Trends for 2008: Outsourcing Industry

In the last few years, outsourcing has transformed into a more streamlined and mature industry. Here are some of the top trends predicted for the outsourcing industry for 2008.

The Analyst House Gartner expects that the outsourcing sector will grow at a robust 8.1% in 2008. Companies are outsourcing more, but opting to go for a multi-provider strategy, resulting in smaller deals and lesser media hype.

Politically Correct Outsourcing: With a heightened sense of environmental consciousness everywhere and the US presidential elections looming large on the horizon, 'socially responsible outsourcing' looks to be the mantra of 2008. There will be an increased focus on how service providers deal with their social and environmental responsibilities. Outsourcers in the US and the UK are taking an interest in the social credentials of their offshore service providers and the ethics of outsourcing practices. Offshore service providers who contribute to the environment around them, adhere to good in-house work ethics and enhance overall employee opportunities with training and career growth are the ones who will make the grade in a new environmentally conscious marketplace.

Outsourcing goes Professional: Outsourcing is emerging as a professional domain in its own right with growing demand for professionals having domain expertise in outsourcing best practices. As policy makers recognize the criticality of vendor management to gain from their outsourcing strategy, there is a growing demand for professionals with experience in the field. Experts predict a scenario where there will be more and more outsourcing professionals sitting at the executive table and defining the shape of business. The International Association of Outsourcing Professionals (IAOP) is offering the industry’s first and sole professional certification program – the Certified Outsourcing Professional (COP) – to address this need for a more professionalized approach to a dynamic industry. This could well be the time of the year when companies acquire a new COO (Chief Outsourcing Officer).

India Dominates as an Offshoring Location: A recent study by research specialists AT Kearney shows that India continues to have the dominant market share of 31% in global offshoring while Canada, China, Ireland, Philippines etc. are seen as challengers to the position. However, the last few years have seen the growth of locations such as Israel, Mexico, Brazil etc., which are making their presence felt as alternative offshoring locations.

Growth Areas in Outsourced Services: Outsourcing of Remote Infrastructure Management, Healthcare and Drug Discovery Services is poised for growth this year. The focus on SOA(Service Oriented Architecture) in software development and the widespread use of SaaS (Software as a Service) are also generating a lot of activity in the realm of IT and Software Development Outsourcing.

A New Wave in Outsourcing to India

The BPO sector in India is poised for a new growth wave according to industry experts. Traditional offshoring to India was always focused on basic back-end processing functions. Moving away from this trend, international companies are now outsourcing to India, complex processes that involve higher levels of expertise, decision-making and research-based support.

Services once considered as outside the scope of outsourcing such as litigation support services and creative services for the media and entertainment industry are two of the high growth areas taking off in a big way. The stereotype of the Indian data entry ‘sweat shop’ no longer holds true as some of the brightest legal minds and creative specialists in India join the offshoring bandwagon to provide expertise, know-how and creativity to global companies.

Litigation Support Services from India

LPO (Legal Process Outsourcing) is a segment that is seeing a lot of hectic activity in the new evolutionary phase of BPOs in India. The inflow of work into the LPO sector is on the rise; with significant amount of work coming in from the U.S. Industry analysts predict revenues to touch $640 billion by 2010, up from $146 billion in 2006.

The pressure from clients to lower litigation costs and shortage of legal professionals in the west was a prime factor that triggered the outsourcing of litigation support services to India. Many contracts that started off as low end service engagements for document indexing and coding have now moved up the value chain to full-fledged litigation research and support.

Presently litigation services outsourced to India include legal research using various electronic databases, creation of appeals and deposition summaries, document management and legal transcription. Many companies also create draft motions, legal briefs, memoranda and discovery documents as well as create print, videotape and animation exhibits for trial. Being connected with the legal system abroad and familiarity with the U.S. legal framework is a major edge for service providers in this sector.

Outsource2india has been providing comprehensive LPO (legal process outsourcing) and litigation support services to overseas law firms, in-house legal departments and attorney practices.
O2I's litigation support services are a virtual and seamless extension of our customers’ in-house capabilities and include creation, indexing and sorting of online legal databases, objective and subjective coding, unitization and other legal research services.

Creative Services for Media and Entertainment

The Indian media and entertainment industry has a reputation for expertise and high quality. Outsourcing of media, publishing and entertainment related services has been seeing rapid growth in the last year. Many global majors have partnered with Indian creative houses to send a significant part of their digital production and post production work to processing studios here at India.

Nearly 70% of production processes for media houses can be taken care of externally. International media and entertainment houses have made substantial cost savings and leveraged the creativity and expertise of India’s finest talent by outsourcing media and entertainment services to Indian firms.

Outsource2india has been offering customized solutions to the media and entertainment industry. Our comprehensive creative services in storyboarding, video editing, animation and music composition have assisted global majors in reducing costs, cutting production cycles and improving quality.

As companies move up the value chain and away from basic back-end processing to more frontline functions, the opportunities are immense. Companies ready to take up the challenge can be part of the new wave in outsourcing!

Outsource to O2I and give your company that competitive edge.

Are you listening to the voice of your customer?

Voice of the Customer (VOC) is a process used to capture the customer’s opinion/feedback on the service or product performance. The VOC is a term used to describe the customer’s stated and unstated needs.

This helps you understand the customer’s needs, discover his quality priorities, gauge process performance, compare performance with the competition, identify the deficiencies in the process and redesign or improve the process to achieve customer satisfaction.

