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The Official Magazine of the International Association of Outsourcing Professionals

GlobalizationToday November 2011

Commerce Redefined

t II r a P 5 2 e s u o h ls. Page 12 r a n io s s Powe fe ro P p o f Industry’s T o t is L l a u n n A r Ou Schocklee tt a M y b t n e nagem a M ip h s n io t la e Sourcing R h of your outsourcing relationship. Page 38 Check the healt

by Danny g in c r u o s t Legal Process Ou 2

s. Page 3 e k ta is M y s a E id Avo


RecRuitment pRocess outsouRcing

business pRocess outsouRcing

contingent woRkfoRce outsouRcing

Human ResouRces consulting

caReeR tRansition & oRganizational effectiveness

Some workForce SolutionS ProviderS Say they’ll go where you need them. we’re already there. delivering outSourcing SolutionS in 40 countrieS. today.

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executive seaRcH

INSIDE November 2011


POWERHOUSE 25 – PART II Second part of list of individuals who made the Powerhouse 25



How to avoid easy mistakes when making decisions about Legal Process Outsourcing. 7 PUBLISHER’S NOTE 8 NEWS FEED

What’s new and noteworthy in global commerce.


by Paul Gardner, James Cockroft and Stuart Gibson

Generic solutions based on economy of scale vs. bespoke solutions for a tailored applications portfolio.


A key lesson in outsourcing.





Latest developments, findings and best practices in optimizing outsourcing and shared service center relationships.


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



Through IAOP’s chapter network, members share their expertise and gain knowledge on best practices for specific industry segments, topics and geographic areas.


The official publication of IAOP for the growing ranks of outsourcing professionals.


The industry’s premier repository of outsourcing information, housing more than 1,000 articles, studies, white papers, reports, and conference proceedings.


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 Helping customers source and hire the most qualified outsourcing professionals and provide outsourcing professionals with the best job opportunities.


IAOP® is the global, standard-setting organization and advocate for the outsourcing profession. With more than 110,000 members and affiliates worldwide, IAOP is the leading professional association for organizations and individuals involved in transforming the world of business through outsourcing, offshoring, and shared services.

A Global Community IAOP has members in nearly 50 countries. Each member has direct, online access to each other and to IAOP’s entire portfolio of services, including its vast chapter network, regional-level events, certifications and corporate and professional development programs. MEMBERSHIP Customer Corporate Membership provides organization-wide access to the association’s research, training, certification and networking programs — all designed to help companies

International Association of Outsourcing Professionals® (IAOP®)

Tel +1.845.452.0600

Fax +1.845.452.6988

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.

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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

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Powerhouse 25 Part II

Ali Comelek

Founder and Publisher

As I mentioned in the previous issue the response from the individuals who made the Powerhouse 25 and quality feedback we received was so overwhelming we couldn’t publish in a single issue. Therefore, we decided to split the content into two parts. In this issue, we are continuing from where we left off with the rest of the folks that made the Powerhouse 25. See page 12. Once again, our hats off to everyone for voting and helping to make the outsourcing industry even stronger. On page 38, our own Matt Shocklee gives his latest installment of Sourcing Relationship Management. In this section, Matt shares the latest developments, findings and best practices in optimizing outsourcing and shared service center relationships. Next we have a must-read feature from Danny Ertel from Vantage Partners. Danny gives great insight on how to avoid easy mistakes when making decisions about Legal Process Outsourcing as more legal work is moving from law firms to LPO providers around the world. Read more about his hard-learned lessons on page 32. Last month, we welcomed Thom Mead with his first column. This month Thom is back with another insider’s look into an outsourcer’s mind. He shares a key lesson to follow so that all your efforts don’t become a tiny footnote in your organization. See page 44 for Thom’s column. When it comes to IT applications, there are two main themes; but which one is flavor of the month? On the menu is ‘Vanilla’ – generic solutions based on economy of scale – or ‘Neapolitan’ – bespoke solutions for a tailored applications portfolio. Paul Gardner, James Cockroft and Stuart Gibson of Xantus Consulting take the taste challenge and give their verdict as to which flavor is best. See page 42.

Founder and Publisher Globalization Today Magazine “Official Publication of IAOP” 1-602-492-4194






TPI, said he expects more contract re-evaluation in the near future. “With the recent change in government in the UK and accompanying public sector funding shifts, outsourcing activity has been re-evaluated,” he said. “Service providers now recognise the need for providing better value for money. Although these same providers have previously offered cost reduction and changes to their delivery models, it is only now pressure to reduce costs across the public sector has heightened that authorities are taking a step back to evaluate outsourcing activity and have the clarity to review the objectives, targets and outcomes.” Tuppen predicted that the extensive restructuring of outsourcing contracts in the public sector will result in more innovative agreements and service integration. “Looking ahead, we expect to see DEMANDING BETTER VALUE an increase in the standardisation FOR MONEY of public sector outsourcing contracts and increased use of Steve Tuppen, UK president at IT multisourcing, both of which will benchmarking company Compass, result in a strengthening of service, which is part of the same group as as well as greater flexibility,” he said. Changes in the way the government buys IT services were reflected in the latest figures from TPI, which revealed that the number of outsourcing contracts signed by the UK public sector in the first half of this year was 70% higher than the same period last year, whereas the total value of these contracts was 47% less. Similarly, the number of public sector outsourcing contracts awarded in continental Europe increased by 70%. However, in contrast to the UK, the total value of contracts also grew by 40% on last year. Research from TPI revealed this was the result of the restructuring of existing agreements in the UK, whereas continental European public sector organisations were adopting large outsourcing projects for the first time.


GlobalizationToday November 2011



He said there are already some examples, but he expects many more in the near future. The recent contract awarded by the Department of Work & Pensions (DWP) in its IT transformation plan is one example. The contract was split into five lots, with HP, IBM, Capgemini and Accenture sharing deals. This would not have been split into five in the past. Tuppen said the standardisation of IT services and contracts will move control to the centre of government and improve governance. Another example of a new way to outsource is demonstrated by the structure of a civil service pension administration. My Civil service Pension (MyCSP) was announced earlier this year as the first example of a government body spun out into a mutual and partnered with a private sector company. MyCSP will administer 1.5 million civil servant pensions. It will be owned by three groups:

NEWS FEED the 475 staff, the government and a private company that will run the service. All final bids from the four short-listed companies are now in. Capita, Wipro, Xafinity and JLT are the final four bidders, after 14 bids were received initially. The private sector partner will use its expertise to run the service, and will become a shareholder and be paid for running the contract. Like any other outsourcing contract, the private sector partner will have to compete to win the contract after five years. John Worthy, technology partner at law firm Field Fisher Waterhouse, said deal structures are changing, with a move away from public sector mega-deals. He said the public sector is also showing an appetite for mutualisation as well as shared services. “We have seen a number of public sector deals that are being promoted as having potential to become mutuals.” He added that there will be much more multisourcing in government, with risks spread across a group of suppliers. Mark Lewis, head of outsourcing at law firm Berwin Leighton Paisner, said the introduction of a mutual to run government administration functions is a “potentially enormous development”. A number of these types of deals have been announced, and they are public/ private partnerships.

Shared services, where a public sector organisation supported by an IT supplier offers a service to organisations with similar requirements, is also a growing trend. The NHS Shared Business Service, which provides NHS trusts with back office systems, is an established example, but it could go much further, said Lewis. COMMERCIAL OPPORTUNITIES FOR GOVERNMENT

New models for outsourcing are not new and have been muted before. The Labour government under Gordon

Brown commissioned former civil servant Gerry Grimstone to find ways to raise money. The plan recommended the creation of massive public sector companies, out of administration departments, that would eventually be floated on the stock market. They would compete with big public sector service providers such as Capita in providing administrative services. At the time, Grimstone told the Financial Times that there are

lots of things in the public sector that are akin to business activity. “We are just embarking on what could turn out to be a radical piece of work on identifying business activities within government and corporatising them,” he said. Lewis at Berwin Leighton Paisner, said there is great potential for public sector organisations to share back office services. “For example, HR is HR, and although you might want a small core team of your own, the processes are the same.” Robert Morgan, director at sourcing broker Burnt-Oak Partners, said the government “could and should” be giving this serious consideration. “If you put all the civil servants’ payroll administration in a shared service, for example, it would be the largest BPO [business process outsourcing] deal ever seen,” he said. Morgan said this could be a good way for the public sector to reduce its workforce significantly without incurring huge costs and providing the workers with continued work in a private organisation with the same benefits. The public/private partnerships model, which is on the agenda, works for the public sector because the supplier will take on the capital investments and the supplier will benefit from the business and a share holding, he said.




BNP Paribas Corporate and Investment Bank has signed an outsourcing agreement with BNY Mellon to provide treasury services in the US. The deal will enable BNP Paribas to expand its suite of global Cash Management solutions to include US Cash Management services. The agreement will enable BNP Paribas to private label BNY Mellon’s technologically payables and receivables services including controlled disbursement, lockbox, and payment outsourcing.

The agreement includes the creation of an interface between BNP Paribas and BNY Mellon’s systems and platforms. BNP Paribas head of cash management Americas Walid Shuman said leveraging BNY Mellon’s technology and product strength in innovative treasury services will allow them to build on their global cash management relationships and provide their

clients with solutions that will further address their needs in the US market. BNY Mellon Treasury Services executive vice president and CEO David Cruikshank said they look forward to developing with BNP Paribas a strong level of support for their treasury services clients and adding an exciting new dimension of excellence to their delivery of private label solutions.


71 per cent of business leaders polled by KPMG said they were looking to improve outsourcing processes. More businesses are turning to outsourcing and shared services in order to improve their service delivery performance, according a survey of business leaders and IT providers by KPMG. Some 71 per cent of people polled in KPMG’s Q3 Sourcing Advisory Pulse Survey said the most common approach buyers took to enhance their service capabilities was to improve their current outsourcing governance processes and capabilities, up five per cent from the last quarter. The most popular approach cited by respondents was the use or 10

GlobalizationToday November 2011

expansion of IT outsourcing (56 per cent), followed by internal process improvement or re-engineering efforts (46 per cent). Investments in cloud computing services were ranked low – at 28 per cent – by those polled, but KPMG said further analysis indicates that cloud investments are in face growing in significance. “These findings signal a maturing service delivery market, in which

buyers are more focused on improving efforts already deployed in the field, versus just initiating new outsourcing or shared services arrangements,” said Stan Lepeak, global research director in KPMG’s Management Consulting group. Recently, technology expert Phil Wainewright recommended outsourcing IT support as a way in which small firms can cut their expenditure.



