The Indian technology providers are offering services for free, cutting back on new hires, not replacing consultants as they leave firms – and let’s face it with all the uncertainty and cutbacks going on – a lot of people are just choosing to walk.

And yet, what’s going on at IBM? It just increased its dividend by 25 per cent. For the past four quarters shareholders in Big Blue have enjoyed a 40 cents per share dividend, yet in the latest payout IBM paid 50 cents per share.

Just two weeks ago IBM reported a 26 per cent increase in annual profits and earning forecasts were increased. In fact, IBM is even buying back $12bn of its own shares this year.

Has anyone told IBM there is supposed to be a global credit crunch that is causing some other IT service providers to weep into their masala tea?

I received an interesting email from a friend of mine, Gavin Cooney, who runs a company in Dublin called Learnosity. It is focused on using the telephone for tests and exams, such as taking an oral language test with the telephone instead of with the teacher in a school.

Gavin is trying to set up a call centre in India. It’s designed to connect job candidates to people who can test their English language skills on the phone. Now, in most countries this would be a pretty easy thing to set up. There are plenty of virtual call centre services such as Voxbone that could be set up extremely quickly.

However he has a problem trying to get any service together because there are questions over the legality of some kinds of IP services using voice over IP (VoIP) in India. Take a look at this blog entry for an opinion - http://andyabramson.blogs.com/voipwatch/2004/08/india_cracks_do.html.

Isn’t it strange that India presents such an advanced face in the contact centre industry, yet unrestricted VoIP is not an option?

One of the big debates around offshore is whether the US economic slowdown will encourage more investigation of offshoring by companies as a means to control costs, or will it just mean that all purchasing decisions are frozen? In a recent report, Offshoring IT Services Can Cut Costs: Options for a Potential Economic Downturn, analyst Gartner claimed that the slowdown will be an absolute boon for offshoring.

The Gartner prediction states that the US economic slowdown will lead buyers of IT services to consider increasing the percentage of their labour in offshore, lower-cost locations. India will remain the dominant location for IT offshore services for North American and European buyers as a result of its scale, quality of resources and strong presence of local and traditional service providers.

Gartner goes further to state that this will be the case whether we only see a mild slowdown or a more prolonged and deep recession. The analyst believes that in the best-case scenario – a mild slowdown – existing plans to use the offshore model will be accelerated and some companies who might not have previously considered offshoring will now think of it as a more feasible option.

In the worst-case scenario – a deep recession – we can expect to see a considerable amount of cost cutting through aggressive offshoring programmes.

On the surface it all sounds good for the offshore suppliers, but in my recent conversations with several of these companies I know they are starting to feel the pain because the uncertainty in the economy is making it harder for their clients to make a decision. Even companies that are considering offshoring programmes are taking a lot longer than usual to make decisions right now. Let’s face it, if your firm has reined in business travel and put a freeze on new recruits then a major business decision such as outsourcing a process to the other side of the world is going to take longer to plan than usual.

Roll up, roll up. Get your free outsourcing here! You know how we spent years trying to shift the perception of offshore outsourcing from the slash ‘n’ burn strategy, the race to the bottom, the exploitation of developing economies where everyone will work for pennies?

Remember how it gradually moved into the realm of being a strategic tool used by the management to access better, more flexible resource, with skills that were not previously found in the retained organisation?

It seems we are now reaching the ultimate in low cost offshoring though – free offshoring. Well, not really totally free, but Tata Consultancy Services (TCS) is using the loss leader concept to try stimulating some buying decisions. It’s a bit like the supermarkets that will sell butter and eggs at a loss safe in the knowledge that once you are inside their four walls, you are probably going to buy something else.

TCS has started offering to shoulder the cost of transition work, the process of preparing a function to be moved from it’s current location and into the new offshore location. Usually the client would pay for this, as it is their project, but this TCS ‘special offer’ looks like it is designed to spur on a few decisions that may be currently stalled due to the black clouds swirling over the economy.

Perhaps it is working for them, but it seems like a bit of a cheap shot that devalues the expertise of the supplier. Will they ever be able to charge for transition again now some clients get it for free?

