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GlobalizationToday


Official Magazine of the International Association of Outsourcing Professionals

GlobalizationToday July 2010

   

Analytics Delivering Shocking Results The rise of advanced analytics changing outsourcing as we know it (page 18)

Meet the 2010 IAOP Hall of Fame Awardees (page 26)

Penny-Wise and Pound-Foolish? Treat and prevent the 10 ailments of outsourcing relationships now (page 36)


July 2010 7 PUBLISHER’S NOTE 8 NEWS FEED What’s new and noteworthy in global commerce

13 BLOG BEAT Outsourcing news and commentary from the blogosphere

17 IS OFFSHORING ON THE RIGHT TRACK? Mutually resonant service level agreements and efficient communication are two key hallmarks of an effective ff offffshoring program

26 A LEGACY FOR TOMORROW’S OUTSOURCING Get to know more about this year’s IAOP Hall of Fame inductees

3610 AILMENTS OF OUTSOURCING RELATIONSHIPS The most common pitfalls and how to prevent and treat them

43 DIGITAL LIVELIHOODS FOR WOMEN Solving unemployment among women in developing countries through outsourcing

44 SOURCING RELATIONSHIP MANAGEMENT New techniques in data analysis to optimize existing outsourcing relationships

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Analytics Delivering Shocking Results

46 BRINGING OUTSOURCING TO THE WORLD A commitment to innovative thinking, continuous performance improvement and the sustaining development of outsourcing as both an industry and as a profession

The rise of analytics and how it will change outsourcing as we know it

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IAOPmembership 85% of IAOP members credit IAOP for improved outsourcing outcomes at their organizations

MEMBER SERVICES VA L U E H E A LT H C H E C K S U R V E Y (VHCS) A diagnostic tool to assist buyers and providers in rapidly identifying opportunities to enhance business value obtained from their outsourcing relationships.

W W W. B E S T O U T S O U R C I N G J O B S . C O M

IMPROVING OUTSOURCING OUTCOMES BY CONNECTING YOU TO THE RESOURCES YOU NEED. IAOP® is the global, standard-setting organization and advocate for the outsourcing profession. With a global community of more than 100,000 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.

Looking for the best talent in the industry? Seeking the job that is right for you? Built for you by outsourcing professionals!

O P E R AT O R E VA L U AT O R Designed to assist buyers and providers in systematically enhancing the quality of their output.

G L O B A L I Z AT I O N T O D AY The official publication of IAOP for the growing

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, 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

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.

ranks of outsourcing professionals.

International Association of Outsourcing Professionals® (IAOP®)

Tel +1.845.452.0600

Fax +1.845.452.6988

w w w . I A O P. o r g


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FOUNDER & PUBLISHER Ali Comelek ali.comelek@globalizationtoday.com CO-FOUNDER Larry Genkin lgenkin777@gmail.com

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Get Listed in Globalization Today Buyer’s Guide All Globaliizattion Today subscribers have complete access to our Buyers Guides that alllows the em to quickly find and purchase ou utsourciing g and offshoring ff related products an nd serviice es. Globalization Today offers ff a frree basiic liisting to providers in the followin ng categories: t*OGPSN NBUUJPO5FDIOPMPHZ t*OUFSO OFUU8FC t$POTTVMUUJOH t#VTJO OFTTT1SPDFTT t)VN NBO O3FTPVSDFT t"SU % %FTJHO t.FE EJDDBM#JMMJOH t1SJO OUJO OH1VCMJTIJOH t8SJJUJO OH&EJUJOH t&OH HJO OFFSJOH"SDIJUFDUVSF t'JO OBO ODF t7JSSUV VBM"TTJTUBOUTIJQ

Go to www.globalizationtoday.com to get your FREE listing!

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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: 1-602-494-4194 g obalizationtoday.c gl y om

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E E

Limited Time Special Offer (Expires July 31st, 2010)

FRSpecial Report Reveals Experts Top 10 Secrets to Getting a Raise, Promotion and Landing the Job of Your Dreams (Reg. $99.)

www.OutsourcingThoughtLeadership.com “Larry is a visionary marketer. marketer Learning his methods should be e mandatory for anyone who works for a living, including billionaires!� ~ Bill Bartmann, Self-Made Billionaire & Former #25 on Forbes Wealthiest List


PUBLISHER’S NOTE

Outsourcing relationships rise above tough challenges. In 10 Ailments of Outsourcing Relationships (page 36), not only do we give the most common flaws in a business model and relationship but also factual examples and ways to prevent them. If you think you’re already going through one or more, we give solutions on how to get out of them as well. Women rise from poverty. The growth of outsourcing as an industry provides women in the poorest parts of the world digital jobs, thus freeing them from poverty-level wages. Check out page 43 and read about how organizations such as Samasource make this possible. You rise from being a valued reader to a respected editorial contributor. In our quest to come out with a better issue every month, Globalization Today takes a radical approach to journalism. We believe the only way to achieve great content is by relying on real experts—and that’s you, someone who lives, breathes outsourcing. Here’s why sharing your much-needed opinions is an advantage:

IN THIS ISSUE, WE ALL RISE. It’s all about moving forward this July. Here’s what we have in store: Advanced analytics rises and takes the spotlight. We delve into how it will change the future of outsourcing by leading providers to revenue-enhancement and cost-reduction results. Read more about it on page 18. Outsourcing rises as an industry and shares this success to society. The International Association of Outsourcing Professionals (IAOP) inducted three individuals into the prestigious Hall of Fame. Get to know them on page 26.

tAs a “Thought Leader,” it’s a great opportunity to discuss your thoughts on any topic concerning the industry. tEach submission comes with a Resource Box, the perfect venue for authors to share information to readers about their company, the products and services they offer and their professional credentials as well. tThe best content gets printed in the monthly magazine edition. tHard work is always rewarded. Rest assured that everything you submit will be published online. We are looking for news, columns, analyses, interviews—basically anything and everything that you think would be beneficial for the industry. What’s even better is that our editorials do not come in a written format only. Thanks to our advanced publishing platform, we’re able to get audio and video recording as well. There’s nowhere to go but up! Enjoy reading.

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NEWS FEED

NEWS Feed WHAT YOU NEED TO KNOW IN THE WORLD OF OUTSOURCING

INFOSYS PUBLIC SERVICES APPOINTS CEO TO CHARGE UP GOVERNMENT FOCUS www.procurementleaders.com

Almost nine months after Infosys Technologies established its subsidiary in the US for targeting over a $100B government outsourcing market, Eric Paternoster, the current head of insurance and healthcare business at the company, has taken charge as the chief executive of Infosys Public Services. Paternoster will report to Ashok Vemuri who heads Infosys’ US business and will also work with the company’s independent director Jeffrey Sean Lehman. The Infosys Public Services board is constituted of SD Shibulal, Mohandas Pai, Vemuri, Lehman and Paternoster himself.

PHILIP MORRIS STRIKES DIRECT-SOURCING DEAL WITH TOBACCO FARMERS www.procurementleaders.com

Philip Morris International (PMI) has announced that its affiliate, Philip Morris Brasil Industria e Comercio (PMB), will begin directly sourcing tobacco leaf from approximately 17,000 tobacco farmers in Southern Brazil. According to PMI, the deal will enhance its direct involvement in the supply chain and provide approximately 10% of PMI’s global leaf requirements. The vertically integrated structure was made possible following separate agreements with two current leaf suppliers in Brazil, Alliance One Brasil Exportadora de Tabacos Ltda. (AOB), a subsidiary of Alliance One International, and Universal Leaf Tabacos (ULT), a subsidiary of Universal Corporation, to each assign around 8500 contracts with tobacco farmers to PMB. Under the new leaf-procurement structure, PMB will offer employment to more than 200 employees, most of them agronomy specialists, and will acquire related assets in Southern Brazil. AOB and

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 Today July 2010

ULT will continue to process the tobacco grown by PMB contracted farmers and also supply additional PMI leaf-purchase requirements. The transactions, which

are subject to approval by the Brazilian competition law authority CADE, are expected to be completed by the end of the third quarter of 2010.


NEWS FEED

ENERGY EFFICIENCY TO DRIVE $19B IN US GOVERNMENT SPENDING www.procurementleaders.com

Federal IT and building-technology contractors will be key to the federal government meeting its energy-efficiency goals, experts predict. According to Federal Technology Strategies for Energy Efficiency, 2010-2015, a new report from INPUT, spending associated with the key approaches being used—cloud computing, virtualization, green hardware and building management systems—will reach $19B by 2015. The publication of the report follows on the heels of the US General Services Administration’s recent announcement of Eleni Reed as its chief greening officer. Reed will be in charge of reducing the environmental impact of more than 9000 federal facilities which consume an

estimated $7B in energy costs annually, according to the Department of Energy. This is the latest step in a long list of activities

that signal the federal government’s focus on sustainability and energy-efficient operations.

CONFIDENCE IN OUTSOURCING GROWS POST-RECESSION www.noa.co.uk

More than half of outsourcing end-users are more confident in the use of outsourcing to support their business objectives than they were in 2009, according to the National Outsourcing Association’s (NOA) quarterly Outsourcing Confidence Index released recently. According to the report, which surveyed UK outsourcing end-users, 52% of respondents are reviewing existing outsourcing contracts and considering new sourcing opportunities as a result of increasing confidence across the board. However, together with the industry’s renewed confidence, the recession has also wrought certain changes in how endusers are using outsourcing. Focus on cost reduction has risen sharply, with end-users now seeking approximately 15% savings from outsourcing compared with 10% before the recession. The continued focus on cost reduction has also led to a greater interest in offshoring, as users search for lower cost delivery around the globe. One hundred percent of respondents said they planned to increase offshoring by the end of 2010. Although the overall outlook looks positive for the industry, users did indicate a distinct lack of confidence in

the outsourcing suppliers. Seventy-eight percent of respondents believe that supplier outsourcing capability has not improved over the past 12 months. The areas where users would like to see improvements

include lower costs and more transparent pricing and greater service flexibility, together with improved ability to access specialist personnel.

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NEWS FEED

LONDON SCHOOLS SAVE ÂŁ390M WITH PRIVATE FIBRE NETWORK www.computerweekly.com

London’s 33 boroughs are saving £131M a year by aggregating their schools network and content-delivery applications onto a newly upgraded Juniper Networks-based fibre-optic network. An analysis of the value achieved by the borough consortium showed that over three years, London

ratepayers were paying £392M less than if the boroughs were buying equivalent network and content-delivery services on their own. The London Grid for Learning (LGfL) uses 100% optic fibre and 100% Ethernet running on Juniper’s Junos network

operating system to connect primary and secondary schools in the Greater London area. This makes it the largest educational metropolitan network in the world. LGfL CEO Brian Durrant said the upgrade was needed to keep London at the forefront of online education.

ACCENTURE GETS APPLICATION OUTSOURCING CONTRACT FROM HENKEL www.globalservicesmedia.com

Accenture will deliver applicationmanagement services to the North American operations of Henkel under a six-year application outsourcing contract. Financial terms of the contract were not disclosed. Under the terms of the agreement, Accenture will provide management

GEO

services for the local applications and related project services of Henkel’s North American business. The technologies covered by the program will include Oracle, Lotus Notes, Electronic Data Interchange, IBM AS 400 and Web applications. The new contract will complement an existing,

seven-year global application maintenance and support agreement announced by the two companies in August 2009. Accenture will deliver the services from both North America and one of its Global Delivery Network centers in Bangalore, India.

Get Recognition For Your Team!

IAOP’s Global Excellence in Outsourcing Award

IAOP recognizes outsourcing professional teams at customer organizations that are leading the effort to better serve their customers and make their companies more successful through outsourcing. GEO Awards are given in two categories: ¡ The GEO Award for Best Practices ¡ The GEO Award for Innovation

Enhance awareness — both inside and outside your company — of your team’s accomplishments. There is no fee for applying. Teams selfnominate through an online application at www.IAOP.org/GEO.

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 Today July 2010

For more information and to apply, visit www.IAOP.org/GEO.


NEWS FEED

ADA TO SOURCE UNIFORM FABRIC FROM BRUCK TEXTILES www.fibre2fashion.com

Contrary to some media reports, uniforms worn by Australian soldiers are manufactured in the country. No Australian troops are currently deployed, or in training, wearing combat uniforms made from Chinese fabric. A tender was won late last year by a local clothing manufacturer from Bendigo, Australian Defence Apparel (ADA), to provide camouflage uniforms under an interim arrangement. This is great news for the Bendigo economy, as it provides great support for local manufacturing and jobs. ADA will be sourcing the fabric used to make these uniforms from Bruck Textiles in Wangaratta for the contracted period. There was never a requirement to use Chinese fabric on combat clothing.

