Business Process Offshoring

Appendix : Case Examples

April 27, 2005

NOTICE: Proprietary and Confidential

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Outsourcing case studies v3

© 2005 Opera Solutions All rights reserved
Table of Contents

ƒ IT Case Study

ƒ Offshoring Analytics

P1
IT Case Study
For a Global Information Content Company, Opera Developed and Implemented an
Offshoring Plan for the IT Function
CLIENT—A MAJOR GLOBAL SUPPLIER IN INFORMATION CONTENT BUSINESS
Background
ƒ Client develops, manages, and distributes
business data and information across a broad
array of applications
ƒ Client is global in scale--revenues $4 to $5 billion
ƒ Client cost structure is IT Intensive– incurs major
costs for both:
– Development of New Applications
– IT Support of Ongoing Business Processes
ƒ Opera has worked with Client over several years
CURRENT OPERATIONS
Canada
USA
Scope and Objectives
ƒ Scope included all IT staff in:
– New Applications Development and Maintenance
– IT Support of Ongoing Business Processes
ƒ For New Applications Development, focus was on
identifying Offshoring opportunities, targeting specific
types of Development Programs and Staff.
ƒ For Ongoing Business Processes, focus started with
process mapping and identification of reengineering
opportunities. Project subsequently identified Offshoring
opportunities as well.
ƒ Objective then turned to Selection of Offshore Vendors.
Europe
Asia Pacific
Results
ƒ For New Applications Development, Offshoring
Savings approached 35% reduction in baseline
spend.
ƒ For Ongoing Business Processes, fewer IT staff
were Offshorable, but savings still approached
15% to 20% of total baseline, and 30% to 35% of
Offshored portion of baseline spend.
ƒ Vendor Selection began with 20 Qualified
Offshore Vendors. Two rounds of bidding, plus
final negotiations, narrowed field to three finalist
Vendors.
Global Footprint
Headquartered in Amsterdam,
Netherlands
Locations in Europe, North America, Asia
Pacific.
19,500 FTEs
Five Operating Divisions
P2
Project Approach
The Project Comprised Three Work Streams

II. Scoping and Strategy

I. Diagnostic III. Implementation
Development

Work Stream 1.– New Applications Development

Baseline,
Opportunities Offshoring Organization Business
Benchmark,
Identification Approach Alignment Case
Process Map

Work Stream 3.– Vendor Qualification and Negotiations

Partner Site and

Migration Roll-out Contract
and Risk Infrastructure Ramp Up
Plan Schedule Negotiations
Assessments Development

Work Stream 2.– Ongoing Business Processes

Baseline,
Opportunities Offshoring Organization Business
Benchmark,
Identification Approach Alignment Case
Process Map

P3
Work Stream 1. New Applications – Baseline
Criteria Were Established for Baseline Development
SCOPING CRITERIA FOR BASELINE DEVELOPMENT
IT Outsourcing Scope Criteria
ƒ Client will maintain full control over IP of products
– Comprehensive control and ownership over all
software produced
– Retain knowledge of design and implementation
ƒ US Staff to lead the following:
– Management of software projects
– Software architecture
– Acceptance Test specification
– Verification of the configuration management process
ƒ Standards around new product development should
adhere to Client practices where appropriate
ƒ Domain expertise must exist within Client for applications
that are under consideration for offshoring
ƒ All resources will be assessed on a case-by-case basis
for applications that are considered to be either in legacy
state or in pure maintenance mode
1. Agreed to by CTO’s in Fall 2003
Resource Implications
ƒ Program and Project Management is a US based
responsibility.
ƒ Architects and Senior Designers are US based
staff positions
ƒ The function of translating business requirements
into technical specifications will transition
offshore overtime
ƒ Coding, testing and low level design resources
are in play on an application by application
review
ƒ Management and support staff has to be right
sized over time based on the results of the
offshoring program
ƒ Domain expertise must remain/be built within
Client
P4
Work Stream 1 – Baseline
Baseline Developed at Granular Level of Detail-- by Position, Skill Level, Cost Component,
Business Unit, and Application

2003 FTE Costs

Application Maintenance & Development
Data Indexed
to 100 5.9 100
100 12.9
In scope
90 Outsourcing/Offshoring
Baseline 6.3
80 12.5

70 1.6
4.7
60 3.1
18.8
Index

50
3.5 Out of immediate
40 scope
3.1 3.1
30 5.5
10.6
20
8.2
10
0
Engineer Technical SQA External Application Production Program Total
Leads Consultants Architects Ops Management

