Every other day I’m getting a ‘partnership offer’ from another ‘outsourcing company’ which started their operations (or I shall say ending).

The shortest example of an unsolicited junk that I have to clean out from my inbox daily:

We are a company in China, and we could provide you with any web related services for only $12 per hour, either PHP, ASP, Net programming or any flash development, web site designing, etc. You can have a whole group of experts, AND you don’t need to pay until the project is completed (only available for those projects are below $2000).

Not only the those ‘marketers’ are not able to understand that they are emailing to the VP of outsourcing company (why would we need to outsource the work when it’s outsourced to us), their spam emails are not wanted (I never subscribed to their mailings) and no one is interested in their cheap and unreliable services.

Anyway this post is not a rant about confusing marketing techniques but about the fact that people cannot think deeper than just following their desire to replicate the success of established big vendors. This so called ‘companies’ fail to recognize that offshore outsourcing market is over-saturated already. There will not be another Wipro, Infosys or Satyam or as a more local example there won’t be another MoveYourWeb, Itransition or Aitoc. Big fish which is swimming in this pond is able to keep with market saturation and keep well. They are able to employ administrative personnel needed for effective functioning of the company (executives, marketing, sales, hr, attorneys, office managers, system and networks admins, representatives). They are able to compete on price easily because there is no need to earn high profits on every employee to maintain the functioning of the company. They are able to provide solid offices and work space to the employees and motivate those. They have millions of other advantages that the similar small company doesn’t have.

Don’t take me wrong – there are and will be successful outsourcing companies starting (few -providing services, many - developing proprietary product) but founding another outsourcing service provider trying to emulate the model of an established successful company located next block is just a FAILURE. A lot of times this new ‘CEOs’ of such ‘companies’ think: ‘We know everything about technology and outsourcing. We’ve been working in outsourcing company for years. Why not to start our own company. We will compete for the customer by lowering prices, offering a additional compensation advantage to employees and claiming that we have a more personalized clients approach and earn some decent buck for it, right?’ WRONG. Optimizing competitive advantages by 10% will not do the trick of competing with big names established long ago! That is simply not enough to brake though. You will end up in spending years of your life, face debt, bad image and other bad karmas. The business model should be different to compete and succeed.

Types of offshore outsourcing companies that can get successful:

1. Companies providing UNIQUE set of services. Take a look at this company providing online tutoring services. Finding the unique niche which is not saturated is the key for companies giving a stake on this business model.
2. Companies leveraging relatively cheap offshore resources to develop unique web properties. Those are generally called Product companies. This is a concept of the future, the only downsize aspect of this is that you will need funding to support the operations. But that’s the different story.
3. Companies which act as an office of established software companies or big outsourcing houses employing AT LEAST 100 full-time people in other countries. Partners that have small ventures don’t qualify (you don’t want to become the company with the 1 customer). In 99.95% of cases this is the dead road since the ‘partner’ will not be able to grow the company big due to the same reasons mentioned plus additional like multi-focus on different businesses that are being run (in 90% the ‘partner’ will be just trying out this outsourcing venture). Only big established companies. Full stop.
4. Companies located in rising outsourcing destinations. Vietnam, Egypt, Argentina and others – outsourcing is just starting there that’s why you can compete on price on the global market and grow because there is not much fight on the local labor markets yet. The disadvantage is lack of strong experience and sometimes communication of the employees so that’s valid to specific types of outsourcing only.

So you are located in a third world country and willing to start your own company or already running it (small one). Does the business model qualify as one of described in 4 types? NO? Then keep building the career at the company you work for, gaining additional experience and skills, leveraging the expertise you have for your success, the success of the company you work for and the ultimate success of the customer. You future is stable and planned and stable in this case. In case the answer is YES – you are at a spot where it might be worth trying. Go for it if you are really confident about it! Just remember that in case everything goes wrong sending out the cry for help if the form of SPAM emails begging for a project will not be the way out.

