This page provides links to offshore outsourcing news articles published in January 2004. Please note that over time some links may become broken as the various web sites are updated. We endevour to keep the links up-to-date, but inevitably some broken links will occur.

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You can also read January's News Reviews.

News Archive

30 January 2004 Misys expands operations in India

Network World Fusion

Misys is expanding its software development operations in India, by setting up a facility in Bangalore for product development and professional services...

...The facility will have 100 people by next year, which will go up to 250 by 2006...

26 January 2004 India outsourcers nonplussed by U.S. Senate restrictions

Network World Fusion

...A bill passed by the U.S. Senate last week restricting federal government contractors from outsourcing work overseas is unlikely to have a significant impact on India's software and services companies, according to an executive of the National Association of Software and Service Companies (NASSCOM) in Delhi...

23 January 2004 CSC's deals of R1-billion for Cape

Cape Business News

Computer Sciences Corporation operations in South Africa have, during the past year, secured offshore outsourcing multi-year work from its northern hemisphere counterparts worth in excess of R1-billion...

23 January 2004 Protesters to rally against offshore outsourcing

SearchCIO

...Protesters from at least seven workers' organizations are involved -- rallying against offshore outsourcing and the loss of U.S. jobs to cheaper overseas labor...

...At the protest, he plans to hand out flyers urging Americans to write their banks and insurers to ask whether each company is using foreign labor -- and, if they are, to demand that they stop...

22 January 2004 The opportunity cost of offshore

IT Business.ca

At a monthly meeting of the association's Toronto chapter Thursday evening, members invited outsourcing experts to discuss a series of statistics culled from a survey of approximately 111 senior IT professionals...

...While panelists told CIPS that coding, testing, call centre work and some back-office banking activities were the primary candidates for offshore outsourcing, Yan warned that some skill sets are best kept at home...

22 January 2004 'We want to make India a Global HRD Hub'

Sify

...the Department of Information Technology (India) places a great emphasis on HRD and it has launched various schemes and programmes in this direction...

22 January 2004 'UK not opposed to outsourcing to India'

Sify

..."We are not a protectionist government. No, not like the US. It is good for British businesses as they stand to benefit from it commercially. There is no fear."... [British High Commissioner in India Michael Arthur]

22 January 2004 Made in India

The Washington Times

Executives from Silicon Valley to Wall Street are adamant that shifting white-collar jobs from the United States to developing countries is good business, but a backlash is brewing...

21 January 2004 Trade unions rue global jobs shift

BBC News Online

[From the World Economic Forum in Davos.] The nature of the shift of jobs - not just in manufacturing but in services as well - pointed towards "an inherent deficit of the globalised economy"...

20 January 2004 LogicaCMG study says UK GDP could rise £16bn if more companies outsource in the next 5 years

Top-Consultant.Com

A LogicaCMG study says British business could see 1.7 billion pounds in additional profits while GDP could rise by 16 billion pounds if more companies outsourced over the next five years. The study is the first to look at the macroeconomic impact of outsourcing in the UK...

19 January 2004 IBM: Offshore outsourcing will save $168m a year

Infoconomy

...Initial transition costs, such as severance costs for US redundancies of $30.6 million in 2004 and $47.4 million in 2005, mean the shift will generate a loss of $19 million in the first year. But the resulting savings, which are forecast to reach $40 million in 2005 and $168 million by 2006...

...IBM puts the cost of a Chinese programmer with up to five years' experience at $12.50 per hour, while his or her US equivalent costs $56 per hour...

...actual cost savings from offshore development are far less than straight wage comparisons might suggest...

19 January 2004 The Secret to Successful Outsourcing

Destination CRM

...The report states that over the next five years successful vendors will have to develop price-competitive infrastructure solutions, global resource delivery, vertical market depth and specialization, integrated solutions, the ability to be an integrator of services, and the ability to cost-effectively sell models that reach small and midsize enterprises...

19 January 2004 Offshore Outsourcing: Business Boon or Bust?

Newsfactor

...Offshore outsourcing is not only less expensive -- as much as 75% less -- but also faster and better, some experts say. But, they admit that not everyone is thrilled by the prospect of sending jobs out of the country. "I don't think there is a more divisive and partisan issue in the I.T. community right now than offshore,"...

19 January 2004 Sears CEO Alan Lacy sings praises of offshore outsourcing

Computerworld

Alan Lacy, CEO of Sears, Roebuck and Co., last week talked about offshore outsourcing and expressed keen interest in the "non-U.S. opportunity" available for outsourcing some IT functions during a general session on retail trends at the National Retail Federation's annual conference here...

15 January 2004 Adaptec To Boost Indian Development

Computer Business Review Online

Adaptec Corp is to invest $25m over the next four years in its engineering centers in Hyderabad and Bangalore, India, doubling the number of staff employed there...

