Sunday, September 30, 2007

World’s coming to India: five cities among the top outsourcing hubs

Bangalore, September 28: Chennai, Hyderabad, Pune and Kolkata are rated among the top five emerging destinations worldwide in the latest ranking of top 50 promising outsourcing cities around the globe. Bangalore, Delhi NCR and Mumbai, along with Manila and Dublin, are the five established hubs that are unlikely to fade from the outsourcing map, according to a study by services globalisation & investment advisory firm Tholons and media group Global Services.

he study ranked Chennai as the top most emerging hub for outsourcing globally, with established expertise in application development and maintenance, finance and accounting, product development, engineering services and testing. The Tamil Nadu government was IT-friendly, and an upcoming Mahindra World City, slated to be the world’s largest IT Park, in Chennai was favourable to its outsourcing climate.

Hyderabad, with relatively low property rentals and favourable government policies, recently attracted investments from BPO majors such as HCL BPO, EXL Services and Genpact and was ranked second in the list. However, recent terrorist attacks in the state have alarmed investors, the report pointed out. Pune gained prominence among outsourcing hubs owing to lower operating costs and attrition rates compared to other metros.

Among the 50 global hubs, Chandigarh, which was described as “one of the best planned cities in India” was ranked at nine and Coimbatore at 21. Cebu City in the Philippines, Ho Chi Minh in Vietnam, Sri Lanka’s Colombo and the Chinese cities of Shanghai and Beijing were also among the ten top outsourcing locations.

Kolkata and Bangalore were emerging as workplaces for application development and maintenance and business analytics, respectively. Tholons CEO & chairman Avinash Vashistha said tier-II centres are gaining prominence as investors become wary of investing in a single city as operations grow. Locations were being gauged for the available skill-sets, and investment decisions were business-driven, he said.


1. Chennai (India)
2. Hyderabad
3. Pune (India)
4. Cebu City (Philippines)
5. Kolkata (India)
6. Ho Chi Minh City (Vietnam)
7. Colombo (Sri Lanka)
8. Shanghai (China)
9. Chandigarh (India)
10. Beijing (China)
According to The Economic Times, Citigroup Venture Capital (CVC) has also entered the race to acquire Citigroup’s BPO arm, Citigroup Global Services.

ET, quoting sources say that Genpact, WNS Holdings and CVC are the final three players who are interested in this transaction. The report adds that while Genpact is the frontrunner, CVC may also have an advantage being part of the Citigroup family.

The current valuation of the deal is expected to be in the region of $ 600 million. The BPO arm is expected to report revenues of $ 200 million this year.

Another potential bidder, Firstsource Solutions is learnt to have moved out of the race, having already acquired the US-based MedAssist for $ 300 million recently.

Friday, September 14, 2007

India is still the most attractive country to which to move back-office operations, according to the 2007 Global Services Location Index compiled by A.T. Kearney.

The index evaluates 50 countries according to three main categories: financial attractiveness, availability of skilled workers and the business environment. India stays ahead of China, ranked second, thanks to lower wage, infrastructure and regulatory costs. Both countries lead the rest by a good margin. Policies to promote service exports in Latin America have helped Brazil and Mexico rise in the global league. Less established locations in eastern Europe, such as Bulgaria and Slovakia, are now ranked higher than either Poland or the Czech Republic.
LAST month, Amazon, an online retailer, announced that it had opened a software development centre in Cape Town. Chris Pinkham, a South African who is returning home from Seattle to head the operation, says that Amazon chose South Africa because of its pool of high-calibre IT workers and good infrastructure. The new outfit will create programmes for users around the world. Will other foreign firms also move such operations—a strategy known as offshoring—to South Africa?

According to a recent study by McKinsey, a consultancy, South Africa is well placed to benefit from the trend of firms shifting business processes, such as customer care and payroll administration, to cheaper places. This, says McKinsey, could create 100,000 jobs in South Africa as well as attracting a modest but useful $90m-175m in foreign investment by 2008. …

Wednesday, September 12, 2007

IT Spending by Indian SMEs Expected to Reach $900Mn in ’07 – AMI

According to a study conducted by AMI Partners (a US-based market research company), IT spending by Indian small and medium enterprises (SMEs) is expected to reach USD 900 million in 2007, reflecting an increase of 19 percent over 2006. IT spending by Indian companies includes both product support and professional services.

Among the key findings, the long-term managed services in the Indian market are strengthening, while the traditional services, such as applications development and integration are losing their foothold. The managed IT services in the country comprises end-to-end outsourcing and discrete managed services. Currently, the maximum amount of investment by Indian SMEs is made in discrete managed services.

