outsourcing issue #18

8/8/2019 Outsourcing Issue #18

1/47

KDN NO: PP14967/02/2011 (029501)MICA (P) 140/07/2009

PREMIER MAGAZINE ON BUSINESS AND TECHNOLOGY SERVICES INDUSTRY

I S S N 1 9 8 5 - 1 0 0 6

ISSUE #18, 2010

Sustainingvirtuous circleof metricsframework

Pickingthe mindof servicebuyers

Assign bestpeople forGlobalisationinitiatives

www.the-outsourcing.com RM12, S$8, US$8

An interviewwith CIO of MAS

Enabling business transformationthrough outsourcing practices:


2/47

alaysian Investment

Development Authority

Malaysian Investment Development Authority


3/47

CONTENTSEuro bloc will remain major ITOmarket: Nasscom

An interview with CIO of MAS:Faridah Abdul Rahman

Picking the mind of servicebuyers

Sustaining virtuous circle ofmetrics framework

Assign best people forGlobalisation initiatives

Establishing safety inworkplace

Roaring success at CDPRoadshow

8

12

16

20

20

22

22

38

40

40

8

16

38


4/47


5/47

If you deprive yourself of outsourcing and your competitors do not,youre putting yourself out of business.

Lee Kua Yew (Ex-Prime Miister, Sigapore)

n this edition, we train our ocus on Chie Inormation Ofcer Malaysia Airlines (MAS) Faridah Abdul Rahman, who

shares with us the reasons behind her companys continuedtrust and optimism with outsourcing.

When MAS embarked on IT outsourcing back in 2003, thebig target was to transorm into a more service-orientatedrganisation with better end-to-end processes not just tout costs.

Outsourcing has also paved the way or Faridahs Group ITepartment to spend more time towards business enablement

nstead o being just a support entity.Faridah, who joined the company some 25 years ago,

says the cost savings were achieved over time as the GroupIT department matured through the projects.

Today, MAS boasts better understanding on relevant costrivers and whether certain costs are necessary to support ornable the business.

Recently the airlines inked a fve-year outsourcing contractwith TATA Consultancy Services (TCS) or end-to-end ITnrastructure services.

The engagement was in line with MAS BusinessTransormation Plan (BTP2) to align the role o IT to the

irlines P&L (Proft & Loss). One o the key initiatives includesne-tuning its IT outsourcing strategy to deliver the required

business results at lower cost.uring the interview, the CIO also delved on the actors

she considers in evaluating vendor capabilities.The over Story is part o our continuous eorts to inuse

ore o buyer perspectives in the overall content o thisublication.

eanwhile, in another related article Picking the brainf service buyers regular columnist Jerry Durant explains

why an organisations readiness is an important componentto the success o outsourcing engagements.

The main drivers o outsourcing initiatives must be able toanage the organisational change, he writes.

aturally, peoples reaction to change can be unpredictablend irrational.

e notes that, somehow, change is difcult even when itsonsidered essential to a business. This is because it requires

someone to move rom a comort zone, albeit marginally

roductive, into an arena o uncertainty, but one that has astrong success potential. Sritharan Vellasamy

FOUNDER / MaNagiNg EDitORSth VellaSamy

CONsUltaNtSd Surian

dt [email protected]

sUb EDitORS Vella

jOURNalistJ Hoo

aRt DiRECtORStv CHoo

gRaphiC aRtistShf oSman

CONtRibUtORsT menonDth llew, mhd arSHaD

ss [email protected]

Vk ViSnoa . a. KarKHaniSrsh naTHen

ctct [email protected]

worDbs meDia (001645509-W)27-1, Metro Centre, Jalan 3/146,Bandar Tasik Selatan,57000 Kuala Lumpur;Phone: +603 9056 4770, 9058 0971;Fax: +603 9056 4771, 9058 0972

edts noe

et

[email protected]

KDNNO: PP14967/02/2011 (029501)MICA (P) 140/07/2009

PREMIER MAGAZINE ON BUSINESS AND TECHNOLOGY SERVICES INDUSTRY

I S S N 1 9 8 5 - 1 0 0 6

ISSUE#18,2010

Sustainingvirtuous circleof metrics

framework

Pickingthe mindof service

buyers

Assign bestpeople forGlobalisation

initiatives

www.the-outsourcing.com RM12,S$8,US$8


Enabling business transformationthrough outsourcing practices:


6/47


7/476| Outsourcing | May-June 2010

Outsourcing | news bits

Malaysias outsourcing

industry is expected to grow be-tween 15% and 20% this year, asmore companies outsource theirservices to remain competitive.However, to remain competitivein the outsourcing market in theuture, Malaysia will have to ocuson segments where it can have anedge, such as the mid-layer seg-ment, says Interactive IntelligenceIncs regional sales director (Asean),David Toh Yue Heng.

I oresee good growth in theoutsourcing industry because ithelps to drive down cost, Toh toldBernama.

According to Toh, Malaysias ad-vantage is its multilingual talents.We can speak multiple languageapart rom English, Malay, Chinese

and Tamil, and some even speakJapanese and Korean, he said.

Asked whether Malaysia wasprepared to become a contactcentre hub in the uture, Toh saidMalaysia has all the ingredientsto become a successul hub.Among them were skilled workers,resources and inrastructure aswell as reasonable costs, he said.Hence, with all the ingredients, itis possible, he added.

Toh said the government andthe people in the industry shouldwork hand-in-hand to achievetheir aims and attract externalmarkets. Among the key areasthat Malaysia could ocus werethe government sector, and theinbound and outbound markets,he said.

bruneis halal driveis headed inthe right direction, a top executive o the

Malaysian agency coordinating all halalinitiatives told The Brunei Times, citing the Sul-tanates decision to ocus on strict certifcationand standards and outsourcing productionoverseas.

Dato Seri Jamil Bidin, chie executive andmanaging director o Malaysias Halal In-dustry Development Corp (HDC), said Bruneimay not have much natural resources, but ithas a lot o capabilities in terms o fnancialresources. You dont really need to produce theproducts in your own country, Jamil said.

Go to countries, which have a lot oresources. For example, Brunei buying a arm

in Australia, and through this collaboration,

you can work with people in those countriesto produce halal products.He added that Brunei can have ownership

o its halal brand, but the product can beproduced elsewhere and that is the strategysome countries in the Middle East has adoptedbecause o their desert climate. I think its acorrect strategy because certain countries havea lot o natural resources, like Australias cattleand Thailands ood products.

Ghanim International Food Corp Sdn Bhd,the Bruneian frm tasked to market BruneiHalal Brand goods, had said goods underthe brand were not only manuactured lo-cally but also rom regional and internationalmanuacturers in countries including China,

Malaysia and Spain.

CisCo Malaysia, teMutmed DevepmetCrprt (MDeC) dUvert M rewrkg tgeter uqueudergrdute terpprgrmme, te Cc idutrTrg Prgrmme (CTP).

Te prgrmme w detf,devep d prepre kedfrmt d cmmucttecg (iCT) etwrkgpect fr m d medumzed eterpre (sME), dae abrm, MggDrectr f Cc M.

se ggted tt sMEre te ertbet f tet ecm, cttutgver 90% f buee dccmmdtg 65% f tett wrkfrce te cutr.

T mrket egmet expected t ctrbute 37%t M gr dmetccme b er-ed, mkgit signifcant to local economicgrwt, e d er peect te uc f te prgrmme M 20.

accrdg t abrm,

te ucce f te CTPw determe te ce fmpemett mvg frwrd.

Evetu, ur mbt t tke t furter, wdepprtute d etb t de mde, t frur peer te iCT ectr, butcr dutre te mrket.

Te prgrmme, curret t pt pe, w kck-ffwt trget f 35 eectedudergrdute frm te Fcutf Cmputer scece, UvertM. Te w be ged tdegted sME, e d.

ThE Malaysian ConTEnTdevepmet cee ctue tgrw t rpd pce, tk t teMsC M iteectu PrpertCretr Cege (MsC MiPCC) sere.

Te cmpett rgedb te Mutmed DevepmetCrprt (MDeC) dffer wer, pprtutt wce cret dcmmerce ter wrk, tert eve.

Prtcpt m cmpete f te fur ctegre t

u evet amt, CuGme, Dgt iterctve Cmc,d Mbe Gme. Prze tefrm f RM1 m grt reup fr grb.

Ec wer w receve RM50,000 grt ctegre,except fr te Dgt iterctveCmc cmpett were t RM20,000 grt.

Te wer f te MsCM iPCC 2010 w receve metrp frm dutrper d be gve cce tdevepmet fcte t te MsC

M amt d CretveCtet Cetre (Mc3).

T mprtt, t rrepprtut, mrket tt crwded d ver cmpettve.

Trug t ttve we MDeC rec d bt, were be t ep M ctetcretr mve t te ext eve,d t Coo, ng W Peg t tecompetition briefng on May 10.

The closing date for thesubmission of entries is July 1.It must be made online at www.mscmalaysia.my/ipcc.

Wan Peng MDeChelping Malaysiancontent creatorsmove to the nextlevel.

Grt wrt RM1m up fr grb t MsC M cege

Cc, MDeCj d

Outsource halal productsmanufacturing, Brunei urged

Malaysias outsourcing

industry set tosoar

I foreseegoodgrowthin theoutsourcing

industrybecauseit helps todrive downcost.

