OpenOffice Could Soon Become Web-Based Apps

"Via Linuxtoday.com, a message from the OpenOffice Dev mailing list in which a new company is introducing the GravityZoo OpenOffice porting project. The unusually named group aims to bring OpenOffice to the Internet as a series of online apps. 'When OpenOffice.org is GravityZood, it will become a suite of productivity applications that are always available, online, via a broad range of devices. It will be possible to share and collaborate in real-time, to switch from one device (e.g. a PC) to another (Mobile) device. There will also be no need to save data, because everything you produce is saved automatically on the network. There is no need to download, install or update, the latest version is just available and accessible from any GravityZoo enabled client.'"

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Satyam launches China development center

SHANGHAI, China - Satyam Computer Services Ltd., India's fourth-largest software company, on Thursday began construction of a major development center, its largest outside India and first campus-style facility in China.

The groundbreaking for the center in the eastern city of Nanjing follows Satyam's announcement of plans for a software development center in Malaysia. Both are part of the company's effort to evolve into a global company, according to Virender Aggarwal, the company's senior vice president and regional director.

Hyderabad-based Satyam's expansion is aimed partly at offsetting rising costs in India and at developing a base of skilled workers, Aggarwal said in a phone interview.

Like other Indian outsourcing companies, Satyam is trying to win clients outside the United States and Europe, looking to China, Australia and Latin America to diversify risks and build markets.

"China is one of the largest economies in the world and is likely to be the No. 2 economy in 20 years or so. It is very important that we are here," he said.

Satyam has 500 employees in China, almost all of them Chinese, at support centers in Shanghai, Beijing, the southern city of Guangzhou and the northeastern city of Dalian.

The abundance of jobs in India means workers job-hop often. China offers the advantages of a huge labor pool, a plus in Satyam's fight to recruit and retain labor, Aggarwal said.

"The labor market in Nanjing is relatively untapped," he said.

The center will be campus-style, providing lodging and other amenities, and will be located in a high-tech zone that is expected to attract more than 300 software companies, Qi Lu, the Communist Party secretary in charge of the zone said in a statement.

Asia-Pacific, Africa and the Middle East contribute around 16 percent of Satyam's global revenue, while Europe contributes about 18 percent and the United States about 65 percent, he said.

Other Indian software companies are expanding in China, too. Infosys Technologies Ltd., India's second-largest software company, plans to open two development centers in China that will employ 6,000 people.

India's top information technology company, Tata Consultancy Services Ltd., has a joint venture agreement with three Chinese partners, with strategic investment from Microsoft Corp., to expand its operations in China.

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Eastern Europe: Outsourcing hot spot?

Eastern Europe could soon become a favorite location for offshore outsourcing, with activity in the region estimated to triple between 2005 and 2008.
That's according to consulting firm McKinsey, which predicts that the business process outsourcing (BPO) industry will support 130,000 jobs in the region by 2008.
Although only 1 percent of the world's total BPO spending--worth $30 billion--is currently located in Eastern Europe, the region emerged as one of the favorite locations for Western European companies to invest in between 2004 and 2006.
McKinsey identifies three main advantages for companies locating BPO operations in Eastern Europe in the winter issue of McKinsey on IT.
The region offers low wage levels, comparable to India's, with slow wage inflation looking likely to keep the region economically competitive for at least 15 years.
Also, compared with competing regions around the world, Eastern Europe is a relatively low-risk location for investing, due to the reliable infrastructure already in place.
The other benefit is the region's geographical and cultural proximity to Western Europe, making the process of setting up offices much easier. There are also fewer language barriers compared with elsewhere, with German and French both being widely spoken.
Countries such as India, Ireland, Malaysia and the Philippines have until recently been the favored locations for offshore BPO investing.

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Marmorean : Marble and its products

Study: Asia-Pacific IT outsourcing to top $10 billion

A new market study forecasts Asia-Pacific outsourcing spending to cross the $10 billion mark this year, suggesting that companies in the region are open to contracting out more IT work.

Excluding Japan, research firm IDC estimated that $10.5 billion will be spent on IT outsourcing within the region in 2006, topping $16 billion in 2010. This represents a compound annual growth rate of 10.9 percent over the forecast period.

