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Payment Business Services Offshore Outsourcing the “Danish way” N ASSCOM India Leadership Forum 2008 Claus Lund Pedersen S...
Offshore Outsourcing in PBS Agenda <ul><li>Payment Business Services - PBS </li></ul><ul><li>PBS’ rationale for outsourcin...
Offshore Outsourcing in PBS Scope for this presentation <ul><li>Something on outsourcing of… </li></ul><ul><ul><li>IT Syst...
Offshore Outsourcing in PBS Payment Business Services <ul><li>PBS develops, sells and operates systems and services in the...
Offshore Outsourcing in PBS Payment Business Services <ul><li>Mission </li></ul><ul><ul><li>To make payments and exchange ...
Offshore Outsourcing in PBS European market future <ul><li>New players </li></ul><ul><ul><li>New global players on the Eur...
Offshore Outsourcing in PBS PBS future <ul><li>Keep our position as the leader </li></ul><ul><li>Digitised services </li><...
Offshore Outsourcing in PBS Rationale for outsourcing <ul><li>2002 … </li></ul><ul><ul><li>Big project – Reengineering of ...
Offshore Outsourcing in PBS Rationale for outsourcing <ul><li>Variable costs </li></ul>ODC Contractors Projects PBS staff
Offshore Outsourcing in PBS Sourcing strategy <ul><li>PBS identifies the sourcing option for each project based upon the p...
Offshore Outsourcing in PBS Sourcing strategy <ul><li>Resource pools </li></ul><ul><li>Always a PBS Project leader/manager...
Offshore Outsourcing in PBS Sourcing set-up <ul><li>PBS has set-up an Offshore Development Centre (ODC) </li></ul><ul><li>...
Offshore Outsourcing in PBS Sourcing set-up Payment SAP Card
Offshore Outsourcing in PBS Sourcing set-up <ul><li>Strategic investment !! </li></ul><ul><li>PBS invest time and money in...
Offshore Outsourcing in PBS Experiences - Maturity <ul><li>CMMI  makes a difference  (SEI Capability Maturity Model Index)...
Offshore Outsourcing in PBS Experiences - Culture <ul><li>Indians work long hours </li></ul><ul><li>Easy to blend in when ...
Offshore Outsourcing in PBS Experiences - Culture <ul><li>Religion is important to Indians - Acknowledge many religions </...
Offshore Outsourcing in PBS Experiences - Recommendations <ul><li>Make your company ready as an “outsourcing customer” </l...
Offshore Outsourcing in PBS Future for PBS <ul><li>PBS believes that controlled and managed outsourcing is one of the tool...
Offshore Outsourcing in PBS Not everything is suited for outsourcing
Offshore Outsourcing in PBS Thank you – Contact information <ul><ul><li>Claus Lund Pedersen , Senior Manager </li></ul></u...
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Global leadership: IT as a competitive advantage, Claus Lund Pedersen, Head,Denmark

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Global leadership: IT as a competitive advantage, Claus Lund Pedersen, Head,Denmark

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Transcript of "Global leadership: IT as a competitive advantage, Claus Lund Pedersen, Head,Denmark"

  1. 1. Payment Business Services Offshore Outsourcing the “Danish way” N ASSCOM India Leadership Forum 2008 Claus Lund Pedersen Senior Manager & Head of Resource Management within IT Development ...the right resources with the right skills at the right time for the right projects…
  2. 2. Offshore Outsourcing in PBS Agenda <ul><li>Payment Business Services - PBS </li></ul><ul><li>PBS’ rationale for outsourcing </li></ul><ul><li>PBS’ sourcing strategy and set-up </li></ul><ul><li>PBS’ experiences </li></ul><ul><li>Future plans for PBS’ outsourcing </li></ul>Agenda
  3. 3. Offshore Outsourcing in PBS Scope for this presentation <ul><li>Something on outsourcing of… </li></ul><ul><ul><li>IT System Development </li></ul></ul><ul><ul><li>IT System Maintenance </li></ul></ul><ul><li>Nothing on outsourcing of… </li></ul><ul><ul><li>BPO </li></ul></ul><ul><ul><li>IT Operations </li></ul></ul><ul><ul><li>IT Support </li></ul></ul><ul><ul><li>IT Data scanning </li></ul></ul>… or … So…
  4. 4. Offshore Outsourcing in PBS Payment Business Services <ul><li>PBS develops, sells and operates systems and services in the market for payment cards and payment services. PBS are also sub-suppliers to the common IT infrastructure of the Danish banks. </li></ul><ul><li>In popular terms, PBS moves money and information between citizens, companies and public institutions. Every minute of the day several million DKK passes through our systems. </li></ul><ul><li>PBS was founded in 1968 and we are owned by most of the Danish banks and the central bank in DK, Danmarks Nationalbank </li></ul><ul><li>PBS employ approx. 850 people of which 99% work at our headquarters in Ballerup, northeast of Copenhagen, Denmark. </li></ul><ul><li>PBS is the company behind systems such as Dankort (Danish debetcard) and Direct Debit Service (used by 94% of the Danish household). </li></ul><ul><li>1¾ billion transactions were processed via PBS in 2006 </li></ul>
