pekİn & pekİn ‘outsourcing of business process services - a legal prospective : ‘the...

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‘OUTSOURCING OF BUSINESS PROCESS SERVICES -

A LEGAL PROSPECTIVE :

‘The Advantages and Issues of Setting up Outsourcing in Turkiye,

Specifically and Eastern Europe in General’

Hakan HANLIAttorney at Law

American Bar Association Section of International Law

Fall Meeting October 27, 2005 Brussels

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I. General Overview : ‘Outsourcing’1. ‘What is Outsourcing ?’2. Why Should We Outsource ? 3. Benefits of Outsourcing4. What and When You Should Not Outsource ?

II. Business Process Outsourcing & Legal Issues1. What is Business Process Outsourcing ?2. Legal Contract 3. Risk Management System and Insurance Policy4. Intellectual Property & Conflict Resolution5. Team Work

III. Global Outsourcing: ‘Challenges’1. Global Co-operation & New Job Creation2. Intellectual Property Rights’ Abuse3. Legal Deficiency, Risk & Solution

IV. Outsourcing in the Eastern European Countries : ‘Challenges & Benefits’

1. General Perspective2. Advantages & DisadvantagesV. Outsourcing in Turkiye1. Perspective of Offshore Outsourcing2. Turkiye’s Customer Service Offer

VI. Conclusion : ‘Outsourcing is a Legal Business’

PEKİN & PEKİN Outsourcing of Business Process Services - A Legal Prospective :

I. General Overview : ‘Outsourcing’

1. ‘What is Outsourcing ?’Outsourcing is the transfer or delegation to an external service provider the operation and day-to-day management of a business process. The customer receives a service that performs a distinct business function that fits into the customer's overall business operations. Sometimes the process is one that historically has been performed by a vertically integrated enterprise, such as data processing. More recently, outsourcing defines; the services sector for those services that were not part of the vertically integrated enterprise, such as telecommunications, web-site hosting, transportation services, logistics and professional services of regulated professionals.

There are two principal types: "Traditional" and "Greenfield" outsourcing:

1. Traditional outsourcing: Employees of an enterprise cease to perform the same jobs to the enterprise. Rather, tasks are identified that need to be performed, and the employees are normally hired by the service provider. For example, an information technology outsourcing may include a transfer of responsibility for management of data centers and networks (LAN, WAN, and Telecommunications). In the field of facilities management, individuals acting as property managers might become employees of a facilities management company.

2. Greenfield outsourcing: the enterprise changes its business processes without any hiring of personnel by the service provider. For example, the enterprise might hire a startup company to provide a new service, such as wireless remote computing, that was not previously managed internally.



PEKİN & PEKİN 2. Why Should We Outsource ?

Many reasons exist to engage in outsourcing. When to outsource will depend on the severity of existing problems or challenges, as well as the ready

availability of an outsourced solution.Taking Information Technology (‘IT’) as an example; there could be one or more of the following

circumstances favoring an outsourcing solution:

• CEO is being "held hostage" by a non-responsive IT department. • Compared to competitors, the enterprise is not keeping pace with changes in technology. • High inventory costs. • High personnel turnover. • IT budget is not predictable or affordable. • IT organization does not have a strong grasp of company's objectives, critical success factors and/or bottom

line. • IT organization does not provide industry best practices, processes and/or services to internal/external

customers. • IT strategy not consistent with business strategy. • Loss of senior IT management. • Missed delivery dates. • Multi-IT vendor environment/data centers. • Need to focus on core business(es),. • Need to increase earnings, growth, ROI, and/or shareholder value. • No business continuity/recovery plan. • No documented, measurable, and/or repeatable IT strategy. • Not ready for e-Business (e-Commerce, e-Procurement),. • Port internal and/or external customer service. • Post-M&A - redundant or mismatched IT infrastructure. • Runaway IT projects. Similar considerations might apply to other business processes eligible for outsourcing. American Bar Association

Section of International Law Fall Meeting October 27, 2005 Brussels

3. Benefits of Outsourcing

Outsourcing may solve problems, but more significantly, it may lead to many hidden business benefits, such as;

• Renewed focus on core business. • Mitigation of risks by reliance on an expert. • Improved customer satisfaction through improved processes not previously part of the enterprise's culture or

experience. • Ability to reward workers with career opportunities in a specialty company dedicated to the workers' skills as a revenue

generator, rather than to a general company where the worker is considered an overhead expense. • Project enhancement. • Service improvements. • Skills upgrade. • Skills retention. • Skills access. • Technology infusion. • Cost accounting and overall visibility of accounting and performance in a business process. • Cost reduction. • Management of volatility in costs through financial engineering. • Asset conversion. • Avoidance of capital investment.