The IT outsourcing market saw its first substantial decline in twelve months during the third quarter of this year. Transaction volumes fell for both the IT and business process outsourcing (BPO) markets, by seven percent and 12 percent respectively, according to the outsourcing consultancy Everest Group’s quarterly report on the global services industry. The average contract value of BPO transactions plummeted by 50 percent, while the average contract value for IT contracts increased by 14 percent, thanks largely to three billion-dollar plus deals signed during the quarter. “The global outsourcing and offshoring market is beginning to show signs of slowing growth in selective areas, but we’ll need to see a few more quarters to determine if this is the beginning of a downturn trend,” says Eric Simonson, Everest’s managing partner of research. Despite a decline in activity, Simonson remains cautiously optimistic in the medium term, given the level of new location activity by service providers. IT service providers opened 32 new outsourcing delivery centers in the third quarter compared to 17 the previous quarter. HP led the way by announcing ten new locations, followed by Dell, which announced four. Convergsys, IBM and Tech Mahindra each

announced three new centers. A second downturn in the economy—the so-called double dip effect—could have a big upside for outsourcing providers. More than 40 percent of corporate IT leaders said that a double-dip recession would lead to increased outsourcing in their organizations, according to an October survey conducted by outsourcing analyst firm HfS Research. Another 46 percent said a second downturn would result in layoffs. HfS Research also surveyed outsourcing providers and analysts and found that 61 percent of providers and 44 percent of advisors said their revenues would increase over the next six months if the economic situations worsens. Just 16 percent of advisors and six percent of providers said revenue would decrease. One-fourth of advisors and 21 percent of providers said revenue would remain the same, while 15 percent of advisors and 11 percent of providers said it’s too early to tell what will happen with their revenue. Corporate IT organizations may have no choice but to look for help outside their organizations if the financial situation continues to deteriorate. They made so many cuts in the previous downturn— in some cases to the bone—that

outsourcing might be the only option for further productivity gains, according to HfS Research founder Phil Fersht. Those IT decision makers considering outsourcing more aren’t just looking for lower costs. While 40 percent said immediate cost cuts were a strong motivating factor, 43 percent cited greater flexibility to scale global operations as a strong impetus. Meanwhile, just over half said access to technology and support services as well as better access to standardized business processes were also somewhat motivating. While many organizations shy away from public outsourcing announcements when unemployment is high and layoffs are looming, Fersht says that sending some of the remaining work to third parties can actually boost morale in corporate IT. “You can only request your managers to increase their numbers of direct staff reports so much, and have them take on only so much extra work, until you get to the point of negative returns from your staff output,” Fersht says. “Outsourcing can provide that opportunity to reenergize your top talent, [by bringing in] new resources and eliminating the ongoing costpressure.”




25 part II

The Industry’s Most influential Revealed by our Readers In this our second installation of the Powerhouse 25, we round out our list of the most influence-yielding individuals in our industry as chosen by you – our readers. Thousands of online votes were cast for this first-ever survey and the response was so great we’ve split the coverage into two parts. Be sure also to see part one in our October issue. Our Powerhouses are risk takers; champions for causes; entrepreneurs and pioneers; and leaders in their organizations, 12

GlobalizationToday November 2011

industries, communities and world around them. These top players also are doing business for and with today’s leading companies, including Google, Nike, LinkedIn, Coca-Cola, Disney, Johnson & Johnson, Xerox, Cisco, General Motors and many others that are kept confidential because of the size and magnitude of the outsourcing deals. Many are involved in leadership positions in the International Association of Outsourcing Professionals and other industry associations so you’ve likely had the opportunity to hear them speak or network with them.


The public has spoken and here are the final results: Name


Aparup Sengupta Atul Vashistha Ben Trowbridge Bill Randag Bobby Varanasi Carina Smith Cesar Gon Christopher Stancombe D.Zachary Misko Dylan Taylor Guibert Englebienne Guy Holden

Managing Director and Global CEO Aegis

Hubert Giraud Jay Desai Jerry Durant Johannes Giloth Julia Santos Kate Vitasek Mike Salvino Peter Lowes Peter Moller Phil Fersht Rohit Kapoor Ron Keith Shunee Yee


Chairman & CEO

Neo Group, Inc.

Founder and CEO



Datamark, Inc.

Chairman & CEO

Matryzel Consulting, Inc

Vice President, BPO


Founder and CEO


Global Head of Finance and Accounting Outsourcing


Vice President

Kelly Outsouricng & Consulting Group


Colliers International



Vice President Global WorkPlace Solutions Group Vice President, Business Process Outsourcing SBU Senior Vice President - Global Sourcing Chairman Emeritus

Johnson Controls

Head of Supply Chain & Logistics

Capgemini Northern Trust The International Institute for Outsource Management Nokia Siemens Networks

Head of Global Business Optimization & Contracting Founder

Johnson & Johnson

Group Chief Executive - BPO


Deloitte Consulting

Deloitte Consulting

Principal, Global Outsourcing Practice Leader Founder and CEO

Principal, Deloitte UK

President and CEO

EXL Service


Riverwood Solutions

President and CEO

CSOFT International Limited

Vested Outsourcing

Horses for Sources

The response from the individuals who made the Powerhouse 25 was overwhelming and we received more quality feedback than we could publish in a single issue. Therefore, we decided to split the content into two parts.



Back home in Argentina after working at IBM and on Wall Street, Guibert Englebienne and three fellow engineering friends shared their entrepreneurial dream in a bar.

With only $5,000 and the blessing of the bartender, they set out to defy the odds by founding a young multinational company exporting software from Buenos Aires. Seeing the trends toward outsourcing and offshoring and

Guibert Englebienne Co-Founder & CTO Globant Years of Experience: 21 years Major accomplishments: Founded Globant in 2003 with $5,000 and three friends in a bar and turned the Argentina-based software company into the fastest growing IT company in Latin America. Education: Holds a degree in Computer Science and Software Engineering from UNICEN University Notable: Globant is the first company in the world to provide software development for Google and also counts Dreamworks, Disney, Nike, Electronic Arts, LinkedIn, YouTube, Zynga, Playdom, Orbitz, Travelocity, Southwest Airlines and Coca Cola among its customers. Quotable: “Entrepreneurship is not about not committing mistakes. It is all about learning and adapting, so as leaders we need to create learning organizations” - Guibert Englebienne Outsourcing Vision: Sees consumer technologies shaking up the corporate environment. Personal: Enjoys extreme outdoor sports and skiing with his daughters Connect: Read about the work Globant does for Google and LinkedIn:


Read an interview with Englebienne: prod=1473

See a video of Englebienne speaking at a conference:

GlobalizationToday November 2011

how it was impacting countries like India, the friends saw an opportunity to transform Argentina into the next IT powerhouse. “We wanted to import opportunities and export software,” says Englebienne, Fast forward eight years and his company, Globant, has become Latin America’s fastest growing IT company and a global role model for entrepreneurship with 3,000 employees, an entirely fresh approach to what the industry offers and a blue chip customer list that includes Google, LinkedIn, Dreamworks, Disney and Nike. In less than a decade, Globant has been featured in books for its young IT talents and case studies by MIT, Harvard and others; recognized as “Entrepreneurs to Watch” by the World Economic Forum; cited by Gartner as a “cool vendor,” ranked highly in outsourcing by IAOP and others; and won the “AlwaysOn Global 250” for creating technology innovations for the Global Silicon Valley, among other accolades. As Globant CTO, Englebienne leads the software product development practice and the Premier League, a group that gathers the most experienced professionals of Globant to cross pollinate ideas from different fields to increase value to clients. Through his guidance, Globant has become an expert in some of the most relevant technologies of today’s times, such as social networks, video games and mobile. It has also become the first company to have specific

POWERHOUSE 25 practices around popular Google technologies like OpenSocial, Google Checkout and Google App Engine and has actively contributed with the open source communities with different applications. Literally breaking into the industry after being hired in 2006 to test Google’s e-commerce platform, Google Checkout, and successfully hacking into it during testing, Google has influenced Globant’s culture and helped turn its offices into a place that’s all about innovation, thinking big, acting ethically, playing as a team and having fun In the Globant Labs, new ideas are converted into hot products and Globant’s employees are working in areas like bioinformatics, smart cities, robotics, social networks, gaming, tangible interfaces and high performance computing. Englebienne sees consumer technologies based on innovation, scale, agility, usability and time to market like social networking and gaming changing the corporate environment and the scope of any IT manager’s job. “For the first time, a generation of digital natives is getting into managerial roles, bringing consumer technology into the corporate environment,” he says. “The last decade has seen our industry creating a lot of capacity on a wide spectrum of knowledge areas. It is now the turn for us to provide innovation to our customers.” An emotional leader that wants to show his company the

importance of fulfilling a larger purpose than just an economic success, Englebienne has ambitious goals for both Globant and the Latin America IT sector. To help reach the goal of making Globant the best company in the world developing software products in the next five years, he has enlisted the support of his 5,000 employees who have been given the power to find something wrong and fix it as part of “Globant Beta.” Working with the Endeavor Argentina foundation where he

is vice president of the non-profit board and has been recognized as an “Endeavor Entrepreneur” for his contributions to economic development, Englebienne and Globant is promoting a healthier environment for creating startups who aim big. By connecting the local talent in the region with knowledge on the latest processes and technologies, he’s betting you just might see the next Facebook, Google or Twitter started by the many people who have been exposed to these experiences.

César Gon Founder & CEO Ci&T Years of Experience: 16 years Major accomplishments: Founded and grew Ci&T today into one of Brazil’s most important and awardwinning nearshore application outsourcing, software product engineering and digital marketing services provider with clients around the world, including Coca-Cola, Johnson & Johnson, Nestle, Yahoo, Citibank and Panasonic. Education: Chaired the committee to organize the first “Meeting of Entrepreneurs of UNICamp,” where he completed his undergraduate and graduate degrees, and participated in the Foundation for UNICamp Ventures Group. Notable: Established in 2011 an Entrepreneurship Program that offers Ci&T employees the time and resources to pursue their own technology projects that helped hatch Ipanema Games’ Smelly Cat top-selling mobile app. Quotable: “Software is transforming every industry, quickly and often disruptively, creating new possibilities and a new competitive environment in each sector. What is happening in the entertainment, mobile phones, gaming and retail industries is just a taste of the transformation that lies ahead.” - César Gon Outsourcing Vision: Sees a completely new game in software outsourcing emerging with new rules about to transform the industry again. Connect: Read “Deeper in the Value Chain” by Salvino: Follow César Gon on Twitter:!/cesargon

César Gon believes that IT is about people first and technology second. And by focusing on his

employees and customers at the start, he’s fostered a culture of great loyalty and innovation



where technology solutions naturally follow. Since founding Ci&T in 1995, he has grown the IT services provider that employs agile methodologies and Lean principles into one of Brazil’s most important and awardwinning nearshore application outsourcing, software product engineering and digital marketing services providers. Gon leads with a strong commitment to innovation, putting Ci&T on the forefront of discovering new ways to deliver value and eliminate waste to help clients reduce costs and improve quality, speed and business agility. From the company’s inception, Gon has been has been singularly focused on creating a global, multi-cultural company built on the nearshore model where he serves clients around the world – like Coca Cola and Nestle – from development centers in Brazil, Argentina and China. He’s also created an atmosphere where innovation can openly thrive. Ci&T’s Entrepreneurship Program, a corporate initiative established in 2011 to help employees turn their creative ideas into real business opportunities, has hatched top-selling mobile apps like Ipanema Games’ Smelly Cat game for the Apple iPhone, iPod Touch and iPad. Gon established the Ci&T


GlobalizationToday November 2011

Innovation Network, an open network where all organizations can freely interact. Comprised of employees of the Ci&T Group and the researchers it partners with, the Innovation Network seeks to determine how best to create real business value for customers and partners. The culture he’s created at Ci&T helps to retain the best employees and low turnover. Gon also is committed to the achievement and progression of Brazil in the IT landscape. Throughout his career he has worked closely with other Brazilian IT entrepreneurs and was integral in establishing Actminds, a consortium of 10 Brazilian companies seeking to export IT services to the U.S. He chaired the committee to organize the first “Meeting of Entrepreneurs of UNICamp,” where he completed his undergraduate and graduate degrees, and participated in the Foundation for UNICamp Ventures Group. Similar to his approach with his team of 1,300-plus developers, Gon promotes an open dialogue with his customers, solidifying Ci&T’s position as a valued partner to its clients, instead of a mere vendor. Ci&T has been early to embrace social, mobile and cloud technologies and Gon

works closely with his global customers, identifying their business challenges and innovating new ways to address these challenges by employing disruptive approaches that focus on delivering value to the client’s business at every step of the process. Gon believes that the industry is entering a new cycle for software production offshore driven by the social Internet and mobile devices. The old model of outsourcing based on negotiating cost and heavy specifications and processes is ending, he says. “Six decades after its birth, software is transforming every industry, quickly and often disruptively, creating new possibilities and a new competitive environment in each sector,” Gon says. “What is happening in the entertainment, mobile phones, gaming and retail industries is just a taste of the transformation that lies ahead.” “At the same extent the investment in software grows, pressure on the ecosystem of service providers for expertise, agility and innovation increases,” he says. “And of course, opens up room for new players and different models of value creation through technology. A completely new game is emerging ahead and new rules are about to transform our whole industry again.”


