Niyamath Parveez

LG Electronics are probably one of the most famous companies and brands all around the world. Being active in a number of different product types has helped the company reach an awareness level that many firms can only dream of. One of the best things about LG Electronics is that their initials can be seen as standing for Life’s Good. This has been at the heart of the firm’s advertising campaigns in recent years and is now probably in the mindset of consumers everywhere. This is why LG Electronics has managed to stand apart from so many of its peers.
However, although Life’s Good for so many people who use the plethora of products made available by the company for some of the companies employees, life is not looking so good. The economic crisis that has engulfed the world has meant that companies and firms have had to re-examine their financial situation and outlook. Unfortunately, the needs of a company and a firm may not be aligned. This means that what is good for the company may actually be bad for the employee, which is where the problems and trouble begins. What is bad for employees will eventually become a PR problem which companies need to be aware of.
LG Electronics have decided to turn to outsourcing solution for their manufacturing of all personal computers. This means that all desktops and notebooks will have their production methods outsourced away from in-house methods. Desktops have been at the forefront of computers for many years but notebooks have risen dramatically in popularity in recent times. The beauty of these products is that they allow users to have access to their files or get online wherever they are. The size and weight of the notebooks have become so manageable that everyone can take one wherever they need to go.
On Sunday 29th of November, LG Electronics announced that it would be ceasing laptop production in Kushan. This production plant was the key China PC production location for LG Electronics and this decision has caused a lot of heartache and soul-searching within the organization. This move has been in the process as a number of computer productions for the company have been outsourced. All laptop productions were given over to a number of contracted suppliers whereas desktop productions have been moved to an outsourced supplier as well. Therefore, the final decision to stop production in Kushan is not altogether surprising but it is not welcome for many people.
This move will signal the end of PC production for LG Electronics as a whole. This is not an indication that LG is turning its back on the PC market though, far from it. The company hopes that outsourcing the production will enable it to focus on its core strengths in the PC market. This means that LG Electronic will be looking to develop their design, research and development areas which will see them remain at the forefront of the industry for many years to come.

There has been a suggestion that the Indian outsourcing fad is coming to an end. With so many other nations realizing the financial and economic benefits that have came to India through outsourcing, it has been harder for India to compete effectively. Much like India was able to undercut and out-compete the larger nations with regards to labor costs, smaller developing nations have managed to do to India. This is very much in line with cyclical nature of economics and would not have come as a complete surprise to industry experts. The successful firms will find a way to keep on top or be attractive to other firms and the smaller and weaker firms will fall away.

However, the stories about the death of Indian outsourcing would appear to be greatly exaggerated. There have been enough positive news stories in recent weeks to indicate that India will remain at the forefront of outsourcing services around the world. As stated, the firms who are able to provide quality services to other companies will remain in high demand. This is due to the fact that many firms are realizing that low labor cost is not the only thing worth pursuing, there are other aspects which are desirable too.

One of the ways that India is managing to stay at the top of the outsourcing tree is because there are still firms around the world looking to move into outsourcing. For companies who are unsure of what to do or where to go, it makes sense to look for the market leader. By and large, choosing the companies widely recognized as being market experts will provide customers with a level of confidence that they are making the right decision. This is of great benefit to the new customer and a great reward for being recognized as a market leader.

Some of the companies who have moved into outsourcing recently and therefore very late in the game compared to some companies include Renault, Volkswagen and Harley Davidson. These are all huge brands which further add to their need to associate with large firms who can handle high pressurized orders. They are all interested in the engineering industries and this should ensure that this industry in India will reap the benefits for years to come. There will always be a shakedown to lower levels, which means that emerging companies will be able to find a niche but when it comes to top level companies, India remains the top choice.

In fact, this continued reliance on Indian engineering outsourcing is said to achieve a sum in the region of $55bn by the year 2020. This is just over 10 years away, so it is not so far away in the future that it cannot be imagined. The past ten years have moved rapidly and the next ten years are likely to be the same. The top outsourcing firms will be the ones who have the income to invest in new technology and this should help them stay at the very top end of the market.