According to Nirupam Chaudhuri, the Research Manager at AMI Partners, the managed IT service market in India is growing at a faster rate than the average market growth. He further added that a good relationship between both the sides is essential with a single point of contact for dealing with various issues regarding IT infrastructure and facilities.

Till now, a majority of Indian SMEs have spent heavily on annual maintenance contracts (AMC) for hardware and software applications. These annual service contracts are likely to mature into distinct outsourcing deals, where the service provider will deliver risk sharing, round-the-clock support, and facilities management services.

The competition among vendors delivering desktop management and routine network management services is enormous in India as the number of contracts in this domain is increasing. In addition, the contracts regarding FCAPS (fault, configuration, accounting, performance, and security)-based network management are increasing.

SolutionInc Acquires Line 4 Communications & Pelatis BPO Solutions

SolutionInc Technologies (SolutionInc), a Halifax-based Internet connectivity, billing, and management software and services provider, has entered into a letter of intent to acquire the Halifax-based Line 4 Communications from Armshore Investments (a merchant and investment bank based in Halifax, Canada). In addition, SolutionInc signed a letter of intent to acquire a 51 percent interest in Pelatis BPO Solutions (a BPO service provider) from Pelatis BPO. Through the deal, the company’s headcount will increase from 40 to 200. The financial terms of the transactions were not disclosed.

The transaction with Pelatis BPO, a BPO service provider with operations in Canada and the Philippines, will facilitate SolutionInc to deliver more services through its own firm, and hence lessening third-party outsourcing costs and increasing profits. In addition, the company has the option to acquire the remaining 49 percent of Pelatis BPO Solutions within the next 2 years.

The acquisition of Line 4 Communications will strengthen SolutionInc’s portfolio to include IP telephony systems as well as enhancing the potential recurring revenue streams.

Glen Lavigne, the President and CEO of SolutionInc, cited that the two acquisitions will strengthen the company’s credibility in key areas, such as support services, customer services, network management services, and product testing services.
Brocade Partners with Ness to Set up R&D Center in India

Brocade, a US-based provider of networked storage solutions that help enterprises connect, share, and manage their information, has signed a partnership agreement with Ness Technologies, an Israeli IT services and solutions company, to set up an advanced R&D center at Pune, India. The center has been set up with a focus to provide support for Brocade’s File Area Network (FAN) business. It possesses state-of-the-art IT infrastructure, such as advanced connectivity infrastructure and energy saving hardware. In addition, the R&D center meets high security standards.

This partnership will provide Brocade with access to Ness’ resources to support its FAN technology development, maintenance, and test activities.

Ness’ Indian operations are spread across Bangalore, Hyderabad, Mumbai, Pune, and Chennai. The company’s Indian operations offer outsourcing and offshore services to clients in IT, financial services, BFSI, life sciences, telecom, and utilities verticals across North America and Europe.

Global investment in research and development is rapidly shifting from North America and Europe to Asian centres such as Bangalore, Hyderabad, Mumbai and Beijing, according to new research.Researchers at the University of Sheffield and Aston Business School found that the shift was resulting in a small elite club of regions, in both the advanced and developing world, that are dominating the global knowledge economy.

The researchers found that companies in advanced regions such as Silicon Valley in the US, Cambridge in the UK, Ottawa in Canada and Helsinki in Finland, are increasingly establishing partnerships and networks with companies and universities in fast-developing Asian regions.

They found that of the US $50 billion invested by multinational companies in R&D projects around the world between 2002 and 2005, Asian economies received 58 percent of this investment, with Europe receiving 22 percent and North America 14 percent. The research has been published in a report titled ‘Competing for Knowledge´.

The majority of the investment in Asia is concentrated in a very small number of locations such as Bangalore, Hyderabad, and Mumbai in India and Beijing, Guangzhou, Hangzhou and Shanghai in China.

While Asia was the dominant destination of R&D investment, North America was the primary source, accounting for 50 percent R&D investment, followed by Europe with 28 percent This resulted in North America having net R&D investment deficit of US$18 billion and Europe a deficit of US$3 billion.

According to report authors Robert Huggins, of the University of Sheffield´s Management School, and Hiro Izushi, of Aston Business School, the key impact of this global redistribution of knowledge is that many regions in North America and Europe were losing out and the competitiveness gap between these locations and the elite regions was becoming even wider.
The research also showed that companies in advanced economies were finding it increasingly difficult to create innovations resulting in market-leading goods and services.
For example, between 1996 and 2006 productivity growth resulting from innovation in the United States amounted to only 1.5 percent per annum, considerably lower than that achieved in the 1950s or 1960s.