P5
 Work Stream 1 – Opportunities
Opportunities Identified and Prioritized-- Each Application Scored For Suitability / Affinity
for Offshoring

PRIORITIZATION OF APPLICATIONS FOR OUTSOURCING/OFFSHORING

High Priority Medium Priority

100
60 70 80
High High
Application 6
Development Process

Development Process
90 70 Application 5
Maturity of Product

Maturity of Product
Application 2
80 Application 1
60 Application 7
Application 4
70 70
50 Application 8
60 60
Application 3
40
50

Low Application 9
Low 30
40
40 50 60 70 80 90 100 30 40 50 60 70 80

High Low High Low

Complexity Complexity

ƒƒ Complexity
Complexity Axis
Axis Comprised
Comprised of of Following
Following Criteria–
Criteria– For
For Each
Each Application:
Application:
–– Impact on Business– Financial and Operational
Impact on Business– Financial and Operational
–– Outsourcing
Outsourcing Economics–
Economics– Potential
Potential Savings
Savings
–– Alignment with Overall IT Strategy
Alignment with Overall IT Strategy
–– Technical
Technical Complexity
Complexity

1. Bubble size represents 2003 outsourceable baseline in $MM P6

Work Stream 1 – Business Case
Significant Financial Value Creation From Offshoring Priority Applications– Approach
Selected was Non-Captive Vendors

POTENTIAL SOURCES OF SAVINGS

3rd Yr Steady State Savings
35%
35% Reduction
Reduction
In Baseline
In Baseline
100.0
Data Indexed 8.4
to 100 11.5

5.9
9.7
64.5 0.8 65.3

Current App. Group App. Group App. Group App. Group Revised Outsourcing Project New
Baseline 1 2 3 4 Baseline Overhead Baseline

P7
Work Stream 2 - Ongoing Processes– Baseline & Process Map
IT Supported Three Basis Business Processes

BASIC LEVEL 1 BUSINESS PROCESSES SUPPORTED BY IT

Initial Observations
Process Type Processes
1.
1. Development
Development is is usually
usually not
not based
based on
on
1. Production
strategic business needs
strategic business needs
Activities repeatedly required to • Acquisition –– No
No build
build vs.
vs. buy
buy due
due diligence
diligence
deliver products to external • Data Conversion –– Business
Business case
case not
not available
available
customers.
• Develop Forms
2.
2. Limited
Limited offshoring
offshoring for
for development
development
• Extract & Assemble
–– Outsourcing
Outsourcing activities
activities are
are narrow
narrow in
in scope
scope and
and
• Test for Business Acceptance geared
geared towards
towards augmentation
augmentation

2. Development 3.
3. Automation
Automation could
could be
be further
further improved
improved
–– Link
Link checking
checking
One-time-only projects to create a • Plan Project
new product or operational –– Manual
Manual order
order re-entry
re-entry from
from online
online forms
forms
• Implement Project
process and subsequent fixes and –– Distribution
Distribution of
of acquired
acquired content
content
• Acceptance Testing
enhancements.
• Transition Project 4.
4. Fighting
Fighting production
production “fires”
“fires” and
and deadlines
deadlines
are
are the
the norm
norm
–– People
People pitch
pitch in
in to
to resolve
resolve immediate
immediate problems
problems
3. Support –– Systems
Systems require
require extensive
extensive “care
“care and
and feeding”
feeding” due
due
Planned and ad-hoc activities that • Problem investigation
to
to evolved
evolved technologies
technologies
indirectly aids production. • Assist Editors
Addresses production exceptions,
5.
5. Inconsistent
Inconsistent systems
systems development
development lifecycle
lifecycle
• Ad-hoc reporting for sales and methodologies
training and administrative-type
marketing
methodologies –– limited
limited documentation
documentation
functions.
6.
6. Multiple
Multiple and
and non-integrated
non-integrated project
project
management
management applications,
applications, which
which inhibits
inhibits
metrics
metrics
–– Two
Two time
time tracking
tracking systems
systems
–– Formal
Formal and
and informal
informal work
work order
order requests
requests
–– Multiple
Multiple defect
defect tracking
tracking applications
applications

