International Business Opportunities

Indian NASSCOM and Dutch CBI have jointly announced an agreement which would make available to European small and medium-sized enterprises (SMEs) the benefits of business process outsourcing to highly specialised companies in India (BPO).

BPO, covers activities such as call centres, finance and administration, data processing, research, back office processes, human resource management and many others.
As many SMEs are not able to take advantage of BPO, the agreement aims to help them formulate exactly what their outsourcing demand is and to help them locate a perfectly matching partner in India.

CBI - an agency of the Dutch ministry of Foreign Affairs, leading centre of expertise in Europe in the area of trade with developing countries, will help European SMEs recognise the huge advantages of business process outsourcing. It will also assist them in finding reliable partners who understand their needs in India and other outsourcing destinations.

NASSCOM - National Association of Software and Service Companies, the largest and most important trade body for the Indian IT and

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A few weeks ago we have reported the result of a survey conducted by Capgemini about outsourcing trends in Europe.
The study showed that British and Irish companies outsourced 8 percent of IT operations to offshore partners, as the European average was of only 2 percent. A difference expected to increase by 2008, with the British figure reaching 24 percent, compared to a European average of 5 percent.

Social and cultural issues, were reported as cause of such difference.
What is now happening in France, with the protests across the country caused by a Government measure proposed to decrease the jobless rate, seems to confirm how to be hard bringing changes in such societies.

Newsweek, in “Leaders Only Know How to Say No“- April 3 issue, calls this European attitude as “politics of protest about resisting change”.
It continues:

“It seeks to uphold the status quo. And for Europe as a whole, that is a disaster.”

Going a step forward: “At bottom, Europeans from the founding states have lost the ability to say Oui or Sí to change, reform and modernization. Chirac says Non to opening up Europe’s services industry to greater competition, even though France is Europe’s biggest exporter of services.”

It concludes: “Both countries -France and Italy- need a revolution. But it will not come from students who protest against change, labor leaders who deny modernity—and politicians who only know how to say Non.”

The predictions of slow offshore ousourcing growth for European companies are also based on such scenario.

Growing IT services demands from USA and Europe along with shortage of skilled employees, are forcing Indian IT firms to look for outsourcing to China.

“Reoutsourcing” to China, seems a new strategy for leading Indian IT companies, which also try a way to face increasing salaries of high cost workers.
In China, on an average IT-engineer with little bit of experience can be paid 500$ salary per month as compared to over $700 in India.

However, what can be outsourced to China is related to Information Technology services, not BPO segment which requires knowledge of English language.
Poor English skills of its employees, limit China also to become a potential competitor of India in the offshore outsourcing market.

India has currently about 80 % of IT services being outsourced offshore, as reported from Gartner Group,research company. ( source )

A study by KPMG found that Singapore is the cheapest country, among the major industrialised nations, to run a business.
The bi-annual study is based on the costs of setting up and running businesses across different industries over a 10-year cycle.

The research - which covers 128 cities in nine countries, takes into account key factors such as wages, business taxes, rent, and energy costs.

Average wages lower in Singapore than in the other nations included in the study, pushed the Asian country at the top of this cost-competitiveness league, as labour costs are the most important factor for businesses when deciding where to locate their operations, the KPMG report explained.

Below the cost-competitiveness league (Source: KPMG-2006)
1- Singapore
2- Canada
3- France
4- Netherlands
5- Italy
6- United Kingdom
7- United States
8- Japan
9- Germany

In times where most of companies go offshore to cut costs, whether moving manufacturing plants or outsourcing to low salary countries, new fashion trends lead to new strategies in the apparel industry.

The concept that is going to have major implications for the supply chain of American retailers and on the manufacturing of apparel, as reported in the Newsweek article: A New Fashion Frontier - March 20 issue, is Fast Fashion.

Fast Fashion, for retailers means avoiding overstock and clearance sales, by introducing new items much faster than the norm, for shoppers means checking out the latest items weekly or even daily, rather than monthly. This typically European trend is now spreading out among the American consumers.

