Offshore outsourcing in turbulent economy

It would be a complex phenomenon to judge how the propensity for outsourcing will behave in the context of economic disequilibrium.
The companies providing outsourcing services could be local (large, mid size and small), offshore (large, mid size and small) and a newly added entity of domestic laid-off workers who would desperately look out for survival may be in small groups or in individual capacities.
The latter entity would put definite price pressure on the smaller companies providing outsourcing services. In my opinion this will affect the local smaller service providers more and offshore service providers also to some extent.
On the buy side, from cost considerations, the disequilibrium might trigger organizations to take challenges and more desperate decisions by shifting the outsourcing contracts from larger organizations to no-frills organizations (medium and smaller sized companies) with good track records. Even they might choose to outsource to their laid-off employees who they know to be efficient for years but had no choice than to let them go.
The small business houses providing outsourcing services have to religiously realign their offerings with more standardization, trying to bring down the cost of offerings and time of delivery. I also think any approach towards making their offerings more sustainable in nature would be well accepted by the turbulent economy.

How long labor intensive offshoring?

There was a time years back when one of the major advantages for offshoring was the cost differential. This was ofcourse derived from the salary differential. Time has changed the scenario a lot and as more projects getting outsourced to different countries, the supply-demand magic on the resource side started playing its tricks, gradually levelling the salary differential.

This has set a new predictable limits in the outsourcing patterns. High end projects, which are more of knowledge process outsourcing in nature, are in great demand even with higher fees and higher end salaries. On the lower side of the limit exits the non-technical or less technical, volume driven services like Call center activities, Data entry etc.

Which has essentially vanished are the mid-stream activities. With economic downturn in countries like USA this new character of offshore outsourcing is possibly getting more pronounced.

Developing a database for engineering components could be a welcome idea to architects and engineers engaged in design and detail engineering business. I am yet to see such an umbrella database existing currently with 3-D and 2-D CAD drawings which can be directly downloaded by engineering fraternity for their use.

The architects/engineers can directly insert the components into their design drawings - strecth/alter the same to match with the layout parameters. Comments for such a venture will be greatly appreciated.

Energy Highway

Millions of cars travel 24X7 over the highways network around the world. How is about reclaiming the lost frictional energy?

Imagine clusters of frictionless, freely rotating wheels placed alond the high ways at predesigned areas. The upper surface of the wheels are flushed with the road surface. The energy produced are picked up, processed, transmitted and distributed. Definitely a conceptual design is needed.

The picture on the left shows the freely rotating wheels. A current collector strip runs parallel to the highway. The energies are pickedup and processed for routing to the T&D facilities.

Offshore outsourcing: Important driver
Engineering OutsourcingGenerally, outsourcing most of the times tends to be related to cost saving. Well, this may be one part of the story but not the single driver. Basically, one goes to outsource when it is not possible to accomplish the same way in-house. So this may be cost, technology, time lines or whatever.With our experience of handling various projects from offshore, we have seen engineering outsourcing is also interpreted most of the times as drafting assignments. Equally untrue is this interpretation!There are many areas like design, analysis, project management where the customer simply may not have the expertise. Recently, we did a finite element analysis of a complicated configuration for a large manufacturing US organization. It is interesting to note that the organization had been manufacturing the same product for 20 years but when it came to performing a finite element analysis, they had to outsource offshore.In this case demand for technology prevailed over everything else. So offshore companies are not solely meant for labor intensive functions - many of them have highly specialized technology skill to offer.

2006: What's in for outsourcing?

Clinical Process Outsourcing probably could be one of the areas that might emerge out with simplification of health care legislations. If carefully handled, the world should witness the dream come true - a more efficient health care delivery system. The most critical part will be the selection of the offshore providers and correctly assessing the expertise level. The criteria for selection would be a tougher process and for performing that correctly the decision makers should thoroughly acquaint themselves with the medical education system prevailing in the target countries.In fact the standard of medical education in some of the institutions in India, for example, is highly comparable with what is known as best in the world. It will be misleading to comment on the standard of medical education on the basis of the current scenario of health care delivery system as exists in those target countries. These are two different issues, the latter being an intrinsic function of socio-political parameters.

