| Straydog 2007-12-05, 10:02 pm |
|
FAQ: India No Longer Offshoring Destination
Offshore outsourcing (including BPO to India) is declining and has a high
failure rate, defective products, is leading to a new pheonmenon:
backsourcing/backshoring, is somethines called the "H-1B swindle," and
there are reports that outsourcing is declining or reversing.
Aug 21, 2007 revision: Adds material from Wall Street Journal, Aug 21,
2007, page A6: title: "Middle East Beckons as Outsourcing Hot Spot" item
#26
July 29, 2007 revision: Adds from The Economist, July 28, 2007 issue, and
Business W , Aug 6, 2007 issue at item #25
July 15, 2007 revision: Adds from WSJ article, July 12, 2007, page C8
(at item #24)
July 4, 2007 revision: Adds from front page WSJ article (July 3, 2007)#23
Feb 27, 2007 revision: Adds comments on jobs coming back to the USA (#21)
Adds reference from WSJ article at item #22
Feb 22, 2007 revision: Adds WSJ article at item #20
Nov 14, 2006 revision: Adds WSJ front page article at item #19
Nov 13, 2006 revision: Adds Financial Times article at item #18
Oct 23, 2006 revision: Adds Financial Times article at item #17
July 4, 2006 revision: Adds WSJ article at item #16
June 26, 2006 revision: Adds Business W/Small Biz, Summer, 2006 report
(see item #15)
June 12, 2006 revision: Adds BW article reference on Apple pulling out of
India (see item #14)
June 6, 2006 revision: Adds one question (#4) about economic conditions in
India and references (in item #13, below).
FAQ:
QUESTION #1: How well is offshore outsourcing & BPO (especially to India)
really working?
ANSWER: Below are many different sources (1-11, 14-16, 20, 26) and many
comments, summaries, and quotes that report that the failure rates are
very high and satisfaction is not very high, either. Especially in
reference # 10, it is clear that you don't get increased "productivity."
Instead, when the cost goes down, so does the quality of what comes out.
QUESTION #2: Instead of offshoring jobs to, for example, India, US companies
import foreign labor to the USA through a visa such as the H-1B which
requires that the employee work only for the company that sponsors that visa
and they justify this on a shortage of IT expertise in the USA. How true is
this picture?
ANSWER: Reference #12, below, is a source of information that H-1B employers
are more interested in cheap labor than quality service or products.
QUESTION #3: Are there any anti-offshoring internet resources?
ANSWER: See at the very end of this file, one website. If you know of any
more, please send email to me or post to the newsgroups.
QUESTION #4: What BPO economic changes are currently being reported for
India?
ANSWER: See item #13, below.
QUESTION #5: What is the latest trend in outsourcing?
ANSWER: See item # 17, #18, #23, #24 below.
QUESTION #6: What is the quality of offshored products like?
ANSWER: See item # 19, below.
- - - - - - - - -
26. From WSJ, Aug 21, 2007, page A6 (see title above): Quote of first
paragraph: "CAIRO, Egypt--As rising wages and attrition rates in India
spur some international companies to s new locales for outsourcing
operations, Southeast Asian, Eastern Europe, and Latin America have all
been competing to become new offshoring hubs." The article says Satyam CS
hired 300 in Cairo; Wipro set up in Saudi Arabia and plans to enter Egypt,
Tata says it will go into Morocco. Says in recent years Egypt, Jordan and
the UAE have all broken into the top 20 for offshoring destinations.
Quotes A.T. Kerney as saying the Middle East is the next big destination.
Paris-based Teleperformance hired 3,500 in Tunisia, and going into Cairo.
EDS is putting $100 million into Abu Dhabi (UAE emirate), and already
hired 450 in Egypt and planning to hire more. The sidebar clearly implies
that India is no longer the offshore destination any more. On the list in
the sidebar for offshoring destinations are China, Malaysia, Thailand,
Brazil, Indonesia, Chile, Phillipines, Bulgaria, Mexico, Singapore,
Slovakia, Egypt, Jordan, and Estonia.
--------
25, From Business W, August 6, 2007, page 66m ("Rise of the Rupee") and
The Economist, July 28, 2007, pages 65-66 ("Outsourcing-External
Affairs").
