The Chinese information technology (IT) outsourcing market has been forecast to increase at a compound annual growth rate (CAGR) of 15.1% through the years to 2015.

Growth within the Chinese IT outsourcing industry looks set to be driven by a number of factors including the rapid development of IT infrastructure and mobility services, along with the increase amount of investment from a number of multinational corporations.

However, increasing competition from other offshore destinations could pose a challenge to the growth of this market.

In addition to cheap labour, other drivers for the expansion of the Chinese IT outsourcing market include market deregulation, large-scale investment in technical education, better intellectual-property protection, IT core standards and infrastructure development, and the flourishing Chinese economy.

Despite promising growth, however, China still needs to consolidate its workforce capabilities in terms of English-language proficiency, project-management skills, and experience to step up its challenge to the global market.

While Chinese IT companies are increasingly bidding for international outsourcing projects, they are also leveraging their proximity to markets such as Japan and South Korea, where they have an advantage in both geography and language. The Korean electronics firm Samsung outsourced about US$18.5 billion of business to China in an attempt to lower production costs.

The best Chinese IT outsourcers are gradually incorporating more advanced applications, integration and infrastructure services into their offerings. Some are developing strong embedded software capabilities to work with makers of mobile phones and other hardware devices.

Key companies dominating the Chinese IT outsourcing market include Digital China Holdings Ltd., Fujitsu Ltd., Hewlett Packard Co., and IBM Corp.
The Chinese information technology (IT) outsourcing market has been forecast to increase at a compound annual growth rate (CAGR) of 15.1% through the years to 2015.

Growth within the Chinese IT outsourcing industry looks set to be driven by a number of factors including the rapid development of IT infrastructure and mobility services, along with the increase amount of investment from a number of multinational corporations.

However, increasing competition from other offshore destinations could pose a challenge to the growth of this market.

In addition to cheap labour, other drivers for the expansion of the Chinese IT outsourcing market include market deregulation, large-scale investment in technical education, better intellectual-property protection, IT core standards and infrastructure development, and the flourishing Chinese economy.

Despite promising growth, however, China still needs to consolidate its workforce capabilities in terms of English-language proficiency, project-management skills, and experience to step up its challenge to the global market.

Source: The Outsource Blog

The Fifth Sino-Japan Software and Service Outsourcing Conference of 2012 was held in Chengdu on Feb 21. The Chengdu Association of Sourcing Services invited over 180 Chinese and Japanese delegates from governments, companies, institutions and industrial organizations.

Topics for discussion included the Business Process Outsourcing, embedded IC design, SAAS product applications, logistics information and outsourcing talent training.

The guests exchanged ideas on software outsourcing in cloud times and also industrial migration and cooperation after an earthquake and tsunami struck Japan on March 11, 2011.

Japanese guests also visited the Chengdu Municipal Government and local enterprises including Tianfu Software Park, Dujiangyan Outsourcing Industrial Park and Chengdu Winnersoft, Co. Ltd.

Chengdu attaches great importance to the software and outsourcing industry, which have become major indicators of an annual average growth rate that has reached over 30 percent in the region. Chengdu is a competitive and attractive area for software industries such as Fortune 500 companies, well-known domestic software companies and numerous local enterprises.

Three of the top 10 service outsourcing enterprises in the world – Accenture, IBM and Wipro, and 19 Fortune 100 companies – have operations in Chengdu. Six of the top ten domestic service outsourcing enterprises have set up branch offices and over forty multinational companies have established global delivery centers, shared services centers and research and development centers locally.

Industrial departments and associations in Chengdu have established strategic relationships with the Okinawa Prefectural Government, Japan External Trade Organization and Japan-China Economic Association. Several local enterprises have established long-term business relations with Fujitsu, NTTDATA, Nomura Securities and Toyota. A new business model has taken shape amidst the rapid rise of its outsourcing trade with Japan.

by Samantha Selinger-Morris

Rent-a-friend trend hits town.

TOO tired or busy to, you know, function?

Until now, the concept of outsourcing all our undesirable chores – from the mundane to the profound – has largely thrived overseas.
In Japan, an agency called Hagemashi-tai – meaning ”We want to cheer you up” – supplies clients with adult actors to impersonate blood relations, like a trial husband to leave towels on a bathroom floor, to help people practising for coming marriages. And in the United States, a growing industry of ”baby planners” helps mothers-to-be with everything from choosing the perfect moniker for their unborn child to fitting their car with a baby capsule.