With so much technology and IT functions for firms to consider, there are many ways to think about how to get the best from them and the budget available. It would be great for every firm to stay at the top end of technology and have all the greatest products but this is not possible. There are many instances where older generations and models are more than capable for doing the job they are asked to but problems can arise from using older models in certain areas. Whether there are networking or communication issues with different rooms or departments, there is a need for firms to review their IT capabilities and ensure they are managing their mix as best as possible. This makes perfect sense and should be considered as good advice by most firms but when a company like Deloitte informs companies to do this, it should be taken as great advice. And this advice should be heeded by local government authorities as well.

Deloitte made the recommendation that local councils and government bodies should look to outsource a great deal of their IT functions and capabilities such as call centers, data centers, networks and even desktops in order to get the best value for money. However, the same advice was followed on with the fact that these bodies should maintain control of their technology and strategy issues in-house. These steps should help to make the best possible cost savings to anybody as well as providing a great deal of benefits as well.

If existing bodies do not believe they have the staffs that are capable of managing the services and functions properly, they may feel it is easier to outsource. With capable training and strong communication between management and staff there is not always the requirement to go running to outsourcing but in some case, it does make sense. This is where a body really needs to weigh up the best decision based on their needs and their budget. It can be straightforward to think that a government body or local council would consider price to be the all important issue. After all, with tax payer’s money at stake, it is important to keep costs as low as possible. However, if obtaining a low cost leads to a poor quality of work being returned, the long terms costs are likely to be higher. This in turn will be in-effective and cause a greater degree of problems and issues.

By outsourcing the physical elements of IT but retaining a skilled staff in house, it should be much simpler for a body to be able to communicate what they need effectively. Having experienced IT workers on board should ensure the outsourcing firm can be talked to properly and misunderstandings should be minimized. This level should also provide a clear link between all levels of staff and outsourced, creating a more focused approach to the work. Outsourcing can be the savior for bodies’ woes but only if it is managed correctly.

One of the most innovative new products in recent years has been netbooks and notebooks, which have opened up the world of computing and the internet to so many more people. Whether these products have been bought to act as a cheap second computer, to use whilst on the move or to take advantage of the great low pricing, the huge level of demand for both of these products has taken some suppliers by surprise and looks set to continue to soar. Some firms are laying on overtime or requiring their workers to improve their productivity but some firms realize that outsourcing can provide the simple solution for all their netbook or notebook demands.

Asustek Computer are just one such firm which has had to increase their production levels to ensure they have enough products available on the market place and in stores. Gossip and speculation has been building that the firm are close to signing a contract with Quanta Computer or Compal Electronics in order to remain competitive. So far, Asustek have been quick to deny these stories but it appears that there is no smoke without fire and that a deal will be announced soon.
There are many obvious benefits of using outsourcing and whilst most people will consider the cost savings first of all, there are many other ways a firm will benefit from taking the outsourcing option. Being able to meet any demand for their product by hiring external firms and their workers to meet the increased demand is just one such method and this is where Asustek hope to benefit from any forthcoming deals. Working with other respected firms should make it easier to maintain the level of quality expected by consumers, which is very important to any firm that undertakes outsourcing as a solution to their production needs.

If the outsourced work is of a much lower standard or quality than what is generally expected from the firm, it could seriously damage their reputation. Given the harsh levels of competition that exist nowadays, it is vital to remain as competitive as possible but using substandard suppliers will ruin any benefit that may be obtained from a lower labor cost. There will inevitably be terms and conditions included in the contract stating that quality must be maintained so the firm should be covered with regards to the money they have spent but maybe not with their reputation.

As more and more consumers demand netbook products, the rise for these mini computers is only going to rise and it seems inevitable that new markets are going to open up very quickly. This means the main players in the industry are going to be under a lot of pressure in the near future to meet the demand which could open up many avenues for smaller firms to get on side with outsourcing and assist with the production of these products. Any small firm that can prove they are able to meet the quality expected from the big suppliers could find themselves in a great position to safeguard their economic future for many years to come.

Everyone knows the name Intel and they are easily one of the world’s most recognized brands, sitting alongside Coca-Cola, Microsoft and Apple. In fact, you know that Intel is so successful with the fact that Apple changed their manufacturing processes in order to include the Intel chip in their macs. This is high praise indeed for any firm and shows that the power of Intel is something that can make a huge difference to any computer user. However, it is interesting to note that not even a firm like Intel is immune to the difficulties that the current credit crunch brings and the company is looking for ways to reduce their cost, to become leaner and to be more cost effective in their working.

