750 People Involved In A Call Center Scam...how is it possible ?

The link to the article is below and even though it is a few weeks ago I still wanted to offer my thoughts regarding the issue.

Americans have been on the receiving end of fraudulent phone solicitations for a long time, as such the story below might not be that unusual. What is unusual to me, and really strikes me as rather amazing is the scope of the operation which was revealed when Indian police busted the network.

India is obviously well know for its outsourcing services within the call center industry. It is not the biggest supplier of outsourced telemarketing services anymore, that rank has been taken over by the Philippines now, but it still is a place where millions work on the phone talking to US customers. 

750 Indian nationals were arrested in what must surely be  the biggest call center fraud ever perpetuated. The fraud was apparently conducted by using the IRS as the scapegoat and people were coaxed in resolving their outstanding IRS issues through a settlement.

The settlement would typically take place via the purchase of voucher or gift cards which the fraudsters then used to purchase items with the goal to resell those in the open marketplace.

The average daily amount generated this way was apparently 150,000 USD. Considering that the fraud has been going on for quite a while it seems clear that the actual damage might be more than a hundred million US-$.

What is more striking than the actual amount though is the level of sophistication one needs to employ in order to have 750 people involved in an operation like this day in day out. A structure like this needs management, training and supervision to stay on message.

It seems therefor very likely that this level of sophistication is not a just a one time deal but rather the result of a consistent and organized effort. With that in mind I would vouch to say that what the Indian police closed down was simple a part of a bigger network which specializes in that type of fraud.

The "Tip Of The Iceberg" is what comes to mind here.

Indian Police Arrests 750 In Phone Fraud

Cybersecure Software Development In An Outsourced Software Development Situation...What to Look Out For

Cybersecure Software Development has become a much bigger issue in the past 2 years than it has ever been.

The C Suite as well as the Board level of corporations has become painstakingly aware of the issues corporations face when it comes to cyber security. We have had some spectacular breaches of security where the cyber criminals got ff with a boatload of data which ultimately will be used to facilitate some form of crime.

Another aspect of cyber security is straight theft of intellectual proprietary data. (Corporate Espionage). One aspect of corporate espionage is that it happens below the radar and it often times not properly identified by the corporations involved.

The two forms of cyber crime mentioned above are well understood and corporations are doing their  best to safeguard their networks and data.

One often overlooked aspect of the problem of how  to safeguard data (whether it is customer data or proprietary firm data) arises in the context of outsourced software development.

Market Research shows that more than 90 % of companies use external sources to procure some or all of their software code. (Forrester Research).

The software development operations of any company  are an obvious target for corporate espionage. Since the code developed will ultimately be used to power Business Applications any advance knowledge of such code provides a potential significant strategic advantage to a competitor.  

The practice to outsource software development is so widespread that it should be an absolute priority for corporations to implement a code of conduct to be employed by the outsourced software development team.

Obviously the implementation of such a code of conduct gets progressively more complicated when the provider resides in countries and jurisdictions which are more difficult to control from far away. Cultural differences and a general lack of awareness of the problem might complicate matters even further.

Never the less...market circumstances dictate that any responsible company makes cybersecure software development a priority in their effort to fend off cyber crime.

One advantage when establishing a Cybersecure Software Environment is that the users of the environment are technically savvy and  well aware of what it takes to safeguard their work.

Often times it is the weakest link within an organization which opens the floodgates for a successful penetration of the network. The weakest link is sometimes as simple as an employee who is just not aware of cyber security protocols.

In theory highly skilled developers, even working in remote locations and far away countries, should be able to comply with the steps needed to secure their development work. As such it is one area of cyber security where the remedy is relatively easy to come by.

The issue might exist a bit under the "radar" for the Senior Level...but once attention is paid it might be a rather easy fix.



Here Is How and Why A Virtual Assistant Will Kill The BPO Industry...A Real Life Example

A lot has been said and written as to the impact Artificial Intelligence (AI) and the eventual integration with Natural Language Processing (NLP) will have on the BPO industry.

If some of the more aggressive forecasts are to be believed up to 70 % of the more clerical support based BPO activities are on the chopping block. Further integration into work processes should extend the reach of AI powered applications all the way into the more complicated tasks currently being outsourced.

Of course...all of this happens in the abstract and it remains to be seen how fast (or if) the new era will approach.

In my opinion it is already here...perhaps not visible to most people yet...but the beginning has been made.

I would like to tell you about a real life example which I was involved in...and which has led to a solution which is liked by the management and the customers.

About 4 months ago we were approached by a company which distributes a SaaS product which is being used by a lot of smaller to midsize companies. The product has rather universal appeal, very limited customization and is a low revenue product with high margins.

Now...the low revenue characteristic of the product is the reason for the rapid adoption...but it also is what has been eating into the profit margins of the company. Simply stated...the product support costs were rather  high vis a vis the revenue per customer.

Continued growth of the company has been forcing the company to scale up support staff to deal with inquiries as to the best use of the product. Despite the company limiting support to chat and email for the lower priced plans the support costs were chewing up margins.

Management decided that rather then hiring yet another customer support agent they were going to develop an AI based solution. They consulted with us and we were tasked with he development of a Virtual Agent for chat and email support to handle. to the extent possible, their level 1 support.

One advantage the company has was that the existing support history was rather extensive. They were tens of thousands of emails and chat logs with the Q's  and A's needed to develop the Virtual Agent.

As is undoubtedly the case for most organizations...the same questions do repeat themselves. A question might be asked in a variety of different ways...but the answer is often times the exact same one.

With the help of the company we reduced the more than 10,000 support cases to about 200 actual support scenarios.

It had been decided that we were going to use Watson as the backbone of our support agent. We developed a procedure and the required technical tools and went to work.

It took about 2 months to get a Minimum Viable Product (MVP) out of the door. Another months was spent on refining and improving the MVP at a steady clip.

The interesting aspect of the exercise is the result for the company. A couple of things materialized after the deployment:

The company experienced very little negative feedback. Even in a situation where the Virtual Agent was not able to help the customer a built in escalation feature to a live operator resulted in high customer satisfaction ratings.

Key Performance Indicators (KPI's) the company had been using to measure customer satisfaction for their support rose across the board. Due to the immediate availability of the Virtual Agent (no need to wait for a live operator) KPI's rose rather dramatically in the areas of expediency and quickness of response.

The company was able to migrate level 1 support staff to level 2 support and avoid the hiring of additional personnel

The costs associated with running the agent (IBM charges for each API query) resulted in net reduction of approximately 75% in total support costs.

Perhaps most beneficial for the customers...the company went to a 24/7 level 1 support after about 6 weeks of usage for the Virtual Agent.

The Virtual Agent has been getting better. It goes without saying...but the "intelligence" aspect of the agent results in better answers over time.

All in all the company views the implementation of a Virtual Agents as a huge success. Customers are satisfied and the company estimates that it will reduce hiring, given current growth rates, by about 5 bodies.

Of course..the real life example cited above cannot necessarily be the blueprint for every company. Not every support scenario can be successfully resolved through the use of a VA. Never the less though...AI is here to stay and slowly but surely it will work its way into real life support situations.

The consequences will be felt...for some providers of BPO companies  rather soon...for other companies
it might be years before they will feel the impact.

