A new solution for outsourcing

03.10.07 15:35 Filed in: The Prague Post
From Brno to Bangalore, firms bridge continents with chores

Outsourcing, once the somewhat simple process of moving the entire back office of a major company to India or China, is getting more sophisticated. Firms are beginning to divide their offshore operations across continents, using near-shore locations in Central and Eastern Europe as a bridge between Western Europe and Asia.
Multinational companies like Infosys and Accenture are increasingly relying on the “cultural affinity” — mostly, language skills — of employees in their Czech outsourcing centers to shrink the distance between their large clients, with their hodgepodge of European languages, and an army of low-cost, English-speaking workers in India.
“We’ve designed some solutions for splitting tasks between two locations,” said Ratnesh Mathur, head of European operations at Infosys BPO, a division of the major Indian outsourcing company that focuses on back-office work such as accounting. “We do have live instances of a single process being worked on simultaneously from Brno” — where Mathur is based — “and Bangalore.”
Mathur cautioned that this kind of cross-country outsourcing can actually add additional overhead, in the form of coordination and supervision, unless a seamless IT solution is developed and customized for the particular task at hand.
Having such a streamlined method is important, confirmed Andrew Grech, head of the Prague operations of Accenture, the multinational outsourcing giant.
At its Prague outsourcing center, Accenture digitizes 25,000 invoices and receipts every month for an unnamed customer, a financial institution. The scanned images are archived and then sent to India, where office workers enter the data manually into the bank’s computer system.
“We are able to perform work in the most efficient manner possible,” Grech said. “Scanning [data], for instance, does not need to be done in the location in which it is processed.”
While some critics have raised concerns about sending important financial data to countries outside the European Union, these privacy concerns are mostly unfounded, Mathur said, and do not hinder companies working jointly between the Czech Republic and India, with a few exceptions.
“Apart from regulatory requirements specific to some industries, like banking, data privacy has not come up as an impediment to outsourcing outside the EU,” he said.
As European multinational firms, which have lagged behind their U.S. rivals in accepting outsourcing, increasingly take advantage of globalization, it comes as no surprise that French, German and Italian language skills, among others, are becoming more important for outsourcing firms.
“Europe is used to serving customers in European languages, and those are not typically available in English-speaking centers in India and the Philippines,” Grech said.

Slipping in rankings
Despite serving in this new gateway role, competition for the fast-growing outsourcing business is intensifying among low-cost countries, and the Czech Republic is beginning to fall behind some of its competitors, according to one consulting firm.
In a recent ranking of 50 service locations worldwide compiled by the consulting firm A.T. Kearney, the Czech Republic slipped nine places, to 16th, from Kearney’s 2005 rankings. Bulgaria, boosted by its entry into the EU, replaced the Czech Republic as the only European country in the top 10, and neighboring Slovakia skipped up to 12th place. Outsourcing stalwarts India, China and Malaysia remain on top of the list.
Despite this downgrade, both Prague and Brno remain attractive investment locations for IT services and support, contact centers and back-office support, Grech and Mathur concurred.
“The depth and spread of languages available is a feature that is not matched on many markets,” Grech said. “In addition, we have found our people to be of a high quality with good education backgrounds and a strong motivation for learning — and keeping our customers happy.”
Will Brno then become a copycat version of Bangalore, the outsourcing capital of India? That’s unlikely, Mathur said.
“A high-scale model [is] more suited for a large Asian metropolis than the cities of Prague, Brno or Ostrava,” he said. But as a center for business process outsourcing (BPO), where firms take over office chores like accounting and tracking expenses, the country is still improving, he said.
“This is just as good a location, or even better, for multilingual BPO operations [than] it was in the past,” he said. “However, you have to get your BPO model right. There is little room for error.”