The Voice of the Customer can be captured in a variety of ways - through surveys, focus groups, direct discussion or interviews, field reports, complaint logs, customer specifications, etc. CATI or Computer Aided Telephone Interviewing helps you detect customer churn and keeps your finger on the pulse of your customer with 100% data capture and voice recording.

The reason for analyzing this data is to be proactive and innovative in providing the customer with a best-in-class product or service. In fact, service is often a major differentiator in a product, particularly a technical product. Outsourcing technical support to a call center provides your customer with a service that sets your product apart from the rest.

Creating loyal customers is essential for a company’s sustainable competitive advantage. Every company should be able to create and retain customers. This comes from satisfying customer changing needs over time.

Levels of quality

When we talk about quality in services, there are primarily three levels of quality:

Level I - Must-be-quality – The customer expects this level of quality and takes it for granted.
Its absence causes dissatisfaction.

Level II - Satisfiers – The better you do, the happier the customer is

Level III – Delighters – These meet the latent/ unexpressed needs of the customer and come as a surprize to him. There’s no penalty for not doing them, but if you do them you get bonus points.

When a company focuses on Satisfiers and Delighters, they help to create and retain customers.

However, customer expectations are always rising. Over time, a Satisfier may get taken for granted and be perceived as Must-be-quality. Or a Delighter may become a Satisfier. The company too must constantly raise its sights to offer the customer newer satisfiers and delighters through innovation and listening to the customer.

Quality can increase profitability, both at a product level and at a process level. Outsourcing your call center can help your company more effectively
- Generate leads
- Process orders
- Implement deliveries and post-purchase concerns
- Cross-sell other products
- Provide helpdesk and technical support
- Conduct surveys and interviews ... and a whole lot more.

At each stage, your call center can increase customer satisfaction and loyalty. By listening to the voice of your customer,managing customer relatinships, detecting customer churn, taking proactive action and meeting stated and unstated needs.

Clinical trials outsourcing to India to top $1000 million by 2010

Clinical trials outsourcing has the potential to touch Rs. 5,000 crore (over $1,241.9 million) by 2010, according to a McKinsey report released in June this year.

India is establishing itself as a hub for clinical trials with more than 10 large multinational pharmaceutical companies and 15 leading CROs (Contract Research Organizations)based here. India’s $100-120 million contract research market is growing at 20-25% each year, driven by the following factors:

The India advantage in clinical trials outsourcing

• A vast patient population
• A diverse number of diseases that can be studied
• Quicker enrollment of patient volunteers
• Faster time-to-market for trial, testing and manufacture of critical drugs
• Highly affordable R&D costs
• IPR protection
• World-class facilities to undertake high-quality, cost-effective Phase I Clinical Trials
• Facilities to carry out bio-availability (BA) and bio-equivalence (BE) studies on healthy human volunteers
• A large pool of trained professionals in the fields of medicine, pharmacology, biosciences, IT and R&D. They also have good English language skills
• Outsourcing service providers that are familiar with the global regulatory framework and have in-depth experience in managing the complexity of clinical trials outsourcing

The global contract research market

The research firm Datamonitor places the size of the global contract research market at about $16 billion, with over 1,000 contract research organizations (CROs) globally. The global pharmaceutical industry operates within a rigorous regulatory framework and is squeezed between the pressures of spiraling costs, time investment and complex process of developing an innovative new drug.

CROs help pharmaceutical companies cut clinical trial time by about 30%, says Business Insights, a market research firm.

India with its KPO skills and human capital in biosciences, bio-IT, analytics and medicine, affordable costs and up-to-date infrastructure for drug development research and clinical trials, is well-positioned to seize the huge outsourcing opportunity presented by clinical research.

International drug companies are profiting from the benefits of outsourcing to India as a business strategy in the areas of clinical trial data management, information technology, finance and accounting, data management, payroll, logistics and HR.

Outsourcing drug discovery research to India slashes cuts costs and time-to-market

India has demonstrated its capability in removing the traditional roadblocks to faster drug development.

Patient recruitment

In order to get a few patients for initial screening, companies in developed countries have to reach a huge number of patients first. In India, the availability of a large patient population and a diverse spectrum of diseases, helps reduce lead time for patient recruitment by 30-40%.

The time and cost factor

From the lab to the market and actual usage by patients, the development of an experimental drug costs around $802 and takes between 10 – 15 years. Every day lost in bringing the drug to market is $1 million lost.

Only five in 5,000 compounds that enter pre-clinical testing will actually progress into human clinical trials, and of these five, only one is likely to be approved by the regulatory authorities.

The rising cost of clinical trials is compounded by other factors. For example, drug testing of degenerative or chronic diseases requires longer trials.

Clinical monitoring

Lab testing and diagnostics is carried out in world-class laboratories by trained professionals in India. This generates huge volumes of data which must be managed.

Data management in clinical trials

Conducting a large number of tests (a few thousands per day) while maintaining data integrity and quality, is a time-consuming and labor-intensive task. Relevant data must be entered into case reports and source documents, data at research centers needs to be reviewed and evaluated for quality.

India offers proven IT and data management skills to deliver quality with quick turnaround in clinical data management and statistical analysis of clinical data. Specialized IT solutions, analytics and new technologies speed the processing of data, routing of documents and management of data collection, storage and retrieval.

Reverse brain drain

Indian scientists are returning to India from foreign shores, bringing with them a wide exposure to the regulatory environment abroad.

A bright future

India is fast emerging as a preferred hub for CROs and CMOs, providing a cost and skill base to support affordable drug development. Transnational business partnerships are also on the rise.

