Offshore Alternatives to a Politically and Economically Unstable India

Outsourcing: A love / hate relationship for U.S. I.T. professionals. Ask the average employee in any I.T. organization, and hearing about fear of jobs going to India and China is almost unavoidable. Although many have started the move toward business service management (BSM) to address the chaotic labor trends, I.T. labor itself still consumes over one-third of I.T. budgets. This figure is perfectly in line with a recently published Gartner report stating that 37% of the typical I.T. budget goes directly to personnel costs. What are you as the CIO going to do to manage this frenzied situation? Is outsourcing, or “offshoring,” the answer?

How can you outsource your operations to a foreign country and still maintain compliance with best practice frameworks such as ITIL or MOF? How do you maintain Sarbanes-Oxley, PCI, or HIPAA compliance when utilizing 100% offshore resources with far less control?

Almost everyone in the I.T. sector has at least one story about various operational tasks being “offshored” to India, and no call-center, network operations center (NOC), or infrastructure team has been immune to rumors of jobs going offshore. No longer are the cities of Mumbai and Delhi simple manufacturing hubs and suppliers of raw materials. The country is home to some of the largest corporate call centers and development centers in the world. In late 2005, the Indian outsourcing workforce numbered 350,000 individuals. That total is now estimated at well over 800,000, with many new positions going unfilled due to the lack of qualified candidates.

Eleven years ago this month, USA Today published an article titled “Can political instability be eliminated in India?” Looking solely at the news of the past six months, the answer to that question is an obvious NO.

The trend toward a twenty-first century India has not fostered the sort of sweeping political change one might expect from the world’s most populous democracy. Moreover, the unwillingness of the Indian government to more robustly combat intellectual property theft is the stuff that causes your legal team to lose MANY nights of sleep.

Recession has made its way to India as well. The 4 December 2008 issue of The New York Times ran an article discussing the wave of outsourcing firms scaling back their daily operations in India due to the unhealthy global financial climate. As of this week, the Indian rupee is at a record low.

India makes a strong case as the “global back office,” yet it has failed to produce an environment supporting front-office operations such as product innovation and corporate strategies. The prevailing thought of the past 5 years has been that Indian outsourcing firms are masterful in the art of efficiency and product development measures. What about now?

On 7 January 2009, Indian stocks took a nosedive in the wake of announcements by Satyam Computer Services that corporate profit summaries had been inflated for several years. The announcement by Satyam’s chairman and co-founder that he had directly falsified accounting documents on an ongoing basis has thrown the entire Indian outsourcing industry into dramatic turmoil. As a provider of back-office services for many of the largest banks and healthcare institutions in the world, the result of the SATYAM crisis is nothing short of devastating.

By Friday, January 9, 2009 news sources were reporting that interim CEO Ram Mynampati does not have faith that the firm can continue past the next few weeks. Mynampati stated they were working to find the liquidity to pay current employees, suppliers, and creditors.

In less than a week, the crisis has crossed the Pacific Ocean and hit U.S. shores. Auditing giant PricewaterhouseCoopers is expected to pay a hefty price for the emerging fraud. The auditor has been responsible for Satyam financial oversight for over eight years, and Satyam investors are expected to go to court in attempts to recoup losses. According to legal sources from within India, most are likely to attack PricewaterhouseCoopers directly rather than Satyam.

The tragic events of November 2008 in Mumbai clearly show that the concerns go much deeper. Over 200 people were killed in the attacks, and the entire central business district in Mumbai ground to a halt for several days, resulting in billions of dollars in lost labor. Within one week of the attacks, five high-profile Indian cabinet members were forced to resign. On 1 December, TIME magazine posed the question “Will India’s Government Survive the Mumbai Massacre?”

Many companies are selecting alternate destinations, and some trends show an actual migration OUT of India to other knowledge-rich environments such as Singapore, The Philippines, Armenia, Pakistan, and various Latin American countries. Companies requiring less interaction with the public (for example, a software development center) may select destinations where English is not the primary language, or in some cases, is not a language spoken at all. Companies building public-facing operations such as helpdesks or call centers are being forced to reconsider earlier decisions, and many are moving to more English-centric countries like Taiwan and the Philippines.

Key players are making a strong case for themselves as these trends develop. In the Western Hemisphere, Costa Rica and Peru have marvelous records of rock-solid software development and high customer satisfaction ratings. In Europe, Armenia is emerging as a major powerhouse and model of efficiency. In Asia, many are discovering that the almost-perfect English spoken in Taiwan and the Philippines combined with some labor costs equal to or less than those in India make each a destination of choice. In fact, the November 30 edition of The New York Times Magazine featured a four-page article touting the viability of the Philippines as a premier outsourcing destination.

