Monday, May 19, 2008

3 Offshore Big Players

We talk about offshore outsourcing and usually treat them as one whole package. We say China, India and the Philippines and figure that the outsourced work is all the same and that is Information Technology. What we don't usually point out is that there are types of work that these countries excel in. Not everyone can do IT, not everyone can do customer support. They each have their own strategic strengths.

India is playing the IT card. Their software engineers are sought after by companies outsourcing their work offshore. There is a logical reason behind this. When India released the mandate that all foreign businesses have Indian majority ownership, a lot of the US companies left and India had to compensate for that by investing on IT education. So now they're mostly made up of programmers and IT specialists. With the advent of offshore outsourcing, India now becomes ripe for the picking.

China has long been a manufacturing country. I'd bet my socks that in each household there's at least one item there that's made in China. Most of offshore outsourced manual work is done in China and in huge amounts too. Even before the trend of offshore outsourcing started to surface, companies have been sending work there particularly when it comes to toy manufacturing. That's where their strength lies.

Philippines has a lot of common with the American lifestyle. They have a high literacy rate and the similarity in lifestyle makes them perfect for call center work. Most call centers are set up in the Philippines. Whether inbound or outbound, the Philippines has hold of most customer support work. Their accent is easily passable for authentic American English too and that's what's important in customer support services.

These three countries play a different role in offshore outsourcing and soon enough more countries will be stepping up and filling in the needs for offshore outsourcing.

Wednesday, May 14, 2008

Reverse Outsourcing: India getting a piece

I figured it's going to happen sooner or later. Outsourcing now becomes everyone’s playing field. The whole outsourcing process has been looked down with disdain mainly because the act was one-way. The definition practically amounted to "Americans giving jobs to other countries while taking away jobs from their own citizens" However, now that India is starting to see the benefits of outsourcing to their own companies, they decide to take part in it too. The process of information technology outsourcing takes a full turn now.

Which is good don't you think? The big companies comprising India are now looking into outsourcing possibilities to reduce the workload in-house and focus on their core functions. The top functions that are outsourced are information technology and customer relation management. With these out of the way, their headaches are now more focused on things that have a great impact to their operations.

More and more Indian companies are setting up offices in the United States. Indias Wipro Technologies Ltd., a global IT services and outsourcing provider, plans to open a global software development center in Atlanta, adding 500 new jobs to the economy. Wipro also opened a service center in Detroit earlier this year.

How about cost? The decision to reverse outsource is the same as the reason why outsourcing is a hype in the US companies. India wants to cut back on cost and at the same time make their company global. The rupee currently valuing 40 to a dollar, makes Indian wages higher and setting up businesses in the United States relatively cheaper. At least by theory. This is still a new concept for India but they are hopeful and it seemed like the future is bright for this venture.

With the cycle of US companies giving jobs to India and India returning jobs to the US, will we be able to see improvement in both economies? Will Yin finally balance Yang? We don't know that yet. But even if reverse information technology outsourcing doesn't work for India when it comes to cost, they are still persistent to set up global companies. So I guess we don't have to worry about anything. Not yet at least.

Monday, May 12, 2008

Outsourcing Homework and Laundry

I found this outsourcing joke while going around my daily rounds in Google. When I saw it, well first I laughed then I got curious and searched for similar concepts. I came across several articles that discuss how people from India, Korea even the Philippines give "personal" outsourcing services. Offshore outsourcing is not strictly relating to big companies anymore. Now even individuals can outsource their work. I read in one of the articles I came across with that her daughter is studying English (or was it Math? I forgot the subject) through an online course prepared by a teacher in India. There are also freelance IT specialists who offer their services. Outsourcing in the micro scale is not exactly a half bad idea.

So how do you avail offshore professional help for your personal tasks?

Because of instant messaging, email, and even webcam, transactions can be made even without meeting in person. You have to know your way around the Internet to get the best bargain and the best value for your money. There are insitutions and websites now that cater to personal offshore outsourcing need. Tapping the talent pool of India, China and the Philippines is not a difficult task anymore.

1. Make qualification tests. Once you post your ad, there will be thousands and thousands of people bidding for it for sure. To narrow your choices down, put up stringent requirements and specific qualifications. If it's a skill work such as drawing or painting, then have them send samples or even a video of them so you'd see their skill live.

2. Compare cost of labor. Some people would work double for a price that another person would charge for only half the effort. Be discriminating.

3. Avoid third-party transactions. If the person you're talking to is redirecting you to another person then drop it. You'd most likely get ripped off and be compelled to pay twice the amount since there is a middleman involved. Always go for the direct contacts.

4. Clear out cultural gaps as early as possible. Lay down your rules and have the vendor explain his side before going into any transactions. There may be limitations to what he can do depending on his culture and certain laws covering their country. As for the laws that may not be a problem since most offshore outsourcing countries have less protective laws which makes business easier.

