Scotland attracts Indian outsourcers

Scotland aims to get Indian outsourcers to set up call centers and business process outsourcing BPO centers in the country, by offering staff with multilingual capabilities. A number of Indian outsourcers are setting up centers in Europe to offer near-shore services to European customers in their local languages. Indias second largest outsourcer, Infosys Technologies, for example, has a service delivery center in Brno in the Czech Republic.

Rather than set up a number of small centers in various European countries to support different European languages, Indian outsourcing companies can set up a single center in Scotland, where staff can offer services in up to 25 languages, said Shivendra Singh, country manager for India of Scottish Development International, a Scottish government-funded agency set up to attract investment to Scotland.

Scotlands key advantage is that there are a large number of foreign students who come to study in universities in Scotland, and stay on to work there, said Ronnie Melrose, head of IBMs hardware services delivery in Europe. This gives us an opportunity to hire people for their language skills, he said.

The government in Scotland has also helped as it gives foreign students graduating from universities in Scotland an automatic work permit, Melrose said.

IBM, which started manufacturing equipment in Scotland in the 1950s, has been running call center and BPO operations in the country since 1995, both to support its own operations and those of its customers that have outsourcing contracts with the company.

IBMs five centers in Scotland, with a staff of about 1,100, offer services in 23 languages, including French, Italian, German, Spanish, Dutch, Turkish, Hebrew, and the Nordic languages.

One benefit for us is that there is as yet very little competitive attrition in Scotland, Melrose said. There is however attrition of a different kind: Students that stay in Scotland for their first job often move back to their home countries after about two years, Melrose said.

Scotland currently has over 70,000 call center and BPO staff in Scotland out of a population of 5 million, said Phil Taylor, professor of work and empowerment studies in the Department of Human Resource Management at the University of Strathclyde in Glasgow. About 10 percent of these staff speak at least one more language besides English, he said. Foreign students coming to Scotland, as well as migrants, have helped position Scotland as a location for multilingual services, he added.

Scotland also has a large pool of staff specialized in the financial services area, because of the large number of banks and other financial services organizations in Scotland, Taylor said. A large number of banks in London have also set up call center and BPO operations in Scotland, to take advantage of this expertise, and also because costs there are lower than in London, Taylor added.

Four Indian outsourcers have so far shown interest in setting up centers in Scotland, Singh said. Some Indian outsourcers have already set up or acquired delivery centers elsewhere in the U.K., typically as part of outsourcing contracts with clients in the U.K.

HCL Technologies, of Noida near Delhi, acquired the Apollo Contact Center in Belfast, which was operated by BT Group, to offer contact center services from the center to BT and other clients.

An overview of Chinese BPO

China has the potential to develop a large IT BPO Business Process Outsourcing industry, said a report released by Indian famous IT chamber of commerce NASSCOM here on Tuesday. With substantial domestic market potential, a sizable educated workforce and strong government emphasis on developing the sector, China will become a major player in IT BPO industry, said the report.

The NASSCOM report Tracing Chinas IT Software Services Industry Evolution, a white paper series of which this is the first, shows that the body considered China as an alternate market, competitive destination and potential partners for India.

Speaking at a press conference, NASSCOM President Kiran Karnik said, China has come a long way in establishing itself as a destination for IT sourcing, with all stakeholders including government, academia and industry working towards improving the regulatory environment, offering incentives to IT companies and increasing the talent pool.

IT software and services is a fledging sector of the Chinese economy, estimated at 12.2 billion U.S. dollars in terms of revenue in 2006. And the domestic market accounts for over 86 percent of the total IT software and service revenues, said the report.

However, the total value of IT software and services exported from China was estimated at 1.8 billion U.S. dollars in 2006, a growth of 41 percent over the previous year. And Japan and South Korea are the largest export markets for Chinese IT software and services, the report added.

Presently the Chinese IT market is hugely skewed towards IT hardware which is 90 percent of the total market size. The IT software and services sector accounts for just about 0.5 percent of Chinas gross domestic product in 2006, said NASSCOM Vice President Ameet Nivsarkar.

Pakistan IT Exports Revenue crosses USD 116 Million

Pakistan IT industrys export revenue as reported by State Bank of Pakistan SBP has hit US US dollar 116 million mark in the financial year 2006..07, crossing the target of US US dollar 108 million set for the year. This indicates a quantum increase of 61.18 percent in IT exports when compared to the previous years export revenue figure of US US dollar 72 million

SBP, in its statement for the year 2006..07, has estimated the countrys IT services export revenue at US US dollar 116 million, which indicates a consistent annual growth, a spokesman of Pakistan Software Export Board PSEB said. BPO and call centers have made a significant contribution in the increased exports due to adequate telecom facilities and trained manpower available in the country. Considering that the 15 percent GST imposed on computer hardware in the federal budget 2006..07 has not yet been removed, this rise in IT exports is remarkable.

The current IT exports annual growth rate is still understated as only 5 percent of the countrys registered companies file their exports data with SBP. PSEB is making vigorous efforts to ensure that the export figures of all IT companies are reported to SBP.

The State Bank of Pakistan utilized the BPM 5 Reporting System to report the IT exports revenue, which also restricted the export revenue figure to US US dollar 116 million in 2006..07. The Reserve Bank of India, on the other hand, follows the BPM 6 Reporting System, which raises its exports to billions of US dollars. BPM6 includes sales to multinationals, earnings of overseas officials & salaries of non..immigrant overseas workers to export revenue. Utilizing the BPM 6 Reporting System, Pakistan IT Industrys exports are estimated at US US dollar 1.4 billion while the total industry size is estimated at US US dollar 2.8 billion.

