Business Process Outsourcing: Pros & Cons

Everywhere you go, people are talking about outsourcing. A recent statistic projected that the market for training outsourcing alone will grow to $20 billion over the next few years. What is the real story? Last summer, Bersin & Associates performed an extensive study, “The Economics of Outsourcing Training Technology and Operations,” and found several important trends. Outsourcing is having a major impact on e-learning and the technology side of training. Several new business models bring tremendous resource and cost savings for learning organizations. However, the study also found that the market for business process outsourcing (BPO), the traditional type of outsourcing, is still immature. What does outsourcing mean to learning and development? Is outsourcing something your organization should consider? There are pros and cons to consider before determining if this business option makes sense for your organization.

What Is Outsourcing?
Outsourcing is not new in learning and development. In fact, training is one of the industries where outsourcing has been popular for years. Most learning organizations are relatively small groups of people who are expected to be experts in a wide variety of topics, skills and procedures. Well-run training organizations have always outsourced content development, a wide variety of learning programs, management and executive education, and many functional tasks, such as production of books, training materials, videos and CD-ROMs.

Today, the term “outsourcing” really means three things. First, it refers to the traditional use of vendor services described above. Second, it refers to the outsourcing of training technology: learning management systems (LMSs), e-learning content development, content integration and the hosting of complex LMS and learning content management system (LCMS) software. Last, the term refers to the outsourcing of business processes, also called business process outsourcing (BPO). This area includes the outsourcing of help desks, vendor management, classroom administration and the training personnel themselves.

Research shows that approximately 40 percent to 60 percent of learning organizations fall into the first category of outsourcing—the traditional use of outside vendors for content development and other related tasks. Research suggests that this number will hold steady in the future. The area of huge growth is the outsourcing of training technology. In the study, 47 percent of companies surveyed use hosted LMS services, and 70 percent used hosted services for other learning technologies, such as virtual classroom, content management or collaboration. Far fewer companies do true business process outsourcing.

Why these trends? Training technology is dauntingly complex. LMSs, e-learning content, content management, development tools, assessment tools, simulations, virtual classroom tools and integration with internal HR and financial systems are far more complex than many other enterprise technologies today. Most learning organizations are starved for technical resources. IT organizations usually serve training last, and the few training technologists available are often spread quite thin.

Learning technology is changing rapidly. Nearly one-third of the LMS vendors in the market three years ago have gone out of business. Why? Because the rapid rate of change in learning technology makes it hard for even seasoned technologists to keep up. How can a small or medium-sized training organization expect to stay current and fresh?

Although business process outsourcing makes sense for business functions such as IT and HR, it is difficult to deliver for training. Learning is an inherently decentralized operation. Most companies do not truly know how much they spend on training across the enterprise. The process varies widely from group to group and company to company. Outsourcers make money by becoming efficient at repeatable processes. When you look across a large learning organization, often 70 percent or more of the programs that are developed are customized and unique to that organization. The only way an outsourcer can reduce costs is by taking this customized solution and making it more generic and repeatable—something that may reduce quality. This is not to say that BPO will not grow. However, research shows that it is growing slowly and will not take over learning the way many others predict.

Outsourcing Saves Money
The economic benefits of outsourcing are real and significant. Outsourcing LMS technology and operations reduces costs in three areas:

• Implementation costs: Outsourcing companies save time and money by leveraging the outsourcer’s IT investments and professional expertise. Implementations are simplified and streamlined because configuration options and customization options are typically limited. Research shows that in the first year of LMS implementation, companies implementing their own LMSs spent an average of $392 per learner. Those using a hosted LMS spent an average of $328 per learner—a 16 percent savings.
• Operational costs: Companies that manage their own LMSs spend more than twice as much per learner annually in LMS maintenance and upgrades than those companies using outsourced LMSs. The dramatic cost savings are largely based on LMS outsourcers’ ability to pass on economies of scale and efficiencies of centralization to their customers.
• Reduction in technical staff: Those companies that manage their own technology typically have a dedicated technical staff—a big cost with no training benefits. The research shows that companies that use outsourced technology platforms are able to reduce their technical staffs by almost half, compared to companies with internally managed systems.

