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OFFSHORE OUTSOURCING
ByBy Marcus MitchellMarcus Mitchell
Christopher ShyChristopher Shy
Joe WillisJoe Willis
Laura ReiterLaura Reiter
Thipsuda ChanlertfaThipsuda Chanlertfa
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OFFSHORE OUTSOURCING
IntroIntroductionduction
CaseCase Study – Cognizant Study – Cognizant
CaseCase Study – DFS Galleria Study – DFS Galleria
ConcConclusionlusion
CaseCase Study – Lincoln Industrial Study – Lincoln Industrial
CaseCase Study – Exult Study – Exult
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OFFSHORE OUTSOURCING
Introduction
• Began in 1970s with U.S. computer manufacturers
hiring technical staff from India for service centers
(initially to save costs).
• India developed skilled base of technologists
(understand wide range of ops systems and service
a variety of hardware).
Reference 1
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OFFSHORE OUTSOURCING
Pros of the Trade
• Cost savings – up to 80 percent
• More resources = attention to core competence,
design and business knowledge
• Offshore needs meet with competence
• Demand for temporary work and consulting met
• On-demand, at short notice, without commitments
Reference 2
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OFFSHORE OUTSOURCING
Cons of the Trade
• Communication due to language/cultural barriers
• Time differentiations
• Technical/skill mismatches
• Quality discrepancies/lack of repeatable process
• Security issues
• Bad management/hierarchical stubborn organizations
Reference 2
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OFFSHORE OUTSOURCING
Not Just India
Meeting growing demands for inexpensive yet
competent programming talent:
• China
• Philippines
• Russia
Reference 3
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Just India
• Most mature here
• Holds 85-90 percent of offshore outsourcing
market today
• Maturity due to government support for past
decades and their continued improvements of the
education system built by the British
Reference 4
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OFFSHORE OUTSOURCING
In 2003: 5% of the US IT services market is operating offshore
300 of Fortune 500 have a relationship with an Indian IT service firm 360,000 US jobs moved offshore $7 billion dollar market
In 2005:15% of US workforce (2 million) will move offshore.$10 billion market
In 2007: $15 billion market
By 2015: 3.3million US jobs and $136 billion in wages will transfer offshore.
Size of Market
Reference 17
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Market Trends
In 2001: Forrester Research found 12% of IT budgets offshore, estimated to be 28% of IT budgets by 2003 (based on interviews with 50 IT executives and survey of 145 IT Directors).
In 2001: Forrester Research found that 44 percent of US firms with more than $1 billion in sales performed IT work offshore, estimated to be 67% by 2003.
In 2003: Deloitte Research found that 33% of Global Financial Institutions already sent IT work offshore.
75% will move work offshore within next 24 months.Reference 18
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OFFSHORE OUTSOURCING
In 2003
Canada
Mexico India
Brazil
EU Russia
Israel China Japan
PhilippinesSingapore
Australia
In 2003: 95% of US Offshore IT sourcing activity istaking place in these nations:
Reference 19
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OFFSHORE OUTSOURCING
Global IT Spending in 2000
Service Line Market Size(US$ Billion)
India ExportRevenues
India’s MarketShare
Custom Application Development
Application Outsourcing
Packaged Software Support
Systems Integration
IT Consulting
Network Management
Total
$18B
$11B
$41B
$72B
$19B
$20B
$181B
$2.5B
$1.7B
$.3B
$.15B
$.05B
$.05B
$4.75B
13.6%
15.8%
.7%
.2%
.3%
.3%
Reference 20
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Scale of Leading Offshore Venues (2001)
Average IT Labor Cost per Year
Estimated # IT employees
China
India
Ireland
Israel
Malaysia
Mexico
$8,952
Philippines
Russia
Estimated #Software companies
$5,880
$34,000
$38,000
$7,200
$1,400
$6,565
$7,500
5,000
900
750
400
1,000
1,000
200,000
415,00
23,000
35,000
290,000
8,000Reference 21
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Thus, Labor Arbitrage is Driving Force,
• More expensive to contract
• Higher transportation costs
• Higher management costs (on site vendor staff
and in-house project management)
• Poor communication
• Cultural differences
• Lapses in technology infrastructure
But labor savings will be offset by
higher transaction costs:
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Offshoring
Offshoring, a key element of Global Sourcing, can yield significant benefits... Thus,
Cost Savings Realized
19%33%
38%10%
0% 10% 20% 30% 40%
0-10%
31-50%
Quality Improvement
27%
41%
25%
7%
23%
38%
39%
0% 10% 20% 30% 40% 50%
Significant Improvement
Some Improvement
Unchanged
Somewhat Decreased 2002
2003
What Drives Offshoring?
