Posts Tagged ‘Outsourcing’

The potential for anti-offshoring legislation

March 19th, 2010

When President Obama addressed the nation in his State of the Union, he stressed that tax breaks should be eliminated for American companies who ship work offshore and instead include tax advantages for organizations creating jobs locally. This assertion constructed the idea that the federal government was in pursuit of anti-off shoring legislation.

 

In an article for CIO.com, Stephanie Overby provides insight into how organizations can protect themselves from what she describes as “potential protectionist legislation.” According to Overby, states cannot outright ban offshore outsourcing operations by private companies, but that there are several who are attempting to enact laws that will slow its pace.

 

Overby suggests that organizations can protect themselves from anti-off shoring legislation by making “change in laws” provisions in contracts for compliance purposes. In addition, Overby suggests to include a “benchmark clause” in the event that modifications need to be made to services as prompted by legislation. Overby also recommends for outsourcing clients to work with provides with significant operations in the U.S. in case they are asked to move work onshore.

Do you think legislation will pass that will significantly hinder offshoring operations in the U.S.?
  
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Recently Published Report: The Total Cost of Outsourcing: The Rural Advantage

January 11th, 2010

In an IMF Web Forum, Martin Gardocki from Rural America Onshore Sourcing, discussed the rural alternative in the total cost of outsourcing. Rural America Onshore Sourcing is responsible for finding and aggregating rural talent to provide customers with contract assistance as required for their businesses.

The different types of outsourcing that exist include:

  • USA Urban Outsourcing (domestic, urban firms contracted to provide a service)
  • Offshoring (contracting with firms in places such as India and China)
  • Nearshoring (outsourcing to firms in Central and South America)
  • USA Rural Onshoring (domestic firms in rural communities or distributed rural teams contracted to provide a service)

According to Gardocki, “the opportunity of outsourcing is to actually use the capacity and the capability of the outsourcer to drive even further benefits going forward.”

There are 4 basic costs associated with outsourcing which include the following:

1.      Labor (cost of personnel and source of savings generated through arbitrage)

2.      Transition (cost of identifying, negotiating, and moving work to the outsourcer,

3.      Operation (ongoing cost of the relationship)

4.      Management reserve (cost of managing the unexpected)

Click here to view the entire blog post summary of Martin Gardocki’s web forum presentation.

Follow the Discussion on Twitter @ITInfoForum

Outsourcing IT and business processing operations

January 5th, 2010

An IMF member initiated an outsourcing-related connect and wanted to talk with other organizations who had experience with outsourcing their IT and Business Processing Operations (BPO). The company originally had two separate departments for IT and for BPO, but since the company has company both departments under one unit and reduced the number of employees, they wanted to outsource to different parts of the world.

 

The following are tips that one of IMF’s member company has found through trial and error over multiple companies.

 

· Use of companies in Brazil, India and the Philippines.

· Brazil: They felt that the language skills and accents really hindered their ability to outsource well.

·  Philippines: They are currently using West Call Centers and haven’t worked with them long enough to make a fair call of whether they are good or bad.

· India: Most experience has been outsourcing with Infosys.

·     Infosys in India has worked the best for outsourcing IT and BPO. It has taken about five years to develop the relationship and provide the knowledge with India. The first two years were very difficult because of the language barrier in teaching a new system. But by year three, they found that the company had begun cost saving efforts and really improving the procedural methods. He believes that Infosys was a great decision because they were willing to train people on RPG and they have shown to have excellent PC support.

 

· Visit India personally and make as many resources available to aid them as possible.

· Be very direct on what you want and when you want it. Verify that they understand and agree.

· Give an incentive for Indian employees to stay: this will cut down on your turnover and rehiring needs and costs.

· They would estimate that the cost of outsourcing has not saved them much cost in the long run.

· Your company still needs local support

· They also believe that one great in house IT employee is equal to about two and a third outsourced IT employees.

 

Summary:

Overall, have the expectation that when you outsource any part of your business it is not going to be great over night. A good outsourcing relationship takes time to build. But it seems that with the right team you can create an effective group to help you manage your cost and support.

 

 

 

 

Helpful hints on how to accomplish this at other organizations: