Outsource Partners International’s Expansion Efforts Drive Employee Count to 2,000 Worldwide

LOS ANGELES, CA - January 29, 2008 - Outsource Partners International, Inc. (OPI), a leading provider of finance, accounting, and tax business process outsourcing (BPO) and related services, today announced that it recently achieved a major company milestone with the hiring of its 2,000th employee worldwide. This notable figure represents employee growth of 48% during 2007.

Typical of an OPI professional, the 2000th employee is a Chartered Accountant with 7 years of work experience at one of the Big Four accounting firms. Based at OPI’s Bangalore, India service delivery center, this professional now oversees a team of professionals delivering banking related services.

Commenting on the accomplishment, OPI Chairman and CEO, Clarence T. Schmitz, noted, “I’m especially pleased with our steady growth which has been driven not only by the addition of new clients, but also by scope expansions from our existing clients. Achievement of this milestone is a testament to OPI’s capabilities in the outsourcing of complex and mission-critical finance & accounting functions.”

Kishore Mirchandani, OPI’s President, said, “Our success to date is directly attributable to the efforts and dedication of our highly-skilled professionals. It is with their attention to delivery excellence and their advanced skill-sets that we have been able to deliver high quality service and expand our offerings. As we grow, our employees’ growth is of the utmost importance to us and we are committed to providing ongoing training and career advancement opportunities.”

About Outsource Partners International, Inc.

Outsource Partners International, Inc. (OPI) is a leading professional services firm dedicated to the provision of finance, accounting, and tax business process outsourcing (BPO) and related services. These finance & accounting BPO related services include data management, research & analytics, business operations consulting and information technology outsourcing.

OPI was built and is managed by experienced professional accountants, most of whom are former Big Four accounting firm partners and managers. This unique heritage underlies a strong spirit of partnership with its clients. Placing service and quality first has enabled OPI to build an extensive portfolio of satisfied clients who serve as real-world examples of the benefits of outsourcing.

OPI has more than 2,000 professionals operating in its offices throughout the United States, Europe and India. For more information about OPI and its finance and accounting solutions, visit www.opiglobal.com.

IT and Business Alingment

The utopian dream of closely aligning business and IT remains just that for most CIOs — a dream. IT has historically been delivering technology while the business consumes services. The key to realizing the dream is to transition IT away from just a cost-center and technology provider towards being an actual business unit, thereby enabling it to provide high-quality services to both internal and external customers. The idea is to visualize and run IT as a business in itself.

Smaller vs. Smaller Business Process Outsourcing contracts

Such deals do appear to be on the decline. A recent article in The Economic Times, citing information from Everest Research, notes that buyers increasingly prefer to work with multiple outsourcing providers rather than a single supplier.

Seen in tandem with the move toward multiple suppliers is an increase in shorter, smaller-value contracts. The number of mega-deals, which Everest defines as contracts valued at $1 billion or more, is dropping and will continue to do so. The article quotes an Everest VP:

A decline in mega-deals is likely irreversible any time soon as few Fortune 100 companies remain that could sign new mega contracts.

And the value of such big contracts is shrinking. According to TPI, the average size of billion-dollar-plus outsourcing contracts fell from $9.6 billion in the first quarter of 2006 to $2.4 billion in 2007’s third quarter.

As the outsourcing market continues to mature, buyers feel more comfortable with this model, says Gartner Research Director Kurt Potter, who is interviewed in a recent vnunet.com article. But should they?

Many companies “have fundamentally sound procurement organizations to initiate outsourcing contracts,” says Potter. “But many IT sourcing strategies and governance structures are still immature, and are lacking altogether, or misaligned with, enterprise objectives. ”

The pendulum may swing back — at least a bit. Gartner predicts that some early adopters of multisourcing will consolidate their outsourcing relationships in 2008 to “reduce their service-integration costs and harvest the benefits of better relationship management with fewer strategic suppliers.”

There are certainly benefits associated with multisourcing, says EquaTerra Managing Director Charles Collier in a recent IT Business Edge interview: “Complexity Still Calls for Longer Outsourcing Agreements.” He says:

… Clients are seeing that rather than having one company doing all of my infrastructure or all of my services, I can go to more of a best-of-breed strategy and usually the buying of the service is more commoditized now, which means it doesn’t take as long or it’s not as costly to say, “Please take over my help-desk services” or “Please take over my network management” or my desktop management or my data center. It’s easier to move those things so you do not have that chunk of expense of transitioning people and process and getting the service moved from the client to the outsourcer.

But there are possible pitfalls as well. Shorter outsourcing contracts work best, says Collier, when they involve services that are relatively straightforward. They don’t make much sense for buyers who are seeking a sweeping business transformation.

Echoing Gartner’s comment about governance, Collier says shorter contracts and multiple suppliers require process maturity and effective management strategies.

If you have good process maturity, you’ll have those handoffs well documented and it will be very clear who should be doing what, and you should be able to write very specific contracts that outline who is responsible for what responsibilities. If you aren’t that mature and you add in multiple players, it can become very chaotic.

A realistic evaluation of process maturity is one of the keys to determining the optimal length for an outsourcing contract, says Collier, along with a good understanding of your company’s internal company culture and what it hopes to accomplish by outsourcing.

Somewhat surprisingly, cost can also be a “gotcha” in working with multiple suppliers, says Collier.

If you have to generate an RFP and send that out to a multitude of providers, go through a rigorous evaluation and then execute that, if you do that every three years versus every five years or seven years, there’s a lot of internal time, effort and associated expense with shorter arrangements.

India is no more paradise for Labor Arbitrage

A tight labor market and rising salaries in India led Gartner earlier this year to suggest that Indian companies might need to evaluate the use of Tier 2 and Tier 3 service providers — or even those located in other countries — to supplement their staffs.

So is it really so surprising that a startup called Riya has decided to relocate its development team from India to the U.S. to save money? OK, it’s a little surprising.

To date, it’s been more common for Indian companies looking to reduce labor costs to look to places like Eastern Europe, Latin America and China. Those establishing operations in the U.S. — like Wipro, which plans to open at least two software development centers in the States — tend to cite business and communication benefits other than cost.

But as noted in a blog on CIO.com, Riya’s CEO found that, over the past two years, the salary of one of his programmers rose to 55 percent of an equivalent U.S. programmer’s salary. Not only that, but Riya would need to further boost his pay to keep him from leaving the company.

When Indian salaries reach 75 percent of those paid to U.S. employees — the point at which Riya and other companies are finding themselves — the labor arbitrage is no longer enough to justify performing work in India. Added management and travel costs cancel out the cost difference.

Riya’s CEO says that he could reduce his costs in India by hiring workers in more rural areas, but he doesn’t want the costs or hassles of maintaining multiple offices. Unlike multi-national service providers like IBM and Unisys, he also hires only experienced workers in order to minimize training costs.

The author of the CIO.com blog, BeyondCore CEO Arijit Sengupta, says that startups like Riya have an especially tough time with long-distance software development. Unlike their larger counterparts, they generally don’t have the financial reserves to compensate for infrastructure issues or to respond to the cost of errors.

Indeed, as I noted in an earlier blog that cited research from Columbia University’s Amar Bhide, tech startups are notably reluctant to offshore strategic tasks like product development.