David Toh


8/47




indian it industrys rev-enue rom Germany, Austria andSwitzerland could increase ourold to US$10 billion by 2020,

as potential clients mull nearshoreand oshore options to overcomecost pressures and resource crunch, areport by Nasscom said.

Large Indian tech vendors such asTCS and Inosys currently oer appli-cation development, inrastructure ser-vices, engineering services, production

support, and BPO services to clients inthe region, although Indian industrystotal revenue rom this market hasbeen less than US$2.6 billion.

Business Line newspaper reportedthat TCS, or instance, serves 65 Ger-man and Austrian companies. Someo its large clients include Daimler,Deutsche Bank, Deutsche Brse, SAP,and Commerzbank. Conversely,German majors such as SAP haveleveraged Indian skills by setting-upR&D and global services and supportunits in India. SAP Labs India employsover 4,000 proessionals with centres

in Bangalore and Gurgaon.The Germanic nations are acingacute talent shortages in the knowledgebased sectors like IT and engineeringservices. India is a natural partner,with a large technically qualiiedtalent base, global experience andlower cost.

The current European uncertain-ties are short term in nature and weare confdent that the European blocas a whole will continue to be one

City of Frankfurt Germany purchasesover US$36 billion worth of IT servicesevery year.

Mahindra satyaM, a consult-ing and IT services provider, said itsBPO arm Mahindra Satyam BPOhas renewed its existing contract ora urther period o ive years withGlaxoSmithKline, a research-basedpharmaceutical and healthcarecompany.

Mahindra Satyam BPO currentlyprovides high-end artwork and de-sign services to the pharmaceuticalcompany. The Regional Service Center(RSC) at Mahindra Satyam BPO willprovide creative logo, production andpromotional graphic artwork servicesto a global customer base o GSK.

Vijay Rangineni, CEO o MahindraSatyam BPO, said: This contract

renewal is a reairmation o theaith placed by GSK in MahindraSatyam BPO. Our ocus on high-endservices and our ability to leverageknowledge o the customers businesshave enabled us to oer servicesthat are at the core o the customerorganisation.

Mahindra Satyam BPO providesGSK with a ully integrated cost e-ective scalable model within thehigh-end Artwork and Design servicesspace.

Mahindra Satyam BPO serves over100 countries and manages Designand Artwork Shared Services, SupplyChain Management and LogisticsSupport.

Work has started n nw It n cnc

cn vlpmn Bui Ci in nf Pilippin.

t Bui-alLn tcnhub inviin b n in It cmmuniconsisting of ve to seven low-rise buildings in Cmp Jn h spcil ecnmic Zn.The ofce campus development is designed quimn f BPo nIt-enbl svic.

t Buin Pcin aciin f Pilippin (BPaP) plc Bui Ci p f i p 10 Nx Wv Cii. t 14 cll n univii pucin bu22,000 u p , wic wi ci vilbl infucu n ccmpiivn i civn BPo inin.

Upn cmplin, vlpmn ixpc n m n 20,000 jbfrom the BPO ofces, retail establishments andupp minnnc vic.

keLLy oUtsoUrCINg aNd CoNsULtINg(klloCg) n ai Univi (aU) in Mmnum f amn (Moa) n M 24, f pnip lv n puin nc f mulininl univi n xpiof the global corporation to bring the rst GlobalPfinl humn ruc (gPhr) cu Mli.

eim un fu im , i

pmm i ppv f clim un hrvlpmn fun ivn b Pmbnunn sumbMnui B (PsMB) n licn b sci f humn ruc Mnmn (shrM), wl l hr pfinl ciin.

ti cllbin wi ai Univi iinumnl in u n-in cmmimn vlpmn f hr pfinl in mwic w v, i g Cn, excuivVic Pin & Coo f kll svic Inc.

MaNPoWer VIetNaM xpn imn wi tccmbn pvi

cuimn pc uucin vic lp cmpn m w n xpnin .

tccmbn w fc wi cuiin1,500 ppl n bliin cnnpiplin f nw cni m i pjcw pln in bcp f ilcmpiiv m n n vilbl innluc f cuimn, nbin nvlpmn f ff.

t w- cnc Mnpwmn tccmbn cmpl cuimnand hiring processes, from job proling tonbin wll lpin tccmbnensure that required stafng levels are achieved,pfmnc lvl f ll pmnn i xc

quimn, n l m.

Euro bloc will remain

Indiasmajor market:Nasscom

W n nwBui BPo cmpu

Mnpw Vinm xpntccmbn l

ai Univi pnwi klloCg

Mahindra Satyam BPO extendsdeal with GlaxoSmithKline

o the largest markets or the IndianIT and BPO industry, the NasscomPresident, Som Mittal, said.

The IT services market in the Ger-manic countries is estimated to beUS$100 billion, o which US$46 billionis purchased (that is outsourcing andoshoring). Close to US$5.6 billionworth o services are oshored, almostUS$1.4 billion goes to India.

Germany is the largest IT marketin the pack, purchasing over US$36billion worth o IT services, ollowedby Switzerland (US$7 billion)andAustria (US$3 billion).


10/47www.simedarbyhealthcare.com




integreon, unit o conglomerateAyala Corp. has bagged a 10-year contractworth US$852 million to provide middleofce services to UK-based law frm, CMSCameron Mckenna LLP.

Integreon, which provides research,legal and proesssional business solutions,is majority owned by Livelt, Ayala Corp.sbusiness process outsourcing holdingcompany.

Ayala Corp. and CMS McKenna saidn a joint statement on May 18 thathe contract is considered as the largestutsourcing agreement in the legal inustry.

CMS Cameron McKenna said that taping Integreon will allow it to ocus on itsore competencies, which include providingigh-end legal and tax services to anxpanding client base.

With a broad and integrated servicesportolio, Integreon will meet our needsas a rapidly growing frm, said DuncanEston, managing partner or CMS CameronMcKenna.

Integreon has about 2,000 associatesoperating in North America, Europe, Asiaand Arica. Its services also include marketand competitive intelligence, discovery andlegal process outsourcing.

t e company that manuactures Evereadyand Energizer batteries is considering putting upits own business process outsourcing (BPO) acilityin the Philippines.

Energizer Philippines president and managingdirector Esteban Vorbeck said support or Energizers United States customers were currently beingperormed out o Manila, through third-partyservice providers.

With more and more locals perorming regionalroles or the company, Vorbeck said it made senseor Energizer to put up its own BPO acility, the frstever or the multinational frm.

Were looking at the Philippine BPO sector.Were thinking o possibly setting up our ownacility, he told Philippine Daily Inquirer. We havea number o roles here that are being perormedor the region. Were looking at the Philippines

s a support or back-ofce organisation. Wehope to align the growth o our business

with something thats already beenproven.

Should the BPO plan pushhrough, the acility would be

ocated in the Metro Manila,he said.

However, he also did notdiscount Cebu, since thecompanys manuacturing

acility was located there.he BPO centre, he said,

could handle logistics, fnancend marketing and would

promote the Philippines as aback support ofce.

Mobile phone Manufacturern k w s s sg ssmy s y s mks.

n k s y s ssmysg, w 2008 s 17% mg m s.

ls y, s wsmy , mg sm

x ... w (s y) swk x s, nkkswm ej-r h

rs.

o w wk s s y,h s, g yy ssg ws ssy.

h s mk ms x gw 10% m s y g s y m ss.

affiliated coMputer ServiceSw s Xx , sy s g y sss m hw-pk c. u $125 m.

t exhro llp , ws ms mg sprograms and other employee benefts,ws gy w y acSs s, p-s ed .

edS ws s 2008 y hpag s,

s s x s wg

s smy sgs. t s w s the frst acquisition by ACS since it wasacquired by Xerox in February this year.

This acquisition clearly demonstratesXxs mmm s mss ss w my

beneft all our clients, said Ann Vezina,ac x s

s, acS hm r sSs.

This acquisition, coupled with oursg sms w s ss, s ac sms, sgs s ssy xg s.

This acquisition will accelerate s sskg ss s y

g m ss mk,s r K, x mgg, ac .

ts s s s s s m w m xs gwg y m.

Ayalas Inte reonclinches

US$852M ega eal

Xeroxs ACS division tobuy over HP unit

nk sm ssmy sg s y

Energizer mulls

bpo

y

e prov e serv ces o pac ng an unpac ng o goo s or ouse,ofce and actory removals. This will be done by our experienced andwell-trained sta. We oer high removal service standards at the mostcompetitive rates. Furthermore, sae and secured storage acilitiesare also provided or removals that cannot be done within a day.Transportation is provided to all parts o Malaysia & Singapore.

Contact us:Tel: +603-4041 9058, +603-4042 1173; Email: [email protected];Web: www.sevenstar.com.my

Seven Star Packing ServicesAdvertisement


12/47



Outsourcing | Cover Story


Asignifcant issue to have emerged or many global organisations in the recent

ears has been the rising relevance o outsourcing to their business. The driveor greater efciencies and cost reductions has motivated many organisations

o only specialise in a limited number o core business areas and outsource the

rest to capable and cutting-edge vendors.

Malaysia Airlines Chie Inormation Ofcer (CIO) Faridah Abdul Rahman recently satdown or a one-on-one interview with Sihaan llasam to answer questions withregards to her opinions and perspectives on outsourcing and how it has helped MAS provideexceptional services and solutions to its clients.


