Outsourced IT

Phil Searle
MD & Founder
Chazey Partners

So, looking forward to next year, what are the challenges and opportunities that face us? 

As highlighted in the Year in Review feature, shared services and BPO as delivery solutions that can achieve the triple benefit of reduced cost, improved service levels and an enhanced control environment has been on the agenda of many an Executive Board.  This has been a great opportunity for shared services professionals to become more visible within the organizations they support.  Shared services has also been able to move up the value chain and expand scope across multiple processes.  This will likely continue in 2010. 

The challenge is that if we do not fall back into recession and sustained growth does return, the focus on shared services and BPO at the senior Executive level may reduce.  That is just natural as “growth” strategies return to the fore.  However, that is not to say at all that shared services and BPO will not stay critical to overall enterprise sustainability and long-term success.  Those organizations that already had effective shared services and BPO in place have generally been better placed to weather the storm. It is just that an adjusted approach and emphasis from shared services and BPO professionals will be required.  Constant marketing of the benefits is always required.  It is also likely that service levels to the business and the quality of support will have a greater overall weighting compared to cost and control than perhaps it has in the last year.  But always remember that effective shared services can deliver all three!

And as cash becomes less restricted, there will be the opportunity and benefit of more money potentially becoming available for investment in implementing shared services and BPO and in training, technology and, where necessary, seeking expert third-party help.  Nevertheless the lessons learned during tough economic times should not be forgotten – targeted investments are key.  Do not return to “blank check implementations” of new technologies or new shared service centers.  A robust approach, with clear governance, ownership and sound principles will always greatly enhance the chances of long-term, sustainable success.

The challenge with Public Sector finances and the need to fund huge borrowing requirements will also be of great importance and generate significant debate.  Shared services in the public sector has been growing in recent years but this will only accelerate as ministers and officials look to new ways to reduce spending whilst trying to maintain frontline service levels.  Shared services can help achieve this by creating efficiencies and lowering the cost of running “back office” transactional and administrative services significantly which, if done properly, means that any cuts in frontline services can be minimized.  This is a going to be a massive political, economic and social challenge across many countries in the years to come.  Shared services can be part of the solution, although the problem is going to require multiple different strategies , including of course looking at taxes and public spending programs.

For sure, as we sit here in December 2009 things look a lot more promising from a broader economic perspective than they did this time last year.  But this is of course not the time for any sort of complacency as significant challenges and opportunities remain, including continuing restriction of credit in certain markets, mass unemployment and the threat of inflation at some point down the track. 

What is definitely true is that shared services and BPO have really come to the fore again as a proven way to help with efficiency, effectiveness and control.  Indeed, they never went away! But as growth returns the opportunities will be viewed differently, which is a good thing.

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Mark Toon
CEO
EquaTerra

Recession fatigue has set in and talk is turning from surviving the downturn to succeeding in the upturn. The C-suite is doing two things: they are optimizing where they spend their money and they are focused on those areas where they need to reduce their costs. In 2010, optimization will be the new transformation. Ultimately, organizations still want to “transform” how they deliver back office services, but they typically want to move in pragmatic, incremental steps and focus on achieving best in class, standardized and optimized delivery models. Companies will continue to use outsourcing as a mechanism to achieve cost reductions. In 2010, CEOs will seek balance in the business and carefully evaluate where they invest, what they transform and what they maintain.

Stan Lepeak
Managing Director of Global Research
EquaTerra

Contrary to what is widely believed, global sourcing activity will continue to grow in 2010. There are several reasons for this, the most obvious being the desire to reduce costs. While there is greater protectionist sentiment, there is a lack of action in the market, and therefore this is not materially impacting most organizations.

Rick Bertheaud
Managing Director of Procurement Advisory Services
EquaTerra

As the procurement discipline matures, the use of and demand for procurement outsourcing will continue to grow through 2010 – and it is currently the fastest growing outsourcing segment. A value driver fueling the demand is the inclusion of sourcing activity such as indirect spend management. Organizations that include strategic sourcing of indirect goods and services in their procurement outsourcing scope seek, and are achieving, double-digit savings on managed spend.

Paul Cornelisse
Managing Director, Information Technology Advisory
EquaTerra

Market share will shift towards global and more remote infrastructure management outsourcing where benefits can be achieved from doing so. However, maturity in this market has led to organizations identifying certain processes which are better delivered more locally and selecting service providers on flexibility and customer intimacy as well as price, creating new and interesting opportunities for new midsized service providers.

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Jim Whitworth
Independent Shared Services Specialist

The year ahead is unlikely to see the emphasis move far away from cost, both in terms of the SSO or BPO achieved and the project to get there. However, more activity in the market will provide the opportunity to look at new ideas for scope, organization and operation as a means to achieve savings rather than simply looking for cheaper and cheaper implementation and operating costs. Outsourcing has managed to evolve and grow through the recession and will continue to do so. The challenge facing the internal shared services option will be to compete with outsourcing on results and establish a true value beyond just cost-cutting. There need to be some high-profile internal SSO programs kicked off in the next few months to regain previous momentum and, through quality of execution re-establish the added value attainable. Where success of the BPO industry is reflected in the business wins, growth and M&A activity of BPO providers, we need to see some objective measure of success for internal shared services and appropriate publicity for that success. Practitioners and supporters of shared services as a winning organizational design structure need to ensure that cautious C-level execs see compelling business cases, robust designs, exceptional implementations and delivery of significant, tangible operational benefits in 2010 and beyond.   

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Phil King
Associate Partner
Atos Consulting

2010 sees the launch of SAP’s Shared Services Framework in June, so maybe shared services leaders using SAP will be able to help their IT colleagues justify some ERP investment again. Interest in both new and optimization of existing shared services will increase even further particularly as more and more Public Sector organizations come under pressure to reduce “back-office” costs while protecting front line services as economies emerge from recession – so there will be an increase in the tempo of collaboration across both national and local government and other agencies – not necessarily in a coordinated way leading to many different models requiring analysis and assessment. The challenge as always is to deliver on the promise and realise the benefits. I expect continued focus across all sectors on exploiting shared services as an asset to deliver organization-wide benefits. To support this a growing trend will be utilisation of user-friendly business process management solutions to assure standardization, control and compliance, and underpin end-to-end process improvement to get the most out of existing or proposed technology investments.

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Ravichandran Venkataraman
MD
ANZ Operations & Technology Pvt. Ltd

What does 2010 hold in store for us?

• Productivity – there will be a call for at least 20% to 25% productivity this year with little to no investment in technology;
• Consolidation – companies that are cash rich will push harder for takeovers – we are seeing this in the Financial Services Industry where valuations are attractive. We will see this happen in the shared services industry also;
• Moving to smaller regional hubs – with the risk of terrorism, natural calamities, etc. going up significantly, most companies are moving towards smaller regional hubs across countries to manage their shared services needs. This also helps from a language perspective given that Asia and Europe have the need for different languages;
• Integration & Change Management – With consolidation taking place, there will be a need for integration and change management expertise globally. there is already a huge shortage of this and the need will increase.

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Zachary Misko
Global Director
KellyOCG – RPO

In 2010, companies will focus recruitment strategies on building effective sourcing plans and use of technology and available tools, use processes like LEAN to improve overall efficiency and metrics and reduce waste within their team and organization, as well as look for ways to bets understand and simplify all of the technology and tools available within the realm of talent acquisition.

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Mark Judd
HR SSO Director
HR Shared Services
Rolls-Royce plc

If the management of an HR Shared Service Organization has ever been considered a challenge in the past, the last twelve months have reset the bar. In both the public and private sector the concept of a cost saving business case is no longer enough to justify investment and commitment to transformation. The need to work within the boundaries of affordability, in an environment where cash is scarce and closely protected, has meant that we have to make more careful choices on how we progress our service offerings. This impacts on the design of our solutions and the pace at which they can be implemented.

It has also created a paradox in that there is an urgency to deliver much more to preserve and improve the business cost base but caution in moving delivery away from the corporate control where the benefits are not immediately obvious. There is also less capital investment available to make it happen.