"In the past 10 years, we've already seen significant (spending) by the mature Australian and New Zealand markets," Eugene Wee, a senior analyst for IDC's Asia-Pacific services research, said in a statement. "But increasingly, companies within (Southeast Asia), India and China, are becoming more open to the idea of letting the experts take care of their IT ecosystem."

India and mainland China will continue to be high-growth markets in the next five years, driven primarily by large IT infrastructure growth in past years. These markets are not expected to have fully matured by 2010, IDC said.

According to the report, Singapore and Hong Kong--despite some market saturation--continue to offer opportunities in contract renewals and extensions, where companies look to migrate from support contracts to managed or outsourcing contracts.

A recent survey conducted by ZDNet Asia also revealed a growing interest among Singapore's small and midsize businesses to contract out selected IT functions. Areas that are most likely to be outsourced include application development and maintenance, as well as Web site development and hosting, the survey revealed.

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Offshoring deals on the rise

Despite the continued controversy surrounding offshoring, a record level of outsourcing deals currently under negotiation involve offshoring, according to the latest Quarterly Index data from TPI, the sourcing advisory firm.

Very little information is available on the breakdown of outsourcing between onshore and offshore operations. However, an analysis of deals on which TPI is currently advising (which represent approximately a quarter of the commercial outsourcing market and provide a six to nine month indicator of where the market is heading) reveals that almost half (47 per cent) involve offshoring or ‘global service delivery’. This compares with 28 per cent at this point last year and represents a record high. Furthermore, where outsourcing contracts contain an offshore element, a far greater proportion of the work is moving offshore, averaging almost half (48 per cent) of the contract value, up from 27 per cent a year ago.

Duncan Aitchison, Managing Director, International with TPI, commented: “Contrary to speculation about rising levels of dissatisfaction with offshore outsourcing, our data predicts further growth in the value of work being moved offshore. In our experience, the approach of many companies to outsourcing has now matured to the extent that it is now no longer a question of whether to offshore, but rather which elements and to what degree."

Indian service providers winning bigger deals
This growth in offshore outsourcing is further evidenced by impressive gains for the Indian service providers, whose market share has risen to 5.2 per cent of the total value of contracts signed so far this year, up from less than 3 per cent in 2005 and just over 1 per cent in 2004. Moreover, data relating to deals currently under negotiation (with which TPI is involved) points to a dramatic, almost threefold (284 per cent) increase in the value of deals for which the Indian providers are competing, compared with three months ago.

The size of deals the Indian service providers are winning is also increasing, up by 25 per cent from an average deal size of €101 million in 2005 to €126 million in 2006 to date. Of 11 contracts totaling €1.38 billion awarded to Indian providers this year, 9 are in Indians’ traditional areas of strength in applications development and maintenance (ADM) or finance and accounting (F&A). However, data on the transactions on which TPI is currently advising reveals that the Indian providers are now being considered for remote IT infrastructure work as well.

Duncan Aitchison said: “The mature Indian vendors have achieved significant growth. Infosys, Satyam, Wipro, TCS and HCL are beginning to win larger and more varied deals. Our data suggests that there is no reason to doubt that this trend will continue, especially as buyers gain experience of working with them, and their confidence grows as a result.”

However, the Big Six of outsourcing--Accenture, ACS, CSC, EDS, HP and IBM--still dominate the offshore outsourcing market having won almost three quarters (73 per cent) of contracts in 2006 to date compared with 18 per cent for the Indian providers.

Strong demand for outsourcing in UK, despite a dip in Europe UK companies have signed outsourcing contracts totaling over €5.2 billion so far this year, up 9 per cent from €4.8 billion this time last year. The continued strength of the UK market contrasts with the rest of Europe, where demand for outsourcing has dipped. The total value of contracts signed in Continental Europe so far this year (€4.8 billion) is some 30 per cent lower than the equivalent figure at the same time last year.

Taking a global view, the UK accounts for 17.2 per cent of the value of contracts signed this year, Germany 6.6 per cent and the Netherlands 2.6 per cent, with no other country in Europe representing over 2 per cent of the global market.

