Professional Documents
Culture Documents
A challenging relationship 5
Common pitfalls 8
Proprietary tools 10
2
Introduction
1
Throughout this paper, the word
“outsourcing” refers specifically to
business process and IT services
outsourcing, and specifically
excludes the practice of moving
manufacturing operations abroad.
3
Outsourcing & offshoring
In simplest terms, outsourcing is the contracting of a • Within Country – Service is generally performed in
business function to an external supplier. This often the same country as the service is received or in a
involves the transfer of process, people and assets to country where labor rates are generally consistent
the supplier. Outsourcing can also involve offshoring as with those where the service is received (e.g.
well as significant transformation, for instance where US-to-US, US-to-UK, Sweden-to-UK, etc.).
an IT function is outsourced and the supplier migrate • Near Shore – Service is generally performed in
services to their own, lower cost infrastructure. another country near where the service is received
Outsourcing is most mature in the Information (usually within or close to the same time zone) and
Technology (IT) sector and is increasingly developing where labor rates are generally lower than those
to include a wide range of business processes such as where the service is received (e.g. Mexico-to-US,
HR, Finance, Procurement, Customer Service and other Eastern Europe-to-Sweden, etc.)
back office operations functions. Hence, two main • Offshore – Service is generally performed in another
strands of outsourcing have merged; IT outsourcing country where labor rates are lower than those
(ITO) and Business Process Outsourcing (BPO). where the service is received and there may be a
significant difference in time zone (e.g. India-to-
Outsourcing by nature means that a certain part of
Sweden, Philippines-to-UK, etc.)
your delivery is placed with an external vendor who can
apply any of the following delivery models:
in
Bu
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IT
Outsourcing
Outsourcing
Bus
Application
Outsourcing
iness Pro
& Maintenance Resources
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Infrastructure Processing
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Outsourcing urc
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In recent years, offshore providers In recent years, offshore providers have entered the
European market, providing increasingly sophisticated
have entered the European market, alternatives to the established US and European
providers. Outsourcing can also bring regulatory and
4
A challenging relationship
5
Ensuring success and avoiding pitfalls
Deloitte asked five vendors active in the Swedish “Who does it from where, is not as important as what
market about their capabilities and their point of view and how and the ability to measure the outcome. This
of what makes successful engagements and what is a cultural change and needs to be addressed before
preparations organizations considering offshoring offshoring begins” as one of the Indian headquartered
delivery should undertake. The following vendors vendors express it.
participated:
As a result, the transition phase has to be well-planned
• Wipro
and agreed first with clearly defined outcomes and
• HCL financial targets before launching any initiatives. Be
• TCS clear on top priorities and your reasons for outsourcing
• Mahindra Satyam and leveraging global delivery. Ensure that these
• L & T Infotech priorities are constantly validated over the course of the
engagement.
All of them have substantial experience in the field
of enterprise applications, where particularly strong
A number of key activities are recommended by all
support can be seen for niche applications in the
the interviewed vendors to be carried out before
Banking and Telecom industries. Generally, vendors
entering into an offshoring agreement.
have broad experience of development projects and
application maintenance. Although “traditional” • Secure commitment and support from senior
services for offshoring such as application development management
and maintenance still represents a substantial part of • Define a strategy including goals and objectives
the offshoring vendors businesses, a highly emerging • Define areas that set the scope and limitations for
trend is the cloud concept where the vendors are offshoring - Core (business critical) & Non-Core
offering scalable IT services through on-demand (non-business critical)
models.
• KPI’s should be established both for transition and
Further, the vendors are expecting the enterprise steady state
mobility area to emerge as more and more corporate
applications are being used on handheld devices which If this is the first engagement using a global delivery
puts higher demands for flexible cloud computing. model, it is advised by several vendors that clients start
For the vendors in the survey, this is also an area of small to build their capabilities as well as build trust in
expected revenue growth during years to come. the vendor before increasing the scope.
is a cultural change and needs to be premises and offer various activities for potential clients
to gain better insight and understanding of the vendors
an activity vendors have inbuilt stage/ toll gate mechanisms, which also
provide for rollback options. This is an effective risk
7
Common pitfalls
The vendors mention a couple of common pitfalls that leveraging offshore to the maximum. Adoption of
clients fall into when entering offshoring arrangements: offshore services in the Swedish market requires a
• The Business case - A clearly defined ‘business more strategic intent from the clients, where global
case’ for outsourcing - with financial outcomes and delivery models are incorporated in the clients IT
incentives thereof is not articulated between all operating models
parties. Measuring success or failure will be left to • Lack of experience - Most IT managers have little
subjective interpretation. international experience, which makes it difficult to
• Mismatch in expectation - Client is asking for educate them on potentially better processes which
‘personnel’ and expecting ‘services’ for example. are deviating from their current processes
Clients should not offshore ‘bodies’ or ‘personnel’
or even ‘roles’. Instead they should offshore services, Measures taken by the vendors
processes and activities. to support clients
• Managing Cultural gaps - While most service The vendors participating in the study all apply
providers have workforces culturally aligned to work strategies to manage the uncertainty of clients or
with local customer teams, vice versa also needs to potential clients in order to build trust and increase
be established. confidence.
