10 Outsourcing Articles
10 Outsourcing Articles
Date: Thursday, June 26, 2003 4:14 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
While I was putting this newsletter together, I noticed an article (#6)
from March. An alarm bell rang in my head because I had just put an
article that CSC was doubling their staff in India (#5). Going back to
#6, the significance becomes obvious:
"the acquisition of DynCorp, solidifying the companys position as
one of the top 10 government information technology contractors."
The U.S. government is accelerating the outsourcing of jobs to India
and other foreign countries. Of course if asked, government
spokespeople would probably say they are outsourcing to the U.S.
company CSC.
Article 1:
http://www.informationweek.com/story/showArticle.jhtml;jsessionid=3LY1OIYAQPLCGQSNDBGCKH0CJUMEKJVN?articleID=10700323
EDS Opens Services Facility In India
Article 2:
http://www.bayarea.com/mld/mercurynews/business/6122384.htm
EDS to lay off 2,700 as earnings fall short
Article 3:
http://www.informationweek.com/story/showArticle.jhtml?articleID=10700286
Outsourcing Call Centers Pays Off For Delta
Article 4:
http://www.rediff.com/money/2003/jun/19it1.htm
IT backlash temporary: Gartner
Article 5:
http://www.ciol.com/content/news/2003/103062008.asp
Computer Sciences to double staff in India
Article 6:
http://www.washingtontechnology.com/news/1_1/daily_news/20273-1.html
CSC completes DynCorp acquisition
Article 7:
http://www.theinquirer.net/?article=10192
AMD completes Indian outsourcing move
Article 8:
http://www.theinquirer.net/?article=10016
AMD to outsource IT to India?
And HP lays off 800 middle managers, the story goes
Article 9:
http://www.siliconvalley.com/mld/siliconvalley/5920345.htm
PeopleSoft to invest US$30 million to $40 million in India
Article 10:
http://www.pcw.co.uk/News/1139395
Indian outsourcers take slow boat to China
http://www.informationweek.com/story/showArticle.jhtml;jsessionid=3LY1OIYAQPLCGQSNDBGCKH0CJUMEKJVN?articleID=10700323
EDS Opens Services Facility In India
The center, located in Mumbai, will handle voice and data
communication, data entry, and financial process management, among
other services.
By Paul McDougall, InformationWeek
June 17, 2003
URL:
http://www.informationweek.com/story/showArticle.jhtml?articleID=10700
323
EDS said Tuesday that it has opened a 500-seat IT services facility in
India to serve customers who wish to move back-office operations to the
subcontinent--where labor costs can be less than half of what they are
in the United States.
Voice and data communication, business process outsourcing, data entry,
and financial process management are among the services EDS will offer
at the facility, which is located in the city of Mumbai. It will house
about 700 staffers by year's end. EDS is investing roughly $12 million
to build out the center.
EDS currently maintains about 1,200 staffers in India and says it plans
to triple that number by the end of next year. Analysts say U.S.-based
services companies need to expand their presences in India if they hope
to stay cost-competitive with indigenous firms such as Wipro and
Infosys. "India offers a low-cost, highly skilled labor pool; there is
no getting around that," Technology Business Research analyst Humberto
Andrade says.
http://www.bayarea.com/mld/mercurynews/business/6122384.htm
Posted on Thu, Jun. 19, 2003
EDS to lay off 2,700 as earnings fall short
By David Koenig
Associated Press
DALLAS - Electronic Data Systems said Wednesday that it would cut 2
percent of its workforce, or about 2,700 jobs, and sell some assets to
save hundreds of millions of dollars a year.
The troubled technology-services company, which has diversified through
acquisitions, said it would focus on its core business of running
technology systems for other corporations and governments.
Officials, however, warned that earnings in the second half of this
year will fall slightly short of analysts' expectations. Revenue for
the full year also will decline as much as 5 percent from last year,
they said.
Investors shrugged off the lower earnings outlook, as EDS shares rose
$1.70 to close at $24.20 on the New York Stock Exchange, continuing a
rally that has seen the stock jump 54 percent since a change in company
leadership in March.
EDS officials, meeting with analysts in New York, said the job cuts
would save $230 million a year and the sale of ``non-strategic'' assets
would raise about $250 million. They did not indicate what assets would
be sold.
