The Outsourcing Blog..."Horses for Sources"

It’s time for disruption, not stagnation

2009 is going to be remembered as the year of cost-containment. Most client discussions are not very sexy – it’s largely about cost, as opposed to innovation or revenue generation. McKinsey recently revealed 70% of its current client engagements are cost-reduction focused, only 30%focused on revenue-generation (the opposite of a year ago).

I strongly believe our businesses, while being diligent about cost-containment, must use this opportunity to make fundamental changes to their business operations in order to emerge more profitably in the future. Simply ripping away cost elements and failing to improve access to global corporate data and processes, is a massive wasted opportunity to be more competitive over the long-term.

I wrote recently about how the lay-off culture that has afflicted both the US and UK in recent years, where many firms treat their labor as a variable cost that can be scaled-up or down at will, depending on the next quarterly forecast. I cannot stress enough the damage this can cause to businesses as the economy recovers. One common theme that has dominated discussions with business leaders recently has been their surprise at the amount of visible cost they have been able to take out of their businesses as they move from a revenue-generation to cost-containment strategy.

It’s not solely the cost of labor that is highly visible – it’s the costs of technology, travel, infrastructure, real-estate etc. that can often be easily driven-down in a desperate business climate. Less visible are costs associated with poorly-integrated business processes and procedures, of dated analytical tools, of ERP systems incapable of supporting global process templates, and so on.

Why the lay-off culture is far more damaging than offshoring

Ever since President Obama proposed to change the IRS tax code that regulates how US corporations declare income from international activities, I've been thinking about other measures governments can take to slow the recession and help businesses become less myopic with how they navigate these rough waters. 

Reading between the lines, he appears to be targeting a revenue grab, while making political overtones against companies which use offshore resources.  However, he's simply penalizing firms from being more productive with their exports.  Sure, there are issues with tax fraud from havens such as Bermuda or the Caymens, but this is primarily an issue with individuals, not large enterprises. 

Why penalize a US conglomerate for manufacturing diapers in Brazil for the

Why protectionism is failing

With all the recent fuss in the media and the global sourcing industry about protectionism derailing new engagements, I wanted to set the record straight with some brand new survey data and some views into President Obama's current position, that protectionism is not proving to be as big an impediment behind companies' making outsourcing decisions in the near future as many people have stated.

To this end, I wanted to share some preliminary data from our current survey on global sourcing dynamics that tackles the issues preventing companies from making outsourcing decisions this year:

The politics of offshoring: all talk, no action

Many of you whom I've been interacting with lately know I'm concerned by the degree of protectionism from some politicians and a handful of organizations; namely the TARP-funded financial services firms and a few from the healthcare sector.  We recently discussed many of these issues here. 

Professor Bob Kennedy, who heads up the William Davidson Institute, a non-profit research and educational institute that focuses on business and policy issues in emerging market economies, has been keeping very close tabs on these issues and I asked him to contribute his recent experiences and views with us.  Bob also has a new blog up and running entitled "Services Shift", and has recently released his new book, adorning the same name.  Over to you Bob...

Why No Regulation of Offshoring: Untangling the Gap Between Rhetoric and Action

Picking up on Phil’s April Fool’s day post, I wanted to share a few thoughts on why we see lots of anti-offshoring rhetoric from politicians, but (thankfully) very little actual policy.

White water canoeing with Newt Gingrich

I had the pleasure today of having lunch with former Speaker of the House Newt Gingrich, who is also widely rumored to be a possible Presidential candidate in 2012.

While I do not share many of his political views, Newt does have some nailed-on perspectives on globalization, outsourcing, and some measures the US needs to take to get its act together to remain the world’s economic superpower. Plus, he’s very funny.

Here are some soundbites from his keynote speech at the excellent Sourcing Interests Group conference in Baltimore from earlier today:

"We’re spending trillions to cover up really stupid policies, violating every fundamental principal of economics. These congressional leaders are people who know nothing – our Founding Fathers deeply mistrusted politicians. Bush was wrong for all of 2008. Paulson the worst ever Treasury Secretary, even though Geithner is now rivaling him."

Was it really that believable?

I'm still getting emails / tweets and calls from all sorts of people wanting to talk about the "sensational news" yesterday, on what was a record traffic day on the Horses.  And if I haven't already made it plain enough, it was an April Fools joke.  And while it was kinda funny, what hit home was how believable the story was. 

Yes, protectionism already is the number one impediment to outsourcing growth over the next few months, but we're never going down anything like the crazy lines outlined in the post.  What's nervy, however, in this era of rapid change, is the fact that so many people fell hook, line and sinker for that little prank.  It made me realize how prepared so many people are for sensational changes to their way of life.  And if you feel I went too far I do apologize, but everyone seems to have taken this in a good spirit.  I really feel we need a sense of humor and a few laughs to help out out of this tough time...

 

The soon-to-be-appointed head of the outsourcing disciplinary committee

Global business on a Knife-edge: Bonuses, H-1Bs and Naïve Protectionism

Has the world gone mad? Or is it just the US Senate? One month after Senators Bernie Sanders and Chuck Grassley pushed their amendment through the Senate making it tough for TARP recipients to hire H-1B* or L1 visa holders, we use the same TARP cash to pay retention bonuses to the very people who got us into this mess in the first place. We could create many, many more jobs with that bonus cash than we’d ever had “saved” by blocking a small minority of H1-B applicants.

The original intent of the Sanders/Grassley amendment barred all recipients of TARP funding from hiring any H-1B workers. However, the amendment was

Guatemala: Bananas, Green Tomatoes... and BPO

We've been debating the opportunities for Latin American countries to take on BPO work for a while now, and spending a few days in Guatemala has confirmed - beyond doubt - the potential of the region. 

I had the pleasure of visiting Capgemini's facility, which is quickly ramping up customer-facing F&A work for Coca-Cola Enterprises (which we picked up on here).  I am going to write more about this engagement in due course, but the hybrid nearshore/offshore operating model for Finance and Accounting and Procurement is showing strong signs of being the way forward for the industry.  This is also the case for many global strategic sourcing, supply management and HR BPO engagements. For example, Coca-Cola Enterprises is sourcing neashore work to Capgemini's centers in Guatemala and Krakow, and using its Chennai operation to support these centers with non-customer facing processes. 

Guatemala's population itself is only 13.7m people, with 40% based in urban areas, however, it is the largest Central American hub with strong potential to source activities to neighboring countries, such as El Salvador and Nicaragua (see graph below) to compliment serices and keep costs low.  What impressed me most meeting many operations agents and managers was the easy-to-understand English intonation, the obsession with process, the youthful energy and the discipline. 