15 January 2004 How to Safeguard Your Data in a Dangerous World

CIO

...This is a new minefield for defense IT. While other parts of the business have incurred major penalties for export violations, military defense contractors have, up until now, largely dismissed the idea of using offshore talent on their systems...

...The potential for trouble has only increased with the pervasiveness of offshore outsourcing, especially since companies such as India's Tata Consultancy Services and Wipro are subcontractors to some of the largest U.S. outsourcers including CSC, EDS and IBM...

15 January 2004 Guidance For negotiating offshore outsourcing contracts

HR Gateway

...Beachcroft Wansbroughs offers firms the following guidance when negotiating an outsourcing contract...

...As the trend for financial services firms to outsource their call centres to India increases, Beachcroft Wansbroughs warns of cost issues & complexities for failing to manage contractual issues...

15 January 2004 Abbey and Axa jobs follow the path to India

The Guardian

...Abbey National said it would be shutting its customer services centres in Warrington and Derby, and transferring the 400 jobs to Bangalore, while insurer Axa announced that up to 230 staff in its general insurance division were likely to be laid off as a result of plans to move posts to India...

14 January 2004 Tech Council Backs Foreign Labor Use

Washington Post

The Northern Virginia Technology Council's board of directors voted unanimously yesterday to oppose any legislation that would ban companies that ship jobs overseas from doing business with state government...

14 January 2004 Global Sourcing To Benefit All: Report

Financial Express

...“Offshore BPO is a mega-trend that will change business worldwide. The cost has fallen sufficiently to open up vast pools of low-cost, educated labour in developing countries,”...

14 January 2004 Offshore outsourcing hits IT wages

VNU Net

..."As more work is transferred offshore, premium pay becomes unnecessary. It is one of the reasons why IT certifications pay specifically began collapsing in 2003."...

14 January 2004 Offshore outsourcing shouldn't cause U.S. panic in New Year

Network World Fusion

Will 2004 one day be called the year of offshore IT outsourcing? Many warning signs indicate that the offshore phenomenon is about to take off - but it may not be as great a threat to U.S. IT employment as initially feared...

12 January 2004 Nationwide snubs Indian call centres in favour of UK

Silicon.com

The Indian offshoring backlash has begun, with major 'British and proud of it' financial institutions declaring they won't move call centres abroad...

...the company will instead invest in its UK call centre operations because of its ties to local communities, the service they can offer and concerns over offshore data protection for consumers...

12 January 2004 A New Tide in Offshore Outsourcing

Business Week

..."We often got spaghetti code that was functional, but couldn't grow. We had no idea if delivery dates would be hit because they would freely give promises, but not results...

...But while Ryan may have accrued skepticism about outsourcing overseas, there was never an ideological opposition to the proposition on his part. In fact, he kept thinking about how neat it could be...

...an alternative to India: outsource to South America…

12 January 2004 The challenge of managing offshore outsourcing

IT analysis.com

In discussions about outsourcing, most of the attention has been paid to the performance of the offshore supplier rather than on managing the outsourcing relationship once the contract is signed...

...An outsourcing project needs a joint management structure to manage operational, tactical and strategic liaison...

...Outsourcing customers will find it challenging to select the right people to manage these contracts...

...Only customers who invest wisely and well in the management of the offshore outsourcing relationship will obtain the promised benefits.

12 January 2004 Outsourcing in the Boardroom: Issues Executives and Managers Need To Consider in 2004

LocalTech Wire

...technology companies of all sizes should consider outsourcing as a potential part of their business model. The following checklist identifies important considerations for tech companies that desire to remain competitive...

12 January 2004 Outsourcing Debate Enters Political Arena

Information Week

The offshore-outsourcing debate has become political. Will this be a beneficial development for a white-hot topic that is already poorly understood and clouded on both sides by overly emotional perspectives? First we'll hear from Democratic presidential candidate John Kerry...

...Pushing against the proposed protectionist policies, a computer-industry trade group called the Computer Systems Policy Project last week...

...What's the right approach? Here are a couple of ideas...

12 January 2004 Signs of offshore backlash growing

IT World.com

As the trend of IT outsourcing continues to grow, organizations may find themselves traversing a tightrope between their customers and cross-cultural considerations...

...In ensuring outsourcing success, enterprises should categorize their "application portfolio" into informational, strategic, transactional and infrastructure units...

...But the bottom line, if the IT support on the other end of the phone can provide solid and in-depth technical help, "that's worth vastly more than learning the latest football scores,"...

09 January 2004 Tarang trio makes waves

The Economic Times

...Given that two of them were divisional CEOs from Wipro and the other a head of technology at Hughes Software, it was not long before a queue of VCs lined up outside their door...

