Niyamath Parveez

Given the uncertainty and dangers involved with the business world at the moment, it makes perfect sense for many firms to focus on their core strengths or the most important elements of their business. Too often firms struggle because they spread themselves too thinly across their business enterprise or industries, causing them to lose shape or maintain control. With competition being extremely fierce in all walks of industry, any weaknesses can be very damaging to a firm. This has led to a great number of major firms paring back their activities and focusing upon their bore activities. The ability to do this has been greatly helped by the outsourcing options that are now available for a firm. Relying on external partners for assistance and support has never been easier and the quality never more reliable. This has ensured that the firm who needs to take control of what they are best at can outsource other areas of their workload.

This is exactly what Citigroup have decided to do and their latest foray into the outsourcing market stands as a clear shift from their actions for the past decade. This period has seen Citigroup providing a unified mix of banking and brokering but this tactic has been halted by the firm. In a move which will see over 500 employees move jobs or undertake new roles, Citigroup are changing the way their wealth management business is run and the level of investment services that they provide. Given that this area of the firm controls around $30bn of its customer’s money, it is still a hugely important area for the business and its customers but it does signify the way that the company is moving. Even though this is a large sum, and will of huge importance for the consumers, the company has clearly larger elements of their business to consider. Therefore, the move to hive off some of the work that is currently based in the lower growth area of the retail banking market in the United States makes a great deal of sense for all concerned.

In the near future, Citi will take the initial steps of referring a number of their important customers to independent financial advisers. This will move their work away from the current crop of brokers that are located in many of the US based branches. As well as freeing up the 550 or so brokers who were previously responsible for this work, Citigroup will receive a referral fee for every client that they pass on to a new adviser. This brings a further economic reason for the firm to channel their business in such a manner, bringing short and long term benefits.

The brokers who will no longer have a portfolio are expected to be retrained in other parts of the Citigroup business, with many earmarked to become financial consultants within the firm. These brokers will also play a strong role in customer focus, hopefully providing advice and information with regards to customers finding the best possible financial advice available to them.

Given the current economic crisis, many firms and entities are looking to organize themselves better in order to remain economically prudent at these difficult times. Previously, many firms were happy to give over their entire outsourcing business to other companies but now these major deals could be coming to an end. This was the previous best partnership solution for many companies working in the IT and telecom industries but as these are rapidly moving areas and it is about time to examine if another way may not be more palatable to a business and their needs.

Selective outsourcing is the new way forward for a number of industries and it is easy to see why. When so much importance is being placed on one relationship or entity, then the thought of something going wrong can be massively damaging to a company. If one supplier can make a mistake or be late with a delivery, it could have potentially disastrous consequences so it is better to have a shared responsibility. This will have negative points in the fact that bulk buying will not be as easy but for many firms, having the greater safeguard is worth the extra money.
This news may provide a great deal of benefits to the smaller firms around the world who may now find themselves able to enter the outsourcing market. Previously, only the major firms with a strong reputation and able to undercut the opposition were in a position to work with medium to major firms but the rules have all changed regarding this matter now. The opportunity to be a part of a bigger supply chain will see many companies tendering for more work and perhaps being able to obtain more work than what they would have previously obtained. Given the current economic climate, this is a fantastic opportunity for many different suppliers to prolong their financial future and remain solvent for a greater period of time.

And that is always the thing to remember about outsourcing, money is important but it does not have to be the only factor. When using an outsourcing supplier, it is important to think about the quality of service that is received from the partner. If the service is of a very poor quality, no matter how cheap the provision is, it will not be worth paying the price. It has to be remembered that poor quality or service will not be accepted by the end consumer so the firm needs to be aware that every element of the chain will be up to a standard to impress end users.

The opportunity to freshen up your supply chain management and lessen the risk involved is a major benefit to the major firms and there is an opportunity for smaller firms to earn themselves more work. It can be seen that the changing world of outsourcing is going to provide a whole world of opportunities for a great number of firms and may be the solution for some of the difficulties experienced by many of the firms today.

You don’t have to be an avid news junkie to understand that the world economy is in a pretty bad place at the moment and that many people and businesses have been struggling to make ends meet. This has led to firms going under, people losing their jobs, their homes and their self-esteem and generally placed a lot of pressure on people and their relationships. However, in life, wherever there is a bad reaction, there can usually be an equal yet opposite reaction which sees people benefiting whilst others are suffering. This is a very natural reaction and nothing out of the ordinary but up until recently, it has been considered that outsourcing has been doing very well out of the current economic downturn and recession.

This has been due to the fact that firms have been so desperate to cut costs and reduce their overheads that they have looked to reduce the costs of labor and outsourcing has given them a fantastic opportunity to do so. The chance to save money whilst having the same, if not higher, quality of product or service is a no-brainer in these troubled times and this has led many people to believe that outsourcing was one of the untouchable industries, striving onwards in a time when destitution came knocking at the front door of many companies and organizations.

