IBM Targets India to Beat Rivals at Their Own Game

Courtesy: http://www.bloomberg.com/

International Business Machines Corp. is expanding in India and grabbing enough customers to take the top spot in the country’s domestic information- technology market from local rivals.

While Tata Consultancy Services Ltd. and Infosys Technologies Ltd. have won over US companies with cheaper labor and low capital costs, IBM snapped up contracts with some of India’s largest companies, such as wireless carrier Bharti Airtel Ltd. The strategy will yield dividends for IBM over time as India’s economy thrives, Kaufman Bros.’s Karl Keirstead said.

“They’ve beaten their competition relatively handily,” said the New York-based analyst, who pointed to IBM’s brand name and experience as draws for potential clients. “There’s a cachet in using IBM.”

IBM has hired more than 70,000 employees in India, taking advantage of the “hyper-growth” there by helping domestic companies develop infrastructure, said Sandip Patel, managing partner for services in the country. IBM also may attract new customers from India’s Satyam Computer Services Ltd., embroiled in the nation’s largest accounting scandal.

India is slowly transforming from a back office -- a place where companies send work to cut costs -- to a coveted domestic market with fast-growing companies, Patel said. The services market is worth almost $5 billion, according to research firm Gartner Inc.

India’s economy will grow 5.3 percent in the year starting April 1, the International Monetary Fund said in March. The US economy will shrink 2.6 percent this year, IMF projects. IBM’s sales from India increased more than from any other country in the past three years.

Building Infrastructure

IBM snapped up contracts from Bharti, India’s largest mobile-phone operator, and Kotak Mahindra Bank Ltd., the former partner of Goldman Sachs Groups Inc. in India. IBM is helping emerging markets develop, as opposed to just focusing on cost cuts, said Edward Jones & Co. analyst Andy Miedler.

“They’re focusing on how they can help emerging governments become the big governments of tomorrow,” he said. “One of the key ways you can do that is build the computing infrastructure.”

IBM, the world’s biggest computer-services provider, has more than 13 percent of the Indian market, which includes technology and business consulting services, according to Gartner. Tata Consultancy, the biggest India-based computer- services company, has 9.7 percent and Wipro Ltd. has 4.5 percent. Infosys, the No. 2 Indian services company globally, has 0.2 percent of its domestic market.

IBM started manufacturing hardware in India in the 1950s, then had to abandon the efforts when the region’s political situation was unfavorable, Patel said. IBM started focusing on the market again about a decade ago, opening a local research lab in 1998.

New Landscape

“We looked at the changing landscape in India. We had seen there was a growing educated workforce,” said Patel. “We brought in our expertise and our investment at the right time.”

Since then, IBM boosted its headcount in India to 73,000 at the end of 2007, the last time it provided employee numbers for the country. Chief Executive Officer Sam Palmisano held an analyst meeting in Bangalore in 2006, the first such IBM event in India. In 2008, the company opened a center for so-called cloud-computing services in the same city.

Meanwhile the company is reducing jobs elsewhere. Last month, IBM cut 5,000 business-services jobs, mainly in the US, according to a person familiar with the matter. The cuts added to at least 4,000 in other units since January.

Largest Market

IBM’s sales in India jumped 26 percent last year, compared with 15 percent in China and 18 percent in Brazil. The company doesn’t break out the dollar value of revenue from those countries. Sales growth in the US, Armonk, New York-based IBM’s largest market, amounted to 2.9 percent.

Indian outsourcers such as Tata Consultancy and Infosys didn’t initially invest the capital necessary to land large domestic jobs, which are mostly about developing infrastructure, said Allie Young, an analyst at Gartner.

Tata Consultancy gets 8.9 percent of its revenue from its home country. Infosys gets 1.3 percent of sales from India. They are slowly shifting away from just providing software services aimed at cutting costs, toward longer-term outsourcing deals in India, Young said.

