Mumbai: One of China's leading IT services companies, Beyondsoft Co. Ltd. is planning to enter India's booming IT/BPO segment by the end of the first quarter of fiscal 2007-08. "We are planning to enter India in a very big way in the BPO and ITO (information technology outsourcing) sectors," Jonathan C.Chu, vice president, Beyondsoft, said on the margins of the India Leadership Forum organized by NASSCOM (National Association of Software and Service Companies) in Mumbai. Refusing to give any financial details Chu said, "We are planning to invest several million dollars in Mumbai." The company works for global software giants such as Microsoft, IBM, HP, SAP and Oracle in software development, testing and localization, and it has grown from a small firm of 100 people in 2001 to one of China's major software outsourcing providers.
The $45 million group now employs 800 developers and boasts of headcount of over 1600. "We will open our first unit by the first quarter of the coming fiscal. We plan to hire over 100 people in our first year of operation and our revenue target for the first year would be over $1 million - $2 million," Chu added. "India is a very strategic market for us and we hope to grow in Mumbai. The IT market in Mumbai is more sophisticated and mature whereas Chinese companies are gradually coming up."
2/12/2007
Infosys bullish on Europe, China
IT bellwether Infosys Technologies Ltd Thursday said it is looking for greater access into markets in China and Europe.
"We already have presence there but we are on a lookout for more acquisitions to have a greater access on their markets," Nandan Nilekani, chief executive of Infosys, said on the sidelines of the India Leadership Forum organised here by the National Association of Software and Service Companies (NASSCOM).
"Europe is one of our fastest growing markets where we are growing at a rate of 60 per cent and where our revenues have gone up to 21 per cent from six percent," Nilekani added.
"In China we have 700 people working. We will discuss about our acquisition by the end of this quarter."
"We already have presence there but we are on a lookout for more acquisitions to have a greater access on their markets," Nandan Nilekani, chief executive of Infosys, said on the sidelines of the India Leadership Forum organised here by the National Association of Software and Service Companies (NASSCOM).
"Europe is one of our fastest growing markets where we are growing at a rate of 60 per cent and where our revenues have gone up to 21 per cent from six percent," Nilekani added.
"In China we have 700 people working. We will discuss about our acquisition by the end of this quarter."
2/11/2007
Outsourcing, Off-Shoring: Truth and Consequences
Outsourcing and Off-Shoring are not new ideas or a new way of doing things. Companies have been moving manufacturing to lower cost of production centers since the sixties and services since the late eighties. It isn’t new but once service outsourcing received the stamp of approval from mainstream media it has increasingly been perceived as a panacea for all ills that are impacting the company. Of course outsourcing/off-shoring won’t solve all a companies ills, it can if, executed well, it can reduce the cost of delivering service. But there are risks in outsourcing: degrading service quality, eroding customer loyalty and negatively impacting employee morale. So how can a company determine when and where to employ outsourcing/off-shoring and estimate what the savings might really be? In this article we will examine a number of questions that a company should ask when considering outsourcing the provision of service to help gain a realistic perspective or what they can achieve through outsourcing or off-shoring.
First a couple of definitions:
Outsourcing is the use of an independent company to provide services that previously were delivered by a companies own staff.
Off-Shoring is the use of resources that are located in a country remote to the company.
Both of these concepts can be executed independently or in combination. There are domestic outsource service providers, there are off-shore outsource service providers and there are captive (company operated) off-shore service providers. Another term that comes up in discussions of outsourcing and off-shoring is ‘near-shoring’ the provision of services in another country, but one that is close both geographically as well as culturally.
The news has been full of outsourcing stories gone bad…British Rail outsourcing their call center to India and then telling customers that they cannot book a ‘slipper car’, when the customer wanted a ‘sleeper car’. Dell has publicly announced moving support services to India and then publicly returning it to the US. An automaker outsourced technical support for their mechanics to India only to have the mechanics boycott the center and ultimately bring it back to the US. In the latter two cases the costs to move the business off-shore and then to bring it back cost significantly more than leaving it alone in the first place. What were the company executives thinking when they made their original decisions, did they ask themselves and their organizations the right questions?
