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InterGlobe Technologies: A global leader in travel technology and

business processes

I n t e g r a t e d I T - B P O S e r v i c e s – A W

h i t e p a p e r



© Copyright 2010 InterGlobe Technologies

1. Introduction :

Outsourcing has evolved to become a key component of strategy for global companies. The world hasstarted viewing outsourcing more as a way to increase the value of their businesses, rather than justcost reductions and are seeking tangible results from both IT investments and improved business

processes.

Cost savings can be the main driver of an outsourcing project. Each outsourcing initiative within anycompany – has a mix of other drivers, prioritized differently in each case.

Beyond cost savings, a second major theme is access to capabilities – whether human talent, process

excellence, or sheer physical resources. Apple designs the iPod in its Cupertino, California offices, butit outsources the manufacturing to select Chinese firms – not just because they can build it

cheaply, but also because of their unique intellectual property in materials science and packagingtechnology.

A third major theme is strategic benefit – freeing up one’s own resources, improving

flexibility, gaining access to capital, access to new markets, or changing the rules of competition in anindustry. In 2003, Bharti Airtel, lacked the capital to respond to a massive growth opportunity in itsdomestic market. It cut an end to end IT outsourcing deal with IBM. Much of IBM’s compensation in

this deal depended on Airtel’s market growth. Airtel made other shared risk/reward deals withequipment suppliers Ericsson, Nokia and Siemens. Today Airtel has some 40 million customers and is its

country’s market leader.

Each company must achieve an optimal balance of top-down management and collaborativepartnering in dealings with suppliers, channel marketers, companies selling complementary services

and customers. Each definitely illustrates that a uniquely integrated IT and BPO service businessmodel makes possible the squaring of many circles: cost savings with growth, speed as well asquality, and organizational cohesion plus knowledge and innovation.

8%

8%

8%

0%

8%

18%

50%

3%

3%

3%

6%

15%

6%

40%

Consolidating assets/resources

Flexibility

Availability of cheaper manpower

Leveraging technology expertise

Lack of In-house Resources

Gaining Competitive Advantage

Reducing Costs

Key Drivers for Outsourcing

2009 2010




2. Multi-outsourcing Relationship – A shift in approachThe outsourcing of discrete functions of a business has been a way of life for many years. Diversity of non-core business processes allows the organization to focus on more important matters, make better

use of skills, mitigate risk and, in certain cases, reduce costs. Information Technology outsourcing hasgained in popularity, with huge international contracts worth billions of dollars signed annually.

However, recent years have seen significant changes in the way organizations approach outsourcing.

Whereas a decade ago, the typical organization either fully outsourced their IT function to a singlevendor, or provided IT in-house through the IT department, today the option of relying on a single

provider is less attractive for many reasons: The expected reductions in IT spend are not beingrealized, there is no alignment to business objectives and more often than not, the relationshipcontributes little in terms of innovation and thought leadership. Today, organizations are demanding

more from their outsourced service providers and are seeking more of a partnership where common goalsand aspirations are targeted.

These factors have resulted in organizations opting for Integrated Outsourcing or ‘Multisourcing’models, where certain functions are outsourced and selected functions are retained in-house. Byemploying a variety of ‘best-of-breed’ service providers, organizations are seeking to enjoy greateragility and reap competitive advantage.

Information Technology

20%

Real Estate

10%Transportation

5%

Administartion

15%

Customer

Service

7%Management

4%

Finance

7%

Distribution & Logistics

10%

Human Resource

9%

Marketing

& Sales

6%

Manufacturing

7%

Reducing

Costs

Leveraging

Location

Enhanced

Products &

Services

Enhanced

CustomerReach

Supporting

Decision

Making

Partnership &

Transparency

Low

High

Cutting

Costs

Operational

EffectivenessRevenue

Generation

Business

Growth

BusinessEffectiveness




2. Multisourcing Relationship – An integration between IT &

BPO Services

Companies adopting outsourcing as a significant part of their sourcing strategy face increasingcomplexity from managing multiple outsourcing efforts and multiple suppliers. To cope with this

growing complexity, integration of IT and BPO services come into play. Specific skills are required toeffectively manage the volume and complexity of relationships between the various parties involved.

2.1 Adopting a ‘Partnership’ Approach

In traditional client / supplier relationships, the primary focus is generally on cost or price. Moreover,organisations often view the service provider with suspicion and a lack of trust exists between the twoparties, which can jeopardize the success of the overall engagement. When adopting a multisourcing

model, the development of a ‘partnership’ relationship between client and supplier, based on trustand focused on mutual business outcomes, is key to the success of the contract.

This model requires organisations to adopt a new attitude toward service providers as strategic partners– not just as vendors from whom goods and services are procured, but as business partners with

experience, skills and assets that can be harnessed to create competitive advantage. Serviceproviders, in turn, must be prepared to work to better align their services and contracts to theirclients’ unique needs.

2.2 The Right Measurement Tools

Effective measurement techniques are critical to establishing a ‘trusted partner’ relationship betweenclients and service providers. A common problem in traditional sourcing relationships is that often

Service Level Agreements (SLAs) just measure incidental items that have no bearing on businessoutcomes.

The result is that the organisation cannot ascertain whether it is getting value for money and is unableto prove to management that it has made a good decision to outsource. Adopting a multisourcing model

therefore requires a new discipline to measure and monitor the performance of sourcing relationships.Key to this process is commitment on the part of both the client and supplier to being fully transparent.

For service providers, this means being willing to share true cost and delivery effort information withthe client.

2.3 Supplier Management Skills

One of the hardest parts of moving to a ‘best-of-breed’ outsourcing approach is managing theprocess. With this model, one sourcing relationship is not autonomous of another and numerous

service providers depend on each other and on internal services to reach goals. Managing multiplesuppliers is much more complicated and demands a new set of skills and management techniques.To effectively cope with these new challenges, organisations need to develop a coherent plan for the

ongoing management of their supplier relationships and the services that are provided. This includesre-evaluating the roles and responsibilities of in-house IT personnel, building up internal skills to track

the performance of the outsourcing contract and developing techniques to assess whether value isbeing delivered.




3. The Value Proposition

Lead Source

Niche

Suppliers

B

C

D

E

A

•Management of multiple

relationships with third partyvendors and customer

•Coordination and collaborationwith other suppliers

•Clear overarching responsibility for

delivery with lead supplier

•Ensuring robust requirementsdefinition

•Managing and supporting end toend integration

•Use of effective methodologies and

tools

Lead Supplier

Model

Integrated

Services

Model

• Clear roles, responsibilities andterritories

• Competitive tension

• Co-operation between partners• Sharing knowledge Communication

• Coordination and collaboration of all

vendors

• Any central lead supplier role issubject to competition

• Collaboration and Partnering

• Honest intentions and best interestsof customer

MasterPartners

4. Case Study

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