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The Importance of Offshore Support

J Ben Trowbridge

In today’s globalized world, businesses are constantly seeking ways to maximize efficiency and reduce costs. One strategy that has gained popularity is offshore support. Offshore support involves outsourcing certain business functions to companies located in other countries, often with lower labor costs. This blog post will explore the benefits and challenges of offshore support and provide tips on how to effectively maximize efficiency when working with offshore teams. Benefits of Hiring Offshore Support Offshore support can offer a number of benefits to businesses. One of the most obvious advantages is the cost savings associated with hiring offshore support services. Companies can often save up to 50% on labor costs by outsourcing their support needs to offshore companies such as offshore IT support. Additionally, having an offshore support team can help businesses maintain 24/7 operations, as teams located in different time zones can provide support at any hour of the day. Finally, offshore services can provide companies with greater scalability and flexibility. Companies can quickly ramp up or scale down their support staff as needed, and can take advantage of a larger pool of talent when looking for specialized expertise. Cost Savings The cost savings associated with offshore support are hard to ignore. Companies can save a significant amount of money by outsourcing their support needs to offshore companies. This can be especially helpful for businesses operating on a tight budget, as they can still maintain a high level of support without breaking the bank. Furthermore, companies don’t have to worry about the costs associated with recruiting and hiring in-house support staff, as they can access the services of offshore companies without any additional effort. This makes offshore support a great option for businesses looking to save money while still ensuring their customers get the support they need. 24/7 Operations Offshore support teams can provide round-the-clock service, which is essential for businesses that operate on a global scale. With offshore teams, businesses can provide 24/7 support to their customers, no matter what time zone they are in. This ensures that customers always get the help they need, whether they are working remotely, during odd hours, or in different parts of the world. Having remote teams like these allow businesses to provide better customer service overall, as customers can always reach out for assistance when they need it. Scalability and Flexibility Offshore teams also offer businesses scalability and flexibility. Businesses can hire as many or as few offshore support staff as they need, depending on their current workload and budget. This allows businesses to scale their staff up or down as needed, without having to worry about the long-term commitments of hiring full-time staff. It also gives businesses the ability to quickly find the right personnel for any given task, as they can quickly source and hire offshore staff with the specific skills required for the job. This can help organizations become more agile and responsive to changing customer needs. Challenges of Hiring Offshore Support While offshore support is a great way to increase scalability and flexibility, there are some challenges associated with it. One of the biggest challenges is communication. Working with an offshore team can be difficult due to language and cultural barriers, which can make it difficult to effectively communicate with one another. It’s important for businesses to ensure that their offshore support staff have the necessary language skills and cultural understanding to be able to effectively communicate with customers. In addition, businesses should also make sure that any documents or data shared with their offshore teams is correctly translated for them to understand. Communication and Language Barriers Another challenge of working with offshore support teams is cultural differences. Companies must be sure that their offshore support staff are aware of the company’s values, culture, and expectations. This can make it difficult for them to understand the customer’s needs and wants. Companies should make sure that their offshore support teams are given the necessary training to understand the company’s culture and values. Additionally, companies may need to provide their offshore support team with additional cultural training to ensure that they are better able to understand the customer’s needs. Cultural Differences Cultural differences can also lead to communication issues due to language barriers. It is important for companies to find offshore support teams that are able to speak the language of the customer. Companies should also ensure that the offshore support staff is given training on the local culture and language so that they can better understand the customer’s needs and expectations. Companies should also ensure that their offshore support team is aware of any local laws and regulations to ensure that they are adhering to them when working with customers. Data Security and Intellectual Property Protection Data security and intellectual property protection are both important elements to consider when outsourcing to an offshore support team. Companies should ensure that their offshore support team is trained on data security and privacy protocols to ensure that customer data is secure and protected. Companies should also have measures in place to protect their intellectual property, such as using encryption or watermarking technology. Companies should also ensure that their offshore support team is aware of any local laws and regulations related to data security and intellectual property protection. Tips for Successfully Implementing Offshore Support When implementing an offshore support team, it is important to define clear objectives and expectations for the team. Companies should provide their offshore support team with a clear understanding of their role and responsibilities, as well as the team’s expected timeline for completing tasks. Companies should also ensure that the team is properly trained and that they have access to the necessary resources to complete their tasks. Additionally, companies should clearly communicate their expectations to the team and ensure that any changes or updates to the project are communicated in a timely manner. Doing so will ensure that the offshore support team is able to provide the highest quality of service. Define Clear Objectives and Expectations When establishing …