P8
Work Stream 2 – Baseline and Process Map
Each Business Process First Mapped At High Level (at Level 1.0).
1.0 TOP/SS PRODUCTION WORKFLOW SUMMARY
Suppliers
Suppliers Business
Business Domain
Domain Customers
Customers
EPES
EPES
Research
Research
Key Opportunities
1.1
1.1 ƒƒ 1.1
1.1 Acquisition:
Acquisition:
EPES
EPES
Acquisition
–– Outsource
Outsource thethe low-value
low-value text
text updating
updating
Acquisition Editorial cut/paste functions
cut/paste functions
–– Adapt
Adapt processes
processes to to find
find and
and acquire
acquire formatted
formatted
source data
source data
Information 1.3
1.3 –– Additional
Additional intelligent
intelligent searching
searching via
via Spider
Spider
EPES
EPES
Sources Conversion
Conversion
1.9
1.9 Manager,
Manager, augmented by automatic distribution
augmented by automatic distribution
IRN
IRNRetrieval
Retrieval

ƒƒ 1.3
1.3 Conversion:
Conversion:
–– Outsource
Outsource all all but
but immediate-turnaround
immediate-turnaround jobs jobs
1.2
1.2 –– Expand
Expand outsourcer’s
outsourcer’s role
role to
to eliminate
eliminate in-house
in-house
1.4
1.4
EPES
EPESForms
Forms 1.8
1.8
EPES
EPESExtract
Extract SGML
‘finishing’
‘finishing’ for
for graphics,
graphics, charts
charts andand tables
tables
&&
&&Assemble SGMLLoad
Load
Development Assemble
Development
External ƒƒ 1.4
1.4 Extract
Extract &
& Assemble:
Assemble:
Customer
–– Outsource
Outsource work
work given
given to
to RSC
RSC
–– Outsource
Outsource development and
development and post
post conversion
conversion
1.5
1.5 data analysis functions
data analysis functions
Print
PrintProduct
Product

1.7
1.7 ƒƒ 1.6
1.6 CD-ROM
CD-ROM Products
Products
Fulfillment
Fulfillment
Editorial –– Outsource
Outsource product
product QA
QA
1.6
1.6 –– Further
Further automate link
automate link testing
testing
CD
CDROM
ROM
Products
Products
ƒƒ Implement
Implement formal
formal change
change management
management
procedures
procedures and practices across Groups.
and practices across Groups.
Outsourcing Outsourcing & Process Improvement
Process Improvement No action

P9
Work Stream 2 – Opportunities Identification
Then Mapped at Detailed Levels– Both Process Improvement and Outsourcing
Opportunities Identified…
EXAMPLE 1 Outsourcing Process Improvement No action

Editorial
Editorial Manage
Manage
Content
Release
Pages
Information Content Compose
Using Compose
Using Pages
Pages Standardize
Manager Auto
Auto Composed Pages • Editors do not follow the file
Looseleaf
Looseleaf
naming convention. Print
Review
Review Pages Yes Submit
Submit
group has to manually
Compose
Compose Acceptable Print
Print rename files
dd Request
Request • Require editors to follow
No standards, which will
eliminate fixes; 10%
EPES
EPES Correction throughput improvement.
Instructions
Assist Review
Names Yes
Assist Review Adhere to Fix
Editors Object Fix
Editors Object standards Names
Eliminate Service Names
Names
Names
Service
• Inadequate tools/process Determin
No Determin
requires manual fixes eeHow
HowToTo
• Replace POD and Print Fix
Fix
Problem
Problem
Assem tools (2 FTEs and
Yes Yes Insert
10% throughput benefit) Interim Blank Page Insert
Hand Interim Blank
Reporting Missing Blank
create Reporting Page
Page
pages? No
No Eliminate
• Fixing other
Customer
Customer Service
Service and
and Operations
Operations identified process
deficiencies will
result in 80%
Current
Current Ins and Print reduction of rework
Mail POD POD
POD Print
Mail PODTool
Tool Update
Outs Assem
Assem
Tracking
Tracking Update
Vendor
Vendor
Printing
Printing
Filing
POD Update Instructions
Info
InfoPrint
Print
Instructions POD Database Yes No
Pod Tool Metafile
Automate
• Tool prohibits some desirable Transfer
Transfer Problems? Printed on- Print
Printfor
for
Pages
Pages Dry
DryFile
File Distributi
formats Report site? Distributi
• Build/acquire tool that allows
using
usingFTP
FTP Report No ? on
on
Yes
working with newer file formats.

P10
Work Stream 2 – Opportunities Identification
...(Continued) Both Process Improvement and Outsourcing Opportunities Identified.

