IT Outsourcing India

Indian IT Major Reveals Unique FTO Package To Lead The Market

Offshoring - now seen by many as a strategic initiative for any software organisation that is serious about competing globally - was given a massive boost earlier today with a new initiative aimed at the critical "virgin" market - First Time Offshoring (FTO), launched by Zensar Technologies at the Gartner Outsourcing and IT Services Summit 2007.

Krishna Ramaswami, Head of Operations for Global Outsourcing Services at Zensar Technologies, revealed to an audience of leading UK and European companies a unique FTO package designed exclusively for organisations who had either yet to offshore or who had done so but had been less than satisfied with results achieved.

Mr Ramaswami, speaking at the sixth annual Gartner Outsourcing and IT Services Summit in London, told his audience that many companies across the world were aware of offshoring but had not taken the first step, for a variety of reasons, ranging from whether the time was right for them to outsource, to how they would retain control, whether there might be a cultural mismatch, what implications there might be on security and how the whole process would be managed.

"Promoting wage disparity to achieve cost savings has been a significant contributor to failed offshore initiatives, primarily because other hidden costs of infrastructure, due diligence etc are not articulated. They believed they must achieve massive, often unrealistic, cost savings on outsourcing. The real savings however come on achieving steady state,12-18 months into the engagement," said Mr Ramaswami.

"As the confidence builds, we also see relationships build from just cost saving to more value adding services that include key BPO (Business Process Outsourcing) areas and KPO (Knowledge Process Outsourcing)," he added.

To address potential barriers to achieving FTO, Zensar had completed several months of obtaining customer opinion and feedback. From this research it had developed a process to provide reassurance and reinforce the offshoring message, demonstrate expertise and support the decision-making process, as well as achieving buy-in from users in addition to decision makers.

Zensar’s view of the offshoring market segments comprises three major categories - First Time Offshorers, Dissatisfied Offshorers and Educated, Experienced Offshorers. The First Timers need reassurance and guidance; the Dissatisfied need a guarantee of success and customer references and the Experienced need to move to the next level of the value chain, with continuous productivity and cost improvements through proactive initiatives.

Zensar’s answer has been to produce its five-stage FTO Service Pack. The five stages making up the FTO are:-

• Leadership Team Imperatives Workshop (LT1) - agree on the need for FTO, identify expectations, educate and draw up an Action Plan
• Offshore Readiness Study - assessing the customer’s readiness, looking at its applications, people, processes and technology, looking at risks and presenting a high level business case for offshoring
• Application Portfolio Assessment - Mapping applications, categorizing them and giving priority to applications best suited for FTO
• Offshore Analysis Study - Defining a roadmap and offshoring plan, with strategy, timelines, transitioning and defining business benefits and ROI 

Phase 1 identification - Deciding on the first implementation, building a plan and team and formulating a contract

"We believe our approach gives first timers a unique chance to learn and better understand what they are getting into. They control their involvement and can then feel much more confident as they move forward. This approach will be an important milestone in the concept of FTO being introduced to a vast new range of organisations".

Zensar employs over 3,800 people globally with nearly 200 people based in the UK and Europe. It has a robust customer base, and has formed strong partnerships with Sun Microsystems and Oracle. Zensar opened its new European headquarters in the UK last Autumn, where its customers include Marks & Spencer, National Grid, Cisco Systems, and Electronic Arts.
End.

Source : http://www.it-analysis.com

As IT outsourcing of all types and across all industries and geographies becomes pervasive, operational complexity and risk increase accordingly. Some types of risks are extremely familiar to CIOs. Securing a more extended enterprise, for example, is always front of mind. Meeting a business case, achieving a return on investment — these and other financial and economic risks are also major preoccupations. Some other risks are less understood and, thus, more potentially damaging because traditional risk mitigation in these areas may not be in place.
 
One of the lesser-known risks in a complex outsourcing environment is the potential loss of institutional knowledge and insight. With an outsourcing model, companies often lose ready access to the individuals most knowledgeable about the business; some are lost to the new outsourcing units, others to turnover. Companies also risk losing opportunities for insights and innovations born of collaboration, because fragmentation of a strategic and unified view across the organization inevitably occurs in a multiple-provider model.
 
Lost Knowledge
 
Consider the parable of the fire station that caught on fire. Its crews were all out fighting blazes elsewhere; no one with firefighting expertise or tools was back at the station, so the firehouse burned down.
 
By analogy, think about what often happens when a company outsources several IT functions — say, telecom to a niche provider, data center to a multinational and applications to an offshore provider — while keeping the remaining infrastructure in-house.
 
With a blended sourcing model, a CIO overseeing a staff of 500 might keep 20 to 30 people and transition the other 470 or 480 staffers to the various outsourced entities. Such a ratio might work if one could be assured that those retained were the right ones, or if those kept on were sure to stay with the company through the life of the outsourcing arrangement. Both presumptions are extremely tenuous.
 