With its ever-growing capabilities in clinical development, acceptance of Indian clinical data by USFDA/EMEA and R&D collaborations with US and EU companies, India is all set to make its mark in the global arena for clinical trials.

Web analytics outsourcing takes websites to new heights of performance

Websites are crucial to online marketing success and can even make or break a business.

If you're wondering why your website isn't performing as it should, you would do well to call in the experts. Techno-savvy web analytics teams in India have helped to boost website performance, drive targeted traffic, and get users to take the desired action on websites - whether it is to buy a product or download a form.

Outsourcing web analytics to India enables a company that doesn't have an in-house web analytics team to get professional site monitoring, reporting and site optimization services. Outsourcing can also help to get the web analytics process in place or augment the capabilities of an in-house web analytics employee. The outsource team can help define the Key Performance Indicators (KPIs) and metrics, configure the web analytics tools, track and measure results, provide feedback - and the company can take it on from there.

A web analytics outsourcing service provider has to demonstrate an understanding of the latest web analytics tools, flexibility in their usage, and a clear perspective on the goals for the website as a business acquisition tool. Using proprietary or free web analytics software like Click Tracks, Web Trends, Sawmill, Google Analytics, Coremetrics, NetTracker, Netinsight among others and tailoring them to a client's needs, requires specific web analytics expertise.

Web analytics begins by deciding what to measure - which involves mapping business objectives and setting KPIs for the website. This could be a complex task if the website in question is a large and complex one and has several different categories of stakeholders.

Converting potential customers into regular ones, changing parts of your website to generate business results, measuring results - the process of web analytics is a cycle that feeds back into the system to continuously improve and fine-tune your website.

Right from software configuration to optimize investment, to data auditing to ensure that web traffic data is up-to-date and error-free, to dashboard creation that enables 'at-a-glance' capture of critical website data so decision-makers can immediately act on it, to regular reporting and analysis, and website optimization to improve and measure results, web analytics outsourcing ensures that your website delivers the business results you want.

Outsourcing digital photo enhancement gives photographers more time to do what they do best

Professional photographers would much rather spend hours composing and taking a shot rather than hours re-touching it. Outsourcing image editing work to India saves them time and effort and brings in results that delight clients. Whether their focus is on photojournalism, wildlife photography, model portfolios, sports photography, wedding photography, real estate and architecture, advertising, travel photography or documentary photography, outsourcing image processing helps photographers and professional photo studios add greater value to their work. It also boosts their business growth as they are then able to handle more clients in less time, and take on additional work related to their core expertise.

Quality and quick turnaround
High-end online stock photo sites and stock photo retailers are fussy about the quality of photographs they will accept for retailing. Even a little dust on the image would end up in a stunning photograph being rejected. Outsourcing digital photo enhancement can change all that. Reliable broadband connections in India have made it faster and easier to transmit large digital files on the internet. All that a photographer has to do is to email or FTP raw digital files to India for quick turnaround of processes like image retouching, masking, color correction, creating photomontages, composition, image manipulation, and panoramas combining multiple images through image stitching software.

Global companies that provide digital photo enhancement services to retail customers also use imaging services from India for back-office support.

Prepress production

Image editing services also prepare a photographer’s work for printing or publication. Processes like photo restoration, color scanning, conversion of low-resolution images to high-resolution files can be easily outsourced for excellent results in print-ready formats.

Outsourcing prepress services is particularly helpful when there are large numbers of photographs to handle, as in catalogs and brochures. Commercial printers, graphic designers can expect high standards of quality at very affordable prices.

The next logical step is to outsource the printing itself. India has a thriving printing industry that has the expertise to handle the design and printing of magazines, catalogs, newsletters, promotional material, posters and calendars.

Give a fillip to your company's image, save on time, effort and money and produce high-quality results in image editing and printing. Add the outsourcing edge to your services.

India draws Fortune 500 companies like a magnet

Fortune 500 companies from a wide range of industries have placed their bets on India -the world’s largest democracy and the 12th largest economy (the 4th largest based on purchasing power parity). And this is not just about outsourcing. They have invested in India for the long term, have set up base in India and are growing rapidly.

These multinational companies (MNCs) are represented in sectors like pharmaceuticals, automotives, food and beverages, petrochemicals and chemicals, computers and software services, financial services, engineering and logistics among others.

The reasons are not far to seek. These global leaders have come:
• To set up R&D and engineering centers in India – often the largest centers outside the companies’ headquarters in terms of investment and staffing
• To make inroads into a key growth market - India
• To fuel company-wide growth and acquire new capabilities such as
- high-quality, cost-effective software-development capacity
- product development and project management capabilities
- process chemistry skills
- manufacturing strengths
- cutting-edge technology
- financial/accounting services , payroll processing,
tax preparation ,and other services
• To attract managerial talent
• To conduct clinical trials and testing
• To tap lower manufacturing costs and minimize import duties
• To leverage India's low cost and productive workforce
• To set up captive outsourcing units
• To set up shared services centers
• To partner with third-party outsourcing service providers

A study by the Indo-American Chamber of Commerce showed India is home to 220 of the Fortune 500 companies from countries such as the US, Switzerland, Canada, Sweden, United Kingdom, Germany Netherlands, France, Japan and South Korea.

As globalization accelerates the pace of change, there is a need for MNCs to be present in India, one of the largest economies and markets of the future.