Now, the trend has hit Australia.

Deborah Webber, 57, and Tasmin Sharp, 35, are just two of 181 Australians who have recently signed up with www.rentafriend.com to offer their friendship – for a fee.

”I’m hoping [someone] will rent me and say, ‘Can you show me around Sydney?”’ says Webber, a home healthcare worker. ”I like to help people that need help.” Ms Sharp, an actress who works part-time in marketing and promotions, said: ”I thought, well, it could be quite cool to have that as your job, to get paid to hang out with someone.”

Scott Rosenbaum, the New Jersey owner of rentafriend.com, attributes the success of his company – 417,000 friends for rent worldwide and 4100 renters – to a growing group of people open to hiring ”purely platonic” friends for various reasons. They include business travellers who want a local to attend a boring corporate function with them and others who simply want ”to get an outsider’s point of view” on personal problems.

A social behaviour and trends expert, David Chalke of AustraliaSCAN, sees a future in Sydney for rentafriend.com, and continuing success for other existing companies, such as Melbourne’s Rent A Crowd (which provides revellers to musicians and comedians who are just starting out) and The Yellow Brick Guide, an audio GPS system that not only tells travellers how to find various wineries in the Hunter Valley, but also advises them on what to do there once they arrive.

”We’ve certainly been through the loss of the extended family, as we’ve become more mobile, and there isn’t the family compound [for support any more],” Chalke says. ”What we seem to be doing these days is recreating our own personal villages that are not bounded by geography. Because the trouble with real villages is that it’s got nutters, it’s got thieves, it’s got vagabonds.”

That renters on rentafriend.com could possibly be just as unscrupulous as members of our own communities is an issue of concern, say Webber and Sharp.

But it’s not an issue for Rob Marjenberg, creator of The Yellow Brick Guide audio tours, whose know-it-all winemakers offering tips – like giving fellow Hunter Valley tourists parked at a renowned romantic spot ”some space” – are, after all, present only in voice.
Another reason Marjenberg is confident his new business will find a market: ”It’s the typical traveller’s dilemma,” he says. ”You want to give yourself over to the wonder of a new place, but don’t know what to do when you get there. That’s always been the case. The difference is now, with the net, there’s so much information. It’s draining making all those decisions.”

Source: Sydney Morning Herald

Japan and Korea Driving IT Outsourcing in China According to New Report

China has seen increased IT outsourcing coming its way from regions such as Europe and the US. Japan and Korea have also begun outsourcing to China to utilise the availability of huge labour forces. Minimal costs have also been attracting these countries to this region. The market is expected to grow substantially.

Increased foreign investment and strong support from the Chinese government have been driving factors in this market. Language barriers and a lack of high skilled professionals however continue to prove to be challenges for this market.

TechNavio’s IT Services Outsourcing Market in China 2010-2015 report has been prepared based on an in-depth study of the market along with inputs from various experts. The report contains market and vendor landscape supported by drivers, restraints and trends. It also contains an analysis of key vendors in the market.

For the purpose of this report the market includes the Chinese Information Technology Outsourcing (ITO) market and key vendors. The Chinese Business Process Outsourcing (BPO) market and its vendors are not covered in this report.

Traditionally the US and Europe have been key contributors of IT outsourcing to China. Of late, Japan and Korea have also followed suit. Availability of a large pool of labor coupled with significant cost advantages has been making the Chinese market attractive. Moreover the familiarity of regional languages has been an added advantage for countries like Korea and Japan. The growth of the Chinese market is viewed as a threat to other outsourcing leaders such as India and the Philippines.

The growth of the Chinese market as an outsourcing hub can be directly attributed to foreign investment and strong support from the Chinese government. Transportation, telecommunications and network infrastructures have been developed quickly and consistently to be at par with developed countries.

TechNavio’s analyst says, Mergers and acquisitions will continue to be the key strategy used by organisations to gain a share in this market. The possibility of low cost acquisitions has been attracting several global companies into this market.

Source: BusinessWire.com

By Dennis Estopace

Barring any cataclysm, the crisis in Japan is expected not to affect business process outsourcing (BPO) companies in the Philippines as most of them have redundant systems in place.