All may benefit from customer defections at scandal- embroiled Satyam, particularly foreign companies such as IBM and Accenture Ltd., Miedler said. Satyam founder Ramalinga Raju admitted to inflating $1 billion of the company’s assets, and faces charges including criminal conspiracy and falsification of accounts.

More Competition

Tata Consultancy spokesman Mike McCabe didn’t respond to requests for comment. Infosys is set to receive several long- term contracts, Amitabh Chaudhry, head of the company’s services unit, said in a March 13 interview.

Wipro, India’s third-largest provider of software services, is starting to win larger deals in India, K.R. Lakshminarayana, the company’s chief strategy officer, said in an interview.

IBM rose 64 cents to $101.83 at 9:54 a.m. in New York Stock Exchange composite trading. It had risen 20 percent this year before today.

US rival Accenture has made inroads in the country, announcing plans last year to boost its workforce there. Still, that company also focuses more on software-based services instead of infrastructure, rendering it more vulnerable to Indian competition, Young said. An Accenture spokesman declined to comment.

“There are companies that are in dire need of just a physical infrastructure -- a data center or a network system around India,” Young said. “That’s where IBM has the advantage.”

Competition from IBM and other multinationals is welcome, Infosys co-chairman Nandan Nilekani said in an interview in New York on March 23.

“The more the merrier,” Nilekani said.

Agencies Find Benefit by Outsourcing Ad Ops

Courtesy: http://www.clickz.com/

When Darren Herman joined The Media Kitchen as head of digital media two years ago, the integrated agency handled digital ad ops in-house. However this arrangement had become a burden to the MDC Partners-owned firm's internal media teams, as rising spending from clients like Armani Exchange, Vespa, and Mohegan Sun saddled its account staff with painstaking trafficking and reporting chores.

The Media Kitchen faced a choice: build an in-house ad ops unit to manage ad trafficking and reporting, or outsource those functions to a partner. Outsourcing won out, and the company struck up a partnership with Operative, a yield management and ad operations company based in New York and with offices in LA, London, and India.

Herman is not alone. A growing number of agencies have lately decided to hand off display ad trafficking, reporting, and other operations duties to outside specialists. The main reason, they say, is to better scale their investment in ad ops to client spending.

"Let's say we hire two people to do ad ops," said Herman. "If I've got STARZ, PBS, and Windstream launching the same week, those two people are going to be inundated. Whereas two weeks later, when we have no launches, those two people are twiddling their thumbs."

Ad ops firms can ramp up the number of ad ops people working for an agency client quickly. In the case of The Media Kitchen's relationship with Operative, the outsourcing cost is passed onto the client without a markup, according to Herman. "They nicely scale, and I don't have that overhead," he said.

Last month, Operative handled 84,000 ad placements for 220 agency and publisher clients, according to CEO Mike Leo. Leo said the past six months have brought a big increase in interest from mid- to large-sized agencies. He said the firm brought in millions in revenue from agency clients last year, but declined to be more specific.

He agreed with Herman that the scale issue and its related costs is a big problem "agencies have that the rest of the industry doesn't."

"An agency will have one massive campaign -- tons and tons of work for two weeks, and then they'll go to almost zero activity for two or three weeks," he said. "They're either understaffed or they're overstaffed. Once the campaigns are up, there's less work to do."

Another ad ops company, Theorem, employs 470 people globally. CEO Jay Kulkarni said the company's offshore centers allow it to support agency clients around the clock. According to Kulkarni, Theorem has seen a considerable uptick in agency business in the last six to 12 months -- a phenomenon he chalks up to its more aggressive recruitment of tech-savvy senior executives.

"The agencies definitely are increasing the high-end technologists on staff and also data analysts," he said. "What outsourced ad operations companies do...is the actualization of the process."

Comprehensive outsourcing is not the only way to go. Geoffrey Katz, Razorfish's director of advertising services, said his agency works with Theorem on one particular aspect of ad ops.