The media message related to outsourcing is that companies can save 40, 50 even 60% of their processing costs simply by moving the services to an off-shore location like India or the Philippines. The truth is quite different while the costs of labor in off-shore locations are significantly less than the costs to operate domestically (often less than half), there are other costs which can be significant. These additional costs include: Management costs; to support a service operation half way around the world requires a team of staff to support this initiative, Systems and networks need to be expanded and secured, Travel costs to deliver trainings and to attend meetings is not insignificant in terms of both costs and senior management time. So what is the bottom line? According to Gartner the average savings a company actually achieves is only 12%. Savings greater than 12% can often be achieved domestically by streamlining or reengineering the current operational model. In call and contact centers we often se organizations that save 20% to 30% by improving the existing center.
So what should a company consider when considering outsourcing and/or off-shoring? First, we must understand what the nature of the services that are being provided. Specifically we must look at whether the service provides direct interaction with customers. Back office processes where no customer interaction are the easiest services to move to an outsource and/or off-shore provider. This assessment focuses almost exclusively on the price and quality of the work that will be completed. But where the service involves direct interaction with customer such as a call center the assessment becomes far more complicated. For simplicity’s sake we can classify customer interactions into two categories: those that are one time or one-off events and interactions that are a part of a broader customer relationship. In the case of a one off one time transaction then quality of service is often less important than the cost to provide the service. These types of interactions can usually be off-shored within acceptable cost and quality parameters. Where the interaction is a part of an on-going relationship we must consider the value of the relationship, the lifetime value of a customer and the quality of the service that can be delivered. The costs of executing service may well be lower off-shore, but the quality is impacted by customer perceptions, actual quality of linguistic or communications skills and the context of knowledge that the provider may or may not possess. Thus the service quality may actually erode customer value, drive churn and increase customer dissatisfaction.
Second, before any company looks at outsourcing or off-shoring they need first to ensure that they have taken all possible measures internally to improve the service quality that is delivered to customers. Outsourcers of all kinds but significantly domestic outsourcers employ labor arbitrage and economies of scale to deliver an operational cost lower than that possible internally. In reality outsourcers take the existing processes and procedures and deliver the service employing these operational parameters with lower paid staff and across a larger more technologically sophisticated and more efficient operation. Outsourcing and expecting the outsource provider to reengineer your processes and procedures is unrealistic. So if your processes are dysfunctional or your procedures are counterproductive the outsourcer will deliver the service with the same dysfunctional and/or counterproductive activities at a lower cost. There will be no operational breakthroughs through outsourcing. The company must ensure that they have optimized their service provision before outsourcing, because it won’t happen after.
So as you assess your company’s suitability you must determine:
Are your service transactions a one-off or are they part of a broader on-going customer relationship?
What are the risks to the customer relationship associated with off-shoring?
· From the companies perspective?
· From the customers perspective?
Can these risks be mitigated?
Are we willing to accept these risks and the worst case scenario to save approximately 12%?
Have we optimized our existing internal operational model?
· Is our technology the best possible to support the delivery of service?
· Do we have the right people with the right skills delivering service today?
· Do we have the appropriate training and development in place to grow and develop our staff to deliver ever improving service?
· Are our operational metrics aligned with the goals and objectives of the company?
Do we have the resources and appropriate knowledge internally to source, implement and manage an outsource provider?
Do we possess a network and IT infrastructure that can support extension to an outsource provider?
Outsourcing can be an effective and efficient means of delivering service. Outsource agencies can deliver superior service than a company may be able to deliver internally. While this seems counter intuitive often companies cannot secure sufficient resources to provide appropriate technology, sufficient staff or may simply lack the knowledge or resource bandwidth to create and deliver effective hiring, training and service delivery.
