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Managing Global Processes and Remote Teams

IT Challenges: 

IT Challenges IT Departments worldwide are challenged to simultaneously: Realize Cost Savings/Containment Ensure the Stability/Availability of Production Environments Enable New Business Strategies

IT Outsourcing Strategies : 

IT Outsourcing Strategies Companies are: Reshaping according to core competencies, bringing greater value to the customer and higher productivity to the company Making outsourcing a long term strategy instead of a tactical solution Hoping to achieve numerous benefits from appropriate outsourcing Increase Agility Rapidly Capitalize on Emerging Opportunities Get Products to Market Faster Realize Tremendous Cost Savings Mitigate IT Risk

Offshore Outsourcing Trends: 

Offshore Outsourcing Trends META Group, October 2004 (Penni Sanchez, Alan Katz) By 2006, Most IT Organizations will have an Offshore Strategy Offshore Outsourcing Market Exceeds $10 Billion Average Enterprise to Offshore 60% of Application Work by 2006 Political Backlash Toward Offshore Not Deterring Market Adoption Offshore Outsourcing Market to Grow 20% Annually Through 2008

IT Outsourcing Trends: 

IT Outsourcing Trends Offshore Outsourcing Trend Still Gathering Momentum Gartner predicts that one out of 10 jobs with US-based IT vendors and service providers will be staffed offshore by the end of 2004 Jones, Lang, and LaSalle, Inc. study states that 31% of the companies surveyed had offshored some of their jobs. An additional 32% said they planned to do so in the next three years. Ross Research’s prediction of the top 10 offshore outsourcing trends of 2004: Outsourcing contracts will widen in Scope, Geography and Price in 2004 as offshore elements become more global and accepted The number of countries providing offshore outsourcing services will rise substantially in 2004

Indian IT Services the Main Player: 

Indian IT Services the Main Player Computerworld Survey of IT Managers in US June 2004 US Managers Currently Outsourcing IT Work to the Following Countries

Top Indian Vendor Growth: 

Top Indian Vendor Growth TCS Infosys Wipro* Comparative Parameters (FY04) Sales Growth % 32.6 36.7 35.1 Profit Growth % 27.5 25.5 N/A Operating Margins % 27.3 25.5 22.0 *Only for Global IT Services Source: META Group, July 2004

More OutsourcingPredictions: 

More Outsourcing Predictions Some Changes on the Horizon TPI (Greg Blount and Paul Schmidt, 2004) - ‘We believe that the Indian market will continue to experience increased competition. What India has done is to create a blueprint for other countries to emulate so it should be expected that other locations such as China, the Philippines, Eastern Europe, and South America will increase their capabilities and become more competitive.’ Also: ‘Managing risk through multi-sourcing through multi-geographies will continue and grow’ ‘Competition will provide more downward pressure on rates and pure play Indian companies’ margins will continue to erode’ Giga Research predicts that attrition will skyrocket in the Indian IT services arena in 2004.

Prominent Causes of Outsourcing Failures: 

Prominent Causes of Outsourcing Failures Source: Outsourcing Center 2004 Survey

Other Outsourcing Inhibitors: 

Other Outsourcing Inhibitors Geopolitical Risks Time Zone Differences Lack of Infrastructure Readiness of Client Client’s Fear of Losing Control Loss of Critical Skills Client’s Fear of Loss of Confidentiality Lack of Understanding of Business

Client Challenges: 

Client Challenges Clients that understand the success factors of outsourcing, and can also mitigate the inhibitors, will achieve significant benefits Companies need to be ready - which means experienced, capable internal Project Management and standardized processes Top down management support required for successful outsourcing relationship Companies need to be flexible and embrace mixed models according to project objectives

Provider Challenges: 

Provider Challenges Providers of outsourcing must understand the challenges of IT departments to reduce costs, support business strategies, and maintain aggressive technology agendas Providers must eliminate many of the inhibitors to successful outsourcing New providers need to differentiate themselves from the usual outsourcing paradigm by combining: Compelling Low Cost Same Time Zone Communication Collaborative End-to-end Perspectives Cultural Affinity Scaleable for Small/Medium Companies Strong Local Project Management

Outsourcing Enablers: 

