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Skyline Business School |
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Issue:6
Bharti Teletech to manufacture GE
phones for Atlinks
Amid the ongoing controversy over outsourcing to India, Atlinks has entered into an
alliance with Bharti Teletech as part of which the latter would manufacture fixed line
phones for Atlinks for global exports. The alliance involves outsourcing of GE-branded
phones (for Atlinks, a subsidiary of Thomson) to be manufactured by Bharti. It would also
become the sole marketing and distribution company for Atlinks in India and neighbouring
countries like Nepal, Srilanka, Bhutan, Bangladesh and Maldives. To begin with Bharti
Teletech plans to export one million GE phones in the next two years.
Source: Press Trust of India, February 20th
2004
The Economist assessment
'BPO boom, yes; but not for long'
India's sunrise business process outsourcing industry faces a number of dangers,
including protectionism in the US, third country competition, government meddling and the
country trying to over-reach itself, according to the UK-based magazine, The Economist.
Lately, America's Federal Government and a number of states have started to pass anti-BPO
laws. In Britain, trade unions have expressed fears about job losses because of
outsourcing. Secondly, India is facing increasing competition from Philippines and China
on the back of higher literacy rates, larger number of english speakers in the former,
while China having long-term clout and size in the global marketplace. Wage rates are
increasing at the rate of 10 percent per year, denting fat margins that firms are used to.
Other cost pressures such as poor infrastructure, and appreciation of the rupee against
the dollar, increasing meddling of the Government are adding to the shrinking wave of
euphoria sweeping BPO circles.
Source: The Hindu Business Line, March 1st
2004
Tax breaks seen attracting global BPO companies
Tax changes for India's rapidly growing outsourcing sector may attract more global firms
to set up their own outsourcing operations in India. Foreign firms seeking cheaper
accounting, payroll management and insurance claims processing are turning to India to
take advantage of the country's educated workforce and a growing telecom infrastructure.
The government issued a tax clarification last month, saying multinationals outsourcing
their non-core business to India were exempted from taxes to avoid double taxation. Global
firms welcomed the ruling, although it has not removed all confusion. "In the absence
of clarity on what is core and what is non-core, this can become contentious as it is
subject to interpretation," said Raju Bhatnagar, president and chief operating
officer at ICICI One Source.
Source: Reuters, February 24th 2004
Outsourcing is legit, says UNCTAD chief
The United Nations Conference on Trade and Development (Unctad) has supported
outsourcing and stated that any efforts by the legislation to bar it may not work. Rubens
Ricupero, secretary general, Unctad said outsourcing has opened up new trade avenues for
developing countries. "Off shoring is a legitimate part of global trade
liberalization and this enables developing countries to leverage their comparative
advantage, competitive labour and lower cost environment." Unctad is clear that any
moves to prevent outsourcing or the movement of jobs are covered under General Agreement
of Trade in Services (GATS). US Federal government and state government legislation
preventing outsourcing may be seen in violation of the provision of the GATS under the
different modes of transfer of services, according to Unctad.
Source: Times News Network, February 26th
2004
BPO centers to focus on data safety
BPO centers across India are turning themselves into information fortresses. This move has
been fuelled by rising concerns among the anti-outsourcing lobby in the US about the
safety of data. Private information about individuals like their credit card and social
security numbers comes to the BPOs, which process insurance claims, loan appraisals, tax
returns and medical diagnosis. Critics in the US say, that the data at the Indian centers
is vulnerable to thefts. Though Indian BPO chiefs rubbish such claims vehemently, an
incident, which immediately comes to mind, is of a call center employee who used a credit
card number to purchase a color TV for himself.
Since then, corporate firewalls such as armed guards posted at office sites, restricted
entry by chip-embedded swipe cards, no bags and briefcases, confidentiality pact with
staff and filtering of emails are a few measures hoping to assuage any fears.
Source: The Hindustan Times, February 28th
2004
Design: the next outsourcing frontier for India
India is fast emerging as a design hub for MNCs increasingly outsourcing industrial
and engineering design tasks to the country. From GE to Caterpillar and Infosys to Tatas,
over two dozen companies have begun tapping the country's design capabilities. Engineering
design has garnered a big chunk of the design work, and R&D centers (IBM, Texas
Instruments, Philips Innovation) are now giving shape to patented products. While India
has developed expertise in 3D modeling and plant engineering in sectors like aerospace,
automotive, and industrial machinery. Airbus and Boeing outsource design work to Infosys.
Construction machinery major Caterpillar has set up its design hub at Chennai. Intel is
working on chipsets in Bangalore. Apple has approached NID to work on a handheld computing
device.
Competitive and cost advantages that India can offer work out to the tune of nearly 25%.
Typical computer aided design (CAD) and computer aided engineering (CAE) project in the US
will cost about $60 per man-hour, while in India work out to less than $30.
Source: The Times of India, March 1st 2004
Indian Rayon Plans to double BPO seat capacity to 1600
The BPO business of the Aditya Birla group Company Indian Rayon & Industries-which has
performed well eight months after acquisition, plans to double seat capacity to 1600. Its
net revenue rate has been of $1.7 million per month. Indian rayon acquired Trans Works (an
Indian BPO/ITES company) in June 2003. The acquisition was aimed at giving Indian Rayon a
running start in the BPO sector and enhance Trans World's business through the Aditya
Birla group's financial depth, professional excellence and strong relationships with
potential BPO Customers.
Source: Business Standard, February 27th
2004
Bertelsmann BPO Operations to touch 1000 seats by 2005
German-based media conglomerate Bertelsmann AG will shift some of its process
operation to its BPO unit in India. The company has entered into a JV with Arvato Services
India. While Bertelsmann has 51 percent stake in the BPO Company, the balance is held by
its local partner the Bird Group. The company will also transfer part of its BPO
operations worldwide under Arvato Services to India. Arvato Services is one of the largest
companies within Bertelsmann AG and operates across the globe with clients spread across
telecomm, IT, media, automotive, financial services, healthcare, travel and educational
marketing. Arvato Services is planning to expand its 160-seat capacity to 1000 seats in
the next year.
Source: Business Standard, February 27th
2004
Prepared by - Abhimanyu Puri,
BBA-MAHE-LEVEL1
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