Under the contract, ADA put forward an option to supply additional uniforms if required. For these uniforms, ADA would source the fabric from a Chinese company. This option has not been exercised by the Minister for Defence Personnel, Materiel and Science Greg Combet and neither will it be. The combat clothing that Australian troops will be supplied with is required to meet exact specifications. All fabrics used in uniforms are rigorously tested before use. The government is committed to giving Australian products a fair go, as long as the local industry is competitive on schedule, cost and capability. Last year, the government spent over $6B in Australia on the acquisition and sustainment of defense materiel.

IBM INKS FIVE-YEAR OUTSOURCING DEAL IN INDIA www.globalservicesmedia.com

IBM has signed a five-year Integrated Managed Services (IMS) agreement in

May 2010 with Quippo-WTTIL, a telecom infrastructure company, to improve

efficiency as business demands increase. IBM will provide a technical support system to revamp Quippo-WTTIL’s IT infrastructure for its operations throughout India. The technology services provided by IBM will allow the company’s business processes to achieve maximum operational efficiency and control or reduce operational costs. As part of the agreement, IBM will deploy server and storage support, networking and security services. This includes managing and administering the relationships Quippo-WTTIL has with existing service providers and providing overall management of services including monitoring and integration functions to meet service levels.

CONTINUING ACQUISITION BINGE, SONDA SCOOPS UP SMALL MEXICO IT FIRM www.nearshoreamericas.com

Chilean IT company Sonda SA acquired Mexican IT firm NextiraOne Mexico SA de CV for $29M. The Chilean company has an aggressive $500M expansion plan between this year and 2012, which includes the recent acquisitions of Brazilian companies Telsinc and TI Procwork and Colombian company Red Colombia. The acquisition will bring Sonda’s

annualized sales in Mexico to nearly $100M, the company said in a filing with the Chilean securities regulator. Sonda is the leading company in the Chilean IT sector, accounting for close to 26% of the local market. It provides IT solutions in nine Latin American countries including Chile, Brazil, Colombia and Mexico.

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Special Event - Exclusive to GlobalizationToday

$50,000-a-day BUSINESS BREAKTHROUGH SUPER CONSULTANT JAY ABRAHAM PROVIDES A NEW SLANT ON OUTSOURCING!

Marketingg legend g Jayy Abraham,, now turningg his sights on outsourcing.

Outsourcing is rapidly becoming one of the most strategically critical areas of a company’s operations. But, if every company does the same thing the same way – even outsourcing, guess what? Your short term advantages all get minimalized and marginalized. We decided to try a bold, daring (and some would say audacious) experiment for our readers and the companies you represent. We contacted famed business growth expert Jay Abraham and asked him to put his highly innovative mind behind coming up with some breakthrough, non-traditional (highly inventive), ways companies could outsource different elements of the business than most of you focus on now. Why Jay? Well first, NOT because he’s an expert at outsourcing. He is not! But what Jay IS world-class “masterful” at doing is taking approaches, concepts, strategies, and success processes from the over 465 different industries (Jay has successfully worked for) – and engineering wildly profitable and staggeringly fresh breakthrough concepts that make or save his client companies millions (or multiples thereof). rly Also, Jay has personally advised nearly xperts 200 of the world’s top consultants, experts and business authorities. None came to ology. They Jay for help with their methodology. mmand all wanted Jay to help them command ng or greater prices, superior positioning preeminent market perception. For example, he’s helped the Deming organization and the world’s leading

1,000 Globalization Today readers will be admitted to a 90 minute tour-de-force re-examination of outsourcing processes, functions, activities and elements in your company. Register your seat below. (First come, first served.) multi-variable testing company, and the world’s largest litigation strategic consulting company, and top technology companies, manufacturing and on and on. Bottom line? We asked him to look at untapped areas, overlooked opportunities, undervalued possibilities that a traditional minded outsourcing professional may not think about. If his 25 year track record is any indication, those in attendance will witness some utterly (and unimaginably valuable) new things you can do for your company that will be highly unconventional (and mostly street-smart “entrepreneurial,” not corporate). Jay’s doing this partially as a challenge. Partially in hopes he’ll come up with some appealing possibilities your company will want his help engineering. Either way, it might be the absolutely most fascinating (certainly most unusual) 90 minutes you spend on a conference call this year.

“Probably the finest marketing mind around today.” ~ Success Magazine

“Jay Abraham is the real thing.” ~ Forbes Magazine

“One of the best business minds I’ve met.” ~ Stephen Covey, Author, 7 Habits of Highly Effective People

“Jay knows how to get maximum results from minimum efforts.” ~ Investor Business Daily

“Jay’s innovative and dynamic approaches are the most powerful and practical I have ever seen.”

F FREE SPECIAL BONUS: All event eve registrants will receive FREE Digital Copy C of Jay’s Best Selling Book Containing Hundreds Business Bo of Exam Examples of How His Non-Linear Mind Works www.ProfitonPerformance.com/Outsource w

~ Brian Tracy


BLOG BEAT NEWS AND COMMENTARY FROM BLOGGERS AROUND THE WORLD OUTSOURCING NOT MEETING EXPECTATIONS FOR GROWTH—WHY? www.procurementleaders.com/blog

by Steve Hall

One line of thinking goes that outsourcing would be a natural choice during the downturn as companies seek to tackle costly and often inefficient functions. But while it’s well-recognised that this is far too simplified a view, it’s safe to say that, as yet, the outsourcing market hasn’t witnessed the jump in 2010 that many were predicting. Yet it’s not obvious why that is. In a recent analysis piece, Procurement Leaders looked at some of the reasons that might be—companies minimising risk exposure, lessening large-scale projects—and reaches the conclusion that the outsourcing industry, though ambitious, has work to do. For those that keep up with some of the excellent industry blogs around, there’s a clear mountain of very smart people who are reconsidering what outsourcing can do and it seems that there’s still a large degree of education to be done around how outsourcing should be treated. If, for example, CIOs are increasingly focusing on cost optimisation and regarding risk and compliance measures as crucial to their organisation as a recent study indicated, that says something about what they will be looking

http://outsourcingbpo.cbronline.com

for in outsourcing. Likewise BPO, the gap between the perceived areas where innovation is a possible outcome of an outsourcing relationship and the reality being achieved at the moment is still surprisingly wide. Again, for all the bold examples of companies that take the “If it isn’t what we do, we give it to someone else” approach, there’s still a huge amount in the current climate that doesn’t have the mindset to take those risks. To what extent it’s the outsourcing market that needs to develop and to what extent it’s the businesses which need to have a clearer idea of what they should be getting from an outsourcing relationship and what governance structures they need to have in place to do so are interesting questions. Procurement can certainly be at the heart of that, though. Outsourcing isn’t always procurement’s domain, but few are as well positioned as the CPO to demonstrate what exactly outsourcing can and should offer. ff Perhaps it’s time to ask vendors some probing questions.

EU CONUNDRUM: DO WE REALLY WANT BRUSSELS BEEFING UP DATA PRIVACY ON OUR BEHALF? by Gary Flood

Is our new government, committed as it is to rolling back the state and curbing electronic intrusion and collection of needless data about us, set for an early confrontation with Brussels on the subject of data privacy? That seems very possible, given reports the commission has told the Ministry of Justice it needs to give more powers to the Information Commissioner’s Office (ICO), the UK privacy watchdog. Apparently, Brussels says the current data-privacy legislation isn’t tough enough and that the ICO should have more powers—powers some (and not just those in Number 10) might think a tad strong for the British taste. How about taking away court powers to refuse the right for people to have information about themselves corrected or deleted? Or powers to check other countries’ data-protection practices before international transfers of data can take place? How about random checks on people or data-processing

organizations, or penalties after such checks, as EU law says it should? As far as the commission is concerned, the UK is failing to meet EU standards and we could eventually be hauled up in front of the European Court of Justice, which is what happens to all naughty EU countries that don’t follow all the rules. In the words of the relevant commissioner, we have a “guard dog tied up in the basement” by not making the ICO scary enough. Well, as we all know, the ICO was given new powers this April to increase fines of organisations it finds in breach of the DPA of potentially up to half a million quid. It regularly names and shames bodies that it feels have flouted basic information-security hygiene on its Web site; and at least in the abstract, we all agree that we could be doing more as an industry to protect customer and citizen privacy. Where do we draw the line? Security vendors and consultants are always

demanding transgressors of security regulations should be put in the public stocks, tarred and feathered, struck offff being company directors—you know the story. We sort of listen and agree but feel it is all just posturing to give them a business case, which most reasonable business people feel, to some extent, they legitimately have. But making the ICO radically stronger? Changing UK law to allow more Big Brotherr snooping activities? I’m really not sure about that. Nor do I suspect that our new prime minister will either, or his team. Recall that six weeks in, ID cards are dead, the DNA database rules are to be tightened, CCTV is to be much more highly regulated and the children’s database CheckPoint is to be eventually scrapped—quotes like “This government is going to transform our politics so the state has far less control over you, and you have far more control over the state... It is outrageous that decent, law-abiding people are regularly treated as if they have something to hide.” Two agendas are heading for an almighty collision here. In the middle is the ICT leader, at least potentially, trying to work out where to put his head in a potential information-security war. Be careful out there—it may get nasty.

globalizationtoday.com

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THOUGHT LEADER

IS OFFSHORING ON THE RIGHT TRACK? By Yann Gloaguen

Mutually resonant service level agreements     

           Over the past few years, offshoring ff has established itself as a necessity in the global business landscape. The clear financial and performance benefits of offshoring ff certain types of business and IT functions such as call handling and software development and testing have made the practice a compelling choice for a whole slew of vertical markets worldwide. In spite off its popularity l andd maturity, off ffshoring h stillll suffers from f a variety of adoption barriers and common mistakes that mean the difference ff between success and failure. Balancing the benefits of offshoring ff against maintaining high-quality processes and eff ffective risk management is critical. One common mistake is failing to ensure that a secure, reliable and agile connection supporting efficient communication is established between the client and the offshore ff team. Another issue can be the failure to recognize the importance of cultural alignment. Although this is often assumed to be a given, communication effectiveness ff may still be challenged if completely ignored. STRUCTURED SLAS AND A RISK-REWARD SYSTEM From a global perspective, some enterprises keen to benefit from offshoring ff also fail to structure service level agreements (SLAs) correctly. While all would agree that effective ff SLAs are essential, few really ensure that the SLA is crafted in a way that motivates both parties to foster a partnership rather than a mere supplier-customer relationship. SLAs should include a risk-and-reward system to encourage good performance. Without this, any incentive to define and action a processimprovement plan core to a true value-add proposition is compromised. Good performance must be incentivized as well as bad performance penalized. A risk-reward agreement where both parties have a measure of transparency is far more likely to succeed than one where some issues are kept behind closed doors. Moreover, an outsourcing relationship must mu st be flflex exib ible le, an andd in a tar arge gett-ba base sedd riisk sk-r -rew ewar ardd re rela lati tion onshhip ip, bo both th saavi ving nggs annd beenefi nefifits tss aarre sha h reed. d.