From BW: Quotes: '"We are losing our competitiveness to China, Korea,
Taiwan, and Singapore...and the Reserve Bank [of India] is allowing the
rupee to appreciate?" growls New Delhi economist Surjit Bhalla." And,
"Profitability across the sector [Indian IT] fell by 8% in the most recent
quarter." And, "A further rise in the rupee, says Suresh Ramrakhiani,
economist at the Cotton Textile Export Promotion Council in Mumbai, could
lead to job losses for up to 200,000 people."
From The Economist: "...jobs no longer flow only from richer countries to
poorer ones." And, "The latest outsourcing from TPI, a consultancy, was
published earlier this month. It showed that both the number and value of
contracts awarded during the first half of this year had declined in
comparison with the same period in 2006 [lowest since 2001]." Article also
says Wipro is going to set up its first software-development center in
America (either Atlanta, Austin, Raleigh, or Richmond) and "Azim Premji,
Wipro's chairman, says that the proportion of local employees (as opposed
to visiting Indians) in the company's overseas locations will rise from
10% to one-third over the next three years." Jobs coming back to the USA.
- - - -
24. title: "Infosys Shaves Forecast After Strong Quarter" by Jackie Range
(WSJ, July 12, 2007, page C8)
"...citing the stronger currency, Bangalore-based Infosys cut its
full-year, rupee-based earnings outlook..." and "In the past three months,
the rupee has appreciated some 7% against the dollar. That has
particularly hurt companies like Infosys, which earn most of their revenue
in dollars." The graphic, made from data provided by the company, shows
projected 1Q, '08 net profits as being below 4Q, '07 net profits by about
7 %. Looks like India's "rising" and "shining" may be coming to an end as
more foreign companies don't consider India as an outsourcing destination
any more (see below).
------------
23. from: The Wall Street Journal, Tuesday, July 3, 2007, front page
title: "Some in Silicon Valley Begin to Sour on India"
subtitle: "A Few Bring Jobs Back As Pay of Top Engineers In Bangalore
Skyrockets" by Pui-Wing Tam and Jackie Range
Interviews and research with quotes as follows:
Munjal Shah [with image of him, and born in India] led a California start-up
[Riya] opened an office in Bangalore in 2005, hired about 20
skilled software developers at 1/4 what they cost in Silcon Valley. Then
salaries soared. He said this year it cost 75% of SV salaries, plus extra
expenses of running an office in India, and in April this year he closed
the Bangalore office.
"Across SV, some technology companies, particularly start up and midsize
ones, are beginning to turn away from India for low-cost labor to do
sophisitcated tech work. Kana ... eliminated 100 software-developemnt jobs
in India in late 2005 and expanded its U.S. hiring instead. Teneros, Inc.,
shut down a 30 member India office and brought 12 of the people to its
headquarters in ...California."
The article mentioned that Apple cancelled plans to open a facility in
India.
"'The wage inflation rate for engineers in India is four times what it is
here' in America, says Intel's chief executive, Paul Otellini."
Article says Indian wage inflation is 10-15% per year, other sources say it
is closer to 50%.
"India is no longer the premier outsourcing destination."
Article says even the simple call-center work may be done more cheaply in
the Philippines and Vietnam, and mentions that Indian companies are even
looking outside India to create jobs. TCS recently opened a center in Mexico
and is considering a move to Morocco. Wipro has two centers in China and
planning one for the Philippines.
Pervasive Software (from Texas) opened a Bangalore unit in 2004 with 45
people, but turnover reached more than 25% per year. Last year it closed the
Bangalore office.
The article mentioned that it takes more supervisors to manage Indians.
So, they are asking why pay a junior guy in India just a little less when
they can get a senior guy right in California.
---------------
22. Quotes from A Wall Street Journal article, Feb 26, 2007, page B3:
title: "Behind Outsourcing: Promise and Pitfalls" by Scott Thurm
"Companies such as Lehman Brothers Holdings Inc. and Dell Inc. reversed
decisions to move customer call centers to India after a customer
rebellion." and "[Jagdish] Dalal advised a big insurance company with
little outsourcing experience to locate a call center in Canada, to
minimize problems with non-North American English accents." This article
also gave many other details on problems with outsourcing that had nothing
to do with India or offshoring.
----
21. I have seen many reports (sorry I have no specifics) of Indian (and
other foreign corporations) opening up branches in the USA and
establishing jobs within the USA. An important caveat regarding this
action is that while these are new jobs in the USA, foreign companies are
allowed to transfer existing employees from their home country into these
jobs on L-1 visas and there is no cap on the number. I hardly think that
many of these jobs will be offered to US guys (green card or citizens)
when home country guys can probably be transferred at lower pay.
