more on Hopeful Report on Outsourcing

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Sun, 21 Dec 2003 21:26:25 -0500
From: Suresh Ramasubramanian <suresh () hserus net>
Subject: Re: [IP] Hopeful Report on Outsourcing
To: dave () farber net

I'd say that in any market, there's a classic pattern of expansion followed 
by consolidation, where the market settles down, and the fly by night 
operators / more inefficient setups get weeded out and a fewer number of 
good quality providers remain solvent and functioning.

Outsourcing is no different.

The last two or three years in India have made outsourcing / call centers 
etc what the dotcom boom was a bit before that.

The market is just starting to settle down.

More and more offshore contract firms are now concentrating on retaining 
big ticket clients and acquiring more clients by increasing and maintaining 
quality.

For example, the outfit my wife works for (http://www.cognizant.com) does 
software QA and coding work on contract for outfits like eBay, 3M and 
Metlife Insurance, and is one of four or five SEI-CMM5 rated outfits in 
India.  And there are at least 4 or 5 firms in India larger than they 
are.  I believe your colleagues at the SEI will tell you that India has 
more CMM5 rated outfits than anywhere in the world ..

Further, other companies, in other sectors (such as automotive 
manufacturing) are gaining a rep for quality.  Companies from the TVS group 
(which is an almost century old automotive and heavy engineering 
manufacturer, who have manufactured OEM components for GM, Suzuki etc) have 
won the Deming award for quality, over the heads of companies from around 
the world.

Then there are the overseas branches of companies ranging from Citibank to 
GE, that have been in India for several years before the current 
outsourcing boom, without Lou Dobbs ever foaming at the mouth about 
them.  Citibank has been in India for over 80 years, for example.

So - while the outsourcing / offshoring issue is highly overrated, it is 
here to stay. And it is a fact of life that even companies that Lou 
describes as "American" are global companies, with global markets.

"No man is an island, independent of the main ..." etc, as John Donne once 
wrote.

        srs

Dave Farber  writes on 12/21/2003 7:12 PM:

> Delivered-To: dfarber+ () ux13 sp cs cmu edu
> Date: Sun, 21 Dec 2003 13:12:30 -0800
> From: Dewayne Hendricks <dewayne () warpspeed com>
> [Note:  This item comes from reader Bob Roy.  DLH]
> At 12:48 -0800 12/21/03, Bob Roy wrote:
>
> > To: Dewayne Hendricks <dewayne () warpspeed com>
> > From: Bob Roy <bobroy () rjrassoc com>
> > Subject: Hopeful Report on Outsourcing
> >
> > Dewayne,
> >
> > Here are highlights from a program on outsourcing from National Public 
> > Radio's "Morning Edition" last Thursday.
> >
> > A growing number of U.S. firms are contracting out white-collar work 
> > overseas based on promises of huge cost savings. A recent example is 
> > IBM's consideration to move 4,000 programming jobs from five U.S. states 
> > to India and Malaysia. But several recent studies show a different 
> > picture such as (1) The fact that overseas labor rates have dramatically 
> > increased recently, sometimes doubling in a mere six months as seen in 
> > India, (2) Some U.S. firms that have succeeded in this pursuit have spent 
> > years doing the preparatory work at great cost, and even then it 
> > sometimes doesn't pay off, as in the case of Dell Computer's recent 
> > announcement that they are pulling back a large technical support 
> > contract from India because of excessive customer complaints, (3) High 
> > overseas employee turnover and poor readiness; in many cases the overseas 
> > suppliers turn out to be fly-by-night operations with weak resources, and 
> > (4) Concerns about industrial espionage. One survey revealed that 78% of 
> > U.S. companies had pulled the plug early on an overseas contract due to 
> > dissatisfaction with a contractor. Certainly U.S. and overseas firms will 
> > continue to smooth out these wrinkles, but perhaps this grim dose of 
> > reality will diminish the "great sucking sound" of contract work going 
> > overseas.
> >
> > The NPR audio segment: <http://www.npr.org/features/feature.php?wfId=1552637>
> >
> > Bob
>
> Archives at: <http://Wireless.Com/Dewayne-Net>
> Weblog at: <http://weblog.warpspeed.com>
>
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