In a move seen as increasing group synergies and customer centricity, Edelweiss Air is following Swiss International Air Lines by moving its global call centre services from Zurich to Mindpearl in Cape Town effective April this year.

Nils Flaatten, CEO of Wesgro, the Western Cape’s Destination Marketing, Investment and Trade Promotion Agency, welcomed the news of an additional investment in Cape Town.

“Edelweiss Air currently has two direct flights into Cape Town from Zurich airport. These flights have been well subscribed and have contributed to an increase in Swiss tourist arrivals in the city. The airline has increased its commitment to the destination by investing in the Cape Town-based call centre. This investment taps into the City of Cape Town’s strong BPO sector and makes Edelweiss Air the second international airline to do so. Capetownians will now man this call centre and deliver high class services to Edelweiss’ international passengers.” Flaatten said.

“South Africa has become the location of choice for many of the world’s leading businesses and was recently recognised as the Offshoring Destination of the Year in the National Outsourcing Association awards,” explains Fiona Meijer-Innes General Manager of Mindpearl Cape Town. “At Mindpearl we are looking forward being a part of Edelweiss Air’s rapidly developing business.”

Mindpearl is a specialist, global, unilingual & multi-lingual outsource contact centre provider delivering customer service, sales and business process solutions operating from Cape Town since 2001. Further centres are found in Brisbane, Barcelona and Suva, Fiji.

From Outsourcing Center, by Karthik Nagendra

Remember the time when the whole world got its silk from China, spices from India and cotton from Egypt? The world of IT is veering towards the same concept, sourcing development of specialized software where it’s made best. In the truly flat world with data traveling in real-time across continents and time zones, there’s really no reason to work in any other way.

Trying to kill “offshore” is bound to fail. Indian software development companies such as Infosys, TCS and Wipro are all over three decades old and thriving. More such companies continue to see growth. Meanwhile, the nearshore lobby too has seen big successes. Software companies have sprung up in Mexico, Argentina, and Chile to service the Americas. Countries of eastern Europe and Russia are experiencing searing growth serving the nearby western European companies where development costs is much, much higher.

See full article below:

http://www.outsourcing-center.com/2013-03-trying-to-kill-offshore-is-bound-to-fail-55456.html

By Rosemary Howard

Offshored call centres can often produce superior service to domestic ones. But companies already doing this badly should beware thinking that moving it overseas will solve their problems.

We have all had at least one bad experience with dialing through to an Australian firm’s call centre. A long wait. Finally an operator. Answering lots of questions the firm already has in their database. Getting disconnected as they transfer you to another division, and then having to start all over again.

We often assume that these experiences are with outsourced, offshored call centres in India or the Philippines. But this is not always the case.

Sometimes offshored call centres can provide superior customer service (and at lower costs) to Australian call centres, and provide better data analytics.

When we think about the offshoring of Australian financial institution jobs, what questions should we ask?

The first I suggest is why is an organisation thinking of doing it. If the answer is as simple as cost due to Australia’s high wage structure and high dollar, then one probably needs to ask more.

As revenues are harder to come by, there is no question that Australian financial institutions (like all Australian firms) need to manage costs more carefully.

However, the outsourcing or offshoring of call centre and IT jobs should be a more strategic decision.

All firms – including Australian financial institutions – need to consider their long-term strategy and therefore how they operate in that context. They need to reflect on the key trends of our time, namely globalisation and digitisation.

In the constrained post-GFC world, Australian financial institutions cannot grow sufficiently to meet investor expectations without the support of offshore markets, particularly in the Asia Pacific region. This insight is reflected in the Government’s recent Asian Century white paper.

As companies consider the optimal destinations for the demand side of their business, they need to also think about where to best locate supply side functions.

This raises the question: what supply side functions are best located in Australia, and what are the sources of our national competitive advantage?

With the finance sector, the GFC has demonstrated we have some real competitive strengths. These include the strength of our banks, our financial regulatory system, our universities and our superannuation system. Given this, what jobs are best located here versus offshore?

There is no question that on face value at least, lower paid roles such as call centre and IT processing can be delivered more cheaply offshore. India and the Philippines come to mind and even our nearest neighbour, New Zealand, guarantees at least a 25-30% cost savings based on wages and overheads.

But then some strategic questions need to be asked. Can these roles be performed to a high standard offshore? Will customer satisfaction data be readily available to drive innovation? Are there hidden costs or risks from having functions offshore? What is happening to wage relativities given wages are rising faster in China and India?

Australian organisations often send offshore the functions that may not be working for them. But you cannot offshore what you cannot manage well yourself.

Organisations also need to consider that by offshoring, they may throttle their employment pipeline of younger workers. Up to half of call centre employees in Australian financial organisations are university-qualified and may likely be suited to progressing to higher-level positions in the firm.

If offshoring is strategically right (not just short-term cost cutting), and the whys have been thought through, then it can work. In fact some specialist offshore firms who focus on call centre management or IT processing can offer superior services to some available in Australia or delivered in house.

Outsourcing particularly offshore requires a high level of partnering between the Australian firm and the outsourcer, and this requires the right supplier.

Proactive communication is needed with all stakeholders so as not to tarnish the brand, reputation and image of the Australian firm with customers and employees alike, and affected employees need to be given every chance to be supported and move to a different role.

But there is no question outsourcing often fails and is followed by a period of insourcing and onshoring – we are seeing this happening at present with many US and UK firms.

Many would argue that more regulation is required to stop jobs going offshore.

Australia now ranks 96th in the World Competitive Index in terms of regulatory barriers to business performance, down from a ranking in the 60’s. We also rate more poorly than we should for strategic, people and sales management.

Australia’s focus needs to be on developing high value-adding jobs. That’s why we should only regulate where necessary but educate and develop wherever possible. I am a strong advocate for the ongoing development of those in leadership positions to enable optimal strategic and people management decisions to be made.