94%
51%
63%
32%
92%
41%
41%
32%
0% 20% 40% 60% 80% 100%
Saving Cost
Improving Quality
Accessing Skilled
Resources
Reducing Cycle Time
2002
2003
What Drives Offshoring?
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Offshore Outcomes
Very Effective
Effective (Meeting Goals & Objectives)
Somewhat Effective (Meeting Some Goals and Objectives)
Too Early to TellSurvey by A.T. Kearney,
Respondents asked 100
Financial services
Executives about the
Effectiveness of their
Offshore initiatives
93% of respondents expect offshore
outsourcing to reduce costs
32%
18% 9%
41%
Reference 22
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Offshore Cost Savings
Survey by IBM
Consulting Services,
Respondents asked
percentage of savings
from offshore
outsourcing of IT
services and software
development
US Companies charge $80 to $120 per hour for programmers Offshore providers charge about $40 per hour
More than 50%
Less than 10%
Ten to 30%
Thirty to 50%
40%
42%
9%9%
Reference 23
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Offshore Quality Improvement
Unchanged
Some Improvement
Significant Improvement
Some Decrease
7%
25%27%
41%
Survey by IBM Consulting
Services, Respondents asked
Level of quality change
After offshore outsourcing of
IT services and software
development
Reference 24
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Offshore: The Quality Issue
6973World
Level 5Level 4
4628India
10 (2)Russia
20China
Number of SEI Capability Maturity OrganizationsCountries
Out of the top 400 companies, more than 272 Indian
companies have already acquired ISO 9000 or SEI
level 2 or other equivalent certification
Reference 25
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Offshore: The Quality Issue
6973World
Level 5Level 4
4628India
10 (2)Russia
20China
Number of SEI Capability Maturity OrganizationsCountries
Company: Annual RevenuesTate Consultancy Services $689mWipro Technologies $661.7mInfosys Technologies $413.9mSatyam Computer Services $308.2mCognizant Technology Solutions $177.8
Top 5 Indian Vendors
Reference 26
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IT Activities Moving Offshore
Percentage of Respondents
Application Design
And Development
Application Maintenance
Software Testing
IT Consulting
Legacy Transformation
Application Outsourcing
Contact Centers
Infrastructure Management
Packaged Application
Implementation
Data Integration & Cleansing
Transaction Processing
BPO
Data Centers
0 10 20 30 40 50 60 70
Study of 42 Current Offshore UsersBy Gartner Group
Reference 27
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Most Important Vendor Selection Criteria
Study of 42 Current Offshore UsersBy Gartner Group
0 1 2 3 4 5 6 7
Vendor Maturity
Cost
Quality of Resources
Speed of Delivery
Project Management Capabilities
Business Process Expertise
Certifications
Full Outsourcing Capability
Significant Presence in US
Multivendor Capabilities
Near-shore Capabilities
NotImportant
ExtremelyImportant
Reference 27
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Respondents indicated interest in exploring new business models
Captive Joint Venture Build-Operate-Transfer (BOT)
More complex to set up
Moderate investment
Opportunity to share reward
Local knowledge of the JV partner helpful
Facilities Management
Highest investment
High management commitment
Potentially high risk if no local knowledge
Greatest opportunity to realize value
Potential to insource
Outsourced
Requires robust vendor management
Heavy management focus in the multi-vendor model
Opportunity to employ Best of breed providers
Firm’s own offshore “shared service center. Examples include GE, American Express and HSBC.
An offshore center with joint ownership of the firm and a third party
An offshore center built and operated by a third party for a finite time period after which the ownership transfers to the client firm.
Helpful when a firm wants to retain control but lacks local knowledge
Also appropriate when vendors lack domain experience
Opportunity to realize value as a “captive” facility
An offshore center fully owned by the firm; facilities management (real estate, security, transportation, cafeteria, etc.) provided by a third party .
Helpful when a firm wants to retain control but lacks local knowledge
Also appropriate when vendors lack domain experience
Opportunity to realize full value as a “captive” facility
Popular choice for low-end business processes or contact centers. Could have ttwo or more vendors and multiple countries
“Extended Organization”
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Which US companies are moving IT work offshore?
