35 Marketing Trends found for Human resources / Outsourcing

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India losing English-speaking advantage to China

India is rapidly losing one of its clear economic advantages over China, with the number of Chinese able to speak English on par with its neighbour and rival.

A new study published by the British Council says China may already have more English speakers than India, a remarkable development, given the language legacy of British colonial rule in south Asia.

The study, English Next India, by David Graddol, reveals that India is likely to find it harder to compete with China, which already has better infrastructure and a more flexible labour market.

The study estimates less than 5 per cent of the Indian population speaks English. This would mean that by 2010 only about 55m people in India will be fluent English speakers.

The report compares this with an apparent 20m new Chinese speakers of English each year, a figure attributed to new education policies that require English to be a compulsory subject in China’s primary schools. According to an earlier British Council study, China had 200m English users in 1995.

In both countries exact figures are vague and those cited often confuse the number of students enrolled in English classes with real proficiency.

Nevertheless, English Next India highlights the lack of English-medium education as one main cause of India’s “educational failure”. It says this has hindered the spread of the language despite high demand for it from the employment sector.

Recent studies have shown that India’s talent pool may be drying out. With nearly two-thirds of India’s population under the age of 35, the country has the world’s largest pool of young people but is lagging competitively because of a gap in employer expectations and realities.

A recent survey of 150 Indian companies by the Federation of Indian Chambers of Commerce and Industry and the World Bank revealed that 64 per cent of Indian employers are “somewhat to not-at-all” satisfied with the quality of engineering graduate skills, which most notably include English language skills.

Speaking at the launch of English Next India, Nandan Nilekani, a co-founder of Infosys, an Indian IT company, highlighted the great potential for the Indian economy in sectors such as IT because its huge youth population is set to be the largest in the world in a few decades.

But he also warned that this ”demographic dividend” could turn into a “demographic disaster” if English-language education is not featured more prominently in India’s development plan.

The success of India’s IT sector has shown young Indians that the lack of English means a lack of access to opportunity, Mr Nilekani said. The British Council study cites government figures to show that a big shift from public schools to private schools in India may be because parents are aware of the importance of an English-medium education. The 2009 Annual State Education Report says 26 per cent of children in rural areas attend private school, a 9.6 per cent increase since 2005.

Whether the Chinese population will surpass India’s number of English speakers as a percentage of the population remains difficult to determine, as reports show progress in some sectors and not in others. For example, the bulk of China’s growing peacekeeping mission, which reflects its desire to become a big power, lacks one necessity: good English skills.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: FT.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4925

IT Group Passes Outsourcing Milestone in India

Passing a controversial milestone, European IT giant Capgemini has revealed that it will soon have more staff in India than it does in its home market of France – in an indication of the growing power of the subcontinent in the global outsourcing industry.

Capgemini is creating a new business information management unit in Bangalore, India’s Silicon Valley, which will help increase its workforce in the country to beyond 21,000 people, more than its headcount in France of about 20,000.

“We are able to access abundant application and technical skills in business information management in India and we can scale up there much more quickly than we could in onshore locations,” said Paul Nannetti, general manager of Capgemini’s global business information service line.

India’s computer services and business process outsourcing industry experienced one of the most difficult periods in its history during the global financial crisis as many of its largest clients, the world’s banking multinationals, fell deeply into the red.

A recent McKinsey study predicted the sector would miss its target of hitting revenues of $60bn by 2010 as it faces pricing pressure and falls in the volume of business.

However, the industry has recently begun clawing back business, as its clients begin work on integrating acquisitions made during the downturn and try to cut costs.

Before the crisis, India’s domestic IT leaders, Tata Consultancy Services, Infosys Technologies and Wipro, were already facing growing competition in the low-cost offshore outsourcing business from global leaders such as Capgemini, IBM and Accenture. The western multinationals began ramping up their workforces in India to enable them to tap low-cost talent in the country.

US-based IBM’s Indian workforce was 74,000 in 2007, the latest figures available, but earlier this year was reported to be shifting more jobs to India. Accenture has been increasing its numbers in India at a similar pace in recent years.

Salil Parekh, Capgemini India executive chairman, said the group’s headcount in the country was expected to show “high single digit” percentage growth this year and would next year register a double digit increase. Capgemini’s Mr Nannetti said the company was establishing a new business information management centre of excellence in Bangalore that would start with a workforce of 1,000, scaling up to 3,000 in about 18 months.

Business information management, a service that helps companies to improve their collection, use and analysis of data, is one of the areas for which India’s large talent pool is particularly attractive.