Time to put banking executives on trial?

As the sheer magnitude of the unfettered lending and borrowing that has taken place over the last few years continues to unfold, I am hearing more and more calls to put banking and government executives who failed to prevent this (or knowingly encouraged this) on trial.  I am inclined to agree with them.  The BBC's Robert Peston just put out an excellent analysis of HBOS's final earnings report as a discreet entity:

This corporate division generated losses of £6.8bn in 2008 from loans and advances to businesses of £116bn.  It has had to write off an average of 47% of those loans in this area that have gone bad. Almost 12% of all its corporate loans are now classified as impaired or damaged. And as a percentage of the total corporate lending book, the impairment charge is just under 6%.  On the basis of those statistics, HBOS appears to have left a big bag of money open on the pavement with a sign saying "borrow what you want".

How can you give out over $100 billion in bad loans?  In Spain, for example, their banking system, which has been one of the least affected by the crisis, operates using dynamic provisioning, where each loan mustbe underwritten with capital in the banks' reserves.But what has transpired in the US and UK banks is tantamount to executives knowingly driving their businesses into the ground at the expensive of getting fat and happy themselves.  It's like hundreds of these executives were riding tigers without knowing when to get off. If I hear one more jingoistic anti-offshoring argument about the fact that a whole industry should be tarnished because a single service-provider was caught cooking the books... how about a whole industry cooking its books?

Everything will change

I've been avidly following Robert Peston's coverage of the economic crisis.  Peston is the BBC's business editor and has built a stellar reputation for reporting the key facts on what went so massively wrong and what we can do to emerge from this crisis. His recent BBC radio discussion with Robert Wolf, Financial Times's chief economic commentator, Richard Lambert, director general of the CBI and Roger Carr, the chairman of Centrica and Cadbury, is well worth hearing.  Key points discussed:

• The UK is the most vulnerable economy, due to its unprecedented housing bubble and over-reliance on the financial services sector.

• The strong sense of denial is fading - there aren't going to be any winners out of all this, just relative advantage. 

• Not everyone yet grasps this is a massive structural change - we're not going back to 2006.  The massive consumer-led debt boom cannot be repeated.  We might go back to fast growth, but the whole pattern of global demand will have to be different for that to happen.  The world economy will have to be re-balanced in different ways.

• We've done a very good job of driving short-term stimulus and saved the banking system, but the long-term solution has to be the restoration of healthy private sector demand across the world: that is the next stage of getting back to a healthy economy...but does the private sector understand this?  There is an increasing awareness that we are interdependent.  Unless the strong support the frail we will have continuing difficulty.

• We must protects the emerging economies now and change the way we finance them.  The IMF resources need to be bigger to protect developing economies.

• We need to have serious intelligent dialog with the Chinese on how to make their growth more compatible with global stability.

All-in-all, you can really start to guage how crucial the role global sourcing has to play as we emerge in a new economic structure.  The inter-dependencies across economies and businesses can be managed more effectively by firms adopting multi-cultural, multi-lingual and multi-regional delivery models. Both governments and businesses need to embrace both local and global talent to restore private sector demand over the long-term.  What is abundantly clear is that we don't fully realize how this structure will ultimately develop, but we are quickly understanding the basics of what needs to change.  The next stage is for both governments and business to work together on stimulating long-term demand and making these inter-dependencies really function effectively.

What goes around comes around

This credit-crisis-fueled recession is testing us far more deeply than merely everyone shaving a few costs while we ride this sucker out. And while it hurts, a little pain should bring about some positives that go far deeper than mere penny-pinching. We need to dig deeper to understand more about what makes us good people: fun to be with, smart to do business with, and decent returners-of-favors. I have always (somewhat naively) operated on the “what goes around comes around” principle, but I truly believe these times will help many of us get what we deserve. I don’t mind doing people favors – I just don’t do them twice if the first one never got returned when I needed it.

But we will come out of this, and we will emerge a bit smarter, a bit leaner, a bit more streetwise, and I firmly hope this will bring the best qualities out of us. We may emerge a few percentage points poorer than when we went into this, but the world we will be living in should be one where we help each other out more, and appreciate what we have.

When I look at the way many corporates and people behaved during the greed years, I sincerely hope these experiences bring a degree of humility to us all. I live and die by my friendships – whether personal or work-related, and I know many of you who have the same principles will get through the next couple of years. However, we all know people who just focus on what they can get out of others and rarely put back – those are the people I fear for in this economy, and I hope learn to act with more humility as a result.

Anyway, I will finish this little diatribe with a couple of points about how to treat our friends and colleagues:

People: remember who your friends are. Stop thinking just about your career and your self-interest, but take some time to get to know people a little better – and not simply those aspects that can further your own goals and ambitions

Work: use this episode to get smarter at what we do. Focus heavily on providing value and put in a little extra time and effort. If you are lucky enough to be in a job, remember the unluckier folks who helped you along the way, and take some time to see if you can help them out. If you are one of the unlucky ones, call in your favors – you will quickly learn who your real friends are...

I write this piece at 37,000 feet above the Atlantic, it's my birthday... and I need a break from this presentation, so forgive me this little opinionated indulgence...just this once :)

Are we demonstrating value?

When we talk about "change", we're not just talking about Washington or Detroit.  We also need to include OURSELVES.

The events of the past couple of months have given us all pause for thought with our careers and what we're going to be doing in a couple of years' (or weeks' / months') time. 

We had a great discussion a few months' back when we talked about the challenges of staying relevant in today's corporate climate, and this current economic shift is driving this need for relevance right down to all employees in the organization.  The "relevance" discussion now goes far deeper than roles and responsibilities, it goes right into demonstrable value-add, and the ability to impact revenue.  Whether you work in sales, operations, finance, marketing etc., you need to be able to tie what you do to your company's mission and revenue stream.

Bad recessions bring out different reactions from companies with their approaches to steadying the ship and readying themselves for sustained profitability.  These reactions nearly always result in staff reductions, reorganizations and aggressive means of reducing both variable and fixed costs.  Past recessions have resulted with most companies "snipping" costs without changing their business models, and several firms even kept hold of all their staff and rode out the downturn in anticipation of recovering much quicker and stronger than their competitors.  Most of the snipping was focused on low-performers.

