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| Dr. Shailendra Palvia is currently the Director of MIS at Long Island University. He received his Ph.D. from University of Minnesota, and has more than 100 research articles in refereed journals and refereed conference proceedings. Prior to joining the ranks of academia, Dr. Palvia worked in industry for IBM and Control Data Corporation. His most recent book, with co-editors P.Palvia and Ed Roche, on Global Information Technology and Electronic Commerce, is a standard text used by global information technology and international business curriculums. He is also the editor-in-chief of the Journal of Information Technology-Cases and Applications (JITCA).He can be contacted by either sending email to spalvia@outsourceglobal.org or by sending email to spalvia@liu.edu. |
| Equinox : What is the value of offshore outsourcing? How many companies are transitioning from focusing on costs to focusing on quality and strategy? Dr. Shailendra Palvia : The value of offshore outsourcing, initially, is invariably for cost cutting. But this basis would be difficult to sustain in the ensuing years. Clients would not tolerate any reduction in quality of products or services. So, it is really not a matter of how many companies are transitioning, it is a question of how many companies are joining the off-shoring bandwagon. Judging from the latest statistics of outsourcing within USA (onshoring) and offshoring to India, it is clear that more and more companies are choosing offshoring over onshoring. According to the latest statistics, revenues of IBM, EDS, and Computer Science Corporation have gone down whereas the revenues of TCS, Wipro, Satyam, and Infosys have gone up. This clearly shows the increasing realization of value of offshoring to client companies in USA and other advanced nations. If the offshoring strategy works for a company, it is likely to become its long term business strategy to tap into foreign markets for its own products and services, to form joint venures, and to even open its own foreign subsidiary. |
| Equinox : What are the top mistakes clients make when they outsource? What is one piece of advice you might give a company conducting vendor due diligence? Dr. Shailendra Palvia : Top mistakes clients make: • Not taking the time to evaluate the vendor options by participating in conferences, doing reference checks, and also examining the culture/language, legal/regulatory, intellectual property protection and taxation environment of the vendor country. • Not doing documentation of own IT systems before engaging a vendor. • Not establishing a liaison individual or department to manage offshoring relationship. • Not having a contingency strategy, in case, offshoring fails. One piece of advice • Must collect adequate information before plunging into offshoring with a vendor. Best source of such information is participating in international conferences like the one organized by the Center for Global Outsourcing every year. The 2006 conference is on Sept. 21-23, 2006 in Sheraton Universal Hotel. |
| Equinox : What are your thoughts on measuring return on investment on outsourcing in relation to improvements to the bottom line? Dr. Shailendra Palvia : Depending on the size and industry of the client company and the size and track record of the vendor company, beak-even on investment is not likely to occur before 2 to 4 years. So, instant gratification in terms of ROI is out of question. Offshoring is a long term business strategy. In the first few years, there is a heavy investment by client who is exploring offshoring in learning about the nuances of offshoring, about the country with its diverse differences in terms of language, culture, legal system, regulatory regime, and so on. There have been claims of break-even and even savings in the very first year. But once one factors in all the hidden and intangible costs, such claims may be misleading. |
| Equinox : What are your thoughts on vertically focused BPO companies particularly in financial services? Do you see a trend wherein bigger companies are outsourcing their processes to smaller shops with singular domain expertise and experience? Dr. Shailendra Palvia : This is a tough one. We have moved a long way from vertically integrated companies to essentially vertically disintegrated companies - or companies focusing on their core competence and outsourcing the rest. I know of companies focusing only on banking industry or on insurance industry (so called verticals) It is clear that having a niche is really going to help new vendor companies. They may broaden their niche areas as they establish market presence and client loyalty. No, I do not see that trend. But smaller vendor companies are likely to survive with big companies like Infosys, WNS, Wipro. |
| Equinox : ITO, BPO, Co-sourcing, In-sourcing...where do you see it all going? Dr. Shailendra Palvia : I always thought that the global Internet platform and free flow of trade is going to make this world a global village and an egalitarian society where world’s resources are equitably available to all world citizens. In the short term there will be give and take between advanced and developing nations, but in the long term, it is a win-win situation for all. Global Outsourcing with ITO, BPO, on-shoring, off-shoring, far-shoring, near-shoring, in-sourcing, co-sourcing is all leading to having a global village, where the world will become a level playing field for all. The reduction in economic disparity due to this phenomenon will drastically reduce tensions and conflicts and battles and wars among the nations of the world. |
| Equinox : How has the BPO industry changed in the last twelve months? In your opinion, what are the most significant trends in outsourcing today? Dr. Shailendra Palvia : Most significant trend - nothing is off limits in terms of outsourcing and off-shoring. Once it was manufacturing industry, then it was IS development, then it was IT Operations and maintenance, then it was accounting and HR functions, now it is legal and taxation and healthcare outsourcing and off-shoring. IN future, it will be off-shoring of knowledge processes and R& D functions. |