Duncan Aitchison commented: “The likelihood is that the falling off of outsourcing in Continental Europe is nothing more than a temporary blip. Nevertheless, the UK is likely to remain the most significant buyer of outsourcing in Europe for some time to come.”

The strength of the UK market is also demonstrated by the growth in business process outsourcing (BPO) by UK companies. The UK accounts for over a quarter (27 per cent) of the total value of business process contracts signed worldwide to date in 2006, up from 19 per cent in 2005 and 23 per cent in both 2004 and 2003. The next largest user of BPO in Europe is Germany, representing 3.8 per cent of the value of contracts signed globally this year.

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Off-shoring, outsourcing and competive sourcing:

By Sen. Craig Thomas (R-Wyo.)

In the charged political climate of this election year, the issue of off-shoring and outsourcing has taken on a political life of its own in the last couple of months. As American companies look for ways to stay competitive in the global economy, many have turned to moving certain parts of their operations overseas. This has proved to be a powerful talking point in describing a growing economy and the pace of job growth.

This phenomenon of “off-shoring” presents a set of problems that certainly should be studied in greater detail and dealt with properly. We are all concerned with the trend of sending good-paying American jobs overseas. Unfortunately, the term “off-shoring” has increasingly been used interchangeably with the term “outsourcing.”

In the pursuit of an election-year slogan, the debate has become muddled. This is not a good way to identify the best solutions to the problem.

When a company chooses to “outsource,” it does not necessarily mean those jobs go overseas. American companies may outsource to other American companies. The federal government may outsource positions to the American private sector. In short, outsourcing is different from off-shoring, and efforts to claim they are the same are misleading and counterproductive.

Adding to the mix, “outsourcing” and “privatization” are also being used interchangeably and increasingly as ways of describing President Bush’s Competitive Sourcing Initiative in managing the federal bureaucracy. “Competitive sourcing” is a useful tool that allows federal agencies to evaluate whether or not commercial functions should be performed in the future by federal employees or the private sector.

When we talk about competitive sourcing in the federal government, we are not talking about outsourcing, off-shoring or privatization. These are four different terms that mean different things. In these days of tight federal budgets, competitive sourcing provides an extremely useful tool to make more efficient use of taxpayer dollars. It is an attempt to identify what federal employees can do best and what the American private sector can do better. And, it is good government.

As numerous independent reports to Congress have shown, competitive sourcing saves taxpayers between 10 to 40 percent — regardless of who wins. In fact, in 2003, federal employees won 89 percent of the federal jobs that were subjected to competition. Clearly, the American taxpayer is the real winner in this process. And, with more than half of the federal work force eligible for retirement in the next five to seven years, we need to perform sourcing reviews to ensure the continuity of important government programs.

Unfortunately, there are those who do not want to see a decrease in the size of government and believe that more private-sector activities should be done by the government. I expect we will be having several more of these debates in the coming months, and opponents of the president’s management agenda will indeed try to link them to the debate about off-shoring.

As I have stated, competitive sourcing is not about off-shoring. Not one federal employee has lost a job to overseas competition. I am unaware of a single example of a federal competition won by the private sector that was then sent off shore to another country.

In fact, it is already illegal to send federal contract work off-shore without the government’s prior knowledge. The Truth in Negotiations Act and False Claims Act outlaw that practice.

There are “place of performance” and Service Contract Act wage-rate requirements on most federal contracts that also restrict sending the work off-shore. In last year’s omnibus bill, I included an amendment to clarify and strengthen those provisions.

The off-shoring issue in the competitive sourcing debate has been taken off the table, and should remain there. As we continue to discuss the problem of off-shoring, it is important that we draw distinctions between the terms and not further confuse the debate.

Thomas has supported competitive sourcing during his time in Congress.

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Government urged to promote outsourcing

IT suppliers and customers are calling on the government to promote the benefits of outsourcing to employees, in order to help UK outsourcing companies better compete with their overseas rivals.

Supplier and customer body the National Outsourcing Association (NOA) said that changes to employee-related legislation are needed to address widespread concerns from staff about the implications of being transferred to an outsourcing supplier.