Deal Dynamics – Outsourcing Models That Will Thrive

Debbie Fisher, Business Writer, Outsourcing Center

In 1984, Wendy’s coined the slogan “Where’s the beef?” For outsourcers, the answer in 2014 is unanimous—it’s business outcomes. Gone are the days of labor arbitrage. “Technology is changing so fast that the focus is now on outcome-based models where value is driven from measuring business impacts and linked to compensation,” predicts Lalit Dhingra, President of NIIT Technologies. Tracing the changes he’s seen in the evolution of the outsourcing market over the past 20 years, Amitava Sengupta, Global Solutions Head at HCL, agrees that today’s buyers expect clear business benefits. “Generation 1.0 outsourcing was centered on time and materials, tactical and staff augmentation. Then Generation 2.0 brought fixed priced, IT SLAs and megadeals. We are now seeing enterprises buy based on business outcomes and KPIs tied to business operational KPIs.” In recognizing the move from labor-centered deals to outcome-based contracts, it’s important to understand the key factors and trends behind this new generation of outsourcing. Trends Driving the Shift “The digital transformation is a huge change that impacts the entire business value chain,” suggests R. Arun Kumar, SVP, Application Services, at Capgemini. “IT leaders will need to reimagine what it means to partner with the business and share in value creation. This extends to funding mechanisms, budgeting, metrics, planning, governance models, and all aspects of how IT—as a function—is managed”, he adds. Passionate about how sourcing has evolved, Arun and other outsourcing industry executives identified five key trends enabling business outcome-based models: Mobility. Proliferation of smart devices and easy-to-use mobile applications are driving the demand for data. Everything from front end to back end applications are being digitized as consumers interact with businesses in whole new ways. Globalization. Economies are still volatile in many parts of the globe, but models must be able to go global and provide consistent delivery across every region that a firm operates in. Global experience is the key to the productivity curve. Local languages are increasingly important. Faster Pace of IT Changes. Technology changes rapidly. IT is out-of-date daily. Consumers have become the champion through the use of their smart devices. This is also leading to a Bring Your Own Device trend within IT. Lower Labor Costs. Globally available talent and fluctuations in exchange rates have reduced the role of labor and location. Cloud Computing. As-a-Service cloud-based offerings with ready-made platforms are predicted to have a huge impact on deal dynamics and the shift to the new model. Transaction-based pricing, multi-tenant deals drive more innovation and business outcome services. Building Business Outcome-Based Models Leading outsourcers agree that enterprises have already started to buy business outcomes. The digital enterprise is part of every deal. Rick Windon, VP of Strategic Business Development & Client Services at Zensar Technologies knows firsthand that cost reduction and risk transfer are only the foundation for this new outsourcing model. Revenue generation is essential with customers asking how providers can help them make more money. Windon suggests that “Revenue generation, market penetration, and brand awareness are all essential ingredients to the outsourcing equation.” “Business aligned SLAs are the cornerstone to today’s business outcome based model,” suggests Amitava Sengupta of HCL. “A major retailer rewrote one of their key business processes to ensure prices at the storefront were up to date 98% of the time by 8 am. This is a huge change from uptime-oriented SLAs.” Another area ripe for change is bundling across vertical stacks, predicts Capgemini’s R. Arun Kumar. Managed Intelligence as a Service and Managed Business Intelligence are top opportunities for build, manage, and run. Global adoption rates vary, but every region is shifting to business outcome based models, suggests Vipul Doshi, CEO of InterGlobe Technologies. Mobile technology deployment is driving the shift in North America, specifically the US, while social media and analytics are pushing business oriented models in Europe and Asia. Providers Respond with Innovative Services To facilitate this new model centered on measuring business outcomes, providers recognize the need to deliver new tools and frameworks. Realtime Dashboards. “Month-end reports must be replaced by realtime dashboards in order to respond to today’s omni-channel consumers,” details Sengupta. Processes & Frameworks. Closer relationships between business users, IT and outsourcers mandate changes to process and frameworks. HCL has created a benefits management framework for transformation, tying benefits to payments. Stepped up security. “Production workloads with serious business impacts demand security shift to the forefront. Innovative approaches commercialized from government applications are expected in the next few years,” predicts Scott Vogel , VP NA Sales at Unisys. Other Changes Fewer megadeals. There are still some large deals, especially in Europe, but many report that large megadeals are being broken down to match service needs or lines of business. Rick Windon offers: “the growing number of smaller deals in the $5 million to $40 million dollar range, allow corporations to drive a new level of precision into the engagements, ensuring achievement of desired business outcomes” Best of breed providers. How to get the work done with the best skills in a high quality environment is the key. IP protection has created what Lalit Dhingra at NIIT Technologies calls virtual captives where business users and IT have more control. “Company resources work with outsourcers with best in class skill set,” concludes Dhingra. Flexible terms, shorter duration. “Right sizing to the environment is critical. Outsourcers must be able to adjust to geographic changes, business trends and sales volumes,” indicates Scott Vogel. Matching the quick pace of technology change, “5-10 year deals are fewer and fewer, with 3-5 year contracts more common,” he adds. CIO’s Role There’s no doubt the role of the CIO has changed when it comes to selecting an outsourcing provider. Many predict even further changes in the next few years. Enabler, integrator. “CIOs are no longer focused on IT or legacy IT but are quickly becoming business experts, partners that can add real business value through IT. Conversely, IT decision-making is no longer only the CIO’s mandate and is in fact moving to business units outside of the CIO’s office.” concludes …

Get More Bang for Your Buck: Do’s and Don’ts in Formulating Cloud Computing Contracts

