Outsourcing in IT & the challenges

By N. AYYAPPAN Vice-President POLARIS SOFTWARE LAB LTD Chennai 31st July 2009

COPYRIGHT NOTICE Copyright © 2009 Polaris Software Lab Limited All rights reserved. These materials are confidential and proprietary to Polaris and no part of these materials should be reproduced, published in any form by any means, electronic or mechanical including photocopy or any information storage or retrieval system nor should the materials be disclosed to third parties without the express written authorization of Polaris Software Lab Limited.

Ground rules & Disclaimer What is Outsourcing ? Why do organizations out source? What are the challenges in outsourcing? What are the common mistakes done in outsourcing? What are the factors that drive the outsourcing success ? Slide No. 3 5 6 7 8 9 2 .Index Slide Contents Introduction.

situation to situation 3 . can vary from industry to industry. challenges etc.OUTSOURCING Ground rules ‡ Mobiles must be completely switched off ‡ Interaction is encouraged ‡ questions are welcome after each slide Disclaimer ‡ Contents shared in this presentation are from my practical experience and may not define the complete boundary of outsourcing ‡ Techniques.

OUTSOURCING NASSCOM predicts India·s IT and outsourcing industry is expected to grow over 7% this fiscal year and log revenues of $64 billion 4 .

OUTSOURCING What is Outsourcing? It is a method to get the requirements done through external parties or organizations Examples: ‡ Maintenance of computer hardware outsourced to a third party ‡ Outsourcing the job of recruiting young MBA executives ‡ Outsourcing of development & implementation of systems such as Inventory Control. ‡ Outsourcing of credit card application campaign & processing 5 . Financial accounting etc.

OUTSOURCING Why do organizations out source? ‡ Expertise or infrastructure not available within the organization ‡ Time to market factor ‡ Helps companies to concentrate on their core strengths ‡ Cost advantage and increase profitability ‡ Improved efficiency & better customer satisfaction ‡ For strategic reasons 6 .

OUTSOURCING What are the challenges in outsourcing? ‡ Selection of the right Vendors is a time consuming & costly process ‡ ROI in Outsourcing takes longer period of time ‡ Lack of control over vendor companies· resources ‡ Possibility of quality compromise by vendor companies ‡ Risk of vendors demanding more price when the dependency increases ‡ Failure of vendor companies will impact the Outsourcing companies ‡ Risk of divulgence of business confidentiality ‡ Time zone and language challenges ‡ Cultural gaps between the two companies 7 .

OUTSOURCING What are the common mistakes done in outsourcing? ‡ Vendor selection process does not consider all factors ‡ Contract does not cover all situations and clauses leading to arguments. challenges & litigation between both the parties ‡ Lack of clear documentation of Scope of work ‡ Over caution on either sides lead to loss of TRUST 8 .

commitment and timely delivery ‡ Mutual understanding of statutory compliance and culture 9 .OUTSOURCING What are the factors that drive the outsourcing success ? ‡ Meticulous Vendor selection process ‡ Signing of detailed Scope of Work / Contract / NDA ‡ Regular project progress review with the vendors and initiating corrective actions ‡ Inspection of the process followed by vendor companies ‡ Identifying single point of contact strengthens the relationship ‡ Acknowledging Vendor companies· contribution ‡ Sharing incentives to vendor companies to encourage quality.

Questions ? .

These materials are confidential and proprietary to Polaris and no part of these materials should be reproduced.Thank You email: n. published in any form by any means. . electronic or mechanical including photocopy or any information storage or retrieval system nor should the materials be disclosed to third parties without the express written authorization of Polaris Software Lab Limited.ayyappan@polaris.co.in COPYRIGHT NOTICE Copyright © 2009 Polaris Software Lab Limited All rights reserved.