Source blog: Mark Kobayashi-Hillary
Better Benchmarking: Getting Good at Governance
People & Governance: are the correct governance structures in place, and do the key people have the right attitudes and capabilities? This is the final blog in a series of seven brief blogs on the subject of Value Assurance ¿ best defined as an effective route to maximising value in a long term outsourcing agreement, through aligning service expectations, perceptions and realities. A Value Assurance exercise typically involves a review of both service provider and client in equal measure. It takes a more holistic view than benchmarking alone and includes and assesses 6 `Ps'. The sixth of which, `People & Governance', is discussed in this blog.
Better Benchmarking: Is it Success or Perceived Success?
Perception: Are performance and perception aligned?This is the sixth in a series of seven brief blogs on the subject of Value Assurance ¿ best defined as an effective route to maximising value in a long term outsourcing agreement, through aligning service expectations, perceptions and realities. A Value Assurance exercise typically involves a review of both service provider and client in equal measure. It takes a more holistic view than benchmarking alone and includes and assesses 6 `Ps'. The fifth of which, `Perception', is discussed in this blog.If you're currently managing an outsourcing relationship, analysing the `6P' areas of a relationship is an excellent way to move the performance of the contract towards an optimal state ¿ typically, but not always, this means from a transactional to a true partnership relationship.
Better Benchmarking: Getting the Prices Right
Price & Commercials: are service costs fully understood, actively managed, and constructed to drive the right behaviour? This is the fifth in a series of seven brief blogs on the subject of Value Assurance ¿ best defined as an effective route to maximising value in a long term outsourcing agreement, through aligning service expectations, perceptions and realities. A Value Assurance exercise typically involves a review of both service provider and client in equal measure. It takes a more holistic view than benchmarking alone and includes and assesses 6 `Ps'. The fourth of which, `Price & Commercials', is discussed in this blog.
Better Benchmarking: Perfecting Processes
How well do processes support good practices and corporate standards?This is the fourth in a series of seven brief blogs on the subject of Value Assurance ¿ best defined as an effective route to maximising value in a long-term outsourcing agreement, through aligning service expectations, perceptions and realities. A Value Assurance exercise typically involves a review of both service provider and client in equal measure. It takes a more holistic view than benchmarking alone and includes and assesses 6 `Ps'. The third of which, `Process', is discussed in this blog.If you're currently managing an outsourcing relationship, analysing the `6P' areas of a relationship is an excellent way to move the performance of the contract towards an optimal state ¿ typically, but not always, this means from a transactional to a true partnership relationship.
Better Benchmarking Series: Make Performance Management Perform
Performance: How well are services being delivered against requirements?This is the third in a series of seven brief blogs on the subject of Value Assurance ¿ best defined as an effective route to maximising value in a long-term outsourcing agreement, through aligning service expectations, perceptions and realities. A Value Assurance exercise typically involves a review of both service provider and client in equal measure. It takes a more holistic view than benchmarking alone and includes and assesses six `Ps'. The second of which, `Performance', is discussed in this blog.If you're currently managing an outsourcing relationship, analysing the `6P' areas of a relationship is an excellent way to move the performance of the contract towards an optimal state ¿ typically, but not always, this means from a transactional to a true partnership relationship.
Better benchmarking series: Hitting the hard and soft targets
Plan and potential: Is the service delivering against current goals and objectives? Following on from my introductory blog on this topic, this is the second in a series of seven brief blogs on the subject of value assurance ¿ best defined as an effective route to maximising value in a long term outsourcing agreement through aligning service expectations, perceptions and realities. A value assurance exercise typically involves a review of both service provider and client in equal measure. It takes a more holistic view than benchmarking alone and includes and assesses six Ps, the first of which are plan and potential.If you're currently managing an outsourcing relationship, analysing the `6P' areas of a relationship is an excellent way to move the performance of the contract towards an optimal state ¿ typically, but not always, this means from a transactional to a true partnership relationship.
Value assurance...avoiding throwing the baby out with the bath water
In an outsourcing relationship it's not uncommon for there to be pain points or situations where expectations and delivery are not aligned. Today, organisations that I speak to are increasingly willing to invest their energy in tackling these issues to maximise the value of a contract rather than ending a contract which is not delivering to its full potential. But what's the best approach to getting the most out of your relationship? A benchmarking exercise and review of key performance indicators can show that the contract represents good value for money and is meeting targets, despite there being room for improvement in reality.
Innovation Insights...
The recent National Outsourcing Association's Inaugural Innovation Day attracted over 60 attendees representing both outsourcing buyers and service providers. The session's objective was to understand the opportunities and challenges of innovation in outsourcing from an end-user's perspective. There was a real desire, put succinctly by one of the attendees to, “talk less about what innovation is and focus more on how we embrace innovation.” Key behaviours of end-user organisations and service providers which have enjoyed success with innovation which were identified at the event included:For end-user organisations:1. Bringing strategic suppliers together in one room to discuss innovation 2. Managing innovation as part of governance activities3. Being prepared to take risks to achieve innovationFor service providers:1. Service provider account teams working on a client's innovation agenda with their wider organisation2. Being willing to engage other competencies outside of the account team to develop innovation3. Innovation shouldn't be seen as just another ...
What do you get when you put 15 governance experts in a room?
Last week I led a governance master class with 15 governance experts from outsourcing client organisations in the public and private sector. This was a great forum to hear first hand what has worked and what hasn't worked when trying to create an effective governance organisation. Attendees felt that governance could be too technical and that to develop the full potential of the relationship it was essential to engage more with their business and translate requirements for suppliers. The reason for this? Quite simply, as outsourcing is increasingly tied to organisational change activity, it's vital that the relationship between the client and service provider is more strategic in order to support their business objectives.
What do you get when you put 15 governance experts in a room?
Last week I led a governance master class with 15 governance experts from outsourcing client organisations in the public and private sector. This was a great forum to hear first hand what has worked and what hasn't worked when trying to create an effective governance organisation. Attendees felt that governance could be too technical and that to develop the full potential of the relationship it was essential to engage more with their business and translate requirements for suppliers. The reason for this? Quite simply, as outsourcing is increasingly tied to organisational change activity, it's vital that the relationship between the client and service provider is more strategic in order to support their business objectives.
Create a habitat where innovation will thrive
So what does innovation really look like to client organisations? Innovation is not to be confused with continuous service improvement - it's radical change rather than incremental change and is likely to create business-wide benefits. This was the view of senior IT outsourcing buyers who I discussed this subject with recently at an innovation workshop, as part of my role for the National Outsourcing Association. The attendees represented a good cross section of industries and the event was very valuable in casting some light on that stubbornly difficult to define aspect of outsourcing relationships: innovation. One of the strongest messages to come out of the session was that a transparent and collaborative relationship is needed between client and service provider in order to create the environment in which innovation can flourish. Service providers need to have a deep understanding of a client's business in order to innovate. Similarly, clients need ...
Create a habitat where innovation will thrive
So what does innovation really look like to client organisations? Innovation is not to be confused with continuous service improvement - it's radical change rather than incremental change and is likely to create business-wide benefits. This was the view of senior IT outsourcing buyers who I discussed this subject with recently at an innovation workshop, as part of my role for the National Outsourcing Association. The attendees represented a good cross section of industries and the event was very valuable in casting some light on that stubbornly difficult to define aspect of outsourcing relationships: innovation. One of the strongest messages to come out of the session was that a transparent and collaborative relationship is needed between client and service provider in order to create the environment in which innovation can flourish. Service providers need to have a deep understanding of a client's business in order to innovate. Similarly, clients need ...
Welcome to 'The Outsourcing Debate'
Welcome to the first `The Outsourcing Debate' blog which picks up the baton from Mark Kobayashi-Hillary's `Talking outsourcing' blog. Here I intend to add my thoughts and insights on the latest outsourcing developments, which I hope will appeal to all those for whom outsourcing is a part of working life. Outsourcing is at the heart of the global economy and is an effective, dynamic and rapidly evolving tool which is being used in ever greater and ever more creative ways by the world's organisations to achieve their objectives.
Welcome to 'The Outsourcing Debate'
Welcome to the first `The Outsourcing Debate' blog which picks up the baton from Mark Kobayashi-Hillary's `Talking outsourcing' blog. Here I intend to add my thoughts and insights on the latest outsourcing developments, which I hope will appeal to all those for whom outsourcing is a part of working life. Outsourcing is at the heart of the global economy and is an effective, dynamic and rapidly evolving tool which is being used in ever greater and ever more creative ways by the world's organisations to achieve their objectives.
Brown says Whitehall must follow a shared services model
Talking Outsourcing 454Mark Kobayashi-HillaryThe Hub in King's Cross was packed full of the digerati this morning, all there to hear the Prime Minister, Gordon Brown, announce the latest Digital Britain initiatives. And though most of the debate focused on the pledge to provide universal broadband access ¿ yes he confirmed after some probing that the intention is to achieve 100% access ¿ I thought that there was also an interesting announcement about public sector services buried away amongst the sexier Internet pledges.He stated explicitly that the various government departments in Whitehall must follow the example of the Department for Work and Pensions (DWP) ¿ a move to shared services sourcing.
