Tag Archives: outsourcing work

Outsourcing work for $2 per hour?

Categories: Outsourcing Articles, Semi-Popular | Tagged , | Leave a comment

I talk to a lot of people involved in outsourcing and read about this topic regularly as well. Prices for outsourcing work can really vary. The issue with me is that I want to know what I am paying for and what I’m getting. You never really know what you are getting, especially when you outsource to India. Companies there hire a lot of beginners who haven’t a clue what they are doing. On the other hand, they also have some seasoned professionals who will work for a reasonable cost as well.

I just got an email stating that a data entry company would work for $2 per hour. I wonder what the cost would be to fix the errors that their clerk made, or how efficient their work could possibly be. When you see prices like this, you have to keep in mind that they are probably only paying their clerk about 70 cents per hour, and their offer might only be a come on, and not a long term price.

On the other hand, I talked to many providers of social media services. I heard prices like $3 per hour if you get one hour a day and you pay a fixed monthly rate of about $120. Another social media company wanted $5 per hour. A third company wanted $500 per month for one hour per day which is about $25 per hour. I wonder how much better the quality of the $25 per hour provider is. The man who answered the phone didn’t seem at all polished. $25 per hour is more than 90% of programmers in India charge — and I assure you that social media is a lot simpler to learn than PHP programming!

In America and other wealthy countries, outsourced labor can run from $30 to $100 per hour for various tasks. Call center work pricing has really gone down due to intense competition from Manila. But, social media work in the USA is no bargain. The sad part is that the providers of these expensive services in the US or India generally have very little experience, very limited knowledge, and quit their jobs on a whim. How can anyone run a business based on outsourcing I ask?

My solution is that you become an expert at whatever you are outsourcing and keep a close eye on whomever you hire to do anything. You might be able to get some good work from the $2 and hour folks, and maybe even teach them something that will benefit both of you.

Overseas Outsourcing in the 21st century: Different Countries, Diverse Benefits?

Categories: Of Interest, Semi-Popular | Tagged , , , , , , , , , | Leave a comment

The notion of outsourcing work to overseas companies is, of course, not a new one. For many years, a large number of American businesses have selected to recruit talent from abroad rather than enlist assistance from within the US itself; for a variety of reasons; tax benefits being among the most prevalent. For many years, India has dominated the face of outsourcing; and in recent times, India’s economy has witnessed an incredible $69 billion boom from outsourcing alone; causing previously unheard of destinations such as Hyderabad and Chennai growing to become thriving business cities. However, as the 21st century marches on, the stronghold that India holds on the outsourcing market begins to loosen. Other up and coming countries are staking their claim; and US companies are gradually broadening their horizons and exploring outsourcing opportunities in other lands. So just what are the countries currently challenging India’s position as number one outsourcing nation in the world, and what are the benefits to working with them?

Countries on the Rise

In recent months, the US has witnessed a number of relative ‘newcomers’ to the outsourcing scene, making distinctive impact on the market. ComputerWeekly.com identifies five particular countries on the rise in the IT sector; including unsurprisingly, China, but perhaps more surprisingly, countries such as Bulgaria and Egypt. Interestingly, a number of global companies in the US are turning to Middle Eastern outsourcing services; partially due to the ‘skilled programming workforce’, but also due to the considerable tax incentives that the Egyptian government (and others) are offering to outsourcing prospects. Interestingly, large Indian companies are also outsourcing to the Middle East, such as Wipro and Satyam. BusinessWeek.com also identifies other up and coming major players in the outsourcing arena, such as Poland, Brazil and Argentina.

Knowing Where to Hire

Now that the playing field has leveled out, and India is no longer the only viable option for a US company looking to outsource, the question on every business owner’s mind is ‘where to head to for outsourcing work now?’ With a number of excellent options now available, the company must now start to take a number of things into consideration. Of course, wages are as relevant as ever, but it is also worthwhile to consider other aspects, such as performance; for example, if outsourcing call center services, how adept is the center at US English, and how understandable is the accent? (Many customers cite ‘hard to understand’ call center workers as a pet hate when communicating with a company). Consider turnaround time too. A lower wage rate may look appealing on paper, but if the job takes twice as long to complete, then it may well be false economy. It is a good idea, before committing to a large-scale outsourcing venture, to visit the establishment and get in-depth knowledge of their working arrangements, level of commitment and working conditions. Of course, this can be a straight-forward business trip, or it can be combined with pleasure; giving you a valuable opportunity to not only familiarize yourself with the company, but to learn about the culture of the country you are about to enter into a working alliance with.

Harnessing the Power of Outsourcing

Used appropriately, outsourcing still remains one of the most cost-effective decisions that a US company can make. For example, a Chinese manufacturer earns on average, around 60 cents an hour; considerably less than their US counterparts. With savings such as this, it is clear to see why outsourcing is such an appealing option. Obama recently spoke out against outsourcing, and recommended revamping the federal tax code to encourage more work to stay on US soil. But even with tax laws relaxed, it would be hard for comparable US outsourcing services to compete with those from abroad. Quite simply, the current international economic structure supports outsourcing from overseas. For US companies, outsourcing also means being able to hire from a greatly increased pool of talent. For example, Brazil currently boasts a huge number of professionals who are expert in JAVA programming, but will offer their services for a considerable amount less than their US counterparts. It is unsurprising why more and more US companies are broadening their outlook and turning to overseas companies to develop their products and improve their productivity.