Outsourcing Enablers Client/Provider Relationships, Trust, Flexibility Comprehensive Contract/Project Management Large Pool of Highly Skilled Resources Advanced Infrastructure, Telecommunications, Facilities Mature Delivery Models Business Oriented People Offshore SLAs/Metrics Well Defined and Understood Clear Objectives Top-down Support

Premise for New Outsourcing Model: 

Premise for New Outsourcing Model Successful IT outsourcing does not have to be limited to the big tech centers in India As long as the provider country has: Large technically educated middle class Stable, modern infrastructure Business experience If providers can be from anywhere that satisfies above requirements, why not reduce inhibitors such as time zone differences, cultural misunderstanding, communication issues

New Model Differentiators: 

New Model Differentiators Cost Equal to or less than competition Solution Oriented Interactive, collaborative, and end-to-end business perspective Time Zone Work day corresponding to that of the US Culture Westernized culture and values correspond to that of the US, facilitating communication and understanding Geography Provides geographic alternative Communication English speaking dialect, culture similar to US Scope Services are scaleable and available for small and medium companies Offshore Differentiators On-site Support Local staffing, project management and bench strength through staffing company partnerships US Project Management Experienced, US-based management team for effective project management Onshore Differentiators

IT Outsourcing Cost Model: 

IT Outsourcing Cost Model Application Development Sourcing Cost Model AD Project Phases Efforts on a Phase Billing Rates Additional Project Costs Effectiveness Communication External/Market Adjustment Technology Expertise Project Management Expertise Business Domain Expertise Language Collaboration Project Sourcing Cost Factors Project Sourcing Cost Adjustments Source: Gartner 2004

GIT’s Value Proposition: 

GIT’s Value Proposition Compelling Low Cost and Low Total Cost of Ownership (TCO) Rates equal to or less than Eastern companies and with less overhead required due to local presence Same Time Zone Communication Work day corresponding to that of the US, facilitating communication and providing geographic alternative to Eastern companies Collaborative, End-to-end Business Perspective US and International business/technology experience of executives provide mature, interactive, big-picture business view Measurable, Agreed Upon Expected Results Project and life cycle processes ensure collaborative measures of success and prompt delivery of expected results Exclusive, Dedicated Resources Flexible staffing models allow assignment of committed resources to client projects and ongoing engagements Strong Local Project and Risk Management US based executives with extensive project management and risk management experience ensure project control and success Accessible to Small/Medium Size Companies Scaleable services allow access by small and medium size companies unable to attract the attention of large providers Cultural Affinity Westernized culture and values similar to that of the US, facilitating communication and understanding

GIT Corporate Structure: 

Global Intelligence Technology LLC USA Sales, Liaison and Delivery USA Clients Development Centers IT Factory and Staffing Specialized Subcontractors/Partners (when necessary) Service Master Agreement Global Intelligence Technology, LLC (GIT) Service Master Agreement Mirroring LA Clients Argentina USA GIT Corporate Structure

Latin America Shows Outsourcing Promise: 

Latin America Shows Outsourcing Promise Study by Jones, Lang, LaSalle, Inc., reported by the Wall Street Journal, Oct. 2004, (Ryan Chittum) Latin America comes out ahead of India and China in the offshoring equation when factors like labor quality, labor supply, and time-zone differences are taken into account. Increasing need for work forces that speak Spanish could mean more jobs for places like Mexico City and Buenos Aires. Ranked by the size of the labor pool and the quality of labor, the top city was Manila, the Philippines. Sao Paulo; Mexico City and Buenos Aires were next.

Why Argentina?: 

Why Argentina? Cost Among lowest countries for global outsourcing Superior location advantages: time zone, distance, responsiveness Infrastructure Solid communication and power-supply infrastructure development over the last ten years 2001 most significant renewal of PCs and servers in Latin America Commitment to innovation and ongoing investment in infrastructure Human Resources Large, highly skilled IT work force Proven competencies in developing and maintaining large-enterprise infrastructures and programs Workers possess a wide range of technology skills, business background, and client interaction skills Available Skill Sets University Students per 100.000 inhabitants

Why Argentina?: 

Knowledge Jobs Globalization Economic Dynamism and Competition Transformation to a Digital Economy Technological Innovation Capacity Ranking of Argentina according to Meta patterns Overall Ranking 32 Argentina is ahead of: Poland 40 Turkey 36 Slovenia 36 Russia 34 China 34 Philipines 34 India 33 Argentina is behind: Czech Rep. 28 Brazil 27 Hungary 27 Estonia 27 Best Ranking 1 Worse Ranking 49 Source: Meta Group, March, 2003 Argentina is at the same level of many of today’s outsourcing leaders in terms of its infrastructure, workforce, and country’s commitment to change. Why Argentina?