There is little doubt though that once corporations go the AI VA route the consequences for BPO companies can be dramatic.


Strange News....Indian Call Centers Are Shut Down Because They Impersonate IRS Collection Officers...700 (!) Are Arrested

Most of us have heard the occasional warning from the IRS that the caller on the other line pretending to offer you a bargain on unpaid tax dues might be a scam artist. The scam usually culminates in the recipient of the call settling the debt for a token amount (or a large amount) with the money disappearing  into cyber space.

Unfortunately there are plenty of victims to be found. The scam has been proliferating and does not seem to be running  out of steam anytime soon. 

What is usually not so well understood is where the crime originates. Some light on the practice has been shed by an Indian newspaper which reviewed some of the enforcement actions taken by local police to combat call center crime.

In one such action Police arrested 700 (!) people connected with call centers set up in India with the sole purpose  to call US citizens and impersonate IRS collection officers. The daily revenue generated this way came out to approximately 250,000 US-$ or about 7.5 Mio a month. (close to 100 Mio per year)

The average monthly revenue per call center agent was therefor about 10k. Considering that the call center agent should not cost more than US-$ 500 per month...a rather profitable venture. 

The article can be found here and makes for an interesting read as to how the companies are structure.

Romania Outsourcing Industry Keeps On Gaining Ground Over Other European Countries

The Outsourcing / BPO industry is constantly looking for better solutions to address their needs. One country which has consistently been rising in the ranks and has become the "hot' destination in Europe is Romania.

In the latest ranking by Colliers International Romania managed to climb 5 spots and is now ranked as number 13  in the Global Services Location ranking. It has left countries like Hungary (32) , Czech Republic (26) and Ukraine (24) solidly behind it. If the trend continues it might be able to overtake its only remaining regional competitor Poland (10) within the next few years.

The ranking takes into account things like costs, business climate and the quality of the work force. 

Romania's climbing up the rank is driven by its well qualified IT workforce which is graduating at a steady clip from its Universities.

Another advantage all  of central and Eastern Europe enjoys is the relatively better time zone they are operating in when dealing with clients based in North America. Most European countries are about 7 hours ahead of Central Standard Time (Chicago).

Compared to the 800 pound Gorilla in ITO , India, this represents a clear advantage. India as well as most of Asia is squarely on the other side of the clock. Hence dealing with a European software team might be a bit easier.

One disadvantage all of Europe has compared to India and most of Asia is that the depth of the talent pool simply does not compare. Overall there are estimated to be about 600,000 employees in the outsourcing sector for all of Central and Eastern Europe. That compares with about 3.5 Mio for just India.

Never the less though...Romania and its other European peers are making steady inroads into the BPO and ITO industry and that trend should continue for the foreseeable future.

Can Strategic Marketing Be Outsourced ?....

I am a firm believer in the concept of outsourcing non core functionalities. Functions which are not mission critical to your business and are not part of your core expertise can very successfully be outsourced without impacting operational performance. 

In practice that means that almost any business can outsource functions like Accounting, Bookkeeping, Human Resources, Data Entry, Scheduling and so on....

If done right outsourcing these functions will reduce opex spent while improving or at the very least maintaining  Key Performance Indicators (KPI's).

One function which is always on the radar for being outsourced is the Strategic Marketing. Strategic Marketing is what is responsible where the marketing dollars are spent..and for the subsequent evaluation if the dollar spent has produced the desired result.

Perhaps most importantly...Strategic Marketing is what drafts the message for the company.  In essence it is responsible for the overall perception of what any new customer might think of the business.

Clearly...the actual task of marketing in non core to pretty much every business. As such the theory goes that it is fair game for being outsourced. At the same time though....Strategic Marketing is what the company needs to do right in order to be successful in the marketplace. Therefor the decision to outsource the Strategic Marketing should not be made lightly.

Below are the key points one should consider before deciding if it can be outsourced.

Do You Have A Resource Gap?
First you need to evaluate why you  are considering outsourcing Strategic Marketing. Is it simply for cost reasons or are you looking to gain additional expertise ? If you feel that you have a resource gap, either in intellectual capacity or just in terms of manpower...outsourcing could be a viable for your company.

Do You Have Short Term Needs Or Long Term Marketing Needs?
If you decide that you have a skill and/or resource gap you need to evaluate if the gap is short term or long term. As an example...you are rolling out new products and your marketing department is not sufficiently staffed to cover the roll-out properly. Is that short term resource gap driving your desire or do you have long term ongoing needs ? If you just have short term needs you might be better off to muddle through....if your needs are long term outsourcing might be an option.

What Is Your Core Competency ?
This one is important. If you feel your Marketing Messaging needs to be fully under your control and you have the need to be intimately involved...chances are marketing is one of your core competencies. If on the other hand marketing is more running alone with everything else you have going on... it might be worth while to consider outsourcing it.

Do You Need A Fresh Approach / Fresh Thinking ?
Consistent Messaging is what today's brands are all about. You build  brand reputation by consistently staying on message to make sure that your customer understand why you are the best solution. Sometimes though it might be necessary to introduce fresh thinking into the process. Your marketing might have become stale...and thus not generating the impact you want it to have in the marketplace. If that is the case..outsourced marketing might help your company.

Do You Need Specialized Skills Which Are Difficult To Come By?
Sometimes your marketing team might need specialized skills which are difficult to come by. This might happen in a case where your company introduces a completely new product category or you want to use a marketing approach which has simply not been done before by your In House team. If that is the case outsourcing might be a good option.

Generally speaking I am not a big fan of outsourcing the Strategic Marketing. Even though it does not fall into the "Mission Critical" category it is very important longer term.

 However...if after reviewing the questions above you walk away with the realization that you are a candidate, by all means...I encourage you to outsource Strategic Marketing.

As is always the case when it comes to outsourcing...your BPO partner will make the difference in determining if your outsourcing venture will be successful . 

Strange News...A Chaplain Is in Charge Of The Emotional Well Being Of A BPO Team

Any executive who has been deeply involved running a BPO operation knows that the agents making up the team are real human beings with real life problems.

Due to the location of BPO centers the needs which the average worker might have are sometimes driven by cultural issues as much as by simple hardship.

Taking the cultural needs and the difference into account when running a successful BPO center is needed since employees in Asia or South America might have vastly different needs than employees located in the heartland of the US.

Any executive running a BPO center can attest to the fact that it feels sometimes more like a babysitting operation than running a corporation.

It is widely understand that South America is very religious with the church being  a cornerstone of society.

Taken advantage of that situation has Qualfon, a global Provider of BPO services. They have created the position of Chaplain for their Mexico City operations to help employees deal with any type of emotional, spiritual and economic challenges their employees are facing.

It might seem to be an unusual solution to some of the real life problems but it certainly seems to be working for them. An article explaining how it has been working for them can be found here

The BPO Industry Keeps On Growing...At Least In The Phillipines

There has been ample data which suggest that the BPO industry is having a tough time to maintain the growth rates they have been used to.

The environment will be challenging for the big and small BPO players in the years to come. Robotic Process Automation, Natural Language Processing and the rise of Apps powered by Artificial Intelligence will make it a challenging environment for the BPO industry as a whole. The impact might not be felt yet, mainly because a lot of new developments is still in the Beta stage...but corporations are investing huge amounts to commercialize some of the new technologies.