"The only thing we are using Theorem for, and it's quite successful, is to do reporting," he said. "We have one report that takes three days to produce. A massive report with all different data sources that we have to bring in at different times."

He added, "If you have account people who want to grow, have a career path, you can't saddle them with that kind of thing forever."

But Katz is not a believer in outsourcing trafficking work offshore.  "It can be just as much effort to [articulate] the trafficking instructions...as to upload it into the ad server."

For larger agencies, or agencies that are part of a holding company, another option is to centralize ad ops within a separate entity. Havas Digital took such an approach, creating a subsidiary to handle ad ops, production, and other technology outsourcing services for all its agencies. Called Excelis, the unit provides "in-sourced" ad trafficking and other services to Havas-owned companies.

Adam Kasper, SVP and director of digital media at Havas-owned Media Contacts US, relies on the firm for a wide range of services, not all of them strictly within the definition of ad ops. "We mainly use them for trafficking, analytics, and search works. It keeps money within the family," said Kasper, adding working with an internal company creates more transparency. "We have a better sense of what the real costs are."

There are several reasons agencies are taking more interest in partnering on ad ops right now. One is the increased hiring of technologists to senior agency roles. Another is the sheer number of horror stories about flubbed ad tags and insertion orders gone wrong. (See "Ad Operation Failures Dog Agencies, Crippling Client Campaigns.") Anecdotally, ad networks and publishers have described rampant ad ops errors committed by harried agency staffers. ComScore has estimated that waste generated by such mistakes is in some cases as high as 80 percent.

"There's just a lot of waste, especially for an environment where our value proposition is the ability to have less waste," said Operative's Leo. "Lots of mistakes happen that fly right in the face of that."

Leo believes the economic crisis has also contributed to the renewed attention to ad ops, as advertisers scrutinize all aspects of their advertising.

"The great thing about a recession is it drives attention to areas that are ineffective," he said. "For the industry on all sides, this is a black box. Now all of a sudden, when it's not easy keeping advertisers happy, you start looking at all sides."

Diebold targets ATM market with outsourcing solution

Courtesy: http://www.mbtmag.com/

US self-service and security provider Diebold is targeting the Chilean market with an ATM outsourcing solution that many banks in several other South American countries are already using, Diebold's South America sales VP and general manager Juan José Sánchez told BNamericas.

For several years, Diebold did not have a strong focus on Chile, but that changed in 2006 when it acquired local security firm Bitelco to tap into the Chilean security market. Now, the next phase of Diebold's expansion in Chile has begun, with a focus on outsourcing, ATMs and other self-service terminals.

The Chilean ATM market has seen strong growth over the last several years. Between 2002 and 2007, the number of ATMs in country jumped 72% to 6,306, according to UK-based research and consulting firm Retail Banking Research (RBR). The growth outlook for ATM players is also positive, as RBR expects Chile to have around 8,500 ATMs by the end of 2013.

Sánchez said he recently visited Chile, where he met with several banks' executives that showed real interest in the outsourcing solution.

"This year we want to shake up the market, and next year start to grow quickly in Chile," said Sánchez.

The executive also said he believes that Chile could become one of Diebold's fastest-growing markets in South America within a few years.

According to Sánchez, ATM outsourcing is attractive for banks because it allows them to focus on their core banking business and also permits them to take an asset off their balance sheet and free up more capital for lending.

The outsourcing solution sees Diebold providing the ATMs and taking over all of the bank's ATM-related services, and usually charges the bank on a per-transaction basis.

In other South American countries, Diebold operates ATMs through the outsourcing model on behalf of many banks in Brazil, Colombia, Ecuador and Venezuela.

In Chile, Diebold already has sold approximately 600 banking correspondent terminals to a local payment service chain. The provider could not divulge the client's name for contractual reasons.

Ohio-based Diebold is one of largest ATM and self-service solutions providers worldwide, with operations in some 90 countries. In 2008, the company posted $39US.5mn in net income.