India offers
Scalability
Cost-effectiveness
Quality and process maturity
High-performing software, services and biotech sectors
A large talent pool of managers, engineers, scientists and skilled workers

The presence of MNCs in India is bringing about a cultural shift towards a more performance-oriented work culture. Employees are learning cross-cultural team management and gaining familiarity with global best practices. This can only benefit international clients as India develops and strengthens its global workforce.

A shift from captives towards third-party BPOs

The high costs of operating captive outsourcing centers has prompted some MNCs to spin off their captives and outsource work to third-party Indian BPOs. 60% of the offshoring market is held by captives.

Although MNCs have been able to ensure data security through their captive units, the shift towards Indian third party BPOs is a business decision dictated by:
1. Costs - The operating costs of captives are typically 28-30% higher than that of Indian third-party players, who are seizing the opportunity to acquire captives with capabilities in the BFSI sector (banking, financial services and insurance), which is slated to be the fastest-growing segment in the Indian outsourcing industry.
2. Scalability –Third-party BPOs are better able than captives to manage the increased size and scale of their operations to keep pace with the rapid global growth of their clients’ businesses - while keeping the cost advantage.
3. Attrition – The rate of attrition at captive centers is higher than the industry average and adds to the costs which are already high.

According to a Forrester report:
• 10% of captive units in India will shut down
• 20% will use a hybrid approach - outsource less critical work to
third parties while keeping strategic work within their Indian captive units
• 10% will sell out and go the third party route
• Almost 50% are likely to exit over time.

Third-party outsourcing service providers in India have proved their capabilities and are in a position to provide best-of-breed outsourcing services that satisfy stringent data security and confidentiality norms.

Indian outsourcing industry widens geographic footprint

The global research firm Forrester says that offshore service providers will have to scale up and provide a broader geographical footprint so that international customers feel comfortable outsourcing to them. Without this option, the perceived operational risk is a deterrent to outsourcing over the long-term.

This is why Indian outsourcing service providers are setting up global delivery centers not just in India alone, but in countries outside India. This enables them to offer their clients the flexibility of a blended outsourcing model (a combination of onsite, offshore and nearshore delivery options).

The choice of the partner country is determined by the availability of skilled human resources, low-cost services, and specific language skills. India, for example, is strong in IT-BPO and English language skills, but lacking in capabilities in languages such as Spanish, Dutch, French, German, Italian or Russian. New opportunities for business growth in BPO lie in European countries requiring BPO services in these languages.

India heads the list of top 50 outsourcing destinations
With its advantages of low costs, mature vendors, technical and language skills, and supportive government policies, India heads the list of top 50 outsourcing destinations in the AT Kearney Global Services Location Index. India is followed by China, and the two countries are set to dominate the outsourcing industry for the next 20 years. Even allowing for the highest estimates of wage increases, these countries will retain their cost-advantage over other contenders.

By 2010, Indian companies are expected to earn revenues of $25 billion in the offshore BPO market, which is slated to grow at a compound annual growth rate of 37 per cent to reach $55 billion by 2010, according to a NASSCOM-McKinsey study. To compete globally, Indian service providers are developing a global footprint.


Indian outsourcing service providers are looking beyond the US and UK, which are their strongest markets, owing primarily to their English language skills. Over-dependence on these traditionally strong markets could erode India’s competitive edge in the outsourcing landscape of the future.

Indian vendors are now setting their sights on European markets, which Gartner estimates will be the markets with the strongest business growth prospects in BPO.

Choice of a partner outsourcing destination

The top 50 global outsourcing destinations according to the AT Kearney study have been short-listed based on the parameters of cost, business environment, and availability of skilled manpower.

With India and China on top of the list, South-East Asian countries like Indonesia, the Philippines, Singapore, Thailand and Vietnam fall within the top 20, and are attractive locations for Indian vendors to find partners providing outsourcing services.

Other countries like Brazil, Chile and Mexico in Latin America have found favor as important nearshore outsourcing locations for the North American market. Argentina, Uruguay, Mexico, Guatemala and Bolivia are upcoming locations offering Spanish language skills, cultural affinity and low employee costs.

Russia offers high-end technical skills and capabilities to solve complex problems. Eastern Europe is home to growing outsourcing destinations like Poland, Romania, Bulgaria, Romania and the Ukraine, which are in a position to offer nearshore support to Europe.

African countries such as Mauritius, Morocco, Senegal and Tunisia offer French-speaking skills to provide services for markets that require them.

Indian outsourcing vendors are partnering with companies in these leading or emerging global outsourcing hotspots, to stay abreast of large competitors who already have an established global presence.

The advantages are:
o Nearshoring benefits – business visits are easier to arrange rather than traveling halfway across the globe
o Similar time-zones – ease of communication
o Language and cultural familiarity – comfort level in understanding the client’s requirements
o Compatible geo-political environments – understanding of the client’s frame of reference
o Technically skilled, educated workforce at affordable costs
o Government benefits such as ‘free zones’
o Risk mitigation
o Less employee attrition

The global delivery model is enabling more companies to outsource to India, while mitigating risks, offering the flexibility of a blend of onsite, offshore and nearshore outsourcing options, and ensuring better communication and cultural compatibility with the outsourcing vendor.

FAO to grow 30% in 2007 - AR outsourcing to drive growth

The $11 billion Accounts Receivable (AR) market makes up two-thirds of the $17 billion global market for managed Finance & Accounting services. A study by the Everest Research Institute in Dallas predicts a 30% growth in Finance and Accounting Outsourcing (FAO). The key driver for business growth in the multi-process FAO market will lie in outsourcing AR processes of order-to-cash.

