Planet Outsourcing

For more than two thousand years China has been dependant on soyabeans for producing tofu which has become the staple diet of country. Now the country has started facing water problems and in order to meet its daily dose of tofu it is looking forward to Brazil to come to its rescue. Industrialization has diminished water supplies and cultivable land in the country therefore China is looking towards South America for its food needs where land is still available in plenty and is cheap.

The figures talk for themselves as a fifty percent jump has been witnessed in soyabean trade between China and Brazil which stands at eleven million tons. China has been witnessing a drop in the water table at the rate of three to ten feet every year and let me tell you that a thousand tones of water is required for production of one ton of grain therefore the best thing for China is to import it.

Now the situation is such that China is looking forward to get in direct contact with Brazilian farmers and they are even ready to improve facilities and upgrade the rail system in Brazil all for a regular supply of soyabean.

Via medindia

Every time work has been outsourced from Britain to India it has called for a lot of hue and cry but a recent report comes as a shocker which states that work being outsourced to India is having no effect on the call centers in Britain and a million jobs would be generated by the year end. As per ContactBabel around three percent of the working population in Britain was working in call centers. With around 960,000 jobs in the sector the numbers will continue to increase in the months to come.

Steve Morrell, of ContactBabel stated on this issue:

The UK contact centre industry continues to grow at a healthy and sustainable rate, driven by the expansion of existing operations, rather than the opening of new contact centres.

Outsourcing boom in countries such as Eastern Europe, South Africa and India have not affected work in U.K. Even some companies in U.K have withdrawn the outsourcing work and it is expected that around 1.1 million people would be employed in call centers in U.K by 2010. I was just wondering why such a hue and cry was raised every time work was outsourced to India. Was it all some political agenda? Seems so!!

Via andhracafe

The growing attractiveness of the Indian market has also diversified to the medical sector as many of the US companies are planning to outsource their offshore their employee healthcare to India.

Due to the fact that the healthcare is pretty expensive in the US; and that the companies can save to about 90 percent on the expenditure cost by outsourcing; India is proving to be an irresistible option for the companies including those in the fortune 500 List. The cost advantage for the companies can range from 85 percent to 90 percent. The main reason which had led to the controversies to the idea of outsourcing healthcare is the fact that the healthcare requires a degree of intimacy with the patient is not possible by outsourcing it.

Dr Naresh Trehan , Escorts Heart Institute and Research Centre stated:

We have patients coming from there on a regular basis so far mainly those who are uninsured if you say the trend, I think it’s three times today than what it was two years ago.

It is expected that Indian health care industry can reach $47 billion in the next five years and if it undertakes outsourcing then the figures can double. The Indian healthcare industry surely has a bright future ahead.

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Via: ibnlive

American telephone companies will have a tough time enjoying outsourcing since Federal Communications Commission or FCC has strengthened the outsourcing regulations therefore it would become difficult for the companies to outsource their marketing or customer service functions. Now in case companies would like to release their customer records to a third party they would have to get the permission of the customer before they intend to do so.

Both the parties are bound to suffer since outsourcing was being deployed as a means of bringing down the costs of the companies by giving their customer service functions to third parties. Companies are worried that as a result their overall costs will shot up. They even feel that even this rule will not be able to prevent the leakage of customer data.

It seems FCC is acting tough on the issue of privacy and is taking all measures to achieve it but telecom companies have been left high and dry since they no longer would be able to enjoy the benefits of outsourcing.

Via cellular-news

Pharma and medical devices companies are having a tough time in meeting the testing guidelines due to the development of combo products and outsourcing has the potential to come to their rescue in this regard. Combo products are selling like hot cakes and with the market expected to shoot up to $9.5 billion by 2009 pharma companies are fighting to introduce new products in this segment.

Most of the companies are not equipped to handle the experience and skills required for testing and validating these products and as a result of this most of the companies may find it difficult to get past the guidelines of FDA.

As per Steven Richter, Ph.D., President, Microtest:

As we anticipate the issuance of new FDA guidelines specific to the research, development, production, and validation of combo products, the selection of an outsourcing laboratory testing partner is nothing less than a critical element for any manufacturer’s successful development and production process of a new combo product.

The best option for these companies at this stage would be to undertake the services of outsourcing companies with regards to testing and validation requirements for combo products if they would want to get past FDA and introduce their products in the market.

Via drugnewswire

Irish Independent, Evening Herald, Sunday Independent and Herald AM are some of the most respected newspapers of the world but rising costs are forcing them to follow the outsourcing route. This has irked the journalists and they have voted to reject this cost cutting arrangement. The newspaper had planned to outsource its sub editing work to a company set up by its two employees but now it may not become a reality.

