U.S. companies seem to agree. Of a record 23,300 new jobs created in Ireland last year, 13,407 were with U.S. companies. American Home Products, for one, recently announced that it would spend $520 million to expand its Dublin operations, adding 1,300 jobs. Meanwhile, Microsoft celebrated its 15th anniversary in Ireland last year with the announcement that it was establishing an Internet data center to handle all of the company's Web business transactions across Europe, the Middle East, and Africa.
Passage to India
India, long renowned for its huge pool of software engineers, is also a favorite location for offshore technology services. According to India's National Association of Software and Services Companies (Nasscom), 185 Fortune 500 companies outsourced their software requirements to India during the last two years, and the industry grew by 53 percent during 1999.
In the wake of Y2K, India is attracting attention for services that include E-commerce, euro solutions, customer relationship management, application service providers (ASPs), and IT-enabled services, according to a recent Nasscom report. A Nasscom-McKinsey study notes that IT-enabled services (covering a wide gamut of services, including call centers, data processing, back-office operations, Web content development, and so on) could generate annual revenues of $17 billion in India by 2008, creating as many as 1 million new jobs.
Hewlett-Packard decided in July 2000 to open a finance shared services center in Bangalore to support its European operations. Although still in pilot phase, with 90 people on site, it is expected to grow by 50 people per quarter over the next two years and will become "our global center," says Robert Shultz, HP's director of worldwide finance operations. "Ultimately, it will serve more than Europe for certain corporate transactions."
Although he describes the new center as "pretty much a green-field operation from the financial services side," Shultz notes that HP's existing infrastructure in Bangalore played a major role in the location decision. "We thought about both Manila and Ireland," he says, "but we had a fairly large software operation in Bangalore already."
Shultz says Bangalore's other draw is that "the city has a large number of universities that offer both commercial [business administration] and engineering degrees." To date, he says, the skills of the center's employees have exceeded his expectations. Data communications, another critical concern, has also worked well. "The Internet is the key to this," says Shultz. "Our goal is for an employee to sign on to the Web for finance activities and not know where the back office is. In our case, a lot of finance functions will be done in India."
The Need for Speed
Shultz says HP is moving "fairly conservatively" in India, but other companies are moving faster.
"We got our Indian operations up within a month," says John Hunt, CEO of Redwood City, California-based Obongo. An ASP, Obongo provides bank Web sites with E-commerce applications used by the banks' customers. Thanks to a contract with Citibank that required round-the-clock Web-based customer service, expansion of Obongo's Silicon Valley customer service center became a top priority. India was a natural choice for Obongo because so many Indians work at the company. "We're an Irish-Indian company, but we didn't even consider Ireland," says Dublin-born Hunt.
Just 30 days after the company's co-founder, Samir Palnitkar, flew to India to explore the options last summer, says Hunt, the company's customer service operation was up and running in Mumbai, outside Bombay. A dozen customer service reps provided by Quarktek, an Indian outsourcing firm chosen by Palnitkar, were quickly trained on the company's Kana system, which E-mails responses to customer questions or complaints.
"The vast majority of customer service inquiries are handled with canned responses," says Hunt. "However, these are very well-educated, literate people."
They're also cheap. Although Hunt insists that speed was the primary advantage of using Quarktek, Obongo's vice president of finance, Adam Gold, estimates that the full cost of handling each customer service inquiry in India is half of what it costs in California.
American English
While Web-based customer support can theoretically be done anywhere, it might seem that telephone-based support must be done in-country. Indeed, the local accent of call center reps is a major consideration when locating call centers. But while a strong Irish brogue or Indian accent might be a bit too much globalization for the average U.S. consumer, Los Angeles-based PeopleSupport Inc. found that the long association between the United States and the Philippines provided a low-cost source of "American-English speakers."
"We looked at a number of offshore locations, including Ireland and India, for a talented and educated labor pool," says PeopleSupport CEO Lance Rosenzweig. But Ireland was expensive, he says, and both Ireland and India use British English. Accent wasn't the only advantage of the Philippines, he adds. "We have 100 percent college-educated employees," says Rosenzweig. "That's important, because the call center industry is changing from pure telephone support to a multitouch support that traditional call-center employees couldn't handle."
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