This time is different.  Most companies - right now -  are snipping staff who do not directly impact their revenue, whether they be a low or high performer.  Staff who may be incredibly talented, but focus on activities that are peripheral to the company's core revenue-generation, are at risk in today's corporate environment. 

Employees at risk in today's corporate climate:

1) Staff working in new product lines which are yet to have matured, or are considered discretionary in this environment;

2) Staff in management roles that are largely administrative and have limited involvement in direct sales / client relationships;

3) Staff who are unpopular and considered to have a negative impact on revenue development;

4) Low-performers, which the company has wanted to shed for a while and now see the long cold winteras a chance to ease them off the payroll with limited reproach.

And if you are unlucky enough to get caught in the cross-fire, your next challenge is to understand why this happened.  Most likely, you were unlucky and need to find a new opportunity that aligns you with another firm's core revenue channel.  But if you dig really deep, you may have to concede that you need to develop your skills and knowledge to make yourself attractive to future employers, so you can directly impact their core businesses.  I believe we'll see many people seeking career changes in the coming year as they concede their current skills and experience are no longer as relevant as they once were. 

New growth and investment areas, such as health-care, renewable energy, new technology development, are going to be the lucky recipients of an influx of talent willing to retrain for long-term career security. Moreover, jobs in the public sector and education are now appearing far, far more attractive than they were a couple of years' ago.

All-in-all, we're moving into an environment where some industries will find their feet, others will decline and some may die altogether.  Many people will be refocusing their careers in new areas that they may not have envisaged in the recent past.  One thing is clear - we are in new era where people are going to have get used to change and learn to adapt themselves to new job roles, new routines... and new expectations.

 

Preparing for '09: It IS time to dump the term "Outsourcing"

You may recall the discussion we had earlier this year regarding whether it is time to stop using the term "Outsourcing".  The general consensus among many of you (including myself) was that we are stuck with the phrase and we shouldn't go out our way to dress-up global sourcing with other, more relevant, terminology:

"However you want to spin it, your staff will view it as outsourcing, and the more you try and disguise the taboo term, the more suspicious your staff will be that you are simply trying to ship them out for lower-cost labor"

With the dramatic changes in our corporate climate and political attitudes in recent months, I believe it's now time to change our well-worn phrase.  The core issues being:

1) Poor comprehension of global sourcing. Too many people associate "outsourcing" with greedy corporate leaders only interested in slashing costs, with little regard for employee livelihood. They have pre-conceived notions that organizations have forgotten about their people, and only care about the bottom-line.  I can assure anyone that is not the case with the majority of companies with whom I speak with daily. 

Now the election is over... what about outsourcing?

Not many people are better-placed to debate the thorny issues of outsourcing and government policy than my old friend Glenn Davidson.  Glenn is synonyous in the public sector world with issues relating to human resources strategy and broader outsourcing strategy, having been one of the founding members behind Equaterra's public sector practice that was launched in 2005 and now a major part of their business.  Among several commercial roles, Glenn previously served as one of Accenture's key executives behind their early forays HRO post their e-Peopleserve acquisition, and prior to that as a chief of staff and communications director to a Virginia governor, as the Commonwealth’s chief federal lobbyist and as a legislative director to an Ohio congressman.  

With so much heated discussion regarding the policies President-Elect Obama is going to deliver regarding the USA's future stance on offshore outsourcing and public sector contracting (which we touched upon here), I asked Glenn to put together some of his thoughts on where this will lead... over to you Mr D:

After the wake-up call: time to focus on our young talent

As painful as this current economic climate is, we really need to start looking ahead to the positive changes that times like these can bring in the long-term when we recover. Recessions normally occur when many years of bad habits culminate, where certain things were progressing down the wrong track and, finally, the bottom fell out of the market and woke us all up. And, this time, the wake up call is a very loud one.

To correct our future, we need to focus on where our future is going to be molded - our young talent.

So how could this play out?

Mumbai events test appetite for offshore

My esteemed colleague at AMR Research, Dana Stiffler, who works with me in our Global Business and Outsourcing Services practice, has compiled some thoughts about the recent atrocities over in Mumbai, which we wanted to share with you, discussing the impact on the offshore sourcing industry... over to you Dana:

India's financial markets, including technology company stocks, bounced back admirably following last week's terror attacks in Mumbai.

Looking to 2009: a chat with Peter Allen

One of the most sought-after thinkers in the sourcing industry, fellow-blogger and TPI  veteran, is Peter Allen.  Peter started his own blog Consider the Source around the same time "Horses for Sources" got rolling, and we've pretty much been bouncing ideas, opinions, advice and outlooks off each other over the last couple of years. Peter spent some time at our offices recently and I wanted to share some highlights from our discussion as we move into this new era of global sourcing:

PF: Peter - You've witnessed the growth and development of the global outsourcing industry and probably have had more conversations with sourcing buyers and suppliers than most people over the years.  How critical is this current economic crisis to the outsourcing industry?  Do you see increased activity on 2009 as a result?

PA: Thanks, Phil. These are certainly times of considerable stress

Ford: outsource only where it makes long-term strategic sense

I trust you enjoyed the animated discussion on the woes of the US autromotive industry. My take was that these issues facing Detroit represent a microcosm of the problems facing many of today's flagging industries, with urgent needs to transform their business models, product-lines, management talent, labor unions, global supply chains and outsourcing strategies in order to survive.  I wanted to share these comments from Rachel Geiger, who is a lead HR executive at Ford Motor Company, where she has held senior HR positions for both labor relations and procurment strategy.  Rachel makes some interesting points regarding why Ford is a little different; namely it's focus on ongoing transformation and strategic outsourcing.  Over to you Rachel:

 

"I agree that it is about changing their DNA, or "What does it mean to work at Ford?". Being in the organizational change business, and taking part in driving this cultural change, I can honestly say that I do see it happening.

Investing in the right vehicles for change

This whole automotive situation is a microcosm of the broader issues facing the crumbling Western economies in this crisis market, and these issues require significant surgery to our very corporate DNA.  And outsourcing and globalization are right at the heart of the issues. 

Outsourcing provides an enabler for businesses to change, but ultimately we have to be put in a position where we have to change our corporate DNA and stop clinging to the inefficient ways of the past.  That time is now upon us and we need to embrace new ways of working, and new ways of doing this smarter.  And if it's fear that is driving us, some short-term panic, some short-term hardship, is a small price to pay to find new avenues of growth and value-creation further down the road.

And that doesn't mean businesses should go out and find outsourcing providers to save them a few dollars today, for the sake of making a quarterly target. 

