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The Official Magazine of the International Association of Outsourcing Professionals
GlobalizationToday February 2012
Conquering the Summit Transforming your business at the 2012 OWS Tips to get most out of the summit Page 16
Also in this issue: Protecting the privacy of information By Jagdish Dalal. Page 22 What Kind of Transformation Does Cloud Bring? By Leslie Willcocks, Will Venters and Edgar Whitley Page 26 Is “Outsouring” Hurting the US Economy? By Thom Mead. Page 34 Global Sourcing – Tryst with Growth By Bobby Varanasi. Page 38
INSIDE February 2012
7 PUBLISHER’S NOTE 8 NEWS FEED
What’s new and noteworthy in global commerce.
34 IS “OUTSOURCING” HURTING US ECONOMY?
CONQUERING THE SUMMIT
Transforming your business at the 2012 OWS. Tips and an insider’s guide to get most out of the event. By Sandy Frinton.
By Thom Mead, Firstsource
It seems the time has come again, as it does about every 4 years, when politicians feel the need to throw a dark shadow over “Outsourcing” as the economic equivalent to the bubonic plague.
38 GLOBAL SOURCING
Tryst with Growth by Bobby Varanasi, Matryzel.
42 IAOP WORLD CONNECTION 46 SCRAPBOOK
CLOUD AS TECHNOLOGY
Leslie Willcocks, Will Venters and Edgar A. Whitley share their findings of a big research
PROTECTING THE PRIVACY OF INFORMATION
IAOP’s managing director thought leadership Jagdish Dalal shares 4P’s of Privacy Protection globalizationtoday.com
Sourcing Best Practices - building strong strategic relationships
ITSqc and their eSourcing Capability Models have been selected as the basis for economic development programs in Latin America by the Inter-American Development Bank (IDB) and ProExport Colombia, and as the basis for organizational certification by the International Association of Outsourcing Professionals (IAOP). The eSourcing Capability Models were developed with participation from leading provider, client, and advisory organizations. ITSqc and its partner Authorized Organizations provide globally:
• Professional Education Courses on the Models and their use • Client and Service Provider Organization Certifications • Improvement and Self-Appraisal Consulting
ITSqc series in association with IAOP
eSourcing Capability Model for Service Providers (eSCM-SP) ISBN: 978-90-8753-561-2
eSourcing Capability Model for Client Organizations (eSCM-CL) ISBN: 978-90-8753-559-9
Elaine B. Hyder, Keith M. Heston, Mark C. Paulk, and Bill Hefley
Bill Hefley and Ethel A. Loesche
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EDITORIAL and PRODUCTION
Get Listed in Globalization Today’s Buyer’s Guide All Globalization Today subscribers have complete access to our Buyer’s Guides that allow them to quickly find and purchase outsourcing and offshoring related products and services. Globalization Today offers a free basic listing to providers in the following categories: • Information Technology • Internet & Web • Consulting • Business Process • Human Resources • Art & Design • Medical & Billing • Printing & Publishing • Writing & Editing • Engineering & Architecture • Finance • Virtual Assistantship
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EDITORIAL ADVISORY BOARD Dr. Bruce Greenwald Prof. Asset Management and Finance Columbia Business School Dr. Matt Waller Prof. Marketing and Logistics University of Arkansas Dr. John Hindle Sr. Manager - Accenture, Adjunct Prof Vanderbilt University Mike Corbett Chairman - International Association of Outsourcing Professionals Matt Shocklee CEO & President - Global Sourcing Optimization Services Arijit Sengupta CEO of BeyondCore, Inc Chair of the Cloud Computing Chapter of IAOP
Address: 6501 E. Greenway Pkwy., Ste 103-494 Scottsdale, AZ, 85254, USA Phone: 1-602-492-4194
IAOP congratulates the 2012 “Global Outsourcing 100” and “World’s Best Outsourcing Advisors” AbsolutData Accenture Aditya Birla
Minacs ADP Advanced Technology Services Aegis Altisource Amdocs ®
Aon Hewitt AppLabs Artezio Auriga Birlasoft Bleum Capgemini Cassidy Turley CBRE Ceridian CGI Group ChinaSoft International Ci&T CIeNET
International Colliers Global Corporate Solutions Compass Group Concentrix Convergys Cross-Tab Marketing Services CrysTelCall CSC DATROSE Diebold Integrated Services Donlen Donnelley Global Outsourcing EMCOR Group Emerio GlobeSoft emids Technologies Endava EPAM Systems First Line Software Firstsource Freeborders Genpact Getronics Workspace Alliance Grupo Prominente
Harbinger Systems HCL Technologies Hexaware Technologies HGS hiSoft
Technology International HP Enterprise Services iGATE Patni Indecomm Global Services Infosys Infotech Enterprises Insigma Inspur Intetics ISS ITC Infotech Itransition Johnson Controls Jones Lang LaSalle Kelly Outsourcing and Consulting Group LeasePlan USA LegalBase Lionbridge Long View Systems Luxoft Nagarro National Medical Billing Services NCR Neoris Neusoft Newmark Knight Frank NIIT Technologies Océ Business Services PCCW Solutions Pitney Bowes Management Services ReSource Pro Scicom Sodexo SoftServe Softtek SPi Global Sutherland Global Services Syntel Synygy TEAM
The 2012 rankings will
International TeleTech TIVIT Towers Watson transcosmos
be announced in a special
Unisys VanceInfo Williams Lea Wipro Technologies WNS
advertising feature in the
Global Services Xceed Xchanging Zensar Technologies
World’s Best Outsourcing Advisors
July 23 Global 500 issue of FORTUNE® magazine.
Alsbridge Archstone Consulting / The Hackett Group Avasant Baker & McKenzie Booz & Company Deloitte DLA Piper
Elix-IRR Ernst & Young
Hunton & Williams Kirkland & Ellis KPMG Mayer Brown Morrison & Foerster PA Consulting Group Pace Harmon Pillsbury Winthrop Shaw Pittman PwC Quint Wellington Redwood Zinnov Management Consulting IAOP Founding and Corporate Members (as of print date) are in bold.
For more information on the program, visit www.IAOP.org/GO100.
Founder and Publisher
In his January 28th New York Times opinion column, Thomas Friedman says “CEO’s rarely talk about “outsourcing” these days. Their world is now so integrated that there is no “out” and no “in” anymore. In their businesses, every product and many services now are imagined, designed, marketed and built through global supply chains that seek to access the best quality talent at the lowest cost, wherever it exists. They see more and more of their products today as “Made in the World” not “Made in America.”” You may not agree with everything Mr. Friedman proposes but I believe his assessment about how CEO’s see the world is spot on. What does it really mean when a product says “Made in _fill_in_ country_name_” nowadays when the parts are sourced globally? The whole notion of importing/exporting is losing its meaning. When it comes to services, you see the same pattern. The R&D department is in one place, development is located somewhere else and service is delivered yet another country/region. For executives and directors who are tasked with growing their businesses under fierce pressure by their competitors, the rules of the game are constantly changing. There is no safe place, no status quo. Actually oftentimes status quo means you are losing the game. These executives and directors have to re-invent their business over and over to keep up and the only way to do that is to unlearn old ways and learn new ways. Okay – I am little biased as the publisher of IAOP’s official publication but just looking at the 2012 Outsourcing World Summit program, we are truly lucky that we have IAOP’s annual summit. You get a chance to get together with colleagues from other companies, regions and maybe more importantly from the other side of the table. It’s like a mini-MBA on steroids. Here is a sample of the topics that will be discussed that further validates the point Thomas Friedman makes: • Building a Strong Global Sourcing Ecosystem: A Panel Discussion (How can buyers develop a strategy that will endure the constant changes in the sourcing environment?) • The Road to Partnership (Lessons learned from the Vodafone/Ericsson partnership after 5 years) • Moving Beyond Transaction into Knowledge-Based Activities • Global Delivery Model Strategy (perspective on overcoming internal challenges) • Outsourcing Tools, Technology and Models: From the Cloud and Beyond • And more... I am looking forward to seeing you in person in Florida! Don’t hesitate to stop by and say hi… I’ll be around.
Founder and Publisher Globalization Today Magazine “Official Publication of IAOP” www.GlobalizationToday.com 1-602-492-4194 globalizationtoday.com
WHAT YOU NEED TO KNOW IN THE WORLD OF OUTSOURCING
INDIA INC TO OBAMA: WE ARE CREATING JOBS IN US, EUROPE www.economictimes.indiatimes.com
With HCL Technologies announcing 10,000 jobs for locals in the US and Europe, India Inc chose the WEF meet to send a strong message that Indian IT firms are creating and not stealing jobs in troubled western economies. Also, a message emerged from British Prime Minister David Cameron’s advice to the European Union (EU) that instead of being a threat, the emerging economies like India can be of great help to Europe. Concluding a Free Trade Agreement (FTA) with India by the year-end would be in Europe’s interest, he said. “We need to have a check-list to tackle the euro crisis. There has to be FTAs, bilateral trade agreements and EU trade agreements with countries like India and Singapore, among others by the end of the year,” he said. His plain-speak to Brussels (EU headquarters) comes against delay in trade-opening pact with India. Barely a day after President Barack Obama hit out against outsourcing, HCL Technologies’ Vice Chairman Vineet Nayar made a major announcement here that his company would create 10,000 locals jobs in the US and Europe in the next five years. “Companies in today’s world of globalisation need to create jobs wherever they go. We have taken a pioneering step.”, he said. Wipro chief Azim Premji, known for his frank talk, said the issue of outsourcing is “getting hyped up since elections are coming up... The US has become over-sensitive on jobs”. Chairman of Mahindra Satyam Vineet Nayyar hinted at creating jobs in the western economies
GlobalizationToday February 2012
from where they get bulk of business. “Indian firms when they go overseas will have to create jobs there. We will certainly do so,” he said. German Chancellor Angela Merkel also wanted investment in Europe to create employment. Obama in his State of the Union address had hit out at outsourcing. “No American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here,” he had said. Amid economic uncertainties and rising unemployment in the western world, the focus is on generation of jobs. On Wednesday, Citigroup chief Vikram
Pandit had said that job-creation was the single biggest issue, both in developed and developing markets. According to him, 400 million new jobs could be needed to be generated in next 10 years. Indian IT industry, which rakes in about USD 60 billion revenues from overseas markets, depends significantly on outsourcing of business processes of the Western companies. Painting a pessimistic outlook, the International Labour Organisation earlier this week had said that urgent attention is needed to create 600 million new jobs in the next 10 years. “Despite strenuous government efforts, the jobs crisis continues unabated, with one in three workers worldwide, or an estimated 1.1 billion people, either unemployed or living in poverty,” ILO said
EUROPEAN CRISIS- CATALYST IN DRIVING OFFSHORING www.economictimes.indiatimes.com
The European crisis is acting as a catalyst in driving offshoring from a region that has traditionally preferred onshore IT services. The strong Europe revenue numbers and client additions of Indian IT majors in recent times indicate that clients are viewing offshoring as a cost and efficiency lever. In calendar year 2011, top-tier IT companies grew their Europe revenues between 23% and 40%. In the just completed Oct-Dec quarter, they posted strong sequential growth in Europe, with Infosys growing at 17%, TCS at 19% and HCL at 6.3%. Europe also saw a larger share of multi-million dollar deals being signed than the US. Infosys added 14 new clients in Europe of which two were in the $500-million bracket and these were the largest deals the company won in the quarter. TCS won 10 large deals in the quarter that included four from Europe, three from the US, and two from Asia-Pacific. HCL won 18 large deals worth $1 billion, in which Europe led the list in terms of value. Europe accounts for about 20-30 % of Indian IT’s revenues, but a large portion of this comes from the UK. In Continental Europe, led by Germany ($44 billion in IT spends) and France ($37 billion), Indian IT has just a single-digit market share of IT spends. Other large but under-penetrated markets include Spain, Italy and the Nordic regions. There are other factors too that explain Indian IT’s improved performance in Europe. Anil Chanana, CFO at HCL Technologies, said Indian IT has developed capabilities both organically and inorganically to take on large and complex projects. European IT spends are skewed towards higher-margin, project based services such as system integration. There are also emerging opportunities in ‘run the business services’. Cognizant CFO Gordon Coburn said, “One of the things we are seeing as part of the current economic cycle, even in places like France and Germany, is that clients are beginning to openly address the issue of lowering their cost by moving application management services to the global
delivery model.” Indian vendors have also made huge investments in Europe in the past couple of years and have appointed country heads recruited locally. Sanjay Vishwanathan, CEO of Sonata Software, said the growing success of the global delivery model, as well as service lines like remote infrastructure and cloud, are helping the cause of offshorers. Indian IT companies also have near shore centres in Europe in countries like Hungary, Poland, Portugal and Romania. A Deutsche Bank study with 55 major IT decision makers in Europe found that TCS and Wipro were the most favoured vendors. TCS has a greater revenue exposure to Germany and France, which gives it an advantage in this market. Wipro offers the best near shore delivery alternatives and has recently made some key strategic acquisitions. Infosys is said to offer high-end services
on par with European and American counterparts, but is not very flexible when negotiating commercial terms. HCL’s acquisition of Axon and strong infrastructure management capabilities has enabled it to win key deals in Europe but is still not viewed as a tier-1 player. However Infosys CEO S D Shibulal cautions that despite adding 120 European clients in the last nine months, he would wait for a couple of quarters more to say confidently that the European uptick is a secular trend. There is also the danger of Europe falling into a deep recession which might lead to cuts in IT spends. Clients view offshoring as a cost and efficiency lever. In 2011, top-tier IT cos grew Europe revenues between 23% and 40% In Q3FY12, they posted strong sequential growth.