Processes/ Methodologies: 

Outsourcing Agreements define Statements of Work (SOWs), Service Level Agreements (SLAs), Operating Principles and Metrics Project Management Processes and Tools used offshore/onshore Standardized Development Life Cycle being used offshore with phase deliverables defined in detailed schedules Risk Assessments and Contingencies produced as early phase deliverables Onshore/Offshore Architecture: VPN or Frame Relay connection to US allowing offshore developer access to shared files Same firewall rules apply as currently in place at company Repository file servers may be required onshore if deemed appropriate by client Reporting Detailed Project Status Report weekly Executive Status/Early Warning Report monthly/ad hoc Ongoing Issue Log maintained and reported Tools MS Project, Configuration Tools, Collaboration Tools (as required by client) Processes/ Methodologies

Contract/Agreement Structure: 

Contract/Agreement Structure Master Contract/Agreement Operating Principles SOW 1 SOW 1 SOW N SLA 1 SLA 2 SLA N Metrics Definitions Defines the legal terms of the agreement Defines the procedures shared between client and outsourcer Specifies the metrics to be used (context and content) Defines the acceptance criteria Defines the work to be performed

Project Organization Sample: 

Project Organization Sample Project Director CUSTOMER Project Manager PMO Business Systems Technology Project Manager PMO Business Systems Technology PROVIDER Projector Director Communication Reporting STEERING COMMITTE (weekly) Project Directors Project Managers (Ad-hoc) Project Plan Issue Log To Do’s

Risk Management: 

Risk Management Early Risk Assessment with Impacts/Mitigators Robust Project Management Processes Software and Data Backup and Recovery Physical Site Security Business Continuity Protection Infrastructure Redundancy

Knowledge Transfer: 

Knowledge Transfer Create Knowledge Transfer Plan with detailed responsibilities Start with pilot Maintain employees offshore Understand cultural differences Visit offshore facilities - establish relationship

Global Outsourcing Models: 

Global Outsourcing Models Offshore Onshore Mixed Completely outsourced to single offshore provider Riskiest Bring offshore resources to local geography Costlier, more overhead Combination of onshore/ offshore Most effective model

On-site/Off-site Resource Mix: 

On-site/Off-site Resource Mix On-site/off-site mix varies by project: Size of project Complexity of project/technology Level of specificity of requirements Duration of project On-site team is critical and must be skilled in global projects Technical ‘translation’ Cultural differences Compliance with quality standards Commitment to plan

Application Delivery Model: 

Application Delivery Model Architecture Integration Development of Tools, Utilities & Middleware Report Creation User Interface Design Iterative Development Application Maintenance & Enhancement Package Customization Conversion Highly Specified Development Re-engineering Unique/ Creative Efficient/ Repeatable Low/Freestanding High/Interactive Required Client Interaction Task Characteristics Source: Clarity Consulting, Ian Hayes

Choosing the Right Partner: 

Choosing the Right Partner Agile Methodologies Unique/ Creative Efficient/ Repeatable Low/Freestanding High/Interactive Required Client Interaction Task Characteristics Source: Clarity Consulting, Ian Hayes Offshore Delivery Model On-site Staffing Model More Open Culture Robust Project Management Processes Hierarchical Culture Offshore Delivery Model Mixed Delivery Model

Other Model Characteristics: 

Other Model Characteristics Parameters Ratio of onshore to offshore Location of data, source code Location of computer resources Project governance Interfaces - who works with who Level of knowledge transfer needed Logistics Communications Data Telephone Video-conferencing Face-to-face Collaborative Work Environment Support Tools (project management, configuration, testing, QA) Travel

Thank You!: 

Thank You! Carlos D’Elia CEO Robert Morgan – EVP & COO