PROTECTION AGAINST CLIENTS WHO DO NOT PAY

Today's job/business posting led me to write this article.

Despite several legal measures that any company may resort to, there always exist a possibility that a client will refuse to pay. This possibility is heavily magnified in the outsourcing industry where the clients and service providers are separated by large oceans.

I have listened to several litanies of complaints from BPO firms about clients who refused or simply stopped paying the outsourcing company. Lawsuits may always be resorted to but with both clients and vendors being located in different countries, the complication brought about by legal jurisdiction will always exist. In addition, legal action takes time and before its conclusion, the BPO firm may have already folded.

Here are some practical lessons that I have learned in order to avoid getting into this situation.

1. WRITE A TIGHT CONTRACT: Hire a lawyer from the client's country that will write a tight contract. To save on legal fees, the lawyer may be hired only during the negotiation phase. It is also imperative that a lawyer from the BPO firm's country is also hired to serve as a local adviser. That way, the outsourcing company is able to make informed decisions. Not to worry, the process is only tedious during the first contract. Beyond that, the BPO firm should have refined and mastered this process.

2. REQUIRE A DOWN PAYMENT: Starting a contract means committing company resources into an endeavor. It is but wise to be able to get hold of some of the client's money that wil also commit them to seriously do business with you. If not, a bank escrow or Letter of Credit (L/C) will be good. Again, double check the terms of the escrow or L/C agreement.

3. PROGRESS BILLING: This system simply means that the provider gets paid for every percentage of the job completed. A contract may specify a 20% downpayment making the service provider eligible for additional payment once his progress exceeds 20% of the project.

Here is an example of a progress billing.
There are many variations of this system. Please contact me should you need help.

4. HAVE A GOOD LAWYER PRESENT IN THE CLIENT'S COUNTRY: In the event of disputes, it always good to have a lawyer that will send collection notices on your behalf. Identify the law office prior to doing business with the offshore client. Have the lawyer agree to represent you should you need him. That way, you will not be scrambling for legal representation when the problem has already started to bother you.

HOW IS CHINA IN THE BPO RACE?

Here's the latest in Outsourcing...

China has been tagged as India's formidable contender in the race to become Outsourcing's top destination.

Two articles tackle this issue.

Where does China stand in BPO race? and China lags far behind India in BPO sector

"Though the Chinese government came out with supportive ordinance to promote BPO in the country with huge level of visibility on the global arena, Chinas offshore market has not taken off as expected and it still seems a long way before it could claim to be of any potential alternative to India, as reported by technology research firm Forrester on Thursday.

Forresters Vice-President John McCarthy said "When China was looked upon as an alternative to offshore two years back, it was widely considered as a key contender to challenge India's dominance on offshore business. However, the latest finding reveals an opposite story, which says, "China has still more to prove,"

In addition...

"Forrester in its finding clarifies that Chinas overall offshore resources has dropped and other countries are growing at a rapid pace. The need of the hour for the country is to refurbish its offshore efforts.

Instead of trying to compete in areas like application development and management, where India clearly dominates, China should encourage its local firms to focus on other areas like testing, data management and product development services.

Chinese firms also need to implement strict intellectual property controls..."

I KID YOU NOT. IT'S $7.47 PER CALL

The Japanese would say; "TAKAI!!!!" -- Expensive

A call center in Denver is computed to be costing the taxpayers $3.31 per call and if the set up costs will be considered, the figure goes up to $7.47/call.

That's way too expensive if it will be compared to what the Asian Call centers charge.

The complete article can be found in this link.

LATEST OUTSOURCED JOBS AND HOMEBASED BUSINESS OPPORTUNITIES

This site compiles the latest outsourced job listings and homebased work at home possibilities. It is currently being hosted at http://outsourcing-jobs.blogspot.com

Please refer the site to friends. Contributions are also welcome.

Thanks!

IS OUTSOURCING REALLY BAD?

It seems that the number of Americans feeling threatened by outsourcing dramatically increases by the day. In a number of past articles, I have always maintained that outsourcing should lead to a better company/country since the "Outsourcer" will be able to free a lot of resources and put a lot more attention to its core business.

As for the outsourced jobs, the output should drastically improve since it is now being done by specialists. At the end of the day, outsourcing should lead to more focused and productive companies with a much lower cost structures. This site also maintains that outsourcing should not be seen as a job killer for it is not. It's been here for a long time but it's only now that it is being percieved as a threat.