• British Airways• MasterCard• GE• British Telecom• GM• Ford• American Express• Xerox• World Bank• America Online• Procter & Gamble
Non-IT Companies: IT Companies:
• Accenture• Microsoft• Intel• EDS• IBM
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Leading the Way:
Infosys
Wipro
Cognizant
Today’s Companies
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Current Trends
• Increasing acceptance of value and viability of
using remote programming resources.
• Companies continue to refine their approach to
global sourcing.
Reference 7
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Outsourcing Futures
• Offshore outsourcing will grow.(At least 25 percent in 2003)
• U.S. - based outsourcing and consulting firms will increase offshore resource pools.
(By increasing offshore partners or existing facilities)
• India will continue to dominate.(Indian vendors will look offshore for even cheaper help)
• Indian vendors will continue to move up the value chain.
(By offering architecture, design, development and technology strategy services)Reference 7
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Outsourcing Futures (Continued)
• Business process outsourcing in India will grow
at least 65 percent during 2003.
(Given the cost benefits and early successes of Indian IT-enabled service outsourcing)
• Companies continue to focus on contingency
plans for offshore vendor relationships.
(New processes and workarounds to ensure safety of their clients’ systems in the event of communications
outage or bombing in India)
Reference 7
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Outsourcing Futures (Continued)
• Fortune-class companies will require vendors to
have mature processes in place before they
engage.
(Process maturity equals quality)
• Companies will increase investments with offshore
service providers, even first timers.
(In the past - pilot projects were small; in the future – comfort and confidence will increase initial deals)
Reference 7
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Outsourcing Futures (Continued)
• Companies will put in place centralized program
management offices or governance structures to
manage, monitor or consult on offshore
outsourcing relationships at the corporate level
(Today – companies often have multiple offshore relationships with multiple vendors within
different business units or groups)
Reference 7
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Concepts of the Past 25 Years
The evolution of
the generations
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First Generation:
• SyntelSyntel and TataTata – main suppliers of technical
personnel.
• In the end – minimal cost or value impact.
Staffing
Reference 1
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Second Generation:
• TataTata and WiproWipro – providers
• Totally cost-focused
• Suffered from usability and quality issues
Offshore
Reference 1
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Third Generation:
• CognizantCognizant and InfosysInfosys – Today’s dominant
players.
• Technical-focused with high quality outcomes
and resourcing flexibility.
On–site/Offshore
Reference 1
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Fourth Generation:
On–site/Offshore and Business Transformation
• CognizantCognizant – with its u.s. and European market
base in conjunction with large development
facilities in India; pioneer and definer of the
fourth generation.
Reference 1
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The Fourth Generation:
Transformation
and
Corporate Executives
Reference 5
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Transformation:
Efficient Execution• Requires close partnership-based relationship
between client and service provider
Conceptual Shifts
• Moving from technical to strategic
• Treating vendors as colleagues rather than
contractors
• Outcome focused instead of activity focused
Reference 5
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The Fourth Generation
• Allows corps to focus more on the customer and
doing business vs. the processes that support it
• Dramatically faster flow of knowledge, greater
ease of complex strategic problems, high
motivation achieving more with less
Reference 5
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The Fourth Generation:
Innovative Concept
Companies partner with a single integrated
provider simultaneously allowing:
• Understanding of execution
• Supply solutions
• Guidance through essential change
management process
Reference 5
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A Fourth Generation
Case Study
CognizantCognizant
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Cognizant
Location: Headquartered in Teaneck, New Jersey
Founder: Kumar Mahadeva – chairman and CEO
History: Started as subsidiary of Dun & Bradstreet
to establish a large offshore development
center for the parent company
Reference 5
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Cognizant Figures
As of September 30, 2003:
• 6,168 employees
• 260.1 million in past year’s sales
• 39.6 million in past year’s earnings
• 1.129 billion in market value
Reference 6
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Cognizant
• Based on client relationships guided by value
and shared goals, not rigid, locked contracts.
• Operates as technology partner to client.
• Always been project oriented as opposed to
staffing oriented.
Reference 5
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Cognizant and the Fourth Generation
How does Cognizant provide
its services to its clients?
