According to Clinton, the U.S. – India relationship needs an “upgrade,” which she termed “U.S. – India 3.0.”  Her speech seemed to indirectly support the arguments made by India’s IT outsourcers that visa restrictions fall under the category of protectionism.  Clinton did not address the argument regarding offshore outsourcing and lost jobs in the United States.  Instead, she said that any differences in perspectives regarding the relationship between U.S. and India could be worked through by focusing on shared objectives and concrete results.

Legislation proposed by U.S. Senators Chuck Grassley (R-Iowa) and Dick Durbin (D-Ill.) seeks to establish stricter prevailing wage standards that could increase salaries for H-1B workers and impose limits on the number of visa workers to 50 percent of a company’s total workforce.  This bill has been strongly protested by the Indian IT community and Indian government.  Wipro Chairman Azim Premji, said that there is extreme concern among the India IT industry regarding the Grassley-Durbin bill.

The basic argument against the Grassley-Durbin bill is that global sourcing tends to lower costs for U.S. companies.  By lowering costs through offshore IT outsourcing, companies can expand in other areas and markets outside of the United States. 

India’s ambassador to the United States, Meera Shankar, said that India’s IT talent has enabled U.S. companies to become more competitive globally, while at the same time creating jobs and profits that can circulate through the economy. 

There are many offshore outsourcing benefits available for U.S. based companies.  If your company is looking to outsource IT development, you should first speak with an outsourcing consultant from A&E Consulting at 661-200-3612.

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The current world economy and geographic instability has forced many companies to rethink the way they approach outsourcing.  It is possible to establish practices that will help you anticipate possible threats and create an alternative plan.  One of the ways you can protect your company when global sourcing is to negotiate or re-negotiate your outsourcing contract.  CIO.com gave several tips for negotiating outsourcing contracts, some of which are summarized below:

1. Revise clauses, such as force majeure to include other threats.  Force majeure usually releases both the buyer and vendor from liability when there is an event out of their control.  Typically the focus is on natural disasters.

2. Review termination provisions.  Termination provisions should take into account the possibility of an unforeseeable threat to the vendor’s viability.  The buyer should make sure that the provision allows them to respond to changing vendor conditions.

3. Modify change of ownership provision.  This provision should address an event where there is a breakup of the supplier.  The change of ownership provision should include acquisitions, as well as breakups.

4. Decide who owns the assets.  It should be clearly stated in the contract which entity owns software, documentation and other intellectual property.

5. Include terms and conditions that focus on emergent concerns.  CIO.com advises suppliers to use clauses addressing transition-out requirements, audit provisions and termination costs.

6. Seek advice from a professional.  It is advisable to contact a professional, such as an outsourcing consultant, who can help you get the contract right.

The outsourcing consultants at A&E Consulting have the experience and knowledge to help you succeed with your outsourced IT projects.  We offer support throughout the entire process and we will provide you with flexible solutions to meet your IT outsourcing needs.  Call (661) 200-3612 or email info@aandeconsulting.com today.

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Most companies looking to outsource IT development typically focus on the benefit of cutting costs.  However, what most companies fail to realize is that global outsourcing has more to offer than just cost reduction.  Additional value can be created in an outsourcing relationship through innovation.  Once an outsourcing relationship has been established, it opens the door to innovation, allowing the buyer to realize an even greater benefit provided by the vendor and to stay current with technology trends.

Offshoring and near shore outsourcing provide a way for companies that have been forced to layoff key personnel, to still move forward with strategic projects.  Global sourcing is an attractive option for many companies that have had to reduce budgets due to the economic slowdown. 

Companies today are feeling the pressure to achieve results while avoiding the common mistakes made by other companies that have outsourced in the past.  This sense of urgency had made companies try to avoid the learning curve associated with IT outsourcing.  It is often difficult to attain this goal, but with the proper preparation and informed decision making, it can be done. 

A company must decide if it will outsource to multiple providers or focus on one vendor.  While choosing to outsource to just one IT provider does make the process a lot simpler, the company can be missing out on the opportunity to take advantage of the diverse expertise offered by multiple providers.