Furthermore, the reports may be overly glossy if a foreign company just
buys an existing company and then claims that it is "bringing" jobs to the
USA. When, however, a US MNC lays off 20,000 US guys and moves those jobs
to India, that MNC is going to hire local Indians into those jobs and NOT
invite the US guys to "transfer" to India with something like a 2/3 pay
cut.
-------
20. Wall Street Journal, Feb 21, 2007, page B6:
Under "Plots and Ploys" section entitled "Call it insourcing":
Quotes: "One real-estate company has decreased it outsourcing of some
services to india and turned to a North Carolina town that has lost jobs
to overseas competitors. Situs Cos., a Houston-based company that provides
services to the commercial-mortgage industry, says it will send some work
to Robbins, N.C. the company previously had tried to outsource certain
services to india, but looked elsewhere as well in part because of soaring
rents in India, says Situs Chief Executive Ralph Howard. 'We think we are
getting a better quality for the same price, and at the same time, we're
creating U.S. jobs,' says Mr. Bean [who works for Mr. Howard]."
---------
19. WSJ, front page, November 13, 2006. title "Clothes Made Abroad Create
Factory Jobs in L.A. for Mr. Fix-It" subtitle: "Barry Foreman Left Rag
Trade, But is Back, Salvaging Flawed Chinese Garments" by Stephanie Kang.
This whole article is about a fairly large fraction of imported clothing
that comes with a variety of defects and the featured guy, Barry Forman, got
back into business to "correct" the defects in the imported lots so as to
make them saleable again. His business is booming, expanding, and the
article is worth reading for those who want the details. Not all of that
cheap labor is worth what people pay for it. You get cheap quality, too.
------------
18. Financial Times, Nov 2, page 18, 2006
title: "Volkswagen chooses to swim against the current-The German carmaker
is to shift some of its production back home" by Richard Milne
"To move production away from lower-cost countries to a high-cost nation may
appear to be a peculiar decision, but not at Volkswagen. The carmaker
intends to cut thousands of jobs at Spanish, Portugese and Belgian factories
and to shift some of th models back to Germany..." In the course of this
change, workers in Germany will work longer hours for the same pay (and keep
their high-paying jobs which will end up at about E40.65/hour [or around
US$50/hour]).
------------
17. From Financial Times, Oct 12, 2006, page 15, entitled "Boom in
outsourcing abates as groups s shorter deals" by Francesco Guerrera.
"The wave of outsourcing that has engulfed the global economy over the past
five years is showing signs of abating as multinational companies opt for
shorter and smaller deals, according to a study to be published today. The
outsourcing industry has just experienced its worst quarter in four years
and is unlikely to match the $81.9bn in contracts won in 2005 by the end of
this year, data from the consulting firm Technology Partners International
shows. A slowdown in 2006 would mark the second consecutive year fall in the
volume of outsourcing contracts since their $84.7bn peak reached in 2004.
The results suggest that, following the drive to curb costs and streamline
operations by contracting out non-core functions, multinationals might be
running out of major operations to outsource. ...The average contract is
down to four years from about 10 years in the recent past. 'In some sectors,
especially information technology, companies perceive that there has been a
commoditisation of services, leading them to opt for shorter-term contracts
of lower overall value,' said Peter Allen, a partner at TPI. 'We just don't
see enough big deals in the pipeline to cause us to believe the levels of
last year will be reached.' The trend is likely to raise concerns in
countries such as India and China and among groups like IBM, Accenture and
[EDS], which have been among the biggest beneficiaries of the outsourcing
trend... According to TPI, which tracks worldwide deals worth more than
$50m, outsourcing contracts signed between July and September totalled
$13.4bn, a fall of more than 20 per cent on both the previous quarter and
the same period last year. The weakness of the past three months has left
the total for the year at $55.3 bn, more than #26 bn below the figure for
the whole of 2005....
--------------------
16. From WSJ, Monday, July 3, 2006, page B1, entitled "Siting a Call Center:
Check Out the Mall First" by John Lyons.
Quote(p B3): "After Lehman Brothers moved its internal computer help desk to
India in 2003, the mismatch between the investment bank's hard-charging
employees and their new Indian phone-support agents created problems, say
industry insiders, and the help desk returned in house."