...Today, a majority of revenues come from software but the effort is to increasingly move towards products. In fact they even have BPO plans on the one-stop shop agenda...

09 January 2004 Banks follow Barclays' union deal lead

VNU Net

More high street banks are expected to follow the lead of Barclays Bank and negotiate deals to safeguard the interests of staff affected by offshore outsourcing...

...The deal will give employees three months' notice of potential employment strategy changes, regardless of their affiliation to a union...

09 January 2004 Analyst plays down offshore outsourcing impact as tension rises

ZDNet Australia

...there are indications that the practice of using offshore resources is rapidly becoming top-of-mind for Australian and New Zealand...

..while only 28 percent were presently using offshore resources, 47 percent either intended to use or would consider using offshore resources over the next year...

09 January 2004 WHEN ALL ELSE FAILS, CALL FOR SUBSIDY

Comms World

...Election year in America has flushed protectionist sentiment in the IT industry out into the open...

...Since Americans can't be expected to invest in the tech sector themselves – having had their bank accounts emptied by the dotcom bust – "Americans" in the CSPP's [Computer Systems Policy Project] document is really a call for taxpayer funds. The CSPP wants tax relief for tech companies in the form of permanent R&D credits...

...American CEOs and staff are arguing over detail and direction – but they both want protection...

08 January 2004 Lawmakers, Tech Leaders Debate Offshoring

Tech News World

...The upcoming presidential election, a job-challenged economic recovery and an unstoppable trend toward outsourcing have forced a debate…

...While neither additional legislation nor industry self-regulation has yet to emerge, analysts, economists and others agree offshore hiring for IT services and support jobs is going to increase over time...

...Efstathiou predicted private industry and the government will come together to create a policy that includes restrictions on offshoring and synchronization of U.S. and global legal structures, intellectual property and fair labor practices...

07 January 2004 Outsourcing opportunities to shift in the New Year as budgets increase

Network World Fusion

...As the industry begins a new year, the picture looks significantly less dire...

...What does this apparent recovery mean for IT outsourcing? In simplest terms, it means that enterprises this year will look to outsourcing providers more for growth, and less for survival...

...In 2004, most outsourcing providers should see greater balance between full outsourcing ("brawn") opportunities and more project-focused, consultative ("brains") opportunities...

07 January 2004 Outsourcing Lands In Political Ring With Both Feet

Information Week

...Democratic presidential candidate John Kerry says American companies that move jobs overseas should lose certain tax breaks...

...[The Computer Systems Policy Project] released a position paper arguing that the computer industry needs unfettered access to global labor...

...EarthLink Inc. is cutting another 1,300 jobs, or 40% of its workforce, and outsourcing the work of some of its call centers to other locations, including Jamaica...

..."American service providers would have higher costs and less-flexible service than their foreign competitors, would likely lose business as a result, and then be forced to lay off workers anyway."

07 January 2004 Tech CEOs: Hiring offshore workers helps U.S.

IDG News Service

U.S. IT companies need to hire foreign workers in order to stay competitive in the global market, but the U.S. government could also help by passing laws that improve the country's education system and encourage spending on IT products...

...As the U.S. encounters new global realities policy makers face a choice: we can compete in the international arena or we can retreat...

07 January 2004 IT buyers lay out new plans for 2004

ZD Net

...Offshore outsourcing also is expected to continue its momentum in 2004. The IT services market in India is anticipated to grow at least 30 percent this year...

06 January 2004 Union seeks offshore pledges

Guardian Unlimited

HSBC and Lloyds TSB were under pressure last night to make assurances about moving jobs offshore after Barclays struck a deal with the main finance union to minimise redundancies as a result of shifting work to India...

06 January 2004 Face off: Offshore outsourcing

Tech Target

There's probably no greater threat to U.S.-based IT worker job security than offshore outsourcing. Editor Mark Brunelli argues the practice is sleazy and if it doesn't stop it will likely do irreparable damage to our economy. Editor Sarah Lourie counters saying the fear of job loss will keep U.S. workers competitive--so stop whining...

05 January 2004 Outsourcing draws attention in US Presidential race

Manorama Online

...candidates are being inundated by messages from IT and blue collar workers who have lost their jobs, as well as from labour unions to make clear their stand on outsourcing...

...At least nine bills are pending in the US Congress seeking to bar foreign workers from government contracts. Legislation is also pending in at least four states...

...Opponents also point out that protectionism would hamper US companies from investing in new areas and would eventually impair innovation and job growth...

05 January 2004 What's Next For India?

InformationWeek

...demand for quality talent is driving up wages. Nearly half of the 172 business-technology executives surveyed by InformationWeek who are engaged in offshore outsourcing expect to spend somewhat or significantly more on offshore outsourcing this year than last, but competition for talent in India could reduce anticipated cost savings and hasten the growth of markets such as China where IT labor costs even less...