What is Accounts Receivable?
The Small Business Encyclopedia defines Accounts Receivable as “the amount of cash, goods, or services owed to a business by a client or customer. The manner in which the collection of outstanding bills are handled, especially in a small business, can be a pivotal factor in determining a company's profitability.”

That said, opinions are divided as to the actual definition of Accounts Receivable services. Some service providers refer to AR in terms of collections, others extend it to a wider description that includes order-to-cash, invoice-to-cash, or quote-to-cash. AR outsourcing service providers have come up with an expanded service offering that defines AR as “revenue cycle management outsourcing.” This includes order management, credit, cash application, deduction management, collection, reporting and financial analysis. Indian service providers have the specialized skill sets to undertake these tasks to high standards of performance.

AR outsourcing is a critical factor in the client company’s business growth as efficient receivables management impacts cash flow and customer service.

By including order management (a function traditionally dominated by the sales department) within the accounts receivable function, the entire order-to-cash cycle is integrated into a single outsourced process. This impacts Day Sales Outstanding (DSO), one of the key metrics in measuring performance in an outsourced environment. This puts outsourcing service providers in a position to offer added value. They can also offer services like Electronic Invoice Presentment and Payment, (EIPP), for all those millions of hard copy invoices that must be integrated into the AR function.

India leads the pack as global FAO destination
A NASSCOM study finds that FAO has already saved $6 billion over the last four years, for American Banking and Financial Services companies offshoring to India.

Small wonder then that almost 50% of the world’s leading banks in terms of asset size are outsourcing F&A to India.

India is the world’s fastest-growing FAO destination and total business volumes are projected to touch $100 billion by 2020.

India has proved itself adept at delivering FAO services for the world’s largest companies in business verticals like telecommunications, BFSI, telecommunications, pharmaceuticals, retail, packaged consumer goods and transport.

Of the third-party service providers offering F&A outsourcing services, some have concentrated on offering standalone AR services while others offer multi-process FAO, in answer to the strong market demand for bundled FAO services. While hybrid or blended outsourcing business models are preferred, the market has been moving towards a multiple-vendor, multiple-vendor, multiple-model approach.

According to a study by the Hackett Group, a single Fortune 500 company could cut costs by as much as $40 million in one year, by sending finance and procurement jobs offshore. Outsourcing Finance & Accounting services to India has the potential to save billions of dollars for global companies. They stand to gain 30-50% in savings through FAO – money that can profitably be invested in their core competencies.

Midsized hospitals to fuel boom in revenue cycle management outsourcing in India

As hospitals grow and their workload increases, rising costs have prompted hospitals in the US to use the outsourcing option to handle revenue cycle management efficiently. Until now, the market has been dominated by large hospitals who have taken the first-mover advantage with regard to outsourcing. But mid-sized hospitals in the US in the <500-beds space have now started the outsourcing trend to retain their competitive edge. Currently the mid-sized hospital segment presents a major opportunity for business growth for offshore providers of healthcare revenue cycle services in India.

Revenue Cycle Management or RCM refers to a range of services covering the cycle from patient admission to post-discharge. These services include medical billing and coding, charge entry, medical claims processing, cash posting, accounts receivable and patient follow-up. A process-driven, customer-centric business model with a streamlined transition process ensures outsourcing success. Indian offshore service providers are capable of providing stand-alone services within the process as well as turnkey revenue cycle management services.

Medical billing and coding outsourcing revenues
set to triple by 2011

The healthcare market in the US is comprised of three segments – payers (insurers), providers (physicians and hospitals) and patients (insured).

Focusing on the hospital segment will yield good returns for offshore vendors as 20% of the total medical billing and coding link to work outsourced to Indian vendors comes from hospitals today. Medical billing and medical coding are two of the core processes in offshore revenue cycle management.

While the total revenue from RCM earned by Indian offshore players in 2006 accounted for just $125 million, this is set to triple - to reach USD 410 million by 2011, according to ValueNotes, a leading provider of business intelligence and research in international markets. ValueNotes estimates that the number of employees engaged in billing and coding will increase to 17,500, creating a large human resource pool for hospitals to tap.

End-to-end RCM a winner
Investment capability is a factor that outsourcers are watching for in offshore vendors of RCM. This translates into:

-the ability to add on capacity and ramp up swiftly
-greater automation capability
-expanding the range of services to provide end-to-end RCM

The competitive edge
With the advantages of actually adding on revenues of 15-20% in their healthcare practice, and trimming costs by 40%, outsourcing revenue cycle management is not just an attractive option but a business necessity, helping hospitals survive and thrive in today’s highly competitive environment. While large hospitals are already reaping the benefits, recent RCM outsourcing trends in India indicate that mid-sized hospitals will not be left behind in the race to stay ahead.

Medical Tourism in India

Business 2.0 has an article in the August 2006 issue about medical tourism. This is a big trend to watch. The article says it will grow to 40 billon a year by 2010! And india has to be one of the best destinations. The combination of quality and experience of the doctors and price in India is hard to beat.

Business Book Trend

It seems every book I buy has a big section on outsourcing to India. For example the three most recent business books I purchased all have sections explaining the implications of outsourcing to India ( and China).

Revolutionary Wealth by Alvin & Heidi Toffler has chapter with tiles like Asia Ho - Opening the Floodgates - Disolving Borders - The Cheap Labor Derby.

A Whole New Mind by Daniel H Pink has a chapter called Abundance, Asia and Automation.