New improved outsourcing guidelines
The National Outsourcing Association (NOA) has always been known as a body that offers independent advice and views on sourcing. I should know, I've been elected to serve as a director a couple of times now and most recently I've started working with them on a redefinition of the NOA Sourcing Lifecycle.For many years, the NOA offered a lifecycle package to members. It was a kind of `how to' guide to outsourcing, but in many ways it withered and died and was rarely used or read. It's hard to create a one-size-fits-all guide in business today and anything that does proclaim to be a guide, should utilise links and references to regularly updated material online ¿ not just be a document that sits gathering dust.So, I'm working with the NOA on a new version.
It's time to put this 'IT vs business' thing to rest
I wrote an article for the British Computer Society recently, focused on the latest developments in outsourcing. The editor sent it back to me with the complaint that there was `not enough IT' in the article. Disgruntled, I added a few acronyms and buzzwords and returned the edited piece hoping it ticked enough technical boxes.But despite my annoyance at having to edit something I thought was complete, is it really the right approach to focus on the technology, rather than the business problem it solves?Can you think of a business today that can run without IT? It's just about impossible isn't it?
IT is the business
I wrote an article for the British Computer Society recently, focused on the latest developments in outsourcing. The editor sent it back to me with the complaint that there was `not enough IT' in the article. Disgruntled, I added a few acronyms and buzzwords and returned the edited piece hoping it ticked enough technical boxes.But despite my annoyance at having to edit something I thought was complete, is it really the right approach to focus on the technology, rather than the business problem it solves?Can you think of a business today that can run without IT? It's just about impossible isn't it?
Keeping up with the boys - and girls - from Brazil
I've recently been blogging about globalisation and young people for the British government Department for Children, Schools, and Families, because of their FutureStory project.Yesterday this took me down to Southampton, where I met Catherine Gilmour, assistant headteacher of Westgate School in Slough. Catherine has recently visited Brazil to see how young people are facing up to a future where jobs can whizz all over the world because of the internet and outsourcing.Catherine explained to me: “I was amazed by the can-do attitude of the people in Brazil and in particular the business people who are focused on constantly learning new skills.” Then she went on to explain about the difference in attitude between many young people in the UK and Brazil: “The young people have very high aspirations there.
Offshoring market needs more match-makers
I was sitting in the Frontline club - a media club next to Paddington station - yesterday morning with an acquaintance from the sourcing industry who specialises in outsourcing to Mexico. We were kicking around some ideas about how to find the best vendor in a particular skill in a particular area.Sure, if you are big you can hire a consultant to do it. If you are really small then you might not be interested in outsourcing anyway.But you would assume that a search engine like Google would help. Try it though. Type in something like `Brazil outsourcing SAP vendor' and you get a long list of information, but nothing like a list of the best SAP systems integrators in Brazil.
Measure the combined influence of tweets on your company
The lobby of the Metropolitan hotel in Mayfair is packed full of impossibly beautiful people, even early in the morning. I know this because I sat drinking coffee yesterday morning with PV Kannan, CEO of 24/7 Customer, the India-based business process outsourcing firm.PV was talking to me about the iLab ¿ a team 24/7 Customer has focused on innovation. Now, this is something that many service suppliers talk about ¿ the endless need for innovation and even the labs they have set up all over the world. Though in this case, it does seem rather different because the team has been asked to develop products and they are not restricted to the present focus of the company.
When outsourcing and values conflict
Holy Communion!News reached the Guardian today that French churches are outsourcing the production of the holy wafers used in communion. Traditionally produced by nuns in religious communities then sold across the nation, some authorities have started sourcing cheaper wafers from Poland.And even worse, the Polish workforce is secular.This sounds like a silly season story of the kind that fills the newspapers all summer, but underneath the good humour (the outsourcing decision was reversed ¿ thank God) there is an important message.If you are only considering the cost of production or service, then there may be many options around where or how you outsource.
TCS wins PADA contract: Talking Outsourcing 447
Indian technology giant, Tata Consultancy Services (TCS), has won another British government contract. This time it's to build and service the next generation government pension scheme, formally titled the National Employment Savings Trust (NEST). Most of the online comment today seems to be little more than the information on the press release, so I thought I would ask TCS for a comment ¿ only to find that they are keeping quiet for the moment and letting the client do the talking. So I got in touch with Tim Jones, Chief Executive of the Personal Accounts Delivery Authority (PADA) ¿ the government agency charged with making NEST a reality.
It makes sense for the police to lean on private firms
"Private company to answer `999' emergency calls". I can't say I'm shocked to see this story in the Guardian today about Cleveland police, who are proposing to outsource their emergency call service.The police in Cleveland need to save money, so they have put together a proposal that should save about £20m over the life of the contract. The Police Federation are arguing that this is the thin end of the wedge ¿ a move towards private companies having control over services like policing. Can you picture your local bobby on the beat with a logo on his uniform like a footballer's shirt?But take a look at what Ben Priestley of the union Unison had to say.
An Indian take on the future of pricing
I had a chat with Pramod Bhasin this morning. Pramod is the Chairman and CEO of Genpact, the largest business process outsourcing (BPO) firm in India and he is also the present chair of Indian high-tech trade association NASSCOM.You can listen to the entire call on the Talking Outsourcing podcast, but I want to highlight two specific points where Pramod gave some interesting replies to my questions.I asked him first about the confidence in India. I was over there in Mumbai a couple of weeks ago for the NASSCOM India Leadership Forum and some IT and BPO executives were like Cheshire cats, after being more like drowned moggies last year.
Is IT services missing an opportunity?
Arvind Thakur, CEO of NIIT Technologies, has some interesting ideas on where IT service companies need to look in future. He believes that there are many new markets the IT services industry is not considering in the constant drive to consider `when will banking or retail recover from the recession?' These are the new global mega trends of the twenty-first century and they will fundamentally reshape where services can be sold.Arvind explained the concept to me: “The ageing population in many developed nations means more healthcare, and more healthcare means the fragmented healthcare systems have to be improved. Second, anything and everything we now do has to focus on energy efficiency.
Brazil enters new wave of thinking
When I was in India recently for the NASSCOM conference I noticed a lot of other countries being represented at the show. In fact, over twenty different countries had delegations there in Mumbai.One of the most prominent was Brazil. Possibly because of the sheer size of the industry there, but also because they have some different views on what makes outsourcing work.I called up Flavio Grynszpan today to ask him about the Brazil approach. Flavio is well known as one of the leading outsourcing advisors in Brazil and he formerly spent a decade running Motorola there. I asked Flavio first about the lack of recognisable Brazilian IT brands.
What is our FutureStory?
I was participating ¿ as a blogger ¿ at the launch of a new government initiative yesterday. I was in Durham at the Northeast Economic Forum where the Talent and Enterprise Task Force were promoting their FutureStory project.FutureStory is all about connecting young people to business and for both to consider how work will look and function in future. It's phenomenally important for anyone involved in outsourcing because we are all at the cutting edge of changing how companies do business.I've been writing for years about the connection between outsourcing and how it changes company structures, education and how young people need to be ready for a different world of globalised work, and migration and how skilled people are more footloose and ready to search the world for work.
The future of customer service harks back to the past
I met a couple of interesting executives from Firstsource at the NASSCOM conference in Mumbai yesterday. Firstsource is well known as an Indian-based services company that has hired extensively in the UK, particularly Northern Ireland. They focus on banking services and telecoms, and I managed to sit down to talk with both Santanu Nandi, the head of telecoms and media, and Sanjeev Sinha, head of banking and financial services.We had a chat about the market in general ¿ most people at the NASSCOM conference are feeling good about where the industry is headed ¿ and I asked a few questions about how the industry is changing.
IT services market looks optimistic
What a day of positivity!I can honestly say that in all my years of coming to the annual NASSCOM conference for most of the past decade, I have never felt such optimism about the IT services marketplace.One year ago, India was an entirely different place. The terrorist attacks on Mumbai were fresh in the mind of many delegates, the recession was at a peak, and one of the leading IT firms ¿ Satyam ¿ was falling apart due to a financial scandal. One year on, everyone I met has reported good news.And not good news in a very simplistic `people are ordering IT again' way.
Corporate social responsibility recognised at NASSCOM
It's the first day of the NASSCOM conference in Mumbai, India and in true NASSCOM style they opened with some interesting and unusual sessions. This time the conference opened with the NASSCOM Social Innovation Honours ¿ awards to firms that had led the corporate social responsibility agenda.One of the winning firms was actually European ¿ Steria. They won the award for the best ICT-led innovation in CSR for their work supporting schools in India. The numbers are actually astounding and go far beyond most CSR programmes.
It's time for the NASSCOM conference in India
It's that time of the year again. The NASSCOM conference in Mumbai, India, is the largest annual gathering of tech people in India. And now, with over 20 countries represented, it's a more of a global gathering looking at the year ahead in outsourcing and technology services.I'll be there all next week reporting back to you on what's happening at the event - I'm even an official NASSCOM blogger.
