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Outsourcing Alternatives to India politically and economically unstable

Outsourcing: A love / hate relationship for professionals in USIT. Ask the average employee in any IT organization, and the hearing on the fear of jobs going to India and China is almost inevitable. Although many have begun the movement towards business management services (BSM) to the face of trends chaotic work, work itself consumes over one third of IT budgets. This figure is in perfect harmony with a recently published Gartner report indicates that 37% of typical IT budget goes directly to staff costs. What are you like CIO going to do to handle this hectic? Is outsourcing or "offshoring," the answer?

How may outsource its operations to a foreign country and still maintain compliance with best practice frameworks such as ITIL or MOF? How do you maintain the Sarbanes-Oxley, PCI, HIPAA, or when using 100% of offshore resources with less control?

Almost everyone in the IT sector has at least one story about various operational tasks to be outsourced to India, not call center, network operations center (NOC), or the infrastructure team has been immune on talk of jobs going offshore. No longer are the cities of Mumbai, Delhi and simple manufacturing centers and raw material suppliers. The country is home to some of the largest call centers and business development centers in the world. In late 2005, the Indian labor outsourcing numbered 350,000. That total is currently estimated at over 800,000, with many new jobs go unfilled due to lack of qualified candidates.

Eleven years ago this months, U.S. today published an article entitled "Can be removed from political instability in India?" Looking at only the news the past six months, the answer to that question is obvious NO.

The trend toward twenty-first century India has not encouraged the kind of radical political change one might expect from the world's largest democracy. Moreover, the unwillingness of the Indian government more forcefully to combat intellectual property theft is the stuff that makes your legal team to lose many nights of sleep.

The recession has made its way to India. From 4 December 2008 of the New York Times published an article about the wave of outsourcing firms to reduce their daily operations in India due to weather global financial unhealthy. Starting this week, the Indian rupee is at a historical low.

India makes a strong case as the "world office again," however, has not failed to produce a supportive environment front-office operations such as product innovation and business strategies. The prevailing thought in the last 5 years has been that companies Indian outsourcing are skilled in the art of efficiency and measures for product development. What now?

On 7 January 2009, the populations of India fell sharply following the announcements of Satyam Computer Services that summaries of corporate profits had been inflated for years. The announcement by the chairman of Satyam and co-founder who had falsified records directly continuously puts a major Indian outsourcing industry in dramatic chaos. As a provider of back-office services for many of the largest banks and health institutions in the world, the result of the crisis is nothing Satyam less than devastating.

On Friday, January 9th 2009 news sources reported that interim CEO Ram Mynampati has no faith in the company can continue beyond the next few weeks. Mynampati stated that they were working to find funds to pay for current employees, suppliers and creditors.

In less than a week, the crisis has crossed the Pacific Ocean and hit the U.S. coastline. PricewaterhouseCoopers Audit giant is expected to pay a high price for the emerging fraud. The auditor has been responsible for financial supervision to more than eight years Satyam, Satyam and investors are expected to go to court in an attempt to recoup losses. According to judicial sources within India, are likely to attack directly instead of PricewaterhouseCoopers Satyam.

The tragic events of November 2008 in Mumbai clearly show that the concerns are much deeper. More than 200 people died in the attacks, and the whole district in the central business area of Mumbai was halted for several days, resulting in billions of dollars in lost labor. Within a week of attacks, five of high profile cabinet members in India were forced to resign. On 1 December, Time magazine posed the question: "Government of India survived the slaughter of Mumbai? "

Many companies are choosing alternative destinations, and some of the trends show a migration India's real to other knowledge-rich environments such as Singapore, Philippines, Armenia, Pakistan, and several Latin American countries. Businesses that require less interaction with the public (for example, a software development center) may select destinations where English is not the primary language, or in some cases, not a language spoken at all. Public construction companies against operations such as support services or call centers are forced to reconsider previous decisions, and many countries are moving to focus more on English as Taiwan and the Philippines.

Key players are making a strong case for themselves, these trends develop. In the Western Hemisphere, Costa Rica and Peru have a wonderful history of rock solid software development and high satisfaction Customer ratings. In Europe, Armenia is emerging as the main engine and the model of efficiency. In Asia, many are discovering that the near-perfect English spoken in Taiwan and the Philippines combined with some labor costs equal to or lower than those of India make each destination of choice. In fact, the November 30 issue of The New York Times Magazine presented a four-page article promoting the viability of Argentina as a major destination for outsourcing.

While China, Russia and Korea have fantastic talent pools, the cost of labor and in some cases difficulty in dealing with local and national governments that are less attractive to some U.S. based companies.

While being one of the least mentioned even more colorful countries historically Europe, Armenia is a safe virtual extraordinary talent. As mentioned by the CIA World Factbook, 18% of Armenia's current population is under the age of 15, ie, the talent pool is on the verge of tremendous growth.

Armenia declared its independence from the former Soviet Union on 21 September 1991 and is now a bastion of political stability (a factor particularly attractive to industry in the O & O). A healthy real GDP growth rate of 13.7% makes Armenia one of the major producers in the EU.

Moreover, Armenia is rapidly becoming a major challenge in the relative economic freedom index. As reported by the Heritage Foundation, the change has been nothing short of amazing. In 2000, Armenia ranked 84th in economic freedom on. Since late 2008, Armenia 28th place – ahead of European powers in Spain (31st) and France (48th) and just behind Sweden in the 27th.