It is likely this is a temporary hiatus as need surpasses caution. Certainly we have had a lot of interest in visiting the Rolls-Royce HR Shared Service Centre from private and public sector organisations alike. I think the next two years will see an unprecedented level of activity in HR transformation projects. Much of this will probably be in the public sector where the choice of back office infrastructure is weighed up against the ability to field front line staff. There is no real choice between the two and there are only so many options to reduce costs. Politically unpalatable collaborations between public sector entities could now be seen as very desirable. This may see the emergence of some of the very largest HR transformations.

This could be set to be a very exciting couple of years.

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Traoloch Collins
CEO
www.serviceframe.com
 
Shared Services:  Increasing confidence within shared services organizations as they are recognised as ‘engine rooms’ of companies rather than ‘support services’.  This process will be driven by shared services teams as they demonstrate that they can deliver services at higher quality and more efficiently than a distributed model.  These teams will also adopt slicker and more effective performance and risk communication approaches as they increase their capability and maturity. 
 
Outsourcing:  Client organizations will drive a more holistic approach to ‘sourcing management’.  CFOs will recognise that outsourcing contracts represent very significant amounts of OPEX spend and that an organizational approach should be taken to managing risk, performance and cost on all outsourcing contracts.  The Client focus will be ensuring there is clear and consistent information on service delivery and value creation across all contracts. Service Provider Organizations will welcome a structured approach to relationship management but will need to focus on how to measure and define the innovation and value creation that clients are looking for – this is an area which I still think lacks any real measurement and precision.

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Cliff Justice
national leader of Shared Services and Outsourcing Advisory
KPMG LLP

Looking out to 2010 and beyond, key trends may impact how organizations’ shared services and outsourcing initiatives will evolve:

• As shared services functions and outsourcing agreements enter a mature stage in their natural lifecycle (years 3-5), organizations will be challenged to reinvent the next value curve or face diminishing returns;
• With increasing supply choices, in terms of both countries and suppliers, organizations will be faced with developing more diverse (and complex) outsourcing portfolios in pursuit of greater value, speed and competitive advantage.
• The drive for continuous improvement in the delivery of services to the organization will force companies to rethink how competition between internal and external capabilities generates sustainable efficiency, effectiveness and innovation.

Dwayne Prosko
Director, Shared Services and Outsourcing Advisory
KPMG LLP

Strategy: Looking forward, we believe that buyers of outsourcing services, such as CFOs and CIOs, will take more of a demand management view of services. Reducing the demand for services does not necessarily mean stopping work, but rather working in a more sophisticated way. Traditionally, business units often receive the same level of service regardless of business needs – a one-size-fits-all approach. Frequently, this results in all business units receiving the lowest common denominator of service. A more sophisticated way is to tailor the service offerings, so that some business units are not under-served at the expense of over-servicing others. For example, in Finance & Accounting (F&A), this can involve employing customer segmentation principles to offer tailored products and services to the business units that use the reports and analysis produced by F&A. 

Eugene Kublanov
Director, Shared Services and Outsourcing Advisory
KPMG LLP

Governance: An evolved approach to governance will be required. In the past, the shared services and outsourcing governance function was primarily focused on executing certain processes in a consistent manner. In the governance model of the future, the focus will be less on process execution and more on demand generation, value creation and customer satisfaction. It will require a more holistic, market-driven approach, more akin to a nimble start-up than a back office function. By addressing the extended global enterprise, this governance model will allow organizations to reinvent, realign, implement and manage service delivery portfolios that remain perpetually relevant.

Matamba Austin
Director, Shared Services and Outsourcing Advisory
KPMG LLP

Transactions: In 2009, companies tried all the traditional forms of cost cutting, and considered many of the traditional areas for outsourcing and shared services. In 2010, buyers of outsourcing services will be trying to find new ways to improve profitability. As a result, organizations will approach their existing outsourcing partners with a new willingness to consider transformational improvement solutions, so long as they can be done with minimal up-front capital investment. Experienced outsourcing buyers will consider more aggressive transaction parameters, e.g., more aggressive onshore/offshore mix, with an open mind to some of the newer offshore geographies. Buyers that have not done significant outsourcing in the past will finally start entering the market. They may not pursue large, multi-tower deals, but will approach transactions on a more aggressive schedule than in the past. 

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Linda Merritt
Research Director, HRO
NelsonHall

2010 sees the rise of the HR services portfolio manager and delivery architect. The question is not outsourcing or shared services. The question is what is the optimum mix of outsourced, shared services and locally determined HR delivery services given the current and going forward needs of the business?
 
The HR services portfolio executive is a business and HR leader who blends a review of business plans and HR initiatives with internal capabilities and costs to develop a strategic plan to manage the total cost of ownership for the entire portfolio of HR services while maximizing HR’s efficiency and effectiveness and its impact on the business. The HR services portfolio manager partners with the HR executive to gain funding and the buy-in of stakeholders.  
 
The services delivery architect builds out in phases the “Lego” mix and match service delivery model ensuring it is all seamlessly integrated, managed and provides the required service quality, cost and performance. The HR delivery architect combines the skills and competencies of a technology leader, vendor manager and an HR-savvy operations manager. 
 
Whether this describes one HR super star, or team capabilities, we are not talking about quiet “factory” managers toiling out of the way in the back office taking out a few more pennies here and there. We are talking dynamic executive talent that impacts the lion’s share of the HR spend, and accelerates HR’s delivery of business results.

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Vipin Suri
Managing Director
Shared Services International Inc.

In 2010, the cost pressures will continue and SSCs will be required to pursue non-traditional approaches for increasing efficiency and effectiveness.  Focus on Demand Management, End-to-End Process Cost Optimization and SSC Administration Cost (Cost-to-Serve) will increase significantly.  The future in shared services is about continuous improvement and customer partnerships.

Anther area of focus will be on the way SSCs report and provide information to management along with greater transparency of costs of doing business. 

In addition, key shared services priorities during 2010 will include:

• Service quality management
• Governance framework
• Enhancement of internal controls
• Cash flow enhancement
• Cycle times acceleration for all SSC processes
• Moving up the food (value) chain progression
• Talent management
• Outsourcing opportunities

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This article was first published on the Shared Services & Outsourcing Network (SSON) – Read it here: http://www.ssonetwork.com/topic_detail.aspx?id=6652&ekfrm=6&utm_source=ssonetwork.com&utm_medium=SMO&utm_campaign=DIRECTORIES&mac=SSON_External_Listing_2054

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When it comes to outsourcing, before entering into any type of formal agreement with another vendor it is important to test and understand the business value of outsourcing. All too often organizations jump into outsourcing a component of their business without fully understanding what their action will mean to the company on a large basis. Thus, testing and examining a company from the inside out is the only true way to decide if outsourcing is the correct approach for reducing costs.

Systems thinking vs. cheap vendor outsourcing

When organizations that are not familiar with outsourcing initially consider the idea of sending work outside of the company the first thought that usually enters their minds is to outsource to a cheap vendor. While this is the basic idea of outsourcing, this is a dangerous way to approach outsourcing and a very sub-optimal step given that cutting costs upfront is not worthwhile if later the organization suffers as whole as a result of the move.

On the other hand, systems thinking outsourcing involves looking at the business value of outsourcing and deciding if there is a better way to outsource that will allow every component of the company to benefit. Goals that should identify before an outsourcing vendor is chosen include flexibility, quality, market time, change, and competitive advantage. Systems thinking outsourcing also mean that the entire company is scrutinized thoroughly across every channel, not just one department such as the customer support area.

Optimizing business value with outsourcing along the value chain

This can be a difficult approach to outsourcing given that fact that within a single organization there are generally many different departments that each consider themselves a key component of the company. Thus, employees within these sectors will be resistant towards offering suggestions and inputs or helping assimilate outsourcers with their trade. Properly reassuring members of staff and offering incentives is a great way to get more employees on board.