To optimise our firms’ performance, business and government need to work collaboratively together. We need to work harder at improving in the areas of management practice, active stakeholder communication, long-term strategy, sales, marketing, innovation and creativity.

Better-educated and developed leaders will ensure that the right strategic decisions are made and the right jobs stay onshore.

AUTHOR

Rosemary Howard

Adjunct Faculty AGSM Executive Education and CIFR at University of New South Wales

DISCLOSURE STATEMENT

Rosemary Howard does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

QBE chief executive John Neal has moved to stamp his mark on Australia’s largest global insurer, launching a new cost-cutting drive that will see hundreds of jobs sent overseas and unveiling a shake-up in the ranks of senior management.

The insurer said it was entering a new phase in its 127-year history, with a growing push to curb expenses and run existing businesses more efficiently after years of acquisition-fuelled growth.

In a move forecast to save A$250 million a year, QBE will shed about 700 jobs from its operations in Australia, Europe, and North America, and fill the roles with staff in the Philippines.

It also cut the share of cash profits it will pay out as dividends to 50 per cent, from up to 70 per cent, arguing this was more suited to its goal of becoming a top-tier global insurer.

Chief financial officer Neil Drabsch, who worked closely with former boss Frank O’Halloran during his 14-year stint at the company’s helm, also said he would step down as part of a broader management reshuffle.

The series of changes came after a disappointing year in which QBE’s struggling US arm was battered by hefty claims from super storm Sandy.

After-tax profits rose by a weaker-than-expected 8 per cent to $US761 million in the year to December, and the final dividend was cut to 10¢ a share, from 25¢ a year earlier.

Mr. Neal, who took over from Mr. O’Halloran last August, argued the cost-cutting drive was needed for the company to keep growing in a more subdued financial environment.

”QBE has been a hugely successful organisation over the last 15 years but, as the world changes, we need to evolve to continue to meet or exceed the expectations of our key stakeholders,” he said.

Unions have slammed the growing number of financial services firms that are sending jobs offshore, but Mr. Neal argued QBE needed to be simplified.

”If we can standardise and simplify what we do, then we can grow the business. And that means we can grow the business here in Australia, and it means we can grow the business elsewhere in the world,” he said. ”If we don’t take that type of view then I don’t think we can grow.”

It is not clear how many Australian staff will be affected by the plans, which are intended to save $250 million a year by 2015.

Mr. Neal said most of the changes would come from natural attrition and lower use of contractors and there would not be a mass redundancy round. He played down reports that the company was considering cutting as many as 3000 jobs from its global operations.

Under Mr. O’Halloran, QBE was transformed from a mid-tier player to a global insurer through over 120 acquisitions around the world. It now has operations in 52 countries, deriving about a third of its income from the US.

An analyst at Nomura, Toby Langley, said QBE under Mr. Neal’s leadership appeared more focused on containing costs and running its existing businesses with greater efficiency.

Read more: http://www.theage.com.au/business/qbe-takes-axe-to-costs-as-neal-makes-his-mark-20130226-2f42g.html#ixzz2MApD9Axx

Telstra says its customers will get better service from Filipino or Indian call centre workers who will take over from many of the 648 staff the telco axed last week.

The managing director of Telstra’s Sensis directories business, John Allan, told BusinessDay ”the vendors that we are considering provide services for customers that go beyond our service today, such as 24/7 operations and unique technologies that assist in processing efficiencies, which they do for many directory businesses around the world”.

Earlier , Mr. Allan reportedly told union officials that ”Australians will get better customer services from Manila or India. They have better technology and innovation.”

The Community and Public Sector Union spokesman Julian Lee said the comments were made during a meeting with union officials after Telstra announced the job cuts at the ailing Sensis unit.

The cuts, which include moving 391 customer service positions to the Philippines or India, come just two weeks after the telco booked a record half-year profit of $1.6 billion.

Telstra is slashing costs to arrest falling revenues at Sensis, which was once a cash cow for the company.

It hopes to turn the struggling print-based media business, which produces the Yellow Pages and White Pages directories, into one that is better suited for the digital market.

”Until now we have been operating with an outdated print-based model – this is no longer sustainable for us,” Mr Allan said. ”Our future is online and mobile where the vast majority of search and directory business takes place.”

The Prime Minister, Julia Gillard, described Telstra’s decision as ”really dreadful news particularly for the staff members”.

”It’s always incredibly tough when someone loses a job,” Ms. Gillard told the Adelaide radio station 5AA.

The union condemned the company’s actions. ”Telstra has done well out of Australia, its profits have risen off the back of hard-working staff and loyal customers and this is how it repays them – by sending almost 400 jobs offshore,” the union’s national secretary, Nadine Flood, said.

”And to add insult to injury, we have been told that one of the reasons why they are doing so is because Australian consumers can get better customer service in the Philippines or India.”

The Sensis business has been under pressure in recent years as customers desert print for digital advertising. At Telstra’s most recent half-yearly results, the unit reported a 12.6 per cent fall in revenue.

Telstra remains obliged to produce the White Pages as part of its license conditions.

Read more: http://www.smh.com.au/business/outsourcing-will-deliver-better-service–telstra-20130221-2euby.html#ixzz2MApdPaDa

By Clay Lucas - Workplace Editor for The Age

Telstra and other companies that reap millions of dollars in public money from contracts with the Australian government should lose this work if they send large numbers of jobs overseas, unions argue.

Telstra’s fully owned subsidiary Sensis last week began the process of sacking 400 staff, many of whom are based in its Melbourne office.

Telstra will out-source sales and call centre staff, graphic artists, web designers, online editors and production employees.

Much of the work is likely to be moved to the Philippines or India, where wages are significantly lower.

The move by Sensis, which provides directory services, to sack 20 per cent of its workforce came just weeks after Telstra posted a first-half profit of more than $1.6 billion.