The company, which has 138,000 employees, said it would take a charge
of $425 million to $475 million this year to cover the layoffs and
other cost-cutting moves, including the shifting of call-center and
software-application jobs to low-cost countries.
Chief Executive Michael H. Jordan said the layoffs would be evenly
split between the United States and Europe. Officials declined to say
how many additional U.S. jobs would be shifted to countries including
India and Brazil.
Jordan, a retired CBS chairman who replaced CEO Richard H. Brown, said
EDS's first job is to stabilize and then increase its core
information-technology outsourcing business. ``It's three-quarters of
our revenue. We've lost focus on it,'' he said.
Jordan blamed the company's problems on the economic and technology
downturns of the past two years, perceived weakness compared with
industry leader IBM and costly contracts and acquisitions.
http://www.informationweek.com/story/showArticle.jhtml?articleID=10700286
Outsourcing Call Centers Pays Off For Delta
The airline is on track to save $26 million this year by outsourcing
parts of its call-center operation to India and the Phillippines.
By Mary Hayes, InformationWeek
June 17, 2003
Delta Air Lines Inc. has been losing money since the terrorist attacks
on Sept. 11, 2001, and doesn't anticipate returning to profitability
anytime soon. But the company is getting some relief from a decision to
outsource parts of its call-center operations offshore, and is on track
to save $26 million this year, said Gloria Richard, Delta's general
manager of call-center partner relations.
Richard, speaking to about 100 attendees at a conference hosted by
India-based IT services firm Wipro Technologies last week, said a
portion of some 91 million calls per year are now answered by Wipro
employees in India and Sykes Inc. employees in the Philippines. The
company went live with offshore call centers in January and is
preparing to sign up a third, undisclosed vendor in the coming weeks,
Richard said. She added that offshore outsourcing is just one of many
cost-reduction measures the company has taken--others include reducing
head count by 13,000 people and cutting the number of flights by 14%.
"It was time for us to fundamentally change our business," Richard
said.
Indeed, despite the angst facing U.S. executives about moving jobs
offshore, those who spoke at the conference predicted that more large
companies will find they'll have to do so in order to stay competitive
in the global marketplace. "Offshore outsourcing is going mainstream,"
Gartner analyst Rita Terdiman told conference attendees. "It's not a
matter of if. It's a matter of when and how much."
Remarkably, Delta so far has avoided laying off any of its U.S.-based
call-center employees, Richard said. Like most other companies that use
call centers, the turnover rate is high for jobs that involve dealing
with repetitive requests from the public all day on the telephone. The
avoidance of call-center layoffs has helped morale at the company
during the transition, and Richard said Delta hasn't seen any of the
feared decreases in U.S. staff productivity due to offshore
outsourcing. In fact, Delta has seen productivity improvements "as a
result of a little bit of competition" from offshore workers, she said.
During the planning process, Delta categorized employee relations as
the biggest and most potentially damaging aspect of offshore
outsourcing, which it has tried to manage through "very matter-of-fact,
honest communication" and an emphasis on management's commitment to
avoid involuntary reductions, Richard said. Still, the largely nonunion
company has earmarked money for union-avoidance campaigns.
Since call-center employees are often the company's first contact with
customers, Delta includes "accent neutralization" as part of its
call-center training to help reduce communication problems. But the
company sees such efforts as worthwhile: The average salary with
benefits and bonuses for a call-center employee in the United States is
$46,000, compared with $6,000 in India and $7,300 in the Philippines.
Richard said that having three locations helps the company mitigate
risks and provides some competitive leverage with fees.
http://www.rediff.com/money/2003/jun/19it1.htm
IT backlash temporary: Gartner
| PTI | June 19, 2003 | 22:06 IST
Research firm Gartner?Inc said on Thursday that while there would be
occasional backlash on outsourcing towards Indian IT companies, no
long-term damage was anticipated due to these "temporary anomalies".
Bob Hayward, senior vice president, Gartner APAC told reporters that
India's information and communication technologies or ICT market would
be the "fastest growing" in the world.
"The growth rate this year will be better than last year...the domestic
ICT market will be the fastest growing in the world, even faster than
China," he said but added that while India would sport larger growth
rate on smaller base, bigger markets like China were growing on a
larger base.
The Indian domestic market would grow in the backdrop of demand coming
from infrastructure spending in terms of hardware and networking.
He, however, did not comment on the quantum of growth for the Indian IT
industry.????
