10-12-2003, 10:10 PM
From Business 2.0 (subscription site)
What to Send Overseas
Customer Service
To most consumers, the term "customer service" has become synonymous with phrases like "phone-tree hell" and "know-nothing idiots." The fear of alienating customers even more makes many companies reluctant to move this function overseas. But truth be told, a big part of the problem is rampant job dissatisfaction: U.S. call centers are plagued by turnover, with most phone reps lasting less than a year. So moving call centers overseas can do more than shave costs -- it can help you dramatically improve customer service merely by reducing employee turnover. ePerformax Contact Centers, which manages outsourced call centers in both Memphis, Tenn., and Manila, reports that its Filipino reps not only stay on the job longer but are better educated -- 100 percent are college grads vs. 70 percent of ePerformax's U.S. employees. Costs are 30 to 50 percent less in the Philippines, a savings that's typical for offshore locations.
Data Entry
This is perhaps the easiest task to outsource -- workers don't even have to speak the language they're typing -- and thus where cost savings can be most dramatic. Typical is a facility in Ghana operated by Affiliated Computer Services. Linked to the States by a satellite Internet connection, 1,400 workers process medical claim forms for Aetna and others for about $10 a day (10 times Ghana's minimum wage). Costs are similar in the Caribbean, Bangladesh, and Central America.
Software Development Offshore programmers made a name for themselves fixing the Y2K problem. Now they do everything from maintaining aging code to sophisticated work like architecting entire applications. Infosys, Tata, and Wipro dominate the Indian market -- where 85 percent of all tech outsourcing goes. Three years ago, Indian programmers worked for less than 20 percent of their American counterparts' salaries ($65,000 a year, on average). Today the best talent commands as much as $50,000. They're worth it too: Carnegie Mellon's Software Engineering Institute now ranks top Indian firms alongside U.S. companies such as Lockheed Martin and SAIC. Meanwhile, more basic work is moving to Bulgaria, Romania, and Russia, where quality is spotty but wages can be 25 percent less than on the subcontinent.
Is Outsourcing Damaging the U.S. Economy?
Shifting computer programming offshore doesn't generate the grim images that shuttered factories provided in the '70s and '80s. Nevertheless, offshore outsourcing still produces plenty of controversy. (Not to mention irony: New Jersey recently pulled the plug on a contractor's plan to have the calls of state welfare recipients answered by offshore phone reps.) Forrester estimates that 3.3 million infotech jobs will move overseas in the next 12 years -- taking $136 billion in wages with them.
Those aren't very big numbers. In fact, at less than 1 percent of our GDP, the loss is barely noticeable, economists say. "It causes a lot of pain to the workers involved," admits University of Chicago economics professor Robert Shimer. "But there are benefits to a lot of other people from the lower costs of goods and services." Just as America did not become a nation of burger flippers, as was famously predicted two decades ago, the movement of tech jobs shouldn't kill the economy now. And when the impending worker shortage hits, we may even be better equipped to handle it.
<table width="100%" cellspacing="0" cellpadding="0" bordercolor="#000066" border="2"> <tr> <td bgcolor="#000066"><font color="#FFFFFF" class="x15"><b>Outsourcing Hot Spots</b></font></td> </tr> <tr> <td> <table width="100%" cellspacing="0" cellpadding="2"> <tr valign="top"> <td width="50%" bgcolor="#FFCC99"><b><font color="#CC3300">Canada</font></b>
<b>Growth areas:</b> Software development, customer service
<b>GDP per capita:</b> $29,400 (81% of U.S.)