A report by two white-collar unions recently found that, in the past four years, 80,000 jobs in Australia had been moved to countries where labour costs were cheaper.

Among the firms to move large numbers of jobs overseas is insurer QBE, which this week confirmed it will shed 700 jobs and hire staff in the Philippines, to save $250 million a year.

The move by Telstra’s Sensis to sack staff and likely hire overseas workers has enraged unions.

”Should Telstra get public money and government contracts if they offshore jobs?” asked Paul Bastian, the Australian Manufacturing Workers Union’s national secretary.

Staff and unions rallied outside Telstra’s Lonsdale Street offices to protest against the sackings.

The manufacturing union demanded the federal government step in to punish firms like Telstra when they took jobs overseas, by denying them access to projects like the National Broadband Network.

Mr Bastian said corporate Australia had an obligation to keep jobs in Australia where possible, and that their record on offshoring must be directly relevant to bidding for federal government contracts.

The Gillard government in February released its ”plan for Australian jobs”, which provided new incentives for companies to use local goods and services.

Mr Bastian said it should also have included new rules on sending jobs overseas.

But Industry Minister Greg Combet’s spokeswoman said making companies ineligible for government contracts in this way would be in breach of Free Trade Agreement rules.

”It could also put at risk the ability of Australian businesses to win overseas contracts and the jobs that come with them,” she said.

And she said 98 per cent – or work worth $22.5 billion – of government service-based contracts entered into in the last financial year were with Australian suppliers.

Read more: http://www.theage.com.au/opinion/political-news/union-rage-as-jobs-go-offshore-20130228-2f98u.html#ixzz2MQgHpvdx

As a global leader on China Outsourcing and Market, Devott released its annual forecasts of Top 10 Trends in China Outsourcing via its international informational portal www.chnsourcing.com on December 25, 2012. Based on extensive data from its customers around country and globe, Devott studied the mechanism of the vertical transformation and undisclosed the drivers of the trends along with industry standards and own methodologies. Devott predicts that under the native influence of the shrinking global markets and sluggish recovery in major economic powers, national protectionism as demonstrated in US Presidential Election, China-Japan Island Conflict, reducing growth rate in China, there are numerous challenges and adversities China Outsourcing will face in 2013.

Prediction 1: The market size of onshore and offshore will be contracted slightly; Competitions over prices will be intensified.

It’s a bumpy road to recover the global economy. The unemployment rate keeps going up and the international offshore market will further shrink. As to Chinese outsourcing service enterprises, the European and American market will shrink dramatically with the re-emergence of trade protectionism and insourcing restart. To Japanese market, due to the declining Japanese economy as well as disgusting impact from political factor that the dispute on Diaoyu Island between China and Japan ,Japanese outsourcing market is getting fewer opportunities for China in 2013. Under high expectations, Chinese domestic market is still waiting for breakout because of without enough driving force from the State-owned enterprises and government agencies although domestic market increases fast. The overall recession of the onshore and offshore market directly results in more fierce market competition. Meanwhile, the majority of the companies are on the low end of the industrial chain that resulting from Chinese outsourcing industry’s remaining on primary stage, the price war is going to be intensifying in 2013 both for offshore and onshore market.

Prediction 2: Overseas investment from China based sourcing corporations will get more consensus; More Chinese companies will plan and implement their global strategies onshore in developed countries.

More and more work is called for being shifted back to local caused by American president election, which has become a big feature in the second industrial transfer for global service outsourcing. As the worldwide largest outsourcer, the United States leads the “outsourcing backflow“ trend which will drive the global outsourcing enterprises to reformulate the strategy of development and market. To set up branches and delivery centers locally in the U.S. will become one of the core trends for Chinese outsourcing industry in 2013. Many countries’ outsourcing enterprise will launch fierce rival in the U.S., especially the competition between China and India.

Prediction 3: Growth Drivers of China Outsourcing will be transformed rapidly, depending more on capital and market instead of incentives and low cost talent.

Through the rapid growth of the industry size, the development of the whole Chinese outsourcing industry is evolving from the basic embryonic stage to the upgrade stage, during which every factor coordinates and interacts with each other to establish an ecosystem for service outsourcing. Chinese outsourcing industry’s growth pattern is onto a turning point. “Market + capital” model is going to replace “policy + talents” to facilitate the future industry, so as to lead the industry’s transformation and upgrading.

Forecast 4: M&A activities will be increased considerably; so are hidden risks and negative impact of the Investments.

Under the shrinking domestic market and intensifying competition, as well as being driven by some industry giants such as Pactera, Achievo and The Devott Fund, the trend of investment and acquisition within outsourcing industry will further be continued in 2013. The trend of industrial integration will be intensified. However, due to the great risks of M&A, all kinds’ of problems gradually appeared in the process of M&A at the later stage. Consequently, the number of failing cases will be on an increase accordingly.

Prediction 5: Focus of the growth will be more on innovation than cost reduction.

Due to incapable of affording the innovation and transition for some enterprises after economic crisis such as market survey, trial operation, and risk and opportunity costs, they crave for outsourcing enterprises with professional abilities and practical experience as their intellectual strategic partners to help them improve efficiency and transform their businesses. Therefore, the value of outsourcing service is predicted to shift from cost reduction and core competence enhancement to innovation support to reshape their core competence. Meanwhile, the status of the outsourcing enterprises will be improved as well.

Prediction 6: “Big” is no longer growth objective. Fast deployment, flexible practices and vertical solutions are 2013 Performance Indexes in corporate board rooms.

In 2013, the global service outsourcing buyers will become more cautious on outsourcing strategy decision making and service providers’ choosing. Resources resolutions become very popular in this industry. With the development of the global buyers’ demand, the development of China’s outsourcing service providers will change their direction to “flexible structure, rapid iteration and fast reaction”. Global buyers pay more attention to enterprise solutions and service capacity and request the enterprise develop professionally.