Outsourcing Center, Karthik Nagendra, Business Writer

In late September, high-profile cloud storage start up Nirvanix told its customers to stop replicating data on its servers and migrate to other providers like Microsoft Azure, IBM SoftLayer and Amazon S3. For several reasons, Nirvanix, sitting on a tidy $70 million in funding, was shutting down . Users had until October 15 to download their data. It was a wakeup call for the community of cloud providers, users and technology analysts. Business compulsions can take a heavy toll on cloud users. And incidents such as these where a cloud provider shuts down practically overnight gives credence to the voice of those who believe that cloud computing can’t be trusted. While business failure is difficult to predict, you can still aim to gain better value from the service. The cardinal rule is that before you sign a cloud-based outsourcing contract, ensure your contingency and disaster recovery plans are water tight. Mitigating risk is the responsibility of the end user as is extracting value from outsourcing contracts (with or without cloud-based elements). Difference between Cloudsourcing and traditional outsourcing Cloudsourcing is when you engage a provider for services you may have built or assembled in-house. It sounds very much like outsourcing and in many ways it is. The differences, however, are in the details. Cloud services largely use a pay-per-use model with little or no volume commitments. On the other hand, most outsourcing contracts depend on an annual or monthly fixed contract. Traditional outsourcing models have focused on service delivery for dedicated infrastructure or for specially-skilled talent. Contracts are changing. Over the last three years, practically every outsourcing contract has some element of cloud-based services. And given the benefits of moving apps to the cloud, the cloud component of nearly every outsourcing contract is likely to continue to grow in the future. This means your outsourcing contract must be designed to deliver cost savings, productivity improvements and shorter time-to-market for the cloud elements. Contract Do’s and Don’ts Today, every outsourcing contract must have the following considerations: Short-term Outsourcing/ Cloudsourcing. A short-term contract is essential as business demands will vary, changing the amount you Cloudsource (as a total of the outsourcing contract) as well as the nature of what you Cloudsource. In addition, Cloud technology is undergoing rapid change. Short-term contracts will help you decide how you want to leverage the changes. Insulation from changes in delivery of Cloud services resulting from acquisitions and mergers. The cloud eco-system innovation is being led by small, agile and widely differing companies. These companies are frequent targets of acquisitions. Acquisitions can lead to major changes in provider-customer relationships, and most of the time, the changes will be in favor of customers. But that isn’t always the case, so you must protect yourself. Balance between pay-per-use models and billing based on service consumption slabs. Fluctuations in business can result in major spikes in cloud-based service consumption. This means there is some benefit in pre-negotiating slab-based pricing. Within each slab, billing should be based on actual consumption. This means as your consumption of the cloud services grows, each slab delivers increasingly favorable pricing. Option to take additional volumes to a different provider. Moving additional volumes to a different provider may not always result in a cost saving. It may also mean sacrificing the lowered pricing that becomes available with each slab. However, changes in the business environment may demand that you lower the risk to your business by opting for multiple providers. Visibility into operations, management and governance. Traditional outsourcing contracts ensure that customers have adequate visibility into and control over operations, management and governance related to the outsourced service.  That is one reason most organizations are comfortable with outsourcing a number of complex processes and infrastructure. They have visibility into the operations, technologies, people and quality standards being applied by the outsourcing partner to their processes and infrastructure. Periodic reviews with the provider are meant to bring these operations and management practices in line with the vision and standards of the business. This is not completely replicable in cloud-based services that are standardized and centralized to ensure that low-cost services can be provided to a number of concurrent users. However, your contract with the outsourcing partner for cloud-based elements must baseline the operations, management and governance standards. Security standards as good as those for outsourcing sensitive business processes. With critical workloads, applications and data storage migrating to the cloud, your contract should ensure extremely high levels of security. In the event that security standards are not met, opt for a private cloud where it is easier to set up the security layers your business demands. Outsourcing has changed dramatically. Procurement for IT infrastructure and services must undergo a radical a transformation to extract benefits from the cloud elements of an outsourcing contract. This means getting it right from the start. Before you ink a contract, ask yourself this question: was my RFP designed to attract services providers who truly understand cloud? If you answer “yes,” you can expect a contract to deliver what you want.  