While China, Russia, and Korea have fantastic talent pools, the labor cost and in some cases difficulty dealing with local and national governments make them less attractive to some U.S. based companies.

While being one of the lesser-mentioned yet more historically colorful European countries, Armenia is a virtual strongbox of extraordinary talent. As mentioned by the CIA World Factbook, 18% of Armenia’s current population is under the age of 15, meaning the talent pool is poised for huge growth.

Armenia declared independence from the former Soviet Union on 21 September, 1991 and is now a bastion of political stability (a particularly attractive factor for the O&O industry). A healthy GDP real-growth rate of 13.7% makes Armenia one of the top producers in the EU.

Additionally, Armenia is rapidly becoming a major challenger in the index of relative economic freedom. As reported by the Heritage Foundation, the change has been nothing short of amazing. In 2000, Armenia ranked 84th in relative economic freedom. As of late 2008, Armenia ranked 28th – ahead of European powerhouses Spain (31st) and France (48th) and just behind Sweden at 27th.

Hong Kong ranked #1 on the list for 2008, with the U.S.A. at #5.

The appraisal of economic freedom is based on 50 economic indicators within the following categories: capital flow and foreign investment; financial systems; monetary, budget, and trade policies; salaries and prices; government interference in the economy; property rights and regulations; and black markets.

Many outsourcing experts are finding a presence in Armenia quite successful for many of their clients and partners. The cooperation offered by the Armenian government to ease immigration and visa restrictions for executives and other technical employees traveling between Armenia and the United States has been a huge advantage to many, and this is compounded by great satisfaction with the talent pool offered by this European country.

Having a stable presence in Armenia is but one example of alternatives to the current Indian instability. There are numerous other alternatives as well, and diversification is going to be the keystone to success over the next few years.

As pointed out by one CEO, “…the logical approach for today’s global economy is to diversify. Many of my contacts who previously invested heavily in Indian resources are already asking for new alternatives, and we believe the best approach is to simply avoid the old cliché of “putting all the eggs in one basket.”

Singapore has emerged as another destination of choice, with an extremely stable economy and government as well as strictly enforced laws on intellectual property rights. Perfect English is widely spoken, and the country is considered one of the top-five technical innovators in the world.

Originally founded as a British trading colony in 1818, Singapore joined the Malaysian federation for a short two years ending in 1965. Now completely independent, Singapore is undeniably one of the most prosperous, diverse, and cosmopolitan destinations in the world and has a per capita GDP greater than that of many “leaders” in Western Europe.

In 2006, the World Bank rated Singapore as “the most business-friendly economy in the world.” Immediately behind London, New York, and Tokyo, Singapore is the fourth largest foreign exchange trading hub in the world.

The country is home to three major state universities: The National University of Singapore, Nanyang Technological University and Singapore Management University, resulting in a literacy rate over 93%. The island nation accomplishes it all with a geographic size only three times that of Washington, DC.

The Philippines and U.S.A. share not only a very similar legal system but the English language as well. Companies in the legal sector consider this fact especially attractive. Once a U.S. colony, the Philippines has a workforce that is already familiar with many legal factors not readily obvious to those in countries with less of a seasoned relationship with the United States.

A few facts about the Philippines:

  • Population of 91,000,000 as of 2008
  • 550,000 college graduates per year on Average
  • Educated labor pool of Over 30,000,000
  • Entry-level I.T. salaries average $2500-$8000 USD P.A.
  • Top-quality CBD real-estate costs average $17 PSF
  • 95% literacy rate
  • English as a primary language

In 2003 the world’s largest law firm centralized systems operations and support in Fort Bonifacio Global City in the Philippines.

The initiative has been so successful, the service has grown hundreds of staff covering Systems Operations, Service Desk and Development as well as Document and Legal services.

Scott Noble, NOC creator and former Director said “We had 35 countries with existing offices to chose from. Philippines turned out to be perfect because of it’s cultural ease, time zone, infrastructure and most of all, it’s wealth of top notch IT talent. The skill and professionalism of the staff we selected is outstanding. I can’t imagine achieving what we did with anywhere near the same time or budget in the other countries we compared.”

From 1997 to 2008, companies such as Citibank, Fluor, IBM, Convergys, Telus, HSBC, Dell, JP Morgan, Siemens, and Deutsche Bank have all opened major offshore facilities in the Metro Manila area of the Philippines.