Why are these savings taking place? Technology outsourcers (application service providers and managed service providers) have developed excellent economies of scale. Providers become experts at implementation, configuration, customization and operation of an LMS. They integrate content only once and can share that technology integration across dozens to hundreds of clients. They offer “standard” customizations, which are then used by many clients and can be implemented in minutes, while customizations in companies running their own LMSs can take months. Once they have integrated with a particular vendor’s HR system, providers can easily integrate again. Examples of companies that deliver such savings include GeoLearning, Learn.com, General Physics, Intellinex and KnowledgePlanet.

Outsourcing Frees Valuable Staff Resources
Companies that outsource also realize measurable benefits in other areas of training, even if outsourcing is limited to technology functions. The research shows that companies that outsource spend, on average, 31 percent less per learner and have a 26 percent lower staff-per-learner ratio. They also have 30 percent to 40 percent smaller program staffs and 25 percent smaller administrative staffs. In addition to generally running tighter ships, companies that outsource often have the option of offloading registration, help-desk support and reporting functions.

One of the most interesting aspects of the study compared the differences in staff allocations between companies that outsourced and those that did not. In addition to having smaller administrative, technical and support staffs, companies that outsource devoted 28 percent of their training staff to content development, compared to 17 percent in non-outsourcing companies. This means that these outsourcers can focus on more strategic activities: building and delivering the right content to meet their immediate business need.

Outsourcing Increases Business Effectiveness
Does outsourcing impact business? Bersin & Associates asked companies how well they rate themselves in delivering learning that impacts the business. The findings were surprising: Companies that outsource are 18 percent more likely to rate their learning as extremely effective than those that run all of their learning programs and technology internally. This confidence indicates that companies that outsource focus more on training programs tied to business impact. Consequently, the training organizations feel closer to the business.

Conversely, companies that do not outsource are more likely to rate their training as not very effective (one out of 12 non-outsourcing companies gave themselves this rating, compared to one out of 33 outsourcers). This result shows that companies that do not outsource suffer from some amount of frustration with administrative and technical operations that precludes laser focus on learning that drives business value.

Outsourcing Facilitates Reallocation of Resources
When training managers and other executives were asked how they spend time saved in outsourcing, they responded:

• Focus more on strategic planning with line managers.
• Spend more time on measurements and analytics.
• Spend more time planning and budgeting.
• Work with line managers to better understand training needs.
• Evaluate new technologies and approaches for greater efficiency and effectiveness.

Notice that all of these areas are strategic and put the learning organization closer to the business. The more back-office functions that can be offloaded, the more effective the learning organization can be.

Business Process Outsourcing Is Still New
While most companies are comfortable deciding to use outside trainers or content developers, outsourcing of the entire learning and development function is still a new approach and one that is unfamiliar to many learning professionals. Moving from a training model that is completely managed in-house to one that involves dependence on one or more vendors is indeed a big leap.

The biggest perceived benefit of BPO is the ability to turn a fixed cost into a variable one. When the demand for training is low, you can “turn off the spigot,” and unneeded resources disappear from the company’s bottom line. When demand returns—or even increases—theoretically, you can “turn on the spigot” to get the resources now required.

Boeing is one example of a company that finds this to be an attractive approach. The downside of this model is that the outsourcer typically needs some kind of revenue guarantee to accommodate this flexibility. Thus, while overall costs may be lower, they are not fully flexible. For instance, Boeing must guarantee a certain number of hours of training to its external provider.

One major issue drives BPO: financial stress. When companies have a tremendous need to cut costs, outsourcing is often used as a way to dramatically reduce the total expenditure on learning. This is not necessarily a strategic benefit—it is often a desperate move to reduce expenditures as quickly as possible.

