Offshore Outsourcing — Good or Evil?

1. Offshore Outsourcing — Good or Evil? Clothing, toys and shoes are manufactured overseas. So why not make software there too, where labor is cheaper?

2. What is Outsourcing? Two kinds of outsourcing • IT Outsourcing • Offshore Outsourcing • IT Outsourcing In the first sense, “IT outsourcing” means hiring somebody outside your company to provide IT services. Outsourcing is most common for companies whose IT needs are well known in advance. IT outsourcing can also mean hiring someone to be your IT department. Such a partner must have people who can work closely with your staff to understand your unique business problems so that you can deliver, implement, and service unique solutions. • Offshore Outsourcing of software is simply software development at another location, a facility connected with the client’s location using high-speed data communication links to allow engineers and managers to communicate on a real-time basis. Clients on the other side of the globe can monitor developments and project milestones on an up-to-the-minute basis, ensuring both quality and progress.

3. Top Five Tactical Reason For Outsourcing • One Time Applications • Reduce Or Control Operating Cost • Make Capital Funds Available • Generate A Cash Infusion • Secure Resources Not Available Internally

4. Top Five Strategic Reasons For offshore Outsourcing • Improve Business Focus • Gain Access To World Class Capabilities • Accelerate Reengineering Benefits • Share Risks • Redirect IS Resources To More Strategic Activities

5. Reasons for offshore outsourcing • Offshore Outsourcing has proved to be a differentiating factor for companies, offering cost, time and quality advantages. Today, it is common practice to look to distant shores for: • Offshore outsourcing is a high-gain - high-risk proposition, powerful and perilous. The elusive key to a successful offshore venture resides in a twelve-letter word - relationship. • Offshore outsourcing development is as much about technical skills and quality as it is about a relationship based on compatibility, trust and mutual respect. • Expertise in latest technology • Rapid deployment • Lowered Costs

6. Companies outsourcing offshore • Oracle • Microsoft • Boeing • Prudential • American Express • Franklin Mint • IBM • Exxon • Mobil • Ernst & Young • Reuters • Office Depot • Northwest Airlines • Amazon • Intel • Kaiser Permanente • America Online • and Aetna. There are many familiar names among companies that outsource and offshore, across a wide range of industries: Some of the big recruiting companies in India

7. Why India? • large numbers of highly trained software and hardware engineers • by lower development costs • High volume of English speaking population American technology companies are increasingly shifting part of their research efforts to India

8. How India Became a Global Force • According to JOHN RIBEIRO India’s popularity as an outsourcing hotspot didn’t happen by chance • Indian professionals, venture capitalists and entrepreneurs of Indian origin helped promote India as an outsourcing destination, according to a study conducted for the World Bank Institute in Washington, D.C., by Evalueserve, a business intelligence and research firm • The decision to outsource to India comes from “India's reputation as a location for low-cost and quality services that companies like GE helped build,” Gurbaxani says http://www.cio.com/archive/120104/tl_india.html

9. Kinds of jobs that are going offshore • Technical Support • Call centers • Software • Hardware • Computer programming

10. Prosperity has it’s perils In a recent survey by India’s Dataquest Magazine, • 40% said that they have suffered from sleep disorders • 34% have complained of digestive problems • Night shift depression is on the rise at call centers Time Magazine, March 1, 2004

11. Can offshoring of jobs be stopped? • Legally there is no way any of us can stop the jobs from being offshored • “A recent survey of 145 U.S. companies by consultant Forrester Research found that 88 percent of the firms that look overseas for services claimed to get better value for their money offshore than from U.S. providers, while 71 percent said offshore workers did better quality work.”

12. Can offshoring of jobs be stopped? • According to News Forge magazine’s business section, dated December 06, 2004. Struggle: “many people who have lost high IT industry paychecks and are struggling financially because their jobs are now being done in lower-cost countries. But none of the legal remedies currently proposed are going to stop this problem – assuming it really is a problem in the long run. Solution: “Your next “IT job” may be in an industry you didn't even think about a few years ago. It may be in a place you never thought of as an “IT mecca.” But if you have solid skills, whether as an entry level programmer or sysadmin or as a top-level IT manager or CIO, some company out there almost certainly needs someone just like you. The trick is finding that company” by Robin ‘Roblimo’ Millerhttp://business.newsforge.com/article.pl?sid=03/08/27/132243

13. Is it going to change? • No, probably not • In the long run...John Maynard Keynes,an economist says, “perhaps spreading the IT industry worldwide will raise living standards everywhere, and make us all better off. This is a moralist’s approach to the concept of exporting jobs.” http://business.newsforge.com/article.pl?sid=03/08/27/132243

14. Can Americans Learn To Love outsourcing? • Outsourcing has become the essential element of corporate strategy, even for small/start up companies • This move will help our companies and it’s resources to concentrate on product development – be a designer • To come up with innovative ideas • Travel to different countries, and learn other cultures

15. The End Thank you Vimala