Inside Track | The view from inside outsourcing

The Second Life of outsourcing

I spotted on Steve Rubel’s blog that US clothes retailer American Apparel is opening a store in Second Life – the massive online roleplaying game that currently boasts almost 300,000 residents.

Second Life has been at the centre of a media frenzy for a while. The main reason people are so interested in its effects on business is because its currency – Linden dollars – can be exchanged (on LindeX – the game’s currency exchange or a host of other third-part sites) for real US dollars at a rate of L$300 to US$1.   

Recently, even the BBC got involved by simulcasting its live Big Weekend roadshow in Second Life, including the chance for visitors to ‘meet’ with the DJs. There is also talk of the BBC building a replica of its Maida Vale studios inside the game.

Interestingly, some Second Life businesses have been doing so well – particularly those selling clothes for your avatar (or online character) – that there have been stories of entire companies being formed in the real world just to operate them. In other words, these online businesses – which are opening branches in Second Life – have been forced to move their administration back to the real world.

So, if offshoring can transcend dimensions, what about outsourcing to virtual reality?

Rocket launch

Couldn't resist saying something about the session i've just had at Mallory Park. I finally got to test out the new bike after a winter of stripping it down and uprating all the necessary bits to make it go faster and stop quicker. It's official - it goes like a rocket.

Very little got past me i'm pleased to say, and a game of cat and mouse ensued with a couple of other riders as we all vied to make the chequered flag first at the end of each session. Unfortunately the ambulance was called out on three occasions, the nastiest of which to cart off a couple of unlucky guys who both tried to get the best position into the Edwina Chicane - and failed. They turned out fine, which is more than could be said for their bikes.

Send in the clowns

Water shortages continue to make the press, this time via some hapless circus clowns in Surrey who have been banned from throwing water or squirting it out of plastic flowers because it violates the local drought order...

I feel a John McEnroe quote coming on...

Still the place to be

Despite the fact that, (as discussed before in this blog, and in the NASSCOM blog), Indian wage inflation continues to rise and competitive pressures from other global locations continue to rise, India is still The Place for outsourcing.

By 2010, India will be earning some $60bn from IT exports - a staggering number. The interesting shift in the market dynamics is that now the growth is predicted to be even greater as a result of the "unbundling" of large IT outsourcing deals. In other words the letting of streams of activity such as applications development, separate to infrastructure, desktops and so on. 

As Kiran Karnik, President of NASSCOM says: "Factors like evolution of the global delivery model, unbundling of large IT outsourcing deals [resulting in a larger share for India], and the large contract values due for renewal over the next two years are some of the positive indicators for the sector." 

The interest in India that our clients show is clear testimony to this - whilst they might look into other locations, both near shore (eg Europe) and far shore (eg Far East), India remains the best option for most of them.

Classic story makes a comeback

Picked up an interesting article in another blog this week on a topic that I've heard before - the outsourcing of the order-taking at McDonald's burgers.

Basically, when you drive up to the order board of your local 'Mickey D's' in the US and place your order by speaking in to the microphone, the person taking your order actually isn't sitting in the kitchen of the restaurant at all - they are actually in a call centre in California.

Why California? Because of the apparent ability of the customer service reps in that State to sound cheerful all day long, and to upsell easily - to convince you to supersize your meal and add those side orders, increasing McDonalds' profits in the process.

Apparently the service-level of the order takers is some 95 an hour - Adam Smith would be proud his economic theories are alive and well in the modern day service industry. The order is then fed into a piece of software which routes the order back to the kitchen of the store your sitting outside, where the order is made up in the more traditional way for you to collect from the drive-thru window.

Now if only McDonald's can figure out how to make up the burgers by computer too...

links for 2006-06-07

• Indian IT outsourcing reaches £30bn - vnunet.com
• Outsourcing the drive-through
• BBC NEWS | World | South Asia | IBM plans big India investment