If you are a salaried employee in the Netherlands, there's a 50-50 chance that Pink Roccade produces your paycheck. "If we are one day late, there's a big economic problem," says Hans Kateman, one of the communications managers for Pink Roccade, an IT outsourcing supplier headquartered in Apeldoorn, the Netherlands.
Even though the outsourcing vendor has service level agreements (SLA), it understands its systems must have a high degree of reliability to meet the nation's payroll. Many of the pay checks of the nation's top governmental officials come from Pink Roccade's data center. "We have never had a problem," points out the Pink Roccade executive. It doesn't want a pink slip from these high level customers for missing an SLA.
To ensure the paychecks arrive on time, Pink Roccade uses a data mirroring device. If one data center has a problem, another center can produce the checks.
The company was formed in 1950 as the Mechanical Administration, which was part of the central government of the Netherlands. Every 20 years saw a new incarnation. In the 1970s the department morphed into the Government Computer Center. In 1990 the department became a public limited liability company as part of a privatization move.
Last year the company changed its name to Pink Roccade. A separate company, Pink Elephant, provides infrastructure management services.
Kateman says the outsourcing vendor grew by acquisitions. Currently he says the company is the No. 4 player in the Netherlands' IT market. It holds second place in the national IT outsourcing arena.
Working 40 IT Contracts
Currently Pink Roccade is working 40 outsourcing contracts which have been signed within the last six years. "For a Dutch company, that's a lot!" exclaims Kateman. The executive says currently 70 percent of Pink Roccade's income comes from outsourcing. Contracts based on time and material produce the remaining 30 percent.
Pink Roccade began its outsourcing career catering to government markets, since that is what it knew best. Its clients include the big cities in Holland. The company then expanded its reach to the financial markets.
Pink Roccade is a traditional IT outsourcing vendor. "Our definition of outsourcing is to take over the IT function, both staff and systems," says Kateman. When Pink Roccade signs an outsourcing contract, it typically hires the customer's employees. Kateman says one of his company's strengths is its human resources department, which makes these transitions as painless as possible for the buyer's employees.
Kateman says workers in the Netherlands don't want to work for international outsourcing companies; they are more comfortable when a home grown firm takes over their company's IT.
Kateman believes in the promise of the Web, noting it makes connections between supplier and vendor easier and cheaper. Pink Elephant is an Application Service Provider (ASP). However, in Holland, Kateman says many business people worry about online security. "They don't trust the Net," he says. "They prefer a dedicated network."
Like most forward thinking outsourcing companies, Pink Roccade has formed a joint venture with an insurance company to construct a new application to replace its legacy system. The two partners plan to sell this application to other customers.
Sharing Profits from the Joint Venture
The partners created a separate company for this joint venture. This new company pays a management fee to Pink Roccade for the software development. Eventually it will keep the profits from the new application.
Kateman says an outsourcing vendor must be able to communicate with its buyers on all levels. "You have to be able to manage expectations," he points out. Patience is also a necessary ingredient. When an outsourcing vendor takes over a customer's IT department, "you have the same systems, the same people and the same problems." The executive says it takes at least six months to improve the process.
Buyers, on their part, must be realistic. "They have to be aware of their expectations and know why they are outsourcing," says Kateman.
Lessons from the Outsourcing Primer:
- When a buyer outsources a vital function like payroll to a vendor, SLAs are important. But a good vendor understands the importance of performing.
- If buyers outsource a vital function like payroll, they must make sure the vendor has mirroring sites in case there's a problem in the data center that usually produces the payroll.
- Buyers must be realistic in their outsourcing expectations. They must also understand their goals.
- Vendors must be able to communicate and have patience, especially if they assume the buyer's employees.
- In Holland, employees are wary of working for international outsourcing companies, feeling more comfortable working for a Dutch firm.