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Automation, not cheap labor, is reshaping outsourcing

automationThe offshore outsourcing of IT grew because of the cost of offshore labor. A software engineer in India is paid but a fraction of what a U.S. worker earns. Payscale puts the median salary for a senior software engineer in India at $10,000.

When IT services firms bring in H-1B visa workers, these workers earn substantially more than their overseas counterparts, but often significantly less than American IT employees.

This labor cost advantage has been a powerful lure for U.S. customers, but analysts see labor costs diminishing in importance. Customers want more automation, whether it’s infrastructure management or business process outsourcing. IT services firms can no longer complete exclusively on lower cost labor.

“The search for just cheaper people is a thing of the past,” said Frances Karamouzis, an analyst at Gartner. What customers now want is to buy more “thinking” and automation for the “doing,” she said.

One process that has taken off is called “Robotic Process Automation (RPA),” a term given to a virtual machine that takes over some of the applications and workflows managed by workers. These systems don’t directly replace humans, but take structured tasks and automate them, with users saving as much as much as 15%, said Karamouzis.

But Karamouzis sees RPA as a gateway to more sophisticated tools. Once IT services customers realize savings using this tool, their next question often is: What else can we automate?

Automation tools are coming, and quickly. IBM, which is a major employer in India and has shifted much of its work overseas, is focusing a large part of its future on its cognitive engine, Watson.

Gartner believes that by 2020 Microsoft will center its strategy around Cortana, its intelligent personal assistant, instead of Windows.

The overseas firms — Infosys, Tata Consultancy Services and Wipro, in particular — are also focusing on artificial intelligence tools to take over tasks. Infosys, in a recent annual report, said it was able to move nearly 4,000 full-time employees from projects to other tasks as a result of the automation of underlying services.

“Is offshore dead? No, but it’s no longer going to be used for competitive advantage,” said Karamouzis.

Offshore outsourcing may be one of the more controversial issues in the political landscape, but the industry has grown despite it.

Among the large offshore providers, Everest Group said that HCL, for instance, had 450 clients in 2014 providing $1 million plus in revenue; last year, it had 495. Infosys had 950 active clients in March 2015. This past March, that number had grown to 1,092, with repeat business accounting for 97%, said Salil Dani a vice president at Everest. Other firms showed gains as well.

IT services firms are shifting to automation, cloud, the Internet of Things and to “next generation services contracts that have pushed the traditional outsourcing services to the backseat,” said Dani.

More broadly, the arrival of intelligent automation is spreading through all industries, not just IT services.

“Intelligent Automation is one of the most disruptive trends the industry has seen,” said Tom Reuner, an analyst at HFS Research. The approaches are “about decoupling routine service delivery from labor arbitrage. However, the direction of travel is toward human augmentation, and not substitution.”

In some ways, it is hard to imagine the labor advantage disappearing anytime soon.

The cost advantage of using offshore workers in the U.S. remain substantial. Outsourcers must pay visa workers the prevailing wage, but about half of these workers are paid Level 1, or entry level, salaries in a four-tier system, according to a report by the U.S. Government Accountability Office. (The prevailing wage Level 3 represents the median.)

Presumptive Republican presidential nominee Donald Trump has offered up an immigration reform plan to raise H-1B wages that strongly implies using Level 3 as the new wage floor.

Ron Hira, a public policy professor at Howard University, looked at the wages paid at one firm, Southern California Edison, which cut some 500 jobs last year after signing outsourcing deals, and compared it to data paid to H-1B workers. What he found was that the offshore contractors were saving as much as 41% on labor cost by using visa workers. His research, which was published by the Economic Policy Institute.

The idea of raising the wages of H-1B workers is championed by reformers in Congress. But what analysts are saying is that wage advantages won’t be as important as automation capabilities in the years ahead.

Article source: http://www.computerworld.com/article/3083264/it-careers/automation-not-cheap-labor-is-reshaping-outsourcing.html

Trondheim 2016 Gala Dinner

Euroma Trondheim 2016

A well known conference for an academic getaway is the Euroma conference. An annual event, where academics from around the world, including the UK, gather and discuss important matters around operations management. Included in this brain expanding event is a brain cell destroying gala dinner where some 500 or so Profs and Lecturers drink copious quantities of alcohol out of the sight of prying eyes of the university  🙂

Here is a short clip of the fantastic entertainment put on for the Gala dinner by our hosts. More on the actual content of the conference later.