EXAMPLE 2 Outsourcing Process Improvement No action

Steering
Steering Committee
Committee Outsource
Prioritize
Prioritize • Outsource entire content
Requests
Requests conversion process

CFU
CFU Content No Specifi
Specifi No Taggin
Taggin No Approv
Approv
Change
Change
No
cation Review gg New ed Perform ss
Prioritize
Prioritize to be cation Review New edfor
for Perform
Approv Generated
Generated accept Content
Content Produc Final
Final Requir
Requir
Requests7
Requests7 Approv accept Produc
developed ed?
Reports
Reports able?
Review
Review tion?
Review
Review ed?
ed?
ed? Yes able? Yes tion? Yes
Sgml One List New Content Yes

EPES
EPES and
and Tech
Tech Liaisons
Liaisons Perform
Prepare Perform
Prepare Structural
Functional Structural
Functional Analysis
Analysis
Functional Specification
EPES
EPES No
E-Profile
Write
Write
Review
Review Feasibl Specificatio 1.3.1
1.3.1
Feasibl Specificatio Apply
ApplySGML
SGML
Request
Request ns Convert
Convert
e?
e? ns Tags
Tags
Yes Structure Analysis Docs Image
Image
Content to be marked

Outsource
Outsource Vendor
Vendor Content to be marked Apply
ApplyMark-
Mark-
up
up

EPES
EPES Conversion
Conversion Development
Development
Prepare
Prepare No Review
Reviewand
and No Review
Review Request
Request
Conversion
Conversion Check
Check Make
Make Taggin
Taggin Resolve
Resolve Shows
Shows Turnover
Turnover
Specificatio
Specificatio Tagging
Tagging Corrections
Corrections ggOK?
OK? New
New Proble
Proble for
for
nn Content
Content ms? Scripts/Data
Tagged Content Yes ms? Yes Scripts/Data

EPES
EPES Electronic
Electronic Products
Products Link
LinkMap
Map Develop,
Processing Develop,
Processing Extract
Extractand
and
Insert
InsertNew
New Determine
Determine
Assemble
Assemble Run
RunSGML
SGML Make
MakeFinal
Final
Content
Contentto
to How
HowtotoFix
Fix
Scripts
Scripts Load
Load Changes
Changes
IM
IM Problem
Problem

Information Manager Product Image

EiTIPS
EiTIPS Migrate Move
Migrate Create Move
Content CreateFinal
Final
Content&& Load
Product
Productto
to
Scripts LoadImage
Image Production
Scripts Production

P11
Work Stream 2 – Business Case
Significant Savings From Both Business Process Driven Improvements and
Outsourcing/Offshoring Opportunities

POTENTIAL SOURCES OF SAVINGS

3rd Yr Steady State Savings

29% Reduction
In Baseline*
100.0 11.9
Data Indexed
to 100
8.4

10.2
0.8 70.3
69.5

Current Process 1 Process 2 Process 3 Revised Outsourcing Project New

Baseline Baseline Overhead Baseline

* Of entire baseline. If only in scope areas considered, savings would range from 30% to 45%. P12
 Work Stream 3 - Vendor Assessment and Negotiations
Vendor Selection-- Based On Two Rounds of Bidding Plus Final Negotiations

VENDOR EVALUATION– PRICE AND QUALITY DIMENSIONS

Scoring Matrix

Favorable
Final Actions
Vendor(s)
Selection
Vendors (3 Vendors) ƒ Round 1: Leadership Team
eliminated agreement on selection of
after Round 2 vendors based on RFP backed
(3 Vendors quality and price scores.
Price Eliminated)
Score ƒ Round 2: Leadership Team
agreement on selection of
vendors based on subjective
evaluation of vendor
Vendors eliminated presentations and supporting
after Round 1 material, initial quality scores
(14 Vendors Eliminated) and revised pricing
Unfavorable
Unfavorable Favorable
Quality Score