For e.g. SKG Technologies is the company when you are looking to outsource Search Engine Marketing

The other problem with testing outsourcing along the value chain is that within each department there is a strict focus on how much work can be extracted by each organization. This involves looking at individual measurements of every employee task within the organization which can be time consuming, with or without cooperation from staff.

Objective of business value outsourcing

It is important to keep in mind that at the root of any outsourcing attempt is a fundamental goal. When it comes to business value the goal should be finding added value for the company and a more cost effective organization team than the one that is currently in place.

Additionally, for maximum benefits the outsourcing vendor should be known for its continual innovations and forward movement in the business world so that your company continues to benefit from its new relationship.

Lower the risks with careful study of outsourcing vendor as well as your organization

The move to choose an outsourcing vendor should be low risk when compared with the benefits that are gained with the new partnership. In order to properly ascertain that this is the result, a company needs to perform thorough research of the outsourcing vendor it is considering hiring. Among the questions that need to be answered are if the company has experience, an adequate reputation, and if they are able to respond to your organization’s needs in the proper timely manner. A company that offers a trial period is often an excellent choice since they are ready to stand behind their commitment.

Although it will be easier to find a generic outsourcing vendor and will certainly reduce costs much more short term on the budget sheet, it is quite possible that in the long run your business will pay more in other departments and overall performance as the months pass. Thus, it is up to an organization to choose a responsible team and supply it with the vital information needed to continue to allow all departments both those in house and out of house to prosper.

Values to look for from an outsourcing vendor for maximum benefit

There are set qualifications that every vendor should be able to meet. To start, they most provide an option vale for the vendor such as offering entry into a new market or field and access to new clients. This alone can help propel an organization along. This will allow a company to move forward with integration along the business value chain and possibly produce new service or product offerings.

An organization also must look at how they can improve in house services now that the outsourcing company is taking a department out of the budget. They should consider if their best practices are being applied in both locations and redesign their budget to improve other departments now that there are available funds.

Finally, in the case that an outsourcing agreement fails, an organization should search for an outsourcing vendor that will cover the cost of moving the tasks they took on back in house. If a decision is made to switch outsourcing vendors then they would be responsible for promptly transferring all data and related activities to the new vendor. While this may seem unrealistic, a professional vendor will provide this service as part of their guarantee of satisfaction.

Final thoughts on business value and outsourcing

While outsourcing is a risk regardless of how well each step is followed and how integral the business value chain is with the final vendor choice, it can be a calculated risk which predicts much more success. Carefully weighing each factor such as vendor responsibilities, overall organizational affects, and outsourcing budgetary requirements can aid a business in finding the proper vendor without experiencing a large financial impact later.

It sounds better but with the advancement in the technology, the world has literally shrunk. The main reason of offshore outsourcing may be to lessen the costs due to the basic difference in currency. However, a complete understanding of farming out the work is required before outsourcing. Let’s briefly discuss the reasons for why outsourcing services are favorable at offshore places.

Reduce the Operating Costs and concentrate on core business:
Offshore outsourcing will be a powerful tool to reduce administrative and production costs. By leveraging an outsourcing service provider’s company size, specialization and lower wage rates, small and mid-sized companies can drive down costs in their ancillary business functions.By concentrating resources on primary business functions, a company will become more efficient, drive costs further down, provide better service and expand its market share.

Gain Access To World-Class Capabilities:
Outsourcing frees the organizations from the auxiliary business functions and concentrate on their core businesses. So they are experts in some of the business processes such as, Human Resources, Sales, Marketing, Finance, Accounting, Customer Service, Procurement, Business Administration and IT infrastructure, commerce, Data Processing, Network Management, Telecommunications, Data Security and Software Development. A well equipped outsourcing company will invest more in people, technology and process engineering to provide state of the art services to their clients. This level of investment and commitment is beyond the abilities of most middle market companies.

Free Internal Resources For Other Purposes:
Outsourcing frees key management from day to day routine and permits them to focus on Primary business functions. Staff utilizes more of their skills they have more interesting work and it will be resulted in the overall productivity, so the productivity will be increases. Boredom is the biggest enemy of productivity.

Resources Are Not Available Internally:
Finding the qualified and skilled employees is also a very big problem for small and mid-sized companies. So they are preferring offshore outsourcing, and it let them to rapidly field an expert team and implement financial, marketing, manufacturing and distribution programs. Sometimes an executive needs to make a major change to save an organization and the staff does not have the enough skills or the interest to execute a plan in a timely manner. Outsourcing offers easy access to qualified staff that may be more experienced and receptive to change.

Make Capital Funds Available:
Offshore outsourcing reduces the cost of the company in many ways like, it is cheaper than running the internal operations, and by focusing more on the primary business functions it will be very efficient and profitable for the organization. Capital expenses and fixed costs are lowered and are transformed to variable costs driving up operating margins and lowering break even points. Because outsourcing increases the value of a business, the capital markets place a higher multiple on future earnings.

These are all the main reasons for outsourcing is favorable at offshore place. The process involved in Outsourcing the business functions to another country is termed as offshore outsourcing. It sounds better but with the advancement in the technology, the world has literally shrunk. The main reason of offshore outsourcing may be to lessen the costs due to the basic difference in currency. However, a complete understanding of farming out the work is required before outsourcing. Let’s briefly discuss the reasons for why outsourcing services are favorable at offshore places.

Reduce the Operating Costs and concentrate on core business:
Offshore outsourcing will be a powerful tool to reduce administrative and production costs. By leveraging an outsourcing service provider’s company size, specialization and lower wage rates, small and mid-sized companies can drive down costs in their ancillary business functions.By concentrating resources on primary business functions, a company will become more efficient, drive costs further down, provide better service and expand its market share.

Gain Access To World-Class Capabilities:
Outsourcing frees the organizations from the auxiliary business functions and concentrate on their core businesses. So they are experts in some of the business processes such as, Human Resources, Sales, Marketing, Finance, Accounting, Customer Service, Procurement, Business Administration and IT infrastructure, commerce, Data Processing, Network Management, Telecommunications, Data Security and Software Development. A well equipped outsourcing company will invest more in people, technology and process engineering to provide state of the art services to their clients. This level of investment and commitment is beyond the abilities of most middle market companies.

Free Internal Resources For Other Purposes:
Outsourcing frees key management from day to day routine and permits them to focus on Primary business functions. Staff utilizes more of their skills they have more interesting work and it will be resulted in the overall productivity, so the productivity will be increases. Boredom is the biggest enemy of productivity.

Resources Are Not Available Internally:
Finding the qualified and skilled employees is also a very big problem for small and mid-sized companies. So they are preferring offshore outsourcing, and it let them to rapidly field an expert team and implement financial, marketing, manufacturing and distribution programs. Sometimes an executive needs to make a major change to save an organization and the staff does not have the enough skills or the interest to execute a plan in a timely manner. Outsourcing offers easy access to qualified staff that may be more experienced and receptive to change.

Make Capital Funds Available:
Offshore outsourcing reduces the cost of the company in many ways like, it is cheaper than running the internal operations, and by focusing more on the primary business functions it will be ver efficient and profitable for the organization. Capital expenses and fixed costs are lowered and are transformed to variable costs driving up operating margins and lowering break even points. Because outsourcing increases the value of a business, the capital markets place a higher multiple on future earnings.

These are all the main reasons for outsourcing is favorable at offshore place.

Call center outsourcing is fast becoming popular nowadays and if you are planning to venture in offshore outsourcing for call center services, it is important for you to understand at least the top ten most popular buzzwords in the industry.

• Near Shore Outsourcing

Near shore outsourcing is when a call center outsourcing company outsources their services within its neighboring countries. Basically, near shore outsourcing provides quite a number of benefits for an organization because of the strategic geographical propinquity reducing travel costs and communication expenses on the part of the company as well as the outsourcer. There will also be a great advantage with communication because it will be more likely that the people involved in the venture will all be speaking the same language which also reduces the need to train the staff on using a language foreign to them.

• Onshore Outsourcing

Domestic outsourcing or onshore outsourcing is when BPO requirements are being fulfilled by a particular company which is within the same country. As compared to other outsourcing opportunities, onshore outsourcing is a lot more expensive especially when it comes to labor costs, taxation, and other related aspects of the business.