Strategic Sourcing | Technology Optimization | Globalization Advisory Learn more on www.avasant.com
VODAFONE AND TELEPERFORMANCE ANNOUNCE STRATEGIC PARTNERSHIP www.globalservicesmedia.com
Vodafone and Teleperformance, a UK leader in outsourced customer services, have announced a new strategic partnership which will see Teleperformance taking on some of the work currently managed at Vodafone’s Newark contact centre. This new partnership will see the transfer of 207 roles in three of Vodafone’s specialist operations team to Teleperformance. This will mean continuous employment for these individuals with the same terms and conditions. Teleperformance has been chosen for their experience and expertise as a leader in the provision of customer services in the business sector. The partnership underlines the importance of Vodafone’s operations in Newark and our commitment to provide the best service for all business customers. Alistair Niederer, CEO of Teleperformance said: “This will be a true collaboration with Vodafone and the partnership will ensure a great future for the Newark contact
GlobalizationToday February 2012
centre and the services we can provide for business customers. We look forward to
welcoming our new colleagues over the coming months.”
IT OUTSOURCING DEALS WORTH $1B IN LIMBO www.business-standard.com
The fate of over a billion dollars worth of information technology (IT) outsourcing contracts is in a limbo after on Thursday’s Supreme Court verdict cancelling 122 licences of telecom firms. For, the order comes at a time when both Indian and multi-national IT firms like Wipro, Tech Mahindra and IBM, besides business process firms such as Firstsource, Intelenet and Aegis, have signed multimillion dollar deals with telecom firms including Uninor, Etisalat DB, Videocon and Idea. For instance, Wipro had signed an estimated $500-600 million outsourcing deal with Uninor in 2009. Similarly, Tech Mahindra had signed an outsourcing deal from Etisalat, with a revenue estimate of $400-500M. MNC firm IBM, which has a $1B outsourcing deal with Bharti-Airtel, had also bagged a $200M deal from Videocon-led Datacom Solutions. An email to IBM and Wipro did not elicit any response. Tech Deals (Deal Value $mn) Wipro-Uninor 500-600 Tech Mahindra-Etisalat 400-500 IBM-Videocon 200 IBM-Idea 800 Wipro-Aircel NA Several Indian, MNC IT firms, BPOs have inked multi-million dollar deals. These deals were signed during 2009-10, when the telecom vendor segment was much more mature. Experts are of the view that barring a few contracts, the entire ecosystem — both IT vendors and tower companies — will be negatively impacted, unless the situation changes for good in the next two to four months. Tech Mahindra, when contacted, said it was aware of the matter and were “closely monitoring” the development. “At this point in time, we would not be able to offer any comment. Further, as a policy, we do not comment on any details pertaining to client-specific engagements,”it said. Tech Mahindra had won deals from Etisalat and Sistema Shyam. An estimated 500 employees manage the Etisalat deal at
Tech Mahindra. “The verdict will have a domino effect on both vendors and suppliers,” according to Kamlesh Bhatia, Research Director, Gartner. “The only way IT vendors can mitigate a large-scale impact is if the contract had factored in some market risk. Even then, there will be an impact.” Bhatia says these deals were signed during 2009-10, when the telecom vendor segment was much more mature. “Most of these contracts would be structured as partnerships with revenue related to the milestones achieved by the telecom vendors. Many would even incorporate a situation where the company might wind up operations. Some might also have asked for an upfront capital investment from the telcos, which might buffer the vendors. But even then, there will be considerable impact,” he notes. Firstsource that provides services to telcos like Airtel, Idea and Vodafone says the BPO firm does work with a few telecom players in India. Yet, “the circle that we work have not been impacted by the Supreme Court verdict. There is only one circle where one of our customer
has been impacted. But that will have a marginal impact on us.” The company’s telecom unit employs close to 12,000 people. Jaideep Ghosh, partner, KPMG, believes that barring a few contracts, the entire ecosystem —both IT vendors and tower companies — will be negatively impacted, unless the situation changes for good in the next two to four months. “All the contracts would have an element of risk and payment. But keeping the current situation in mind, many might have to be renegotiated,” he adds. Aegis says it cannot comment on individual clients. “The overall impact of today’s judgement will be very minimal, amounting to under one per cent of our domestic business,” according to the spokesperson of the Essar Group technology and BPO arm, when contacted. The court has asked the government to take steps within a month on the recommendations given by the telecom regulator, saying spectrum would be allocated through auctions within four months. This time-frame, experts say, will be lend a “breathing space” to the operators to act on the order.
HOW WELL DO YOU KNOW YOUR OUTSOURCING SERVICE PROVIDERS? www.globalservicesmedia.com
A new mobile app for iPhone and iPad called ‘GlobalSourcer’ breaks barriers by offering information about outsourcing service providers in ITO and BPO sectors to the public. A new mobile app called “GlobalSourcer” has hit the Apple Stores. The App facilitates knowledge sharing about outsourcing service providers and acts as a direct link between the buyers and providers within the global sourcing ecosystem. The App thus breaks the monopoly of the leading analyst and sourcing advisory firms and brings down the cost of advice. Typically, a customer looking towards India for service providers approach outsourcing advisory firms for advice on selecting the most suitable provider that best fits their organizational needs. The advisory firms provide them with insights on the service providers for a premium based on the data they hold, which is normally inaccessible to the buyer. Buyers also tend to be billed heavily for running the provider selection process and the deal itself. So, it is an over kill for the buyers. The app, aptly named ‘GlobalSourcer’ for its focus on global sourcing industry, breaks this hold by making information about service providers in sectors like ITO, BPO, etc open to the buyers and the public. With an intuitive interface, insightful infographics and up-to-date information it is priced modestly at $19.99. This is also one of the first true enterprise apps sold on the App Store. The app is being hailed as a revolution in the global sourcing space as typically global sourcing knowledge is not normally transparent or well understood. The sensitive information, decisive in nature, which the advisory and analyst firms hold onto, is being opened up to the decision makers through this simple app. The app was designed by [x]cubeLabs for Headstream Advisory based in Hyderabad. Commenting on the announcement, Managing Director and founder Sashikant Kakara, stated, “In the current highly volatile economy, the key traps for any outsourcing buyer is a lack
GlobalizationToday February 2012
of in-depth analysis of service provider domain expertise and a clear methodology to distinguish service providers. This app fills the gap and reshapes the way customers perceive the providers. On the other hand, for service providers, the app
is a new channel and platform to optimize their brand presence and gain traction in new geographies and verticals. Clearly, it is a win-win situation for the Indian Service Providers and the outsourcing customers.”
IBM COMPLETES ACQUISITION OF EMPTORIS TO EXPAND SMARTER COMMERCE INITIATIVE www.globalservicesmedia.com
IBM announced it has completed its acquisition of Emptoris Inc. The acquisition expands IBM’s cloud-based analytics offerings that provide supply chain intelligence leading to better inventory management and cost efficiencies. Emptoris solutions bring more intelligence to procurement and supply chain operations with spend, supplier and contract management for Smarter Commerce. Smarter Commerce helps organizations that are struggling to meet the demands of a rapidly changing market. The acceleration in online connectivity and speed, combined with the explosion of information and unprecedented access to it, is reshaping globally interconnected commerce systems. This new digital marketplace requires companies to respond rapidly to customer demands by automating their buying, marketing, selling and service processes. “Developing the right procurement strategy and an adaptive supply chain are
keys to achieving the business objectives of Smarter Commerce,” said Craig Hayman, general manager, IBM Industry Solutions. “Together, Emptoris and IBM’s integrated solutions will transform how clients manage compliance and mitigate supply risk.”
With this acquisition, IBM builds on its capabilities in the procurement aspect of Smarter Commerce and extends it to a new line of c-suite executives – chief procurement officers. Procurement and sourcing professionals increasingly need better supplier
management, spend analysis and contract management solutions to lower sourcing costs and risks. Emptoris is a leader in delivering these benefits by automating vendor selection, negotiation, management and compliance. Emptoris’ solutions complement multiple IBM offerings. They supplement the existing B2B integration and supply chain management capabilities IBM acquired through the purchase of Sterling Commerce in 2010. They also complement IBM’s Supply Chain Management (SCM) Business Process Outsourcing (BPO) capabilities, a services offering available to clients through IBM Global Process Services (GPS). Emptoris technology combined with IBM GPS BPO capabilities help accelerate cost savings and speed to benefit. With the closing of this acquisition, approximately 725 Emptoris employees will join IBM’s software group, which is a key driver of growth and profitability for the company.
ACCENTURE: CONTEXT-BASED SERVICES SET TO EMERGE IN 2012 www.computing.co.uk
Businesses are now able to derive new revenue streams from context-based services, in which real-world and digital data are reconciled in order to provide new services and value to existing or potential customers. Gavin Michael, Accenture’s chief technology innovation officer, who spearheaded the report, explained that the trend is already seeing traction within some enterprises: “CIOs and other IT leaders who have started to leverage contextual data to build a deeper understanding of consumer preferences and habits are establishing themselves as strategic players within their companies. “They are teaming up more effectively with functions such as sales and marketing, and leveraging contextual services to drive new revenue and deliver more value for their businesses.” One example given by Accenture of
how context-based services might create new business opportunities is a travel company that scans Twitter accounts in search of mentions about upcoming trips. It then informs hotels located in the communities where the traveler is headed.
The hotel can contact the traveler with discounted rates. Another trend highlighted in the report is converging data architectures in which the challenge of big data will be not only the rising volume but also the need to develop new data architectures for handling both
structured and unstructured information effectively. Other trends include industrialized data services, which sees data being decoupled from applications and no longer owned by a single business; and social-driven IT, where social media is no longer just a “bolt-on” marketing channel for organizations, but a catalyst that will change the ways customers, employees and partners use technology to interact. This is in addition to the trends of PaaS-enabled agility, in which PaaS [Platform-as-a-Service] providers will increasingly offer the additional components of reusable business services, integration capabilities and extension capabilities; and orchestrated analytical security, in which companies are more connected than ever, through the web, mobile technologies and partnerships.