ACHIEVABLE TARGETS AND DEFINING METRICS When advising our clients at SQS, we often find that SLAs are not sufficiently structured towards this end, with many allowing risk-averse offshoring ff companies to wriggle out of accepting their due share of penalties while safeguarding their benefits. Often key performance indicators in offshoring ff SLAs focus on metrics and targets, ignoring means of measurement, thus resulting in inconsistencies between expected and actual behavioral or other outcomes from SLAs. The clear definition of exact metrics and measurements empowers enterprises to build better, more flexible and more effective ff governance models, which minimize communication issues in offshoring ff projects. However, this standardized approach can function only if everyone involved can agree that the measurements are a true indicator of performance and the agreed targets are achievable. MEETING MILESTONES From the business perspective, perspective percentage of milestones met is a metric of paramount importance. This is intended to be a true indicator of expected delivery time and a reflection of an offshorer’s ff responsiveness. Discussion of milestones as a metric is often stormy due to varying opinions of the definition of a milestone. In fact, we have seen milestones mistaken for tasks and vice versa in many offshoring ff arrangements. Milestones do not have duration; they are the product of multiple tasks delivering towards one project objective especially in offshore ff testing environments. For example, a test approach analysis is not an example of a milestone, but a test approach document signed off ff is. When tasks are called milestones, the target result is to weaken and omit dependencies and also to increase the number of milestones, which dilutes failures. What’s also essential to consider is which milestones to choose. They should always be handpicked from project plans, ensuring that the ones selected will impact directly on the business if missed, although one could argue that failing to meet any of them will be detrimental. Selecting them all, however, will result in diluting the perceived impact of a missed major milestone, which may in fact be far more significant than many others combined. SLAs alone do not deliver successful offshored ff projects. They cannot predict nor solve the specific problems that occur on the ground and can never be a substitute for the creative, pragmatic management that comes from offshoring ff management experience. The same applies to offshoring ff in a broader context—without a hands-on, competent management stru st ruct cture and a shared knowledge base between in-house and external cont co ntra ractor orss of all all ttyp ypes es, buusiness processes will ultimately suffer. ff

RESOURCE BOX

Yann Gloaguen Global service delivery manager at SQS UK

Yann Gloaguen is the global service delivery manager for Northern Europe, India and Africa at Software Quality Systems (SQS) UK. Got any questions? Contact him thru yann.gloaguen@sqs-uk.com. For more information on SQS, log on to www.sqs-uk.com.

globa gl loba obaliz lizat at ont ati ontod o y.c oda .ccom

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ADVANCED ANALYTICS

Analytics y Deliverin Shocking Results The rise of advanced analytics changing outsourcing as we know it By Ali Comelek “I have been helping outsourcing firms pay their clients millions of dollars,,� responded Arijit Sengupta to my cheery “So what have you been doing?� A grad duate of the Harvard Business School and Stanford University, he is now the IAOP amb bassador for India and a member of the editorial board of Globalization Today, he exp plained that the advanced-analytics company he founded, BeyondCore, Inc., has be een helping five of the 10 largest outsourcing providers save money for their clientss by helping them avoid the hidden costs of errors. “Advanced-analytics solutions reveaal untapped revenue opportunities or hidden costs and then provide actionable in nsights that help you dramatically increase revenues or reduce costs,� he clarified. A Arijit further explained that yesterday, an insurer would pay a provider $10M to processs claims and the conversation would focus primarily on how cheaply the provider co ould process those claims. Today, the provider can use advanced analytics on the claaims data to identify patterns of errors that lead to claims overpayment or cause expen nsive claimsreconciliation activity. By using this data, they can easily reduce these d downstream costs and, for example, generate $25M of additional benefits for the clientt. Now, the question is: “Who wrote whom the check?� Did the customer write a $10M check to the provider, or did the provider in fact write a $15M check to the customer? Tomorrow, outsourcing conversations will no longer focus on the cost of processing the claims—that would be table stakes. The key question will be: “Which provider has better advanced-analytics capabilities and can thus create greater revenueenhancement or cost-reduction results?

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 Today July 2010

DETECTING A PATTER P N

This vision of the outsourcing ecosystem sounded real interesting. Bu ut how real was it? When I asked Arijit for f examples of value created, he shared th he following: “While analyzing the invoicee process of a Fortune 500 manufacturerr, we found one pattern that counted for 80% of the errors in the amount paid and d was costing the company $2M annually at just one

processing center. The manufacturer gave clients who paid on time a small discount on the manufactured goods. However, 37.5% of the operators were, incorrectly, also applying these discounts to thirdparty line items like freight. This was a systematic error that was easily corrected once our analytics software revealed the underlying pattern. Often, the client or provider is aware of the problem but can’t solve it in the


ADVANCED ANALYTICS

HOW DO YOU SE SEE ANALYTICS IMPACTING THE OUTSOURCING E ECOSYSTEM?

“C Consumeers, aparrt from om wanting ng llow ow prices, are also looki kiing ng at difffffferentiat ator ors in ser ervi vice vi ce offffer erin ings gs and th thereforre arre mo moree val aluue-conscious. The ouutsourcinng induusst stryy will il see in the days to come a convvergencce oof the traditional bac ackk offi ffice ce proceesses withh annalytics to op optitimize processes, reevenue, e, bui uild ld forrecasts tss aand technolog ogyy to ttak akee servicee de delivery ttoo th the next lev eveel.” – Ashutosh Vaiddya, ya, Head, Wiippr pro BPO Soolu lution onss

absence of the underlying pattern revealed by advanced analytics. A mid-sized US health insurer had significant concerns about claim overpayment. Despite significant efforts ff over six months, they and their provider were unable to solve the underlying problem and the client was quite dissatisfied. The provider was still meeting the agreed-upon service level agreements and was actually delivering higher-average quality than the original in-house process. Thus, cancelling the outsourcing contract was not likely to be a useful solution and could actually open the client up to significant penalties. BeyondCore analysis revealed a single error pattern that counted for 94% of the overpayments and was costing more than $5M annually. Whenever the amount paid was negative, 83 out of 200 operators were typing it as positive. For example, they would type $200 instead of -$200, leading to an overpayment of $400. Once this underlying pattern was revealed, the provider was able to eliminate the problem in just three weeks. Turned out that these 83 operators did not realize that the amount paid could be negative and were actively ‘correcting this error’ without realizing that they were actually causing a claim overpayment.” On the revenue-enhancement front, Arijit described a case where an S&P 500 bank was unnecessarily rejecting potentially profitable credit-card and loan applications. Advanced analytics revealed the underlying pattern to those rejections and helped the bank minimize such rejections, thus increasing their revenue. Other advanced-analytics solutions have helped firms by improving

“A Analytics is thee ‘s‘sma mart’ or ‘in intellligent’ part of the overall bus usiiness-pr process so solu lutition. As outsouurccing coompaniees move ve towards offering ff more re end-too-eendd serv rvicess, analytics will need to be em mbeddded de in the solutions. At Genpact, we have ha ve launnched thhee Smart Ente terrprise Pro roce cess sses es (SEPSM M) approa oacch that takees ouur cuust stomers on the joourney fr th froom efficien ency cy too effectiveness. ff ” – Paankaj Kulshreeshthaa, Seniior Vice President, Anaalytics al annd Reseearchh, Genp npact “W We wiill see a convvergence of businessconsultting, co ti technnology gy and KPO PO services in the futuree. Analyticcs hass been tra raditionally offered ff as a stand-aloone serrvice which typically suffers ff from m adoptioon anndd scale. So it is very important thaat the annaly lyticcss is re relevant to the business coontext annd embeddeed in the business process. This can happpenn onnly if there is an inteegr grat atioon of the seervicces that h t interact with the businnes ess,s, deeliver tech chnolo loggy and provide the he analytics.” – Kishoor Guumm marrra raju, Strategic Buusi siness Practice Head, Know wledg dgee Services, Infosyys ““Correect usagee oof analytics will help you take the riright deci ciisi s ons; it will allow you to have a bettter hanndle on the risks expected and create te a govvernaance moode d l that will enable imprrovedd conntroll on the outsourcing program.” – Deeepannjan Bannerjee, As Associate Vice President, Zenssar a Tecchnoologi ol ies “Bettter annalyt yttic i s that inc n orporate new data pointts shoouldd coontinue to drive both lift and efficieency, trransllating into more proficient poolicyy admin i isstrrattion, impproved cost estimation, sm marte ter porrtfoolilioo manage gement, thus leading to bet etter seervvicce deliveryy.” – Manish Jaiswal, Naatitonnal a Saless Maan anager, Insuurance BPO Solutions, ACS, S, Incc.

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ADVANCED ANALYTICS

PLEASE SHARE AN EXAMPLE OR A SCENARIO OF ANALYTICS SIGNIFICANTLY IMPACTING CUSTOMERS.

“Blazent was brought in to help out with a large government organization that was having significant issues with their service provider. Blazent’s analytics discovered that an entire building of servers had not been included in the day-to-day operations inventory, and so was without backups, anti-virus or other operational tools. Critical data was lost, and the bill did not accurately reflect services delivered. Blazent was able to identify areas where the contract was out of compliance, then report on improvements over the course of problem resolution. This shared view of trusted data completely turned around a very contentious relationship.� – Gary Oliver, CEO, Blazent “One of our customers, a financial-services company, was able to generate $200M in incremental sales using a combination of response, propensity and spend models for their credit-card offering.� – Kulshreshtha “Predictive-analytics (PA) software can comb through current and past customer-service calls in search of speech patterns that indicate dissatisfaction. Carriers can home in on that data to determine what is driving customers to call. Policies and procedures can then be put in place to correct issues and increase customer satisfaction.� – Jaiswal “Segmentation and profiling of consumer base to arrive at predictions of which consumer has what probability of responding to marketing promotions, maximize consumer lifetime value, generate more revenue through cross-sell and up-sell targeted consumer campaigns� and “Fraud control models that are implemented real time in the approval and decision engines, for example in credit cards, when a card is swiped and waiting payment authorization.� – Vaidya “All organizations can reap significant benefits by becoming more analytical. The UK’s Royal Shakespeare Company, for example, examined seven years of ticket sales to optimize its share of wallet among its existing customers—and to identify new audiences. The RSC’s targeted marketing program increased the number of “regulars� by more than 70%.� – Dave Rich, Managing Director, Accenture Analytics

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 Today July 2010

the pricing strategy for their products and services, targeting their offerings at the most likely customers and optimizing supply chains to minimize stockouts while minimizing inventory. Arijit explained, “The underlying algorithms behind most advanced-analytics solutions are often extremely broadly applicable. Thus, the value-creation opportunities are only limited by our imagination. I am always pleasantly surprised and energized by the new ways and new domains in which our partners and customers decide to use our technology.� ADVANCED ANALYTICS: THE KEY TO OUTSOURCING’S FUTURE?

Dr. Warren McFarlan, Harvard Business School professor and investor in analytics firm BeyondCore responded, “In a rapidly commoditizing outsourcing market, advanced-analytics capabilities are one of the critical differentiators that leading outsourcing firms can leverage.� Audrey MacLean, a well-known Silicon Valley entrepreneur, investor and consulting professor at Stanford University who has been recognized in Forbes’ Midas Touch list of top investors added, “As traditional sources of value creation are exhibiting diminishing returns on investment, outsourcing firms are looking for new ways to derive financial benefits for their clients. Advanced-analytics solutions are rapidly becoming the key new source of value creation.� Clearly, if such leading academics and investors were taking this space seriously, I needed to learn more about it. I reached out to several analytics firms and outsourcing providers and most of them seem to be already leveraging advanced analytics in key outsourcing relationships. (See the sidebar for excerpts from their responses.) I left Arijit with one question: “What would you change about how analytics is being used today?� He responded, “Customers still see analytics as an add-on offering. It should not be an optional thing the provider does for extra credit; it should be a core part of the outsourcing agreement. Customers should require quarterly reports on how much money their provider saved or additional revenue they generated by leveraging advanced analytics. At the same time, customers should appropriately

incentivize their providers by sharing the net benefits with their providers. Here’s a good example: Eons.com set the right incentives with their provider. Including higher basic rates and bonuses paid, they ended up paying the provider four times as much as they were previously paying. However, the provider drastically reduced the error rate of the process and the resultant downstream costs to deliver an overall 67% total-cost-of-ownership reduction to Eons.com. Customers need


ADVANCED ANALYTICS

WHAT WOULD YOU CHANGE ABOUT HOW ANALYTICS IS BEING USED TODAY?

“I would change the perception that buying technology will create analytics-driven value. Starting with the business problem and applying the appropriate mix of data, people, process and technology is required. The need for a holistic approach that overcomes organizational silos makes driving value through the use of analytics a challenge for most companies. In addition, organizations should realize that advanced analytics can be used in non-traditional areas as well. A new trend centers around the use of advanced analytics for workforce issues as organizations focus on improving workforce planning through a better understanding of supply and demand. On the supply side, predictive models are being deployed in recruiting and retention. On the demand side, models are being developed that use macroeconomic data to predict demand at the employee level. This can be a true competitivedifferentiator for organizations. Given the use of outsourcing in the delivery of HR-related services, advanced analytics for HR and peoplerelated issues will have a big impact on that segment of the outsourcing marketplace.” John Houston, Principal, Advanced Analytics and Modeling Practice, Deloitte Consulting, LLP

to be very careful that they are not being penny-wise and pound-foolish here.” Arijit added, “Provider CEOs also have a major role to play. While many of the senior executives at leading firms understand the importance of advanced analytics, most of them still have not managed to align their corporate culture around this opportunity. Even if the CEO fully understands the importance of analytics, the organization as a whole cannot generate tangible results if the line managers or functional

managers see analytics projects as a distraction from their core job of keeping the process running. Moreover, operational organizations have a systematic preference for stability and some suffer from a ‘not invented here’ syndrome. The world of analytics is changing rapidly with new approaches and algorithms being developed every month. Provider organizations thus have to foster an eagerness for new ideas and new approaches and forget about the way they did things in the past.”