Outsourcing recession draws to an end
New research from outsourcing advisory firm TPI has given a boost to the consensus that the recession is over in outsourcing.Though the contract value of deals signed in EMEA for the full year 2009 are down, if you look at the final quarter value then it's almost the same as Q2 2008 ¿ the final period before the downturn affected the outsourcing market.That's only to be expected ¿ confidence has been rising as 2009 went on. I know myself just from talking to people in the market, but it's good to see the hard data from TPI reflecting what people are saying out on the street.
Obama address threatens offshore business
President Obama's State of the Union address yesterday included some chilling words for the offshore outsourcing community:“To encourage ... businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America,” he said.All the major Indian tech firms saw their share price tumbling today. Wipro lost 4.9% of their value, while Infosys lost 2.7%, and TCS 3.3%.But, Som Mittal, president of NASSCOM, the trade body representing the Indian hi-tech service sector, said that his member firms are the “solution, not the problem.” His view is that the USA cannot rebound from the depths of economic despair without the help of overseas partners.And Mittal is right.
Legal process outsourcing ¿ the jury's still out
Mark Kobayashi-HillaryI mentioned on this blog recently that I was still unconvinced by the hype that surrounds legal process outsourcing (LPO). And not just me, as I wrote that blog after a conversation with a heavy-hitter from the London legal community who shared my scepticism.That blog attracted comments suggesting I'm just opinionated and not in touch with the market. So I was interested to see a feature in Financial Director suggesting that the market is far from mature. In fact, most people answering questions from the magazine on LPO were still scratching their heads.Yes, if you dig deeper into the questions then some people are exploring the market, but it's still immature.
Outsourcing is back on the agenda
Outsourcing is back with a vengeance. I noticed this statement, or variants of it, several times this morning on Twitter and I thought nothing of it, until it popped up for about the twentieth time in one morning. So what's new?After digging around I found that it's all down to some new research by PriceWaterhouseCoopers, where they show that outsourcing has roared back into the boardroom in the past six months. Forbes magazine ran a big feature based on the PwC research, hence all the online comment today.It's interesting to see some more sources verifying what I've been saying for some time.
Talking Outsourcing
E.On just announced that 600 jobs are to go as they close their customer call centre in Rayleigh, Essex, here in the UK.E.On's managing director of retail business, Graham Bartlett, claimed in a press release that “¿the decision to close the Rayleigh site was not a move that we've taken lightly and we absolutely understand the effect that this decision will have on our colleagues who have been affected. But the fact of the matter is that our retail business has only just returned to profit after years of loss-making and, to ensure we can continue to do that, we have to make these tough choices.”A few thoughts run through my mind when I read a story like this, apart from the obvious industry-level issues of customer call centres changing in the way they operate ¿ automation, social media interaction and the like ¿ I am wondering:¿ How can the ...
E.On cuts service jobs... but staff not first to know
E.On just announced that 600 jobs are to go as they close their customer call centre in Rayleigh, Essex, here in the UK.E.On's managing director of retail business, Graham Bartlett, claimed in a press release that “¿the decision to close the Rayleigh site was not a move that we've taken lightly and we absolutely understand the effect that this decision will have on our colleagues who have been affected. But the fact of the matter is that our retail business has only just returned to profit after years of loss-making and, to ensure we can continue to do that, we have to make these tough choices.”A few thoughts run through my mind when I read a story like this, apart from the obvious industry-level issues of customer call centres changing in the way they operate ¿ automation, social media interaction and the like ¿ I am wondering:¿ How can the ...
Talking Outsourcing
So is the recession officially over? The Indian tech majors seem to believe so. Wipro just announced a 21 per cent increase in Q3 profits, with a rosy forecast for Q4 and this is all in the tailwind of recent strong numbers posted by Tata Consultancy Services (TCS) and Infosys.Announcing the results, Wipro Chairman Azim Premji, said: “We have seen a positive demand environment, which has driven broad-based sequential growth across all our verticals, service lines and geographies.” Which translates from executive-speak into customers want to buy services again, and they are from a broad mix of different industries.Wipro is planning to give salary increases to their staff next month.
Indian tech firms signal end of recession
So is the recession officially over? The Indian tech majors seem to believe so. Wipro just announced a 21 per cent increase in Q3 profits, with a rosy forecast for Q4 and this is all in the tailwind of recent strong numbers posted by Tata Consultancy Services (TCS) and Infosys.Announcing the results, Wipro Chairman Azim Premji, said: “We have seen a positive demand environment, which has driven broad-based sequential growth across all our verticals, service lines and geographies.” Which translates from executive-speak into customers want to buy services again, and they are from a broad mix of different industries.Wipro is planning to give salary increases to their staff next month.
Is outsourcing about to make headlines?
Yesterday, the New York Times featured an exploration of the outsourcing of news. A question many are asking in the newspaper industry, is that now news-gathering itself can be outsourced, who polices the quality of that journalism? This leads me to mention an interesting discussion I'm taking part in on 27 January at the House of Commons for the Commonwealth Journalists Association. The discussion will feature other speakers from News International (The Sun, The Times¿), the New York Times, the London School of Economics, and the BBC. It's exploring the future of news in a digital environment.
Legal process outsourcing: is it still just a dream?
So is anyone really making any money from legal process outsourcing (LPO)? I don't mean sales hype. Or what it might be possible to achieve. I mean real genuine examples of large-scale process offshoring by law firms.This was a dream industry a few years ago. There were startups popping up all over, but particularly in India, offering their "legal services" at a fraction of London or New York prices. There is a horribly edited (where are the open source editors when you need them?) piece on Wikipedia about the subject, with a barefaced admission from someone that the dream remains a dream.I was in the pub a couple of days ago with the head of outsourcing for a very large law firm and we talked about it.
Will Kelly be a hero at BT Services?
It's a new decade and a new era is about to commence at BT Global Services with the appointment of new CEO Jeff Kelly. Kelly is a big-hitter from the States, with multi-billion dollar IT services experience running EDS.At the end of 2008, BT parted ways with then-CEO François Barrault because a terrible set of results meant Global Services was at odds with the rest of the BT Group. That is, they had either ignored the recession or felt that an aggressive "spend more on marketing" strategy would pay off. Unfortunately it didn't, because the entire global economy was going the way of the pear.If Barrault's strategy had worked then it could have been a shot in the arm for the entire BT group, but it was one of those bet-your-house gambles and he lost.
Thoughts on Barclays' shift away from outsourcing
So what is prompting Barclays to start shifting more and more processes in-house, having previously favoured an outsourced model?Last month they dumped Getronics and brought the management of their desktop systems in-house, six months before the contract was even due to run out. Yesterday, it was announced that they are dumping Accenture and bringing application development back in-house. Some 230 Accenture employees will join Barclays, though when that deal was signed five years ago about 900 Barclays staff moved to Accenture.So what's the thought process behind all this?It could be that big outsourcing contracts have just fallen out of favour at Barclays.
Brazil ¿ the sleeping giant of IT services
I'm back. Apologies to those who may have thought that this blog had died, but I took a long break over the Christmas and New Year period to recharge my batteries for 2010.I was in Brazil and it's summer there, so it was blazing hot, but it wasn't just the weather that was hot. The outsourcing market is also really taking off, too. About an hour after arriving there, I had a beer with Flavio Grynszpan. He headed Motorola in Brazil for the whole of the 1990s and he now advises on outsourcing to the region.I'm going to keep in touch with Flavio and speak to him on the record so I can detail some of the most interesting points he came up with, so for now I'll just mention one point in this first blog of the year.
Vote for me!
Arch rival to Computing, Computer Weekly, has shortlisted this blog for the IT consultant and analyst blog of the year award. Perhaps it's just a vote of sympathy, getting a blog from a rival magazine on their shortlist, or perhaps they will engage in some Simon Cowell-like skulduggery to ensure I can't win. But either way, I'm shortlisted for the blogger award so I hope that you ¿ dear reader ¿ can help me win! I need your vote.I would note that my editor, Bryan Glick, finishes work at Computing at the end of this week and is moving to be the boss at Computer Weekly so I would dearly like to see myself voted to win an award from his new magazine while I am writing for his former title!You can vote for me now by clicking here.
When not to outsource
There is an interesting case study for Blank Label shirts in the latest edition of Forbes magazine. As a new venture designed from scratch, Blank Label outsourced both manufacturing of the shirts and the design of its web site. After months of troubles, now only the manufacturing is outsourced. The owner of the company found it too difficult to specify exactly what he wanted on the site and so design decisions were left in the hands of the development team, who invariably made poor choices. It's a nice example of what can be easily specified and outsourced and what's more difficult to pin down.