Prediction 7: New Delivery Models and Business Processes Developed by “Cloud Platform” will penetrate deeper of enterprise markets.

Starting from 2013, cloud outsourcing based on the “cloud” platform and “cloud” model increasingly become the mainstream and trend in the development of outsourcing industry. With the core element – CCES (Cloud Computing Enabled Service) model, could sourcing drives the whole industry to achieve the transformation and upgrading and extend to 3.0 eras. The whole industry will be endowed with new connotation. At the same time, crowdsourcing as a new mode will get more and more respected and application by global buyers.

Predictions 8: New Outsourcing Models and Process Management Methodologies will appear widely in Big Data Era.

As data becomes a new hub to promote industrial development and the core element, a new service outsourcing segmentation field appear and rapid development – that is, great data outsourcing. As a new field of KPO, great data outsourcing based on data mining will be got full development in 2013. A large number of great data outsourcing enterprises will appear and gather abundance data outsourcing solutions. At the same time, the development of great data outsourcing will give rise to a new business model and accelerate technological progress.

Prediction 9: The weight of BPO in outsourcing industry will be increased. It’s expected the first public company in BPO vertical emerges in 2013.

In 2013, China’s BPO industry will develop rapidly from the document entry, data processing and other low-end level BPOs to high-end level BPOs which related to the core businesses. At present there is no one real BPO enterprise in 29 local service outsourcing listed companies. Until 2013, the situation will be broken and the industry will appear “competitive advantage gets sustainable” situation, the leaders will enjoy extra income.

Prediction 10: Supports and incentive policies and regulations remain key driving forces to China Outsourcing’s transformation and innovation

In 2013, the public platform construction funds and services tax and other services outsourcing policy are expected to extend. The whole service outsourcing industry will get a further development by personal training of service outsourcing, developing the international market, intellectual property protection and other aspects. At the same time, the state will take new measures on the new features appeared in the development of service outsourcing industry such as support large enterprises mergers and acquisitions and increase the management training subsidy of service outsourcing enterprises.

According to the problems China service outsourcing industry may face in 2013, “Forecasts and Suggestions of Service Outsourcing for China 2013” gives ten core development suggestions from the government and enterprise aspects. For more detailed information and download, please visit: http://www.chnsourcing.com.cn/top/tenforecast/2013/

By Deborah Kops, Research Fellow at Horses For Sources (HfS)

There is an exclusive club developing in the Western World… “onshore” people who have experienced working for an offshore-centric provider, where all roads lead to Mumbai, or Delhi, or Chennai, or Bangalore… These folks quickly realized that this execu-life is an acquired taste – and either adapted or quickly bailed… or got fired.  I personally know a multitude of executives now on their second, third, or even fourth (yes, fourth) offshore-centric firm.

What’s abundantly clear is the need to hire and develop quality onshore account management and delivery personnel is becoming the crucial differentiator in today’s ever-tightening outsourcing marketplace.  Those that can win this talent war will be the ones who can truly move beyond yesterday’s flagging outsourcing model.

So who better than Deborah Kops, the doyenne of disruptive dialog herself, to expand on this topic in a way that, quite frankly, no one has dared put into print before…

Why offshore providers come up short onshore

Over the last few weeks, I must have had at least 10 calls from outsourcing talent currently looking –or being recruited for new positions–many of them by offshore providers. And that’s not counting the calls from search consultants, desperate to locate that buried diamond of a sales-accounts-or-solutions guy who can be persuaded to jump ship.

Deborah Kops, Research Fellow at HfS (click image for bio)

Comparing their stories with my own recruitment experiences, it struck me that I’d been listening to a broken record. The tales were so very similar—even across a number of providers—that perhaps it’s time that someone called attention to the fact that in a war for onshore talent, offshore providers can unwittingly come up short. And that’s not good for the provider, for the talent, and certainly not for clients who increasingly demand that their providers become more globally and culturally adept.

Last week, yet another resume showed up in my email. Now, convinced that you can’t know too many smart people, I spent a few minutes with Mr. X, going over a very impressive list of qualifications: both buy-and-sell-side experience; a real track record in sales and operations;  good communication skills and a great educational pedigree. When the conversation got to the stage where I was convinced that any number of providers would love to have him as part of the team, I started my usual ‘what about x? Or y?’ And then I got an emphatic “I won’t work for an offshore-legacy firm.” “Why,” I asked. “You’ve never worked for one. How do you know you can’t have a great career?”  “Deborah,” he said, “Why would I work for a firm where the power structure is all overseas and doesn’t include me?  And every time I’ve been recruited by an offshore firm, it’s been a waste of my time. They don’t seem to know how to run a good process. I am underwhelmed, and since recruitment is seduction, I’m not falling into bed with a firm that doesn’t know how to sell me on working with them.”

Offshore providers, please take note. With fewer and fewer good onshore sales/account management/solutions/operations guys and gals willing to switch horses, putting your best foot forward in the recruiting cycle is no different than courting a client. In fact, without the ability to attract the right onshore talent, it’s arguably impossible to grow and prosper.

What parts of the plot are offshore providers seemingly missing when they attempt to recruit onshore talent? 

Onshore outsourcing talent is not fungible. Unlike talent pools in offshore locations, there may not be more than one or two really good candidates onshore, especially if that talent has an enviable track record in sales or solutions.  And, as the market contracts, good talent has  become more concerned about the quality of the brands they represent, paying more attention to crafting a career progression that underwrites their market worth by working for what the market sees as the “right” organizations.  After all, names like Accenture and IBM on a resume act as career validation. Ask the search consultants; few candidates are calling them hankering after an introduction to an offshore player.