TCS INAUGURATES SILICON VALLEY CUSTOMER COLLABORATION CENTER IN CALIFORNIA www.globalservicesmedia.com
Tata Consultancy Services (TCS), a IT services, consulting and business solutions firm, today announced the official opening of its Silicon Valley Customer Collaboration Center in Santa Clara, California. Located in the heart of Silicon Valley, the Global HQ for its Mobility Solutions Unit and Next Gen Solutions Unit is a collaboration center and is designed to provide an open, innovative and collaborative workspace that adopts the entrepreneurial spirit and best practices employed by the world’s leading startup companies in the Valley. The center will serve as the worldwide headquarters of TCS’ Mobility Solutions Unit, which aims to bring the benefits of emerging technologies like big data, analytics and mobility to enterprises across all industries. The center will serve as the base for TCS’ Next Gen Solutions Unit, which applies the latest advances in software technology to real-world business problems that customers may face. This center features several innovative collaborative work place features designed to enable effective collaboration between TCS and its customers from around the world on leading-edge technologies. “Silicon Valley is a perfect place for this new TCS customer collaboration center, given the match between the innovative and entrepreneurial spirit of TCS and that of the
Valley,” said N. Chandrasekaran, TCS’ Chief Executive Officer and Managing Director. “The convergence of the innovation in the Valley with the highly scalable, high quality and cost-effective engineering strength of TCS will help jumpstart the powerful new phenomenon of the democratization of innovation.” “TCS’s decision to choose Silicon Valley as the global headquarters for its Mobility Solutions and Next Gen Solutions Unit is a significant contribution to California’s innovative economy,” said Deputy Director at the California Governor’s Office of Business and Economic Development, Brook Taylor. “California is the global leader in high-tech employment and our
RECENT OUTSOURCING DEALS www.outsourcing-center.com The U.S. Navy has awarded CSC a task order to instruct naval aviation simulator training programs as part of its ongoing national defense mission. With an estimated $60 million total value, the task order, awarded during CSC’s fiscal 2012 third quarter, has a one-year base period and four one-year options. The Basque Regional Government has selected Accenture to develop a strategic cost transformation program for the Department of Internal Affairs responsible
GlobalizationToday February 2012
for policing and public safety. Accenture will provide management consulting services to drive rapid cost reduction and operational efficiencies across the department’s fleet management activities. CGI Federal Inc.(CGI), a whollyowned U.S. operating subsidiary of CGI Group Inc. has been selected by the U.S. General Services Administration (GSA) for its five-year, US$20.76 million cloud modernization project led by the Office of Citizen Services and Innovative Technologies (OCSIT).
office looks forward to working closely with TCS as they create valuable job opportunities for our citizens.” The launch of the new TCS collaboration center was attended by local officials including US Congressman Mike Honda and over 65 customers from the USA, Canada and Europe. The Santa Clara center is the latest addition to TCS’ growing operations across North America where it has been operating since 1979 when it established its first office in New York City. TCS now has more than twenty offices across the region including four development centers and centers of excellence creating winning solutions that provide its North-American customers with a competitive edge in the marketplace.
BLOG BEAT NEWS AND COMMENTARY FROM BLOGGERS AROUND THE WORLD
COGNIZANT GRANT AIMS TO IMPROVE ENGINEERING AND MATH EDUCATION IN THE U.S. by Marissa Alemany
Cognizant is doing good and doing well. The technology consultancy wants to stem the tide of slowly degrading technical education in the U.S. It has just made a $1 million grant over three years to bolster the technology and engineering portions of STEM (science, technology, engineering and math) education. Specifically, Cognizant’s grant will help Boston’s Museum of Science create a library of video training tools for the Museum’s Engineering is Elementary program and allow the New York Hall of Science to build a “Maker Space” for hands-on learning. Cognizant saw three broad issues in elementary education, according to Mark Greenlaw, vice president, sustainability and educational affairs. 1. American kids are falling behind relative to other countries in both science and math, based on results from international tests. “We are below the median for 15-year-olds,” he reports. 2. There has been a decline in interest in STEM education. “A lot of kids feel it’s too geeky,” Greenlaw says. Many kids are overlooking STEM careers. The problem: “Because our kids lack interest in STEM, the U.S. faces a potential innovation crisis,” worries the Cognizant executive. 3. There’s a drop in measurable creativity, according to the Torrance Tests of Creative Thinking. This worries me the most,” says Greenlaw. Cognizant has a history of making a difference. It currently has 20,000 volunteers working in public schools in India. The service provider has funded libraries and computer labs there. It even supplies lunches to hungry Indian children. “We are a U.S.-based company and felt we wanted to do more here in the US,” Greenlaw says. (Cognizant is based in Teaneck, N.J.) Of course, educating American children also helps the supplier “by improving our future talent pool.” The Engineering is Elementary program provides basic engineering education for elementary school
children from kindergarten to fifth grade nationwide. The 20unit program is designed to create engaging hands-on activities to spark children’s understanding of engineering. Greenlaw says 32,000 teachers from coast-to-coast have used portions of its curriculum with over 2 million students since it was introduced in 2003. An example: kids read a story about a child in Africa that can’t stop coughing because his mother cooks his food over a fire inside their hut. They have to: • Understand the problem • Brainstorm solutions • Select one solution from the options • Implement the solution In this situation, the kids decide they need to build a solar oven – and then design and build it in the classroom. “The program encourages creativity, collaboration and communication. We want people who have those abilities,” says Greenlaw. The second beneficiary is the New York Hall of Science in Queens. The money will allow the museum to build a “Maker Space” where kids can make electronic gadgets, robots, software programs, or technology-enhanced clothing. “It’s an area where students and teachers can do hands-on projects that involve technology,” Greenlaw explains. Finally, Cognizant is donating $500,000 a year to Citizens Schools to extend the learning day by three hours in low-income schools. Cognizant employees can become Citizen Teachers to teach 10-week “Apprenticeships”. This year Cognizant ranked No. 2 in Citizen Teacher volunteers, second only to Google. Greenlaw noted that employees from the company’s legal team are working with middle schoolers to create a campaign against violence. Another team of volunteers is leading a Robotics apprenticeship. This year Cognizant hopes to launch a college scholarship program and fund after-school programs. “The experience is life-changing,” Greenlaw reports.
IAOP Celebrates 15 Years of Excellence at the Outsourcing World Summit By Sandy Frinton
An Insider’s Guide to Getting the Most Out of the Event of the Year It’s been called a “mini MBA in outsourcing,” a “must attend for every calendar” and an opportunity “to hear the crème de la crème of the outsourcing community” by past delegates. The mix of endless networking and interacting with the industry’s elite, inspiring speakers and top-notch education with some guaranteed fun on the side all packed in one three-day event is what keeps bringing professionals from around the world to IAOP’s Outsourcing World Summit year after year. Celebrating its 15th edition this month in Florida, the Summit has grown from its early days before the management practice of outsourcing as we know it today was really born to being one of the world’s premier events for the industry. Since 1998, nearly 7,000 people have attended, more than 700 educational sessions have been presented and more than a thousand leaders have spoken from industry powerhouses like Gary Wendt, Oren Harari, Ram Charan and John Sculley, to political figures like Robert Reich, Jack Kemp, and even one astronaut, Buzz Aldrin.
GlobalizationToday February 2012
Speakers at the 2012 Summit come from such leading companies as Colliers, CB Richard Ellis, McGraw-Hill Cos., P&G, IBM, Vodafone, Ericcson, Kraft Foods, Nextel, Wyndham Hotel Group, Petco, Sears, Johnson & Johnson and Pfizer among many others. In addition to high-profile speakers, the level and roles of the delegates at the event is impactful. According to IAOP, 42 percent of Summit delegates play an organizational-wide role in their company’s outsourcing decisions and the average outsourcing buyer at the Summit oversees a $60 million annual budget. “The 2012 Outsourcing World Summit provides an unequaled opportunity to see old friends, meet new ones, learn about IAOP’s recent advances, and tackle the most important issues facing the outsourcing industry,” says IAOP CEO Debi Hamill, who expects 700plus attendees at this year’s Feb. 20-22 at Disney’s Contemporary Resort and Conference Center. “It is often a challenge to find a single event that provides such a full overview of all aspects of outsourcing with the very
latest content from industry leaders and experts. The Outsourcing World Summit provides this greater visibility into the outsourcing landscape,” says Christopher Thomas, manager of Accenture.
SUMMIT TOP PICKS FL!P YOUR THINKING
If you think the OWS is like any other conference you’ve attended, keynote speaker Peter Sheahan, Founder and CEO of ChangeLabs, will set the stage for turning your beliefs upside down from the opening of this event. Speaking on Feb. 20 at 2 p.m. on “FL!P: Creative Strategies for Turning Challenge into Opportunity and Change into Competitive,” Sheahan will redefine the concept of innovation for delegates. “Innovation doesn’t just mean a hot new product or advertising campaign,” he says. “True innovation is more often a realignment of the way that leaders think about business structure and
organizational design.” The best-selling author and worldrenowned speaker will reveal how organizations must look at their business model, customer and organizational design differently to find new opportunity and increase competitive advantage. Sheahan will draw on his experiences working with clients, including Newscorp, Google, Apple, Hilton Hotels, GlaxoSmithKline, Harley Davidson, Cisco and Goldman Sachs, and share industry-specific examples and case studies. A native of Australia, Sheahan quickly progressed from a trainee accountant to general manager of a $10 million hotel business and has since established himself as a highly successful entrepreneur. In addition to his world-renowned thought leadership practice, he also is the founder and CEO of ChangeLabs, where he applies his passion about creating behavioral change around social causes. ChangeLabs specializes in large scale
social change projects for clients such as Apple and IBM, and developed and still delivers the largest face-to-face youth financial literacy program in the world. In 2003 Sheahan was named “Young Entrepreneur of the Year” in his home state. He is the author of six books, including Fl!p: How to Turn Everything You Know on Its Head and Succeed Beyond Your Wildest Imaginings and Making It Happen: Turning Your Good Ideas into Great Results. Don’t miss the other outstanding keynote presentations, including an address on “Outsourcing in Transition” on Feb. 21 at 10 a.m. by Harvard University’s F. Warren McFarlan, Baker Foundation Professor, Albert H. Gordon Professor of Business Administration, Emeritus. RECOGNIZING THE INDUSTRY’S BEST
For the lunch ticket that lets you dine with the industry’s elite, be sure to attend the Gala Awards Luncheon on
Feb. 21, starting at 12:15 p.m., where IAOP will honor its newest inductees into the Outsourcing Hall of Fame, Global Excellence in Outsourcing (GEO) winners and the association’s Members of the Years. John Maher, Certified Outsourcing Professional (COP), executive managing director, Global Corporate Services, CB Richard Ellis, will introduce the honorees for the Outsourcing Hall of Fame, one of the most prestigious awards available to individuals working in the field of outsourcing. Started in 2006, more than a score of exceptional outsourcing professionals from customer, provider and advisor organizations have been inducted annually since then and recognized for their contributions to both the outsourcing practice and industry as well as society-at-large through outsourcing. Also taking the stage will be winners from two organizations that will be presented with GEO awards for Best
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outside in Research suggests that 30 percent of your workforce may be unmanaged. What would your CEO say about that? In the quest to meet your business goals with a flexible and responsive workforce, the supply and demand of talent is becoming more difficult to predict. As frustrating as this may be, there are other issues that continue to complicate the employment landscape. Could your 30 percent increase? Get a new perspective on managing your workforce with Kelly ServicesÂŽ. We look from the outside in with a proactive approach to acquiring talent that leverages the principles of supply chain management. We understand how to manage the variability found in the supply and demand of talent. We combine robust data analytics with our labor market insight to maximize the effective and efficient use of the talent supply chain. This forwardlooking approach will enable your company to make strategic workforce planning decisions. Look from the outside in with us and gain a deeper perspective on making your workforce a strategic asset.
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Practices and Innovation. IAOP started the award program last year to distinguish outsourcing professional teams at customer organizations who advance the field’s best practices, create innovative solutions and deliver great results for their companies. INSIGHTS REVEALED
Among the other highlights of the Summit are the results of IAOP’s annual survey conducted with the support of Accenture and the unveiling of the unranked list of the Global Outsourcing 100 service providers and top advisor’s list. Jagdish R. Dalal, COP, managing director thought leadership, IAOP, will share key trends and developments revealed in the survey based on experiences and insights from IAOP’s
members and affiliates worldwide. Findings that will be shared and discussed by a panel of C-level executives during the keynote session on Feb. 20 at 1:15 p.m. include how the continuing challenges in the global economy are affecting outsourcing plans and identifying the critical issues that customers and providers are facing. Another anticipated event creating buzz at the Summit is the release of the 100 names of service providers that make up of Global Outsourcing 100 as well as the top consulting, legal and advisory firms named to IAOP’s World’s Best Outsourcing Advisors list. Take a sneak peek at the names included. The ranked list, sublists and more will be unveiled in the FORTUNE Global 500 issue on July 23, with extensive coverage also in Globalization Today.