It is also interesting that most of this article is about an Indian, Mr.
Shankardass, a US citizen ("born to Indian parents in Nairobi, Kenya") who
works for ClientLogic, that sets up call centers as an outsourcing business
and most of the article is devoted to his work finding call center sites in
Mexico.
--------------------
15. From Business W/Small Biz, Summer, 2006 (may be on the website:
[url]www.businessw.com/smallbiz[/url]) entitled: "Here or There" subtitle: Six
entrepreneurs explain why they outsource or not. Here is a quote from the
first page of the article (page 67):
"Some 24% of small manufacturers said they had purchased goods or services
from vendors outside the U.S. in the past three years, according to a 2004
study by the National Federation of Independent Business. For the rest, the
best place to manufacture is right at home, at least for now. The easy
rapport with vendors, relatively short plane rides, and the quality of
American-made goods keep these business owners and their customers perfectly
happy."
---------------------
14. Subject: More India BPO failure
(in Business W, June 19, 2006 issue, page 48):
title: "India: Why Apple Walked Away"
subtitle: "Plans for an Indian tech support center have been scrapped. A
cautionary tale"
by Manjeet Kripalani and Peter Burrows.
Quotes:
"Just three months back, Apple ...[was talking about] hiring 3,000 workers
by 2007 [in Bangalore]...."
These plans are now cancelled and most of the 30 existing employees in
Bangalore have been dismissed. The factors mentioned as working against the
original plan include "Entry level pay at tech and outsourcing companies
climbed by as much as 13% annually from 2000 to 2004, while salaries for
midlevel managers jumped 30% a year during the same period...." Also cited
as a problem was high turnover. Thus the financial advantage of sending work
to India has just about vanished.
--------------
13. Quote from CFO magazine, June 2006, page 17 (may be on their website,
cfo.com, I did not check): "Passing on India? Rising wages in India are
eating into some of the cost advantages of sending work to the popular
outsourcing destination. Wages have increased roughly 11 percent in each of
the last three years with little sign of abating, says Michael Spellacy,
vice president at The Boston Consulting Group. In major cities like Bombay
and Bangalore, inflation has climbed as high as 14 percent, with worker
attrition rates now averaging 25%. A full time worker in outsourced
financial services in India earns between $22,000 and $27,000, Spellacy
says."
Also, in The Economist, June 3rd, 2006 issue is a special report on India "A
Survey of Business in India" with the title "Now for the hard part" and on
page 6 of the special report (center section of the issue) is a large
article ("If in doubt, farm it out") on the difficulty India is having
finding workers for this great expansion in BPO service to the outside
world.
---------------------
12. The article "The H-1B Swindle" by Ephraim Schwartz, appearing in
Infoworld, October 31, 2005, page 12, has the subtitle "A new study suggests
that companies hire foreign workers for cheap labor, not skill." The article
goes on to say: "It appears there is hard evidence to prove that employers
are using the H-1B visa program to hire cheap labor; that is, to pay
substantially lower wages than the national average for programming jobs
(infoworld.com/3449)" The article goes into additional detail and cites data
sources such as BLS (infoworld.com/3450) and DOL's H-1B website
(infoworld.com/3451). Across the board, foreigners were being paid less. As
a general fact, companies have a financial incentive to preferentially
recruit foreigners because they know foreigners will accept a job offer at a
lower wage.
---------------------
11. A study show that outsourcing really does not save as claimed.
http://www.boston.com/business/tech...les/2006/04/13/
outsourcing_saves_less_than_claimed/
(this reference was posted on a newsgroup in early 2006, and was not
checked)
--------------
10. Three more recent articles. First: the article "Don't Offload Big IT
Problems On Outsourcers" by Rob Preston (VP.Ed-in-cheif) as appeared in
Informationw, April 10, 2006, page 88 (may be online at
informationw.com). Second: the large article "How Do You Spell Relief?
O-U-T-S-O-U-R-C-I-N-G" by Bruce Boardman, appearing in Network Computing,
April 1, 2006, pages 30-36, and a third article in the same issue on pages
39-48.
So what do these three articles say? The first is a one page qualitative
review of several outsourcing failures and cites "Outsourcing Backlash"
(presumably at informationw.com/650/50iuout.htm [I have not checked it])
and explained that any problems people have at home become magnified when
they offshore/outsource (many references to India).