• Offshore Outsourcing

Offshore outsourcing on the other hand refers to the outsourcing opportunities on other parts of the world where there is a much cheaper labor cost and lower tax expenses on the part of the company requiring for an offshore outsourcing for call center services.

• Virtual Call Center

Virtual call center is a simulation of a call center environment but the only difference is that call center agents are not working on the same premises.

• TCO (Total Cost of Outsourcing)

TCO typically directs its focus on the total cost of the outsourcing opportunity which includes the labor cost, tax rate, and other expenses included in the business venture. For call center outsourcing, TCO is very important because this alone can determine whether outsourcing will be advantageous on the part of the company that needs it or not.

• BPO (Business Process Outsourcing)

Business process outsourcing is important for business organizations that need to contract a particular business-related task to third party providers. Basically, BPOs are used to save on operational expenses and in-house resources but this strategy is not used in order to become highly competitive in the market.

• Globalization

This particular term refers to the dispersal of services as well as technologies all over the world. For call center outsourcing, globalization is typical especially those opting for call center offshore outsourcing.

• SLA (Service Level Agreement)

SLA is basically the contract agreement between the company and the service provider.

• Core Competency

Core competency refers to the field of expertise of a particular business. In call center outsourcing, majority of the companies often outsource the not so important areas of their business in order for them to focus their resources on their own core competency for further development of their businesses.

• E-Outsourcing

E-outsourcing is fast becoming part of some major business entities. This particular activity is when a particular business entity purchases their required IT products or services using the internet instead of using their in-house resources to satisfy their IT requirements.

Auriga, a software R&D services house serving US and EU customers, is proud to announce that it has been named #15 in The 2010 Black Book of Outsourcing’s prestigious “Global Top 50 Vendors” list by Datamonitor. The 2010 Black Book of Outsourcing survey is focused on measuring customer satisfaction with the received outsourced services and was conducted on a large scale worldwide between April and August 2010. Datamonitor analyzed 6,547 survey responses from client companies from various industry sectors, of different size and location, rating 31,118 service experiences based on 9 criteria of outsourcing excellence. The survey provides true and unbiased picture of the global situation with outsourcing services from the customers’ point of view.

Auriga is a relatively small, even by Russian standards, ITO vendor, providing software R&D services for customers in the US, EU, and Russia starting from 1990, thus being one of the forefathers of the Russian outsourcing industry. The company has about 300 employees and several engineering centers in Russia and EU. In addition to technical/vertical expertise, Auriga, unlike many other vendors, explicitly focuses on ‘soft outsourcing skills’: easy communications, flexibility in business terms and engineering processes, removing cultural gaps, caring about real customer goals and building long-term relationships. And that pays off. Once started working with the company, customers tend to stay, some using its services for 10 years and more.
Remarkably for such a small company, Auriga is well known worldwide.

In 2010 it was recognized as one of the top global providers in such ratings as Global Outsourcing 100 and Global Services 100. And now Auriga is in The Black Book of Outsourcing – the achievement that very few global players can repeat, let alone other Russian providers, none of which made it to The Black Book of Outsourcing this year. Talking about the Datamonitor’s ranking, at its #15 in the list, Auriga is ranked higher than such IT industry majors as Infosys, Capgemini, BT, Fujitsu, IBM, Dell, Microsoft and Google, being one of three IT-outsourcing companies that made it into the Top 15, and the only one among the three with primary focus on software R&D. This is historically the highest ranking for a Russian company in The Black Book of Outsourcing’s Top 50.

One of the most prominent trends recorded by Datamonitor was that larger service providers were rated lower for client satisfaction. The reasons for this named by Datamonitor are that
• regarding large projects, the primary concern is simply ‘getting the job done’ rather satisfaction
• smaller providers can offer strong focus on specialist expertise or niche services

In general, smaller-scaled innovative providers like Auriga climbing to the highest positions in the customer satisfaction level ratings seem to be part of the new trend that is indicated by many industry analysts. A big slice of the pie in ITO market goes to industrialized utility services where everybody gets the same predictable level of service and satisfaction. This sector is served by the giants, and getting high levels of customer satisfaction is hard due to the unification of services. The other highly customized part of the work goes to companies like Auriga – where a few can do a lot, as smaller providers struggle for providing the highest level of satisfaction to their customers, in each case in its own, customer-specific way.
Eamonn Kennedy, research director at the Black Book of Outsourcing, comments: “The survey results demonstrate that Auriga is delivering comprehensive, integrated product development outsourcing solutions that exceed client expectations around the world.”

Andrei Pronin, Auriga General Manager says: “Auriga has earned the distinction of being one of the outsourcing services companies with the most satisfied clients in the world. Since the ratings are based on direct customer feedback, they assert Auriga’s continuing commitment to its clients as being not just a technology vendor but a business partner. We are extremely proud that our high performance and attention to customer’s real needs received recognition once again.”

About Auriga
Auriga (www.auriga.com) is a software R&D and IT outsourcing services provider incorporated in the U.S. and operating development centers in Russia and Lithuania. The list of provided services covers all aspects of software product engineering for a broad range of knowledge areas from embedded and mobile software to enterprise and Web applications. Auriga combines top engineering talent with flexibility, cultural proximity to clients, and focuses on clients’ interests and convenience as its main driving strategy.

Founded in 1990, Auriga was the first Russian company to provide offshore/nearshore services to EU/US customers. Auriga is among top 10 outsourcing providers in Eastern Europe and Russia, and a worldwide leader in such services as R&D, OPD, software testing and QA, and such verticals as high-tech, healthcare, telecom. Auriga is constantly included in Global Services 100, Global Outsourcing 100, The Black Book of Outsourcing and other global industry ratings. The client list combines industry majors, leaders in their segments, and innovative start-ups, including IBM, Draeger Medical, LynuxWorks, Dialogic, Actel, BroadVision and many others.

About Black Book of Outsourcing
Now owned by the Datamonitor Group, The Black Book of Outsourcing (http://www.theblackbookofoutsourcing.com/) is the leading independent benchmark for customer satisfaction with outsourcing.
The 2010 Black Book of Outsourcing survey is specifically designed to capture customer satisfaction ratings from users of outsourced services across the globe.
Findings from the annual survey are presented in reports that investigate outsourcing markets by industry, geography and service domain. In addition to rankings of how individual vendors perform, reports typically contain analysis of the customer experience, market trends and advice on how to realize desired outcomes.

Clients use The Black Book of Outsourcing to:
* Determine strengths and weaknesses of individual vendors
* Establish industry benchmarks to determine desired satisfaction ratings
* Negotiate contract terms to ensure desired outcomes are achieved
* Understand trends in outsourcing satisfaction by service, industry and geography

Read more at The Black Book of Outsourcing: State of the Outsourcing Industry 2010 – http://www.datamonitor.com/store/Product/the_black_book_of_outsourcing_state_of_the_outsourcing_industry_2010?productid=SO00001-001

About Datamonitor
Datamonitor (http://www.datamonitor.com/) is a leading provider of online database and analysis services for key industry sectors. Datamonitor helps its clients, 5000 of the world’s leading companies, to address complex strategic issues. Through its proprietary databases and wealth of expertise, Datamonitor provides clients with unbiased expert analysis and in-depth forecasts for seven industry sectors: Automotive, Consumer Packaged Goods, Energy, Financial Services, Pharmaceuticals and Healthcare, Technology, Transport and Logistics.

Source:
http://www.1888pressrelease.com/top-20-vendors-culture-beats-scale-auriga-size-300-ahead-pr-247170.html

The origin of Outsourcing

The concept of outsourcing originated with Ross Perot when he established Electronic Data Systems in the year1962. EDS convey the following message to their potential clients,
“You are familiar with designing, manufacturing and selling furniture, but we’re familiar with managing information technology. We can sell you the information technology you need, and you pay us monthly for the service with a minimum commitment of two to ten years.”

