As outsourcing has become a very common practice in business area in this era of globalization, it is yet to fully penetrate into personal life and service area since this is just so different from the way to deal with business. Personal service requires so much interaction between customers and people who do the job, it is highly customized, language and cultural difference is always the obstacle for accomplishing services involving direct communication and cultural understanding. Because of all those reasons, personal life and service have long been out of consideration of being sourced. However, the fast moving Internet technology(the broadband, Instant Messaging, online shared doc. etc) along with the maturing of E-business mode makes it Outsource-able. Below is an article published on WSJ that described the current status of personal life outsourcing business and how it is run, examples are provided as well. Hopefully this can give you an idea of how life is outsourced
Sending work offshore has transformed the U.S. economy. Now, some families are tapping the same approach for personal tasks, getting them done for a fraction of what they'd cost at home. Taking your to-do list global.
By ELLEN GAMERMANJune 2, 2007
When David San Filippo decided to create a tribute video in honor of his sister's wedding, he could have gotten a recommendation from a friend or looked up video editors in the phone book. Instead, he did what big corporations have been doing for more than a decade: sent the work offshore.
On the Internet, Mr. San Filippo located a graphic artist in Romania who agreed to do the whole thing for $59. The result was a splashy two-minute video with a space theme and "Star Wars" soundtrack. It won raves at the wedding.
Offshore outsourcing has transformed the way U.S. companies do business. Now, some early adopters are figuring out how to tap overseas workers for personal tasks. They're turning to a vast talent pool in India, China, Bangladesh and elsewhere for jobs ranging from landscape architecture to kitchen remodeling and math tutoring. They're also outsourcing some surprisingly small jobs, including getting a dress designed, creating address labels for wedding invitations or finding a good deal on a hotel room, for example.
Such "personal offshoring" is still new and represents a tiny fraction of the more than $20 billion overseas outsourcing industry. But management consultants and economists say it's likely to evolve into a larger niche as offshore workers identify the opportunities. Thanks to instant messaging, computer scanners and email attachments, any work that doesn't require meeting in person has the potential to be done overseas.
The approach relies on the same model that drives corporate outsourcing: labor arbitrage, or benefiting from the wage differential between U.S. workers and those in developing countries. In the U.S., tutoring services charge $40 to $60 an hour for math help. Some skilled tutors in India are paid $2 to $3 an hour.
Sending personal work offshore requires Internet proficiency, and some patience as well. Though a few firms have begun tailoring their services to consumers, most deal primarily with businesses. Tapping this bargain work force means knowing about the online bazaars where workers abroad compete to bid for small projects.
Some big free-lancing sites include Elance.com, Guru.com and Rentacoder.com. In a recent study on the growth of offshoring services to small businesses and homes, market researcher Evalueserve found more than 90 such online marketplaces, with 500,000 vendors from low-wage countries using them.
Consumers must also be able to recognize when a routine task can be done digitally, and across time zones. Earlier this year, Dan Frey went in search of an artist to illustrate a children's book his mother had written for the grandkids about her life growing up in New York City. He thought about finding a student from a local art school, but then it dawned on him that he could outsource it without leaving his house. The job didn't necessarily require a face-to-face meeting -- he could just email the draft.
He logged on to Guru, which he'd learned about from computer programmer friends who had used it for work. Within a week, 80 bids had come in from countries like Lebanon, Ukraine and Malaysia. To narrow the field, he had 10 finalists send him sample drawings depicting a young girl. He rejected the illustrators who didn't follow instructions and sent pictures of animals instead, and he bypassed an Indian firm that seemed big and impersonal, offering him a "project manager" to oversee a staff of artists.
The woman he finally hired lives in the Philippines. He says her drawings, styled after Japanese anime, were more cheerful than other entries, and he was impressed by her polished portfolio. She offered to do 25 drawings for $300 -- what some others wanted for a single illustration. "I was kind of amazed at how easy it was," says the 36-year-old sales and marketing consultant. He says his mother was "overwhelmed" when she saw the finished product.