Jay Desai Senior Vice President – Global Sourcing Northern Trust Major accomplishments: Desai has spent the past decade designing and implementing offshore outsourcing strategies, having worked on both the buyside and the sell-side, and his experience includes a broad spectrum of exposure across the sourcing lifecycle. Prior to Northern Trust, he also has worked at Tata Consultancy Services (TCS), Reuters, Hong Kong & Shanghai Banking Corporation (HSBC) and Standard Chartered Bank Education: Holds a Masters in Management Studies and a bachelor’s in Computer Engineering from the University of Mumbai, India. He also is certified by IAOP as a COP, a PMI-certified Project Management Professional (PMP) and holds the MCCM accreditation from the International Association for Contract & Commercial Management. Notable: Part of the HFS 25, an elite, by-invitation-only group of 25 buy-side only sourcing thought leaders, created to be the preeminent influencers of the direction of the sourcing industry. He currently co-chairs IAOP’s Chicago Chapter and also is a member of the Training & Certification Committee. Outsourcing Vision: Desai’s top buy-side predictions: buyers will move beyond cost reductions, outsource more complex functions, increasingly focus on governance, use more complex pricing mechanisms and realize the benefits of cloud technology. His sell side predictions are: increased margin pressure on vendors, increased onshore presences, continued consolidation of suppliers, more varied delivery locations, increased verticalization and integration. For both customers and suppliers, he sees captive and third party models coexisting.

Carina Smith Vice President, Head of Public Sector Strategic Development, Global BPO Capgemini UK Plc Major accomplishments: For the past eight years, Smith has led the BPO sales growth in Europe in one of the fastest growing parts of the Capgemini Group. Under her leadership, Capgemini grew from having one client in Europe to more than 30 and the company is recognized as a Tier One global provider. Notable: Smith has closed several ground breaking deals across FAO, Procurement and HRO service lines and at customers as diverse as Tetra Pak, SKF, Syngenta, Danfoss, Stora Enso and Zurich Financial Services. Personal: Smith is a German national who is multi-lingual and has previously managed German and Spanish businesses. She enjoys skiing and sailing with her family. Outsourcing Vision: Believes the leaders in the BPO industry will make more use of transformational technology to eliminate roles and process overlaps in the future.


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POWERHOUSE 25 recognition it is deserved. From leading global operations Dylan Taylor serving the real estate needs of CEO multi-national corporations to Colliers International in the U.S. growing the U.S. business and service lines of Colliers, Taylor Years of Experience: 18 years is an outsourcing guru in every Major accomplishments: Heads the U.S. sense of the word. business of Colliers International, the world’s His vision is for the outsourcing third largest commercial real estate firm. industry to become one where Taylor was the lead transition and account there’s performance-based manager for some of the largest outsourcing relationships in the real estate industry, including Xerox, General Motors compensation that aligns all and Cisco, and is one of the pioneers in performance-based contracts in parties; fair and balanced the real estate services industry. risk sharing; joint policy and regulatory perspectives and Education: Earned a MBA in finance and strategy from the University advocacy; and joint training and of Chicago where he studied emerging markets, and also holds a development. bachelor’s in engineering from the University of Arizona Taylor also envisions that the outsourcing industry will become Notable: Taylor has been acknowledged as a global leader by the a broader thought leader within World Economic Forum and has been a guest on such broadcasts as the realm of business on overall CNBC’s Worldwide Exchange and Bloomberg TV; and quoted in The Wall Street Journal and numerous real estate trade journals, business productivity and organization publications and wire services. innovation. “Outsourcing organizations Quotable: “The only obstacles in life are the ones you create for within large organizations will yourself” – Dylan Taylor become the laboratory by which the ‘C’ Suite seeks to identify, Outsourcing Vision: Sees a future where the outsourcing industry understand and pilot leadingis truly partnership-based and becomes a broader thought leader edge process improvements and within the realm of business on overall productivity and organization productivity initiatives,” he says. innovation. In his role, he is working to transition Colliers International Personal: Has won the “Denver Business Journal 40 under 40 Award” and is active on the Young Professionals Organization (YPO). He also to a partnership/performanceis Chairman Emeritus of the Board for the Colorado State Chapter based outsourcing entity. He of March of Dimes and a Board Member of the Colorado Film is responsible for integrating Commission. operations across all services lines, enhancing client engagement Connect: Read Dylan Taylor’s blog: strategies and cross-selling, and Follow Taylor on Twitter: developing systems for supporting Colliers International’s U.S. As head of a division of the the growth of the U.S. operations. Also responsible for positioning CEO Dylan Taylor see a future world’s third largest commercial the firm’s go-to-market strategy to for outsourcing that is truly real estate firm since 2009, Taylor partnership-based and recognized is doing his part to advance the ensure a differentiated client value by the C-suite as the lab they go to industry toward those goals proposition, Taylor is currently for thought leadership. and ensuring it gets the positive further developing two key service 20

GlobalizationToday November 2011

POWERHOUSE 25 lines: Colliers International Corporate Solutions and National Real Estate Management Services capabilities. Taylor has been on the forefront of global outsourcing in real estate and facility services. In 2000, he was the co-principal author of the CoreNet Publication Corporate Real Estate 2010: The Strategic Role of Place, which is considered seminal work for the industry on the topic of offshoring, outsourcing, workplace strategies and hoteling. Taylor also was the lead transition and account manager for some of the largest outsourcing relationships in the real estate industry, including Xerox, General Motors and Cisco. One of the pioneers in performance-based contracts in the real estate services industry, Taylor has been at the forefront of driving innovation to the outsourcing industry, in particular with technology innovation in real estate services. He is the recipient of numerous awards, including Denver Business Journal’s Top 40 under 40 Executives, Grubb & Ellis Circle of Excellence, the LaSalle Club award and a Young Global Leader by the World Economic Forum. Taylor has been a guest on such broadcasts as CNBC’s Worldwide Exchange and Bloomberg TV. He is widely quoted in national publications including The Wall Street Journal and numerous real estate trade journals, business publications and wire services such as Bloomberg News.

Julia Santos Head of Global Business Optimization Johnson & Johnson Group of Consumer Companies Years of Experience: 20-plus years Major accomplishments: Established a global “Center of Excellence” at Johnson & Johnson Group of Consumer Companies to support the outsourcing needs for the R&D community, while directing cross-functional teams to exceed objectives. Notable: Holds the Certified Outsourcing Professional® (COP) designation and is Six Sigma Green belt certified. Quotable: “Mediocrity is not within my vocabulary”-- Julia Santos Personal: Santos also is a ballroom dancer and extreme sports competitor. Outsourcing Vision: DGlobal outsourcing is here to stay and wise business executives will leverage outsourcing, whether nearshoring or offshoring, to achieve business advantage.

Johnson & Johnson’s Julia Santos is a leader who can turn the ordinary into the extraordinary but she knows she couldn’t do it alone. “No one is successful in a vacuum or in silos,” she says. “A Powerhouse is built on strong partnerships and collaboration, and having strong, brilliant people around them to support their vision. My success is dependent on the many relationships I have made over the years and have come to trust.” As Head of Global Business Optimization, the outsourcing projects Santos is involved in reach North America, Europe, Latin America, Asia Pacific, Africa and Middle East, and she has helped the company save millions of dollars in cost savings/efficiencies and contributed to double-digit business growth.

Recognized by the industry and her company for her many “Best in Class” contributions, Santos’ “Center for Excellence” in outsourcing/contracting for the Johnson & Johnson Group of Consumer Companies often is used as a benchmark and model. A strategic, versatile industry leader in the global outsourcing arena, Santos is an executive Board Member of IAOP and several other associations. She is a speaker at many globalization forums and outsourcing events, and has contributed to several articles in industry magazines on global outsourcing. Santos also is an advisor to governments on the global outsourcing industry to include Foreign Direct Investment (FDI), innovation and R&D attraction,


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: Research_and_Insights/Outlook/ Journal/Feb2010/industrialize.htm

Š2010 Accenture. All rights reserved.

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where she has helped shape country policies. Describing herself as a transformational leader, Santos says her leadership style thrives most during today’s challenging and daunting times. “I put passion and energy into everything I do,” she says. “I like to think this enthusiasm inspires and motivates my people to get things done. It’s important for me to ensure my team feels they are valued and that I care about them. Ensuring my people are happy is at

the core of my leadership style.” But those who work with Santos also will be challenged by her and held accountable. Known as tough by fair, she says: “Mediocrity is not within my vocabulary.” Pushing from outside her own comfort zone to transform challenges into opportunities is what most strongly motivates Santos who also can be inspired by reading about her own children’s aspirations. “I learn best when I take the road less traveled,” she says.

Bobby Varanasi Chairman & CEO Matryzel Consulting Sdn Bhd Years of Experience: 15 years Major accomplishments: Advises federal governments across four continents on ICT sector development and Fortune 500 customer organizations. Notable: Has done work in India, United Kingdom, U.S., Malaysia, Indonesia, Singapore, China, Jordan, Brazil, Jamaica, United Arab Emirates, Egypt, Sri Lanka, Italy, Spain and Colombia. Quotable: Believer in the maxim “The only evil in life is the refusal to think.” Outsourcing Vision: Varanasi’s 11 trends to watch for: China’s market growth being overrated; growing India’s marketplace; growth in knowledge services; adoption of technology services by governments; increased use of social networks; unraveling of cloud technology; demise of technopoly; continued clutter amongst suppliers; increased rural and domestic sourcing; and more cross border partnering. Connect:


GlobalizationToday November 2011

Being recognized by IAOP as its “Global Member of the Year” in 2011 certainly sums up what makes Bobby Varanasi a power player in the outsourcing industry – his global impact. Varanasi has advised federal governments across four continents on information and communications technology (ICT) sector development emphasizing policy development, industrygovernment partnerships aimed at creating GDP growth and enabling positive economic impacts. The firm he leads as CEO, Matryzel Consulting, has worked with the governments of Jamaica, Jordan, Brazil, Egypt, Uruguay, Malaysia, Sri Lanka, Colombia and Kenya, as well as Special Operations Command (UAE Armed Forces), Starfield, Qooljets, Maxis, Maybank, Revionics, AgreeYa, Bleum, Dyson among other client organizations. Varanasi was among the first group of individuals in the world to earn the Certified Outsourcing Professional (COP) designation in 2006 from IAOP and also the first individual from the Asia-PacificOceania region. He also holds the title of COOPM (Certified Outsourcing & Offshoring Project Manager). In addition to his widespread involvement with IAOP as a Global Ambassador, certified COP instructor, chairman of the Malaysia Chapter and Pacific Rim Advisory Board and member on other key committees, he also is a member of the AITEC’s African

POWERHOUSE 25 Advisory Board, Outsourcing Malaysia Executive Committee, Rockefeller Foundation’s Impact Sourcing Think Tank and on the board of the Tri Sister City Alliance of cities from India (Pune), South Africa (Johannesburg) and Brazil (Rio). He has spoken at a host of events around the world and published dozens of thought leadership pieces regionally and globally. Varanasi says one of the most important facets he has been able to consistently bring to the table is “inclusivity” with strategies, implementation and governance in the global sourcing marketplace. He approaches getting things done by first understanding and learning about environments and business practices, and listening to the various stakeholders before taking action. Describing his leadership style as “more of a listener and influencer” than a do-it-yourselfer, Varanasi feels this trait has enabled him to more effectively influence the industry across various continents and countries. “I am inspired by ideas, issues, social inequities, economics and my own insatiable curiosity,” he says. “I am guided by actions of others that provide a learning platform.” Among those Varanasi says he has learned from are conscientious business leaders (like ColinCoulson Thomas, Dr. Narayana Murthy, Michael F. Corbett, Oren Harari), to thinkers (like Dr. C.K. Prahlad, Patrick Smith, Roger Thurow, Scott Kilman, Jared

Diamond, Bjorn Lomborg), to economists (like Jeffrey Sachs, Steven J. Levitt, Ashraf Ghani, John Cooley, Clare Lockhart, Tim Hartford Stephen Dubner) to journalists (like Fareed Zakaria, Thomas Friedman) to futurists (like Eugene Linden, Cass Sunstein, Neil Postman). “This learning guides my actions, my perspectives and my

endeavors,” he says. “I don’t find it difficult to roll up the sleeves and get a thing done when required, and also step back and guide actions of others, without judging people. I have learned that judging people is the worst thing you can do, hence staying away from doing so helps you make friends, create everlasting relationships and build mutual trust.”