Huggins said: “As the knowledge required to produce innovations becomes more specialised and located in new locations around the world, companies are having to ensure that they are closely linked and aligned with these new sources wherever they may be.

“Since China is now the second highest research spender it is increasingly likely that it will feature more prominently as one of these new sources.”

Source: Indo-Asian News Service

Saturday, September 08, 2007

In the first phase of expansion, Wipro had tapped cities like –
Delhi, Mumbai, and Bangalore

In the second phase it had tapped cities like –
Kolkata, Chennai, Hyderabad, and Pune.

Now Wipro is looking at the third phase of expansion
Nasik, Guwahati, Bhubaneshwar, Kochin, Vishakhapattanam, and Jaipur.
Wipro’s employee strength of key delivery centers in India:
[Delhi and Pune: - ~3,000; Kolkata: ~2,900; Mumbai: ~5,000 ]

With established centers close to saturation point, it was logical to stabilize them and look at new cities. Wipro already recruits a lot from satellite towns for its Kolkata operations. The ratio of ‘met to offer’ to ‘fit’ candidates had declined from 15-16 per cent earlier in cities like Delhi or Mumbai, to 8-10 per cent currently in the big cities. In smaller towns, the ratio was lower.

Wipro preferred to have people on board who would stay on for longer periods and one way to do this was to ensure they started off with realistic expectations from the industry. Attrition rates fell 40 per cent since last year thanks to this. At the same time, Wipro developed incentive schemes, with around 200 employees going to offshore operations, and around 400 shifting from BPO to IT. The company today provided personal growth opportunities to deserving employees including on-going education while on the job. Candidates below internal criteria in some way or the other received training in skill-deficit areas and were absorbed if they cleared tests.

Kolkata was a leading training centers. Kolkata as a centre grew at 100 per cent over last year. Wipro would add 500 recruits in the coming six months. One of the major advantages of Kolkata was that it attracted talent from satellite towns like Jamshedpur, Ranchi, Bhubaneshwar, and eastern Indian cities.

Thursday, September 06, 2007

Globalization Changing Service Delivery Models for Organizations’ Business Processes – EquaTerra

Globalization is rapidly forcing a paradigm shift in G2000 organizations’ delivery models for their core business and information technology (IT) functions, as per EquaTerra perspective paper titled, ‘How to Design and Optimize Global Service Delivery Models’. These delivery models are becoming increasingly global themselves, and encompass a mix of internal and external delivery options including domestic shared services centers, offshore captive centers, and local, nearshore, and offshore outsourcing.

Virtually all functions within an organization – including IT, human resources, finance and accounting, procurement, call center, engineering, research and development, logistics services, research and analytics, clinical trials, and legal – contain some processes that could be optimized if delivered via an external captive, offshore or outsourced delivery model.

Thus, according to the paper, the question for today’s leading organizations is not whether a global service delivery model is needed, but rather, how to design, deploy and manage such a model. Given the plethora of in-house and third-party delivery alternatives, corporations must address how to assess, prioritize, execute on and exploit the breadth of options to achieve the desired outcomes. The paper also identifies the value achieved when organizations move beyond a focus on just cost reduction or labor arbitrage, and include an increased emphasis on multi-pronged service delivery models to achieve process improvement and transformation.

Said paper co-authors Cliff Justice, EquaTerra’s Managing Director of Globalization, and Stan Lepeak, EquaTerra’s Managing Director of Research, ‘Today’s buyers must understand their global options and opportunities for enterprise-wide delivery of a broad range of functions and process areas. They must also assess their organization’s unique needs in terms of what benefits they seek, which service providers and geographic locations to add to their short list when outsourcing, how to prepare a retained organizational model to govern the effort, and how to undertake outsourcing and still support various regulatory compliance mandates.’

According to the paper, organizations must address many topics when developing and implementing a global service delivery model, including:

Firstly, a process to determine which business and/or IT functions are suitable for and should be outsourced beyond local providers and boundaries, as well as those that should be managed via domestic or offshore captive shared services centers. Secondly, what the business case is – including expected benefits – and how to measure achievements for a specific outsourcing scenario. Thirdly, a risk profile to identify and assess the additional potential risks involved (e.g., financial, personnel, regulatory, compliance, data privacy, intellectual property, negative public relations) in offshore and outsourcing models. In addition, processes to identify, vet, assess and select candidate service providers and service locations and geographies. Lastly, a retained organization and outsourcing governance model capable of supporting global sourcing efforts.