It therefore comes as a sign of relief that the BPO industry in the Philippines seems to be doing well. Revenue remittances by the major users of BPO in the Philippines increased by about 13 % to 25 Billion USD for 2015.

The strong uptick in revenues for the Philippines is pretty much in line with what the 800 Pounds Gorilla in the business has been reporting. India also reported a rise in revenues of 13 % for their BPO industry.

The Philippines are benefiting form their western influenced workforce which speaks on balance significant better English than all of the other providers of BPO services.

The language advantage should insulate the Philippines from the emergence of decelerating revenue trends for the time being.
Never the less...it will be interesting to see when the business climate will get a bit more challenging.

Free Download...Here is a free E-book from Baker Mckenzie which covers the legal ramifications of outsourcing

In a lot of jurisdictions is not necessarily always simple to outsource jobs. The transfer of jobs when to a  BPO  company sometimes creates the potential for legal challenges.

The challenges can be somewhat tricky to ascertain when the executive tasked with the outsourcing project resides in another country.

Most countries simply do not have laws dealing  specifically with outsourcing related issues...as such common labor laws are being used to safeguard the process. One of the mandatory considerations any business therefor has to consider is if the process of outsourcing will violate applicable labor or other laws.

Baker McKenzie has created an Ebook which is available for free download which addresses a variety of questions related to outsourcing. They currently allow for a free, no registration download at the link shown below.

They presumably created the book to drum up some business. Never the less, credit is due where credit is due.  It is a great resource. It covers 19 jurisdictions (countries) and therefor  has a broad based appeal.

If you like to learn a bit more about what the document entails please visit their designated page (Baker McKenzie) explaining the Ebook in a bit more detail

Can Inside Sales Be Outsourced ?

I was confronted with this question the other day. I usually do not entertain sales related outsourcing questions, mainly because it is a field I ordinarily do not deal with.

After contemplating the question though I wanted to provide my view on the subject.

There are quite a few things to consider when outsourcing sales.
Sales is first and foremost the first point of contact between a company and what might be the next customer. Clearly...first impressions count...and Sales is what makes the first impression.

Hence the question of outsourcing sales should not be taken up lightly...it does require some hard thinking as to what the KPI's  (Key Performance Indicators) are which need to be hit.

The very first step in the process should be to conduct your needs and define the KPI's. In order to do so the following should be asked:

Why do you feel the need to outsource sales ?

Potential reasons can be:

  • You want to rapidly increase sales and/or  meet demand spikes
  • The company lacks the infrastructure to increase sales (either technically or resource wise). 
  • Company wants to focus your internal resources on operations and rid yourself of the sales process
  • Elimination or reduction in staff turnover 
  • Lack of Senior Sales management which can drive the sales process internally
  • Reduce costs associated with the sales process
  • There might be other factors to consider unique to your business, identify them here.

After a self examination which addresses all the weaknesses and objectives you want your external sales team to address and/or rectify you will need to find the right partner for your outsourced sales process.

 The sales partner is tasked to be your brand ambassador....he/she will be the very first contact any potential customer will have with your business. As such proper selection is key to make the venture successful.

In the analysis of whether or not your potential Sales Partner suits your needs use the afore mentioned Key Performance Indicators to conduct the review.

Questions which need to be answered are:

  • Does the Sales Partner have related industry experience ?
  • If so, what was their documented success, track record working for companies like yours?
  • Will there be a learning curve , and if yes, how steep will it be ?
  • Do the sales people posses the right skill sets to level with your customers ?
  • Can the Sales Organization be up-sized (or downsized) if and when needed?
  • Do they have experience with your target audience ? (B2B or B2C, industry experience?)
  • How does the Sales Partner structure its reporting to the company ?
  • Does the Reporting Structure suggest that there is a willingness to be accountable for failures ?
  • Consider the costs. Actual deployment costs as well as human capital costs within your organization.
  • Once again, there might be questions unique to your company, make sure you address them

If the above questions are answered to your satisfaction you might want to consider the idea of outsourcing Inside Sales. A good option to branch out into Outsourcing Sales is the deployment of a Hybrid Model.  A lot of organizations run such a hybrid model whereby some sales is  being outsourced and then bench-marked against the performance of the In House team.

A Hybrid approach is often times the best solution to start the process of outsourcing. If done right  it might foster competition and makes the entire sales team (Inside and Outside) more productive.

At the end of the day the decision is just not about dollars and cents. Sales is the driver of any business and having an organization that can be authentic in conveying a message is often times the most important part of the sales process.

Only if and when a business feels that it will not loose its authenticity vis a vis a customer the decision to outsource sales should be made.

Did McDonalds just exchange 70 In House Accounting Staff with H1-B workers ?

Outsourcing takes form in many different ways. Most often the task is outsourced to companies which have workers in their facilities which are located in India, Philippines or any  other outsourcing destination.

Sometimes though the outsourcing does happen within the country.

One  solution which is frequently employed (some people might say "abused") to cut salaries is to engage  an outsourcing company which takes over the business process and provides domestic personnel to perform the job requirements.

There is nothing wrong with that practice on the surface. What makes it problematic is that the main users of H1-B visas are companies which provide consulting services which are priced cheaper than what corporations pay their own workers.  Effectively the companies are building a workforce using H1-B workers to provide  the same service cheaper than what it would cost the US corporation to get the job done with In House staff.  

The H1-B program does not allow the loss of jobs (substitution) to a H1-B worker. Unfortunately though there  is no safeguard to prevent the contractor who takes over the process to use H1-B workers.

The above is apparently exactly what McDonalds did...they hired a company in an attempt to save on their accounting costs. The company who took the job staffed the position with H1-B workers.

Article can be found here

The graphic below shows the Top 19 users of H1-B visa users in the US.

Does Legal Process Outsourcing Work ?..You Bet It Does!

Legal Process Outsourcing or LPO is one of those services which are more difficult to evaluate in its performance than other more conventional BPO services.

Unlike those more conventional services which often times have easy to validate Key Performance Indicators (completed processes, error rates, accuracy rates and so on) LPO is a bit more tricky to asses.

Depending upon which tasks is being outsourced the validation of Key Performance Indicators is usually not an obvious solution. After all, discovery documents being improperly prepared or reviewed will often times only show up months later as a potential problem.

As such LPO has been existing in a bit of a vacuum..law firms use it more and more but no one really knows much about whether it really works.

The fact that law firms are usually privately owned makes it even more difficult to asses if LPO is one of the methods employed to successfully reduce their expense ratio. Transparency is just not a high priority when it comes to dealing with attorneys.

An interesting insight into the validity of LPO was provided through a survey conducted by Corbin Partners and Taran Virtual Associates. In the survey about 250 Canadian law firms and attorneys were asked if they were using LPO and if so, what their  satisfaction rating was with the services provided.

The survey provides a rather interesting viewpoint of the Canadian legal industry. It established that
40 % of respondents said they use LPO currently.

