many others. Outsourcing these forms of tasks also proves to be cost friendly for the big business houses. The company will not only save on the house rent allowances, bonuses, cash advances and various other ad ons, but will also be able to cut down on the huge salaries that a trained staff would demand.

When it comes to small business houses, it becomes difficult for them to outsource. Since the owner of these business houses keep on managing the task on their own; they hardly outsource their work to any other company. Whatever the case may be, business process outsourcing helps to a great extent in saving the money that can be invested in enhancing the progress of other departments. The main aim of this service is to save you from problems that may crop up at any point of time. In fact, business process outsourcing has become an important part of every type of business.

There are various things that have to be tackled in a particular business. If you are running a business house and are getting worried about the increasing load of the work, then outsourcing is the best option for you. Usually, the concept of business process outsourcing has earned a wide acclaim. This service providing division is slowly and slowly entering every business house and is creating a special place for itself. The professionals with outsourcing companies are skilled enough to manage the tasks properly and complete the work on time.

IBM: China & India Are Mission Critical

India and China will be "pivotal" markets for IBM going forward, say Big Blue executives.

Michael Cannon-Brookes, IBM's vice president for business development in China and India, said at a media briefing here Tuesday that the ability to innovate business models and having access to a ready talent pool are key for a global enterprise to be successful.

The two most populous countries in the world meet both conditions, said Cannon-Brookes, adding that there are "dramatic changes in business models coming out from China and India".

Pointing to research from McKinsey & Co., Cannon-Brookes added that China and India had the most cost-effective developer pools in 2005, compared to other geographies such as Latin America, Russia and Western Europe. By 2010, the number of Chinese and Indian developers is expected to triple, while remaining the most cost-effective.

India is a particularly significant market as it also has a young workforce, said Cannon-Brookes. Quoting data from the United Nations, he pointed out that India is expected to have a median age advantage of 10 to 20 years over competing economies by 2025. By that time, the median age of India's workforce will be 30 years, compared to China and the United States at 39 years, Western Europe at 45 years and Japan at 50 years. Currently, the Indian workforce's median age is estimated at 24.

IBM has made substantial investment in both China and India, as part of its global integrated enterprise strategy which develops business capabilities in various locations to serve the global market.

In June, the company announced a US$6 billion investment in India covering hardware and software, services and research. Big Blue currently employs over 43,000 personnel and operates over 25 facilities in India.

In October, the company relocated its procurement headquarters in New York to Shenzhen.

China and India are also important hubs for business transformation outsourcing and business process outsourcing services, said Randy Walker, general manager for managed business process services in the Asia-Pacific region, in an interview with ZDNet Asia.

The regional growth potential for BTO and BPO is high, with many businesses wanting to have access to skills and best practices. Typical BPO deals start on a small scale and gradually build into larger, more complex ones, he noted.

According to Walker, IBM will be opening a new BPO center in Vietnam, another emerging market for the delivery of services. However, Vietnam will not be as key a market as India, China and even the Philippines which specializes in human resource services, he said. The company has identified Vietnam as a site with the potential to service the French and Japanese markets.

There will always be new and cheaper locations to provide labor, but China and India will maintain the skills edge, Walker pointed out.

He added: "If you're looking at 'cheap', there'll always be a Christmas Island (new low-cost locations). If you're looking at 'skills', the 'what next' will always be India...the 'what next' will always be China."

Securing the BPO network

Safety first, the rest can wait. Research reports have consistently favoured India as the outsourcing hub of the future, provided data security gets more-than required attention from India's BPO industry.

IDC estimates that the Indian IT industry is all set to grow to $55 billion by the end of 2008, fuelled by the rise in technology and business process outsourcing. While there is not shortage of enabling factors, certain issues like information security could debilitate growth. In the outsourcing domain, security means trust. Organisations hold and exchange massive amounts of sensitive data relating to their customers, products, suppliers, and clients. Corrupted, lost or leaked data could jeopardise an organisation’s survival. The availability of information systems may also be critical for the achievement of an organisation's business objectives.

Networks are critical to business performance especially in the IT and BPO sector with organisations depending on these networks for communication, transactions and data sharing. The overriding concern of CIOs today is to ensure their networks are constantly safeguarded against various attacks. As a result, information security is increasingly playing a strategic role in today's outsourcing environment.

Organisations outsourcing to India look for service providers with strong security practices and robust, secure yet open networks. Enterprises face daunting challenges when it comes to security. In addition, IT and BPO service providers have to address the following issues:

Compliance to Regulations
A majority of Indian companies primarily comply with BS 7799. Companies have also signed service level agreements (SLA), which have very strict confidentiality and security clauses built into them at the network and data level. Laws such as the IT Act 2000, Indian Copyright Act, Indian Penal Code Act and the Indian Contract Act, 1972 provide adequate safeguards to companies offshoring work to the US and the UK. Most of the BPO companies providing services to UK clients ensure compliance with UK Data Protection Act 1998 (DPA) through contractual agreements.

But in some cases, organisations are eyeing compliance certificates as ticket to more business. Some firms scramble for certification just before a client visit. Despite various security certifications, many organisations have had a rude awakening to severe breaches that have impacted their businesses. Therefore, establishing a culture of security in an enterprise and creating relevant user awareness in terms of empowerment, confidentiality and code of conduct are of great importance and supplements the process of becoming standard compliant. An organisation should be clear from the beginning that becoming compliant to a standard is not a mere IT exercise but a serious business initiative with an end goal of improving enterprise performance.

Privacy and Trust
Enterprises are constantly handling data and information of their clients' customers. Care should be that the information is used only for purposes authorised by the owner or supplier and is not shared with unauthorised personnel.
Businesses need to effectively and securely manage who and what can access the network, as well as when, where, and how that access can occur. Deploying a complete identity management solution lets enterprises secure network access and admission at any point in the network, while isolating and controlling infected or unpatched devices that attempt to access the network.

Data Protection
While the concern for data protection always existed, the India outsourcing phenomenon has only increased the concern for protection of sensitive information . While stringent data protection laws exist in EU and USA, most clients are keen that their Indian service providers have stringent policies to prevent the misuse of data. While addressing security concerns, organisations need to consider various factors like:

Integrity
Gathering and maintaining accurate information and avoiding malicious modification

Availability
Providing access to the information when and where desired

Confidentiality
Avoiding disclosure to unauthorised or unwanted persons

Secure Connectivity
A vast majority of companies use the flexibility and cost effectiveness of the Internet to extend their networks to branch offices, telecommuters, customers and partners. Ensuring the privacy and integrity of all information is paramount. Not only must organisations protect external communications, they must also help ensure that internal information remains confidential.