You know you're doing something right...

...when CIO.com starts picking up on your posts.  They got the context a bit wrong, but it's good to know outsourcing discussions are hitting mainstream media these days.  I'll leave you with an autumnal scene from the Public Gardens in Boston this afternoon...

Getting the fundamentals right

We've had some serious - and sometimes passionate - discussions on "Horses" these last few weeks, and I laud so many of you for chiming in with your feelings and thoughts. 

We've examined the impact of our current predicament on the outsourcing industry, how globalized delivery has such a pivotal role to play in improving businesses' competitiveness, and even how struggling industries and faltering economies could embrace global delivery to create new jobs and industry.  It's proving to be a time for many of us in the outsourcing industry to reflect on how this business has developed over recent years, and why we must focus on helping enterprises compete more effectively at a global level, than simply stripping out short-term overhead.

To sum things up, my old friend Lowell Williams sent me his thoughts yesterday on the current economic situation. 

The change imperative: it's back-to-basics time

Even though you are probably more interested in the breed of puppy Barack is going to buy his girls, I have had a chance to ponder the realities of the recession.

In a nutshell, we have reached a crucial juncture in our economic history:  gone are the days we can borrow whatever we want to subsidize ambitious business ideas, buy houses we cannot really afford, or fritter money away on expensive holidays. Walking down Boyslton Street at 7.30pm on Friday night - one of Boston's prime restaurant areas - every restaurant had vacant tables and was taking walk-ins.  It really hit home to me that things have finally changed.  Years of over-spending have finally caught up with us and we're now feeling the pinch.  But whether this was to be a rapid banking meltdown, or a long painful slowdown, this had to happen eventually. 

I recall sitting on a panel at at outsourcing conference in New York City back in 2004

Can flagging industries be replaced by BPO services?

I had a distressing conversation regarding the future of the US automotive industry today with a guy from Detroit.  Their main concern these days is the widely-speculated acquisition of Chrysler by General Motors. 

The expectation is that if GM buys Chrysler, it will only retain the Jeep and Minivan businesses, close all the other Chrysler plants, and lay off 75% of Chrysler's engineering staff, for a direct loss of 90,000 jobs - not including ~6x more jobs at suppliers -  throughout North America. If no merger happens, one or more of the "Big 3" will go bankrupt, resulting in a total loss of all jobs - more than 120,000. One of his neighbors is putting his house on the market tomorrow, anticipating losing his job soon. Several other friends and neighbors expect to lose their jobs by the end of the year.

 

This reminds me of the situation in the UK in the 1980's when

Why not build a shared services infrastructure to support the banking sector?

With the US Treasury yesterday making an initial $125 billion stock purchase of nine beleaguered financial institutions, it makes me think seriously about how these colossal investments also could be deployed to create new jobs, better technology investments, and more efficient support processes. 

Our recent survey shows that many financial institutions are ready to grab the low-hanging fruit of outsourcing offerings, where they can make quick cost-savings and transition costs are offset by arbitrage.

However, while outsourcing clearly has its benefits, what about the

Banks ramp-up their outsourcing plans

Thanks to all of you who took the time to complete our recent poll of the financial crisis and its impact on the outsourcing strategies of financial institutions.  Below is a snippet of the findings:

* Only 16% of financial institutions surveyed have actively sought to pull-back their outsourcing expenditure plans, while 39% are now looking to increase expenditure in light of recent events

* 45% have not made any changes to their planned outsourcing expenditure on ITO and BPO services

When we delve deeper into the data, it's the major US banks which are clearly the most aggressive with ramping-up their plans to pursue outsourcing strategies.  The main service-lines where they are focusing are banking-specific BPO services, application outsourcing, IT infrastructure outsourcing and Finance and accounting BPO.  Insurance companies also stated a strong focus on adopting insurance-specific BPO services in a 6-12 month period.

Service lines not being so aggressively pursued are primarily HR outsourcing and IT staff augmentation projects.  More thoughts to follow. 

Many thanks to the folks at Global Services Media for their help in sending the survey to its readership.

 

Can Obama turn the USA into a competitive sourcing location?

Being ineligible to vote in this country, I've been an amused observer of one of the the most enthralling and contentious elections in years - and trying to understand how each candidate will impact the future of the global outsourcing industry.

What is clear, is that shipping jobs offshore isn't necessary very good for the local unemployment rate - the age-old argument of focusing US staff on "higher-value" work is wearing a bit thin these days.  What's more, many offshore service providers are now focused on taking on more higher-value work activities for their clients, in addition to routine transactional work. For example,

Dispatches from DC: Shift Happens

Here is the movie clip taken from my recent presentation "Creating a Strategic Enterprise Sourcing Strategy and Governing Change".  A special thanks to John Fisch for supplying some great content, and Mike Brown at AMR for mixing up the clip with this great soundtrack.  Enjoy.

Click to Play

 

And we did this before the Wall street shenanigans, just to add fuel to the fire...

Is the day of the offshore financial services captive in terminal decline?

The current financial crisis is driving many of the leading financial institutions to sell their Indian captive operation to third-party service providers, typified by Citigroup today offloading its Indian banking services operations to Tata Consultancy Services for $505 million. Most of these offshore captives were established in recent years to cater for growth in the financial services sector, and with the current climate, many of them have little choice but to sell them off.

I was having an interesting discussion just yesterday regarding Securities/Capital Market BPO (back office operations of Investment Banks, Asset Managers etc.).

Cash is king again as M&A activity in outsourcing hots up

We've been talking a lot about consolidation in the outsourcing industry and when/how/if it will happen.  We can debate for hours the strategic benefits of service providers of adding niche competences, industry specialization, process acumen and global scale, and whether they should merge, acquire captives, or grow organically through client acquisition to achieve this.  However, the financial crisis is creating a compelling event to accelerate M&A between service providers. 

The amount of consolidation we're seeing in the financial sector, which is likely to have knock-on effects into other industries, will drive new client needs for global sourcing models. Many clients are worried about making large initial capital investments in outsourcing engagements - especially ones which have complex transition and transformational needs, hence those service providers which can help streamline these costs over the course of a contract will be successful. Complexity, disruption and increased globalization drive change, and outsourcing is one vehicle that can help many companies reach a global support infrastructure quickly.  Hence, those service providers with the global scale, competency and financial resources to deliver this quickly will be the winners in this market.

While this industry has ramped-up beyond the wildest expectations over the last 5 years,

In case you missed the real debate...