Onshore talent no longer sees the same risk/reward equation; the heady early days of get-in-on-the-ground-floor –and-make –a-few –million-bucks-at-IPO are over. With no new market entrants into entrenched process offerings such as finance and accounting, and more closely held offshore ownership in digital and analytics start-ups, the opportunity to make big bucks no longer justifies the perceived risk of working for an offshore provider that, quite simply, is less likely to trade career satisfaction for money.  Talent now is more sensitive to finding—and staying with—the right employer, especially in light of economic uncertainty. Call it a flight to safety.

Onshore talent does not have the same linkages or ties to their employers as offshore talent Offshore providers that are not culturally savvy often forget that there is no one-size-fits-all approach when it comes to managing global human resources.  The employee/employer relationship that underpins offshore personnel relationships simply does not translate onshore. For example, onshore employees tend to manage their careers more independently, and do not have the same sense of family…or indebtedness…when it comes to staying with their employers.  In other words, loyalty barely plays in career decisions.

The press doesn’t help In a market where seven degrees of separation is quickly reduced to two, the tales of working in a legacy offshore firm quickly become part of urban legend. Stories (rightly or wrongly) abound about cultural insensitivity: staff retreats held in India close to Christmas or on Easter weekend; cheap travel policies including coach travel at all times and sharing rooms with colleagues;  and being managed by buddies of the boss who have limited experience or skill. Potential candidates who are used to certain working conditions are scared off from seriously exploring a career with an offshore provider.

What can the offshore provider do to improve its talent value proposition?

It comes down to changing approaches to market and being realistic about what talent looks for when they consider new opportunities. It’s time to stop replicating very familiar offshore talent management constructs and approaches, and start to act like a local.  Let’s dig a little deeper here:

Bear in mind that the provider is the seller, and the recruit is the buyer In a market bereft of a real deep talent bench, good candidates are the sellers.  Unfortunately offshore providers forget that fact, sometimes approaching the candidate with a “you’re so lucky to be talking to me” attitude. In fact, sometime this is taken to the extreme; a recent urban legend has a partner in a global firm being offered a trial 90 day position which would convert to full employment if a real deal is identified during that period. The candidate approached the meeting with a high degree of interest, but walked out with a high level of disgust when the terms shifted from employment to trial.

Have an honest strategy to move to global management Onshore talent consistently complain about being managed  offshore and through offshore practices, resulting in what they see as lack of empowerment, disenfranchisement, cultural insensitivity and lack of trust. While moving to a true global talent management model won’t happen overnight, offshore organizations that make good faith efforts to devolve leadership and in country operations to those in the know onshore will ultimately reap a number of rewards: reputation as a provider with deep local contextual knowledge; a strong reputation as a good place to build a career for onshore talent; and a brand as a truly global player.

Adopt local HR practices What goes for best practices in India, or even the UK, does not fly in the US. HR practices must be contextual in order to be effective.  An offshore company may be able to compel someone in their home company to sign away certain rights, or work under certain conditions, or sell shares on their timetable, but it won’t work in the US or other onshore locations.

Be realistic about how the brand is viewed Despite the enormous success they’ve enjoyed in the outsourcing  market,  offshore players need to  recognize that  they’re starting with a of brand deficit when it comes to recruitment.   When it comes to attracting a strong team, providers who think they are on a level playing field with the industry dominants onshore are kidding themselves. Offshore companies do not yet have the same local draw that the big globals—or even some smaller local players– have. When a company’s future success depends on globalization of talent, understanding the shortcomings of its brand, and then doing something to mitigate its implications in the minds of highly desirable talent, is critical.

Acknowledge that the network influences talent attraction Whenever a recruiting process takes excessive time, or is a market outlier, or is downright disrespectful, trust me– everybody knows. In a market where one or two calls obtain the full skinny on any company, talent is already armed with strong opinions of what it’s like to be recruited by or work for any provider. Remember that any experience—good or bad—will quickly be reported on the tom toms, and act accordingly.

Be realistic; don’t require talent to do the impossible Some of the job descriptions churned out by offshore providers are unrealistic; if a candidate has the ability to walk on water and rope in $10million ACV deals at the same time, it still would not be sufficient for many providers. People with deep relationships with multi-national CEOs, Master Black Belts, a degree from Harvard with an MBA from Insead, enviable thought leadership, and viewed as all around good guy and gal willing to travel 80 percent of the time do not exist. A full complement of skills is rarely contained in one individual; unfortunately offshore providers often become parsimonious and won’t make the level of investments in the right combination of positions. Stop trying to locate one onshore savior to change the fortunes of the business, and start thinking realistically about hiring a talent ecosystem.

Run a respectful, timely, transparent process Onshore talent often complain about the lack of respect demonstrated in the hiring process. I’ve heard tales of processes that ended up taking a year because of constant cancellations, or at the last minute requiring everyone from the chairman of the board to the offshore delivery leader to weigh in on the candidate. Flying into a city to suddenly find that the first meeting is delegated to junior, non-decision making staff is offensive.  Or asking senior candidates to players to spend one or two cycles interviewing with a low level person, either in HR, recruitment or sales, before the actual  hiring manager is even introduced sends the wrong message.  Tell the candidate what the process and timeline is,  being fully mindful of the fact that, if s/he is any good, by the time the second interview is finally scheduled, he or she will have probably be off the market. Open ended processes without closure frustrate the candidate, and shut the door on future engagement.

Pay market A guy making a base of $200,000 plus a good bonus is rarely seduced by an offer of $100k plus stock…”someday.” And if he is interested, it’s either because he thinks the upside is a pretty sure thing, or he’s about to be terminated by his current employer.  Offshore providers that think that the opportunity to carry their card has a value beyond market compensation are sadly mistaken. Ensuring that compensation is competitive with the market is the first step in winning the talent game.  And share the wealth.  If Mr. X is so important to the growth of your business, make it worth his or her while with equity to make the switch.

Stop playing the tease Many talented folk have had calls from providers who are constantly testing the talent waters. Stories abound of offshore C-suite leaders calling onshore guys quarterly, thinking they can catch them at a weak moment by flattery. And when the candidate bites, there was no real opportunity. If there’s a real job, send the candidate the job description; don’t play the flirt. There are better ways to keep good talent warm.