The uplifting and heartwarming side of software innovation
I have visited more technology parks and contact centres than I have had hot dinners, so it's hard to muster any enthusiasm sometimes when I receive an invitation to go and look at another “fascinating” office, but I have to confess that I was interested in taking a look at Patni's engineering labs. I was shown around on a personal tour last week by Ajay Chamania, the head of product engineering services at Patni, and I found right from the start that I could sit and talk for hours with Ajay about the complexities of designing embedded software that could control a bank of elevators in an earthquake situation, or a pacemaker trying to replace the missed beats of a dodgy heart.
A matter of organisation
Most of the technology services firms I know are changing their structure to move away from country heads and a geographic distribution of power to be aligned around business verticals, so the insurance head is the boss for that type of business in all regions. This seems to be the conventional wisdom, for example a root-and-branch shake up of Tata Consultancy Services (TCS) recently led the firm to adopt this model ¿ even to the extent of it feeling like a “demotion” for the country bosses. But I was chatting to Deepak Khosla the new South Asian Association for Regional Co-operation (SAARC) head of Patni last week, and he told me that the outsourcer has a bold new strategy for climbing out of the global economic slowdown ¿ it is going to focus on the regions once again.
Packing them in at the bookstore
I'd like to say a quick thank you to everyone who came out last Friday evening to see me talking about my book, Who Moved My Job?, at the Oxford Bookstore in Mumbai, India. The bookstore was packed, with standing room only, which was quite an achievement considering that Friday was a national holiday for the Hindu God Krishna's birthday - huge gangs were roaming the streets of Mumbai building human pyramids as part of the celebration - and the Mumbai traffic is just atrocious anyway. I talked about the book and read the whole of chapter two to an enthusiastic audience, including representatives of around a dozen newspapers ¿ so hopefully the book gets a few mentions in the local press this week.
The new offshore destination: the UK
When did you last hear of turkeys voting for Christmas? Well, I felt as if I heard something like that at the Mumbai headquarters of Indian tech firm Patni yesterday. The Patni chief executive, Jeya Kumar, said to me: “Outsourcing in the UK is going to increase, but offshoring will only get back into momentum in late 2010, so between now and then the UK itself will increase in popularity for outsourcing.” I had to stop and check. I was sitting in the office of a major Indian tech firm and the chief executive was telling me that the UK itself would rise up and become a major offshoring player in the next year.
If you're in Mumbai, the beers are on me
One thing I do want to ensure my blog readers in India are aware of is that I'm going to be making an appearance at the Oxford Bookstore in Mumbai on Friday this week, 14 August, at 7pm talking about my book Who Moved My Job? I'll be introducing the book and talking a little about why I wrote it, and the assistant editor of the Economic Times newspaper, Pankaj Mishra, will ask me a few questions and will lead a Q&A session with the audience. It's free to attend and it's in the centre of the city, so if any of you are nearby and in town on Friday then please come along to the talk.
Back to India
I'm back in India again, Mumbai this time. I am spending the week visiting Mumbai, Delhi, and Bangalore and capturing some new thoughts and ideas about what is going on here. I might not be updating the blog very often this week as I'll be rushing between planes, but rest assured, there will be a lot of new content soon as these interviews are written up.
Back to India
I'm back in India again, Mumbai this time. I am spending the week visiting Mumbai, Delhi, and Bangalore and capturing some new thoughts and ideas about what is going on here. I might not be updating the blog very often this week as I'll be rushing between planes, but rest assured, there will be a lot of new content soon as these interviews are written up.
It's not easy being green
The National Outsourcing Association (NAO) has just formed a new Green Steering Committee, focused on how the environmental agenda affects and influences organisations that use outsourcing. It's a great initiative, but it is worth remembering that so many commentators have been talking about the environment in the past few years that the term “greenwash” has entered into general use. As Kermit the frog once sang: “It's not easy being green.” There are plenty of reasons to consider the green agenda in outsourcing, not least the fact that many organisations are now very concerned about their entire supply chain and the impact of suppliers on the wider environment.
Out of Africa
Last year I did some interesting work for the International Trade Centre ¿ an agency of the United Nations that promotes trade with developing regions. I helped to design the structure of the fledging African Outsourcing Association, and I went to Nigeria to speak to a group of African IT leaders ¿ eventually convincing them that the proposed body could really help them to change the impression of the African hi-tech services industry.Unfortunately, the UN has decided to discontinue the funding for this initiative. Individual countries are talking about supporting a big conference somewhere in Africa later this year, but I expect the entire programme of work will just fizzle out.
Out of Africa
Last year I did some interesting work for the International Trade Centre ¿ an agency of the United Nations that promotes trade with developing regions. I helped to design the structure of the fledging African Outsourcing Association, and I went to Nigeria to speak to a group of African IT leaders ¿ eventually convincing them that the proposed body could really help them to change the impression of the African hi-tech services industry.Unfortunately, the UN has decided to discontinue the funding for this initiative. Individual countries are talking about supporting a big conference somewhere in Africa later this year, but I expect the entire programme of work will just fizzle out.
A fuss over nothing at the FCO
I picked up the Times today and noticed a big headline on the front page: “Union fury as civil service outsources jobs to India.” Dramatic news. The union fury is because The Times has learned that more than 100 jobs at the British Council are to be outsourced to India as part of a massive cost-cutting drive to save the taxpayer money.Yet, as I read further into the story I felt quite underwhelmed. For a start it does not look strictly like outsourcing to me. People are being hired directly in locations such as India ¿ so that sounds like offshoring to me.
All change at ABN?
In 2005, the Dutch bank, ABN AMRO, awarded a $2.24bn technology outsourcing deal to a group of suppliers including TCS, Infosys, Accenture, Patni, and IBM. This had followed years of planning and was heralded as a case study in multisourcing ¿ working with a pool of co-dependent suppliers simultaneously.Now, roll forward a few years and as that contract starts drawing to a close what will become of it? The Indian newspapers have already started reporting their fears that business will be reduced.And let's not beat around the bush. They will be lucky to only see their business reduced, rather than cut off entirely.
Speaking globally...
Voice-to-text firm Spinvox is under fire over claims that their technology is not quite what they had claimed. Spinvox claims to use voice recognition technology to turn voice messages into text that can be sent to your phone, however a BBC investigation has found that human agents in South Africa and the Philippines are transcribing the messages manually.Spinvox have featured at National Outsourcing Association events in the past and their offshore operations were no secret in the industry. They always liked to talk up their technology, but never made any secret of the fact that they had people checking messages too, so it's interesting to see the `human checking messages' aspect as `news'¿However, it looks like the Information Commissioner will be interested in the story as Spinvox claims to not transfer data outside the EU.
Outsourced
I attended the UK premiere of John Jeffcoat's movie `Outsourced' at the Soho hotel screening room in London last night. I was fortunate enough to be introducing the film as I started the ball rolling and created the possibility of arranging the screening in the first place.It all started a couple of years ago when I saw this video on youtube. I liked the fact that someone had turned a current affairs story into a human-interest story ¿ an actual movie that would interest people beyond the business community. I started using the video in some of the MBA classes I teach, as an example of business strategies crossing into general consciousness.
Carving out a niche
As outsourcing destinations go, Sri Lanka is not having the best of times. Protests have been taking place non-stop in London for months, with Tamils trying to encourage the British government to do something about the civil war in Sri Lanka ¿ generally by making a lot of noise for their cause in Westminster. The heat of these protests has barely died down, though since the death of the Tamil Tiger's leader, the Sri Lankan government has now declared the country officially `at peace'.So it was with some trepidation that I took a call today from the director and general secretary of SLASSCOM, Madu Ratnayake.
Unwelcome rumours
A supplier asked me recently if I could provide them with information about which CIOs are `thinking' about outsourcing, so they might have some advance warning and they can pitch for business earlier.It struck me as a strange thing to ask. CIOs don't just randomly share their thoughts about what areas of the business might be outsourced, and even where they might be considering an outsourcing programme it is likely they will keep it very silent. Even their own staff won't hear about it until the strategy has been decided, because rumours and discussions about plans that are undecided could cause chaos in most companies.
Skills for a global industry
Rob Preston's blog in InformationWeek earlier this month caught my attention recently. He recounts a recent event in New York where the CEO of HCL Technologies, Vineet Nayar, said he doesn't hire greater numbers of American graduates because they are `unemployable'.Notice the focus on `greater numbers' though. HCL does employ a lot of Americans, but when he was pressed on why they are not hiring more kids straight from college Nayar explained that he just felt that the American college system is not preparing them for work in the technology industry.We have heard similar arguments about technology or computer science courses in the UK for a long time.
Trade lessons from Indian IT
I was at the Confederation of British Industry (CBI) this morning because their equivalent body in India (the CII) had brought a large delegation of Indian business leaders over to London to talk about trade between the two nations.I was most interested to hear a speech by the new commerce and industry minister, Anand Sharma. The minister has only been in the job for three weeks and yet he spent last week in the USA talking to business groups there and here he is today in London talking to similar British groups.The general debate, and Sharma's speech, was not specifically themed around outsourcing or the tech industry, however the tech sector was mentioned a number of times ¿ particularly when the discussion turned to work visas.
Touchy subject?