ATTENDEE’S ADVICE FOR “DOING THE SUMMIT” RIGHT •
Bring Plenty of Business Cards Then first-time delegate Ashley Gross, marketing manager of Rural Sourcing, Inc., learned this a year ago when the unexpected level of networking almost wiped her out of cards to distribute on the first day. “I had no idea what to expect as a ‘first-timer’ and new to Rural Sourcing, Inc.,” she shares. “The conference itself was like nothing I had been to before. Everyone, and I do mean everyone, was interested in networking with one another. It didn’t matter if you were a buyer or supplier. This was a fresh change from other conferences I had attended in the past. In fact, I had to start rationing out business cards after the first day, as I didn’t bring enough! This year I will be well GlobalizationToday February 2012
The concept of doing right has been around forever but CSR is a relatively new term in outsourcing and one that continues to grow in interest. A panel of experts will look at “CSR Risks and Rewards” and educate attendees on managing the economic, social and environmental impacts of their operations to maximize the benefits and minimize any downsides. The panel will tackle such topics as evaluating risk, developing a CSR strategy and budget; how to handle public perceptions and coverage; selecting the best CSR standards for your organization; ensuring compliance and transparency; recognizing new and evolving ethical/ moral norms; and impact sourcing. Moderated by LaMae Allen deJongh, U.S. Human Capital & Diversity Managing Director, Accenture, the panelist include Essein Lore Eme, Associate Director,
equipped with a box of RSI business cards and a smile to greet each person I see. You just never know who you’re going to meet.” •
Put Technology to Work for You Use new technologies such as QR (Quick Response) codes to disseminate your contact information and easily capture other’s so business cards don’t get lost and mixed up, suggests Sudeep Misra, Head of Marketing at Neo Group. “QR codes are a wonderful resource, offering the convenience of sharing your contact information immediately with others, helping to reduce the carbon footprint with a need for fewer business cards, and, more importantly, ensuring that your contact info. is entered immediately into a smartphone,” he says. “And keep the interactions going beyond the Summit.”
Connect at Networking Start the Summit with a bang with the well-attended and popular “Customer-Only” and “Provider/AdvisorOnly” Networking Sessions. Teresa Harris, Certified Outsourcing Professional® (COP), Contact Call Center Management, says she never misses the
The Rockefeller Foundation; Pumela Salela, Advisor to The World Bank; Jeremy Hockenstein, CEO, Digital Divide Data; and Bill Hefley, Ph.D. CDP, COP, Clinical Associate Professor, University of Pittsburgh and Director, ITSqc. GET POINTS
The Summit also will provide delegates with the chance to get started or continue their professional outsourcing certifications with complimentary presummit workshops on Feb. 19. Sessions are offered for professionals interested in getting certified or starting an in-house program to certify employees as well as an advanced intensive session for Certified Outsourcing Professionals® (COP) that provides 5 recertification points for attendees. SUMMIT SOCIALIZING
From the champagne welcome to the fireworks display, there’s plenty of
opportunity to meet new friends and enjoy the Florida scene along with networking, networking and more networking over breakfast, lunch, dinner and evening cocktails. Among the highlights: Summit Golf Outing on Feb. 19, Welcome Reception in the Global Services Mall hosted by Accenture on Feb. 20, Dessert Party and Fireworks on Feb. 21, and Food for Thought Networking Lunch on Feb. 22. GLOBAL OPEN HOUSE
Before heading for the airport home, stick around for an opportunity to network and connect with outsourcing leaders from around the globe on Feb. 22, following the networking luncheon. During this informal open house, IAOP’s Regional Advisory Boards and its Transboundary Chapter will discuss the state of outsourcing. A panel of industry leaders from China to Latin America and Africa to Europe will answer pressing questions to bring the Summit to a close.
session for customers. “The ‘Customer Only Networking’ event is a unique opportunity to connect with other customers of outsourcing to discuss specific topics of interest,” Harris says. “Topics are submitted ahead of time and you can choose to sit at discussion tables that fit your interests. It’s a great way to network and to help share ideas and discuss real issues faced in the industry.” •
Open Your Mind and Explore With seven educational tracks and more than 30 hands on interactive sessions, past attendees recommend trying out some different sessions. “Be open-minded in selecting sessions to attend,” says Antoinette Forth, President of RT Enterprises of NY LLC. “Branch out from your area of expertise or outsourcing industry. Skills and success stories are transferrable. You will always learn something.”
Smile and go! Yvette Kimmel, Vice President at Aegis Communications, recommends packing your
Sandy Frinton IAOP
Sandy Frinton is a staff writer at IAOP. She is an experienced PR and media specialist with strong journalism and writing background, with a combination of nearly 20 years of PR and journalism experience. Sandy has written bylined news and features stories, traditional and Web 2.0 press releases, employee communications, e-newsletters, corporate letters from CEOs, annual reports and other communications in a wide range of business sectors. She also has managed communications and media relations for international businesses for major acquisitions, plant closures and business restructurings in the U.S. and globally. You can reach her at: firstname.lastname@example.org
schedule with networking opportunities and it will pay dividends. “Attend as many networking events at the conference as possible, including luncheons and breakout sessions, and have business cards available,” she says. “I have met friends, business contacts, future employers, future business opportunities and more by simply putting on a smile and saying ‘hello.’” •
Share your Smarts The Outsourcing World Summit as well as all IAOP conferences, chapter meetings and events are always filled with knowledgeable people who are experts in outsourcing. Ben Trowbridge, CEO of Alsbridge, offers this insight: “Spend time getting to know as many people as possible to include vendors and fellow enterprise clients,” he says. “This is your chance to open your horizons and vision the possible as you learn about new capabilities. If you are a provider, do not tug on the sleeve too much. Sell by not selling and share your best capabilities.” globalizationtoday.com
Protecting the Privacy of Information in Outsourcing By Jagdish R. Dalal, JDalal Associates, LLC
4P’s of Privacy Protection The issue of protecting privacy of information is receiving a great deal of media attention especially as it concerns the politically hot topic of outsourcing. However, an enormous amount of private information has been outsourced for decades. Data entry of private information has been around as long as keypunching has existed. Checks were “keyed in” long before imaging processes existed, airline tickets were data entered prior to computerized “e-tickets”, and medical records were input into billing programs before the U.S. federal HIPAA act was passed. Over the years, much of this work was outsourced and even outsourced off shore. So, is the issue of protecting the privacy of information based on a new threat or just a new spotlight on the work process? Should companies not consider outsourcing due to the fear of violating some privacy act? Yet, companies should not be cavalier about dealing with the issue and not take available precautions – through policies, practices – enforced through contracts. Before we discuss the protection of privacy of information, let’s briefly examine the legal issues involved.
GlobalizationToday February 2012
PRIVACY ISSUE – LEGAL BASIS
Privacy protection is widely understood as the right of individuals to control the collection, use and dissemination of personal information that is held by others. This central principle has been adopted in U.S. law, in privacy laws outside of the United States and in many international agreements such as the 1980 OECD (Organization for Economic Cooperation and Development) Guidelines on the Protection of Privacy and Transborder Flows of Personal Data. The OECD Privacy Guidelines and privacy laws are based on a set of Fair Information Practices that describe the obligations of organizations that collect personally identifiable information and the rights of individuals who give up their personal information. There are multiple US federal acts that govern the privacy of information: ••Privacy Act of 1974 (5 U.S.C. § 552a ) ••Graham-Leach-Bailey act for financial institution ••Health Insurance Portability and Accountability Act (HIPAA) of 1996 ••Telecommunications Act of 1996 –
Section 222 dealing with Customer Proprietary Network Information (CPNI) Additionally, the European Economic Union has passed several laws regulating data protection and transmission of information and has extended these laws to non-EEU countries conducting business with member states. The so-called “Safe Harbor Act” requires non-EEU countries and individual businesses to implement policies and procedures that comply with requirements of the act in order to obtain a “safe harbor” designation. PROTECTING PRIVACY OF INFORMATION IN AN OUTSOURCED ENVIRONMENT
Protecting the privacy of information is the legal obligation of the entity that is collecting and processing the information. If work is outsourced, it is still the legal responsibility of the company outsourcing the work to protect that information. This requires that outsourcing arrangements be structured (legally and process-wise) to
assure that the data is properly identified as â€œprivateâ€? and processes are put in place to protect them. Later in this article, we will examine the best practices in assuring that. However, if the outsourcer is processing information within the US, all applicable US laws are extended to the outsourced company. This is one of the fundamental tenets of the Graham-Leach-Bailey act. FRAMEWORK FOR PROTECTING PRIVATE INFORMATION
place and protected while under the jurisdiction of the service provider. The IT environment, physical security requirements, and workforce background checks are some of the processes that should be defined and contractually binding for the service provider. Later, as a part of the on-going governance, these processes must be tested for compliance and weaknesses addressed.
Policy: Policy must exist that defines the privacy requirements-data that must be protected and the consequences for not protecting the information. This policy will be the basis for the legal agreement between the business and the off shore service provider.
Practices: Practices are the instructions and procedures that ensure day-to-day compliance of policy and operations. These include ongoing training of new staff, refresher training for team leaders, employees and security staff. Public display of policy and processes also assists in ensuring that employees are constantly reminded of their responsibilities in securing the work environment and protecting the information available to them.
Processes: Processes must be pre-defined by which the transfer of information will take
Persistence: As in any business, constant vigilance and discipline are important in assuring
The attached figure outlines the framework for protecting the privacy of information in an outsourced environment:
compliance with policy and processes. Violations must be reviewed and rootcause analysis completed so that the policy, processes and practices are revised for greater effectiveness in protecting the information.
4 Pâ€™s of Privacy Protection
PROTECTION OF PRIVATE INFORMATION AND GOVERNANCE
“Inspection” is one of the key foundations for managing quality. No matter what processes and discipline is installed, flawless execution can never be expected at all times. Similarly, no matter how well the outsourcing strategy is developed, contract constructed and provider selected, inspection on an ongoing basis assures total compliance. This inspection is “governance” as defined within outsourcing language. The framework as promoted by IAOP assures that all aspects of outsourcing governance play a role in assuring protection of private information. Management commitment and discipline assure that policy is in place and there is vigilance in the process as well as practice. Relationship helps define singularly the responsibility of each party in protecting the information. Operational delivery and commitment compliance review performance against plan continually. Risk management helps identify potential exposure-risks and define mitigation action that assures continued protection of private information. Risk management also diligently identifies changes in information structure, content as well as applicable laws and modifies the
GlobalizationToday February 2012
framework that manages protection of information. LESSONS LEARNED
Companies have been outsourcing information for many years. Although, there have been some instances of abuse and misuse of protected information, generally, experience has shown that there are very few breaches of privacy in outsourced processing. Outsourcing
providers are most vigilant when it comes to protecting information and providing for security in general. Protecting their reputation in the marketplace is the main driver for this vigilance. Their clients must have trust and confidence in their ability to manage and maintain a secure environment and comply with regulations. Their very survival depends upon it. The last thing any provider wants is to have the company name splashed across CNN or a Financial Times story involving fraud
or abuse. I also believe that generally, there is a far greater degree of compliance with the 4 P’s (Policy, Processes, Practices and Persistence) in an outsourced environment. This is not just because of concern for reputation but the result of a greater propensity to be disciplined and compliant to rules and laws. Outsourced centers generally have a greater commitment to the Quality Program that requires discipline and continuous compliance to processes and practices. The following are some of the lessons learned we have observed regarding the overall protection of information in an outsourced environment: ••Not considering privacy issues and protection requirements while developing outsourcing strategy and making it one of the key drivers for sourcing of service ••Not creating and maintaining a well defined policy for the protection of information ••Not providing adequate identification of the “protected” information ••Insufficient preparation prior to entering into an agreement and subsequently not defining all of the aspects of security in the contract with
the service provider ••Not conducting a thorough due diligence and performing risk analysis before the contract is completed, so that the contractual provisions can directly address weaknesses and inadequacies in the service provider’s environment ••Not implementing a governance process that assures periodic evaluation and degree of compliance to all aspects of the information security SUMMARY
Protection of private information is important to all businesses and is required under foreign laws and US regulations. Outsourcing of business processes (or IT operations), while impacting how information is protected, does not present an inherent problem or weakness in protecting the information. The location of processing centers – off or on shore – does not matter when it comes to managing the protection of private information as long as the security environment is well designed, tested and periodically inspected for compliance. Since, service providers are often more vigilant about security, in order to protect their business reputation, we believe that
there is actually a greater opportunity and incentive for fraudulently misusing private information within an organization than in an outsourced environment.
