GT_May_2011 by Ali Comelek

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GlobalizationToday

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The Official Magazine of the International Association of Outsourcing Professionals

GlobalizationToday Commerce Redefined

May 2011

THE GLOBAL OUTSOURCING 100 The Leaders Who Earn a Seat at the GO100 Table

Also in this issue: Our Criteria for Making the GO 100 How Outsourcing is Transforming Aerospace Improving Troubled Outsourcing Relationships

To all 522,835 employees – Thank you! Service Delivery Excellence is the backbone of ISS. Our 522,835 employees are all equipped, enabled and empowered with the license to act upon customer needs.

With operations in more than 50 countries ISS provides services within six different areas: Facility Management, Catering, Security, Cleaning, Property and Support Services.

Our successful performance is based on the day-to-day efforts and capabilities of all our employees, who ensure that we exceed our customers’ expectations. Thanks to our employees ISS is now among the very top of the Global Outsourcing 100 Leaders and we would like to express our warm gratitude for their dedicated work.

For more information on how your company can benefit from the experience and skills provided by our 522,835 service professionals, visit www.issworld.com.

Every day ISS employees work as an integrated part of our customers’ organizations, ensuring that service value is created through customized service solutions based on valued customer partnerships.

INSIDE May 2011 7 PUBLISHER’S NOTE 8 NEWS FEED

What’s new and noteworthy in global commerce.

26 OUTSOURCING TAKES WING by Oscar S. Garcia

Here’s why aerospace outsourcing in Latin America is gaining altitude and posing stiff competition to other fast-growing regions.

32 IMPROVING TROUBLED

OUTSOURCING RELATIONSHIPS by Joseph Bubman and Sara Enlow

Practical advice on how to overcome the challenges inherent in outsourcing partnerships.

36 PLAYING THE TAG GAME by John Persinos

Our Editorial Director provides advice on how the outsourcing community can get the most out of Radio Frequency Identification (RFID) tags.

38 TURNING AROUND A FAILING PROJECT

by Eddie Kilkelly

Here’s how outsourcing organisations can help turn around a failing project.

42 IAOP WORLD CONNECTION 46 SCRAPBOOK

THE GLOBAL OUTSOURCING 100

by Sandy Frinton

We reveal our annual ranking of the leaders of the pack— and how they got that way.

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FOUNDER & PUBLISHER Ali Comelek ali.comelek@globalizationtoday.com

EDITORIAL and PRODUCTION

Get Listed in Globalization Today’s Buyer’s Guide All Globalization Today subscribers have complete access to our Buyer’s Guides that allow them to quickly find and purchase outsourcing and offshoring related products and services. Globalization Today offers a free basic listing to providers in the following categories: • Information Technology • Internet & Web • Consulting • Business Process • Human Resources • Art & Design • Medical & Billing • Printing & Publishing • Writing & Editing • Engineering & Architecture • Finance • Virtual Assistantship

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EDITORIAL DIRECTOR John Persinos john.persinos@globalizationtoday.com AD PRODUCTION MANAGER Donna Eastman donna.eastman@globalizationtoday.com GRAPHIC DESIGN AND PRODUCTION Webstaze Design Studio www.webstaze.com

EDITORIAL ADVISORY BOARD Dr. Bruce Greenwald Prof. Asset Management and Finance Columbia Business School Dr. Matt Waller Prof. Marketing and Logistics University of Arkansas Dr. John Hindle Sr. Manager - Accenture, Adjunct Prof Vanderbilt University Mike Corbett Chairman - International Association of Outsourcing Professionals Matt Shocklee CEO & President - Global Sourcing Optimization Services Arijit Sengupta CEO of BeyondCore, Inc Chair of the Cloud Computing Chapter of IAOP