4 Tips for Better Outsourcing Deals

Courtesy: http://www.itworld.com/

Nothing says "cost cutting" like a big outsourcing deal. Some firms will either panic or simply be forced to pull the trigger on outsourcing deals without laying the foundation for success with effective internal preparation. Some of these deals will work based on brute force and luck, but luck is not a good business strategy, and many deals will not meet expectations. For firms that must execute or renegotiate an outsourcing deal, there are some steps that improve the chances of success.

Today's economic headlines have put IT outsourcing decision-makers under pressure to deliver near-term cost savings while simultaneously improving support for the business.

However, sourcing and vendor management professionals should see the current US economic turbulence as an opportunity to ensure that sourcing strategy and tactics are value differentiators for the firm's end clients.

The trick to coming through this recession is balancing the intense pressures to use outsourcing to cut costs quickly with the responsibility for building a solid foundation for the future.

Sourcing professionals can take steps to help balance the pressure for near-term cost savings with all the same risks and rewards associated with outsourcing that are still in play by doing the following:

Don't shortcut internal preparation and strategy setting. Savvy sourcing decision makers should strongly resist the temptation to shortcut internal preparation. Although some deals certainly can be "fast-tracked" and still succeed, there is a lower probability of achieving strategic business objectives. The connection between internal preparation and sourcing outcomes has been claimed before, but Forrester data shows that outsourcing decision makers find it beneficial to devote even more effort to internal preparation and strategy setting.

Don't put the move from IT to business technology (BT) on hold. Regardless of current weaknesses in the broader economic market, an upturn will come, and the smartest businesses will continue to aggressively leverage technology as a business accelerator rather than as a sunk cost. The evolution from IT to BT-including pervasive technology use that boosts business results and in which the business becomes deeply embedded in technology-should not be put on hold. Laggards will be under even more pressure. Exercising some caution is just smart business, but self-imposed paralysis could be as damaging as a thoughtless lurch toward outsourcing for a quick cost reduction. Working with CIOs and IT management, smart sourcing decision-makers can implement solid outsourcing relationships to help drive this change.

Ride the turbulence to your business' advantage. Forrester often sees real-world examples where firms view IT service outsourcing primarily as a cost reduction mechanism around what they perceive to be commoditized work. That may be partly true, but outsourcing creates a remarkably effective opportunity for large-scale change in an organization. Visionary IT and sourcing leaders will position a slowdown, or even a recession, as a driver for cost reduction, productivity improvement, and the shedding of business processes that don't add to brand equity.

Leverage your existing outsourcing ecosystem. Firms that have good existing outsourcing relationships are much better positioned to grow their deals and accrue near-term savings. Now is the time to consider aggressively expanding existing healthy relationships with service providers. Firms should also drive hard for additional pricing and service concessions from providers.

Outsourcing and using independent contractors can be a legal minefield

Courtesy: http://kpbj.com/

Employers have shed a record number of jobs in the last few months. All of our businesses are running leaner and struggling to get the work done with fewer hands on deck. Creative staffing solutions are in high demand as businesses look for ways to take care of the demands of their customers and their business needs.

In this economy, flexibility and cost containment are the keys to success. There are several ways to incorporate these elements into your company’s staffing plan.

First of all, as you juggle your internal workforce, maintain those employees who are cross-trained and willing to handle a variety of job functions. In this climate, employees are being required to wear a variety of hats. For example, if it’s necessary to eliminate the receptionist’s job, the employees who remain need to be willing to answer the phone, or your customer service will suffer.

Many businesses are turning to outsourcing as a way to hold the line on labor expenses. Outsourcing is when you hire an outside vendor to perform work that was previously performed by an in-house employee. Oftentimes we think of outsourcing as a call center in India, but many times companies outsource functions to providers in their own community.

There are advantages and disadvantages to outsourcing a business function. The advantages include cost savings, flexibility, access to new processes and technology, ability to focus on core competencies, and the ability to tap into a more skilled workforce. The disadvantages include a loss of control over the process and product, and challenges incorporating an outsourced function and personality into the company’s culture and environment.

