Pakistan-India Conflict Has IT Execs On Edge

Companies that outsource offshore want business-continuity assurances.

By Diane Rezendes Khirallah and Sandra Swanson : InformationWeek

As the Pakistan-India standoff escalates, IT managers are keeping watchful eyes on offshore outsourcing partners--even though IT workers in India seem relatively unconcerned about tension in the region.

"It's very surreal," Wipro Ltd. CEO Vivek Paul says. "Our employees in India watch CNN and see U.S. and British civilians leaving, but they aren't feeling under threat." That may be because most of India's estimated 445,000 IT workers are in southern cities--Bangalore, Chennai, Hyderabad, and Pune--some 1,500 miles from the border with Pakistan .

Still, the word from top Indian outsourcing firms Infosys, Tata, and Wipro is that U.S. clients are concerned about business continuity.

"They aren't worried that systems will be destroyed, because the systems don't reside in India," says Giga Information Group analyst Stephanie Moore, "but they're worried that resources that develop or maintain systems could go down because communications are cut off."

For now, most IT executives, including Jarnail Lail, VP of business systems for W.W. Grainger Inc., are simply watching the situation. "I have family there, and I also want to make sure we have proper coverage in case there are any problems," he says. Grainger outsources programming and production support to Covansys Corp., a U.S. outsourcer with several offices in India. Data and systems reside in the United States. A 50-50 split of personnel between the United States and India means someone can handle any IT issues that arise if communications go down, Lail says.

Less than 5% of Sears, Roebuck & Co.'s IT staff is offshore, so the company says it isn't concerned about IT workflow interruptions. After Sept. 11, Sears requested contingency plans from its five offshore partners. Such plans typically include moving staff to safer locales, shifting communications to other regions, and ensuring that redundant systems are in place.

If the situation worsens, Sears may move some work elsewhere, but it has no intentions of abandoning its Indian relationships, says Karen Schram, a member of Sears' IT sourcing strategy team. "There are up-and-coming strong pockets of IT resources, but they're several years behind India in terms of a mature offshoring model."

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Outsourcing Benifits

Outsourcing development work offers significant savings, but companies need reliable offshore partners to realize those savings. When you consider the advantages of outsourcing, you'll realize there's a lot to gain by using it as an intrinsic part of your business strategy.
The benefits of outsourcing to Pakistan of course are variable, dependent upon the nature and situation of the organization. However, the following is a list of common reasons why outsourcing is undertaken:
Lower costs due to economies of scale
Ability to concentrate on core functions
Greater flexility and ability to define the requisite service more readily
Specific supplier benefits. For example, better security, continuity, etc.
Higher quality service due to focus of the supplier
Improved internal management disciplines resulting from the exercise itself
Less dependency upon internal resources
Control of budget
Faster setup of the function or service
Lower ongoing investment required in internal infrastructure
Greater ability to control delivery dates (eg: via penalty clauses)
Lack of internal expertise
Increase flexibility to meet changing business conditions
Purchase of industry best practise
Improve risk management
Acquire innovative ideas
Increase commitment and energy in non core areas
Improve credibility and image by associating with superior providers
Generate cash by transferring assets to the provider
Gain market access and business opportunities through the supplier's network
Turn fixed costs into variable costs
As part of the outsourcing, many companies are debating when to outsource their management support tools as well. This is a complex question that must consider the competitive advantage which a tool may provide. The company must also account for how ready the market is to support such a tool in an outsourcing model. The final direction should not solely be question of cost savings, but must consider the benefits and the strategic position of the company in the marketplace.
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Skype buys VoIP technology companies

APRIL 11, 2006 (IDG NEWS SERVICE) - Skype Technologies SA today said it has acquired Internet voice technology company Sonorit Holding AS and its U.S. subsidiary, Camino Networks Inc., for about $27 million in eBay Inc. stock.
Skype, which is owned by eBay, made the acquisition to add the companies' online voice engineering experts to its staff, it said. They will help design and develop future versions of Skype's VoIP (voice over IP) product.
Skype described Sonorit and Camino as start-up companies building products for speech processing, coding and transmission over Internet-based networks.
Camino's speech products are geared toward mobile IP networks, according to a biography of Jonathan Christensen, Camino's president and CEO, on the Web site of an investment company for which he serves as an adviser.
Sonorit and Camino have been the subject of at least one lawsuit. In December, Global IP Sound AB (GIPS), a company that offers VoIP technologies, filed a lawsuit that charged them with violating trade secrets. GIPS said some Sonorit workers were former GIPS employees.
EBay bought VoIP provider Skype in 2005 for $2.5 billion, aiming to help buyers and sellers using its online auction site to communicate with each other easily.
http://www.dizyn.com
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Latest In Outsourcing, Pakistan; India To Use Canada As A Backdoor To America

Entering the frontdoor of the outsourcing market is Pakistan, sneaking in the backdoor is India. Interested-Participant has an excellent post on the challenges facing Pakistan in providing outsourcing. Here's an excerpt:

... although India is recognized as the largest recipient of outsourced telecommunications, many other countries are also providing workers for outsourced jobs. China, Malaysia, Singapore, and Russia are benefiting, just to name a few.

...

Enter Farukh Aslam, Chairman of the Call Centres Association of Pakistan ... he predicts that the Pakistani call center industry will employ 10,000 workers by next year.

In other outsourcing news comes plans by Indian companies to head off the angry people who are pissed about all the high-tech work moving out of country. They'll do this by setting up backdoor companies in Canada and funneling the work to their companies in India.