Don't let all the big shots have all the offshore outsourcing benefits. You can also benefit from it and you will find that it will help you a great deal. It may also free you from any offshore outsourcing prejudice you have.

Offshore Call Centers: Accents make or break the deal

We already know that offshore outsourcing call centers save a great deal of cost for a company. That’s why everyone’s jumping in the bandwagon in the first place. But let’s look more closely at how offshore call centers operate.

It is inescapable to note the weakness of having a call center offshore and that is none other than accent. The thing about customer service is that the person calling for help should be able to trust the one helping him. Generally, irate customers don’t listen to proper reason anymore and would curse at the nearest ear they could find. Now, if the person they’re calling has a strong accent and horrible English, chances are they’d get even more annoyed. The annoyance won’t be so much focused on the problem anymore but would actually fall on the fact that they are being redirected to people who they think doesn’t understand because of their accent and grammar. In truth, a lot of Americans right now even ask the one who answered their call if they really are Americans because they wouldn’t talk to them if they weren’t. Profit goes down, and the number of potential customers will decrease if by word-of-mouth or by some other means, it would spread that your company has bad customer service.

Same goes for call centers that make outbound calls. Aside from the fact that these people are disturbed from their homes by complete strangers, it is also doubly irritating if the person who disturbed them had an accent they could not get. Chances of selling dwindle down to near zero.

It is no secret either that aside from the standard American accent, Asian or Middle-eastern accent on the English language is a bit frowned upon, if not laughed at. That’s why it’s important for offshore call centers to train their agents to speak like Americans. IBM once devised a way to fix the accent problem through a web-based technology that helps improve language skills.

While accents are imperative to actually bagging that customer and making sure they won’t hang up on you, it is also equally important for an agent to listen to the customer. I think the whole call center system is wrong in placing highest priority in finishing a call in the shortest time possible. That makes some agents neglect their responsibilities and forget that their purpose is for the convenience of the customers.

Sunday, May 11, 2008

Pitfall of Outsourcing IT Jobs

Offshore outsourcing IT jobs has been the main anxiety of people in the advent of the offshore outsourcing trend. Suddenly, computer programmers find themselves getting “replaced” by cheaper labor overseas. At first it was considered a fad but when companies start seeing the benefits and started following suit, the immediate dismissal of US employees alarmed everyone.

Americans are highly patriotic and would stand up for their country until the very end. But what happens when he is stripped off his job and he suddenly realizes that his expertise is not needed anymore? When a company that used his IT specialization for so many years decide to relieve him from work and give his long-term job to Indians offshore, what will he do?

Sadly for Kevin Flanagan, the answer to that was a gunshot to the head. This suicide issue has been blamed on the fact that the Bank of America has opened its doors to offshore outsourcing and that with their process of dumping programmers and IT specialists, Flanagan was one of those unfortunate ones to get his termination notice that day. With the unending, rising debate regarding the pros and cons of offshore outsourcing, Flanagan’s case fueled anti-offshoring camps in their vehement resistance to the concept of sending jobs overseas.

What are Americans so afraid of?

Well for one thing, they’re losing their jobs most probably permanently. Computer programmers and IT professionals find themselves lining up for a job, any job at all including clerical work if they’d get lucky enough to get in there. Offshore outsourcing companies are dumping their programmers to cut back on cost by outsourcing it to places where labor is cheaper. The rope is tugged between two groups, those who think that offshore outsourcing is just a passing fad and those who think that offshore outsourcing is a doomsday device. It is important to note that the companies are now holding back on discussing offshore outsourcing plans to their employees for fear of resistance.

With the current panic surrounding the issue of offshore outsourcing IT jobs, it is important for companies to discuss this openly with their employees.

Thursday, May 8, 2008

Offshore IT Outsourcing: Everyone's Game

Contrary to what everyone thinks, not all IT jobs are losing to the offshore outsourcing trend. It has been a well known fact that India has been a power player in the whole offshoring business. With so many companies setting up call centers in India it seems that the jobs just keep on coming. However, that’s not entirely the case as more and more countries steps up to offshore outsourcing hype and takes advantage of its prominence. Apple withdrew its plans on India because it figured that there are more services that offer good quality with still lower costs.

That is one of the prime examples where the main logic of offshore outsourcing to cut costs doesn’t apply anymore. Suddenly, with the emergence of countries stepping up to the plate offering high quality service at an even lower cost the battle for offshore attention gets tougher. This makes me think though, just how low are these companies aiming for? The cost keeps going down and the quality seemingly keeps going up.