Basic Elements of BPO

Outsourcing in the present times is termed as a “strategic management option” instead of a way just used to cut costs. It enables an organization or company to attain its business objectives through applying factors such as operational excellence and an edge in the market place. Today, there not a single company exists which does have one or more of its services outsourced so that it can pay more attention to its core competencies. The power of outsourcing as a significant business tool of unique versatility and flexibility is undoubted. The main reason why most of the companies employ the strategy of outsourcing is that their resources need to be more focused on core business functions and consequently the non-core functions need to be outsourced.
Outsourcing is the fundamental process that provides a company with the right combination of people, processes and technology to operate effectively in the Global market place without burdening its time and budget. This is the most crucial reason for the increase in the number of companies who are interested in outsourcing their activities to various offshore locations. There are two key factors that should be observed while looking for a reliable outsourcing provider, they are:
-Quality
-Price

Tips To Make an Outsourcing Project Successful

The results of outsourcing if seen as a whole have both been positive and negative for organizations. There results depend on the important factors such as:
-How the contract between the outsourcer and vendor is structured
-The efficient management of the customer and vendor relationship
-The measurement of the end results
If all the above points are kept in view while deciding to outsource, outsourcing can prove to be fruitful for both the outsourcers their potential customers. Industrialists and business men are always in search for methods to accomplish their business objectives by investing less amount of money. For such people, a best solution is to outsource their work to skilled but cost-effective third party service providers. To make outsourcing projects successful the following tips should be followed:

-Conduct a thorough research to find the best Vendor for the project
The easiest way to find outsourcing companies is to try search engines or relative online directories. But there lies a possibility that cheaters would also be there. Hours should be spent while conducting extensive research to find the best vendor.

-The scope and the schedule for the project should be clearly defined
The scope and schedule for the project should be clearly identified in order to avoid any misconceptions regarding the deadline and limits of the project which would have a negative impact on the successful and timely completion of the project. The requirements of the project should be defined without any ambiguities by the outsourcer. The service providers require accurate, complete information to present the outsourcer with realistic proposals and to quote a reasonable price. The outsourcer must be precise regarding the deliverables the outsourcer expects the vendor to provide. The vendors must be provided complete information about what exactly the outsourcer wants to be delivered with and the method in which the outsourcer requires to be followed while doing the work. The outsourcer should clearly state the schedule of the project as it could have a great influence on the project cost.

-The service provider should be evaluated thoroughly
The outsourcer should question the service provide with ease while evaluating his proposal. The selection of an appropriate vendor to whom the project should be outsourced is similar to the experience of hiring a full-time employee. The outsourcer should make a check on the references of the vendor and contact the other clients who have been served him.

-Search for specific experience
In normal situations the service provider selected by the outsourcer will posses specific expertise similar to the type of the project the outsourcer is undertaking. For instance, if an outsourcer requires a business plan for opening a retail store, the best results can be obtained if the vendor hired would have certified experience in the same sector.

-The Selection of the Vendor must be not be based only on the factor of price
Low price seems to tempt to select a certain vendor but this method should not be adopted for selection. The buyers who have gone through the experience of outsourcing many projects and evaluating hundreds of proposals almost always support that the highest-priced and lowest-priced bid consideration for selecting a vendor should be not be given importance at all.

-Begin with a Small project
When working with a new vendor for the first time the outsourcer should begin with a relatively small project. This would be beneficial in terms of providing the outsourcer with a view of the vendor’s capabilities.

-Converse about the ownership of the end work or result
The outsourcer and vendor should negotiate clearly over the ownership of the end result, work or product and its components (Top 10 Tips for Outsourcing Success).

The global economic meltdown has exacerbated these challenges with new R&D staff and budget reductions. In order to remain competitive, drug makers must now do more with less. Outsourcing, particularly to low cost offshore venues like India and China, offers a means to maintain productivity within new cost parameters.

However, while some drug makers have optimized their R&D outsourcing methodologies and have developed sophisticated processes to select, monitor and manage a wide range of projects, many other R&D outsourcing projects fail due to poor planning on the part of sponsors. A large proportion of these failures could be averted as many of the most common reasons for failure are preventable problems relating to R&D outsourcing strategy, supplier evaluation & selection, contracting, project organization and expectations, supplier management, culture, staff turnover and intellectual property.

Key features of this report

• Discussion of the factors leading to current imperatives to increased outsourced R&D.

• Detailed descriptions of both effective and ineffective R&D outsourcing approaches.

• In depth analysis of the types of different R&D outsourcing relationships, their advantages and disadvantages.

• 5 case studies that illustrate R&D outsourcing best practices.

• Comprehensive discussion of offshore R&D outsourcing, particularly focusing on India and China.

Scope of this report

• Understand the driving forces behind R&D outsourcing.

• Save time and money with the report’s succinct compilation and analysis of current R&D outsourcing trends.

• Learn how R&D outsourcing will evolve over the next several years and why.

• Assess your competitive position vis-à-vis other drug makers and learn about R&D outsourcing best practices via detailed case studies.

Key Market Issues

(1) Although cost cutting has previously not been a concern for R&D departments, the current economic environment has brought expense reduction programs into research labs. Most of the leading drug makers have recently undertaken and/or are currently in the midst of broad R&D cost cutting programs

(2) Because drug makers must continue to introduce new products, maintaining high productivity is key. R&D outsourcing offers a means to achieve this, particularly via low cost offshore outsourcing.

(3) Most R&D outsourcing programs do not focus on a single approach but include several different types of relationships with contractors. The savviest drug makers combine these approaches in a well thought-out, synergistic manner while many others will implement them in a slipshod, ineffective fashion that results in high project failure rates.

Key findings from this report

(1) Usage of CROs will rise by 9.9% annually through 2014 with the greatest growth in Phase IIIb and IV testing at 13.8% per year.
(2) While the top 10 CROs account for more than half of all R&D outsourcing, more than 1,000 others comprise the remaining 44%.
(3) Offshore outsourcing, particularly to India and China, offers cost savings of 30% to 60% compared to the US and Western Europe.
(4) The 100 Indian CROs tend to be larger and more focused on clinical trials while the 300 Chinese CROs are smaller and many are building strong pre-clinical capabilities.

Key questions answered

• Why is R&D outsourcing rising?
• Which types of R&D outsourcing approaches are currently most common?
• Which forms of R&D cost cutting will increase most in the future?
 
