| Outsourcing Center: Today, hospitals are much more computerized. Data networks are the repository of all of a patient's medical records (medical, insurance and financial), which makes them the central nervous system of the hospital. Add to this the large number of serious and fine-heavy regulations (namely, HIPAA and The Notification of Risk to Personal Data Act) that apply to hospitals, and the need for effective IT security is clear. This article examines how hospitals are increasingly outsourcing their IT security in order to avoid breaches of patient information — and the massive fines that would accompany such a breach. Most hospitals don't have the financial resources to provide the necessary data security 24/7, which is why outsourcing is such a good fit. | Sponsor: VoIP Business Case Resource Kit | | Understand, Quantify and Explain the VoIP Opportunity
Save 20 hours or more of your valuable time with our background research, pro forma financial calculations, and ready-to-use PowerPoint presentation. Make the right decision on this critical technology and back it up! > Get more info. | CRM Buyer: China has long been seen as a manufacturing offshoring behemoth, but IT offshoring has been steadily India-bound. India's hold on the IT outsourcing industry may be loosening a bit, according to a new report by McKinsey & Co. China is working diligently to prove that it offers many of the same attributes that have lured U.S. businesses to India: low wages and a large pool of talented, eager workers. But China wants to achieve much more than even India has from the outsourcing trade. According to the article, China clearly has grand designs for its computer industry. It wants to make its mark in computer software, hardware, semiconductor and programming services. bios: This column takes the unique stance that one of the chief sources of failures in outsourcing software development projects is that the "humble Word document" is insufficient to communicate the project's goals across the application development team. A document-centric approach is an ineffective requirements management tool when offshoring software projects because of the high number of variables commonly introduced during the lifetime of a project (for example, company-specific terminology and ambiguous requirements). With this in mind, requirements management tools are a necessity to avoid Word document lethargy and inflexibility during any offshore software project, according to this article. | | Special Offer: Free Info~Tech White Paper Learn How Encryption Can Protect Your Most Important Business Assets
Encryption is a complex technology, so there are many challenges inherent in deciding what to encrypt, selecting the right encryption method, and determining which computing environments can support that encryption. Info~Tech Research Group uses a business-case approach to clarify these issues and present them in a context business decision-makers can understand. Learn more by reading this independently produced white paper, available for a limited time courtesy of thawte. | | | | Financial Express: This disheartening article examines a Confederation of Indian Industry (CII) survey that found that 38 percent of Indian enterprises do not have any information security policy. As many as 86 percent of the survey participants did acknowledge the need for an information security policy, but about 72 percent do not have security process certification in place. About 40 percent of those surveyed do not have network or perimeter protection, or separate administrators for data and database systems. The final upshot is that risks related to business outsourcing and business process outsourcing still exist, in a big way. Knowledge@Wharton: This article examines the R&D phenomenon in India as if it were a three-act play. Advanced development for products would be in the first act. Basic research, the software engineering and development to support other labs would be in the second act. As the number of U.S. and European companies moving R&D operations to India rises, hopes are high in India that the third act could turn the country into an R&D powerhouse, according to this article. The play is still being written, as experts say that much of the R&D in India is geared toward smaller IT projects that complement innovation centers in Silicon Valley and elsewhere. But expansion in this arena is sure to come, and quickly. InformationWeek: The strike against British Airways that brought London's Heathrow Airport to a standstill involved a catering company instead of an IT outsourcer, but the airline's plight offers an excellent lesson on the hidden risks companies take on when they outsource key operations. According to this article, the basic facts of the situation could easily apply to many technology outsourcing scenarios as more IT vendors look to trim costs by paring staff. Because many of the major outsourcing vendors (think IBM and HP) have suffered significant layoffs, similar situations could crop up in the IT industry. Companies that hire those vendors need to ensure that the cutbacks won't affect the successful fulfillment of their outsourcing contracts. | 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:
Selective Outsourcing Brings Big Benefits with Little Risk
With Steve Cameron, senior vice president of managed services at Siemens Business Services. Question: What are some of the key benefits of selective outsourcing?
Cameron: The number-one benefit our clients are seeking is cost savings through the innovative application of the selective service. This also gives the client transparency in the cost structure because of the fixed scope of the selective IT element under management. After that, benefits vary based upon the client context, adoption rates and focus. For many, the real benefit of selective outsourcing is access to subject matter expertise that they don't have internally, or find difficult to obtain. Additionally, we see customers coming to us to manage an element of their IT portfolio that is underperforming, or causing them issues with their business users. In this way, selective outsourcing is the mechanism for quickly and permanently addressing service delivery issues that might have been difficult to address previously. Finally, selective outsourcing provides organizations with a way to validate their assumptions regarding the benefits of outsourcing while minimizing any perceived risk. Question: Considering some of the more common problems with outsourcing, such as hidden costs, extra management efforts and poor partner relations, does the risk of encountering these problems increase with the more outsourcing partners a company has?