Big Data Trends: New Uses, New Challenges, New Solutions

Outsourcing Center, Patti Putnicki, Business Writer

It’s hard to find a business enabler that’s evolving as quickly as big data analytics. Big data trends are on the minds of business owners everywhere. This undisputed darling of the loyalty program and retail world has now infiltrated nearly every industry, from transportation and healthcare to insurance and supply chain management. It’s the catalyst for a new marketing mindset, where targeted offers are not only mapped to what the individual customer likes but how many “likes” that person is worth in social media. While Big Data trends are morphing as fast as Lady Gaga’s wardrobe, so are the accompanying challenges. How do you know if the data is ‘good?’ How can you validate information without delaying real-time analysis to the point where the opportunity has passed? And how do you use Big Data responsibly, increasing customer intimacy without crossing the line to customer voyeur? We set out to find the answers and look at the emerging big data trends. Big Data is Watching You—with Your Permission, Of Course While knowing who you are and your position in life is still important, it’s the ability to look at what you do that is driving the analytics surge. “There is a wealth of new behavioral data out there today,” explained Carl Madaffari, senior vice president, database solutions at Epsilon. “Take telematics (systems used in automobiles that combine wireless tracking with GPS tracking), as an example. Insurance companies are using this technology to monitor customer driving behaviors and adjusting rates accordingly. The value proposition is this: if you give us permission to monitor your driving behavior, you will be rewarded with lower rates if you prove that you’re a good, defensive driver.” Once an individual checks that all-important, “yes, I give you permission” box, it opens the door for other types of interactions—like text coupons for discounts at nearby restaurants or special offers from other retailers en route. “If there’s one emerging trend around telemetric data, that is collaboration and data sharing with business partners. Insurance companies work with restaurants, retailers, car dealerships and other types of vendors who could benefit from the data they’re gathering,” Madaffari said. But, it’s not just the automotive and personal lines insurance sectors that are getting in on the act. “Think about the growing use of Fitbits® and similar products that track an individual’s movements, sleep patterns and physical activities—all behavioral data that could help healthcare providers monitor patient care and insurance companies reward customers who adapt healthy lifestyle choices,” Madaffari said. “They can share this data with the local juice bar, and at the end of a run or workout, the Fitbit®-wearing consumer is rewarded with a coupon for a free kale smoothie to finish off his or her day.” Loyalty Programs Transform from “Earn and Redeem” to “Surprise and Delight” According to Madaffari, the loyalty program space is in the midst of transformation. While those old, familiar points programs still exist, that market is saturated. So, many consumer-facing companies are trying something new: the sneak attack. “Instead of purchasing nine coffees and getting the tenth one free, companies are testing the concept of ‘unexpected rewards.’ The idea is to surprise and delight loyal customers with an unexpected discount or bonus,” Madaffari said. It’s important to note that, while buying a lot of stuff from a company makes you a valuable customer, so does your perceived influence over other prospective buyers.  Are your blog posts highly likeable?  Does your Twitter following rival that of George Stephanopoulos? Your “net” worth just increased. “Through the cloud store, we can quickly pull up an individual’s connectivity score and identify not only who is influential in social media but what kind of followers that person has, ” Madaffari said. “So, for example, if a person is heavy into home electronics, is typically a positive speaker when she posts, and has numerous followers and ‘likes’ among technology lovers,  these factors might prompt  the salesperson at a boutique electronics store to give her a 40 percent discount on her purchase that day.” Using face recognition technology, an in-store retail system might identify a frequent shopper at checkout, ‘see’ that he bought two red sweaters on line and has looked at a jacket twice but never finalized that purchase. Because he has a large social following among the fashion-forward, the salesperson might offer him the jacket he’s been eyeing at a 30 percent off, just-for-him price. Cool, right?  To some. Other people might find the whole concept a little bit creepy. “We have to walk a very fine line with how we use the data we collect. It’s the balance between learning what your girlfriend likes so you can be a better boyfriend to becoming the creepy, stalker guy staring into her window so she’s never out of his sight,” Madaffari said. Insurance Underwriting Of course, all of the Big Data trends aren’t focused on generating consumer response. We’re seeing Big Data make its move to more traditional industries, the most notable of which is commercial insurance. In the past, underwriting wasn’t necessarily a moneymaker; companies relied on investment income for revenue. Today, it’s a brand new world. “In this era of low interest rates, insurance companies need strong real-time analytics capabilities to achieve the elusive underwriting profit and sustained growth,” explained Amit Unde, chief architect and director of insurance solutions for L&T Infotech. “Going forward, the competitive battles will be played on the data turf. It’s the companies that leverage both external and internal Big Data, predictive analytics and adoptive underwriting models that will come out on top.” In the past, commercial underwriting was a back-office function, with decisions based on agent submissions coupled with the underwriter’s intuition.  Because agents have a vested financial interest in gaining approval at a competitive price (it’s called commission), their submissions sometimes painted a rosier picture than what actually existed. “With Google Maps and location intelligence services, the underwriter can view a property from all angles and assess distance from a coastline, flood plain …