When I do talks about outsourcing, I often try to illustrate different points by using video or images. Let's face it, someone talking to PowerPoint slides for an hour is about as interesting as a rail timetable, so I try to find ways to liven it up a bit. I like using this video when reminding people that most people out there find outsourcing to be annoying, useless, or pointless. It's a funny little viral that has been sent all over the web in the past couple of years, but it does explain some of the issues around outsourcing in an amusing way.
The benefits of Brazilians
I came late to the Gartner outsourcing summit yesterday. I knew I had to be at the conference all day on Tuesday because I was presenting, but Monday was going to be more of a networking day. When I did arrive, I talked to a few people and then went to a session highlighting the outsourcing opportunities in Brazil. Robert Janssen of Brasil IT gave an interesting presentation, of course full of all the usual information one would expect, but used an interesting analogy I'd like to repeat. Robert said: “I was at my favourite pizza place in San Francisco the other day.
Breaking the helpdesk bottleneck
I was wandering around the Gartner outsourcing summit in London today and I bumped into Christoph Neut, the European head of Techteam. Techteam was founded in the US in 1980, so it has been around for a long time, but I'm not really familiar with the company. Christoph explained to me that they have been working in Europe since 1996 ¿ which is when he joined the company. Techteam focused on helpdesks ¿ the poor guys and girls who get the brunt of users' anger when their IT falls apart. But they have an interesting angle on the old helpdesk model.
Taxing time for Indian IT industry
Way back when the Indian technology industry was taking off, the companies managed to negotiate a raft of tax breaks that allowed the hi-tech sector to operate without the usual burdens placed on Indian business. All those benefits are due to end next year. All the commentators in the sector knew that this was going to happen, but in the past couple of years whenever I have asked people in India about their fear of having to start paying considerably more tax, they have all said that the Indian tech sector is maturing and doesn't need these special benefits anymore. Almost everyone in the industry, including the trade body NASSCOM, imagined that once the sector has matured enough then these additional benefits from the government would not be required.
Sales calls can find you anywhere
Here is something interested that happened to me today. Someone added me to their phone book on Skype. I wasn't sure who the person was ¿ other than the name meant it was obviously a tech firm ¿ so I said hello on chat. It turned out to be a firm called GKS Technologies in India. First, it's a big surprise to me that anyone would just randomly trawl Skype looking for potential customers to call in locations that just might have some business ¿ will they call everyone in London looking for some IT work? Then, wouldn't the process of using unsolicited Skype calls like this alienate anyone who might even potentially give them some business?
Delving in to the detail of the OEP
The recent British government budget emphasised that public services need to be delivered for less ¿ because debt levels are so high right now. In the same week, the Operational Efficiency Review (OER) led by Dr Martin Read came to a similar conclusion, that more must be delivered for less. More recently still, the Child Maintenance and Enforcement Commission (replacement for the Child Support Agency) commissioned India IT firm TCS to redesign their IT. Connected? Possibly.Perhaps there is a new wind of change in the public sector that means an emphasis on efficiency is going to force public bodies into more outsourcing?
Offshoring in decline?
The Financial Times published a very interesting piece of analysis based on their own research on offshoring from the UK yesterday.The analysis suggests that offshoring has rapidly declined because of the recession. That's not a surprise if you are regularly reading this blog. There is a tendency to assume companies will use offshoring more in a recession ¿ as they need to cut costs fast ¿ but it's not always true, and the FT research indicates that offshoring from the UK is presently at miniscule levels.The report said: “An FT analysis of job losses announced since the recession began last July suggests little more than 4,000 job cuts at 17 locations can be wholly or partly attributed to work being moved abroad.
Some harsh truths about technology
The Evening Times newspaper in Scotland features a front page story today about the 850 jobs Hewlett Packard is planning to axe in Erskine. The manufacturing plant is being reduced in size, with more focus on increasing production in the Czech republic.This is a blow for the local economy in Renfrewshire, and the newspaper has pointed out that in the last quarter alone HP made profits of £1.1bn.This is an emotional decision for anyone who cares about job creation in the UK, but who is right and wrong in a case like this? Companies such as HP do have to think of all stakeholders when they make these decisions, and clearly they believe that continuing to offer a better deal to their millions of customers is more important than the livelihood of a few hundred people in Scotland.Someone in Glasgow using the name `openmind' posted a comment on the Evening ...
HCL to help MTV reach out
Indian tech giant HCL has just announced a new IT outsourcing contract with MTV. It's reasonably interesting because MTV is a pretty cool brand for any IT company to associate itself with, but what was more interesting to me was the list of different work to be included in the deal.According to the media in India, the contract includes the development of a new media player, and a new social network ¿ in addition to other software development, such as bespoke games.In an environment where the Internet has a surfeit of free social networks and media players, it's interesting to see the music giant commissioning an IT firm to develop these.
A new era of management consulting?
Could the recession be good news for management consultants cast adrift by the lack of advisory work? It could be. After all, another effect of this economic slowdown is a reaction against `foreign' service companies, so many companies ¿ like the Indian tech majors ¿ are keen to be seen hiring locally in places such as the UK and US.We have seen this before. Many of those same firms started hiring locals a few years back in an effort to create a strong cultural fit with the markets where they were winning business, but as business started thinning out, a lot of those six-figure-salary consultants were shown the exit door.Now the consultants are cheaper, because they can't find the work, so companies like Wipro are back in the market and looking for good, local domain experts again.
Collective wisdom
This blog has featured over 300 entries since 2006. I've tended to steer away from the day-to-day news agenda and more to the personal experiences I have had of the outsourcing marketplace, so I think it complements the news coverage in the main magazine.As I sat scanning through some early blog entries recently I realised just how fast the industry has moved, and how some of the trends predicted even just a couple of years ago now seem defunct. And though it might seem anathema to hardened users of RSS feeds, I thought it might be nice to collect all this material together in a single physical volume ¿ to have a book of what has happened in outsourcing over the past few years.So, after getting permission from my editor at Computing, I've pasted it all together and added a few extra comments and observations and it will soon be ...
Cutting through the greenwash
I can remember a couple of years ago feeling certain that environmental concerns were going to become the critical issue in outsourcing. The belief was that companies in high energy-consuming industry sectors would demand better green credentials from their suppliers ¿ to improve the carbon neutrality (or in an attempt to reach that status) of their own supply chain.It started off that way and some companies made very public pledges of carbon neutrality. However, this area of the outsourcing marketplace has been flooded with greenwash ¿ the false promises hyped up to appear like your IT supplier does anything and everything for the environment.I was interested to see the 2009 Green Outsourcing Survey from the Brown Wilson group ¿ the guys who publish the Black Book of Outsourcing.
A matter of trust
On the subject of trust in outsourcing, how many more times do I need to receive emails from suppliers in far-flung corners of the world promising me a percentage of any projects I can find for them in the UK?If a supplier wants to work with me then I'd be only to happy to advise them on how to improve their presentation for the European market, how to talk to the media and analyst community, how to create a great online presence. I can do all this stuff, because that's what I do, when I'm not writing. One thing I certainly don't do is take percentage cuts on `deals' because here I am commenting about companies in the media.
A little knowledge goes a long way
The thing about the offshore outsourcing market is that trust is a genuine currency, hence the importance of brands in that marketplace.Major IT firms, like IBM and HP, have strived for years to create a sense of trust in their brand and so when they offer a service that is delivered from offshore you can be pretty sure it's going to work well ¿ at least within the boundaries of the agreed service levels.And it should be quite obvious to any of the smaller service providers that this is the case. Think about the client who might be considering an offshore project.
The song remains the same
Two years ago I wrote a book for the British Computer Society with Dr Richard Sykes, who some of you may know as a board member of Intellect ¿ the British hi-tech trade association.Richard is a friend of mine who has had a long history in the IT business, including time as the technology head of ICI and chairman of advisory firm Morgan Chambers.The book, Global Services: Moving to a Level Playing Field, has finally been distributed to the USA so readers over there can buy it from local stores, such as Amazon.com.I was always disappointed that it never got much distribution in the USA, as it's the natural home for a book like this, so it's pleasing to see that the publisher has finally got their act together.Although I wrote this book with Richard and I'd be inclined to talk it up, I hope American readers of this blog ...
It's looking tough down Mexico way
As we might have expected, swine flu is finally affecting outsourcing. With business in Mexico almost paralysed by the flu, contact centres and other services there are suffering from the uncertain business situation.In a recent statement, Peter Ryan, head of contact centre outsourcing analysis at Datamonitor, said: “To date, medical research has shown that swine flu is most commonly transmitted in areas of limited air circulation and close human proximity. For a location like Mexico, in which contact centre agents frequently use public transportation to travel to and from work, it is very possible that many could choose to stay at home rather than risk contracting the virus during regular commutes.