“It all depends on telecommunications companies, if their services are not interrupted,” Mike Perry, vice president for international operations InContact, said when asked on the impact of the three disasters that have hit Japan last Friday.

Perry said there is not much effect on their business “unless all four locations—Hong Kong, London, Canada and the US—where we have a data centre experience a crisis of that magnitude.”

The company provides cloud-based services for BPOs and call centres by removing the need of the latter to buy hardware and equipment.

InContact claims to be “the leading provider of on-demand contact centre software and agent optimization tools.”

Likewise, executives of Brussels, Belgium-based Arinso International NV also said their backup servers—one of which is in Singapore—and data centres like in Adelaide, Australia, ensure continuous operations for clients, mostly companies outsourcing payroll and human resource management functions.

InContact formally inaugurated on Wednesday a 24-employee facility and data centre in Manila while Arinso executives announced the rollout of their software developed in the Philippines.

Executives of both companies said they remain optimistic of growth and regard the disaster in Japan as a temporary setback for the region.

Japan, the world’s third-largest economy, is grappling with a nuclear disaster after an earthquake and tsunami hit the country last week.

Interconnectivity has been a concern since undersea earthquakes have disrupted international communications in the past few years.

In 2006, an earthquake in Taiwan disrupted telecommunications operations as it damaged the Asia-Pacific Cable Network 2, a submarine telecommunications cable linking several countries in the Asia-Pacific region.
Disruptions that cause “downtimes” impact on revenue of BPOs that rely on information and communication technology for their businesses.

Perry said the company is talking to all telecommunications companies in the country to ensure connectivity.
“We can’t put all our eggs in one basket. Our agreement [with Bayan Telecommunications Inc.] is just one of the multiple partnerships we’re aiming to secure in the next months.”

Perry said redundancy is the key to smooth operations of BPOs like InContact.

Source: ABS-CBNNews.com

Mother nature to the mother of all revolutions – lets keep our fingers crossed.

Martin Conboy
President Australian BPO Association

The horrifying TV pictures as the giant Tsunami smashed into Japan and turned urban centres into piles of matchwood in seconds are once in a lifetime images. And as if that was not enough they are faced with the very real consequence of a nuclear meltdown of one of their nuclear power plants.

Japan is the second largest economy in the world and the knock on effects of this disaster will have ramifications around the world. This has completely spooked global equity markets as investors feed upon the uncertainty and sell their stocks. When Mother Nature is angry we really do look puny.

This is against a background of the populist upheavals in Arab nations that are also making waves around the world. There is no doubt that western governments and businesses will need to reflect and re–evaluate their relationships with distasteful dictatorial regimes.

There are violent flashpoints right across the Middle East and particularly in Libya, where most pro–Qadhafi forces are ill–equipped though still probably stronger than the uncoordinated yet determined rebels. It looks like it is heading to a Mexican stand–off that will turn into is a civil war. The euphoria of the revolution in Egypt is quickly dissipating as the lack of government control is allowing crime and lawlessness to fill the vacuum. This uncertainty is driving the cost of oil up and up and fragile economies in the west that are completely addicted to oil are neverously and impotently watching from the sidelines.

Western economies are overly reliant on oil and the rising cost of oil will feed into rising inflation, it is shaping up to the perfect storm in that western governments need to expand their economies but will be hamstrung by their inability to pull the levers of economic policy as and when they would like to.

In the aftermath of the floods and cyclone in Australia, Insurance claims are expected to total US$3.5bn, the Kiwis are talking about $11 billion but these will be dwarfed by the costs of cleaning up Japan. The impact of the earthquake and Tsunami on the Japanese economy, and the flow on to global business is frightening. This coupled with the oil shock takes us into unprecedented waters and there will be major economic ramifications.

Looking ahead and looking for a silver lining, the rebuilding of Japan, Australia and New Zealand infrastructure will create economic opportunity that will certainly feed into global recovery. The share markets will eventually correct and we will get back to normal trading levels.

Having said that the human cost is staggering and to horrible to contemplate homes and businesses can and will be rebuilt, but lives are lost forever.

Our thoughts go out to our BPO colleagues and friends in Japan we send our condolences to those affected by the catastrophe and our support and prayers to those who are living through the nightmare.

The Japanese have a new twist on outsourcing. The way outsourcing usually works is that one company outsources its call centre or back office processes to another company overseas, and the outsourcing vendor hires its own workers from its location. This outsourcing has worked for many companies worldwide, but some outsourcing companies in Japan have a slightly modified outsourcing model.