On the software and services exports front, Hayward said the export
growth would be "good" and "in double digits".
http://www.ciol.com/content/news/2003/103062008.asp
Article Title: Computer Sciences to double staff in India
BANGALORE: Computer Sciences Corp (CSC) aims to double its staff
strength in India to 1,600 by April 2004 and set up more centres as it
seeks to make its Indian unit a strategic technology hub.
"CSC has very aggressive plans to grow CSC India. I expect a minimum
100 percent growth (in staff size) during this fiscal year," Arun K.
Maheshwari, managing director of CSC India Pvt Ltd, told Reuters in an
e-mail interview.
California-based CSC, which competes with IBM and EDS in managing
information technology operations, including data centres and desktop
computers, had about 800 employees in the Indian unit in April.
Global firms like IBM and CSC are expanding in India at a time when
leading Indian software services exporters including Infosys
Technologies and Wipro are making a push to grab multi-million dollar,
long-term outsourcing contracts.
By tapping into India's army of low-cost engineers, foreign and local
companies are emerging as one-stop service shops combining software
with back-office work such as accounting and payroll management offered
to overseas clients over high-speed telecom links.
"CSC India is doing some data entry work in general insurance, life
insurance and banking industries. There are plans to expand this
substantially both in terms of additional activities such as call
centre and volume," Maheshwari said.
He declined to provide any investment details. Headhunters say
aggressive hiring by companies like Hewlett-Packard, IBM and CSC is
building up pressure on local software firms already struggling with
tighter margins.
India is the most fancied destination for remote work among CSC's
network of company-owned operations in countries such as South Africa,
Canada, Malaysia and Australia, Maheshwari said.
"We have started migrating to India technical infrastructure work CSC
is doing for its customers. This consists of technical help desks and
storage management," Maheshwari said.
CSC has one centre in the central Indian city of Indore and two units
in the northern township of Noida near the nation's capital New Delhi.
A third centre in Noida, which will have a capacity to house 500
employees, is expected to be ready by December and another facility
will be set up in south India this year.
) Reuters
http://www.washingtontechnology.com/news/1_1/daily_news/20273-1.html
Washington Technology
CSC completes DynCorp acquisition
03/07/03
By William Welsh,
Staff Writer
Computer Sciences Corp. has completed the acquisition of DynCorp,
further solidifying the companys position as one of the top 10
government information technology contractors, CSC announced today.
The acquisition strengthens CSC in the areas of federal outsourcing,
base and range operations, telecommunications, training and simulation,
healthcare and homeland security. The announcement followed the
approval of the acquisition by DynCorp shareholders at a special
stockholders meeting held the same day. CSC of El Segundo, Calif., paid
$931 million in cash, stock and debt assumption for the purchase. CSC
paid $162 million in cash, $463 million in stock and assumed 306
million in DynCorps debt, CSC spokesman Mike Dickerson said.
Each of the approximately 10,800,000 outstanding DynCorp shares was
converted into $15 cash and 1.3940 shares of CSC stock for the deal.
With the announcement, DynCorp of Reston, Va., becomes part of CSCs
Federal Sector business unit, which is based in Falls Church, Va. The
combined federal sector organization is expected to derive about $6
billion in annual revenue from the federal government and have about
40,000 employees serving the U.S. government.
This transaction provides CSC with increased access to the federal
information technology services market and expands our service delivery
capabilities, said Van B. Honeycutt, CSCs chairman and chief
executive officer.
As a result, CSC is ideally positioned to provide on a global basis a
greater breadth of end-to-end solutions to both civil agencies and the
Department of Defense, he said.
http://www.theinquirer.net/?article=10192
AMD completes Indian outsourcing move
Updated Significantly Have you been "walked out" recently?
By Adamson Rust: Thursday 26 June 2003, 10:36
IT PEOPLE were, in the parlance "walked out" of AMD Austin earlier this
week as the firm carried on cutting costs.
As we reported earlier this month, the IT people are being replaced
with IT people in India.
The outsourcing firm, according to our sources, appears to be HCL
Technologies.
But while the IT staff themselves were "walked out", we understand from
reliable sources that most of the managers have stayed just where they
are.
Apparently about 30 people out of 115 AMD IT staff will remain
employees of AMD. Many of the staff were given pre-notification of
termination.
How exactly will this work? It will be, in the jargon, "transparent".
If you are an AMD worker and you need technical support, you will find
yourself chatting to an amiable person at the other end of the line who
will know practically everything about you.