Don’t make undue and unusual demands Recently I heard a story about a (reluctant) candidate being asked for his W-2s and references after an introductory recruitment meeting.  And about another candidate who was asked for a copy of his rolodex during the first contact. Net outcome? They ran for the hills, badmouthing the provider at every opportunity.   Onshore candidates share data when they see a viable opportunity, not before.

Look at the CV first, and in context of the position How many times have candidates walked into an interview to find that neither HR nor the business unit leader ever bothered to look at their bios? Or had any idea of the scope of the job? (True confession: I was once recruited by a provider who had not seen my CV, and thought I was a Black Belt continuous improvement type). Spend the time to evaluate the candidate’s credentials in advance and in light of business needs, not because you’re on a reconnaissance mission.

Global fluency clients seek starts with hiring the right team locally. But when providers are unable to start by hiring the right onshore team, the dial does not move very far.  To paraphrase a recent bestselling business book—“change the recruitment process, change the game.”  Growth depends on it.

Source: Horses for Sources

Shifting jobs overseas gets bad press but in the Asian Century, it’s the path to business success and survival.

By Ash Truscott

In a recent report, the Australian Services Union and Finance Sector Union claim that offshoring staff leads to a net loss of Australian jobs. Our experience suggests instead that offshore staffing can be a catalyst for business growth – and could even lead to an expansion in the Australian workforce.

More than 64 per cent of MicroSourcing’s Australian clients – all small and medium enterprises that lease offshore staff at our headquarters in the Philippines – say their initial decision to outsource was based on a desire to expand their team. Only 25 per cent say they used offshore labour to replace some of their existing staff.

What’s more, since hiring their first offshore staff member, 43 per cent of Australian MicroSourcing clients have seen their Australian workforce grow. A further 36 per cent have maintained the size of their Australian team, while only 21 per cent say their home workforce has contracted.

The ASU and FSU claim the US economy has suffered due to offshoring, and Australia should be wary of following the same path. But in fact our US clients tell a remarkably similar story to their Australian counterparts. Since engaging offshore staff, 44 per cent of them have seen their US-based workforce grow. Thirty-six per cent have maintained current staffing levels.

Rather than being the destructive bogyman the unions make it out to be, our clients’ experience suggests that offshore staffing can be an innovative solution for cash-strapped small businesses looking to kick-start their growth phase.

The debate about offshore staffing has focused on big business setting up vast call centres in India, but in reality it is Australian small businesses that stand to benefit the most from accessing affordable talent as they expand their business and forge into new markets.

In fact, offshore staff leasing might be the only viable staffing solution for start-up companies who simply cannot attract or afford the right people to join their firm. Once they kick-start their growth through offshore staff, they usually hire skilled workers in Australia too.

Our research suggests that offshore staffing is not a zero sum game. While some companies will move jobs overseas, others will use offshore staff to complement their Australian workforce and ultimately help their business grow.

Jobs data from the Bureau of Statistics supports our findings. The ASU and FSU claim in their report that 20,000 jobs a year are being ”lost” offshore. But this ignores the fact that more than 65,000 jobs were created in the Australian economy over the past 12 months and unemployment remains relatively low.

There is no doubt that technological innovation will force structural changes on the Australian workforce. To date there is little evidence to suggest this will lead to an overall loss of Australian jobs.

Digital technology means that an Aussie software designer can be based in Kalgoorlie while contracting to an employer in Silicon Valley. We rightly applaud this type of labour exchange as a great example of globalisation working in our favour. But we must also be aware that this kind of innovation goes both ways.

That’s why former Treasury secretary Ken Henry exhorted Aussie companies to embrace offshoring in his comments last month in a Sydney speech, signalling this is likely to be a recommendation in his highly anticipated ”Australia in the Asian Century” white paper.

Henry knows that Australia’s long-term economic viability must be based on expanding our exports into Asia. To do this effectively, we must embrace new technologies and efficiencies available to us – including offshoring.

The 20th century saw Australia transform itself from a highly protected economy into a remarkably open one. We decided long ago that the benefits of free trade in manufacturing and agriculture, which accrue both to Australia and our neighbours, far outweigh any advantage we may be able to buy by imposing tariffs and other trade barriers.

This lesson applies equally today. The unions claim more government intervention will ”save” service sector jobs. But ultimately it will just hurt the economy – and the wider workforce. Only by collaborating with the region will our economy grow.

Offshoring, like all other forms of hiring staff, does have risks. As every business owner or manager knows, not all employees work out. Choosing the right partner provider for your business and having a strong integration plan helps minimise the risks associated with offshore staffing. But ruling out offshoring altogether, or imposing more regulation as the unions suggest, will only have a negative impact on productivity.

Technological change and the fast-paced economic development of our neighbours mean the regional economy is changing fast. By taking a head-in-the-sand approach and refusing to keep up, Australia runs the risk of being left behind.

Ash Truscott is the managing director of MicroSourcing Australasia, an outsourcing company with staff in the Philippines.

Read more: http://www.theage.com.au/opinion/politics/offshoring-is-not-the-bogyman-20121016-27ovt.html#ixzz29tcn9mNi

XMG Global Releases Mid-Year Review and 2012 Year-end Forecast 
Analyst cites factors impacting global outsourcing and projects year-end revenue forecast

By Anna Juanillo

The outsourcing industry worldwide is celebrating the recent initiative by the U.S. Senate to reject the anti-outsourcing bill. Continued growth is expected, though at a marginally lower rate than the previous year. Revenue increased 13.9% to $425 billion, as compared to last year’s figures, which showed a 14.4% increase from the previous year, to a total of $373 billion.

Growth has been tempered by global economic issues, and the American bill highlighted two concerns for the industry. 