As they can see from a whole host of companies and firms, outsourcing has become a fantastic way to reduce costs whilst obtaining a great level of skill and experience from staff well trained in the processes that the firm has to deliver. Intel may be one of the best firms operating in the market but there is always room for development and their recent decision to outsource should see them benefit in this manner too. It is the Southbridge chips that the firm has decided to outsource and the lucky recipient of this agreement is Advanced Semiconductor Engineering Inc (ASE), who is based in Taiwan. This move will enable Intel to close a number of their assembly and testing warehouses and insiders predict that the companies working revenue could rise by a figure close to 50% in the next quarter. This move indicates why outsourcing is such an attractive proposition to a great number of firms.

Of course, a firm like Intel has to be fully aware that many of their rivals and competitors are keen to learn what makes their chips tick and will attempt to copy and steal their ideas at every opportunity. This means that Intel look to take great care and have a higher level of security over their products and naturally they are mindful of the issues that may arise when using outsourcing firms. It is not that outsourcing firms are not to be trusted but any process which adds an extra layer to the process and involves more people is sadly more likely to run the risk of leaks or information escaping but Intel has made moves to keep their information and products safe from harm. Any firm based in mainland China and suspected of operating in the trade for knockoff chips and processors will not be allowed to buy chips directly from the outsourced producer. Intel are maintaining a strong control over the production and any suspected firm that wishes to buy chips from Intel will be required to purchase and interact directly with Intel. This should give the firm a greater degree of control over their product and alleviate any of the blame or concerns from the outsourced firm. This will work out for the best for all parties and indicates that outsourcing can be managed in such a way to take care of any concerns that a firm may have about security or confidentiality.

Outsourcing engineering processes to India has become a common trend among US-based engineering firms lately. Many US-based engineering firms are outsourcing their engineering processes to India these days. The outsourcing service providers in other countries in Asia and Europe that used to provide these services to US-based companies are steadily getting replaced by service providers located in the Indian cities of Bangalore, Chennai, Mumbai, etc. The processes include conversion services, cost estimations, structural drafting and detailing, only to name a few.

There are some definite advantages that American companies get by outsourcing their engineering services to India. These are as follows:

1. Skilled labor working 24/7 – Many Indian service providers hire employees who can work in shifts, thereby keeping the factory running 24/7. Thus it is possible for them to meet even tight deadlines that clients may put forward at times. Besides, India is the home of many talented and technically qualified engineers, who know how to get a job done efficiently. The labor force is mostly well-trained. So, for projects for which quality is an important factor, skilled labor force is automatically chosen over unskilled labor forces. Indian service providers are thus preferred over providers in many other Asian countries, where skilled workforce may be a tad harder to find.
2. Good communication – Indians learn English quite well in schools. As such, it is significantly easier for Indian engineers to communicate with their American clients. This is not the case with many other Asian countries, where the knowledge of English may not be so good among the general population. This is another important reason why outsourcers from US prefer Indian service providers over those from other Asian countries.
3. Cost-effective services – The service cost is quite less in India compared to many other Asian countries. In fact the difference in the values of US Dollar and Indian Rupee is what attracts many outsourcers to India in the first place. Besides, Indian service providers often provide value added services to outsourcers, which makes the arrangement all the more profitable for US-based companies. Thus, investing in the services of an Indian outsourcing service provider means big savings as well as high-quality service. What more can a client ask for?
4. Unit conversion services – Many Asian service providers work with the metric system, while US-based companies mostly use FPS system of units. While this is quite a big hurdle for most US-companies who outsource their engineering processes, Indian service providers take care of this problem by providing unit conversion services to their outsourcer clients at no additional cost. This means even greater value for money for the outsourcer. This factor also contributes to the popularity of Indian outsourcing service providers among US-based clients.

These are the reasons for which Indian service providers get chosen over providers from other Asian countries for engineering processes outsourced by American companies. In the coming years, these factors are supposed to increase the popularity of Indian service providers even more.