Going for green
This week I chaired the first meeting of a new `Going for Green' steering committee, organised by the National Outsourcing Association.It was a useful meeting because we had an excellent mix of contributors on both the buy, sell, and advisory side of the outsourcing mix, including HMRC, Gartner, Adec, Capgemini, IBM, and Fujitsu.This was only the initial meeting of the steering committee, but the group already highlighted a number of areas where the NOA could really get their teeth into the green supply chain. These are going to be written up by the NOA team into a white paper that should be published within just a few weeks.The aim is to create some momentum within the industry on the real green issues ¿ measurements, standards.
The value of networks
Straight after I had listened to PA Consulting telling me all about their new research ¿ as featured in my last blog post ¿ I caught a bus to Shoreditch. I wanted to go and have a chat to Charles Armstrong, the CEO of Trampoline Systems.This was an interesting and quite random connection. I met a girl in a bar last year in Idaho in the US ¿ we chatted and shared a few glasses of local Idaho beer. She worked in music promotion and introduced me to a venture capital guru, who introduced me to Charles ¿ all through social networks and without any motive other than sharing contacts where it looked like we might add value or get along together.Shoreditch remains a kind of forgotten wilderness within London.
Going for green
This week I chaired the first meeting of a new `Going for Green' steering committee, organised by the National Outsourcing Association.It was a useful meeting because we had an excellent mix of contributors on both the buy, sell, and advisory side of the outsourcing mix, including HMRC, Gartner, Adec, Capgemini, IBM, and Fujitsu.This was only the initial meeting of the steering committee, but the group already highlighted a number of areas where the NOA could really get their teeth into the green supply chain. These are going to be written up by the NOA team into a white paper that should be published within just a few weeks.The aim is to create some momentum within the industry on the real green issues ¿ measurements, standards.
The value of networks
Straight after I had listened to PA Consulting telling me all about their new research ¿ as featured in my last blog post ¿ I caught a bus to Shoreditch. I wanted to go and have a chat to Charles Armstrong, the CEO of Trampoline Systems.This was an interesting and quite random connection. I met a girl in a bar last year in Idaho in the US ¿ we chatted and shared a few glasses of local Idaho beer. She worked in music promotion and introduced me to a venture capital guru, who introduced me to Charles ¿ all through social networks and without any motive other than sharing contacts where it looked like we might add value or get along together.Shoreditch remains a kind of forgotten wilderness within London.
No more surprises from Satyam?
Last week it was announced that Tech Mahindra would purchase the troubled Satyam. Yesterday, they published details of the new board and all the initial welcome messages to the new management team.The press release from yesterday details the financial offer that has been confirmed for Satyam: “Following the Company Law Board's approval on 16 April, 2009 of Tech Mahindra as the successful bidder to acquire a controlling stake in Satyam, Tech Mahindra has deposited the initial subscription amount of approximately Rs. 1,756 Crores (approx $351m) and the total funds necessary to consummate the mandatory public offer being approx Rs. 1,154 Crores ($231m), in separate escrow accounts today. Tech Mahindra is expected to announce plans for the Public Offer, shortly.”Forgive me if I sound surprised, but nearly $600m in cash is changing hands?
Beware the outsourcing rumour mill
I was quite amused to read this statement in the Economic Times this morning: “In a press statement PA's Executive team and Board has clarified that Cognizant Technology Solutions are not, nor have ever been, in talks with PA about anything whatsoever.”I do like the flourish of that final "whatsoever". It just sounds as if PA Consulting has had its nose completely put out of joint by a false news story in the ET.And yet, news on mergers and acquisitions in the outsourcing market is notoriously unreliable. Everyone wants to be the first to report on a merger or takeover and so some papers will run the story before there is anything other than smoke and mirrors.
Destination Dubai
I was interested to see that the BBC current affairs programme `Panorama' is focused today on the story of economic growth in Dubai, and some of the harsh realities being faced there as the economy starts to falter.It's interesting because I had been invited to speak at the Arab outsourcing conference in Dubai later this month. In fact I can't make it due to some other commitments, but it looks like I am still listed as a speaker on their website - I can assure you I'll be here at home in London.I don't think the BBC investigation will have much of an impact on outsourcing in the Middle East, Dubai in particular.
A destination too far?
I was asked yesterday about my opinion on offshoring to Myanmar. I was a bit taken aback, not least because I still refer to the country as Burma. After all, a military junta enforced the name change in 1989 soon after killing thousands of innocent civilians who wanted nothing more than their democratic rights. It seems the government there is now eyeing up the international services and outsourcing market as a way of generating some foreign revenue and potentially increasing their own legitimacy.When we work around the world it's a fact that standards of governance and democracy are different, but isn't Burma a fairly clear-cut case of a place that should be avoided?
A risky business
I can't confess to being a regular reader of Financier Worldwide, but a story in the latest edition of the magazine caught my attention because of some comments by Peter Brudenall, a partner at law firm Hunton & Williams.Peter is one of the leading legal advisors on outsourcing based in London, so I always tune in to his comments in the press or at conferences.In the Financier Worldwide article he warns: “Few companies truly appreciate the value of their IT systems to ensuring the efficient and stable functioning of the company.” He goes on to say: “Many companies only appreciate the level of dependence when something goes wrong ¿ whether it be a major systems failure, a problem with a key service provider if, for example, the operation and support of IT systems has been outsourced, or when data is lost.”The bottom line is that risk is back on the ...
Recessions fuels offshoring fears
Don't try doing any business with France today. The entire country has gone on strike in protest at President Sarkozy's economic policies.More than two million people are expected to down tools or leave their desk, paralysing the nation for a day, because unemployment in France has now soared past two million people (sounds like the UK). Government figures suggest that 10% of workers will be unemployed within a year, with 350,000 layoffs expected in the coming months.I love the fact that people in Europe, France especially, remember who put the politicians in power. In too many countries, the political classes exert such power over the population that we seem to forget it was the people who elected them as representatives - not kings.But national strikes like this are scary and unsettling.
Don't shoot the baggage handler
A consumer pressure group just announced that airlines around the world mishandle around 42 million bags each year, and over a million are irretrievably lost.I was eating my breakfast and listening to this story being debated on the BBC Radio 5 Live breakfast show.A representative of the Air Transport Users Council was recounting her own experience on losing her baggage and then reporting it to the airline. The airline said `we outsourced baggage handling, so it's not our fault the bags are lost'.This is a typical complaint on outsourcing and it's a shame that the airline involved feels that by blaming the supplier they can make the situation better.
The power of publicity
Oh dear. ANZ Bank in Australia is caught somewhere between a rock and a hard place.The bank has issued a stern press release distancing itself from press assumptions that by focusing on creating value in their Indian technology centres, ANZ will cut local jobs in Australia. The Australian press has been reporting that around 500 jobs are set to be lost, but the bank has stated: “ANZ did not announce job losses in Australia related to offshoring. Employment in ANZ's Australian operations increased by over 500 full time roles in 2008.”Isn't it strange when a company has to release a shotgun press release like this?
Local jobs not for local people?
Take a look at this headline from the Essex Echo last week: “Essex County Council outsourcing scheme could take work abroad”.The story is about a county council plan to outsource clerical work. It explains: “Council leader Lord Hanningfield held talks with Mumbai-based Tata Group when he visited India last year on a trade mission. At the time, the firm was on a shortlist of companies bidding for the council contracts.”Though Tata is no longer on the shortlist, the newspaper keeps reminding the reader that “New York-based” IBM is on the list, though it seems that having “Milton Keynes-based T-Systems” on the list is OK.
Satyam students likely to whistle
The latest news from Hyderabad on the Satyam scandal is that a group of students has now formed a union to try campaigning for their jobs ¿ before they had even started working for Satyam.The company had been on campus at various universities and formally offered jobs on graduation to hundreds of students. They never received their joining papers because of the present turmoil in the company and now they want the government to take notice and do something for them, by counting their employment as a liability of the firm.Who thinks they are going to get very far?
Playing the innovation game
Last Friday, I was speaking at an ESRC event focused on career migration at Loughborough University. My talk was focused on connecting the discipline associated with outsourcing and the fluidity of the retained organisation in a globally connected world. I stressed a number of points that extended the reach of outsourcing as a business practice into the realm of P2P (peer to peer) systems, social networks, and the open source movement ¿ with a thread connecting them all and describing how work itself will change because of the way we are engaging socially with other people using the internet.I was really interested in a lecture by Dr MH Ravishankar (Ravi) from RMIT in Melbourne, Australia.
NOA Pathways workshop
The first workshop in the new National Outsourcing Association Pathway programme takes place on March 26th. This is a real effort to try creating a recognised qualification in outsourcing and should be supported by the industry. Do please take a look at the information online at the NOA web site and come along for the first workshop if you can make it.
Dangerous destinations
About a week ago, I was reading a report about the 25 most dangerous cities for offshore outsourcing, based on some new research published by the Brown-Wilson Group ¿ `2009: The Year of Outsourcing Dangerously.' So are Rio, Mumbai, Delhi, Kuala Lumpur, and Bangkok all really as dangerous as the report authors would have us believe? They are all in the top ten¿India remains the most popular destination for offshore outsourcing of technology services, yet there has been sporadic violence there for years. Major companies are still in Sri Lanka, and the obvious question would be how many companies pulled out of New York after 9/11 or London after 7/7?These rankings of `dangerousness' are trivial at best and potentially dangerous.
