Acquisitions or Offshoring – The battle begins

Computerworld published the this interesting article recently. It compares Axon’s announcement that over the next few years they will be on the acquisition path for businesses that will help grow its position in the industry. Compared to Geni’s decision to start discussions with offshore outsourcer Tech Mahindra.

Geni appears to be driven down this path by Telecom. It is good to hear Geni talking about close discussions with its clients on this path, it could be rather damaging to them if they just announced the change over. Geni has in recent times also spoken about the lack of suitable talent in New Zealand to cover its growth needs.

Both approaches have merit. Axon is right to realise that the ICT market is rapidly converging. And the acquisition path has merit. Over the last few years IT and Telecommunication companies have been bedding into their market and a few of these companies might be prime for the picking.

I have seen the consolidation of the IT market gather pace in the last few years as smaller companies become part of larger companies. So Axon maybe on the right path. However they may have entered the acquisition market a bit on the late side.

Outsourcing on the other hand has plenty of merit too. Especially on Telecom’s (Geni) bottom line. Unfortunately my gut feeling is that this is a directive from the juggernaut Telecom rather than from a recruitment or customer service driven directive.

I say that because over the last few years and the next few years, Telecom’s market share will be severely dented. Rather than invest in making themselves different they are looking at cutting costs. How can we keep squeezing more out of what we have rather than change.

I am a sceptic, Telecom is not my favourite company. Lets hope I am wrong for their customer’s sake. If I am right though, what was once a great IT company in Geni, will be a company struggling to stay a float in a few years.

The digital age … Job losses & Job gains

Two articles of interest have popped up on the stuff website today that are of interest.

1) BBC to cut 1800 jobs as it confronts digital age

2) 11,000 more IT industry jobs by 2011

There was a lot of talk years ago about how technology would threaten jobs and that it would become harder and harder to get a job. I suppose technically this statement is right. Technology is a threat to jobs. However based on these two articles it is obvious that this statement needs to be added to.

“Technology will threaten jobs that can be duplicated easily, and grow job opportunity in other areas”.

If you consider the record unemployment rates that are all over the globe & the challenge of finding good people. I would have to say that more jobs are being created by technology than lost.

The biggest outsourcing news of last week

Both the stuff & NZ Herald websites have articles on Vodafone’s call centre move to Cairo last week. A rather large announcement. You can find the articles here & here. This is big news for the industry. Not only because it is such a big call centre move, but also because of the suggested reasons behind the move.

It will obviously have some dollar saving attached to the move, however the main reason stated was the difficulty in finding call centre staff. This poses an interesting question. Was it that there wasn’t enough staff in Auckland, or New Zealand? Or was it that there wasn’t enough staff at the hourly rates that Vodafone was willing to pay?

I will be interested to see how the level of service goes. Will the change to Cairo improve quality or decrease quality. I thought it was interesting to see that Vodafone has chosen Egypt as the country of choice. There is a general ground swelling of dislike for the Indian call centres, because of the language differences.

My gut feeling is that Egypt would have a higher level of understandable English than the likes of the Indo-Asian countries. But I am not an expert in this of course.

The other nice thing to note is that Vodafone has announced that there won’t be any redundancies in New Zealand. This maybe a short term strategy or more likely long term. There will probably be a slow ramping down of the New Zealand operation over time I imagine. But I suppose that will depend on how well things turn out in Egypt.

More thoughts on call centres in New Zealand

Earlier this week I posted regarding the TUANZ question on the outsourcing of call centre work to India etc and whether it was a good idea long term. I suggested that this was the way of the world and New Zealand just wouldn’t be able to compete with pricing and value.

This isn’t completely true. New Zealand can have an outsourced call centre market, however it needs to focus on finding niche markets that it can fill. While New Zealand can’t compete on price for most outsourcing to the likes of India or Philippines, it can compete in two areas.

1) It can compete on language. While India and the likes will try to train staff with American accents, ultimately they will still sound Indian. One of New Zealand’s unique advantages is that it speaks a very individual style of English. This can be used to its advantage.

2) While it can’t beat outsource pricing from the likes of India, it can be extremely competitive against all other English speaking countries & their currencies.

Mix these advantages together, find a niche and fill it. That is how New Zealand can compete.

A great article on the gap between tertiary and the real world

Computerworld has reported on the 25th conference on tertiary-sector ICT which carries some messages that make a lot of sense to me. You can read the article here. There are a couple of points of interest worth exploring further.

The first paragraph talks about the gap between what students learn and the things practiced in the workplace. My belief is that this is not only true of ICT but also of many other areas of Tertiary education. We have a graduate marketing person working with us at the moment. It is interesting how some of the basic theories and ideals taught in university are very different to application in the real world.

