Global Trends Of IT Outsourcing Presented by: Sudarshan – Consultant Recruitment Han Digital Solution (P) Ltd
Introduction: <ul><li>Saravanan Balasundaram, President and CEO of Han Digital Solution (P) Ltd. </li></ul><ul><li>Vision: </li></ul><ul><li>"To be established as one of the top 10 Executive Search Companies in India by means of recognition well within and outside the company with constant Talent pool Mapping and selection process" </li></ul>
Our Services: <ul><li>Recruitment: </li></ul><ul><li>Making the right hire is no longer just a case of matching someone with the right skills but is increasingly leaning towards finding someone with the same cultural aspirations and the right set of competencies; someone who can add value not only to a job but to the development of a company's personality. We, at Han Digital, specialize in this. </li></ul>
Recruitment Consulting: <ul><li>Developing a thorough knowledge of the client company's work culture, product portfolio and operational procedures as well as a familiarity with its management team is necessary to provide better consulting service. </li></ul><ul><li>This knowledge allows us to speak with a passion and belief about a client company when we interact with the sought candidates. It is an important factor in successfully recruiting top talent. </li></ul>
Advisory Market Research & Intelligence: <ul><li>A dedicated group of professionals in our firm is assigned to global knowledge management and we have our own proprietary information technology platform that allows us to access easily our firm's knowledge and know-how for the benefit of clients. </li></ul><ul><li>We fully use and apply these tools in every engagement to assure quality and comprehensiveness. </li></ul>
Executive Search: <ul><li>An executive search firm specializes in providing executive search and specialized research solutions to emerging growth companies. The firm's clients are those looking for senior executive management, marketing, sales, operations, technical or professional services leaders. Its establishment is on the premise that the recruitment of top executives is the most important factor of successful technology companies </li></ul>
Objective: <ul><li>Today’s Topics: </li></ul><ul><li>Review of IT outsourcing past. </li></ul><ul><li>Identify Risks and Challenges and how to mitigate them. </li></ul><ul><li>Look at rewards and value of IT outsourcing. </li></ul><ul><li>Identify Current Rewards and Values. </li></ul>THEN NOW And WHEN
What is Outsourcing? <ul><li>Some may say…” The procuring of services or portions of product manufacturing, in order to cut costs.” </li></ul><ul><li>Others may say…” Contracting with organizations outside your country for work that could otherwise be done by employees within your company. </li></ul><ul><li>While the above statements may be the perceived definitions of some, the actual definition encompasses both areas of cost and capability as well as increasing value and transferring some areas of control. A compilation of various referenced definitions is provided below. </li></ul><ul><li>Contracting with organizations outside your organization for work that might otherwise be done by internal resources or additional new hires to your company. </li></ul><ul><li>In the interest of increasing value through reduced costs, increased speed, or high quality results, a buyer contracts with a third party to meet specific objectives. An outsourcing engagement transfers the control of how the work is done to the vendor, while the buyer retains control of the requirements definition and expected results. </li></ul>
Outsourcing History: <ul><li>In the recent times there has been lots of speculations and negative criticisms against outsourcing to offshore destinations. But it has to be noted that outsourcing as a phenomena is not new but has been going on since ages. If one looks at the outsourcing history one can realize that since ancient times companies in developed countries have outsourced services to nearby less developed countries. </li></ul><ul><li>Before the IT revolution, many companies in the US outsourced manufacturing jobs to counties like Canada, Mexico and South America in order to cut costs. Many even set up separate workstations and factories in these regions. </li></ul><ul><li>The only difference between then and now can be seen in the frantic pace at which things are happening. Also as manufacturing jobs involved solid goods they needed to be transported that gave rise to a different kind of employment opportunity. </li></ul><ul><li>IT outsourcing does not involved any transportation from the manufacturing destination to the client's place. Apart from these differences outsourcing history seems to be quite an old thing. </li></ul>
Early Outsourcing Highlights 1830s 1830s England’ textile industry grew to the point India could not compete. Most textile work was outsourced to England. 1830s-1850s First wave of outsourcing during the industrial revolution fostered large-scale growth of domestic outsourced services such as insurance services, architecture and engineering services. 1970s-1980s Outsourcing payroll and accounting was fairly common practice for US services companies and India emerged as one of the first international providers of these business services, a predecessor of the 1980’s IT outsourcing entrance. By the late 1980’s international outsourcing, termed offshore outsourcing, had become a viable alternative for many large firm CIO’s to consider. 1830s-1850s 1970s – 1980s Early US History: manufacturing of covered wagon covers and ship sails were outsourced to Scotland, and raw materials from India.
Global IT Sourcing today <ul><li>India – 67% </li></ul><ul><li>Central/Eastern Europe – 11% </li></ul><ul><li>China and South east Asia – 9.5% </li></ul><ul><li>Latin/South America – 9% </li></ul><ul><li>Middle East/Africa - 2% </li></ul><ul><li>25% of Services budget include Outsourcing </li></ul>
Risks and Challenges <ul><li>Legal </li></ul><ul><li>Great Expectations </li></ul><ul><li>Partners </li></ul><ul><li>Infrastructure </li></ul><ul><li>Communication Transparency </li></ul><ul><li>Culture </li></ul><ul><li>Process Maturity disparity </li></ul><ul><li>High Turnover </li></ul><ul><li>Low Morale – on and offshore </li></ul><ul><li>Detailed Specifications </li></ul>
Global Country Outsourcing Index Ranking Criteria* Global Outsourcing Index (GOI) Geopolitical risk Legal risk Cultural risk Economic risk IT infrastructure risk Human capital risk Country IT competency risk Market Opportunity Rating Future Outsourcing Rank Global Outsourcing Rank Global Outsourcing Report : Opportunities, Costs, and Risks of doing business in IT outsourcing by Country. CIO Insight has ranked the top 10 Countries in the global market through weighted criteria on the left. Rankings for 2004 and forecast for 2015 are given.
Factors Necessary for Achieving Success <ul><li>Infrastructure Challenges </li></ul><ul><li>Employee - Job Satisfaction </li></ul><ul><li>Legal issues </li></ul><ul><li>People – Upgrading, Compensation, Training. </li></ul><ul><li>Sales and Marketing. </li></ul><ul><li>Balancing growth. </li></ul><ul><li>Client partnerships – get them involved </li></ul><ul><li>Vision requires bifocals. </li></ul>
Future of Global IT Outsourcing According to the Gartner Hype Cycle for IT Outsourcing 2006 Report , the constant market tension between method of delivery, location of delivery and method of purchase creates new IT service opportunities for which organizations can meet changing business requirements. IT Services are a backbone of business operations globally and will remain a significant are of Global Trade. With technology innovations and new applications of technology in the future, the Global outsourcing market is expected to continue to expand. New opportunities emerge on a regular basis for both providers and buyers, however one must be aware that new outsourcing offerings and markets may take years to mature in the Global Market.
Future Challenges <ul><li>Aside from risks already know today, future risks will include more global oriented risks such as: </li></ul><ul><li>Global Trade policies. </li></ul><ul><li>Individual Nation commitments to talent development. </li></ul><ul><li>Global Economy strength. </li></ul><ul><li>And the challenge of identifying emerging technologies and services trends with eye towards future outsourcing opportunity. </li></ul><ul><li>International Conflicts. </li></ul>
Summary <ul><li>Move fast </li></ul><ul><li>Swim Upstream </li></ul><ul><li>Transparency </li></ul><ul><li>Field of Dreams </li></ul>