More than just a country filled with call centers, the Philippines is home to dozens of offshore operations involving network operations, wireless services, energy, shipping and logistics, legal and medical transcription, finance and accounting, and software development.

The country is now recognized by some as the top destination of choice in Southeast Asia. In 2006, the country generated in excess of $3.0 billion in outsourced operations, and that figure is expected to more than double by the end of 2009. The Philippine government has targeted a global market share of 8 to 10% in the O&O market by 2011.

Regardless of where you go, there is no “single best answer” to every situation. When looking for that “trusted advisor” to help you make your next outsourcing, offshoring, development, or infrastructure decision, you need a firm with the knowledge, process, devotion, and proven direction to make it a success.

Only by in-depth knowledge of your core business can any firm help in an effective O&O engagement. You need a firm that endeavors to understand and optimize how the process will enhance not only the I.T. department, but all other business units as well.

O&O will continue to gain momentum over the next few years, regardless of what happens in the Indian subcontinent. The recent events in India and the surrounding territories are but a small stumbling-block to an ever-evolving global business model.

Businesses today realize that three very important factors have emerged in the outsourcing and offshoring industry:

  • O&O cannot and should not be based on the “one size fits all” methodology anymore. Diversification is the key.
  • Every situation is different.
  • Unless you are prepared to invest in learning foreign tax and H/R systems, unfamiliar holidays, unique infrastructure, governmental regulations, and possibly a few foreign languages, you NEED a trusted advisor on your side.

Companies and their investors who spent the billions of dollars (and thousands of man-hours) building outsourced operations based solely in India have found that trying to separate the technology from the actual business process is not only foolish-it is futile. Outsourcing and offshoring can provide limitless possibilities, but they must be done with precision , care, and proper distribution.

Rather than outright withdrawal from offshoring operations, now is the time for diversification.

“There is timing in the whole life of the warrior, in his thriving and declining, in his harmony and discord. Similarly, there is timing in the Way of the merchant, in the rise and fall of capital. All things entail rising and falling timing. You must be able to discern this..” – Miyamoto Musashi , 1645

Advantages of Offshore Medical Coding

The arena of the healthcare department is huge. Apart from providing the best treatment, there are several types of healthcare management required to follow to run a hospital efficiently. Accuracy is required to maintain in each and every department of healthcare industry. Health information management (HIM) is an integral part of a hospital. And in HIM, medical coding is something that cannot be taken lightly. Through accurate coding, a hospital ensures that patients are receiving proper care and the medical billing is accurate.

Medical coding is the process where the data of medical diagnosis and procedures is transformed into universal medical code numbers. The work is done only by coding experts who have taken special coding training and have good experience in the field. These days, most hospitals prefer to outsource the work. The coding work has been outsourcing for many years and the medical industry have found it beneficial. Outsourcing is the process where a company shared its job responsibility to an offshore agency that are expert in handling the same work responsibility. There are several advantages of offshore medical coding, check them out.

  • Accuracy

    This is a focal point in medical coding. A high level of accuracy is required to maintain in coding. A little mistake can cause trouble in medical billing that can affect the overall performance of a hospital. Outsourcing coding agencies eliminate inaccuracy chances. They hire well trained coders who keep themselves aware of the latest development on Local Medical Review Policies (LMRP) and Correct Coding Initiative (CCI). Mostly, three level of proofreading is done where workers are divided into three positions-junior, senior and superior. Proofreading increases the accuracy rate. There is no chance of any type of error in coding as coders are well aware of medical methodology.

  • Work Transparency

    Outsourcing coding agencies maintain happy customer relationships by keeping their clients well connected with their work production. The work progress report is sent by the outsourcing agency to the client from time to time. Easy access to the work is offered to clients to make them assure about work flow. Clients receive regular feedbacks on coding changes, periodic reports, case-mix review and coding related denial analysis.

  • Privacy

    Offshore medical coding offers high level of privacy. The work is sent safely via email. No work report is disclosed to third person in any case. This is one of the biggest advantages of outsourcing.

  • Enhances Revenue for Clients

    Right medical coding work leads to generate revenue for clients. Both patients and physicians are benefited from it. Medical billing work goes smooth. Patients are able to claim to their insurance agency for maximum reimbursement. Thus, patients get financial assistance and physicians get the right amount for treatment.

  • Saving of Money to Healthcare

    A great deal of saving is made by the healthcare industry. Outsourcing coding work prevents a hospital to make a special space for coding work and hire medical coders on a regular basis.