14/47

So preparation is key. However,just like the recent Icelandic volcanoash incident proved, certain vari-ables are uncontrollable.

From an IT perspective, how hasMAS evolved over the years inproviding the best services for itscustomers?IT in MAS used to be seen as a sup-porting entity but now it is seen asan enabler in business. This is in linewith our ocus to Save Money, MakeMoney, Serve Customer (SMS).

There is an increased appre-ciation, support and complianceto corporate governance and thisincludes IT. Over the years, we haveadopted the model o ASP (Appli-cation Support Provider), wherewe have the application hostedexternally instead o buying anddeveloping it ourselves.

We have also condently engagedand invested in IT outsourcing, busi-ness process outsourcing (BPO) andmanaged services over the time.We have also leveraged on socialnetworking model.

For example, our PassengerService Systems (PSS) is open, agileand built to seamlessly leverage onBusiness Intelligence components,total are management and ancil-lary services.

In 2008, we have also engaged aglobal managed services vendor tohandle our end-to-end IntegratedDatabase Management System

(IDMS).All these engagements made

business sense and helped us satisythe expanding user needs.

What are the key drivers to adoptoutsourcing by MAS that go beyondcost savings?Essentially, when you decide to takethe outsourcing route, you needto ind and analyse the reasonswhy you want to do it. When weembarked on SITO (Strategic ITOutsourcing) back in 2003, ouraim was to transorm into a moreservice-orientated organisation withenhanced end-to-end processes.

Since our initial outsourc-ing engagements, our success inimplementing business IT projectsimproved tremendously. The cost

savings were achieved over time aswe matured through the projects.Now, I can condently say that wehave a better understanding on thecost drivers and whether certain costsare necessary to support or enablethe business.

The recent IT outsourcing en-gagement with Tata ConsultingServices was mainly driven by costsavings and aligning the services tothe business Prot and Loss (P&L).We also took the opportunity tone-tune the outsourcing contractsto include ESM (Enterprise ServiceManagement) with a plan to in-source and increase automation todo a predictive, proactive problemmanagement.

In the PSS project the strategicintent was business process (eTick-eting dateline) and operationalimprovement (e-commerce compo-

nents), and an ASP was chosen toimprove delivery and reduce cost.

How does MAS approach the port-folio of services that lend them-selves as key targets for sourcingout to competent providers?A number o actors drive the de-cision or sourcing. Its not just acost cutting measure. Firstly, thestrategic intent must be clear. Is itor cost improvement, operationalenhancement or business processimprovement?

I its mainly to reduce costs, thenthe drivers o outsourcing and the

design o sourcing would be verydierent. I the strategic intent is toenable overall business, dierentset o actors must be taken intoaccount. So it basically depends onthis strategic intent.

Sourcing and delivery models arealso other aspects to consider. Mak-ing the right decision on the sourcingmodels such as single vendor,multiple vendor or pay-per-use type is also very important.

You must also know i you wantto engage local vendors or oshoringpartners or even a hybrid modelaccording to your business needs.

The readiness o the organisationitsel is also a vital indicator notmany people are ready to go intooutsourcing, so we need to be careulon this matter.

May-June 2010 | Outsourcing | 13

Cover Story | Outsourcing

MAS Group IT used to be seenas a supporting entity but now we areseen as an enabler in business.

Is there a single work matter thatcan keep you awake at night?The impact o business disruptioncaused by prolonged IT systemsdowntime or an airline can be verycostly. This is because we use a num-ber o key applications enterprise-wide that is supported by multiplevendors.

Just one hour o unplanneddowntime can translate to 20-30minutes o light delay causing achain reaction o events aectingpassengers, stations and codesharepartners.



Outsourcing | Cover Story

Risk management too plays avital part in this mix or MAS. Weneed to measure how much riskcertain business components will beable to take. We need to also analyse

the potential risks in order to mitigatethem through proper control andgovernance, which must be includedin the contract.

For example, in our initial out-sourcing engagement in 2003, we didnot outsource our entire IT unctionto the vendor it was only the FTEs(Full Time Equivalents). The reasonwas simple we were just not readyor major outsourcing engagementdue to the risk o the unknown.

Later or the IDMS (IntegratedDatabase Management System)unction we purchased the neededhardware due to better pricing.Technology reresh control, sotwareand services were then bundled asmanaged services.

The IT security assurance andincident management were alsobundled as managed services wheredaily real-time security dashboardsare made available to MAS.

What are the top factors in yourevaluation of vendor capabilities?Depending on the size o the proj-ects, weight age to the criteria varies.Firstly, the nancial stability o thevendor is very important. Secondly,

they must have proven track records in providing good quality o ser-vices with operational reliability andstability with established airlineclients. At the same time, the vendorsmust have a good product and tech-nology road maps. The ourth actoris the vendors presence and supportin the countries important to ourmarket. Last but not least, is the costcompetitiveness o the suppliers.

How important is knowledge of theairline industry in your assessmentof provider competencies?For us, it is extremely important

or vendors to have good airlineindustry knowledge and experience.For example, in our ERP project,we expect the provider to have theability to propose to us the Charto Account, which aids airlines tomanage route protability and otherairlines specic requirements.

Vendors also must have theexpertise to be able to provide solu-tions to manage overlying chargesbetween airports and advise on howto manage Class A assets, such asengines, that have both xed assetand inventory characteristics.

They must also be well versedwith the requirements and stan-dards sets by IATA (Air TransportAssociation) and AAPA (Airline AsiaPaciic Association). Airlines likeMAS are governed by the regulations

We are costefcient in certain

areas, but I believethat there are stillways to improve

because thetechnologies outthere today make it

possible to do it.


16/47May-June 2010 | Outsourcing | 15

Cover Story | Outsourcing

ability and are management, wecan infuence the trac fows. Atthis point in time, in my opinion itshould be kept within our organisa-tion, as its a strategic unction.

In customer services area I sup-pose it depends on the customer

touch points. It is easible in certainareas and not at all in others suchas in-fight services, customer com-plaints department where personaltouch matters and creates servicedierentiation. These unctions haveto be kept internally as these are parto MAS unique brand identity.

However, the IT helpdesks arecompletely outsourced, as it makesno major dierentiation to the MAScustomer services.

Costs vs. revenues do you viewthese separately? Or do you see that vendors have to holdthemselves accountable for bothcomponents? If so, how?It depends on the type and size othe engagement. I its a strategicrelationship, both the clients and

the vendors need to be responsibleor the revenue.

In a JV, or example, both partiesneed to be responsible or revenueand cost impact. For a contract thatextends beyond three years, I thinkit is air to expect the vendor to look

at ways to reduce costs throughconsolidation, automation and in-novation and share the cost savingswith the client.

You choose to work with globalvendor TCS recently. What areyour opinions on Malaysian serviceproviders that go beyond scale?For the record, we have local vendorsproviding services to MAS. In act,we have a number o local vendorsproviding inrastructure services andproject management. As I mentionedearlier, as long as the criteria we useto evaluate provider capabilities aremet, we dont discriminate. We arevery open and do not dierentiatebetween a global and local vendor provided they are capable andcredible.

and requirements set by both theseimportant organisations.

While the need or such in-depthindustry knowledge is one step loweror the inrastructure services vendors,nevertheless it is still a prerequisite.

How do you evaluate the risk ofthe unknown with technologyproviders?This is where due diligence is key toan outsourcing engagement. Whilethere are always risks I think its aquestion o how you monitor andmitigate them. Sometimes therewill be new risks, and at other timesthere will be risks that had becomeirrelevant. It is important or continu-ous reassessment in this aspect.

Do you consider sourcing of routemanagement and customer serviceas feasible? Or are they best servedby retaining within the organisa-tion?There are strategic and operationalcomponents in route management.For example, through seat avail-

For us it isextremely

importantfor vendorsto have

goodairlineindustryknowledgeand

experience.



Outsourcing | analysis

ByJerry Durant

s

ince the beginning otime, suppliers have soughtto understand what is on themind o the buyer. To unlock

the answer to this question wouldbe to oer a solution that wouldbe attractive to draw out sales op-portunities. However to believe thatbuyers, experienced or otherwise,know what they want is to openthe door or possible engagementailure.

While labour arbitrage may beocal to the outsourcing decision,one cannot even assume thatthis element has been carried outproperly. Sourcing isnt a matter osimple dierences in rate, it requires

a complete study o the cost and ben-et solution choice. By way o thissimple example, suppliers who ailto seek insight into buyer thinkingwill certainly ace challenges duringthe engaged relationship.

So why are we still grappling withthis question and have not come upwith an answer or the Holy Grail oOutsourcing? Is it a ailure o buyersto divulge their innermost interestsor is it the ailing o the supplier toeven ask? BPO/ITO/KPO servicesare not a commodity they area solution and solutions involvedeveloping an understanding.

StatusOur quest starts with understandingthe various types o buyers that weare dealing with. By all accounts wehave three types:>Those that have had no experienceand no interest in sourcing,> Companies that have done somesourcing either on domestic, nearshore or international basis, and> Experienced organisations, whichhave used sourcing services as a parto the business delivery model.

All three are constantly acedwith the question about the value ooutsource services. This question isnot just based on costs it also begsdeep ethical considerations withregards to the loyalty to country

and employees. In almost everycase, a company agonises overthe question o whether to employexternal suppliers or nd ways tourther economise internally.