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PUBLISHER’S NOTE

We Salute The Best of the Best Drum roll, please…

Ali Comelek

Founder and Publisher

This issue, we unveil the “Globalization 100”, our ranking of the best outsourcing companies on the planet. It’s an eagerly awaited list that confers enormous prestige on those companies included. How did we come up with this honor roll of top-quality outfits? Read our cover story, in which we lift the curtain and reveal the inner workings of the judging process. Devised and operated by the International Association of Outsourcing Professionals (IAOP), the criteria for making the final cut serve as benchmarks worth achieving for all professionals in the outsourcing field. All of the companies on the GO100 focus on the bottom line, of course, but the criteria for making the list also encompass less tangible qualities that equate with excellence. The process for determining the ranking started way back on the application deadline of November 1—and since then, picking the Best of the Best has been a rigorous job for the judges. Turn to page 16, to learn more. Also of interest is a column by our Editorial Director, John Persinos, who examines how Radio Frequency Identification (RFID) tags are increasingly pervasive in outsourcing, as supply chains strain to keep track of the myriad pieces of equipment, parts and finished goods that zip around the globe (see page 36). As John explains, RFID does not produce just a stream of undifferentiated information, akin to water blasting out of a fire hose. RFID data must be up-to-the-second and actionable, a goal that requires computing capabilities of mind-boggling sophistication. As outsourcing companies adopt this technology, they’re finding that it can change their entire strategic outlook. Another feature of note is an examination of Latin America as a rising star in aerospace outsourcing, written by the influential aerospace consultant, Oscar Garcia. Much is written about the growing affluence and clout of China and India, but Latin America seems to be given short shrift. Oscar explains why outsourcing is hot in these warmer climes (see page 26). Meanwhile, on page 32, we examine practical ways to improve troubled outsourcing relationships. As with any human relationship, tensions, misunderstandings and poor communication also can plague an outsourcing partnership. Here are no-nonsense ways to get a problematic business back on track. For the rest of our informative and compelling content, turn to the Table of Contents. Enjoy your issue and please don’t refrain from sending John Persinos or me your feedback! We love hearing from you.

Founder and Publisher Globalization Today Magazine “Official Publication of IAOP” www.GlobalizationToday.com 1-602-492-4194

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NEWS FEED

NEWS Feed

WHAT YOU NEED TO KNOW IN THE WORLD OF OUTSOURCING

NASA AWARDS $2.5 BILLION SERVICES CONTRACT TO HP www.outsourcing-alert.com

HP Enterprise Services has been chosen for a single-award firm-fixed-price, indefinite delivery/indefinite quantity contract worth up to $2.5 billion over a four-year base period with two threeyear option periods by the National Aeronautics and Space Administration (NASA). HP will provide end-user desktop services and devices that will increase NASA’s efficiency and allow its employees to more easily collaborate in a secure computing environment. As a part of NASA’s Agency Consolidated End-User Service (ACES) Program, HP will modernize NASA’s entire end-user infrastructure by delivering a full range of personal computing services and devices to more than 60,000 users. The modernization is expected to deliver significant productivity gains and cost savings to NASA. “NASA personnel use IT to support NASA’s core business, scientific, research and computational activities,” said Michael Sweigart, procurement officer, Shared Services Center, NASA. “HP will provide, manage, secure and maintain these essential IT services for the agency.” Under the ACES contract, HP will provide a variety of Computing Seat, Tier 2/3 Service Desk Support and Collaboration Services to more costeffectively manage NASA’s end-user infrastructure at all NASA sites across the United States. Computing seat and cellular seat services are designed with

GlobalizationToday May 2011

security and collaboration capabilities to help the NASA team safely share information. “The ACES contract will help evolve NASA’s IT environment to a centralized, adaptable IT infrastructure to enable economies of scale, agency-wide visibility and improved management and security,” said Dennis Stolkey, senior vice president and general manager, U.S. Public Sector, HP Enterprise Services. “HP will build on our deep industry, infrastructure and

end-user services expertise to support this significant work for the agency that is pioneering the future in space exploration, scientific discovery and aeronautics research.” HP will team with numerous small businesses to meet NASA’s small business participation guidelines and diverse mission needs. The contract will be managed at the NASA Shared Services Center in Stennis, Miss., and will serve all NASA centers and facilities.