As roles and responsibilities shift, the teams most knowledgeable about processes, outsourcing contracts, and the terms and intent of the various deals often end up in different roles in the company or elsewhere. Executives managing the outsourcing relationship risk losing negotiating leverage with their providers as their outsourcing teams transition to other roles. When these people disperse, their vital knowledge and skills disperse as well.
 
The considerable turnover that typically occurs when a company outsources complicates matters further. What remains, ultimately, is an in-house team without the skills and capabilities to protect the firehouse.

To combat the risks of lost knowledge, a CIO must carefully consider existing staff and retain highly skilled individuals to serve on the two remaining teams — the retained operating staff and the outsourcing governance team. The retained operations staff will own the strategy, control policy-setting and retain expertise in every area being outsourced: the data center, infrastructure, telecom and so forth. Ideally, the retained governance team would be in place during the service provider evaluation and negotiation process, and would continue in this role after the transaction is executed and complete. The professionals on this team should include a combination of excellent project and program managers, strong financial analysts and strategists, and individuals capable of handling the complex environment of managing multiple suppliers to keep each one focused on common goals.
 
Lost Collaboration
 
The importance of growth and innovation has not diminished for organizations in either the public or private sector. What the best innovators know is that breakthrough insights are most likely to arise out of the interaction among people and groups collaborating on a day-to-day basis. When IT processes are segmented and assigned to multiple providers through outsourcing, companies face the risk of lost information and insight across the organization.
 
As more organizations migrate to a multiprovider model, they find it increasingly difficult to establish an organizational view of performance, produce detailed cost and budget analyses, evaluate service levels and effectively resolve performance problems. The risk of not having the information necessary to do this inhibits an organization’s ability to appropriately develop plans and budgets. Creating an enterprisewide view can be labor-intensive and costly.
 
Too many organizations realize too late that the fragmented governance teams they have established to oversee multiple providers of IT services have yielded siloed views of those functions. Performance and service-level agreements have been defined within each of the particular IT worlds, and no incentives exist for working closely with the other functions.
 
To combat the risk of lost institutional insight, most companies that outsource successfully work to ensure collaborative operational excellence across the various entities and service-level agreements. Companies in such multiprovider environments should create a centralized governance team or a center of excellence for the IT organization, and implement governance best practices that will provide frameworks for the management of operations, finance (including contracts) and the overall relationships among the providers. Ideally, these teams would be in place during the service provider evaluation and negotiation process to ensure continuity of the team and to help mitigate the risk of lost knowledge and insight.
 
Mitigating Risks
 
New technology-based tools can help manage performance in a multiprovider environment and protect against lost knowledge and insight. Integrated governance and communications tools can help CIOs manage and view a portfolio of shared services and outsourcing relationships across the organization. More to the point, these tools can also provide ongoing and rapid insights into the health of the key management areas of all outsourcing relationships in a collaborative environment across multiple service towers. These tools can provide a cross-enterprise view of performance, budget, business case and cost tracking and planning. They can also provide a near-real-time view of service levels and critical outsourcing contract terms.
 
Especially important to mitigating the risks of lost knowledge and insight is the ability of governance tools to capture institutional knowledge over the life of the outsourcing contracts, and then to serve as a learning resource for onboarding and transitioning governance staff. Governance tools can support effective two-way communication among business users about requirements, successes, value, performance reporting, chargebacks, demand forecasts and issues relating to the various service providers.
 
Many companies have cobbled together a set of tools and governance teams in an attempt to address and mitigate their risks. A fragmented governance approach often leads to a failure to realize the full value of the outsourcing business case, because the hidden costs of lost knowledge and insight have not been adequately addressed. If governance teams and tools are implemented properly as part of an outsourcing strategy, companies should no longer have to worry about becoming an "outsourcing failure" statistic because they will have effectively managed a large share of their risks.

Source : http://www.offshoringtimes.com

The slight decrease in the IT dynamics at the beginning of 2000s being over, the new drivers has fueled further development of the IT branch throughout 2006 – 2007.

One of the tendencies of the global impact has to deal with growing business value of the Internet as well as associated boom in e-commerce. The IT-rich enterprises have won substantial market advantage over the competitors that have not placed IT as the key element of their business strategy. According to Gartner, the investments in the new information technologies would double within 2006 – 2010 period.

The burning IT issues of the two previous years have included digital convergence, mobility and Service-oriented architecture. Other point of focal interest turns out to be the alignment of IT and business processes within the enterprise in general and in sourcing models in particular.

The analysts from Experton Group have come up with the statement that in the next few years outsourcing "would be the driving force behind IT market dynamics". Despite the global slow down in outsourcing dynamics – for the most part in America, the number and quality of outsourcing contracts concluded in Europe has risen during the first quarter of 2007 (Morrison & Foerster’s Global Sourcing Group). The year 2007, alike the previous one, has demonstrated the increase in the IT staff, despite the forecasts for decrease due to the outsourcing of IT activities. Hence, it proves out that outsourcing strengthens the market position of outsourcing buyers, expanding their technological scope and consequently creates new workplaces.

