Magazine article CRM Magazine

The Bitter Taste of Offshoring: Europe Is Setting an Example of Best Outsourcing Practices That American Business Might Want to Follow

Magazine article CRM Magazine

The Bitter Taste of Offshoring: Europe Is Setting an Example of Best Outsourcing Practices That American Business Might Want to Follow

Article excerpt

Corporate America's appetite for highly educated Indian employees at a fraction of U.S. wages is causing some severe indigestion. After loading up on a diet rich with extra travel, training, telecommunications, infrastructure, and dual management, companies that have made the Transatlantic trek are still ending up with the bitter aftertaste of employee frustration.

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"A lot of U.S. managers in charge of a company's outsourcing operation are being vocal about their quality of life. It's being eroded because they have to manage people on the other side of the world," says Jarad Carleton, IT consulting analyst for Frost & Sullivan.

Cultural difference can be problematic as well. "While India has a large group of talented people, it's the little things that get in the way," says Peter Ryan, CRM analyst, outsourcing and offshoring, at Datamonitor. "They don't use the same types of bank accounts, mobile phones, or even laundry detergent you would find in the West."

Another problem Western outsourcing providers are finding is that India is a victim of its own success. With so many outsourcing operations already stationed there, American businesses are finding it difficult to hire new employees, get them to and from work in overcrowded metropolitan areas, and deal with a power grid and infrastructure that is overstrained.

Some experts suggest taking heed from European companies. In September ABN Amro, a Dutch financial services company, signed a global services agreement with five IT service providers worth a total of 1.8 billion euros, which industry experts say is the largest outsourcing deal to date. That same month, Forrester identified that Germany and Great Britain closed more than 5 billion euros in outsourcing deals during Q2 2005. Though the number of European outsourcing deals has started to level off, the deal making was marked by seven straight quarters of substantial growth. …

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