IT firms find payroll outsourcing a good bet

Amid the ongoing slump in the financial service industry, payroll outsourcing has emerged as a better bet for Indian IT firms looking to provide the entire gamut of HR solutions to the US and European clients.

Companies like Infosys, TCS and Caliber Point are relying on pay roll outsourcing to achieve faster growth. No wonder, payroll outsourcing has tipped its subset human resource outsourcing in terms of growth.

A recent study shows that while payroll outsourcing registered a growth of 50 per cent, HR outsourcing grew only at 12 per cent.

“We have started to see payroll services getting more interest from larger and organized suppliers,” Gaurav Gupta, principal and country head of Everest Group.

Payroll outsourcing market pegged at $250 million is much smaller compared to HR outsourcing market at $1.3 billion.

But a large part of HR outsourcing requires onshore or near shore presence for understanding tax and regulatory issues, negating the cost advantage.

In contrast, payroll outsourcing provides immediate and quick cost reduction. It also provides simplification and standardization of the payroll process with quicker access to information.

Out of 104 multi-country, HRO deals signed as of December 2008 only 30 deals included Asia Pacific, but out of 78 multi country payroll deals, 58 were signed in the Asia-Pacific region. Realizing the opportunity Indian players are now getting aggressive to acquire more deals.

“Infosys has partnered with a niche player for providing these payroll solutions in many different geographies and that is the trend going forward,” Gupta said.

The US recession has proved that dependence on just one vertical, BFSI, which accounts for 50 per cent of the outsourcing market can be risky.

So, payroll outsourcing is now emerging as the new opportunity for Indian BPO/ITO companies to leverage on.

Source: http://profit.ndtv.com/2009/05/24212809/IT-firms-find-payroll-outsourc.html

Airline Rule Threatens Pact With EU

The US House of Representatives passed a measure aimed at boosting air safety that threatens to disrupt cooperation with Europe.

The provision, passed as part of a bill to fund the Federal Aviation Administration, requires for the first time that FAA experts inspect at least twice annually any overseas maintenance facility handling American airliners. Currently, the FAA relies heavily on inspections by its foreign counterparts.

The bill's sponsor, House Committee on Transportation and Infrastructure Chairman James Oberstar, said he added the provision because US carriers are increasingly outsourcing maintenance work overseas. Inspections of these facilities would "ensure that foreign entities conducting repair work on US aircraft adhere to US safety standards and regulations," he recently told a gathering in Washington.

Opponents say the current system works fine, and the provision is an effort to protect US jobs. They say it will duplicate inspections.

Final passage of the FAA act could take months, as it must next go to the Senate, which could remove the inspection provision.

But the new provision has already prompted the European Union to freeze enactment of a safety accord signed last June with the US And EU officials say that if the US demands FAA inspection of European repair stations, they will respond by requiring European inspections of repair facilities in the US The overlapping inspections could cost millions of dollars for each side.

The new provision "goes against the spirit and the wording of the US-EU Aviation Safety Agreement," said Daniel Hoeltgen, spokesman for the European Aviation Safety Agency, or EASA, the EU's counterpart to the FAA. The accord would boost cooperation, in part by establishing a joint US-EU board to oversee maintenance and certification. EU officials say such mutual assistance can't work if the US is acting unilaterally.

An FAA spokeswoman declined to comment.

Air safety is a delicate topic now, as accidents in the US and Europe -- two of the world's safest aviation markets -- killed 220 people and destroyed seven airliners between August and February, significantly more than in recent years.

Backers of the provision say that maintenance outsourcing poses big safety risks. Robert Roach Jr., general vice president of the International Association of Machinists & Aerospace Workers, which represents US maintenance workers, recently told a congressional hearing that his members had repaired planes returning from overseas flights that had "departed with obvious mechanical problems."

Under current rules, the FAA works with foreign air-safety regulators to ensure their inspections of local repair shops are on par with what the FAA would do. FAA experts then use the foreign reviews -- plus FAA spot checks -- to certify repair stations for US airliners.

Some 700 facilities outside the US now maintain American planes, about 400 of them in Europe. In the US, more than 1,200 repair shops have certification by foreign aviation authorities on top of that from the FAA.

Source: http://online.wsj.com/article/SB124291388570643335.html?mod=googlenews_wsj

Upset with outsourcing, union won't give up raise

One major state workers union is saying "no thanks" to Gov. Jim Doyle’s call for them to give up a promised raise to help fill a gaping state budget hole.