Jagdish Dalal IAOP
Jagdish Dalal is Managing Director, Thought Leadership for IAOP and a world-renowned consultant in the field of outsourcing. He brings over 3 decades of senior executive leadership experience at Fortune 100 companies and PricewaterhouseCoopers. Jag is a Certified Outsourcing Professional and in is role at IAOP®, he manages the COP® program content as well as be the lead judge for the Global Outsourcing 100 list jointly published by IAOP® and Fortune® magazine. He is a noted author and presenter and has earned recognition for thought leadership in the field of IT management and outsourcing.
CLOUD AS TECHNOLOGY
Cloud as Technology —What Kind of Transformation? By Leslie Willcocks, Will Venters and Edgar Whitley The nature of this potential transformation
Microsoft’s CEO Steve Ballmer recently stated that Microsoft’s move to the cloud reflects a “transformation that’s going on in the computing world”. This sense of the potentially transformative effect of cloud computing is also reflected in our own empirical research undertaken in 2011 including a survey of more than 1035 business and IT executives3 and more than thirty-five interviews with key players in the cloud computing ecosystem including cloud providers, system integrators and users of cloud services. Reprinted by permission from Accenture
GlobalizationToday February 2012
was eloquently stated by one of our respondents, Tim Barker, of salesforce.com: “Cloud computing in its best form lowers the barrier to actually getting the business what they want”5, that is, through the use of cloud computing the IT department ceases to be part of the “business prevention unit” and instead delivers tangible business benefits. This was supported by our survey where over 50 percent of business respondents believed that cloud would “enable us to focus on transforming our business and not our IT”. Even amongst IT executives nearly 50 percent recognised that cloud could enable far quicker implementation of business applications. As arises with most emerging markets and new technologies, there are countless definitions of what a new technology is or may be. Cloud computing is no different, with some vendors providing innovative new services and others seeking to re-badge their existing provision to use the latest buzz words.Instead of worrying about words, we find it most helpful to consider cloud computing as the maturing and convergence of two distinct technological streams. The first stream relates to the maturing of the technological infrastructure. That
CLOUD AS TECHNOLOGY
associated with providing video streaming services for movie launches. If the movie launch is particularly successful, with many thousands of people wanting to stream the movie trailer, they are able to scale their operations rapidly; if the movie bombs, then the service element of cloud computing means that they are not paying for unused infrastructure. That is, because their cloud providers can offer and manage computing resources as a service, RAPP are able to purchase as many, or as few, cloud services as they require. To date, most discussions of cloud have focused on the benefits that cloud can offer in terms of flexibility in the technological infrastructure. However, cloud computing is unlikely to result in the kinds of transformation signaled by Ballmer and Barker if it is understood In and of itself, however, developments in computing infrastructure do not result in the opportunities that cloud computing can provide. solely in terms of cost savings arising from data centre consolidation and virtualisation. Indeed, there is a direct parallel here with the earliest stages of IT is, over the past ten years there have been ”When you start to understand that you’re outsourcing, which we have studied for the significant technological developments that going to be buying things that used to be past twenty years, and from which many enable cloud computing6. These include products, i.e., applications software, now as lessons for cloud can be learned. far more reliable internet services, with a service then you understand that you’re The earliest stages of IT outsourcing also higher throughput and resilience coupled going to be required to manage those highlighted the potential cost savings that with virtualisation techniques that enable services as you do outsourcing services outsourcing could offer and this resulted computing facilities to be replicated and today and you’re going to understand that in many companies moving to what can be reproduced easily. One consequence of this you will be required to integrate those called contract or supplier management— move to virtualisation is that it is no longer services just as you integrate services from establishing performance terms and then managing to these terms9. With hindsight, necessary to have in–house computing various outsourced companies today”. infrastructures. Instead, in an echo of the The unique proposition that is cloud however, it is apparent that such an outsourcing movement, it is possible to shift computing comes about when both streams approach is fraught with problems: even computing and storage capabilities “into the are relatively mature. That is, the service managing contracts in terms of a single cloud” where they offer economies of scale perspective of offering computing resources variable (for example, cost) is tricky if there is no real in-house capability to including in terms of IT support, Cloud computing in its best form manage such contracts. Moreover, energy consumption and speed. In is growing evidence10 and of itself, however, developments lowers the barrier to actually getting there that relationships based on cost in computing infrastructure do minimisation are unlikely to provide not result in the opportunities that the business what they want.” sustainable competitive advantage cloud computing can provide. For -Tim Barker, salesforce.com and will rarely lead to innovation. that to happen, the second stream also needs to have matured. This stream is as and when they are needed is coupled Instead, the most effective forms of longa service perspective on computing7. This with the technological capability of using term outsourcing tend to have a perspective focuses on providing computing capability more or fewer virtualised servers over the that is diametrically opposed to concerns as a service that is consumed as and when internet. To illustrate this combination about cost–minimisation, focusing instead required rather than as a one–off, one size of the two streams we can consider the on risk–sharing and collaboration11. We must–fit–all capability. The resulting change case of the media agency RAPP. They therefore approach the question of cloud of management mind-set for both IT and utilise the technological capabilities of computing cognizant of the challenges and business directors is marked, as Jimmy cloud computing such as virtualisation to experiences of IT outsourcing and draw our Harris of Accenture observed: address the unknown processing demand analysis in terms of these insights.
CLOUD AS TECHNOLOGY
Cloud Technologies— Four Elements of Desire While the idea of providing computing as a service through networks dates back to the 1960s, and was the driving force behind the early development of the Internet, it was the dot-com boom, and the associated explosion in fibre-optic networking, which allowed internet companies to provide services which are equivalent to running a LAN based service. This change allowed the much promised “Application Service Provision” and NetSourcing to become commercial realities—now termed cloud computing. In order to understand the technological direction of cloud computing, and thus to evaluate differing technology options, it is necessary to understand the distinct dimensions by which the various offerings differ from existing solutions. We therefore define a set of dimensions which enable easy comparison between offerings—and enable the evaluation of new offerings against old. Crucially however our “Desires Framework” strips out the “value-added” benefits of cloud—the stuff of marketing hype—and allows organisations to focus on the specific differences, and thus make decisions on such differences alongside the promised benefits. Our framework consists of four desired dimensions of the different offerings— Equivalence, Abstraction, Automation, and Tailoring (see Table 1). By considering these dimensions we can evaluate the four key types of cloud computing offering—SaaS, PaaS, IaaS and Hosted Services. A summary is shown in Table 2.
GlobalizationToday February 2012
SaaS—Software as a Service This is the highest level of abstraction in which complexity is hidden at the application level. The cloud provider runs all elements of the service with the user presented with a complete application— usually through their browser. Equivalence is achieved if the application meets users’ functional requirements—if the application does what they need it to do. Examples include salesforce.com but also
complete “desktop” applications such as Google Apps. Automation is high since the user is not required to consider the management of the service. The tailoring of the service to specific needs is limited by its author—who remains in control of the applications development path.
CLOUD AS TECHNOLOGY
PaaS—Platform as a Service Abstraction occurs at the developmentenvironment level—with the underlying computing resource hidden but with developers given the freedom to tailor components in order to develop specific services. Described as like Lego15 the tailoring is constrained by the building blocks provided by the vendor. Automation is relatively high—as all basic management of the underlying hardware is handled by the platform, but with management of the application left to the user. Examples include Microsoft Azure, Google App Engine and Force.com. Such services can achieve high equivalence if they capitalise on existing software development practices. Microsoft Azure for example is closely equivalent to existing Microsoft development practices.
IaaS—Infrastructure as a Service Here abstraction occurs at the hardware level—with only a simulation of underlying hardware provided to the user (based on virtualisation16). Automation is limited to ensuring the virtual machine runs—with users required to run the
operating system and management services such as backup, monitoring and networking. Equivalence is close to that of owning a local server, as is tailoring. Examples include Amazon’s Elastic Compute Cloud and RackSpace. In each of the above examples the physical hardware is abstracted from the user. This allows multi-tenancy in which a number of users’ services are consolidated onto shared hardware. Traditionally most servers run below capacity as they needed to be provisioned for peak demand rather than average usage. Multi-tenancy thus enables vast reductions in the costs of processing, power and cooling. Further statistical multiplexing (selecting the “tenants” of the server such that their demand for processing complement each other) ensures high utilisation of the processors at all times.
Hosted Services Hosting servers in outsourced data centres predates the “cloud” term and is often ignored from cloud debates— however it should be included in the mix when considering some intensive business applications which are inappropriate for virtualisation. Here no abstraction occurs—a physical machine is hosted
in the cloud providers’ data centre, and is managed remotely by the user. Automation is minimal, but equivalence is only limited by network latency, and tailoring is closely equivalent to a locally hosted server. As there is a direct equivalence of hardware no benefit in cost reduction is achieved through multitenancy or statistical multiplexing. Having defined the basic concepts we discuss the direction cloud computing technology is moving in the near future.
Cloud Ecosystems Once equivalence is achieved between the local data centre and the cloud it is possible to create enterprise services by “mashing up” the services from a variety of cloud providers to create what has been termed a cloud ecosystem. This integration allows the tailoring of services to specific business needs using a mixture of SaaS, PaaS and IaaS—though considerable technical skill is required to integrate such services. Further the resultant ecosystem is limited by the service quality of the weakest component. Such ecosystems have been termed “BPaaS”—Business Process as a Service—reflecting the focus on business specific services. As equivalence is achieved between
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IAOP® is the global, standard-setting organization and advocate for the outsourcing profession. With more than 110,000 members and affiliates worldwide, IAOP is the leading professional association for organizations and individuals involved in transforming the world of business through outsourcing, offshoring, and shared services. A Global Community IAOP has members in nearly 50 countries. Each member has direct, online access to each other and to IAOP’s entire portfolio of services, including its vast chapter network, regional-level events, certifications and corporate and professional development programs. MEMBERSHIP Customer Corporate Membership provides organization-wide access to the association’s research, training, certification and networking programs — all designed to help companies
International Association of Outsourcing Professionals® (IAOP®)
achieve better business results through outsourcing. Provider/Advisor Corporate Membership provides the same organization-wide benefits of Customer Corporate Membership, but also includes member-only sponsorship opportunities that serve the marketing and business development needs of these companies. Professional Membership is available to individuals either as part of their company’s corporate membership or on an individual basis. This membership serves the needs of practitioners working in the field of outsourcing whether as customers, providers or advisors. In addition, it provides these professionals with direct, personal access to association services.