Decentralized Budgets Are a Challenge
One challenge to outsourcing is the decentralized nature of training. Outsourcing is easiest when learning is centralized and a single organization controls most of the resources and decision-making power. Getting multiple groups to agree on outsourcing-related decisions can be an obstacle. Often, outsourcing proposals also are viewed as a test to autonomy and control. Business units are sometimes reluctant to support initiatives that, in the long run, might lessen their autonomy and cause them to lose staff—especially individuals who are experts in their unique training requirements.

In addition, finding the necessary budget for outsourcing can be a challenge for organizations with decentralized learning functions with dispersed budgets. Many companies don’t know how much they’re spending on training or even where it is being spent. Finding and centralizing the money to fund outsourcing initiatives can be extremely difficult, even if various departments agree that outsourcing would be for the greater good of the organization.

Outsourcing May Limit Technical Flexibility
One factor that often limits technology outsourcing is technical flexibility. Large enterprises typically require tight LMS integration with HR, financial and IT systems. In many cases, integration capabilities drive the entire LMS decision. A hosted solution may not offer the same customization flexibility as one that is managed internally. Flexibility in other technical functions, such as customized reporting, also may be limited. Companies that use hosted LMSs and other technologies typically must follow the upgrade cycle of their LMS provider and may have to wait to get the features and functions they need. However, companies should keep in mind that as LMSs become more customized, they also become more costly. The projected costs for implementing and maintaining customization should be considered in tandem with the cost benefits of outsourcing.

Weigh the Pros and Cons
While outsourcing isn’t right for every organization, it is an option that should be considered and evaluated by managers on a periodic basis. Studies show significant cost and strategic benefits, including:

• Reallocation of staff for concentrated focus on content development and program management.
• Enabling learning executives and staff to spend more time with line managers and field operations.
• Freeing resources for measurement, evaluation and overall operational and quality improvement in training programs.
• Greater flexibility and responsiveness to meet business demands.

In general, those organizations that outsource report high levels of satisfaction within their staffs and from the clients they serve. These organizations also take a highly pragmatic, business-driven approach to the learning function. Outsourcing is a trend that will continue to grow, especially the outsourcing of technology. Increasingly complex solutions, integration initiatives, budget and staff constraints, and the demand for diverse training resources are among the factors that will fuel the trend.

However, the research does not support the belief that the outsourcing of business processes will dramatically increase at this time. Unlike HR and IT, areas that lend themselves well to outsourcing since the needs and functions are consistent across most organizations, much learning is unique. While technologies and basic skill requirements are similar for all organizations, business-specific strategies and training processes can differ widely.

Companies need to consider outsourcing as part of the regular planning and budgeting process. When used under the right conditions, outsourcing can have near-term value to learning organizations and the clients they serve. Even if outsourcing is not appropriate for your organization, the diligence you’ve shown will help you make smarter decisions.

Offshore outsourcing a no-go for Minneapolis CIO

March 20, 2007 (Computerworld) -- DALLAS – If CIO Karl Kaiser allowed his IT outsourcing provider, Unisys Corp., to move desktop support, network management and some other infrastructure services offshore, it likely would yield financial benefits. But it would also create problems.

Kaiser is CIO of the city of Minneapolis, and offshoring government IT work – even work that's done by the employees of a public-sector contractor – would touch off a political maelstrom. Kaiser only has to cite Lou Dobbs, the CNN commentator who has been waging a war on offshore outsourcing, to make his point about how explosive the issue is.

On the other hand, Kaiser said at Gartner Inc.'s Outsourcing Summit here this week that offshoring has to the potential to cut the $10 million that Minneapolis spends annually on IT infrastructure services by about $500,000 -- freeing him to use that money for other kinds of services. It isn't a huge sum, and Kaiser isn't pressing for offshoring. But he would like to see the attitude that government officials have about offshore outsourcing change.

"At the moment, it is not yet an option," Kaiser said of offshoring IT work. Businesses and governments "do sourcing around the world," he said. "We buy Japanese cars; we buy all sorts of things. But when it comes to offshore outsourcing, that's a no-no."