Cameron: The risks associated with managing multiple outsourcing partners is directly dependent upon the surrounding governance model, program structure and complexity associated with the overall service model. We have seen environments where a multi-vendor approach achieves the intended business results. We have seen others that have not worked as well based on the integration strategy. Another area that Siemens Business Services has invested in is the process and governance model established to integrate our services within our client's environment across all facets of process and technology. Question: How can a company combat these problems when using selective outsourcing?
Cameron: Whether your organization outsources or not, the key to effective and efficient IT service delivery is a working governance model, developed and implemented with input and support from the business community and IT. When properly implemented, IT governance provides the organizational construct to manage and control the IT service portfolio, whether delivered internally or outsourced.
We also believe that a move to common process libraries, such as those defined under ITIL [IT Infrastructure Library], enable consistent service delivery, methods to quantify effectiveness, and the ability to increase scope based upon the client's business requirements.
In fact, the most critical challenge that selective outsourcing creates is in the building of or implementation of a common methodology (tools, process and governance) for service delivery across multiple elements and partners. A precursor to achieving this is to ensure that the client retains the ability to provide the strategic vision that supports alignment with the business goals. We have seen some organizations underestimate the importance of this as a core success component. | | Also from IT Business Edge: Voice & Data Convergence Voice & Data Convergence examines the strategic and tactical implications of emerging IP telephony technologies, from VoIP services to advanced CRM systems to security considerations. Find out what every IT decision maker should know. Click here to sign up! | By the Numbers
$600 million Amount that the Chinese IT outsourcing industry earned in 2004, compared to India's $20 billion (which represents 90 percent of the world's outsourcing business), according to Neusoft Group. 1 million Estimate of the number of workers needed in the Indian IT and BPO sector by 2009, up from around 350,000 Indians who are currently employed in that sector. 75 percent Amount by which poor governance can reduce anticipated returns from an outsourcing venture, according to Compass Management Consulting. Breaking Headlines
Globes Online: IBM beat out Electronic Data Systems for a five-year $11 million Israeli Ministry of Construction and Housing IT outsourcing contract. IBM's contract includes upgrading the Ministry of Housing's computer system and servers, approximately 1,000 workstations, printers and communications equipment. After the upgrade, IBM will operate and maintain the ministry's computer infrastructure. Sify.com: Bharti Group has entered a major outsourcing deal with telecom major Nokia to expand its network to cover more than 5,000 towns, up from 2,700 across India. Nokia will provide managed services as well as expand Bharti's Airtel networks. Nokia will begin work immediately, hoping to complete the expansion by March 2006. According to a Nokia spokesperson, the expansion would double Bharti's network capacity, providing reduced congestion, seamless coverage and enhanced quality to Bharti's subscribers.
ZDNet: The Indian IT industry body Nasscom has launched a new national entry exam aimed at improving the quality of graduates recruited into call-center and IT positions in the outsourcing industry. The goal of the exam, according to Nasscom, is to create an "employable" workforce out of the current "trainable" workforce. The skills tested by the Nasscom Assessment of Competence (NAC) exam include listening and keyboard skills, verbal ability, spoken English, comprehension and writing, office software usage, numerical and analytical skills, and concentration and accuracy. Emerging Trends
Webindia123.com: This article highlights comments made by U.S. Ambassador David C. Mulford at an Indian Chamber of Commerce function. According to Mulford, outsourcing to India is still a sensitive matter in the U.S. but is no longer a central issue. In his talk, Mulford discusses progress made in the pursuit of a global market, including the open skies agreement with India, which is already increasing air traffic and creating new jobs. The U.S. is still committed to deep economic and commercial ties with India, according to Mulford, who said that U.S. exports to India are up by 50 percent and India's exports to the U.S. are up by 15 percent for the first quarter of 2005. Source Wire: This press release examines findings from the Compass FactBase, which indicate that 80 percent of outsourcing contracts that fail do so due to poor governance, with problems such as a lack of proactivity and a shortage of management skills on the part of the customer and service provider. Poor governance in an outsourcing relationship can significantly reduce returns. In the end, a successful outsourcing venture relies on a good working relationship. Such a "soft, intangible" idea as a good vendor relationship is often overlooked, but the trend of relationship failures is growing at such a pace that companies need to start heeding this side of the IT outsourcing equation. This article describes the five main types of personalities in outsourcing relationships, with only one being indicative of a healthy relationship. Hindu Business Line India: India's IT outsourcing scene involves a number of peculiar trends that, when examined together, demand a larger explanation. The trends in question are the slowdown in several industries, individuals at senior levels leaving IT companies, and small-sized companies looking for opportunities to merge with like-sized ones. The bigger picture that these trends seem to define, according to this article, is that those execs that left profitable, comfortable positions (three from Wipro and two from Infosys) and those in charge of the swell of mergers know that the quantum jump that happened between 1999 and 2005 may not be easily replicable. According to this article, getting out while the getting is good is the next big trend in outsourcing. 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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