Even when considering domesticsourcing (inshore services) thequestion o loyalty is raised. Second-ly, buyers must support and provethat the outsource solution yieldsproductive monetary results knownas ROI (return-on-investment).

ROI considerations always takeinto account benets and costs, butsometimes ignore the sot ROI ele-ments that cannot be easily quanti-ed but nonetheless exists suchas expanded resource bandwidth,comort/consistency improvementsand escalating cost containment. A

truly actual analysis will considerboth hard and sot acts and willrepeatedly consider these aspectsover the extent o using sourcing asa solution. But the question o ROIis in jeopardy.

ROI is threatened when corporateculture, internally and externally,challenge the outsourcing deci-sion.

Why the interest?Todays economic climate is orcingus to reexamine everything that weare doing and the basis rom whichour actions are taking place. What

may have worked, or not worked, inthe past needs close re-examination.For example, i we had been suc-cessul in selling into a market andtoday we are struggling, we need tonot only understand why, but alsoneed to make policy adjustment toaddress current conditions.

The most illustrative exampleis pre-2000 outsource selling vs.today. Prior to Y2K, outsource serviceselling was easy because there wasmore demand than supply. AterY2K we enjoyed a brie period otrend continuance but it quicklystarted to decline because supplywas catching up with demand.

This shit also ound that purecommissioned based selling (whichis attractive during high demandperiods) was becoming less attrac-

Picking

the mindofservice buyers

ROIconsi-derations

alwaystake into

accountbeneftsandcosts, but

sometimes

ignore thesoft ROIelementsthatcannot

be easilyquantifed

butnonethelessexists.

tive as an employment option.The result is that companies had

to move to an employment (domesticto the client) based strategy. Eventoday some companies, oten neworganisations, still try to utilisethe old commission based strategyand ail to achieve suitable results.Change requires vigilant ongoingexamination and adjustment. Inthis specic example opportunists(sales brokers) have exploited thisailing.

Preying on the desire or sales,irreputable brokers will oer op-portunities that are raudulent (non-existent, engagements with lowopportunity or success or projectswhere the broker and client are work-ing together to extort money whilestill receiving services). Reputablebrokers serve as a conduit into a

market but will never guaranteesale outcomes since they do

not control the buying deci-sion. They can however,

illustrate the service andprocess that will be

used and how this



analysis | Outsourcing

will eect opportunities in a ashionthat is similar to having sales stadeployed in the marketplace.

The supplier needs to know moreabout the buyer they are dealing withand having domestic representation

is key to having success.

The PlayersThere are three types o buyers weneed to understand better as de-scribed previously:>sdr:companies who havelittle or no interest in outsourcing>nov: companies with a littleexperience, and>Pro: companies with a historyo use and experimentation in out-sourcing.

Each carries with it challenges andunique interests. These variationsorce suppliers to better understand

their uture clients. Getting specic isa part o market scoping that a com-pany must take into consideration.The cost to implement an eectiveselling programme goes up as thescope increases.

All too oten suppliers are soanxious to attain sales that thescope remains broad and produceslow yield results. Any engagementsthat are obtained have to be viewedas coincidence and not purposeul,strategy-driven occurrences. Onemight ask, is this really all thatimportant?

Yes, because coincidence can-not be reliably repeated and as aresult, companies cannot rely ona consistent fow o work. More op-portunities must be kept in the salespipeline and this requires signicantresource commitment (more thanocus targeting).

The common considerationor outsourcing is regarding costarbitrage (Attempting to prot byexploiting price dierences). Otenthese strategic buying decisions in-volve other actors that may rangerom obtaining specialised deliveryresources to expansion o service

delivery. With this knowledge, thebuyer is acutely aware o engage-ment risk.

Making a wrong choice in todayseconomic climate can place decisionmakers at risk o losing their jobs.With the downturn in the economyand stress placed on companies tocut costs (to retain investor yield),buyers are orcing risk-reductionmeasures.

Oten maniested throughlegal channels (contractual andService-Level Agreements) someattention must be given to how theprocess o sourcing selection takesplace. Despite having three distincttypes o buyers, all can suer romthinking that buying rom large tiercompanies or in common regionswill insure a reduction in risk. This

is totally alse and has been consis-tently demonstrated.

Buyers are oten inconsistent intheir approach and evaluation osuppliers. There is a oundation oqualication that buyers attemptto evaluate by looking at viability(business survivability) and capabil-ity o vendors. Any shortcomingswould increase engagement riskor them

The result is additional engage-ment attention, which reducesROI. I there is limited engagement

oversight then it will lead to servicedelivery ailure. As suppliers, know-ing that buyers may have ailingsin their assessment o viability andcapability, can oer inormation toproactively provide insights aboutviability and capability strengths.Proactive inormation requires con-rmed evidential proo otherwiseit may be relegated to marketinghype.

So What is Really on BuyersMind?Money savings with as little risk aspossible is the simple answer. Thebigger challenge is how this canbe delivered by suppliers withoutputting in jeopardy their own or-ganisations? A lot depends on thestrength o the supplier. Companies

that are desperate or business andinexperienced in orming a crediblestream o work are more apt to takeon engagements that have thinprotability and require excessivedelivery diligence. Under dierentcircumstances more negotiationswould take place to reach a healthywin-win compromise that benetsthe buyer as well as the supplier.

What really turns buyers onis supplier leadership. Outsourcesuppliers expected to have soundviability and solid delivery, but

are also expected to have cred-ible rameworks or operational,engineering and communicationdisciplines.

This level o leadership issomething that Western buyerscan understand, possibly relateto, and orm a basis or growingthe relationship. Suppliers can goterribly wrong when they developrameworks that:> Dont work,> Are overly complex and dicultto apply,> Are fexible, adaptable and fuid,> Fail to meet undamental businessneeds, and> Havent been applied.

Leading means committed truththat others can identiy with and it

Suppliers who failto seek insight intobuyer thinkingwill certainly facechallenges duringthe engagedrelationship.



Outsourcing | analysis

allows the buyer to reduce their prescriptive

and oversight levels o attention. By nomeans does this eliminate them rom theneed to insure that the basic activitiesare taking place. It will however, allowbuyers to ply their trade without excessiveintervention, and to build a relationshipthat goes beyond delivery to also involveimprovement innovation.

Simple supplier leadership involvesstrong situational analytics. Repeatedly,suppliers deliver service quotes based oncurrent buyer behaviour. Leadership takesthis knowledge and crats a way to deliverthe same or potentially more services at lesscost. Suppliers who chose to all into linewith past practice nd themselves deending

their honour with buyers oten jeopardisingtheir competitiveness.

When buyers look outside o their or-ganisations, they subconsciously look orsuppliers with similarities. Similarities maybe in terms o common goals, commitment,belies and even care and attention. It isvery easy or suppliers who ail to recognisethis primal need to their service agendasdisregard client desires (even i vague andunrealistic).

Suppliers oten push a strong message sel ueled by a rabid drive or business.This approach disenranchises buyers andcreates an atmosphere that is not conduciveto the development o a successul sourcingrelationship.

Understanding clients prospects, listen-ing, developing sensitivity and studyingright solutions will gain respect and windeals or vendors. I vendors treat their

Reputablebrokersserveas

aconduitintoamarketbut

willneverguaranteesale

outcomessincetheydonot

controlthebuyingdecision.

Always keep in mindthat a cooperative win-

win relationship canovercome barriers.



analysis | Outsourcing

SidelinesThis group might also be referred to as the long shots. These are companies thatmay have little to no interest in alternative service options, let alone foreign sources.Substantial buyer examination is needed to get inside of their minds. Has their

sourcing absence been caused by social concerns, lack of implicit value, too busy toconsider this option or the lack of a credible discussion with potential suppliers.Maybe other suppliers have been too busy selling their services and have not

spent enough time listening to the potential clients. Everyone likes to tell aboutthemselves, even buyers. Sideliners require Outsourcing education 101 that isdelivered by the supplier company.

They need to understand how you will mitigate risk concerns, form a mutuallybenecial engagement relationship, and how this will be done to produce positiveeconomic results. If you are unable to listen, evaluate, propose and insure controlthen sideliner companies may not be the right audience for service providers.

NoviceBest described as knowing just enough to be dangerous but wise enough to knowwhere they stand. Often novice buyers see engagement successes through theircommitment and failures through that of the supplier. In fact both are the direct resultof a mutual level of participation.

If the buyer has made a wrong choice, or the supplier took on work that wasoutside of their ability to deliver, both are at fault. Suppliers can effect an operationalframework that is exible but is rich in delivery enablers. This measure, combinedwith viability and capability attention, provides a powerful basis that buyers can gaincomfort with.

Moreover, this reects supplier engagement leadership, which is welcomed bybuyers. Knowing that you can rely on a supplier takes pressure off of implementationand engagement management. It does not eliminate it, simply it reducesmicromanagement and reafrmation of each step that must be taken. Over the longterm a much stronger buyer-supplier relationship will form reducing the potential forretrosourcing.

In addition, suppliers need to determine the status on sourcing with novicecompanies. Are they in a present relationship and how is it going (this will requirefurther study to determine the legitimacy of any relationship status)? Avoid takingsides and look at all reasons with suspicion. If they are not in a present sourcing

relationship, was there reasons why they curtail it? Again be skeptical as no one fullyadmits the real reasons why things didnt work out especially when you have had arole to play in the outcome.