Empire building in Egypt
I'm sitting in the mother of all traffic jams at 8am trying to get from central Cairo out to the Smart Village, the hi-tech campus on the outskirts of the city housing both the IT ministry and several IT and BPO firms. Perennial traffic seems to be a major problem with this city, but that's something shared with many major capital cities ¿ including London.Just before I went for dinner last night (very nice and on the bank of the river Nile) I managed to chat to Amin Khairaldin, strategy advisor and board member of ITIDA, the agency charged with promoting hi-tech services from Egypt.I asked Amin about the realities of Egypt.
A NIIT at the movies
Last month I wrote a story in this blog about Dr Sugata Mitra and his experiments with slum children in India ¿ inspiration for the award-winning movie Slumdog Millionaire. As you might recall, Mitra performed these experiments while he was at the Indian technology firm NIIT - he is now a professor at Newcastle University here in the UK. Last night, at the private screening room of the Mayfair Hotel in London, NIIT and Pathé Films hosted a private viewing of Slumdog Millionaire, but with a slight difference. Mitra was there in person to talk us through the experiments he performed with the slum kids around India before we got to see the movie.
The world has changed
NASSCOM tends to always get a big hitter in to speak in the final, Friday afternoon slot before the annual India Leadership Forum closes and we all head off for a Bollywood party. This has ranged from big name corporate leaders to the President of India, but last Friday they mixed it up a little by getting the well-known academic CK Prahalad to talk about management in turbulent times.And what a talk it was!Throughout the entire three-day event I had wanted someone to give me some insight into the changing nature of business in this economic slowdown. I'm really fed up of hearing doom-mongers explained how it's the end of the world or optimists telling me that consumers will start spending again by the middle of this year.
News from NASSCOM
So the first day of the NASSCOM India Leadership Forum is over. I'm passing up the opportunity to sit in the bar so I can make sure you get a blog update from me today.John Chambers, CEO of Cisco, gave a great keynote speech to open the conference. He drifted between two parallel themes ¿ how Cisco has pulled through bad times before, and how collaboration is going to define the company of the future. Chambers foresees a world in which content, rather than software or networks, is what we are concerned about. He has a great vision, but let's face it ¿ most companies are still stuck in the Stone Age with their bans on any form of social networking.
Are offshoring prices coming down?
I'm in the Philippines right now as I am speaking today at the 9th annual eServices conference in Manila.The opening speaker at the conference was Peter Bendor Samuel, founder of the Everest group. He talked immediately about the Philippines: “The Philippines is the natural second location for skilled English speakers, after India. China and Brazil can't compete.” Though he did also warn that business in the Philippines is highly concentrated in Manila alone.Peter summarised the outsourcing market in general at present as being driven by these four key issues:1. Ongoing concern of being over-concentrated in a specific location or specific suppliers2. Increasing complexity in the buyer portfolio3. The economic slowdown4. Diminishing arbitrage opportunityPeter stressed that the issues in the economy are really causing a change in purchasing behaviour: “We are now seeing clear deflation, forcing supplier prices down¿ people are asking for quick strategies with immediate returns.
Does Satyam need an outsider?
Here are the first lines of a press release I just received from Satyam:Satyam Computer Services Limited (NYSE: SAY), a global consulting and information technology services provider, today appointed A.S. Murty as chief executive officer. Murty, a 15-year veteran of the organisation, begins immediately. “Extensive board discussions over the past few weeks made it clear that the new CEO should come from within,” said Satyam Board Member Deepak Parekh. “ASM, an extraordinary executive with widespread support among all stakeholders–internal and external–will do an exceptional job leading Satyam at this critical juncture.”So, what can be made of this? The interim board at Satyam has done a good job of managing the fallout from this scandal.
A little more knowledge
I was just talking about Legal Process Outsourcing (LPO) yesterday on the blog and here I am this morning in a meeting with Kulvinder Reyatt, who is managing director of European Sales at RR Donnelley.RR who? You might ask. Well yes, I had to do a bit of research myself before chatting to Kulvinder, but it's an interesting story. RR Donnelly has been around for almost 150 years now. They started out in printing, publishing, binding, typesetting, and anything you can think of related to the publishing business. However, in the last twenty years or so, the firm has expanded into a number of areas ¿ including hi-tech services.They now provide secretarial and support services to some of the biggest law firms in the world ¿ including the Magic Circle names ¿ dashing my comments yesterday about not hearing of much genuine outsourcing in the legal industry.They have also started ...
Time to reappraise LPO?
Legal Process Outsourcing (LPO) is one area of outsourcing that has consistently left me underwhelmed year after year. One budding entrepreneur after another seems to launch a venture based in a far-flung Commonwealth country with the belief that because legal services are cheaper in India/Kenya/Pakistan it must follow that British lawyers will buy services from them.Law firms are, by their very nature, pretty conservative and more interested in getting the process right than saving a few pounds here and there ¿ so I haven't seen any convincing evidence that the offshoring of legal services was ever going to take off in any large way.
Helping small businesses
I often type `outsourcing' into Google to see what comes up. Obviously Google News is a useful tool, but it's interesting to also see the organic search results too.Usually the Wikipedia entry for outsourcing and the National Outsourcing Association come top of the list, but I was surprised today to see that the second entry (after Wikipedia) is the UK government's Business Link service.Business Link is a national advisory service that offers practical information and help to UK companies, typically smaller or medium-sized enterprises, and I've never noticed much in the way of outsourcing advice from them in the past.
Hiring the skills for outsourcing
I was recently scanning through the Offshore Futures report by consultancy Alsbridge. It was published about a month ago, and I saw I had been quoted in there, but given that I have lunch with the author on Friday I thought I should give it a closer inspection.One thing that jumped out at me relates to human resources. Many in the industry have argued for a long time that partnering with companies demands a different skill set to procurement and purchasing. For long-term outsourcing to work, suppliers need to be included within the supply chain ¿ and therefore to share in the success when the operation is working well.The author of the report, Paul Morrison, states: “Outsourcing specialists would be a career evolution for procurement professionals, technical specialists and industry experts.
Customers to desert Satyam?
The dust is starting to settle on the financial scandal at Indian outsourcing giant Satyam. While the founder and chairman Ramalinga Raju languishes in jail, confidence in his company is collapsing.In the Financial Times last week, Ashutosh Gupta of research firm Evalueserve recommended that customers should be hiring private investigators to poke around and ask difficult questions.The Wall Street Journal claimed that at least half a dozen major clients of Satyam are preparing to leave if they don't see some stability and certainty restored within weeks.We are now only a fortnight away from the biggest Indian technology conference ¿ the annual Nasscom Leadership Forum.
No offshore fears with Obama
Wasn't the inauguration of US President Obama just stunning? I just love this Techcrunch photo of Washington DC from taken from a satellite. Ever felt you were about as insignificant as an ant? Well, here is the proof.A number of countries with a lot to gain from offshore outsourcing are concerned that some of the anti-offshoring rhetoric employed by Obama during his election campaign might now come into force. I don't think so.Note that Obama's first move in office was to end the terror suspect trials at Guantanamo Bay. He has more on his plate with the ongoing Middle East military campaigns and the crashing economy than possibly any other incoming president.
The Satyam scandal
The Satyam founder and chairman, Ramalinga Raju, has resigned in the most bizarre circumstances, by sending a resignation letter to the Satyam board that also details a number of financial irregularities. As you might recall, I blogged about Raju last month because of his plan to invest billions of Satyam dollars in companies his family already owns.The company plans to conduct a press conference at its Hyderabad headquarters within the next 24 hours, which is going to be like throwing a fox to a pack of hounds. Satyam needs to come up with some answers fast.We are living in a post-Enron, post-WorldCom, post-Tyco world.
Seasonal bargains
Is there now a bargain to be had from every member of the banking sector trying to divest service units to free up cash? Wipro has certainly found one this week by purchasing Citi Technology Services from Citigroup for $127m.The deal also includes a six-year contract to continue providing services to Citigroup, and this is a business unit expected to turn over $80m this year.That six-year deal could be worth about $500m, so the purchase price looks like a tremendous bargain.
Keeping it in the family
Here is a challenge from the moral maze of business life. You are the chairman of a major international - and publicly-traded - IT services company. You are concerned about the effect of the credit crunch on the IT services industry, so what do you do? Perhaps try using spare cash to diversify the company offerings by buying into companies in other industries, such as construction?It sounds like a classic diversification strategy, but what if the $1.6bn investment is spent on companies that your family already owns? Ask Satyam chairman Ramalinga Raju, because it's exactly what he just tried to do.