The Flexi-pricing Route to Cloud Innovation

Outsourcing Center, Karthik Nagendra, Business Writer

I’ve got a little story about cloud solutions. A wealthy looking woman entered an optician’s shop, pointed to a very stylish frame and declared to the shopkeeper, “I’d like to buy that. How much?” Gauging at a glance her capacity to pay, he replied: “$500.” When she didn’t bat an eyelid, he added quickly, “for the frame.” “And the glass?” she asked haughtily. “$1000,” said the shopkeeper, tremulous at his own boldness but looking for any sign of outrage. When he saw none, he quickly added, “for each.” There’s often a thin line between flexi-pricing and fleecing, as the joke above illustrates. But the truth is that sellers often try to gauge how much a buyer is willing to pay, and fix rates accordingly. The sensible buyer is happy to pay a price that reflects the value received from the product. Reaching that balance is an age-old dance, with new moves still being added. One such move borrowed from other industries is flexible pricing. Airlines have for long sold seats for a higher price on dates closer to the date of travel. We also have witnessed airlines offloading unsold tickets at throwaway prices some three hours before take-off because an unoccupied seat on a flight is nothing but a complete waste of opportunity. Flexi-pricing sends shoppers into frenzy during ‘Sale’ periods—it tempts people to spend more by asking for less. The origins in tech sector In the technology industry, flexi-pricing was embraced by the outsourcing industry pretty early in the day, with service providers billing their customers on a cost-plus basis—and the bill amount could differ from month to month, depending upon the number of people the service provider hired to carry out the work. Flexi-pricing evolved a notch when service providers started to add value and were rewarded for it accordingly. When product development was outsourced, service providers asked for and began to receive a percentage of the royalty on product sales. BPOs (business process outsourcing firms) too got into the act, charging clients per transaction rather than per employee. The higher the number of transactions handled, the higher the payment received by the service provider, while the cost per transaction fell for the buyer of the service. This acted as an incentive to automate processes, leading to better performance and enhanced income for the BPO, but also shorter resolution-time for clients. Evolution leads to innovation With Cloud computing taking off, flexi-pricing has become the new norm, in turn setting off a chain of innovations. Those opting for cloud solutions are paying only for the amount (of server space, virtual desktops or package software) used without having to actually buy anything. Some decades ago you could only order an entire pizza even if you could consume only a slice. With evolved pricing, you can now ask for just a slice at many pizzerias. But can you pay for a bite at a time? If it was a digital pizza, you could—and that is what Cloud computing has made possible. Of course, this has made the payment collector’s life incredibly complicated. Keeping track of who’s using what and how much and for how long is the challenge. Fortunately, tools automatically keep count, measure out billable events and so on. Improved process automation will lead to further evolution of transaction-based pricing—and a lot of new products and services in the following areas: Management tools: Cloud solutions already deliver intelligent governance that allows customers to consolidate and virtualize resources, allocate and manage applications, improve service levels, and reduce operational costs. This will reduce manual monitoring drastically and allow for the monitoring to happen from remote locations at lower costs. Predictability tools: How much of that particular software are you going to need in the future? How much server space? Will your needs change from month to month, day to day? New tools will be able to estimate future demand based on historical usage and your own business plans. Analytical tools: While large companies are making their business intelligence and predictive analytics solutions available on the cloud, we could foresee startups offering a newer and more nimble way to analyse data. Innovation takes over It’s a virtuous cycle that will lead to further innovation on the Cloud platform, fuelling early-stage funds inflow into this sector. IDC has predicted earlier this year that over $25 billion will flow into acquisitions of companies with cloud service offerings until perhaps the end of 2014—a big jump from the $17 billion in acquisitions during the previous 20 months. A whole set of innovations are also likely to be industry specific. Take, for instance, the healthcare industry. With doctors using mobile phones to receive photos of ailing patients, then remotely diagnosing the condition, or using collaborative platforms to share patient notes, x-rays and MRI images with the patient himself or with another expert, it’s almost certain that HIPAA-compliant cloud-based collaborative platforms are on the horizon. Similar stories will be written in other fields, such as education, manufacturing, hospitality, automobile, aviation, and nearly any field really. Could the sky be the limit for cloud solutions?  

The Do’s and Don’ts of Payroll Outsourcing

Outsourcing Center, Patti Putnicki, Business Writer

Payroll outsourcing is an excellent way to improve accuracy, streamline processes and offload time-consuming, often tedious tasks to a proven specialist. While the service is designed to simplify life for the client company (and the people in it), without careful planning or adherence to some best practices, the whole thing can get a little complicated. We spoke to some industry experts on both the provider and client side to pinpoint common stumbling blocks and identify best practices – essentially everything you need to enter this type of engagement with eyes wide open. DON’T Dissolve Your Entire Payroll Department While it is true that a great motivator for payroll outsourcing is FTE reduction, slashing to the bone will only hurt you. “One of the biggest mistakes companies that are moving from in-house to an outsourcing relationship can make is getting rid of all of the internal payroll experts when they outsource,” explained Jim Adams, executive director of payroll services at OneSource Virtual. “It’s critical that companies keep one, preferably two, hands-on payroll professionals who understand payroll laws, how the calculations work and can check for accuracy. Every outsourcing partner needs that type of company liaison.” According to Adams, client companies still have to take an active role in some parts of the payroll process. “Outsourcers do a lot, but we can’t do everything. We can’t check for timecard accuracy, or make sure every work site actually entered their employees’ time in the system,” he said. It’s like leasing a car versus buying a car. “Even if you don’t own the vehicle, you still have to fill it with gas, change the oil and turn on the ignition, or it’s not going to take you anywhere,” Adams said. “You have to do something to make the car run, whether you own it or not. The same is true for payroll outsourcing.” DO Identify Your “Out of the Ordinaries” and “Special Cases” Up Front Here’s the reality: if you lift and shift a payroll operation with issues, those problems won’t get solved in outsourcing. If you don’t communicate your company’s unique payroll idiosyncrasies before the migration, you’re sure to hit a roadblock. “You have to take an honest look at your ‘special cases’ and document your ‘issues’ — everything that causes you pain,” explained Beth Jung, a veteran HRIS consultant who spent a good portion of her career on the client side. “Those are the very things that will bite you in implementation.” Larry Dunivan, chief information officer, for Ceridian HCM, adamantly agrees. “If you have unnecessary problems that add complexity, the problem is not the process – so outsourcing won’t be the panacea,” Dunivan said. “For example, let’s say someone has negotiated a union contract with some odd overtime calculations, and unusual vacation accruals. It’s a tactic that probably got the contract signed, but also created a tremendous administrative burden, because, by its very nature, it can’t be built around best practices.” Translation? You’re just not going to see the efficiency gains. “In that situation, there are really two choices: you can go back and renegotiate the union contract, or you can keep the contract, realizing that you are going to pay more for your payroll processing,” Dunivan said. “In this case, outsourcing makes a lot of sense, but it is not necessarily going to save you money.” DO Seek Out Your Outsourcing Partner’s Advice Although the union contract example is pretty black and white, Dunivan is quick to point out that there are other, easier policy changes that could increase efficiency and reduce cost. So, it’s important to use your outsourcing provider as an advisor as well as an executioner. “Your provider is a payroll specialist, who understands processes, knows how to scale and has a wealth of knowledge gained from previous engagements. Let your provider guide you on the best way to reduce complexity or deal with recurring issues. Chances are, we’ve seen that issue before,”  Dunivan said. The “easy” fixes are typically internal policies that exist because “this is the way we’ve always done it.” “It could be something as simple as altering the way an employee is onboarded or making sure employee self-service requirements are enforced,” Dunivan said. “Sometimes, what seem like very minor things can make a big difference in efficiency and ultimately impact your pricing. The right partner can help you be more efficient and reduce costs where you can.” DON’T Spring the Change on Your Employees According to Jung, one of the biggest factors in a successful payroll outsourcing transition can be summed up in two words: Change Management. “Communication is extremely important, on all levels,” explained Jung. “Your HR team has to understand that the change will make their jobs easier and take away redundant tasks. They also need to understand and become excited about what their new positions will be. Talk to them about what they will be doing instead of all the manual work you’re taking away with outsourcing,” Jung said. “That way, they’ll stay focused on the transition and not on whether or not they’re losing their jobs.” It’s also important to start talking to employees early, educating them on how to use self-service portals and easing their fears about anything that will look or work differently in the new environment. “If your employee is going to get paid by direct deposit instead of paycheck, start talking about that early on,” Jung said. “If they’re going to use a self-service portal for changes instead of picking up the phone and calling HR, explain how everything will work and let them see for themselves, before the change.” Jung recommends identifying change agents – employee advocates in the trenches to keep everyone positive about the changes to come — while keeping the rumor mill at bay. “It’s important to keep employees not only informed, but to talk about the features that will make their lives better. For example, if the change means mobile portal access –talk about that 24/7 access. If it’s …