The second walks people through the "process" of outsourcing/offshoring
work, including a discussion of how to do this, but also has a sidebar on
page 36 which includes a summary of a Deloitte Consulting survey of 25
organizations (worth $1 trillion in market cap, and with 1 mil employees,
and spent $50 bil on operations outsourced) and the sidebar says things
like: one in four brought functions back in house after realizing they could
do the work better, cheaper themselves, 33% of outsourcing relationships
failed in one year while 50% didn't last five years, and 57% paid extra for
services they though were included in the original contract.
The third article also helps the IT specialist by evaluating four data
center packages (from Savvis, EDS, Globix, and Infosys). There were a number
of tables with data. Bottom line results: Infosys was the cheapest, EDS
about three times more expensive, others midway; quality of results- Savvis
and EDS got A-, Globix got B+, and Infosys got a C. You get what you pay
for.
----------------
9. Courtesy of "indiabpoking" are the following reported negatives, failures
and shortcomings of BPO, quoting his quote from the source given:
> From indiabpoking@yahoo.com Mon Apr 10 18:36:37 2006
Date: 10 Apr 2006 15:36:37 -0700
From: indiaBPOking <indiabpoking@yahoo.com>
Newsgroups: alt.computer.consultants, alt.politics.economics,
alt.politics.bush, sci.research.careers, soc.culture.british
Subject: Outsourcing seen as source of innovation
http://news.zdnet.com/2100-9595_22-6059512.html
"An IDC and Capgemini survey of almost 300 executives attending IDC's
Outsourcing Forum East last w found that top reasons for deciding to
use Business Process Outsourcing in a corporate strategy include
reducing costs, driving innovation, and the ability to focus on core
competencies."
[but see below]
"Additional [negatives, failures, drawbacks] survey highlights include:"
"* More than one third (38.2 percent) of participants felt the biggest
downside to outsourcing is not getting the expected results, followed
by public/customer backlash (23.5 percent), and anxiety over loosing
control (20.6 percent)."
[note that 38.2 percent is much lower than other figures cited from other
sources farther down]
"* The three most important legal issues concerning BPO today according
to those surveyed were: governance procedures (33.8%), business
continuity (27.7 percent) and intellectual property rights (26.2
percent)."
--------------------------------
8. More complaints about India:
from the article "View from Asia-India won't fully benefit from the amazing
productivity of its companies unless it builds a better infrastructure for
business" by Tom Leander (Editor-in-Chief, CFO Asia). Appearing in "CFO"
magazine for April 2006, page 27 (may be at their website:
www.cfo.com/backissues).
Some quotes:
"... GE's CFO, Keith Sherin, told CFO Asia late last year that he finds
India frustrating. 'You get excited and nothing happens,' he says. Three
years ago, GE did about the same volume of business in both India and
China. Today, China is a $3 billion market for GE, triple that of India.
So, it's no surprise when Sherin sums up GE's Asian strategy by saying
that 'China is number one, two, and three for us'."
"His primary complaint is the lack of government support for infrastructure
improvements. Turn off any highway in India and you'll know what Sherin is
talking about."
"It may be unseemly to criticise a government that has to take care of so
many poor citizens for not building better roads to facilitate commerce, but
India's CFOs point out that infrastructure is a social-welfare issue. Sumant
Sinha, CFO of leading conglomerate Aditya Birla Group, says that he spends
more on capital expenditure every year than peer companies in other nations
might. How many of them, after all, must build their own power stations?"
"But its wishful thinking [despite all the positives of India] to conclude
that India's remarkable productivity will translate into a thriving
internal market any time soon. In the eyes of most U.S. finance chiefs,
China remains number one, two, and three."
---------------------------------------
7. Backshoring...the new buzzword
Feb 13, 2006 issue of Infoworld, pages 8 (Efraim Schwartz's column) and page
4, (editor's);
Developer poaching and rapidly rising prices are causing US based companies
to start pulling jobs back to the USA. Read about it in the periodical.
------------------------------------------------
6. Subject: Deloitte Report: outsource failure rates
From June, 2005, CFO magazine, page 19.
(it may be on their website, www.cfo.com/BackIssues)
Deloitte Consulting was said (by the CFO article) to have said "'In the real
world, outsourcing frequently fails to deliver its promise.' wrote
researchers who surveyed 25 companies with average revenues of $50 billion.