Outsourcing any service carries risk and we must take the time ask the important questions before we jump. Failure to take the appropriate steps and assessments can result in higher costs and a loss of customer loyalty. Unfortunately many companies fail to complete appropriate due diligence before they jump: a survey conducted by Orbys found that almost 50% of blue chip companies entered the sourcing process to select an outsourcer without “knowing exactly what they want or how best to source it”. Perhaps not surprisingly one third of the companies ultimately found that heir outsourcing arrangements failed to meet their needs and almost 25% ultimately brought the services back in house.
In our next article we will discuss the steps and activities a company should take once they have made the decision to outsource service delivery to ensure that they have the best opportunity for success.
First a couple of definitions:
Outsourcing is the use of an independent company to provide services that previously were delivered by a companies own staff.
Off-Shoring is the use of resources that are located in a country remote to the company.
Both of these concepts can be executed independently or in combination. There are domestic outsource service providers, there are off-shore outsource service providers and there are captive (company operated) off-shore service providers. Another term that comes up in discussions of outsourcing and off-shoring is ‘near-shoring’ the provision of services in another country, but one that is close both geographically as well as culturally.
The news has been full of outsourcing stories gone bad…British Rail outsourcing their call center to India and then telling customers that they cannot book a ‘slipper car’, when the customer wanted a ‘sleeper car’. Dell has publicly announced moving support services to India and then publicly returning it to the US. An automaker outsourced technical support for their mechanics to India only to have the mechanics boycott the center and ultimately bring it back to the US. In the latter two cases the costs to move the business off-shore and then to bring it back cost significantly more than leaving it alone in the first place. What were the company executives thinking when they made their original decisions, did they ask themselves and their organizations the right questions?
The media message related to outsourcing is that companies can save 40, 50 even 60% of their processing costs simply by moving the services to an off-shore location like India or the Philippines. The truth is quite different while the costs of labor in off-shore locations are significantly less than the costs to operate domestically (often less than half), there are other costs which can be significant. These additional costs include: Management costs; to support a service operation half way around the world requires a team of staff to support this initiative, Systems and networks need to be expanded and secured, Travel costs to deliver trainings and to attend meetings is not insignificant in terms of both costs and senior management time. So what is the bottom line? According to Gartner the average savings a company actually achieves is only 12%. Savings greater than 12% can often be achieved domestically by streamlining or reengineering the current operational model. In call and contact centers we often se organizations that save 20% to 30% by improving the existing center.
So what should a company consider when considering outsourcing and/or off-shoring? First, we must understand what the nature of the services that are being provided. Specifically we must look at whether the service provides direct interaction with customers. Back office processes where no customer interaction are the easiest services to move to an outsource and/or off-shore provider. This assessment focuses almost exclusively on the price and quality of the work that will be completed. But where the service involves direct interaction with customer such as a call center the assessment becomes far more complicated. For simplicity’s sake we can classify customer interactions into two categories: those that are one time or one-off events and interactions that are a part of a broader customer relationship. In the case of a one off one time transaction then quality of service is often less important than the cost to provide the service. These types of interactions can usually be off-shored within acceptable cost and quality parameters. Where the interaction is a part of an on-going relationship we must consider the value of the relationship, the lifetime value of a customer and the quality of the service that can be delivered. The costs of executing service may well be lower off-shore, but the quality is impacted by customer perceptions, actual quality of linguistic or communications skills and the context of knowledge that the provider may or may not possess. Thus the service quality may actually erode customer value, drive churn and increase customer dissatisfaction.