Novice and Pro buyers have the potential of utilising procurement generalistsand legal counsel to form sourcing engagements. While some specialisation hasoccurred, it remains to be a somewhat generic purchase exercise. This conditioncreates some of the evaluation problems as previously mentioned and reects theposition that selection can be driven by process (when it really needs to be driven bycharacteristic comparison).

ProChanges in the economy and the increase in buyer risk concerns have causedmany companies to re-examine their sourcing portfolio. We have seen a gradualshift from single-source mega engagements to parceled sourcing. Spreading riskdoes not eliminate these factors, simply it spreads the potential around. Parceled

engagements may involve supplier delivery or geographic separation (using a singlesupplier or multiple suppliers) to enable risk reduction. With this shift buyers arelooking to different suppliers and regions.

This is great news for smaller companies and emerging sourcing destinations.There is however, the need to again provide evidence of viability and capability.Since many of the mega deals involve large tier-1 suppliers these engagement areentrenched with formality and legalities. This sets a level of expectation that newservice providers must take into consideration. Overlooking this will put the supplierat risk of not obtaining the engagement.

As for emerging regions they must provide a business case against the goldstandard regions of India, Philippines, China and other market leading nations. Whilea reasonable person understands that market maturity is going to be less basedpurely on experience, this comparison is often used to steer buyers to establishedcountries. A more suitable standard to support regional evaluation is utilising theBrown & Wilson Black Book of Outsourcing: Safe Sourcing Destination Report.Under this framework locations are based on such factors as social stability, legal

system, environmental exposures, crime rate, terrorism threat, and currency stability(partial list).

1Retro-sourcing the act of removing an outsourcing relationship and either returning internally to the buyingorganisation or moving it to another service provider. To a limited extent retro-sourcing engagements may

include renewal engagement reviews. Def. IIOM 2008.

services as a commodity, then they willstruggle to win deals that have long termpotential.

ConclusionOutsourcing is lacking innovation and

enthusiasm. Buyers seeking the saety ousing a lit-and-drop approach reduce ROIpotential and do not mitigate risk. Sourcingallows buyers to get innovative and orsuppliers to assist in this exercise. Not everybuyer or supplier is up to this challenge.Simple needs dictate simple solutions butin most businesses there are ew simpleactivities that would justiy overlooking theopportunity or sourcing innovation.

No one ever really knows what is onthe mind o the other. We can only guessbut we run a real risk o being wrong.When we hang our entire strategy on thisapproach we ail to obtain our goals andput in peril our sourcing businesses. Being

humble and admitting to ourselves that wedont know everything but that we can ndout and learn more about our client buyersis essential. Buyers are not dummies, theysee these attempts and greatly appreciatethat you are placing them rst and aremaking them eel as though they are youronly concern. This cannot be thinly veiledand must be sincere and honest.

Change is not easy even when consideredessential. It requires us to move rom acomort zone, albeit marginally productive,into an area o uncertainty that has strongsuccess potential. This newness can eitherbe greeted with excitement and dedication,

or be held in skepticism that produces noresults. As suppliers the choice is up to you.Keep in mind that making a buying decisionaces these same uncertainty challengesor your clients. Realising this provides anideal opportunity to work jointly to set asidethese concerns.

Outsourcing is viewed as an evil businesschoice. It deprives local citizens o jobs thathinders Western social development. Addto this prejudice about other societies andrandom ailure examples and now you haveconditions that are ripe or impassionedchaos. Engagement ailures, regardless ocause plays heavily on the psyche o thebuyer.

Why would any reputable businessconsider outsourcing even with signicantsavings? Simply there are measures thatcan be taken to alleviate some o the risk.It maybe to consult an advisor, to developthe procurement model or resort to stickmeasures like SLAs and strong contract andpricing negotiations. Always keep in mindthat a cooperative win-win relationship canovercome barriers. Buyers must be willingto lead and to compromise but not at thepotential peril o their business.

Jerry Durant serves as Chairman Emeritus(founder) for The International Institute forOutsource Management, a trade organisationdedicated to the assessment, development,and guidance of outsource service providers inthe ITO, BPO, Call Centre and KPO domainareas.

Labeling the Buyers

1



Outsourcing | InsIghts

BYADITYA BHALLAANDDEEPAK CHOPRA

Years of research onmea-sures o perormance have ledto the design o high maturityrameworks or standardisingmeasurement practices in the

IT and BPO industry.All rameworks stress on creating metrics

aligned to the organisation goals, creationo measurement systems and using thedata to make inormed decisions.

The image (reerVirtuous Circle ofMetrics Framework) illustrates the deploy-ment in an IT environment (GQM reersto the Goal, Question, Metric approachdeveloped by V. Basili and D. Weiss).

To urther enhance the eectiveness othe metrics deployment organisations haveadopted process improvement rameworkslike Lean Six Sigma that are triggered bythe altering perormance o metrics in theperormance dashboards.

It thereore comes as a surprise thatdespite years o research and implementa-tion experience, organisations still acechallenges and dilemmas in implementingan eective measurement system.

There are many unseen traps in thedeployment o Metrics ramework thatcan suck management into the viciouscircle o spending their energies in thewrong areas:

Sstaiivirtos circleof metrics framework

the sources o variation on areal-time basis.

The service industry has yetto master the concepts romJapanese organisations suchas Toyota (which has inspiredothers to adopt Lean and AgileProgramming) where a strongemphasis is laid on detectingsources o variation live on theoor. The result is a much moreproactive response to deviationsin day-to-day operations.

2) Misaliedmeasremet systemsAs shown in the image (reerPurpose of Collecting Metric),

every metric has a purpose.For organisations that are trapped in the

vicious circle, this context is lost over timeas they ail to set up programs or educatingtheir sta on an ongoing basis. This showsup in the ollowing two ways:

i) Inconsistent understanding of how themetric is computed.

>> Wrong ormulae are incorporatedin the measurement systems resultingin incorrect reporting o inormation tomanagement.

>> Typical examples include measureso perormance such as deect density inIT environment (reer Box), Service Level

Business/Project

Goals

Making informed

decisions Metrics ListMetrics

Framework

Measurement

collection,

analysis system

Aligning

the system

Reports &

Dashboards

Standardprocesses

& procedures

GQ(I)M

Virtuous Circle of Metrics Framework

1) Excessive reliace o codctipost-mortemOrganisations with relatively mature mea-surement systems and process improvementrameworks like Lean Six Sigma rely on theobjectivity o data rom perormance dash-boards. But the culture o analysing data cansometimes be disadvantageous as sta startsrelying excessively on metric perormancereports o events that happened in the pastand not what is happening on a real timebasis. It is almost like driving while viewingthe rear view mirror.

It is not very uncommon to ind op-erational environments in service industrywhere team leads are unable to identiy



InsIghts | Outsourcing

computation in call centres orProductivity measures in serviceindustry.

ii) Inconsistent understanding onhow to interpret the performance

on any metric.>>For large organisations peror-

mance is evaluated or departmentsthat exist as independent silos.

>> While the intent o manage-ment is to view the health o the pro-cess rom the end-customers pointo view, or sta working in silos theview is limited to their targets.

>> Many large organisationscontinue to tolerate this ambiguityo interpretation thereby deeatingthe purpose o measurement.

3) Putting fear of God in staStatistician Pro William EdwardsDeming had advocated Drive outFear rom workplace but organisa-tions caught in the vicious circlecontinue to use metrics ramework asa handy tool to inspire ear in sta.Since no one wants to look bad (or getfred) the end result is that either themeasurement system or the metric iscompromised as illustrated below:

i) Targets are set at very low thresh-old levels.

>> The low threshold levels areusually justifed through the com-plexity o departments, processes and

transactions handled by the sta.>> At the same time the met-rics may be couched in complexsounding statistical terms such as99 percentile perormance.

>> Finally incremental improve-ments are demonstrated on a regularbasis to stave o management pres-sure.

>> Typical examples o suchmetrics are productivity metrics(e.g. transactions processed/day byinsurance underwriter) with internalperormance benchmarks are set ona non-scientifc basis.

ii) Aggregated performance isreported to management in sum-mary reports.

>> While the reports are meantto highlight the Red/Amber/Greenstatus o any perormance metric,the aggregate numbers by deaultend up in the Green or Good status.

>>Management caught in the vi-cious circle is rustrated but unable tobreak the circle as it lacks the resourcebandwidth to explore deeper. End othe day many resign to the act: Iit aint broke, dont fx it.

The real loser in the above is the

organisation as it is unable to proac-tively identiy the constraints slowingit down till it is rudely awakened bythe market realities. Organisationtheorists even coined a phrase or

this: boiled rog syndrome.Here again organisations could

take a cue rom the team-basedmeasurement systems that relivethe stress o individuals and at thesame time encourage team-building

through tacit knowledge sharing byexperienced good perormers withothers who are relatively raw.

CoclsioMetrics serve a useul purpose oreporting the perormance o anorganisation, its products, its opera-tions and its processes.

Metrics rameworks can be likea double-edged sword that needs tobe handled careully. I done wellmanagement can realise the intent

o deploying metrics and avoid thecomplexities associated with ine-ective deployments. The end resultwill be a cultural transormationwithout the negative energies associ-ated with the vicious circle.