The study reveals that 70 percent of its respondents have had significantly
negative experiences and are outsourcing business processes and IT with
increasing caution."
"...there is growning evidence that large comapnies are rethinking massive
outsourcing contracts. Big name defectors that have unwound at least part of
their arrangements include Conseco, Dell, Capital One, and Lehman Brothers."
"A sure sign that outsourcing isn't working is the amount of renegotiation
surrounding the vendor agreements, sayd Deloitte senior strategy principal
Ken Landis. 'There wasn't a single participant in the study wohe contract
went to term,' he says. 'All of them had renegotiated prior to the contract
expiration date'"
"Companies are souring on outsourcing, the survey asserts, for the same
reason it has been criticised for years: failure to live up to cost-
reduction promises, risks to intellectual property, and confidentiatlity,
and lack of transparency."
The article states that, so far, 25% of the companies have brought services
back (now called backsourcing).
------------------------------------------------------
5. From Information W, page 8, in the Nov 21, 2005 issue.
Sidebar: "48% of all companies will spend more money on BPO this year than
in 2004"
"55% of current BPO service delivery is conductend inside the USA"
"41% of companies are satisfied with their BPO services"
So, that sounds like 100 - 41= 59% are dissatisified with their BPO
services. And, there's going to be more BPO?
Says the source is IW, Managing Offshore, and Equa Terra study of 200 BPO
customers.
-------------------------------------------------
4. "Offshoring isn't such a sure thing"
by Lora Kolodny,
Inc. magazine, September, 2005, pages 22-24
Quotes:
"Companies are finding that sending IT work overseas can be more trouble
than it's worth, according to a new survey from DiamondCluster
International, a Chicago-based management consultancy. The number of
executives surveyed who said they were pleased with their outsourced
IT vendors fell by 17 pecentage points versus the previous year, marking
the first decline since 2002. Moreover, early termination of relationships
between buyers and offshore service providers spiked to 51%, which is
double the rate of 2004."
In other words, half of all relationships are terminated before their
first contract period is up.
In view of this, a spokesman for the consulting firm says that "...tech
buyers will think twice about sending critical services abroad--at least
for now."
--------------------------------------------------
3. From "CFO" magazine, FALL 2005, special issue, pages
40-44. (may be on www.cfo.com/Backissues)
article: "Customer Disservice: Critics say the promised savings from
offshoring come at too steep a price, while companies say very little at
all"
by Norm Alster
some content and some quotes:
This article starts by saying that on a recent talk show where people
could call in with comments and questions, it was discovered that
virtually everyone in the USA does not like foreign call center
representatives.
"But the practice of outsourcing customer service to offshore call centers
is beginning to look like a classical idea carried too far. Critics of the
pracctice point to a growing body of evidence that suggests faulty
economics and customer dissatisfaction are forcing a rethink of what
once seemed a no-brainer."
"'The economic benefits of outsourcing customer service are grossly
overstated' according to Niels Kjellerup, a senior partner with Australian
consulting firm Resource International and editor of a Website devoted to
call centers (www.callcenters.com.au). Customer resistance, along with
data-security concerns and the unexpectedly high costs of managing
offshore call centers, offset and dilute their promised economic benefits,
says Kjellerup."
"There is already evidence that these factors have combined to slow the
offshore migration. Several large firms, including Dell, credit-card giant
Capital One, and insurer Conseco, have shifted at least some customer-
support operations back to the United States."
Gartner's analyst, Robert Brown, says that the initial large growth in
offshoring is expected to be, in the future, much much smaller.
"Companies with monopolistic or overwhelmingly dominant market positions
are more apt to risk customer alienation where near-term savings can be
realized."
"Alexa Bona, a Gartner analyst based in London, predicts that during the
next three years, up to 60 percent of companies outsourcing
customer-facing service will encounter customer defections and hidden
costs that will either cancel or outweigh any perceived savings in such
arrangements."
"He [Chris Selland, at Covington Associates in Boston]says executives at
firms that have employed offshore call centers keep telling him that 'it's
harder, it takes more management attention, and you have to be meticulous
about the way you structure the agreement.' As a result of all this
unexpected overhead, the projected savings from offshoring can swiftly
evaporate."
The article says there is huge turnover at Indian call centers; it can be
up to 70% per year. And, with the big expansion, there have been
recruiting wars in India and escalating pay scales.