Offshore: Megan Oyler, top, sits at her computer in her home in North Carolina, while Raji Suresh, bottom, tutors her in math and reading from her home in Chennai, India.
It isn't always easy to evaluate a vendor. Language gaps can lead to misunderstandings, and if projects involve revisions, they could take more time -- and cost more in long-distance bills -- than they're worth. When reporters tried outsourcing personal tasks, they were offered a range of prices, making it difficult to know what they were getting (see adjacent chart for more on our test).
Janice Harrelson says she was ultimately satisfied with the Web site designed for her by Virtuoso Online, a firm in India. But she says cultural gaps initially hampered the designers' ability to strike the right tone on a site devoted to her Christian beliefs. The theme she wanted to emphasize was the bond that believers have with Jesus Christ -- a concept known as being "the bride of Christ." The Indian technicians posted pictures of women in wedding gowns.
"They were beautiful, but not what I had in mind," says the real-estate manager from North Carolina, who went through a few more revisions before the site was completed with images of a waterfall and a crown. The total bill came to $250 -- half the price she was quoted by a local Web designer.
Global Solutions India, in Mumbai, is one of the firms now adding consumers to its primary business of corporate graphic design and web development. Americans never used to call for small personal projects four years ago, but now the company says about 20% of all inquiries comes from individuals in the U.S. -- some of whom discover the company after seeing its occasional banner ads on sites like Google. The jobs are handled by a six-person team making $1,000 to $1,500 each per month. They work in a small office with anything from Hindi pop to Shania Twain playing in the background.
Rajesh Shah, the 27-year-old president of Global Solutions, tells his clients to call him anytime, even on his cellphone at 3 a.m. He sometimes works 16-hour days, and he lives a seven-minute walk from the office so he can get there fast. "I normally don't turn down work," says Mr. Shah, who often sends work to new customers before they've paid him. The most prominent feature of the office is a statue of the elephant-headed Lord Ganesh, worshiped as a god of wisdom and a remover of obstacles.
Outsourcing has already trickled down from big corporations to small businesses, which now send everything from secretarial work to graphic design to back-end legal research overseas. Outsourcing revenue from small businesses was more than $250 million in fiscal 2006, and is likely to grow to more than $2 billion by 2015, according to Evalueserve. As offshore providers gain proficiency in dealing with smaller clients, individuals are a logical next step. "We're seeing the very tip of a very big trend," says Peter Allen, partner and managing director of TPI, a Houston management consulting firm that specializes in outsourcing.
Glen Hackler says he was inspired to try outsourcing for his personal income taxes after he hired an offshore firm to do the bookkeeping for his business. The owner of a Web site that sells RV parts, Mr. Hackler came across FinTax Experts, part of a larger outsourcing firm based outside New Delhi, during a Web search. He says FinTax saved his business several hundred dollars in accounting work.
This year, he decided to have FinTax do his personal income taxes, too. He emailed his earnings and scanned receipts, getting a completed return within two days. The firm charged him about $50, a third of what H&R Block charges for an average return. Since the return wasn't prepared by a U.S. accountant, he says, he filed it as "self-prepared," but he says he got all the deductions his CPA used to find him. "They seem to know all the laws here."
Most consumer outsourcing takes place on auction sites like Guru. In 2000, the Pittsburgh-based company launched an online job board. Its infrastructure is like eBay, with a ratings system so buyers can feel more comfortable choosing a vendor. Guru has an escrow system to avoid handing over a credit-card number to a stranger. Vendors pay a listing fee of roughly $10 to $80 a month, and Guru gets 6% to 9% of every successful deal. Customers aren't charged to list projects for which they're seeking bidders.
Guru says it is taking steps to make the process more user-friendly, with additions it says are likely to appeal to consumers. A new feature will let vendors post short videos of themselves and their offices.