P13
Work Stream 3 – Vendor Assessment
Price Evaluation Based on Vendor Locations, Skills, Roles, and Bill Rates
VENDOR PRICE EVALUATION ATTRIBUTES
Locations Skills
• Billable Staff working on an IT Project in the • Oracle Forms, VB, SQL*Plus, Developer 2000, Sybase, AIX, UDB, SQL
Offshore Supplier's facility in India Client Server Server, C/C++/C#, Java, .NET Framework, Business Objects, Siebel, Trilogy,
Clarify, COGNOS, CRYSTAL REPORTS, SPREADVBX and other
applications, environments and tools, including those the supplier may
consider as “Special Skills”, “Unique Skills”, “Premium Skills” or equivalent
• Cobol, PL1, DB2, Assembler, VSAM, IMS, CICS, DB2, SQL, MQSeries,
Mainframe FILEAID, SAS, FTP, Connect Direct, Cyberfusion, Changeman, SORT,
• Billable Staff working in a US facility VSAMAssist and other applications, environments and tools, including those
Onsite US • 13 US Locations the supplier may consider as “Special Skills”, “Unique Skills”, “Premium
Skills” or equivalent
• ERP - JD Edwards, Oracle, SAP, Vertex, Salesforce.Com, Peoplesoft
Integration - Biztalk, .NET, Oracle, MSMQ, Web services, Verisign, EDI,
Enterprise MQ Series, XPI, Informatica, SQL server, DTS (data replication
services), XML, UDDI, PKI, LDAP/X500, Telephony, OLTP, C/C++/VB/SQL,
• Billable Staff working on an IT Project in the COM+, EJB/CORBA, TP Monitors), InstallShield Reporting - Cognos,
Offsite US Supplier's facility. It is also known as near-shore or Crystal, OLAP, Optio, Business Ob
Proximity Development Center Legacy: - UNIX, MKS, CICS, C, DB2
• Java, JavaScript, HTML, XML, EJB, JDBC, ASP/ASP+, C/C++/C#, .NET
Framework, Visual Age, Visual Basic, Perl, MQSeries, API, DB2 Connect,
Web ODBC, XSL, COM, PVCS, and other applications, environments and
tools, including those the supplier may consider as “Special Skills”,
“Unique Skills”, “Premium Skills” or equivalent

• Oracle, Microsoft SQL server, DB2, PL/SQL, Transact/SQL, Stored

Database Procedures, performance
Roles
QA • Testing, LoadRunner, Capacity Analysis, Identify Black Box
ƒ Engineer ƒ Production/Operation – 8
ƒ Senior Engineer roles (Db Admin, Sys. • Business and systems analysis
ƒ Application Architect Arch, Sys. Admin etc.)
Bus./Sys.
Anal.
ƒ Business/System Analyst ƒ Network/Telecom – 8
ƒ Technical Lead positions (Net. Analyst, • Administration and support of Operations environments
ƒ UI Designer Net. Admin, Telecom Prod./Oper.
ƒ Quality Analyst Eng.
ƒ Senior Quality Analyst Architecture • Application Architecture/Design Services

P14
Work Stream 3 – Vendor Assessment
Vendor Quality Scoring Based on Four Key Criteria– Company Quality, Delivery
Capability, Process Knowledge, and Personnel.
VENDOR QUALITY ASSESSMENT
Categories Sub- Categories Comments
Customer Reference (5.0%)
Financial Information (4.5%) Framework
Framework
Engagement Structure (2.5%) •• Quality
Quality Framework
Framework follows
follows aa 3-tier
3-tier approach:
approach:
Company ––Tier 1: 4 Categories
Geographical Coverage (2.5%) Tier 1: 4 Categories
Background
Key Personnel (1.75%) ––Tier
Tier 2:
2: 26
26 Sub-Categories
Sub-Categories
(19.25%)
Quality Assessment (1.5%) ––Tier
Tier 3:
3: 140-150
140-150 Individual
Individual Metrics
Metrics
Industry Coverage (1.0%) •• Examples of Metrics:
Examples of Metrics:
Type of Company (0.5%) -- CAGR
CAGR Revenue
Revenue Growth
Growth (2001
(2001 to
to 2003)
2003)
-- CMM
CMM Certification
Certification Level
Level
Performance Metrics (12.0%) -- Number
Number of of Business
Business Continuation
Continuation sites
sites
Subject Matter Expertise (9.0%) -- Ability to fill resource requests
Ability to fill resource requests
Business Continuity (8.0%)
Delivery Delivery Model (3.0%) Process
Process
(39.75%) Pricing Practices (3.0%) 1.Generate
1.Generate Metric-level
Metric-level information
information based
based onon
Relationship Management (2.25%) supplier
supplier responses
responses
Subcontracting (1.5%)
––Example:
Example:
•• Calculate
Calculate CAGR
CAGR Revenue
Revenue Growth
Growth based
based on on
Data Backup (1.0%)
3-year financial info
3-year financial info
Planning and Estimation (6.0%) 2.Compare
2.Compare suppliers
suppliers onon each
each metric
metric and
and assign
assign
Knowledge Transfer (4.5%) relative scores for each metric
relative scores for each metric
Processes Software Development Lifecycle (4.0%) ––Weights
Weights were
were assigned
assigned to to different
different criteria,
criteria,
(18.00%) sub-criteria
Quality Metrics (2.5%) sub-criteria and
and metrics
metrics through
through detailed
detailed
Release Management (1.0%) discussions
discussions with
with key
key stakeholders
stakeholders
3.Assign
3.Assign predetermined weights
predetermined weights toto each
each metric
metric
Capacity (11.0%) to
to generate
generate scores
scores for
for the
the various
various sub-criteria
sub-criteria
Turnover (4.5%) 4.Roll-up
4.Roll-up sub-criteria
sub-criteria scores
scores toto generate
generate “Overall
“Overall
Personnel Quality Score” for each supplier
Training (4.0%) Quality Score” for each supplier
(23.00%)
Recruiting (3.0%)
Compensation Practices (0.5%)
P15
Work Stream 3 – Vendor Assessment
Vendors Ranked Relative to One another on Price and Quality Dimensions