Peter Moller Principal Deloitte UK Years of Experience: 15 years Major accomplishments: Leads Deloitte’s European Shared Services and Business Process Advisory Team. Since 1995 he has helped some 60 organizations with outsourcing and offshoring initiatives and leads a European team that has worked with more than 300 organizations in this space. Notable: Moller was the lead Partner on a project in 2008 that helped Unilever spin off its two Latin American shared services centers to Capgemini. The project led to Deloitte UK being awarded Outsource Advisor of the Year by the Management Consulting Association in 2009. Quotable: Moller has been quoted on BPO and shared services in a number of management journals, including The Financial Times, The Times, Accountancy Magazine, CFO Europe, Director, the EIU’s Business Europe and Sunday Times. He has also featured on CNN Europe, BBC Radio 4 and Japan’s leading business radio station Personal: Moller chairs a tri-annual SSC/BPO Discussion Group for Shared Services leaders that includes over 50 leading multinationals and the Annual European Deloitte SSC/BPO conference that was attended by some 600 people. Outsourcing Vision: Sees organizations moving from finance function initiatives to multi-functional programs; finance moving up the value chain with more advisory/business partnering processes now being looked at for nearshore or offshoring; and more hybrid models using both captive SSCs and outsource providers on a global basis.



Christopher Stancombe Global Head of Finance and Accounting Outsourcing for Capgemini BPO Capgemini Years of Experience: Nearly a decade Major accomplishments: Designed Capgemini BPO’s Global Process Model (GPM) encompassing a multi-layered, world-class process delivery and transformation asset, complete with embedded controls, service measurements and a ground breaking transition methodology to create standardization for clients at maximum speed to value. Education: Holds masters degrees from the University of Cambridge and Imperial College and also is a fellow of the Association of Chartered Accountants of England and Wales. Notable: Stancombe has been instrumental in establishing Capgemini BPO’s innovative Finance Academy approach to the recruitment, on-boarding and training of staff, enabling them to deliver services to clients at the highest level. Outsourcing Vision: See the outsourcing industry truly becoming partners to their clients, delivering outcomes that add value to both parties. To achieve this, providers will have to take more business risk and apply their skills from managing labor pools in distributed delivery networks to world class process knowledge and fit for purpose technology solutions.

Shunee Yee CEO and President CSOFT International Limited Years of Experience: 15 years Major accomplishments: Founded CSoft in 2003 in a one-room office and guided it to a multinational, multimillion-dollar enterprise providing multilingual localization, application testing, terminology management and software development services for the international market. Based in Beijing, China, the company has four locations in key markets around the globe and more than 400 employees. Education: Completed a senior executive education program at Harvard Business School, and holds a Bachelor of Arts from Nanjing Normal University in Nanjing, and a Master’s degree from Rhode Island College. Notable: A leading mobile phone/cell phone manufacturer is using CSOFT’s wiki-based technology tool as its main resource for terminology management. The community version of this platform, TermWiki, is now the world’s fastest growing social learning network. Personal: Yee was awarded the International Stevie Award for Best Asian Entrepreneur for Women in Business in 2009.


GlobalizationToday November 2011


Peter Lowes Principal and Global Leader of Outsourcing and Service Delivery Transformation Advisory Services Deloitte Years of Experience: 24 years Major accomplishments: Lowes has led, co-led or advised on more than $25 billion in outsourcing arrangements spanning more than 30 countries. He has been global leader of Deloitte’s Service Delivery Transformation offering since it launched in 2009. Education: Holds a bachelor’s in Computer Science from Imperial College, University of London, and did summer internships at Unisys during its formation. Notable: Lowes currently oversees Deloitte’s continuing advisory work on the outsourcing of CoreLogic’s Indian Captive in 2011, which is the largest offshore BPO deal this year to date, among other major deals. Quotable: “I’m inspired by the potential of this industry to make the world a better place through its ability to deliver services that improve the lives of individuals all around the world, while at the same time increasing global communication and understanding among people, enterprises and governments.” – Peter Lowes Personal: Serves on the International Advisory Board of Global Angels and as the U.S. Treasurer of The IOCC, both children’s charities. Outsourcing Vision: Sees exciting times ahead for the outsourcing industry and a radical transformation in the landscape over the next decade. He envisions rapidly growing awareness, understanding and adoption, fueled at the core by technology innovation and the global sourcing and utilization of both employee and third-party service provider talent. Connect: Learn more about Lowes: Service-Delivery-transformation/28e0aeaf7a6e3210VgnVCM100000ba42f00aRCRD.htm

Phil Fersht Founder and CEO HfS Research Major accomplishments: Created the first true research analyst brand, “HfS Research,” associated with the outsourcing industry that is breaking the mold of the traditional incumbent research firms, according to Fersht. He has advised on more than 100 major outsourcing and offshoring engagements and consults regularly with senior operations and IT executives on their global sourcing strategies. Education: Holds a bachelor’s with Honors in European Business & Technology from Coventry University,



United Kingdom and a Diplôme Universitaire de Technologie in Business & Technology from the University of Grenoble, France. Notable: Named “IIAR Analyst of the Year 2010” by the Institute of Industry Analyst Relations (IIAR), the most coveted global award for industry analysts in technology and services. Quotable: “As we venture into unprecedented times of uncertainty that are bringing new challenges, business leaders can no longer afford to cling to many of the methods of yesteryear to steer their organizations.” – Phil Fersht Outsourcing Vision: Outsourcing is entering a new era where businesses will find they must embrace its benefits. Connect: Follow Fersht’s blog: “Horses for Sources”: Read his research:

Jerry E. Durant Chairman Emeritus The International Institute for Outsource Management (IIOM) Years of Experience: Nearly 25 years Major accomplishments: Founded three well respected and recognized thought leadership organizations: The International Institute for Outsource Management (IIOM), The International Outsource Management Research Center (IOMRC) and Certellus Corporation. Notable: Durant holds nine professional certifications, including Certified Outsource/Offshore Project Manager (COOPM). He is on the Global Sourcing Council board and is a council member of the China Import-Export Software Magazine; has advised the Beijing Association for Software Sourcing (BASS), Boco Soft (Beijing) and Outsourcing Institute in New York; serves on the editorial board for outsourcing magazines in Malaysia, Australia and the U.K.; and has spoken at more than 350 global conferences. Quotable: “A man is not measured by the size of his name but the mark that is made on the heart of mankind” – Jerry Durant Personal: Climbs tall mountains as part of the Appalachian Mountain Club and loves speed racing sports. Also helps to save lives as an Emergency Medical Technician and first responder in Maine and New Hampshire, and a certified fire officer, fire instructor and arson investigator in Maine. Outsourcing Vision: Sees these game changes impacting the outsourcing industry: New buyers continuing to dive into outsourcing at moderated levels and tier 2 operators growing the most in size as tier 1 and 3 operators shrink in size. Connect: Follow Durant on Twitter:!/IIOM


GlobalizationToday November 2011


Bill Randag Jay Desai Senior Vice President – Global Sourcing President Northern Trust DATAMARK, Inc. Years of Major accomplishments: Experience: 19 years Desai has spent the past decade designing and implementing Major accomplishments: offshore outsourcing As companystrategies, presidenthaving since 2001, worked Randag on both hasthe ledbuysidegrowth the and theofsell-side, DATAMARK, and his a leading experience BPO provider includes specializing a broad spectrum in large-scale of exposure across the digital mailroom sourcing processes lifecycle.for Prior Fortune to Northern 500 corporations, Trust, he also into has new worked business at Tata Consultancy areas, including Services digital(TCS), mailroom, Reuters, document Hong Kong capture, & Shanghai remittance Banking processing Corporation and (HSBC) and bilingual customer Standard contact Chartered centers. Bank Notable: Directed Education: Holds athe Masters acquisition in Management of DATAMARK’s Studies first and processing a bachelor’s facility in Computer in Juárez, Engineering Mexico, in 1995; fromthe the University of Mumbai, establishment of a jointIndia. venture He also withisProdapt certifiedSolutions, by IAOP as anaoutsourcer COP, a PMI-certified based in Chennai, Project Management India, in 2005; and Professional the recent corporate (PMP) and headquarters holds the MCCM moveaccreditation to a historic building from theinInternational El Paso, Texas. Association for Contract & Commercial Management. Outsourcing Vision: Anticipates the global outsourcing industry will continue to evolve toward a higher Notable: Part of the HFS 25,vendors an elite,offering by-invitation-only group of 25 that buy-side onlyend-to-end sourcing thought level of sophistication with strategic partnerships provide processleaders, recreated to beinnovative the preeminent influencers of the direction of the sourcing industry. He currently co-chairs engineering solutions. Also, sees a trend of U.S.-based outsourcing customers increasingly IAOP’s and alsoproject is a member of the Training seekingChicago to workChapter with U.S.-based management teams.& Certification Committee. Outsourcing Vision: Desai’s top buy-side predictions: buyers will move beyond cost reductions, outsource more Personal: Before joining DATAMARK, Randag had a successful career aspricing an Air Force pilot and pilot instructor. complex functions, increasingly focus on governance, use more complex mechanisms and realize the He’s even been interviewed for a segment on digital mailroom management for “The Executive Report” benefits of cloud technology. His sell side predictions are: increased margin pressure on vendors, increased audio program broadcastcontinued on American Airline flights. onshore presences, consolidation of suppliers, more varied delivery locations, increased verticalization and integration. For both customers and suppliers, he sees captive and third party models coexisting. Connect: Link In at: Read about Randag in CEO Magazine: datamark/

