WAYS TO FIGHT THREATS TO ASIAN OUTSOURCING

Note: This article is about India but all of the problems discussed in this post are also being faced by most outsourcing companies in the world.

First, it was wage inflation which they are fighting by moving their offices out of the expensive business districts and by hiring fresh (low waged) graduates. Now, it's the Rupee's appreciation which creates an additional worry for India's outsourcing executives. The two events are further compounded by India's recent rationalization of its tax system which is perceived by some to be detrimental to the industry.

The problem of wage inflation increases in magnitude when Forex appreciation occurs. However, the two problems that can be managed with one solution. A creative method proposed by another blog is to settle wages and a few other costs in the currency of the outsourcing firm's contract price. the method effectively arrests the increase in costs brought about by any appreciation in the currency rate.

Should there be any devaluation of the local currency, the employees and suppliers alike are also bound to benefit. I would call that proposal "fair and equitable".

Taking it a step further, the outsourcing company can bring in additional value to their clients by introducing innovations that will result to bigger gains for their clients. A glaring example is India's newly introduced service area called "Knowledge Process Outsourcing (KPO)" industry which is turning out positive growth for 2007.

As for taxes, I maintain my position that Asia's outsourcing businesses should be officially considered a part of its export industry. As such, it deserves all he breaks being enjoyed by all the other exporters in the country. Importations of equipments should be free of any tariff, sales taxes should not be collected and several other incentives should be given to any offshore outsourcing company. An outsourcing firm exports its services and being a labor intensive industry, wages paid to the employees go back to the local economy in terms of consumer spending.

BPO Industry Hires 25% of Bagiuo's New Grads

The Philippine's summer capital now has another reason to smile. Aside from it's brisk tourism trade, a big portion of its new graduates were recently hired by the BPO sector.

"Only 2 to 3 percent of Manila's labor pool land jobs in business outsourcing firms, he said. But the BPO industry has been hiring 25 percent of Baguio's fresh graduates, he added."

In contrast to the pronouncement of an article posted in another site (read here), this column wishes to thank the foreign clients who entrusted some of their business processes to the Filipinos. As I have always maintained, the companies who outsourced properly, are bound to end with better productivity and emerge as a much better organizations. Furthermore, the offshore companies that benefited from outsourcing are called local heroes for having provided jobs. However, they should always be on their toes and stay competitive. Otherwise, the contracts might leave, faster than the rate the it came in.

As the new battlecry goes; "let's move towards KPO"

Apartheid in the BPO Industry? + Other BPO Updates

A US Congressman filed a bill requiring foreign call center workers to disclose their location. Read the complete news this page:

"The congressman, a Democrat, has filed legislation called the Call Center Consumer's Right to Know Act that would require call center employees to state their physical location when called by consumers. supporters believe location disclosure would inform consumers that many of their calls have been redirected to foreign countries and will focus attention on the degree to which U.S. call center jobs have moved overseas."

Hmmn.. Does the congressman want to encourage the practice discrimination based on location, race and color? Isn't this bill leading to a new variant of Apartheid and Racial Profiling? Let's see what the American Civil Liberties Union have to say regarding this.

Andolini, an economist, will probably have a different take on this. Let's wait for his comments.

Cops Outsource the maintenance of their crime database. Click here.

"Police officers are entering crime incident reports, arrest records and other important data into the CrimeCog integrated criminal justice system using personal computers and a common Internet browser. The information is encrypted as it is sent to a secure data center, where it can be accessed by other authorized users, including other police departments."

In Jerusalem, large tourists arrivals are forcing hotel owners to do what others may think as "Unthinkable". Hotels are currently outsourcing rooms to competitors. I hope Asian hotels will have a way of transporting the tourists to their hotels for the evening and return them to the streets of Jerusalem in the morning. Hmmn.. "Beam me up, Scottie!" Read the news here

7th E-Services Expo: KPO

The Businessworld reports regarding the recently concluded E-Services Expo, wherein the Philippine government asked the local BPO industry to "Upgrade" in order to keep up and overtake the competition. The local industry was also urged to move into the KPO (Knowledge Process Outsourcing) business in order to bring in higher revenues and eliminate the need to compete in the cut throat BPO sector.

"According to BPO advisory and equity manager Tholons, Inc. the KPO market is poised to grow to $17 billion by 2010 from last year’s $3.7 billion. India is expected to capture around 70% of the total market, while Philippines — along with China, Russia and the Czech Republic — are described as the emerging players next to India. Tholons chairman and chief executive Avinash Vashistha said the Philippines can compete well in the areas of animation, content, health care, as well as financial and legal services. "India will definitely be the dominant player, but Philippines will be distant but clear second," Mr. Vashistha said.

Mr. Vashistha and Harry van Geijn, the BPO consultant of the government of the Netherlands, both agreed that Europe is a lucrative market for the Philippines to tap in the area of KPO.

One of the biggest drivers of demand for Philippine-sourced KPO services is that continent’s declining population.

"Population [growth] has already reached its peak and is estimated to decrease 10% year on year. But, we still remain a growing economy and offshoring is the only way to deal with this," Mr. Geijn said.

"The European Union is a very high potential market. This year, you will see more KPO activities because the labor force problem is not going to be better. The same is true with the US," Mr. Vashistha said."