Out of the 40 % who use the service the breakdown of services utilized was (multiple selections were possible):

  • 51 % use the service for legal consultations  and opinions
  • 37 % use it for agency services
  • 37 % use it for trial and appellate work
  • 36 % use the service for legal research
  • 28 % use it for clerk and paralegal support
  • 24 % use it for document review and discovery
The most important takeaway from the survey though was the level of overall satisfaction. Of those who were currently using LPO:

45 % reported that they were very satisfied with the service
41 % reported that they were somewhat satisfied
9 % reported they were neither satisfied or dissatisfied 
5 % reported that they were somewhat (3%)  or very dissatisfied (2%) with the service

Only 5 % of the respondents reported dissatisfaction with the service. This makes it clear that LPO is here to stay.

Considering that 60 % of the respondents in the survey did currently not use the service it seems that the industry as a whole has some room to grow.

If you consider that the providers of LPO services will continue to perfect their processes it seems plausible that they will also work themselves deeper into the law firms over time.

A provider might start out with just discovery as the outsourced process but there should be a good chance that over time more and more functions will be turned over to the LPO provider.

Judging by the results of the survey LPO is here to stay and business should be good for the industry in the years to come.

How You Can Make Sure That Your Arbitration Clause Is Air Tight When Dealing With An Overseas Outsourcing Partner

No one wants to go to court. This is even more true when your potential adversary is residing in a jurisdiction where the ability to enforce US laws is limited at best. (Mexico, China and India will for the most part not enforce US judgments)

It therefor has become the norm within the outsourcing world that  most contracts are using arbitration clauses to safeguard the legal interest of the parties.

Commercial Arbitration Firms like JAMS offer an alternative dispute resolution process which is faster and also cheaper than what is available through the courts. An added benefit might be that because of the nature of arbitration (private resolution) there is a significantly greater degree of confidentiality.

The big advantage arbitration does have is that  countries like China, Mexico and India have  signed the New York Convention for the Enforcement of Foreign Arbitral Awards, thus enabling the collection of judgements even in those countries which would not enforce a judgement obtained at a US court. 

Another significant advantage utilizing the arbitration route is less cost and less time consuming, both of which constitute a  significant advantages as compared to litigate in front of a US court.

There are of course pitfalls to consider when executing an arbitration clause. The wording of the clause has to be as such that it will withstand legal scrutiny in case a party wants to evade their arbitration responsibility.

At the very least the following key points should be incorporated into the arbitration clause:

  • A provision stating that "all disputes arising under or in connection with the agreement shall be resolved" by the rules of a particular international arbitration organization
  • A clear location of arbitration
  • The number of arbitrators involved (typically one or three)
  • The language in which the arbitration process will occur
  • An agreement that any awards issued by the arbitrators "may be enforced in any court of competent jurisdiction"
Obviously a competent attorney should review any contract to make sure that the legal language used is up to par.  

Looking out for the proper arbitration language will go a long way that in a situation where an outsourcing relationship has gone sour. No one ever wants to go to court and in a situation where some kind of dispute resolution is considered arbitration is a much better bet.


Robotic Process Automation (RPA) Is Coming...Here Are Some Estimates As To How Much Cheaper It will Be

Robotic Process Automation is coming hard and fast. One of the industry which has the most to lose is the BPO industry.

At its most basic level the Robots will take over repetitive mundane tasks which are currently done through a help desk or are happening on a fixed easy to automate schedule. Payroll processing, password recovery, service alerts and updates are some of the tasks which can easily be allocated towards a Robot.

What has made the BPO industry successful is the concept of labor arbitrage. A task which costs X domestically can be performed at a fraction of X with a BPO provider who employs at its core a labor arbitrage model to provide value to its customers.

Robots will challenge that model rather dramatically. Not only will the Robot lead to lower fees...it can also conceivably be deployed by the onshore customer, cutting out the BPO provider altogether.

The simple fact is that the resources a customer allocates towards the management and supervision of a BPO relationship might equal the resources needed to maintain an In-House robot...thus eliminating the BPO provider completely.

In my opinion the cost reduction associated with a Robotic Process Automation will lead to reductions in BPO fees of 75 % or more (depending upon the licensing model of the Robotic technology).

I consider this number even conservative. Since Quality Control and Capacity Utilization will be a Non-Issue in a Robotic Process Automation environment BPO providers will loose their pricing advantage. Not only can they not claim any more that their BPO services are "better"..the actual Robot can also  be duplicated by other vendors...thus creating an opportunity for customers to exert real pricing pressure.

The article below makes a few good points as to RPA. I disagree somewhat with their anticipated reduction in fees...in my opinion the reduction for customers should be significantly bigger that what the article seems to suggest.

Article: Robotic Process Automation, Economics of it

Never the less though..it is a great article which makes quite a few good points.

The "How To Bible" for a Non Tech Person How To Supervise Outsourced Software Development

The decision to outsource a new application development often times seems like a rather daunting tasks for a business executive who has never supervised outsourced application development.

The simple truth is that not all companies have the In House tech staff who is experienced in organizing and supervising outsourced software development.

Fortunately the proper way to be successful when outsourcing software development is really not that complicated. Below is a 6 step list which, when followed, should ensure that your outsourced software development will no go off the rail.

Please note that the steps below are only applicable once you have selected the right outsourcing provider. Obviously, if your selected outsourcing partner does not deliver on the technology it can get rather tricky.

Step 1:  Requirements Management and Audit
You start with the most important item first. A detailed analysis of the requirements is key. Each capability of what the software needs to do has to be properly documented. Additionally you have to assign the proper permissions, (edit, read, modify, delete and so on) to each user level which is authorized to access the data relevant to that function and or feature. There is a good chance that your Outsourcing Provider will have a Requirement Manager on staff who will guide you through the process. If not...assign a member of your team that responsibility. Once you have the requirements down schedule meetings with the Lead Developer or Team Leader and run through all the requirements to clarify any misconceptions which might arise. A well thought out requirement list will ensure that your application has all the features you need while avoiding excess development time which might arise due to changes and/or additions which become otherwise necessary.

Step 2: Testing Tools
Once the outsourced software development team starts working testing of what is produced becomes the most important task. The Quality Assurance needs to stay on top of the development process to make sure that the development is correctly aligned with the requirements. Gantt and/or waterfall charts should be used to structure the development process into easy to follow steps. (the sprints). Your outsourcing partner will have a dedicated QA team (Quality Assurance). However, you or the person tasked with supervising the development will need to make sure that testing is done in accordance with the progress the developers make. It goes without saying, testing should never be done on the live app...a dedicated testing environment is something your outsourcing partner should have set up for the entire development process.

Step 3: Timelines
Besides the quality of the product timeliness of the development effort should be your second most important priority. You want your development effort to stay on track. As such it is vital that prior to development the estimated time and allocation of resources is done. Reputable outsourcers will provide detailed estimates as to how long the development of certain milestones (broken into sprints) will take. By tracking actual hours spent versus the estimate you will be able to easily ascertain  if the project is on schedule. Reputable software development firms will have that process down by using specific project management software which makes them accountable based upon the  hours pent versus a prior estimate.

Step 4: Consistent Feedback
It goes without saying...your outsourcing partner needs to know what you think. You need to regularly review how the software works and test it. Based upon your testing you need to provide feedback as to what features are to be amended and changed. It is much easier to change requirements early on while the particular feature is still under development. If you do not have the time to engage in regular testing assign the task to someone else and make them responsible to provide the needed feedback.