Past England Manager Grahame Taylor

Here is a nice picture of Stephanie, one of our regular contributors, in an earlier reincarnation as a computer word processing sales manager. The football manager in the picture is Grahame Taylor England’s manager from 1990 to 1993 when he had a bit of a raw deal with a Dutch player scoring a killer goal after a dreadful foul (see here the story http://bbc.in/1QzjJNs). Anyhoo here is Grahame in happier times at Aston Villa.

Grahame Taylor tries out a word processor

Stephanie as sales manager at Philips

 

New Report Finds That Outsourcing Is Programming the Government to Fail

Report Programed to failOTTAWA, ONTARIO – Outsourcing is costing the federal government money, jobs, morale, accountability and productivity, according to ‘Programmed to Fail’ a new report released by the Professional Institute of the Public Service of Canada (PIPSC).

“Canadians are paying a heavy price for outsourcing,” said PIPSC president Debi Daviau. “Outsourcing removes much-needed expertise from the public service, gives rise to more, not fewer, management problems and leads to an unproductive dependence on outside consultants. It costs Canadian taxpayers billions of dollars each year. It works against growth of the middle class and promotes insecure, part-time contract jobs without benefits over permanent, full-time jobs with benefits.”

The report found that nearly half of PIPSC members were aware of contractors in their team or work unit. Nearly 60% said contracts in their team or work unit are routinely renewed, 41% reported contractors present for periods between 1 to 5 years, and 17% reported contractors present for over 10 years.

The cumulative annual cost of outsourcing to taxpayers is now over $10 billion, approximately $8 billion of which is spent on private contractors.

“Programmed to Fail” recommends that the government adopt a more aggressive strategy of “insourcing” and implement a consistent approach to adequately tracking and reporting the numbers of contracted workers it employs.

“Negotiating and administering a few dozen collective agreements is much better than negotiating and administering tens of thousands of individual contracts,” said Daviau. “Unless the government changes course soon, Canada is at risk of employing a permanently precarious public service.”

PIPSC represents some 55,000 public-sector scientists and other professionals across the country, most of them employed by the federal government.

Article source: http://finance.yahoo.com/news/report-finds-outsourcing-programming-government-123000542.html

How to Get the Most Out of Business Outsourcing

Outsourcing helps your company save time and resources on various projects, such as web design, app development, social media campaigns and online marketing projects.

There are many different ways to maximise the potential of your outsourcing relationship to better benefit your company.

Choose Wisely

These are some the key considerations when choosing a third-party company to work with:

  • Do they have experience in your sector?
  • Have they worked with other companies that are a similar size to yours?
  • How long have they been in business?

When it comes to choosing an outsourcing partner to work with, treat the process like you are hiring a new employee. It is up to the firm to make a good impression on you, so think of your first contact as less of a sales call and more of a job interview.

This also means that you should check their references thoroughly. Most agencies will have a portfolio featuring work that they have done with other clients. You should get in touch with some of these clients to find out more about your potential partner. Just as you would with a new employee, get in touch with someone that the agency has worked with previously to understand more about their business and what it is like to work with them.

Related Article: Business Beware: Top 12 Mistakes To Avoid When Outsourcing

Understand the Barriers

Most affordable outsourcing partners are located overseas, so you will have to take cultural differences into consideration. One of the major things to consider is national holidays. Find out when the agency you are thinking of working with have their holidays, and make sure that they don’t coincide with busy times for your company.

The same goes for standard work hours. If the time difference is negligible, then you should be able to work together easily and communicate at reasonable times throughout the working day. However, if your employees work flexible hours, you could benefit from working with an agency that is up to 5 hours ahead or behind.

Pool Your Own Resources With an External Agency

An outsourced marketing or web design firm offers up specialist expertise to perform to benefit your business. However, that doesn’t mean that they should work on your project completely on their own.

Since your staff should know your business better than anyone else, ensure that a couple of your employees are in close contact with your outsourced agency; they can cooperate to leverage all available resources for one cohesive strategy that will benefit your company.

While it is beneficial to have several of your staff members involved with the agency, ensure that there is just one person on your team who is in charge of your  who can make the important decisions. Without this single point-of-call, the relationship can get messy and cause confusion on both sides. So, assigning a single person to this relationship will help your staff and agency work together more effectively and deliver the right results.

Having your staff work closely with the outsourced agency can actually enhance their own skills and knowledge. In fact, it is a mutually beneficial relationship, as your own team will learn more about marketing or web development and the external agency will learn more about your business’s specific sector.