Tags: it outsourcing, offshore outsourcing, outsourcing, outsourcing business, outsourcing company, web development
Posted in management, outsourcing, web development | 6 Comments »

India has been dominating offshore outsourcing market since its opening. Despite the cultural differences the majority of American companies considered India the best place to outsource jobs to, mainly because of the cost benefits. However, the decline of the U.S. dollar against other currencies including the Euro, Yen and the Indian Rupee makes most countries such as India, China, Russia and number of European countries less competitive in offshore development. The currency exchange trends give Belarus a competitive advantage in terms of its outsourcing potential. In addition to other benefits that Belarus has to offer, exchange rate factor gains momentum: BRB/USD exchange rates are fixed and the value of the Belorussian ruble follows that of the dollar.

Since the rupee has appreciated by 8.9 percent against the US dollar in 2007-2008, Indian outsourcing companies now have to compete with the countries that have more favorable dollar exchange rates. The following graph shows the recent dynamics of INR/USD exchange rates.

(source www.exchange-rates.org)

The rising appreciation of rupee against dollar and West Asian currencies is not the only challenge for Indian outsourcing providers. Indian economy is overheating with excessive demand pushing prices even higher. Considering the current account deficit the U.S. has got with China future looks very promising for Belorussian outsourcing companies. But the favorable situation on the currency exchange markets is not the only advantage Belarus has got.

(source www.exchange-rates.org)

Considering the future we see the Belarus keeps BRB on the same exchange rate to the USD thus maintaining this advantage to other outsourcing destinations.

Tags: offshore web development, outsourcing
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We all know that competition is a crucial business law, and that if there were no competition, there would not have been progress. In the case of most businesses, competition is comprised by a big or small number of other companies involved in the same business but mostly in the same country. In the case of outsourcing, offshore outsourcing companies have to compete not only with other companies in their home country, but also with other countries of the world, which makes the competition tougher, but also stimulates and encourages for better and better results.

According to A.T. Kearney Global Services Location Index, 2007 (below is the cut down version of the Kearney’s research. The original version is available at http://www.atkearney.com/res/shared/pdf/GSLI_2007.pdf), Russia is rated in top 50 locations worldwide that provide the best remote functions, including IT services and support, contact centers and back-office support.

Table 1

Note: The weight distribution for the three categories is 40:30:30. Financial attractiveness is rated on a scale of 0 to 4, and the categories for people and skills availability, and business environment are on a scale of 0 to 3.

Source: A.T. Kearney

If we look into the summary of Gartner Outsourcing Summit in Dallas in March, for example, we will see that Russia is mentioned in the trinity of IT outsourcing global leaders. It is not a surprise. The total value of Russian IT market grew 25 times over the last 7 years, and it means that outsourcing in Eastern Europe is speeding up the pace. Below you will see the table demonstrating the marks for quality of workforce in a number of countries involved in outsourcing:

Table 2

Source: PRTM (Pittiglio Rabin Todd McGrath), Ernst & Young

It is evident that India’s progress has become an example of how people can gain profits offering developed countries the services that they strongly need but at lower rates. As a result, the 90-s have brought the world a number of offshore outsourcing companies in Eastern Europe, which have been making a tough competition to Asian countries for about 10 years already. However, it is quite challenging to change the people’s established opinion of India as the best country to outsource jobs. On the other hand, if we think where this common belief takes its roots, we will understand that only from the fact that India is the first on the outsourcing market.

So, now, why is it a common belief among Americans that India is the best place for outsourcing? Is it a stereotype? A mistaken view? Or maybe there is something at the bottom. Let’s speculate. Below is a table with a comparison analysis of Belarus and India as two potential countries that an American company would think of contracting for outsourcing.

Table 3

According to the table, Belarusian outsourcing promises to be a smoother process than Indian outsourcing with its communication gaps and quality breaches. However, since the Indians were the first to offer outsourcing services to American and European companies India transformed into a ‘brand’ or synonym to outsourcing. That doesn’t necessarily mean that this is number 1 choice of an outsourcing destination nowadays – the Indian outsourcing market is overheated already.

What conclusions can we make from the mentioned above?

First of all, Belarus has a more favorable geographical location than India. Located almost in the heart of Europe, Belarus borders on countries-members of EU, which makes it incorporation into the European culture quicker. Besides, Minsk, the capital, is within a two and a half hour flight from Frankfurt, which means that it will be possible to build business relationships not only on a virtual level, but also personally. It is critical that customers visit the office or delivery center of their outsourcing partners, establishing thus personal contact with management, get acquainted with the company’s workflow, facilities, etc.