Step 5: Solicit Advise From Your Outsourcing Partner
You might have very specific ideas as to what the software needs to do. However, often times the outsourcing provider might have some very valuable ideas as to how to build a "better mousetrap". Technology moves at rapid speeds and there is a pretty good chance that your outsourcing provider has a good idea of how to improve upon desired functionality without adding much to the development effort. By cooperating and soliciting feedback throughout the process  you will end up with a better product; without necessarily making it more expensive.

Step 6: Test After It Is All Done
There is nothing more disruptive then having a new software release out with your customers and/or staff and then realizing that there is a problem. It is never good to roll back a software release. The problem might be with the functionality or feature or with platform compatibility. Therefor you will need to make sure that once you have the final product ready to go that it is performing as required and that it works on the platforms your business needs to support. (various browsers and operating systems, desktops, tablets and phones). The above might seem trivial...but I have personally encountered software releases where quite a few remote team members of a customer were still working on XP and Vista  even though the requirements were to be compatible with Windows 7 and up. Proper beta testing  can avoid disruption in business processes prior to making the software operational.

Supervising outsourced software development is easier than people often times think. By following the steps outlined above there is a pretty good chance that your project will go off without a hitch.

The Changing Role Of The CIO and How Outsourcing Is The Enabler

It is pretty obvious to winning organizations  that the role of technology within a business has been changing dramatically over the past 15 years.

In the old days technology was used to manage a business...to some degree or another. Every company was using technology which often times was similar in its application and features  vis a vis the customer. Technology was really not a deciding factor in the success of a business.

The success of a Kmart versus a Sears was  not dependent upon which company had the better online offering, nor did they have to worry about the emergence of other players competing for their customers.

Obviously, this situation has changed dramatically for a lot of older and established corporations.

In this day and age technology is used to enable customers to access a corporations goods and services in an easier and more convenient way (who has the better online presence). Additional services never been seen before have developed  challenging brick and mortar industries (Uber, Lyft, Airbnb).

In combination all of the above have led to a change in objectives for the CIO.

In the old days the CIO was expected to keep the technology running  so that the business processes making the business successful kept on running smoothly.

Nowadays he or she is tasked to create value (innovate) while at the same time reducing costs. Of course, innovate is nothing else than the task to create additional revenues or, at  the very least reduce the expense versus revenue spread. (gross margin).

For a lot of corporations the go to solution in their never ending quest to out-innovate their peers is outsourcing Business Processes. The idea is that a high level BPO provider will not only deliver meaningful cost cuts...it is also expected that the technical know how and delivered solution improves upon the Key Performance Indicators the business uses to benchmark its operational success.

The goal to cut costs is nothing new for any business. What is new though is that business use outsourcing to get ready for Web 3.0 or just position themselves better within the Web 2.0 environment. The digitization of the business is no longer something which is done only internally...it is increasingly entrusted to third party vendors.

The graph below shows the results of a Deloitte Study regarding the motivation of CIO's to use outsourcing.

What does stand out is that besides cost cutting the primary benefit/innovation attributed to the outsourced process are  :

  • Solving Capacity Issues (45 %)
  • Creating global scalability (29%)
  • Providing access to intellectual capital (28%)

Perhaps the most interesting finding is that in 28 % of the cases the  respondent cited the access to intellectual capital as the reason to embark on the process. Barely 15 years ago no organization would have considered an outsourcing relationship as a suitable solution to beef up on intellectual capital. 

At the end of the day it remains to be seen is this trend continues. Never the less though it is becoming clear that outsourcing has come a long way. 

Top 10 Users of H1-B Are All Outsourcing Companies

It should not be a surprise, but I have to admit that the extent to which some companies rely on H1-B visas to build up their US workforce was a bit surprising.  Perhaps more surprising is that the Top 10 beneficiaries of H1-B visas are all in the business of offering outsourcing services.

The debate of whether H1-B visas are offering  a backdoor for corporations to lower their salary base without having a legitimate need to procure the talent overseas has been raging for a long time.

The  Economic Policy Institute (author of the graph shown above)   is undoubtedly critical of the practice.

 One needs to remember though that  a legitimate need is often times the driver behind the H1-B imports. The US does have a shortage of IT personnel and without the H1-B program and the accumulated import of foreign workers which has happened since the inception of the program certain industries in this country would not be in the "fighting form" they are in right now.

The contribution  H1-B workers have been making for countless corporations are significant and a huge net positive.

Never the less though, the numbers speak for themselves and certainly made me make a double take.

Here Are The 8 Issues Every Company Needs To Consider When Outsourcing IT....

Whenever I sit down with a company and discuss an outsourcing structure it becomes quickly apparent that there are a few reasons and considerations  why companies want to pursue an outsourcing solution for IT related services.

Sometimes it really is only one or two reasons..and sometimes it is a combination of 5 o 6 reasons which in aggregation compels the company to consider an outsourcing provider.

What makes it interesting is that not every company has the same priorities...but they never the less share most of the same considerations. What is important for one company might be less significant as a reason to outsource for another.

The following reasons / considerations are usually part of the decision making process to decide upon executing an outsourcing strategy:

Consideration # 1 Expenses
Always one of the main reasons (if not the main one).  CIOs are expected to cut costs while maintaining service levels. CIO's have to keep their existing, classic IT  landscape running (slow tier) while at the same time developing the fast tier (Social Media, Cloud and SaaS). All of that has to happen while KPI's are maintained and preferably improved. New technology needs have to be addressed and incorporated all the while CEO's expect the value being added at a lower price point, Outsourcing can address all of the above at a lower price point.

Consideration # 2  Forming a Partnership
Contractual obligations are one thing in IT outsourcing – trust is another. Before corporations  outsource IT, decision-makers contemplate if their potential outsourcing partner is trustworthy. Some of the questions which needs to be addressed are: Has the outsourcer related industry experience ?  Does the offered service seem reliable and at the needed quality level ? Is the outsourcer up to deal with the rapidly changing technology environment ?  Does he meet the operational and legal requirements for the security of the entrusted Intellectual Property?  Are the existing customers happy ?

Consideration # 3 Expertise
The Cloud and Web 3.0  is forcing companies to change  existing business processes and/or establish new ones. Specific  departments have requirements and expect the  IT department  to implement them as quickly as possible. Additionally the  IT organization is now looked upon as a revenue creator...it has to innovate and offer new services itself in an attempt to outperform competitors in the digital marketplace. An outsourcing provider needs to be aware and proficient in strategies incorporating those requirements.

Consideration # 4 Cyber Security
Cyber Security if front and center now for IT executives. Data security, data  privacy and  protection are key drivers of any decision making process.  Cyber attacks are getting progressively more sophisticated and IT departments are caught in an arms race they try to fight with limited resources. A top level outsourcer with significant experience in cyber security can alleviate a lot of the pain points for companies trying to harden their network and infrastructure.

Consideration # 5 Customer Focus
According to IDG, onshoring is the most popular sourcing strategy.  The advantages are  that the service provider can be contacted quickly and directly. Often times onshoring delivers its services through a combination of onshore, nearshore and offshore activities. A heavy emphasis on customer service without compromising service quality is what corporations are looking for. Of course, the price point at which the desired level of service is delivered is always key and center for corporations.