Aparup Sengupta Managing Director and Global CEO Aegis Limited Years of Experience: 23 years Major accomplishments: Under his leadership, Aegis - an outsourcing service provider focused on total customer lifecycle management - has grown from $60 million to $800 million-plus in revenues in less than five years. During this time, Aegis completed 16 successful acquisitions, resulting in larger than expected returns and an attrition rate of less than 2 percent at the top management. Education: Holds a bachelor’s in engineering from BE College, Kolkata, and has participated in several post-graduate leadership programs at institutions, including IIM Calcutta, XLRI Jamshedpur and Portsmouth University, UK. Notable: Honors include the Lead Assessor and Member of the Jury of the CII Business Excellence Award;



nominee as an Advisor to Benchmark Portal, an affiliate of the CCDQ at Purdue University that evaluates call centers; and “Corporate Dealmaker of the Year” by Global M&A. Also currently serves on the National Association of Software and Service Companies (NASSCOM) Executive Council and was Chairman of the BPO Steering Committee of ASSOCHAM, India’s leading commerce and industry forum. Personal: Sengupta came to the U.S. under an ambassadorial scholarship in 1994 and was exposed to the American business, academics and cultural life that included Harvard University and Northwestern University. Connect: Read an article by Sengupta in the Wall Street Journal: Hear Sengupta speak about Aegis:

Johannes Jay Desai Giloth Seniorof Head Vice Supply President Chain/ – Global Logistics Sourcing Northern Nokia Siemens Trust Networks Major accomplishments: Initiated Desai hasand spent designed the past the decade biggest designing and most and complex implementing Business Process offshore Outsourcing outsourcing projectstrategies, in the telecommunications having worked onindustry, both the buyside and thethe addressing sell-side, entire order and his management experience includes of NokiaaSiemens broad spectrum Networks. ofThe exposure project across the sourcing successfully outsourced lifecycle. somePrior 800 to employees Northernfrom Trust,several he alsocountries, has worked including at Tata Consultancy Brazil, U.S., Finland, Services Germany (TCS), Reuters, and India, Hong with Kong outsourced & Shanghai tasks Banking rangingCorporation from (HSBC) and complex order Standard management Chartered over Bank distribution tasks to customer invoicing. Education: Holds a Masters in Management Business Administration Studies andand a bachelor’s Mechanical in Engineering Computer Engineering from the University from the of University of Mumbai, Kaiserslautern, Germany India. andHe thealso University is certified of Greenwich, by IAOP as UK. a COP, a PMI-certified Project Management Professional (PMP) and holds the MCCM accreditation from the International Association for Contract & Commercial Notable: Giloth Management. has spoken on supply chain business process outsourcing at several events, including EVO Logistics Yearbook 2011, BME Business Excellence Days in Munich and IQPC Outsourcing conference in Notable: Part of the HFS 25, an elite, by-invitation-only group of 25 buy-side only sourcing thought leaders, Amsterdam. created to be the preeminent influencers of the direction of the sourcing industry. He currently co-chairs IAOP’s Chicago Chapter and also isahead a member of the Training &outsourcing, Certification” Committee. Outsourcing Vision: Sees a future for “transformational where BPO providers become

partners whoVision: can transform processes together with client. This cost approach focuses on the more Outsourcing Desai’s top buy-sideworking predictions: buyers willthe move beyond reductions, outsource transformation of the entire end-to-end process anduse willmore provide significant growth perspectives for BPO complex functions, increasingly focus on governance, complex pricing mechanisms and realize the companies in the coming years, he says. benefits of cloud technology. His sell side predictions are: increased margin pressure on vendors, increased onshore presences, continued consolidation of suppliers, more varied delivery locations, increased verticalization Personal: Describes his leadership as risk taking, entrepreneurial, innovative, fast moving and being a and integration. For both customersstyle and suppliers, he sees captive and third party models coexisting. team player.


GlobalizationToday November 2011


Hubert Giraud CEO, Business Process Outsourcing Capgemini Major accomplishments: Giraud launched Capgemini’s Business Process Outsourcing discipline in 2004 and grew it to more than 12,000 people today. He led the development of the BPO Rightshore delivery network that now comprises 23 Global Delivery Centers; managed acquisitions and expansions that have grown into five Capgemini BPO Service Lines; and has supported engagements comprising more than 60 major Capgemini BPO clients. Education: Graduate of Ecole Nationale d’Administration and Institut d’Etudes Politiques de Paris. Notable: Previously, he was head of public financing at Societe Generale and Chief Operations Officer of GEMPLUS, a world leading smart cards manufacturer. Quotable: “In the current climate, clients are now looking for service providers to deliver more and to focus on the real business outcomes they need. To achieve this, service providers will need to offer flexible, outcomes-based contracts, with gain-sharing. They will need to offer deep industry insight so that services are customized for each industry and for every client situation.” - Hubert Giraud Outsourcing Vision: BPO providers need to be experts at processes connected into end-to-end processes and embed their process expertise into software tools and technologies. By doing so, clients can get the benefit of the highest quality delivery and fast time-to-benefit anywhere in the world. GlobalizationToday

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Easy Mistakes to Make When Making Decisions About Legal Process Outsourcing By Danny Ertel

Legal process outsourcing (LPO) is a reality. Legal work is starting to move from law firms to LPO providers around the world. There are those who prophesize the end of (large) law firms and those who are just as certain that this is all just a passing fad that will surely be shown to be unsustainable, if not unethical.. Given all of the noise, it seems worth setting out a few relatively safe assertions, and then building on those premises: •• LPO is today about repetitive, high-volume tasks of low to medium complexity. LPO providers are doing the kinds of things for which many law firms have long relied on paralegals, temp agency lawyers, or junior asso-ciates. •• While there is some legal research, contract summarization, and drafting, most of the work being carried out by LPO providers today is document review for litigation and work around the early stages of patent clear-ance. •• •• In-house law departments are leading the way in exploration and experimentation with LPO. Most law firm ex-perience is limited to serving a particular client that has insisted on the use of a lower-cost resource for some of the work. Even the firms that have made the investment to set up a captive service center 32

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in a lower-cost loca-tion (onshore or offshore) are currently using those centers much more for back office services than for legal work. The LPO industry is still relatively immature, populated by many small providers that may not have significant staying power and that do not, in fact, offer the usual outsourcing benefits in terms of scale,technologyin-vestments,orprocessexpertise. Lawyers will generally be unable to shed responsibility for the quality of the work carried out by the LPO pro-vider, even when the client has selected the provider and foisted it on the law firm. Whether bound by ethical or court rules, or simply because they value their reputation, law firms will have to take steps to assure the quality of their client deliverables.


Many law firms are feeling pressure from their clients to take a hard look at LPO and develop some kind of offer-ing that significantly reduces the cost to the client. That pressure is not going to go away. Having been trained, like most lawyers, to learn by studying things that have gone wrong, let’s consider some of the mistakes law firms make when they consider LPO.

1. Failing to understand what your clients are really asking for When a client asks (or demands) that the firm make use of an LPO provider for high-volume, repetitive tasks, at least one of the things they are asking is that you show them that you understand that they are under pressure to become more efficient, to deliver value for their spend, and to work with outside counsel who can help them not just meet today’s budget cuts, but to think more creatively and strategically about how to manage their legal and regulatory risks. They want you to understand that legal fees cannot continue to increase year after year after year. While the general counsel’s office was for a long time insulated from the pressures that Sourcing & Procurement have brought to bear on other parts of the organization, that is no longer the case. RFPs, preferred provider panels, and volume discounts for legal services have become a matter of course. Responding to a client’s question about LPO with any kind of answer that does not acknowledge the pressures clients are under to demonstrate

that they are being responsible in how they spend their budget just misses the boat. This mistake is at best a lost opportunity to improve the relationship and address one of the inherent tensions between in-house and outside counsel, and at worst a confirmation of the client’s most negative perceptions about the firm.

2. Ignoring LPO as an option Remaining uninformed and disengaged from discussions about what kinds of tasks should or should not be auto-mated, delegated, or even dispensed with altogether is another common mistake. Although law firms certainly should remain firmly in


LEGAL PROCESS OUTSOURCING control of the higher-value level services, refusing to dig into what LPO could or should mean for your practice, as if absolutely every task could be done only by partners and associates of the firm, is to ignore what is happening in every other part of the economy. Clients have experience and comfort with out-sourcing a broad range of services throughout the corporation to providers that can deliver quality at a lower cost; it is an increasingly hard sell that legal services are, categorically and in their entirety, different. Rather than burying your head in the sand and hoping it will just go away, a much better stance is one that is open to the discussion, perhaps even proactively so, and that demonstrates knowledge of the available options and adds value in helping the client make informed choices and manage the associated risks. 3. Grudgingly accepting LPO when a client forces it upon you A common mistake many firms are making today is allowing clients to feel that they are twisting their lawyers’ arms to explore LPO. If you are essentially “caving in” to client pressure to make use of the provider the client has vetted and selected, you will certainly get no credit for any savings. But even if you get no credit when you “go along” with a client’s request to use an LPO provider, you do not avoid the responsibility for their outputs. Like it or not, ethical duty (and in some cases, court rules) requires that if you take on the representation, you have to make sure that the use of an LPO provider does not diminish the quality of the results. It is easier to obtain quality outputs from an LPO provider if you enter into the relationship in a collaborative fashion rather than as the result of being coerced by your mutual client. It is much easier to deliver high-quality legal representation to your client if you have been an active part of the process of identifying what activities should be outsourced and defining criteria for the selection of a provider (instead of inheriting a selection that may have been made primarily on the basis of price). It is even easier to do a quality job and get some credit for being responsive 34

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and innovative if, when asked by a client about LPO, you can identify some providers with whom you have already established a relationship and perhaps even have run some successful pilots. 4. Jumping into LPO with both feet to appear to be innovative Using an LPO provider is not without risks. Starting to use LPO providers without fully understanding from an op-erational, regulatory/ ethical, and economic perspective, which activities should be done where and by whom, is a mistake. •For • example, sending document review work to an Israeli law firm for $150/hour to be done by qualified law-yers may feel safer than sending it to India or the Philippines to be done by more junior staff, and it may seem like a good deal compared to what your own firm charges for document review work. But what you charge cli-ents and what it costs you to have documents reviewed are two different things. If you are ready to abandon your profit margins on document review, one way to lower your client’s costs is to outsource the work and treat it as a disbursement. Another way is simply to charge a lower rate for doing that work internally.

