It outsourcing in Nepal / Asia - Nepal news

ICT outsourcing in Nepal

Outsourcing is fast moving from just software codes and call centers to a vast category stretching from copy editing to financial analysis to tax preparation. Outsourcing is tending towards the fast changing of office atmosphere and staff chemistry. Jobs such as personal assistants, secretaries, typists may soon fade into history and people will be able to move up the value chain to take up more creative and specialized works. In the recent years, most of the Fortune 500 companies have started the trend of concentrating more on their core competencies areas, and outsourcing non-related areas to other specializing organizations. This has been a shot in the arm for IT-Enabled Services industry.

Estimates suggest that the global market for telephone-based industries and peripheral information services activities was in the region of US$200 billion in 1998. Equally importantly, the industry is steadily growing at over 23% per annum and is showing no signs of abetting. However, the outsourcing of IT-Enabled Services is growing at much faster pace. Nepal could have an important role to play in this outsourcing and out locating market. The spectrum of IT-Enabled Services suitable to Nepal include the following broad segments:

Call Centers: Call Centers are used by most of the large services and manufacturing organizations to provide customer information and services. They are used for responding to customer queries, telemarketing, conducting customers surveys, etc.
Medical Transcription: This consists of transcribing medical advice recorded by doctors into Dictaphones or other such recording equipment, and sending them back electronically. The recorded advice is sent to offshore medical transcription centers in remote locations through electronic means or through physical delivery. Two Medical Transcription companies have already started in Kathmandu, employing over 500 people.
Back Office Operations, Revenue Accounting, and Other ancillary operations: Paper documents/raw data are sent to remote locations, which are used for data entry and necessary reconciliation. Using high-speed datacom links for back office and data processing operation, organizations with extensive data turnover and customer interface, are able to save costs and improve productivity. Airlines and banks are the main organizations that require these services.
Insurance Claims Processing: Insurance, a typical instance of data-intensive industry, receives a myriad of claims from their customers. The claims submitted can be processed on the basis of well-defined rules and parameters. Remote locations like Nepal can save costs.
Web/Digital Content Development: The services required for developing digital or web content for intra-organizational dissemination, web site development and maintenance, CDROM’s and other forms of new media channels.
Mapping and Digitization: As the world maps get digitized, the older maps need to be corrected with newer construction data and updates. There are already two Japanese companies in joint venture in Nepal for this kind of work and there are three more companies in the process of starting. Apart from above, there are plethora of opportunities in Data Entry, Data Processing, Payroll, GIS, Data Conversion and many other emerging IT-Enabled Services.

Where does Nepal stand?

For Nepal, the trend of outsourcing can be emerged as an opportunity in the future if proper planning is started now. Just as production jobs moved from Japan to South Korea to China due to cost increases created by the demand for higher wages to support better living, the same will happen with India. In India, outsourcing centers are already moving from the metropolitan cities to smaller cities, and Nepal will have comparative advantage in terms of wages, and our growing numbers of English speaking youth will provide the pool or resources.
However, Nepal will definitely need to look again at the labor and employment-related legislation to make this happen. This lesson has already been learnt from transcription centers that once ran well, and then crumbled due to problems with legal provisions.
Provided the fact that the countries like Nepal have a young work force well skilled in information and communication technologies and that many companies in the United States and Europe farm out software writing payroll accounting, and customer-service calls to firms in developing nations where wages are lower and English-speaking skilled workers are plentiful. India get a huge amount of that work but also has set up so-called centers of excellence in Mongolia, Mauritius, and Nepal to help those countries develop software skills, understand international business practices, and enhance education.
Beside, it is quite impossible to make a check on outsourcing, as it is a practice followed by almost all the big US companies. In the long term, Celent Communications, a consulting firm, calculates that 2.3 million financial jobs are at risk. A research by University of California at Berkeley shows that as many as 14 million jobs of all types will be outsourced. Many economists feel that with the increased competition and with demand not increasing in proportion companies are left with no other choice but to cut costs drastically. If you put up barriers to save jobs, the exact opposite will happen. As companies get less profitable, more Americans will lose jobs, say many economists.
The cost factor alone is not the attraction for the firms to outsource the works. With competition for experts in every field climbing up most of the bright workforce are snatched away by the top-end firms paying hefty salaries. The not-so-rich companies are often found wanting in the service they provide. Hiring labor from overseas directly means cost escalation again. So many firms are seeing outsourcing as the best way to stay ahead in the quality quotient without hurting the balance sheet.

Source: Kathmandu Post - september 2004

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