“There is a need, in most companies, to instill a culture that is data- and number-friendly. With cloud computing and open source slowly gaining popularity, many of the analytical models should become ‘off-the-shelf’ service tools to help increase speed of analytical strategy adoption and reduce development effort. For certain specific business problems, custom-built models will of course remain the reasonable choice. However, for the oftconfronted organizational challenges and business issues, a pay-per-use analytics model library should become available whether at a company or an industry level to help reduce time-intensive effort and gain speed.” – Vaidya “Analytics alone is not sufficient, but the thorough knowledge of the insurance workflows, namely channel of distribution, products, sales, underwriting, claims, etc. coupled with predictive models are important for success.” – Jaiswal

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THE 2010 IAOP HALL OF FAME AWARDEES

A Legacy g y for Tomorrow’s Outsourcing Get to know more about this year’s IAOP Hall of Fame inductees The International Association of Outsourcing Professionals (IAOP) gave recognition to the unique leadership of three outstanding professionals as they got inducted into the Hall of Fame at the annual Outsourcing World Summit. Held in Lake Buena Vista, Florida last February 16, it is a prestigious award given to individuals for their contribution not only to the industry but society as a whole. The awardees were selected by the IAOP’s Advocacy and Outreach Committee, with Neo Advisory CEO Atul Vashistha as chairman.

Dr. Ganesh Natarajan on Dewang Mehta Former president, NASSCOM What has been the effect ff of the late Dewang Mehta’s induction into the IAOP Hall of Fame on NASSCOM? Being recognized in what is largely a customer forum, which is what the IAOP is all about, is good because it places recognition on the fact that the association has done good work for the industry. The reason why India is so prominent in global offshoring ff is because of the good work done by people like Dewang Mehta. So it’s very important for us. Does the award help in the global footprint of India and the evolution of the outsourcing industry in terms of the IAOP’s position in the marketplace?

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All the mature offshoring ff India has done had led to an enhanced brand recall but the award reinforces the fact that we are in the right direction. It also focused on some of the lesser known factors about India and the kind of work we do in social responsibility and community development. It all helps to highlight the fact that here’s a mature industry with good legal and IP protection and everything else that includes a comprehensive social responsibility program. Part of what we do as the Advocacy and Outreach Committee is to look at the multi-faceted aspects of outsourcing. Not only have people been successful in terms of what they have done as part of their profession but they’ve given back in some way that contributes to a larger whole. Tell us more about social responsibility.

As this industry has evolved, how important is it to a company, a country and the industry’s reputation? I think it’s extraordinarily important for our industry because obviously when you’re exporting close to $50B, people do ask. Saying that this is all about job relocation to India is not the whole story. My company is very active in community health and education programs in India, South Africa, Australia, the UK and the US. It’s very important for us to be seen as a company helping in giving job opportunities not just in India but everywhere else. What you see as a visible successful part of India probably covers a huge fraction of the population. Close to 250 million people are below the poverty line and we think of what we can do to improve their lot. I was mentioning at the conference our


THE 2010 IAOP HALL OF FAME AWARDEES

Being recognized in what is largely a customer forum, which is what the IAOP is all about, is good because it places recognition on the fact that the association has done good work for the industry

initiative to promote education, health and re-employment. NASSCOM and its very active non-profit foundation called NASSCOM Foundation has set up various knowledge networks enabling displaced people to find better jobs and work in small parts of the country. There’s an increasing focus today in India that all the successful companies should contribute a significant portion of their profits towards corporate social responsibility to really make way for a new, developed India.

we expect it, we’ll probably see that 12% growth in the industry returning to 15% or 18% next year, but getting back to 20% will probably take a couple of years. The good news is that most companies do realize that offshoring ff is a reality and they will look at more opportunities to reduce costs, improve quality and innovate. I think this is a growing industry and that despite some inevitable wobbles, it will come back to full growth very soon.

Let’s talk about the global recession and its impact on the industry and on India. As we’re starting to recover from it, what do you foresee will go forward?

What about the public’s perception of outsourcing and offshoring? ff Do you foresee this continuously evolving and as terms that are not going to be so volatile?

The industry was growing close to a 25% growth which came down to a much lower 5.5%. We do expect, given the traction we’re seeing with existing customers, that most companies will go back to doubledigit growth, but it could probably be 12%, 13%, 14%. I think it will take a couple of years and once the stimulus effects ff wear off, ff you’ll see what really the recession’s impact is on global recovery. If it happens the way

It is an emotional issue. In the US, for instance, where you have an unemployment rate of 10%, this is a fair question. As a responsible industry, NASSCOM and most of the other companies are now seeing how we can employ more people in the US. But if you look at most companies noted on Fortune 50, almost 60% to 70% of their work is offshored, ff thus creating jobs abroad instead. So you can’t expect all of that job

creation to happen in the US. But I think if it happens on both shores and hopefully if growth happens across the world—if people see the profit value, the time to market value and the job opportunities it opens—this will be less of an issue. You have to see how you can do offshoring ff responsibly with as much positive impact to society as possible. Do you see a more balanced effort ff from companies to practice outsourcing? Do you see that trend continuing? I think so. We do many of our projects offsite, ff doing it in our offices, let’s say in San Jose, Princeton or Chicago. We have centers in Poland and we’re looking at setting up one in Latin America, then offshore ff to typically India and China. Indian companies today have 400 to 450 centers outside, so it’s not entirely concentrated within the country. That’s the trend of the future. It’s just a question of the globalization of services— getting work done where it makes sense the most and not just looking at costs by either offshoring ff or doing it onsite. It can be a combination of both. globalizationtoday.com

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THE 2010 IAOP HALL OF FAME AWARDEES

Dm mitryy A. Losch hinin n Pre esident and CEO,, Luxxoft Is the global viewpoint of the IAOP important to you from the standpoint of what you are doing and being recognized in that context? The IAOP is on the right track and has done a really good job of consolidating this industry. Your opinion is definitely important. Tell us about the global economic recession and its impact on your business last year. What do you think will be its effect ff going forward? The impact very much depends on what perspective you look at. Look at the financial sector, one of the most damaged by the downturn. Despite what happened—lots of layoffs, ff shuffling, investment banking struggling and the fact that only trading brings in money—this sector has the biggest growth potential right now because there are new regulations and a new state system. There’s so much happening with trading in terms of new IT platforms, etc. So by definition, this industry requires lots of support in order to grow. It provided a huge opportunity, resulting in growth

“

The IAOP Hall of Fame award will definitely help Luxoft to further strengthen its reputation. Having a high-quality one is vital in a service industry and by all means is a key component for us

�

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 Today July 2010


THE 2010 IAOP HALL OF FAME AWARDEES

for financial services in 2009. I assume that although it may not double, we will continue to see growth by approximately 50% in 2010. Are you addressing financial services globally, not only in the US but also in other countries that are challenged by the same issues? Technology companies stepped back and reduced some of their budgets on research and development and their growth has been very limited or maybe flat in these areas. At the same time, certain industries are booming because technologies like media and social networking are changing the landscape of these industries. The new environments require lots of IT work, offering ff huge opportunities for, say, Google, Microsoft and Apple. These opportunities in turn call for deep technical and domain skills on the vendor side. You need to be really well-prepared for this new world. Close skill-match along with creative mindset is what will get you right in the game these days. As opposed to having a lot of employees, you are positioning your business to have the cream of the crop—good thinkers, technicians and creatives. The quality of work and having a really good track record are more important to us. We are very selective in terms of the people and the projects we take on and in how we commit to them. Even though Atul mentioned that we’re modest on our growth, the company still managed to grow by nearly 40% average annually in the past three years. Do you think that this award will help you open up new markets and give you a better reputation? The IAOP Hall of Fame award will definitely help Luxoft to further strengthen its reputation. Having a high-quality one is vital in a service industry and by all means is a key component for us.

Josshua a Jew wett CIO O, Fa Familly Do ollarr When they called from the IAOP saying they want to induct you into the Hall of Fame, what were your initial thoughts? Outsourcing is relatively new in retail. Our company has been using it to support our growth as opposed to many that have used it to reduce their cost structure, so I guess that makes us a little unique. We are sort of a hybrid. I didn’t consider our efforts ff to be terribly innovative but after speaking with folks at the group, I started to think about it a little differently. ff Did you realize the direction that you were taking the company in, the impact the award might have for you? No. There‘s two colleagues being inducted simultaneously, both leaders in Russian and Indian outsourcing, respectively. Then there’s little old me. I feel humble about it. The committee inducts practitioners of outsourcing and providers of outsourcing services, and they did a really nice job with the event. The IAOP had a lot of good speakers and topics that I enjoyed. It’s always better when real people get up and tell their story. They brought in people from Disney and Microsoft who were not from their sales organizations but were people who had done things with outsourcing within their own operations. I found it all very interesting. Is the global viewpoint of the IAOP important to you from the standpoint of what you are doing and being recognized in that context?

The IAOP had a lot of good speakers and topics that I enjoyed. It’s always better when real people get up and tell their story. They brought in people from Disney and Microsoft who were not from their sales organizations but were people who had done things with outsourcing within their own operations. I found it all very interesting

I feel more flattered than anything else. It is nice to be recognized by one’s peers for doing a good job. How has the global economic recession impacted your business last year? What do you think will be the effect ff as you move forward in terms of growth and development? Customers have different ff needs. Some are more acute at this time, so what is it that we can do in our business to service their needs and be more relevant to them? We have changed the assortment in our stores and shifted more to consumables, as we call them in the retail industry—things you need to use in your home daily. When we started 50 years ago, we only sold apparel. We still have a great assortment of clothing, but the majority of our goods have migrated to consumables. You shift and sell items customers are more

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ADVERTORIAL

Industrialize and innovate By Jo G. DeBlaere, chief operating officer—Accenture and Jeffrey D. Osborne, chief operating officer—BPO Industrialization: It isn’t a pretty word, especially when spoken in the same breath as “services,” a word that carries connotations of customization and a personal touch. After all, “industrialization” shows up for work not in a business suit but in a pair of overalls. But then, when applied to the outsourcing of services and business processes, that’s precisely the source of its value. The industrialization of any activity represents a relentless drive to discover the essence of how that activity is optimally done, and then to do it in exactly the same way every time. It breaks a task or capability into smaller components, optimizes them, eliminates redundancies, automates and standardizes wherever possible, and then drives the work itself to the most costeffective and competent workforce available. The result is that companies get to mitigate the biggest threat to a business: the unknown. Outsourcing has succeeded because of its ability to reduce risk, drive standardization, increase productivity, and improve reliability and predictability within the domains it touches. In other words, where outsourcing has been successful, it has been so because of its ability to industrialize assets, capabilities, functions and tasks.

Not just standard work, but the right work Industrialization is often thought of as a way to standardize production or processes. That’s part of the picture, but only one part. Using standardized production methods, a company could make the very best concrete lifejacket in the world—faster, cheaper, and better—but it obviously wouldn’t have any practical value. In much the same way, a company can standardize IT infrastructure and applications using a one-to-many platform or through rationalized technologies. But unless standard technologies are aligned with the correct business processes, the standardization does not produce sufficient business value. True industrialization goes closer to the heart of the matter—taking a company beyond “standard” work to efficient and effective work.

But just how does industrialization work exactly? The companies that have been most successful in driving business value through industrialized outsourcing of business processes have leveraged the following principles. Apply lean and Six Sigma principles to the services environment The majority of companies do not spend the time or money to look in detail at the efficiency of their non-core business processes. An outsourcing provider, however, can give these kinds of processes an end-to-end review and apply so-called “lean” principles and Six Sigma approaches to drive time and waste out of all the handoffs, and to eliminate needless variations when they occur. To innovate, get the noise out of the system In an outsourcing environment, innovation is actually rooted in industrialization. The inefficiencies in processes and functions— redundancies, delays, performance issues, multiple operating models, and the like— constitute “noise” that has to be eliminated if the voice of innovation is to be heard. If a company can get the operating environment stabilized and running optimally, it can look beyond today’s urgencies toward the innovations of tomorrow. It will also have savings generated by those efficiencies that can be plowed back into making new ideas actionable. Focus on what’s common, not only what’s different Often, the biggest sticking point that companies face internally as they move to adopt advanced industrialization principles is the belief that their operations are somehow different from the norm. The key is not letting pockets of uniqueness get in the way of improving those parts of the business that really can benefit from solutions and approaches that have been tested in the fires of experience with multiple companies. Industrialization lets a company use common approaches where those are workable, and particular ones where those are appropriate.

Measure outcomes, not inputs Challenging though it may be, executives often need to change their management mindsets when working with an outsourcing provider. If they try to stay “down in the weeds” and manage the inputs—every detail of how the process is delivered—they may simply add more noise to the system and disrupt an otherwise smoothly flowing industrialized process. The answer to the problem of managing inputs is simply stated but sometimes difficult to achieve: trust. The establishment of trust is essential to driving greater value from industrialization. Trust the process, not only the people What a company relying on an outsourcing provider really needs to do, in short, is put faith in the reputation and qualifications of the provider’s industrialized model, not simply the personalities who designed or are implementing the model – trust the process, in other words, not just the people.