LEGAL PROCESS OUTSOURCING very significant role as part of a portfolio of services you provide, even as it raises questions about your leverage model and how you recruit, hire, and train associates. 5. Thinking you have to “own it”

LPO Whether or not this is a good deal depends a lot on your staffing model (would you use attorneys or paralegals? are your costs for those resources mostly fixed or largely variable?) and your utilization rate at any given point in time. •• Similarly, it would be a mistake to entrust client confidential materials to a provider ill-equipped to protect those materials, or whose hiring, training, and monitoring practices do not give you sufficient comfort on the issue. With over a hundred small, newly-established providers out there sharing what is still a modest amount of total industry revenue, it is unsafe to assume that all providers really are fully capable of delivering quality outputs. Ideally, a decision to use LPO should be made strategically, more than just enthusiastically. How you use LPO in your practice should fit with how you are positioning your firm with your clients. For firms seeking to focus on high-end advisory work, for example, LPO could be one of several options to consider when you discuss the kinds of work you should (or should not) be doing for them. Other options would include helping them become selfsufficient for some tasks, or using quality regional or specialty firms. On the other hand, if you are positioned as a full-service firm, LPO could play a

Some law firm partners are convinced that, whatever the firm does, it should own the delivery center. Whether coming from fears about quality control and confidentiality, or from an optimistic view on the strategic importance of such assets, the instinct to build a captive is not an unreasonable one. The mistake comes in thinking that owning the facilities is the only way to address the need to unbundle services, consider where and by whom each piece should be done, and assure that each is done well. There are “best friends” relationships or networks that can serve as good alternatives and don’t require a large capital investment. There are providers that can leverage economies of scale and process expertise to deliver a reliable and more flexible managed service and who do so under fairly stringent service level agreements. There are hybrid alternatives that can capture many of the benefits of both the captive and the outsourced model, giving law firms some control over hiring, for example, while still allowing them to leverage a provider’s multiple locations for business continuity planning. 6. Ignoring the change management challenge In seeing how some firms have struggled to make effective use of lower-cost resources, whether their own or those of a third party, we have noticed a common set of change management challenges. •Out • of sight/out of mind — Partners responsible for particular engagements tend not to think of the offsite re-sources as readily as they do the more familiar, locally based resources. •Resistance • to the unfamiliar — Even when they are reminded of such resources, some partners resist relying on teams that may be across the country or across the globe, working in a different time zone,


LEGAL PROCESS OUTSOURCING twho who may com-municate with a different accent, or who may simply feel less under their direct control. tFailure to adopt new processes —When the delivery center is responsible for meeting quick turn-around times and demanding quality metrics, they tend in turn to require from users some standard lead times and specificity with regard to the task. Those kinds of “form-filling” requirements often feel countercultural, like something of a bother to partners and senior associates. tLagging metrics and incentives — There is huge variance among firms about what is measured, what is reported to whom, and what is rewarded (both formally, in terms of compensation and promotion, and informally, in terms of status and praise from the most influential partners). Many firms fail to think carefully about what metrics and incentive levers need to change to integrate the use of LPO in their offerings. The problem is not only one of partner behavior. The messages that the firm sends about its commitment (or not) to the use of alternative resources for low-complexity, repetitive, highvolume tasks will impact how associates and other staff view those resources, and whether they consider that developing the skills and capabilities to manage engagements that make use of such resources is a good, or not-so-good, career move.

Danny Ertel

Vantage Partners

Danny Ertel is a founding partner of Vantage Partners, leading its outsourcing practice area. He also chairs the Legal Process Outsourcing Chapter of the IAOP. Ertel was previously a senior researcher at the Harvard Negotiation Project; taught negotiation at the Unive vers rsit i y of Toronto Law Faculty; practiced law with Debevoise & Plilim mpton; and served as a law clerk to the Hon. Justice Harry A. Blackmun on the US Supreme Court. He is a graduate of Harvard College and Harvard Law School, where he was managing editor of the Harvard Law Review. He can be contacted at dertel@vantage gepartners.ccom


GlobalizationToday November 2011

Climbing the learning curve This is certainly an interesting time to be practicing law in a large firm and there is no simple answer to the question of outsourcing legal processes. As you embark on a consideration of these issues, here are a few things to keep in mind and questions to pose: 1.Engage key stakeholders early: people respond much better to being included in the consideration — even of things they may believe should not be done — than to being excluded and surprised later. 2.Define a path for your investigation: what questions do you need to answer first, second, third? What do you need to validate right away and what can you “wait and see?” 3.Keep an open mind: although we seem to have passed an initial tipping point, there are still lots of moving parts. The answers may not be what you expect when you set out to explore our options. 4.Consider the following issues: tWhich of our clients are likely to be interested in LPO, for what categories of work? tFor that work, which specific tasks can be done substantially more efficiently elsewhere, by others? tWhat kind of quality assurance mechanisms do we need to meet or exceed our current levels of accuracy? tWhat kind of ownership or contractual arrangements could support our business and professional objectives? tIs there value in moving quickly to gain momentum and experience? tWhat are the risks of waiting and learning from the mistakes of others? tShould we focus across the firm, on the “bottom 10%” (from a value perspective) of the activities we cur-rently do, or should we make narrower, practice-specific choices? tWhatever choices we make, how do we prepare our firm for the changes required of us, if implementation of any such program is to be successful?

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Insights to Optimizing Business Value In Outsourcing Relationships Welcome to the Fall 2011 edition of Sourcing Relationship Management (SRM) where we share the latest developments, findings and best practices in optimizing outsourcing and shared service center relationships through the Outsourcing Relationship Health Check Process® and use of the Value Health Check Survey®(VHCS®). Customers & Service Providers Increasingly Not Aligned On Transparency & Use of Tools & Technologies in Outsourcing! With over 50 outsourcing relationship health checks performed using the Outsourcing Relationship Health Check Process® and the Value Health Check Survey® (VHCS) tool, what’s becoming clear is that outsourcing customers are increasingly seeking greater transparency in their outsourcing relationships and the use of advanced tools and technologies to accomplish it may be an area of opportunity. Over the past year (2011), outsourcing customer’s agreement scores have consistently fallen when customers are asked if they’ve got the necessary processes, tools and technologies in place to understand outsourcing performance in areas such as business case realization service levels and overall governance. Based on comments from VHCS users responsible for governing these relationships, there’s a consistent concern and lack of alignment with service providers regarding the degree of transparency required by users into 38

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outsourced business operations. What’s even more alarming is a concern with some users that service providers and therefore their customers may not be able to readily demonstrate compliance with increased government regulations in industries such as healthcare and financial services. Let’s take a closer look at specific VHCS Value Statements to better understand the issues. As our experience using the VHCS across multiple industries increases and we use the tool in more highly regulated industries such as healthcare, pharmaceuticals and financial services, we expected outsourcing customers to have a higher priority and greater level of performance expectation from their service provider on the topic of process, data & information transparency. What we hadn’t expected was the degree of misalignment and the widening gap we’re seeing in agreement scores when we ask customer and service providers to react to the following three (3) related Value Statements:

Governance Value Statement: 2011 alone. No other related group Customer - We have the necessary processes, tools & technologies of Value Statements increased by in place to effectively & efficiently govern this outsourcing contract/ this factor during the 2011 period. relationship. Provider - Our client has the necessary processes, tools & technologies in pIace to effectiveIy & efficiently govern this outsourcing ARE THE ECONOMY, INCREASED REGULATIONS & TECHNOLOGY contract/relationship. DISPARITY TO BLAME?

Financial Performance Value Statement: Customer - We have the processes, tools & technologies to easily monitor, manage & report on the business case realization of outsourcing. Provider - Our client has the processes, tools & technologies to easily monitor, manage & report on the business case realization of outsourcing.

Based on reviews of customer and service provider comments collected during VHCS engagements and from select interviews of VHCS users (both customer and service provider) regarding this trend, Service Quality Value Statement: we’re getting divergent opinions. Customer - We have adequate transparency into supplier performance First and foremost, outsourcing & supporting data/systems to appropriately understand supplier users tell us that they’re under performance. Provider - Our client has adequate transparency into the gun or knife to continuously supplier performance& supporting data/systems to appropriately optimize the financial performance understand supplier performance. of their relationships, given persistent economic uncertainty. When taking the VHCS, customers and service These continued pressures require greater real-time providers score their level of priority and level of access and transparency to outsourcing performance agreement with 40 Value Statements across the five (5) related data and information. In most cases users key areas of business value in outsourcing: Financial surveyed felt that their service providers either should Performance, Service Quality, Capabilities, Risk/ or do have the tools/technologies and capabilities to Compliance and Governance. The Value Statements provide them enhanced transparency and access to are presented to the customer and service providers outsourcing data/information they need, however as represented above with only a slight difference in their service providers appear reluctant to given them wording of the value statements due to the context of ready access to their tools/technologies to do so. The how they’re asked. following comment was typical of outsourcing users: In 2011, use of VHCS has accelerated especially in “I know my service provider has the data/information the pharma, energy, financial services and healthcare and transparency into the processes. They’ve got to sectors. What we’re seeing as a result, especially in the have this in order to run their business, however they three related Value Statements above, is a consistent appear reluctant or unwilling to give us real-time widening or gap in the agreement scores between access to the data/information.” Service providers customers and service providers. Our experience on the other hand felt strongly that their outsourcing tells us that if a customer and service provider have customers either had the appropriate level of access a gap in their agreement score of 1.5 plus or minus, to data, information and process transparency or this is an area of value that the organizations should they (the customers) had the tools of their own to discuss to determine if there is an alignment issue in accomplish it. One comment from a service provider their expectations and/or perceptions. In the case read; “We’re using the latest tools and technologies of the 3 Value Statements above, the average overall and we’re fully ITIL compliant, what more could my GAP score doubled from approximately 1.0 to 2.0 in client ask for?” When this same service provider was


asked if their customer had real-time access and full transparency through their systems, the answer was no, due to security and governance concerns! Where customers and service providers seem to agree is the impact that increased government regulations are having on the need for real-time transparency into data, processes and outsourcing performance information. Whereas service providers appear confident that they can address the regulatory challenges ahead, customers on the other-hand appear skeptical as typified by the following comment; “Our existing provider is redesigning our processes and systems to comply with new regulations, however I don’t see how I’ll be given the real-time access we need to be able to adequately address our new oversight responsibilities. In the past our provider said trust us, and now I’m not compliant if I do!” Another reality that customers and service providers are facing is the relentless advance of new technologies (especially through the Cloud) and the fundamental impact this is having on the outsourcing industry and how relationships can be governed. By their very nature, outsourcing service providers should be pushing the envelope of technology and how it can impact outsourcing productivity, efficiency and effectiveness. The providers are usually the early adopters of new technologies and deploy these technologies to manage their portfolio’s of outsourcing customer relationships. And, as you should expect, how they deploy these technologies may be proprietary and must serve the interests of their bottom line. Outsourcing customers/users on the other hand are typically not early adopters of new outsourcing governance technologies. In many cases users are under-funded and under-staffed from the outset of the relationship and therefore highly dependent on their service providers for transparency and data/ information concerning the performance of the relationship. As outsourcing continues to accelerate across all “O’s” (i.e. ITO, BPO, KPO), we are beginning to see the realization by outsourcing customers that they require the same degree of real-time transparency


GlobalizationToday November 2011

and access to outsourcing performance related data and information as their service providers. This realization by outsourcing customers appears to be a major driver of the increase in gap scores in the three (3) Value Statements between the parties. CLOSING THE GAP – COLLABORATIVE TRANSPARENCY

As we work with customers and service providers to identify ways to close the gap in their expectations and perceptions of agreement on the topic of transparency and the use of tools and technologies to effectively govern outsourcing relationships, a few common themes emerge. First is the recognition that in many cases the customer and service provider are not on common ground as it relates to definition and of what is meant, expected and possible as far as transparency into the relationship. Most outsourcing relationships we’re performing health checks on were built years ago when the global economy, regulatory environment and available technologies were very different then today. Transparency wasn’t as serious an issue, nor were there technologies that easily and affordably enabled it. The second theme is the reality that we’re in a networked world and partnering, collaboration and even co-opetition may be the best way to succeed. And finally, transparency is a “stark reality” of the world today and this is both good and bad. In today’s world of Wiki-leaks, Facebook, Twitter and Linked-In, transparency is a reality and how an organization manages transparency is an important element of business survival and success. So transparency is a given and it must be managed and increasingly it can’t be done well alone. What do we see for the future? We see increased collaboration between and among customers and service providers in outsourcing. We see a greater degree of standardization and sharing of those process, data elements and information components that don’t provide competitive differentiation and therefore can reduce cost, complexity and risk for all across the outsourcing industry. We envision

in some sectors that are highly regulated or higher risk, a higher degree of collaboration among and between service providers and customers where collaboration & transparency can bring down costs, reduce risks, improve safety, enhance quality and drive ROI for all. What’s absolutely certain is that tools and technologies will continue to rapidly advance. How well outsourcing customers and service providers put them to work collaboratively to enhance outsourcing transparency will be factor in their mutual success. PARTICIPATION TO-DATE IN THE VALUE HEALTH CHECK SURVEY