Secondly, the Belarusian time-zone allows Belarusian and American working hours overlap, while Indian and American working hours do not overlap at all. Some of the businesses even offer almost full business-hours time overlap with the USA. There is not that much difference in the price, but there is some clear difference in the quality of the services provided. Belarus is known for performing all outsourced tasks promptly and effectively with the business relationships based on trust, teamwork, and effective use technology.

Third, Belarus is offering the same set of services as India. BPO is a niche, which still requires some intellectual investment, but this is only a matter of time. Lack of experience in BPO is fully compensated by a high level of expertise in software development.

Fourth, the Belarusian education is one of the strongest growth supporting elements. In fact, when it comes to experience with complex software development tasks, Belarusian developers tend to outrank all others.

Add to this the absence of vivid cultural differences and a good command of the English language, and you will see why Belarus is so much better than India. Plus ambitious plans of the Belarusian government for the future of the Belarusian IT. In 2004, the government announced an initiative
to create a high tech park that would unite the leading IT outsourcing companies under one roof and promote their services. Apart from that, the government has announced an ambitious goal to boost the country’s IT services export to 4 percent of that of India by 2008! All that makes us believe that Belarus is a true outsourcing hotspot in Eastern Europe.

Tags: outsource India, outsource-to-Belarus, outsourcing, outsourcing jobs to Belarus, outsourcing offshoring
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The countries, which have established the greatest number of knowledge process outsourcing firms, are India, Philippines and China. These countries possess extensive knowledge banks and enough professionals in different fields for fulfilling the knowledge process needs of businesses in the USA. The work of knowledge process outsourcing firms requires profound analytical and highly specialized skills.

It is estimated, that knowledge process outsourcing is rather prospective and is going to grow in the next few years. Most probably, the area of information technology services, which is currently provided by knowledge process outsourcing firms will expand and include such services as intellectual property services, clinical research, legal research, business research, analytics and publishing.

Right now, knowledge process outsourcing firms specialize in the fields of content writing and rewriting, research and development, patent research, pharmaceutical technology, equity research, market research, data research, database management, finance modeling, design and development in various industries, animation, medical reports and services, distance education. Engineers, doctors, attorneys and many other professionals are becoming more and more popular.

Experts of the market research industry have already evaluated all the benefits produced by knowledge process outsourcing firms and have started to outsource the fields in which technology and IT solutions seriously improve the research process. The researches are highly profitable as they are really cost effective. Even small companies can make use of them, not having to increase their budget spending. Therefore, knowledge process outsourcing is a really proven method of quickly boosting the productivity and cost savings in the field of market research.

The article has been taken from Knowledge Process Outsourcing, Ezinearticles authoritative resource

Tags: knowledge process outsourcing, outsourcing
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While reading some stuff on outsourcing, I came across a peculiar new title of a Chief Globalization Officer. This position was new to me, and I thought that it might be new to somebody else, too. So, I got down to my next article for the blog, which, as I decided, would be dedicated to this new C position.

The necessity of creating this new position was conditioned by the fact that many companies that work on an international level are very often puzzled when it comes to the real issues of targeted or online marketing with a local flavor. In fact, “website globalization puts this issue front and center as firms market their brand and wares through their corporate URLs”. Companies often lack a high profile specialist to control the messaging, budget, technology infrastructure, and other key elements for the channel of global communication and commerce.

It happens that this is exactly a CGO who should take upon all these duties. The CGO is often compared to that second steady hand: the catalyst for global thinking, and responsiveness.

The CGO’s main functions include:

1) to form a corporate global mindset to help the organization enter new markets, and maintain competitiveness in those markets for many years to come;

2) to pursue the best global leadership talent to be able to respond to local conditions;

3) to continuously improve organizational structures to meet local conditions;

4) to conduct the management of knowledge and information, and utilize it through the best use of technology.

The first company to appoint a Chief Globalization Officer outside the US is American Cisco Systems, Inc. With that, one more C level position has been created in corporate America. Wim Elfink, the first professional Cisco’s Chief Globalization Officer will go to Bangalore and work from there, thus creating the first CGO job in Corporate America outside its borders; i.e offshore.

According to Mr Elfink, as a Chief Globalization Officer, he will be in charge of “executing the growth strategy for the company globally, including collaborating with Cisco’s worldwide functional leaders to innovatively globalize and scale all functions by leveraging their work in India as a platform”.