Consideration # 6 Innovation
Companies feel the constant need to innovate. Innovation is what keeps them ahead of the competition. The problem is how to innovate without spending human resources (and capital) in a non productive manner. A good outsourcing partner might very well be solution to the innovation dilemma. The outsourcing provider will stay up to date on the latest technologies without the company having to needlessly spend human capital. (and its associated costs)

Consideration # 7 Scarcity of Talent
A recent Bullhorn (2016) study showed that 77 % of respondents in the technology filed reported a skill shortage they have trouble filling in the labor market. Besides the scarcity of talent the price and premium to be paid to address the skill shortage are the main problems identified. Corporations which employ a sourcing strategy involving outsourcing are able to fill the skill gap while maintaining a lid on personnel expenses.

Consideration # 8 Quality of Final Work Product
Perhaps the biggest challenge IT departments have been facing over the past 10 years is the need to change. Digital Services, Cloud and SaaS as well as Social Media have forced companies to innovate at a faster pace then any other time during the past 30 years. IOT and AI (Web 3.0) are the next challenge which need to be addressed by a lot or corporations. IT departments face tremendous pressures to get it right on the first try. As such the pressure is on for Outsourcing providers. The quality of the work product has to be right. There is not a lot of time available for trial and error releases which are fixed post release.

Of course, the above list is not all inclusive. There might be other consideration an individual company might contemplate. However, in my experience the list provided above is rather comprehensive.

Corporations which start the process can use the 8 points listed above as a check mark list to see where they are standing and what is important to them.

Delivery Centers Are Becoming Popular in Latin America for IT Companies...Here is why

One of the issues with offshore software development is always the delivery. Development talent (especially high level) in Asia is not necessarily keen to stay up overnight to supervise the delivery of software. The back and forth required makes it a time consuming task and working on the other side of the clock makes it an unattractive job for talent in Asia.

Conversely...US personnel involved in the delivery has limited desire, for the most part, to work well into the night to ensure a smooth delivery.

One solution to the problem which has been gaining popularity by globally operating IT organization is establishing delivery centers in South/Latin America. (LATAM) Latin America is considered "Nearshore"...as such it offers some of the advantages of a true offshore operation while at the same time eliminating the disadvantages of offshore providers.

The most commonly cited advantages cited as a reason to establish an Nearshore Delivery Center are as follows:

  • Cost Arbitrage: LATAM does offer substantial cost savings over US based operations
  • Quality IT Talent: Depending upon in which country the delivery center is established Quality IT personnel are easy to come by. The education system is generally considered good and a steady flow of new graduates in Computer and Science related fields ensures that new supply is available.
  • Close Alignment in Time Zones: Working throughout the US business day is a breeze. Most LATAM countries are only 1 or 2 hours off CST time...as such the work schedules are aligned.
  • Good Business Climate: Generally speaking the LATAM countries which are a natural fit for a Development Center offer a good business climate. Countries like Mexico, Costa Rica, Brazil, Colombia and Argentina are well established democracies with little political risk.
  • Easy Travel: Most of the popular LATAM destinations centers are easy to reach via plane from the US. 
  • Language Capabilities: The dominant languages in the LATAM countries are Spanish, Portuguese and English. Therefor language barriers are usually limited and can be overcome relatively easy. 
  • Access to Local Markets: Some of the LATAM countries (Brazil) have rather draconian taxes and laws restricting the import of goods and services. Establishing a local delivery center (beachhead) often times circumvents these rather restrictive policies, thus enabling globally operating companies to access local markets more easily.

Executives in charge of ITO have been looking at Asia for the longest time as the solutions provider for all things IT related. A more balanced view has been emerging which suggests that certain aspects of the ITO value chain can be better accomplished by mixing Offshore and Nearshore solutions into one comprehensive package.

It might be to early to tell...but there is a good chance that LATAM will become the go to destination for Delivery Centers...the advantages are striking and might justify the higher expense (compared to offshore). 

Assuming favorable currency rates and no political changes it seems safe to assume that the trend of setting up delivery centers in LATAM countries will continue.

The Biggest Trend Ever In Outsourcing...Cyber Security....Here Is Why

Outsourcing ITO related services has saved tens of billions of dollars (and possibly more) for US corporations. In almost any case it is the trifecta of lower expenses, available skill sets and ability to scale up or down as needed which results in the adoption of an outsourcing strategy.

What is usually never part of the consideration is time to market (fear of loosing out) or a really pressing business need which necessitates the adoption of an outsourcing strategy.

Cyber security though is different though. For sure, lower expenses , available skills and the ability to scale are nice to have when it comes to Cyber Security...but what really separates Cyber Defense as an outsourcing strategy from the rest of the pack is that corporations feel a HUGE (!) need to address the issue as quickly as possible.

Simply stated....corporations feel like they are being overrun with cyber security related issues and they simply do not have the necessary skills and time to address it.

The need for Cyber Defense has created a bottle neck with a huge amounts of companies trying to get through the bottleneck in their attempt to access the services offered by so few professionals.

It is the perfect storm...and I can say that I have never seen a pent up demand for a particular service like this before.

A recent Intel Security report surveyed IT decision makers and reported that a whopping 82 % of the respondents are complaining about difficulties in their attempt to  hire cyber Security professionals.

It should come therefor as no surprise that 60 % of the respondents are considering outsourcing some or all of their cyber defense needs. Considering the fact that cyber defense was really not on the radar until a few years ago...this is a rather stunning number.

The report is a rather fascinating read...and I encourage anyone with some stake in the cyber game to take a look at it. Download It Here

What might be the most important takeaway from all of it is that the issue will not go away anytime soon. Baring a rather revolutionary technical solution to Cyber Security this is an arms race which will go on.

As such it seems a fair guess that Cyber Security will stay on top of the priority list for outsourcing related services for years to come.

How To Manage Your Outsourced Software Project....A Step By Step Guide

For corporations which are new to the concept of outsourcing software development the mechanics of how to properly supervise and structure the dialogue between the onshore and offshore team might seem a bit intimidating at first.

Collaboration between the members of an In House team is rather simple...in most cases it is as simple as walking over to someone'd desk or just picking up the phone. 

It is a bit more tricky (or so it seems) with an offshore team. Not only are the members of the team separated by 1000's of miles..they also often times are working on the other side of the clock with a limited ability to overlap work hours.

Consequently the question of how to collaborate is rather valid.

The single most importation item to collaborate a software development is the use of specific collaboration software which is used to supervise and structure the entire process. Using a proper coloration tool (assuming it is being used by the onshore and offshore team) will do wonders for the development. 

There are plenty of software solutions out there which offer collaboration, some of them are even available free of charge. We use Active Collab for all of developments but there are plenty of other solutions available. (https://www.activecollab.com/)

A Software  like Active Collab offers the ability to properly organize Task Management, Team Collaboration, Time Tracking and even the corresponding invoicing. 

One important thing to remember...Active Collab or its peers is not a tool to control development. It is not being used to verify the work is actually being done. As such the users of the software are relying on proper reporting of hours worked on a voluntary basis. 

There are specific tools available to supervise that alleged work is truly being done. I will address that in a separate blog post.  (Hive Desk)

I have included some screenshots which displays some of the functionality of Active Collab. 
A great way to gain a good understanding of what a software like Active Collab can do for you is to subscribe to a trial. Almost all of the vendors offer a free trial.   