The Only Sustainable Edge by John Hagel & John S. Brown has a chapter called Offshoring.

McKinsey Quarterly May 2006 : Beyond Labor Cost Savings

Waltzing or Leaping

I am looking forward to reading the Mckinsey Report called "Pharma Leaps Offshore" due out in June 2006. Since we are specialist is medical writing it will be helpful to see what is happening in India. In the mean time I found a recent short McKinsey Report that provides a very positive outlook for India. In my opinion - India has come a long way fast. If this trend continues then India will become known for a lot more than just cost savings. Here is a clip from the Mckinsey Report.

Most global executives know by now that offshoring can deliver more than just labor cost savings. A good offshore strategy should also generate new revenues, increase capital productivity, and manage risk in ways that would be unaffordable in home markets. (For a look at how offshoring plays out in the pharmaceutical industry, see "Pharma leaps offshore," available in late June.)

But in many sectors, relatively few executives are acting on this knowledge, even though leading companies are showing where the gains can be made. One reason for the lag is that many executives don't fully recognize the potential for generating revenues and cutting costs through offshoring?or through broader strategies that combine it holistically with other restructuring initiatives.

Yes, but all this is possible because of labor cost savings. It is just not going to be that easy for India to waltz into competing in other areas like quality and inovation. Cost saving is an easier step but it is not sustainable for much longer. For example Apple is no longer interested in Bangalore. Steve Jobs thinks it is too expensive and there is too much attrition.

Now is a bad time to be starting in Bangalore. How can you run a company when 1/2 your people jump ship for a slightly better opportunity. And if they have not jumped then mentally they are thinking about it. Without long term vision, planning and commitment Indian companies will never be competitive in quality and innovation.

Once global salaries flatten out then Bangalore will become more stable and everyone will be forced to compete on quality and innovation rather than low wages. That is why I say it will not be a waltz. The big opportunity in India right now is retail. I will get into that next time.

Global Communication Trends

Skype conferencing has now brought outsourcing to another level. One of the missing elements in global collaboration has been synergy. Emails back and forth are no substitute for brainstorming. Previous poor communication has created a tendency to just send clearly defined projects to India with few suggestions from the Indian partner/vendor. But everything is changing - now a global conference calling is so easy and inexpensive that in 2006 outsourcing has become more collaborative. What is next in communication? It is hard to guess but imagine that I am writing this blog about global trends while connected on my cell phone ( Airtel) from one of the most remote parts of the world - NE India.

Job Trends in India

Outsourcing Trends
With such a huge population it would seems like there would be more people than jobs but believe it or not it is hard to find and hire a certain kind of person in India. The person I am talking about is someone who can INTERACT. These people are in big demand because a) outsourcing is moving up the value chain b) the new networked way of working demands this skill. The supply is limited because a) technical skills have been more developed in India b) few people have experience interacting globally. The best people can earn $2000 -$4000 plus plus per month and why not? If they do equal work they should get equal pay (as anyone in the world).

Google and Sketchup

One could probably track Internet trends by learning from the kind of companies Google purchases. We were please to hear Google bought Sketchup. With this software it is possible to use a photo to draw a 3D building that can be viewed from all sides. Also it is easy to make it zoom in the front door and go from room to room.

The software is easy to use and is a perfect fit for our graphic design team. It does not require much technical knowledge and is good for customers who want to quickly visualize what a building will look like before construction. There are tons of other applications.

Google can help Sketchup become bigger and better.

Harnessing the Potential of Companies in India

The World Economic Forum rates India # 50 for global competitiveness. The WEF is trying to find key factors to help a country prosper. They have some very good insights. Take a look to get a better understanding of India. Also the World Economic Forum has a great report called Harnessing Private Sector Capabilities to Meet Public Needs.

McKinsey Trends for 2006

The McKinsey Trends for 2006 contain some very insightful information. What I find very interesting is how communication is changing the way people work in India. Patterns in India are often slow to change so the typical office work hours and methods will remain but smart Indian companies are amazing. Work is recieved from many places and the work is done by teams spread across India and quickly returned to the customer.

Here is what the McKinsey Report says
More transformational than technology itself is the shift in behavior that it enables. We work not just globally but also instantaneously. We are forming communities and relationships in new ways (indeed, 12 percent of US newlyweds last year met online). More than two billion people now use cell phones. We send nine trillion e-mails a year. We do a billion Google searches a day, more than half in languages other than English. For perhaps the first time in history, geography is not the primary constraint on the limits of social and economic organization.

This is a great report by McKinsey - you should read it. And if you want to learn about a start up company that is proving that geography is not a constraint then discover a company that is providing Adobe graphic services in one of the most remote places on earth.

Outsourcing to India is hot and getting hotter

I found this in Time online today. This is really fascinating.

But because of Beijing's long-standing one-child policy, China's working-age population will begin to decline in the next 10 years. Meanwhile, India's youthfulness?350 million of its citizens are under age 15?ensures its workforce will expand for decades, potentially enabling it to outstrip China's economic pace through sheer weight of numbers. "This is a key thing," said Kamal Nath, India's Minister for Commerce and Industry. "China is aging faster than any other country in history. It is growing old before it has grown rich." It's one surprising side effect of Beijing's brutal efficiency that may eventually work to India's competitive advantage.

India vs China: India has these advantages...

