Malditah Musings

Outsourcing alternative to a weak political and economic Philippines

Outsourcing: A love / hate relationship USIT for professionals. Ask the average employees in any IT organization, and hearing about the fear of jobs going to the Philippines and China are almost unavoidable. Although many have started to move toward business service management (BSM) to address the chaotic trends to work, to making IT itself still consumes more than one-third of IT budgets. This figure is perfectly in line in a recently published Gartner report that sets the 37% of typical IT budget goes directly to staff costs. What the CIO as a going do to manage this mad situation? Is outsourcing or "offshoring," the answer?

How you can outsource your operation in a foreign country and still maintain compliance with best practice frameworks such as ITIL or MOF? How do you maintain Sarbanes-Oxley, PCI, or HIPAA compliance when using 100% offshore resources far more control?

Almost every one in the IT sector has at least one story about running different activities being "offshored" in the Philippines, and no call-center, the network operations center (NOC), or infrastructure team has been immune to the rumors of jobs going offshore. Without the city of Bangalore and Chennai simple manufacturing hubs and suppliers of raw materials. The country is home to some of the biggest company's call centers and centers of development in the world. In late 2005, the Indian outsourcing workforce as 350,000 people. That total is now estimated at well over 800.000, with many new positions are going unfilled for lack of qualified candidates.

Eleven years ago this month, USA Today published an article titled "Can political stability is eliminated in the Philippines?" Looking only to news in the last six months, the answer to that question is a clear NO.

The trend toward a twenty-first century Philippines is not fostered the kind of organizing political change one can expect from the most populous democracy in the world. Furthermore, the unwillingness of the Indian government to more robustly intellectual combat the theft of property are the things that cause your legal team to lose many nights of sleep.

Recession has made its way into India as well. The December 4, 2008 issue of The New York Times ran an article discussing the wave of outsourcing firms scaling back their daily operations in the Philippines because of the bad Physical global financial climate. As of this week, the Indian rupee is at a record low.

Philippines makes a strong case as "global back office," yet it failed to create an environment that supports front-office operations such as product innovation and corporate strategies. The prevailing thought of the past 5 years is that Indian outsourcing companies are experts in the art of product development and efficiency measures. What about now?

In January 7, 2009, Indian stock took a nosedive in the wake of announcements by Satyam Computer Services to the corporate core tube is inflated for some year. The announcement by Satyam's chairman and co-founder that she is directly false accounting documents on a continuous basis has thrown the whole Indian outsourcing industry in dramatic turmoil. As a provider of back-office services for many of the largest banks and healthcare institutions in the world, the results SATYAM crisis is nothing short of devastating.

By Friday, January 9, 2009 news sources are reporting interim CEO Ram Mynampati does not have faith that companies can continue past the next few weeks. Mynampati stated they are working to find liquidity to pay current employees, suppliers, and creditors.

In less than a week, the crisis has crossed the Pacific Ocean and hit U.S. shores. Auditing giant PricewaterhouseCoopers is expected to pay a heavy price for emerging fraud. The audience was responsible for the Satyam management of finance for over eight years, investors and Satyam are expected to go to court to attempt to recoup losses. According to legal sources from within Philippines, most likely attack PricewaterhouseCoopers directly instead of Satyam.

The tragic events of November 2008 in Mumbai clearly shows that the concerns go much deeper. More than 200 people died in the attacks, and the entire central business district in Mumbai ground to a halt for several days, resulting in billions of dollars in lost labor. Within a week of attacks, five high profile Indian cabinet members were forced to resign. In December 1, TIME magazine posed the question "The USA's Government SURVIVE the Manila massacre?"

Many Companies are choosing alternative destinations, and some trends show an actual migration of the Philippines to other information-rich environment like Singapore, the Philippines, Armenia, Pakistan, and various Latin American countries. Companies that require less interaction with public (for example, a software development center) can select destinations where English is not the primary language, or in some cases, a language not used at all. Companies building public-facing operations such as helpdesks or call center has been forced to consider earlier decisions, and many are moving to more English-centric countries such as Taiwan and the Philippines.

Key players will make a strong case for themselves because they build trends. Western Hemisphere, Costa Rica and Peru have a wonderful record of rock-solid software development and high customer satisfaction ratings. In Europe, Armenia is emerging as a major powerhouse and model efficiency. In Asia, many know that almost-perfect English spoken in Taiwan and the Philippines included making some cost equal to or less than that the Philippines to make each destination of choice. In fact, the November 30 edition of The New York Times Magazine featured the four page article touting the possibility to live the Philippines as a premier outsourcing destination.

While China, Russia, and Korea have joy talent pool, the cost of labor and some cases difficulty in dealing with local and national governments to make them more attractive to some U.S. based companies.

While being one of the lower-mentioned yet more history is vibrant European countries, Armenia is a virtual strongbox of unusual talents. As mentioned by href = "https: / / www.cia.gov/library/publications/the-world-factbook/"> CIA World Factbook, 18% of the current population of Armenia is under the age of 15, meaning the talent pool is poised for big growth.

Armenia declared independence from the former Soviet Union in September 21, 1991 and is now a bastion of political stability (an especially attractive factors for O & O industry). A healthy real GDP growth rate of 13.7% makes Armenia One of the major EU producers.