To learn more about IAOP membership or to become a member, visit www.IAOP.org.
w w w . I A O P. o r g
CLOUD AS TECHNOLOGY
existing internal data centre computers and cloud-provided services so it is possible to use a hybrid mix of internal machines and cloud-provided machines within a business process. This so- called hybrid cloud allows parts of the process to be run internally (e.g. handling sensitive data), when other parts of the process run at low cost externally. Further “cloud bursting” can occur where services are run internally but ‘burst’ to the cloud when internal capacity is insufficient to meet demand. For many enterprises who already operate large-scale data centres the economy-of-scale benefits of IaaS and PaaS are limited (particularly if they already operate multi-tenanted servers)—whereas the risks of outsourcing to the cloud are perceived to be high. In response software vendors have created software to operate existing enterprise data centres as though they were a pay-as-you-go (PAYG) cloud provider (albeit to one customer—the enterprise17). Such private clouds benefit from the automation and abstraction of service provision from business needs and allow billing of IT service usage to business units. In response some IaaS and PaaS providers are offering equivalent virtual private clouds18—in which a cloudprovider dedicates (and separates) part of their data centre wholly to one enterprise as though it were their own private cloud accessed by secure virtual networking. In such cases automation is provided—but with a high degree of resource tailoring. Another interesting technology relevant to cloud computing is the Container Data Centre. Some enter- prises are unable
to exploit the public cloud but demand data centre renewal or expansion. The shipping-container- based modular data centre responds by providing a complete data centre within a shipping container (or some form of modular box). All elements of a data centre are pre-configured and all that is required is power, water (for cooling) and network connectivity. Such facilities allow the rapid creation of relatively automated data centres which could themselves be used for hosting private or public clouds at relatively low cost where network equivalence is not achievable. Examples include financial services (where latency is a key issue), military uses (where connectively is generally poor), or where legislation demands hosting in particular locations (e.g. data protection laws require data to remain inside a country). Finally, though, it is worth reflecting on the trajectory of computing in general. Gordon Moore’s19 famous “law” of microprocessors continues apace and this will impact upon the cloud providers,20 dynamically changing their cost and profit models. The attraction of moving to the cloud must thus be compared with the speed by which the service being rented PAYG becomes cheaper to purchase. Modern multi-core processors are designed to support the running of many virtual machines per server21. In a few years it may be possible to purchase processors capable of running entire 2010-equivalent data centres on one server. As a result we note that long-term cost benefit modelling for cloud computing is immature and demands much further attention.
Cloud must be seen in the context of previous so-called “revolutions” —particularly in technology and in service outsourcing.
ABOUT THE AUTHOR
Leslie Willcocks is Professor of Technology Work and Globalisation in the Department of Management at the London School of Economics and Political Science. He is head of the Outsourcing Unit at LSE, and is internationally recognized for his work on strategic sourcing, the management of information technology and innovation. www.outsourcingunit.org Will Venters is a member of faculty within the Information Systems and Innovation Group, part of the Department of Management at the London School of Economics. His main research interests include Utility, Cloud and Grid Computing; Distributed Work Practices; and Knowledge Management and Communities of Practice. www.utilitycomputing.wordpress.com Edgar Whitley is Reader in Information Systems and member of the Information Systems and Innovation Group in the Department of Management at LSE. He has a particular interest in identity assurance and public sector IT as well as in outsourcing. http://personal.lse.ac.uk/whitley
IS “OUTSOURCING“ HURTING THE US ECONOMY? By Thom Mead
It seems the time has come again, as it does about every 4 years, when politicians feel the need to throw a dark shadow over “Outsourcing” as the economic equivalent to the bubonic plague. In the recent State of the Union address, President Barack Obama stated that the practice of “Outsourcing” needs to be stopped…that companies which “Outsource” should have punitive actions taken against them in the form of higher taxes and other penalties aimed at making the idea of “Outsourcing” economically not viable. Too bad Ross Perot, the man most widely credited with creating the Outsourcing Industry 50 years ago, is not running for president this year. I can almost hear his straight speaking, Texas twang in another infomercial setting the record straight on this whole Outsourcing thing. Ross Perot, created EDS in 1962 with his first commercial contract with Frito Lay, and went on to build a massive corporation whose former employees founded and now run many other outsourcing companies. Even Ross, who left EDS shortly after it was purchased by General Motors, went on to create an EDS competitor.
GlobalizationToday February 2012
What is unfortunate is the general misunderstanding of “Outsourcing” due to the term being misused and the subsequent broad strokes many politicians use when referring to it. Practitioners have not helped the cause either by constantly inventing new terms in a futile attempt to differentiate their offering and to avoid being labeled as “Outsourcing”…that evil business practice that destroys jobs everywhere it goes. Having been in the industry for nearly 25 years now, and having worked in Sales, Marketing, Operations, Support functions and General Management, I felt compelled to correct some of the untruths President Obama, and others who are also similarly misinformed (like his speech writers), have on the subject. Hopefully, if we can strip away the emotion, the hyperboles, distortions and the rhetoric that is often used to fan the flames of anti-outsourcing sentiment, we can get back to doing what is right…and running our companies in a
more competitive way…which, by the way, creates jobs. So let’s start there. First we need to strip away the emotion surrounding the idea that all companies are evil and the people running them are selfish executives whose sole purpose is to oppress the workers and line their own pockets with the savings outsourcing will generate. While this may happen at times, it is rare. If you feel it is commonplace, then there is an “Occupy Something” near you to find people with similar sentiments. What seems ironic about the “Occupy” movement is you have hordes of people complaining about the lack of jobs when they should be spending their time looking for a job. Having owned a business myself and having interviewed hundreds of people in my career, I have found that those who diligently look for a job are more successful at getting a job than those who don’t look and complain that there are no jobs. Statistically there are currently more jobs available than there are
qualified workers to fill them. Employers cite their number one challenge is finding qualified, skilled workers, which are usually not the target of illegal aliens…so dismiss that argument. If there were no jobs, there would be no need for recruiters…but that industry is far from dead. So, back to outsourcing. So…outsourcing kills jobs. More accurately stated, “Outsourcing killed MY job, as I knew it, and all the plans I had for rising up in the company.” All the brown-nosing, politics and lame office parties they attended in the naïve belief that they would one day rise from the mailroom, customer service, IT, HR or other non-core functions to become CEO of a bank, Big 3 car company, or leading pharmaceutical company…all that effort wasted. It is standard practice in outsourcing that the service provider extends an offer of employment to all affected employees at the client company. Every effort is expended to normalize pay and benefits in the transition so nobody is economically disadvantaged. By most measures, the only difference is the name of the employer on the paycheck. The other big difference is yesterday, you worked for an employer who did not value your function, and you had to make every effort to plea for the budget and resources to meet the company’s expectation for your job. When budget cuts hit, your department was often one of the first to see its budget slashed. You have now transitioned to a company that specializes in the very thing that defines your job. Now you are a valued employee
to be invested in, and whose talents can be used in many new and career enhancing ways. If your dream is to work on an account specializing in Artificial Intelligence with a company in Australia, then hope your department gets Outsourced to HP, IBM or SAIC. Always wondered how you could go from recruiting to be the CEO? If your company outsources its recruiting function, known as Recruitment Process Outsourcing (RPO) to a company such as Aon or SourceRight…then you may have a legitimate chance to rise assuming you have, or get, the other essential education and skills for the job. But at least now, you can have a realistic career path, not just a job. Bilingual programmers may have the opportunity to spend time working in their country of ethnic origin…VSI or CCA in Colombia, Neusoft or iSoftStone in China, and many others. When outsourced, career growth and opportunities within your profession are now greatly expanded. Most affected accept the offer of employment and soon find out their fears were unfounded. Many, having valuable skills needed by the Outsourcing provider to grow, have risen up rapidly in their new employer. In a successful Outsourcing relationship, there is a near net neutral impact from an employment perspective. Outsourcing does not cause unemployment…except for those who choose to be unemployed rather than transition. The other risk is that over time those who are not on top of their game will be weeded out eventually…and probably would not have survived at their former employer for the same reason. Let’s be real about it too…with call center attrition running from 80-120% in a typical
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domestic call center…how long is the horizon anyways in that role? However, and this is where President Obama and others go astray when they speak of topics they do not really understand, the model for “Outsourcing” and “Offshoring” are a little different operationally, but very different from an employment perspective. With Offshoring, the jobs are often moved over a period of time, to a lower cost location. This is done to get access to highly educated talent in the host country as well as to sell off facilities, which in combination, enable the client company to reinvest the dollars into new technologies, acquisitions, or other investments to fuel growth and stay competitive. Had they not made this change… the jobs may have gone away through multiple reductions in force and eventually when the company has to close its doors because it cannot compete effectively with those who are outsourcing. While it is true, some jobs will be sent overseas, such as programming maintenance for the company’s aging mainframe, often written in code that is seldom used anymore…and was probably never properly documented either. The reason for outsourcing may be to channel the savings into a new ERP system which will provide many new job openings for those with appropriate skills. Some companies don’t do outsourcing wholesale, but do it selectively. Nearly a decade ago JP Morgan chose to outsource its R&D to Mumbai, India. The CFO for JP Morgan at the time was quoted roughly as saying, “For raw research and analytics, and MBA in India will do just fine. My superstars who advise clients…they will stay right here in the US”. Or as Firstsource frequently does, a mixture of approaches, what is commonly known as “rightshoring”. For a major bank, they retained key customer contact functions here in the US and the UK, while non-customer facing, labor dependent, transaction intensive work was performed in the Philippines. Sort of the best of both worlds. But in a world of free trade, we need to acknowledge that many companies are outsourcing to the US for the high quality workforce. The automotive industry is a great example. Here in the South, Kia has built a massive facility in Georgia, Mercedes Benz in Alabama, BMW builds in South Carolina. Thousands of good jobs were created here by utilizing a global workforce model rather than retaining all work locally. Protectionism and isolationism will not enable the US to be a global economic power. Famed management consultant and author Tom Peters said in his book, Liberation Management, “Do what you do best and outsource the rest.” He went on to say, “If you are the undisputed leader in a process, then you should consider getting into outsourcing yourself. If not, outsource it to somebody who is the best at what they do.” Many jobs that are sent overseas are ones where the client company knows it needs to do the job well, but as it is not core to the company’s product or service, it looks for the place where it believes it can achieve comparable quality at a much lower price… much like how it procures MRO items. However, because these are not a one-time buy for light bulbs, office furniture, or tableware for the cafeteria…a little more scrutiny in needed. Doing an outsourcing deal more closely resembles a merger or divestiture under a sell / lease-back scenario, on the part of the client. While procurement can be involved, it would be prudent to involve a
cross functional team. Lowering the price point to where the company will be serviced out of some tertiary city in a developing country half way around the world will save money…but history has shown that doing this will irritate and lose customers too. Advice: Pay a little more to have it done well. The notion that was put forth in the State of the Union address that Outsourcing is bad for the economy is laughable. The Outsourcing industry itself has created more US jobs and currently employs more people than the current Administration has created over the last 3 years. More likely the new automation or software will eliminate more jobs than the outsourcing did, but you never hear that part of the story from the anti-outsourcing crowd. So this is where the double standard comes in…it is not okay for a programmer to have his/her job outsourced…maintaining full employment and continuing to do what they do…but it is okay for that same individual to take a job making robotics or software that will automate a job…and provide the potential to eliminate thousands of jobs through its use. Visit any modern automotive manufacturing plant and you will see legions of robots performing tasks that previously would have required more people, taking more time and doing the job less effectively…and now it can be done without concerns about lost time due to illness, OSHA inspections, or overtime costs. And those jobs are not coming back. Has not the use of a PBX and IVR resulted in people losing their jobs? Yes. But for the companies that create the technologies, it is creating new jobs. Even the teleprompter replaced the person holding poster size “queue cards”. Outsourcing is not ruining the economy. It creates jobs for outsourcing companies. It preserves jobs for those whose jobs, not viewed as core or strategic the company’s reason for being, are at risk as the economy falters for a host of other factors. Outsourcing is good for the economy and the companies that use it correctly. ABOUT THE AUTHOR
Thom Mead is VP of Marketing, Alliances & Channels – North America for Firstsource, a leading global provider of BPO solutions for the Banking, Financial Services, Insurance, Healthcare, Telecommunications & Media, industries. With nearly 30,000 employees across more than 45 delivery centers around the world, Firstsource delivers both onshore (70%) and offshore (30%) solutions for its clients. Prior to Firstsource, Thom was CMO for EXLservice, SVP Sales for Spherion, VP of Sales and Marketing for Unisys Outsourcing and VP of Global Marketing for ACS where he also served as president for an ACS BPO subsidiary. Thom has been a key figure in structuring and closing more than $17B of outsourcing transactions in his career. Thom can be reached at: 770-769-7795 email@example.com; www.linkedin.com/pub/thom-mead/0/224/a98