I was in the gents' toilet earlier today at the Washington Hotel in London’s swish Mayfair district. “Who would have thought it? I cannot have imagined this 10 years ago,” said the London-based correspondent of PTI – the Press Trust of India. We were sharing a toilet conversation about the past hour in which we had witnessed some of the great and good in British politics talk about the importance of the UK / India relationship.

The lunch was arranged for the Labour Friends of India by Saffron Chase, a PR and lobbying firm run by a friend of mine, Vikas Pota. Vikas is one of those movers and shakers in political society who knows everyone worth knowing. As I entered the room, Vikas wandered over and grabbed my arm; he guided me over to have a chat with the guy running one of the biggest hedge funds in London.

The MP for Ealing North, Steve Pound, who chairs the Labour Friends of India, gave a talk about the British relationship with India. He introduced the Prime Minister, who had been delayed trying to get through the crowded bar area of the hotel, much to the amusement of the guests – at least one peer was heard to mutter that this was not the first time the PM was delayed in the bar, though I’m sure it was in mirth and not in the literal sense of a Liberal Democrat leader.

The Mayor for London, Ken Livingstone, followed with a speech that included the sentiments that he could never disagree with anything the Prime Minister said. I bet Tony Blair wished for that kind of compliance back in the day.

Lord Kinnock, Chairman of the British Council and former leader of the Labour Party, was being presented with the Fenner Brockway medal for promoting better relations between the UK and India. He then made a rambling, but interesting speech. The hosts were getting worried as Kinnock was going on a bit. It was interesting to most of us, but clearly some people like the PM and Mayor had to get moving. Steve Pound attempted to sneak up alongside Kinnock to tell him to hurry up. Kinnock immediately said that he knew he was running over and that he would finish soon. He then added that he was always careful when people approached from the side in case he would get stabbed in the back. He recalled a 1985 speech at the Labour Party Conference where Eric Heffer had tried approaching while Kinnock was speaking.

It may have been somewhat hagiographic because of the Indian audience, but the off the record view of many politicians is that India is a great friend and worth developing. A lot of those in power fear talking on the record about their concerns for China, and so the emphatic support for India can be taken as a vicarious way of saying that they will support a large democratic state over a large dictatorship any day – but the economics of the matter prevents them saying it openly…

A new survey out today commissioned by PriceWaterhouseCoopers and the Department for Business Enterprise and Regulatory Reform (BERR), indicates that 13 per cent of Britain’s large businesses have faced malicious network penetration by cybercriminals.

This is an interesting observation, not least because the survey took the views of over 1,000 companies, but also because the figure was a marked leap from the 2 per cent reported only two years ago, and could even underestimate the problem, given that many firms do not admit to successful attacks on their IT systems.

Malicious attacks are estimated to cost the UK economy several billion pounds a year. The same survey also revealed that despite falling victim to 94 serious data breaches in the past year, 90 per cent of businesses still let staff take sensitive information off site on USB sticks and in laptops – a disaster waiting to happen with various examples of pub laptop thefts proving the point.

Outsourcing can provide two sides to the coin. Sometimes it can be a benefit to get some standards written up, procedures in place, and relationships with a specialist IT company that understands the value of digital information. On the other hand, sometimes it means that company-to-company hand-offs of information need to take place where previously everything was internal, and that itself can cause issues.

I made a short visit to Kolkata (Calcutta) in India last week. UK Trade & Investment (UKTI) had arranged a mission to West Bengal to examine how more links could be established between that area of India and the UK. I was speaking at a conference for a group of local Indian technology firms.

I had prepared a talk the day before leaving and then polished it off waiting in the bar at Heathrow airport. Things like a limited battery life can really create a strong incentive to get things finished. I arrived at the hotel where I was staying – and where the talk was due to take place – with very little time to spare. I basically arrived in India on Thursday, got a shower, had a shirt pressed, and then went downstairs to do the talk. Talk about hectic.

On the agenda it said I had 45 minutes. Just before I was going to start they said to me I should aim for 1hr 15 minutes instead, as the agenda had changed! Fortunately the extra time made it possible to turn the presentation into more of a dialogue with the audience. I asked them to interrupt and throw comments into the talk so we could bounce ideas around, rather than waiting for a Q&A session at the end.