Minneapolis is somewhat unique among government entities: When the city outsourced its IT infrastructure nearly five years ago, Unisys took over ownership of its servers and PCs. Many government bodies outsource IT, but they typically do so as part of a managed services deal while retaining ownership of their systems.

But Minneapolis is squarely in the mainstream of the broader outsourcing trend. According to Gartner, the worldwide infrastructure outsourcing market totaled $164 billion in 2005 and is expected to increase to $234 billion by 2010, an annual growth rate of 7.4%.

The offshoring of infrastructure services, which includes functions such as the IT help desk, network and hardware management, database administration and security support, is attracting significant interest from corporate users, said Gartner analyst Kurt Potter. And, he said, outsourcing vendors can deliver those services from offshore locations.

Unlike Kaiser, Greg Tranter, CIO at The Hanover Insurance Group Inc. in Worcester, Mass., doesn't have to deal with the political complexities of government. His overriding mission is to improve IT and its ability to deliver business value at Hanover.

One of the steps Tranter is taking to meet his goals is to have 25% of the insurer's IT infrastructure outsourced by next month to Keane Inc., which runs a services center in India, and as much as 50% by year's end. The support services that Keane will handle include configuring servers and desktops, which is relatively routine and repetitive work.

"Why should I pay somebody here $100,000 to [configure] a server when I can pay somebody in India half of that to build it?" Tranter said.

He added that IT workers in the U.S. will be able to devote their time to more intensive tasks and to helping Hanover meet some of its other goals, such as building a service-oriented architecture and making its application environment "more reusable and easier to develop." Tranter is also interested in grid computing and the ability to move resources between computing platforms as needed to increase utilization rates.

Tranter took his current job in 2000 and soon began outsourcing some of Hanover's application development and maintenance work to Boston-based Keane because of problems hiring IT staffers, who were taking advantage of the job climate before the dot-com bubble burst. "The first four months that I was on the job, we had 30% annualized turnover, so I had no choice but to try to find capacity someplace," he said.

Over the years, Hanover has developed a tight relationship with Keane, and Tranter said he extended the outsourcing contract to 2011 late last year. The insurer, which had about 1,200 employees in its IT department seven years ago, now has 450 tech workers on its payroll, although the total IT workforce increases to 900 when Keane's staff is counted.

Tranter said the IT operation has become more a broker of services, working with Keane and IT vendors to integrate software. Internal skills have changed. Business analysts work closely with end users to define business requirements, which then are handed off to IT architects and technical leads, who design systems and create technical specifications. Keane codes, tests and delivers the applications.

"We get more work done today with less people then we did six years ago – significantly more work," said Tranter.

Business Process Outsourcing: Friend or Foe?

Outsourcing rumors are sure to set off pandemonium among employees in an IT organization. Though outsourcing may seem like management’s shortsighted means of cutting costs, the act of determining the pros and cons of meting out certain business processes can have real benefits for your organization.

The key is to conduct a thorough outsourcing analysis.

Why Not Outsource?

Having taken a good look at both sides of the proverbial fence, there are many scenarios where outsourcing can work as well as situations where it won’t solve a thing. For starters, there’s finding the right outsourcer, which you’ll quickly discover is just a small piece of the puzzle.

Nearly any outsourcer can make a strong case, but with a proper analysis of your current processes, an equally, if not stronger, case can be made for keeping the business in-house.

If you have never done this type of analysis before, it can be a real learning experience. Keep an open mind and you may find that there are situations where outsourcing makes perfect sense for your enterprise by freeing up some of your internal resources for more important and sensitive efforts.

USA vs. the World

The most notable and politically charged trend has been to outsource labor to countries outside the United States. Countries like India and Mexico, among others, tout well-trained, low-cost workers and can be a good fit in some situations. There are also, many well-established domestic outsourcers that may be a better fit for your business depending on the sensitivity level of the process under consideration. Regardless of whom you consider, whether based in the US or overseas, be vigilant that all scenarios have been accounted for, that there are no hidden costs, and that service levels will not be compromised.