In case you missed it...last night's hilarious skit of the VP debate on Saturday Night Live:

Why these are good times for the outsourcing industry

Despite the uncertainly and current gloom that is consuming us, these really are opportunistic times for the outsourcing industry.

Outsourcing thrives on mergers. disruption, corporate restructuring, cost-containment needs and business change (remember the post 9/11 outsourcing bounce). 

The financial services industry is finally ready for that change, and early survey results show this.  In addition, the majority of service providers are polarizing their sales efforts on the beleaguered sector to increase their market presence and defend existing business. Moreover, my optimistic side tells me that this bail-out package will be ratified by Congress, and it will drive a new culture of long-term change into the sector that will favor long-term ITO and BPO contracts that reduce costs and add core focus to re-emerged enterprises. 

Traditionally, this sector has been very reticent

The Wall Street Mess and the Outsourcing Industry... early thoughts

With the whole of Wall St being restructured and substantial investment being primed to re-vitalize the financial services sector, what will be the short-medium term impact on the outsourcing industry?    please complete this 2 minute poll here.

I've been trying to get my head around the looming crisis on Wall St. the past few days, and the situation is far more severe than when we discussed the sub-prime crisis a few months ago. 

Normally, I'm quick to pounce with my thoughts and opinions (as if you didn't know that already), but I've been truly perplexed by the goings on - and the potential magnitude - of the potential outcome to global markets.  I cling to the hope that the bail-out package will quickly steady the economy and spark a mini-revival, despite the long-term ramifications of paying back this debt - and our children footing the bill too.  So what does this mean to the outsourcing industry?

Historically, tough economies have proved to be lucrative markets for increased outsourcing: remember the 2001 recession and subsequent deal activity.  However, this situation will have a two-pronged impact on the outsourcing industry:

1. Outsourcing drivers:  Merger activity is going to provide new outsourcing opportunities, for example the Bank of America, with its acquisition of Merril Lynch, will surely look to move Merrill's support functions onto third-party resources, as BoA has a strong and effective outsourcing culture.  And the newly-merged entity may have to look at additional or new providers to support the broader global presence of the new firm - especially when you take into account Merrill's international operations.  We can also expect to see a host of other M&A events taking place in the coming weeks (i.e. JP Morgan taking over Washington Mutual's assets, and CitiGroup taking over Wachovia and its global BPO operations).  In addition to M&A activity,

The Book of Lists (revisited)

There's been a lot of heated discussion in the outsourcing industry of late regarding the issue of lists, rankings, awards and proclamations of vendors, advisors, tought-leaders etc.  As per expected, emotions are strained when some come out looking good, and some not-so-good. 

However, with such a ramshackle swirl of information out there... from consultants, media, bloggers, analysts, associations, researchers, there has never been a more critical need for the ultimate target - the buyer - to have balanced, unbiased and accurate information and advice. The real issue here is that rankings or "best of" lists are only as valuable as the rigor and independence of the evaluation methodology.

Deborah Kops, who has guested here with some intriguing views on outsourcing issues, has offered to share her thoughts with us on this whole issue.  Deborah is widely recognized as one of the outsourcing industry's most experienced voices, having spent the majority of her career on the advisory and practitioner-side of global services, leading global transformation efforts at Deutsch Bank and Bank of America, before helping to establish PwC's outsourcing division.  Today, Deborah is Chief Marketing Officer for WNS Global Services, a leading offshore BPO and KPO provider, and has greater exposure than most people in the industry to these "lists", now she is leading marketing for a services provider with revenues of half-a-billion dollars. Over to you Deborah:

The TSA awards its HRO engagement to Lockheed Martin - an overreaction?

There's been a lot of noise in the market this week concerning the TSA's award or their HRO contract to Lockheed Martin.  While this is clearly a bold move into HRO for Lockheed, this isn't likely to prove a major loss for Accenture.  Why?

The Legacy of Global Sourcing – What is (Y)our Legacy?

My good friend David Kinnear has been working hard to drive the Global Sourcing Council over the last year, and has some passionate views on how today's industry should approach global sourcing.  David has submitted a compelling argument about how we should look at the longer-term remifications of the global outsourcing climate today.  Before I send you over to David, I'd also like to draw your attention to the next meeting for the GSC in New York's Down Town Association next Wednesday 18th June.  For more details click here.  Take it away David:

A final word from India: moving beyond "old BPO"

As we discussed last week, BPO is rapidly evolving into "Global Services Provision". Most enterprises ventured into early BPO engagements to take advantage of the quick cost-savings on offer from employee remediation, using low-cost offshore labor on offer from outsourcing service providers. Many enterprises undertook BPO in times of financial distress, their priority centered on their year-end balance sheet and satisfying short-term shareholder demand, as opposed to long-term strategic thinking.

NASSCOM dispatch: "We're now past the era of BPO" (Pramod Bhasin)

Have just listened to the inaugural NASSCOM address delivered by Som Mittal (President, NASSCOM), Ganesh Natarajan (Chairman, NASSCOM), Shri Jainder Singh (Secretary for IT and Comms Department for the India Government) and Pramod Bhasin (CEO Genpact).  My main observation is the level of energy, passion and enthusiasm for the industry by the speakers - a far cry from some of the tired, jaded speeches I have been subjected to in the States and Europe recently. 

Bada Din comes late this year for Indian outsourcers: the Indian STPI tax holiday is extended

The Indian Government has clearly been reading this blog and bowed to our pressure to extend the Software Technology Parks of India (STPI) tax holiday.  The Indian finance minister has now proposed to extend the  STPI tax holiday to expire on March 31 2010, a year later than the originally stipulated March 31 2009 date. 

This is a shot in the arm for the Indian offshore services sector, and the shares of Infosys, Wipro, TCS, Cognizant, WNS, Patni, Satyam, EXL Service, Genpact et al. are all expected to jump by up to 10% as a result.  The additional year should give the Indian outsourcing industry the time it needs to stabilize its current issues with Rupee appreciation and wage inflation.

Thanks to all you for you great contributions on this issue.

How severely will the expiration of India's STPI tax scheme impact the Indian outsourcing industry?

360DegreeVendorManagement raises some real concerns regarding the Software Technology Parks of India (STPI) tax scheme which expires on March 31 2009.  The scheme currently gives tax-breaks to new Indian organizations in the region of 10-20% for their first 10 years of inception, designed primarily to bolster India's software industry. Established Indian firms are constantly spinning out new companies to keep enjoying the tax breaks. Today, exports by STPI registered units comprise more than 95% of the total software exports from the country, which include ITO and BPO exports.