Existing AMD IT staff will effectively help train their successors in
India, meaning some will stay on the payroll for another three months.
Meanwhile, if you're a "walked out person" in Austin, you'll just be
looking for a job. 5
http://www.theinquirer.net/?article=10016
AMD to outsource IT to India?
And HP lays off 800 middle managers, the story goes
By Adamson Rust: Sunday 15 June 2003, 14:56
SOURCES CLOSE to people who used to work for AMD tell the INQUIRER
there's Indian outsourcing afoot at the chip firm.
The firm has, apparently, made three attempts to outsource its IT in as
many months but appears to have succeeded in finding some one to do it
in the sub-continent.
The outsourcing trend is well advanced in Western European and North
American companies.
Only this week, other sources tell us, a whole slate of middle managers
at HP, probably from the former DEC and Compaq camps, have been told
their services will no longer be required.
There's even a political lobby in Washington to speed the India
outsourcing cause along.
As one reader notes: "Today's oligarchs just need a Will Rogers to act
as the national or even global conscience, shaming them when they go
too far".
The pro-Indian lobbyists political action committee (PAC), which has a
web site here, numbers 132 reps of Congress who belong to the India
Caucus, made up at the last count of 92 democrats and 40 Republicans.
The list of the members of India Caucus for 2002 can be found here. 5
http://www.siliconvalley.com/mld/siliconvalley/5920345.htm
Posted on Thu, May. 22, 2003
PeopleSoft to invest US$30 million to $40 million in India
BANGALORE, India (AP) - An American software company, PeopleSoft, will
invest US$30 million to $40 million in a software development center in
southern India, its Indian partner said Thursday.
The Pleasanton, California-based business software maker announced
earlier this month that it will set up a software center in the
southern Indian city of Bangalore, the hub of India's high-tech
industry, and that India's Hexaware Technologies will run the center.
Hexaware, in a disclosure to the Bombay Stock Exchange where its stock
is listed, said the new center will initially employ 300 people and
develop software only for PeopleSoft. It will help cut development
costs and reduce time for implementing and upgrading software
applications, it said.
PeopleSoft set up sales operations in India in 1999 and has offices in
New Delhi, Bombay and Bangalore.
It has followed its competitors, notably SAP of Germany, and technology
giants such as Microsoft, Intel, Oracle and Compaq in setting up
``outsourcing'' centers that do technology work on a subcontracted
basis.
Hexaware has development centers in Bombay and Madras, while its top
management team is based in Princeton, New Jersey.
http://www.pcw.co.uk/News/1139395
Indian outsourcers take slow boat to China
By Ian Lynch [12-03-2003]
Capacity in India to last three to five years yet, but firms are
looking for alternatives
Growing competition between Western and Indian offshore outsourcing
firms has seen leading Indian vendors making investments in China.
Indian offshore firms are being squeezed and cannot offer the same
level of cost efficiencies for outsourced application development and
customisation that was possible five years ago, especially as they now
have to invest in better marketing to compete with established
competitors such as EDS.
Leading offshore companies Wipro and Infosys have already made
tentative investments in China, although staff numbers measure only in
the hundreds.
Experts believe that it will be three years before the Chinese market
shows any signs of "serious maturity".
"Today, although offshore firms in India started with 60 per cent cost
efficiencies, they are now more like 30 to 40 per cent and have to
invest in marketing to compete against strong forces with established
brands," Stratos Sarissamlis, vice president at analyst Meta, told
vnunet.com.
"The offshore firms need to improve service and lower costs, and that
is how we are arriving at China."
But Sarissamlis explained that there is currently little need for UK
firms to consider China when negotiating outsourcing contracts.
"There is sufficient capacity and capabilities in India for the next
three to five years," he said.
"China can handle support, maintenance and integration, developing
systems that support the business, but we don't expect any serious
level of maturity through 2005/6."
Sarissamlis added that opportunities to outsource directly to China
would also be affected by the size of the internal Chinese market.
"China has tremendous capacity at the back end but doesn't have the
management discipline, the project management, the ability to go to
market and the financial resources to target overseas markets," he
explained.
"Also, why should they? China is the largest market in the world, and
Chinese companies will focus on the internal market."
Sarissamlis added that the investments being made by Indian firms are
also with an eye on the Chinese market as much as to provide cost
efficiencies for US and European markets.
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