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Fear Factor with Outsourcing

Presentation at the PMI Congress, Singapore in 2005

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Fear Factor with Outsourcing

  1. 1. The Fear Factor in Remote Based Development Eastern Foreign Cultures Satisfying Western Initiatives Presenter: Benaud Jacob Feb 23, 2005
  2. 2. Geo Initiatives IN THE NEWS“The fear of failure can be debilitating but the aroma of success can be tantalising when the West meets the East.”
  3. 3. Geo Initiatives IN THE NEWSEnd of the Affair: Bringing Outsourced Operations Back In-house(Computerworld – May, 2004)“Many IT organizations decide for a variety of reasons that an outsourcingarrangement just isnt working, and they pull those functions back inside.There are a host of challenges, not the least of which is the likelihood that yourorganizations knowledge base has probably eroded during the time thefunction has been outsourced.”
  4. 4. Geo Initiatives IN THE NEWSOffshore Dilemma: What Stays?(ComputerWorld – December 2003)“Support for data center hardware, servers and mainframes will remain in theU.S. for the following reasons: Hardware and software licensing costs aren’tany cheaper overseas; real estate and data center construction costs can bejust as expensive overseas; loss of control of data is possible; it can be difficultto switch from one offshore vendor to another.”
  5. 5. Geo Initiatives IN THE NEWSBarclays shows cost wins override outsource fears(ComputerWeekly.com – Nick Huber, Tuesday 19, August 2003)“The news that Barclays is considering outsourcing its application developmentdivision illustrates how companies are now prepared to risk farming out eventhe most vital areas of their IT departments in the push to cut costs.”
  6. 6. Geo Initiatives IN THE NEWSOutsourcing fears rattle U.K. government, businesses(IDG News Service, January 26th 2004)“Fear of Chinas and Indias growing strengths as outsourcing anddevelopment centers permeated the U.K. governments enterprise conferencein London, Monday, where top technology executives and government leadersmet to discuss strategies for developing more business at home”
  7. 7. Geo Initiatives GEOINITIATIVESThe terminology “GeoInitiatives” has been introducedthroughout this presentation, to refer to all remote basedinitiatives such as offshore, nearshore and inshorebusiness activities.“GeoInitiatives” is defined as business initiatives instrategic geographical locations that maximiseshareholder values. “GeoInitiatives” use resources in strategic geographicallocations to develop a product or provide services thatresults in cost effectiveness, operational efficiency andprofitability to the GeoInitiators
  8. 8. Geo Initiatives FACTORS DRIVING GLOBAL CULTURES TO WORK TOGETHER TRUST & ETHICS •Profitability •Economies of scale FINANCIAL REWARDS •Cross regional selling •Domain Knowledge •Domain Expertise HUMAN INTELLECT •Innovation & Creativity •Cross Regional Selling •Global Standards GLOBAL MARKETS •Global Presence •Technology Media •Enhanced Data and TECHNOLOGY Information Security •Common Language and Terminologies COMMUNICATION •Channels & Processes •Aggressiveness •Passiveness PERSONALITY •Interpersonal Skills •Professional •CulturalTOLERENCE / FLEXIBILITY •Personal J&B Diagram – Factors Driving Global Cultures