Our mystery vendor management expert, recommends to her vendor management peers:

• Get more knowledgeable on this subject now. Talk with your attorneys, analysts and consultants. Do not wait for your vendor to “educate” you. There are many layers of taxes and your advisors will be able to separate hearsay from fact.
• Negotiate your pricing terms to reduce your exposure to changes in Indian taxes.
• Use the risk as another reason to diversify your offshore vendors and locations. Multi-location, multi-vendor strategies mitigate a wide variety of risks.
• Recognize that this change will not kill the Indian industry - it will just level the comparative costs among countries. India will likely become just as expensive as the Philippines.
• Adjust your financial plans now as you enter into 2009 budgeting and planning.

To compound issues with the competitiveness of India's outsourcing exports, Ted Botzum at TPI discusses the issues with foreign currency fluctuations and their impact on outsourcing contracts.  Ted pushes the point that firms looking at outsourcing need to invest in scenario development to balance the financial risk. 

Hence, there are a number of variables that must be built into the Indian outsourcing scenario:

• Rupee appreciation
• Weak dollar and potential weakening of the Euro
• Impact of the STPI tax scheme elimination
• Impact of Indian wage inflation

By taking away the tax break, the price-playing field will be leveled considerably between the Western outsourcers and the Indian-centric firms.  The Indian firms are now competing for the majority of top-tier enterprise outsourcing contracts, both BPO and ITO - which was not the case five years' ago.  Firms such as Infosys, Wipro, TCS, Genpact and Satyam (as we discussed here last year) are constantly having to evolve their human capital strategies to retain and develop quality staff over longer periods and keep wage inflation to a minimum.  Moreover, they are moving increasingly towards volume / service-based pricing models and relying less on FTE-based pricing, which leaves them vulnerable to these pricing pressures.  Incumbent global outsourcing firms such as Accenture, ACS, HP and IBM, which have large employee-bases in India, are also facing similar challenges to keep spiraling costs to a minimum, but benefit from having a larger proportion of their employee resources in other global locations, and are not going to be impacted when this tax break is eliminated. 

My view is that the Indian-headquartered suppliers have arrived on the global stage and are now seeking to take their services to a new level by investing in higher-value services and greater onshore presence.  By taking away their tax-break, the Indian government is only serving to harm its star performers at a time they need greater support to maintain their market surge.  With the current economic downturn, outsourcing deals are more competitive than ever, and next couple of years will lay the groundwork for the global sourcing industry for years to come.  I'd be surprised if the Indian government doesn't relent on extending the STPI tax break, but maybe it's decided the time has come to cash in on its most successful export? 

Update:  the Indian finance minister is proposal a 1 year extension to the STPI tax holiday until March 31 2010

Can outsourcing be a catalyst for driving down the cost of healthcare?

Outsourcing has proved to be a major "hot potato" for the US healthcare industry.  Coming from the UK, the healthcare system in the US is like comparing a Porsche with a Lada, but the British National Health Service (NHS) has, in recent years, been resorting to outsourcing major pieces of its back office infrastructure in efforts to slash cost, centralize and standardize processes, and access skilled IT services it simply does not have inhouse.  I don't believe the NHS would have dragged itself from a 1950s infrastructure to something vaguely resembling a modern-day organization, if it wasn't for the outsourcing services that have been provided by Accenture, EDS, IBM, Steria (Xansa) and others.  Outsourcing provided a shock to the system that forced reform and modernization it was never going to achieve on its own.

When you spend time studying the improved efficiencies and cost saving opportunities from which hospitals, managed healthcare providers and ambulatory services can benefit, simply by centralizing and standardizing their operational processes, you will scratch your head to understand why this industry has been so resistant to change.  These operational functions include specific healthcare processes such as revenue cycle management, contract management, clinical data management, patient accounting system management, in addition to the classic general and administrative processes such as application management, payroll, benefits admin, transactional accounting and management reporting services.  I have seen cost savings opportunities well in excess of 50% from original budget (and sometimes even more) that many healthcare providers can take advantage of, by outsourcing many of these processes to providers such as ACS, Perot Systems or Vengroff Williams, which specialize in taking on healthcare processes from both onshore and offshore locations.  Perot, for example, has significant medical coding resources in Bangalore, which comprise qualified medical personnel to take on routine revenue cycle processes such as medical insirance coding.  Vengroff Williams has service centers located onshore within the United States for healthcare providers nervous of taking processes offshore.

So why is this industry one of the least willing to adopt third party services?  Much of the problem is cultural - healthcare managers tend to stay with organizations for very long periods, and if they do switch jobs, will move into other organizations with similar infrastructures.  Things do not change much.  Most of the administrative functions are layered with top-heavy management structures that are highly resistant to change and argue that outsourcing will severely disrupt the quality of their services, and ultimately the quality of healthcare.  Perspectives of third-parties are that they will never be able to deliver the quality of services as well as they do themselves.  The healthcare industry has also been, on the whole, highly profitable, and the onus to take on "disruptive" strategies such as outsourcing has never been as strong as it is for highly competitive industries such as manufacturing and consumer business.  And I can tell you from experience, that outsourcing is rarely successful where the resistance is deep and senior managers simply will never buy in.

The US healthcare industry is plagued by high costs throughout its value-chain - from the drugs companies, through to the doctors' salaries and finally through to the heavy administrative costs of healthcare services.  My view is that we need to see a knock-on effect throughout this value chain to reduce the overall cost of healthcare in the US, and outsourcing is just one catalyst to enable this.  The pharma industry is going to be the spark for change ultimately, as competitive dynamics, globalization and low-cost generic products are forcing the incumbents to look towards new ways of stripping out cost and driving efficiencies.  GlaxoSmithKline, Novartis, Bristol Meyers Squibb and some other leading pharma giants have recently entered into BPO engagements, and last week Astra Zeneca announced a significant engagement where Cognizant will provide clinical data management services.  At the end of the day, competitive dynamics drive change, and this is the prime vehicle for outsourcing adoption in pharma.  With increased competition and pressure to reduce costs among healthcare providers, surely it's only a matter of time?  Perhaps the next occupant of 1600 Pennsylvania Avenue will have a say in this?

Will China's Internet purges inhibit their knowledge services industry?