NOA chairman Nigel Roxburgh told vnunet.com that embracing the trend towards outsourcing, rather than introducing protectionist measures, would be key to a thriving UK economy.

"The government needs to be aware of the potential of outsourcing for the UK economy. We should see this as a trend rather than being the machine breakers of the knowledge economy," he said.

The call comes as banking giant HSBC Holdings announced plans to move 4,000 call centre and back-office processing jobs to India, Malaysia and China over the next two and a half years.

HSBC will close five back-office processing centres around the country by the end of 2005, enraging unions which have pledged to fight the plans.

Employee concerns, and the emotional reaction provoked by outsourcing, have tainted the industry's reputation.

Roxburgh believes that extending TUPE, the legislation to protect employees' rights when a business is sold or merged, to include pension rights would go some way to addressing fears.

The knock-on effect would be to bolster support for, and investments in, outsourcing.

"We would be better at this if we had a tight, regulatory environment and less fear about being displaced by an outsourcer," said Roxburgh.

"Constant learning, re-skilling and redeployment also need to be priorities for the UK government. Having strong outsourcing companies will bring employment back to the UK."

But Lee Whitehill, a spokesman for union Amicus MSF, said: "We have to move the UK into an ideas economy, and training and education definitely have a role to play.

"But I don't think anyone in their right mind would say that encouraging outsourcing, which has led to the loss of 4,000 jobs at HSBC, can be good for the UK economy."

The union has called on the government to set up an independent commission to examine the likely effects on the economy and levels of unemployment.

Analysts and consultants predict that 200,000 UK jobs are likely to be lost to offshore firms as the trend towards outsourcing gathers pace.

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onexant Systems Inc. will pay Texas Instruments Inc. $70 million to license certain DSL (Digital Subscriber Line) patents, settling a legal dispute between TI and GlobespanVirata, a Conexant subsidiary, they announced Friday.

Conexant's dispute with TI dates to its 2004 acquisition of GlobespanVirata Inc., which had ongoing litigation with TI. GlobespanVirata filed a complaint in June 2003 against TI claiming that Texas Instruments violated U.S. antitrust law by creating an illegal patent pool, manipulating the patent process and abusing the process for setting standards related to ADSL (asymmetric digital subscriber line) technology. TI countersued, alleging that GlobespanVirata infringed certain ADSL patents.

In February of this year, a federal jury found that GlobespanVirata infringed TI patents.

The agreement between Conexant, in Newport Beach, Calif., and TI, in Dallas, resolves the alleged past infringement of ADSL patents by GlobespanVirata and provides a license for these products under a previous 2003 agreement between Texas Instruments and Conexant, according to a statement Friday from Conexant.

A Conexant patent license with TI was also extended under the settlement to include a fully paid-up license for VDSL (very high bit-rate DSL) products, the company said.

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Outsourcing Questions

Linda Cohen, analyst at research firm Gartner, outlined the questions to be asked when any organization decides to outsource. Answers have to be provided for:
WHY – Why should the company outsource? Is it to cut costs or to improve or change business processes? Whatever the reason, it should be unanimous throughout the upper echelons of the company.
WHAT- What should be outsourced? Only the back office operations, the customer service interactions, or other processes those are strategic to the business?
WHO – Who should you choose to entrust with a part of your business? Should you choose a start up company that promises much or stick with a tried and tested firm that has been in the market for a few years?
HOW – The how relates indirectly to the WHO. You have to decide if you are going for customized, high-value solutions, or standardized, cost-effective ones. You also have to coordinate how your internal and external personnel work together, and set a standard to monitor and evaluate performance.
WHERE – Where should you send your operation? As far away as India, closer home to Mexico, or better, to home-based agents in the United States? This depends on the complexity and range of the operations you are outsourcing, and the control you would like to maintain over them.

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Paucity of Skilled Labour

While countries like India were concerned with the adverse impact of brain drain in the early ‘80s and ‘90s, the reverse is true of the USA today. IT companies in America are finding it increasingly difficult to hire skilled, well-qualified American professionals for jobs relating to software development and programming. They are hampered more by the restriction on the number of H-1B visas allowed by the US Government.