  9. 9. Geo Initiatives AN OFFSHORE DELIVERY PARADIGM PLANNING PHASE TRANSITION MANAGEMENT• Planning Risks • Adjust Team Roles• Form Project Team • Define Transition Plans• Train Project Team • Address Transition Issues / HR, Communications etc.• Set Objectives and Goals • Meet with Employees, Organization and Vendors• Align Offshore initiatives • Physical Move• Evaluate Vendors GOVERNANCE COST/PERFORMANCE ANALYSIS • Adjust Management Styles• Measure Activity Costs • Create Governance Council• Evaluate Project Future Costs • Communicate, Communicate, Communicate• Measure Current Performance • Define/Design Reporting, Meeting Agendas, Meeting• Benchmark Cost/Performance Schedules, Performance Reports etc.• Determine Specific Risks, Asset Values, Pricing • Measure Performance Models and Goals • Confront Poor Performance Issues / Improvements • Relationship Management NEGOTIATING CONTRACTS• Plan Negotiations• Address High Level Issues and Deal Breakers• Service Level Agreements• Internal Communication Plans• Contract Announcements HOW DOES IT APPLY IN REAL LIFE? J&B Diagram – Factors Driving Global Cultures
  10. 10. Geo Initiatives CONCERNS REGARDING GEOINITIATIVES DOES OFFSHORE OUTSOURCING REALLY REDUCE COSTS? • INCEPTION COSTS • FIXED COSTS – INFRASTRUCTURE • LEARNING CURVE COST • COSTS OF DELIVERABLES • FLUCTUATING CURRENCY EXCHANGE RATES • INCREASING OFFSHORE RESOURCE COSTS DOES GOING OFFSHORE IMPACT YOUR PROJECT TIMELINESS? •I NCEPTION PERIOD • AVAILABILITY OF RIGHT CONSULTANTS AT THE RIGHT TIME? TIME • ELAPSED TIME v.s ACTUAL TIME BILLING • LEARNING CURVE • RESPONSE TIME • KNOWLEDGE TRANSFER • INBOUND/OUTBOUND LOGISTICS QUALITY, RELIABILITY AND EFFICIENCY?QUALITY • QUALITY MEASURES TO ENSURE A RELIABLE PRODUCT • OFFSHORE OUTSOURCING – STRATEGIC PARTNERSHIP? • BUSINESS DELIVERY MODELS – DOES THAT WORK FOR ALL BUSINESS TYPES? HOW ABOUT YOUR BUSINESS STRATEGIES? • HUMAN CAPITAL – CAN THEY BE RETAINED LOCALLY AS WELL AS OFFSHORE? HOW ARE THEY MOTIVATED? • INTEGRITY / HONESTY – CAN OFFSHORE ENSURE YOU TOTAL PEACE OF MIND WITH SENSITIVE BUSINESS INFO J&B Diagram – Concerns Regarding GeoInitiatives
  11. 11. Geo Initiatives PITFALLS TO BE AWARE OFFinancial setbacks ILL Defined Processes Inadequate Quality Standards Operational Inefficiency Incorrect caliber of workforce Unethical standards Global complexities Technology breakdowns Inadequate communication model Passiveness and aggressiveness J&B Diagram – Pitfalls to be aware of Intolerance and lack of flexibility Inadequate conflict management
  12. 12. Geo Initiatives FEAR FACTORS• Losing jobs to Foreign Countries• Retaining Human Capital in the East• Fear of the Unknown• Fear of Failure• Uncontrollable and Spiraling Project Costs• Information Security
  13. 13. Geo Initiatives FEAR OF ALL FEARS : The Dominant FearThe fear of losing strategic control over the core teams, operations,products, in-house talent and intellectual property Losing jobs to Foreign Countries Retaining Human Capital in the East Fear of the Unknown Fear of Failure Uncontrollable and Spiraling Project Costs Information Security
  14. 14. Geo InitiativesHANDLING THE “FEAR FACTOR”Create social awareness of “Job Facts”Arrive at effective employee retaining strategiesCreate awareness of offshore business modelsAdequate planning and decision makingRealistic cost estimationCreate awareness of Information Security
  15. 15. Geo Initiatives HANDLING THE “DOMINANT FEAR” Understand RESPECT Analyse THE FEAR Address Tolerance BRIDGE Sustained Relationships ALIGN CULTURAL Ethical Standards OBJECTIVES GAP Human Element Geographical/Time Zone Constraints TRUST Lifestyle / Personality RELATIONSHIP Political / LegalTHE KEY TO SUCCESSFUL Client ControlGEOINIATIVES IS Predictable Vendor SustenanceRESPONDING TO THE DOMINANT FEAR Cost / Quality / Time / Objectives
  16. 16. Geo InitiativesQUESTIONS Feb 23, 2005www.geoinitiatives.com

Presentation at the PMI Congress, Singapore in 2005

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