Another site, Elance, is starting up "Elance University," a mandatory online course for vendors that will instruct them on how to attract customers and improve their customer-service skills. Elance just doubled the size of its customer-service team as it gets more calls from people who aren't Internet whizzes. "We're just coming out of the early adopter phase," says Fabio Rosati, CEO of Elance. "We're starting to see more and more mainstream people ... people that are not Silicon Valley technofreaks, that are not online entrepreneurs."
As evidence that more consumer tasks will wind up going overseas, economists point out that it's already happening more than Americans might realize. Many U.S. service businesses now routinely subcontract some portions of their work offshore. An architect designing a residence, for instance, might send drawings overseas to be turned into computer-generated renderings.
Some labor experts are skeptical that this kind of outsourcing will ever go beyond a small group of enthusiasts. One issue is being able to trust a worker thousands of miles away with projects of a personal nature.
And though it's hardly the political hot-button that's provoked industries like manufacturing and information technology, it is bringing consumers face to face with some thorny issues. Many are stumbling into their own personal-life versions of corporate responsibility in terms of working conditions and fair wages.
That has become an issue for the Oyler family of Fayetteville, N.C. Nitza Oyler raves about her stepdaughter's tutor, Raji Suresh, whom she hired through TutorVista, an online tutoring service based in Bangalore, India. Ms. Oyler says after shopping around, she couldn't find anyone else to beat the price: $99 a month, compared with the roughly $40-an-hour quote she got from Sylvan Learning Center. Last fall, her daughter Megan began two-hour sessions five days a week, using a digital tablet, instant messaging and a headset to communicate with her tutor.
Ms. Suresh, has grown close with the Oylers. She frequently tells Megan she loves her and says Megan always replies, "I love you more." But earlier in the spring, the Oylers began to worry about Ms. Suresh, who wakes up at 3:30 a.m. so the 12-year-old can do her homework after dinner in North Carolina -- and works a full day after that. "I felt bad," says Ms. Oyler.
When daylight savings time kicked in, Ms. Oyler decided that instead of making Raji get up even earlier to accommodate the new hours, Megan would start her homework an hour later, at 7 p.m., giving Raji some extra sleep. "That was very considerate," says Ms. Suresh, who lives with her husband and two sons in a three-bedroom apartment in Chennai.
Architects, accountants, landscape designers and other professionals say it's too soon to tell if this kind of outsourcing poses a threat to their business. But American free-lancers say they're getting hit. To compete on auction sites, U.S. vendors are either positioning themselves as experts so they can charge more, or lowering their bids. "People are undercutting each other to remain competitive," says Jia Ji, who manages community relations at Guru.
Tanisha Coffey, who does small writing jobs through her Atlanta-area company, Scribe, Etc., says larger offshore firms with several dozen employees routinely win contracts she's going after because of their low prices. While she asks 50 cents a word for a long article, she says some offshore firms charge $3 for the whole thing. "I can't work for that," she says.
Actress Michele Greene, known for her role as Abby on "L.A. Law," has found a way to outsource one of Hollywood's most entrenched jobs: the personal assistant. She contracted India-based concierge service GetFriday last year. Ms. Greene says she pays $150 a month for about 20 hours of service. That's about $2 less per hour than her L.A. assistants charged.
Ms. Greene says her offshore assistant has been a big help while she works on her second young-adult novel and a country-folk CD in addition to acting projects. Along with paying her bills and booking her flights, her assistant has given her tips on Bollywood movies and Indian food. His recipe for garbanzo beans with eggplant and peppers has become one of her signature dishes. It's a huge improvement over the unemployed actors who typically fill these jobs in Hollywood, she says: "They'd screw up everything you'd ask them to do."