Related Article: Freelancers to the Rescue: Top 5 Tasks to Outsource for Small Businesses

Set Goals and Measure Your Progress

For ongoing outsourcing projects like marketing, it is important that you set goals and benchmarks. You should know what you want your company to achieve from outsourcing, and check up on the progress regularly to ensure that your agency is meeting these goals. You can revaluate as necessary, but assessing your goals should ultimately let you know if your outsourcing party is providing the results you’re after or if you should seek out another agency.

Reduce Your Time-To-Market

If you have an innovative or ground-breaking new product, app or website that you want to get to market as soon as possible, outsourcing is often the best way to go. An external agency has the resources necessary to offer a quick turnaround time when developing an app, creating a website or establishing a marketing campaign.

Time-sensitive products are ideal candidates for outsourcing. Currently, the mobile payment sector is expanding rapidly with more and more companies launching new products regularly. In this type of situation, outsourcing would be an ideal option, as you would want to beat the competition to market with new technology.

Related Article: Let It Go: Outsource These Tasks to Keep Your Business Running Smoothly

Treat Your Agency as a Partner

Look at your outsourced agency as a partner rather than a vendor, as they can really benefit the growth of your company. Your outsourcing partner has specialist resources and tools, and they can provide you with valuable insight about improving your processes or products. You should be able to feel comfortable asking for advice on certain topics that could benefit your business. 

Article source: http://www.business.com/business-opportunities/how-to-get-the-most-out-of-business-outsourcing/

Article source: http://roystonmorgan.com/royblog/?p=5558

Swedish bank Sparbanken Syd expands IT outsourcing to trading

Swedish bank Sparbanken Syd has turned to outsourcing to improve the cost-efficiency and quality of its trading business.

The organisation – Sweden’s oldest savings bank – has signed a five-year outsourcing agreement with Finnish service provider Tieto, which covers IT systems, operations and back-office services.

“Over the last ten years the fixed costs of running operations have increased and the margins of the business have gone down,” Hans Nelfelt, vice-president at Sparbanken, told Computer Weekly. “So if it’s not your core business and you don’t have the necessary scale, you should outsource.”The deal expands on Sparbanken’s existing relationship with Tieto. The bank already uses trading management software from Tieto, which will now be migrated into software as a service (SaaS). New to the collaboration is business process outsourcing (BPO) of the back-office services, including system support and process management, as Tieto will take charge of the entire securities process from ordering to settlement.

Nelfelt said he believes this combination of software and process outsourcing will help to develop its securities offering more cost-efficiently.

“We have to be able to supply good savings products and advice, but trading is not a core service for us,” Nelfelt said. “Of course cost savings are a goal for outsourcing, but also to be able to deliver a good service.”

In addition, the bank hopes the agreement will streamline Sparbank’s trading processes with its existing outsourcing strategy. The bank has a small IT team of six people and relies heavily on partnerships.

Most of Sparbanken’s IT infrastructure, maintenance and development is handled by Skandinavisk Data Center SDC. However, Nelfelt said the decision to outsource securities trading to Tieto was simple, as it was the only supplier in the Sweden’s securities sector to cover both SaaS and BPO outsourcing.

“It was also a natural choice. We already use their system so it won’t be a complicated transformation process,” Nelfelt said.

He said there will be minimal impact on Sparbanken’s 65,000 private and business customers, as the user interface will largely stay the same, he said.

Preparation essential to yielding benefits

Nelfelt stressed that, while the outsourcing is not a dramatic change for the bank, the transition of all trading processes has its challenges. “It’s very tempting to take shortcuts and try to make it easier by keeping part of the processes in-house, but then you wouldn’t be able to get all the benefits you want,” Nelfelt said.

“We have done quite extensive work in mapping and defining the processes Tieto will be doing for us. It has taken time, but it is very important to do because you save that time and money in the actual outsourcing.”

The software migration is currently being finalised and the transfer of its back office services will be concluded in early September 2016.