<b>Literacy:</b> 97%
<b>Telecom infrastructure:</b> Excellent
<b>Edge:</b> Doing software R&D here lets you profit from the favorable exchange rate and government tax credits. </td> <td width="50%" bgcolor="#FFFF99"><font color="#CC3300"><b>Ireland</b></font>
<b>Growth areas:</b> Software development, customer service
<b>GDP per capita:</b> $28,500
<b>Literacy:</b> 98%
<b>Telecom infrastructure:</b> Excellent
<b>Edge:</b> Michael Dell thinks Ireland's the best way into Europe, and he may be right: It boasts an educated, tech-savvy populace whose work habits are more flexible than those of their neighbors in the European Union. </td> </tr> <tr valign="top"> <td bgcolor="#FFFF99"><font color="#CC3300"><b>China</b></font>
<b>Growth areas:</b> Software development, contract manufacturing
<b>GDP per capita:</b> $4,600
<b>Literacy:</b> 82%
<b>Telecom infrastructure:</b> Better in coastal cities
<b>Edge:</b> Wages are low. Caveat emptor: Weak intellectual-property laws can lead to major contract headaches. </td> <td bgcolor="#FFCC99"><font color="#CC3300"><b>Argentina</b></font>
<b>Growth area:</b> Customer service
<b>GDP per capita:</b> $10,200
<b>Literacy:</b> 96%
<b>Telecom infrastructure:</b> Excellent
<b>Edge:</b> International calls cost 3 cents a minute, and thanks to a ravaged peso, Argentina's educated workers make less than that. </td> </tr> <tr valign="top"> <td bgcolor="#FFCC99"><font color="#CC3300"><b>Ghana</b></font>
<b>Growth area:</b> Data entry
<b>GDP per capita:</b> $1,980
<b>Literacy:</b> 65%
<b>Telecom infrastructure:</b> Poor
<b>Edge:</b> Shoddy landlines mean outsourcers must use satellite links, but low wages and high quality make up for the added telecom expense. </td> <td bgcolor="#FFFF99"><font color="#CC3300"><b>Romania</b></font>
<b>Growth area: </b>Software development
<b>GDP per capita:</b> $6,800
<b>Literacy:</b> 97%
<b>Telecom infrastructure:</b> Poor
<b>Edge:</b> Three dozen universities teach computer science here, producing a surfeit of highly trained programmers. </td> </tr> <tr valign="top"> <td bgcolor="#FFFF99"><font color="#CC3300"><b>India</b></font>
<b>Growth areas:</b> Software development, customer service
<b>GDP per capita:</b> $2,540
<b>Literacy:</b> 52%
<b>Telecom infrastructure:</b> Mediocre
<b>Edge:</b> India's programming talent has lured 85 percent of all software outsourcing. But wages are on the rise. </td> <td bgcolor="#FFCC99"><font color="#CC3300"><b>Philippines</b></font>
<b>Growth areas:</b> Customer service, data entry
<b>GDP per capita:</b> $4,000
<b>Literacy:</b> 95%
<b>Telecom infrastructure:</b> Good
<b>Edge:</b> American-accented English and a 12-hour time difference make this country perfect to handle the overnight phone shift. </td> </tr> </table>
</table>
Source: www.business2.com
What to Send Overseas
Customer Service
To most consumers, the term "customer service" has become synonymous with phrases like "phone-tree hell" and "know-nothing idiots." The fear of alienating customers even more makes many companies reluctant to move this function overseas. But truth be told, a big part of the problem is rampant job dissatisfaction: U.S. call centers are plagued by turnover, with most phone reps lasting less than a year. So moving call centers overseas can do more than shave costs -- it can help you dramatically improve customer service merely by reducing employee turnover. ePerformax Contact Centers, which manages outsourced call centers in both Memphis, Tenn., and Manila, reports that its Filipino reps not only stay on the job longer but are better educated -- 100 percent are college grads vs. 70 percent of ePerformax's U.S. employees. Costs are 30 to 50 percent less in the Philippines, a savings that's typical for offshore locations.
Data Entry
This is perhaps the easiest task to outsource -- workers don't even have to speak the language they're typing -- and thus where cost savings can be most dramatic. Typical is a facility in Ghana operated by Affiliated Computer Services. Linked to the States by a satellite Internet connection, 1,400 workers process medical claim forms for Aetna and others for about $10 a day (10 times Ghana's minimum wage). Costs are similar in the Caribbean, Bangladesh, and Central America.
Software Development Offshore programmers made a name for themselves fixing the Y2K problem. Now they do everything from maintaining aging code to sophisticated work like architecting entire applications. Infosys, Tata, and Wipro dominate the Indian market -- where 85 percent of all tech outsourcing goes. Three years ago, Indian programmers worked for less than 20 percent of their American counterparts' salaries ($65,000 a year, on average). Today the best talent commands as much as $50,000. They're worth it too: Carnegie Mellon's Software Engineering Institute now ranks top Indian firms alongside U.S. companies such as Lockheed Martin and SAIC. Meanwhile, more basic work is moving to Bulgaria, Romania, and Russia, where quality is spotty but wages can be 25 percent less than on the subcontinent.
Is Outsourcing Damaging the U.S. Economy?