The main argument in favor of setting an upper limit on the number of foreigner work permits issued each year is that of protecting the interests and jobs of qualified American professionals, but with the advent of outsourcing, this does not hold water any more. In a case of the mountain going to Mohammed, if the professional is not able to come to the US, the job will go to his homeland.

In effect, this has given rise to a large number of jobs being outsourced. While organizations are enjoying the double advantage of cutting back on operational costs and employing highly skilled and dedicated labor, the US Government is losing out on the taxes and purchasing power of these employees, as they live outside the USA.

Another problem in this scenario is that there are some jobs that cannot be outsourced. Add to this the shortage of qualified American personnel, and you have numerous lost opportunities, less innovation and creativity, a significant decline in the quality of products and services, and unnecessary delays and cancellations. If this situation continues, it will only be a matter of time before countries with adequate and skilled human resources advance technologically to go ahead.

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Outsourcing Customs Operations

The fifth Information and Communication Technology (ICT) conference and trade show to be held between April 6 and 8 in India will see the World Customs Organization (WCO) reach a decision on whether to outsource and offshore IT services in the customs operations of its member countries. The meet will discuss the possibility of the ICT being able simplify operations in the international supply chain and meet the increasing needs and tasks of customs administration. Hindustan Times reports:

"The trade show will offer first-hand knowledge of ICT in customs administration and an opportunity to develop customs-business partnership in a PPP (public-private partnership) model and explore potential markets in terms of outsourcing and offshoring software development," according to an official from the customs department
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TCS in deal with Citigroup

The news is just around the corner that Tata Consultancy Services (TCS), the Indan IT giant is close to finalizing a deal with Citigroup Inc. The deal is pegged to be around $500-900 million.

Reports are pooling in that the deal will be signed very soon. It is said that TCS would employ around 2,200 people for the contract in the first year and would take future decisions depending on the contract. The contract is based on a take-or-pay-order system. According to the deal, the IT giant would be paid a fixed sum if the work is completed in the stipulated time.

It is said that TCS would provide manpower, quality and processes to Citigroup, which is against the present method of time and material contract, where Indian vendors charge fees by the hour.

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Iron Mountain outsources product development

MARCH 17, 2006 (IDG NEWS SERVICE) - Information protection and storage services provider Iron Mountain Inc. has outsourced some of its product development to Symphony Services Corp., a product development company with facilities in India, according to executives of both companies.

Palo Alto, Calif.-based Symphony will have over 80 engineers in Bangalore and Pune working on the development of products for Boston-based Iron Mountain, Ajay Kela, president for India of Symphony, said Friday.

Symphony will also offer product management and user-interface design services to Iron Mountain, Kela said

The agreement between the two companies follows an earlier contract between them, whereby Symphony had about 25 staffers offering quality assurance and support for Iron Mountain products.

The Symphony centers in India will be an extension of Iron Mountain's own development centers, said Greg Nicastro, senior vice president for product development at Iron Mountain. Having a development center in India will help Iron Mountain work around the clock on product development, helping to cut time to market, he added.

Symphony will work on a variety of products, including Iron Mountain's digital archive service and on data protection products from Marlboro, Mass.-based LiveVault Corp., which Iron Mountain acquired earlier this year.

A number of multinational technology companies have set up wholly owned product development centers in India. But a large number of foreign companies now prefer to outsource product development to third-party operations in India that handle the hiring and management of the development teams.

Setting up a wholly owned center in India is not a core expertise of Iron Mountain, and the company preferred to partner with Symphony, which has experience in the area, Nicastro said.

Iron Mountain already has development centers in the U.S. and the U.K. where it employs about 200 developers.

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Bush: Outsourcing painful, but remedy is worse

NEW DELHI, India (CNN) -- Praising India's expanding economy, President Bush warned Friday that fears about job outsourcing to other nations should not prompt the United States to limit global trade.

"It's ... important to remember that when someone loses a job it's an incredibly difficult period for the worker and their families," Bush said in a speech in New Delhi.

"It's true that some Americans have lost jobs when their companies move their operations overseas," he said.

