| BusinessWeek: This article deftly highlights a growing area of concern in the IT/outsourcing arena: The U.S.'s IT stalwarts aren't pushing innovation nearly enough. Meanwhile, relative newcomers in China and India are chomping at the bit to get in on the high-stakes IT innovation game. The concern here is that the U.S. is breeding a sense of complacency, a feeling that innovation is a U.S. birthright. Offshore meccas are working with a sense of urgency to usurp the status of the U.S. But they aren't focused on innovation as the U.S. has defined it in the past. The majority of businesses in India and China focus on rapid incremental process and product innovation. It's not as visible as breakthrough products or technologies, but such innovations can lead to impressive advances. | Sponsor: SPAM Filter Business Case Resource Kit | | Understand, Quantify and Explain the SPAM Problem
Save a week or more of your valuable time with our background research, pro forma financial calculators, and ready-to-use PowerPoint presentation. Make the right decision on this critical productivity issue with data to back it up! > Get more info. | CRM Buyer: A new report from McKinsey Global Institute offers a calming view of the offshoring craze, finding that, while offshoring will probably continue to create a relatively small global labor market, it will not threaten to create any "sudden discontinuities in overall levels of employment and wages in developed countries." The statistics estimate that 11 percent of service jobs around the world could be carried out remotely, and that this percentage varies widely by sector depending on the amount of face-to-face contact involved. For example, retailing could offshore no more than 3 percent of its jobs by 2008, but because retailing is such a huge employer, this would total 4.9 million positions. On the other hand, almost 50 percent of jobs in the packaged software industry could be done offshore, but because this business is much less labor-intensive, that would represent only 340,000 positions. McKinsey sees a number of issues playing a role in keeping companies from offshoring, including management difficulties and hidden expenses. WebProNews: It's not too often you hear about outsourcing the development and testing of version 1.0 of a software product, but that is just what this article is suggesting. Accelerance clients are using outsourcing in uncharted territory, namely the Fuzzy Front End of a software development project. Accelerance recommends that you don't code up your product or prototype at the start. Instead, you should use an HTML editor to create screen mock-ups, then link them to tell the "user stories" of your software product. These stories will help to show how the real product will be used. This article goes on to share the five-step Accelerance formula for successfully designing a software product. 0024HFPRO0016 | | Special Offer: Free White Paper Solid Approaches to Mitigate
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Successful BI and data warehouse projects share at least one common characteristic: explicit consideration of risk. According to this white paper, nothing addresses BI project risks as well as a Rule-Based Audit or Proof-of-Concept. Download this informative white paper today to learn about these two approaches and see how they can outshine a detailed project plan, expensive technology and costly talent. | | | | Tekrati: It appears as if casting a wider net with your outsourcing efforts is a good thing, according to new research by Zinnov, an offshore research and consulting company. The research shows that U.S-based technology companies that are using their captive centers (subsidiaries) in India strictly for engineering projects are realizing a lower cost savings than peers who use captive centers for broader functions, such as support. This article includes some best practices to improve the total cost savings afforded by captive centers, including making sure that every department in the organization is encouraged to use the captive center for some of its operations. Computer Business Review: This Butler Group blog does a nice job congratulating the trade union Amicus and Computer Sciences Corporation (CSC) for coming to an agreement in which CSC will look to invest any savings it realizes moving jobs from the UK to offshore locations in retraining the UK-based staff in higher-value skills, and looking to avoid compulsory redundancy. This blogger is especially taken with CSC's advanced World Sourcing program, which does a great job enabling its resource managers to discover skills throughout the company that can meet customers' resource demands. Keeping in mind the need for "reduced resource costs in the services industry, and for all countries to develop employment and skills widely," the CSC and Amicus agreement goes a long way in showing the right way to use offshoring, according to this piece. Computerworld: The benefits are clear: Being able to gather your best skilled resources from your global talent pool for any IT project that comes up is a definite plus in the virtual outsourcing sphere. The virtual team can follow the sun as it completes a project in the most efficient way possible. But there are hitches to this perfect vision. You can run up against the duplication of source code, multiple tools and processes in use, and limited network connectivity and reliability, to mention a few. By choosing the right technologies, you can avoid many of these headaches. This article gives suggestions for keeping a virtual team on target, such as staying on top of problems, keeping communication lines open, and exerting more managerial discipline and control. | IT Marketplace | | | | Tell the IT Business Edge audience of technology decision makers about your product, service, event, or job. Click here to list it in the IT Marketplace! | | 3 QUESTIONS:
The On-Time, On-Money, On-Quality Outsourcing Guarantee
With Jeff Van Fleet, president and founder of Lighthouse Technologies Inc., who has more than 20 years experience in management, development and deployment of complex software systems. Question: Lighthouse Technologies, a Dayton, Ohio-based software development company, recently outbid an India-based company for a major outsourcing job for the UK financial services firm Collins Stewart Limited. How were you able to compete on the global scale?
