Niyamath Parveez

There are many famous quotes and proverbs involving statistics and this has led many people to sometimes overlooking the true meaning or situations outlined by numbers. This is best shown in the saying that 68% of all statistics are made up but sometimes it can be of great value and benefit to listen to what is being said. Outsourcing is clearly a way of working that brings a great deal of benefits to firms and companies and most people can see that it has been on the rise in recent years. What people may not see is the fact that it is on the rise to such a huge extent and that the amount of firms using outsourcing may be much larger than anyone thought.

Studies have shown that just under two thirds of firms and organizations operating in Western Europe at the moment will outsource some element of their IT and their processing functions within the coming year. This equates to just over 60% of the firms in Western Europe will be undertaking at least some element of outsourcing, which is quite possibly the biggest indication of the strength of outsourcing at the moment. With President Obama taking steps to hopefully reduce the number of outsourcing jobs affecting US companies, it can be seen that Western Europe is experiencing its own issue with regards this situation.

A big reason for this change has come from the number of firms now taking their first steps in the outsourcing market, with a third of the organizations being new to the market this year. There is no doubt that the current financial troubles that are affecting the world economy has caused a great number of firms to re-examine how they do business and look for ways to cut costs. Outsourcing is an ideal way to reduce the costs of labor as well as bringing in a greater degree of skill and expertise which some firms may lack. Training is an expenditure that can fall by the wayside during tough economic times and this may mean that companies experience a shortfall in the skills and knowledge levels they have available in the office. By outsourcing, a firm can replace these lost skills with the experience of external partners and therefore not be affected by any diminished level of expertise.

Although this trend has shown a large rise in outsourcing, it is not expected to be the end of the rise with more firms expecting to turn towards outsourcing in 2010. Whilst some economic forecasters would suggest this will have a grave impact on the employment prospects of Western Europe, it should be remembered that not all outsourcing jobs leave the country. Far flung places like India may seem to be the natural place for outsourcing tasks but may IT jobs, which require a hand on approach to solving any issues, will require a more local approach and this is where outsourcing can be given to firms based in the local region. This means that the employment situation is not as badly affected as may have been first thought.

There are many things in life that are important and even during these harsh economic times, their importance and quality is one of the few things that keep people going. The love and warmth of a family and friendship is equally important, as is having an income but for so many people around the world, life would not be worth living without beer. If we have learned one thing from Homer Simpson in the past few decades its that beer is the cause of and solution to all of life’s little problems. Of course, whilst beer may have peppered your thoughts on a number of topics, there is every chance it may not have clouded your thinking about outsourcing. Until now that is.

The Anheuser-Busch, home of the Budweiser brand, is synonymous with alcoholic beverages and even throughout their multi-national takeovers and changes have been considered as one of the genuine beer manufacturers in the market. This owes a lot more to the product they produce and the good times that people associate with it as opposed to any genuine love and admiration for the company behind it but such is the power of branding. However, some of the gloss and shine may have come off the label recently with the announcement that Anheuser -Busch are to outsource the work that was previously supplied by two legs of it operation in providing promotional material, store displays and other related products. It is said that in excess of 100 employees will be affected by this round of measures as the company takes advantage of the benefits of outsourcing. Even though they have a product that remains in high demand even during a period of recession, it appears as though the Anheuser-Busch branch are keen to make as many savings as possible and this opportunity is one that is too good to be missed.

Staples Promotions Products will be taking over these jobs and their work will now include giving away promotional material such as jackets, bags, cigarette lighters and much more to convince people to switch their brand of beer. The promotional activity undertaken by beverage companies is an extremely big business and with the market featuring so many customers who are happy to switch brand on a number of factors, it is an important activity for firms in the area.

One benefit that will come from using the Staples Promotions Products should see the firm lower their costs in this field considerably whilst tapping into the knowledge and experience of a firm who should have considerable contacts within the industry. This means that savings should come from sourcing raw materials, distributing products and the benefit of having skilled staff to get the right products to the right people. This means that you may be seeing more promotional goods for Budweiser and related products in the near future and if you do, a large part of this will come from the expertise of the Staple Promotions Products brand. In case you were any doubt, this latest piece of outsourcing news means that outsourcing is available to all firms and not just the ones that you expect.

Written by Seema Sapra

This Economic Times story reflects Indian industry and policymakers sensitivity on the issue of any protectionist clamp-down on outsourcing. Though I think the Economic Times jumped the gun here a bit. Its too early to be talking about WTO contests especially since the whole story seems to be based upon this sentence in President Obama’s speech to Congress:

We will root out the waste, fraud, and abuse in our Medicare program that doesn’t make our seniors any healthier, and we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.

The news report captioned “India may contest Obama’s move against outsourcing in WTO” seems to be based upon Minister Kamal Nath’s response on being asked whether India would respond to the suggestion in Obama’s speech. This is what Nath is reported to have answered:

We have to ensure what they (US) are doing is WTO compatible when we are talking about trade, movement of goods, movement of people and movement of services," Commerce and Industry Minister Kamal Nath said here.
"Yes, of course," he said when asked if India will take up the issue of outsourcing with the US administration.
…

Nath said, "One has to see how the US companies using India as a base for technological development respond to their own government." Outsourcing of technology development by large companies cannot be switched on and off, he added.

It should be interesting to see what shape the US measure on discouraging outsourcing takes. A PTI story has more:

Nearly 1,000 US firms, which have shipped their jobs overseas are anticipated to be affected with the proposed elimination of tax incentives. The plan mainly refers to one of the provisions in the tax code that allows companies to pay lesser taxes for profits earned from foreign shores.

Here’s another interesting aspect linking the outsourcing issue with H-1B visas. A Computerworld story discusses this:

The U.S. government’s H-1B visa usage data for fiscal 2008 shows that offshore outsourcing firms based in India are employing a growing number of H-1B workers — a hiring trend that is affecting the IT workforces in communities such as Oldsmar, Fla.

Oldsmar is the home of a technology center operated by The Nielsen Co., which measures TV audiences, consumer trends and other metrics for its clients. Nielsen last year began laying off workers at the facility after announcing in October 2007 a 10-year global outsourcing agreement valued at $1.2 billion with Tata Consultancy Services Ltd.

And while Nielsen cut employees, Mumbai, India-based Tata was increasing its hiring of H-1B workers. Tata received approval for a total of 1,539 H-1B visas during the federal fiscal year that ended last September, according to government data released this week. That was nearly double the 797 visas that the outsourcing and IT services vendor received in fiscal 2007