Talking outsourcing - comment and opinion on the latest in outsourcing and offshoring by Mark Kobayashi-Hillary Talking outsourcing - comment and opinion on the latest in outsourcing and offshoring by Mark Kobayashi-Hillary Talking outsourcing - comment and opinion on the latest in outsourcing and offshoring by Mark Kobayashi-Hillary

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Wednesday, 26 September 2007

The Buffalo stance on offshoring

Given that I live in London, and not New York, The Buffalo News is not often part of my daily reading matter, but I was drawn to a story about Senator Hillary Clinton today because of the links to Indian technology firm Tata Consultancy Services (TCS).

Clinton has been criticised by anti-globalisation and anti-offshoring supporters because four years ago she assisted TCS in coming to the town of Buffalo and opening a local office. The spin at the time was about economic regeneration and how Tata would be employing up to 100 local people from the Buffalo area within two years.

Unfortunately The Buffalo News has reported that TCS currently has only 10 people, with plans to hire around five more. Clearly that’s not exactly the economic regeneration promised by the marketing people, but there is another side to the story. When the newspaper asked TCS to explain why it had not created the promised local jobs the company confessed that the biggest problem has been luring people with the right level of skills to Buffalo.

For those without an intimate knowledge of US geography, Buffalo sits on the wind-swept coast of Lake Erie in northern New York State. It’s about 400 miles from the lights of New York City and in terms of population it’s about the same size as Belfast. So we are not talking about a one-horse town, but even Leeds is twice as large.

So I can understand what TCS is saying and a quick look at the web site does indicate that it has over 50 offices in the US, employing over 10,000 people in well-paid consulting jobs. So it would seem that a lot of the negative briefing is politically motivated, rather than just objective criticism of Clinton. In fact, it seems the TCS story has come to light because another hopeful for the Democrat’s presidential campaign nomination, Barack Obama, was briefed that Clinton’s ‘support for offshoring’ could be an issue worth focusing on in the forthcoming campaign.

It takes me back to the presidential campaign of 2004. Offshoring is bad. No, it’s good for the economy. No, it takes US jobs away to India and China… here we go again.

Posted at 12:59 PM in government, offshore outsourcing, outsourcing | | Comments (3) | TrackBack (0)

Tuesday, 25 September 2007

What can the iPod teach us about outsourcing?

Protecting intellectual property (IP) has become a key part of the outsourcing debate, especially as service providers are now offering more valued knowledge services that potentially create value outside the established physical walls of the organisation. Digitised content ends up everywhere and even in our non-work role as consumers, the rules around digital content are unclear. I mean, is it still really illegal to rip a CD that you have bought and paid for to an iPod or have they changed that rule yet?

Though most outsourcing contracts draw up some form of IP protection on a case-by-case basis is it also useful to be aware of what is going on in  digital rights management (DRM) – which tends to focus more on the ownership of content such as music or literature. I believe that as we advance more and more into knowledge process outsourcing (KPO) in our part of the business, all the cross-border intellectual property arguments we hear about involving Apple and iTunes will become more relevant to what we are doing in sourcing services, because we are talking about services that create knowledge and content.

A guy I know from my local BCS branch in north London, Jude Umeh, has just written a book about the whole debate over DRM and IP protection and he is going to give a talk about the subject in central London on 23 October (details here). I plan to go and hear what he has to say and to see if there is anything we can learn in our part of the industry from what is going on in the music and entertainment sector. In any case, it will be a good opportunity for a bunch of IT people to see who has got the biggest iPod song list.


Posted at 03:00 PM in offshore outsourcing, outsourcing, security | | Comments (2) | TrackBack (0)

More opportunities for government outsourcing?

A new study just out from Kable, the public sector research and events company, shows that UK government spend on IT outsourcing is expected to increase from £74bn in 2007–08 to £100bn in 2012–13. Most of this (£56bn) will be spent on citizen services in 2012–13 as compared to £41bn in 2007–08, while £44bn will be spent on government services in 2012–13 as compared to £33bn in 2007–08.