Why is Outsourcing Innovation So Hard? Here’s How to Make the Impossible Possible!

Outsourcing Center, Beth Ellyn Rosenthal, Senior Writer

Talk to most outsourcing buyers at the outset of their engagements and innovation is always on their wish list. Talk to them two or three years later, and the one thing they wish they had gotten is innovation. The lack of innovation in outsourcing seems to be one the few things they are unhappy about. Why is innovation so difficult in outsourcing relationships? Differing perceptions are major part of the problem, according to KVL Somayaji, Global Transition & Transformation community leader for IBM. “While outsourcers provide ROI and can demonstrate tangible savings, buyers are interested in its impact on the ground. That is a matter of perception, making innovation difficult to prove,” he explains. Another problem may be the definition itself. “Disruptive innovation may not fit into a business process management context,” says Keshav Murugesh, Group CEO, WNS Global Services. That kind of innovation, which appears at regular intervals at Google and Apple, “while not impossible, will be few and far between” in a typically outsourcing engagement, he says. The importance of trust and collaboration for innovation Instead, innovation that is possible in a BPO or ITO relationship is “more of a two-way street,” Murugesh observes.  And he believes partnership is the requisite foundation. “If the engagement model is built around partnership, then innovation is more likely to happen,” the WNS executive believes. “Openness, trust and the will to collaborate,” are the key drivers to innovation, adds Rich Jaso, vice president, Global Operations, Unisys. These behaviors create an environment where both sides “have the freedom to display new ways of thinking.” Buyers and providers in adversarial mode, on the other hand, can count on no or minimal innovation, he has observed. “Both sides have to keep each other honest,” adds Subramanian Gopalaratnam, group head of innovation for Xchanging. And the will must be there on both sides for innovation to happen. The WNS executive believes innovation can happen if it’s “an aspiration for both sides.” He says it can’t be lead by service level agreements or by pressuring the service provider. “Innovation happens in a relationship of equals,” he says. In addition, the relationship’s maturity determines the level of innovation possible. “Some innovations may seem very risky at the start of a relationship, especially when dealing with non-linear models,” according to Murugesh of WNS. How do you define innovation? Murugesh equates outsourcing innovation like viewing the hour hand of a clock. “It does not move if you keep looking at it. It’s only after a point in time that you see it has moved,” he explains. Somayaji of IBM adds that the concept of innovation changes from industry to industry, even from process to process. “If there is a concept that is used in different contexts by different stakeholders with different meanings at different times, it probably is innovation,” he says. Yet he took a stab at an all-encompassing definition: “any project or process that can deliver significant tangible and intangible benefits by using emerging technologies that are ahead of industry standards.” Gopalaratnam says innovation requires “a different thought process.” In his experience, innovation “is not about shiny things. It’s about a sustained effort to think differently.” Murugesh of WNS adds innovation in outsourcing comes in many forms:  Completely new, disruptive business idea A  never-seen-before, high-impact business outcome that may create a new revenue stream A dramatic idea that changes the way the client engages with its end customer An idea that can change the direction of the client’s organization internally Jaso of Unisys adds an innovative idea doesn’t have to be completely new. It can be “an old idea used in a new way.” How buyers can aid innovation The experts say both parties are equally at fault for not producing the desired innovative outcome. Outsourcing buyers serious about innovating should do the following: Get everyone on board. Sandeep Malhotra, associate vice president, industry solutions, HCL, observes that the biggest hindrances to innovate are getting  buy in to the idea and dealing with the inertia to change. He says it is often easier to deal with both issues if the new idea has a measurable business impact, either revenue upstream or margin improvement or both. “You have to start a change management initiative early in the game,” he suggests. Look both upstream and downstream too. Jaso of Unisys says clients frequently ask his team to innovate a certain segment of an IT process. But things are also happening upstream and downstream. He says clients have to look at the entire process and be willing to work on all the pieces if they want to solve the problem. “Tangential things impact processes. You have to address those too,” he says. Invest. Somayaji of IBM says buyers need to invest both time and money if they desire IT innovation. Time is just as important as money, he adds. “Buyers can help by spending significant time in planning, so the long-term strategy is the culmination of several near-term strategies.” Ask insightful questions. Murugesh says clients can help by asking insightful questions, like: What more can I drive into my processes to make the outcome more dramatic? What kind of analytics can change the way I work? How can I generate a new revenue stream with my existing sales and marketing force? Stop focusing on the”how.” Jaso of Unisys believes the real focus should be on the “what.” He says focusing on the “how” is an inhibitor to change. He believes the ‘how’ “should be open to adopting best practices and better ways of doing things.” Adopt a long-term perspective. Somayaji of IBM believes any innovation road map must be long term, “while not losing sight of the low-hanging fruits: the near-term benefits.” Don’t fixate on cost reduction. “This inhibits innovation,” says Jaso of Unisys. Clients who live and die by their outsourcing contracts “don’t have the right mind set for innovation,” he says.  “You have to look broader than just this month’s SLA or KPI.” Stop thinking in silos. Real innovation …