My session went on for about 90 minutes and it was great. I was talking about some of the present issues in outsourcing generally and then more specifically how Kolkata could/should promote itself. The audience was full of comment and we had a great debate.

In the afternoon, a number of local companies were presenting to each other with me there as well to offer some tips on what UK service buyers might think of their pitch.

On Friday I went around Kolkata in a car in blazing heat – and with failing air conditioning. Each office we called at offered some respite from the heat and the traffic noise. I visited some of the major companies that have invested in the area such as HSBC, Cognizant, Capgemini, and IBM.

It was interesting to see the facilities these major firms had created in Kolkata. Each of them has recruited thousands of people locally and they kept on repeating some of the same reasons for investing in this part of India – primarily attrition is much lower here, there is a stronger sense of loyalty to the company and people don’t job hop as easily as in some other locations. It’s also slightly cheaper than locations such as Gurgaon or Bangalore. However I don’t think the difference in cost outweighs the far greater benefit of being able to reduce the staff churn to someone more manageable.

I actually found some of the local home grown companies more interesting, perhaps because there were some stories and studies that I enjoyed hearing, from companies I have never heard of. Rebaca are working on better ways of pushing video around the Internet and creating streaming technologies that blend all sorts of existing technologies – I imagined it as something like a cross between Sky+, Joost, and Slingbox.

Brick and Click also impressed me with a number of product ideas, including a complete pharmacy management system that handles the entire prescription and dispensing process for pharmacy retailers. The NHS should really talk to these guys, given some of their difficulties in this area. The Brick and Click system has already been rolled out to a number of US states.

And let’s not forget the humble contact centre. The COO of BNKe Solutions, Suresh Menon, was so keen to meet me he dragged himself into the office after major spine surgery. It was literally his first trip outside since the surgery and then the people from the West Bengal government who were arranging all my appointments hustled me in and out in something like 15 minutes, because we were running hopelessly late on the schedule! Suresh explained how his major advantage in the market was that he has an attrition rate of below 5 per cent. It’s an incredibly low figure for a contact centre and does demonstrate that there are differences between different regions of India. That sort of figure would be almost impossible in Bangalore.

I hope to get back to Kolkata soon. Not just because I want to explore some more of the historic sites associated with Nobel laureate Rabindranath Tagore, but there is a lot taking place in India beyond the well-established metropolitan areas we are all familiar with. I’d like to see how fast this ancient city could develop a hi-tech future.
 

I have come here so many times before, but I was a bit fed up yesterday morning when I arrived at the international airport in Delhi. I needed to transfer immediately to a domestic flight to Kolkata (still better known as Calcutta), so I went immediately to the transfer lounge. Lounge is a euphemism as this is more like a holding pen full of flies and mosquitoes.

You might expect that the transfer between an international and domestic flight would be a fairly smooth procedure, but that's until you have experienced travel to India.

I arrived in the lounge at 7.01am only to find that the transfer bus leaves on the hour. Great. Another hour until the next bus. Nothing like a rapid transfer service here in Delhi. But what really annoyed me as I arrived was the fact that the security guard managing the entrance to the lounge asked to see my air ticket. It seemed like a reasonable security question, but he then took it and handed it to a guy in a dirty t-shirt who walked off and told me to follow him. I called after him and sure enough he was a taxi driver hoping to earn a few bucks by giving me a "fixed price transfer" to the domestic terminal in his cab.

Now, we all know cab drivers will hustle for business wherever they can, but the airport security being in on the game too is a bit much. I went up to the only member of staff wearing a suit and asked him what is going on when the security in the lounge transfer area - which is basically a waiting area for the free bus - are handing air tickets to cab drivers? He said he had no control over the cab drivers, who can come and go as they please walking in and out of the terminal building when the rest of us get harassed for tickets or passports to prove a reason for being there.

Then I sat around waiting for the 8am bus when the guy sitting on the next chair asked if I had my name on the list for the bus. What list? I've been to Delhi before and I can't remember ever having to get on a list to get access to a bus that just transfers you from one terminal to another! This guy insisted that I had to have my name on a list, so I wandered over to the same people I had earlier been asking about the bus timetable and they confirmed that I did indeed need to be on the list if I wanted to get the 8am transfer bus. I asked them why they did not take my name earlier when I was asking the time of the next bus - they just smiled at me.