Est. 2003
Vendor Total
Incumbency Rev.
Name FTE
USD MM(1)

1 Vendor No 13,000 48,000

PRICE – QUALITY MATRIX

2 Vendor No 324 7,776 Legend: (Price Score, Quality Score)

Favorable 12
3 Vendor Tax Acct. 42 795

4 Vendor CLS 5 105

10 0, 10
Vendor A Vendor K
5 Vendor Dropped out 5.1, 8.9

Quality Score
6 Vendor No 388 9,205 8 5.7, 8.1
Vendor L
Vendor E
7 Vendor No 60 3,000 10, 5.9
6 Vendor D Vendor M
3.9, 5.6 6.7, 4.7
8 Vendor No 100 1,730
5.9, 4.8
Vendor H Vendor J
9 Vendor No response
4 Vendor B 8.1, 3.9
6.1, 3.7
0.8, 3.2 Vendor G
10 Vendor Dropped out Vendor F
7.8, 2.8
11 Vendor No 118 1,615 2
Vendor C
12 Vendor FS 240 1,795 Unfavorable
0 4.2, 0
13 Vendor No 500 9,160
0 2 4 6 8 10 12
14 Vendor Dropped out
Unfavorable Favorable
15 Vendor CLS, FS 1,200 29,990
Price Savings Score
16 Vendor No 1,100 13,266

1. Estimated by doubling the 2003 six month revenue

P16
Work Stream 3 – Vendor Negotiations
Final Selection Made by Client Leadership Team– Based On Final Quality Scores, and
Revised Round Two Pricing, and Qualitative Assessment During Vendor Presentations

VENDOR SHORT LIST Vendor Finalists

Selected in
Vendor Name Incumbent Rationale
Round 2
ƒ Best in price and high in quality
ƒ 150 person SAP practice and broad spectrum on other capabilities
1 Vendor A No Yes ƒ Impressive list of publishing clients
ƒ Good .Net Practice

ƒ Lot of publishing experience, including Reed and Thomson

2 Vendor C No Yes ƒ Good .Net Practice
ƒ Understood processes well
ƒ Strong SAP as well as JDE customers
ƒ Strong incumbent
3 Vendor G CLS,FS Yes ƒ Depth and Breadth across various practices
ƒ Understands processes well
ƒ Weak in SAP/JDE, no domain expertise
4 Vendor J No No ƒ Blended rate not favorable to Client
ƒ Offshore model is too US heavy
ƒ No publishing experience
5 Vendor K No No ƒ Limited SAP/JDE experience
ƒ No ODC
ƒ Poor pricing and medium quality
6 Vendor L No No ƒ Weak presentation of capabilities
ƒ Highest percentage of inexperienced staff

P17
Table of Contents

ƒ IT Case Study

ƒ Offshoring Analytics

P18
Scope and Strategy
Business Analytics focuses on delivering measurable business value through a process of
strategy development and deployment……
Transition Planning Transition Execution
2.
2.
1.
1. 3.
3. 4.
4. 5.
5. 6.
6. 8.
8.
Bench-
Bench- 7.
7.
Scope
Scope&& Site
Site &Vendor
& Vendor Migration
Migration Contracts
Contracts&& Infrastructure
Infrastructure Migration
Migration
marking
marking&& Pilot
Pilot
Strategy
Strategy Selection
Selection Planning
Planning Negotiations
Negotiations Preparation
Preparation (Execution)
(Execution)
Prioritization
Prioritization

ACTIVITIES FOR OFFSHORING COMPONENTS

Strategy Creation & Testing Development of Testing & Roll Out Decision
Modeling & Validation
Hypotheses

Decision Modeling Project Business Data Data Analysis & Decision

Definition Analysis Specs. Preparation Modeling Logic

Process Reengineering As Is Process Re-engineering for Strategy

Change Management
Process Implementation

… which have their bases in application of advanced scientific techniques to business problems.

