1. Offshoring Trends
Arash Shahideh

2. Offshore Trends in
Offshore becoming mainstream -- 25%+ growth
India continues to dominate, but country diversification imminent
New entrants, new competition
New decision makers -- business buyers and consultants
Big names, preferred vendors
Most of the work is still project work NOT outsourcing
Concerns about risk, distance and no “cookbook”
Longer decision-making cycles;
Increasing interest in other segments -- ITO, BPO, Network
Tendency to build relationship and then leverage across services
Way too much focus on rates
Some backlash globally as a result of IT jobs flowing offshore

3. “Offshore” is becoming Mainstream
Global delivery
moves to the main
Number of
stream
Enterprises
Using Offshore
All types of
Sourcing For
enterprise such
The First Time
as healthcare,
retail and energy
companies are
Early adopters of
Type B:
piloting or
sourcing
Pragmatists
outsourcing
programming in India
include:
Largest segment of •
Financial service
enterprise buyers •
High-Tech
comprise this
manufacturing
category; thus, there
will be a large volume
of activity
Type A:
Type C:
Early Adopters
Laggards
1995 to 2001
2002 to 2003
2004 +

4. Regions of Supply for Offshore IT Services
Russia
Canada
Eastern Europe/
Baltic States
90% of enterprises source from here
Ireland
China
Philippines
Mexico
India
Nearshore
Easier travel
Cultural similarities
Time zone
Team integration
South America
Offshore:
Lower costs
Round the clock
Resources
Quality
Longer-Term Prospects
Current Priorities

5. A Simple Value Proposition….
Lower costs
For example, UK based SAP consultants cost £600 and up, where SAP consultants in India cost $22 - $35 an hour
The savings in labor is enough to pay for the incremental overhead remote management incurs and still save 30% – 50%
Flexibility of Resources
India, China and the Phillipines supply 90% of the market
Other low cost geographies quickly gaining in popularity (Canada, South America, Ireland)
Quality/Stability of Service
High quality infrastructure
Highly educated staff
Time zone difference
Faster turnaround of tasks

6. … But a very complex execution
Loss of communication richness
Constructive Responses
Service architecture
Loss of Collaboration
Cultural differences
Managerial techniques
Development methodology
Loss of teamness
Coordination breakdown
Telecom infrastructure
Collaborative technologies
Disruptive Issues
Team building

7. Evolutionary Stages in Offshore Sourcing Relationships
Transformational Outsourcing
Stage 4
Offshore Development Centers
High
Stage 3
On-site/ Offshore Projects
Quasi-captive offshore facilities
Value commitment
Processes & technology infrastructure common between client and center
Stage 2
On-site Project Team
Dedicated offshore facilities
Committed long-term revenue
Typically connected to client site by direct leased telecom link
Stage 1
On-site Contract Work
Project manage-ment and client services in the UK; delivery team offshore
Charged hourly, maybe milestone fees
Risk shared between client and vendor
Persistence of Services
Delivery team on-site
Low
Simple
Complexity of Service Delivery
Complex

8. High level approach to off-shoring
IBM can either consult on the approach and/or provide off-shore services
6 weeks
6 months
2-3 months
1-2 months
1-2 months
1 month
On-going Support
Scoping
Supplier
Selection
Portfolio
Assessment &
Migration
Strategy
Application
Specific
Migration
Plans
Knowledge
Transfer
Parallel
Perform
Application
Cutover
Denise’s comments – the words in the blue box are confusing . It would be clearer if you left them out as this is a logical flow of slides : you are starting with a high level view of the complete process and then describing the scoping phase in more detail.
Also, rather than say ‘IBM Story’ say ‘IBM experience’ as this covers both internal and customer experience.
Feasibiltiy
Review strategy
Analyse current IT services and solutions
Conduct organisational assessment
Develop sourcing strategy
Evaluate key findings and develop business case
Supplier Selection
RFP
Site visits
Contract negotiation
Portfolio Assessment & Migration Strategy
Due diligence
Migration prioritisation
Master migration schedule
IBM’s Story
Transition
Fit with wider initiatives
Transform retained organisation (IS and business)
Change Leadership, Communications and Stakeholder Management

9. Remote Delivery Models Adopted by Our Clients

10. Delivery Models

11. Application Migration Criteria

12. Migration /Transition Process Overview
Contract Engagement
Transition
Operation
Phase 5:
Application Cutover
Application supported by in steady state
Phase 4:
Parallel Perform
Phase 3:
Assisted Perform
Phase 2:
Guided Perform
Formal milestone for completion of knowledge transfer. Suppl. team is ready to take on project management of new services
Phase 1:
Transition
Planning
Application skill level
Assurance checkpoint for knowledge transfer - new team now ready support independently
First phase of knowledge transfer – Customer Team to mentor suppl. staff
Second phase of knowledge transfer – suppl. staff to deliver 75% of support calls
Detailed transition planning
= Quality Gate/Review

13. Typical Application Support Structure at Steady State
Client Site
Global Delivery Center
Business Help Desk (L1)
Incident/Problem Manager - assigns PT to appropriate support queue
Owns the issue till it is closed
Application Support Desk (L2)
Functional consultants
Owns the PT till the fix is tested and approves the code.
Reassigns the PT to the L1 queue for closure with the comments
Technical Support Desk(L3)
Tech Consultants, DBAs, Queue,Interface monitoring
24x7 for sev 1 calls
emergency fix, unit testing
Tools (SDMS, PELICAN)
Quality Processes
WW SAP ICM Database

14. Production Maintenance Call Management
Flexible 24 x 7 support services based on severity levels
The teams are equipped with
Pagers and cellphones
Laptops to connect from home
Central repository of all key contacts in the production support team
Roster charts
Backup contact details
Daily status update conference calls across all the support teams
Monthly reporting on performance based on the agreed SLA’s
Based on criticality (sev 1), hourly management calls on status
Customer PT
Business Help Desk
Status Reports
Level1 Support
Updates PT
Resolves data
related
problems
& working
with
Customer
personnel
assign severity
Problem
levels
Reporting
Controlled
database
Access
Updates
Updates PT PT PR
Global Delivery Team Level 3, Emergency Fix
Onsite Team
Global Delivery
Team Level 2 Support
Level 2 Support
Telephone
Cell phone
On-Site
Pagers
Global Delivery Center
Travel
On-line chat
e-Meeting

15. Key Performance Indicators : At Steady State