The F&A Forecast: 14 Challenges and Six Solutions

Outsourcing Center, Beth Ellyn Rosenthal, Senior Writer

The finance and accounting function, along with HR, have traditionally been the BPO processes that companies testing the waters of outsourcing get wet with first. Today “transactional outsourcing has been leveled to a simple commodity,” says Michael J. Alfonsi, Managing Director, BancTec Financial Transaction Services. So what are FAO’s challenges 20 years later? Processes are seasoned and systems are humming. So what keeps CFOs up at night these days? We interviewed four of the industry’s leading experts to find out. The biggest change is those demanding buyers. You know, the ones in their third generation of outsourcing.  “As F&A buyers and providers continue to mature, so do buyers’ demands,” observes Sanjay Jain, head, Global Transformation Practice, WNS. These experienced buyers are putting the pressure on their service providers to perform.  They are demanding that their service providers “finally come up with the famous and ethereal ‘value add,’” notes Alfonsi, who is responsible for the BancTec’s portfolio of outsourced financial solutions,  But this time, he says, “they need real value, like analytical tools, crisp process improvement tools involving fact-based reviews and strong business cases.” Knowledge process outsourcing is one way to produce that value add. In addition to these demands, according to Amit Sharma, general manager, Corporate Business Services for Wipro, pressures on the finance department have intensified over the last five years and not just because of the global recession. “More stringent regulatory regimes and a changing demand from the business to have finance become a true partner have created a need for faster information and a more agile response to change, particularly with mergers, collaborative ventures and divestments,” he says. And if that’s not enough, Sharma adds buyers now expect the finance function “to provide greater business insight, give more relevant decision support and make recommendations regarding business opportunities.” Oh, and buyers still insist their service providers meet routine expectations like closing the books on time. In fact, V. K. Raman, global head, Domain BPO Services for TCS, says this year CFOs who want to “sleep better” have to adopt a completely new mind set. They have to “stop considering themselves the custodians of the financial records and the monitors of internal financial controls.” Instead, they are in the process of morphing into trusted advisors to the board and top management. “CFOs are required to anticipate risks and develop scenarios to meet them,” he says. 2013’s current challenges The experts call out five different issues they have to conquer this year to be successful. They are thorny all and include: Access to working capital. Alfonsi of BancTec says “just because the first shock waves of the financial crises have eased doesn’t mean real concerns about cash flows, payback periods and access to capital have changed. Instead, they are actually “more important now.” He notes organizations that are still capital constrained are “pressed harder than ever,” and companies sitting on cash “require a preponderance of evidence before they deploy it for a project—and even then in small increments—because the atmosphere is still risk adverse.” Sharma of Wipro wonders how business can grow and maintain competitive advantage “when they are faced with an environment where funding and equity are scarce and expensive pressures remain on cost reduction.” How do you grow without the money to grow is the existential question. IFRS compliance deadlines. Jain says EU countries must finally implement the road maps they established to comply with the international financial reporting standards (IFRS) this year and next. “The next phase of challenges is translating the strategy into clearly actionable plans,” he says. Many companies this year are creating partner ecosystems of technology providers and outsourcers “to help them navigate the next few years.” Add SAS-70 and SOX (Sarbanes-Oxley) to the pressures of regulatory compliance in the US. Staring down regulators is a task CEOs want to avoid. FAO executives have to be on their toes here. Technology. In 2013 new technologies like cloud and mobility “pose a threat to the agility of those organizations that are locked into traditional technology delivery methods like mainframe licenses and at-desk-only work situations,” says Sharma of Wipro. 2013 might be the year they are forced to move into the 21st century, kicking and screaming. The emphasis on accuracy. Jain says CFO organizations have “increased their glare on internal and statutory auditors alike.” This means they expect their F&A suppliers to “ensure transactional accuracy and strict compliance in a highly visible and transparent manner.” For that reason, Raman of TCS says buyers are increasing their demands for regulatory risk-related services, especially around financial reporting. “Because of the recent global financial crisis, governments and regulatory bodies around the world have become more stringent in enforcing rules and reporting requirements,” he says. More global operations. More customers that have global operations are turning to it for help with managing reconciliations, maintaining books in multiple currencies and formats, and identifying areas of potential risk, according to TCS. In addition, companies are facing “market pressure with global competition,” he adds. And global expansion can only increase because that is one of the surest ways companies can grow in today’s economic environment. The pace of change. Rajashekaran Gokulan of Xchanging adds the pace of change “continues to pick up speed, which impacts many of the above. For example, governments are introducing regulation “at an uncompromising rate, companies are launching new technologies on an almost daily basis and business models are rapidly evolving in almost every industry sector,” he points out. Inhibiting issues Many CFOs are finding a range of issues inhibit their ability to master these challenges. The experts say these roadblocks include: Accurate and timely information is difficult to get. Sharma of Wipro says this is “because systems are inflexible and fragmented.” TCS adds disparate systems running financial applications add to the complexity. The wrong focus.  The Wipro executive believes too many business units are preoccupied with transactional and tactical issues. This prohibits the finance department from providing “innovative, forward-looking strategic tools.” So processes stay “inflexible and inefficient,” …