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Fourth Generation Services
• Vertical industry domain knowledge: (Knowledge of business)
• State-of-the-art technology expertise: (From legacy platforms and major enterprise applications to
Java, .net, and XML services)
• Business transformation core competency:
• Highly disciplined program management and change management competence:
(eliminates hurdles of managing complex offshore developments)
• Organizational agility:
(speed and flexibility to coordinate local and offshore resources)
Reference 5
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A Fourth Generation Model
• Creates ‘community of practice’ that fully
integrates business strategy with it’s execution.
• On site/offshore information technology
outsourcing combined with change management
practices is key.
• Increased speed, quality, productivity are the
outcomes (all with lower costs).
Reference 1
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Cognizant’s Differentiators
• 100 percent end-user application focused
(most others are product and research/development
oriented).
• Focused on working with business end-users with
deep knowledge in key verticals.
• Focused on bottom line business results through IT
portfolios analysis and change management.
Reference 5
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Cognizant Industries
First major offshore company to establish vertical
industry practices through experts who know
competitive challenges that client companies face.
Reference 5
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Vertical Industry Practices
Healthcare
Financial Services
Telecommunications
Manufacturing & Logistics
Media & Publishing
Pharmaceuticals
Insurance
Retail
Sierra Health / Lifeguard / Healthnet
Philidelphia Stock Exchange / First Data Corp
United States Cold Storage / Coors
Nielson Media Research / Dun & Bradstreet
Royal & Sun Alliance / Liberty Mutual / Metlife
Ace Hardware / Radioshack / Brinker Int.
Reference 5
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Some Recent Industry Awards
October 2003
topped forbes’s list of ‘hotshots’
June 2003
8th overall in business weeks’ list of ‘hot growth companies’
April 2003
15th on forbes’s ‘25 fatest growing tech companies’
(ranked by five-year totals)
October 2002
ranked 16th in fatest growing 100 tech companies list published by business 2.0
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Kumar Mahadeva Speaks
“Cognizant is a recognized premium player in the
offshore IT services industry and is growing faster
than its offshore peers because our model is built
for the new world of large scale offshore
outsourcing. through our industry leading fourth
generation servicing model we partner with clients
on a process we call ‘transforming while performing’
to drastically cut IT and business costs, while better
aligning clients’ IT portfolios with business needs.”
Reference 5
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Partners
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CaCase Studyse Study
DFS GalleriaDFS Galleria
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Case Study: DFS Galleria
• Engaged Cognizant Technology Solutions, an
Indian offshore service provider, to provide on-
site support.
• Leading retailer of luxury goods and general
merchandise for international travelers.
• 6,000 + employees & several hundred stores.
Reference 8
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Situation
• Sept 11th; Dramatic slowdown in business.
• Need for accelerated cost reductions.
• Demand for increased speed and quality of IT
services.
Reference 8
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Approach
• Cognizant proposed its “Transformational Offshore
Outsourcing” methodology to achieve large-scale,
radical changes needed.
– Phase 1 – Mid 2000; Cognizant assumed responsibility for on-
site maintenance and enhancements to retailers core
merchandising system.
• Slow and in phases to help manage risk.
• Measured in stages before making long-term commitment.
• Fully up to speed in 6 months; comfortable with operation in
12.
Reference 8
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Approach (Continued)
– Phase 2 – Early 2001; DFS extended India support to
include the second and third shifts.
– Phase 3 – Oct 2001; Cognizant became responsible for
all the application support and new development
activities globally.
– Phase 4 – Early 2002; all financial, human resources and
email systems were added.
Reference 8
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Results
• Overwhelming success: surpassed DFS’s
expectations on quantitative and qualitative
dimensions.
– Significant reduction in application support costs.
– Met all original objectives and delivered other
value-added services.
Reference 8
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Critical Success Factors
• Cooperative culture: Teamwork, strong work ethics
and “can do” attitude.
• Patience: Success takes time.
• Pre-planning: Resources need to be allocated early.
• Vendor responsibility: Qualified, trained, mature
staff must be utilized in a timely fashion.
• Clarity: Roles must be clear with responsibilities
and expectations defined.
• Outside the box: Both parties must think about
advantages beyond cost savings.Reference 8
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CaCase Studyse Study
LincolnLincolnIndustrial, Inc. Industrial, Inc.
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OFFSHORE OUTSOURCING
Part #548447 Handheld Grease Gun
• Most popular of this line
• Annual volume 48,500+
Reference 9
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Scenario
Reference 9
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CaCase Studyse Study
ExultExult
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Exult’s Offshore Outsourcing Plan
• Exult, with the assistance of NeoIT Inc., signed a
deal in early 2003 to move some of its “day-to-day
application maintenance” offshore.