In one outsourcing analysis, it was found that telecommunications and software license costs were not included in the foreign outsourcer’s initial proposal. With the addition of these costs, the foreign proposal was comparable in cost to that of the domestic outsourcer. Given that the process involved direct contact with customers and requiring the ability to listen in on live service calls, the contract was awarded to the domestic partner.

In another example, rather than hire additional staff to keep up with the workload in the networking department, it was decided to outsource routine administrative and maintenance processes from skilled internal positions to an outsourcer.

In this case, the foreign outsourcing proposal was a perfect fit. It freed up skilled internal resources to perform the intensive work while routine processes were handled by capable, but less skilled and less expensive resources overseas. The best part of this particular outsourcing initiative was that no jobs were cut and the company ended up getting more for its payroll dollars. While headcount reduction is often a goal in outsourcing, it is not always a prerequisite.

This last example involves depot repair. The shipping costs alone eliminated foreign outsourcers from the equation. Most of the domestic companies that were evaluated came in pitching that they could take over the whole department. One company listened and provided a proposal that would meet our needs and allow them to earn more business based on performance goals. It was a new concept at the time and their proposal was accepted and they earned more business over time.

One Outsourcer’s Perspective

Carl Albrecht, Founder and CEO of PointManagement LLC, a business process outsourcer, has the following to say.

“It turns out that what customers really need is for us to answer the phone, make decisions, and track and manage their processes with at least as much interest in it as they have. The idea, after all, is to take on the painstaking daily tasks that don’t earn their employees any glory and no one in their right mind wants to do. Make sure they know you get it: The purpose of outsourcing isn’t to replace a core competency. It’s to free them to do brighter work on the core business while you use your core competency and economies on the mundane things that have to be done well.”

All or Nothing?

If management is determined to outsource, your best bet is to be open to the possibilities; suggest a multi-phased approach; have your processes documented and have internal baselines for comparison.

Some of the most successful outsourcing strategies involve keeping the highly skilled, specialized functions in-house and farming out the smaller, routine processes. Not only can this strategy save time and money, but as mentioned earlier, it can free up your skilled internal positions to work on more pressing initiatives.

And while many outsourcing companies will come in and try to pitch an all or nothing approach, if you start small and reward good performance it can make for a smoother transition out (or back in, if necessary). Regardless, analyzing your processes is well worth the time and serves to improve efficiency.

Using China For Offshore Software Development: Eric Rongley, CEO of Bleum

Using China For Offshore Software Development: Eric Rongley, CEO of Bleum

January 22, 2007

In an industry where most companies perish before they find any gold, entrepreneurial foreign ventures find it difficult to make any headway in China's technology sector. But offshore development company Bleum has not only grown in size since its launch in 2001, it has risen to be one of the top software development centers in China.

Originally from the United States, Eric Rongley is the CEO and founder of Bleum. After graduating in 1989 with a degree in Economics, he worked as a futures broker in London. He then worked in the PC and training industries in Taiwan before landing an opportunity in 1994 to establish a software development center in India for a U.S. firm called IVR. He ran the development center there for five years, learning the offshore business model and a new management process called CMM–Capability Maturity Model.

In 1999 Rongley was recruited by the U.S. bank, Capital One, to open an offshore development center for them in Shanghai. He grew this to be the first CMM Level 3 in China and then in 2001 Capital One changed its strategy and sold off the Shanghai center to one of the top Indian firms to capitalize on its success. Having already set up two successful development centers in Asia for others, he decided that the time was right to strike off on his own.

How was Bleum founded and when?
In 2001 I resigned from Capital One to build China's greatest software company with several friends who recognized the opportunity and wanted to invest. However, before the company was formed the dot-com bubble burst and those friends who were still in their jobs became risk averse. Since I had already quit my job, I decided to go ahead on my own.

In August of 2001 the first employee was hired, which may be considered the start of the company. We worked out of my apartment in Shanghai for several months while we looked for our first clients and developers. Since we started under-funded, Bleum first focused on local China projects. Quickly I learned that success building offshore development centers in India and China to serve Western clients did not necessarily translate into success serving the local market.