• Managing (Threat) perceptions - Move from • Increase confidence by taking a more consultative
“fear of the unknown” to “embrace the change” in approach to the market place; exploration of client
a structured fashion. A common pitfall is to replace scope and objectives often together with developing
local consultants with offshore consultants but have a proof of concept
the same processes of engagement as before. • Highlight additional benefits of offshoring, such as
• Underestimating transition - The most sensitive efficiency, increased resource availability, etc., and
period in any engagement is the initial transition not just cost reduction
period - especially in a new relationship. This • Conduct workshops to bridge cultural gaps and to
needs to be well structured, detailed and with full improve mutual understanding
commitment from Senior Management. Enough
• Work with partners with specific industrial
resources and sufficient time must be allocated.
knowledge to mitigate gaps in knowledge regarding
• Managing Communication - The timing and local requirements
level of communication should be planned to the
The information presented by the vendors shows
last detail – what to tell whom and when. Too early
that hiring a local service provider can be challenging
would raise the level of apprehension – too late runs
enough. Cultural and geographical differences can
the risk of misinformation from the grapevine or the
add to the complexity and therefore clients need to
media.
be better equipped with competence, processes and
Vendors on Swedish companies tools in order to realize the benefits of an offshoring
arrangement.
appetite for offshoring
According to the vendors, Swedish companies are
generally too reluctant towards offshoring. This might
be natural from their perspective, but let’s take a closer
look at the reasons they bring up and their means to
overcome the obstacles.
8
Deloitte Outsourcing Advisory
Services: Proven Capability
Prepare your
leadership and key
stakeholders for
change.
9
Outsourcing Advisory Services
(OAS) from Deloitte
Proprietary tools
Market knowledge and insight Enablers and accelerators
We maintain a Market Intelligence Database The Sourcing Strategy Template provides
that provides an accessible pool of outsourcing a logical, structured framework for assessing
deals across all industries, giving us a unique sourcing options (e.g. suitability for outsourcing,
insight into the marketplace. Our Supplier single vs. multisourcing, global vs. regional,
Database contains research into individual BPO governance models) to help identify the most
and ITO suppliers, boosted by our own experience suitable strategy.
of their capabilities, strengths and weaknesses. The Value print Business Case tool was
This provides us with an up to date view of the developed for creating business Cases and to
industry landscape, and can be used to help draw enable tracking of benefits and reconciling these
up a long list of potential suppliers. against the estimated value. It is supported by
The IT sourcing Health-check Diagnostic structured Business Case and benefit capture
Tool identifies the strengths and weaknesses of templates.
a sourcing project by scoring it on a number of eValuate, our proprietary RFI/RFP Evaluation
criteria. The tool generates feedback on how weak Tool supports supplier selection processes
areas might be improved and provides insight by enabling clients to set up, administer and
from past Deloitte engagements to defend against participate in supplier evaluations, whilst offering
future risks. In addition to written commentary a method of centralising and managing evaluation
and feedback, the tool also produces a radar chart data in a controlled environment. It can produce
and a “heat map” to focus attention to specific reports on the current status and leader boards.
development areas.
The Transition Assurance Toolkit provides a
We maintain an eRoom and intranet site to framework and detailed checklist for undertaking
provide an easily accessible platform for internal Quality Assurance on the transition phase of a
collaboration and anthology of OAS materials, sourcing engagement, together with an automated
including project qualifications, proposals, sample reporting dashboard. Support is provided for
deliverables, methods, tools, research articles, different modes of transition (client-supplier;
points of view and other information. supplier-supplier), and the toolkit covers the full
scope of transition activity in application and
infrastructure outsourcing.
Company
Tech Mahindra
Contact name
Jonas Bränning
Address
Tech Mahindra
Norrtullsgatan 6
113 29 Stockholm
Sweden
Website
www.techmahindra.com
Phone number
Tech Mahindra represents the connected world, +46 (0)73 398 58 56
offering innovative and customer-centric information
E-mail
technology services and solutions, enabling Enterprises,
jonas_branning@
Associates and the Society to Rise™. We are a USD 2.7
techmahindra.com
billion company with 84,000 professionals across 49
countries, helping over 500 global customers including
Fortune 500 companies. Our Consulting, Enterprise
and Telecom solutions, platforms and reusable assets
connect across a number of technologies to derive
tangible business value. We deliver and implement
innovative software solutions across a number of
technology platforms and partner with customers
to co-innovate and co-create solutions that bring
measurable business value.