• Exult’s management deemed this a logical step in
their bid to stay competitive in the ever-changing
global economy.
Reference 12
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Background - NeoIT
• NeoIT is the leading offshore advisory and
management firm.
• “Focus exclusively on assisting companies in
maximizing their returns from offshore sourcing
of both IT and business processes on either a
project or enterprise-wide basis.”
Reference 12
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NeoIT
• “Capable of delivering results in the form of cost
savings, improved governance, reductions in
sourcing process time and decreased risks with
offshore supplier partnerships.”
• Essentially, NeoIT focuses on four factors: cost
savings, quality, risk & control.
Reference 12
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OFFSHORE OUTSOURCING
A Perfect Match
• Exult’s VP of Business Model Architecture, Steve
Unterberger, was considering offshore outsourcing
due to three primary factors:
1. Savings- the economic environment overseas can
provide significant cost reductions.
Reference 12
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A Perfect Match (Continued)
2. Skill- By taking application maintenance offshore,
Unterberger believed he could tap into new
sources of expertise.
3. Scale- Access to skilled offshore providers
substantially increases the available resource
base, providing the additional capacity to
accommodate Exult’s Growing business.
Reference 12
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Exult & NeoIT
• Mr. Unterberger made it clear from the beginning
that Exult would be taking a “hands-on” approach.
• “What made the relationship even more effective
was the unique skill set that each party brought to
the table.” – NeoIT
• “Unterberger understood Exult’s business
requirements and drove the decision making
activities, while NeoIT had extensive knowledge of
offshore markets and providers” - NeoITReference 12
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Exult & NeoIT
• “NeoIT’s understanding of the Indian Vendor
environment meant that they knew which buttons to
push to create a positive supplier relationship. After
meeting the providers…I was completely convinced
that both the capabilities and the economics we
needed were there.”- Steve Unterberger
Reference 12
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Exult & NeoIT
• Next, an intense review and due diligence process
by both parties was conducted and the supplier list
was narrowed to the three most qualified candidates.
• Then, NeoIT sent a team of veteran auditors to
perform a detailed assessment of each supplier’s
domain, technical and functional knowledge.
Reference 12
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Evaluation Criteria
• NeoIT used a five step process to assess the
competency of each of the firms. Their evaluation
criteria included:
1. Past Projects
2. People (management of Human Resources.
3. Pricing
4. Performance
5. Platform
Reference 12
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Final Decision
• Based on the previous criteria and the extensive due
diligence performed by both parties, Exult and NeoIT
were able to identify the two most qualified
providers and award the final contracts accordingly.
Reference 12
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Keys to Success
• According to Harding Goodman, Global ASM
Director for Exult, “the exacting vendor process that
NeoIT had helped coordinate began paying dividend
right away. The vendors’ skills and familiarity with
our needs were excellent. They knew exactly where
we were going and how we wanted to get there.”
Reference 12
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OFFSHORE OUTSOURCING
Keys to Success (Continued)
• According to Mr. Goodman: “the keys to a smooth
transition process are communication and
expectations. You need to have a communications
plan in place right from the beginning, and you need
to stick with it…you need to make sure everyone
involved knows your expectations fro time, quality
and other success measurements.”
Reference 12
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OFFSHORE OUTSOURCING
Ongoing Contract Governance & Program Management
• Ongoing management responsibilities were given to
Exult’s Operations group.
• NeoIT’s work was just beginning; they were now
focused on ensuring that the savings negotiated
would be delivered consistently and on schedule.
Reference 12
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OFFSHORE OUTSOURCING
Managing for Continued Success
• NeoIT provides ongoing program management
services to oversee the activities of the offshore
suppliers.
• With the aid of NeoIT’s Project Office tool, the
suppliers, NeoIT staff, and Exult managers have the
ability to: track milestones, allocate resources,
manage service levels, gather feedback, and see
invoicing and payment information.
Reference 12
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Managing for Continued Success (Cont.)
• Project Office generates weekly status reports and
automatically alerts team members whenever
significant events occur – e.g. when performance
falls below service levels.
• In addition, NeoIT has a full-time program director
based in India to monitor work activities, ensure
compliance, and act as an arbitrator if any issue
arise.