Offshore IT outsourcing has been a delicate subject for many Americans as they have been losing their jobs for cheaper labor overseas. Buildings used primarily for business in the US have slowly been converted to residential spaces because of more and more Americans losing their jobs to the offshore outsourcing trend. While this is happening, more and more residential spaces in countries like India and China are being converted to commercial spaces.

The situation seems to grow dim but aren’t we overreacting a little? People lose jobs and gain jobs on a regular basis. The only reason that offshore outsourcing is getting the spotlight is that the change and the number happened to be too big, too fast. But the rate of the sudden crash in employment doesn’t equate to underemployment. At least not yet. If the government wants to calm its citizens down, then they should determine which jobs are getting offshored, which jobs are staying and how to protect them. Probably more important than all this, is the creation of new job opportunities and greater compensation benefits. India is currently the number one offshore IT outsourcing player in the game but even India loses their IT jobs from client companies to greater competition. So nothing is absolute. It's everyone's game.

The Problem with Outsourcing Overseas is?

The thing about employing a foreign country to do some of your company’s work is that like in any other foreign relations, something gets lost in translation. Well that’s unless your outsourcing partner is very good, I can name some knowledge process outsourcing companies that actually deliver good results but I’ll save that for another post. We’re here to tackle one major problem with outsourcing overseas.

I’m sure this isn’t the first time you’ve heard of communication barriers. In a normal business venture, communication between employer and employee is of utmost importance. Maintaining a harmonious relationship in the company is important too. But when it comes to offshore outsourcing, communication barriers and cultural differences take a much bigger awkward spot. Settling differences is not as easy as talking over matters with a colleague over coffee. Usually, at the beginning of the partnership, it should be clear already what the terms are and how the communication lines would remain constantly open.

English fluency can be an issue since not all overseas outsourcing vendors are native speakers of English. As I’ve said, something might get lost in translation and this is usually the root of most problems. Time zone difference is also another potential problem with offshore outsourcing. Communication can be difficult but if outsourcing vendors are willing to take that extra mile by adjusting their own body clocks then that would help a great deal. Also, time zone difference can prove to be beneficial; we can see it like this, your company works in the morning, and while you sleep, offshore outsourcing vendors are working in your behalf so that makes you company efficient almost 24/7.

Your company and your offshore outsourcing partner should have a clear common goal. Communication can come in the form of online conferencing and consulting and video conference, this can usually be done at a minimum cost. You would want to be updated weekly and your offshore program developers or IT specialists can clarify inquiries. All this is done to ensure that both groups share a common goal and understand each other’s issues.

Anti-offshore outsourcing groups could probably come up with a dozen more problems about outsourcing overseas but I’m going to tackle this one for now. Every good thing starts with good communication. Every problem can be solved through communication just as any goal can be realized if communication lines are always open.

Tuesday, May 6, 2008

Offshoring, Outsourcing: 3 reasons why it's good for you

It's every businessman's goal to maximize profit using minimal cost. The first question starting entrepreneurs ask is "What do I get out of this?" In the ancient art of alchemy it has been said that in order to gain something you must offer something of equal value. However, when it comes to offshoring and outsourcing, you actually manage to get a whole lot while giving so little. Companies save millions of production cost by offshoring and outsourcing. This is particularly evident with the prominence of call centers in various countries like the Philippines, India, Australia and China.

Price goes down = Demand goes up

It's basic knowledge that the relationship between price and demand is almost completely inversely proportional. If all other things are taken to be in equal value then we can safely assume that as price decreases, the quantity demanded increases. Now where does offshoring and outsourcing come in? Let us remember the relationship between cost of production and price of commodity. If it takes less money for you to produce then it is possible to lower the price. If you outsource certain business functions, you cut down cost. You do the math from here.

Odd Jobs out, Great Jobs in

Along with the progress offshoring and outsourcing give, it won't exactly be a business venture without worry and risk now would it? What people worry about is that employees of these client companies will lose their jobs to relatively cheaper alternatives to labor cost. That is one way of looking at it. That's the easy way of looking at it. However, if you'd also look at another side of it, if a company moves call center jobs offshore, the way would be paved for more sophisticated jobs; jobs that require greater skill and qualifications. This in turn moves the education system and trains people to be more competent to qualify for higher-paying, more fulfilling jobs.

Business will focus on what really matters

Most of the jobs being outsourced by client companies are customer service jobs or tech support jobs. These business functions though still needed is at the bottom of the food chain and once you offshore this business function, you will have time to focus more on the things that do matter. Invest more time, money and effort on research or marketing.

In offshoring and outsourcing, good things keep coming. Outsourcing jobs to foreign countries may be one of the best ideas to come out. Call centers top the list. Inbound or outbound, these are jobs that developing countries strive for and the developed countries can easily dispense. It’s a win-win situation for both parties.