Presentation by DATA Inc's CTO Michelle Mitra on current trends in IT Outsourcing globally.

1. 72 Summit Ave
Montvale, New Jersey
Phone : (201) 802 9800
http://www.datainc.biz

2. Outsourcing

3. Outsourcing Overview
Overview – Transfer Management /Execution of a business function to an external Vendor
Drivers – Cost Savings (Labor Arbitrage)
– Focus on Core Business
– Cost Restructuring (Fixed to Variable)
– Better Access and Utilization of Knowledge/Experience/Talent
– Access to Operational Best Practices
– Transfer risk of excess capacity to Vendor
– Use external knowledge to enhance in-house innovation
– Reduce Time-to-Market
– Risk Management (Mitigate risks with outsourcing partner)
Process – Strategic Decision to Outsource
– Select Vendor (RFP, Negotiation, Contract)
– Transition (Staff Transfer, Service Take-on)
– Transform (Execute Projects, Implement SLA, Reduce Total Cost of Ownership)
– Ongoing Service Delivery
– Periodic Benchmarking

4. Outsourcing – IT (Rationale)
Reasons
IT is a Strategic Asset
IT is a Key Driver of High Performance
Benefits
Reduce Costs
Reduce Total cost of Ownership
Transforms organization’s IT capability
Improve Service, Quality, Delivery Capability
Enables a broader strategic agenda

5. Outsourcing – IT (Profile)
Application Outsourcing
Application Development
Application Testing
Production Support
Application Maintenance
Enhancements / Upgrades
Legacy Modernization
Infrastructure Outsourcing
IT Spend Management (Assets, Procurement)
Data Center Services
Service Desk
Security Services
Network Services
Workplace Services

6. The Maturing of Outsourcing
1st Generation – Select a Single Large Vendor and contract large-sized ‘take-all’ deals:
Gain competitive advantage
Reap quick benefits
Save time
Easier management overhead
Leading to risks and challenges
Cost and SLA Targets not met
“The prevalence of IT outsourcing megadeals valued at $1 billion or more dropped 67%
…” according to Gartner Inc.
Multi-Sourcing – Allocate separate IT functions to different vendors:
Leverage the skills and value propositions of each vendor
Enhance efficiency
Reduce risk
Operational Level Agreements provide service governance
No loss of control owing to monopoly by vendor
Pick ‘best-of-breed’ solution providers for specialization and domain knowledge

7. Outsourcing and Off-Shoring
Outsourcing and Off-Shoring had distinct identities:
Outsourcing = Work done by a vendor within the ‘industrialized world’
Off-Shoring = ‘Third World Country’ did mundane tasks at a much lower cost
Offshoring to...America? "With the continued decline in value of the dollar and sluggish
employment, I would expect to see more U.S.-based sourcing solutions evaluated by private
and public sector clients across the globe," says Peter Iannone, EquaTerra's executive director
for the Americas. CIO, December 2009
Global Sourcing has Matured
Decision Makers make Strategic choices of Where, What, How and Whom based on:
Cost Management
Skills
Experience
Value Proposition to enhance efficiency and reduce risk

8. The Global Marketplace (Characteristic)
“Outsourcing is less about labor arbitrage and more about access to Global
Talent that is available”
Information
New Ideas Expertise
Globalization “CONNECTS” Companies

9. The Global Marketplace (Leverage)
Choose the work they want to do
Where they want to do it
Drive the greatest profit
Globalization “AFFORDS” Leverage

10. Outsourcing & Employment
FACT
US & EU have witnessed high rates of un-employment
Outsourcing has caused job transfers to locations overseas
Location is insignificant in the maturing Outsourcing Model
Advances in communications
Improved computational technologies
Availability of large pools of capable workers in the world

11. Outsourcing & Employment
Biggest Players:
India, China, Ireland, Israel, Former Soviet Block.
New Players :
Pakistan, Brazil, Chile and Ghana are some of those that are
becoming players in the market.
Reverse off-shoring

12. Outsourcing Today
FACT
Initially simple APP-DEV & MAINT. were given to emerging economies
Drive down IT Cost
Improve Efficiencies within IT
EMERGENCE
Now, outsourcing has matured and enables Companies to :
• Enhance their Competitiveness
• Drive Transformational Change (handle more critical business functions
and processes)
More and more jobs such as financial industry equity research, actuarial
analysis and data modeling are moving to India with very encouraging
results. Additionally medical research and engineering services in industries
like aerospace and civil aviation are going to India.
Mature Vendors now have operations in many new markets (S America, E Europe, China)

13. Conclusion
Outsourcing is here to stay. It helps companies
remain focused on their core business and
leaves the back-room, non-core business to the
experts without losing control.
“Don’t just stretch the dollar, but create new dollars by unlocking
value and revenue”