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Skyline Business School |
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Issue:13
Spectramind, peers in 'no-hiring' pact
Wipro Spectramind, the BPO and call center arm of Wipro Ltd has signed 'no hiring'
pacts with nine BPO and call center firms to stem the attrition rush, Wipro Spectramind
Chairman, Mr. Raman Roy, has said. According to him, the agreement is not only 'no
poaching' but extends to 'no hiring' at the associate level. Wipro Spectramind was in
talks with 11 such firms to extend such pacts, he said. The firm currently faces 14-15
percent attrition rate. With the agreement in place, Wipro Spectramind and its partners in
the pact, will not hire employees from each other. Wipro Spectramind, the top BPO firm by
staff strength, reported a net decline in employee strength to the tune of 156 people by
the end of March quarter. The company's staff strength was 9300 as on March-end, down from
9456 a quarter ago.
Source: The Hindu Business Line, April 16th
2004
HP finds India attractive
HP is actively increasing outsourcing of manufacturing and
other related jobs to the APAC region, including India.
The outsourcing controversy not withstanding, Hewlett-Packard views India as an attractive
destination even though here are no formal plans in the immediate future. HP plans to
shift its call centers and offshoring units to the country in the near future. "India
has an educated and English speaking workforce which makes HLP accord a preferable status
to the country," Mr. Larry Tracy, Marketing Manager, Enterprise Imaging and Printing,
Imaging and Printing Group, Hewlett-Packard Company. The company outsourced jobs to nine
destinations in Asia and Europe because 'it helps save in cost and time apart from getting
efficient services'. This includes India and China in the APAC region and it depends on a
case-to-case basis' said Mr. Tracy. On the backlash against outsourcing in the US, he
stressed that it was due to the political scenario in the country and will die down once
the elections are over.
Source: The Hindu Business Line, April 16th
2004
Anti-outsourcing Moves Thwarted
U.S Business Lobby kills, weakens proposed laws to halt
offshore job shift
When India's largest software company won a $15 million contract to upgrade the
processing of Indiana's unemployment claims, public outrage prompted to state Senate to
vote to ban any future outsourcing of state contracts to other countries. But then the
business community swung into action to derail the bill. The result: A watered down
version was introduced that eventually died. Indiana's experience is typical. Dozens of
U.S. state legislatures, responding to the furor over white-collar jobs being sent
overseas, have been mulling anti-outsourcing bills. But so far, the business lobby has
killed or weakened every proposal to prohibit government work from being sent abroad.
Spearheading these efforts is the Coalition for Economic Growth and American Jobs, formed
last year by the U.S. Chamber of Commerce, The Business Roundtable, the American Bankers
Association and other powerful groups. Among the tactics: enlisting big employers to say
that they would be hurt by the restrictions, warning that taxpayers' costs would go up if
outsourcing were curbed and trying to run out the clocks on the legislative sessions. The
strategy is working. Of the 35 state legislatures where tough anti-outsourcing proposals
were introduced in recent months, six have adjourned without acting on them. And the rest
aren't likely to produce anything better than watered down versions of the ban sought by
organized-labor lobbyists.
Source: The Asian Wall Street Journal April
15th 2004
Citi to buy 100% stake in e-Serve
US-based banking major Citigroup has announced that it intends to buy out the 55.6
per cent public shareholding in its publicly listed subsidiary, business process
outsourcing company e-Serve International, for Rs 550 crores. Citigroup is looking at
offering e-Serve's existing shareholders up to Rs 800 per share for buying their holding
in the company. This puts the enterprise value of e-Serve at more than Rs 1,000 crores.
Citigroup is also the sole customer of e-Serve, which makes it a captive unit of the
banking major. Citigroup wants to fully own e-Serve as integrating it into its global
operations will provide the company with increased operational flexibility to support its
business and meet the needs of its customers.
Source: www.economictimes.com April 12th 2004
EDS, TCS in race for Phoenix's BPO
EDS, one of the world's largest outsourcing services companies, and Tata
Consultancy Services, Asia's biggest software services firm, are in the race to buy US
insurance giant Phoenix's 100 per cent stake in its Bangalore-based BPO outfit Phoenix
Global Solutions. Both EDS and TCS have been trying for M&A deals in recent times.
Both companies have bid for buying News Corp's stake in Hughes Software, while TCS is also
a bidder for acquiring a portion of General Electric's call centre business in the
country. Phoenix Global Solutions has a turnover of about $14-15 million and is fully
owned by the US-based financial services giant, based in Hartford, Connecticut.