The Pros and Cons of Single and Multiple IT Providers: Competitive Tension versus Accountability

Frank Usher, Managing Consultant

When considering sourcing alternatives for IT services, buyers must make a fundamental decision on structure. Do you want a single IT provider or multiple IT providers? Both have their pros and cons. Neither of the approaches is wrong. But each presents unique challenges, both in operations and in provider management. When IT outsourcing initially evolved, very few buyers gave any thought to splitting the provision of services and using multiple providers. The big focus was on handing all of internal IT to a provider because that decision came with end-to-end accountability. The biggest concern was to ensure that the client did not interject itself into the workflow processes to the extent that it abrogated provider accountability. Benefits of multiple providers Recently, splitting the service provision among two or more providers has gained popularity – it’s a way to provide “competitive tension” between two or more providers. Buyers can compete any addition or change to their services so they can receive the best pricing. It also permits the movement of scope between providers who have current knowledge of the client environment and have contracts in place, should there be service issues. Today, buyers use a multi-provider solution to gain “best-of-breed” providers for specific portions of the overall scope. Perhaps one provider is better at applications support than infrastructure or another has a specific strength in a particular area such as SAP services. Benefits of a single provider Awarding all IT service provisions to a single provider means the provider has full accountability. The provider is responsible if a service fails, regardless if the failure is caused by problems with an application or the infrastructure. Buyers can require the provider to commit to an “end-to-end” SLA for application availability, and that accountability will be most closely aligned with the user experience. In this model, hand-offs within the support process are all within the control of a single provider, so delays in response and resolution should be minimized. A single provider monitors the management tools that evaluate both the application and infrastructure performance, so trouble shooting and fault isolation are more effective and quicker. From an operational perspective, all the operational hand-offs between applications and infrastructure are internal to a single provider. So there is no vested interest in finding another party responsible for a failure. The provider just has to remediate the problem and restore the service. Challenges of a multi-provider approach Using a multi-provider service environment means the providers are only accountable for the scope of services they provide. If there is a service failure, the service desk must do a more thorough level of triage to determine which provider should get the initial incident ticket. That initial diagnosis may or may not be correct, and there may be subsequent hand-offs between providers until all parties work together to determine the actual cause of the failure. This activity can present issues in actually getting incidents resolved in expected time frames. For example, if the restoration of service SLA is within two hours, the clock starts ticking only when the final owner of the incident gets the ticket from the resolution queue. Any time spent triaging where to assign the incident ticket does not count against the provider resolution time. Importance of provider management Because of the characteristics of each approach, provider management will be significantly different. With a single provider, there is a one-to-one relationship between the client and the provider with very clear lines of accountability. In a multi-provider environment, there is a need for someone to own overall accountability. That responsibility generally falls to the client unless leadership contracts an additional party to be an integrator that will have operating level agreements with each provider and be held accountable. With multiple providers there is also a need for a multi-provider council that meets frequently to provide proactive oversight of operational issues that transcend providers. This ensures there are no breakdowns in workflow and assures operational continuity. This oversight is not trivial and will take significant effort on an ongoing basis. It is not always easy to make sure there are no issues between providers that can affect the end-user experience. Buyers need to give the structure of their IT sourcing serious consideration before embarking on the sourcing journey. Left unplanned and unprepared, you can face  continuing operational and user satisfaction issues.  

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