It can involve the use of multiple sources of information, from the weather to shipping schedules, to build a more complete picture for a client of its business performance.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: FT.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4859

Rethinking The Model For Offshoring Services

The outsourcing and offshoring industry is at a turning point. What began as a small-scale sector dedicated to application development, accounting and payroll has become, as of 2008, an $80 billion global industry, addressing a range of business processes and technology services. As the IT services and BPO industry matures, however, challenges are emerging.

Our research finds that more that 70% of offshore delivery centers, including both wholly owned captive operations as well as vendors, narrow their global operations to just three locations, often situated in only two countries (most frequently India, China or the Philippines). This reliance on a limited number of geographic regions--historically driven by the availability of highly skilled, low-cost labor in these areas--is exposing providers to a variety of location-specific risks. These include abrupt currency and wage fluctuations, intense competition for employees and regulatory limits. While a narrow geographic concentration may result in lower labor costs at the outset, the overall risks are higher, according to our research. The same is true on a microlevel: Our data show that when a delivery center in a large Indian city grows beyond 3,000 employees, costs spiral and performance begins to deteriorate.

Offshore service providers can mitigate these risks in the way a financial manager would--by diversifying their holdings. While diversification has long been the rule for investment decisions, outsourcing providers were under little pressure to change their lowest-cost-country approach until recently, when rising volatility in many favored offshoring markets began to impair providers' ability to predict costs and manage talent needs. As a result, many are looking to address these vulnerabilities while still reaping a cost advantage.

Offshore delivery centers can accomplish this goal by diversifying their operations in two ways: on a macro level, by expanding their global footprints to reduce overconcentration in any one region; and on a micro level, by broadening the range and scale of activities conducted in any one center. The result is a network approach to offshore delivery management that features centralized global delivery hubs and decentralized local or specialized service spokes. This next-generation model not only improves overall global delivery but also brings greater predictability to cost management while fostering better coordination, flexibility and responsiveness--characteristics that can give global companies a sharper edge in this period of rapid change. The remainder of the article and exhibits that follow illustrate the benefits inherent in moving to this new model.

The Benefits of a Portfolio Approach

The underlying volatility of today's markets makes planning more difficult, particularly in the cost-sensitive IT and BPO service industry model. With increasing pressure on margins, service centers need to anticipate changes in costs--and avoid sharp movements in local market conditions (such as higher wages, labor shortages and inflation). Such swings have been particularly marked in preferred offshoring destinations such as India, where the economics of doing business were significantly altered in the space of the 15 months between January 2008 and March 2009. Over that period, the rate of wage inflation fell by 8 percentage points (to 4 percent), the U.S. dollar rose 32% against the rupee, and employee turnover declined by 15%. These double-digit swings would have wreaked havoc on any cost projections and have made planning quite tricky.

Delivery centers can ease the planning burden by adding other geographies to their portfolios--ones that offer more stable economic profiles or whose market movements counteract those of the original location. Doing so allows companies to hedge their exposure to risk and makes managing costs more predictable. Such considerations form the basis of strong portfolio planning.

For the complete article, click here.


All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: Forbes.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4826

'Yahoo News' to Move Key Development Teams to Taiwan

In a risky but interesting move that has some at the company nervous and others excited, Yahoo is in the process of moving key development responsibility for its juggernaut Yahoo News unit to Taiwan.

In a risky but interesting move that has some at the company nervous and others excited, Yahoo is in the process of moving key development responsibility for its juggernaut Yahoo News unit to Taiwan.

Under the new system, product management, engineering and user interface design for the powerful Yahoo (YHOO) property will become the responsibility of staffers there.

Editorial employees for Yahoo News–which is the No. 1 news site on the Web with 48.4 unique monthly visitors, according to comScore data (SCOR)–will remain in the U.S., largely located at its Santa Monica, Calif., office.

Sources had alerted BoomTown to the change at Yahoo’s flagship content offering this week and many I spoke to about it were deeply worried about further separating key functions in the creation of Yahoo News.

“We are losing more and more of our ability to make quick changes and react to new technologies, which has worked pretty well so far, since we are #1,” said one staffer. “First, we all worked together across a room, then hundreds of miles away and now it is thousands.”

Previously, as was first reported here in February, the distributed and regional method of developing content was shifted to a central global product development organization, with product management, engineering and UI design centered at Yahoo’s Sunnyvale, Calif., HQ under CTO Ari Balogh.

The argument for the shift posits that centralizing the product development of a Yahoo media offering drives efficiencies, saves money, eliminates redundancies and accelerates growth across the world.

