Off Shore Outsourcing Beyond Cost Savings

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Off Shore OutsourcingBeyond Cost Savings

• Jagdish R. Dalal
• Principal, JDalal Associates, LLC
• www.JDalalassociates.com

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Credentials (outsourcing relevance)

• As a Business Executive
• CIO, VP E-business, Carrier Corp (a 14B division
  of United Technologies), Implemented unique
  governance program for outsourced activities
• VP, Information Management, Xerox. Developed
  strategy and executed then, largest outsourcing
  deal with EDS - 3.2 Billion (10 years) now a
  Harvard Business School teaching case study on
  outsourcing and managing employee transition
• Director, MIS, Data General (50M budget)
  Established off shore Applications development
  and maintenance facility in India in 1984.
• As a Service Provider
• Partner, PricewaterhouseCoopers. Joined as a
  founding partner at Price Waterhouse for Business
  Process Outsourcing practice
• Led the team that provided outsourced HR,
  Procurement and Accounts Payable services to
  Nortel Networks worldwide. Then it was the
  largest BPO deal - 650 million (5 years, 1200
  employees, 11 countries)
• As a Consultant
• Helped businesses (service providers as well as
  end users) in developing outsourcing strategy as
  well as create and implement due diligence,
  transition and governance programs for Business
  Process and IT outsourcing
• Lead Judge for inaugural IAOP and Fortune
  magazine insert on Global Outsourcing 100 list
  and subsequent sub-lists
• Recognized as a writer and presenter on
  outsourcing and shared services strategies
• Award finalist for Outsourcing Achievement Award,
  2002
• Named Sourcing Pros to know, 2003
• One of 13 initial recipient of Certified
  Outsourcing Professional designation from
  IAOP,2006

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Outline of Presentation

• Understand the business drivers for outsourcing
  (offshoring is a subset)
• What is beyond cost savings
• Creating the tipping point
• Discussion, questions, arguments, protests

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Why Companies Outsource
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Offshoring Drivers

• Traditional
• Cost
• Cost
• Cost
• Cost
• Cost
• Access to skills

• How do you change the paradigm and look for the
  other 50 ?

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Business drivers for outsourcing HR example
Opportunity for Outsourcing
Opportunity for Outsourcing

• Reduce total cost of operation
• Focus on strategic issues and planning and not on
  administration
• Invite service provider to redesign the processes
  and invest for higher productivity
• Consider increased outsourcing scope as a means
  to achieve the end result

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Measuring Success - Outsourcing

• Measured in 4 dimensions
• Cost
• Time
• Quality
• Sustainable Change in Business

Off Shore Outsourcing Measured in Same Dimensions
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BenefitsTime and Quality

• Time
• Follow the Sun processing by American Express,
  British Airways
• Global Shared Services Center by GE Capital,
  Standard Chartered Bank
• Product development and support centers by Cisco,
  Nortel Networks

• Quality
• Reducing error rate in loan and mortgage
  processing by banks
• Graphics and animation for Hollywood studios
• Efficacy testing and result assimilation by drug
  companies

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BenefitsChanging the Shape

• Creating a boundary free organization that
  explores offshore advantages of all 3 dimensions.
  Example E-Loan, Google, Microsoft
• Exploring new markets and product opportunities
  using presence as well as benefits of offshoring.
  Example Motorola, Honda

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What will it take
OFFSHORING
Geography
Outsourcing
Industry / Process Domain Knowledge
Process Discipline
Technology/Process Experience
Managing labor
Access to Skilled Labor
PROCESS
CONTENT
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What havent we learned yet

• How to leverage quality principles, culture and
  discipline for a broader impact
• How to transform time advantage into a new
  business delivery model
• How to go beyond labor rate differential as the
  cost savings drivers
• How to change

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What will it take - Business

• Create the strategy that includes offshoring as a
  means of change in business
• Drive offshoring through business units (and not
  be dominated by sourcing organization and
  consultants)
• Demand providers who offer advantages beyond rate
  differential
• Be the influencer for the tipping point

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What will it take Service Providers

• Build the domain expertise and drive business
  solutions through the domain knowledge
• Be the leader in setting the strategy and rules
  of the game with business and not be a mere
  follower
• Resist competing on cost and look to the horizon
• Be the influencer for the tipping point

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Thank You
Visit JDA website for more information on
relevant articles and presentation www.JDalalassoc
iates.com