Offshore Outsourcing
DePaul University
October 18, 2004
Richard Howe
Topics
•
•
•
•
•
60 seconds about SAIC
Why outsource to offshore
Considerations
How to make it work
What did you say
SAIC
Why
Consider
How
Recap
SAIC Overview
Technology/Capabilities That Contribute to Our Competitive Advantage
SAIC
Why
Consider
How
Recap
SAIC
Why
Consider
How
Recap
Government Business Areas
Core Competencies
•
Information
technology systems
•
Professional services
•
Engineering services
•
Telecommunications
systems
IT Outsourcing
2.9%
Energy
1.4%
Telecommunications
2.4%
Health Care
4.9%
Environment
6.6%
Other
14.7%
National Security
67.1%
SAIC
Why
Consider
How
Recap
Commercial Business Areas
Core Competencies
•
•
Telecommunications
systems
Information
technology systems
and outsourcing
Environment
1.6%
Health Care
2.4%
Energy
4.9%
IT Outsourcing
21.3%
Other
10.9%
Telecommunications
58.9%
Sustainable Competitive Advantage
Leading to 35 Years of Growth
SAIC
Why
Consider
How
Recap
Why outsource?
SAIC
Why
Consider
How
Recap
Business Drivers
Internal
External
Work force constraints
 User dissatisfaction
 Inefficient operations
 Escalating budgets
 Attrition
 Redirect internal staff
 Mission critical services
 Complex services


Tight labor market
 Global competition
 Rapid change in technology
 Technology complexity
 Cost pressures
 Integration needs
 Business process change
 Partners are competitors
Today, irrelevancy may carry larger risks than inefficiency
SAIC
Why
Consider
How
Recap
Why Outsource?
•
•
•
•
Create flexibility
Focus on core business
Improve quality
Realize cost reductions
Core value
Through 70’s
70’s - 80’s
90’s
Why outsource to offshore?
SAIC
Why
Consider
How
Recap
Some Macro Drivers:
• Large highly educated labor force
• Wage Arbitrage
• Relative political stability: post-cold war period permits
capital & labor mobility
Some Business Drivers:
• Depressed global demand (Overcapacity) – Need to
Cut Costs
• Maturation of offshore service delivery platforms –
Initial driver was unmet labor demands
• Emergence of Information Technology Enabled
Services – Back Office and Call Center
• Standardization of IT software platforms
Source: Information Policy Institute January 14, 2004
Considerations
Offshore adds a third dimension to outsourcing
•
Insource
•
Outsource
Control
–
–
–
–
–
Cost structure
Economies of scale
Financial engineering
Service requirements
Process expertise/ capabilities
Business Process
•
Call Center
Information Technology
•
Offshore
On-shore
Location
– Vendor capabilities and availability
– Labor pool projections/economics/skills
– Deal types/relationship structure
(e.g., subsidiary; JV; consortium)
– Location/geographic considerations
– Risk management
Source: Society for Information Management, SIMposium 2004
SAIC
Why
Consider
How
Recap
Considerations
•
•
•
•
•
•
•
Culture
Coordination
Cost
Complexity
Constancy/Stability
Core/Strategic process
Confidentiality
SAIC
Why
Consider
How
Recap
Onshore v. Offshore Delivery comparisons
High
Proportion Offshore
Low
Complexity
High
Core/Strategic
Application
Development
Application
Support
Medium
Offshore
Legacy
Legacy &
maintenance
enhancements
maintenance
&
Low
High
Project selection
selection
Project
done
donethrough
through
diagnostics
diagnosticsstudy
study
Non-core
Application
Development
Medium
Constancy/Stability (e.g. Requirements)
High
Low
SAIC
Why
Consider
How
Recap
Facts about India
• Government: Democratic & Secular.
• Religion: Hindu, Muslim, Christian, Sikh, Jain,
Buddhist, Parsies etc.,
• Calendar: Christian Calendar for Business; Indian for
Ceremonies/Festivals
• Food and costumes: Distinct regional food &
costumes. Besides regional song and dances.