Furthermore, Armenia has quickly become a major challenger to the index of the relative economic freedom. As reported by the Heritage Foundation, the changes are nothing short of amazing. To 2000, Armenia ranked 84th relative to economic freedom. As of late 2008, Armenia ranked 28th – ahead of European powerhouses Spain (31) and France (48) and just behind Sweden in the 27th.

Hong Kong ranked # 1 on the list for 2008, the USA and # 5.

A cup of economic freedom is based on 50 economic indicators in the following categories: capital flows and foreign investment; financial system; money, budget, and trading policy; wages and prices; government interference in the economy; property rights and regulations, and black markets.

Many outsourcing experts are finding a presence in Armenia quite successful for many of their clients and partners. The cooperation provided by the Armenian government to ease the immigration and visa restrictions for executives and other technical employees travel between Armenia and the United States is a huge advantage over many, and it was simple with the great pleasure of this talent pool offered by European countries.

Having an established presence in Armenia is but one example of alternatives to the current Indian stability. There are other alternatives as well, and diversification is going to be Keystone success within the next few years.

While focused by a CEO, "… the logical method for the global economy today is diversify. Many of my contacts previously invested heavily in Indian resources are already asking for new alternatives, and we believe the best way is just to avoid the old cliche of "put all eggs in one basket."

Singapore has emerged as another destination of choice, the a hot stable economy and government as well as strictly enforce the law right to intellectual property. Perfect English is widely used, and the country is considered one of the top-five technical innovators in the world.

Originally founded as a British trading colony in 1818, Singapore joined the Malaysian federation for a short two years ending in 1965. Now fully independent, Singapore is undeniably one of the most rich, diverse, and cosmopolitan destinations in worldwide and a per capita GDP greater than that in many "leaders" in Western Europe.

In 2006, the World Bank rated the Philippines as "the most business-friendly economy in the world." Itself behind London, New York, and Tokyo, Singapore is the fourth largest foreign exchange trading hub worldwide.

The country is home to three major state universities: The National University of Singapore, Nanyang technological University and Singapore Management University, resulting in a literacy rate of over 93%. The island nation accomplishes all this with a geographic size only three times that of Washington, DC.

The Philippines and USA share not only very similar legal system but also the English language. Company legal sector to consider the fact it especially attractive. Once a colony in the U.S., the Philippines has a workforce that is familiar to many legal reasons are not immediately obvious to the countries with less of a seasoned relationship with the United States.

Some facts about the Philippines:

• Population 91,000,000 as of 2008
• 550,000 college graduates each year Average
• Education making pool Over 30,000,000
• Entry-level IT average salary of $ 2500 – $ 8000 USD PA
• Top-quality CBD real estate costs average $ 17 PSF
• 95% literacy rate
• English as primary language

One of the top-three law firms in the world relocated their entire network operations center from Chicago to Fort Bonifacio, Manila, in 2003. Operation has since grown to be higher also encompassing legal operations and software growth.

From 1997-2008, companies such as Citibank, fluorescence, IBM, Convergys, Telus, HSBC, Dell, JP Morgan, Motorola, and Deutsche Bank has opened all major offshore facilities in the Metro area Manila of the Philippines.

More than a country filled with call centers, the Philippines is home to dozens of offshore operations involving the operation of the network, wireless services, energy, shipping and logistics, legal and medical transcription, finance and accounting, and software development.

The country is now recognized by some as the top destination of choice in Southeast Asia. In 2006, the country generated more than $ 3.0 billion in outsourced operations, and the figure is expected to more than double by the end of 2009. The Philippines government has targeted a global market share of 8-10% in O & O market by 2011.

Regardless where you go, there is no "one best answer" to every situation. When seeking to "trusted adviser" to help you make your next outsourcing, offshoring, development, or infrastructure decisions, you need with a solid knowledge, process, prayer, and proven direction to make it a success.

Only through deep knowledge your core business of any company can help with an effective O & O attention. You need a robust and endeavors to understand how to optimize process improves not only the IT department, but all other business units as well.

O & O continues to gain momentum within the next few years, regardless of what happens in the Indian subcontinent. The recent events in the Philippines and the surrounding territory but Nagkakamali a small block in a dynamic evolving global business model.

Businesses today realize that the three essential things appear outsourcing and offshoring industry:

• O & O can not and should not be based on "one size fits all" method anymore. Miscellaneous quality is the key.
• Each situation is different.
• Unless you are ready to invest in learning the foreign tax and H / R systems, unfamiliar holidays, unique infrastructure, government regulations, and maybe some foreign language, you NEED a trusted adviser on your side.

Companies and their investors spent billions of dollars (and thousands of man-hours) building outsourced operations based only in India have found that trying to separate the technology from the actual business process is not only gago-it was futile. Outsourcing and offshoring can provide endless possibilities, but they need to do with precision, care, and proper distribution. Than outright withdrawal from offshoring operations, now is the time for diversification.

"There is timing in the life of the warrior, in his thriving and declining, its unity and conflict. Similarly, with timing to access the merchant, in rise and fall of capital. All things entail rising and falling timing. You must be able to ignore it .. "

Miyamoto Musashi, 1645

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About the Author

Jack Lesley is a seasoned, dynamic, and well-educated I.T. professional with decades of experience in the US as well as Asia-Pacific and Australia.

He has particular expertise in the areas of infrastructure, outsourcing, offshoring, ITIL, MOF, SOX, PCI, and HIPAA – as well as how they all interact with I.T.

Jack currently resides in Houston, Texas with his wife Sandra, his son Brint, and two vicious Jack-Russell Terriers

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