The paper also discusses how service providers are addressing the growing need for global service delivery capabilities, how to design a global services governance model, and graphically depicts how a services delivery model answers the questions of what work gets done, by whom, and how.


RR Donnelley on Expansion Move in India

RR Donnelley & Sons, an Illinois-headquartered print and BPO service provider, has announced the opening of a 1,000-seater BPO delivery center in India at the Technopark Thiruvananthapuram, Kerala. The new BPO facility will focus on delivering transaction processing and financial management services to the US and European clients. The company already has a BPO facility in the city with 500 professionals. In addition, the company’s Chennai-based Indian facility employs more than 4,500 professionals. It will continue to focus on offering non-voice BPO services.

RR Donnelley specializes in delivering solutions in commercial printing, direct mail, financial printing, logistics, call centers, and content and database management to clients across several industries, such as publishing, healthcare, and technology.

Tuesday, September 04, 2007

Hewitt Associates has announced its decision to acquire RealLife HR to strengthen its benefits outsourcing services and solutions portfolio for middle-market companies. The transaction is expected to be concluded by end-August 2007. According to the acquisition, Hewitt will acquire RealLife HR's existing 35 clients with about 15,000 employees and/or retirees. The RealLife HR's clients will also have access to Hewitt's outsourcing and consulting services portfolio as part of the transaction. Post-acquisition, about 85 professionals and the facility of RealLife HR in Maryland will be transferred to Hewitt.

HOUSTON & LONDON--(BUSINESS WIRE)--EquaTerra has acquired Morgan Chambers, creating the market leading independent sourcing advisory firm.

As EquaTerra and Morgan Chambers are, respectively, the world's number one and number two top ranking Full Service Outsourcing and Offshoring Advisors(1), the acquisition creates the advisory firm of choice for organisations seeking to improve their business and IT processes through shared services, outsourcing and offshoring.

The collective teams will provide unrivalled depth of knowledge and services across all business support functions, including Information Technology (IT), Human Resources (HR), Finance & Accounting (F&A), Procurement and Customer Care. The firms have additional expertise in sector-specific processes such as claims management, mortgage processing and policy administration. The acquisition will also broaden and solidify the firm's geographic reach, thereby providing greater value for clients. The combined firm has approximately 300 employees across North America, Europe and Asia Pacific.

Mark Toon, CEO, EquaTerra said, "The leadership teams of our firms are excited about this acquisition. We are in the unique situation of bringing together two organisations with a strong presence in different geographies, yet with similar cultures, methodologies and depth of experience in the markets we serve. The expanded geographic reach and enhanced service offerings, combined with the tenure and expertise of our advisors makes this acquisition a positive event for our clients, employees and business partners."

Phil Morris, CEO, Morgan Chambers said, "Both EquaTerra and ourselves possess a relentless commitment to our clients and their needs and objectives. We've built a well-respected advisory business in Europe and we feel joining EquaTerra gives us the organisational depth and geographic reach our clients need. We believe our collective strengths will further support our clients on their journey to create sustainable value in their business support functions."

Robert Morgan, Chairman and founder of Morgan Chambers will leave the organisation once the deal is complete. "Creating Morgan Chambers back in 1994 was such an exciting opportunity and I am extremely proud of what the company and its hugely talented staff have achieved for our clients. I am pleased to be able to hand over to such a likeminded organisation, which in turn provides me with the opportunity to invest in new ventures."

(1) Source: Black Book of Outsourcing 2007

Notes for editors:


EquaTerra sourcing advisors help clients achieve sustainable value in their business and IT processes. With an average of more than 20 years of industry experience in over 600 global transformation and outsourcing projects, our advisors offer unmatched industry expertise. EquaTerra has deep functional knowledge in Finance and Accounting, HR, IT, Procurement and other critical business processes with advisors throughout North America, Europe and Asia Pacific. We help clients achieve significant cost savings and process improvement with outsourcing, internal transformation and shared services solutions.


Established in 1994 with a single purpose - to provide high quality, practical and totally independent advice on the best client Sourcing solutions, Morgan Chambers remains true to these principles today. Morgan Chambers employs business and service delivery experts who passionately believe that balanced Sourcing strategies deliver sustainable business advantage and huge flexibility. Whether in-house, Shared Services or utilising external suppliers, we drive innovative, accountable and measurable solutions. Europe's leading specialist Sourcing advisory firm, we employ over 60 full-time consultants from eight offices world-wide. With more than 1000 client engagements in over 60 countries, we have unrivalled experience in achieving successful results.