In order to provide you with a better understanding of some of the functionalities I have included five screenshots  with explanations as to what is shown. 

 A snapshot of a task list is shown below. Developers work off the task list to move through the process. Typically each specific development step is assigned to a developer as part of the task list. 

Once the task list is created the developers work off the task list and report their progress on the update page. 

Separately  the developer report the hours worked on each task. Assigned hours to a task and hours actually spent can then easily be reconciled

The developers report their progress and raise questions or issues as part of the daily discussion. The daily discussion is typically used to address technical issues.

The General Discussion area is where Top Level Discussion are being held. Management will use that to check in on the overall status of the development.

At least some areas of the BPO industry are growing....Global Procure To Pay expected to grow at 15.77 % CAGR into 2020

It is well understood that the BPO industry in general is fighting declining revenue trends. I have written extensively about the continued challenges the industry is facing from a couple of sides.

Matters will only get worse for the industry once the combination of AI and NLP will reach its full potential. Admittedly this is perhaps up to 2 years away...but at this point is simply a matter of when...not if.

Robotic Process Automation (RPA) will decimate certain BPO providers..there is little doubt about it. It is therefor somewhat refreshing that at least some areas of the industry can look forward to a few good years.

The guys at at "Research and Markets" , one of the better market intelligence firms out there,  have just released a new report which reviews the market outlook for the outsourced "Procure To Pay" industry.

The report foresees compound annual growth rates of 15.77 % into 2020.  By any standard the foretasted  growth rate is rather healthy...as such at least this part of the BPO industry should not face the headwinds other segments will encounter over the next few years.

The lesson learned here is that specialization and deep integration into an organization's internal structure is what insulates the BPO provider from the general industry malaise. By managing the entire procure and pay life cycle the BPO provider is deeply embedded into internal processes...which makes the service more valuable to a corporate customer.

It is that added value which insulates providers of that service from the general industry challenges. Deeper integration and more complex Business Processes are what will separate  BPO providers from here on out.

The lesson for BPO providers is clear, specialize and go up the value chain or face the consequences.

Client Churn Within The BPO Industry...Is It A Problem ?

Any business is keenly watching new revenues as the number one gauge to judge if the fundamentals are solid. After all..as long as revenues keep on growing at a healthy clip the business, presumably, will continue to generate free cash flow which will enable it to expand further.

One component to the revenue stream is customer churn. Every industry faces some degree of customer churn as part of the overall business environment. Sometimes customers merge or cease operations, sometimes they discontinue a part of their operation which makes the use of services obsolete. Sometimes though the churn is because of a general willing of the customer to consider alternative solutions...which in most cases leads to the transfer of business to a competitor.

The BPO industry is not immune to the general competitive environment faced  by corporations. In theory the long lead time in negotiating a suitable BPO solution combined with strong operational challenges implementing said solution should lead to a low churn rate.

The hurdle rate, so it seems, is rather high to transfer business away.

A recent recent study though seems to suggest otherwise. The study evaluated respondents willingness to consider moving their business away form their existing BPO provider and their motivation for doing so.

The results differ dependent upon the industry surveyed. A whopping 26 % of respondents within the "IT Networking and Infrastructure Support" group  indicated a willingness to move their business.

On the other end of the scale only 9 % of "Finance and Accounting Users"  seem to be prepared to entertain different solutions.

The most interesting take away of the study is the degree to which SaaS or BaaS is making inroads into traditional BPO relations. Between 4 to 5  out of 10 respondents indicate that their reasoning to abandon their existing relationship is rooted in their willingness to entertain a Saas or BaaS solution.

Of course...the notion that the BPO business is under attack by the emergence of SaaS and BaaS is nothing new. As such the study does not really suggest anything out of the ordinary.

It is never the less an interesting fact that almost 50 % of customer churn in the BPO industry can be attributed to new solutions as apposed to competitive pressures.

There Is Trouble Brewing In BPO Land....And The Cloud Is To Blame

Executives in charge of BPO operations know that their business is under siege. Growth rates have stalled and for some markets negative growth rates are firmly established.

There are of course a few reasons for it but perhaps the single biggest reason is the migration of services into the cloud. SaaS has become a job killer for some BPO services and there is little doubt that the trend will continue.

One of the challenges the BPO industry faces is to put a numeric value on the exodus of services into the cloud and come up with a good estimate.

Gardner has done the work for the industry now. They have compiled a report which attempts to give a forecast as to what what % of revenue will be either lost or transferred  to cloud services.

The report does a great job analyzing individual segments of the IT industry and providing estimates as to the $ amounts expected to be migrated.

The BPO industry is seen as the biggest loser. Out of the current 119 billion (market size in 2016) a whopping 43 % are expected to migrate into the cloud until 2020 -  (Cloud Shift Rate)...making the BPO industry by far the biggest loser.

Of course, all that cloud business still needs to have operators and administrators....so the 43 % shift in revenues does not necessarily equate to a 43 % reduction  in workload for the BPO providers.

However...given that any business which transfers into the crowd does ultimately so because they want to increase efficiencies (=save money)...there will be a noticeable impact on BPO providers.

Once the emergence of AI powered chat bots and NLP powered voice solutions are thrown into the mix...it becomes clear that the BPO industry should face some significant headwinds from here on out.

How To Close The Productivity Gap When Outsourcing Web Design Work ...A Real Life Example

It is well known that outsourcing does have some disadvantages. One of the biggest ones every user of outsourcing services has to battle with  is the issue of productivity gap vis a vis the onshore worker.

Experienced users of outsourcing services know that the productivity gap is real...and they have some specific strategies to make sure that it is as small as as possible in the beginning.

Over time and with proper integration of the outsourced worker the productivity gap will shrink...and often times the offshore worker might become more  productive than the onshore worker.

Below is the real life experience of one of my customers. The customer is a web development and design firm. When the company needed to increase headcount they decided  to hire 2 web developers overseas and integrate them into their team of onshore web developers.

With our help the company devised a specific, 6 Step plan to integrate the developers.

Step 1:
The company assigned each one of the developers to a designer in their US office. The offshore designer were deemed junior to the onshore designers.  In the event of vacation and/or sickness the onshore developers/designers would cover for each other and supervise the offshore designers. Importantly though...the offshore designers were not supposed to cover for each other.

Step 2:
Daily Skype Meetings. A schedule was set whereby each design team would meet up via skype once a day. In the beginning the meetings primarily served as a "get to know each other" opportunity. It was deemed important that a team spirit was created among the onshore and offshore designer and in order to foster it the Skype meets were deemed mandatory.

Step 3
It was decided that collaborative tools were to be used instead of emails. Specifically it was agreed that skype was going to be used for screensharing. Active Collab ( https://www.activecollab.com/) was to be used for the submission , feedback and related  questions regarding any project assigned to the offshore designers.

Step 4
In order to enable the President to verify that the offshore designers were in fact working and not just playing video games both offshore workers were put on Hivedesk (http://www.hivedesk.com/). By using Hivedesk any perception that the offshore workers might not dedicate the hours needed towards the client were eliminated. It was agreed that the offshore workers were on a 9 hour workday with a one hour flex break.