Shifting computer programming offshore doesn't generate the grim images that shuttered factories provided in the '70s and '80s. Nevertheless, offshore outsourcing still produces plenty of controversy. (Not to mention irony: New Jersey recently pulled the plug on a contractor's plan to have the calls of state welfare recipients answered by offshore phone reps.) Forrester estimates that 3.3 million infotech jobs will move overseas in the next 12 years -- taking $136 billion in wages with them.
Those aren't very big numbers. In fact, at less than 1 percent of our GDP, the loss is barely noticeable, economists say. "It causes a lot of pain to the workers involved," admits University of Chicago economics professor Robert Shimer. "But there are benefits to a lot of other people from the lower costs of goods and services." Just as America did not become a nation of burger flippers, as was famously predicted two decades ago, the movement of tech jobs shouldn't kill the economy now. And when the impending worker shortage hits, we may even be better equipped to handle it.
<table width="100%" cellspacing="0" cellpadding="0" bordercolor="#000066" border="2"> <tr> <td bgcolor="#000066"><font color="#FFFFFF" class="x15"><b>Outsourcing Hot Spots</b></font></td> </tr> <tr> <td> <table width="100%" cellspacing="0" cellpadding="2"> <tr valign="top"> <td width="50%" bgcolor="#FFCC99"><b><font color="#CC3300">Canada</font></b>
<b>Growth areas:</b> Software development, customer service
<b>GDP per capita:</b> $29,400 (81% of U.S.)
<b>Literacy:</b> 97%
<b>Telecom infrastructure:</b> Excellent
<b>Edge:</b> Doing software R&D here lets you profit from the favorable exchange rate and government tax credits. </td> <td width="50%" bgcolor="#FFFF99"><font color="#CC3300"><b>Ireland</b></font>
<b>Growth areas:</b> Software development, customer service
<b>GDP per capita:</b> $28,500
<b>Literacy:</b> 98%
<b>Telecom infrastructure:</b> Excellent
<b>Edge:</b> Michael Dell thinks Ireland's the best way into Europe, and he may be right: It boasts an educated, tech-savvy populace whose work habits are more flexible than those of their neighbors in the European Union. </td> </tr> <tr valign="top"> <td bgcolor="#FFFF99"><font color="#CC3300"><b>China</b></font>
<b>Growth areas:</b> Software development, contract manufacturing
<b>GDP per capita:</b> $4,600
<b>Literacy:</b> 82%
<b>Telecom infrastructure:</b> Better in coastal cities
<b>Edge:</b> Wages are low. Caveat emptor: Weak intellectual-property laws can lead to major contract headaches. </td> <td bgcolor="#FFCC99"><font color="#CC3300"><b>Argentina</b></font>
<b>Growth area:</b> Customer service
<b>GDP per capita:</b> $10,200
<b>Literacy:</b> 96%
<b>Telecom infrastructure:</b> Excellent
<b>Edge:</b> International calls cost 3 cents a minute, and thanks to a ravaged peso, Argentina's educated workers make less than that. </td> </tr> <tr valign="top"> <td bgcolor="#FFCC99"><font color="#CC3300"><b>Ghana</b></font>
<b>Growth area:</b> Data entry
<b>GDP per capita:</b> $1,980
<b>Literacy:</b> 65%
<b>Telecom infrastructure:</b> Poor
<b>Edge:</b> Shoddy landlines mean outsourcers must use satellite links, but low wages and high quality make up for the added telecom expense. </td> <td bgcolor="#FFFF99"><font color="#CC3300"><b>Romania</b></font>
<b>Growth area: </b>Software development
<b>GDP per capita:</b> $6,800
<b>Literacy:</b> 97%
<b>Telecom infrastructure:</b> Poor
<b>Edge:</b> Three dozen universities teach computer science here, producing a surfeit of highly trained programmers. </td> </tr> <tr valign="top"> <td bgcolor="#FFFF99"><font color="#CC3300"><b>India</b></font>
<b>Growth areas:</b> Software development, customer service
<b>GDP per capita:</b> $2,540
<b>Literacy:</b> 52%
<b>Telecom infrastructure:</b> Mediocre
<b>Edge:</b> India's programming talent has lured 85 percent of all software outsourcing. But wages are on the rise. </td> <td bgcolor="#FFCC99"><font color="#CC3300"><b>Philippines</b></font>
<b>Growth areas:</b> Customer service, data entry
<b>GDP per capita:</b> $4,000
<b>Literacy:</b> 95%
<b>Telecom infrastructure:</b> Good
<b>Edge:</b> American-accented English and a 12-hour time difference make this country perfect to handle the overnight phone shift. </td> </tr> </table>
</table>
Source: www.business2.com