The workers won’t give up the 2 percent raise scheduled for June as long as the state continues to outsource additional work to contractors, said Bryan Kennedy, president of AFT-Wisconsin. The union has roughly 10,000 white-collar state workers including computer staff, public defenders and university teaching assistants.

"As long as the state continues to contract out, we will not discuss giving back the pay increase," said Kennedy, arguing that state workers are cheaper for taxpayers than contractors. "It’s a non starter."

Earlier this month, Doyle said he would rescind a pay raise for 9,500 non-union state workers to help fill a $1.6 billion hole in the state budget opened by falling tax collections and the struggling economy.

If the state’s 38,600 union workers don’t agree to give back their pay raises as well, Doyle has said that he could seek the savings by laying off up to 400 of them. Those layoffs would come on top of up to 700 layoffs and 16 days of unpaid leave for state workers also being sought by Doyle to solve the budget gap.

Department of Administration spokeswoman Linda Barth on Wednesday repeated the possibility of added layoffs if unions don’t go along with the pay cuts. She said state agencies are also looking at cutting spending on contracting.

As recently as April and early May, state agencies without enough staffing have taken steps toward possible contracting for computer work in spite of cost figures that show state workers would could do the projects for hundreds of thousands of dollars less, according to documents provided by AFT-Wisconsin.

If all union workers give back the 2 percent raise, that would save some $30 million in state and federal money spent on salaries. Marty Beil, executive director of the 20,000-member Wisconsin State Employees Union, didn’t respond to requests for comment.

Source: http://www.madison.com/wsj/home/local/451976

Toshiba says to end cellphone output in Japan

Japanese electronics group Toshiba Corp said on Wednesday it would end production of mobile phones in Japan in October and outsource some output to overseas manufacturers to cut costs as demand slumps.

Cellphone sales in Japan tumbled about 30 percent last financial year as a new business model came into effect that led to handset price hikes, prompting consumers to hold onto their phones longer, while the economic downturn also weakened demand.

Toshiba's mobile phone unit sales halved last financial year, causing it to log its first annual operating loss on these operations in five years.

The company, Japan's No. 6 cellphone maker with a 7 percent market share, said it would continue to make smartphones in China on its own as it shifts focus to the growing segment of phones with computer capabilities.

The planned outsourcing would help it cut 4.5 billion yen ($47 million) in annual fixed costs, a Toshiba spokesman said.

Toshiba has forecast it will return to an operating profit this financial year as it pushes ahead with a $3 billion cost-cutting plan. It logged massive losses last year after sharp price falls and sluggish demand battered its main chip business.

Toshiba shares closed down 1.9 percent at 355 yen, against a 0.6 percent rise in the benchmark Nikkei average .N225.

Source: http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUST19832520090520

Hynix raises US$300 million in IC packaging outsourcing deal

Hynix Semiconductor is to establish a back-end IC packaging joint venture in China with Wuxi Industrial Development Group Company Ltd. Certain equipment currently owned by Hynix in both Korea and China will be purchased Wuxi Industrial Development Group, for approximately US$300 million.

The IC packaging JV will support production at Hynix-Numonyx Semiconductor facility in Wuxi. The new JV reduces the Korean based memory manufacturers back-end operations by 20%, resulting in Hynix now outsourcing 50% of back-end operations

Source: http://www.fabtech.org/news/_a/hynix_raises_us300_million_in_ic_packaging_outsourcing_deal/

Outsourcing American dreams and Hollywood endings

America was always wearing a big smile when it strode into our living room in damp and ghostly England: Lucille Ball, the Beach Boys, a shining young president with two small kids, all stepped down from the screen in the days just before the convulsions of Vietnam, and summoned my Indian-born parents and me to the Land of Promise and Unending Sunshine.

It would never seem quite so rosy after we knew it off screen, but Ronald Reagan or Julia Roberts -- even Bruce Springsteen, at times -- ensured in later years that America still meant to the outside world possibility, freedom, the perpetual future tense. It was, everyone knew, the home of the Hollywood ending: the final clinch, justice restored by the lone hero, the dawning of a bright new day.

Or so, at least, ran the self-fulfilling myth of the last 100 years, rightly called the American century.

In 1890, as the global columnist Fareed Zakaria points out, the United States had only the 14th-largest army in the world, and its navy was an eighth the size of Italy's. By the late 1940s, it controlled 50% of the world economy.

The growth of technology meant that the American dream got turned into a global cottage industry that everyone longed to feed on. It was the vision that drew millions of dreamers up from south of the border, over from East Asia and my parents' Bombay, and as these migrating dreamers raised the country to even greater heights, they made it their business to spread rags-to-riches stories to the world (on screen) and to tell their friends back home that you really could find new beginnings in America.