After a year of struggling in the local market it became clear that we should focus on what we do best, building high performance teams for overseas clients. By the end of the second year this transition to pure offshore work was completed successfully and we have never looked back.

How has the company grown in its personnel and product offerings since you started the firm?
Initially Bleum staffed up to 10 developers and we did a number of development and testing projects for banks, both foreign and local in China. Once we transitioned to offshore work we focused on a service called ODC. That stands for Offshore Development Center, and it is quite different from project-based work.

An ODC is a large team that is dedicated to one overseas client and acts more as part of their organization rather than as a subcontractor. The customer benefits from retained knowledge and increasing productivity and Bleum benefits from the stable business resulting from these long term relationships.

Today Bleum provides a number of services all focused on our ODC customers. Some teams do custom development, others maintain large legacy systems for our clients and others produce sophisticated automated testing frameworks that are critical to keep highly complex production systems operating. Having passed the survival stage we are now entering our high growth stage and are surging past 200 staff.

How does Bleum differentiate itself from competitors?
There are a number of ways we differentiate ourselves. Firstly, we are a service provider only. Therefore our focus is on client service and providing best possible added value solutions.

Secondly our focus to date has been on developing our long term growth platform. We have turned key concerns for not outsourcing to China into our key differentiators. Our business is therefore based around; capability; security and communication. For example with regards to capability, we are one of the only companies in China with CMM Level 5 certification and the first to also achieve ISO 27001 security certification. This is the highest information security standard globally. We also have an "English Only" policy that is backed up with a comprehensive English training program that is winning praise from our customers.

A final differentiator is that amongst all our competitors here in China we remain American owned and managed. This means we understand the culture and the business pressures our clients in the west have.

When Bleum gets a new client, what is a typical process you take to prepare to service that client?
At the start of a new engagement we have a formal knowledge acquisition process. Depending on the circumstances we may send a core team to work for a period of time onsite with the customer, they may send their key technical people here, or we may capture the knowledge remotely. In this first stage the team will learn and document the customer's processes, business domain, development environment and build relationships with the customer's team.

An ODC operates like an extension of the customer's IT organization rather than just as a subcontractor. Like with internal teams, bottlenecks of communication reduce productivity and ease of operation. Building strong relationships with the customer and enabling fluid communication between all members of both teams are critical to getting an ODC up and running smoothly. Consequently English skills throughout the whole team are vital, not just for the project manager.

Although we have a mature CMM Level 5 software process, the processes used by a new customer's internal team invariably differs from ours at the start. If we try to force our process onto them in the beginning of the relationship we may alienate the very people from whom we most need cooperation. Therefore we first synchronize with our customer's process, and focus on building a successful track record delivering results. Then slowly over time we make suggestions and implement parts of our process which compliment theirs enabling us to provide us long term improvements in quality and productivity. We often hear from our long term clients that collaborating with Bleum has improved the performance of their internal teams.

What are some challenges you have or currently face in operating a technology business in China?
We have viewed challenges as opportunities for ensuring our business model has a great foundation and addresses major concerns about outsourcing to China.

Assuring clients about capability is vital. Hence Bleum is one of the first companies to receive CMM Level 5 certification and all of our project managers are PMP certified. PMP stands for Project Management Professional and is the most recognized certification globally.

Security is another key challenge. Bleum addresses this by putting in place security systems and processes including ISO27001. Through our continuous attention to security issues and rigorous processes we have built close to a Zero Risk Environment for our customer's Intellectual property and data.

The other key challenge is language and cultural compatibility. Bleum has a proactive English language policy that is winning support from our clients.

Finally, like all businesses in China we are challenged to find enough suitably qualified talent, especially middle managers. We have a continuous recruiting program designed to identify the brightest talent in China with the competencies that we see as critical to success in the offshore industry. We often find that our best managers are ones who have risen up through the ranks and therefore have a comprehensive training program to identify and nurture the most promising individuals.