 
Table of Contents : 
Table of Contents
The Future of R&D Outsourcing
Challenges facing drug developers 10
Dynamics of outsourced R&D 11
R&D outsourcing in Asia 12
Strategies to optimize R&D outsourcing relationships 13
The future of R&D outsourcing 14
Chapter 1 Challenges facing drug developers 16
Summary 16
The drug approval process 17
US 17
Europe 21
The Mutual Recognition Procedure (MRP) 21
The National Competent Authorities 23
Rising financial pressure 24
Expiring patents on blockbusters 24
Decreasing market exclusivity 27
Healthcare cost containment 28
Rising usage of generics 28
Elimination of coverage 30
Step therapy 31
Utilization of OTCs 31
Manufacturer rebates 32
Consumer skepticism of drug benefits 32
Drug development imperatives 33
Targeting large markets 34
Focus on efficacy 34
Expansion into biologicals 36
Decreasing time to market 36
Drug development hurdles 37
More complicated disease targets 38
Rapidly escalating costs 38
Reduced R&D staff 40
Heightened regulatory scrutiny 43
Declining drug approvals 44
Conclusion 46
Chapter 2 Dynamics of outsourced R&D 50
Summary 50
Contract research organizations 51
The role of CROs 51
Services offered by CROs 51
Discovery 53
Preclinical evaluation 54
Clinical trials 54
Repositioning 55
Expanding technological expertise 56
Reasons for outsourcing R&D 56
Types of relationships 60
Preferred vendors 63
Functional service providers 64
Risk sharing 64
Technology partnerships 65
Drug licensing 66
Benefits and limitations of using CROs 66
Long term cost savings vs. high short term expenses 67
Speed to market vs. potential project overruns 68
Access to expertise vs. CRO staff turnover 70
Flexibility vs. loss of control 71
Ability to customize research vs. CRO clutter 72
CRO usage 72
Usage estimates 2009 – 2014 73
Leading CROs 73
Conclusion 74
Chapter 3 R&D outsourcing in Asia 78
Summary 78
Introduction 79
Offshore outsourcing of clinical research 81
Offshore outsourcing of preclinical research 82
Contract research in India 84
Key outsourcing issues 86
Intellectual property 86
Regulatory issues 87
Business issues and infrastructure 88
Leading players 90
CRO usage and market size 90
CRO developments in India 91
Case study: GlaxoSmithKline 92
Contract research in China 95
Key outsourcing issues 96
Intellectual property 97
Regulatory issues 98
Business issues and infrastructure 100
Leading players 102
CRO usage and market size 103
CRO developments in China 103
Case study: Eli Lilly 106
Offshore outsourcing partnerships 108
Types of relationships 108
Early stage collaborations 109
Global networks 110
Conclusion 111
Chapter 4 Strategies to optimize R&D outsourcing relationships 114
Summary 114
Introduction 115
Key causes of and remedies for R&D outsourcing failures 116
Outsourcing strategy 118
Supplier evaluation and selection 119
Contracting 122
Renegotiation 124
Project organization and expectations 125
Supplier management 126
Culture 128
Corporate cultural differences 129
Ethnic divergence 130
Management changes and personnel turnover 131
Management changes 131
Personnel turnover 133
Intellectual property 133
R&D outsourcing best practices 134
Case study: Wyeth 134
Case study: AstraZeneca 135
Case study: Eisai 136
Conclusion 137
Chapter 5 The future of R&D outsourcing 140
Summary 140
Introduction 141
The drug development landscape in the US and EU 142
Near term: 2010 – 2011 143
Long term: 2012 – 2015 146
R&D outsourcing trends 147
Near term: 2010 – 2011 152
Long term: 2012 – 2015 154
Conclusion 155
Index 156

List of Figures
Figure 1.1: US and EU spending on generic drugs, 2009 30
Figure 1.2: US NME approvals vs. R&D spend ($bn), 1990-2009* 46
Figure 1.3: Average US R&D spend per NME approval ($m), 1990 – 2009* 47
Figure 2.4: Services offered by CROs 52
Figure 2.5: Potential benefits and limitations of using a CRO 68
Figure 2.6: Growth of outsourced R&D by segment ($m), 2009-14 74
Figure 2.7: Market analysis of major CROs, 2009 75
Figure 3.8: Advantages and disadvantages of leading Asian outsourcing venues 80
Figure 3.9: Clinical and preclinical test capabilities of India and China 83
Figure 3.10: Growth of outsourced R&D to India by segment, 2009-14 91
Figure 3.11: GlaxoSmithKline sales vs. R&D expense (£m), 2000-09 94
Figure 3.12: Growth of outsourced R&D to China by segment ($m), 2009-14 104
Figure 3.13: Eli Lilly sales vs. R&D expense ($m), 2000-09 107
Figure 3.14: Key characteristics of offshore partnering relationships 109
Figure 4.15: Risk factors when outsourcing R&D 117
Figure 5.16: Confidence level of drug development & outsourcing predictions, near vs. long term 143
Figure 5.17: Drug development trends, near vs. long term 144
Figure 5.18: Relative usage & growth of different types of R&D outsourcing relationships, near vs. long term 148
Figure 5.19: R&D outsourcing trends, near vs. long term 151

List of Tables
Table 1.1: CDER Drug Advisory Committees, December 2009 21
Table 1.2: Leading European National Competent Authorities, 2009 25
Table 1.3: Leading European National Competent Authorities, 2009 (ctd) 26
Table 1.4: Revenues and patent expirations for selected companies’ blockbusters, 2009 27
Table 1.5: Leading medicinal research areas, 2009 35
Table 1.6: Significant R&D staff reductions, 2008-09 41
Table 1.7: US NME approvals, 2000-09 45
Table 1.8: US R&D spend for approved NMEs ($), 1990-2009 45
Table 2.9: Key characteristics of CRO partnering relationships 62
Table 4.10: Reasons for time and budget overruns 127
Table 4.11: Corporate cultural characteristics of sponsors and contractors 129
Table 5.12: Global growth of outsourced R&D by stage ($bn), 2009-14 153 
 

For More information please contact :

http://www.aarkstore.com/reports/The-Future-of-R-D-Outsourcing-Investigating-development-hurdles-key-challenges-strategies-to-optimize-CRO-relationships-38039.html

Outsourcing – NEVER, I will never outsource anything related to my company ever in my life.

If this is what you think when you hear the word outsourcing, please go ahead and read the rest of the article. This article should change your thoughts about Business Process Outsourcing. And would definitely guide you how to set up a successful and beneficial outsourcing model. Many corporates have already discovered the path of success called outsourcing. Now you must be wondering I have always heard my customers complain about outsourcing. Even when I call some companies, the support I get, makes me highly dissatisfied, then how can I outsource my services yet make my customers happy. Well, I would say it is possible, if done correctly.

It is not that your customers hate outsourcing; they hate outsourcing when they suffer because of it.

What does that mean? The customer would love outsourcing, if it is a pleasant experience for them. Now, you must be thinking, how to outsource, yet make your customers love it. By the end of this article, you will get to know how to outsource your business needs, without upsetting your customer. Let us get familiar with the basics of Outsourcing.

Business process outsourcing (BPO) contains the transmission of processes along with the associated operational activities and responsibilities, to a third party with at least a guaranteed equal service level and where the client contains a firm grip over the (activities of the) vendor for mutual long term success. This generally involves an organizations non-core processes. Outsourcing: Contracting some or all call center services to an outside company. OnShore: Onshore outsourcing is outsourcing within nearby region or the same country. Offshore: Offshore outsourcing is outsourcing beyond your country. Call Center: A term that generally refers to inbound centers, outbound centers, help desks, information lines or customer service centers, regardless of how they are organized or what types of transactions they handle. Help Desk: An inbound call center primarily utilized for support on product installation and troubleshooting. The same can be offered through Voice support, chat or email support.

Now that you understand few terms related to outsourcing, let us try to understand why it is important for your business.

Why is outsourcing necessary?

I am sure; you must have read about the term Opportunity Cost. An Opportunity Cost is the value of a product that is forgone when pursuing another product. For example, if a CEO of a company chooses to spend two hours a day on building more sales channels, something that could be easily outsourced, the opportunity cost is the value of the time he denied himself and his primary work. That time could have been used to take important strategic decisions about your company, or it could have been time well spent playing baseball with your kids. Either way, the time represents an opportunity cost, or you may call it an opportunity lost. Now let us try to understand how to make outsourcing a beneficial experience for both you and your customer. Cutting cost is the first thing most of the companies think about while outsourcing their business needs. Now this is the problem. As a company planning to outsource your services you should focus on these 3 things:

Quality of work desired. Customer satisfaction. Reduction in cost.

Most of the times, people forget about the first 2 and focus only on the 3rd point. Such a strategy leads to drop in the quality of service leading to dissatisfaction of customers. A detailed business plan would definitely lead to beneficial outsourcing. Let us take an example. If your company sells a DVD player and you plan to outsource your technical support, this is what i would suggest to keep in mind while making your Outsourcing Business plan.

A document detailing the required infrastructure for the call center. Qualification requirements of the staff. VNA (Voice & Accent) round of the TSRs (technical support reps). Quality guidelines for the call centers and the employees. Thorough product training. (This is where most of the small companies lack) A Complete Knowledge base, with detailed answers on each and every product. Customer satisfaction surveys. Blended outsourcing. Blended outsourcing means, having an offshore as well as onshore support center. If you require 100 technical support representatives, outsource 90 to offshore and keep 10 onshore. You can hire Level 2 support onshore. Timely updates to offshore call center. It is very important to inform your offshore call centers well in advance about any important updates or launch of new products. Please don’t forget to ship new player your company launches to the offshore call center well in advance, so that the representatives can be trained properly before the launch. Start slowly and gradually. Do not outsource your complete services at 1 time. If your business model allows, operate more than 1 call centers and that too at different locations. This would also give you benefits in terms of Disaster management. The most crucial thing: It is preferable to hire a professionally managed Business Process Outsourcing company to take care of your offshore outsourcing.