(1) India has dominated the outsourcing scene for years. But, Bulgaria and Egypt are on the rise!
(2) Getting a good price on outsourcing is one thing, but what if the turnaround is slow?

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What is the correct order of steps to screen an outsourced company?

Categories: Hiring & Firing, Semi-Popular | Tagged , , | Leave a comment

Many of us hire BPO companies to do outsourcing work for us. Some of us who are less experienced just talk to them over the phone, say, “They sound good”, and hire them. Once we have had bad luck a few times, we start scrutinizing a lot more. But, what is the best order of steps to scrutinize a company?

If you spend hours interviewing people, and then find out that they don’t cooperate when given a real task, you just wasted a lot of time. Sure, it is fun to interview people, but that is a huge chunk out of your day, and can go down the drain easily.

Part of scrutinizing companies has to do with finding out how cooperative they are. People these days tend not to be so cooperative no matter what you pay them. An email is a fast way to contact many companies quickly. You can keep a log of how fast people responded to your email. You can ask them all types of questions and see how thorough or realistic their answers are.

Requesting a bid for a project is a wonderful way to get to know companies. You can see right away if they have slow or inefficient workers. I would do basic email Q&A, and a bid request before you spend too much time talking — if you want to save time. Once you get a bid on a sample project, maybe give them a mini-project to see how they do. You would be surprised at how companies handle mini-projects. A few will leave you high and dry, others will deliver horrible work, while a few will do a great job. This is your opportunity to weed out the troublemakers and identify amazing service providers. There are “A” quality people out there, you just have to find them.

After a company has done a good job on a test project, then talk to everyone at that company who is pertinent. However, I recommend spending as little time talking to salespeople as possible. They are not going to be working with you after the fact, so don’t cloud your mind with the impression of how much or little you like them!

(1) Do you talk to the company over the phone and say, “They sound good” or do you test them?
(2) You can spend hours interviewing people & learn that they don’t cooperate w/real tasks!
(3) Requesting a bid for a project is a wonderful way to get to know companies.
(4) Interviewing new companies? Get to know the technical manager, not the salesperson!

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India & China Compete for Outsourcing Revenues

Categories: Outsourcing Articles, Philippines | Tagged , , , , , | Leave a comment

China and India compete for outsourcing work.
Amoung the top several outsourcing nations, India ranks #1 with China and the Philippines next in line.  India’s outsourcing revenue from April 2010 to March 31st 2011 is expected to be US$60-62 billion and was roughly 50 billion the previous year. China’s outsourcing revenue was roughly 36 Billion last year, but is expanding faster than India’s outsourcing revenue.  The future is showing that in addition to China, many other nations are going to be catching up to India in the outsourcing industry.
Indian Outsourcing
Although India is currently the world leader in outsourcing revenue, there are many factors that are governing its growth rate.  Factors leading to a slowdown in the expansion of Indian outsourcing lie in high attrition rates, poor infrastructure, lack of cultural affinity wiht the West, and rising wages.  However, factors in India’s favor include: a reputation of being great at outsourcing, an emphasis on enforcing patent laws, and a diversity of outsourcing services that goes well beyond call centers and IT.  Indian companies provide dozens of outsourced services including data entry outsourcing, legal process outsourcing, market research, payment processing, accounting, web design, SEO,  and pharmaceutical research which is one of India’s newest outsourcing growth industries.
Pharmaceutical analytical services performed in India are less expensive, better quality, have shorter delivery times, and less downtime than if done in other countries. Additionally, intellectual property protection is excellent in India while China has a questionable reputation in this regard.  Pharmaceutical outsourcing is one of India’s new growth industries which is expected to become a multi-billion dollar industry in India in only a few years.
Although the Chinese can compete with India for IT services, and Filipino call centers are gaining market share from India, India has a safe position in the outsorucing industry because they offer dozens of other outsourcing services which are not threatened by foreign competition.
Chinese Outsourcing
China has paved the road for a bright future in quickly growing its outsourcing industry. China has incentives for industries providing outsourcing services which helps to stimulates growth in this sector.  Incentives include removing taxes on outsourcing businesses.
China can easily compete with India for IT work, however China lacks workers with good English language skills which is a huge deficit for many types of outsourcing work. 
One of the main reasons China has such a promising future in outsourcing is that China is investing in new infrastructure in ecomonic zones faster than any other country.  New roads, dams, buildings, and other infrastructure are being built really quickly in China.  China’s capacity for getting projects completed quickly is one factor that works to their advantage.  China has also worked on building good internet connections and developing workers technical skills.
Putting skills, prices, and infrastructure behind, China’s outsourcing industry is growing at 30% while India’s is growing at 14%.  China’s overall economic growth has been a few percent faster than India’s over the last few years, and their growth in outsourcing is also surpassing India’s.
Filipino Outsourcing
The Philippines is a distant third in the global outsourcing market.  Their services are mostly confined to call center and medical transcription work due to their good command of English.  The Filipino call center industry is neck and neck with India, both commanding slightly less than 6 billion per year, but the Philippines looks like it will be taking the lead, once again to their excellent language skills and cultural closeness to the United States.
Its hard to see where the outsourcing industry will be in 2020, but my guess is that China will dominate with India in second place.  Filipino, Indonesian and African companies will also probably gain a higher overall percentage of market share leaving India with a relatively stagnant revenue in the long run.  The overall outsourcing industry will most likely grow tremendously in the next ten years, but Indias percentage of the total looks like it will be shrinking slowly over the next decade.

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