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4. What and When You Should Not Outsource ?

Everyone seems to have an attitude towards outsourcing. You may like the idea of transferring a “dirty” job to an expert third party so you can focus on your more important “high level” job. But you might not like the idea of transferring control over how the “dirty” job is done. And you might feel threatened by the transfer of your job (whether “dirty” or “high level”) to another company that has a different culture, business strategy, management style, incentive plan and personal career path.

So, whether you are;– in the trenches doing non-administrative tasks (doing “real work”);– in a purchasing department or other administrative department buying services to support your people

in the trenches, or– a senior executive re-defining where the trenches are to be dug, your attitude will be more realistic if

you know the types of services that should not be outsourced.

As with every “rule,” there are good reasons not to follow the rule in special situations.



II. Business Process Outsourcing and Legal Issues

1. What is Business Process Outsourcing ?2. Legal Contract 3. Risk Management System and Insurance Policy4. Intellectual Property & Conflict Resolution5. Team Work

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1. Business Process Outsourcing (‘BPO’) is the procurement of particular services that involve ongoing outsourcing of specific business processes. In other words, BPO by being the one of the two types of outsourcing means examining the processes that compose the business and its functional units, and then working with specialized service providers to both reconstruct and outsource these at the same time.

Business Process Outsourcing involves the full transfer of responsibility for functions such as transaction processing, policy servicing, claims management, human resources, finance, and compliance to the outsourcing company. The outsourcing provider then arranges these functions on their own systems to agreed service standards and at a guaranteed cost.

In the BPO, there are many fields needed to be interested separately from each other; equipment, finance, human resources, technology, security, customer and service provider relations, contract negotiation are the basic ones.

On the other hand, while Business Process Outsourcing realizes some legal issues ensue:

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PEKİN & PEKİN 2. Legal Contract

First of all, any outsourcing agreement needs a legal contract. The legal contract determines legal parameters of services and responsibilities shared by both parties.

The legal contract has to balance enough flexibility in order to exercise the scope of outsourcing and enough rigidity to block any undesirable situation. Most vendors have standard forms of contracts while most enterprise customers do not. Without a solid form of contract, the parties normally spend substantial time in negotiations. At the same time however, the unique business strategies and concerns of both parties may be accommodated through such negotiations..

The clauses have to be about defining the scope, identification of process and parties, conditions, aspects, what to do in case of disagreement, operations and their procedures, intellectual property related issues, contact persons and performance indicator, etc…



3. Risk Management System and Insurance Policy

As all BPO programs are based on people, process and technology firms have to consider potential risks and create ‘a risk management system’.

Many outsourcing contracts require the service producer to maintain insurance but the critical point in here is that can the enterprise customer collect under the service provider’s insurance policy in case of loss depending from service provider’s performance.

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PEKİN & PEKİN 4. Intellectual Property & Conflict Resolution (Mediation, Arbitration)

a. Intellectual Property : Intellectual property problems are also part of legal topics in outsourcing as it is required to use them through services. In this part there can be problems related to copyrights, trademark, moral rights, patent and trade secret.

