| Buffalo News: Despite all of the information streaming out about how offshoring is hurting the U.S. IT workforce, this article finds that new research on the topic doesn't support that notion. According to this article, many companies are finding that offshoring saves much less money than previously thought, and other companies are simply choosing to keep work — especially R&D work — in the U.S. because of its infrastructure, market size, risk profile and access to talent. Texas Instruments is a good example of this type of company, as it chose to build its most advanced semiconductor fabrication plant in Texas based on the cutting-edge research that could be done there. Many other companies, such as Dell, say that it is not as simple as just shifting jobs to an overseas location. Dell defines its offshoring as "allshoring," saying it is simply creating more of a global presence in order to better serve its burgeoning global customer base. | Sponsor: IT Manager Development Series | | Maximize Your IT Management Career
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Outsourcing Journal: It's been a concern for U.S. outsourcing suppliers for a long time, but there is now research that shows that Indian suppliers are stacking up to be the potential winners in the global outsourcing industry, while U.S. players are shown to be extremely vulnerable. According to an August 2005 research study by Katzenbach Partners, major Indian suppliers can better serve clients and are much tougher competition than their U.S. counterparts anticipate. As well, U.S. suppliers were found to be potentially disappointing to their buyers in the third or fourth years of their IT contracts. To examine the competitive value of the suppliers in this industry, researchers came up with a new corporate performance metric called the Relative Value of Growth (RVG), which determines the degree to which the capital markets reward a company for growth and/or margin improvement. The metric compares how much extra shareholder value one added point of growth creates against that created by one added point of profit margin improvement. The RVG values show that Indian IT outsourcers could possibly unseat such U.S. companies as EDS, CSC, Capgemini and Unisys. CIO.com: When the IT outsourcing Indian giant wobbles — if it ever does — experts generally expect that China will be next in line to the offshoring crown. Because of this, many CIOs are already eyeing China for their IT projects, but the realities of outsourcing to China currently offer a mixed bag of results. This article takes a close — and eye-opening — look at what IT outsourcing in China really demands by examining one CIO's pursuit of a successful IT offshoring development project there. This CIO ultimately chose China over India because of the greater cost savings offered, and a lower turnover rate. This outsourcing effort had to overcome many difficulties, including language barriers, extreme time zone differences (12 hours), and a lack of specific skills. There seems to be no question that salability and value chain growth will take time to develop in China, but many CIOs are finding it worthwhile to invest that time now.
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Recruiting Process Outsourcing Boosts Staffing Success
With Mark Joseph, a principal who heads up the Workforce Optimization business unit at Acquity Group, a leading provider of technology consulting, recruiting and managed services. Question: Why should companies consider outsourcing their IT hiring? What benefits does it offer?
Joseph: If you are the CIO of a growing company, there are tremendous demands on you to support the increased needs of the business. Finding the right resources to fill critical roles to execute on your technology agenda will define your department's impact. Recruiting Process Outsourcing (RPO) offers significant advantages to traditional recruiting strategies by partnering with an organization with vast technology networks and effective evaluation criteria to make the optimal human capital recommendations.
Organizations need to scale with the right resources in a cost-effective way.
Most companies haven't been scaling their technology recruiting departments since the bubble burst in 2001. With the uptick in demand over the last year, organizations have begun hiring recruiters or engaging agencies to help identify resources. What they really hope they're buying is a channel for hidden sources of IT talent. What they're getting are resumes of candidates that were "keyword" searched off the job boards. With minimal candidate sources and limited evaluation criteria, your employees waste too much time pre-qualifying candidates for positions. RPO offers a unique approach that provides a cost-effective, results-driven alternative to staffing services, recruiters and internal efforts. By bringing IT and HR together, organizations can improve quality while realizing significant cost savings for their full-time and contingent staffing needs. Question: What should a company look for in a partner when seeking to outsource its IT hiring? What are some pitfalls to avoid during the partnership?
Joseph: Companies should look to identify partners that can locate hidden sources of IT talent. An effective sourcing strategy is critical to increasing the pool of candidates to consider. Companies should also evaluate partners on their ability to qualify candidates, including technical evaluations across a wide spectrum of technologies and applying behavioral-based interviewing techniques to the interview process. Lastly, companies should consider organizations that have a proven track record delivering RPO solutions.