Aditya Bhalla is Practice Manager withQAI Innovation Practice consultingclients on product and process design.Deepak Chopra is Consultant withQAI SPI Practice consulting clients onCMMi DEV/SVC/ACQ (specialisingin High Maturity Level 5) and non-model based approaches like AGILEand RUP. They can be contacted [email protected] and [email protected]

MeasurementGoal

Quantifying Goals

QuestionWhat do we want

to know or learn aboutthe Goal

Measurement ofMetrics

What will answerthe question

Business GoalWhat do we want

PURPOSE OF COLLECTING METRIC

Measri Defect Desityi Software Oraisatios

Defect Density (total no. ofdefects/size) can be prone to

multiple interpretations

Inclusions & Exclusions: Areall defects from non-engineeringreviews (Project Plan review etc)also to be considered?

Applicability: Do all typeof projects (development &maintenance) need to implementit?

Level: Is it Defect Density of aphase or entire project?

Formula: Is it defects/size orsize/defects? Is it the size ofthe project or requirementsdocument?

The service industry hasyet to master the conceptsfrom Japanese organisations

such as Toyota which hasinspired others to adopt Leanand Agile Programming.

TROuBLIng Despite yearsof research adimplemetatioexperiece,oraisatios stillface challeesad dilemmas iimplemetian eectivemeasremetsystem.


23/4722| Outsourcing | Ma-June 2010

Outsourcing | feature

Globalisation is not about asingle action, or even a group o actions.Globalisation, when successul, is aboutan attitude. Yet even when the CEO oa company embraces Globalisation as

a new attitude, it will ail unless their partners thepeople who work or them embrace the attitudeas well. But getting others on board is not a job theCEO can do alone; they must recruit the best peopleto help.

Thats what the fth secret is about: recruiting thebest people to help roll out (and guide) Globalisationinitiatives throughout the company. With the bestpeople at the helm, the Globalisation initiatives canfnd strong support at all levels o the organisation.

Wim Elrink, Chie Globalisation Ofcer o Ciscosays that assigning the best people was a key successactor or the company. Assigning the best people is a

key dierentiator between what we did dierently romcompanies that traditionally approach the manage-ment o outsourcing.

We had to have the right people empowered asdecision-makers on both sides o the house. We insistedon having people who could make the decision in theactual negotiation process. And that was huge in usbeing able to accelerate the timeline and deliver value.I dont think that you can aord to do anything elsein this process.

Assigning the best people to their Globalisationinitiative just makes sense or successul Globalisers.Our philosophy is you put your best people on theproject and its successul. You take your second- orthird-level people and put them on the initiative,and youre going to get a second- or third-rate result.Globalisation deserves the organisations best people.Its a top-priority project within the company, said Ron

By AtulVAshisthA

Agnbe peopeforGobaaon nave

This is the fth in a series of excerpts from the newly published book byAtul Vashistha, Globalisation Wisdom: The Seven Secrets of Great Globalisers

Strong lineup W e be peopea e em, eGobaaon naveca d s sa a eve of e

organaon.


24/47

Kier, CIO at Ap-plied Materials.

As ootballg r e a t V i n c eLombardi said, I n d i v i d u a lcommitment toa group eortis what makesa team work, acompany work,a society work,a civilisationw o r k . T h eith secret osuccessul Glo-balisers is aboutgenerating thatindividual com-mitment to thegroup eort.

Strong par-

ticipation romthe organisations C-level executives isimportant or its role-modeling eectsand to help generate buy-in within theorganisations lower levels.

In addition, attention and recognitionby senior management make it easier tolure the best talent to lead Globalisationinitiatives. And developing the practice ostrategic learning will allow the organisa-tion to take advantage o the myriad oopportunities our increasingly intercon-nected world oers.

This secret reminds me o the adage, Youget what you pay or. I the organisationdoesnt put its best people in charge o

services Globalisation i it sends in theB-team, or example, it will see second-rateresults.

Cream of e cropThe best people are not necessarily thosewho know the most about IT, i the organisa-tion is globalising IT, or example. Instead,theyre the people who are agile, understandchange and are globally savvy. All too oten,companies trade the sometimes challengingtask o fnding the best people in avouro the most easily accessible people, evenwhen those people are not right or the job.In many o those cases, the initiative doesnot reach its ull potential.

When ormer GE CEO Jack Welch wasglobalising the company in the 1980s, hisbest people were those who knew how toadapt to, and even embraced, change.He defned the best people not as the best

Individual commitment to agroup effort is what makes a teamwork, a company work, a societywork, a civilisation work.

Vc lbad, Aca fba d

Ma-June 2010 | Outsourcing | 23

feature | Outsourcing

perormers, but as the best ftor a globalised, cross-culturalenvironment.

Consider a common exampleo what can happen when anorganisation doesnt assign thebest people: The companydecides to globalise its ITprocesses, so it assigns theIT managers to lead theinitiative.

Those IT managers areextremely well-versed inIT processes and have alot o knowledge about thecompanys IT system, butare overall more reserved,introverted types. They shyaway rom high-profle leader-ship roles and generally dislikechange.

The organisation thinks that

the IT managers can guide theinitiative because they know IT,in spite o their shortcomings asglobally savvy leaders. Yet theinitiative alls short.

Why? While the IT managersplayed an important role in theorganisations IT department,they were not oten the bestpeople to lead a Globalisationinitiative. They lacked most othe important global peoplecharacteristics. The globalpeople stars are resilient,embrace change, have aglobal mindset and an afn-

ity or dierent cultures, areperormance-oriented, takeinitiative, are admired by otherswithin the company and buildconsensus.

Take another example o anorganisation that assigns a numbero leaders rom dierent depart-ments within the organisa-tion. These people havea record o embracing,and even spearheading,change. They seek outhigh-profle roles andenjoy leading others;theyre admired and haveproven their ability to build con-sensus among employees.

Despite the act that most othese people know little about theday-to-day details o the organisa-

Wen former GE CEO JackWec wa gobang ecompany n e 1980, be peope were oew kw w ada, ad v bacd,cange.

not me, pleASe it manager arexy w-vsd it csssad av a f kwd ab cays it sys, b a va svd, vd ys. ty sy awayf - ads s aday dsk ca.



Outsourcing | feature

tions IT processes, the organisationassigns them to head the initiative.The initiative succeeds.

Why? The organisation assignedas leaders those people who haddemonstrated the ability to be goodleaders and possessed many o theglobal people characteristics.When they needed to understandthe details o IT processes, theysought out the IT managers, whowere able to do what they did best.

Indeed, being one o the com-panys best people is not neces-sarily about knowing things, Elrink

explains that its more about theright business relationships. Its notabout knowing the scope o defni-tion o the activities rom the start;thats all detail to be added. Instead,we looked or people who under-stood proper contextual relationshipthat we were going to establish withthese service providers people whounderstood the business relationshipand could make obligations to thatbusiness relationship.

At Cisco, Elrink looks or peoplewho have a never-ending desire tobe challenged and to win.

He adds: I think that its aspecial A-type personality whoabsolutely enjoys driving these bigchanges. I always say that at theend o the day, the best people wantto leave their mark. Their markis the big change the big resultsthat they deliver. I think youll fnd

that consistent with people who aregood at Globalisation they reallydo enjoy it.

Atul Vashistha is Chairman of NeoAdvisory (formerly neoIT), a leadingmanagement consultancy since 1999,focused on independent, objective andactionable advice to enterprises thatseek to transform their organisationsby capitalising on ser-vices globalisation.

His latest venture isBestOutsourcing-Jobs.com, an online job portal focusedon outsourcingcareers. He can bereached at [email protected]

Fill up thoSe SeAtS srong parcpaon from easas C-v xcvs s a f s -d cs ad a by- w organaon ower eve.

Assigning thebest people is a keydifferentiator betweenwhat we did differentlyfrom companies thattraditionally approach

the management ofoutsourcing. Wm Efrnk, Cef Gobaaon

oc f Csc

if asa ds sbe peope n carge of ervcegbasa f sds B-eam, for exampe, w ee

scd-a ss.


26/47

Otsourcing Malaysia (OM) is an initiative

of the outsourcing industry and a chapterof PIKOM the National ICTAssociation.

The prime objective of this organisation is toenhance global visibility of Malaysian serviceprovider capabilities to the global buyers. OMfocuses on enabling both buyers and providers ofservices to work together on addressing service

eeds, within the aegis of global best-practicesand competencies.Of ciated by t e P ime Minist r n 2006,

OM aims o epresen 80% of all Malaysiaout ourcing providers by 2012. Highlights f tbenefi s our embers re njoying re:

Industry Representation

Trade Promotions Marketing the capabilities of Malaysianndustry to local and global buyers throughvarious trade events, while generating businesseads for members.

Providing business-networking opportunitiesfor members through networking sessions,nbound and outbound trade missions andndustry meets.

Industry Information

JOINOUTSOURCING

MALAYSIA

Contact:OM Secretariat

1106 Block B, Phileo Damansara 2

No 15 Jalan 16/11,

46350 Petaling Jaya

Selango , Malaysia.

l:+603 7955 2922 F: +603 7955 2933

e-mail: i [email protected]

For more information, please visit our website at: www.outsourcingmalaysia.org.my

Access to OMs hought Leadership contentvia Members Login on its website.

Business Exposure Providing members with tremendous businessexposure and visibility through the complimentaryisting via OM website and overseas campaigns;

OM as the direct contact point for global

buyers. Affiliations with global outsourcing focuspublication such as the Black Book of OutsourcingGlobal V ndor Directory, Forbes etc.