There are specific business functions that are typically outsourced. They include IT support, web design, technical writing, engineering, bookkeeping, data entry, customer service, human resources, translating, marketing and public relations services to name a few. When looking at which functions to outsource, companies need to consider what defines their company. For instance, if the company is known for its superior customer service, then outsourcing that function to a call center may very well diminish the company’s position in the marketplace.

If you choose to outsource one or more business functions, take the steps necessary to create success. Consider the management costs associated with selecting the outsourcing firm or contractor, training them regarding your needs, and overseeing their work. Spend time selecting the right contractor for your business. Assess the competencies and check the references of the contractor or firm, just as you would for an employee, before you engage with them. Create a written agreement that specifies the work to be done, the terms of the agreement, and that the arrangement is for an independent contractor versus an employee. Assign coordination to a specific employee so someone on staff always knows what’s going on.

As regulatory and tax issues become more burdensome and complicated, some small businesses are tempted to convert employees into independent contractors, or to only utilize the services of independent contractors. This is dangerous territory for businesses to tread on. The IRS and the Department of Labor are increasing their scrutiny of the misclassification of employees as independent contractors. In 2007 the GAO estimated there were 10.3 million independent contractors in the US. It is unknown how many were misclassified, but in 2000 the Department of Labor estimated it to be 30 percent of businesses. In 2007 testimony before a House committee estimated that employer misclassification costs the federal government in the range of $3.3 billion annually.

Employers do not pay social security, Medicare, unemployment, workers comp or any benefits for independent contractors. The workers are responsible for taking care of all of their own taxes and benefits for themselves. In addition, employers do not have to comply with minimum wage laws, overtime laws, or federal and state employment laws when dealing with independent contractors. Understandably, this raises red flags for federal and state governments.

The IRS has set forth criteria on the proper classification of independent contractors. If your business currently works with an independent contractor, or is thinking about it, visit the IRS website and apply the criteria. It includes principles relating to the degree of control over the contractor and their independence. These are broken down in three areas, which are behavior, financial and type of relationship.

Behavior has to do with whether the company has the right to direct or control how the worker does the work. It involves controlling when and where the work is done, what equipment is used, controlling which workers are hired to do the actual work, the amount of instruction and training, and the evaluation of the performance.

Financial control relates to whether the business has the right to control the economic aspects of the worker’s job. For instance, does the worker have the opportunity for a profit or a loss? Will they have unreimbursed expenses? Does the worker have a significant investment in their own equipment? Are they being paid for the project or job, rather than by the hour?

When looking at the type of relationship, the IRS considers such things as whether there is a written contract between the business and the worker, the permanency of the relationship, if any benefits are being provided, and whether the services being performed are a key activity of the business.

If the IRS finds that a company has misclassified someone as an independent contractor, the business may be liable for overtime wages, benefits, taxes, and penalties. As our federal and state governments grapple with reduced revenue streams, we can expect that they will continue to increase their emphasis on enforcement of these regulations. In addition, the misclassified workers also have the right to bring a claim. Typically this happens when they are injured and find they don’t have workers compensation coverage, are laid off and don’t receive unemployment benefits, or go to file their tax return and learn they are responsible for their entire social security and Medicare obligations.

Despite these pitfalls, accessing a contingent workforce is a smart move for businesses coping with the fluctuations in today’s marketplace. Utilizing the services of a staffing company is another avenue to accomplishing this. The difference in this case is that the worker is an employee of the staffing company, who is paying all of the payroll taxes, providing benefits, and covering obligations for unemployment and workers compensation. Companies still have the ability to staff up for projects or access a specialized talent, without the concerns of misclassification of workers.