India has these advantages over China as reported by cnn on October 4th 2005

India and China: Rivals or fellow 'tigers'?By Marianne Bray CNN
True, India has some advantages -- it has a strong technology and service industry, a relatively efficient capital market with a long history of banks, a strong private sector and legal framework, a younger workforce, a growing population, and a great university system.

India's capital market and strong entrepreneurial culture mean that companies tend to have a higher return on equity than China, the ultimate driver of profitability, and so attract higher prices, experts in the field say.

But red tape, corruption, tough labor laws and bureaucracy all deter investment, leaving a woeful infrastructure and a lackluster primary education system.

Digital Content Creation is Big

3D Modeling and Animation
Sales of digital content creation software ( 3D modeling and animation) ?will reach $3.2 billion in 2005, according to Jon Peddie Research.

Outsourcing Trends: Social Entrepreneurship

I just found a great example of social entrepreneurship in the latest issue or Red Herring. It tells about emerging global outsourcing Hot Spots.

Red Herring magazine Sept 2005
When American entrepreneur and philanthropist Howard Jonas visited
Jerusalem at the height of the intifada, he was struck by the large
number of highly educated unemployed people.

Rather than give charity, Mr. Jonas launched IDT Global Services, a
Jerusalem-based subsidiary of IDT, the fourth-largest telecom provider
in the United States. It began operations in 2002 with 20 employees and
has since grown to around 700 on six floors in a newly opened building
in the Har Hotzvim high-tech industrial park. ?We?re aiming to reach
1,000 by the end of the year and double or triple our work force by the
end of 2006,? says Michael Barnett, IDT Global?s marketing director.

Now StartUp Jerusalem (SUJ), a nonprofit organization seeking to
revitalize Jerusalem and create jobs in all communities by attracting
investments to the city, is determined to build upon IDT Global?s
success and turn Jerusalem into a world-class center for outsourcing.

The Israeli capital currently has about 1,000 people working at call
centers and that figure could more than triple by the end of 2006.

?Jerusalem has a pool of tens of thousands of people speaking foreign
languages at mother-tongue level, which is unmatched anywhere else in
the world,? says Eli Kazhdan, CEO of StartUp Jerusalem

A Great New Article on Outsourcing Trends

outsource2india has just posted an excellent article on Outsourcing Trends. Here is a sample

1. Vendor focus will shift from basic skills, costs and processes to domain knowledge, transition challenges, change management, HR issues and governance.
2. Regional outsourcing hubs will develop as companies will take strategic near-shoring initiatives to minimize risk and leveragecultural and linguistic compatibility. The supplier countries are in the same time zone as their clients.
3. The large diverse Indian companies will face stiff competition from new focused smaller companies.
   

Forrester Report on a Trend: Specialists

Forrester has made a good observation in one of its recent reports. They claim smaller specialized companies are emerging. Yes we agree and guess that this is a major trend that will continue for a long time.

While the tier ones do have broad and deep capabilities across service lines, some customers prefer to work with smaller vendors, are not large enough to interest the tier one vendors, or require specialist skills that are better sourced from niche specialists. Fortunately, the Indian IT services market is maturing, fragmenting, and diversifying ? resulting in the emergence of numerous, qualified specialist players. Companies that understand the market, and not just the top five vendors in the market, can take better advantage of what it has to offer.

Collaboration Tools to Help Outsourcing

We have discovered that using the wiki jotspot helps coordinate our information. It is really a fantastic tool. A new web page can be create in just a minute. Our content development team can now find ( and improve) our writers guidelines, project status, pricing, coaching ideas and a lot of our company knowledge.

The success of this has caused us to experiment with Nextaris.com. This will be used for collaborative research. The result will be a book on outsourcing. We may even consider it an open source outsourcing book.

Mining Blogs for Marketing Insights

The September 2005 issue of Business 2.0 has a short article about using blogs to discover market trends. There are several companies using spinders to search for opinions about products.

This same process can be done by people. Indian companies can provide this service. In fact outsource2india is now focusing on providing Knowledge Processing (KPO) for customers. This trend will continue.

Social Entrepreneurship Trends In India

The is really a global trend. People seem to be moving away from models of helping that cause dependency to a business model. For example micro loans must be paid back. CNN today has a very interesting article For rural women, land means hope One man's drive to help India's poor will need help, analysts say.

This is the story of Abraham George and his success in help people outside of Bangalore. He is very much a social entrepreneur. After selling off his software business he turned to social entrepreneurship.

The article also mentions another model of social entrepreneurship this one from a management guru. Here what cnn reports:

Michigan University management professor C.K. Prahalad has written a book saying business can make huge profits by selling products to the bottom of the pyramid -- people living under $2 a day, and getting them to become entrepreneurs.

But while there is money to be made in rural India, George says, the poor need to have the buying power in the first place.

"First raise the income of the poor so they can buy the toothpaste, but don't tell me how to sell to them, tell me how to increase their income."

The Top 5 Books on Outsourcing to India

Chillibreeze brings you a brief summary of the top 5 books on outsourcing to India. Read the review of these books.

1) The Black Book of Outsourcing: How to Manage the Changes, Challenges, and Opportunities by Douglas Brown, Scott Wilson

2) India Unbound by Gurcharan Das

3) The IT Outsourcing Guide by Rob Aalders

4) Outsourcing to India: The Offshore Advantage by Mark Kobayashi-Hillary

5) What's This India Business?: Offshoring, Outsourcing, and the Global Services Revolution by Paul Davies

Legal BPO Increasing in India says NASSCOM and Forrester

Times of India September 3, 2005

Forrester is projecting steady growth of legal jobs being outsourced offshore. Growing from 12000 jobs now to 35000 by 2010 to 79000 by 2015 with 60% -70% going to INDIA.