Conclusion Many business activities and processes now being industrialized within contemporary outsourcing solutions were once considered out of the reach of effective management. But industrialization is enabling executives to look with more penetrating insight into their operations and processes, and freeing their organizations to think and act in more innovative ways. That which can be made repeatable and predictable needs to be made so, leaving the considerable space that remains as the foundation from which to innovate and grow. This article is based on [or: is an excerpt from] ‘Industrialize and Innovate,’ which originally appeared in the January, 2010 issue of Outlook, an Accenture publication. Used with permission.

You can read the full article at: http://www.accenture.com/Global/ Research_and_Insights/Outlook/ Journal/Feb2010/industrialize.htm


THE 2010 IAOP HALL OF FAME AWARDEES interested in, so now, it’s more food and other household necessities. You have to turn that type of inventory much more quickly, and it puts a lot of stress on the supply chain in order to stay profitable when you change the mix of goods in your store that dramatically. We’ve had to work with the technology to shift and fine-tune to meet the needs of the track we’re riding on right now. One of the things you felt was a catalyst for you getting this award was being a bit of a trailblazer in the retail industry in terms of outsourcing. Do you see yourself in front of the pack? Do you see this as a continuing trend in retail, or do you think it will be a hit or miss?

we identified the first application that we sent to our offshore partner to sunset, I asked, “How many test conditions do we have for this application?” My folks said we’ve got 175, and I asked if they’re certain because that is the extent of what our partner is going to check. They’ll only run through the 175 and give us an e-mail, indicating “green” or “red” test results. My folks honestly believed there were only 175 test conditions. Come to find out after a few months of not communicating very well with our

partners offshore, we realized that we, by the count of our partner, had over 800 test conditions. There was a lot of testing that had never been documented. You discover that there is more wisdom that you rely on in your own culture than even you fully appreciate and understand. That is what everybody will tell you is going to happen to you and that you should avoid, yet we still ran into it. We worked our way through it, but sometimes I think you have to learn some things yourself, often the hard way.

I think it’s a very standard operating procedure these days. Every business has to customize its outsourcing solution to meet its particular needs, and you have to evolve all of the aspects of your operation such as your human capital as you go along. Our outsourcing was designed as a flex capacity originally to allow us to take on new and different challenges as well as support the classic processes with which we started and were transitioning out of our operations. It has allowed us to shift our people into being immersed in the new and gradually let go of the old. Our partner offshore helps us maintain the current and fine-tune it while building the new. What is one of the most favorable outcomes that you’ve had in outsourcing and what was the most unexpected circumstance that you ran into? When I go and meet with what is an extension of my organization, which just happens to be on the other side of the planet, I am always so pleased with the enthusiasm and energy of the team. I come back charged up with all that’s possible when one applies creativity, imagination and enthusiasm. They’re part of the team at Family Dollar. They’re so eager to hear about our business and what they’re doing to be helpful. I think it’s important to stay engaged in multiple levels in the organization. It was unexpected that you have to learn some things yourself. I remember when

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Industrialize and innovate By Jo G. DeBlaere, chief operating officer—Accenture and Jeffrey D. Osborne, chief operating officer—BPO Industrialization: It isn’t a pretty word, especially when spoken in the same breath as “services,” a word that carries connotations of customization and a personal touch. After all, “industrialization” shows up for work not in a business suit but in a pair of overalls. But then, when applied to the outsourcing of services and business processes, that’s precisely the source of its value. The industrialization of any activity represents a relentless drive to discover the essence of how that activity is optimally done, and then to do it in exactly the same way every time. It breaks a task or capability into smaller components, optimizes them, eliminates redundancies, automates and standardizes wherever possible, and then drives the work itself to the most costeffective and competent workforce available. The result is that companies get to mitigate the biggest threat to a business: the unknown. Outsourcing has succeeded because of its ability to reduce risk, drive standardization, increase productivity, and improve reliability and predictability within the domains it touches. In other words, where outsourcing has been successful, it has been so because of its ability to industrialize assets, capabilities, functions and tasks.

Not just standard work, but the right work Industrialization is often thought of as a way to standardize production or processes. That’s part of the picture, but only one part. Using standardized production methods, a company could make the very best concrete lifejacket in the world—faster, cheaper, and better—but it obviously wouldn’t have any practical value. In much the same way, a company can standardize IT infrastructure and applications using a one-to-many platform or through rationalized technologies. But unless standard technologies are aligned with the correct business processes, the standardization does not produce sufficient business value. True industrialization goes closer to the heart of the matter—taking a company beyond “standard” work to efficient and effective work.

But just how does industrialization work exactly? The companies that have been most successful in driving business value through industrialized outsourcing of business processes have leveraged the following principles. Apply lean and Six Sigma principles to the services environment The majority of companies do not spend the time or money to look in detail at the efficiency of their non-core business processes. An outsourcing provider, however, can give these kinds of processes an end-to-end review and apply so-called “lean” principles and Six Sigma approaches to drive time and waste out of all the handoffs, and to eliminate needless variations when they occur. To innovate, get the noise out of the system In an outsourcing environment, innovation is actually rooted in industrialization. The inefficiencies in processes and functions— redundancies, delays, performance issues, multiple operating models, and the like— constitute “noise” that has to be eliminated if the voice of innovation is to be heard. If a company can get the operating environment stabilized and running optimally, it can look beyond today’s urgencies toward the innovations of tomorrow. It will also have savings generated by those efficiencies that can be plowed back into making new ideas actionable. Focus on what’s common, not only what’s different Often, the biggest sticking point that companies face internally as they move to adopt advanced industrialization principles is the belief that their operations are somehow different from the norm. The key is not letting pockets of uniqueness get in the way of improving those parts of the business that really can benefit from solutions and approaches that have been tested in the fires of experience with multiple companies. Industrialization lets a company use common approaches where those are workable, and particular ones where those are appropriate.

Measure outcomes, not inputs Challenging though it may be, executives often need to change their management mindsets when working with an outsourcing provider. If they try to stay “down in the weeds” and manage the inputs—every detail of how the process is delivered—they may simply add more noise to the system and disrupt an otherwise smoothly flowing industrialized process. The answer to the problem of managing inputs is simply stated but sometimes difficult to achieve: trust. The establishment of trust is essential to driving greater value from industrialization. Trust the process, not only the people What a company relying on an outsourcing provider really needs to do, in short, is put faith in the reputation and qualifications of the provider’s industrialized model, not simply the personalities who designed or are implementing the model – trust the process, in other words, not just the people.

Conclusion Many business activities and processes now being industrialized within contemporary outsourcing solutions were once considered out of the reach of effective management. But industrialization is enabling executives to look with more penetrating insight into their operations and processes, and freeing their organizations to think and act in more innovative ways. That which can be made repeatable and predictable needs to be made so, leaving the considerable space that remains as the foundation from which to innovate and grow. This article is based on [or: is an excerpt from] ‘Industrialize and Innovate,’ which originally appeared in the January, 2010 issue of Outlook, an Accenture publication. Used with permission.

You can read the full article at: http://www.accenture.com/Global/ Research_and_Insights/Outlook/ Journal/Feb2010/industrialize.htm


Š2010 Accenture. All rights reserved.

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VESTED OUTSOURCING Bad ne ews: giiving up when faced with outsou urcing--relationship ailments is an optio ion. Good news: so are preventing and treating g them.

10 A AILMENTS OF OUTSOURCING RELATIONSHIPS    and   points out the most common pitfalls and how to prevent and treat them in the handbook        No matter why a firm outsources, almost all outsourcing arrangements have room for improvement. Outsourcing as a large-scale business practice simply has not been around long enough to work out all the kinks. Thus, outsourcing deals have been structured with fundamental flaws in the business model and the relationship. Our research has identified 10 of the most common ailments caused by direct negative behaviors or those done unconsciously that drive unintended consequences. These lead to uncomfortable relationships and wasted opportunities for gains in efficiency. Find out if your outsourcing relationship is afflicted by one of these ailments—then keep reading to learn how to prevent and treat them: 1. PENNY-WISE AND POUND-FOOLISH

Let’s start with the easiest ailment to identify: when a company outsources based purely on costs. Unfortunately, many procurement professionals are still in the dark ages. Too many companies

36

 Today July 2010

profess to have an outsource “partnership� but behind the scenes, they focus solely on beating up their service providers on price. When outsourcing, think beyond the short-term bottom line. The danger in focusing on the cheapest offer ff is like anything else—you make tradeoffs ff in quality and/or service. Many executives view outsourcing as a quick-fix solution to resolving balance-sheet problems. Often, companies suffering ff from a case of penny-wise and pound-foolish fall into a loop of frequent bidding of their work to the lowest price provider and transitioning to that supplier. This can lead to a vicious cycle of bid and transition. When companies get caught in this cycle, they often end up with one or more unintended consequences: outsource providers that work with the company over time will refuse to work with the company again, or they bid such low prices in order to work with a company that they go out of business and put the company in a jam to find a new outsource provider. Organizations with this ailment give

outsourcing a bad name and should not be outsourcing in the first place. Their myopic focus might pay off ff in the short term, but this approach has proved time and time again that it does not pay to be penny-wise and pound-foolish. 2. THE OUTSOURCING PARADOX P

The first symptom manifested by sufferers ff of this disease is the development of the “perfect� set of tasks, frequencies and measures. The “experts� within the company attempt to develop the “perfect� statement of work to tightly define the expected results. The result is an impressive document containing all the possible details on how the work is to be done. However, this is often the first reason that the company fails in its outsourcing effort ff because it’s the company’s “perfect system,� not one designed by the service provider. Thought leaders in performance-based concepts warn that an ill-written taskfrequency specification can sometimes create a harmful and insurmountable


VESTED OUTSOURCING

obstacle to a successful contract. A tootightly written statement of work makes outsource providers responsible for the work without giving them authority to exercise their own initiative in carrying it out.

a variety of transaction-based outsource arrangements. When the contract structure is cost reimbursement, the outsource provider has no incentive to reduce costs because profit is typically a percentage of direct costs. Even if its profit

is a fixed amount, the typical outsource provider will be penalized for investing in process efficiencies to drive costs down. In a nutshell, the more inefficient the entire support process, the more money the service provider can make.

3. THE ACTIVITY TRAP

Here’s an outline of the characteristics of companies suffering ff from the activity trap, in their efforts ff to outsource third-party logistics services:

Many companies that suffer ff from the outsourcing paradox often suffer ff from the activity trap. Traditionally, companies that purchase outsourced services use a transaction-based model. Under this, the service provider is paid for every transaction—regardless of whether or not it is needed. Businesses are in the business to make money, and outsource providers are no different. ff The more transactions performed, the more money for the outsource provider. There is simply no incentive for the outsource provider to reduce the number of non-value-added transactions, because a reduction of transactions would result in a reduction of revenue. The activity trap can manifest itself in Source: Supply Chain Visions

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DON’T YOU WISH ALL YOUR CHOICES WERE THIS EASY? A single point of contact allows you to reduce your current number of suppliers for easier management and cost reduction. One outsourcing provider managing key components of your organization around the clock saves you time and resources and allows you to focus on your core business. One provider can also customize a solution

What does this mean for your customers?

for your specific needs, integrate your

Added convenience, improved security

systems allowing for improved data

and greater services.