"Some people believe the answer to this problem is to wall off our economy from the world through protectionist policies. I strongly disagree." (Watch Bush explain why the U.S. and India are natural partners -- 2:36)

"The United States will not give into the protectionists and lose these opportunities," Bush said.

"For the sake of workers in both our countries, America will trade with confidence."

But he added that "India has responsibilities as well."

"India needs to continue to lift its caps on foreign investment ... and to continue to lower its tariffs and open its markets to American agricultural products, industrial goods and services."

Bush delivered the address just prior to traveling to neighboring Pakistan for talks on terrorism Saturday in Islamabad with President Pervez Musharraf. Pakistan is an important ally in the U.S.-led fight against al Qaeda.

Bush's arrival was preceded by widespread protests and a deadly attack Thursday outside the U.S. Consulate in Karachi. (Full story)

"On my trip to Islamabad, I will meet with President Musharraf to discuss Pakistan's vital cooperation in the war on terror, and our efforts to foster economic and political development so we can reduce the appeal of radical Islam," Bush said.

"I believe that a prosperous, democratic Pakistan will be a steadfast partner for America a peaceful neighbor for India and a force for freedom and moderation in the Arab world."

Outsourcing Health IT: Should Doctors Cut the Cord?

In an era of rising costs and dwindling access to experts, IT is untethering doctors from patients' physical presence. Already, health care organizations are turning to distant practitioners to interpret radiographs and even to monitor intensive care units.

Such practices are not unique opportunities in niche markets, said Robert Wachter, a medical-safety expert at UCSF Medical Center, but the "first salvos" in an escalating trend.

Many tasks no longer need to be performed by a highly trained expert in the same room, or even in the same country, as a patient.

"IT was built to facilitate the ability of existing providers to do their work better and faster," Wachter said. But once the technology to record, store, and send digital images became commonplace, it revealed unanticipated applications.

U.S. IT Hiring Increases Despite Outsourcing

"A CNN article reports that a new study has shown that U.S. tech hiring has increased, despite oversees outsourcing. It mentions that the job market is higher today than it was at the height of the dot-com boom." From the article: "The study suggests that there are several factors in the continued growth in demand for IT workers here. The report said part of it is due to the use of offshoring by U.S. companies, including start-up firms, to limit their costs and thus grow their businesses. That, in turn, creates more opportunities here even as an increasing amount of work is done overseas. The study also said that companies from a variety of sectors in the economy continue to discover greater efficiency and more competitive operations through investment in IT."

Computer Science Students Outsource Homework

"'If U.S. companies can go online to outsource their programming, why can't U.S. computer students outsource their homework--which, after all, often involves writing sample programs?' Wall Street Journal colummnist Lee Gomes asks. 'Scruples aside, no reason at all. Search for "homework" in the data base of Rent A Coder projects, and you get 1,000 hits. (An impressive number, but still a tiny fraction of all computer students, the vast majority of whom are no doubt an honest and hardworking lot.)' Some of the Rent a Coder users appear to be outsourcing their way through school, at low costs--probably less than $100 per assignment. The posting are, of course, anonymous, but Gomes traces one to a student at the New Jersey Institute of Technology, where an instructor tells him that Rent a Coder contributed to a problem of plagiarism last semester."

Songbird the Open Source iTunes?

"Cnet has an interesting story about a company about to release an open source alternative to iTunes. Apparently, the software can be used with a multitude of music services." From the article: "Apple's iTunes is 'like Internet Explorer, if Internet Explorer could only browse Microsoft.com,' Lord said. 'We love Apple, and appreciate and thank them for setting the bar in terms of user experience. But it's inevitable that the market architecture changes as it matures.'"

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Pakistan: Better Late Than Never In Outsourcing

Think software and services outsourcing, and places like Bangalore, Manila, and perhaps Budapest spring to mind. But Lahore or Karachi? The Pakistani cities might not be on the outsourcing map yet, but the country's software shops are out to change that. "As a natural course, American companies would not look at Pakistan," acknowledges Jehan Ara, president of the 250-member Pakistan Software Houses Assn. "So we have to get them to look at us, and once they do business with us and credibility is established, they come back for more."
It makes sense for Pakistan to follow in India's footsteps and try to boost its outsourcing business. The country, after all, shares India's British colonial history and has some 17 million English speakers. It has a huge community of émigrés with experience in technology. And like India, it has a culture that values education and hard work. Wages, meanwhile, stand at about the same level as in India, with call center workers earning about $12 per day and starting software engineers pulling in $5,000 or so annually.