Here are two articles that analyses reports that confirms this views:
- WorldView: Offshore outsourcing not hurting service job numbers
- Outsourcing not the job killer once feared: report

STRONG ASIAN CURRENCIES SCARE ASIAN BPO FIRMS

I have always argued that the BPO industry should be treated by Asian governments as a part of its export industry. As such, it should be given the full incentives due to exporting companies. With the current strengthening of most Asian currencies, the export market is generally suffering and this situation is very much being felt by BPO firms.

Since most outsourcing contracts are dollar denominated, a boost in the value of the local currencies has resulted in corresponding cost increases and decline in profits.

The Philippines, which earned approximately US$2 Billion in 2007, is becoming a little nervous due to the continuous appreciation of its currency. The Peso, which closed at PhP46.60=US$1.00 last Friday, has been on a constant climb since last year.

The other Asian currencies (Malaysian RmB, Indian Rupee, Chinese Yuan, etc.) have also appreciated despite governments’ attempts to restrain its value.

RELATED QUOTES:
Peso to reach our 46 target sooner than expected

"General weakness of the dollar. Despite attempts of most Asian Central Banks to keep their currencies from further strengthening against the dollar, the pace of appreciation seemed to have increased over the past two months. The Indian rupee, which was quite stable from January to March for example, suddenly moved eight percent higher in just two months. This is an exceptional move given that the Reserve Bank of India has been managing its exchange rate closely with the rupee appreciating by only 1.8 percent in 2006 and 3.6 percent in 2005. Likewise, the Malaysian ringgit began accelerating against the dollar in mid-March following announcements of key economic reforms. The Philippine peso, meanwhile, has been on a gradual appreciation since the start of the year primarily due to healthy remittances and capital inflows, and a generally peaceful election period. Finally, the baht is still up 2.3 percent against the dollar despite earlier attempts of capital controls by the Thai government."

Strong peso may dampen foreign investors’ interest in BPO sector

"A strong peso may deter foreign investments from coming into the country as this makes the cost of doing business here more expensive.

International real estate provider CB Richard Ellis warned that the continued strengthening of the peso against the dollar may be a threat to business process outsourcing (BPO) firms in the country.

“If the exchange rate continues to climb, it can potentially be a threat because it makes it expensive to do business here,” CB Richard Ellis general manager Trent M. Frankum said."

Links exchange

Trying out this new linksexchange program that I surfed into. Will write about it after a month.




Business Process Outsourcing - Asia Link Partners





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$sSelf = $_SERVER["PHP_SELF"];
$sQuery = "script=php&LinkID=" .urlencode($LinkID) . "&ScriptName=" . urlencode($sSelf);

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{
$value = urlencode(stripslashes($value));
$sQuery .= "&$key=$value";
}

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curl_setopt ($ch, CURLOPT_HEADER, 0);
curl_exec ($ch);

if(curl_error($ch))
echo "Error processing request";

curl_close ($ch);
?>

THE LATEST IN OUTSOURCING (15~25 May 2007): Two Setbacks

Here's the latest in Outsourcing (15~20 May 2007)

The past couple of weeks saw the continued bombardment aimed against outsourcing based largely on two events.

1) In Springfield, a new law aimed at discouraging the outsourcing of school services awaits the governor's approval. Oh well, if they can afford the higher cost and inefficiencies that go with it, it's fine with me.

"Political pressure for schools to pinch pennies collided with state lawmakers’ loyalty to teachers unions Tuesday, creating a conflict at the Capitol that some area educators fear will increase costs for schools — and eventually taxpayers." - Daily Herald

Related links:
- rrstar
- Daily Herald

2) James Macpherson, publisher of pasadenanow.com hired two Indians to cover the city's council meeting via the Internet. A lot of people ganged up on the entrepreneur, a start up who works from his house. Never mind that one of the two is a graduate from UC Berkeley's Graduate School of Journalism. They simply raised hell, made Macpherson the butt of jokes and at least one even called his idea- cheap.

Until now, the brouhaha over this innovation is yet to end. My opinion as a consumer is simple, there are other websites/newspapers that will cover the council meetings. If the two Indians perform below standard, I can always subscribe to the other providers. Easy, don't you think so?

Then why all this buzz? Scared at the Indians? Probably.