The basic need for outsourcing is to focus on your core business. That does not mean outsourcing your services and to forget about them. I would suggest hiring a Business process outsourcing company, expert in the field of outsourcing to manage your outsourcing needs. If you make a proper outsourcing plan and then outsource your business, it would definitely lead to a beneficial experience for both you and your customers. Always remember, Successful entrepreneurs are those who can see the big picture. They know when to delegate and how to accurately delegate tasks.

In the last decade, the outsourcing phenomenon has gained acceptance and grown in popularity. The reason for this growth is clear. Outsourcing enables an organization to focus on core competency and critical activities and to pass on other business activities to experts and professionals who specialize in specific processes, and business functions.

In the realm of offshore technology outsourcing, an organization might decide to outsource software development, management and support, programming services, project management, business analysis, infrastructure management or any one of a number of other tasks. But, in many instances, an organization may discount or dismiss the value of outsourcing because they assume outsourcing is ineffective or that it may cause delays in projects or even cause the organization to lose its technology investment. They may fear the loss of control over projects or have concerns about protecting intellectual property or data security.

In this article we will discuss the five most common outsourcing myths. This clarification process may help your organization to better understand outsourcing opportunities, and to decide when and how to use outsourcing to accomplish goals and objectives.

The decision to outsource an activity does not mean that the organization defines that activity as ‘unimportant.’ Rather, the outsourcing decision is based on the separation of tasks. The organization will begin by identifying tasks that must be completed by its own team versus tasks that can be outsourced. Tasks that contribute to or involve the core competencies of the organization are those that will be reserved for your team.

Tasks that are specialized, or outside the competency of the organization, can be outsourced. You may also choose to outsource tasks that can easily be performed by your team where these outsourced tasks will free your team to spend time on tasks more critical to the success of your organization. You may also choose to outsource tasks to leverage investment funds, using affordable outsourcing services to complete a project or provide support and investing the money you save on other critical projects or business needs.

To make an appropriate outsourcing decision it is important to separate fact from fiction. This process will help you to make an educated decision about outsourcing some or all of your IT tasks.

The five most common outsourcing myths:

1. Outsourcing is undependable and the vendor may not deliver results

Contrary to what some prospective clients believe, appropriate outsourcing of tasks, projects or technology support is a proven method of achievable goals in a timely, affordable fashion. Clients often believe that offshore outsource partners will be undependable. If a client does not directly employ the people working on a project, it may believe it cannot ensure that deliverables will meet expectations. But, proven offshore outsource providers are skilled at delivering on requirements in a timely fashion and will consistently meet budget needs.

Remember, these vendors are experienced at working with clients as an extension of the client team. They have developed proven processes and models to ensure project success across time zones and in all types of industries. Reputable offshore vendors work in cities, countries and locations that can guarantee a stable economic and political environment and adequate IT resources. This ensures affordable services and a dependable service offering. Proven offshore vendors have dependable data and network security that will ensure your information is protected and mitigate infrastructure downtime, so your organization can be confident of stable, dependable service. They can also supply flexible delivery models that will provide dependable services for those organizations that require onsite or hybrid delivery models.

2. My organization will lose control if we outsource IT tasks

A reputable outsource partner will ensure that the client retains control over critical project decisions and that the client is informed of project progress, issues that require attention and upcoming deliverables. The client will have the option to set guidelines for how much vendor interaction is expected and the types of reporting and communication it requires at various stages of the project.

3. Outsourcing is more expensive than staffing IT tasks with internal team members

Working with a proven offshore outsourcing partner ensures an ideal mix of affordable services and the skills, processes and delivery models required by global clients. Choosing an appropriate offshore partner working in a dependable offshore location allows the client to comply with budgetary requirements and, at the same time, staff the project with experienced resources.

4.Offshore vendor teams are never as dedicated or responsive as internal team members

Working with a proven offshore outsourcing partner ensures an ideal mix of affordable services and the skills, processes and delivery models required by global clients. Choosing an appropriate offshore partner working in a dependable offshore location allows the client to comply with budgetary requirements and, at the same time, staff the project with experienced resources.

Your outsource partner will also focus on ‘soft’ interactive skills, leadership skills and the potential of its team members to grow and adapt. Offshore team members will work as an extension of your team with the same enthusiasm and dedication of your internal technology and business team members.

5. Offshore outsourcing has a negative impact on my job, my company and my country

Organizations often struggle to justify outsourcing projects. While the affordability and flexibility of these services may be tempting, the organization often believes that employing offshore services may result in job loss and send important investment dollars offshore.

At its inception the outsourcing concept seemed to warrant caution. With the passage of time and the advent of global business relationships, outsourcing has become a successful strategy for many companies. Employees of your organization can be more focused on critical tasks and core competencies. By focusing on these core competencies, your employees can learn the business more quickly and move up in the organization to add more value.

Outsource partners can add to the competitive advantage of your company and leverage critical financial investments and provide better ROI, allowing you to pay for other important projects without cost overruns. As local governments adjust trade and service laws and tax structures, your organization can more easily implement a global business structure that will provide flexible, affordable services without a negative impact on the local job market or on the economy. Long-term studies on the outsourcing phenomenon illustrate the proven results and the benefit to local and global economies.

As you consider your technology project or support needs, you should seriously consider the offshore outsourcing solution. In our discussion of the five common myths of outsourcing, you may have noticed our focus on reputable, dependable offshore service providers. Outsourcing projects to an offshore provider can be a very rewarding experience for your organization. However, as with any other project your organization may consider, we encourage you to plan and execute your project using the best, most experienced resources available. In this way, you will ensure a successful project and a positive outcome.

“Outsourcing” is no more a new term in today’s global marketplace. It has become one of the key factors in formulating the overall corporate strategy in the emerging and highly competitive market scenario. The reason as why more and more companies are getting attracted to this concept is because it offers less capital expenditure, improved efficiency, saves on recruiting, training and operating costs and gives access to specialized skills. India being a land of highly skilled professionals is thus becoming a hub of outsourcing.

General Outsourcing Trend

Outsourcing is an arrangement in which one company provides services, sometimes from overseas or sometimes within the same country, to another company that could also be or is usually provided in-house. It is a straightforward concept based on the principles of comparative advantage and division of labour. Thus, the decision for a business to outsource is often made in the interest of lowering firm costs or to make more efficient use of labour, capital, technology and resources. Off-shoring, on the other hand is process where work is sent across the borders of a country which can be even within the same organisation itself.

But outsourcing offshore is now a more popular corporate strategy, which is used, to a large extent, by enterprises in developed countries to increase profitability, by investing overseas in relatively ‘low-wage’ developing countries such as Brazil, Russia, India, China (commonly termed as BRIC) to name a few. Personnel in creating offshore outsourcing alliances stress the savings as being the prime driver, which lead to lower costs while maintaining high quality. This is due to a combination of factors, such as high level of education and skills appropriate to the tasks outsourced.

Service organizations like Intellectual Property practitioners, lawyers, physicians, surgeons, dentists, clinical laboratories, hospitals are relying on developing countries to manage non-core processes for them. The motive of doing so is to focus more on their core competencies. Today India has become the hub of outsourcing and is capable to providing varied types of services to the developed countries, few of them being:

• Call Center Services
• Legal Services (LPO)
• Research & Analysis Services (KPO)
• Healthcare Services
• Transcription Services
• Banking & Financial Services
• Software & IT Services
• Data & Document Management Services

Legal Process Outsourcing

Legal services or precisely the Legal Process Outsourcing (LPO) has picked up high momentum in the recent years. Legal Process Outsourcing is one of the value added Business Process Outsourcing (BPO) services which involves legal work that companies outsource to more economical destinations.  It includes various processes and services which requires varied level of legal acumen and knowledge to perform a particular type of task.