  • On Time Work Guarantee

    Outsourcing coding agencies offer not only accuracy but on time work guarantee.

Offshore Online Brokerage Accounts – Are They Safe?

These days, we are all accustomed to doing almost everything online. There cannot be too many of us left who are nervous about using a credit card online, for example. Doing business online is a way to save time, money and headaches. Investing through online brokerage accounts promises much the same benefits.

However, when it comes to investing offshore, borders still pose a significant psychological barrier. There is no longer any real need to have your online brokerage account in the same country you live in, but it seems investors are still reticent about opening brokerage accounts in foreign countries.

An increasing number of financial service providers are offering cross-border online investment services. This trend has caught on more in Europe than in North America, with larger online brokerages like Saxo Bank and Swissquote offering services specifically tailored to investors from outside their home countries.

However North American investors are also becoming more adventurous, opening more and more accounts with foreign banks and brokerages. Such accounts may be opened as individual US citizens or, more commonly, through offshore corporations or trust structures designed to provide an additional level of privacy. However, the main reason for accessing these international markets is to benefit from more profitable cross-border investment opportunities, and diversify risk by spreading their portfolios across different institutions in different base currencies.

These sophisticated investors have potential access not just to a wider range of investment opportunities –  but to simplicity, tax savings, and greater control over their portfolios.  There is also the opportunity to save money, by gaining access through discount brokerage models to exchanges that would otherwise have to be traded by telephone through far-away correspondent brokerages. 

The current economic climate means a lot of investors love the idea of being able to keep a much closer eagle eye on their internationally-diversified portfolios. But, there remains a concern. Is investing through online offshore brokerage accounts safe?

Are Offshore Online Bank and Brokerage Accounts Safe?

In short, the answer is yes, provided you apply normal common sense precautions. The internet allows you to buy and sell foreign securities through overseas brokerage accounts with just as much ease and security as paying your home electricity bill – and in many cases, much greater security.

The first of these precautions is to invest via a reputable firm.  Do some due diligence on the company behind the service. Just as you should at home (but many people don’t) check references, make sure the broker is registered and in good standing with the relevant regulators, speak with them in person and find out what experience they have. You should also enquire about the security arrangements on their site, and what protection they offer in the case of DDOS and other types of hack attacks. Many offshore brokerages are actually fully licensed banks, which makes them more secure and makes due diligence easier.

Once you have decided where to open your brokerage account, it is important that you you’re your own precautions to ensure that nobody else will be able to access your account without your permission.  Make sure that your security software, like anti-virus and firewalls, are properly installed, functioning and up to date. Consider using an encrypted VPN solution, especially if you are partial to doing your trading from a laptop connected via wifi, which is notoriously insecure. Also remember that just like those anti-phishing warnings from online banking at home, offshore brokerages will not email asking for you to confirm your details. If you receive any correspondence via email, confirm it by phoning the company directly before clicking on any links or taking any action. Try to get to know a single executive in the brokerage who will recognize your voice over the telephone.

What Services Do You Need?

Just like at home, overseas investing services can vary wildly in terms of costs and features. Even within the same brokerage, there are often different packages available.  Fees may differ significantly depending what features, information and access you request.

If you are considering investing in European bonds, unit trusts, ISAs or funds then you probably will not need access to the type of ‘offshore day trading’ account that permits you to buy and sell individual stocks in real time. A so-called ‘fund supermarket’ type account offered by a European bank would suit you in this case. But be sure to check which products of which fund managers are available, and whether the broker is prepared to negotiate fees or rebate  commissions they receive from fund managers (many will, especially on larger amounts, but only if you ask them)

Other banks and brokerages will offer discretionary management of your portfolio. This is suitable for investors who don’t want to have to watch their accounts every day, and who are looking for more of a Swiss-style ‘private banking’ feel in their brokerage. Having  access to quality investment advice is of great importance in this case – so ask what kind of management skills the bank has access to in-house. Larger banks have more expertise, but they may be busy chasing bigger fish. Smaller boutique private banks and investment managers often offer a much higher level of personal service.

In turn these various institutions will often target different types of investor. The more questions you ask your broker or banker before you get started, the more benefits you will obtain from the account you finally choose. It’s called KYB (“Know Your Banker”) and is equally important to investors as KYC (“Know Your Customer”) is to bankers.

If you take the time to do your homework, investing offshore and online is not only safe but it can be very profitable, cutting costs, diversifying risk, and taking charge of your own future. Are you ready for the challenge?

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