As copyrights are generally entitled to legal protection which has the scope of providing property on any kind of expression of idea embodied as a work the potential problem of the service provider’s using enterprise customer’s data have to be solved in legal terms. In the field of outsourcing, trademark problems show-up in the case of co-branding or joint marketing transactions, many outsourcing transactions require service provider’s employees and enterprise’s employees work together that a mistake in the performance of the service provider can affect enterprise. The Patent that is an agreement between the inventor and the government concerns with outsourcing in case of business process patents. In outsourcing, even what is a ‘patentable process’ is a matter of discussion, so that parties have to exceed it by judicial interpretation. Trade secrets’ role in outsourcing is related with both parts’ interests, so that they share confidentiality in order to prevent any illegal act. Nowadays, virtually any contract, including a business process outsourcing contract, for the delivery of goods, services or licensed rights in applied technology contains an indemnification clause concerning possible infringement of third-party intellectual property rights. In the initial draft of the agreement, the typical clause provides for unlimited indemnification for patents, copyrights, trademarks and trade secrets. Increasingly, the suitability and evidentiary issues in such clauses are getting careful scrutiny Patent holders face a challenge in protecting their rights. The European and Turkish Patent Laws ordinarily impose actual damages for patent infringement. On the other hand, Patent holders must think twice about suing for infringement. The stakes are high; invariably, the patent holder's infringement lawsuit will invite a counter-claim for invalidation of the patent. As a result, the infringement litigation could risk termination of all license royalties from parties other than the alleged infringer.



b. Conflict Resolution: In the case of any disagreement about transaction, there can be several solutions to exceed it.

i. Mediation : First of all, parties may prefer to discuss it in their own or they can choose to be helped by a mediator. But these two ways are not enough in some cases because of their having no binding effect. ii. Arbitration: A step further solution is having arbitration clauses in the contract, the decision of the arbitrator is final and in force so that even if the arbitrator makes a mistake regarding law there is no court to review the decision.iii. Litigation : Lastly, parties may use the way of litigation, when each party has its own interests which does not want to involve them in outsourcing.

Except the ones that we mentioned above, there are legal issues concerning human resources, acquired rights of personnel, forms of contracts and bankruptcy, but on the other hand there is a branch of international outsourcing.

Here the problem is ‘what the difference between parties in a legal perspective is’ :

• Freedom of contract and laws : First thing may be the “freedom of contract”, because it varies according to the different laws, then another legal risk can be the identification problem of business process in home and offshore countries.

• Double taxation : About the taxation parties have to pay attention to double taxation and a taxation plan for both countries’ different taxes.

• Other issues : There can be always a problem related to politics; new elections, changing governments and their ideologies can be dangerous for foreign investments.

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5. Team WorkEconomics based problems even if are lesser in Turkiye and in Europe in comparison with other countries.

Having the basic facilities in both home and offshore country is another requirement to keep process going; telecommunication, transportation and storage are main elements in this area. Permits, licenses, protection of intellectual property, restrictions on personnel and data are some other risky topics and to avoid them domestic outsourcing lawyer and local foreign lawyer have to work together as ‘a team’.

Between the benefits of BPO specialization and using experts can take the first place. By co-operating with specialized firms the original law firm can be free to concentrate on its core activities and other law firms can make inroads in their activities thanks to their experiences. This effect of restoring procures the original firm the access to additional resources, reengineering efforts, usage of new technology, and redeployment of internal resources and having monthly expenses instead of capital expenses.

Furthermore, the benefit of over bridging between cultures can be an end to the reactions against economically more developed countries while creating more job opportunities. But more job opportunities in offshore countries do not mean loss of jobs in home country, because in long term both parties get the benefits by the growth of free trade.

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III. Global Outsourcing: ‘Challenges’

1. Global Co-operation & New Job Creation

2. Intellectual Property Rights’ Abuse

3. Legal Deficiency, Risk & Solution

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1. Global Co-operation and ‘New Job Creation’

Business Process Outsourcing takes part in different parts of the global world and makes an economical and legal connection between them. As an example Americans’ and Indians’ venture in China can be given.

In that case Americans and Indians are being strategic partners to develop Chinese software industry and also the system used to China is influenced by examples found in US and India. While having the goal of creating a role-model for growing Chinese software industry, China impressed by made of technological commitments, investment and legal movements in selecting its international strategic partner.

Sponsors and state was interrelated: for example, Sino-India Co-operative Office and National Development and Reform Commission of People’s Republic of China were two sponsors. On the other hand, contributions were mainly from foreign groups such as TATA Consultancy Services and Microsoft. Even though parties conveyed this information to the media missing parts caused speculations just like the amount of payments.