Toronto Star (by way of Slashdot that has a lot of comments on the issue)

As U.S. lawmakers look for ways to discourage the outsourcing of high-paying software jobs to low-cost markets such as India, more Indian companies are opening back doors into the United States by setting up shop in Canada.

The idea is to offer alternatives to U.S.-based Fortune 500 companies that are eager to get some benefit from the cost savings of outsourcing. By moving work to a "near-shore" destination such as Canada, U.S. companies can mitigate the domestic backlash that may come with the "off-shoring" of jobs.

I'm not surprised companies would want to try and hide the fact they are against American workers. Of course the Indian companies doing this are more than happy.

"There are some (U.S.) customers who feel a great affinity to the Canadian market," said Ramalinga Raju, chairman of Hyderabad-based Satyam Computer Services Ltd., India’s fourth-largest computer services firm.

...

Canada is one of several locations targeted by Satyam as "near-shore" or "near-sourcing" opportunities. The company has also set up software centres in Australia and China, is getting into Malaysia and Hungary and is considering moves into Mexico and South America.

...

General Electric Co., Satyam’s largest customer, represented 13 per cent of total revenue in the quarter. The company does work for 109 of the Fortune 500 companies.

So there's no outsourcing problem. Only 20% of the fortune 500 companies are doing it.

Satyam only has 250 people so far committed to the Canadian market – 100 based at its Mississauga development centre and the rest working out of India.

...

Ignoring these changes is what got many U.S. companies in trouble, which is why Satyam is planting seeds in China, a market expected to be the next global outsourcing opportunity after India has run its course.

60% of the outsourced jobs to their Canada "front" go straight out to India. Satyam also clearly admits that India will "run its course". With that many people in India they shouldn't need to go to China, but the fact is these Jackals are going to sell out their own people once their workers start actually making a decent living and ship all those jobs to China.

Anyone who is investing in Indian infrastructure and markets should take a second look at that statement. He is saying flat out that there will be major layoffs in India once they start demanding a decent wage, moving those jobs to China and other lower wage countries. This will cause a great pop to the current outsourcing bubble in India, which is propping up their economic growth. Once this occurs there will be a huge drop in consumer spending there directly affecting the whole of their economy and every industry in it.

http://www.dizyn.com
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Outsourcing to Pakistan Saves Millions

“Outsourcing to Pakistan was my best business decision” says Pervaiz Lodhie, President and CEO, LEDtronics Inc. Los Angeles.

LEDtronics Inc. [www.ledtronics.com] one of the leading firms of the LED [Light Emitting Diode] industry of today with more than 70% of the Fortune 500 companies as its clients, outsources part of it product packaging to Karachi-based Ms. Shaan Technologies, a contract manufacturing company, says that in future it plans to move more labor intensive assemblies to Karachi while maintaining parallel manufacturing in the Torrance California plant.

About 4 years ago with the global market in recession, the companies were cutting costs and looking for newer ways of trying to sustain their falling revenues and Ledtronics was riding the same boat.

LEDtronics, like many other companies, had a large pool of ‘once hot’ leads that were just filed and piled for the past years. These leads that had once originated from Ad responses, web forms, expos etc. were never given their due importance of being followed up in a timely manner as major source of revenue generation for the company - resulting in a vast collection of old, dead and cold leads.

At that time, Mr. Pervaiz Lodhie was finalizing talks with Mr. Nasser Jhumra and Mr. Babar Jhumra to team up and create a Pakistan-US joint venture under their existing company, NBA Computers [www.nbacomputers.com], Karachi - a Business Process Outsourcing and Call Center company.

Now the first of its kind small BPO Company, NBA Computers, was awarded the task of re-heating LEDtronics cold leads. Mr. Babar Jhumra, Managing Partner, NBA Computers, with a unique management style and out-of-the-box thinking mixed with a systematic approach to problem-solving, maximizing efficiency and optimizing results started working on the project along with his team of dedicated and experienced experts.

Behind the scene, Mr. Nasser Jhumra, CIO, CTO and Partner, NBA Computers based in Los Angeles, USA, provided the vision for the setup with a view to the future of global outsourcing needs and also provided the key consumer/corporate US market analysis and information for the target market.

After weeks of system design, technological requirements, process flow, reporting and analysis, a plan of action was ready to put in place. Now came the most important and difficult aspect: Call Center Agent Training. Since a project of this nature had not been attempted in Pakistan, there were no experienced agents available.

To develop the right skill set, script and approach, Babar started making initial calls himself. With every call he made and the type of response received, he knew better on how he could modify the approach and hence improving performance and progress to a final script development. Once this process was carefully completed and recorded, a detailed approach along with a script and devised agent training plan was discussed with the Call Center Supervisors and the agent training began. After six weeks of through training, the project was finally underway.

In the first month, the project received an 8% response rate with an increased order amount nearing $9000. The team at NBA Computers knew they could do better. By the third month the response rate had increased more than twice to 18%.

Because of outsourcing of Call Center and BPO support to NBA Computers and manufacturing support to Shaan Technologies Karachi Pakistan, LEDtronics was able improve its revenues from dead untapped leads by more than $2 million dollars and managed to not only survive but grow in a recession economy.

Mr. Pervaiz Lodhie congratulated the Pakistani NBA Team of experts, Mr. Babar and Mr. Nasser Jhumra, for achieving high standards of excellence in the on-going services being provided to LEDtronics, Inc. from Pakistan.

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