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Offshoring Trends Arash Shahideh.

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Presentation on theme: "Offshoring Trends Arash Shahideh."— Presentation transcript:

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

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