While this process of IT outsourcing China’s need of legal and economical improvement showed up. An international outsourcing just like this case needs definite solutions, first thing to do is ; ‘answering whether the enterprise customer still remains legally responsible or not ?’

While outsourcing means; ‘the transfer of operations and daily management of a business process to an external entity. Can laws consider main entity responsible in legal issues ?’ Sometimes, it can be the content of transaction and in accordance with its being effective in more than one country, there can be such a paradox. Here the legal responsibility can comprise many topics: taxation, cost savings, employee transfer, and intellectual property rights’ usage.

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PEKİN & PEKİN 2. Intellectual Property Rights’ Abuse

Mr. Adrew Carnegie (founder of U.S. Steel in the 1800’s) said that; “The only irreplacable capital an organization processes is the knowledge and the ability of its people. The productivity of that capital depends on how effectively people share their competence with those who can use it.”

One big legal conflict came up with the topic of intellectual property rights’ abuse. European Commission was mainly focusing on monitoring the selling of products such as software, music and information technology services which are violating the protection of intellectual property. European Commission’s actions were based on controlling illegal actions with the help of China; they forced Chinese Government to make new regulations and to take strict precautions.

At the end, the bill was defective in concerning with legal topics, because it had a limited scope and did not answer the needs of enterprise costumers or service providers working with or in China.



PEKİN & PEKİN 3. Legal Deficiency, Risk and Solution

a. Financial Crimes and Violation of Enterprise Consumer’s Protection : While outsourcing supporters make their statements and trying to generalize it, there are some voices in disagreement with them. Their first argument is outsourcing’s being risky, according to them; ‘transferring some operations and making use their data to another party seems like losing control of entity’. Then the defenders of this argument broach the finance crimes and violation of enterprise consumer’s protection.

An event lived in India, in 2005, was enough to justify their argument; some BPO employees was arrested because of illegally transferring funds from customers account.

b. Legal deficiency : It had a big impact on business sector and the only thing to do is to interfering as soon as possible. At that point, costumers faced the legal deficiency. Indian legal system was too slow to answer the problem, but it needs strict norms and quick arrangements. According to experts, the solution in this case can be an indicator to other industry’s staff about ‘what is the end of acting illegally ?’. This case also let employers to pay more attention to the background of their staff members.

c. Hidden costs : Risks of outsourcing does not end with abuse of consumer provider’s employees. According to analysts, also the idea of cost reduction is a mistake, employers do not take into consideration the hidden costs. Then using expert may not be as useful as it thought to be. Separating activities within a firm can blaze to loss of business knowledge and practices besides, even if specialization does not damage directly transfer of knowledge is an indirect way of losing time and money.



d. Transparency and privacy of firms : As outsourcing needs key personnel in both parties also their training can be considered as a loss. Even, when we consider that these risks did have no effect in the process of outsourcing, possible failure of vendor or drift from scope can cause to irrecoverable ends.

About the legal area, balance between transparency and privacy of firms have to be arranged, the enterprise customer have to pay attention service provider’s care on legal requirements or application of specific regulations. In this respect, firms before entering into outsourcing transactions, may want to take into account the relevant legislation in the service-provider’s country. Some of the critical points; these firms and their attorneys must consider with regard to the scope of the service provider’s can be listed as follows:

– Notification of customers whose data have been exposed and are at risk;– Extent and ease of access regarding information available to consumers;– Ban on display, sale or purchase of social security numbers and other personally identifiable

information, subject to safe harbor, without the individual’s consent;– Rules on privacy notices to consumers, including privacy policy statements whereby Consumers would

have the opportunity to limit sale or disclosure of information and to limit other information practices; and

– Individuals’ right to obtain disclosure of all personally identifiable information pertaining to the individual held by an information broker and to be informed of the identity of each entity that procured any personally identifiable information from the broker.

f. Software licenses : Another problematic example is about the software licenses, because of some customer’s of outsourcing services’ having no convenient software license legal problems show up for service providers. Mostly people forget that ‘software license is a type of copyright’. It is entitled to legal protection and in respect of the experts’ studies the cause of this problem is growing out of not considering important the relationship between enclosure of licenses and the enclosure of the contract of outsourcing.