Global sourcing offers many advantages to IT companies.  Companies can benefit from IT outsourcing during this downturn, as long as they take into consideration the unique factors presented in this economy.

The outsourcing consultants from A&E Consulting can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.  Contact us today at 661-200-3612.

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We are experts in our field.  When you partner with A&E Consulting, you are adding our experience to your team.  Our consultants meet the highest qualification standards in the industry and have completed rigorous training.  We possess real world outsourcing experience.

A&E Consulting offers support throughout the entire process.  We offer support and flexible solutions to help you with your outsourcing needs.

You will be able to avoid hidden costs.  Through benchmarking with our industry experts, you will be able to avoid the hidden costs associated with outsourcing. 

We will create a customized decision framework.  Our global sourcing strategists will develop a tailored framework to lead your company through the entire outsourcing project.

Our strategists will provide tools to capture value.  There is more value to an outsourcing relationship than just cost reduction.  We will show you how to capture additional value and innovation.

You can learn to avoid common pitfalls.  Through our experience, we will help you address and prevent the common issues that arise in less effectively managed outsourcing relationships.

A&E Consulting will help you establish governance structures.  We will help you develop a structure to manage your relationship with the IT provider.
 
We provide support for objective evaluations and decision making.  Our consultants will assist you with the evaluation process that will be based on your company’s needs.

Our consultants manage the change process to minimize disruption.  We offer support with early and frequent two-way communications, as well as assistance with developing a communications strategy.

We will help you get the contract right.  Even though we do not provide legal advice, we do have the capability to advise you on matters that will help ensure you have a successful outsourcing relationship.

For more information about A&E Consulting, call (661) 200-3612 or email info@aandeconsulting.com.

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During the initial negotiations it is important to get all of the key contract terms and conditions hashed out.  However, just because the buyer may have gotten it right in the beginning, things change - people change, technology changes, timeframes change and budgets change.  There are certain topics that must be discussed as the outsourcing project progresses, including when something is wrong or when there seems to be a misunderstanding of the project’s requirements.

It is crucial to talk with a vendor when something is wrong.  Unfortunately, things do happen, such as missed deadlines and improperly designed processes.  Some IT managers will initially avoid conflict and choose to avoid uncomfortable conversations with the global outsourcing provider.   If something is wrong, the buyer should address it head on, with the goal of increasing competency and capability.  A buyer can benefit from creating a culture where conflicts are appropriately addressed and handled.

Sometimes there is a misunderstanding of the project’s requirements, which can lead to a failed outsourcing relationship.  When an IT company is working with a vendor located in another country, misunderstandings can become even more prevalent, as there are cultural differences and language barriers.  This challenge can cause frustration and may disrupt the development of the IT project.  To overcome this potential complication, IT managers should schedule regular meetings to review the project’s status.  It would also be advantageous to take the time to understand the vendor’s culture to avoid a cultural clash.

Outsourcing is an effective way to increase productivity, while saving money at the same time.  As long as key topics are discussed, an outsourcing relationship can greatly benefit both parties.

If your company is considering IT outsourcing, contact the global sourcing strategists at A&E Consulting at 661-200-3612.  We can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.

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The article, “Multi-sourcing –Minimizes Risks Associated with Large Global Sourcing Contracts,” discusses some of the key benefits of smaller deals.  For example, it is difficult to find one vendor that can successfully provide a variety of services.  When smaller deals are made with multiple vendors, the IT company has access to a wider range of resources and expertise.  In addition, it is easier to sever an outsourcing relationship when there is a smaller deal, as the IT company can avoid becoming dependent on the vendor.

Shorter-term contracts help alleviate some of the anxiety associated with global IT sourcing.  The majority of IT agreements last anywhere from five to fifteen years.  With a shorter-term contract, IT executives can feel more comfortable knowing that if the arrangement is not what was expected or if outsourcing is no longer a good fit, they are not locked into a long-term contract.

The recent economic uncertainty has also caused more IT executives to take their time in signing outsourcing contracts, which has led to longer negotiation cycles.  Even though IT companies are looking for ways to quickly cut costs, a goal that can be accomplished with global IT sourcing, at the same time, these organizations are measuring the risks and benefits.

