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Wednesday, April 12, 2006

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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Friday, April 07, 2006

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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