04 January 2004 India: the big outsourcing hub of patent ideas

The Economic Times

...Indian units of Cisco Systems, Intel, IBM , Texas Instruments, GE have filed 1,000 patent applications with the US Patent Office. Texas Instruments has 225 US patents awarded to its Indian operation...

03 January 2004 Advisers find niche in outsourcing

International Herald Tribune

...Procter Gamble, with about 98,000 employees in more than 80 countries, needed two years and help from a slew of consultants to consolidate its back office and personnel operations...

...Moving operations to cheap locations has always been a response to economic weakness; in this case, though, consultants say the shift is unlikely to slow or reverse as the economy improves...

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Offshore Outsourcing Press Releases

13 January 2004 Offshore Outsourcing Cost-Savings Perceptions Differ From Realities, Warns META Group

Business Wire

...IT organizations often assume that labor arbitrage will yield savings similar to a person-to-person comparison (e.g., a full-time equivalent in India will cost 40% less) without regard for the hidden costs and differences in operating models. The reality is a general savings of 15%-20% during the first year...

...consider putting a contingency plan in place in case the vendor fails to deliver...

...Other Offshore Outsourcing Risk Factors to Consider...

07 January 2004 Forrester Releases Top Technology Trends For 2004; Predictions Include IT Growth In Several Industries

Business Wire

...this year will see continued growth for Linux and offshore outsourcing, an increased focus on technology to measure corporate performance, and early signs of recovery in the telecom industry...

...Forrester recently spoke with 528 IT decision-makers about their 2004 plans for adopting key infrastructure and integration technologies...

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News Reviews

Offshore Outsourcing News Review - 24 January 2004

I've seen and heard a lot of extravagant claims about offshore outsourcing, and these raise customers' expectations often resulting in disappointment. Unfortunately some of the quoted metrics just won't go away and keep resurfacing, as in this article quoting 75% savings. This really isn't realistic in my experience, and such figures tend to ignore the costs incurred by the customer in adjusting their working and managerial practises to ensure their outsourcing ventures succeed. Offshore outsourcing is receiving enough criticism at the moment, without the industry and it's commentators providing more fuel with easily refutable claims.

A LogicaCMC report claims that the UK will ultimately benefit from offshore outsourcing, and in a report which (naturally) appeared in the Indian press - the British High Commissioner to India echoed this and re-stated the UK's non protectionist stance. Meanwhile there have been further protests against offshore outsourcing in the US and concern voiced at the World Economic Forum in Davos.

Finally one of our partners - Tarang were reviewed earlier this month in the Economic Times, and I've just discovered this item from December, relating how Dell are opening a new facility in India.

Offshore Outsourcing News Review - 16 January 2004

Two new reports featured heavily in the news this week. The first "Choose to Compete" from the American Computer Systems Policy Project, addressed offshore outsourcing directly and had a mixed reception. One article compared the IT Industry's demands to the US agricultural industry's subsidies. You can download the report from www.cspp.org/reports/ChooseToCompete.pdf and judge for yourself. The second is the latest Forrester report, which reinforces the business community's commitment to continue offshore outsourcing despite the current furore. In the UK the finance union Unifi is working with employers to minimise problems to its members arising from outsourcing decisions.

Finally, a recent online debate on offshore outsourcing seemed to me to be more reminiscent of an over-hyped wrestling bout than measured debate. However, what concerned me more was the intensity of the reader feedback, a lot of which appeared ill informed and xenophobic. This indicates a need to raise the level of consumer and employee education concerning offshore outsourcing.

Outsourcing customers also need to consider the wider implications of their strategies. The European Centre for Offshore Development has, for a long time, been arguing the case for offshore augmentation rather than replacement with our customers. It could be that now is the time for the offshore outsourcing industry to embrace this strategy.

Offshore Outsourcing News Comment - 9 January 2004

I suppose it's only to be expected, but as the offshore outsourcing debate rumbles on, apart from a few notable exceptions, not a lot of value has been added to the debate over the past couple of weeks. Despite the bad press offshore outsourcing is enjoying at the moment, outsourcing contracts continue to be negotiated, notable current examples are IBM and Barclays.

The latest reports from Forrester and IDC brought some reality into the media, and though widely reported and in some cases hyped, they failed to obtain the media impact the human interest stories are making.

I suspect some companies may be using the current political situation to reverse out of agreements they aren't comfortable with and at the same time gain some corporate brownie points - but then I'm very cynical at times. But as an example of corporate band wagon jumping, I received one press release that was sub-headed "Company Bucks Industry Trend to Outsource Technical Support Overseas" On detailed inspection, all was not quite what it seemed as the company concerned was actually bringing back in-house activities outsourced to a neighbouring state. Needless to say I've left this particular press release off the list.

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