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PEKİN & PEKİN g. Solution : To minimize these risks both parties need an outsourcing Attorney. The outsourcing Attorney identifies the business process, observes contract according to legal system(s), and defines the aim, strategy and operations.

The Attorney has to consider benefits of both parties and have to be neutral. Risk management, data security and contract negotiation can be the preliminary topics to be interested by lawyer. While sourcing contract means; ‘getting two parties together in a common point without an experienced Attorney ’, parties can have difficulties to exceed hidden risks. The Attorney can take care of the standardization of the transaction, can mention all the detailed issues and can control the situation by the way of re-negotiation.

e. Liability of service providers: In the course of data processing relating to an account receivable, the service provider’s errors could potentially harm the customers of an enterprise for instance by making a mistake that costs a consumer his good credit with whom the enterprise has legally protected business relationships. In such a case, it is vital to know whether or not the liability of the service provider shall be imputed to the enterprise within the scope of the agency relationship presumably existing between the parties Therefore, in order to allocate the responsibility between the service provider and the enterprise in cases where the rights of third persons have been violated, the outsourcing contract should be carefully drafted, and identify the responsibilities of the service provider and the enterprise with respect to the enterprise customers.



IV. Outsourcing in the Eastern European Countries : ‘Challenges & Benefits’

1. General Perspective

2. Advantages & Disadvantages

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1. General Perspective

Europe experienced significant growth in outsourcing during 2004, especially in Business Process Outsourcing. Recently, Europe’s outsourcing market which was only one-fifth of that of the America’s in 2002, managed to equal that of its transatlantic partner by 2004. Cultural affinities, cost, time-zone, language skills, strong technical capabilities, and minimal data-regulatory issues make these countries very attractive destinations for BPO and IT services relocation or outsourcing.

The other important feature being a large talent pool of people with in depth knowledge of mathematics, logic, science and technology.

Although low costs are often the greatest driver for businesses to consider outsourcing in Eastern Europe, costs are not the only decision driver. Stable political environments, good telecommunications, regular air services and a plentiful supply of highly educated staff with language skills are other factors making Eastern European Countries increasingly attractive.



2. The Advantages and Disadvantages of Outsourcing IT functions to Eastern Europe

a. Advantages:i.Availability of resources: Eastern Europe has a substantial reserve of software development resources waiting to be tapped. Its institutes of higher learning and universities continue to turn thousands of graduates in IT and IT related, and engineering fields.

ii.Costs: Although it is recommended to look beyond the low cost of Eastern European IT resources to the additional arguments in their favor, cost factors are undeniably a key consideration in any company’s decisions around outsourcing. Costs for software development depend on a set of factors: needed skills, project size, the geographical location and experience of a provider, guaranteed workload and other factors. Accordingly, hourly rates may vary from as low as € 10 (in rare cases) to € 40 and even € 50.

iii.Technical excellence: Eastern European programmers possess all the needed up-to-date technical skills, as well as those needed for legacy migration. Within Eastern Europe, all the latest worldwide technical literature is available, both in English and in localized versions.

iv.Strong Fundamental Education: It may seem paradoxical, but the main advantage of Eastern Europe programmer is said to come from the fact that they are often not programmers by education. Quite commonly a Eastern European programmer gets a strong fundemantal education in such fields as mathematics, physics and other domains, then switches over to computing when he or she graduates and looks for a job.

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v.European Culture: Today’s young and middle age managers and specialists who work in Hi-Tech companies have he same or higher level of education, English language skills and motivation as their European colleagues.

vi.Location: It takes between 1-3 hours to fly from Paris or Berlin and 8 hours from the USA to reach capitalists of Eastern Europe. Offshore software development companies normally compensate for the time difference with their European and even American clientele by adjusting their working schedules so as to have maximal overlapping hours for mutual contact.