With over 1042 IT companies registered with PSEB, the countrys IT exports grew by an average of 50 percent in each of the last four years. PSEB has been facilitating the countrys IT industry through its programs in Human Capital, Office Space, Marketing, Company Capability Development, Telecom Bandwidth, Industry Finance, Public Policy, Strategy and Research, and Facilitation. The Government of Pakistan has also introduced a package of incentives for the IT sector including tax exemptions until 2016, 100 percent foreign equity and earnings repatriation and low..rent facilities for IT companies.

US Technology Expands Mortgage BPO Contract with a Global Financial Services Provider

US Technology, a leading provider of IT services and Business Process Outsourcing BPO solutions for Global 2000 enterprises, announced today that a global leader in credit and information management has added additional services to the three-year agreement they signed earlier this year with US Technologys mortgage BPO division. The client, a major provider of settlement services to the mortgage lending industry, selected US Technology to support their appraisal valuation business based on the overall US Technology mortgage banking and financial services background and the extensive experience of its on site and offshore teams.

The client had built their appraisal business from a regional to a national level and was ready to increase their market share. Yet appraisal business growth, along with competitive pressures, had challenged their operations and profit margins. They first needed to create as many efficiencies as possible in their operations in order to offer more competitive pricing and raise their profit margins. They also needed to hire more staff to support their long-term growth and market share goals but did not want to have to sacrifice staff as volumes and pricing fluctuated in the marketplace. By outsourcing newly created operational positions to handle their growing market share, the client would be able to maintain current service levels and would not have to layoff staff.

The client had investigated several vendors to provide outsourcing services for these new positions. They wanted to find a vendor that had the experience and understood the importance of the work they needed to get done, said Ram Dhindhwal, president, mortgage BPO operations, US Technology. US Technology recognized the situation they were in and the criticality of the work involved. Key management told us that they had peace of mind knowing the US Technology team could handle the job.

In less than six months US Technology had earned early accolades and the client’s trust through the quality of the US Technology team, methodologies and performance. The client added the following services to their agreement:

Appraisal valuation

Vendor management

Post closing work

The original agreement provides a team from US Technology to process orders, work with contract appraisers and review the final appraisal to ensure that the information is complete. US Technology has set up two shifts to handle the volume of work.

The US Technology team went live with the clients mortgage BPO services on March 4, 2007. The client was able to be more competitive in obtaining new customers with an expanded capacity and the lower operational costs that US Technology provided. With their extended back office team in place, the client was able to acquire additional customers including the entire appraisal business of a Top 10 national bank. They were able to handle this new volume of business in part due to the ability of US Technology to quickly ramp up the staff to handle both the volume and accuracy of the banks needs, which was a major priority.

This client will have a 35 to 45 percent cost savings along with the ability to ramp up and pare down staff quickly depending on current volume levels, continued Ram Dhindhwal. Eventually, the pricing could be restructured from a per person cost to a transactional price. This will lead to further cost savings, more cost predictability and the ability to adjust costs immediately to volume levels which is a mortgage servicing industry first.

The US Technology Mortgage BPO practice, which ranges from loan origination processing or any portion thereof to loan servicing, helps mortgage lenders and mortgage services providers significantly reduce their back office processing costs while improving processing efficiencies. The BPO services enable lenders and service providers to retain complete control of their operations while providing them with the ability to scale up or down during market fluctuations

Firms setting own offshoring centres

The global outsourcing market has slowed down as more and more companies are choosing to set up offshoring operations all by themselves. The increase in the number of organisations setting up their own offshore operations in countries such as India is responsible for the slowdown in the global outsourcing market.

The value of new outsourcing contracts globally has risen by just six per cent for the first half of 2007 compared to the same period last year, according to the latest quarterly market update from outsourcing advisers TPI.
The slowdown is particularly bad in the US where the value of new contracts is down by almost 50 per cent this year, with only €6.3bn of contracts for the first six months of 2007 - the flattest six months of outsourcing activity in the US since 1994.

Duncan Aitchison, MD at TPI, said in the quarterly update that part of the reason is a rise in the number of organisations doing offshoring.

He said in the quarterly update: We believe the slowing of growth in the global outsourcing market is driven by the fact that offshoring to a wholly owned captive operation, or tactical out-tasking of small, discrete processes, is currently considered an alternative to outsourcing by some client organisations looking for short-term cost savings.
Offshore IT outsourcing is also still on the increase and the TPI figures show 59 per cent of deals in the first half of the year had at least partial offshore delivery.

But the overall global market slowdown is not reflected in Europe where the total value of new outsourcing contracts in excess of €40m for the first six months of 2007 is up 78 per cent on the same period last year at €12.3bn.
The increase is on the back of growth in the continental European market in Belgium, Denmark, Finland, Italy, Norway and Switzerland, and Europe now accounts for more than half (54 per cent) of new outsourcing contracts signed globally.

Much of this demand is coming from the banking sector. Globally financial services is still by far the largest private sector market for outsourcing accounting for more than a third (35 per cent) of total contract value this year.
The increase in Europe has also been driven by five mega deals totaling €5.3bn and four of these deals have been for network rather than pure IT outsourcing.

This demand for network outsourcing has pushed some of the telecoms providers such as BT up the overall global outsourcing rankings. The big six outsourcers - Accenture, ACS, CSC, EDS, HP and IBM - accounted for just 10 per cent of the €7.8bn global spend on mega deals in the first half of this year.