The uneasy global supply chain
A lot of people and companies still consider social networking tools such as Facebook to be a frivolous waste of time. Yet, work consists of more networking and communication than ever before. The tools are merely reflecting the way we work today, and are becoming an essential part of the working day.I mention this because there was an interesting post on the discussion board of the Outsourcing Experts Group in Facebook yesterday. Preet Chandhoke, a director of software development firm 01Synergy, posted up his views on the five regions to watch for offshoring in 2009: Argentina Bulgaria China Egypt Philippines Preet highlighted his thoughts on the pros and cons of each location and I tend to agree with his views.
Not so captivated any more
Fidelity has put the IT support part of its back-office in India up for sale. The centres in Chennai and Bangalore employ more than 2000 people, though this sale is not affecting some of the actual knowledge-based processes performed there ¿ such as business analytics.It's one more nail in the coffin of the big offshore captive centre. Now GE, Citigroup, Aviva, and Fidelity have all endorsed outsourcing above offshoring their own resources to another country, is the argument won?
Creative destruction or more bailouts?
I received an email this week from a friend of mine that gives some eye-watering figures. Just over a year ago Royal Bank of Scotland (RBS) paid $100bn for ABN Amro ¿ 80 per cent in cash. For this amount, RBS could today buy: Citibank for $22.5bn; Morgan Stanley $10.5bn; Goldman Sachs $21.0bn; Merrill Lynch $12.3bn; Deutsche Bank $13.0bn; Barclays $12.7bn; And still have $8bn change I haven't checked these numbers, but the fact is that in the current climate it is entirely believable. It also reminds me of a recent message on the blog of US documentary-maker Michael Moore, hardly known as a friend to big business, but certainly an astute commentator.
An Indian bailout plan
Among the charges often levelled against trade unions is they are combative, antagonistic, and their existence creates a “them and us” culture that shouldn't exist in an era of flat management structures. So, I was interested to see an email from the BPO Union about their proposals in India. The organisation seems to be pre-empting measures the Indian government might offer to help the local outsourcing industry and IT service companies ride out this uncertain recessionary period. The suggestion is that staff across the industry would take a pay cut of 10-15 per cent if the reduction were directly subsidised by the government.
India will remain open for business - but that's not the real story
One of the duties I have to fulfil as a director of the National Outsourcing Association is to talk to the media and to give some views and opinion when they call ¿ to give a human voice to the association. Usually the chairman will do the media stuff, but as my focus is offshoring I often get called on to comment on international sourcing issues. But as a part of the media machine myself, I can sometimes feel disappointed when I see my own words incorrectly quoted back at me. Yesterday, a rival publication to Computing called me for a comment on the Mumbai terror attacks.
Perspective on Mumbai bombings
The Times, the Guardian, and the Independent all lead with front-page stories about the terrorist attacks in India yesterday, where at least 80 people were killed and hundreds injured. The Times is particularly striking, with a cover featuring blood on the floor of a railway station and the headline `Carnage in Bombay'. Gunmen targeted major hotels, such as the Oberoi and the Taj Mahal. As I write this blog, the Indian army has surrounded both hotels because more than 200 people are being be held hostage inside. The BBC radio news this morning has predicted that the England cricket team will abandon their one-day tour of India.
Setting the standards for outsourcing
The National Outsourcing Association (NOA) here in the UK has just launched a new series of qualifications in outsourcing. It's an attempt to ensure there is a best practice benchmark for outsourcing knowledge in the industry. So companies should be able to use the courses as a part of their own training programmes, and individuals can use the courses to boost their own CV when trying to get a job in the industry. The NOA has created a new arm called NOA Pathway to administrate the courses and they are all accredited by Middlesex University. There are a number of qualifications, beginning with the most basic foundation knowledge of outsourcing, called the NOA Gateway.
How far can outsourcing go?
I notice I mentioned Cognizant in my last blog. Without meaning to start mentioning them every day, I just want to recount a few comments made when I had a chat to Martin Kochman today. Martin is the head of Business Process Outsourcing (BPO) operations for Cognizant in Europe and we had a chat on the phone earlier about some of the changes in the BPO sector. What was particularly interesting were some of his views on the hard times faced by many companies as we head into recession. Martin remains very positive about the business outlook for the BPO sector as a whole.
It's the economy, stupid
The big theme this year at the National Outsourcing Association annual summit in Westminster is the economy, stupid. As might be expected, all the conference small talk is about what will happen in 2009. I even went to a very nice dinner at Gordon Ramsay's Maze restaurant last night ¿ thank you to Cognizant - and found that in our sumptuous surroundings, we were still all focused on the doom and gloom of where the country is headed. Professor Mari Sako of Oxford University gave the keynote speech this morning focused entirely on the economy and several other speakers have approached the subject, but in my opinion the issue is far more that there seems to be little consensus on how the international trade in services will be affected.
Christmas come early
On Oxford Street in central London they joke is that Christmas comes earlier and earlier each year to the point at which we might one day expect to be returning our summer holidays only to see the decorations going up. I know I snapped a picture in department store John Lewis last month because I was astounded to see the place resembling a winter grotto more than two months before Christmas. The same applies to the business projections from analyst firms. Expect every company to be sending out their views on what is in store for 2009, and every magazine printing those same views ad infinitum.
Smile Jamaica
A few years back, the offshoring community was engaged in a constant firefight over the negative headlines associated with work being sent to remote offshore regions. Now, most reporters are more careful in their analysis. It's never a black and white case of good and bad where offshoring is concerned and this is reflected in the journalism of the past few years. The reporting has matured. However, when I was in New York speaking at the Outsource World conference recently I met some government representatives promoting Jamaica. I was interested in what they had to say because I had heard of some banks setting up facilities in Jamaica back in the 90s, but eventually moving on to places such as India.
The audacity of offshoring
All is well. President Barack Obama is now going to reward his kids with a new puppy for their support. I want to know if that means we are going to be treated to a new series of dog cams, in the same spirit as the “Barney cam” videos produced by President Bush. Perhaps the instigation of this video series was his finest moment in the White House? I don't need to be impartial here. The sooner Bush is on the conference circuit earning big bucks for speeches about fireside chats with Tony, the better. But what everyone around the world wants to know is how far President Obama will go towards fulfilling his campaign pledge to restrict offshore outsourcing.
Literary insights into India
It's not often that I talk about books in this blog. Now and again there are some decent business books that cross my desk, but by and large I personally tend to read more fiction than management books. I'm a firm believer in the art of learning about business mistakes from Richard III. So here is a tip for those of you who want to combine a love of literature with outsourcing. This no longer has to be an oxymoron. Just take a look at the winner of the 2008 Man Booker prize, The White Tiger by Aravind Adiga. The White Tiger tells the story of Balram Halwai, a man with a dark secret who recounts his life in a series of letters to the Chinese Premier Wen Jiabao.
Outsourcing of Africa
I have been working over the past few weeks with Mfanu Mfayela, chief executive of Business Process enabling South Africa (BPeSA), the national co-ordinating body that represents the outsourcing industry in South Africa. Mfanu and I were presented a challenge by the International Trade Centre (ITC) - create the framework for a new outsourcing association to represent the African continent; an African Outsourcing Association (AOA). The ITC is a joint organisation, created by the United Nations and the World Trade Organisation, so to get a request like that was exciting ¿ and a real challenge. Part of the challenge was to come over to Abuja in Nigeria and to present our conceptual ideas to a wide range of technology professionals and government representatives.
Helping small businesses go global
A few days ago, I went to give a talk to a group of customers from QuickStart Global. It's a company that is only about a year-and-a-half old, but has been growing rapidly by making the offshoring path easier ¿ especially for small to medium-sized enterprises (SMEs). QuickStart basically allows smaller companies to go global and create their own captive offshoring unit, because Quickstart already has offices and facilities all over the world ¿ so if you want to get 10 people set up in India, you no longer need to fly over there, find an office, hire an HR person, fire a lawyer - Quickstart can cut through all of this and gives you desks and other infrastructure in its offices.
Every one a winner. Except the losers.
A few days ago, the annual awards ceremony hosted by the National Outsourcing Association (NOA) took place in central London. I was there, as one of the judges, and enjoyed a front seat view as the finest outsourcing minds in the country all celebrated their nominations and awards. The NOA chairman Martyn Hart made a big mistake in his opening speech by suggesting that a forthcoming recession might be good for some companies in the outsourcing sector. Comedian Dominic Holland was MC for the evening, and once he heard Martyn's comments he never let it go. Though, a heckler from Alsbridge did start giving Dominic himself a hard time too, so the crowd turned on some of the negative comments from the MC!
Getting social about business networking
I was chairing a panel discussion at Outsource World in New York yesterday. The focus was on whether offshoring was still viable in an environment where we are seeing rising costs, rising attrition, and rising currency risk. Joining me on the panel were Bill Bierce, a partner in law firm Bierce and Kenerson, and Amrita Joshi, president of consulting firm Ahilia. It was a good discussion and well received by the audience. Strangely enough for these events, the audience was getting bigger as the talk went on ¿ rather than the opposite, so it must have been of interest. It was just a shame that as Bill was entering into a great monologue about pricing issues, the conference organiser came and tugged my arm, asking me to wrap up.