Still, Pakistan remains far behind India. Last year the country's software and IT services business hit just $300 million, and exports made up only about 11% of that. India, by contrast, booked $12.8 billion in software and services exports in 2004. But the Pakistan Software Export Board, a federal body set up to promote outsourcing, forecasts that the business will grow by at least 45% annually in coming years. "Pakistan started late but now is catching up very fast in software development," says Prime Minister Shaukat Aziz.
Lower-level operations such as call centers are expected to grow even faster: Some 120 centers have opened in Pakistan in the past two years. Today they employ 3,500 people, and that number is expected to grow by 60% a year. Arwen Tech, a Karachi company that runs a 600-seat center, saw its sales double last year, to $10 million, serving clients such as Pakistan International Airlines and the local franchisee for KFC Corp. (YUM! ). Now the company is building a 1,500-seat facility and hopes to boost revenues tenfold, to $100 million, in the next five years as it attracts more international clients.

Pakistan could use the boost that outsourcing provides. Unemployment is officially pegged at 8%, although in reality it's far higher than that, and the government is looking for ways to fuel economic growth. Pakistan needs technology to increase efficiency and productivity. And software exports will help the country move away from its reliance on textiles, which make up 65% of total exports.
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Outsourcing

Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that is often made to lower costs or focus on core competences. A related term, offshoring, means transferring work to another country, typically overseas. Offshoring is similar to outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country. Outsourcing became a popular buzzword in business and management in the 1990s. EDS was the first company to establish the outsourcing business.

Outsourcing is defined as the management and/or day-to-day execution of an entire business function by a third party service provider.

Outsourcing and/or out-tasking involve transferring a significant amount of management control to the supplier. Buying products from another entity is not outsourcing or out-tasking, but merely a vendor relationship. Likewise, buying services from a provider is not necessarily outsourcing or out-tasking. Outsourcing always involves a considerable degree of two-way information exchange, co-ordination, and trust.

Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Many companies look to employ expert organizations in the areas targeted for outsourcing. Business segments typically outsourced include Information Technology, Human Resources, Facilities and Real Estate Management and Accounting. Many companies also outsource customer support and call center functions, manufacturing and engineering. Outsourcing business is characterized by expertise not inherent to the core of the client organization.

The overhead costs of customer service are typically less where outsourcing has been used, leading to many companies, from utilities to manufacturers, closing their in-house customer relations departments and outsourcing their customer service to third party call centers. The logical extension of these decisions was of outsourcing labor overseas to countries with lower labor costs, this trend is often referred to as offshoring of customer service.

Due to this demand call centers have sprung up in Canada, China, Eastern Europe, Israel, Ireland, Pakistan, Philippines and even the Caribbean. Many companies, most notably Dell and AT&T Wireless, have gained significant negative publicity for their decisions to use non-US labor for customer service and technical support; one of the most prominent complaints being the expectation that the replacement staff will have more trouble communicating with customers.

A related term is out-tasking: turning over a narrowly-defined segment of business to another business, typically on an annual contract, or sometimes a shorter one. This usually involves continued direct or indirect management and decision-making by the client of the out-tasking business.

The term "outsourcing" became more well known largely because of a growth in the number of high-tech companies in the early 1990s that were often not large enough to be able to easily maintain large customer service departments of their own. In some cases these companies hired technical writers to simplify the usage instructions of their products, index the key points of information and contracted with temporary employment agencies to find, train and hire generally low-skilled workers to answer their telephone technical support and customer service calls. These agents generally worked in call centers where the information needed to assist the calling customer was indexed in a computer system. The agents were often not able to tell the customer they did not actually directly work for the original manufacturer. In some cases, the agents are not allowed to even give out their real name.