Š Diebold, Incorporated, 2010. All rights reserved.

collection about your customers and gives you the advantage of offering the

For more information, visit:

very latest technology.

www.diebold.com/outsourcing


VESTED OUTSOURCING

4. THE JUNKYARD-DOG FACTOR

When the decision to outsource comes down, it means jobs will likely be lost as the work and jobs transition to the outsource provider. The result? Often, employees will go to great lengths to hunker down and stake their territorial claim to certain processes that simply “must� stay in-house. We call this the junkyard-dog factor. Even if the majority of the jobs are outsourced, many companies choose to have their “best� employees stay onboard to manage the new outsource provider. These same “best� employees are often the ones who were asked to help write the statement of work. Is it any wonder why the SOWs become basically rigid documents of the often less than optimal ways the company was performing the tasks that are now being outsourced? Over time, this ailment affects the outsource provider as well. Under a transaction-based model, the service provider is rewarded for work associated with the volume of the transactions. Unless otherwise compensated, the last thing an outsource provider wants to do is develop process efficiencies that eliminate their own work. So a company that might have set out on an outsourcing path to find an efficient and low-cost total solution instead achieves the lowest cost for an activity without really achieving their desired outcomes. This discourages innovation, first at the company outsourcing and then at the outsource provider. The junkyarddog factor often results in inefficient and overbuilt infrastructure because each touchpoint in the process has tried to optimize its individual part to either keep jobs or earn revenue associated with tasks. The result: misaligned desired outcomes. The company gets what they contracted for—but it is not really what they wanted. 5. THE HONEYMOON EFFECT

Studied by the research firm Gartner, Inc., the honeymoon effect found that overall attitudes toward an outsourcing contract tend to be positive at the outset, but satisfaction levels drop as the project progresses. Outsource providers will often jump through hoops as they ramp up (and

40

 Today July 2010

begin to collect revenue) for their new client. While remaining conscientious about meeting the company’s expectations and associated service levels d in the contract, the service provider does not have an inherent incentive to raise service levels (or decrease the price) under typical arrangements, even if the industry service levels are improving. Over time, the downside of the honeymoon effect can lead directly to the seven-year itch: the supplier’s productivity levels may begin to decline if they are not investing in their people and technology. The outsourcing company, feeling dissatisfied with their supplier’s service levels and productivity, will then want to switch to a new supplier. However, suppliers can make it costly and disruptive for owners to exercise this right. 6. SANDBAGGING

To prevent the honeymoon effect, some companies have adopted approaches to encourage outsource providers to perform better over time by establishing bonus payments for them to achieve certain levels of performance. This can work— unfortunately, and all too often, it creates perverse incentives for the outsource provider, whereby it achieves only the amount of improvement in order to get the incentive. Consider this: Ukrainian pole vaulter Sergey Bubka earned $50,000 everytime he set a new world record. From 1983 to 1998, he did it 35 times—never by more than a quarter of an inch. Let’s look at an example: many times during contract negotiation, someone on the company side, frequently senior management, will ask, “Just how much can I save?� Rather than establishing the highest level of savings achievable as early as possible (which would be most beneficial to the company outsourcing), the outsource provider will sandbag and offer up the savings in smaller increments over time. The same is true with service improvements. Why deliver it all upfront when your hardnosed customer is just going to hammer you for more next quarter or next year? Companies know that the savings are made up of “lowhanging fruit� and long-term savings. They often hold back some of their short-term

improvements in an effort to manufacture savings opportunities down the line, in case they don’t perform in the future. 7. THE ZERO-SUM GAME

Outsourcing companies play this game when they believe, mistakenly, that if something is good for the outsource provider, then it’s automatically bad for them (and outsource providers play the game, too). Companies fail to understand that the sum or the parts can actually be better when they are combined effectively, proven by John Nash’s Nobel Prizewinning game theory. The basic premise of the game theory is that when individuals or organizations work together to solve a problem, the results are always better than if they played against each other. The first step in overcoming this ailment is to recognize that an outsourcing relationship should actively seek winwin solutions. Unfortunately, many outsource providers that try to cure this condition often have customers suffering from the activity trap or the outsource paradox. They want to be proactive but are forced into business relationships where the contract’s pricing model provides incentives to perform non-value-added activities or their customers do not allow them to bring proactive solutions to the table. 8. THE DRIVING-BLIND DISEASE

Another ailment that bedevils many outsourcing agreements is the drivingblind disease—the lack of a formal governance process to monitor the performance of the relationship. Typically, companies would track costs but not measure the various aspects of performance. The result was that early agreements often failed because of an unclear definition of success. According to the Aberdeen Groups, assuring that negotiated savings are actually realized on the bottom line is one of the biggest challenges in organizations today. The term “savings leakage� is used to refer to the difference between the savings that were identified and the actual savings that were achieved, as illustrated in the graph on the next page.


VESTED OUTSOURCING

SAVINGS

Collaboration

Contract Signer

Performance Management 75% of sourcing savings lost in 18 months Non-Compliance

Strategic Sourcing

TIME

Source: Geller & Company. PSC

Proper measurement and follow-up of the key cost drivers are critical to preventing this “leakage.” In addition, identified leaders in this area have linked incentives to total cost savings achieved versus initial savings negotiated. Other companies have secured support from company leadership to align sourcing and spend compliance with corporate goals and incentives, according to the Aberdeen Group’s Best Practices in E-sourcing—Optimizing and Sustaining Supply Savings. The good news is that in the past five years, we have seen many outsourcing companies and providers use dashboards to keep score of how the provider is performing. These provide a feedback loop which helps the organization involved get data on how they are doing. Just keep in mind that using a dashboard improperly can result in one or two of the ailments below. 9. THE MEASUREMENT MINUTIAE

With its hallmark being trying to measure everything, the measurement minutiae some organizations are able to create are simply remarkable. We have found spreadsheets with 50 to 100 metrics on them. The measurement minutiae is often associated with companies that are suffering ff from the junkyard-dog factor and agreements that are typified by the activity trap. One technology provider we visited actually had so many metrics that they needed a formal “binder” to keep track of everything on a monthly basis. They were embarrassed to tell us the total person hours across all the organizations that were required to contribute to these spreadsheets. This isn’t a wasted effort ff if the company is getting positive results from the efforts ff based on the improvements they are making. Unfortunately, our experience shows that few companies have the diligence to actively manage all of the metrics they have created. 10. THE POWER OF NOT DOING

The saddest of all ailments is the power of not doing. At a Fortune 50 company, a senior manager was demonstrating what a great job her company had done on establishing measures. They signed up for a seminar to learn how to apply the balanced scorecard and had hired a consulting firm to help them create a world-

class one. They had invested over $1M in an automated scorecard solution to capture and graph performance. Each of the supplier scorecards were posted on an internal Web site. As she pulled up a scorecard, we randomly pointed to a measure and said, “This metric seems to be in the red (their scorecards were color-coded, indicating red for poor performance). When was the last time your team discussed this performance with the provider?” She honestly had no idea. She knew they had quarterly business reviews with their “top” suppliers, but the dashboard in question was not for one of these suppliers. We went on to ask, “How rigorously do you adhere to quarterly business reviews?” She embarrassingly said that they were lucky if they met with their suppliers once or twice a year. This case is not unusual—many companies have fallen into the trap of establishing measures for the sake of measures and have not thought through how they will be used to manage the business. It’s said “you can’t manage what you don’t measure,” but if you don’t use the measures you have to make improvements, you should not expect results. RESOURCE BOX

Author, educator and business consultant Kate Vitasek is a nationally-recognized innovator in supply chain management and outsourcing. She is the founder, faculty and lead researcher in the concept of vested (also known as vested outsourcing), developed in conjunction with the University of Tennessee where she graduated summa cum laude with an MBA in logistics. Mike Ledyard has exceptional credentials in business process design and the management of planning, manufacturing, distribution, product development and engineering in high-volume consumer goods and food industries. He was selected as one of the Top 20 Logistics & Supply Chain Executives of 2001-2002.

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THOUGHT LEADER

DIGITAL LIVELIHOODS FOR WOMEN

to be risky or inaccessible. The rapid drop in setup and transaction costs levels the playing field for workers and moves the workforce towards a global meritocracy where a gender gap ceases to exist. Thus, a significant transformation in the types of people that can do digital work emerges. Today’s digital assembly lines allow people with basic training to plug their skills into much larger work streams that simultaneously engage thousands of people in many continents.

By Leila Chirayath Janah and Lukas Biewald

Solving unemployment among women in developing countries through outsourcing With 90% of the population now able to read and write—compared to 84% in 2008—the world is witnessing a tremendous surge in intellectual capacity. Just as UNESCO reports that more women are graduating from universities and that the ratio of women to men in college is increasing, fewer and fewer jobs are however made available to them. For women in particular, there has not been a parallel surge in economic opportunity. The gender ratio among adults worldwide is around 1.01 males for every female; meaning meaning, if economic opportunity were distributed equally, equally no more than a percentage point difference ff between male and female employment rates should be expected. On the contrary, the difference ff amounts to almost 20%, with women making up roughly just 1.2 billion of the three billion employed people around the world, according to the International Labour Organization (ILO). Women who are employed often work for poverty-level wages, in what is called vulnerable employment—jobs that don’t provide any security and are not likely to build a woman’s skills, such as low-level manufacturing work in export processing zones. In sub-Saharan Africa and South Asia, a whopping 80% of women workers are in vulnerable employment, according to the United Nations Development Fund for Women (UNIFEM). The financial crisis has further exacerbated this problem: in Ahmedabad, India, for example, the garment-sector workers’ monthly earnings have dropped by 50% and working days by 69% since November 2008. Across all of India, 700,000 clothing and textile workers lost their jobs in said year. With factories closing down and production moving to other locations, women are forced to take multiple low-income jobs while keeping up their unpaid commitments to care for their families. These figures considered, the development community must not only focus on educating women but connecting them to jobs that tap their newly-formed skills as well. DIGITAL WORK: THE NEW KIND OF LABOR Thomas Thom as FFri r eddma mann wr wrot otee th the bo bookk Th Thee Wo Worl rldd is Fla latt, wh whic ichh de desc scri ribe bed ho how w thee $200 th $200 0 B gl glob obal al oout utso ut sour our u ci cing n ind ng ind ndusstr tryy was was cr crea eattingg a new m ea mid iddl id d e cl dl clas a s in Indi In diaa annd Ch di Chi hinaa th thro rouggh th ro thee cr crea eation ea on of IT T jjob obbs. Now o , wi w th t lap lap apto pto t ps tha thaat coost st les esss th than an $$10 1000 an andd ra rapi pidl pi dlyy ex dl expa pand pa ndin nd ingg Inte in tern te rnet rn et cov over ov e ag age, e, it’t’ss po e, poss ssib ss ible ib to connne to nect SSan an Franc ncis nc isco is co not jus ustt to Bom mba bay, y, but to rura y, rall vi villllllag agges iin In Indi diaa. di The te Th tech chhnolo l gy ind ndus ustr us t y crrea tr eate tess ann iinccre reas asin as i g de in dema m nd for ma o sim impl ple jobs pl jobs jo that th at can be be do done ne ddig igittal igit ally ly,, fr ly from om lab abel ab e in el ingg ann ima m gee ttoo trran ansl slat sl atin at inng a sn snip ipppe pett of text. ex Th Thes esse mi micr crrot otassks ks,, ba back cked ck ed by mo mode dern de rn qua u lility ty-c ty -ccon ontr trol sys yste teems ms,, caan auto au tooma mate tra rain inin in ingg an in a d pr prov ovid ov ide cus id cuust stom stom merrs wi with t rel th eliiabi bililility tyy ggua uara ua raanttee e s. s. Th This is is drram amat atic at ical ally al ly red educ ucces es tthe he cos ostt of eng ngag aggin ingg wo w rk rkfo forc fo r es tra rc raddi ditiionnal ally ly tho houg ught ug ht

THE OPPORTUNITY Many leading global companies now rely on outsourced microtasks to deliver essential parts of their supply chains. For instance, non-profit organization Samasource and solutions provider CrowdFlower partnered to create a modern workflow for several well-known online retailers to tag and classify products. Poor rural workers may have initially lacked familiarity with all the products involved, but their results were systematically screened by other workers around the world, creating a virtual global assembly line that efficiently provided high-quality answers. The growth g in this risingg industryy has allowed Samasource to launch a new kind of worker—marginalized women, youth and refugees living in poverty—creating a value chain that pumps much-needed capital into some of the poorest parts of the world such as Africa, South Asia and Haiti. By training these women in digital work, Samasource not only provides direct employment but also increases household spending on health and education and a woman’s wages substantially over her lifetime, while decreasing the likelihood that she will be forced to leave her community to find work. Work for women matters, and this message is finally getting through to global leaders in major development institutions. Connecting them to digital jobs can pave the way for sustainable growth and development among the world’s poorest. By promoting and investing in digital work and women’s employment, unlocked is a vast and untapped pool of talent. The women of the world are waiting.