When an IT company begins considering global IT sourcing as an option to reduce costs and increase productivity, executives need to think about the goals for the upcoming year or more.  A quick decision should not be made just to reduce expenses.  Global IT sourcing has a lot to offer, but it is not a good fit for every company.  Once the decision has been made to outsource, it is difficult to come back from it if the firm changes its mind.  A global sourcing strategist can help organizations weigh the benefits and risks of global outsourcing.  Contact A&E Consulting, a full service consulting firm, at 661-200-3612 or info@AandEConsulting.com for more information.

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Global sourcing refers to the practice of sending certain aspects of business development to other countries, either near shore or offshore.  When it comes to IT, global sourcing gives companies the opportunity to send certain business operations or processes to third-party suppliers outside of the country.  Global sourcing generally provides lower labor costs, access to qualified IT personnel, lower overhead expenses, increased productivity and an operation that virtually runs 24 hours a day.  All of these benefits give the company looking to outsource a competitive edge over other IT companies.

According to TechsUnite.org, a website for a high-tech workers union, 528,478 U.S. jobs have been offshored since January 1, 2000 through August 2008.  With the Internet and continuous changes in technology, it is now easier for companies to manage projects sent to global sourcing providers.

Many foreign governments have begun offering companies incentives relating to global sourcing.  India, China and Malaysia boast highly skilled technical workers and graduate thousands of IT professionals every year from the colleges and universities.

Even though global sourcing can create a competitive advantage, companies looking to outsource should be cautious when choosing a vendor and location.

Benjamin Shao, associate professor of Information Systems at Arizona State University’s W.P. Carey School of Business, was quoted in an article as saying, “It (offshore outsourcing) is still a very popular business practice nowadays.  But I think U.S. companies now have learned from their own experience or from their competitors’ experiences over the last few years.  So now they also try to be a little bit more discreet and careful when it comes down to the idea of offshore outsourcing.”

Data and intellectual property protection are often major concerns for IT companies.  When choosing a global sourcing provider, it is crucial to find out what systems are in place to protect data.  This information should be available before a global sourcing contract is signed.

Other factors to consider when choosing a vendor are the country’s benefits and risks, the vendor’s expertise and qualifications and communication capabilities. 

Global sourcing is great tool to use to stay competitive in the global environment.  Companies need to be aware of what global sourcing has to offer, but should also be aware of the risks and how to minimize them.

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The article, Survey: One in Four IT Jobs Moving Offshore, posted on Networkworld.com, summarizes the key findings of this study conducted by a Miami-based firm.

Researchers found that over the next two years, companies with revenues of at least $5 billion are expected to transfer approximately 350,000 corporate jobs offshore.  More than 50 percent of these jobs will be in the IT sector, while some will be in the areas of finance, procurement and human resources.

Some experts believe that eventually 60 percent of IT jobs will be sent offshore and in some firms, this figure could hit 80 percent.  This data has been referred to as “a confirmation of a mega-trend.”

Another study that examined the impact of global sourcing on IT suggested that up to 8 percent of all IT employees have been affected in some capacity by offshore outsourcing.  That study collected information from 10,000 people.

There are many theories as to why there has been an increase in global sourcing within the IT industry.  One belief is that companies are becoming more experienced and comfortable when it comes to global sourcing and are more willing to send additional work offshore.  Many companies have developed standardized practices that have helped in the success of outsourced projects. 

Global sourcing is not expected to slowdown during the economic crisis and may actually increase as companies look for ways to cut costs, while still retaining productivity.  According to the article on Networkworld.com, the average company is currently realizing approximately $16 million in savings each year from global sourcing, with more than 50 percent of that amount in IT cost savings.  As global sourcing grows, the annual savings could reach $30 million by 2010.  Surprisingly, this figure only represents about a third of what companies could eventually save.

In order for companies to remain competitive, there has to be avenues to increase productivity, while cutting costs.  Global sourcing gives companies the opportunity to accomplish these goals, as well as focus on core competencies. 