What type of advice do you have for other wannabe technology entrepreneurs entering the China sector?
Look at the Indian model 10 years ago with a number of major players. Those players of 10 years ago such as Wipro, Infosys and Cognizant are still the major players today. Entry has to be now before it is too late.

How does China compare to India as an outsourcing destination?
China has the greater longer term potential and will be able to keep up with demand and provide a quality offering for far longer than India. This is due to the still untapped but vast and highly skilled and qualified talent pool that is to be found in China. The key challenge with India at present is over demand and under supply and therefore quality is starting to fade.

People aside, China has a better infrastructure; better roads, airports, and communication facilities. On an emotional level, many prospective clients prefer Shanghai to India.

What are some milestones or benchmarks you have that plot your success?
There have been a number of successes, some on a personal level and others at a business level. Starting as a young foreigner in China with relatively little resources compared to what a company like this requires, just surviving was very gratifying.

At the business level, Bleum has established itself as the Gold Standard in China's software industry. This was first realized by pursuing the highest international standards in our industry to demonstrate that one could get the highest levels of service here in China. In 2005 we were one of the first companies in China to achieve CMM Level 5 and last year we became the first to also achieve ISO27001. Last November we became a Microsoft Certified Gold Partner. That is the highest level attainable in the Microsoft development community and validates that our team's excellence in Microsoft's newest technologies such as Service Oriented Architectures (SOA).

Through our uncompromising pursuit of quality we have achieved international recognition. In 2005 we were recognized as the number one outsourcer in China in a review by industry experts NeoIT and CMP publishers. We continue to win international awards and recognitions and seek to raise the standard in China. For the last two years Bleum has been included in the list of the top 100 outsourcing firms in the world and this year was identified as one of the rising stars by the International Association of Outsourcing Professionals. Bleum was also identified as one of the World's top 15 emerging outsourcing companies by industry expert Gartner in 2006. We seek to not just be one of the best in China, but to mature into one of the World's great software firms. Notably we have not achieved our reputation by having the most number of heads, but through our laser focus on delivery and excellent customer references.

Did you raise outside capital in the past, and are you currently looking for capital for expansion?
Bleum has only taken funding from friends and family until now. We are committed to building a long term and sustainable business. We are in the business for the long term. Our success is based on ensuring that our business model is strategically and technically sound. It is based our capability, security and communication. With these in place, sustained growth can be managed.

Offshore Outsourcing and advantages of the overall process

Offshore Outsourcing, as we all know that has made the world very tiny and brought almost all the ends together. Increasing acceptance of this process worldwide show that there is something in it which really pulls everyone towards it. More and more companies today are aiming towards this business path. The main reason behind it is the cost advantage and the flexibility associated with it. One can make the cost profit along with his flexibility in this way of the business. Along with the cost and flexibilities many more advantages are also attached with this way of the business. In some case the ratio of the cost savings is heard to be 60% to 75% by the way of Offshore Outsourcing.

In Offshore Outsourcing one party sends its data and information’s to the other party in the other country and get the work done. At first sight it might sound some strange and costly, but in real scenario it is not like that. It may feel like sending the data offshore may be very costly. It is true but after spending behind this there are lots of other advantages which will repay this cost and make you earn much more than your expectations. Let us take an example that there are lots of American companies who are dealing the IT services in India by Offshore Outsourcing. The main reason behind this purpose is to gain the labor cost of Indian talent and to overcome the expense. In reality in America the local employees in IT industry charges heavy amount and same work is done with almost half or less than that cost in India. So more and more American companies are sending work to the Indian companies and gaining the labor cost advantage. In the area of IT services and problem solving India and China are the best places to outsource. China has upper hand IT Hardware Industry while India has upper hand in IT Software Service. More and more MNCs are also entering in these two countries for Offshore Outsourcing of IT services and problem solutions.

Offshore Outsourcing

Offshore Outsourcing also provides much more facilities along with the cost and flexibilities. It also reduces the headache of the companies to set up the plants in the other unknown country. Such process of setting up the plant, hiring the local talents, huge investment and many more are really headaches for any companies. All the facilities are now available without any real problems. Outsourcing companies provides almost all the services and facilities along with the consultancy programs. These features of the Offshore Outsourcing really make the companies to accept the process.