Second, before any company looks at outsourcing or off-shoring they need first to ensure that they have taken all possible measures internally to improve the service quality that is delivered to customers. Outsourcers of all kinds but significantly domestic outsourcers employ labor arbitrage and economies of scale to deliver an operational cost lower than that possible internally. In reality outsourcers take the existing processes and procedures and deliver the service employing these operational parameters with lower paid staff and across a larger more technologically sophisticated and more efficient operation. Outsourcing and expecting the outsource provider to reengineer your processes and procedures is unrealistic. So if your processes are dysfunctional or your procedures are counterproductive the outsourcer will deliver the service with the same dysfunctional and/or counterproductive activities at a lower cost. There will be no operational breakthroughs through outsourcing. The company must ensure that they have optimized their service provision before outsourcing, because it won’t happen after.
So as you assess your company’s suitability you must determine:
Are your service transactions a one-off or are they part of a broader on-going customer relationship?
What are the risks to the customer relationship associated with off-shoring?
· From the companies perspective?
· From the customers perspective?
Can these risks be mitigated?
Are we willing to accept these risks and the worst case scenario to save approximately 12%?
Have we optimized our existing internal operational model?
· Is our technology the best possible to support the delivery of service?
· Do we have the right people with the right skills delivering service today?
· Do we have the appropriate training and development in place to grow and develop our staff to deliver ever improving service?
· Are our operational metrics aligned with the goals and objectives of the company?
Do we have the resources and appropriate knowledge internally to source, implement and manage an outsource provider?
Do we possess a network and IT infrastructure that can support extension to an outsource provider?
Outsourcing can be an effective and efficient means of delivering service. Outsource agencies can deliver superior service than a company may be able to deliver internally. While this seems counter intuitive often companies cannot secure sufficient resources to provide appropriate technology, sufficient staff or may simply lack the knowledge or resource bandwidth to create and deliver effective hiring, training and service delivery.
Outsourcing any service carries risk and we must take the time ask the important questions before we jump. Failure to take the appropriate steps and assessments can result in higher costs and a loss of customer loyalty. Unfortunately many companies fail to complete appropriate due diligence before they jump: a survey conducted by Orbys found that almost 50% of blue chip companies entered the sourcing process to select an outsourcer without “knowing exactly what they want or how best to source it”. Perhaps not surprisingly one third of the companies ultimately found that heir outsourcing arrangements failed to meet their needs and almost 25% ultimately brought the services back in house.
In our next article we will discuss the steps and activities a company should take once they have made the decision to outsource service delivery to ensure that they have the best opportunity for success.
2/10/2007
China 's Beyondsoft to enter Indian IT market
One of China's leading IT services companies, Beyondsoft Co. Ltd. is planning to enter India's booming IT/BPO segment by the end of the first quarter of fiscal 2007-08.
'We are planning to enter India in a very big way in the BPO and ITO - sectors,' Jonathan C.Chu, vice president, Beyondsoft, told IANS on the margins of the India Leadership Forum organized by NASSCOM - here.
Refusing to give any financial details Chu said: 'We are palnning invest several million dollars here.'
The company works for global software giants such as Microsoft, IBM, HP, SAP and Oracle in software development, testing and localization, and it has grown from a small firm of 100 people in 2001 to one of China's major software outsourcing providers.
The $45 million group now employs 800 developers and boasts of headcount of over 1600.
'We will open our first unit by the first quarter of the coming fiscal. We plan to hire over 100 people in our first year of operation and our revenue target for the first year would be over $1 million - $2 million,' Chu added.
'India is a very strategic market for us and we hope to grow here. The IT market here is more sophisticated and mature whereas Chinese companies are gradually coming up.'
'We are planning to enter India in a very big way in the BPO and ITO - sectors,' Jonathan C.Chu, vice president, Beyondsoft, told IANS on the margins of the India Leadership Forum organized by NASSCOM - here.
Refusing to give any financial details Chu said: 'We are palnning invest several million dollars here.'
The company works for global software giants such as Microsoft, IBM, HP, SAP and Oracle in software development, testing and localization, and it has grown from a small firm of 100 people in 2001 to one of China's major software outsourcing providers.
