Outsourcing - News & Trends

Outsourcing stays stable

DALLAS, GURGAON, and LONDON – The first quarter of 2008 was similar to last two quarters in terms of momentum of outsourcing transactions, according to Market Vista, a quarterly report on global outsourcing by the Everest Research Institute.

Europe has been gaining traction in the outsourcing market and contributed to 36% of the transactions signed during the quarter. Contrary to market speculation, the number of firms outsourcing continues to grow. But at the same time, some large companies, such as Unilever, Shell, and AOL have announced plans for divesting offshore captives this quarter.

India, Philippines, and Eastern European countries such as the Czech Republic and Romania have experienced substantial offshore activity. In addition, new locations are emerging as potential offshore options, including Thailand, El Salvador, Paraguay, Uruguay, Honduras, and the Dominican Republic. In some Central American cities, notably Monterrey, increase in player activity has fueled concerns around labor pool pressures in the medium term.

For more information, see www.everestresearchinstitute.com

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Customer satisfaction key to outsourcing

STAMFORD, Conn. — Outsourcing help desk services to an offshore location may yield as much as 30% to 40% cost savings, but customer satisfaction must be a key factor when making this decision, according to Gartner, Inc.

Gartner analysts found that offshore help desk service voice support services have experienced problems, particularly those located in India. The problems are focused on poor quality that can lead to significant customer dissatisfaction.

Four factors have been identified as the main contributors to the customer dissatisfaction:

• Client knowledge – When a help desk is internal, the client has its own employees supporting the help desk. These employees have access to internal communications which enable them to clearly understand their business and, therefore, support end users. When the help desk is outsourced, the service provider tries to capture the information into a knowledge database, but the information is not always kept up to date or easily understood.
• High turnover – A recent Gartner survey for all IT services showed that the worldwide attrition rate was 14.7% and offshore it was 22.1%. Although this can be a problem anywhere in the world, it can be extremely prevalent in low-cost countries where many IT job opportunities exist and many IT help desk agents will switch jobs for a small salary increase.
• Cultural differences – If clients have a problem, they relate the problem over the phone, but because of cultural differences, the help desk agent may not interpret the problem and react in the most appropriate manner. For example, a client employee may have a problem on a PC and want to know how to fix it. Instead of explaining how to fix the problem, the offshore agent may take control of the employee’s PC and change the image without explaining how this was accomplished because the agent doesn’t want to insult the client. However, the client employee may be dissatisfied because he or she doesn’t learn what was wrong or how to fix the problem resulting in a need to call the help desk again in the future.
• Dialects – Although Indian-based providers’ agents speak English, they are generally trained in U.K. English and may use British words or a more formal context, format, tone, and enunciation. Because many clients are from North America, this adds to oral communication problems. This can cause frustration for the client and the agent, and lead to dissatisfaction with the help desk experience. However, when a help desk problem is sent via e-mail or on a Web chat site, this language problem is not a factor, and customer satisfaction is positive.

Gartner offers recommendations for enterprises to help ensure the success of an offshore help desk service:

• Assess and validate whether the offshore provider’s services can meet requirements.
• Review the service provider’s offshore practice for building and updating its knowledge database.
• Review the provider’s offshore service for cultural understanding, language proficiencies, and employee turnover ratios.
• Talk to references using offshore help desk resources and ask what issues they may have encountered.
• Understand that the help desk may be the first line of IT support to end users, so offshoring should not just be a cost decision.
• Evaluate low-cost onshore alternatives as well. The savings available from low-cost onshore and “nearshore” alternatives may negate the desire to go offshore.

Additional information is available at www.gartner.com

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FAO Research launches blog

BOSTON – FAO Research, Inc. an independent research firm, has launched a blog for financing and accounting professionals.

The blog is anticipated to address topics such as offshoring, pricing, governance, procurement, cost/benefit, success factors, and supplier analyses. The blog can be accessed at www.faoresearch.com

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Outsourcing awards given

DALLAS, Texas – Outsourcing Center has announced the winners of the 2008 Outsourcing Excellence Awards:

• Best Partnership: Harvard Pilgrim Healthcare and Perot Systems Corp.
• Best EU: Universal Music Group and buyingTeam
• Best ITO: Touro Infirmary and Siemens Medical Solutions USA, Inc.
• Best BPO: ENMAX Energy Corporation and Cognera Corp.
• Best Financial Services: Royal Bank of Canada (RBC Financial Group) and iGATE Global Solutions
• Best First Steps: National Life Group and Perot Systems Corp.
• Most Strategic: Microsoft Corporation and Accenture
• Most Flexible: Lloyds TSB Bank plc and Firstsource Solutions Ltd.

For more information, see www.outsourcing-alert.com

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Top outsourcing companies

POUGHKEEPSIE, N.Y. – The 10 largest employers in outsourcing in Europe, according to the International Association of Outsourcing Professionals (IAOP), are: Closed JSC, Epam Systems, IBA Group, Intetics, ISS A/S, KPN Getronics, LogicaCMG plc, SnT  Global Sdn. Bhd., Vertex, and Xchanging.

In addition, IAOP recognized five companies for having the most outsourcing employees in Russia: Auriga, DataArt, Luxoft, MERA INN, and Reksoft. For more information, see www.outsourcingprofessional.org

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Cost no longer vital

DALLAS, Texas – Cost is no longer the primary consideration in terms of Information Technology (IT) outsourcing, according to a study by the Outsourcing Journal.

The need for greater business return, flexibility, and tighter information exchange between IT and the business has outstripped the need to save a few dollars, notes the Journal. In addition, the availability of new IT delivery models is changing the face of IT outsourcing.

Embracing this new approach will enable IT executives to lower IT costs, benefit from innovation, and derive greater business value from their IT infrastructure. For more information, see www.outsourcing-requests.com

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