Analyst Opinion: 
The industry needs to be viewed in a positive light (or, at very least, to not be viewed negatively) by the U.S. The defeat of this bill has, for the most part, takes care of that first concern. Looking at American political shape-shifting, it would be best to view this development as a, “for now” solution; meaning the ebb and flow of political will, seems very much a direct factor of which political party is in power. The long-term impact, of this new political dynamic, remains to be seen; but for now, it would suggest a change in U.S. political control and preferences could affect industry growth, every bit as much as recent floods in Manila affected the industry, and its perception in its ability to deliver.

A tangible example of this dynamic is reflected in the growth of China’s share of the global market. Current year growth for China showed the largest growth share, compared to the next two largest players (India and the Philippines). This reflects how political instability in the U.S. has a smaller impact on China, which has actively sought out customers in the Asian market. Industry volume for India and the Philippines has historically focused on gaining share of U.S. outsourcing.

The second concern addresses where the respective players fit into the recipient list of that global outsourcing. For example, the top beneficiaries of outsourcing include: The BRIC (Brazil, Russia, India and China) Countries, Indonesia, and the Philippines; however the lion’s share is clearly dominated by India remaining the pre-eminent power.

XMG Global forecasts the Philippine industry to grow from US$11B to US$12.7B in revenues from 2011 to 2012, respectively. The top rung still belongs to India growing from US$59B in 2011 to US$63.2B in 2012. A close second is China with revenues of US$45.7B in 2011 to US$53.8B in 2012.

To put that in perspective, the last three years (2010 to 2012 projections) have seen growth, in the Philippines, of 25.4%, 23.6%, and 15.7%, respectively (comparing annual change in revenue). This same period saw growth by the other two primary players. India showed 13.2%, 8.6%, and 7.1% during that same period, while China’s numbers were, 43.5%, 63.6%, and 33.0%.

These numbers collectively show a gradual chipping away of India’s stronger historical dominance; though time will tell if it will be significant. 
At this point, China and the Philippines are each showing “real growth”, in terms of total market share, as compared to India’s current dominant position.

In billions of dollars, India’s last three-year growth cycle was, 54.33, 59.0, and 63.2. China’s market share was 35.76, 45.7, and 53.8. In 2010, India’s revenues were $18.6 billion more than China, but by 2012 the difference was down to $9.4; a significant reduction. The Philippines modest contribution rose from $8.9 to 12.7 billion; a not-so-insignificant 43% increase in revenue. That is only slightly lower than China’s 50% revenue increase.

This trend suggests new opportunities for other players to gain market share as well since the growth of the offshoring outsourcing industry will remain relentless.

Bottom-Line:

 The offshoring outsourcing market is positioned to continue to thrive and grow, but the relative positions, of the respective players, are changing. If current trends continue, China is on target to overtake India as the dominant BPO player, potentially within the next two to three years. This shifting paradigm would also indicate room for new players aside from market leader India to gain a share of an industry, which continues to show growth potential.

Anna Juanillo
Research Manager
XMG Global Research and Advisory Company

By Brian Corrigan (AFR)

Chinese service providers are aiming to snatch contracts from more established Indian rivals as a growing number of mid-size Australian companies move their technology work offshore.

The country’s vast labour pool, government subsidies and the low price of services make China a potentially attractive destination – but those strengths come with some serious caveats.

The services on offer are relatively immature, the poor quality of spoken English can cause communication problems and there are still grave concerns about the security of intellectual property and data privacy.

China’s biggest provider of outsourcing services, HiSoft, entered the Australian market in July after buying local consulting firm BearingPoint for an undisclosed sum. An analyst with technology research company Gartner, Tina Tang, said the deal would help HiSoft target Australian customers, while also providing it with much-needed skills in consulting.

BearingPoint’s biggest customer in Australia is iiNet, which inherited a relationship with the company following its $60 million acquisition of AAPT’s consumer business two years ago. Other clients include British American Tobacco and Goodyear.

In August, HiSoft announced it would merge with VanceInfo, creating China’s largest technology outsource group. The combined company employs 23,000 people and is expected to generate global revenue of $US670 million in 2012.

“This could be one of the most exciting places in the IT services market during the next three or four years,” BearingPoint chief executive Bob Hennessy told The Australian Financial Review. “We’ll continue to see Chinese firms consolidate and go head-to-head with the Indians.”

A director of outsourcing advisory firm Mindfields, Mohit Sharma, said a number of mid-sized Australian companies – including AIA Insurance, Myer and Visy – were now outsourcing technology work after watching others reap the benefits. Project managers from the banks and other big businesses were being brought in to manage the process.

Service providers were now targeting these companies as potential clients because bigger customers had already been divided up between them, he said. But Mr Sharma played down the threat to Indian service providers from Chinese rivals, saying they had very low credibility.

He noted that the Chinese government had given free land to multinational outsourcers including Infosys, Tata Consultancy Services and IBM but that these sites were only used to target the domestic Chinese market.

“Chinese outsourcers might get some application development and testing work but it is very small,” Mr Sharma said. “They don’t do any project management, process engineering or call centre work. It’s a matter of comfort levels.”

BearingPoint’s Mr Hennessy dismissed concerns about information security, describing the Labor government’s decision to ban Chinese telecommunications equipment maker Huawei from the $37.4 billion national broadband network as an example of looking for “reds under the bed”.

Mr Hennessy said an explosion in the amount of work won by Indian outsourcing firms during the past 10 or 12 years had shown that a lot of technology work could be done from anywhere in the world.

He predicted that companies would increasingly use global sourcing models, opening up opportunities for other service providers.

Source: Australian Financial Review

By Shaun Polovin

Outsourcing Vs. Offshoring

Some people would call what we do ‘outsourcing’, but that couldn’t be further from the truth. Outsourcing refers to the process of allocating a portion of your business operations to an external entity or person. Most outsourcing organisations – for the sake of good business sense known to them – have their own agenda and probably a range of clients of which you are just one.