Eastern Europe is also a gateway for entry into the European Union (‘EU’) Labor mobility across these countries, into other EU members, has, in the case of those that are already members, and will become, for those who soon will join the membership of the European Nations, quite easy.

vii.Great potential: All the above factors contribute to the great potential of Eastern European software outsourcing industry for integration in the world-wide IT industry. Eastern European specialists who left their prospective countries to work abroad have begun trickling back, bringing with them invaluable experience in marketing and sales as well as business ties needed for the young IT-industry.

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b. Disadvantages

Like any developing and young industry, Eastern European offshore software development industry has a number of drawbacks. People involved into the industry clearly recognize them and trying to combat them. These disadvantages may be real or just perceived, but they prevent Eastern European countries fro m becoming an outsourcing destination of choice.

i. Lack of high-level managers in software development : Although some providers have worked in the market for ten years or more, the industry has never been taken a hand in shaping educational standards. Until recently the industry enjoyed slight recognition on the local market and was unable to attract talented managers from other fields.

ii. Legal challenges: There are many issues facing Eastern European industry in general, which anyone considering doing business with Eastern Europe hears about. These include intellectual property rights, export and import, taxation, labor and currency laws, company accounting.

iii. Language barrier: This issue of knowledge of English is crucial for middle and top management. However there is no need for every developer to speak English even if he or she should be able to read in English. The process of Eastern Europe’s integration into the global economy allows us to hope that there will continue to be adequate supply of programmers reading and also speaking English with proficiency.

iv. General Industry immaturity: Although leading Eastern European providers have existed for 10 years, the industry is still young. This leads to both disadvantages and advantages. Because the outsourcing sector is small but very competitive with the rest of the Eastern European IT- industry not to mention industry outside of IT in terms of payment, career opportunities, job challenges and social protection, it attracts “the best of the best”. This situation will last so long as free resources are available. Indian companies, by contrast, have started to meet problems attracting new high quality personnel. Another positive impact is that Eastern European companies are much more flexible when seeking to attract clients. They strive to overtake the leader and to prove themselves.

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On the other hand, there is lack of industry associations, powerful lobby and certification authorities, all of which makes industry’s position harder. But the industry is growing very quickly and the situation is changing for the better everyday.

Twenty years ago India had no India to compete with, as Eastern European does today. But the Eastern Europeans are coming and striving to attain their rightful place in the IT world.

Despite the English language handicap (not as apparent in Slovenia, Romania, Czech Republic, Poland, and some parts of Russia), companies in the Former Soviet Union and Eastern Europe currently have about a 6-8% market share of the close to € 2,5 billion global outsourcing market, which is quite respectable. It is predicted that this percentage could double to 12-16 % by 2006-2007.

Thus, it is believed that initiating a presence in these markets, through a Greenfield start or an acquisition / buy-in, is strategically important both for the global outsourcing vendors as well as for the client.

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V. Outsourcing in Turkiye

1. Perspective of Offshore Outsourcing

2. Turkiye’s Customer Service Offer

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PEKİN & PEKİN VI. Outsourcing in Turkiye

During the past 3 years, outsourcing has also developed considerably. There are about a dozen of outsourcing companies in Turkiye (all located in Istanbul), having about 2000 seats - workstations- all together.

1. Perspective of Offshore Outsourcing

In addition to the mounting demand from local companies, Turkiye offers excellent opportunities to be the location for handling Pan-European calls.

During the course 2003, two major developments have certainly reassured that Turkiye is becoming the “backyard” of German speaking countries.

The first development has been that Siemens Business Services have decided to serve their major customer from their center in Istanbul. The second development has happened with Lufthansa. They have recently opened-up a center in Istanbul to serve clients in German language.

Moreover, some Turkish Call Center outsourcing companies based in Turkiye have realized this opportunity and are expanding to Europe. Customer Management Center (‘CMC’) is one of the leading call centers in this arena and is active particularly in Germany.