Related links:
http://bpo-asia.blogspot.com/2007/05/more-on-pasadenas-newly-outsourced.html
http://bpo-asia.blogspot.com/2007/05/cant-get-over-pasadenas-newly.html

FUNNY/ PHONY AMERICAN ACCENT OF CALL CENTER AGENTS?

Having problems with the phony American accents of offshore call center agents? I have encountered call center operators who claim that their success in the business stems from their ability to train people in effectively communicating with their clients. They claim to be able to successfully convert newly hired employees into effective communicators within a short period of time.

Will they share their formula? That was funny of me, having asked. Of course, they won't. It's their corporate secret. Well, the time has come for the rest of the offshore outsourcing community to easily learn to become effective English communicators.

Carnegie Speech has released a set of software that will make offshore agents become proficient not only in English but also in American way of pronunciation.

"Helping overseas agents to overcome this difficult obstacle—and become better performers at work—is Pittsburgh Pa.-based Carnegie Speech, which creates software for testing and improving English pronunciation for non-native speakers. Using advanced speech recognition technology developed at Carnegie Mellon University, the company’s software (currently in Beta) enables call center agents to “self-train” themselves into becoming better English speakers. This not only helps them avoid the high cost of taking classes to help them improve their English language skills, it also helps them avoid the embarrassment of having to stand up in front of others and reveal their mistakes as they go through the learning process."
(Please Read the complete article here)

CAN'T GET OVER PASADENA's NEWLY OUTSOURCED JOURNALISTS

It simply reminds us not to threaten those who holds the almighty pen. Hahaha!

This has been on the news for a few days. American journalists continue to hammer the Pasadena news outfit that outsourced a minor part in its news service by hiring two journalists who will report from their workstations in India.

Nevermind that one of the two has better educational attainment than most of the American public. The outcry stil goes fullblast.

I wanted to post a lengthy discourse regarding this matter but here's an article that captures most of what I have to say;

"Haven't we heard these kinds of protests and this line of reasoning somewhere else? We're told that offshore developers and call center agents don't have the tech chops or communications abilities of their U.S. counterparts, and that they can't possibly appreciate the business nuances that are a big part of the job. And with all the training and hand-holding and do-over work required, these cheap offshore workers are terrible investments in the long run.

If that's truly the case, U.S. companies will realize the error of their ways soon enough. Dell, for one, moved some technical support back onshore after its U.S. customers complained. MONY, Sprint Nextel, JPMorgan Chase, and scores of other companies have reclaimed outsourced IT operations after figuring out that they were losing a competitive edge. Other companies burned by offshore projects have learned to be more selective or to manage them differently. Ultimately, the people who run Dell and JPMorgan Chase (and Pasadena Now)--not a bunch of disengaged critics--will decide whether their customers and financial interests are best served by offshoring. Offshore experimentation is inevitable and unstoppable, but it's also reversible." - ROB PRESTON

For the meantime, a crackdown on Indian's illegaly using thier H-1B Visas is probably in the offing (complete article).

MORE ON PASADENA'S NEWLY OUTSOURCED JOURNALISTS

The Pasadena newspaper's move to outsource news reporting to India continues to generate more buzz. Not including last week's news and blog entries, here are some feedbacks from different sources:

CNN.com - Story details

SFGate.com -

"James Macpherson couldn't afford local reporters to work for his community news Web site, Pasadena Now -- so he hired two of them who live in India."

Outsourcing news: What a cheap idea - Need I say more? :)

Outsourcing in Journalism - This one's from Harvard law.

More outsourcing on the way: blogger-

"Alan Mutter says to be prepared for more outsourcing at newspapers. Even after severance pay to current staff, a publisher stands to save money on that position about 12 months later by having an overseas employee do the work.:

In The Era of Citizen Journalism James Macpherson Wants to Outsource Reporting To India? -

"Bryce Nelson, a University of Southern California journalism professor and Pasadena resident thinks "Nobody in their right mind would trust the reporting of people who not only don't know the institutions but aren't even there to witness the even"

This is why you need redundancy in outsourcing

This article illustrates every outsourcing company's need for redundancy.

Client services should never cease to be delivered despite emergencies in the offshore sites. Storms, strikes and other "Force Majeure" will never be accepted as a reason why nobody is answering the customer service hotline, sub titling the television programs or debugging the critical flaws that was suddenly found inside a commercial jet.