Those who do not like the idea think it is wrong to separate the development of a product from the programming because the two are intricately dependent and need to be tweaked delicately.

In addition, they argue, it makes Yahoo media offerings, which have been largely successful, less unique and more dull.

Well, tough tomatoes, because Yahoo confirmed the transition to me when I inquired about it. It was announced internally several weeks ago.

In an interview I did yesterday afternoon with Jeff Kinder, SVP of media products and solutions, who is spearheading the change, he said it was key that Yahoo News streamline how it makes its products in order to be more innovative and responsive on a global basis.

Before the shift to a global system, he pointed out that Yahoo had 26 different news products worldwide, using nine content management systems.

“This is part of building a global media platform,” said Kinder, who leads development of Yahoo’s anchor media properties, as well as its listings and regional products around the world.

Kinder said the staff in Taiwan was selected to take on Yahoo News because it had been creating top-level news products and was passionate about the arena.

Nonetheless, similar functions for other major Yahoo content categories–Sports, Finance and Entertainment–will remain in the United States.

In addition, he noted, with employees in Taiwan taking over these functions at Yahoo News, it would “free up some of the talent” in Silicon Valley to work on other critical content projects.

Kinder dismissed worries about any logjams in the ability of U.S.-based Yahoo News staffers to make changes to offerings, either for consumers or advertising partners, noting there were weekly calls between the teams and plenty of ways to communicate online.

But those worried about the change said the reason for the move was more to cut costs in the content arena, which–like many parts of Yahoo–has undergone layoffs and expense reductions.

Countered Kinder: “We are all driving to the same goal….This is not about cost savings, but about accelerating change and leveraging a global team.”

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: All things digital
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4721

Outlook for Outsourcing Spending Brightens

Spending on outsourcing is set to come out of a slump and return to pre-recession levels by the end of the year, bringing a much-needed boon to technology companies in India and elsewhere, says a closely-watched survey of the industry. More than half of companies surveyed that outsource say they expect their spending on technology to come back to levels before they made cutbacks, according to the 2009 edition of the Black Book of Outsourcing.


[Estimated timeframe:Q2 2009-onward]


That could be much-needed news for outsourcers globally. For nearly a year, financial and political fears have kept a damper on companies' tech spending, bringing a halt to the skyrocketing growth outsourcing companies long enjoyed.
The results are from a survey to be published Thursday by Brown & Wilson of Clearwater, Fla., that invited over 300,000 clients to rate outsourcers on their performance and professionalism. The yearly ranking is a bellwether of the state of the industry and ranks its most highly-regarded companies. The survey´s results were provided to WSJ.com in advance of their publication.

India, in particular, fared well. HCL Technologies Ltd., based in Noida outside New Delhi, tops the list this year, among a wave of Indian companies that came out further ahead this year. Nearly 94% of companies surveyed say they would definitely consider India as an outsourcing destination for the right price, second only to the U.S. and significantly higher than other emerging markets like the Philippines and Eastern Europe. A proven track record will be crucial when companies start spending on outsourcing again, the report says.

What makes the pro-India results surprising is that they come in the wake of a massive fraud scandal at the country´s Satyam Computer Services Ltd. The company´s founder B. Ramalinga Raju admitted in January to fudging Satyam´s books to the tune of over $1 billion.

For the first time this year, the survey asked clients to score outsourcers on accountability and trust. Indian companies scored highly, with 81% of clients saying that Indian companies had improved their accountability since the scandal broke.

"Post-Satyam, our expectation was that Indian providers were really going to take it right on the chin," says report co-author Scott Wilson. "But it seems that they used it as an opportunity to go out to their clients and talk to them about their concerns."

Three Indian companies -- HCL, Infosys Technologies Ltd. and Tata Consultancy Services Ltd. -- ranked in the top 10 of outsourcers with the highest accountability, transparency and trust.

India´s edge as an outsourcing destination is pushing out the competition from other developing countries, which have the same low wages as India but don´t have the south Asian country´s reputation. "It´s the fourth year in a row that there´s no Chinese firm," says Doug Brown, the other co-author.

If customers do start putting money back in the pockets of outsourcers by the end of the year, they won´t be diving right in. Instead, they´ll be looking for short-term projects -- less than six months -- and will stay away from the complex pricing deals that were popular before the downturn, according to the report.

All data sources are attributed with links to the original insight. The insight is then summarised and, where appropriate, enhanced with additional information.

Source: WSJ.com
MTT insight URL: http://marketingtrendtracker.com/article.aspx?id=4119

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