However, the further reductions in the budgets and spending capabilities of many firms in America is now starting to creep towards India and the outsourcing firms based there are starting to feel the pinch. This is made even harsher by the fact that so many new countries and offshore firms are looking to take some of the outsourcing market as well and they are able to undercut the prices offered by Indian firms. All in all, India’s outsourcing firms are starting to suffer in the way that they hit a number of areas in recent years and if the market continues to struggle, there could be some difficult times ahead for the India based outsourcing firms, especially those specializing in IT.

The IT industry is a strange one as it relies very much on continual development and progression and failure to keep up can be disastrous for the long term future of a firm or business. However, as budgets are slashed, many firms are considering it to be too much of a risk to place all of their IT needs in an outsourced basket. Some of the thinking behind this decision lies in the fact that all of the firm based employees would have an easily defined lack of knowledge about the current developments in IT and if the firm had to take control of their own systems in the future, they could be woefully short of the knowledge needed to perform the task successfully. This has caused further pressure on firms to limit the amount of outsourcing activities they undertake, which has had an even bigger negative impact on the outsourcing firms based in India. India is still the home of outsourcing but if the economic downturn continues and the countries snapping at their heels keep on improving, who knows how long that will last for.

Obtaining any contract or agreement to take over the outsourcing work for a firm is an important boost for any company. With the recession kicking in and new firms entering the outsourcing market every week, it can be tough to maintain a healthy business level. This should not be an issue for a number of firms who very recently announced new agreements that should see them operating successfully for a period of time to come. No one can genuinely say when the recession will end and long-term deals may eventually look to be of poor value if the market recovers strongly but with the future so uncertain, who can blame companies for grabbing any deal that comes their way.

One company who is definitely celebrating the opportunities afforded by outsourcing is CSC, who secured an outsourcing contract for the infrastructure work of the Xerox Corporation. The deal is said to last for seven years and will be worth a sum in excess of $100million. This is a fantastic deal and one that should see CSC is in a great financial position for the foreseeable future. Not only that but the kudos and respect that will come to them for working with a company like the Xerox Corporation will make them a far more attractive proposition for other firms looking for outsourcing firms. If you are a firm and you have a choice of outsourcing companies to choose from, having the pick of one who is viewed as a safe bet by the Xerox Corporation is likely to be very attractive. Therefore, CSC have not only benefited by grabbing this new contract, they have also managed to greatly improve their profile which could see them obtain a lot of work from other firms in the future.

Another firm who are experiencing some joy at the moment is Logica, who have secured a deal with the Finnish airline Finnair. This deal is reported to be a three year deal and will see Logica take control of the desktop and end-user capabilities for the airline. Logica have worked with the Finnish firm for a number of years already and this deal sees them tie up the partnership for another few years. The average age of desktop computers, especially in business, is a period of around three years so the length of this deal should tie in neatly with the expected lifetime of the computers that Logica will be servicing. If Logica provide a successful service, there is every opportunity they will get the chance to extend their service but at least this deal offers both firms the chance to review the agreement at an opportune moment. It is hoped that the market will be buoyant again in three years time and a more attractive deal may be brokered by the two companies.

It appears that on a weekly basis, outsourcing news is announced that shows many firms are reaping the benefits of outsourcing their work and the future of many companies are being guaranteed by this type of work. The lesson of the story is surely that if you want to safeguard your future, utilizing outsourcing is a commendable way to go.

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.

The word mega is one of those that have a different meaning depending on who you are speaking to. It obviously means something good or of a large size but it is not as if it is a measurement that can be quantified easily. This is not as true in the world of outsourcing where a mega deal is a deal that is said to be worth more $1 billion. You would be hard pushed to find anyone who didn’t consider a sum of $1 billion to mega so that definition is accurate in that regard. It is worth knowing the meaning of the term because figures have just been released about of the number of reputed megadeal outsourced contracts. It is said that one individual provider obtained 12 megadeals in 2008, a rise from 10 in 2007. Given the current financial status of the world, this is a phenomenal figure but one that may not be bettered in 2009. In any market, there will always be an outlier that surpasses the industry average and this firm with their 12 megadeals may well be the exception to the rule with regards to outsourcing in 2008.

The overall trend for outsourcing last year indicated that although more outsourcing contracts were being signed, they were for a lower value. Contracts were said to be below £50 million were on the up over the previous two years figures but the figures for contracts worth more than $50 million indicates a fall. As the world economy lurched into the recession there was an apparent tightening of the belts and the megadeals across the industry as a whole appeared to dry up. This is to be expected but it places more importance on the smaller deals and could lead to a change in the way outsourcing firms operate. If the workload coming in is going to be of a shorter term and more fluid nature, this may lead to changes in the way that outsourcing firms employ staff or look to sign contracts. As every industry, not just the outsourcing market, reacts to the recession, these changes are inevitable and it will be the firms that react to it best that will be in the best position to weather the storm. There is no doubt that firms within the outsourcing market are in a strong position in the recession as they provide an outlet for many firms who need to cut costs but retain quality but they are still affected by the downturns. Also, as the current economic downturns can be seen to be a positive thing for some outsourcing firms, it is inevitable that more firms will try to force their way into the market. Increased competition may lead to a reduction in the price that can be charged by some firms or it may make it harder to win a potential customer over. All of these issues ensure that outsourcing firms will have to be at the top of their game to attract and satisfy new business partners.