As of Q3, 2011, there have been over 50 VHCS used in outsourcing relationship health checks worldwide. The VHCS is being used by IAOP Members and Non-Members globally on 5 continents. The scope of outsourcing services includes contact/call center, facilities/property management, IT infrastructure, application development/maintenance, F&A BPO, HR BPO, print & fulfillment, and engineering support services to name just a few. On average, customers and service providers involve 10 respondents in the VHCS process from disciplines across their respective organizations and from around the world. OUTSOURCING RELATIONSHIP HEALTH CHECK PROCESS AT-A-GLANCE

1. During Phase 1 – Assess, the VCHS is used to collect demographic information on each outsourcing or shared service center relationship, enabling future peer group scoring & trend analysis. 2. Customers and Service Providers use the VHCS to prioritize and score their level of agreement with 40 Value Statements across the five areas of business value. 3. Stakeholder’s comments are encouraged and collected at each value statement and/or overall value domain

4. The VHCS provides participants with immediate feedback on their overall score and value driver assessment 5. Once all participant results are compiled, a VHCS Basic Report is provided consisting of 30 pages of detailed data/information and analysis comparing responses from customer and provider. Once sufficient industry data is captured in the VHCS database, peer group scoring will be available to participating IAOP Members and Non-Members 6. Once the Customer & Service Provider VHCS Administrators receive their VHCS Basic Reports, they launch Phase 2 – Analyze that involves a series of internal and joint workshops to analyze the data and identify strengths/weaknesses in the relationship and opportunities for improvement. A VHCS Advisor is assigned to assist the customer and service provider through the process. 7. Once the Phase 2 Debriefings and Workshops are completed, a Final VHCS Report is drafted by the VHCS Advisor and provided to each organization for review and approval. 8. The Customer & Service Provider launch Phase 3 – Implement where they work closely together to implement the recommendations for improvement from the relationship health check that was enabled by the VHCS. ABOUT THE AUTHOR

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, Matt is the Global Ambassador for the IAOP, Chairman of the IAOP’s Outsourcing Tools & Technology Innovation Chapter, Co-Chairman of the IAOP Midwest Chapter and a Certified Outsourcing Professional. Matt is the author of the Outsourcing Relationship Health Check ProcessTM and Sourcing Relationship Value FrameworkTM. He is a frequent speaker on the developing management science in outsourcing and Sourcing Relationship Management (SRM).




Thom Shares a Key Lesson

Having sold more than $900 million in outsourcing deals in my career, and having played a key role in the structuring of more than $17 billion in outsourcing deals across every industry and virtually every process it seems the more things change, the more they remain the same. I won’t add to the dizzying array of endless terms companies develop to differentiate their offerings, but rather, discuss some of the commonalities across all of them. I started my career selling primarily large ITO deals. But there was a certain sense that if we did not fix the core process the IT was supporting, we could be doing the wrong thing exceptionally well, or maybe a little less expensively. My employer, EDS, was also one of the pioneers of BPO, doing claims processing for the Blues back in the 70’s…long before Forrester Research coined the term “Outsourcing”, which has been in place for the last 25 years, or before India appeared on the scene a little more than a decade ago. In the early 1990s, EDS was instrumental in helping Cadillac win the Malcolm Baldridge Award for Quality through its BPO agreement wherein EDS managed the Cadillac Roadside Assistance Program. With their win and success at the City of Chicago Parking Enforcement Authority, EDS ushered in the era of Value Based Pricing…sort of gain-sharing on steroids. To this day, this contract is a textbook example of how to structure the mythical “win-win” contract for amazing results. The initial RFP was for newer, faster mainframes…the solution was an entirely new approach that netted the city hundreds of millions in unrealized ticket revenues, and for EDS, they were paid handsomely, but appropriately, for their role in developing and delivering the solution. Kudos to the City of Chicago… 42

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they had found the Holy Grail…outsource for the result and let the provider figure out the best solution. But that assumes one knows what the REAL problem is that needs to be solved. Usually, RFPs are about contracting for activities. These activities are reduced to the most basic component parts and auctioned like commodities. This is a process known as “contract leveling”…wherein the buyer assumes the suppliers cannot add value, other than expense reduction, so have them do the pricing limbo dance. In quality circles this is referred to as a “sub-optimized process”. When I was SVP of Sales for the Outsourcing Division of Spherion, (the company that developed the RPO market as we know it today) my second day on the job we received an RFP from the Card Services Division of a leading financial institution. Put simply, they wanted to reduce their cost of recruiting. Instead of having 3 suppliers of recruiting/staffing services on annual contracts to keep their call centers staffed properly, they were going to award one contract to one supplier for 3 years. They wanted a declining tier structure on the cost per hire in exchange for the increased aggregated volume. Had we bid to the specs of the RFP…we would not have been helping them to address the REAL problem…attrition. Their call center attrition was 120% annually. As they structured the RFP…the chosen supplier would have been paid no matter how many employees had to be hired, just less per head (so make it up with volume?). Metaphorically, the


supplier would just have been pouring cheaper wine into a leaking wine cask. I proposed a different approach. At their current level of attrition, they would need to hire 6 people every 5 years to keep the seats filled. We would instead contract to fix the attrition problem (which also lowered a lot of other related costs). We proposed to set the attrition at 3 butts in the seat every 5 years. If we could do better than that, we pocketed the difference. If more than 3 were required in a given year, we were at risk to eat the cost differential. Shared risk/shared reward and focused on solving the problem…not just “your mess for less”. But outsourcing for results, not merely outsourcing the process, is not as simple as it may seem. Many factors conspire to undermine the effort. Buyers need to be fully open and trusting with the bidders, suppliers willing to incur meaningful financial risk and share the pain with the buyer if problems arise. Compensation plans are a major inhibitor. Procurement is often compensated by how much cost they can drive out of the supplier compared to current state. Yet a value based contract has many other parts to it that go beyond side by side comparisons. The people managing an existing process are compensated, as a cost center, to drive down costs. The supplier’s account manager is also measured by his ability to keep costs down while meeting SLAs and thereby increase profitability. Senior executives are often compensated on more broad metrics, and for this reason,

this is typically where such deals need to be orchestrated for that very reason. As the godfather of quality, W. Edwards Deming postulated, “People will do what they are compensated to do.” If you want to achieve the ultimate win-win scenario with your suppliers, then outsourcing for breakthrough results is not a process that should be delegated too far down. History repeats itself once again. ABOUT THE AUTHOR

Thom Mead is VP of Marketing, Alliances & Channels – North America for Firstsource, a leading global provider of BPO solutions for the Banking, Financial Services, Insurance, Healthcare, Telecommunications & Media, industries. With nearly 30,000 employees across more than 45 delivery centers around the world, Firstsource delivers both onshore (70%) and offshore (30%) solutions for its clients. Prior to Firstsource, Thom was CMO for EXLservice, SVP - Sales for Spherion, VP of Sales and Marketing for Unisys Outsourcing and VP of Global Marketing for ACS where he also served as president for an ACS BPO subsidiary. Thom has been a key figure in structuring and closing more than $17B of outsourcing transactions in his career. Thom can be reached at: 770-769-7795;



VANILLA OR NEAPOLITAN – WHICH FLAVOUR FOR GLOBAL APPLICATIONS When it comes to IT applications, there are two main themes; but which one is flavour of the month? On the menu is ‘Vanilla’ – generic solutions based on economy of scale – or ‘Neapolitan’ – bespoke solutions for a tailored applications portfolio. Paul Gardner, James Cockroft and Stuart Gibson of Xantus Consulting, take the taste challenge and give their verdict as to which flavour is best. to fit the technology. While this may be possible in a single country, it is significantly more difficult across But before you start tasting, it is important to decide if a globalised business. Vanilla systems score well for you want dessert at all. There are a number of parameters business process outsourcing (BPO) such as HR, general that should be considered when examining IT estates finance, back office administration and standardised before changing or adding applications. Are they: manufacturing processes where data security is not an issue. • fit for purpose; However, the vanilla option starts to melt as soon • delivering value for money; as there is a need for bespoke applications or where • future-proof for up to ten years; regionalisation is required. Accounting standards or • needing total change or just requiring rationalisation sales processes are rarely globalised as, for example, the or upgrade. US rebate system is very different from that of Europe. Generally, in a global context, the vanilla applications For globalised businesses there is the added market is being driven by the implementation of examination of regional or local integration for language, large regionalised systems within one organisation, financial compliance, operating styles and business particularly for enterprise resource planning (ERP) processes. However, once satisfied that application apps, which can deliver significant economies of scale development is definitely on the menu, the next decision but still require regional elements. is which flavour. For vanilla applications to work effectively, there has to Vanilla solutions are based on standard products and be global process alignment. Trying to seek agreement are typically high volume applications with generic on a single process from multiple regions is fraught with functionality. Flexibility is limited in adapting these political and process difficulties and discussions even in applications – whether in-house or outsourced - organisations which act as a single global entity let alone without incurring large re-design costs. They are also those who operate a federated model. In essence, pure likely to require significant business culture change vanilla only really works for a truly global model and 44

GlobalizationToday November 2011



that is a rare commodity. The bespoke, Neapolitan, option allows creativity and a completely tailored apps portfolio which can strengthen the company’s differentiation from its competitors. It is also easier to adapt for local or regional elements of a global system. However, there is a price to pay. As with its more sophisticated ice cream namesake, this approach to IT apps involves significantly greater time to produce and cost to purchase than the vanilla option. In considering the Neapolitan route, it helps to recognise and organise both the project lifecycle and regional variance needs at the outset, making as many elements of the application as repeatable as possible to avoid re-inventing the wheel. In our experience, the best solution to the flavour challenge is almost certainly a mixed dish, using vanilla apps where genuine economies of scale can be leveraged, but Neapolitan where any kind of competitive or geographical differentiation is required. An oftencited example of this kind of approach is in the credit card industry, and Barclaycard in particular, which has used bespoke, ‘contactless’ technology to help grow its business and compete in a saturated market, but use more vanilla-type solutions for call centre, fulfilment and card processing applications.

1. Check the ingredients – Be sure of what you are buying. Vanilla may seem a relatively easy, plug-andplay option, but what service and security levels will be delivered once you sign up? If using a third party supplier, will they guarantee isolation of critical data for example? Neapolitan may provide a more exact fit, but can your supplier guarantee delivery on time and on budget? 2. Prix fixe or a la carte - Read the menu carefully and read between the lines. Look at the total cost of both options before deciding. Vanilla may seem an obvious low-cost choice on the surface, but there are likely to be hidden costs related to significant operating and business culture changes. Neapolitan may mean higher up-front costs in terms of IT development and maintenance, but may be more economical in the longer-term for business and process change. 3. Service with a smile - Consider the human resource costs of both options. Vanilla solutions may allow you to recruit people from a large global market with standard application skills regardless of region. Neapolitan solutions generally require specialist training and, therefore, increased costs. However, this will also provide you with a better-skilled workforce and potentially better customer service. ABOUT THE AUTHOR

Paul Gardner is Head of Applications Practice, James Cockroft is Head of Sourcing Practice, and Stuart Gibson is Applications Practice CTO. All three work for Xantus Consulting. Xantus is an independent management consultancy, specialising in IT-enabled business change - focusing on changing business through IT and making IT run more effectively. Xantus’ experience is gained through working with leading UK and global enterprises across the public and private sector.