Top European retailers, such as H&M and Zara are moving rapidly into the U.S. market, as big American players, too big to copy the fast-fashion model from the ground up, are borrowing elements of it, moving from a seasonal cycle to something much faster.

Even though fast fashion remains a niche—it represented a little more than 1 percent of American market of apparel, H&M says the United States will be its fastest-growing market.

That could leads to shifting production for the U.S. retail market from China to less distant sites, like Mexico, in order to

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According to a new research by Gartner, only 39 percent of respondents have a formal enterprise-wide outsourcing strategy.

The survey, scheduled to be discussed in further detail at the company’s Outsourcing Summit 2006 (April 3-5 in Orlando), was conducted among companies that are already outsourcing or that have plans to outsource in the next 12 months.

Gartner balanced the survey between companies with less than 1,000 employees (401 respondents), companies with between 1,000 and 4,999 employees (243), 5,000 to 9,999 employees (84), and 10,000 or more employees (216).

Allie Young, Research VP at Gartner, says:.

“Senior executives are responsible for some of this ad hoc outsourcing. CEOs are saying ‘outsource now’ or ‘go offshore to cut costs,’ and companies kind of deem that a formal strategy.”

He calls it: “a big black hole…akin to buying your different supplies without having a procurement strategy.” ( source )

A new points-based immigration system is expected to come into force in UK from the middle of next year.

The new system, structured into five tiers, will award points to those applying for visas and work permits based on qualifications, experience and age.
Only those achieving the target points for their tier will get a work permit.

According to the UK IT industry, it will make it easier for businesses to face the IT shortages by recruiting skilled workers from overseas.

Nick Kalisperas, director of public sector, Intellect, said:

“Most overseas IT workers will fall into the top two tiers, covering ‘highly-skilled’ workers - such as entrepreneurs, doctors and IT specialists - who will be able to get a visa without a firm job offer.”
“It’s a step in the right direction. It’s important there is recognition that the industry needs staff from outside the EU.”

However, Mr. Kalisperas over addressing the shortage of some IT skills in the UK in the long term, added:

“More needs to be done in terms of retraining, more in terms of attracting women into the IT workforce and more in making IT an attractive discipline and career option for students.” ( source )

According to a new study by the Association for Computing Machinery (AMC), released on Thursday, March 2, predictions of job losses from shifting high-technology work to lower-wage countries were just nonsense.

The research found that information technology employment was higher today than it was at the peak of the dot-com bubble, despite the growth of offshore outsourcing in the last few years.

Moshe Vardi, co-chairman of the study group and a computer scientist at Rice University in Houston, explains:
“The global competition has gotten tougher, and we have to run faster, but the notion that information technology jobs are disappearing is just nonsense. The data don’t bear that out.”

The study predicts for United States between 2 percent and 3 percent jobs in Information Technology would be moved offshore annually over the next decade.

And most important, the report emphasizes that more jobs will be created than are lost in the future, as long as the industry in America moves up the economic ladder to do higher-value work, typically applying information technology to other fields like Biology and Business.

In order to achieve that, Education will be critical and over that the report complains Government job retraining programs are focused on the manufacturing industry instead of high-technology services.

The study by the Association for Computing Machinery (AMC), is the result of a year long project by the organization to assess the impact and implications of the offshoring of software development and research. ( source )

According to a study conducted by the Organisation for Economic Co-operation and Development (OECD), in the long term the benefits of offshore outsourcing will outweigh any short-term job losses.

The OECD report said:

“In the long run the positive benefits of services offshoring outweigh the costs, even though the adjustment process may occasionally be difficult in the short run.”

The research also found that IT standardisation and automation of tasks are more likely to be responsible for IT job losses than offshore outsourcing to low-cost locations such as India outsourcing.

The report explains that one in five jobs could be hit by the continued growth of offshore.

The study is based on a detailed analysis of occupational data for OECD countries and other business and economic statistics.
( source )