NEWS FEED

EXL AGREES TO ACQUIRE OUTSOURCE PARTNERS INTERNATIONAL www.outsourcing-alert.com

Exl Service Holdings, Inc. (“EXL”) (NASDAQ: EXLS), a leading provider of transformation and outsourcing services, today announced that it has signed a definitive agreement to acquire Outsource Partners International (“OPI”), a leading global provider of finance & accounting (“F&A”) outsourcing services. With this acquisition, EXL establishes itself as one of the leading third-party service providers in global F&A outsourcing. Rohit Kapoor, President and CEO of EXL stated, “I am extremely excited about EXL’s acquisition of OPI. OPI is one of the largest pure-play providers of complex F&A outsourcing in the market today. OPI has over 3,700 professionals globally, approximately 80 clients, and an extremely talented management team. By combining EXL’s F&A outsourcing and transformation capabilities with OPI’s end-to-end F&A outsourcing capabilities and proprietary platforms, we will assemble a comprehensive set of F&A solutions. These solutions will be of tremendous relevance to the CFO’s organization. The acquisition furthers

EXL’s strategic objective of leveraging technology and proprietary intellectual property in our solution offerings.” Kapoor noted that the merged company also will firmly establish its onshore outsourcing presence in the U.S., while enhancing its European and Asian delivery footprint. “OPI’s and EXL’s cultures are aligned and customer centric,”

he said. “Our respective high-touch relationship management models are highly complementary and by combining forces we will be able to provide our clients with a broader range of transformation and outsourcing solutions. I am extremely pleased to welcome the entire OPI team to the EXL family, and we look forward to an

exciting and successful future.” Clarence Schmitz, Chairman and CEO of OPI stated, “This transaction enables the logical next step in OPI’s growth. I am confident it will bring tremendous benefits to OPI’s clients, as well as enhance opportunities for our employees around the world. We are bringing together OPI’s domain expertise in F&A and EXL’s differentiated transformation and outsourcing capabilities.” Schmitz said the combined company will have the ability to meet an even broader range of client requirements and to accelerate its investments in proprietary F&A platforms and solutions. “OPI’s clients will benefit from the addition of EXL’s transformational skill sets, a broader geographic delivery footprint, and its strong balance sheet,” he said. Schmitz and Kishore Mirchandani, President of OPI, will join the management team of EXL after the close of the transaction. Avendus Capital and FT Partners served as financial and strategic advisors to OPI as part of the transaction.

GENPACT COMPLETES ACQUISITION OF HEADSTRONG www.nearshoreamericas.com

Genpact Limited (NYSE: G), a global leader in business process and technology management, today announced that it has closed its previously announced acquisition of Headstrong Corporation for $550 million in cash. Headstrong is a global provider of comprehensive consulting and IT services with a specialized focus in capital markets and healthcare. “On behalf of the Headstrong team, we are excited to continue on this journey in becoming the leading global provider

of domain-led services to the capital markets industry and other high-growth verticals,” said Pramod Bhasin, president and CEO of Genpact. “We are thrilled to welcome the highly-talented employees from Headstrong to the Genpact team. The critical domain and technology expertise we have gained today, combined with our capabilities in business process management (BPM) and Smart Decision Services that encompass analytics, reengineering and risk management, creates a uniquely powerful value proposition for our clients – from whom we’ve already received terrific feedback.” Bhasin said that joint teams are focused on several potential cross-selling opportunities and dedicated senior leaders from Genpact and Headstrong are working

on the integration. “We are confident of delivering enhanced value to our clients, shareholders and employees,” he said. “On behalf of the Headstrong team, we are excited to continue on this journey in becoming the leading global provider of domain-led services to the capital markets industry and other high-growth verticals,” said Sandeep Sahai, CEO of Headstrong. “It has not taken long to realize how well our organizations are synchronizing and working together in developing innovative solutions to meet our clients’ business needs. Now that the transaction is complete, Headstrong is elated to be a part of Genpact with its extensive global footprint, employee development focus, deep business process management expertise, and performancedriven commitment to its clients.”

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NEWS FEED

FOREIGN INVESTMENT IN LATIN AMERICA HITS HIGH: $112B IN 2010 www.nearshoreamericas.com