The second important point that this article mentions is that the shortage is not actually about applicants, rather about suitable skills. This obviously relates very closely to the first point. And it is quite possible that Tertiary institutions are at fault here because not enough real life experience is added to the courses.

The third and most interesting point to me is the paragraph that states

Applicants typically have “grossly inflated expectations” both in pay and in the nature of the work they think they will be doing.

In the IT industry in particular this is definitely a very true statement. Many graduates have a false expectation that they will be able to slot into a high pay packet without paying the dues in an actual working environment.

I saw this with one particular person in the marketing industry. She spent 3 years getting educated in marketing and business. This person was actually very good and had a natural nose for the industry. However she still had to do the 2-3 years hard yakka to get any credibility. Unfortunately her expectation was that she shouldn’t have to do the job experience because she had just spent 3 years at university.

Education is valuable, but ultimately it is experience that allows a person to sell themselves for the higher rate.

What a truely great idea

This article has really caught my attention and interest. I don’t know if the idea of going to India for training will pickup in New Zealand but I think it definitely deserves attention.

Not only does the person get (hopefully) high quality training & a certification, they also get an experience to remember as well. If you look at your standard wanting to be qualified IT professional this experience would be something they could really enjoy.

Maybe New Zealand IT companies that a screaming out for good candidates could offer this as part of their induction process. A free trip to India, a 27 day intensive training course and a really good time.

I am almost tempted to retrain as an engineer myself.

Article on the 4th IT boom

Here is a great article written by Ben Pearson of Beyond Recruitment. It talks about the 4 IT booms of the last 10 – 15 years. I agree with pretty much everything he says. You can read the article here.

There is a general perception around these days that the quality of graduates has fallen substantially. We also experience the same problem as described in the article when hiring engineers. You may look at 100 – 200 candidates to find the one or two good ones.

I believe it is a combination of two things. Firstly the IT industry has received a bad name through the 4 booms. In particular the Y2K and the dotcom booms. I believe that this has discouraged candidates of truly exceptional calibre away from IT and into other careers. Secondly the ability to get a qualification in IT has become relatively simple.

I have heard time and time again from people over the years saying that they are going to retrain in IT as it provides a good pay. They pay money for the courses and get the piece of paper but not the skills. You need to be a particular type of person to be a good IT person.

Most candidates just don’t have the qualities & personality that they need to really make it in the IT industry.

Telecom “testing” out the outsource model … only a matter of time

It came to light last week in an article on stuff that Telecom was trailing the idea of outsourcing more of it’s call centre to the Philippines. Shocking news? … not really, it was only a matter of time. The article here talks about it being a trial only and no decisions have been made.

Mark my words, regardless of the outcome good, bad or otherwise, by the year end the entire 250 jobs will be shifted abroad. It will happen because of one fact alone, cost savings. The savings are just too attractive for a large company like Telecom to leave alone.

I don’t blame them either. They are fighting fires on multiple sides. Yet they are still required to pull good bottom lines for their share holders. The problem will be that a company like Telecom will contract a company with similar features to Telecom.

My prediction is that there will be no gain in service levels rather a decrease in service levels. If they are onto it though, they will have contracted to an outsource company where Telecom would be their biggest account, and thus treated like royalty.

Unfortunately you have to pay a premium for this kind of service (even in the Philippines) and that won’t look good on the books. I wait with interest for the next instalment.

New Zealand companies expanding into Asia

Not 100% relevant to what we do but here is an interesting article from computerworld about three New Zealand IT companies signing a deal with a large Indian IT company to sell their services. Here’s the link

Yet another sign of how close the world is becoming.

Another company challanged by the lack of talent

Computerworld has posted this interesting article today about a technology company called Endace. It identifies that the growth of the company has been marred by the lack of talent available.

This article prompts a couple of lines of thought for me. The first as it is our core business is to suggest looking beyond New Zealand’s shores for the talent they are after. This may or may not be possible depending on how they have structured their business.

The second one though is on the idea of talent being hard to find. It has prompted me to pose this question. As there is a lack of talent, in order to get talent shouldn’t we simply offer more. Example: I am an engineer at ABC company. I earn $75,000 pa. XYZ Company is finding it hard to recruit good talent. If XYZ Company offered me (the engineer at ABC Company) $90,000 to work for them would that solve the talent problem?

I am sure some engineers would say yes to another $15,000 in their pockets. Others may say no. A lot depends of personal circumstances. However it would I believe solve the talent squeeze for that company. Maybe the talent is there we are just not willing to pay enough for it, and it leaves New Zealand’s shores.