GLOBAL SOURCING – TRYST WITH GROWTH By Bobby Varanasi, COP
The past two decades has seen the sourcing marketplace go through some significant upheavals, both on the client side and the supply side. The latter has seen more disappointments than cheer. For long have I argued that “value-scale” needs to become a mainstay driver for service providers, in their quest to grow revenues and market-share. To a large extent, entry of, and leadership by federal government agencies in promoting the sourcing industry (within their larger ICT sector development strategies) has fueled the confusion seen in the marketplace today. I say confusion primarily because clients and end-user organizations looking for partner organizations (as they themselves endeavor to contain costs, conserve capital, increase revenues, penetrate new markets etc) have more often than not come away disappointed at the gap between marketing rhetoric and delivery realities. The heydays of the early 21st century where technology and technology-enabled services were touted as intrinsically important for organizations, are today less the focus as technology has become embedded into their businesses significantly. The aura of “new technology” is being replaced with the “fatigue” of ongoing spend bereft of any continual value. Provider promises of transformation have become nothing more than breakfixes, resulting in an increasing dilution of the value outsourcing seems to have promised. There are quite a few instances of outsourcing portfolios being restructured not because of the ability of providers to deliver upon current needs, but their failure to modulate/ enhance their service
GlobalizationToday February 2012
provisioning in tandem with changing end-user business needs. Restructuring of such portfolios has become increasingly common – with insourcing, and reduction of spend being two key approaches clients have been pursuing over the past five years. The economic crisis has put a big spanner in the works for global sourcing. While sheer volumes within the opportunity have increased by an average 5% - 7% YOY - even during trying times starting 2008 - the nature of services being sourced out have moved away from low-end cost-chasing commoditized ones toward more value-enabling and business-oriented service bundles. The spanner here is that increasing maturity with buying services has finally resulted in an increasingly sophisticated buyer marketplace, whose general ability to discern real vs. the promise has enhanced tremendously. Such sophistication in turn places unplanned and unexpected pressures on service providers to get their act together. In other words, technology for the sake of it has become meaningless, and providers with nothing more than a fancy software solution or the promise of being the best at “keeping the lights up” or offering single-service lines have become irrelevant. We need
to thank the economic crisis for helping the industry focus its attention on “promise of ” vs. “sustained value”. For long, advisors like us have constantly endeavored at stemming the seemingly endless positivity with doses of reality. For once, though I may be sounding narcissistic in an industry that continues to buck trends and grow, I am glad that a thorough distillation of realities is taking place as we speak. Of course it raises some serious questions. I will take up two of the most pertinent in this series I. Mushrooming of Service Providers in Emerging Nations – thanks to the opportunity perceived, there are more service providers across 30 contending nations on the planet (Argentina, Uruguay, Chile, Brazil, Colombia, Costa Rica, Jamaica, Dominican Rep, Mexico, Rural USA, Czech Rep, Serbia, Ukraine, Macedonia, Malta, Poland, India, Philippines, China, Malaysia, Singapore, Vietnam, Bangladesh, Egypt, Jordan, Ghana, South Africa, Kenya, Tanzania, Uganda) than there are perhaps resources to support the industry. An interesting similarity in all these locations is the large number of small service providers who have – being candid – latched on
to the fact that “gestation periods” and “investment needs” in the sourcing sector are quite minimal, hence the opportunity to make some quick monies seems to be a given. What has compounded this issue is that governments within most – if not all – of these nations have taken it upon themselves to transform their economies on the sheer opportunity the sourcing marketplace presents, and have hence taken on the driver’s role in promoting their own competencies with service provisioning. While I am not suggesting that parastatal agencies have no role to play, it seems that these agencies whose role was to promote and enable, have become drivers, leaving their local industry hidden or at best silhouetted in the context of marketplace visibility. While I am no proponent of “unbridled free-market economics” I am also quite averse to having “only state-led” endeavors at economic development. I have often been told by service providers in these emerging nations that their governments do not understand their needs, while the very same governments have confided that their industries don’t know what they want. So it goes – a merry-go-round of blame-fixing. At the end of the day, providers are in
business and what matters for them the most is their balance-sheets, while for national governments there is a pursuit of longevity, and impacts to GDP/ GNI. These pursuits will always remain in conflict given the short vs. the longterm emphasis. Trying to bring these two endeavors together is a foolhardy enterprise at best. Some nations seem to have put some semblance into their public-private endeavors at promoting and increasing FDI into their countries from this sector, while most others are still struggling with basics. Ignoring Demand: Clients are more experienced in their ability to purchase services and solutions. Their endeavors at sourcing beyond the usual (read IBM, Accenture, and the big 5 from India) have more often than not been quite disappointing. Often I have been told by such organizations that service providers from emerging nations have – in their quest at increasing revenues – forgotten one cardinal rule: Know your customer. There is more rhetoric around software and technology while no clarity exists with business lines or industry specificities. And perhaps this is one of the key reasons why providers
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from emerging nations continue to fail to make an impact: their governments do not speak the industry language, while they themselves don’t offer anything beyond a technology or a process fix. And that is the ongoing conundrum. The continual quest to sell however one could - without understanding the broader repercussions to their clients’ businesses - is reflective of this cardinal mistake countries and providers within indulge in. Demand-based provisioning has always resulted in growth. The absence of demand-driven pursuit by service providers is reflective of their current endeavors at growing through collaborative partnerships with all and sundry. At best a minimal evaluation of “common traits” with businesses is established before two providers agree to work together. Taking such a loosely held model to potential client markets is like committing hara-kiri. I have also been witness to parastatal agencies taking it upon themselves to “enforce consolidation” amongst local service providers. Armed with ranking of local providers identified through “internal” assessments of their provider capabilities (where no global benchmarks or comparative indices are ever deployed), such agencies are creating more confusion than necessary. I have always failed to imagine how and why a government is best suited to tell which company in their local industry is the best, and which one isn’t. I would’ve imagined that such categorizations are what the industry is good at – identifying its own leaders! As a necessary next step such agencies have in place robust plans to put money and muscle behind “highly ranked local providers”. So is this benevolent dictatorship? I would like to think so. The moment a government gets into the shoes of “driving and leading” instead of just “enabling and promoting” an industry, there can only be one result: a goal-less pursuit. Capitalist human history has not seen a single industry success as yet from such environments. So I wonder – is this naivety or wanton disregard for business realities? IN CONCLUSION I am unsure as to what will happen next. While I have colleagues tell me that the cloud will replace current provisioning, and
remove all inefficiencies, I am quite sanguine in taking such an advice at face value. Wish life were that simple! I would rather like to think that the industry will continue what it does best – pursue new goals, and ignore those who can’t run along, or have “localized” their justifications as to why their approach is the best. A collective endeavor at industry growth is never planned, hence having 10-year plans to develop industries best remains a government’s economic pursuit, but never an industry’s roadmap. Industry has the faculties to create new opportunities, enlist a few risktakers and surge ahead. The world usually follows. Given the quest amongst most nations to transform themselves into “knowledge economies” I find it interesting to observe that some key development components are missing. While I have addressed two of them, I shall continue the series and touch upon two other components in my next columns, namely (a) Policy Complexities, and (b) Socio-Economics. See you next time! ABOUT THE AUTHOR
Bobby is one of the top 25 most powerful leaders in the global sourcing space, and the [founding] Chairman & CEO of Matryzel Consulting Inc, a strategy consulting, sourcing advisory and management firm headquartered in New York. Matryzel advises corporations and governments worldwide adopt concerted strategies aimed at enhancing competitiveness while focusing on their core competencies. He advises federal governments across four continents on ICT sector development with particular emphasis on policy development, industry-government partnerships aimed at creating GDP growth and enabling positive economic impacts. Bobby has advised Fortune 500 customer organizations on Strategic Planning, Mergers & Acquisitions, JVs, Private Capital Investment Evaluations, Process Reengineering, Pricing Strategies, Sourcing Relationships, Business & Financial Modeling et al, contributing immensely to global sourcing for clients.
WHAT’S HAPPENING AT THE IAOP
WELCOME NEW IAOP MEMBERS IAOP is pleased to welcome new and renewing corporate and professional members from: A.P. Moller Maersk; Accedeo; Accenture; Allstate Insurance Company; APAC Customer Services; Applied Materials; Assenda; AstraZeneca; Backyard Leaders, LLC; Bancolombia; Capgemini; Charles Schwab & Co.; Chubb; Clear Harbor; CME; Columbia Univsersity; Covidien; Credit Suisse; CSC; Eli Lily; GPS Group, Inc.; Hess Corporation; Hewlett Packard; Hospital Corporation of America (HCA); Infosys; ISS Facility Services; Join Innovation Technology Co., Ltd; Kelly OCG; Kraft Foods; Kromann Reumert; Lawson Software; Lear Communications; Lexis Nexis; Manulife Financial; McKenna and Associates; Microsoft; Morrison & Foerster; NCO Group, Inc.; NCR Corp.; Neusoft Corporation; Nordea Life & Pensions; Northern Works; Oakton; Orange Business Services; PHH Corp.; PwC; Softtek; SunGard Asia Pacific; Symantec; TCS; The Goodyear Tire & Rubber Company; The Guardian; The Results Companies; TPI; University of Missouri - St. Louis; VanceInfo; Vangent, Inc.; Vodafone; Washington Gas; Whirlpool; Wipro Technologies; WNS; and Zurich Financial Services. For information on IAOP membership, please visit www.IAOP.org/membership or email email@example.com.
CONFERENCES & EVENTS IT’S FINALLY HERE… THE 2012 OUTSOURCING WORLD SUMMIT® February 20-22, 2012 | Disney’s Contemporary Resort, Lake Buena Vista, Florida
At the conference? Access the SUMMIT HUB - a networking site just for Summit delegates providing up to the minute details on sessions, networking events and more! Open to all registered delegates, this is the place to set up meetings, customize your agenda, find sponsors, exhibitors, and check the schedule. CHINA WEEK 2012 April, 2012
Join IAOP and its China chapters as they tackle critical topics in the outsourcing industry at individual chapter meetings held in
GlobalizationToday February 2012
WHAT’S HAPPENING AT THE IAOP MEMBERSHIP Membership in IAOP provides access to an extensive array of services, and just as importantly distinguishes organizations and professionals as leaders in the field of outsourcing. IAOP membership demonstrates a commitment to innovative thinking, continuous performance improvement, and to the sustaining development of outsourcing as both an industry and as a profession. CUSTOMER CORPORATE MEMBERSHIP Organizations that are currently outsourcing or are considering one or more outsourcing initiatives should become Customer Corporate Members of IAOP. This membership provides organization-wide access to the association’s research, training, certification, and networking programs - all designed to help companies achieve better business results through outsourcing. PROVIDER/ADVISOR CORPORATE MEMBERSHIP Outsourcing service providers and advisory firms should join IAOP as Provider/Advisor Corporate Members. This membership provides the same organization-wide access to IAOP’s research, training, certification, and networking programs as Customer Corporate Membership, but also includes member-only sponsorship opportunities that serve the marketing and business development needs of these companies. PROFESSIONAL MEMBERSHIP Professional Membership is available to individuals either as part of their company’s corporate membership or on an individual basis. This membership serves the needs of practitioners working in the field of outsourcing whether as customers, providers, or advisors. In addition, it provides these professionals with direct, personal access to association services. Beijing, Shanghai, Hong Kong, Qingdao/Shandong. For more information email firstname.lastname@example.org. THE 2012 LATIN AMERICA OUTSOURCING SUMMIT Fall, 2012, Sao Paulo, Brazil
IAOP membership provides access to a wide range of services designed to help you and your organization improve outsourcing outcomes. Many of these services are included as part of IAOP’s Professional or Corporate Membership, with discounts available for use beyond the level provided. Some services are also available individually at non-member rates. • Globalization Today - The official publication of IAOP creates the largest and best informational publication on outsourcing by uniting and tapping the collective intellect of individuals from around the world. IAOP Members receive a free subscription plus the opportunity to get published, promote products/services and advertise. • IAOP’s Knowledge Center - This online repository houses more than 1,000 articles, including chapter meeting presentations, conference proceedings, industry whitepapers, research articles and more. • Global Chapter Network - Through its active and expansive chapter network, IAOP members can share their expertise and find knowledge on best practices for specific industry segments, topics and geographic areas within outsourcing. • Conferences & Events - IAOP hosts the world’s best-known and most highly-respected executive conferences on the topic of outsourcing, including The Outsourcing World Summit®. • Outsourcing Professional Certification Frameworks (OPCF) - RIAOP’s trainings and certifications are the industry’s de facto. Members receive substantial discounts. • Value Health Check Survey - This web-based diagnostic tool provides outsourcing customers and service providers with rapid insights to realizing outsourcing value. • NEW! Global Supply Risk Monitor - A unique web-based product that enables clients to monitor, predict and manage the various risks in their services supply chain (captive centers and outsourced services such as ITO, BPO, KPO etc) across countries, cities and suppliers, in real-time. • BestOutsourcingJobs.com - Companies seeking the best talent for outsourcing jobs, as well as professionals looking for employment opportunities, will benefit from this IAOP member service. For more detailed information on each of these member services, visit www.IAOP.org/MemberServices.