  The Guardian put out an excellent report last week entitled "Behind the Great Firewall", which discusses the Internet popularity in China, and the fact that there will shortly be more Chinese online than Americans.  The piece does a good job pointing out how much the Web is impacting society, but what concerns me is the fact that the Chinese government is working extremely hard to increase its level of censorship and keep the Chinese Internet-world sectioned off from the rest of the world.  The Guardian has since followed up with a further report entitled "China's New Internet Purge",  which discusses how the Chinese government is ramping up its attempts to close down it's "Black Web" bars. Just last month, there were 868 arrests made of people providing "unhealthy" content.  Google reports that the most searched for words in China are related to "money" and "technology", which indicates that this "unhealthy" content probably wasn't all pornography.  People talk a lot about how China will be changed more by the Internet than the Internet will change China, but if the Chinese government manages to keep most Western sites from being accessed, and persists with stepping up attempts to block this "unhealthy" content, then surely there will be a limit to the level with which China can become "changed"?  How far could the Chinese government go to restrict the Internet within its borders?   And will the Internet really change China to a great extent if their citizen are only interacting amongst themselves across controlled media.  If it's a battle for restricting information online, then surely the player with trillions of dollars will win out?

As we discussed here a few week's ago, there are some clear challenges with China becoming a dominant force for delivering outsourced, or offshored, knowledge-services for Western businesses.  One of the key reasons for the success of India and the Philippines, for example, for delivering outsourced services such as application development, insurance services and accounting services, is the ability for their workers to learn and assimilate with Western business culture.  Interaction with Western staff is vital, and so is the ability for offshore workers to research information in the Web.  If the Chinese middle-classes are continually blocked from integrating their online culture with the rest of the world, won't this impact their ability to assimilate, understand Western business culture and deliver knowledge services for customers outside of the Great Firewall?  They have proved themselves highly proficient at producing physical products in China at very low cost, and have clear potential to develop their engineering services on a global scale, but the constant attempts to keep China sectioned off from the rest of the world over the Web could substantially hold back the country from delivering knowledge-based business services for Western companies. If their development is stifled through restricted access to information and people outside of China, they could be left performing knowledge tasks that require very limited "business thinking" , for example data-cleansing services.

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....who's this Barack Obama guy?

  "

H1B Visas: the $12,000 question

You may recall the feisty debate on the H1B Visa and outsourcing issue here and here last year.  With the 2008 campaigning now in full swing, the "O" issue is noticeably absent from the candidates' agenda and our old friend Lou Dobbs is waiting in the wings to shoot pot-shots at any of the candidates who say anything that remotely supports offshoring, outsourcing or increasing H1B visas.  Step up Hillary Clinton (see video clip below, taken from Lou Dobbs' CNN show last year).

Yes, she's supporting Silicon Valley businesses and has them contributing substantially to her campaign, but at least she's openly discussing the issue and - more importantly - attempting to tie together the realities of outsourcing, offshoring, immigration and the need for the US government to invest in developing technical and engineering talent.  I respect Lou Dobbs a great deal - he's a passionate man who sincerely believes in his vision for American workers, has a great sense of humor, and conjures up some excellent - and entertaining - political discussion.   However, this H1B argument just isn't holding up. 

2008 Presidential Update: The Outsourcing Industry speaks out

Thanks to all of you who took the time to vote in our poll "Who whould you LEAST like to see in the White House in November 2008".  We've had over 100 responses back, so I thought it time to update you all that Hillary, on the back of her sensational comeback in New Hampshire, is again leading the charge... yes, she is currently the overwhelming favorite NOT to be the next President.  McCain is the least offensive, but the Obama vote picked up recently, as several of you started to panic at the thought of this guy in the oval office.  Anyhow, keep the votes and comments coming (just click on your least desirables on the poll on the left-hand scrollbar).

 

And if a sourcing advisor was elected President...

• Everyone In the West Wing will have to work until 9PM every night so taxpayers feel they are getting their money’s worth
• He will have walked every congress member through the “State of the Union” address prior to presenting it In order to gain consensus and avoid any political land mines
• The US Budget will be delivered as one large spreadsheet full of pivot tables
• All official White communications will be done in PowerPoint
• White House meal budget will increase six fold
• Cabinet members will need to have a hypothesis prior to engaging in any official business
• The President’s salary will be done through a SOW
• The US will have the greatest strategy, but none of it will ever happen
• He will start planning reelection immediately as a means of “follow-on work”

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.... have a great 2008 to readers of Horses for Sources :)

China and BPO? Don't bet your mortgage on it

There has been a considerable amount of hype around the China's potential as a BPO power-house, typified by this recent article by Sridhar Vedala and Vibhash Ranjan of sourcing advisor Equaterra, which claims the China BPO market reached $1.3 billion last year.  The definition of BPO is somewhat vague, so I will refrain from commenting on this figure, but am sure the economic climate out there is capable of commanding this level of BPO work.  The article has some excellent points regarding the advantages and potential of China as a BPO destination, namely:

• China's BPO market will be driven by (1) companies from Japan, Korea and Hong Kong outsourcing low-end services; (2) foreign investors that have thousands of employees in China (i.e. Danone and Fuji);  and (3) domestic companies that outsourcing within China.  American and European firms are "rarely sourcing" BPO services from China.
• Global BPO firms, such as IBM and Genpact, are developing a presence in China (even thought IBM is the only firm that has surpassed 1000 employees for BPO services);
• New BPO locations, such as Chengdu and Tianjin, are 30% cheaper that the mainstays of Beijing and Shanghai, and their attrition is only running at 5%, as opposed to 30% in the big cities (this really fills me with confidence);
• "China offers multi-region support to the surrounding customer markets, which sets it apart".  I am assuming these are for regions that require Chinese dialects, such as Jin, Wu, Hui and Pinghua, in addition to Taiwanese, Japanese and other Asian languages.
• Multinationals are shifting their Asia/Pacific regional HQs to China and establishing shared services centers or outsourcing local firms.
• De-regulation of the Chinese banking sector.  It is now much easier for foreign investors to offer retail banking services in China - a real drive for BPO.

Is India adapting to the Night Shift?

A new report released by the Associated Press is highlighting the issues of outsourcing jobs on Indian workers' health.  While the report lacks any hard evidence and focuses on a handful of individual cases, data released by the Indian Council for Research on International Economic Relations estimated the cost of these increased health issues, namely sleep disorders, heart disease and depression, could amount to $200bn for the Indian economy over the next 10 years "if corrective action is not taken quickly".

