Planet Outsourcing

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

Financial outsourcing could have picked up but thanks to the regulatory issues which have inhibited its growth. This issue has caused a burden on the companies and it is acting as a roadblock to outsourcing finance and outsourcing business. This was revealed in a study conducted by LogicaCMG which is a leading consulting firm. The reason attributed to slow growth in the financial outsourcing arena is increasing regulation and importance on governance. The study stated that just seven percent of the companies were only outsourcing their finance and accounting functions.

Sixty eight percent of the firms studied stated that the current financial regimes were holding them back and the strict sanctions were was an overriding criteria in the desire of the CFO’s to retain direct control of their finance function.

Probably the companies should try and request the government for relaxation of certain issues if they would like to gain benefit from the world of outsourcing.

Via pr-inside

Air New Zealand now does not want to take the course of outsourcing and has decided to go against the idea of outsourcing jobs to India believing that it would not meet their needs. Earlier the airlines was ready to forego around seventy finance jobs in the company so that it could save out around $NZ20 million by outsourcing these jobs. Earlier the company had plans to outsource jobs to Fiji but the political instability over there caused them to shift their plans to India.

The airline issued a statement:

We have now formed a view that India would not meet our requirements, so the outsourcing proposal has been withdrawn and this was communicated to staff earlier this week.

Fearing that they might lose their jobs the employees’ gave their node for changing the work conditions and SFWU Jill Ovens stated that this move was a nice step forward for the finance staff. It is being said that the airlines dropped its plans after facing difficulties in outsourcing work and government pressure. To me the latter reasoning looks correct though.

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Via livemint

Samuel J Palmisano, Chairman, President & CEO of IBM will personally meet chairman of Reliance Communications Anil Ambani and pitch for an outsourcing deal worth $1.5 billion. In case IBM lands up with the deal it would be the third major contract for the company in India. IBM has a strong presence in India and is looking forward to focus on IT outsourcing contracts. As of now both the companies have declined to comment on the any developments taking place between them.

It is expected to be a ten year contract and four companies had been ahortlisted for this purpose - Accenture, EDS, IBM and T-Systems. Reliance Communications is looking forward to outsource its wireless business to a service provider for bringing down it’s projected IT spending and also remains asset light. The company would save to the tune of twenty percent and as a result also concentrate on its core competencies.

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Via business-standard

Post 9/11 U.S has been losing out on its talent at a steady pace since the government has been handing out contracts to private agencies due to which it is facing lack of talent and expertise for its national security and defense programs. There has been an increasing demand for complex technology and now the situation is such that the country either does not have the expertise for high tech projects or lacks appropriate talent for overseeing the work.

Due to this the government is turning to contractors for undertaking sensitive work. If you check the figures then the figure of private federal contractors has reach 7.5 million and this figure is four times higher as compared to the federal workforce. This highlights the plight of the government and the increased dependence on outsourcing. The whole blame cannot be even put on outsourcing since to an extent the government employees had been undertaking faulty work and this was resulting in losses for them. We cannot solely put the blame on outsourcing only since the government too is a culprit to an extent.

Via: pr