The $45 million group now employs 800 developers and boasts of headcount of over 1600.
'We will open our first unit by the first quarter of the coming fiscal. We plan to hire over 100 people in our first year of operation and our revenue target for the first year would be over $1 million - $2 million,' Chu added.
'India is a very strategic market for us and we hope to grow here. The IT market here is more sophisticated and mature whereas Chinese companies are gradually coming up.'
China fast catching up with India in outsourcing
China is fast catching up with India by offering cost-effective outsourcing services with the latest success being US telecom giant Avaya setting up a large facility in the country, a research firm said.
According to a recent report from callcenters.Net, an Asian research firm, China's call centre industry is set to grow 22 per cent this year.
The size of the industry's labour force, including bank hotline services and it companies' technical support staff, will hit 158,000 this year, up from 130,000 last year, registering a 22 per cent increase.
In India, the work force is seen rising 16 per cent to 312,500, Sydney-based research firm callcentres.Net said.
Although the size of China's Call Centre industry is just half that of India's, experts said china's high productivity and cost-effective human resources will attract more multinationals to set up centres in the country.
Avaya has set up an "intelligent communications centre" in Dalian city in North-East China, as part of the company's commitment to the local government in June last year to help turn the booming city into a call centre hub for China and other northeast Asian markets, the state media reported today.
The centre, located in the Dalian software park, will also be Avaya's software and service headquarters for the Asia-Pacific region, senior vice-president of Avaya Global Services Francis Scricco said.
According to a report by US Consultancy Frost & Sullivan, Avaya tops China's call centre products and services market with a share of about 20 per cent.
However, things are changing rapidly. For example, multinationals including Dell Inc, Motorola and HP have shifted their call centres to China to take advantage of its cheap labour, 'China Daily' reported.
Domestic firms such as China mobile and Bank of China have also begun to establish their own call centres with advanced communication systems.
China is keen to enter the outsourcing business and has sent a number of delegations to India to study the working of Indian call centres.
However, poor English language skills seem to be a major problem for the Chinese to compete with Indians.
China, known as the world's factory, is also keen for an image makeover. Chinese leaders have emphasised that the country should encourage service sector as a new area for high growth along with hi-tech manufacturing while cutting down on low-end manufacturing.
According to a recent report from callcenters.Net, an Asian research firm, China's call centre industry is set to grow 22 per cent this year.
The size of the industry's labour force, including bank hotline services and it companies' technical support staff, will hit 158,000 this year, up from 130,000 last year, registering a 22 per cent increase.
In India, the work force is seen rising 16 per cent to 312,500, Sydney-based research firm callcentres.Net said.
Although the size of China's Call Centre industry is just half that of India's, experts said china's high productivity and cost-effective human resources will attract more multinationals to set up centres in the country.
Avaya has set up an "intelligent communications centre" in Dalian city in North-East China, as part of the company's commitment to the local government in June last year to help turn the booming city into a call centre hub for China and other northeast Asian markets, the state media reported today.
The centre, located in the Dalian software park, will also be Avaya's software and service headquarters for the Asia-Pacific region, senior vice-president of Avaya Global Services Francis Scricco said.
According to a report by US Consultancy Frost & Sullivan, Avaya tops China's call centre products and services market with a share of about 20 per cent.
However, things are changing rapidly. For example, multinationals including Dell Inc, Motorola and HP have shifted their call centres to China to take advantage of its cheap labour, 'China Daily' reported.
Domestic firms such as China mobile and Bank of China have also begun to establish their own call centres with advanced communication systems.
China is keen to enter the outsourcing business and has sent a number of delegations to India to study the working of Indian call centres.
However, poor English language skills seem to be a major problem for the Chinese to compete with Indians.
China, known as the world's factory, is also keen for an image makeover. Chinese leaders have emphasised that the country should encourage service sector as a new area for high growth along with hi-tech manufacturing while cutting down on low-end manufacturing.
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