P19
Business Case
Cost Savings, Quality of Services, and Access to Skills are the key benefits of offshoring
analytics.

US India
120 An engineering graduate with an MBA would typically
82%
82%
83% start in India at ~ $ 15,000 a year, while a US business
100 83%
87%
87% graduate would earn ~ $90,000 a year.
80
TALENT COST
60 Cost of hiring an experience junior analyst in India is ~
40
$ 10,000 compared with that of ~ $ 75,000 + in the US.

20 The cost differential between Engineering Ph.Ds in the

0 US and India is ~ $90,000.
Ph.D Engg. MBA Junior Business
Analyst
Over 7 percent of silicon valley's
Multinationals with high-tech firms are led by Indian
Proprietary Analytics Centers in India CEOs.
TALENT QUALITY Other Contributions in Tech. Area
Hotmail
Sun Micro Systems
Pentium

# Engineers
350,000
Increased
Increased thrust
thrust on
on higher
higher education
education
325,000
11%
11%
Indian
Indian Institutes
Institutes of
of Technology
Technology
300,000 National
National Institutes
Institutes of
of Technology
Technology
TALENT AVAILABILITY Indian
Indian Institutes
Institutes of
of Management
Management
275,000 Indian
Indian Institutes
Institutes of
of Information
Information Technology
Technology
Other
Other Private
Private Institutions
Institutions
250,000
2003-2004 2004-2005
Source: Nasscom, NRI Websites, Opera Research.

P20
Challenges

Sourcing
Sourcing
& ‰
‰ Although
Although there
there are
are 4,000+
4,000+ engineering
engineering colleges
colleges inin India,
India, only
only ~~ 10%
10% meet
meet Western
Western Standards.
Standards.
&
Training ‰
‰ Need
Need for
for an
an established
established streamline
streamline process
process for
for selection,
selection, training
training and
and deployment.
deployment.
Training

Retention
Retention ‰
‰ Average
Average Wage
Wage growth
growth is
is >> 20%
20% per
per year
year in
in the
the field
field of
of analytics
analytics
&
& ‰
‰ High Key Personnel Turnover due to increased opportunities.
High Key Personnel Turnover due to increased opportunities.
Development
Development

Communication
Communication ‰ Excellent
‰ Excellent Communication
Communication Capability
Capability is
is required
required for
for seamless
seamless exchange
exchange of of ideas
ideas between
between teams.
teams.
&
& ‰ The
‰ The gaps
gaps between
between the
the cultures
cultures have
have to to be
be addressed
addressed for
for effective
effective results.
results.
Culture
Culture

Integration
Integration of
of ‰ AA seamless
‰ seamless integration
integration of
of the
the onsite
onsite business
business team
team and
and offshore
offshore analytics
analytics team
team is
is critical
critical to
to
Onsite
Onsite && Offsite
Offsite execute
execute the
the strategies
strategies within
within the
the stipulated
stipulated time
time and
and cost.
cost.
Teams
Teams

Internal
Internal Sales
Sales
& ‰
‰ Need
Need to
to internally
internally sell
sell (and
(and prove)
prove) the
the business
business value
value of
of off-shore
off-shore analytics
analytics team.
team.
& Business
Business
Development ‰
‰ Need
Need to
to overcome
overcome initial
initial skepticism
skepticism with
with establishment
establishment andand achievement
achievement ofof clear
clear Key
Key Performance
Performance Indicators.
Indicators.
Development

Data
Data Security
Security ‰
‰ Need
Need toto manage
manage the
the increasingly
increasingly stringent
stringent regulatory
regulatory requirements
requirements governing
governing outsourcing,
outsourcing,
and
and responsibility
responsibility for
for compliance.
compliance.

Communication
Communication ‰
‰ Need
Need for
for adequate
adequate bandwidth
bandwidth for
for data
data and
and voice
voice communication.
communication.
Infrastructure
Infrastructure ‰
‰ Need
Need for redundancies in the telecom front, and
for redundancies in the telecom front, and measures
measures for
for contingency
contingency and
and disaster
disaster recovery.
recovery.