As we discussed here on HFS a few weeks' ago, the business case for organizations outsourcing certain services to locations closer to home (or even at home?) is becoming increasingly appealing - especially for those services that require a high degreee of interaction between the organization and its outsourced workers (for example software development).  For those services where the offshore workers need to be operating at the same hours as US companies, for example customer support / help-desk services, the Indian workers must adapt to working swing-shifts and unsocial hours.  My concern here is that Indian culture is very family and social-centric, and these types of jobs are becoming increasingly less desirable for many workers who go into these jobs initially to enjoy the increased compensation on offer, but are quickly realizing the trade-off with their lifestyle, health and family / social issues.  As long as outsourcing providers are servicing US businesses from India that require a large degree of worker overlap, they are going to be faced with increasing issues of attrition and rising wages to keep workers in these jobs.  This is the chief reason why the Latin America region is on the cusp of a major upswing of taking on outsourced jobs that benefit from the time overlap.  At the same time, it increases the appeal of UK and European-centric services being run out of India, where the time differences are far less oppressive on the offshore workers. 

These health and social issues are very symptomatic of a developing economy like India - and my only surprise is the speed at which they are happening.  I believe these issues will only be magnified when work is outsourced from US businesses to China, where the time differentials are even more brutal, and the language issues much tougher.  That is one of the principal reasons why China is (and will continue to be) far more successful at taking on services such as engineering and manufacturing, where these worker interaction issues between offshore staff and Western organizations and their customers are less crucial. 

   '

'

Is India growing up too quickly?

The 2008 Presidential Election and Outsourcing

Am going to start following the main candidates for the 2008 Presidential Election closely to dissect what (if anything) they plan to do to promote / restrict outsourcing services if they get elected.  While they all need to be seen to be openly "protecting" US jobs, they also need to protect the motives of business leaders, many of whom have a vested interested in outsourcing and fund the campaigns of the hopeful candidates.  In the meantime, I thought it would be interesting to have a "reverse poll" and get your take on who you would LEAST like to see in the Whitehouse next year (as we're so spoiled for choice, you can select your two most unlikeable candidates).  Vote on the scrollbar to the left. 

Let's keep this conversation rolling...

H1Bing for outsourcing workers... where do you stand?

The last post on Horses for Sources - "Has the Lou Dobbs factor faded?" - certainly got several people voicing their opinions on the outsourcing of jobs to India (and please feel free to air your views publicly on this site rather than email them directly to me!).  Personally, I think the whole argument about the pros and cons of offshoring services has been done-to-death, but one issue that has been raised, concerns the allocation of H1B Visas to offshore outsourcing suppliers looking to bolster their onshore workforces to improve their service delivery:  Should offshore firms have the right to "import" their labor into the US in addition to "exporting" US jobs oversees? 

I'm probably not the best person to provide an balanced argument here, being an H1B Visa-holder myself (but I don't work for an outsourcing provider), so I am inviting you to cast your vote to the left of this post. Personally, I have thoroughly enjoyed my experience working in the USA and helping some US firms develop their services - and hope I am adding some value along the way - and I strongly encourage skilled US workers to apply for temporary work visas to experience working in the UK (my country), Europe or Asia, if they have the opportunity.  Working in dynamic business environments across the globe is such a great developmental experience for people in today's economy. However, the key issue now is whether the offshore outsourcing providers should be entitled to create onshore jobs for foreign workers to help run and develop outsourcing services. So have your say!

I did want to relay some key facts regarding temporary work visas that outsourcing providers typically use for skilled immigrant workers.  There are two types of Visas outsourcing suppliers use to bring skilled immigrant workers over to the US:

1) The L1 Visa:  This applies to an employee working within a foreign subsidiary of a global firm, has over a year of service with that company already completed, and wants to be transferred to a US office of that organization.  The requirement is simply that the firm was unable to find a local US worker who could do that exact job, and that job required a specific qualifying expertise, or was a unique management position that fulfilled certain (strict) qualifying criteria.  The sponsoring firm will have to prove they advertised the job first in the US and was unable to find a suitable candidate.  There is no cap on L1s, and 7 of the top 10 L1 users in 2006, according to the US Senate - were Outsourcing providers that were either headquartered, or had their largest employment base, located in India. 

TOP TEN COMPANIES RECEIVING L1 VISAS (2006)

Rank	Company	Headquarters	Primary Employment Base	L-1 Visa Received
1	Tata	Mumbai, India	India	4887
2	Cognizant Technology Solutions	New Jersey	India	3520
3	IBM	Armonk, New York	USA	1237
4	Satyam	Hyderabad, India	India	950
5	Wipro	Bangalore, India	India	839
6	Hindustan Computers Ltd. (HCL)	Noida, India	India	511
7	Deloitte & Touche LLP	New York, New York	USA	512
8	Patni Computer Systems	Mumbai, India	India	440
9	Intel Corporation	Santa Clara, California	USA	394
10	Kanbay	Chicago, Pune, Hyderabad, and Chennai	India	329

Source: US Senate, 2007

2) The H1-B Visa:  H1B visas apply to skilled individuals applying for jobs with US companies.  As long as the US company is a registered corporation or LLC, the visa is dependent on the university qualifications of the individual to fulfill a specialist role within that US company.  Unlike L1s, H1Bs are subject to a cap for commercial workers, and this allocation of H1B Visas has been dramatically reduced from 195,000 in 2003 to only 65,000 in 2008, with an additional 20,000 made available for worked with US Masters degrees.  This is an exceedingly minute percentage of the US working population (of the fractions of a single percentile).  Like L1s, 7 of the top 10 H1B users in 2006, according to the United States Citizenship and Immigration Service - were Outsourcing providers that were either headquartered, or had their largest employment base, located in India. 

TOP TEN COMPANIES RECEIVING H1-B VISAS (2006)

Rank	Company	Headquarters	Primary Employment Base	H-1Bs received 2006
1	Infosys	Bangalore, India	India	4,908
2	Wipro	Bangalore, India	India	4,002
3	Microsoft	Redmond, Washington	USA	3,117
4	Tata	Mumbai, India	India	3,046
5	Satyam	Hyderabad, India	India	2,880
6	Cognizant Technology Solutions	Teaneck, New Jersey	India	2,226
7	Patni Computer Systems	Mumbai, India	India	1,391
8	IBM	Armonk, New York	USA	1,130
9	Oracle Corporation	Redwood Shores, California	USA	1,022
10	Larsen & Toubro Infotech	Mumbai, India	India	947

Source:  United States Citizenship and Immigration Service, 2007

B/w - thanks to Steve Dunkerley from The Finance Director magazine for contributing these data points,

PF.