They feel that in the long run outsourcing would affect the quality of work being undertaken at the newspaper besides costing their jobs. Media outsourcing has not been as popular as IT outsourcing and it has been generating criticism around the globe. The media fraternity feels that it will lead to loss of quality work besides taking away their jobs.

This may be true to some extent but newspapers are helpless and if they don’t opt for outsourcing they may face extinction as print media has been facing a lot of competition from electronic media of late.

Via irishexaminer

Indian Supreme Court in a landmark judgment on Monday ruled that foreign firms would not have to pay tax on their global income earned from business related to their outsourcing arms or units if these are conducted at existing market prices. The apex court decision came in a case involving Morgan Stanley’s business process outsourcing unit in India, in which Indian revenue officials had earlier served notice stating that the firm should pay taxes on its global income. According to the significant verdict, the income-tax department could not tax the global earnings of investment banker Morgan Stanley attributable to its Indian holding Morgan Stanley Advantage Service (MSAS), which provided back-office support to the parent firm.

In an earlier decision by a tax tribunal, Morgan Stanley was exempted on the grounds that the back-office unit was not a permanent enterprise of the parent company in India. The Authority of Advance Ruling had said Morgan Stanley’s global earnings were not taxable in India since the firm paid an “arm’s length” (a price at which two unrelated parties would agree to a transaction) price to its Indian subsidiary.

In addition, the Supreme Court noted in its judgment that the activities of MSAS did not constitute a permanent establishment. Nevertheless, it further conceded that owing to the deputation of employees from Morgan Stanley to MSAS, the subsidiary holding could be considered a service permanent establishment [PE].

Reacting over the judgment, tax experts have opined that despite the ruling, the concept of a service PE might need greater clarity. According to the reports, the Indian government is expected to review and clarify the definition of ‘permanent establishment’ (PE) for purposes of transfer pricing. As a matter of fact, the latest ruling will surely have far-reaching implications not particularly in terms of captive BPOs but also other sectors.

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With the demand for data center space rising like anything it is expected that the demand would continue to surge at a rate of fifteen percent per year. Its growth is being compared to that of the energy sector. Companies offering data center space have a golden opportunity in their hands as the industry has garnered revenue worth $15 billion last year and this year figures are expected to be much higher.

The advantage of opting for data center outsourcing is that it offers companies a greener way of conducting business. Though it offers numerous benefits but people need to approach it with a lot of care and must consider the quality factors, cost and optimization factors before traveling the outsourcing route. Appropriate research needs to be carried in this regard and exercise restrain in handling over business critical data to third party. Also check that you are not charged unnecessarily since supply is less and demand is more in this sector. If you act with a bit of restraint and brains then your company can surely benefit from it.

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Via infoworld

The R&D arena has been hit by the cost and complexities involved in the innovation process and therefore companies are now looking up to outsourcing of R&D function. Both the offshoring and outsourcing concepts for R&D are being given importance and it is being regarded as a global innovation network model. Increasing number of companies are giving importance to R&D outsourcing now.

Though it offers a number of advantages in the form of speed and greater efficiency it also brings along with it a number of challenges such as loss of control which is being regarded as the biggest disadvantage of R&D outsourcing.

Rob Mitchell, editor stated:

Increased competition, the cost and complexity of innovation and a surplus of ideas are encouraging many companies to restructure their approach to research and development. Our survey shows a considerable shift towards greater outsourcing and offshoring of R&D in what we term a global innovation network model, despite concerns about loss of control over a function that is often considered core to a company’s identity

Via cellular-news

Now Dubai is also looking to emulate the success of India in the field of BPO but high costs in bringing up the BPO centres is acting as a roadblock for the city. Amazingly the economy of UAE has been adjudged as the most competitive Arab economy by the World Economic Forum. It has received strong praises for its entrepreneurial skills but has lost out due to heavy dependence on migrant workers and lack of educational reforms. Lately UAE has been witnessing rising costs due to increasing rents and inflationary pressure which has been affecting business in Dubai.

India is a leader in outsourcing and will continue for a long time since it has the basic communication skills coupled with low costs and with its expertise in IT and BPO makes it a natural choice for companies outsourcing.

Now Dubai is targeting high end outsourcing operations and with its close proximity to Africa, East and South Europe, Central and South Asia will surely offer it a geographical advantage but only if it can control its costs since this is a vital factor in the outsourcing game.

Via hindu