2. 2
Agenda
• Introduction to Outsourcing
• Preparing for Outsourcing
• Running Outsourcing
• Next Steps in Outsourcing
3. 3
INTRODUCTION
A Working Definition of Outsourcing
Outsourcing denotes the continuous
procurement of services from a third party,
making use of highly integrated processes,
organization models and information
systems.
OUTSOURCERCOMPANY
Services
Organization
Level
Agreement
Service
Level
Agreement
4. 4
INTRODUCTION
On the origins of Outsourcing
• 50 - 70 Vertical and Horizontal Integration
• 70 - 80 Foreign Direct Investment
• 80 - 90 Global Sourcing
• 90 - Outsourcing
5. 5
INTRODUCTION
Types of Outsourcing
Business
processes
Application Development
and Maintenance
IT-infrastructure
BPO: Business Process Outsourcing
ASP: Application Service Provider
DBRO: Design, Build, Run & Operate
ADM: Application Develop. & Maintenance
ITO: IT Infrastructure Outsourcing
ITS: IT Services, Managed Hosting
Administrative
processes
APO: Administrative Process Outsourcing
Outsourcing models:
BPO
AMO
SDO
6. 6
INTRODUCTION
BPO - Business Process Outsourcing
Degree of industrialization
medium highlow
Customized Industrialized
Single service delivered
to multiple clients
simultaneously
Similar services delivered
to multiple clients
Custom designed services
leveraging know-how
One-to-one One-to-many
8. 8
INTRODUCTION
Sourcing of Outsourcing
• Off-Site – Local service providers
• Near Shore – Proximity cross-border service
providers
• Off-Shore – Remote Cross-border service
providers
9. 9
INTRODUCTION
Typical Outsourcing Clients
Argentaria
Banca Italease
BBVA
Banco Rio de la Plata
Bankiter
Barclays Bank plc
Bilbao Bizkaia Kutxa (BBK)
Caixa Catalunya
Caja Madrid
CortalConsors
Credit Lyonnais
Depository Trust & Clearing
Deutsche Bank
DnB NOR
Morgan Stanley
Providian
Royal and SunAlliance
Sallie Mae
Santander
SchmidtBank
SEC Padova
SEI
UBS Life International
Universal Leven
Workers’ Compensation Board
Xelion
Espirito Santo Sequros
GE Consumer Finance
Grupo Financiero BanCrecer
Guy Carpenter
Immobiliere 3F
Infocaja
ING Group
Italian Pension Agency
Johannesburg Securities Exchange
JPMChase
London Stock Exchange Losango
Mediolanum
Meridia
Ameren
BC Hydro
Borden Chemical
BP
Britannia Operator
Cogema
Dow Chemical
DuPont
Dynegy
Direct Energy Essential Home Services (DEEHS)
Enbridge Gas Distribution
Enbridge Gas New Brunswick
Freeport McMoRan
RAG American Coal
Repsol YPF
Rhodia
Siam Cement
Sithe Energies
Slovnaft
Southern Company GAS
Talisman Energy Ltd.
Terasen Utility Services
Thames Water
Ticona
Total E&P UK plc (formerly TotalFinaElf)
Halliburton
LASMO plc
Lyondell-Citgo Refining
MOL - Hungarian Oil & Gas
MidAmerican Energy
Norsk Hydro
Orange and Rockland Utilities
PPL (Pennsylvania Power & Light)
02 (formerly BT Cellnet)
Alcatel
Algar
AT&T
Avaya
BellSouth
Boston Scientific
BT
Cegetel
Citrix
eBay
EMC
ETS Sonera
Sun Microsystems
Tecnomen
Telecom Argentina
Telecom Italia
Telefonica Argentina
Texas Instruments
Thomson
VIA Networks
XM Satellite Radio
Fujitsu Siemens Computers
Infineon
Infostrada
JVC do Brasil Ltda. & Nokia Gradiente Industrial
O Globo Empresa
Olivetti Tecnost
Omnitel2000
QinetiQ
Siemens Mobile Communications Italy
SITA
Alcan
Ardent
Asahi Brewery
Astilleros Espanoles,
now IZAR
AstraZeneca
Best Buy
Brahma
Bristol Myers Squibb
Campofrio
Carrefour
Caterpillar
Delphi
Delta
Diageo
DSV Group
eLSG SkyChefs.com
Neptune Orient Lines
New Look
Payless Shoe Source
Pfizer
Renault
Resort Condominiums
International
(RCI)
Sainsbury’s
Sara Lee
Solar Turbines
Texas Medicaid
Transnet Portnet
UPS
Wärtsilä
Wyeth
Edgars Consolidate Stores Limited
Exel plc
HCSC
Health Alliance Plan
Impregilo Achieve
Interstate Brands
KLM Royal Dutch Airlines
Levi Strauss
LSG Sky Chefs Thomas Cook
Marriott
MDB Information Network
Mecalux
Medicines Control Agency
Milwaukee County Mental Health
Multibras Electrodomesticos Whirlpool
10. 10
• Access best in class business processes
• Harness leading technologies
• Increase efficiencies
• Enhance capabilities
• Expand service
• Enrich customer relations
• Improve supplier relations
• Free up management time
• Decrease operating costs
Key drivers for Outsourcing (Survey Results)
INTRODUCTION
Why do outsourcing? - Survey Results
12. 12
PREPARING FOR OUTSOURCING
The Burning Platform
BUSINESS CONCERNS
• Perceived low availability of services
Perceived low level of service quality
(accessibility, turn-around time etc.)
