IT Services & Outsourcing

March 31st, 2008

Looks like I’m next…

Posted by Phil Fersht @ 6:35 pm

Categories: Absolutely Meaningless

Tags: Offshore, Outsourcing, It Operations, Business Operations, Outsourcing & Subcontracting, Phil Fersht

You can now offshore me. 

    Am thinking of re-training as a plumber

       … you can’t offshore them

              … can you?

March 22nd, 2008

Spring outsourcing talk

Posted by Phil Fersht @ 10:45 am

Categories: The Future of Outsourcing, Business Process Outsourcing, Human Resources Outsourcing, IT Outsourcing / IT Services

Tags: Outsourcing, It Operations, Business Operations, Outsourcing & Subcontracting, Phil Fersht

Some excellent recent outsourcing discussions:

Can HR Outsourcing rediscover its froth despite a 97% success rate?

March 6th, 2008

Indian outsourcing redux

Posted by Phil Fersht @ 2:39 pm

Categories: The Future of Outsourcing, Outsourcing Locations, Business Process Outsourcing, IT Outsourcing / IT Services

Tags: Forbes.com, Sramana Mitra, Phil Fersht, India, outsourcing

Feisty discussion on where Indian outsourcing industry is headed.  Is it dying, or maturing… what is your experience?

February 25th, 2008

Outsourcing in a downturn

Posted by Phil Fersht @ 11:22 am

Categories: The Future of Outsourcing, Offshoring and Captives, Outsourcing Locations, Business Process Outsourcing, IT Outsourcing / IT Services, Outsourcing & Politics

Tags: Phil Fersht, Outsourcing economic downturn, recession, IT outsourcing, eWeek

Podcast:  Outsourcing in a Downturn:  Yours’ truly discussing the potential ramifications of an economic downturn on outsourcing trends with AMR Research’s CEO Tony Friscia. 

February 19th, 2008

Outsourcing links for February

Posted by Phil Fersht @ 4:29 pm

Categories: The Future of Outsourcing, Outsourcing Locations, Business Process Outsourcing, Human Resources Outsourcing, Infrastructure Management Outsourcing, IT Outsourcing / IT Services, Outsourcing & Politics

Tags: Human Resources, Value, Outsourcing, Government, Strategy, It Operations, Business Operations, Outsourcing & Subcontracting, Management, Phil Fersht

Will China’s Internet purges inhibit their knowledge services industry? :  Interesting commentary on the fact that the Chinese government is working extremely hard to increase its level of censorship and keep the Chinese Internet-world sectioned off from the rest of the world.

Human Resources Outsourcing: Where’s the Value? :  Great insights on the purpose and value firms have experienced outsourcing their Human Resources function.

The NASSCOM 2008 Diaries: More Fog on the Windshield :  AMR Research’s legend, Bruce Richardson, on his experiences and takeaways from the recent NASSCOM event in India.

Renewal Strategies for ITO Relationships : Peter Allen, TPI’s thought-leader on all things outsourcing comes up with some interesting strategies for firms looking to get more value from renewing their relationships with their IT outsourcing provider.

February 16th, 2008

Should your firm offload its offshore operations to an outsourcing provider?

Posted by Phil Fersht @ 10:46 am

Categories: The Future of Outsourcing, Offshoring and Captives, Outsourcing Locations, Shared Services Strategies

Tags: Outsourcing Company, Outsourcing, It Operations, Business Operations, Outsourcing & Subcontracting, Phil Fersht

Some interesting debate going on regarding whether firms which have already established offshore service centers (termed as “captives”) are better off selling these centers to outsourcing providers.  It would be interesting to hear your views - especially if you work with offshore staff within your own firm - on whether you’d prefer to have these staff work directly for a service provider, where they are contracted to perform stipulated services, as opposed to being part of your organization.  The following 10 questions are posed to help firms understand what is the best option for them:

1) Is the work being performed in the captive truly core to our business, or could we move it over to a third party?

2) How much risk are we exposing to our business by transitioning the captive operations over to an outsourcer?  Can we work with the outsourcer to manage the transition process to ensure there is a smooth transition of people and operations?

3) By selling off our captive, how much can we save over a 5 year period?

4) What is our option-value in the future if we want to take some of these operations back in-house?

5) How severe is our attrition rate, and how does  this impact running costs and quality?

6) Is the captive truly a part of our global organization, or is it really a distant support center that doesn’t play a core role in day-to-day business operation?

7) How much management time, and how much cost, is spent flying senior executives over to offshore locations to oversee low-value processes such as accounts payable, help deck support etc.? 

8′) How much experience with offshoring do our firm’s senior executives currently have, or are they learning it by trial and error and substantial cost to our organization?

9) How complex is it to transfer knowledge from our parent operations over to our offshore operations?  Wouldn’t it be cleaner and easier to move the work to a third party outsourcer, who will take on the work they are contracted to do?

10) Is it worth keeping our captive, but re-locating it to a more appropriate location?  And what are the costs / benefits associated with doing that?