Latin America and the Caribbean recorded the world’s highest increase in foreign direct investment (FDI) inflows and outflows in 2010. The region received US$ 112.6 billion last year, a 40% increase over 2009 and an all-time high in terms of FDI in Latin American and Caribbean countries. In 2011, the value is expected to increase by between 15% and 25%. The figures were culled from a report of the Economic Commission for Latin America and the Caribbean (Eclac). Brazil was the country in the region that received the most FDI in 2010, having recorded an 87% increase in inflows, which climbed from US$ 25.9 billion in 2009 to US$ 48.4 billion last year. Mexico ranks second in the report, having received US$ 17.7 billion; Chile is in the third position, at US$ 15.1 billion. From 2007 to 2010, the share of Latin America and the Caribbean in global FDI inflows went from 5% to 10%. FDI outflows from Latin America and the Caribbean also grew significantly and nearly quadrupled from 2009 to 2010, totaling US$ 43.1 billion. Mexico invested

abroad the most in 2010, at a total of US$ 12.7 billion, followed by Brazil, which invested US$ 11.5 billion. “The figures we are presenting today

point to the growing integration of Latin American and the Caribbean in the process of economic globalization. The region’s countries not only remain attractive to foreign investors, but they are also increasingly daring to conquer other markets by means of trans-Latins,” according to a statement issued by the

organization. “In order to improve the capacity to absorb the benefits of such investment, we are stressing the need to implement productive development policies focused on innovation and on the strengthening of local capacities to promote the creation of quality employment. FDI must help the region to grow with equality,” the statement said. According to the Eclac statement, factors that enabled the growth of FDI in 2010 include the better performance of developed economies and the dynamism of certain emerging economies, which led to increased demand in some sectors. In South America, sectors that received the highest inflows in 2010 were natural resources (43%) and services (30%). In Mexico, Central America and the Caribbean, investment continues to reach mainly the manufacturing (54%) and services (41%) sectors. The countries that invested the most in Latin America and the Caribbean last year were the United States, which accounted for 17% of all FDI into the region, the Netherlands (13%), China (9%), and Canada and Spain (both with 4%).

SURVEY FINDS 77% OF IT STAFF SAY THEIR OUTSOURCERS INVENT WORK FOR PROFIT www.sourcingfocus.com

A new survey from Lieberman Software Corporation, taken at the recent Infosecurity Europe 2011 event in London and mirrored at RSA Conference 2011 in San Francisco, shows that the relationship between many outsourcing companies and their clients is at a breaking point. According to the survey, an astonishing 77% of IT professionals who work in

GlobalizationToday May 2011

organizations that use outsourcing say their outsourcers have “...made up…” work in order to earn extra money. The survey reveals that 43% of IT professionals work in organizations that have outsourced a significant portion of their IT. Larger organizations are more likely to have outsourced IT, with 55% of respondents at organizations having more than 1,000 employees replying that they utilize outsourcers, versus 30% at organizations with fewer than 1,000 employees. However, the shock comes as 62% of respondents said that, compared to their original plans, their outsourcing agreements had cost them more than anticipated, while only 11% said they

paid less than they originally expected. Perhaps most surprisingly, fully 27% of participants said that their outsourcing agreements had cost “…significantly more than planned”. According to Philip Lieberman, President and CEO of Lieberman Software, this should be no surprise to those who have put their faith in the hands of the outsourcing industry. “Fundamentally, IT outsourcing has been an exercise in reducing expenses and passing along HR issues to others,” he said. “The unfortunate by-product of this quest for lower costs and fewer headaches is a situation where corporate collective knowledge, as well as loyalty and intellectual talent, has been lost.”

NEWS FEED

BALFOUR BEATTY WINS £200 MILLION IN LOCAL AUTHORITY CONTRACTS www.sourcingfocus.com

Balfour Beatty, the international infrastructure group, has recently been awarded two support services contracts, totaling around £200 million. These contracts add significant volume to the Support Services order book and are notable in highlighting the changes in local authority requirements, with a marked shift towards larger, multiactivity contracts and bundling together of contracts from more than one local authority. The Warwickshire and Coventry highways term maintenance contract involves full maintenance of the region’s highways and bridges together with street

lighting. The five-year contract, beginning in May 2011, is worth £100 million, with a possible four-year extension conditional to meeting performance targets. The 25-year Cambridgeshire County Council street lighting PPP project announced on 6 May 2011 has a significant element of support services. The maintenance contract, worth around £100 million, is innovative in the way it places emphasis on energy reduction by

using the latest technologies. Kevin Craven, CEO of Balfour Beatty Support Services, commented: “We are developing our business to serve the Local Authority market more effectively. Balfour Beatty is well-placed in respect of the changing nature of local authority contracts which favour companies that can offer a broad range of capabilities, thereby providing savings as well as improved services for local government.”