One more solution worth mentioning is payroll services, which are typically provided by staffing companies. This is a great solution for a company that wants to select the employee or service provider, but not handle payroll, taxes, liabilities or benefits. In this instance, the business selects the worker, sets their schedule and pay, and directs their work. The difference is, they are an employee of the staffing company, who handles the payroll, pays the taxes and benefits, and incurs all of the liabilities such as unemployment and workers compensation. Some companies are utilizing payroll services to temporarily “re-employ” laid off workers to handle projects or peak work periods. It’s also a good way to temporarily bring back a retired worker.

Porsche Finds Fortune From Unlikely Outsourcing

Courtesy: http://www.nytimes.com/

Outsourcing\ to less-expensive places like India, China, Taiwan and Eastern Europe became routine for many American and Western European companies over the past decade. But what’s Porsche doing in Finland?

Since 1997, Porsche, the German sports car manufacturer, has headed north to this tongue-twister of a Finnish town instead of east, a move that helps explain why it is still making money even as so many automakers are tapping government aid to weather the worst industry downturn in a generation.

During the fat years, Valmet Automotive cranked out thousands of cars in Uusikaupunki to supplement Porsche’s production in Germany. Now, the assembly lines here are slowing, which means that Valmet, rather than Porsche, is bearing much of the burden of the global auto industry’s distress.

“We are a lean organization, but at the end of the day, there is a threshold here,” said Ilpo Korhonen, Valmet’s President. “We can’t run like this forever.”

Porsche, the maker of the celebrated 911 two-seater and the Cayenne sport utility vehicle, developed a production system — call it über-outsourcing — that is inspired by Japanese models of lean manufacturing and the kind of contract manufacturing common in the electronics industry. But Porsche has taken the notion even further and, at least so far, its highly supple system is molding well to the contours of an unforgiving world economy.

“This crisis will be the absolute test for the Porsche model,” said Jürgen Pieper, co-head of research at Bankhaus Metzler in Frankfurt. “Right now, Porsche is anything but a fair-weather company.”

Nothing symbolizes Porsche’s ability to steer through the storm more than its plans to introduce the Panamera, an entirely new sports car, during this difficult year for the industry.

Fulfilling a long-held dream of its founding family, the company will unveil a four-door sports car, which aims to blend Porsche’s legendary flair with a little modern functionality, at an auto show in Shanghai on April 19. Porsche designed the Panamera, which will be made in Leipzig, with one eye on Asian markets, where wealthy customers often have chauffeurs and want more space in back than a traditional sports car can offer.

Like every automaker these days, Porsche has had to buckle down and find ways to save money, and it is nipping and tucking where it can to save €100 million, or $130 million. In the first half of its current financial year, which ran from August to January, Porsche’s sales tumbled 12.8 percent, to €3.04 billion, as deliveries fell 26.7 percent. It also booked €6.84 billion during the period from the financial derivatives it used to secure control of Volkswagen.

But Wendelin Wiedeking, Porsche’s chief executive, has assured the 2,500 workers at its Stuttgart plant that their jobs are safe, securing a vital flank in a country where workers are represented on the board.

Automakers universally outsource production of parts or sections of vehicles, and some even contract for the assembly of small numbers of automobiles. This strategy shifts part of the financial risk of a downturn onto suppliers, since a falloff in demand forces manufacturers to curtail production of cars, but not spark plugs, headlights and the like.

Porsche, though, is notable for using an outside company, Valmet, to assemble one of its main product lines, the Cayman, and its convertible sibling, the Boxster. In some sense, the innovation makes Porsche the only major virtual vehicle manufacturer, a company that designs and markets sports cars without actually cranking them all out on its own production line.

The bread and butter of Porsche’s work in Stuttgart is the classic 911 sports car, but with demand for that model now falling, it is pulling Boxster production out of Uusikaupunki back to Germany. Though the system creates fiendishly complex logistical challenges, Stuttgart can keep running at capacity, evading the industry’s hoary problem of covering the fixed costs of factories and labor.