February 9th, 2008

Has Europe lost the offshore war?

Posted by Phil Fersht @ 10:58 am

Categories: The Future of Outsourcing, Offshoring and Captives, Outsourcing Locations, IT Outsourcing / IT Services

Tags: Chief Executive Magazine, Cognizant, Europe IT Services, India Offshore IT Services, Offshore strategies, Peter Schumacher, Phil Fersht, Value Leadership Group

Peter Schumacher, President and CEO of the Value Leadership Group sent me a very interesting article he wrote on the failure of the European IT services industry to compete effectively with the new wave of offshore outsourcing firms, and cites Cognizant’s recent growth surge (a 98% revenue increase for its European business in 2006) as a prime example of European’s IT services providers inability to cope with this competition.  This is not dissimilar to the failure of the US IT services incumbents to recognize the growth surge of Infosys, Wipro and TCS in the late ’90s.  The five key reasons discussed for this failure are:

European IT services firms…

1. Have failed to see the emerging competitive scenario

2. Face revenue deflation pressure from a smart arbitrage strategy

3. Have not addressed the holistic transformational challenges posed by offshore IT firms

4. Lack the financial resources to challenge offshore firms head-on, which are now driving the game

5. Will need to compete with powerful rule-breaker companies funded by private equity and venture capital firms

You can download the full article here.

The article has been sent courtesy of Chief Executive Magazine (thanks Steve)

February 3rd, 2008

The 2008 Election and Outsourcing… have your say

Posted by Phil Fersht @ 7:20 am

Categories: Outsourcing & Politics

Tags: Barack Obama, Hilary Clinton, John McCain, Mitt Romney, Mike Huckabee, Offshoring of US jobs, Outsourcing, Outsourcing and 2008 Election, Rudi Giuliani

I have been taking a close look at the main candidates for the 2008 Presidential Election to dissect what (if anything) they plan to do to promote / restrict outsourcing services if they get elected.  While they all need to be seen to be openly “protecting” US jobs, they also need to protect the motives of business leaders, many of whom have a vested interested in outsourcing, increased H1B allocations and funding the campaigns of the hopeful candidates.

In the meantime, I thought it would be interesting to have a “reverse poll” and get your take on who you would LEAST like to see in the Whitehouse next year (as we’re so spoiled for choice, you can select your two most unlikeable candidates).  Vote on the scrollbar to the left. 

Let’s keep this conversation rolling…

January 12th, 2008

Outsourcing innovation at Burger King

Posted by Phil Fersht @ 12:54 pm

Categories: The Future of Outsourcing, Absolutely Meaningless

Tags: Innovation, Burger King Corp., Outsourcing, Food & Beverage, It Operations, Business Operations, Outsourcing & Subcontracting, Manufacturing, Phil Fersht

Not only is the fast food giant driving customer loyalty with its amusing new advertising campaign, but it also is leveraging the latest outsourcing models to drive down costs and improve the customer experience….

January 6th, 2008

Maintaining a 25% profit margin in this crazy world of globalization

Posted by Phil Fersht @ 1:48 pm

Categories: The Future of Outsourcing, Outsourcing Locations, Business Process Outsourcing, IT Outsourcing / IT Services

Tags: India, Offshoring, Phil Fersht, S. Mahalingham, Steve Hamm, TCS, Outsourcing

I wanted to share some interesting discussion earlier last year between BusinessWeek’s Steve Hamm and Tata Consultancy Services’ (TCS) CFO S. Mahalingham, which reveals some fascinating insight into how TCS has managed to maintain profit margins at the 25% level, despite intense pressures from wage inflation, employee attrition, aggressive competition and rupee appreciation against the dollar and other leading currencies. Some key thoughts I took away from the dialog:

• Creating an environment for staff to develop their soft skills, technical expertise, and global experience is the answer to improving employee retention.  S. Mahalingham explains “There are points when a person decides to make a choice, perhaps in the first two to three years. They are look at their career aspirations and they might leave the company. But if we can cross that hump, and go beyond that period to say seven or eight years, we do find that people want to stay with the organization. At that point, if they do leave, they will become an executive in another organization”.  From my experiences working with suppliers, the key issue for them is employee retention in offshore locations (as discussed in some of the earlier posts here).  Some suppliers prefer to hire experienced staff, who are likely to be more settled and less likely to jump ship in a year or two - which has the drawback of higher wage costs; other suppliers - especially the ambitious offshore providers headquartered in India - prefer to hire college graduates and work on intensive programs to retain them through the early years of their career to a stage where they will be more likely to stay with their employer as a settled manager-level employee when they mature.  It is plainly apparent that the more successful offshore providers are those which have developed successful training programs for their new hires, in order to keep their wage costs at a minimum through lower attrition.  Moreover, an experienced outsourcing provider employee who has three years’ plus experience working with their firm will have far higher productivity than a brand new employee - due to the simple fact they are familiar with their company’s and clients’ processes.  Read the rest of this entry »