RESOURCE BOX

Samasource founder and CEO Leila Chirayath Janah serves on the boards of the San Francisco Social Enterprise Institute and Tech Soup Global and is a member of the International Association of Outsourcing Professionals’ sub-committee on corporate social responsibility. She received an AB from Harvard University. Prior to co-founding CrowdFlower, Lukas Biewald was a senior scientist and manager within the ranking and management team at Powerset, Inc., a natural language search technology company later acquired by Microsoft. Biewald has also led the Search Relevance Team for Yahoo! Japan. He graduated from Stanford University.

globa gl obaliz oba lizzat ationt ontod o y.c oda .ccom m

43


VALUE HEALTH CHECK SURVEY

SOURCING RELATIONSHIP MANAGEMENT New techniques in data analysis to optimize existing outsourcing relationships With increasing use of the Value Health Check Survey (VHCS) by the International Association of Outsourcing Professionals’ (IAOP) corporate members and non-members, not only the key drivers behind high-performing and sustainable outsourcing relationships are learned but also how to best represent, analyze and use the wealth of data and information available from the VHCS process. We’ll provide tools and techniques that will enable customers and services to significantly improve their ability to quickly identify opportunities for value improvement in their relationships. THE VALUE OPPORTUNITY MATRIX (VOM)

One of the key reasons IAOP members and non-members periodically use the VHCS is to be able to quickly and affordably identify the most important areas to focus on improving the overall health and value obtained from their portfolio of outsourcing relationships. Now, it’s much easier for customers and service providers to accomplish if they opt to include the new Value Opportunity Matrix (VOM) as part of their VHCS Basic Report. When executing a survey, customers and/or service providers often involve anywhere from six to 20 key stakeholders from across their organizations. The VHCS Basic Report that customer and service providers receive at the conclusion of the process typically includes over 30 pages of detailed information about the current state of the outsourcing relationship. Sorting through this data, analyzing stakeholder alignment/misalignment and identifying potential opportunities from improvement can be daunting tasks. This is no longer the case when users leverage the optional VOM. The VOM is an analytical model that maps customer and service-provider responses from the VHCS into four quadrants of value opportunities and/or exposures. Each quadrant assists the customer and/or service provider in understanding the potential areas for additional focus on improving value across the five areas of outsourcing value: financial performance, service quality, capabilities, risk/compliance and governance. The following are the four quadrants: t Harvest and sustain value. Value statements that fall into this quadrant have been identified as a relatively high priority in the

44

 Today July 2010

current relationship and the respondents have a high degree of agreement with the overall value statement. If the customer and service provider are in alignment, this is relatively healthy and they should continue to build upon this area of strength in the relationship. tSustain value and balance resources. Value statements in this quadrant have been identified as relatively low priority in the current relationship and the respondents have a high degree of agreement with the overall value statement. If the customer and service provider are in alignment, this area of the relationship is also relatively healthy and the parties may want to consider shifting available resources and/or focusing on other areas of higher priority that may provide opportunities for value improvement. t Closely review for value-improvement opportunities. Value statements in this quadrant have been identified as relatively low priority in the current relationship and the respondents have a high degree of disagreement with the overall value statement. If the customer and service provider are in alignment, this area may provide opportunities for value improvement. However, the parties should carefully review the potential return on investment given other higher priorities in the outsourcing relationship. t Key areas for value improvement. Value statements in this quadrant have been identified as relatively high priority in the current relationship and the respondents have a high degree of disagreement with the overall value statement. If the customer and service provider are in alignment, this area is highly likely to provide the greatest value improvement, thereby contributing to a healthier overall relationship. THE ALIGNMENT CHALLENGE

Understanding where your organization stands as a team on the VOM is a valuable insight to both customers and service providers. However, the consensus from VHCS users is that understanding the alignment and/or misalignment between customer and service provider is by far more valuable in


VALUE HEALTH CHECK SURVEY

7C. The contract we have with the supplier does not limit us from sourcing similar or related capabilities if required from alternative suppliers. 7P. The contract we have with our client does not limit them from sourcing similar or related capabilities from an alternative supplier(s).

8.20 7.00 7.80 7.00

3C. The level of employee turnover in all key areas of the supplier’s workforce relevant to this outsourcing contract are within acceptable ranges. 3P. The level of employee turnover in all key areas of our (the service provider) workforce relevant to this contract are within acceptable ranges.

5.80 5.00 6.60 5.25

1C. The supplier is currently providing an acceptable level of capabilities that we contracted for to support the scope of this outsourcing contract. 1P. We (the service provider) are currently providing an acceptable level of capabilities that the client contracted for to support the scope of this outsourcing contract.

understanding the relative health of the outsourcing relationship and in identifying opportunities for improvement. As the example above illustrates, the customer’s stakeholders identified value statements 5, 2 and 4 as potential opportunities for value improvement. However, service-provider stakeholders are not aligned with their customer, with value statement 5 exhibiting a significant gap in both relative priority and level of agreement. In this case, the customer and service provider should focus on understanding the rationale for the gap in alignment between the parties and whether these value statements reflect opportunities for improving the health and value in the relationship. Based on facilitated debriefings conducted with customers and service providers, the primary reason for a lack of alignment between the parties is largely a result of a lack of formal periodic communication and level-setting on the expectations of the more strategic value drivers in the relationship. Focus on monthly/ quarterly operational performance and associated detailed metrics clearly commands the attention of those involved in outsourcing governance. The good news is that VHCS users are increasingly building into their governance practices more periodic level-setting and review of the strategic drivers of value across all five areas of the Sourcing Relationship Value Framework. As more and more organizations use the VHCS and the Value Opportunity Matrix, we’ll be sharing additional insights on how to leverage the VOM to identify opportunities for improving the health and value in outsourcing relationships. We encourage IAOP corporate customer and provider members to use their two complimentary surveys as part of their annual membership. To learn more about the IAOP VHCS, visit: http://www. outsourcingprofessional.org/surveys/VHCS/Login.aspx.

5.54 5.50 6.40 5.00

8C. We have the necessary processes, tools and technologies in place to understand if we are getting the required capabilities from our supplier. 8P. Our client has the necessary processes, tools and technologies in place to understand if they are getting the required capabilities from us (the service provider).

5.20 5.50 6.40 5.50

6C. The outsourcing capabilities we are receiving from this supplier positions us competitively in the industry. 6P. The outsourcing capabilities that we are providing to our client positions them competitively in their industry.

5.00 4.50 6.60 5.25

4C. The supplier is responsive, flexible and adaptable to our changing needs for capabilities in this business area. 4P. We (the service provider) are responsible, flexible and adaptable to our client’s changing needs for business capabilities as it relates to this contract/relationship.

4.60 7,25 6,60 6,75

2C. The supplier has appropriate recruiting, training and resource-contingency plans in place to address current and future capabilities we need in this area. 2P. We (the service provider) have the appropriate recruiting, training and r esource-contingency plans in place to address current and future capabilities the client requires in this area.

3.60 5.75 7.00 5.00

5C. The supplier is providing us with the appropriate level of innovation and creativity in addressing our current and future business needs. 5P. We (the service provider) are providing our client with the appropriate level of innovation and creativity in addressing our client’s current future business needs.

2.60 5.75 6.80 4.00

THE VHCS PROCESS AT A GLANCE

1. The VCHS collects demographic information on each outsourcing or shared service center relationship. 2. Customers and service providers prioritize and score their level of agreement with a series of value statements across each of the five areas of business value. 3. Stakeholder’s comments are encouraged and collected at each value statement and/or overall value domain. 4. Each stakeholder gets immediate feedback on their overall score and value-driver assessment. 5. Once all results are compiled, a basic report is provided consisting of 30 pages of detailed data and analysis comparing responses from customer and provider. The optional VOM is available for use. Once sufficient data is collected in the database, peer-group scoring will be available to participating IAOP members and non-members. RESOURCE BOX

Matt Shocklee assists organizations worldwide as they develop, implement and optimize their global sourcing strategies and relationships. He’s currently the president and CEO of Global Sourcing Optimization Services (GSOS). In addition, Shocklee is the global ambassador for the International Association of Outsourcing Professionals (IAOP), chairman of the IAOP’s Outsourcing Tools & Technology Innovation Chapter, co-chairman of the IAOP Midwest is Chapter and a Certified Outsourcing Professional (COP). He is the author of the Sourcing Relationship Value Framework and the Value Health Check Survey (VHCS). He is a frequent speaker on the developing management science in outsourcing and Sourcing Relationship Management (SRM).

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WHAT’S HAPPENING AT THE IAOP WELCOME NEW IAOP MEMBERS The IAOP is pleased to welcome new and renewing corporate and professional members from 3forward LLC; Accenture; AstraZeneca; Chinasoft International; CIBER, Inc.; CAN; Danfoss A/S; David Consulting Group; Esfera BPO Solutions; Everest Group; Expense Management Solutions; HSPI SpA; Infosys; Intel Technology India; kele, inc; Morgan Stanley; Neusoft Corporation; Orange Business Services; Pillsbury Winthrop Shaw Pittman LLP; PricewaterhouseCoopers; Quint Wellington Redwood; Royal Dutch Shell; Samsung India; Software Operations; St. Joseph’s University; SymphonyIRI Group; TCS; Telecom NZ Ltd; University of Michigan; University of Phoenix; University of Zurich; VX Company IT Services b.v. and Xerox Corporation For information on IAOP membership, e-mail sales@IAOP.org.

BRINGING OUTSOURCING TO THE WORLD IAOP membership demonstrates a commitment              improvement and the sustaining development of outsourcing as both an industry and as a profession RECENT IAOP ANNOUNCEMENTS

THE IAOP SEEKING NOMINATIONS FOR BEST OUTSOURCING TEAMS

The IAOP has introduced the first and only award program recognizing outsourcing professional teams for their innovation and best practices—the Global Excellence in Outsourcing (GEO) Award. The GEO will distinguish outsourcing professional teams at customer organizations who have advanced the field’s best practices, created innovative solutions and delivered great results for their companies. “We are very excited about this new award program,� said IAOP chairman Michael Corbett. “As outsourcing increasingly becomes a strategic, corporate-wide program, it’s more and more often these teams of outsourcing professionals who are creating the results their companies need. Recognizing these teams will not only be great for

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WHAT’S HAPPENING AT THE IAOP

CUSTOMER CORPORATE MEMBERSHIP Organizations that are currently outsourcing or are considering one or more outsourcing initiatives should become customer corporate members of the 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 the IAOP as provider/advisor corporate members. This membership provides the same organization-wide access to the IAOP’s research, training, certification and networking programs as customer corporate membership, but also includes members-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. STUDENT MEMBERSHIP Student membership is available to all full- and part-time students actively enrolled in a college or university. Student membership provides direct access to IAOP services and includes full use of the association’s online knowledge center, Firmbuilder.comŽ. For information on IAOP membership, e-mail sales@IAOP.org. CALENDAR OF EVENTS

CHAPTER MEETING CALENDAR 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. t

JULY 15

AUSTRALIA

t

JULY 22

CHICAGO

t

JULY 29

NEW ENGLAND

CERTIFICATION AND PROFESSIONAL DEVELOPMENT

The Certified Outsourcing ProfessionalŽ (COP) designation distinguishes individuals as leaders in the field of outsourcing. It powerfully demonstrates that they possess the experience and knowledge required to design, implement and manage outsourcing initiatives that have a high probability of achieving an organization’s intended outcomes. COMPLIMENTARY COP WEBINAR

Looking for more information on the IAOP’s de facto certification? The next COP webinar is taking place on Wednesday, July 21, at 12 PM EDT. Go to www.IAOP. org to register for this complimentary 60-minute primer and find out what it takes to become a COP. 2010 COP MASTER CLASSES AND WORKSHOPS

The COP Master Class is an integral part of the COP program. It provides outsourcing professionals—whether they work as customers, providers or advisors— with an intensive learning experience on the state-of-the-art, end-to-end process for outsourcing success. Individuals who complete the course will not only earn 75 points towards their COP designation, but also will immediately be able to improve outsourcing outcomes at the organizations with which they work. The Outsourcing Governance Workshop is a one-day intensive designed to gain comprehensive cutting-edge knowledge on all aspects of creating and sustaining successful relationships with your outsourcing partners. On top of earning 15 points towards the COP designation, participants also learn to understand the stages of growth in governance and assess where their organization is positioned and how it can move further along the growth curve. t"6(645Ź$01Master Class in Cititel Mid Valley, Kuala -VNQVS .BMBZTJB5PSFHJTUFS FNBJM#PCCZ7BSBOBTJBUCPCCZ!NBUSZ[FMDPN t4&15&.#&3Ź$01Master Class in Chapel Hill, NC, USA t4&15&.#&3(PWFSOBODF8PSLTIPQJO$IBQFM)JMM, NC, USA t4&15&.#&3Ź$01.BTUFS$MBTTJO)POH,POH5PSFHJTUFS DPOUBDU 8JOOJF$IPXBUXJOOJFDIPX!ICDIL t0$50#&3Ź$01.BTUFS$MBTTJO3PNF *UBMZ t/07&.#&3Ź$01.BTUFS$MBTTJO-B+PMMB, CA, USA t/07&.#&3(PWFSOBODF8PSLTIPQJO-B+PMMB, CA, USA

Unless otherwise noted, please register for the above classes and workshops at www.IAOP.org. CAN’T ATTEND A CLASSROOM COP MASTER CLASS?

Gain knowledge, network and earn COP credits! Sign up for a chapter meeting today at www.IAOP.org.

The online COP Master Class is a great alternative for those who cannot attend a live classroom version. Save time and travel expense. The IAOP will soon announce the new Online Governance Workshop, so stay tuned to the Web site. Register at www.iaop-cop.com today.

the teams themselves but will showcase their accomplishments in a way that raises the bar for all of us.�

of other organizations. The goal is to recognize a practical innovation that has produced measurable results.