"Martha Rogers, a consultant and author of several books on customer
relationships, contends that the metrics generally used to measure
call-center performance are flawed."
"Many companies that outsource customer service, in fact, don't like
talking about it, and more than a dozen turned down requests for
interviews. 'Companies are looking to do everything they can to hide the
fact that they are using off shore call centers' says Selland. 'From a
political standpoint and a customer-acceptance standpoint, it is something
they are trying to downplay.' At some Asian centers, agents are actually
trained to conceal their real names and adopt phoney American monikers, a
practice that fools few and can further inflame an already  caller."
"One in three respondents in a British survey said they would stop doing
business with a bank that relocates its call centers offshore. Another
study, conducted in 2004, reported that just 5 pecent of the British are
satisfied with offshore call centers. The Irish arm of Sweden's Tele2AG, a
telecommunications firm, recently switched its call center operation out
of India and back to Ireland, citing consumer preference."
"In an unpublished data-theft case now under investigation, a large
U.S.-based technology multinational contracted with a call center in India
without knowing that that company in turn subcontracted a portion of the
work to firms outside India, where employees of the subcontractor
apparently managed to penetrate the American company's information
database."
"...growing outsourcing industries in Eastern Europe and Latin America
have been targeted by criminals sing access to customer data. "
"'For companies that regard customer service as a key part
of future revenue growth, bringing such operations back to
domestic shores is the way to go,' says Kjellerup."
---------------------------------------------------
2. From _Information W_, page 60, Dec 19/26 issue, 2005
A short article by Paul McDougall reporting that: "...companies
operating in India, including local ones such as Infosys
Technologies, Tata Consultancy Services, and Wipro Technologies,
spend a lot of time and energy time stealing each other's employees--and
that's quickly driving up salaries" and "'There's a
lot of employee turnover [in India], and we weren't interested in that,'
says Martin Mellon, director of development at applications vendor ASG
Software Solutions. The company chose Northern Ireland over India
for its offshore development work."
--------------------------------------------------
1. Subject: "Satisfaction Wanes for Offshoring"
On page 2 of the print issue of Processor.com for June 17, 2005, volume 27,
number 24:
"According to consulting firm DiamondCluster International, the number of
buyers satisfied with the providers of their offshore outsourcing has fallen
from 79% to 62%. The firm's annual survey of IT outsourcing also revealed
that 51% of buyers are terminating their outsourcing relationships earlier
than scheduled."
=============================
An anti-offshoring website (excerpted from a 2006 newsgroup posting):
Subject: US IT Out Web Site (Anti-Offshore-Outsourcing) (fwd)
From: Vladimir Veytsel <VladV@verizon.net>
Newsgroups: alt.computer.consultants, alt.computer.consultants.ads
Link : http://it.davar.net or http://davar.net/IT
Name : US IT Out - USA Information Technology Outsourcing
Descr: Selection of anti-offshore-outsourcing quotes,
opinions, cartoons and links.
(On most part changes are uploaded at month end;
updated sections are marked by colored dates.)
About Short introduction that explains the purpose,
the origins, and the structure of the web site.
Advice Quotes that offer advice on what one can do
to oppose the offshore outsourcing.
Quotes Quotations selected mainly by the following criteria:
1. Random historic quotes (mostly by the US presidents).
2. All USA historic quotes (mostly by the US presidents).
3. Condensed viewpoints that are well taken.
4. Representative statements showing "who is who"
relative to the offshore outsourcing issue.
Opinions Opinions selected on most part from the
"alt.computer.consultants" news group. Just linking
to them would be clumsy and not quite reliable, and
could result in losing them if they were deleted from
the news group archives. A few opinions were selected
from the media, again for the sake of keeping them in
case they were deleted from the media site archives.
Books Short reviews of books that describe and analyze the
offshore outsourcing phenomenon, and related subjects.
Cartoons "One picture is worth thousand words" - especially if
it's a good cartoon. Treating a topic that is anything
but a fun with a smile (though a  one) serves as a
healthy add-on to the mostly depressing content of this
web site.
IT Links Classified links to information about the offshore
outsourcing of information technology jobs by
USA-based companies.
USA Links Classified links to information about USA events
(some links here are related to offshore outsourcing).
World links Classified links to information about world events
(some links here are related to offshore outsourcing).
--
Best regards,
Vladimir Veytsel
http://davar.net
http://it.davar.net
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