Source: computerworld.com

Politec to set up three development centers as part of bid to grow business outside of Brazil

Some offshore outsourcers that want more IT work from companies in the U.S. are expanding their operations here, with the latest example being Brazilian vendor Politec SA.

Brasilia-based Politec, which has about 7,000 employees and $300 million in annual revenue, currently provides outsourcing services primarily to companies in Latin America. The vendor has just 50 employees in the U.S. now. But by 2010, it intends to have as many as 800 people working in development centers in Atlanta, New York and the Miami area, said Dalton Luz, Politec’s vice president of corporate affairs.

In April, Politec received an $80 million investment commitment from Mitsubishi Corp., and Luz said the financial infusion is increasing its ability to expand internationally. He added that most of the people who staff the planned U.S. offices will be hired locally.

Brazil’s total outsourcing market is about $8 billion annually, according to the Everest Group, a Dallas-based outsourcing consulting firm. But the offshore component — meaning services delivered to companies based outside of Brazil — amounts to only about $700 million, Everest said. By comparison, it added, India’s offshore market reached about $40 billion last year. Everest is forecasting that the offshore business in Brazil will increase to $1.25 billion within two years.

Although Portuguese is Brazil’s dominant language, English is also widely spoken there, Luz said. Other factors that may make the country an attractive offshoring location for U.S. companies include the relatively similar time zones and the low cost of IT labor in Brazil. One area that Politec focuses on is SAP development work, and Luz said the average annual wages for developers with SAP skills range from $6,000 to $24,000.

Outsourcing vendors based in India are also moving to expand their presence in the U.S. In March, for instance, Tata Consultancy Services Ltd. said it was opening a development center in Milford, Ohio, that eventually would employ about 1,000 people. And last July, rival Wipro Ltd. announced plans to set up four development facilities in the U.S., starting with one in Atlanta that likewise could have 1,000 employees over time.

Source: asianjournal.com

Its merger with EDS will enable HP to cover a lot more markets in the Asia Pacific region and possibly even Philippine customers, according to the head of HP’s outsourcing delivery center here.

HP’s local outsourcing workforce now has more than 1,500 workers servicing around 80 customers, said Emmanuel Mendoza, director of HP’s Philippine global delivery center in the country.

HP’s outsourcing business in the country has grown in terms of client base since it started in 2003 after the American IT firm secured a 10-year global services deal with manufacturing giant Procter and Gamble.

Though HP has yet to divulge more details about its post-merger strategy, Mendoza believes it will increase HP’s “footprint” in the global market.

In the Philippines, though, he expects little integration between HP and EDS, which operates on a much smaller scale locally and services only one client, Chevron.

“Typically, in multinational deals, the service provider creates local presence to service the client from that geographic area. EDS has more extensive operations from out of India,” Mendoza said in an interview with INQUIRER.net.

In contrast, the Philippines form part of HP’s global delivery network along with operations in India and China.

Source: computingsa.co.za

Traditional models of outsourcing are not conducive to promoting green initiatives, energy or operational efficiency, according to Tim James, director of green IT evangelist, sustainableIT.

James has determined that outsourcing relationships are largely not designed for efficiency, and this does not assist in driving green IT within the outsourced customers concerned. “Whilst on the face of it, outsourcing initially reduces costs and improves services through a more efficient outsourcing vendor, over a period of time, the service becomes more expensive in many instances,” James states.

James points to a number of instances whereby the nature of the contract drives a relationship of inefficiency, with scant regard for the environmental impact. Outsourcing agreements are typically structured and charged on the basis of the concept of baselines, for example supporting 100 servers will cost you Rx, he says.

The dichotomy arises when you introduce new sustainable technologies such as virtualisation. Let’s assume now that through virtualisation you can consolidate down to 10 servers, a massive saving in energy and certainly a saving in terms of resource cost and real estate. In reality, this is not in the outsourcer’s interest, as it reduces their revenue stream and the baseline reduces, he elaborates.

Another example he points to is energy efficiency. The energy used to run services in the data centre is usually covered in an outsourcing agreement, and the utility bills are serviced by the outsourcer, but what about the end-user environment?

“The end-user environment, ie workstations and monitors, is the big hitter in terms of energy reduction, using as much as 39% of total energy in the IT environment, according to Gartner,” James says. This is almost always paid by the end-user or customer, despite the fact that the outsourcer runs the service. There is no pain for the outsourcer to reduce energy in this environment and hence the customer continues to pay for inefficiency.

There are a number of other examples, all driven by baselines. Another is print output, the more you use, the more you pay for and the list goes on. It is in the outsourcer’s interest to get you to use more as this increases revenue. Outsourcers do not want you to become efficient as it will drive down their revenue. This is the fundamental problem with outsourcing and green initiatives.

There is light at the end of the tunnel, however. James is of the opinion that customers embarking upon renegotiating outsourcing agreements or signing new relationships need to take cognisance of green IT and build efficiency into the contractual vehicle.

“Writing clauses into the contract that promote and reward efficiency is probably the easiest way to overcome this dichotomy. Doing more with less, reduce, re-use and recycle as well as energy efficiency clauses should all be considered when signing a new agreement. New technologies may also need to be deployed that allow the measurement of baselines geared to drive efficiency, which do exist,” he concludes.

Source: ukpress.google.com

The outsourcing of computer contracts to other countries has cut the wages of workers in the UK, according to a new report.

The wages of new information technology (IT) support staff have remained stuck at £18,000 over the past five years, while longer serving employees have only seen their pay increase by 0.8% a year, said the Association of Technology Staffing Companies (ATSC).

But salaries for managers have increased by 20% over the last five years to an average of £45,000, the research found.

Low skilled jobs leaving the UK acted as a disincentive for people in the UK to study IT, which could worsen skill shortages in the industry, the report warned.

Ann Swain, chief executive of ATSC, said: “The outsourcing of entry-level IT jobs has meant fewer graduate-level jobs are available in the UK. It is like removing the bottom rung from the career ladder.”

“The shortage now is of candidates with a few years’ experience looking for second and third jobs. But how do you get that experience if entry-level jobs are being sent offshore?

“Concerns over quality of service and data security in outsourced operations are constantly being voiced. However, these concerns haven’t yet prompted organisations to bring their IT support roles back onshore en masse.”

The report predicted that a turning point would arise when Indian salaries, currently increasing at more than 14%, came close to those of UK professionals.

“As the gap converges, it will make less and less economic sense to outsource support functions to India,” added Ms Swain.

Source: smartcompany.com.au

Online advertising firms are increasingly looking to workers in low-cost regions such as Eastern Europe to do the leg work to in creating web advertising, WSJ.com reports.

Traditionally the domain of highly techie creative sorts at the top of shiny towers, ad agencies such as avVenta Worldwide are now delivering web ads to clients at rates up to 50% less than competitors by having them produced by workers in Kiev, Costa Rica and Ukraine.

While the creative work is still usually done by local ad agencies, avVenta does the back room production work on the web ads – kind of like getting Italian designed shoes made in China.

Workers countries such as Ukraine present a range of advantages to companies like avVenta – not only are they well trained and cheap, but they are also relatively plentiful, a big advantage given the ICT skills shortage in developed nations.

As with all outsourcing, however, the cost savings are balanced to some extent by some of the logistic challenges associated with outsourcing.

“They are not down the hall, and they are not down the street. It hinders communication,” Gunnar Wilmot, senior vice president of market development at advertising company McCann Worldgroup told WSJ.com.