Government outsourcing shifts to front line
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Local services for local people An emphasis on meeting policy outcomes and an increase in local procurement are set to create a more diverse market for government outsourcing.â¦
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Contracting has soared during the Bush presidency, fueled by a philosophy that encourages outsourcing almost all government work.
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Government service firms often leaped before they looked as they scrambled to buy their way into the booming intelligence and anti-terrorism field.  -The Washington Post
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As this practice increases globally, the number of countries involved grows, as does the list of products and services outsourced.
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(InfoWorld) - Export revenue of a large number of Indian outsourcing companies was brought under the tax net in the country's federal budget. The tax could be the first of measures by the government to reduce tax benefits for the country's outsourcing industry. Prices that outsourcers charge their customers are unlikely to go up as a result, but profit margins will be affected, said N. Ramachandran, chief financial officer of outsourcer iGATE Global Solutions. In his budget speech before India's Parliament Wednesday, Indian Finance Minister P. Chidambaram announced the decision to extend a minimum alternate tax (MAT) to income that is currently covered under tax exemptions. There are other tax issues looming for the Indian outsourcing industry, consisting of software services, business process outsourcing (BPO), and call center companies. A large number of the operations of these companies were set up under an export-promotion scheme called the Software Technology Parks of India (STPI), which entitled them to tax breaks under the Indian Income Tax Act. However, the STPI scheme ends next year. Although the industry and the National Association of Software and Service Companies (Nasscom) have asked for an extension of the scheme for another 10 years, the finance minister made no reference to this request in his budget speech. The imposition of MAT is disappointing, as is also the absence of any announcement on the continuation of tax benefits beyond next year, said Ananda Mukerji, managing director and CEO of Firstsource Solutions, a BPO company in Mumbai. If the STPI scheme is not renewed, outsourcing companies will have to locate themselves in special economic zones (SEZs) for tax benefits. Under the STPI scheme they could locate their facilities where it was most viable for them from the point of view of cost and availability of staff, Ramachandran said. A small group of executives in India's outsourcing industry, including N. R. Narayana Murthy, chairman of Infosys Technologies, believes that the outsourcing industry is now large enough to pay taxes at levels similar to other industries in India. The finance minister has also brought employee stock options (ESOPs) under a fringe benefit tax. This move will make current ESOPs expensive, and will make it difficult for the IT industry that uses ESOP as a major tool to attract talent, said Deepak Ghaisas, CEO of the India operations and chief financial officer of i-flex solutions ltd., a financial software company that is majority owned by Oracle. The focus of the budget this year was on the agriculture sector, where growth is faltering. India's gross domestic product is forecast to grow by 9.2 percent in the year to March 31, with 11.3 percent growth in the manufacturing sector, and 11.2 percent growth in the services sector. Growth in the country's agriculture sector is likely to be only about 2.3 percent. There are about 115 million families engaged in agriculture in the country.
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Indian outsourcing companies have to move beyond low-cost services on an hourly-rate basis to offering complete services, according to an outsourcing consultancy.
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Cheap labor isn't the only reason for offshoring.
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After human resources, finance and accounting and supply chain management, large corporations and government agencies are turning to outside contractors for security.
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A Yankee Group report suggests that the need to stay ahead of hackers will drive a move to outsource security to managed service providers.
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THE Manpower Ministry (MOM) has scored a first among government agencies by awarding an outsourcing contract to a private firm that includes the transfer of staff.
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When outsourcing IT operations offshore, companies often focus on lower costs and more productivity -- and fail to keep in mind the cultural differences that could affect their security, said experts at the Gartner IT Security Summit.
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Under pressure from the White House and Congress to deliver a long-delayed plan last year, officials at the Department of Homeland Security's counter-narcotics office took a shortcut that has become common at federal agencies: They hired help through a no-bid contract.
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A study of offshore outsourcing by the Brookings Institution indicates that some metropolitan areas in the U.S. could lose IT jobs in disproportionately heavy numbers over the next eight years.
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The traditional competition for U.S. offshore outsourcing business was between nations. That's about to change, according to a new study.
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Security technologies delivered via the SaaS (software-as-a-service) business model may still be in their nascent stage, but some early adopters are already piecing together multiple offerings to outsource a significant portion of their IT systems defense infrastructure.
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For some companies, outsourcing IT is not just a cost-cutting strategy, itâs a way of life. Take General Motors, for example. GM has been contracting out its tech work since the company spun off its IT subsidiary, Electronic Data Systems, into a separate entity in June 1996.ADVERTISEMENTMAKE SOA REAL WITH IBM WEBSPHERE PODCASTStreamline processes and maximize efficiency within a proven service oriented architecture. Take back control of your business processes with IBM WebSphere.
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STANFORD, CALIFORNIA - On Monday, the same day the California Senate passed a bill that would ban state agencies from contracting services out to companies that use overseas labor, opponents and proponents of offshore outsourcing clashed during a conference at Stanford University.