Building on the momentum of the first Latin America Outsourcing Summit, held in Colombia in 2011, which drew over 300 outsourcing professionals, we are excited to announce The 2012 IAOP Latin America Outsourcing Summit, which will bring the thought-leadership and global network of the International Association of Outsourcing Professionals® (IAOP®) together with leaders from across the Latin American business community. An exceptional opportunity for individuals and organizations involved in outsourcing as customers, providers, and advisors with operations in the region or looking to do business in this exciting region to both understand and leverage the explosion of outsourcing taking place across this part of the world.
CALENDAR OF EVENTS
With Brasscom as our partner, the support of our members in Latin America, and Sao Paulo, Brazil as the backdrop, this event will unlock the power of outsourcing for all of Latin America and for the global community of outsourcing professionals.
The calendar is frequently updated – to stay current, check IAOP’s website for details at www.IAOP.org/calendar.
For information on sponsoring or speaking, email email@example.com.
IAOP CHAPTER MEETINGS •
NORDIC CHAPTER MEETING RELATIONSHIPS: DSB’S STORY”
CHICAGO AND GLOBAL HUMAN CAPITAL JOINT CHAPTER MEETING ON “MAXIMIZING THE VALUE OF YOUR OUTSOURCING RELATIONSHIPS - THE TOP TEN THINGS THAT COMPANIES SHOULD DO TO MAXIMIZE OUTSOURCING RELATIONSHIPS”
CANADA (TORONTO) CHAPTER MEETING
THE AUSTRALIA, NEW ENGLAND, NEW YORK CHAPTERS WILL ALSO HOLD MEETINGS IN MARCH, 2012 – WATCH FOR DATES!
IAOP Professional Members may attend an unlimited number of chapter meetings. IAOP also offers complimentary Associate Membership which allows non-members the opportunity to attend up to two chapter meetings as IAOP’s guest. Go to www.IAOP.org/chapters for more information and to register.
WHAT’S HAPPENING AT THE IAOP CORPORATE & PROFESSIONAL DEVELOPMENT GLOBAL OUTSOURCING TRAINING FROM IAOP
A new year brings expanded opportunities for individuals and companies to incorporate IAOP outsourcing training into their plans for exceptional development. Expanding on the success of the globally lauded COP Master Class, IAOP is adding new training opportunities, both live and online, that will appeal to outsourcing professionals at every step of their career pathway. IAOP offers: • COP Master Class (Live public or on-site private, online) - the de facto end-to-end global training for outsourcing professionals. (leads to IAOP aCOP or COP Certification) • Outsourcing Professional Course Catalog Accredited course offerings through our training partners, such as the eSCM Capability Model courses from ITSqc, or the Sourcing Governance Foundation course (leads to IAOP COS-FP Certification) • Governance Workshop (Live public or on-site private, online) - gain comprehensive, cutting-edge knowledge on all aspects of creating and sustaining successful relationships with your outsourcing partners (leads to IAOP COP-GOV Certification) • Service Provider Business Development Workshop (Live onsite private, online) - provides service providers, large and small, with the knowledge and skills to deal with complex and rapidly changing market realities and challenges needed to win and survive (leads to IAOP COP-BD Certification) Tailored training packages from 1 - 10,000 – for more information contact sales@IAOP.org. COP MASTER CLASS & GOVERNANCE WORKSHOP SCHEDULE
The COP Master Class is a great option for earning up to half (75 points) of the Knowledge and Training points needed for COP certification, and fully completes the required training for the aCOP designation. Completing the one day Governance Workshop is worth another 15 COP Certification points. MC= Master Class, GOV=Governance Workshop • MARCH 5-8, 2012: KUALA LUMPUR, MALAYSIA. EMAIL BOBBY VARANASI AT BOBBY@MATRYZEL.COM. • MARCH 26-29, 2012: RIZZO EXECUTIVE CENTER, CHAPEL HILL, NC, USA (MC, GOV) • APRIL 16-19, 2012: KUALA LUMPUR, MALAYSIA. EMAIL BOBBY VARANASI AT BOBBY@MATRYZEL.COM. (MC) • MAY 9-11, 2012: HONG KONG. EMAIL WINNIE CHOW AT WINNIECHOW@ HBC.HK (MC) • JUNE 11-14, 2012: KUALA LUMPUR, MALAYSIA. EMAIL BOBBY VARANASI AT BOBBY@MATRYZEL.COM. (MC) • JUNE 25-28, 2012: KINGBRIDGE CONFERENCE CENTRE, TORONTO, CANADA (MC, GOV) • JULY 23-26, 2012: KUALA LUMPUR, MALAYSIA. EMAIL BOBBY VARANASI AT BOBBY@MATRYZEL.COM. (MC) • SEPTEMBER 17-20, 2012: INVERNESS RESORT, DENVER, CO, USA (MC, GOV) • SEPTEMBER 17-20, 2012: KUALA LUMPUR, MALAYSIA. EMAIL BOBBY VARANASI AT BOBBY@MATRYZEL.COM. (MC)
Please visit www.IAOP.org/training_calendar for a full list of classes and current discounts and specials.
GlobalizationToday February 2012
IAOP, through our Outsourcing Professional Certification Framework (OPCF) is addressing the needs of individuals who work across the global outsourcing industry from entry level positions focused on the delivery of outsourced services through to senior executives leading global outsourcing programs at customer, provider and advisor organizations. IAOP certifications are now available at every step in the career pathway: Certified Outsourcing Specialists • Certified Outsourcing Specialist-Transaction Processing (COS-TP) • Certified Outsourcing Specialist-Finance & Accounting (COS-F&A) • Certified Outsourcing Specialist - Human Resources (COS-HR) • Certified Outsourcing Specialist - Foundation Principles (COS-FP) New! Certified Outsourcing Professionals • Associate Certified Outsourcing Professional (aCOP) • Certified Outsourcing Professional (COP) • Certified Outsourcing Professional - Governance
WHAT’S HAPPENING AT THE IAOP (COP-GOV) New! • Certified Outsourcing Professional - Business Development (COP-BD) New! • Certified Outsourcing Professional - Human Resources (COP-HR) Currently Under Development
FREE WEBINARS: THE INS & OUTS OF CERTIFICATION
Want to understand your certification options and how one of IAOPs designations can benefit you and your company? Regular complimentary webinars are held on COP Certification/ Master Class, COP Recertification, and the OPCF Framework of Certifications. Companies can request a special webinar for their teams. Space is limited and pre-registration is required. All attendees will receive a special gift from IAOP. Recorded versions are also available for 24/7 replay. Contact Courtney Coon at firstname.lastname@example.org for dates and registration information. For more information on any of IAOP’s programs and services, email email@example.com. 10-QUESTION QUIZ: FIND OUT IF YOU HAVE WHAT IT TAKES TO BECOME CERTIFIED
Are you prepared to successfully manage outsourcing initiatives? Do you have the knowledge and experience needed to join the industry’s most elite Certified Outsourcing Professionals? Begin your journey to earning one of IAOP’s most distinguished designations by testing your outsourcing professional skills with IAOP’s 10 question quiz at www.IAOP.org/Quiz. Once you have completed the quiz email it to copprogramservices@ iaop.org for your results. Those who submit the quiz will receive a complimentary electronic sample of the Outsourcing Professional Body of Knowledge (OPBOK) from IAOP partner Van Haren Publishing. THE COP DIRECTORY IS YOUR GUIDE TO THE MOST QUALIFIED OUTSOURCING PROFESSIONALS!
Want to see who the COPs are in your company? Looking to work with the industry’s most elite professionals? Head on over to the NEW COP Directory where you can search by Name, Country and Company! For current COPs this is a great way to keep your information up to date at all times. Just login to your MY IAOP and enter your updated information into your Member Profile. It will automatically update in the directory. Check out the new COP Directory: www.IAOP.org/COPDirectory. PROFESSIONAL DEVELOPMENT RESOURCES AVAILABLE
No matter what industry you are in, IAOP has resources available for all outsourcing professionals. For the latest titles from IAOP, ITSqc and others please visit www.iaopbookshop.com, and get 15% off of any title you order. Also new from IAOP are titles from the American Bar Association found at the IAOP/ABA Legal Bookstore (www.ababooks.org/affiliate/iaop).
IAOP Retrospective – A Look Back on 2011 It was a big year for IAOP, its members and the outsourcing industry as a whole. IAOP celebrated tremendous growth - across the board - in membership, chapters, events and certification, just to name a few! IAOP corporate membership increased nearly 20 percent, while professional membership increased more than 40 percent. IAOP’s global community of members and affiliates now totals more than 120,000 in 183 countries around the world. In 2011, IAOP launched five new chapters for a total of 50 – 32 geographical and 18 topical chapters. Seventy-three chapter meetings were held, with more than 1,000 in attendance. IAOP worked diligently to produce five notable events last year: • Risk Management & Data Security in an Outsourced World, Denver, Colorado • The 2011 Outsourcing World Summit, Indian Wells, California was attended by more than 700 delegates from 30+ countries • IAOP Tools &Technology Symposium East – New York, NY • The 2011 Latin American Outsourcing Summit – Cartagena, Colombia included nearly 300 attendees from across the region. • Use of Advanced Tools & Technologies in Outsourcing, Chicago, IL IAOP continued to enhance and expand its trainings and certifications program: • The COP Master Class was held 16 times in 2011 on 4 different continents • There are now 15 COP Master Class Authorized Trainers globally • IAOP introduced 3 new certifications – COS-FP, COP-GOV and COP-BD • Registrants for the COP application process nearly doubled from 2010 to 2011 • There are now more than 320 COPs • Nearly 700 people have gone through or are currently in the process of becoming a COP • IAOPs Corporate & Professional Development progam supported more than 20 training courses and events from it’s academic alliance partners and corporate members We look forward to exceeding these milestones in 2012. For more information on how you can be a part of IAOP, please visit www.IAOP.org.
GlobalizationToday December 2010
Outsourcing Professional Certification FrameworkTM (OPCF) The OPCF is designed to address the needs of individuals who work across the global outsourcing industry from entry level positions focused on the delivery of outsourced services through to senior executives leading global outsourcing programs at customer, provider, and advisor organizations. At each stage in an individual’s career there is an opportunity for both professional development and professional recognition. The OPCF is made up of three families of certifications:
Certified Outsourcing ExecutiveTM (COE) Certified Outsourcing Professional® (COP) Certified Outsourcing SpecialistTM (COS)
BENEFITS OF CERTIFICATION Certification establishes a level of professional recognition essential in a field as complex and risk-based as outsourcing. When working together across the customer-provider relationship, certification brings a common framework for success that benefits both organizations involved. Certified individuals command greater respect within the industry and their companies, higher compensation levels, and expanded and enhanced career opportunities.
I’M A COP
*Expect better, more consistent results with me.
Training programs are available at the individual and corporate level. For more information, visit
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6, 30, 38, 47
International Association of Outsourcing Professionals (IAOP)
4 16, 17
ITSqc, LLC Kelly Outsourcing & Consulting Group (KellyOCG) Neo Group Inc.