IAOP is pleased to welcome new and renewing corporate and professional members from: A.P. Moller Maersk; Accedeo; Accenture; Allstate Insurance Company; APAC Customer Services; Applied Materials; Assenda; AstraZeneca; Backyard Leaders, LLC; Bancolombia; Capgemini; Charles Schwab & Co.; Chubb; Clear Harbor; CME; Columbia Univsersity; Covidien; Credit Suisse; CSC; Eli Lily; GPS Group, Inc.; Hess Corporation; Hewlett Packard; Hospital Corporation of America (HCA); Infosys; ISS Facility Services; Join Innovation Technology Co., Ltd; Kelly OCG; Kraft Foods; Kromann Reumert; Lawson Software; Lear Communications; Lexis Nexis; Manulife Financial; McKenna and Associates; Microsoft; Morrison & Foerster; NCO Group, Inc.; NCR Corp.; Neusoft Corporation; Nordea Life & Pensions; Northern Works; Oakton; Orange Business Services; PHH Corp.; PwC; Softtek; SunGard Asia Pacific; Symantec; TCS; The Goodyear Tire & Rubber Company; The Guardian; The Results Companies; TPI; University of Missouri - St. Louis; VanceInfo; Vangent, Inc.; Vodafone; Washington Gas; Whirlpool; Wipro Technologies; WNS; and Zurich Financial Services. For information on IAOP membership, please visit or email


THE 2012 OUTSOURCING WORLD SUMMIT® addresses how to capitalize on these opportunities to February 20-22, 2012 | Disney’s Contemporary Resort, Lake Buena Vista, Florida

Register by November 15 at for early bird savings. Outsourcing Beyond the Horizon: Turning Today’s Opportunities into Tomorrow’s Successes.

The financial and economic crisis has reshaped and transformed the outsourcing industry. It has also created never-before-seen opportunities. The 2012 Summit 46

GlobalizationToday November 2011

maximize success at your organization:

• Learn what the latest innovations are and how to implement them • Hear industry best practices and lessons learned from leading practitioners and visionaries • Stay current on the latest outsourcing tools and technologies, including the cloud • Meet and evaluate vendors in the Global Services Mall (or showcase your company as an exhibitor!) • Network with 700+ outsourcing professionals from around the globe


Membership in IAOP provides access to an extensive array of services, and just as importantly distinguishes organizations and professionals as leaders in the field of outsourcing. IAOP membership demonstrates a commitment to innovative thinking, continuous performance improvement, and to the sustaining development of outsourcing as both an industry and as a profession. CUSTOMER CORPORATE MEMBERSHIP

Organizations that are currently outsourcing or are considering one or more outsourcing initiatives should become Customer Corporate Members of IAOP. This membership provides organization-wide access to the association’s research, training, certification, and networking programs - all designed to help companies achieve better business results through outsourcing. PROVIDER/ADVISOR CORPORATE MEMBERSHIP

Outsourcing service providers and advisory firms should join IAOP as Provider/Advisor Corporate Members. This membership provides the same organization-wide access to IAOP’s research, training, certification, and networking programs as Customer Corporate Membership, but also includes member-only sponsorship opportunities that serve the marketing and business development needs of these companies. PROFESSIONAL MEMBERSHIP

Professional Membership is available to individuals either as part of their company’s corporate membership or on an individual basis. This membership serves the needs of practitioners working in the field of outsourcing whether as customers, providers, or advisors. In addition, it provides these professionals with direct, personal access to association services. For information on IAOP membership, e-mail You’ll also get access to The OWS12 HUB — a networking site just for Summit delegates. Open to all registered delegates, this is the place to meet other delegates, get current information about sessions, networking, special events, and more. You will be able to customize your agenda, arrange meetings with delegates, sponsors, exhibitors, and keep your calendar – all in one place! Want to attend The Summit Free? Become a Corporate Member and receive two full-access passes to the summit. In addition, receive organization-wide access to IAOP’s research, training, certification and networking programs. Provider/Advisor Corporate Members also receive complimentary exhibit space. For more information, email Renee Preston at


IAOP membership provides access to a wide range of services designed to help you and your organization improve outsourcing outcomes. Many of these services are included as part of IAOP’s Professional or Corporate Membership, with discounts available for use beyond the level provided. Some services are also available individually at non-member rates. • Globalization Today - The official publication of IAOP creates the largest and best informational publication on outsourcing by uniting and tapping the collective intellect of individuals from around the world. IAOP Members receive a free subscription plus the opportunity to get published, promote products/services and advertise. • IAOP’s Knowledge Center,® - This online repository houses more than 600 articles, including chapter meeting presentations, conference proceedings, industry whitepapers, research articles and more. • Chapter Network - Through its active and expansive chapter network, IAOP members can share their expertise and find knowledge on best practices for specific industry segments, topics and geographic areas within outsourcing. • Conferences & Events - IAOP hosts the world’s best-known and most highly-respected executive conferences on the topic of outsourcing. • Certified Outsourcing Specialist Family of Certifications - Receive 50 complimentary COS tests each year. • Value Health Check Survey - This web-based diagnostic tool provides outsourcing customers and service providers with rapid insights to realizing outsourcing value. • - 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 (BOJ). For more detailed information, visit CALENDAR OF EVENTS




NOV 21


NOV 23


IAOP Professional Members may attend an unlimited number of chapter meetings. IAOP also offers complimentary Associate Membership which allows non-members the opportunity to attend up to two chapter meetings as IAOP’s guest. Go to for more information and to register.



The COP Master Class is a great option for earning up to half (75 points) of the Knowledge and Training points needed for COP certification, and fully completes the required training for the aCOP designation. Completing the one day Governance Workshop is worth another 15 COP Certification points. IAOP is actively registering now for the following classes: • NOV 21-24 KUALA LUMPUR, MALAYSIA • NOV 23-25 MAASTRICHT, THE NETHERLANDS - Only a few seats left • New! MARCH 26-29 RIZZO EXECUTIVE CENTER, CHAPEL HILL, NC

Please visit for a full list of classes and current discounts and specials. CORPORATE MEMBERS

Our in-house training calendar is filling up fast with companies who have seen the value of holding a private COP Master Class for their employees. Don’t get left behind-book your company training today! “The COP program was selected due to its global recognition and application across all of our outsourcing practices,” says Rolf Kleiner, Senior Vice President, KellyOCG. “This will help reinforce thought leadership, credibility and our knowledge of the outsourcing marketplace.” Ask your account executive about private, on site COP Master Class training & certification for your teams of ten or more. Customers, providers or advisors who are not corporate members may email for more information. To see what companies have embraced IAOP training and certification please email 10-QUESTION QUIZ: AND FIND OUT IF YOU HAVE WHAT IT TAKES TO BECOME CERTIFIED

Are you prepared to successfully manage outsourcing initiatives? Do you have the knowledge and experience needed to join the industry’s most elite Certified Outsourcing Professionals? Begin your journey to earning one of IAOP’s most distinguished designations by testing your outsourcing professional skills with IAOP’s 10 question quiz at Once you have completed the quiz email it to 48

GlobalizationToday November 2011 for your results. Those who submit the quiz will receive a complimentary electronic sample Outsourcing Professional Body of Knowledge (OPBOK) from IAOP partner Van Haren Publishing. THE COP DIRECTORY IS YOUR GUIDE TO THE MOST QUALIFIED OUTSOURCING PROFESSIONALS!

Want to see who the COPs are in your company? Looking to work with the industry’s most elite professionals? Head on over to the NEW COP Directory where you can search by Name, Country and Company! For current COPs this is a great way to keep your information up to date at all times. Just login to you’re MY IAOP and enter your updated information into your Member Profile. It will automatically update in the directory. Check out the new COP Directory: COPDirectory. ADVANCED GOVERNANCE CERTIFICATION LAUNCHED

IAOP is happy to announce the newest addition to the continuously expanding Outsourcing Professional Certification Framework™, the Certified Outsourcing Professional in Outsourcing Governance (COP-GOV). This new certification shows advanced skills and experience beyond the Certified Outsourcing Professional® (COP) designation that demonstrates that professionals have the knowledge and experience to design, implement and manage outsourcing relationships. Professionals must first earn the COP status prior to going for the COP-GOV certification and should have three of more years of experience in governance. Candidates also must complete an Outsourcing Governance Workshop either live or online, and pass a certification exam. For more information regarding this certification please contact PROFESSIONAL DEVELOPMENT RESOURCES AVAILABLE

No matter what industry you are in, IAOP has resources available for all outsourcing professionals. For the latest titles from IAOP, ITSqc and others please visit www., and get 15% off of any title you order. Also new from IAOP are titles from the American Bar Association found at the IAOP/ABA Legal Bookstore (

Got Something to Say About Outsourcing? Then GlobalizationToday Wants to Publish You

If you’ve got something to say, then we want to help you say it.

And, it’s easy and free. Just set up your Editorial Contributor Account and your content (written, video or audio) will now reach 100,000 outsourcing professionals from around the world. All content will be published online and top rated content will make it into the magazine edition.

Set-up your Editorial Contributor Account now at


International Association of Outsourcing Professionals Partners with Brasscom to Advance Strategic

Joining forces to expand outsourcing in Brazil, the International Association of Outsourcing Professionals® (IAOP®) recently formed a partnership with the Brazilian Association of Information Technology and Communication Companies (Brasscom). Brasscom has joined the global outsourcing group as a Strategic Partner and will take the leadership role in IAOP’s new Brazil chapter, providing a forum for outsourcing professionals in the country to network, share best practices and promote the industry. IAOP Chairman Michael Corbett spoke on the growth of outsourcing in Brazil and the Latin America region as part of a panel of industry experts during the Brasscom Global IT Forum, Nov. 3-4, in São Paulo, Brazil. With Brazil having the world’s 7th largest economy and 1st in Latin America, the countr y’s ability to innovate and its excellence in IT have played an important role in its fastpaced growth. “Brazil is poised to win a larger share of the global market and offers enormous potential as an outsourcing market and destination,” said Corbett. “IAOP is pleased to join with this important industry group for IT professionals to continue to advance outsourcing across the Latin America region.” IAOP and Brasscom will work together to further outsourcing, offshoring, shared services and related management practic es, industries and its professionals, through conferences and events, publications and other memb er communications. Brasscom also will lead the launch of IAOP’s new geographic chapter in Brazil with support from Ci&T, BRQ, Stefanini, CPM Braxis and Tivit. IAOP has been expanding its presence in the region and Brazil will host IAOP’s second Latin American Outsourcing Summit in Fall 2012, building on the success of the premier event in Cartagena, Colombia that drew more than 300.

Outsourcing Professional Certification FrameworkTM (OPCF) The OPCF is designed to address the needs of individuals who work across the global outsourcing industry from entry level positions focused on the delivery of outsourced services through to senior executives leading global outsourcing programs at customer, provider, and advisor organizations. At each stage in an individual’s career there is an opportunity for both professional development and professional recognition. The OPCF is made up of three families of certifications:

 Certified Outsourcing ExecutiveTM (COE)  Certified Outsourcing Professional® (COP)  Certified Outsourcing SpecialistTM (COS)

BENEFITS OF CERTIFICATION  Certification establishes a level of professional recognition essential in a field as complex and risk-based as outsourcing.  When working together across the customer-provider relationship, certification brings a common framework for success that benefits both organizations involved.  Certified individuals command greater respect within the industry and their companies, higher compensation levels, and expanded and enhanced career opportunities.



*Expect better, more consistent results with me.

Training programs are available at the individual and corporate level. For more information, visit




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International Association of Outsourcing Professionals (IAOP)

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Kelly Outsourcing & Consulting Group (KellyOCG)