During the past few years we have seen the shift occurring in decisive factors for outsourcing: in addition to traditional reduction of development costs, outsourcing buyers become more and more interested in access to the pool of talents (due to the internal shortages of highly-qualified IT graduates) and industry-specific know-how. Another visible trend of 2007 is multisourcing, accompanied by growing process-orientation. The time of "mega-deals" is left behind, while overwhelming reduction of the contract’s scope becoming a nowadays reality. "Gartner’s Key Predictions for 2007" include the forecast that through 2009, market share for the top 10 IT outsourcers will decline to 40.0 percent (from 43.5 percent now), equalling a revenue shift of $5.4 billion. The above mentioned trend consequently leads to the growing number of SMEs on the IT arena and therefore the increase of the impact on the outsourcing landscape.

Precise attention should also be devoted to the Top Trends 2007, outlined by CIO Insight: particularly, Management section of the forecast features predictions that outsourcing will change IT management and that offshoring will shift from India. Concerning the later tendency, notwithstanding pure neashoring, it is worth to note that Indian outsourcing providers are increasingly seeking possibilities for mergers with Eastern European software developers. Inevitably, outsourcing "moves closer to home", with Indian and Chinese outsourcing proposals becoming less appealing to European vendors.

Over the years, data privacy as well as data security has become fundamental prerequisites for successful outsourcing cooperation. Therefore, intellectual property issues together with effective practices on risk mitigation will stay top of the agenda for the years to come. Also, outsourcing service providers are expected to be capable of driving innovation and delivering industry specific know how. Another trend of interest, highlighted by Morrison & Foerster’s Global Sourcing Group, introduces transformational application outsourcing, which foresees restructuring of the code in a more modern architecture, therefore making it deployable in SOA.

To sum up with, the coming years will see tighter alignment between outsourcing providers and software development vendors, resulting in more effective business cooperation models. Also, increasing competition will fuel more innovative approach to outsourcing, with process orientation becoming the core of it.

Source : http://www.articlesbase.com

Growth in the IT outsourcing (ITO) and business process outsourcing (BPO) markets within the banking, financial services and insurance (BFSI) vertical is set to accelerate over the next four years.

New analysis from global growth consulting company, Frost & Sullivan, Enterprise Outsourcing Opportunities in the Australian Banking, Financial Services & Insurance Vertical 2006-2010, reveals that revenues in this market totaled AU$1.83 billion in 2006 and is forecasted to be worth AU$2.63 billion by end-2010, growing at a CAGR of 9.5 per cent (2006-2010).

The strongest growth is expected to be seen in BPO, where a year-on-year growth of 16.3 per cent is expected while ITO will grow at just 6.2 per cent on a compound annual basis. BPO is expected to grow more rapidly due to increased competition and a desire of players in the BFSI vertical to extract more costs out of the back office.

IT outsourcing includes operations and applications. While BPO includes front office, back office and other BFSI processes such as loan processing and verification, collections and superannuation fund administration, among others.

"The outsourcing of BFSI business processes is the key growth area for the Australian outsourcing market looking forward to 2010", says senior industry analyst, Simon Hayes at Frost & Sullivan Australia. "With a CAGR of 18 per cent, banks in particular are branching out from single-process outsourcing like credit card application management to more complex multi-process work like, payroll and procurement."

"However, the potential for higher rates of growth in BPO may be restrained by caution in the BFSI industry over the level of service provider competence in industry processes. Initial growth will be slow until service providers can convince clients that they have the skills necessary to run business-critical processes efficiently," continues Mr. Hayes.

The Frost & Sullivan study found that EDS led the Australian BFSI outsourcing market (for both ITO and BPO) in 2006 with a large margin of 41.7 per cent, followed by IBM with 19.1 per cent. KAZ, Salmat and CSC are in third, fourth and fifth place respectively.

BPO specialists Salmat, TeleTech and HPA all rate highly in that space, however, they face a significant challenge from the traditional IT outsourcing players, with EDS dominating and IBM building up its business in this area.

"IT outsourcers are now increasingly pitching themselves as offering process transformation, rather than simply outsourcing", concludes Mr. Hayes.

Frost & Sullivan predicts that enterprise outsourcing in the Australian BFSI vertical will continue to show growth in years to come, both in terms of renewals and new contracts. A survey conducted with 25 management level executives, with control into their business’ outsourcing budget and strategy showed that the market is generally enthusiastic about offshoring of IT outsourcing and BPO, with 26 per cent saying they currently offshore, with a further 12 per cent planning to offshore in the next 12 months.

The Enterprise Outsourcing Opportunities in the Australian Banking, Financial Services & Insurance Vertical 2006-2010 Demand & Supply reports forms part of Frost & Sullivan Australia’s enterprise outsourcing subscription, which will also include research on the following sectors: Enterprise Outsourcing Opportunities in Government (August 2007) and Enterprise Outsourcing Opportunities in the Australian Healthcare Vertical (November 2007). This service can be purchased separately or bundled as a full report.

All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Analyst interviews are available to the press.

Source : http://www.newswiretoday.com