FAIRFAX, AUSTRALIA NEWS STAFF ANGERED BY OUTSOURCING DECISION www.abc.net.au

The subediting of some Fairfax, Australia newspapers, including The Age and Sydney Morning Herald, will be outsourced. Unions say Fairfax staff are “shocked and angry” over a management decision to outsource the subediting of its news, business and sports reports. In an announcement to staff this morning, Fairfax Media CEO Greg Hywood outlined a number of production changes that he conceeded “carry some pain”. But he said the money saved will be redirected towards recruiting more writers and reporters. Under the changes, the subediting of the group’s flagship metropolitan newspapers, including The Age and Sydney Morning Herald, will be outsourced to Australian Associated Press subsidiary Pagemasters. The federal secretary of the Media Entertainment and Arts Alliance, Chris Warren, says the move equates to significant job losses. “Somewhere between 100 and 200 jobs [will be] lost and a significant undermining of the quality of the product as well,” he said. “At a time when Fairfax is looking to invest in the future of quality journalism and the development of market-leading cross-platform news content, taking the specialised skills and expertise of subeditors

out of the newsroom is grossly misguided,” Warren said. “Not only will it impact on the quality of all Fairfax products and compromise the ability of newspapers to quickly respond to breaking events, the contracting out of subediting work will diminish the local knowledge so important to the quality of our local newspapers. This decision ultimately means less specialised, local and professional journalism from one of Australia’s largest media companies.” Warren says the union will meet management tomorrow morning to argue against the move. “You can imagine there’s a lot of anger at the Sydney Morning Herald, The Age, and the Canberra Times about what this is going to mean. How that anger plays itself out remains to be seen,” he said. “We intend to meet with the company tomorrow morning with some of the journalists from the newspapers, to try to get more detail about what this means and to urge them not to go down this path in the way they’ve outlined.” Pagemasters already subedits the feature sections of Fairfax Media papers. The company’s spokesman, Peter Atkinson, says this work has mainly been done in Brisbane, but the papers’ main sections will continue to be subedited in their home cities. “Certainly

the editing for The Age will be done in Melbourne and the editing for the Sydney Morning Herald will be done in Sydney,” he said. “We’ve had tremendous feedback on the quality of work we’ve produced for Fairfax up to this point. Obviously that underpins the growing relationship we enjoyed with them.” Atkinson says there is potential for Fairfax staff to move across to his organisation. “I really can’t go into the detail of that, obviously there’s all sorts of considerations to be taken into account with regards to who we’ll be hiring. We’re not ruling any staff in or out at the moment,” he said. Meanwhile, Fairfax Media has confirmed some of its pre-press sites will close under the outsourcing plans. The company’s head of regional media Allan Browne says the restructure will also affect some regional papers. He says some of the smaller sites will be moved into larger pre-press hubs. “To name the sites that would be affected, I’m not sure of what communication at this time has been given out to the sites,” he said. “That would be unfair of me to talk about sites that may not have had the opportunity through their management to have the opportunity to have these matters discussed.”

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BLOG BEAT NEWS AND COMMENTARY FROM BLOGGERS AROUND THE WORLD THE ULTIMATE OUTSOURCING BENCHMARKING SOURCE? www.outsourcing-buzz-blog.com

by Kathleen Goolsby

Almost as fast as a wink – that’s how quickly word spreads on Twitter. And everyone’s doing it – you’d have to have been under a rock, so to speak, not to know of the tweets covering the Royal Wedding (2.7 million social media mentions) and of the even bigger stats on tweets about the death of Osama bin Laden. But did you know that there’s a hedge fund now using tweets to predict market movement? Research by two universities says the emotions expressed about companies tracked through tweets will predict market movements up to six days in advance with 87.6% accuracy. Just imagine what this competitive move will do to the market share of companies like Thomson Reuters, which specializes in developing analytics systems that track news sentiment stories. So here’s what’s bouncing around in my head: what would happen to the outsourcing industry if companies – both buyers and service providers – tweeted their sentiments/feelings real time about what’s happening (or not happening as anticipated) in their outsourcing relationships? Certainly the information would be valuable for buyers looking to outsource a new function or looking to switch service providers. It would also be valuable insight into cultural fit, which is crucial to successful outsourcing but often difficult to assess up front. Of course, there could be some heartburn-provoking tweets. It would be the ultimate benchmarking