The most common pitfall in an RPO relationship comes from the interaction with hiring managers. Hiring managers need to be available at specific points during the entire recruiting lifecycle, from position description creation to initial phone screens and face-to-face interviews. When RPO partners have a good understanding on the specific skill sets for the open roles, the better the candidates. This can significantly reduce the time-to-hire by presenting pre-qualified candidates. Question: What makes hiring those in the IT profession different from other professions?
Joseph: Successful IT professionals need to have a sound blend of business and technology skills. Now more than ever, IT needs to have multi-faceted resources to bridge the gap between the business' goals and translation into system requirements. On the technical side, there are significantly more technology skills in demand. Each company has their own unique legacy and emerging technology platforms. The ability to evaluate technology proficiencies across varying technologies and recommend resources with the right blend of skills is critical to their effectiveness as an employer. | | 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
260,000 Shortfall of trained and qualified employees in Indian call centers in 2009, as the number of workers needed hits 1 million. 40 percent The number of IT leaders who said they expect to outsource some IT function to China sometime within the next three to five years, up from 8 percent in 2004, according to DiamondCluster International. 7,000 Number of jobs lost in Oregon by LSI Logic and other semiconductor companies from 2001 to early 2004, according to the Oregon Employment Department, at least partly due to companies' decisions to outsource some of their operations to other countries.
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Breaking Headlines
IT Observer: California-based Parasoft Corporation, a leading provider of solutions for automated software error prevention, is partnering with Indian outsourcing giant Wipro. Under the terms of the agreement, Wipro will adopt Jtest as a standard testing product for Wipro's Java development projects worldwide. Across-the-board use of Jtest will allow Wipro to automate and standardize its unique highest-quality code best practices, along with industry-standard best practices. The Oregonian: LSI Logic Corp. is planning to outsource all the chip production now done in its Gresham, Ore., plant to Asia, striking yet another blow to Oregon's beleaguered high-tech manufacturing sector. The decision to outsource will result in an immediate layoff for 90 of the company's 630 Oregon employees, according to this article. As well, the jobs that remain will face an uncertain future as the Silicon Valley-based company tries to sell the plant, a move that could prove difficult because chip companies currently prefer to outsource production to specialists overseas. LSI Logic's move could be just the first of many layoffs and closings in the area, as the Oregon chip industry faces billions of dollars of upgrades for technologies that are approaching obsolescence.
(Free registration required) TMCnet.com: HP is beefing up the global span of its business continuity and recovery centers thanks to a recent $100 million investment. The centers are designed to help HP customers get back up and running and to help them recover from virus attacks, natural disasters or other events. HP's recovery centers are spanning the globe, with new centers in Georgia in the U.S. as well as Madrid; Milan, Italy; Nieuwegein, the Netherlands; and Reading in the UK. There is also a center in Singapore that became active in August 2005. Emerging Trends
The Economic Times: The IT outsourcing aristocracy in India seems to have loyalty in spades — not so much to the companies that they run, but to the man that helped get them on the path to outsourcing superstardom. When Raman Roy, father of India's business process outsourcing (BPO) industry and erstwhile head of Wipro BPO (formerly Wipro Spectramind), left his former company, he left alone to try to build another BPO. But Roy is alone no more, as most of his original core team has reunited in his new effort — leaving their former companies lurching in their absence. Roy is still attracting his loyal followers, as more of his original core team is expected to join him in his new BPO effort soon. Sify.com: Gartner is warning that Indian call centers are facing skills shortages and security issues that could slow offshoring to the country and cause firms to evaluate alternative destinations. Gartner claims that the labor shortage is due to the growing demand for offshore BPO resources. The shortage has caught offshore call center service providers by surprise, particularly in India. Because of the rise of BPO, staff attrition at call centers is expected to increase as professionals switch companies to advance their careers or improve their salaries. silicon.com: In its most nascent phase, outsourcing was seen as a way to quickly hand off and "fix" the IT problem, and then it was seen as a way to cut costs. Both of those outsourcing reasons have become lessons learned in the school of outsourcing, but they have also helped to define the stronger, smarter trends in outsourcing today. One such trend is the splitting up of outsourcing purchasing — also known as selective sourcing. There is more management involved in such a setup, but the benefits from working with "a basket of services from the smaller suppliers" far outweigh the problems. 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
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