Besides, he will take up elaborating disruptive business models for Cisco to create new markets, go-to-market channels, and technologies. Additionally, he is planning to carry out an analysis of possible implementation of Cisco’s $1.1billion investment in India. He emphasizes that developing and strengthening existing partnerships with Indian IT partners on a global scale is of vital importance to Cisco. The reason is not only that India’s market is growing for Cisco products and services. In fact, India was chosen due to many other factors. First, India is an open culture, unlike, say, China. It is well known for its strong sense of partnership, which is beneficial for implementing Cisco’s globalization strategy. Secondly, it has educated workforce, innovative customers, and skilled partners that have global capabilities. Finally, India’s government pays much attention to economic development across all levels of society.

Overall, time will show if the position of a Chief Globalization Officer justifies itself. However, already now it is clear that with the development of the modern global economy, and growing availability of the offshoring services, this new C position can become irreplaceable for implementing modern globalization strategy.

Tags: CGO, chief globalization officer, general thoughts, globalization, offshoring services, outsourcing
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Outsourcing seems to have recently become a buzz term in the business sphere. Actually, it is not only the word, which has become so popular, but also the process itself. The reality is that many respected businesses aim at outsourcing their business processes. The number of businesses in various industries shifting their work to outside parties is astonishing! If so, outsourcing process must bring quite huge financial benefits to the people introducing it into their businesses.

The very essence of outsourcing is in the wish of many companies to get rid of a significant part of their workload shifting it to third parties. This idea proved to become not that bad, and, therefore, more and more companies bring themselves to trusting outside companies with some part of their work. Furthermore, with the development of the Internet and growing availability of many online services, the work is handled over to outside countries, sometimes, even quite distant: Belarus, India, Pakistan etc. Why is it happening?

The truth is that many developed countries experience lack of qualified and talented professionals, people who are willing to do their job with enthusiasm and proper care. Besides, an employer must pay quite good money to qualified work force in developed countries, which is not always profitable for a company. Here outsourcing to developing countries might become a perfect solution. Imagine, if all work is outsourced to the countries that have immense qualified labour force able to complete your projects perfectly and at lower rates. For instance, if you usually pay a professional in your country about a hundred dollars for doing some qualified job, you will have to pay about twenty dollars to professionals who will do the same job for you through a third party.

Besides, offshore outsourcing industry offers another nice opportunity of organizing your business process in Offshore IT Outsourcing market - Offshore Dedicated Center. The major financial benefit of ODC establishment is that it will save you up to 70% of IT spending by reducing employment costs, contract and project execution. Therefore, if your company is focused on IT, maybe, you should establish an ODC to make your working process more effective, and cheap! It’s your virtual IT department that works produce the product of same or even improved quality but at 1/4 of the cost.

Of course, the fact that so many businesses undertake outsourcing does not mean that you also need it. Before taking up this important decision, you should evaluate if you will really benefit from outsourcing. To do that you will most likely need to consider a number of various factors of your business. First, think carefully if you are comfortable with handling major part of your work over to third parties. The problem is that together with your work requirements and specifications, you will be handing over all the financial details of your business, and so you must establish full trust with the third party firm that is going to perform the work for you.

Secondly, any outsourcing company you choose for working on your projects must have the best security features to protect your personal information and data. Here, references are extremely important. You will need to find out if other firms and companies have previously cooperated with that outsourcing company and if they are satisfied with the results of the outsourcing process. If you get positive feedback on the work of that company, and if you are satisfied with other queries that you have made, go ahead and start outsourcing!

Besides, it is very positive when an outsourcing company let you check the quality of the work performed by its employees before you sign your contract. You can give an outsourcing company a kind of a test (some piece of work) to find out if the quality of their work is good enough for you. If you are not satisfied with the work done by them, you can always say ‘no’, and go search for some other company that will better meet your working standards.

Overall, from the financial point of view, outsourcing is a profitable process to undertake in your business. It helps cut down costs keeping the quality of the work done on the same level as before, and sometimes, even higher. However, think twice before choosing the outsourcing company to work for you. Scan through their official website, examine their portfolio, make the necessary inquiries about the company and only then get in contact with the company’s sales rep.

Tags: offshore dedicated center, offshore outsourcing, outsource, outsourcing
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