A&E Consulting is a leading consulting firm that helps businesses take advantage of the many benefits offered through global sourcing.  The consulting experts at A&E Consulting help organizations choose the right global sourcing provider and will oversee the first outsourced project.

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Obama is stepping into power at a time when the American economy is struggling.  According to the article posted on CIO.com, What Effect Will President-elect Obama Have on Outsourcing, he will need to develop programs and policies to help stabilize and turn the economy around.  Obama will need to put governance systems and agencies in place to ensure another financial crisis will not happen again.  Once the economy begins to stabilize, there will also be more fiscal stability.

According to the article on CIO.com, Obama will be facing so many major issues that it is not likely that he will place outsourcing on his priority list. 

Indian suppliers have transformed from using their initial business models and are now providing more than just labor arbitrage.  These global sourcing providers are offering business models and services that focus on increase in productivity, faster turnaround time of products, improved quality, intellectual property protection and more.

Numerous global brands, such as GE, IBM, Microsoft and AOL, have large facilities and direct employee bases in India.  These Indian centers help the companies stay competitive, while increasing revenues.  Even if Obama’s proposed $3,000 tax credit to employers for each employee hired in the United States goes through, it should not affect the decision to hire offshore.  The reason has to do with the reduction in labor costs and overhead associated with offshore locations, such as India.

Another point addressed in the CIO.com article had to do with the diversity in Indian business models.  Business models among Indian suppliers are much more diverse than in the past and have the capability to withstand economic fluctuations better than before.  IT companies in the United States will continue to look for ways to cut costs and improve competitiveness, which should drive the global sourcing industry.

The bottom line is that most people feel that Obama will not have the time or resources to focus specifically on large-scale policies regarding outsourcing.  Therefore, his administration should not immediately impact the global sourcing market.

A&E Consulting is a leading global sourcing consulting firm that helps businesses with their global sourcing needs.  The consulting experts at A&E Consulting can help organizations choose the right global sourcing provider, as well as assist with overseeing the first outsourced project.

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ITWorld.om posted an article on its website, titled “IT Offshore Outsourcing: Early Predictions for 2009,” in November which examined the research conducted by TEAM International, Society for Information Management (SIM), Info-Tech Research and Robert Half Technology.  Below is a summary of the research findings that reflect the predictions for 2009.

Most IT Budgets Will Not Decrease
Most IT companies expect IT budgets to either increase from 2008 or stay the same in 2009.  According to a survey of CIOs and IT executives of 230 companies, which was commissioned by Society for Information Management, 44 percent plan to increase their IT budgets in 2009, 37 percent plan to keep the budgets the same as 2008 and only 19 percent reported that they plan to decrease their IT budgets.  Another survey conducted by Info-Tech Research that included 150 IT companies in the United States showed similar results to the SIM survey.  Based on the findings from Info-Tech Research’s survey, only 1 in 5 companies plan to reduce their IT budgets in 2009.

Growth in Global IT Sourcing
It is estimated that more projects will be sent to global sourcing providers in 2009.  The SIM survey found that the majority of companies are focusing on ramping up their offshore resources.  The Info-Tech Research survey confirmed this expected growth, with more than 60 percent of IT departments of the surveyed companies reporting that they plan to focus on reducing costs via global sourcing.  Another study by Robert Half Technology, a California-based search and staffing firm, also showed similar results.  Researchers surveyed 1,400 CIOs and the results showed that there was a general support of the optimistic predictions to the utilization of IT outsourcing in 2009.  Among the 111 CIOs who already were engaged in outsourcing, 43 percent stated that they plan to increase their offshore transactions in the coming year.

IT Industry Will Not be Adversely Impacted by Slow Economy
Some researchers believe that the IT industry will not be affected or only minimally impacted by the slow economy.  These researchers base their beliefs on the fact that information technology is centered on the desire to improve efficiency, increase productivity, cut costs and improve revenues. 

Based on these various surveys, it is realistic to assume a positive outlook in global IT sourcing in 2009.

A&E Consulting is a leading global sourcing consulting firm that helps businesses with their global sourcing needs.  The consulting experts at A&E Consulting not only help organizations choose the right global sourcing provider, they also assist with overseeing the first outsourced project.

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