Reference 12
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OFFSHORE OUTSOURCING
Offshore Outsourcing Tips
• According to Harding Goodman of Exult, companies
considering working with offshore providers should:
“Create a single, global team. You can’t have one
onshore team and another offshore team. Everyone
has to play in the same sandbox.”
Reference 12
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OFFSHORE OUTSOURCING
Offshore Outsourcing Tips (Continued)
• “Make sure each individual contributor knows what
is expected of the team and how their work fits into
the big picture.” – Harding Goodman, Exult
• Have a local presence. “The advice of counsel and
our NeoIT representatives in India is invaluable. Our
vendors have complete respect for them, but they
also know they are working for Exult.”
Reference 12
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OFFSHORE OUTSOURCING
Results
• Harding Goodman believes strongly that offshore
outsourcing with NeoIT has helped Exult achieve its
goals for savings, skill, and scale:
• Savings: “With the economic model of offshore
outsourcing, we have been able to achieve
somewhat higher savings that we anticipated.”
Reference 12
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OFFSHORE OUTSOURCING
Results (Continued)
• Skill: “One of my managers said this is the best team
of this sort she’s ever had because of the skills of
the individuals.”
• Scalability: “Our offshore vendors have good ‘bench
strength.’ If I need additional skills or people, I can
add them quickly.”
Reference 12
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Update
Reference 16
• Exult finalized its deal with NeoIT in early 2003
and subsequently employed approximately 150
workers at its facility in India. Recently, Exult has
stated that they plan to “increase its workers in
its BPO facility in India to 2,000 by 2005.”
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CoConclusionnclusion
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OFFSHORE OUTSOURCING
Things to Consider before Outsourcing
• Be patient – long term mindset.
• Vendor selection costs 1 to 10% premium.
– Documenting requirements
– Negotiating contracts, legal fees
– Travel expenses
• Transition period
• Cost of layoffs, morale of “survivors”
• Cultural cost, communication
Reference 10
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OFFSHORE OUTSOURCING
Things to Consider before Outsourcing
• Quality assurance testing
• Cost of managing contract offshore
• Security and privacy
• Skills and expertise – talent match project
• Country stability
• Certification – CMMI (Capabilities Maturity Model
Integration)
Reference 10
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OFFSHORE OUTSOURCING
The Latest Trends
• Multi-sourcing – Multiple service providers in different countries; search for best skills for best price.
• Reshuffling Skills – Rebalancing mix of in-house skills with managerial experience and business process knowledge.– IT Architects – which technologies to adopt– Contracting, negotiation, financial & accounting
• Offshore Handoffs – outsourcers are outsourcing
• Large savings currently– However, demand will drive up global labor costs.– Negotiations for extended long-terms contracts.
Reference 11
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OFFSHORE OUTSOURCING
Offshore Outsourcing Benefits
• Cost Savings
• Increased Productivity
• Time to Market
• Access to Expertise and Skills
• 24/7 Operation
• Higher Software Quality
• Make capital funds available-Cash infusion
• Sharing of risks
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OFFSHORE OUTSOURCING
Offshore Outsourcing Costs
• Unclear objectives and design requirements
• Lack of Control
• Time zone differences
• Language barriers
• Domestic layoffs
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OFFSHORE OUTSOURCING
Backlash/Controversy
• There are numerous proponents for offshore
outsourcing and numerous opponents who believe
offshore outsourcing is simply a low-cost, low-
quality alternative to keeping jobs in the U.S.
Reference 14
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OFFSHORE OUTSOURCING
Opponents
• In recent years there have been a number of people
who have called for legislation that would limit the
ability of U.S. companies to move IT jobs offshore.
• Many people who oppose offshore outsourcing are,
in fact, workers who have been outplaced by the
practice.
• Other negative factors that opponents cite include
downward pressure on salaries in the IT industry
and the potential for a “reverse brain drain,” where
highly skilled IT workers choose to work in countries
other than the U.S.Reference 15
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Government Action?
• Recently, the Bush administration has stated that
they have “no plans to impede companies efforts to
move IT jobs to India or anywhere else.
• Thus, the government has decided that it will not, at
any time in the near future, enact any sort of
legislation that would hinder offshore outsourcing.
Reference 15
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OFFSHORE OUTSOURCING
Proponents
• Many of those in favor believe that they can in fact
get better quality in shorter times at a lower cost by
going offshore.
• The majority, whether they agree with the previous
statement or not, believe that they can attain at least
a level of quality consistent with what they have in
the U.S., at a lower cost.