Two of the largest Japanese outsourcing companies are Transcosmos and Masterpiece. Transcosmos runs a 170-seat call centre in Bangkok, the largest Japanese call centre in Thailand, while Masterpiece operates in Bangkok, Thailand, and Beijing and Dalian in China. While this all sounds like the usual outsourcing model, the difference is its employees. These companies do not hire from Thailand or China – they hire Japanese employees directly from Japan and then send them overseas.

These Japanese employees are paid less than if they work in Japan. For example, Transcosmos pays a call centre operator in Thailand a starting salary of about $930 a month—less than half of the common starting salary of $2,500 in Japan. “That’s 30 per cent to 40 per cent savings for customers, Transcosmos said.

As these call centres are usually staffed by younger independent Japanese workers, a stint in another culture is a bit like a paid holiday. Japanese youth are no different from their counterparts all over the world. Not money, but love of travel and adventure, is the raison d’être (Japanese: Ikigai) for these Japanese knowledge workers.

The Overseas Japanese call and contact centres cater to companies that need to outsource, but prefer Japanese workers because of language and culture. So it’s a win-win situation.

“If you used Japanese-speaking Chinese, for example, the service quality does not match up with the expectations of the end customers,” said Tatsuhito Muramatsu, managing director of Transcosmos Thailand.

Japanese internet bank SBI Sumishin Net Bank (SSNB) announced it has entered into an agreement with Business Process Outsourcing provider Total System Services International (TSYS) to be implemented later this month. Under the agreement, TSYS will handle payment processing for 750,000 accounts, and back-office operation services such as distributing retail membership cards, association-branded credit cards, and a proprietary private label credit card to customers.

“The dependability of TSYS’ processing platform will enable us to concentrate on new cardholder acquisition and new program introduction, and we look forward to calling on TSYS for its extensive knowledge and expertise in day-to-day operational matters including call center operations,” said Tohru Nitadori, SSNB general manager of card business.

The managing director of TSYS Japan, Hitoshi Kondo, said “We believe the value of outsourcing has been proven time and time again in the Japanese card industry. We are strongly committed to our Japanese team and support its mission to meet the increased needs and expectation of clients.”

“SBI Sumishin Net Bank leads the Japanese internet banking market with its innovative products and services. TSYS is delighted to offer a full range of support for SSNB’s entry into the card business, in both system processing and back-office operations,” said TYSYS International president, Gaylon Jowers.

NEC, Fujitsu to boost outsourcing

The Wall Street Journal reported that Asia’s contract chip producers expect to see their earnings get better this year, as the global financial revival boosts demand, along with more semiconductor companies globally come across to outsource additional production.

Increasing outsourcing orders, particularly from Japanese incorporated device producers such as NEC Electronics and Fujitsu Microelectronics, are expected to raise the earnings of contract chip manufacturers Taiwan Semiconductor Manufacturing and United Microelectronics of Taiwan, analysts claim.

Both NEC and Fujitsu are IDMs – established domestic chip producers that handle semiconductor manufacturing. However, as they keep on fighting back with losses, analysts say they are likely to increase outsourcing to keep production costs.

TV producers anticipate Sony outsourcing

According to DigiTimes, Taiwan-based LCD TV manufacturers are likely to account for a big segment of the OEM orders from Sony as the vendor aims to raise its outsourcing capacity, particularly Sony’s three existing associates Wistron, Foxconn Electronics and Compal Electronics.

Sony’s strategy is to boost LCD TV OEM sales, primarily for cheap models, to as much as 40% of its full LCD TV shipments amount in its 2010 financial year. Sony begins discussing among its OEM partners for LCD TV orders for 2011, which may cost up to 15 million units.

Sony distributed 5.4 million LCD TVs in its fiscal third-quarter 2009, up 8% on year. However, proceeds from the partial fall down to $3.76 billion.

Xerox’s BPO industry should deliver

When a company outsources their IT or other business processes, the outsourced firm comes up with a less expensive and more efficient way of handling the work outsourced to them, and that’s valuable. Despite this, outsourced firms rarely reinvent a process entirely – because it’s extremely difficult.

Now that Xerox has spent $6.4 billion in buying ACS, a major player in the business process outsourcing industry, it’s that kind of reinvention that they must deliver.