Van Fleet: We were selected due to our innovative solution, high productivity and our unique "On-time, On-money, On-quality Guarantee," which saved Collins Stewart time and money. Our "On-time" approach uses function points as a basis for scoping the project. Because we know exactly how many function points we can construct per hour, we can accurately develop a project plan for completion that will be met. Our "On-money" approach is a distinct departure from the old "dollars-per-hour" way of thinking. Our approach ensures that our clients, like Collins Stewart, receive specific capability for every dollar invested and focuses on function points as the basis of measurement. We can offer a proposal for development based on "cost per function point." This approach benefited Collins Stewart, since the functionality is agreed to and priced upfront. Our "On-quality" solution uses a multi-release spiral development model and continuous integration to deliver a predefined set of function points per spiral. Early visibility is a key factor that was not offered by the incumbent counterpart, meaning Collins Stewart is able to test the system early and often throughout the development process. Most companies only deliver a finished product, making changes afterward more costly and time consuming. Question: How important are your hiring strategies to your ability to compete with Indian IT firms?
Van Fleet: Our hiring strategies are extremely important in setting us apart from our competition. Our emphasis is on people, process and tools, in that order. We only hire the "best" people. We select people who are intelligent, who demonstrate that they are winners, are self-motivated, creative, and critical thinkers. We recognize that our team is only as strong as the weakest link, or our least competent team member. We ensure that all of our people test strong in their area of discipline and continue to enhance their skill sets. One way we ensure this is by requiring periodic "Tech Checks" on our software engineers. Question: In your opinion, what are the advantage areas where U.S. companies can compete and win in the global IT outsourcing market?
Van Fleet: U.S. companies need to improve productivity. Additionally, by focusing on their specific industries, knowledge can be gained and applied to improve predictability and reduce costs. From a software development perspective, U.S. companies need to transition their software organizations and vendors to provide solutions based on "dollars-per-value-provided" rather than just "dollars-per-hour." | | Also from IT Business Edge: Leveraging Open Source Leveraging Open Source gives you a comprehensive view of open source adoption in the enterprise. From Linux's growing role in the mid-tier server market to open source corporate blogging software, the open source movement is making inroads in the enterprise. Click here to sign up! | By the Numbers
5 to 7 years Time it will take for the U.S. to lose its competitive edge if it doesn't spend more money on IT research, according to Information Technology Association of America president Harris Miller. 3 to 7 percent Amount of operating expenses saved by companies that use captive centers only for engineering functions, according to Zinnov. 4.1 million Total offshore employment in 2008, up from 1.5 million jobs in 2003 and just 1 percent of the total number of service jobs in developed countries, according to McKinsey Global Institute. Breaking Headlines
internetnews.com: Legacy players in the IT outsourcing field are facing increasingly tough competition, as some researchers are now concluding that it's just a matter of time before newer India-based IT and outsourcing companies, such as Infosys and Wipro, overtake standbys such as EDS and Computer Sciences Corp. The U.S. companies are seen as facing problems with growth and margins, while Indian companies continue to ramp up in those areas. The Economic Times: This news tidbit offers yet one more meaning for the phrase, "going postal." India Post has struck major outsourcing deals with Citibank, GE Money, Reliance Infocomm and Tata Indicom to confirm the addresses of potential customers as an additional security measure. Postal workers will now be included in the address verification of credit card applicants and customers of post-paid telecom services. Having a local postal worker in charge of verification should make it much tougher for scam artists to obtain illegal credit cards and mobile phones.
GG2.net: Australian Broadcasting Corporation (ABC) TV claims that Indian outsourcing companies offered ABC's reporters banking PINs, passport numbers, credit card details and other personal information on thousands of Australians for just Australian $10 each. At this point, ABC has not named the Indian company that allegedly offered the illicit information or the reporter who uncovered the scam. Emerging Trends
destinationCRM.com: A new IDC study designed to measure the causes of industry trends among IT services has found that the telecommunications sector will lead all other verticals in outsourcing engagements over the next five years. Analysts expect an increase in the adoption of BPO services within the telecom industry, as competitive forces push this market to offload business processes like customer care and other back-office functions. The Washington Post: Following the path of many other states, Virginia has put its information technology operations up for bid. Three of Fairfax County's largest employers have proposals under consideration for these contracts, which include IT infrastructure and the business applications portion of the state's technology sector. Each contract would be worth approximately $240 million a year. (Free registration required) Knowledge@Wharton.com: Skype's business application is simple enough: It's a software that allows people to talk and instant message for free using PC-to-PC connections. What separates it in the new global marketplace is that, unlike most other VoIP services, Skype uses peer-to-peer technology to combine the computing resources of all of its users. In fact, Skype could be onto something big — something that could affect the way outsourcing is done by transforming how virtual teams can communicate. The company touches on a handful of key trends, including peer-to-peer technology, the commoditization of telephone service, and the viral nature of Internet marketing. This article offers a fascinating look at the future of a company that is gaining millions of users without having to heed the regulatory issues that affect much of the telephony market. IT Business Edge: Outsourcing for Strategic Advantage
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About the Editor
Amy Jackson Sellers is a freelance editor based in New York. She previously worked as the managing editor for Louisville Magazine and as an editor for TechRepublic, a Web site for IT professionals. You can e-mail her at editorial@
itbusinessedge.com.
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