The study outlines the need for reform and efficiency as the main driver of government outsourcing and a need to reduce ongoing cost. In addition, local government and NHS are expected to continue as the largest spenders on outsourced services, while the education sector is expected to provide the strongest growth to the IT outsourcing spending, primarily due to the Building Schools for the Future programme.

It would be interesting to understand what the figures are for the retained organisation across all government services. I understand that there are some highly sensitive or classified areas of the government IT network that would never be handed off to a supplier, but the growth highlighted by Kable does not seem astonishing to me when put in the context of growth over a five- or six-year period. Anyone would expect the government to be outsourcing more and this seems like a modest increase. What is still contained within the civil service and how the interaction with suppliers might be streamlined might be of more interest.

(Thanks to http://www.globalsourcingnow.com for the tip off).

Posted at 10:37 AM in government, outsourcing, strategy | | Comments (0) | TrackBack (0)

Rewarding green excellence

I thought it was worth giving a shout of congratulations to IBM for an award it won last night.

It was at a rival to the Computing Awards for Excellence, for which I am a judge this year, but the technology press in London is really just one big happy family so I’m sure Computing won’t mind me mentioning the Cnet UK Business Technology Awards, for which I was also a judge.

Unlike the Computing awards there was no specific category focused on outsourcing, but IBM won the Green IT award for its Project Big Green. I’ve recently had a couple of conversations with Bruce Ross over at the IBM South Bank office and I also interviewed him for a Computing project where he talked a lot about IBM’s green initiatives.

I have an issue with most IT green initiatives. Often they seem to involve jetting journalists all over the world on alcohol-fuelled junkets to remote data centres so we can write about how ‘green’ the tech company really is. Well I think those days are drawing to a close and not a moment too soon, but it’s always worth keeping an eye on blogs such as BusinessGreen and Greenbang for all the juicy non-green green stories.

What strikes me as different with IBM is that it really is going through the organisation at a very detailed level and creating a greener company. It’s a bit like root canal surgery because there is no area of the company that is not being examined as a part of Project Big Green. The great thing about this for IBM is not that it wins awards or gets press coverage saying how green it is (though I am sure the marketing people don’t mind that), but the company becomes the best in the world at taking an organisation and reducing its carbon footprint. That expertise leads to juicy contracts as other major corporations want help in going green, and joy for IBM shareholders as it wins new contracts that are not just focused on how good the company is at delivering IT services, but how good it is at delivering green IT services.

Posted at 08:00 AM in innovation | | Comments (0) | TrackBack (0)

Monday, 03 September 2007

A purchase to India

There was news of an interesting acquisition just before the weekend when Indian business process outsourcing firm FirstSource (formerly know as ICICIoneSource) bought MedAssist, a healthcare revenue management firm (debt collector for doctors and hospitals) based in the US. Firstsource spent $330m on the acquisition, once again demonstrating that there are Indian service companies out there that are now prepared to start finding niche service companies in the US or Europe and to secure a pipeline of business by acquisition.

Firstsource can now lay claim to being a provider of healthcare BPO from the US, as it doesn’t intend to lay off any of the 1,400 US employees, clearly an extension of its growing global delivery model. The company has already been hiring thousands of Brits in Northern Ireland for contact centre work and importing its methods of managing call centres back to the UK – because its standards are higher than those generally used in Northern Ireland. We are witnessing some extremely rapid growth in the global services marketplace and the money available for acquisition by Indian companies is remarkable.

I predict that it won’t be too long before we stop being all that concerned about where a company was founded. It’s true that there is still a natural bias against companies from Asia, particularly South Asia. We don’t prefix IBM or EDS with ‘American’, Xansa with ‘British’ or Capgemini with ‘French’ all that often – they are accepted as global service companies. As their business brands strengthen and they hire more overseas resource it really will be the same for Firstsource, and Infosys, and Wipro… if they are the best in the business then who cares where they were founded? After all, wasn’t HP started in a garage?

Posted at 03:27 PM in offshore outsourcing, strategy | | Comments (0) | TrackBack (0)


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