Catch them Young..No matter where They are

The story appearing in the Small Business Trends of November 15, 2005, reads as:
Largely because of Sarbanes-Oxley, few startups go public now. For all practical purposes, succeeding now equals getting bought. Which means VCs are now in the business of finding promising little 2-3 man startups and pumping them up into companies that cost $100 million to acquire. They didn’t mean to be in this business; it’s just what their business has evolved into.
Hence the fourth problem: the acquirers have begun to realize they can buy wholesale. Why should they wait for VCs to make the startups they want more expensive? Most of what the VCs add, acquirers don’t want anyway. The acquirers already have brand recognition and HR departments. What they really want is the software and the developers, and that’s what the startup is in the early phase: concentrated software and developers.
More….
I think this is what I wanted to emphasize in my earlier blogs. The tremendous embedded potential in the small business efforts gradually wears out if a timely rescue is not done. And it is good that companies like Google and others have come forward to accomplish.
In my opinion, these efforts should be extended beyond the boundaries of any specific geographical location and globally. For example, in country like India, which is much known for its talents in IT and technology, there are thousands of small businesses which are just waiting for a small push to go past the “sonic boom”.
I think we are approaching a time, where IT is gradually coming out of its old water tight shell and getting discretely mixed up with technology. So the concept of cheap labor and time zone advantages is rapidly becoming a cliché in deciding upon the offshore outsourcing strategy. Superior technology and advance technological concepts are gradually becoming the drivers and countries which were used to be branded as a source of “cheap labor only” can do wonders….particularly the SMEs over there. So catch them young.

Precarn Seeking New Project Proposals
Precarn Incorporated announced today the release of a Request for Proposals (RFP) for collaborative research and development projects in the field of intelligent systems.

China acknowledges SMEs role


Slightly belated though:

Context: Overview of the SME Support
As economic transformation progresses, the Central government of China gradually learned to recognize and appreciate the importance and significance of small and medium enterprises (SME) in the efforts of establishing an enabling environment for SME development (year 2003 is a milestone to Chinese SMEs: “SME Promotion Law” began to take effect and be implemented on Jan. 1st and the State Council newly set up SME department in State Development and Reform Commission-SDRC). The law stipulates the policies that are in favour of SME development, e.g. establishment of SME Support System network nationwide in all municipalities in line with local conditions and the special funds from government budgets set aside for supporting SMEs, etc.

More....

SMEs-where the talent is

Historically, the aggregate revenue generated by SMEs in offshore outsourcing sector has always been much more than the so called blue chip players.

When veteran and experienced professionals, after seeing their respective success and contribution under the umbrella of big corporate start rethinking why not sail of our own — SMEs are born. Therefore at the initial stages, the professionals who have proven success stories behind them directly give hands, contribute and try to gather similar minded professionals on their newly formed platform and that’s how the story goes.

The most nascent and innovative stage in the life of a SME is probably the first three years. The fortunate groups of SMEs which click with their offerings and services in the initial years gradually grow. The left over group, with the compulsion for generating revenues, starts frequently switching their offerings to discover the matching ones to which the market may finally respond. Unfortunately, through this compulsive process their innovativeness is worn out. They take the course of survival being completely oblivious of what they wanted to bring in the market. This way perhaps we have been losing many talented groups of SMEs and probably many innovative concepts and technologies that never see the light of the day.

Perhaps a collaborative platform might have been the answer. Complimentary partnering under one umbrella would have allowed SMEs to maintain their own niche and at the delivery end the customer could have been the final beneficiary.

All said end done, SMEs are where the talents live and let the flame of talents show the ways to tomorrow’s technology.

Tapan Mukerji's World