----------------------------------The end of the article-----------------------------------------
Friday, March 14, 2008
Monday, March 3, 2008
Life in Globalization-------My Evolving Understanding of Globalization(2)
As I have gradually acheived the 1st objective, I have also seen opportunities for myself , which is my 2nd objective, I am making effort to transofrm these opportunies to real business operations. I would like to share my thought here with people who are interested
1)Let your single-piece prototye made with the same quality but 1/3 of the cost in States. The cost advantage of the outsourcing mode has mainly been seen under a relatively large volume purchase, which actually is also applicable to small volume purchase or even single piece purchase. It is especially true for the prototyping making in the industry. Here is a case I experienced that can draw a good comparison: half years ago we made a new design of a product, before going into production tooling directly, we would like to make a prototype of that design to test the functionality and geometrical fitness. Our purchasing manager sent out the inquiry to the prototyping company in the States to quote for CNC machining prototyping as he always did since it was just a single piece manufacturing. The quotation came back with $1876 for the 7 piece set. I decided to make an attempt to get quotation from offshore as soon as he gave me this number. I was lucky enough to find a bunch of prototyping factories and I selected one after talking their director.They came back to me with an unanticipated professional quotation(neat and detailed) showing a more surprising price $285, which accompanied with a shorter lead time 7 days(compared to the 10~20 days) and free international delivery. "Let's do it, $285", I said to the purchasing manager. The arrival of this prototype made of aluminum 6061 eliminated our last concern, the quality and workmanship. Every piece was nicely wrapped in the blister package and they were done exact to our specifications in the drawings, including the tiny geometric features even us didn't care too much about. It was from this case that I saw this underexplored market----outsourcing the prototyping making. Although I am not the front-runner to explore this market, I know it still has potential since it is far from as much outsourced as the Volume Purchase. And it does have a big price advantage while providing comparable quality, which matters a lot for those medium and small companies with tighter budgets. This is also attractive for a lot students and professors in engineering schools who want to make prototypes for their projects.
2)Let some professionals in the Far East accomplish the Engineering Drawings, 3D models, Kinematical analysis,reverse engineering,CAD Animation and even more sophisticated engineering planning&design at your full satisfaction with low cost. Thanks to the constant advancing of Internet Technology, the application of Web 2.0, IM etc, the transfer of such e-products as well as the communications during the service process becomes commercially convenient and acheivable. Of course I am not the 1st guy who saw this opportunity, there are already some front-runners engaging in this type of business, provding a platform for professionals who are able to provide such engineering services and companies who are looking for such service providers to meet and deal. The atlanta based http://www.mfg.com/ is one of those. They concentrate on providing a platform for all manufacturing-related services and products, with the majority of registered suppliers from Mainland China.
However, compared to the prevalence of outsourcing strategy used in the mass production, People and Companies in States are still not used to outsourcing such engineering services as well as small batch products such as prototypes and customized manufacture parts, which actually can save considerable budgets for individuals or small/medium companies. Therefore, providing outsourcing solutions to satisfy the needs of engineering services and small batch productions is becoming one of the focuses for outsourcing professionals and companies, which in turn could largely benefit the service users financially.
1)Let your single-piece prototye made with the same quality but 1/3 of the cost in States. The cost advantage of the outsourcing mode has mainly been seen under a relatively large volume purchase, which actually is also applicable to small volume purchase or even single piece purchase. It is especially true for the prototyping making in the industry. Here is a case I experienced that can draw a good comparison: half years ago we made a new design of a product, before going into production tooling directly, we would like to make a prototype of that design to test the functionality and geometrical fitness. Our purchasing manager sent out the inquiry to the prototyping company in the States to quote for CNC machining prototyping as he always did since it was just a single piece manufacturing. The quotation came back with $1876 for the 7 piece set. I decided to make an attempt to get quotation from offshore as soon as he gave me this number. I was lucky enough to find a bunch of prototyping factories and I selected one after talking their director.They came back to me with an unanticipated professional quotation(neat and detailed) showing a more surprising price $285, which accompanied with a shorter lead time 7 days(compared to the 10~20 days) and free international delivery. "Let's do it, $285", I said to the purchasing manager. The arrival of this prototype made of aluminum 6061 eliminated our last concern, the quality and workmanship. Every piece was nicely wrapped in the blister package and they were done exact to our specifications in the drawings, including the tiny geometric features even us didn't care too much about. It was from this case that I saw this underexplored market----outsourcing the prototyping making. Although I am not the front-runner to explore this market, I know it still has potential since it is far from as much outsourced as the Volume Purchase. And it does have a big price advantage while providing comparable quality, which matters a lot for those medium and small companies with tighter budgets. This is also attractive for a lot students and professors in engineering schools who want to make prototypes for their projects.