LEGAL PROCESS OUTSOURCING

• IPR Portfolio Management
• Patent Application Drafting
• Legal Research
• Document Review
• Contract Management
• Litigation
• Support
• Paralegal Services
• Immigration  Data Analysis
• Legal Memo Drafting

IP Regime & IP Outsourcing

In law, intellectual property (IP) is an umbrella term for various legal entitlements which attach to certain types of information, ideas, or other intangibles in their expressed form. The holder of this legal entitlement is generally entitled to exercise various exclusive rights in relation to the subject matter of the IP.  Intellectual property laws are designed to protect different forms of intangible subject matter, although in some cases there is a degree of overlap.

The existing frame work of intellectual property laws recognized internationally are those identified by TRIPS (Trade Related Aspects of Intellectual Property Rights) and governed by WTO (World Trade Organization). They are:

• Patents
• Trademarks
• Copyrights
• Industrial Designs
• Geographical Indications
• Trade Solutions
• Layout Designs of integrated circuits

IP outsourcing is one of the most talked about services when it comes to legal outsourcing. IP as we understand includes patent, copyrights, trademarks, industrial designs, trade secrets, geographical indications and Layout designs, but when we talk about IP outsourcing it is majorly Patent work which is being outsourced currently. Patents are the most valuable informational source of technical and competitive information. During the last few years these have gained a lot more attention. Due to increase in the globalization and competition, it is very important for the companies to protect their innovations and also make their R&D activities more efficient, by means of Patents.

As we know, obtaining patents has become part of business strategy now but at the same time the cost of obtaining patents is high. Reduction of patent costs therefore has becomes a high priority for many organizations. Outsourcing of patent work is hence considered as a means of reducing that cost. India is well recognized as a knowledge hub, due to its rich talent pool. A lot of IP services providers have emerged in India during the last few years and have become the giants in providing specialized IP services. Lots of Indian law professional and law firms are also now trying to enter into the market to provide the highest quality analysis and research services.

Most of these firms are located in the metropolitans of India like Bombay, Delhi, Hyderabad and Bangalore cities, with well developed infrastructures, internet access and US or UK contacts. Almost all firms are providing the following types of Patent services:

• Prior –Art Search
• Application Filing, Drafting & Prosecution
• Landscaping
• Invalidation Study
• Freedom to Operate  Opinion
• Infringement Analysis
• Novelty & Inventiveness Assessment
• Patent Illustrations & Drawings
• Competitive Intelligence
• Commercialization & Valuation
• Docketing & Maintenance

Trademark comes the second in the list when we discuss IP outsourcing. But as compared to Patents, trademark still is in a blossoming stage and there are very few service providers who have gained expertise in this domain. Few of the Trademark related services catered by the Indian service providers are:

• TM Search
• TM Registration
• Preparation Of Cease & Desist
• Filing & Docketing Services

Issues related to IP outsourcing & their solutions

Associated with outsourcing are many issues which can be alarming if not considered properly before outsourcing the IP work.

1. Export Control Regulations

Mostly all the developed countries who are indulging into outsourcing offshore have well developed export laws in place. The export law generally pertains to “technology transfer” across the border of the country. Taking an example of U.S. for this scenario, we can talk about two distinct bodies which functions for controlling export law. Firstly, Commerce Department and secondly the Patent office (United States Patent & Trademark Office – USPTO) itself. The Commerce Department has set of rules known as Export Administration Regulation (EAR) which regulates the “export of technology” across the border of U.S., similarly USPTO restricts “export of patent application” which generally is sent to off-shoring countries for drafting purpose.

Solution: Almost every U.S. organisation have found a solution to this problem of outsource off-shoring by getting export waivers from the Commerce Department, for the technologies which they want to off-shore. This has helped them in getting away with the regulation of EAR. Similarly other countries can follow the steps of U.S. export control bodies by providing a solution to the organisations interested in off-shoring technology or patent work across the border.

2. Confidentiality Concerns

Maintaining confidentiality is one of the major concerns of the foreign organisations when sending work to someone who is not a citizen of that country or who is not physically present in that country. Keeping track of documents sent miles away from the country becomes the highest priority as losing trust of the client is directly associated with losing confidentiality.

Solution:  Indian law is well established and in practice since decades now. As per the laws it becomes duty of the employee to make sure that each and every employee of the organization has signed agreements or contracts which abide them to follow and maintain confidentiality of the clients’ details. Violations of the legal document which forbid them from sharing the details with any third party can thus lead to punishable offence under Indian Laws.

3. Maintaining Work Quality

When it comes to patent work, quality plays a vital role. Unlike other services, patent services cannot be compromised on quality. A single words presence or absence in claims or specification of the patent application may lead to heavy aftermaths. Hence U.S. or U.K. attorneys are really concerned of a real good quality of work as per their own standards. They are concerned whether service providers in India can deliver as good as what their clients expect.

Solution: The best way to combat this concern of U.S. or U.K. attorneys is to provide quality training to the associates working on behalf of the service providers in India. An extensive training of about one or two years (depending upon the type of work) by U.S. or U.K. attorneys (who are in practice) will lead to a quality work. Though it again adds to the cost of off-shoring, but if the training is imparted efficiently, then it becomes a onetime investment and can be an ever lasting solution to his concern.

4. Cost Savings

The last and the foremost which any off-shoring party can ask is will there be any real cost savings from off-shoring.

Solution: An associate in India for doing a patent related work (specifically drafting of a patent application) will not cost more than $10-15/hr. On the contrary a U.S. attorney for doing the same work will charge ten times of that. Considering training to be a onetime investment, the associate under the supervision of a senior associate can thus produce the same quality of work. Thus, the foreign law firm can expect a 10% saving by off-shoring the work. Apart from cost saving the off- shoring of work like patent docketing, proof reading etc. can reduce the work load of the in-house attorneys. (Outsourcing and Offshoring, A Summary of the Issues”, National Law Journal, September 12, 2005)

India as a solution

India has been the most preferred choice among global organization when it comes to outsourcing. In the U.S alone, more than 80% have ranked India as their first choice, when outsourcing software and IT services. The U.S has also recognized India as an outsourcing superpower. The number of organizations outsourcing services to India has only been increasing over the years. Thus the reasons to outsource to India are:

• High Quality & Wide range of Services
• High End Technology & Best of Breed Infrastructure
• Sound Knowledge of US & UK Law
• Cost Effective Services with Maximum Revenue
• Quick Turnaround Time
• Stable Indian Government
• Skilled, Talented & experienced professionals

Future Scope

Revenues from the Indian patent services off-shoring industry were nearly $46 million for the calendar year 2007 and are expected to reach $206 m by end 2012. Large corporations are in favour of off-shoring patent related (and other legal) work to India as they are the ultimate beneficiaries of the cost savings. The current addressable value of the patent services off-shoring market is estimated at $2.2 billion. Typically catering to the international markets, patent services outsourcing to India is still in its infancy with a history of only about 3 to 4 years behind it. There are about 50 vendors in the industry with an estimated 1,550 professionals employed as of end 2007. While a few vendors have been in this business longer, this industry has gained momentum only in the last few years. The Indian patent off-shoring industry will grow 35% per annum over the next four years. As for the number of employees it is estimated that about 6959 people will be employed by the end of 2012 (“India is new hub for patent outsourcing“, Times of India, 8th July 2008, p: 19).

Conclusion

By virtue of WIPO & TRIPS the IPR regime has attained globalization which has further enhanced the scope of IP Outsourcing. Legal outsourcing in India is still in a beginner stage when compared to the heights which BPOs have attained in India, but the foundation has already been laid and within no time India will shine as a master in LPO industry as well.  While there are pitfalls, IP off-shoring has huge potential cost savings. If handled correctly, this can create history in the field of outsourcing. Indian companies that provide IP outsourced services thus can place themselves at an additional competitive advantage. As the Indian Patent Laws are getting more stringent and effective the Indian vendors are able to backup the U.S. and U.K. attorneys in a more competent manner. Thus, IP Outsourcing is a route to reduce cost and increase effectiveness by outsourcing work to India.