If there was ever any doubt that the outsourcing market was still fantastically buoyant even though many firms and industries are struggling, events of the past few days will have blown any misconceptions away. The need to reduce costs and lower expenditure is hitting every firm and industry hard so the opportunity to utilize outsourcing benefits whilst trimming your own unnecessary expenditure is an attractive approach to take and Xerox are a firm who have been in need of improving their financial outlook.

Like many firms, Xerox have definitely been feeling the squeeze of late and this was best shown when the company released the forecast for their first quarter earnings. There was a reduction of a whopping 85 per cent as Xerox felt the full brunt of the financial crisis engulfing many industries and firms. As Xerox are particularly affected by the behaviour of offices, the global slowdown has caused a big drop off in the amount of sales in this market, harming the revenue levels whilst dramatically reducing the opportunity for the firm to reduce their costs.

This announcement comes hot on the heels of the decision last year to remove 3,000 jobs from the companies’ worldwide payroll, which stood at around 57,000 people. There will no doubt be some concern that the jobs lost in that cull will now be accounted for in this latest venture but Xerox have stressed that this new deal with HCL is in no way related to the round of redundancies.

The deal is based on the fact that Xerox will outsource their data center services work to HCL Technologies and will pay $100 million over a six year period. An investment of this size and scale at the moment indicates the benefits that Xerox are expecting to make from the deal and of the value that it is worth to the organization. HCL Technologies are expected to play a large role in the handling of Xerox’s disaster recovery work and will also provide support and consolidation for the firms’ data centers that are based in Europe and North America.

The deal with HCL Technologies will further enhance the reputation of the Indian firm who have become known as one of the major information and technology service firms and providers in the entire region. The benefits of using Indian outsourcing materials and staff has been recognised by many firms in the past few years but the scope of this deal should remove all doubt that the benefits offered through working with the region can be of massive benefit to many firms.

With many observers still predicting that the economic outlook is showing no signs of picking up, it is inevitable that firms are looking to offset any difficulties and improve their current financial status. In the aftermath of this outsourcing venture becoming known, the share of Xerox rose, which indicated the benefit that should arise from this decision. With outsourcing remaining a viable and healthy option to gain experience and expertise at an attractive rate, do not be surprised if many rival firms copy Xerox and look to outsource as much of their own data center needs as possible.

Egypt is being hailed as one of the best outsourcing destinations in the world for quite some time now. The recognition for the undeniable appeal of the country to international outsourcers was finally made official recently, when the country was awarded the much coveted title of Outsourcing Destination of the Year at the National Outsourcing Association's 2008 Awards. Egypt beat competent rivals Romania and Philippines to top the list of outsourcing destinations across the globe at the ceremony held in London.

The award was received by Dr Hazem Abdelazim, CEO of Information Technology Industry Development Agency, (ITIDA), of Egypt. Dr. Abdelazim was ecstatic after receiving the award at the ceremony, which was attended by over 350 high-level executives and outsourcing professionals from various top-ranked outsourcing service providers of the world. He remarked, “This award recognizes the vast progress Egypt has made in the outsourcing market”, adding that, “Egypt is putting its mark on the map of favored global services locations. Its young population, large multi-lingual workforce, solid infrastructure and competitive cost structure is fortified by unequivocal government support, making Egypt a compelling destination for outsourcing services.”

The judges explained the reason for their decision by pointing out that Egypt qualified for the prestigious accolade because of three primary reasons – the skilled multilingual workforce, the young population in their 20’s engaging in outsourcing, and the growing list of global sourcing investments in the country. Egypt is already recognized as an outsourcing destination for Europe by market giants such as, Microsoft, Oracle, Teleperformance, and Vodafone.

Martyn Hart, Chairman of National Outsourcing Association commented on the award system of NOA, stating, “The NOA awards celebrate best practice in the outsourcing industry. Our winners have demonstrated excellence in outsourcing and have highlighted the importance of best practice and meeting industry standards. These achievements make an excellent contribution to the Body of Outsourcing Knowledge (the BOOK) that the NOA holds on behalf of the industry.”

NOA grants awards every year to competent outsourcers across the globe. The award chiefly focuses on substantial achievements in IT outsourcing and business process outsourcing operations. However, sector specific achievements in the popular outsourcing fields of telecommunications, utilities, and finance do not go unnoticed by NOA either. Usually, countries that provide great performance with excellent value for money to outsourcers are given preference when they are being considered for the award.

The Yankee Group, which is one of the world’s leading independent technology research and consulting firms, recently recognized Egypt as “by far the Middle Eastern country currently best positioned to take advantage of the boom in outsourcing”.

Tholons, one of the leading full-service Strategic Advisory firms for Global Outsourcing and Investments, published a study on the top 50 emerging outsourcing cities in the world in 2008, with Cairo (the capital city of Egypt) placed at the well-deserved 7^th position in the list.

AT Kearney, a global management consulting firm that focuses on strategic and operational CEO-agenda concerns – also placed the country in the 13^th position in its Global Services Location Index in 2007.