Priority, Subsidies & DiscountsOM Members are given priority in OM-organisedevents in terms of reservations, subsidies anddiscounts. Members are provided subsidieson Overseas Campaigns and other CapacityDevelopment Programmes. Discounts andcomplimentary priorities are allocated forparticipations of seminars, conferences, cocktails,ndustry talks, surveys, and media promotions.

Capacity Development

ProgrammesOM s espon ble in nt oducing t e I t rnatonaAssocia on of Ou ourcing P ofe ional (IAOP)Cert fied O tsourcing P ofessionals(COP ndMaster Class programmes; nd working alongsidwi MDeC on eir K-Worker De elopment I s i(KDI) programmes de gned todev lop t e umae urce of t e ndust y.

Global Membership andAffiliationGlobal Membership

Sourcing Interest Group (SIG)

IAOP through partnership with MDeC.

Global AffiliationsThrough PIKOM partnership and membership:ASOCIO NASSCOM WITSA

ADFEATURE

OM represents the local outsourcing industry tothe Govt and private sector both locally andoverseas. OM is backed by the support of itsfounding partner MDeC, and consulted by a largenumber of organisations such as MATRADE,PSDC, Bank Negara Malaysia etc.



Outsourcing | OutsOurcing Malaysia

australia and Ma-

laysia have been en-joying strong diplomaticand historic ties since the

independence o Malaysia. Withthe current paradigm o globalisa-tion, partnership and collaborationbetween corporations o both coun-tries are imperative to be globallycompetitive.

Over the years, with the ASEAN-Australia & New Zealand Free TradeAgreement (ASEAN-ANZFTA),Asia Pacic Economic Cooperation(APEC) and also various govern-ment-to-government trade agree-ments, trade barriers have beenlowered to increase trade betweenthese two nations.

In light o these developments,Outsourcing Malaysia (OM) will or-ganise two seminars in Australia tohelp create a solid platorm or bothMalaysian and Australian servicesproviders to ormulate strategies

in achieving mutual benets andcollectively target markets beyondthe two countries.

The seminars will be held inSydney on June 22 (Sydney Conven-tion Centre), ollowed by Melbourne(Novotel Melbourne On Collins) onJune 24.

Malaysias Minister o Science,Technology & Innovation (MOSTI)Datuk Seri Dr Maximus JohnityOngkili will be ociating the events,thereby refecting highest commit-ment by Malaysia to the Australianmarket.

The seminars will also create a

big opportunity or corporationslooking to expand and optimisetheir business processes and supportservices, while maintaining highlevels o service quality, better costcontrol and ability to scale.

OM Chairman David Wong NanFay said: This is the rst time thatOM is organising such an initiativeto Australia, and we are pleased tohave the support o MOSTI.

Our partners or this businessmission to Australia are the Mul-timedia Development Corporation(MDeC), the custodian o the MSCMalaysia initiative, and PIKOM the National ICT Association oMalaysia.

Wong added: As the organisers,OM will put together the event,besides working with relevant par-

OMembarkson Aussie

business mission

ties and bodies in both Sydney andMelbourne to ensure its smooth

execution to deliver good benetsto the two countries. We have alsoinvited both the New South Walesand Victorian State Governmentsto address the participants.

Australian Inormation IndustryAssociation (AIIA) another part-ner o the event will be assistingto promote this event in order toreach out to the right audience inAustralia.

He said: OM is aiming or atleast ve to 10 Memorandums oUnderstanding (MoUs) to be signedduring the mission with Australianservice providers who can work wellwith Malaysian service providers toexpand and strengthen our capabili-ties in high value services.

Andy Yau, OM Head o BusinessDevelopment & Membership, said

one o the main objectives o thisinitiative is to grow the outsourcing

business in Malaysia to the nextlevel.

Yau said: We must look beyondthe country i we want to expandand go global. And Australia was alogical choice as both countries havestrong diplomatic ties.

Yau said the seminars will provideopportunities or Malaysian andAustralian service providers to meetand explore ways to work togetherto achieve a common goal that otapping into each others strengthsand expertise to get more business.

He added: OM members andparticipants will have the chance tointeract with their Australian coun-terparts to look into the possibility oorging smart partnerships to growtheir business and at the same time,to tap into their expertise.

Ongkili will be ofciating the events, therebyreecting highest commitment by Malaysia tothe Australian market.

Wong We have also invited both the NewSouth Wales and Victorian State Governments toaddress the participants.

Malaysianrms must

look beyondthe country

and goglobal. AndAustraliais a logicalchoice

as bothcountries

have strongdiplomaticties.



OutsOurcing Malaysia | Outsourcing

OM is optimistic that this businessmission will take us a step closer towardsachieving Malaysias goal o becoming theglobal hub or high-value services.

OM Head o Marketing & BrandingBobby Varanasi is also condent that the

mission will help Malaysian companies togo truly global.Varanasi said: Key objectives are to

establish partner models between Austra-lian and Malaysian companies or collec-tive value-creation and sustained servicedelivery to Australian companies. In thiscontext, Malaysian rms will greatly benetby partnering with more mature Australianpartners, and bring back knowledge oworking in a developed nation back intotheir operations, thereby enabling valueaccrual internally.

In turn, I would imagine such increasein competence will aid Malaysian compa-nies to become globally comparable and

competitive as Australian benchmarks operormance are world-standard.

At the same time, Australian vendors willalso gain signicant visibility to Malaysianservice competencies, and determine most-able and complimentary partners, saysVaranasi.

This will give them the leverage tospread their service delivery models, pricemodels and service portolios on oer in acompelling and sustained manner.

Yau says OM is targeting about 100to 120 delegates, both Malaysians andAustralians, or the seminars in each o thetwo locations.

Whether you are a new corporation looking todevelop or an established name looking to expand

business globally, the Malaysia-Australia Partnership wouldbe the preferred choice to achieve your business objectives.Executives who source, or are planning to source business

services will nd this event as Must Attend.

Attend and Find Out About:

> Government-to-Government partnership

> Smart Partnership Model between service providers

> ASEAN countries as the strategic delivery location for

high value services

> The formula towards wins for all parties

> Leveraging on Australia & Malaysias Historical Strong

Ties

> Collaboration opportunities between Malaysia

& Australia, especially in the Shared Services &

Outsourcing (SSO) Sector

Who Should Attend?

Senior management, decision makers and advisors from:

> Listed companies

> Medium to large companies

> Multinational Corporations

> Shared Services Organisations

> Domestic sourcing service providers

For further enquiries, please call Azreel Aswad or Victor Lowat +60379552922, or e-mail [email protected]. my. or [email protected]

OM isoptimisticthat this

businessmission willtake us a

step closertowards

achievingMalaysiasgoal ofbecomingthe global

hub forhigh-valueservices.

> IT Consulting and Outsourcing

> Business Process Outsourcing

> Associate Membership

Outsourcing Malaysia Members



Outsourcing | adfeature

Asia, in particularly Malaysia, Thailand,Philippines, Indonesia, Singapore, Brunei,China, Pakistan, Bangladesh, India andWest Asia with collective population ofapproximately one billion Muslims, is aprime target market for halal products and

services.Over the years, Malaysia hasmade a head start in the global halalmarket. Malaysias halal certication isan extraordinary branding for localproducts to compete with export fromother countries in the foreign markets.Nonetheless, obtaining the logo ofcondence alone does not guaranteesales. It is indeed an added advantage butother pre-requisite should not be neglectedin order to win in the market.

Among the aspects needed to befollowed through is the classic 4Psstrategy: Product, Pricing, Promotion and

Place. It is vital for the halal producers toidentify their market segments and cater tothese markets needs in order to stand outin the market place. Other aspects relatingto the standard of quality and the countryslegal requirements and issues, thetechnological aspects, and the productioncapacity, are equally important to remainrelevant and competitive in the market.

Manufacturers must fully understandthe manifestations of the halal certicationand strive to gain the widest possiblemarket outreach for Malaysian halalproducts.

In 2009 alone, exports of these halal

products to the Organisationof the Islamic Conference (OIC)countries amounted to RM3.7 billion(US$1.15b). Malaysias leadingposition in the halal industry makes itan ideal trading platform to draw theworlds halal players in facilitating thesourcing and selling of global qualityhalal products.

The Government has putinto place necessary incentives,infrastructure, programmes andhalal-related events to assistlocal manufacturers in developingnecessary competitive advantages.

Programmes are also devised tofacilitate local companies to expandtheir business network and nd theirniche in the halal market.

One such effort is the conuence

f three major events International Halal ShowcaseMIHAS), World Halal Researchummit (WHR) and World Halal

Forum 2010 (WHF) all under oneroof. The Halal Malaysia Week

joint effort of three parties, namelyMalaysia External Trade Developmentorporation (MATRADE), Halal Industry

Development Corporation and Kasehdia SdnBhd is an excellent example of public-private sector initiatives to provide supportiveplatforms to showcase Malaysias Halalindustry .

The Halal Malaysia Week will rmly positionMalaysia as a beacon of the Global Halalindustry, highlighting Malaysias thoughtleadership in this area and its strong intentionsto be known as the worlds leading Halal Hub.

Through Halal Malaysia Week, thisountry is setting an example to the

international community by uniting threeinstrumental platforms to help focus theindustry and to drive it to the next level offfective trade and business, said Dato

Noharuddin Nordin, CEO of MATRADE duringthe launch of Halal Malaysia Week recently.