2)Let some professionals in the Far East accomplish the Engineering Drawings, 3D models, Kinematical analysis,reverse engineering,CAD Animation and even more sophisticated engineering planning&design at your full satisfaction with low cost. Thanks to the constant advancing of Internet Technology, the application of Web 2.0, IM etc, the transfer of such e-products as well as the communications during the service process becomes commercially convenient and acheivable. Of course I am not the 1st guy who saw this opportunity, there are already some front-runners engaging in this type of business, provding a platform for professionals who are able to provide such engineering services and companies who are looking for such service providers to meet and deal. The atlanta based http://www.mfg.com/ is one of those. They concentrate on providing a platform for all manufacturing-related services and products, with the majority of registered suppliers from Mainland China.
However, compared to the prevalence of outsourcing strategy used in the mass production, People and Companies in States are still not used to outsourcing such engineering services as well as small batch products such as prototypes and customized manufacture parts, which actually can save considerable budgets for individuals or small/medium companies. Therefore, providing outsourcing solutions to satisfy the needs of engineering services and small batch productions is becoming one of the focuses for outsourcing professionals and companies, which in turn could largely benefit the service users financially.
Sunday, March 2, 2008
Life in Globalization------My Evolving Understanding of Globalization(1)
6 years ago, being as a college student in China, Globalization was just one of the vacabularies I was memorizing without knowing too much about the profound impact it has brougt on the way many multinational companies do business, the increasingly inter-dependent economic relationship between China and U.S and even the daily life of ordinary people in both countries. I didn't realize I would become part of it before long.
3 and half years ago, Outsourcing become the most frequently mentioned when I was sitting in the classroom of my graduate school in U.S listening to the lecture of Manufacturing Trend in U.S in the Globalization Progress. It was from then that I started digging into what was really behind the Globalization. Of course, those multinational companies are the front-runners in this trend. They sensed the considerable financial benefit the Globalization would bring to them and the customers. The exponential growth of retailing giant Walmart is definitely a successful case of globalization. In 2006, the direct purchasing volume of Walmart in China solely reached $20 billion dollars, which was one of the most significant reaons why Walmart can keep its competitive edge of " Low Price Everyday". And according to the survey done by a famous consulting firm, such business mode of Walmart can save a U.S household $2300 dollars a year out of their living cost. Nike is another example of success in taking advantage of globalization. By sourcing all of their prodcuts in Asian countries, Nike is able to control the cost of goods under 10% of its sales so that it can spend more money marketing and promoting its brand value without jeopardizing its competitiveness in pricing. Up till now, most of the Fortune 500 companies have built up their global network in order to stay competitive or even survived. During this progress, those companies' Supply Chains are formed globally with the help of fast moving Information, Communication and Transportation technology. Global Supply Chain becomes another important arena for companies such as Dell, Walmart etc to get a upper hand over their competitors. Globalization is no longer simply a vacabulary to me, it was so real and close to me as I could see all kinds of goods on the shelves of Walmarts, Home depot, staples and products from other Fortunate 500 companies tagged "Made in China".