Turkiye has substantial strengths to be location for handling Pan-European calls. Some of them are; – Ample and low cost workforce– Availability of large number of qualified people who are able to speak fluent German Low staff turnover – Dynamic and practical culture, “can do” attitude – General interest to work in call centers – Flexible labor laws (e.g. you can listen and monitor calls) – Availability of qualified blue chip suppliers – Low set up and operation costs – Proximity to Europe

Nevertheless Turkiye is not without some weaknesses on this arena. These can be summarized as: – Call center sector is not yet totally recognized or supported by the government. – Telecom is a monopoly thus highly regulated. Services provided specific to call centers are limited. – Call center industry is still developing; call center management knowledge is less mature than some European countries. – If the offshore situation is analyzed particularly form the perspective of Germany, the following opportunities appear: – Turkish Telecom deregulated as of 1 January 2004, thus yielding to more competitive prices and flexibly. – There is growing interest from European countries, including German companies to go offshore due to cost pressure.– Germans and Turks have been living together for about 5 decades thus both cultures know each other. There is no need to convince Germans

about the language abilities of returning Turks. – Approximately 2,5 million Turks are still living in Germany. Increasing number German companies see this ethnic group as an opportunity.

Despite the fact that it is possible to offer multitude of languages from Turkiye, the real area for concentration has to be German language due to the vast availably of German speaking people as well as lower cost of operation compared with Germany. France and Netherlands are the two other countries where most Turks are located and French and Dutch are therefore the two other possible languages followed by English (to lesser extent). Due to the close proximity; Russian, Polish and Greek can be supported from Istanbul.

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PEKİN & PEKİN 2. Turkiye’s ‘Customer Service’ Offer

Turkiye has a lot to offer. Famous Turkish hospitality coupled with the “can do” attitude ascertains that customers will receive superior customer service.

Other than in Germany, the best and smooth accent in German can be found in Turkiye. There are plentiful young Turkish people who were either born or worked in Germany. They are willing to work in call centers at a reasonably lower wages than European countries.

Needless to say, a lot will change after the telecom deregulation. Although prices will fall down, specific tariffs and/or services will be offered to call centers, it will still take time for call centers to fully benefit from the advantages of the privatization.

Turkish outsourcing companies must remember the examples from the tourism industry- neither do ant of the companies benefit from price wars, nor it promises a healthy future.

The Turkish government should understand the call center business, what offshore call center mean and what benefits it would bring to the country. It should help promote the industry in international arena, provide the call center companies with the required infrastructure and support.

As India, Philippines do for English, Mexico for Spanish, Morocco for French etc., Turkiye should concentrate on predominantly German language. With its skillful and fluent people, positive customer service attitude coupled with favorable price offers make Turkiye a very strong candidate for handling German contacts.



V. Conclusion : ‘Outsourcing is a Legal Business’

At the end no outsourcing contract can least forever, outsourcing is a tricky business and there have to be an end.

In such an aspect like end, there are 3 types of things to do:

1.The first one is keeping the situation constant, it can be useful when both parties wish to go on and continues having benefits. In these circumstances parties have to think also the financial and personnel related topics. In this option a little change in the scope can be acceptable;

• Below are some of the business and legal factors in deciding whether and how much to outsource:

• cost savings (based on explicit cost analysis),

• avoidance of expenses

• viability and reputation of the service provider,

• financial analysis and related price adjustments to the customer's current fully-allocated costs,

• flexibility as to scope, duration, termination, intellectual property, future pricing, and future services,

• any unusual enterprise-specific considerations concerning the economic risks of transferring certain functions to the service provider,

• regulatory considerations,

• integration of outsourcing with other business processes that are in-sourced or outsourced, or both, and the relationship of this outsourcing transaction to other infrastructure strategies, such as mergers and acquisitions, bankruptcy reorganization, strategic alliances, joint ventures, and other special situations.

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PEKİN & PEKİN 2. Second solution is reviewing the contract. When the aim is changed and financial situation have to be devised again firms take this idea into consideration.

3. The last one is back-sourcing; ‘this totally means your discontent’. When enterprise customer fulfills the service provider’s functions internally or it want a rebuilding leaving the outsourcing have to be chosen.

Finally, even business process outsourcing means; ‘transfer of some operations and business functions to an external entity’, it has a lot to do with laws and legislations and for not being failed at the end. Consumers and service providers have to consider it, as a legal issue more than a financial one.

Thank you for your kind attention.



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