  5. 5. Offshore Outsourcing in PBS Payment Business Services <ul><li>Mission </li></ul><ul><ul><li>To make payments and exchange of information easy and secure </li></ul></ul><ul><li>Vision </li></ul><ul><ul><li>To be the leading supplier of payment and information solutions </li></ul></ul><ul><li>Values </li></ul><ul><ul><li>Responsibility : Because we handle other people’s money </li></ul></ul><ul><ul><li>Creating value : F or our customers as well as our shareholders </li></ul></ul><ul><li>Assets </li></ul><ul><ul><li>People </li></ul></ul><ul><ul><li>Knowledge, experience and expertise </li></ul></ul><ul><ul><li>Systems and services </li></ul></ul><ul><ul><li>Profile in the market </li></ul></ul>
  6. 6. Offshore Outsourcing in PBS European market future <ul><li>New players </li></ul><ul><ul><li>New global players on the European market </li></ul></ul><ul><ul><li>Current 15-20 players will be 3-5 players in the future </li></ul></ul><ul><li>Cross border activities </li></ul><ul><ul><li>New potential customers and competitors </li></ul></ul><ul><ul><li>Multicurrency services </li></ul></ul><ul><ul><li>Multilanguage services </li></ul></ul><ul><li>SEPA </li></ul><ul><ul><li>Single European Payment Area </li></ul></ul><ul><li>Costs </li></ul><ul><ul><li>Lover transaction costs </li></ul></ul>
  7. 7. Offshore Outsourcing in PBS PBS future <ul><li>Keep our position as the leader </li></ul><ul><li>Digitised services </li></ul><ul><li>Lower transaction costs </li></ul>Denmark <ul><li>New home market </li></ul><ul><li>Follow our customers </li></ul><ul><li>Strategic partnerships </li></ul>Nordic countries <ul><li>Be ready for the new competition on the European market incl. SEPA </li></ul>Europe Expansion – More work
  8. 8. Offshore Outsourcing in PBS Rationale for outsourcing <ul><li>2002 … </li></ul><ul><ul><li>Big project – Reengineering of a payroll system (1/3 of PBS’ development capacity for 2 years) </li></ul></ul><ul><ul><li>Few internal experts – both old and new system </li></ul></ul><ul><ul><li>Time and resources – scares resources </li></ul></ul><ul><li>2007/2008 … </li></ul><ul><ul><li>More work than resources </li></ul></ul><ul><ul><li>Reduction of costs </li></ul></ul><ul><ul><li>Release internal resources for process-improvement projects </li></ul></ul><ul><ul><li>Expand resource-pool as variable costs </li></ul></ul>Not only to cut costs !! Lack of resources !!
  9. 9. Offshore Outsourcing in PBS Rationale for outsourcing <ul><li>Variable costs </li></ul>ODC Contractors Projects PBS staff
  10. 10. Offshore Outsourcing in PBS Sourcing strategy <ul><li>PBS identifies the sourcing option for each project based upon the project type, duration, costs, req. stability and knowledge required </li></ul><ul><li>Standard tools/systems wherever possible </li></ul><ul><li>IT development/maintenance carried out by… </li></ul><ul><ul><li>Resources from PBS’ internal IT Development </li></ul></ul><ul><ul><li>Resources from our ODC (either in India or in PBS) </li></ul></ul><ul><ul><li>External contractors (primarily Danish or English) </li></ul></ul><ul><li>Knowledge about our systems and business needs to be in PBS !!! </li></ul>
  11. 11. Offshore Outsourcing in PBS Sourcing strategy <ul><li>Resource pools </li></ul><ul><li>Always a PBS Project leader/manager and a QA person on a project </li></ul><ul><li>Project responsibility is always with PBS </li></ul>PBS has the ultimate responsibility PBS IT Development ODC External contrac-tors & vendors Resource Allocation
  12. 12. Offshore Outsourcing in PBS Sourcing set-up <ul><li>PBS has set-up an Offshore Development Centre (ODC) </li></ul><ul><li>The ODC is an extension to the ressource pool in PBS </li></ul><ul><li>The ODC has been set-up with L&T Infotech in India: </li></ul><ul><ul><li>Office-space, IT infrastructure etc. is owned by the vendor </li></ul></ul><ul><ul><li>Resources are employed by the vendor but allocated to the ODC 100% </li></ul></ul><ul><li>PBS has: </li></ul><ul><ul><li>3 PBS employees for the vendor management and coordination/administration of the relationship - Based in PBS (onsite) </li></ul></ul><ul><ul><li>2 PBS employees for the project coordination - Based at vendors site in India (offshore) </li></ul></ul>
  13. 13. Offshore Outsourcing in PBS Sourcing set-up Payment SAP Card
  14. 14. Offshore Outsourcing in PBS Sourcing set-up <ul><li>Strategic investment !! </li></ul><ul><li>PBS invest time and money in knowledge build-up at the vendor which results in: </li></ul><ul><ul><li>Domain knowledge of PBS’ business and systems </li></ul></ul><ul><ul><li>Knowledge-database/repository </li></ul></ul><ul><ul><li>Certification-program </li></ul></ul><ul><li>PBS has a three year contract which acts as a framework with supporting service orders for each project carried out by the vendor </li></ul><ul><ul><li>Fixed price … and … Time & Material </li></ul></ul><ul><li>Common processes both at onsite and offshore to ensure a smooth, efficient and predictable coorporation </li></ul><ul><li>Workshops, handbooks and project introductions to minimise the impact of the cultural differences between Danes and Indians </li></ul>KEY !!