Sometimes I feel so happy to arrive back in India, but today after a night flight with no sleep, no sound on the only movie I wanted to watch, my only reading material being A Short History of the Labour Party, and then all this hassle on arrival, I think I'd be quite happy to be waking up at home. The punch up when I went through security just added to the flavour of the morning...

I was the first speaker at the Outsource World conference at the eXcel centre in London yesterday. I was really sweating as I was approaching the eXcel because the place is so remote. I live in west London and the eXcel is deep into the docklands of the east end.

I think the last time I went there was to collect my running number for the London marathon, and I drove that time from north London so I didn't get such a sense of how far out it is. The centre is a beacon of modernity on the Royal Victoria Dock, still an iconic place in my mind, with the majestic cranes still punctuating the skyline. But the only time I have really had a good look around this dock was 20 years ago when Jean-Michel Jarre performed one of his laser and music shows right there.

Things have changed in 20 years. Now there are apartment blocks all over, and the eXcel itself. I was arriving there with about five minutes to spare before I was due to speak. Fortunately I was only planning to speak (I mean, no complex audio-visual kit required) about some of the present issues in outsourcing I felt the audience should be thinking of (knowledge process outsourcing, the green agenda, remote infrastructure management, the present macro-economic concerns, and small businesses). I had all my notes ready and printed in my bag so I was all set.

Then I found out that I was supposed to chair the conference for the entire morning. I was under the impression that it was just going to be for the session I was involved in, so I would speak and then I would introduce a few other speakers - who in the event were from Forrester, Capgemini, Skandia, and Logica. In fact, I would normally have not minded chairing the whole morning, but I was getting concerned about a flight I needed to catch in the afternoon to Kolkata in India.

Fortunately, Frank Casale who runs the Outsourcing Institute, was there and took over the chairman duties after the coffee break, so thanks for that Frank. We have corresponded by email quite often, but never met before as Frank is based in the US. When we finally got to meet I was worried about my flight and practically begging him to take my speaking slot at a conference!

Once Frank took over it meant I had a half hour free before I needed to leave, so I had a quick spin around the event to pick up some business cards. Outsource World has been criticised in the past. I know it really used to be a terrible event, rubbish venues, no meaningful agenda, useless sponsors touting cheap and cheerful offshoring... it was truly dreadful. Two years ago the organisers really started to turn it around. Roger Ellis, who I knew already from the BCS and some events he has hosted, started running the event in London and injected a lot of new professionalism. It looked like a new event, but the past two years never saw very many people attending - it was essentially still a tainted product.

So, it was good to see this year that the conference was packed. People were having to stand to listen to the talks in the morning and more kept coming in. For some reason unknown to me Roger is not running the event this year - which in my opinion looks a bit like he put the effort in to change the event format, but never got to see the time when people would start returning.

There is a lot of focus on regional outsourcing at this conference, so different regions of China were promoting their wares, alongside Mauritius and then dozens of individual firms. It was a pretty good event and is now starting to get legs again, especially for the small business market - it has a strong focus on serving smaller companies and that is something that is really needed in outsourcing today.

The news that UBS has apparently ditched a programme to outsource some of its human resources (HR) function, might send shivers down the spine of every outsourcing provider. Is the runaway train of outsourcing growth about to run off the tracks?

Well, I think it is worth putting the issue in context. UBS recently had to write off more than £19bn thanks to the global credit crunch sweeping the banking industry. That’s an enormous figure. It’s no surprise that UBS is now reining in any possible expense.

A major outsourcing programme such as that proposed by UBS would have long-term benefits. It could improve the provision of staff training and HR services and reduce overall running costs, however the transition would be expensive. There is already some existing method of managing staff and there is some existing programme for staff training, so if you were running the bank right now then what would you do?

I have not spoken to anyone at UBS to form this opinion, but I’m assuming it’s not far off the mark. Major change programmes, such as the proposed one for HR, will be put on ice and thawed out when we know (and or least have an idea) how bad this credit crunch is going to be.