Mr. Wiedeking has said repeatedly that it is “preferable to build one car too few than one too many.” That allows Porsche to keep pricing its cars like the luxuries they are, rather than constantly discounting them in order to work off excess inventory — a strategy that left Porsche near bankruptcy in the early 1990s.

At a time when companies like Daimler and BMW are offering strong incentives for sales in the United States, Porsche is holding the line.

“You wonder if they would get sales back if they did incentives like the other luxury brands,” said Jessica Caldwell, manager of pricing and industry analysis at Edmunds.com, a research company. “But their incentives are very low.”

Mr. Wiedeking became Porsche’s chief executive in 1993 and brought with him the gospel of efficient production that openly copied methods he learned from Japanese automakers, above all Toyota. But by outsourcing assembly to Valmet, he did his Asian mentors one better.

The Valmet-Porsche relationship began in 1997 as demand for the 911 rose, forcing Porsche to find another way to make the Boxster. Rumors abound in the industry that Valmet’s quality sometimes outstripped what Porsche has managed back in Stuttgart, a charge Mr. Korhonen does not deny.

“Officially, we are allowed to be only as good as Porsche,” he said with a smile. “What matters is the customer.”

In 2006, Valmet’s production for Porsche peaked at about 30,000, or roughly a third of Porsche’s total output that year. Last year, it was 17,500 vehicles, and it is likely to be far lower in 2009.

Porsche’s customers and dealers never know the difference. Only a hidden code on the cars reveals that Finnish elbow grease buttresses German engineering. Valmet’s production is mixed into shipments from northern German ports that are bound for the United States and Asia.

Mr. Korhonen, a cerebral engineer with an MBA, is constantly calibrating his work force to match Porsche’s needs with the deft touch of an artist applying the final brushstrokes to a masterpiece. In each of the last three months, he idled about a third of Valmet’s 600 employees before ramping up again in January and February, and then shifting down with 190 layoffs in March.

“We are adjusting capacity almost daily,” Mr. Korhonen said.

Managing the inflow of parts that go into a high-performance Porsche is another tricky task. Many suppliers are concentrated near Stuttgart, but Valmet has to arrange deliveries to Finland, and often in smaller quantities.

Hence the “milk run,” as Mr. Korhonen calls it. Trucks are perpetually swinging through Germany, Poland, Sweden and Finland to collect the components that go into the Porsches assembled in Uusikaupunki, a town of 16,000, whose many inlets and islands have made it a popular spot for vacation homes.

No detail is too small. Axles that are delivered to Porsche have the spring-like suspension, which sticks up from the axle, already attached. But they come to Valmet disassembled, so as to pack more into a single truck.

But Valmet’s greatest challenge is, in the end, existential. Its contract with Porsche expires in 2012. The German company will move its outsourced assembly to Magna Steyr, a company in Austria, which has the resources to assist Porsche in some development work.

Valmet workers are already clearing space in the factory to manufacture the Karma, a plug-in electric hybrid designed by Fisker Automotive, a California start-up. It will also soon produce a luxury golf car for a Danish customer and expects to sell other engineering services as automakers create derivatives of existing models, Mr. Korhonen said.

And when the well-to-do rediscover their love of Porsche sports cars, Valmet hopes to produce those, too.

“Eventually we will ramp back up,” Mr. Korhonen said. “We expect the market to recover.”

WA electricity retailer Synergy not outsourcing jobs to India

Courtesy: http://www.watoday.com.au/

WA power retailer Synergy has backed down on a plan to outsource up to 160 jobs to India.

Energy minister Peter Collier told Parliament the state-owned company would retain back-office jobs in WA, and would also invest more in training its own staff.

However, the utility would still achieve cost savings of $75 million in the next five years which would "have a positive impact on customers power bills", he said.

Mr Collier promised that anyone using Synergy's call centre would be answered by someone in WA.

The company would boost its local capability by bringing in outside experts to train locals, as well as setting up a new IT centre. A global IT company would also be set up in the state.

About $2 million would be spent on training in the next nine months, and the expertise would be provided by local companies.