As soon as the new century began, though, we were not so quietly reminded that dreams at some point bump into realities. America's very youthfulness, its remoteness from the tragic lessons of history, seemed to render it more vulnerable to terrorists than even the victims of later (and much smaller) attacks in London or Madrid or Mumbai (the former Bombay) would be. It was as if endless summer had no way of dealing with darkness and cold. Hell, to adapt Shakespeare to America, hath no fury like a dreamer scorned.

Yet as the seasons have continued turning, and as we have adjusted to a new vision of reality, that initial shock has matured into something much more promising. Returning to America this spring, after many months in Japan and India and Europe, I am struck by how much the country, in the wake of its latest attack (from the treacherous cycles of the market), seems in tune with the rest of the world, at last.

Our new president smiles less than did his predecessor, and many of us feel better for it. On a recent episode of the Japanese version of "Who Wants to Be a Millionaire," one question noted that the ringing word Barack Obama kept out of his inauguration address was not "freedom" -- or "peace" -- but "dream."

It has long seemed to some of us that America could best play a part in the new global order once it had older hands, from more seasoned cultures, to help direct its evergreen energy and hopefulness. Youth, as wise men have it, is wasted on the young. As soon as the New World was ruled by people from Iran and Vietnam, bringing us their own, more weathered sense of history, the land of happy endings would have both the experience to see what was realistically possible and the freshness to make it happen. The American dream would have less to do with conquering the world than -- as seems to be happening already -- with living in something like harmony with it.

To the planet as a whole, our new president speaks for the hope and opportunity, the youthfulness of America, which is what most of the planet craves. But to anyone who's met him on the page, he comes from some much older and more qualified place. His memoir is not about finding his roots and bringing "closure" to his search for identity but, rather, about being unsettled and even shocked by what he found out about his father and his legacy in Kenya, and being haunted by Indonesia even in the born-again sunshine of Hawaii. His tone in recent months has been prudently sober, refusing to talk too easily of happy endings or quick victories.

At times this looks like the best, and most unexpected, new development of the century: What's being outsourced now are American dreams and Hollywood endings. After all, this year a British film from my parents' Bombay about the victory of hope and rags-to-riches dreams got the top Oscar, eclipsing our home-grown movies about doubt, a murdered San Francisco revolutionary, a "dark knight" and a prematurely old little boy.

I'd never have guessed it in rainy old England: The Old World is becoming new, even as we -- at last -- are getting a little older.

Pico Iyer is the author, most recently, of "The Open Road: The Global Journey of the Fourteenth Dalai Lama."

Source: http://www.latimes.com/news/opinion/commentary/la-oe-iyer17-2009may17,0,2715857.story

TCS bags outsourcing deal from Volkswagen

Tata Consultancy Services has bagged a five-year IT outsourcing deal with Volkswagen (VW) Group UK which for the first time will use a mixture of onshore and offshore services for managing its software infrastructure.

As part of this engagement, TCS will manage the corporate IT systems, data centres and applications of VW, Mr A. S. Lakshminarayanan, Vice-President and Head of Europe, TCS, told Business Line from London.

“Due to the economic downturn, facilities of auto companies in the UK are not running at full capacity. Hence they are keen to reduce variable operational costs as much as possible. Partnering with companies such as TCS helps them in doing that in addition to improving work efficiency,” he said. TCS will help in virtualization of VW`s servers and consolidate them on a single platform, added Mr Lakshminarayanan. However, neither company disclosed the overall deal size or the number of people to be deployed for the engagement.

TCS’s services will cut across the VW group’s operations including brands such as Audi, SEAT, Škoda, Volkswagen Passenger Cars and Volkswagen Commercial Vehicles. Volkswagen Group UK Ltd is a wholly owned subsidiary of German carmaker, Volkswagen AG, which produces one in every six new cars sold in the UK, according to a press release from TCS.

The global auto industry is facing a huge crisis because of a drastic fall in sales volume due to the ongoing recession. In spite of the downturn, companies still need IT services to manage their day-to-day operations, said Mr Lakshminarayanan.

“Moreover, the positive thing is that the UK Government is giving incentives for consumers to buy cars,” he added.

TCS has several high profile automobile customers such as Ducati and Ferrari in Europe. The company’s scrip was down 2.36 per cent and closed at Rs 622.5 on the BSE.

Source: http://www.thehindubusinessline.com/2009/05/14/stories/2009051452490100.htm