11
Company
Larsen & Toubro Infotech
Contact name
Sarbajit Deb
Address
Larsen & Toubro Infotech
Kista Science Tower
Färögatan 33
164 21 Kista
Sweden
Website
www.Lntinfotech.com
Phone number
+46 76 633 70 07
+45 22 78 96 70
E-mail
Sdeb@Lntinfotech.com
Sdeb-Lntinfotech@mail.dk
Larsen & Toubro Infotech ( L&T Infotech) is a wholly- which emerges out of its rich corporate heritage. Along
owned subsidiary of the USD 13.5 billion Larsen & with Integrated engineering services unit (IES) over
Toubro. 25,000 employees work for global customers, with
95% of revenue coming from outside India.
L&T Infotech provides end-to-end solutions and services
in the following verticals: Banking & Financial Services; L&T Infotech have very long term relationships with
Insurance; Travel & Logistics, Media & Entertainment, our customers like Nets, Nordea, Statoil Fuel & Retail,
Healthcare, Manufacturing, Energy & Process, Utilities, Scania, Vattenfall, Sony, Nynas, Wartsilla, Danaher
E&C, Hi-tech & Consumer Electronics, Product Group, Attends Healthcare AB, amongst others in
Engineering Services (PES), Consumer Packaged Goods, Sweden.
Retail & Pharmaceuticals, Auto & Aerospace, and
L&T Infotech also has strong trade relations with
Industrial Products. Over 2000 people work for Nordic
the Nordic trade associations and we were one of
customers.
the founding members of the Swedish Chamber of
L&T Infotech also delivers business solutions to its Commerce in India.
clients in the following horizontals/service lines: Testing,
Mobility, Infrastructure Management System; Business
Intelligence/Data Warehousing, SAP, Oracle and
Microsoft , Enterprise Integration and Manufacturing
Execution Systems, in addition to an innovative CIO-
thought partnership program that provides a value-
driven edge to clients.
12
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Company
TATA Consultancy Services
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(TCS)
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2X
Contact name
Ritu Dubey
.5X
Address
X
X
Mäster Samuelsgatan 42
X
111 57 Stockholm
.75X Sweden
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Website
www.tcs.com/se
Phone number
08-503 88 427
Date : 31 I 01 I 2007
E-mail
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13
Company
Wipro Technologies
Contact name
Sri Tanguturi
Address
3, Sheldon Square,
London W2 6PS
United Kingdom
Website
www.wipro.com
Phone number
+44 7884 436835
E-mail
sri.tanguturi@wipro.com
14
Company
HCL Technologies
Contact name
Christina Hultén
Address
Sveavägen 21
Stockholm
Sweden
Website
www.hcltech.com
Phone number
+46 763 16 92 27
E-mail
christina.hulten@hcl.com
In Nordics, HCL’s differentiating strategy, balanced Public Services and Healthcare. HCL takes pride in its
portfolio, balanced country and industry coverage and philosophy of ‘Employees First, Customers Second’
our local leadership has made HCL become the fastest which empowers our 84,403 transformers to create
growing IT services company. HCL serves more than a real value for the customers. HCL Technologies had
35 customers in Nordic region including well-known consolidated revenues of US$ 4.5 billion as on 31st
clients as IKEA, Electrolux, Statoil, Nokia, Husqvarna March 2013.
and Danfoss. HCL has a strong Nordic base, with
Of more than 3,000 technology companies in the
several thousand passionate HCLites serving Nordic
Bloomberg database, there are only seven with revenue
clients, established onshore delivery centres in Helsinki
of more than $2.5 billion, a market capitalization
and Stavanger and included rebadged employees from
of more than $5 billion, and a compounded annual
our customers. HCL also filed five patents on behalf of
growth rate greater than 25 per cent during the past
Nordic Companies.
five years.
HCL Technologies www.hcltech.com is a leading global
HCL Technologies is one of those seven companies. A
IT services company, working with clients in the areas
combination of technical expertise and an innovative
that impact and redefine the core of their businesses.
management philosophy that unleashed the innovative
HCL focuses on ‘transformational outsourcing’,
thinking of empowered employees. We believe
underlined by innovation and value creation, and offers
business growth can only be sustained when pursuits
integrated portfolio of services including application
of profit are balanced with social and environmental
services, remote infrastructure management,
imperatives.
engineering and R&D services and BPO. HCL leverages
its extensive global offshore infrastructure and network In two independent Nordic market surveys HCL was
of offices in 31 countries to provide holistic, multi- in one of them recognized as nr 1 in both application
service delivery in key industry verticals including services and infrastructure services, and in the other
Financial Services, Manufacturing, Consumer Services, HCL came out as nr 1 in ten out of eleven satisfaction
indicators.
15
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