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Outsourcing News for March 2010 | MicroSourcing

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BPO Activity Up, Offshoring Declines

In a survey by PeoplePerHour.com, Europe’s biggest online business marketplace, results show that 60 percent of UK-based companies outsource business processes more now than they did two years ago, and 61 percent choose IT outsourcing over offshoring.

More companies choose outsourcing in order to reduce costs during the recession. However, the decrease in the number of companies which are willing to transfer processes overseas can be attributed to the rise in the “freelance economy” which has become an attractive alternative in the UK as well as the growing number of IT professionals.

“You might have expected offshoring to grow through the recession as UK businesses looked to cut costs by outsourcing IT requirements to cheaper overseas suppliers. However, responses to our survey and analysis of transactions on the site points to one conclusion: outsourcing is growing and offshoring is falling,” said PeoplePerHour.com founder Xenios Thrasyvoulou.






According to InsideOut, outsourcing specialists to the recruitment sector, more and more companies are considering back office outsourcing. Instead of handling back office functions in-house, transferring those to a service provider can translate into savings of about £60,000 a year.

Back office outsourcing an economical option for recruiters

As the economy bounces back from recession, outsourcing back office processes is an economical option for recruiters, and will enable them to focus on core tasks. “Employing a couple of people in your accounts department means not only is there the cost of salaries, but also training, office space, office supplies and infrastructures like IT,” said Paris Sheppard, InsideOut Managing Director. “For around £10,000 a year, recruiters could be outsourcing their payroll and invoicing and not only saving money on paying salaries.”


Philippines Named as one of Gartner's Top 10 Outsourcing Locations in APAC

India is still the number one location of choice for offshore IT and business process outsourcing (BPO) services, followed by China. This is according to the latest research “10 Leading Locations for Offshore Services in Asia Pacific and Japan for 2010” by global IT research and advisory firm Gartner. Australia, New Zealand, Singapore, Malaysia, Indonesia, the Philippines, Thailand, and Vietnam also made it to the top 10 list.

“Countries such as Malaysia, the Philippines, and Vietnam have continued to strengthen their position against leading alternatives, while Indonesia has entered the top 10 for the first time,” said Jim Longwood, Gartner research vice-president. “Some of these countries have invested considerably and leveraged increased demand for lower-cost services. The global financial crisis forced many organizations to place a greater emphasis on cost optimization.”

These countries were ranked based on the following factors: language, government support, labor pool, infrastructure, educational system, cost, political and economic environment, cultural compatibility, globalization and legal maturity, and data and intellectual property security and privacy.





Indian BPOs to Benefit from US Healthcare Reform

by: Karen Cayamanda

Thursday, March 25, 2010 | Outsourcing News | Comments (0)

Opportunities for BPOs from Healthcare Reforms

As the US House of Representatives passed the healthcare bill that will bring about 32 million Americans under insurance cover once it becomes a law, it is expected that work such as insurance and claim processing tasks will be transferred to Indian BPO service providers. Insurance companies will be looking for outsourcing service providers that will take on back-office tasks including member database management, claims and new member enrollment processing, and support services.

‘‘All existing IT systems including the electronic medical records, patient information systems and other technology platforms are going to stay untouched, barring some minor to medium tweaking, which will mean some additional work for existing providers like IBM, Accenture and EDS (HP). It's possible that minor portions of these might get shifted to India as well, but the sizable opportunity is for BPOs,” said Dr. Saji Salam, healthcare expert in Minneapolis.



Cost Only Approach in BPO is not Effective

Majority (75%) of UK organizations said they are disappointed with the quality of outsourced work. This is based on the research released by Valueshore Spain, Spanish Government-backed group of IT consultancies.

The research further shows that of the 200 UK IT directors surveyed, 78 percent still use day rates to calculate outsourcing costs, and that majority of organizations look at cost instead of quality of work when it comes to making outsourcing decisions.

Companies should change their perception of what offshore outsourcing can do for them. "Taking a cost-only approach can have a detrimental effect on the quality of work received. Businesses also need to open their eyes towards the 'hidden' costs. The cheapest option doesn't always provide to the biggest overall savings, as quality concerns can often result in more management time being required and increased travel and troubleshooting costs," said Daniel Naoum, co-founder of Valueshore Spain. By failing to consider the hidden costs, companies will lose opportunities for cost savings and pay an outsourcing bill that’s more expensive than what was initially planned.




Firms to Outsource rather than Establish Data Center

by: Karen Cayamanda

Wednesday, March 24, 2010 | Outsourcing News | Comments (0)

Expert predicts that companies will outsource IT services rather than set up a full data center, considering that large-scale capital will be required for a new data center compared to funds for operational expenses should they opt to outsource.

Setting up a data center is expensive

Two years ago, firms were open to the idea of setting up their own data centers, but according to Matt Munson, group technical director for IT services provider BlueSquare Data, an increasing number of companies choose to just pay for the operational costs. “So, certainly from what we can see for the next two years, it's going to be people outsourcing. It's massively expensive to set up a data center,” Munson said.

Munson added that data centers nowadays use different technologies such as cloud computing and blade servers, unlike before when companies used numerous rack servers.




BPO in Kenya

Accenture has piloted a project in Kenya that will likely lead to the establishment of an outsourcing center there in the near future, The Industry Standard reported. The new pilot project is part of the NetHope summet, which supports humanitarian agencies with outsourcing and shared solutions.
 Accenture has worked with the Kenyan government for two years to investigate means of improving market and technical conditions in its growing IT export sector – set for a significant boost with the opening of an outsourcing park along Nairobi's Mombosa Road.

 "It means a lot to Kenya for Accenture to set up its base here; it is a leading outsourcing company and is likely to pull other outsourcing companies," stated CEO of Kenya ICT Board, Paul Kukubo.


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