Step 5
In order to properly integrate the offshore workers the company decided on a set course of action as to what the offshore designers were supposed to do. It was agreed that the offshore designers were going to build only webpages after the initial design had been approved by the client. The senior designer/developer (onshore) was responsible for the home page design and built.  As such the offshore worker had only limited ability to bring their own design ideas into any project. The site tree and structure was already there and thus the offshore workers were to finish out the site after the approval of design and site structure.  

Step 6
All communication between the client and the company was to be handled by the onshore developer/designer. The client would not communicate with the offshore worker.

The steps described above might seem simple in itself. The end result though was that a well functioning team developed between the onshore and offshore developer.

Within a few weeks the offshore designer became attune to the thinking of the onshore team leader and started to adopt and instinctively follow the design ideas of the team leader without having to engage in extensive back and forth.  

The relationship stated to click, enabling the team leader to increase the level of responsibilities assigned to the offshore designer.

The company realized significant financial benefits and increased the size of the offshore team to 6 designers within one year.  

The Distributed Workforce Model Is Creating Problems For BPO Providers....

Traditional BPO providers have had a challenging business environment globally. EMEA has been down a solid double digits  last year (-18 %) and APAC was down a more moderate single digit number. (-6.3%).

The BPO industry has always been rather fragmented. One problem has always been how  to capture the correct data to come up with estimated revenue numbers for the industry as a whole. Market intelligence firms are usually looking at Annual Contract values above 5 Million (some firms will include lower ACV's of 3 Million US-$).

As such the decline in Annual Revenue numbers is rather "top heavy"...it is geared towards bigger contract values.

What is not captured in annual revenue numbers is the shift away from traditional BPO providers  to a more distributed workforce model.

A new breed of providers has emerged which cater specifically to organizations who have demand spikes for services followed by a significant decline.

In the past conventional BPO providers were tasked to absorb those demand surges and had to staff accordingly. Not any longer.

There are now specialized providers who offer "On Demand" (aka Access Contractors) employees to handle those demand spikes. The model is highly attractive to any  sales heavy  organization (etailers) which has to absorb strong seasonal changes in sales volume. (either promotional or seasonal driven)

The distributed workforce model has always been plagued by a rather high error rate. But that has been changing. Tasks have been further reduced into missions. A mission specific employee is tasked with such a small subset or responsibilities that training and subsequent error rate are both minimal.

Making an employee mission specific instead of a more general trained employee in a BPO environment has allowed the distributed workforce model to gain rapid speed.

There are companies in India which have created significant workforce's of on demand workers which can be marshaled into action  within a few minutes. (the biggest providers are in the 1000's of workers or "Access Contractors").

Access Contractors claim that there error rate is about even to the error rate of conventional BPO providers.

The lure of using an Access Contractor is in the associated savings. Savings can be as high as 70 % (!) vis a vis a conventional BPO provider.

Given the realized savings it is easy to foresee continued revenue drain for the established BPO providers. It is one more thing to worry about, besides the emergence of cloud services and AI.


Strange News - Phone Fraud puts Indian BPO providers on the defensive

Most people have been getting unsolicited calls from (mostly)  Indian call centers. Sometimes the calls are simply a solicitation for a  product...sometimes the reason for the call is much more sinister.

The Federal Trade Commission has received about 400,00 calls last year regarding what it deems "imposter scams" where the caller claims to be from law enforcement or even the IRS...with the motive  to extort money.

In almost every case the caller has an Indian accent (or an accent which is deemed Indian). The problem which has been arising for the BPO industry is that distrust is brewing between consumers and operators of BPO companies because of it.

The consumer who calls his bank, or even worse, gets called by his bank and hears an Indian accent goes immediately on the defensive. Call center operations are not easy as it it is anyhow....and immediate distrust only makes it worse.

I can attest to the fact that the problem described above is very much front and center for executives planning to set up or relocate call center operations. The Indian Call Center industry is being tarnished...and it is becoming a factor for executives in charge of call center operations.

It is certainly not the main reason...but it a significant contributing factor why the Philippines are now the call center capital of the world.

Should You Ever Visit Your Outsourcing Provider ?...Here Is What You Need To Consider

Big corporations with budgets of millions of dollars do it all the time..they visit their outsourcing provider...wherever they are located.   Often times, and if the budget warrants it,  they actually have a representative embedded with the outsourcing team..or at the very least have a local rep which looks after the relationship.

There are significant advantages to be realized...which is the reason why they do it.
The question I get asked sometimes if smaller scale projects are worth while to warrant a visit.

The short answer it "Sometimes"..and it depends. 
There are a few things which go into the evaluation of whether or not a visit can make a difference. 

That travel in almost every case leads to second or even third world countries and cities which require connecting flights. As such the decision to travel requires a more significant investment as it relates to time and money.

Below are some of the considerations a small business owner with a smaller project might want to consider to decide if the trip is worth his/her time.

Consideration 1
How long is the estimated time to completion of your project?
If the project is estimated to be completed within 6 weeks even a substantial overrun in time to completion might no be material to your business.  If on the other hand estimated time to completion is 8 months..then a visit might make it more likely that the project will be on time.

Consideration 2
How expensive is your project...and are you responsible for cost overruns ?
This might be the cardinal question...if your project is only 5k...even a 40 % cost overrun amounts to only a 2 k difference. From a financial cost/benefit analysis it might make no sense to visit. If on the other hand the project is spec'ed out at 100 k...a 40 % increase would add an additional 40 k in expenses. Avoiding the additional expense might make it worth your time to go.

Consideration 3
When should you go and visit?
Assuming you have a time to completion numbered in months and a budget which, if there  were a significant cost overrun, would  make it economically feasible to plan a visit...you need to decide when you should visit. As a general rule..the earlier in the process you visit ..the better it will be. Your outsourced software development team will not get a lot of client visits. If you visit them you will l leave a definite mark on their thinking and they will be much more attentive to your needs for the remainder of the project. 

Consideration 4
Will my visit make a difference as it relates to schedule and costs?
The short answer is unequivocally ...YES. It will. I can assure you that there is a pretty good chance that you might be the only client visiting the developers that year. If you buy them a meal, perhaps some drinks...you can be assured that there will be a lot of goodwill created. The Goodwill will translate into more diligence as to your project, saving you time and money.

Consideration 5
Do you have the time to go and spend at least a week with the team?
This consideration is something only you can decide. f you do have the time and like to travel to areas / cities which are usually not mainstream travel destinations...it might be a good idea.

Consideration 6
Does it make financial sense to travel?
I briefly touched on it in consideration 2. There is obviously little point in spending 5k on travel if the total project is 5k. As such there is a relationship between travel expenses and expected benefits. There is though another way of looking at it...and a lot of companies are utilizing that strategy. An alternative way to look at the projects costs is to include travel expenses upfront in your calculation. The combined project cost and travel expenses then make up the Total Project Costs. If the total Project Cost is sufficiently below what onshore development will cost you..then u have found the economic justification for travelling to your Outsourcing Provider.

At the end of the day the decision to travel is an individual one every business owner needs to decide for him/herself.  I can attest to the fact that it will be beneficial.

Some people like to travel...and some do not. I have a client which always makes it a point to travel overseas to visit the software development team. For him it is a vacation in disguise, fully tax deductible.

That reasoning might not appeal to other business owners...but if you do have the time and like to explore different countries..this is certainly one way to make it tax deductible. And this is often times all the motivation a small business owners need.