P21
Best Practices

Sourcing
Sourcing
& ‰
‰ Recruitment
Recruitment of
of employees
employees from
from “non-traditional
“non-traditional disciplines”.
disciplines”.
&
Training ‰
‰ Professional
Professional internal training in techniques and
internal training in techniques and business
business domain
domain to
to enable
enable employees
employees to
to get
get up
up to
to speed.
speed.
Training

Retention
Retention ‰
‰ Attractive
Attractive long-term
long-term retention
retention benefits
benefits for
for key
key personnel.
personnel.
&
& ‰
‰ Adequate
Adequate knowledge sharing between teams and
knowledge sharing between teams and within
within teams
teams to
to mitigate
mitigate risk
risk of
of attrition.
attrition.
Development
Development

Communication
Communication ‰
‰ Professional
Professional Accent
Accent Neutralization
Neutralization and
and Culture
Culture Training
Training Programs
Programs to
to address
address gaps.
gaps.
&
& ‰
‰ Design
Design of
of working
working hours
hours to
to ensure
ensure overlap.
overlap.
Culture
Culture

‰
‰ Regular
Regular dialogs
dialogs to
to enable
enable the
the offshore
offshore team
team perform
perform as as an
an extended
extended armarm of
of the
the onsite
onsite business
business team.
team.
Integration
Integration of
of ‰
‰ Measurement
Measurement of of business
business benefits
benefits on
on an
an ongoing
ongoing basis
basis and
and practical
practical target
target setting
setting to
to match
match
Onsite
Onsite && Offsite
Offsite growth objectives..
growth objectives
Teams
Teams ‰
‰ Clear
Clear agreed
agreed upon
upon methodologies
methodologies for
for internal
internal billing
billing and
and cost
cost allocation.
allocation.

Internal
Internal Sales
Sales
& ‰
‰ Establishment
Establishment of of Key
Key Performance
Performance Indicators,
Indicators, and
and Proof
Proof of
of Concept.
Concept.
& Business
Business
Development ‰
‰ Identification
Identification of potential areas for offshoring and measurement of
of potential areas for offshoring and measurement of benefit
benefit to
to cost
cost on
on an
an ongoing
ongoing basis.
basis.
Development

‰
‰ Selection
Selection and
and deployment
deployment ofof internal
internal and
and external
external professional
professional support
support to
to
Data
Data Security
Security comprehend
comprehend the the evolving
evolving compliance
compliance and and regulatory
regulatory requirements
requirements and
and implementation
implementation
of
of security
security processes.
processes.

Communication
Communication ‰
‰ Due
Due diligence
diligence in
in identification
identification of
of infrastructure
infrastructure partners
partners
Infrastructure
Infrastructure ‰
‰ Annual
Annual maintenance
maintenance contracts.
contracts.

P22
Case Study
We have extensive direct experience in offshoring analytics – in setting up GE’s
Analytical Center of Excellence and in setting up our proprietary capability…

GE
GE Capital
Capital Analytical
Analytical Center
Center of
of Excellence
Excellence
(Now
(Now GECIS
GECIS Analytics)
Analytics)

We pioneered the set- up of the GE Capital Analytical Center of

Excellence in 1997 to offer captive analytical services to GE from

Bangalore.

It was set up to provide analytics services for a number of the GE

businesses in order to leverage the English speaking, highly

educated, intellectual capital of India.

…and both these initiatives have been remarkable success stories.

P23
Key Issues & Lessons Learnt
Our line management experience was critical in addressing the key issues
successfully...

Key Issues Lessons Learnt

‰ Demonstrate success through pilots.

Building Credibility
‰ Achieve ROI and quality and timeline standards.

Communication and ‰ Establish the communication process to exchange ideas regularly to enable the offshore
Integration team act as an extended team and not as a discrete entity.

Time Barrier ‰ Maximize the overlap time between the two teams for increased interaction.

‰ Assign high importance to language skills in the selection process.

Language ‰ Fine tune soft skills with accent neutralization and culture training programs to eliminate
communication problems.

‰ Send out expatriates to work with the offshore teams in the beginning to share the domain knowledge.
‰ Invite employees from India to the US for a brief period for acquiring domain
Training
knowledge and hands-on experience.
‰ Document the domain knowledge clearly, and provide subsequent trainings in-house.

P24
Current Status
GECIS Analytics in India today is a world-class offshore operation that services
its clients from around the world
GE Financial
& Other Clients
Industrial Businesses

Asset Risk
Pricing Collections Logistics SCM
Management Management

Portfolio Market Production Actuarial

Analysis Research Planning Analytics
Process Rigor

Excellence

Six Sigma
Service

Quality
Speed

It currently employs nearly 450 professionals, with over 375 talented individuals
with Master’s or Doctoral Degrees from leading universities in India and abroad.

P25