  15. 15. Offshore Outsourcing in PBS Experiences - Maturity <ul><li>CMMI makes a difference (SEI Capability Maturity Model Index) </li></ul>Goal PBS Current level CMMI level Customer Vendor 5 4 3 2 1 1 2 3 4 5 Good Average Poor Current level
  16. 16. Offshore Outsourcing in PBS Experiences - Culture <ul><li>Indians work long hours </li></ul><ul><li>Easy to blend in when working at customer’s site </li></ul><ul><li>There are cultural differences between India and Denmark… </li></ul><ul><ul><li>Indians does not always tell you if they don’t understand you </li></ul></ul><ul><ul><li>Shaken the head does not mean no – could mean yes or “I hear you” </li></ul></ul><ul><ul><li>Indians are very polite – sometime too polite </li></ul></ul><ul><ul><li>Indians accept the “unequal dimention” - Danes think everybody are equal </li></ul></ul><ul><li>A lot of Indians work far from hometown… </li></ul><ul><ul><li>Illness in the family, marriage etc. can mean leaving their job </li></ul></ul>
  17. 17. Offshore Outsourcing in PBS Experiences - Culture <ul><li>Religion is important to Indians - Acknowledge many religions </li></ul><ul><li>If you want creativity you need to ask for it </li></ul><ul><li>Promotions are expected after 3-4 years in same position/rolle which does not easily comply with long term retention of knowledge in a team </li></ul><ul><li>The impact of cultural differences is very much depended on the vendor’s and customer’s ability to manage these differences </li></ul><ul><li>You need to understand ”hinglish” </li></ul><ul><li>But … not all Indians are the same (just like the Danes and…) </li></ul>
  18. 18. Offshore Outsourcing in PBS Experiences - Recommendations <ul><li>Make your company ready as an “outsourcing customer” </li></ul><ul><li>Choose the right vendor </li></ul><ul><li>State clear requirements and expectations </li></ul><ul><li>Create common processes, templates, checklists and plans </li></ul><ul><li>Ask the “receiver” whether he/she has understood the message </li></ul><ul><li>Priority on all projects – What is most important to you as customer… </li></ul><ul><ul><li>Price, Time or Quality </li></ul></ul><ul><li>Use own staff as offshore coordinators </li></ul><ul><li>Make use of new technology – Videoconf., Skype, Chat etc. </li></ul><ul><li>Internal communication is IMPORTANT </li></ul><ul><ul><li>Inform about plans and status – take the discussions </li></ul></ul><ul><ul><li>Try it = Prove it </li></ul></ul>
  19. 19. Offshore Outsourcing in PBS Future for PBS <ul><li>PBS believes that controlled and managed outsourcing is one of the tools to ensure expansion of PBS’ development capacity </li></ul><ul><li>Key numbers… </li></ul><ul><ul><li>Global development capacity needs to be expanded </li></ul></ul><ul><ul><li>ODC needs to deliver up to 40% of the total kapacity </li></ul></ul><ul><ul><li>Split of outsourced work: 20% onsite and 80% offshore </li></ul></ul><ul><ul><li>Decreasing hourly rates by expanding with “cheaper” development hours </li></ul></ul>
  20. 20. Offshore Outsourcing in PBS Not everything is suited for outsourcing
  21. 21. Offshore Outsourcing in PBS Thank you – Contact information <ul><ul><li>Claus Lund Pedersen , Senior Manager </li></ul></ul><ul><ul><ul><li>IT Development, Resource Management </li></ul></ul></ul><ul><ul><ul><li>Tel.: +45 2948 2252 </li></ul></ul></ul><ul><ul><ul><li>Email: clp@pbs.dk </li></ul></ul></ul>
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