Reference 14
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OFFSHORE OUTSOURCING
Proponents (Continued)
• Essentially, it comes down to a competitive
advantage decision for these global companies.
• As Kevin Campbell, COO of Exult states: “…if I
thought I could clobber all my [competitors] here by
just staying put in the U.S. and outsourcing work
here, why wouldn’t I do that? I am not doing that,
because that [scenario] does not exist”
Reference 13
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OFFSHORE OUTSOURCING
Proponents (Continued)
• Again, global companies see it as a crucial element
to staying competitive in the global market place.
• Some executives, such as Gordon Coburn senior VP
and CFO of Cognizant, believe that not making the
decision to outsource offshore will eventually cost
more jobs because companies will “not be able to
survive , because they won’t be price-competitive.”
Reference 13
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OFFSHORE OUTSOURCING
Sink or Swim?
• Ultimately, after hearing both sides of the argument,
it becomes clear that the executives that are in favor
of offshore outsourcing believe that it is a necessity
in order to stay competitive.
• Essentially, global companies must “evolve or
perish.”
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References
1. “Tech Vendor Cognizant Harnesses the Force of Y6” by Cliff Shaffram, The Bottom Line represented from South China Morning Post Sunday Money – Oct 27,02
2. www.gislen.com/services/why_outsourcing.htm by Mirael Gislen and M.C.Abruham3. “Offshore Outsourcing grows to global properties” by Lassy Greenemeies 2/11/024. “More and More Its Offshore” by Jim Erricson Oct 11,2002 Line 565. www.cognizant.com6. “Healthcare Informatics 100”7. “IT Trends 2003: Offshore Outsourcing” by Stephanic Moose-Idea Byte Oct 21, 20028. www.gartnerconnects.com on10.08.039. Interview: Tom Johnson, Plant Manager on 11.12.0310. www.web.lexis-nexis.com, www.proquest.umi.com on 10.23.0311. Copyright 2003 “PR Newswire Association, Inc.”12. Copyright 2003 “NeoIT, Inc.”13. Copyright 2003 “Living Media India, Ltd.”14. Copyright 2003 “CMP Media, LLC” Information Week15. Copyright 2003 “Computerworld, Inc.”16. Copyright 2003 “Financial Times Information”17. Carmel, E., and Agarwal, R., “The Maturation of Offshore Sourcing of Information Technology,” MIS
Quarterly Executive, Vol. 1, 2, pp. 65-77.Greenemeier, L., “Offshore Outsourcing Grows to Global Proportions,” InformationWeek, Feb 11, 2002 Morstead, S., and Blout, Greg, Offshore Ready, Isani Press, 2003.Vijayan, J., “Companies Expected to Boost Offshore Outsourcing,” ComputerWorld, Feb 17, 2003.
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References
18. Rosenthal, B., “Deloitte Study Discovers 75% of Global Financial Institutions Pan to Outsource Offshore,”Everest Partners, L.P., Dallas Texas, June, 2003 Morstead, S., and Blout, Greg, Offshore Ready, Isani Press, 2003.
19. Carmel, E., and Agarwal, R., “The Maturation of Offshore Sourcing of Information Technology,” MIS Quarterly Executive, Vol. 1, 2, pp. 65-77.
20. NASSCOM, McKinsey Report, 200221. Morstead, S., and Blout, Greg, Offshore Ready, Isani Press, 2003.22. MacSweeney, G., “Offshore Can Improve Quality,” Insurance and Technology, July 2003, Vol. 28, 7, p.39.23. Thibodeau, P., “Offshore’s Rise is Relentless, ComputerWorld, Vol. 37, 25, June 30, 2003, p. 1, 16.
McCarthy, Kack, “Redefining Offshore Outsourcing,” InfoWorld, December 2, 2002, Vol. 24, 28, p. 56.24. McCarthy, Kack, “Redefining Offshore Outsourcing,” InfoWorld, December 2, 2002, Vol. 24, 28, p. 56.25. Auriga.com, Carnegie Mellon University, Software Engineering Institute (SEI), May 2002
http://www.sei.cmu.edu/cmm/high-maturity/HighMatOrgs.pdf26. Greenemeier, L., “Offshore Outsourcing Grows to Global Proportions,” InformationWeek, Feb 11, 200227. Weiss, P., “Behind the Numbers: Offshore Outsourcing’s Cost Effective Edge, InformationWeek, Nov 25,
2002, Vol. 916, p. 66.