Sparbanken is not alone in its move to outsourcing. According to the 2016 Nordic IT outsourcing survey, published by PA Consulting and White Lane Research, 50% of Nordic companies in the finance sector plan to increase their outsourcing. This is slightly higher than the average of 46% across all industries

 

 

Article source: http://www.computerweekly.com/news/450297888/Swedish-bank-Sparbanken-Syd-expands-IT-outsourcing-to-trading

The Deathly GM Crops and The Half-Wit Prince

The Deathly GM Crops and The Half-Wit Prince (Book 8)
Most of the time I regard Prince Charles as an amiable affable buffoon who talks a peculiar brand of new age sentiment and claptrap and dresses in a quaint Scottish (kilt commando style) way so beloved by our American friends across the water or who swans down the racecourse in top hat waving to the assembled masses on the rails. This erstwhile Edwardian who I think at heart harks back to those times when obedient yokels tilled the fields from dawn to dusk and tipped a respectful forelock in his ‘ighness’ direction as he swept by in his carriage to the big house (god bless yer guv) and people knew their place and the beautiful class structure of the realm stood in all its glory whilst he sat at the top of the pile as king (eh not yet the Queen is still very much hanging on ed.) with his subjects arraigned about him.
charlie
Now on the subject of GM crops (and about time too!!) HH has actually managed to hit a few (very few) good points but what surprised me about this whole issue was that a national newspaper gave his non-scientific bar room opinions front page coverage. I was actually about to buy a copy of the Telegraph to peruse on the train when I saw he was the lead for the day – this forced me to buy the broadsheet version of the Socialist Tribune (the Guardian) as a substitute so dear readers you can guess this was a serious setback.

As always I am interested in the purpose of these things and not in the content per se for if I want to hear some claptrap I can always talk to my pocket memo for five minutes then play it back. The point it seemed to me was to position Charles as next ruler and restate the inevitability of a continuation of the stultifying class structure we have in this country with the Windsor’s at its head. Demonstrating that he has thoughtful and erudite opinions (ok that didn’t work ed.) and in an unquestioning way accept and parade his views before the public. Also the writer sprinkled the article with discourses of justification of why this was an important piece due to the role HH would play as future monarch etc etc – not questioning the reasoning behind this rationalisation at all.

Often it is refreshing for the basis behind some scientific advances to be critically reviewed as to their consequences and costs – the debate about cloning being an example where there is not much understanding so very little control. GM crops are a potential benefit to society as a whole at least in the third world where they don’t have the luxury of choosing ‘organic’ or otherwise as we do in comfortable wet UK – and drought resistant strains of wheat may indeed be a breakthrough for them – and of course there are always the agribusiness monopolies wanting to maximise their profits which should be monitored. So there is a basis for debate which is underway but these more thoughtful insights do not get airtime or the grounds of critical debate are undercut by poorly informed half understood issues expounded for purposes of publicity and positioning of a future king.

Royston

Snippet from the Web

Lord Robert Winston, Imperial’s famously moustachioed professor of fertility studies seems to have got himself in a trouble over his comments relating to critics of GM technology.
In a speech at Whittington Hospital (somewhere in North London, apparently) last week, the celebrity ICSM Prof spoke out against those who criticise any kind of genetic manipulation, saying that many protests were “ill-advised”. He was particularly forthright on Prince Charles, whom he called one of “the most genetically modified people around”.

Campaign to get Red Lady of Paviland returned to Wales

The Red Lady of Paviland

As RoyMogg readers will be aware the ‘Red-Lady of Paviland’ currently resides in a box in Oxford and is the subject of action to attempt the repatriate the red-lady (actually red-bloke cos it is man!) to the land of origin Wales. The Red-Lady actually a red-ochre stained body of a man, is one of the earliest known Palaeolithic burials in the UK and quite rightly belongs as part of the heritage of the Welsh being an example of early occupation of this land some 25 to 26 thousand years ago.

The bones were discovered around 1823 by the reverend John Davies on a stroll and have been the subject of many false attributions as to what the remains were – not least that the body was of a woman not a man. One of the most colourful stories was that the ochre-stained skeleton had become a ‘painted lady’ as a consequence of the service she gave to the needs of the local Roman garrison in the camp on the hill just above the cave. It was a good story possibly dented by the fact that the woman turned out to be a man although this would have been no problem for the roman soldiers I am sure – particularly on a cold welsh night in some godforsaken posting in the south of Wales some 2 thousand years ago. This would also have given an alternative explanation to the bones being often referred to as the red queen of Paviland although for political correctness I cannot take this argument too far.