Outsourcing is not really easy. Having back up locations designed to take on additional load (at a moments notice) requires good planning and efficient implementation. On top of that, an outsourcing company should be very careful not to bloat its cost structure. Otherwise, the firm will become uncompetitive.

I can imagine that there are outsourcing companies now that are operating without a good redundancy and back up systems. These firms must be very aggressive in pricing their products. But the real cost of doing business with them will be realized when natural or man made calamities strike.

Wage inflation in outsourcing

It appears that there's a lot of truth to the fears quoted in a past article (please read it here).

THIS ONE SEEMS TO BE A RUNAWAY WAGE INFLATION

"While manpower costs seem to be surging across sectors, the BPO sector leads the charts with the cost of wages, hiring, training, attrition and other human resources (HR) related expenses accounting for a whopping 50% or more of total costs."

I have written a few articles about this topic and it would be very redundant to repeat it here.

The bottom line is for everyone not to price themselves out of the market.

OUTSOURCING: A FEW SURPRISE UPDATES

India increases its drug outsourcing business. This one is not surprising. In fact, the Philippine government even imports a lot of low priced medicines from India and competes against drug companies in the drug distribution business.

But what follows, is something else.

New and a bit surprising. But upon close scrutiny, this is very possible. Out-sourcing your local news coverage to India.


This is starting to become a day of surprises. This organization outsources its adoption service functions

And this one tops it all. Outsource the Israeli Cabinet?

Funny: Anti Outsourcing Video

Exaggerated but nonetheless very funny. Please visit the link and have fun! :D

http://bookmole.vox.com/

Wage Inflation: Perceived to be the greatest threat to outsourcing

Syntel, Inc's recent poll showed that IT executives perceive wage inflation as the biggest threat to global outsourcing. The ranking goes:

-- Wage inflation in India 33%
-- Quality concerns 27%
-- Possible outsourcing legislation 21%
-- Perceived security risks 10%
-- Middle-management resistance 9%

Please check the complete report here:

As explained in a past post (please check it here), one should be careful in pricing his/her services. Putting too much premium in thyself might actually be a step out of the roof- straight into the ground!

Outsourcers who failed

The Outsourcing weblog Quotes a KPMG study pinpointing outsourcers who were unsuccessful because of failure to use the outsourcing model properly. The study is very timely since there are already some claims that it is not really beneficial to outsource.

I remember a CEO of a big outsourcing company who recently said; “Clients are supposed to save time and money by outsourcing. Putting it simply, a client is able to devout more time to his core business by having somebody perform certain parts of his work. However, there are people who use the time saved by going to the bar and start getting drunk early”

Legal Process Outsourcing

What’s new with the industry?

Other than the usual news about expansion of BPO firms and the reorganization of client companies in the US, New Zealand and Europe, it is a buzz in the industry that fresh law graduates from India are filling the demand for offshore lawyers (details here) in the Legal Process Outsourcing sector of BPO.

Hmn.. That’s good to know. The business has actually been in existence for a long time. I just hope that it doesn’t become so controversial in the US and UK that there will be backlashes in the future.

MEDICAL OUTSOURCING

In a related development, Karen talks about reasons why even critical medical services are being outsourced. The practice which is commonly known in Asia as Medical tourism has actually been going on for quite sometime. I remember meeting US citizens (10 years ago), who continues to travel to Manila in order to get medical treatment. The quality and price of the treatments, they told me, are both excellent. The last time I checked on them was last year and I found out that they continue to visit the country and enjoy the quality of medical service that the country provides.

The people in the article both had heart conditions. They both went to New Delhi for surgery. She received more tests than she could remember, & her total, including the 4 week stay in the hospital, was $16,000.00. He spent 20 days in the hospital, had 24/7 nursing, & his total was $15,000.00. They both said the quality of the care was much better than here. He’s even started his own company, to help people who need to arrange such a trip for the same reasons. Please Read the complete article here.

Further to India's outsourcing industry, economists predict that a slowdown in the US economy will force US firms to send more jobs offshore. However, the same analysts also claim that a rise in the US interest rates might reduce the volume of US investments in their outsourcing industry.

And finally, this got me laughing really hard...

An employment expert in The Wall Street Journal recently advised bosses to reward young people with freakin’ balloons and gold stars just for showing up for work on time. We used to get that in the first grade, not on Wall Street. One employer, definitely of the old school, wrote in that instead of calling in the party planner, he would prefer to call in the outsourcing consultant. Amen to that. -- Please Read the complete article Here.