Source: The Economic Times, April 12th 2004
BPO firms cut bandwidth spends, opt for pay-per-use model
With margins under pressure, mid-sized and small BPOs now prefer the 'pay-per-use'
model to meet their bandwidth needs, rather than spending money on buying bandwidth in
bulk. Increasing competition and easier availability of bandwidth has now made it possible
for BPOs to buy a block of minutes (say about 50,000 minutes to 1 or 2m minutes) according
to their needs, rather than blocking money in higher bandwidth quantities that may remain
idle. This move could translate into big savings for small and medium-sized BPOs,
especially after margins dropped by more than 10%. Bandwidth costs typically account for
about 30-35% of the total costs of the BPO. The cost of a DS3, (jargon for the fattest
bandwidth pipe) is in the region of Rs 3 crores, with costs dropping to over Rs 1.6 lakhs
for a 2 Mb pipe (called an E1). The costs vary depending on the bandwidth consumed. In the
'pay per use' model, the BPOs could end up paying as little as 2-3 cents a minute (the
higher the volume, the greater the discount). A 'pay-per-use' option helps smaller BPO
players improve their margins, but not medium and large players to that extent. The unit
cost per minute for large players does not come down significantly.
Source: www.economictimes.com April 13th 2004
Worldwide Human Resources Outsourcing Market Will Reach $80 Billion
by 2008, Says Yankee Group
Growing to $42 billion, U.S. HRO market will account for more than
half of 2008 global total
According to the upcoming Yankee Group report, Human Resources BPO: Market
Analysis, Forecast & Competitive Landscape 2003-2008, HR business process outsourcing,
a new concept of transitioning HR management responsibility to a single supplier, is
driving much of the growth for the whole human resources outsourcing market. The trend
toward HR business process outsourcing is at the heart of this growth. Where BPO services
currently make up only 17 percent of the total Americas HRO market, the Yankee Group
predicts this share to increase to almost 30 percent by 2008 and that short- to
medium-term spending in this sector will center on organizations shifting their existing
expenditures on external HR activities to consolidated offerings from a single provider.
"The ability to source the majority, or all, of the HR function to a vendor as part
of a BPO arrangement is a major shift in the way organizations operate today, and is
paving the way for full-service HR BPO offerings," says Phil Fersht, Yankee Group
business services and outsourcing analyst. "Many organizations now trust a services
company to handle some of their most intimate business. This shift will dramatically
reduce any remaining reluctance by organizations about outsourcing more of their core
business in the future." Traditional HRO vendors such as Hewitt, Ceridian, ADP, Aon
and Fidelity are expanding their HR and technology services to compete for full-service HR
contracts. Major IT services organizations such as IBM, ACS, Accenture and EDS have been
developing their HR services capabilities to compete for projects on a global scale.
Source: BusinessWire, April 13th 2004
Global outsourcing summit on 21 April
With a view to establish India as an outsourcing knowledge hub, Indo-American
Chamber of Commerce has formally announced its offshore outsourcing conference, the Global
Offshore Outsourcing Summit 2004 (GOOS 2004), in Mumbai. GOOS 2004 is scheduled for 21 and
22 April and would be held at the Grand Hyatt Mumbai. The focus of the summit is to
present expert views on version 2.0 of the India offshore outsourcing advantage and how it
enhances the business advantage for large global corporations. At the curtain raiser,
Frank G Wisner delivered the keynote address. Ambassador Wisner is a former US Ambassador
to India and also the immediate past chairman and on board of directors of the US India
Business Council. He spoke at length on emerging US India relations and outsourcing to
India in the context of recent developments. In his speech, he talked about looking
incisively at where industry is headed globally and new advances in the outsourcing space.
He also cited GOOS 2004 being a key event for companies seriously interested in the
business of offshore outsourcing.
Source: www.newstoday.net
April 16th 2004
WNS to invest $5 million in Pune operations
WNS Global Services (WNS), a global BPO provider has announced the addition of 1000
new seats and an additional investment of $5 million to its existing Pune operations.
According to the company, this new investment will be funded through internal accruals and
was recently approved by the WNS board. The new capacity will allow WNS to grow its staff
to over 5000 in Pune. WNS Global Services head-Global Operations Eric Selvadurai says,
"our book of business continues to be strong, and we need to add capacity in Pune to
cater to the new demand. We have been operating in Pune for over 5 years, with over 2000
people and we delighted to grow further in the city."
Source: The Financial Express, April 14th
2004
Apollo arm to buy US medical insurance TPA
Due diligence on, deal within a month
India's largest healthcare company is poised to enter a new league. Apollo Health
Street Ltd (AHSL), the medical BPO arm of Apollo Hospitals Group, is close to acquiring a
medical insurance third-party administrator (TPA) company in the US. The due diligence
process is already on and the deal is expected to be signed within a month. The name of
the US Company has not been given by Sangita Reddy, managing director, AHSL. The size of
the deal is said to be in the range of $2-5 million. Once the acquisition process is over,
Apollo would be the first Indian company to acquire a medical BPO segment overseas. AHSL
currently has medical coding, billing and payer contracts in the medical insurance, and
the acquisition is expected to help in greater market penetration in the US.
Source: The Economic Times April 15th 2004
Prepared by - Abhimanyu Puri,
BBA-MAHE-L1-S2
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