NASSCOM says that this is a substantial change from credit card processing and similar BPO services to hi-end work. Some of the legal work now being outsourced includes legal research and organizing documents for litigation.

World will be using Nextaris.com

I was in a government office yesterday and saw the typical piles of file folders on every spare flat surface including the floor. I pointed this out to my Indian friend and he then told me I should write a book on how things work in India. And how to do business in India. I told him I was writing a book together with Indian writers using a webased wiki software called Nextaris.

There are two worlds in India - one world from 1930 - 1995 and the global world. Both work at the same time and cross paths like they did yesterday. The interesting thing about the global world is that it is even more global and sometimes more advanced than what is found in western countries.

I will write my book with some very talented Indians working in differnet places across India and the world. We will be researching and writing on a cutting edge topic using a cutting edge tool (nextaris).

Just leaving my office for a few minutes I can step back in time to another era. And if I want to go way back that is possible too. Great place India - America seems a little unexciting. There is so much potential here.

Forbes Magazine Sept 2005 Look to India

Look to India
Paul Johnson wants Bush to focus on forging closer links with India.

The tone is changing with each new story about India in the American press. India can be proud that it is no longer just a low cost outsourcing destination. The trend is clear India has emerged. This article paints a clear picture about the future of India. So round up the wagons and head West or is it East.

Paul Johnson says

As for India's economic potential, I regard that as almost infinite over the long term.

I find that many Indians like setting up shop first then they try and get business second. This is what happened with medical transcription in 1999. The medical transcription boom was on so offices were rented, computers purchased, people hired and then and then and then what no customers? So from the looks of the email we get here the same mistake is being repeated again. The typical email coming to us from India is as follows: we have 30 systems and people trained to do OCR and data entry can you send us some work? I have no idea how many of these companies will make it. Maybe all of them are thriving, but if it like the old medical transcriptions days - look out. The prices will go really low as people fight to get projects and then the quality dips as these companies reduce quality because of poor cash flow or no cash flow. Only the strong survive. And I have noticed that the strong Indian companies are getting stronger. There are some really excellent companies doing data entry work and for that matter all kinds of work - I mean world class. But how does the customer know who is strong? There are some good articles on this site about selecting a vendor. Read and proceed with caution.

Now everyone is trying to cash in on the potential in India. Fine if you can't beat them join them but many are just not going to make it. We get a continuous flow of entrepreneurs contacting us (outsource2india) who want to be our American representative. They want to sell our services and be the middle man. In theory we are not opposed to the idea but it just does not seem to work. They are just not able to add enough value to the deal. Sure they can meet face to face with the customer but that is no big deal anymore. In most cases we find they just get in the way. There is no doubt that tons of creative people have models that are working but those who want to take the easy way - beware. In the past two years we have seen them rise and fall. I suggest focusing on adding value. What can you do that we can?t? We want to talk to you once you have defined how your company strength compliments our weakness.

I found this article on cnn.

CNN) -- Web usability expert Jakob Nielsen predicts that more people will live in rural settings, with technology enabling them to do almost anything they like, be it work or play, without leaving their homes.

This article goes on to suggest that real estate values in cities will be down by 2020. So lets look at this from another angle. If people are moving to rural places then why not extent this idea to the most rural and remote place in the world? Can they become work havens. And does this mean that if city values go down then rural values will go up. So what about India? More on this later.

I picked up my May 2005 issue of Harvard Business Review and noticed the table of contents contains 5 Indian names. I mean they may have been born in American or Australia I don't know and I don't even have a conclusion to suggestion. It is just an observation that I seem to see a lot of Indian names joining the ranks of managemnt writers/gurus. My favorite person of Indian origin management guru is C.K. Prahalad.

He is speaking at the World Business Forum 2005 in New York Look at these fantastic topics

How to use emerging markets as a source of innovation
The new nature of strategy: from focus on industry to focus on discovery and innovation
Why the Forgetting Curve is as important as the Learning Curve.

But the best topic or concept comes from his book The Fortune at the Bottom of the Pyramid.

In the last post I mentioned how I get some ideas about outsourcing trends from the potential customers who contact us. I will continue this but for now I will just suggest another obvious but good way to spot trends. Find the gaps between the USA and India. In other words, if there is something not happening in India it will be soon. I know when Indians go to the USA they can see the gaps because they have a fresh perspective. One Indian entrepreneur who became a huge success in the USA said that this was one of the secrets to his success- insights from a new perspective. In the same way gaps appear obvious to visitors to India from the USA and Europe. So visit India and the opportunities will appear obvious and huge. Dell just reported good profits in Asia. It seems to me there is more potential for growth in India. Now you have a good excuse for taking a vacation to India.

I get some of information about where outsourcing is heading from the potential customers contacting outsource2india.com. I suppose this is not much of a long range leading indicator but it helps to be in the middle of this information. Right now it seems outsourcing to India is going from conversion to creation. For example more people want content services like writing. And of course KPO is on the rise. More about what these customers are requesting in the next post.

Just one word plastics this is the classic line from the old movie The Graduate. Now the outsourcing words for today are Stuctural Engineering next week it will be something new. It is like that, each day brings new areas to be outsourced to India. I would be happy to be a plumber is the USA or have any other job that can't be outsourced. I met an American guy who moved to Bangalore to set up an engineering company. You may as well join the opportunity too it is just going to grow and grow.