Awards will be presented annually for:

Nominations are open to IAOP member and non-member customer teams globally and applications for the award are prepared and submitted by the outsourcing professional team itself. Submissions will be reviewed by a panel of judges who will select the winners.

The GEO Award for Best Practices. This recognizes a company’s outsourcing team for developing and implementing one or more advanced business practices that have enhanced the design, implementation and management of their company’s outsourcing program. The team will be recognized both for its contribution to the management practice of outsourcing and for delivering measurable results for their company. The GEO Award for Innovation. This is given to an outsourcing team that has implemented a new type of outsourcing relationship or approach that is groundbreaking and worth the special attention

Winners will be recognized at the IAOP Outsourcing World SummitÂŽ in February and will have the unique opportunity to share their leading-edge outsourcing approaches through multiple thought-leadership activities led by the IAOP. For more information and to nominate your team, visit www.IAOP. org or contact Christina Powers at 845-452-0600 x-106.

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WHAT’S HAPPENING AT THE IAOP

NEW! WEBINAR SERIES: MEMBER SERVICES The next complimentary member services webinar will feature the COP Recertification process. All current COPs are encouraged to attend. Topic: COP Recertification Date: June 29, 2010 at 3 PM PDT Presenter: Pam O’Dell, IAOP Sign up: memberservices@IAOP.org P Next up‌ Companies seeking the best talent for outsourcing jobs, as well as professionals looking for employment opportunities, can benefit from this IAOP member service provided through BestOutsourcingJobs.com (BOJ). Register for this webinar and learn how to make the most out of this member benefit. Topic: BestOutsourcingJobs.com Date: July 6, 2010 at 9 AM EDT Presenter: John Roescher, BesOutsourcingJobs.com Sign up: memberservices@IAOP.org P Attend one of the following pre-recorded sessions by contacting memberservices@iaop.org: The 2011 Global Outsourcing 100 BestOutsourcingJobs.com The Value Health Check Survey Corporate Membership Professional Membership THE 2011 OUTSOURCING WORLD SUMMITŽ

The IAOP presents the 14th edition of its world-renowned conference on February 21-23, 2011, at the Renaissance Esmeralda, Indian Wells, California. The event is designed for outsourcing executives from across the industry and around the world who are seeking the very latest insights and ideas.

Outsourcing Leaders Sought for the

Register by August 15 and receive: t A $500 saving t A $150 resort gift card t Access to the Summit’s LinkedIn group—begin cultivating potential business partnerships with other delegates now!

The IAOP has kicked off ff its nomination process for the 2010-2011 Outsourcing Hall of Fame that honors leading professionals from around the world who have positively contributed to business and society through outsourcing. Now in its fifth year, the Outsourcing Hall of Fame is the most prestigious award available to individuals working in the field. Nominations will be accepted from IAOP members, Certified Outsourcing Professionals (COPs) and others in the industry via an online nomination until July 30. The IAOP will induct individuals at an awards luncheon at the association’s annual conference, the 2011 Outsourcing World SummitŽ on February 21 to 23 at the Renaissance Esmeralda, Indian Wells, California. The recognition program is open to customers, providers and advisors of outsourcing services from around the globe who generally are experienced senior-level executives leading outsourcing initiatives in their companies.

This will be the best deal offered ff to delegates, so don’t delay! Go to www.IAOP.org to find out more. WHY SPONSOR THE 2011 OUTSOURCING WORLD SUMMITŽ?

By sponsoring the summit, service providers and advisors gain a proven, unparalleled opportunity for brand awareness and influence on the thinking and decision-making of client executives worldwide. Support of the IAOP’s Outsourcing World Summit directly demonstrates the commitment your firm has made to leadership and excellence in outsourcing. A wide range of sponsorship opportunities—one for every purpose and budget—are available. These include hosting various networking functions, branding of conference materials, exhibition packages and sponsorship of client case-study presentations. Download the Sponsorship Prospectus at www.iaop.org or contact Renee Preston at renee.preston@IAOP.org to learn how your firm can play a role in this exciting event.

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 Today July 2010

Nominations Now Being Accepted for the 2010-2


WHAT’S HAPPENING AT THE IAOP Said Ron Kifer, Applied Materials group vice president and CIO, “Being inducted into the Outsourcing Hall of Fame is more than an honor. It is an acknowledgment that your efforts ff have had a profound eff ffect not only upon the profession, but also upon the social landscape within which we live and work.” Beyond professional achievements, the other important component of the award is recognition of corporate social responsibility in outsourcing. Hall of Fame honoree the late Dewang Mehta, past president of NASSCOM, was recognized for his pioneering efforts ff to use information technology in India to benefit the masses of the country. “NASSCOM and its very active non-profit NASSCOM Foundation has set up various knowledge networks enabling displaced people to find better jobs,” said Dr. Ganesh Natarajan, immediate past NASSCOM chairman, who accepted the award. “There’s an increasing focus today in India that all the successful companies should contribute a significant portion of their profits towards corporate social responsibility to really make way for a new, developed India.” To nominate for this prestigious award, visit www.IAOP.org.

e IAOP Outsourcing Hall of Fame 011 Program The Hall of Fame is unique in its recognition of individuals not only for their contributions to the management practice and industry of outsourcing, but also for their contributions to community-based economic development, socially-directed investments, as well as career development, education and training through outsourcing. Past honorees include executives from Family Dollar, Luxoft, SAP, Neusoft, ACS, Infosys, TPI, General Motors, Applied Materials, Accenture, Procter & Gamble, Capgemini and other firms. Honorees say the recognition has positively impacted them professionally and their organizations. “The Outsourcing Hall of Fame is an important recognition of one’s ability on a long-term basis to contribute to the industry beyond any company or any deal,” said Kevin Campbell, Accenture’s group chief executive of outsourcing. “It puts outsourcing front and center and represents the good work of teams, and other people look at it as an important distinction.”

CONGRATULATIONS TO NEW CERTIFIED OUTSOURCING PROFESSIONALS (COPS)

Deirdre Hall, COP,P associate director, Pfizer Kumanan Murughan, COP, delivery sssurance leader, EDS MSC Sdn Bhd Jay Desai, COP, VP and manager, Northern Trust Company Joshua Jewett, COP, SVP and CIO, Family Dollar Dmitry Loschinin, COP, president and CEO, Luxoft Tom Cappelli, COP, senior director: global outsourcing, Diebold, Inc. Ulrike Rolinitis, COP, US IT operations service management, PricewaterhouseCoopers Prabhakar Cruwndhi, COP, program manager, HCL America Kalyanaraman J, COP, SVP, HCL Comnet Ltd. Maria Agcaoili, COP, associate director, Pfizer Ujwala Rangole, COP, manager, Blue Cross Blue Shield of Florida Richard Ranft, COP, director of compliance and standards, Canon Business Solutions Shyamsunder Alagandula, COP, business development manager, CtoJ GmbH Ganesh Natarajan, COP, global CEO, Zensar Technologies Vern Sheppard, COP, partner, ICA Solutions Nick Sarkisian, COP, principal, consulting advisor, Blue Shield of California Vinay Minocha, COP, senior manager for procurement vendor management, Ameriprise Financial Julie Alexander, COP, director for procurement vendor management, Ameriprise Financial Boris Kontsevoi, COP, president, Intetics Co. Melia Martinez, COP, strategic alliance and sourcing management, Blue Cross Blue Shield of Florida Kathy Allison, COP, contracts manager, Kraft Foods, Inc.

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WHAT’S HAPPENING AT THE IAOP A SPOTLIGHT ON THE IAOP KNOWLEDGEBASE

Firmbuilder.com is the industry’s premier repository of outsourcing information, with more than 1000 articles, studies, white papers, reports and conference proceedings available. Information is organized by subject, stage of the outsourcing process, industry and function, making it easy to find exactly the information you need. With new articles uploaded regularly, it takes the hassle out of finding documentation that will help you and your organization design, implement and manage simple or complex outsourcing engagements. Below is a sample of new articles and studies posted on Firmbuilder.com: Outsourcing 2010. For the past 18 months and with the help of Accenture, the IAOP has been regularly surveying its members to identify key trends and developments in this highly robust and diverse global industry. Our goal has been to benchmark how companies’ outsourcing programs have changed in size, makeup and impact. The goal of this survey is to better understand the outsourcing profession itself, where in excess of 100,000 people lead the design, implementation and management of these complex, cross-company relationships. Managing Outsourcing Relationships to Maximize ValueEvolving Relationship Management Practices, 2010 Edition. With greater automation, companies have gotten better at applying and integrating technology into business processes, helping to fuel further growth in the outsourcing industry. As the industry has matured, it continues to grow and extend into ever more complex ESOURCING BOOK NOW AVAILABLE

The eSourcing Capability Model for Client Organizations (eSCM-CL), developed by ITSqc and endorsed by the IAOP, is now available through Van Haren Publishing at a 15% discount to all IAOP members. Download the eSCM-CL flyer and free book sample at www.IAOP. org. The eSCM for Service Providers (eSCM-SP) is also available. ITSqc is a certification and professional development alliance partner of the IAOP. NEW OFFERING IN THE OPCC

The IAOP’s Outsourcing Professional Course Catalog (OPCC) recently added the Sourcing Governance Foundation Course developed by Quint Wellington Redwood to the growing number of accredited courses. Those who successfully complete this course may earn 25 points towards COP certification and 15 points towards recertification. Quint Wellington Redwood is a certification and professional development alliance partner of the IAOP. View the OPCC at www.IAOP.org. CEH REMINDER

A reminder for all current and future COPs: visit the OPCC frequently for updated accredited courses and conferences such as the recent Outsourcing World SummitÂŽ, workshops attended at the summit and IAOP chapter meetings. You are responsible for keeping track of your CEHs in your application. For more information, contact Courtney at courtney. giardina@IAOP.org. For more information on corporate and professional development, e-mail copprogramservices@IAOP.org.

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business processes. And the good news is, even with growth in new types of outsourcing, we see fewer headlines about deals failing outright. Companies have learned many hard lessons and are getting better at negotiating agreements that work for both sides, and improving their ability to manage these complex, often lengthy, relationships. Check out this fantastic study from Vantage Partners. Offshoring in the Manufacturing Industry. Innovation has always been considered a core competence that should be developed and maintained within an organization. However, over the past decade, the growth of global innovation sourcing—driven mainly by the globalization of both technology markets and knowledge workers—has begun to challenge this conventional wisdom. Offshoring goes far beyond the migration of relatively routine tasks like administrative work, IT infrastructure or call-center staffing and now includes product development and design and research and development. Although the concept of offshoring is not new for manufacturing companies, its previous application usually involved labor arbitrage in low-level, routine manufacturing jobs. Read this study which highlights findings from the 2009 Offshoring Research Network (ORN) survey produced by the Duke University Fuqua School of Business Offshoring Research Network (ORN) and PricewaterhouseCoopers. Also available on Firmbuilder.com: Offshoring in Retail and Customer Goods and Offshoring in Hi-Tech and Telecom.


Register Today!

The 2011 Outsourcing World Summit

ÂŽ

Conference & Exposition



        IAOPÂŽ is pleased to present the 14th edition of its world-renowned conference — The Outsourcing World Summit.

Embracing Change – How Outsourcing Professionals Can Lead their Companies to Success in this New Outsourcing Landscape Over the last two turbulent years, the outsourcing industry has grown! Companies have found that outsourcing has shifted from a management option to a management necessity. With this, customer companies are looking at further expanding their future outsourcing programs,                                  

              today’s more complex environment. Join us as we address topics including, globalization, corporate social responsibility (CSR), cloud computing & social media, risk management through sourcing strategy, knowledge process outsourcing, outsourcing tools & how-tos, outsourcing as a procurement discipline, transition and governance, exploring new geographies, government outsourcing, and more!

For more information and to register, visit www.IAOP.org.

ADVERTISER INDEX PAGE # P

COMPA PANY NAME

URL

34, 355 32 38, 399 2 166 4, 100, 51

www.accenture.com www.bcs.org/opportunity www.diebold.com www.enlighta.com www.igenesys.com www.IAOP.org

20, 21 52 122 24,, 255

Acccenture BCS Diebold Enlighta Genesys International Corporation Ltd International Association of Outsourrcing Professionals (IAOP) InvestChile ITSqc, LLC Jay Abraham Kelly Outsourcing & Consulting Group (KellyOCG)

42 28, 299

Northern Worx, INC. SE ENC N OR

www.northernworx.com www.sencor.net

6

Thouugh ght Leadership Marketing

www.outsourcingthought htle leadership.com m/

14, 15

WNS Glob obal Services

www.wns.com

www.investchile.com www.itsqc.org       

www.kellyocg.com


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