Predominantly Vegetarian.
• Language:
– National Language: HINDI (30%)
– 25 different regional languages and numerous dialects
– Governments do business in English.
SAIC
Why
Consider
How
Recap
Behaviors
•
•
•
•
•
•
•
•
•
•
Shy, soft spoken, reserved & low voice
Polite, humble & respect for elders
Superior makes decisions; subordinate carries them out
Mutual dependence and interdependence - family bonds
Waving of palm and hands
Nodding of head/shaking head for ‘yes’ or ‘no’
Hesitate to disagree and contradict others
Hesitant to shake hands especially with opposite gender
Eye contact with female colleagues is low
Public display of emotions/affections is discouraged
SAIC
Why
Consider
How
Recap
Asian Indian vs. American English
Differences
• Hello = Hi
• Phone is engaged = Busy
• Disconnect a Phone = Hangup
• Petrol Pump = Gas Station
• Lift = Elevator
• Bill = Check
• Note = Bill
• Too = Very/Lot
• Repair = Fix
• Fix = Assemble
•
•
•
•
•
•
•
•
•
SAIC
Why
Consider
How
Recap
Schedule = S(k)edule
Route (Root) = Route (Raut)
Half = Half
Fast = Fast
Z (Zed) = Z (Zee)
Zero = ‘O’
Organisation = Organization
Colour = Color
One Lakh = Hundred
Thousand
• One Crore = Ten Million
Yes = I heard you (not I agree)
How to make it work
Short-term Transition Project
•
•
Define the “win” for employees and the firm
Communicate, recognizing culture differences
SAIC
Why
Consider
How
Recap
“Tain't what a man don't know that hurts him, tis what a man knows that just ain't
so.” Kim Hubbard
•
•
Process must be more rigorous than you’ve ever used and address time
zone differences
Infrastructure
– Duplicate of test/QA environment
– Robust communication network
•
•
•
•
•
•
•
Knowledge transfer – use phased approach and test to assure success
Risk management
Establish service level agreement at start (e.g. bug fixes, problem
resolve time, “lights on” tasks, etc.)
Allow for 6 week gap in travel (acquire visa’s, etc.)
Clarify when support/development occurs during business day
Clarify who pays for equipment/infrastructure at start
Begin reporting progress against plan from week 1
Objective: Enable daily (or hourly) handoff and return of tasks
SAIC
Why
Consider
How
Recap
Offshore mix progression
100%
90%
80%
70%
60%
Onshore
Offshore
50%
40%
30%
20%
10%
0%
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
Division of responsibilities
SAIC
Why
Consider
How
Recap
Process Detail
SAIC
Why
Consider
How
Recap
SAIC
Why
Consider
How
Recap
Risk Assessment Methodology
(critical risk)
R5
R8
Medium
(Probability x Impact)
Risk Magnitude
High
R1
R6
R4
R3
R2
(minimal risk)
Low
R7
Low
Medium
Outside Influence
Within Influence
Manageability
High
Within Control
Governance
• Oversight
– Steering Board – Annual
– Management Committee – Quarterly
– Operations Group – Monthly
• Pricing
– Real competition with internal and external
suppliers
• Agreed Service Level Descriptions
• Measurement
– Key performance indicators (monthly/quarterly)
– Benchmarking
SAIC
Why
Consider
How
Recap
What did you say?
Results Outsourcing Can Create
SAIC
Why
Consider
How
Recap
Assure performance with actions rather than promises.
• Business can adapt, with a focus on growth, competitive
response, new opportunities, etc.
• IT becomes focused on its own business (clarity in
customers and competitors) and therefore, growth,
competitive response, new opportunities, etc.
• Manage to performance goals and mitigate risks (likely
impacts to performance)
• Focus around survival of a business (not a function)
• Flexibility to respond to business needs in any direction
• Assure access to best quality (service meets requirements)
for price
• Variablize costs – pay according to use versus maximizing
consumption of resources
Descargar

Offshore Outsourcing