Hong Kong ranked at # 1 on the list for 2008, with the U.S. at # 5.

The assessment of economic freedom is based on 50 economic indicators in the following categories: capital flows and foreign investment, financial systems, budget money, and trade policy, wages and prices, government interference in the economy, property rights and regulations, and the black market.

Many experts are outsourcing finding a highly successful presence in Armenia for many of its customers and partners. The cooperation extended by the Government of Armenia to facilitate immigration and restrictions visas for executives and other technical employees who travel between Armenia and the United States has been a great benefit for many, and this is exacerbated by its great satisfaction the talent pool offered by this European country.

Having a stable presence in Armenia is just one example of the alternatives to instability of India today. There are many other alternatives as well, and diversification will be the cornerstone for success in the coming years.

As one executive director, "… the logical approach for today's global economy is diversification. Many of my contacts who previously invested resources heavily in India and are seeking new alternatives, and we believe that the best strategy is simply to avoid the old cliché of "putting all eggs in one basket. "

Singapore has become another destination of choice, with a very stable economy and government, and strictly enforce laws on intellectual property rights. Perfect English is widely spoken and the country is considered one of the five technical innovators in the world.

Originally founded as a British trading colony in 1818, Singapore joined the Federation of Malaysia for a short two years ending in 1965. Now, completely independent Singapore is undoubtedly one of the most prosperous, diverse, and most cosmopolitan destinations in the world and has a GDP per capita higher than many "leaders" Western Europe.

In 2006, the World Bank in Madrid and rated "most eco-economy companies in the world." Immediately after London, New York and Tokyo, Singapore is the fourth largest center of foreign trade exchange in the world.

The country is home to three major state universities: The National University of Singapore, Nanyang Technological University and University of Edinburgh, resulting in a literacy rate of more than 93%. The island carries out everything with a geographic size of only three times larger than Washington, DC.

Philippines and the U.S. share not only a legal system very similar, but the English language. The legal sector companies believe that this made it especially attractive. Once a U.S. colony, Philippines has a workforce that is already familiar with many legal factors not readily apparent to those of countries with less of a relationship with seasoned United States.

Some facts about the Philippines:

• Population 91,000,000 from 2008
• 550,000 college graduates per year on average
• Educated workforce 30,000,000 More
• Introduction of IT salary average of $ 2500 – $ 8000 USD PA
• CBD premium real-estate costs average PSF $ 17
• Literacy rate 95%
• English language main

One of the top three firms in the whole world moved its headquarters from Chicago to network Fort Bonifacio, Manila in 2003. This operation has since grown much larger, covering also legal operations and software development.

1997 to 2008, companies such as Citibank, Fluor, IBM, Convergys, Telus, HSBC, Dell, JP Morgan, Siemens, and Deutsche Bank have opened up large facilities in the metropolitan area Manila in the Philippines.

More than a country full of call centers, the Philippines is home to dozens of operations offshore operations network, wireless, energy, transport and logistics, legal and medical transcription, finance and accounting, and software development.

The country is now recognized by some as the top destination of choice in Southeast Asia. In 2006, the country generates in excess of $ 3.0 billion in procurement operations external, and that figure is expected to more than double in late 2009. The Philippine government has targeted a global market share of 8 to 10% in the O & O market in 2011.

Regardless of where you go, there is no "best answer" to every situation. When looking for that "trusted advisor" to help make your next outsourcing, offshoring, development, or decision of the infrastructure, you need a company with the knowledge, process, devotion, and the address shown to be a success.

Only by a thorough understanding of your business can help any company into an effective O & O commitment. You need a company that strives to understand and optimize how the process would improve not only the IT department, but all other business units as well.

O & O will continue to gain momentum in coming years regardless of what happens in the Indian subcontinent. Recent events in India and around the territories are not more than a hiccup to a changing global business model.

Businesses today realize that three important factors that have emerged in the outsourcing and offshoring industry:

• O & O can not and should not be based on the size of "one for all" methodology more. Diversification is the key.
• Each situation is different.
• Unless they are willing to invest in learning foreign taxes and H / RS, family vacations, single infrastructure, regulations government, and possibly some foreign languages, you need a trusted advisor on your side.

The companies and their investors, spent billions of dollars (and thousands of man hours) the development of outsourced operations based solely in India have found that trying to separate technology real business process is not only absurd, it is useless. Outsourcing and offshoring can offer endless possibilities, but must be with precision, care, and the proper distribution. Instead of outright withdrawal of the relocation of operations, now is the time for diversification.

"There is time in the life of the warrior, in his thriving and declining, in his harmony and discord. Similarly, no no time in the Way of the store, in the rise and fall of the capital. All things implies an increase in the fall and momentum. You should be able to discern this .. "

Miyamoto Musashi, 1645

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About the Author

Jack Lesley is a seasoned, dynamic, and well-educated I.T. professional with decades of experience in the US as well as Asia-Pacific and Australia.

He has particular expertise in the areas of infrastructure, outsourcing, offshoring, ITIL, MOF, SOX, PCI, and HIPAA – as well as how they all interact with I.T.

Jack currently resides in Houston, Texas with his wife Sandra, his son Brint, and two vicious Jack-Russell Terriers

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