When an organisation decides to outsource a portion of their business, they understand that they are placing their business reputation in the hands of their outsource partner and rely on that external entity to have the correct processes, team and ability to deliver what you have promised to your client.

For the right organisations it’s a sure shortcut path to reducing operational costs but depending on the business’s transformation goals and its industry, it may not provide the long-term solution for growth. Relying on an independent company to supply you with core services is always a risk.

In our line of work, the questions clients ask about outsourcing their development work is what if they go under tomorrow? there goes the development arm of your business. I’ll admit, we tried it a few times ourselves before we went down the permanent route. We found an “ISO accredited” company in India and tried to have a small test project developed. What came back was worthy only of our big green garbage bin, but that’s not to say all outsourcing development companies are rubbish.  Decision makers just need to take the care and due-diligence in selecting a reputable partner to hand over a critical piece of their business, and this can take a lot of work.

When you offshore, you are setting up a brand business operation, however it’s in another country where a dollar generally goes a lot further. Our team in Sri Lanka has been hand picked and interviewed by both our local management team and our Sydney management team. Every team member has gone through both internal and most have also been offered external training and certification. They are all valued employees and members of the team and are greatly appreciated for their contribution at both a team and company level.

Why Offshoring your web development company makes sense for you and your clients

When we explain to clients the reason we have built our company in the above manner, our clients often nod their heads in agreement. It makes complete business sense if executed correctly and I’ll tell you why.

In Australia, the high living costs come with equally high salary prices. In our industry you are also faced with demand for quality digital staff considerably outstripping supply. Therefore, when you consider the cost of not only employing your team but also recruitment fees, training, taxes (e.g. Payroll) it comes as no surprise that the cost of delivering a large ecommerce website for clients, when all resources are locally based, would be astronomical. Achieving efficiencies in a service based, labour intensive business is never easy.  It’s almost impossible to apply Henry Ford style production efficiencies, however it is possible to reduce your operating costs through effective offshoring.

The other major benefit from running an offshore office is also the retention of IP. Consider the following scenario: After months of searching and paying a hefty sum to a recruitment agency you find a great web developer to work on a range of new client wins.

Nine months later, after investing heavily in this new staff member’s training so they have a deep understanding of a number of key projects, another firm swoops in and poaches your star developer. The poaching firm is prepared to pay well above market rates out of desperation and have made an offer that can’t be refused. There goes your investment and you’re back to square one – hunting for a replacement in a very competitive market. Compare that to our Sri Lankan office where we have achieved well over a 90% retention rate over the course of 5 years. Now that won’t be the case in every offshore office (as we have managed to achieve this through our continuous efforts to build the best culture for our team) but you’re far less likely to face the same dilemma.

Offshoring Tips

Having gone through the trials and tribulations, I have put together a few key points that I think would serve any business looking to offshore a portion of their business operations well. If done correctly you will reap the reward of delivering a product or service at the same level or even better than your local competitors but at a considerably lower cost – a win for you and a win for your clients. In our situation we’ve offshored our development team, but most of the same principle apply to any other business model – be it technical support, customer service or manufacturing.

1. Invest in your infrastructure

It may be far cheaper to set up an overseas operations in the Philippines, India or Sri Lanka but that’s no excuse to stint on the infrastructure. Ensure you have the best quality dedicated Internet lines (which are considerably more than what you pay locally), comms equipment and PC’s.

2. Invest in your team and training

There is an amazing talent pool of staff ready to commit to your cause. Ensure you hire correctly and offer both internal and external training programs. You will be repaid in spades. Provide them with a good orientation program to the ensure a successful on-boarding journey and retention.  Socialise them into your brand with your corporate values, events calendar, reward and recognition schemes, company policies and processes, career progression maps and other employee engagement programs

3. Run an Agile development methodology

Running your project in Agile ensures that there is far more frequent reviews of the project progress. I won’t go into the details of how Agile works but for those who are not familiar with it there are plently of articles on the topic and I recommend you have a read of it if you’re in the technology or software development space.

4. Transparency across the organisation

It’s very easy to forget to relay company news and messages with your team overseas. It’s important that they get to see where the company is heading and what opportunities you’re working on. Don’t forget to do this. Yammer is a great social networking tool for companies to use that can help bring any newsworthy items to broadcast across multiple offices.


5. Build a Trustworthy leadership and Management team

Here lies one of the real factors to your success in setting up an offshore office. Unless you or one of your partners is prepared to move overseas to run it, you will need to find a trustworthy team to be your representitive over there. Make sure you spend the time finding the right people as this could make or break you. We have been very lucky in  this area as our management team comprises of our longest serving employees and a referal from one of our Sydney team members who had originated from Sri Lanka.

The Fruits of Our Labour

What we set out to achieve those years ago was better cost efficiency with hopefully the same quality of output. What we got in the end was so much more:

• An engaged, dedicated, hard working and highly intelligent team.
• A family oriented team comprising of the friendliest people you are likely to meet.
• A scalable business model capable of catering to our growing clients needs.
• Retention rates that most Australian businesses could only dream of.
• A deep talent pool of well educated and experienced candidates for further expansion
• and last but not least – a great excuse to frequent an amazing country in a beautiful part of the world!

So the next time you think about jumping on Odesk or Freelancer to find that silver bullet, stop, reconsider and think about your long-term strategy.

About the author

Shaun Polovin is one of four founding directors at Sydney’s award winning ecommerce and digital marketing agency Netstarter.   Shaun has worked with B2B and B2C brands such as (Shaun to  fill in the blanks).  He’s passionate about and specialises in digital marketing strategies, creative web design and digital innovation that engages audiences; business and digital commercial strategies that lead to profitable conversion outcomes.  Shaun lives in Sydney, enjoys travelling, the odd spot of surfing and triathlon training.