In short Offshore Outsourcing process is the basket full of advantages. Almost all the companies from all the industries are gaining out of it in one or the other way. These all shows the popularity of the overall process. More and more companies are now investing as much as possible in this to reduce the overall cost of the business. Such huge response to the process of Offshore Outsourcing indicates its advantages and demand in the future ahead.

China lives up to outsourcing hype

16/01/2007 - China is now an industry buzzword when it comes to outsourcing and yet another report adds to the list of research recently published that give evidence of the increasing popularity of the country as a location to conduct drug clinical trials.

According to a new report published by the UK Trade and Investment (UKTI) department, there has been a considerable interest by companies in running clinical trials in China and using the clinical data to support their global marketing objectives.

The report, which analyses the Chinese biotech and life sciences industry, said that a prime attraction for companies seeking to conduct clinical trials in China is the country's large population offering a potentially vast pool of patients.

"The main attraction of China is the sheer population; China represents one fifth of the world's population," said Dr Faiz Kermani, co-author of the report, during a UKTI conference held in London last week.

Apart from patient numbers, there are other attractions for conducting clinical trials in China including positive patent attitudes and low costs.

Indeed, outsourcing clinical trials to China can be cost effective for CROs as conducting trials involve lower costs.

"In terms of general running costs, it has been estimated that clinical trials can be conducted in China for around 10 per cent of the equivalent cost in a Western country," said Dr Kermani.

More specifically, the local industry estimates that Phase I trials in China cost 15 per cent of the price in the west, while Phase II studies cost 20 per cent. Added to that is the speed of studies conducted in China.

"One domestic CRO has estimated typical timelines for running a Phase I study involving 30 healthy subjects to three months, which is quite fast", said Dr Kermani.

Meanwhile, a Phase III trial involving 400 subjects was estimated to take a year.

Of course, one needs to take into consideration the nature of the product tested, stressed Dr Kermani. Products for testing in China are categorised as Type III drugs - available in a western market but not in China - , Type II, also known as "me too" drugs, and Type I drugs, which are new products not yet available in the Chinese market or abroad.

Testing and getting market approval for a Type III drug is likely to be quicker while regulatory attitudes tend to be cautious if the drug is to be trialled for the first time in China, the report said.

As far as the quality of clinical trials is concerned, there are still downsides. While Dr Kermani said during the conference that quality was maintained during clinical trials conducted in China despite low costs involved, the issue of regulatory standards still remains.

In the major world regions for drug development, clinical trials are run to ICH GCP (International Conference on Harmonisation - Good Clinical Practices) standards, which is an international quality standard to ensure that clinical trials involving human participants are carried out in an ethical manner.

However, it is not the case in China and therefore, an issue for drug makers seeking to conduct clinical trials exclusively in China is whether the resulting study data will be considered acceptable to western regulatory bodies such as the FDA in the US or the MHRA in the UK or whether it can only be used to support a new drug aimed at the Chinese market.

But, as the report points out, there are many examples that show that this issue won't be a hurdle for long.

"Although some local observers have suggested that China could be used in a pilot capacity for clinical trials to evaluate the potential of a product for a foreign market, the country appears to be more sophisticated in its clinical trial nature," said the report.

Western drug developers are showing increased confidence in using Chinese clinical data to support their global clinical programmes.

A perfect example that illustrates this trend is Pfizer. The drug giant opened a clinical trial centre in Shanghai in 2003 and stated that not only would this be concerned with developing drugs for local approval, but would also form part of the company's global R&D network.

The increasing popularity of using China as a location for clinical trials has also encouraged the growth of the CRO sector and according to the report, there are now around 100 CROs operating in China - a sector set to experience rapid growth over the next decade.

"Outsourcing to China is no longer just a 'hype'. It is now a great opportunity for CROs and companies involved in clinical trials," concluded Dr Kermani.