No clear service reporting and service
management
Roles & Responsibilities not clear. Processes
unclear, too slow, too many hand-offs
• Slow and error-prone service introduction
• Unsatisfactory support of remote sites &
subsidiaries
• No service culture
• Cost allocation & charges unclear and cannot be
influenced by business decisions
…
IT CONCERNS
Unreasonable service level expectations from
business
No cost & resource awareness
Large number of non-standard work requests
• Overlarge project portfolio, paired with spaghetti
development infrastructure
• High-level of business applications
• Inefficient / underutilized server platform, aging
central technology platforms and complex
networks
Large and divers skill pool required to support
infrastructure
…
Change
Drivers
Management
Control
Service
Scope &
Level
Budget
Levels
Financial
Flexibility
Infrastructure
Quality
Skill &
Capability
Pool
Organizational
Impact
Time to
Benefit
Client
Rating
13. 13
PREPARING FOR OUTSOURCING
Understand Internal Constraints
• Availability of Seed Money – I need to reduce cost,
this requires efficiency gains, efficiency gains require
investments…
• Structural Inflexibility – Your current business and
application architecture may not allow for simple and
low cost ICT changes
• Time to Benefit – Most “quick-wins” have already
been explored over the last couple of years. Major
initiatives have pay-backs seldom shorter than 24 –
36 months
• Business vs. IT Projects – Most projects are
invisible to the normal business users and do not
directly contribute to business revenue generation
• Capacity & Know-How – Are there sufficient
internal resources available to drive the change in a
timely fashion? Will heavy external resource usage
kill the business case?
• Change Capacity – Can the internal organization
absorb this change now (ex. Overall moral, unions,
etc.)
• Sustainability – Can initiatives be maintained in
light of business development?
€
6 Months 12 Months 18 Months 24 Months 30 Months 36 Months
Change
Application &
Technology
Architecture
Head Count &
Infrastructure
Improvement
ILLUSTRATIVE
Procurement,
Financing &
Quick Wins
Reduce
External Services
Operate &
Infrastructure
45%
Maintenance
15 %
SWR & NSWR
10 %
Business Projects
20 %
Manage & Support
10 %
ICT
Budget
- Illustrative -
Discretionary
Fixed
14. 14
Next Steps in Outsourcing
• Outsourcing will continue to grow, mainly for BPO…
• Services will become more standardized, creating new
norms
• New service providers will appear in Eastern Europe and
China
• Asian players will move on-shore and compete head-on
with traditional local players
• Local regulations will continue to be opened up to support
cross-border services
• Politics will start to address increasing social issues and
concerns
Editor's Notes
Custom designed services leveraging know-how, but little else
For example: traditional outsourcers such as IBM; AFS client site operations
Provision of similar services to multiple clients, leveraging the entire services stack.
For example: payroll providers such as ADP and Paychex; Navitaire
Provision of a single service to multiple clients simultaneously, leveraging the entire services stack.
For example: payments processors such as First Data
Accenture provides a flexible spectrum of services and arrangements…from simple to complete end-to-end IT responsibility…and from immediate to well into the future.
Starting with a standard approach, we build on the basics and structure our projects to achieve specific business results for our clients, carefully considering their size and complexity.
We define the extent of our collaboration through two dimensions:
1: Scope of Services
Companies can select basic application management services (such as break/fix support) or broaden the responsibility to include application enhancements, upgrades or comprehensive application development. Over the course of time, Accenture will adjust service levels to meet the client’s changing business needs.
2: Breadth of Applications
Outsourcing arrangements can specify a single critical application, a group of related applications, or an entire portfolio of software applications. Accenture will manage custom or packaged software, including enterprise solutions such as SAP, Oracle, PeopleSoft and Siebel.
Accenture’s Application Outsourcing services are tailored to our client’s needs. Our flexibility is demonstrated by the fact that we manage hundreds of arrangements that involve less than 100 people…and many with more than 1,000 people.
Maximizing Return through Application Outsourcing
Accenture’s Application Outsourcing approach addresses business imperatives head on by transforming application development and maintenance to help our clients achieve high performance.
It also enables them to balance both sides of the return on outsourcing equation, targeting the dual objectives of reducing the total cost of ownership and increasing value from IT investments.
The result is greater operations control with better reporting and a higher rate of on-time, on-budget project completion. They also gain the flexibility of being able to refocus retained employees on critical business imperatives and adjust outsourcing service levels to meet changing business needs.
The overall business outcome is the realization of increased value and lower costs through improved performance.
