HP defends Malaysia offshoring move

Summary:The new boss of Hewlett-Packard's Asia-Pacific operations has defended the vendor's move to offshore some Australian support work to Malaysia, saying most customers would accept the move as long as service levels remained consistent.ZDNet Australia reported in early May that there would be redundancies among the 450-strong Australian remote support team for HP's managed service business.

The new boss of Hewlett-Packard's Asia-Pacific operations has defended the vendor's move to offshore some Australian support work to Malaysia, saying most customers would accept the move as long as service levels remained consistent.

ZDNet Australia reported in early May that there would be redundancies among the 450-strong Australian remote support team for HP's managed service business.

Some of the work is being offshored to a lower-cost facility in Malaysia, with the transition due to be completed by the end of this year.

Yesterday, HP managing director Asia-Pacific and Japan Tom Iannotti said most customers would happily take any savings associated with the move as long as service levels remained intact.

"The way I present that argument is: 'We have two choices, we can do the work here for a dollar, or we can do the work there for 10 dollars," Iannotti said in an interview in Singapore with ZDNet Australia. "Most customers say the dollar."

"Some customers, based on laws, based on certain industries and business practices, say: 'Hey I'll have it here, I don't want to pay 10 dollars for it, but I'll have it here.'"

"But most customers say: 'Will I get the level of service?'"

Iannotti said HP would always look for opportunities to reduce cost without impacting the level of service.

"Labour cost in the service business in particular is a big factor," he said. "Therefore whenever we can move services to a lower cost location, and without jeopardising level of service to the customer, we want to do that."

But he added Malaysia wouldn't necessarily always be the focus for HP, pointing out that as more companies moved their operations to the region, the cost of labour would rise with demand.

ZDNet Australia reported in January that Dell, too, has moved staff into the region, supporting customers of its server hardware.

"There's always a short-term nature to this offshoring," said Iannotti.

The HP executive also took aim at IBM's June move to dramatically expand its operations in the traditional home of offshoring work, India.

"I'm not sure I would do that, because the cost of the workforce in India is getting to a point where it is now as expensive as it is in other areas," said Ianotti.

"This is what happens. When the demand in a market goes up, prices goes up."

Making the rounds
Iannotti has only held his position since 1 May, succeeding Paul Chan who stepped down to take a sabbatical from the corporate world.

But the executive -- who joined HP some 25 years ago in a sales position -- has held a number of senior roles at the vendor in both the Americas and in Europe.

Since coming to the Asia-Pacific region, he has spent a considerable amount of time meeting with staff and customers in key countries such as Japan, China and India.

But Australia hasn't been left off the list -- Ianotti will come Down Under for three days later this month.

The executive sees the Australian market as similar to that of Japan, Europe or the US in that it is mature, established and slowly growing.

Apart from the need to communicate with customers, Iannotti nominated the need to inject HP with highly skilled personnel as one of the top issues on his mind.

"You can't be a great company without great people. I don't care how great your ideas are, if you don't have a team that understands them, that gets excited by them, that accepts them, goes and implements them, you don't have a great idea," he said.

He noted growing countries like China had plenty of personnel available, but the highly skilled ones were in demand and hard to find.

Asked about his sources of inspiration for leading and motivating his staff once they're on board, Iannotti was blunt.

"For me, a lot of it's common sense," he said. "Someone looks at me now and says: 'Hey, you're the MD of Asia-Pacific.'"

"But I joined the company 25 years ago as a salesman. What I wanted then is probably the same things the people who work in our organisation want today."

Iannotti said people simply wanted to make a difference in their jobs.

"They want interesting work," he said. "Who wants to come to work and do the same boring thing? They want challenge. They want to be recognised. They want to know that they are actually helping the company."

Renai LeMay travelled to Singapore as a guest of Hewlett-Packard.

Topics: Dell, Hewlett-Packard, IBM, India, Outsourcing

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