Noharuddin added that this movehighlighted Malaysias commitment inpromoting the Halal industry on a global scalend seriousness to consolidate all resources

in marketing the industry.The seventh edition of MIHAS will take

place from 23-27 June 2010 at MATRADEExhibition and Convention Centre, KualaLumpur, Malaysia. MIHAS has grown to

be the largest halal trade fair in theworld where the return investments aresubstantial.

The consistently large numbers of localand foreign delegates attending the annualhalal trade fair organised by MATRADE inpast years, reects a growing interest inthe global halal market and an increasedawareness on halal products. Clearly,there is much potential for Malaysian halal

products to seek wider market outreach,regionally and globally.Noharuddin said this and other other

halal-related showcase, conference andforum are targeted to draw thousands ofdelegates and more than 600 exhibitorsfrom over 50 countries. These participantswill facilitate trade and drive the global halalindustry and discuss issues and shareadvancements in halal research amongother activities.

Therefore, halal products entrepreneursshould take advantage of MIHAS, theplatform which, for the past six years,succeeded in drawing the worlds halal

players under one roof to meet, networknd trade. MIHAS 2010 presents the

spreading inuence of halal that will inspirethe halal industry to move further andbeyond.

It is the global halal market placewhere both Malaysians and internationalhalal producers can take full advantageto market their products in the localand international markets. Companies

eeking to expand or diversify intothe halal industry should leverage onMIHAS 2010.

To nd out more about whatMIHAS offers for your businesses,

please contact the MIHASECRETARIAT at Tel: +603 6203433 or Fax: +603 6203 4422. Email

to [email protected] or log on towww.halal.com.my

Leveraging on the growing halal marketWith the worlds Muslim population reaching three billion people,the halal industry has become one of the fastest growingindustries in the world. One out of every four human beingsconsumes halal products, thus contributing signicantly tothe growing industry, which is estimated at US$2.1 trillion,of which the food sector alone is worth US 547 billion.

Asia, with collectivepopulation ofapproximately onebillion Muslims, is aprime target marketfor halal products

and services.



adfeature | Outsourcing

Reliance, an established travel brand inMalaysia, has helped business travelers andholidaymakers nd charming travel and servingup delightful travel experiences worldwide forover 40 years. A small travel company wayback in 1969, Reliance Shipping & TravelAgencies Sdn Bhd is today part of a leadingtravel group of companies under ReliancePacic Berhad. Not surprisingly, this travelgroup of companies are also well representedoverseas with business interests in manycountries including Singapore, Thailand,Indonesia, Australia, Hong Kong, and China.

Flagship SteThe Reliance Travel agship store in SungeiWang Plaza remains ever popular with steadystreams of customers looking for true valuetravel products. Many of us would rememberReliance not only as a travel agency operatingfrom within Sungei Wang Plaza, but also asa centre of higher education for travel TheReliance School of Tourism. The schooltoday has since moved on to occupy largerpremises elsewhere in Kuala Lumpur withbranches in Pulau Pinang and Johor Baru.

Pducts & SevicesProduct and services include Airline Ticketing,

Visa Application, and Travel & Tour Packages;although a great many travelers wouldrecognise Reliance more so as a reputablebrand for Travel & Tour Packages. Thismay well be as Reliance has guided toursthroughout the world and they know what isimportant to have a successful tour from theirvery personal experience.

It could also perhaps be due to theinnovativeness of products such asReliance Signature, Reliance China ClassicSeries, Reliance Riang Ria Muslim Tours,and Reliance Europe Beyond the Norm.Extreme importance is placed on offeringthe highest level of service with attention tothe smallest of details. To Reliance, the valuefor the customers money is a top prioritywith on par quality and this has led to manycustomers coming back time and time againfor wonderful holidays and travel experiencestailored to well-researched needs and

Travel experiences around the world served by Malaysias best loved travel brand

Enhancing yourquality of life with travel

interests. Close to 50% of Reliance customersare repeat customers, and 90% are seasonedtravelers.

Natinwide NetwkA nationwide network of over 20 RelianceTravel Centres and over 200 Travel AgentPartners serve our clients, ensuring easyaccessibility and convenience. Most of the

Reliance Travel Centres are members ofthe Reliance Travel Franchise Programme.A Travel Franchise Programme open tothose passionate about travel & tourismand desirous of owning a successful travelbusiness that is built upon the Reliance brandvalues of Trust, Speed, and Choice. Trustin service delivery within the comfort of arelaxing travel shopping ambience backed byover 40 years of personal experience in thetravel & tourism industry. Speed in servicingand delivery of information through multiplechannels nationwide and online. Choice inan endless variety of products and servicesand from multiple choices of channels forcustomers to choose and buy.

Band SuccessPart of the reason why Reliance remainsstrong and resilient is because of its deepknowledge of the industry. It serves over

20,000 holidaymakers year after year andthis low estimate does not even includecustomers for its other regular productssuch as Airline Ticketing! The Managementremains humble despite its growing successand attributes it to a tried and proven systemof constant gathering and assessment ofcustomer feedback to help the businessimprove as it works hard in trying to serve the

customer the best it can.Raymond Lee, General Manager of

Reliance Shipping & Travel Agencies SdnBhd, says: We are where we are todaybecause of the strong trust and condenceour customers place in our credibility as anestablished travel company. Without ourcustomers support we would be just anothertravel agency on the street, struggling tomake a difference and selling whatever travelproducts available.

We are extremely fortunate that ourcustomers love us for our true value whichis apparent in always having more choices,more reasons and more offers for them.

For more information onReliance Travel please visit www.

reliancetravel.com or send in your e-mail [email protected]

AWARD WINNING COMPANY Mr. Tan Sin Chong (Third from left), Managing Directorfor Travel Division, Reliance Pacic Berhad receiving Malaysias The Brand LaureateAward for Best Brand in Services Tours & Travels 2009/10.



Outsourcing | study

By Neeraja KaNdala

Currently, offshore serviCe providers earn a large shareo their revenues rom the United States market. The US based buyers

make up or a signifcant portion o the total contracts. About 75% othe current Indian oshore business is generated rom customers basedin the US while 20% o the business comes rom UK and the remainder

(5%) comes rom the rest o the world, including Asia Pacifc and Middle East.There are also several service providers catering to other markets, which include

Australia, Canada, South Korea, China and Japan. A majority o the work romthe other markets comes rom corporations and is related to contract managementand patent services.

The UK market is gradually opening up with law frms such as Eversheds, OsborneClarke, among others exploring the oshore option. Several service providers arenow taking keen interest in other markets with reportedly increasing number oinquiries rom the UK market.

UK companies have traditionally been open minded when it comes to inter-national business models, and they are comortable with the legal education andtraining in India, as well as with the quality o English spoken in India. Accordingly,they are highly enthusiastic about working with Indian LPOs, says SuchoritaMookerjee, Director Legal Operations, Bodhi Global Services Pvt. Ltd.

Incsing ctivityOver the last two years, several other frms have started giving oshoring a seriousthought. Some o the well-known names in this area are Allen & Overy, Linklaters,

Rest of

theWorld

5%

UK

20%

US75%

Significnt tctionfom UK g mkt

Source: ValueNotes report on Legal ProcessOutsourcing (LPO): Crisis creates opportunities

Share by geography


32/47Ma-June 2010 | Outsourcing | 31

study | Outsourcing

Lovells, Eversheds. Interestingly, severallarge contracts have been announced bythe UK-based law frms over the last oneyear.

While most o these frms have primarilyoutsourced their IT and F&A unctions, ew

o the recent deals include the legal servicescomponent along with support services.Even within the legal services, activitiesoshored by law frms so ar are limitedto services such as word processing, legaltranscription, coding, indexing and scan-ning documents, contract drating, legalresearch and trademark searches.

According to Matthew Banks, SeniorVice President, Legal KPO, Integreon: TheUS corporate market remains a key sourceor growth in LPO revenues across a rangeo services, particularly litigation, contractsand regulatory/compliance. We expect theUK corporate market to ollow suit.

On the law irm side, 2009 has

already witnessed major activity romUK law frms who, in terms o oshor-ing, are some margin ahead o theirUS counterparts and rom a serviceline perspective we expect them tobuild beyond the initial successeso litigation document reviewoutsourcing.

Although this will not aectthe dominant US ocus in theLPO sector, increasing numbero UK law irms and corpora-tions will consider the oshoreoption. While most irms areconcerned about data privacyand confdentiality, the situationwill change considerably once theirms that are oshoring reap thecompetitive advantages o lower costs/higher capacity. Further, unlike in theUS, in the UK there are not many domestic

based service providers oering large scaledocument review services or litigationstafng frms.

In the UK, the move towardsoutsourced legal services has been led bycorporate clients, who are under pressure

to cut costs and are demanding that theirexternal counsel support them in thisarea. Like it or not, law frms are havingto respond.

Some are more responsive than others,although its interesting to see that manyo the UKs biggest law frms are now beingincreasingly linked with outsourcing, eitheras part o a three-way relationship betweenthe corporate client, their external counseland the legal outsourcing provider ordirectly with outsourcing providers, saysPaul McGolpin, CPA Globals Director,Legal Services Outsourcing.

As businesses globalise, UK law frmsare looking to cut costs o maintainingtheir international networks, to be ableto compete with the US law frms. Cuttingcosts (especi

outsourcing issue #18

Documents