2 years ago, after my internship in G.E, I chose to work for a small company as a sourcing engineer, whose responsibilty is to develop new strategic suppliers in Asia,especially China, so that the company can improve its competitiveness in pricing and quality. My Objectives of joining this company at this position was clear 1)Get myself familiarize with the whole outsourcing procedures and hone the skills for outsourcing 2)Keep my eye open for potential opportunities. At that time, I had noticed that following those multinational companies, many medium and small U.S companies had got involved in the Globalization. And the advancement of Internet, together with the emergence of a lot B2B websites(namely, http://www.alibaba.com/, http://www.globalsources.com/ ), tremendously facilitated such trend among those companies. Some companies started to outsource their own products to Asian countries to make themselves more competitive in price while some companies developed a broad supplier base in their respective areas and become the intermediate for companies who would like to source their products in Asian countries but for various reasons can't/wouldn't like to do by themselves. The company I worked for was the latter. How excited I was being at such a position, especially as a Chinese, I was able to pile up my skills and experience dealing with supplier by fulfilling the responsibility of supplier selection&qualification, negotiation for favorable terms, bargaining for best price, diagnosis for problematic suppliers, formation of standard procedures for quality improvement etc. International conference calls and flights, hotels, have become so common to me. I, unconsciously, become a globalized person.
3 and half years ago, Outsourcing become the most frequently mentioned when I was sitting in the classroom of my graduate school in U.S listening to the lecture of Manufacturing Trend in U.S in the Globalization Progress. It was from then that I started digging into what was really behind the Globalization. Of course, those multinational companies are the front-runners in this trend. They sensed the considerable financial benefit the Globalization would bring to them and the customers. The exponential growth of retailing giant Walmart is definitely a successful case of globalization. In 2006, the direct purchasing volume of Walmart in China solely reached $20 billion dollars, which was one of the most significant reaons why Walmart can keep its competitive edge of " Low Price Everyday". And according to the survey done by a famous consulting firm, such business mode of Walmart can save a U.S household $2300 dollars a year out of their living cost. Nike is another example of success in taking advantage of globalization. By sourcing all of their prodcuts in Asian countries, Nike is able to control the cost of goods under 10% of its sales so that it can spend more money marketing and promoting its brand value without jeopardizing its competitiveness in pricing. Up till now, most of the Fortune 500 companies have built up their global network in order to stay competitive or even survived. During this progress, those companies' Supply Chains are formed globally with the help of fast moving Information, Communication and Transportation technology. Global Supply Chain becomes another important arena for companies such as Dell, Walmart etc to get a upper hand over their competitors. Globalization is no longer simply a vacabulary to me, it was so real and close to me as I could see all kinds of goods on the shelves of Walmarts, Home depot, staples and products from other Fortunate 500 companies tagged "Made in China".
2 years ago, after my internship in G.E, I chose to work for a small company as a sourcing engineer, whose responsibilty is to develop new strategic suppliers in Asia,especially China, so that the company can improve its competitiveness in pricing and quality. My Objectives of joining this company at this position was clear 1)Get myself familiarize with the whole outsourcing procedures and hone the skills for outsourcing 2)Keep my eye open for potential opportunities. At that time, I had noticed that following those multinational companies, many medium and small U.S companies had got involved in the Globalization. And the advancement of Internet, together with the emergence of a lot B2B websites(namely, http://www.alibaba.com/, http://www.globalsources.com/ ), tremendously facilitated such trend among those companies. Some companies started to outsource their own products to Asian countries to make themselves more competitive in price while some companies developed a broad supplier base in their respective areas and become the intermediate for companies who would like to source their products in Asian countries but for various reasons can't/wouldn't like to do by themselves. The company I worked for was the latter. How excited I was being at such a position, especially as a Chinese, I was able to pile up my skills and experience dealing with supplier by fulfilling the responsibility of supplier selection&qualification, negotiation for favorable terms, bargaining for best price, diagnosis for problematic suppliers, formation of standard procedures for quality improvement etc. International conference calls and flights, hotels, have become so common to me. I, unconsciously, become a globalized person.
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