Anyhoo … in the early years of the 20th century this did not stack up as it could be seen that as well as not a female burial the mammoth ivories around the body were Palaeolithic. The red-lady has made a trip back to Wales in the meantime and is the subject of a campaign to get this fantastic artefact returned from the canny English but too no avail – there is even a campaign group dedicated to the cause called the ‘The Dead to Rights group’, set up by those who regard the removal of the skeleton as a “desecration” of a sacred site and mirrors the concerns of other groups dedicated to the return of plunder from the colonial era to their rightful place. I am not sure of their success but applaud their cause.

I have been to the cave myself some years back and it is a place of mystery especially when you are on your own – It does take you back and certainly grounded me as a modern day Welsh guy in the land where I was borne (ehh enough of this sentimental crap! ed.)

A recollection of a wonderful moment – the Queen and I

So it is that time when all the country (well except for Prince Charles I guess who must be fed up of waiting for the top job) celebrate the Jubilee of our Madge. It is as if the entire UK population, to the bemusement of foreigners and Americans, like lemmings lose their collective mind and gad around like halfwits joyfully tugging their forelocks and bathing in the aura of someone who has not done a hands turn in 86 years. Anyhoo I actually missed the last one miserable git that I am and have planned to escape to the country for a nice long weekend for this one as well.

But before I clear off I thought I would share one of those moments when my life was touched by ‘Her Majesty’ and just as in the countless others who have recounted these magical moments over the last few weeks I will do the same.

It was many moons ago in the Royal Mews  just before Trooping of the Colour in the times when Her Majesty actually used to ride to take the salute. Anyhoo just before such events a few brush up lessons were required and so the Royal Mews riding school was strictly off limits whilst she was twirled around on the lunge and put through her paces. “Now Ma’am could you please put our leg on that lazy slab of useless horse flesh and get it moving” and so on…

…On occasion I used to ride at the Royal Mews with the civil service riding club. One day I bowled up and wandered off to the school to see if any of my friends were riding (well colleagues I was miserable even then and was billy no mates) opened the door and went to enter the school to be greeted by…

…’Oi you have to bloody well clear orf the school is taken you halfwit!!!’

Even though I was being given an earful I felt awestruck and touched by the great glory of the presence in the school on a grey job in the middle of the school – which was in case you are as slow as I am – Her Madge.

So my life has been touched by the presence just as all those idiotic royal reporters or anyone of the five thousand odd guests at one of those garden parties being held right now.

So have one on me I am ‘orf’ to my country seat in the garden.

Cheers

Springfield board: It’s too early to talk bus outsourcing

SPRINGFIELD—The school district’s investigation of outsourcing transportation services is just that and, at present, no more. Director Doug Carney provided that clarification at the latest board meeting just prior to public comment from retired driver/substitute “Buck” Clark.

Before anyone spoke on the issue, Vice President Frank Agovino, who was presiding, said the board would be forming a smaller committee on transportation, similar to committees in place such as finance, facilities and personnel. Agovino said the purpose would be to “take a longer, more extensive look at the transportation issue.”

With that, public comment began with Dennis Kraus who said he was speaking for his driving colleagues as well as mechanics.

“One thing we requested was what you just said,” Kraus begin, referring to the committee. “We believe this is an economic and not a service issue. We looked at the budget of $62 million of which 3.79 percent is for transportation salaries and benefit. Is that the pile of money we are looking at? The pension and benefits and potential sale of buses are the ‘savings.’ Is there anything else we are missing?”

The board kept to its practice of not engaging in dialogue during public comment.

Kraus continued, noting there have already been a number of drivers who have gone to other districts. He also concentrated on “overwhelming evidence” transportation services privatization does not work economically in the long term.

“We are trying to slow down the process,” Kraus said, believing the district has a deadline of July to make a decision.

Clark began by indicating a sense that the district intended to turn to a management company. Carney interjected that while not the board’s practice to dialogue, clarity was needed.

“No one has expressed an intention to outsource services. We have just asked for an RFP (Request for Proposal),” said Carney, stressing the investigative status.

Clark said he was expressing the feeling “downstairs” that the decision had already been made. He also cited studies on the economic ramifications as ultimate losses for districts, and the concept that returning to in-house service may be “nearly impossible.”

As part of the regular agenda, the board moved forward on establishing the new transportation committee to “study possibilities of outsourcing.” The committee will consist of President Christopher DeSantis and directors Bruce Lord and Jennifer Lofland. All meetings include reports from committee chairs.

Article source: http://www.delcotimes.com/social-affairs/20140426/springfield-board-its-too-early-to-talk-bus-outsourcing

Article source: http://roystonmorgan.com/royblog/?p=2246