resource. Or would it? Would customers only tweet about their negative feelings about being nickel-and-dimed or about attrition or less-than-expected innovation, or would they also tweet about themselves and their behavior being a hindrance to the provider’s ability to deliver excellence in services? Would service providers only tweet about not getting access to the customer’s senior leaders or not getting correct, timely data from the customer, or would they also tweet about customers that backed down on expectations during the recession in order to help the provider’s margins? All of which raises this question: are we already flirting with this ultimate benchmarking tool? • Does your company already search Twitter for information about outsourcing service providers (not the propaganda tweeted by the providers themselves)? • Does your company already search Twitter, anxiously hoping not to find negative comments about your outsourcing services? I’m curious: as a buyer of outsourcing services, would you trust the “sentiment” tweets about outsourcing enough to let them sway your decisions one way or another, and would you consider sentiment tweets as part of a benchmarking exercise?

OUTSOURCING TRAINING TAKES A SLICE OF THE PIE www.sourcingfocus.com

by Martyn Hart

As more and more organisations learn the importance of working with a portfolio of strategic partners or suppliers in order to achieve success, it’s never been more important for organisations in this country to understand the value of how outsourcing works, which is why I recommended in a recent post on these pages that the government invest in training in this area in the recently announced budget. It’s worth remembering that a successful outsourcing relationship is something you need to work at and understand, and there is a risk that without proper guidance, these organisations could stumble down this road blindly, and end up lost. It’s crucial that there is a common best practice standard or benchmark for outsourcing and a way of recognising whether staff involved know their subject or not. The importance of training programmes such as NOA Pathway, the training arm of the NOA, cannot be underestimated, as they help organisations to evaluate suppliers and vendors and enable them to trust the supplier’s outsourcing knowledge, commitment and ability. By offering accredited professional development in outsourcing, NOA Pathway programmes help to establish a recognisable kite mark for quality in the outsourcing industry, and they have been specifically structured to allow students to learn on-their-job, which means that they can add immediate practical value to their organisation while they learn. Such training courses could also help to educate public sector workers as to how to transfer their skills into the private sector; if you believe all that you

hear, the private sector will be looking to take on experienced, skilled workers who face the possibility of losing their jobs as a result of the government’s cuts, which means it could pay for existing public sector workers to gain an understanding of how the private sector operates. To equip both individuals and businesses with the know-how and expertise to ensure outsourcing best practice, will in turn result in the competitive advantage needed. The qualifications open to both individuals and businesses allow for public and private sector training in how to manage outsourcing suppliers which is an important area of focus for those looking to make public sector outsourcing a success. After all, with a focus on the recent cuts, it’s clear that very few public sector departments will have had experience in managing a relationship with an outsourcing supplier, so perhaps this is another area where training has a role to play? As the outsourcing landscape becomes more open in the wake of the government’s commitment to promoting enterprise, more and more suppliers will look for ways they can get a slice of the growing outsourcing pie, thus bringing more competition, effectiveness and innovation into the outsourcing sector. It’s only fair then that both individuals and businesses alike are fully equipped to deal with such changes. Equipping individuals and companies, end-users and suppliers is what the NOA is all about, come to one of our meetings and see!

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INDUSTRY SURVEYS

The Pursuit of Being

An Insider’s Look at the Making of the By Sandy Frinton, IAOP Staff Writer

THE 2011 EVALUATION TEAM

Michael F. Corbett IAOP chairman

••Jagdish Dalal, COP, president, JDalal Associates, LLC, managing director of thought leadership, IAOP ••Teresa Harris, COP, global partner account manager, Eastman Kodak Company ••William Hefley, Ph.D., CDP, COP, Clinical Associate Professor, Katz Graduate School of Business and College of Business Administration, University of Pittsburgh, and Director, ITSqc, LLC. ••Kurt Kohorst, COP, vice president, director of service engineering, Liberty Mutual Agency Corporation ••Vera Marques, IT regional director, Hoffman-La Roche – Latin America ••Manish K. Sahai, COP, vice president, world service, American Express ••Kristin H. Weitz Rammer, vice president-technology, MAXIMUS

GlobalizationToday May 2011

Hundreds of companies from around the globe with teams of employees submitting thousands of pages of data to nine judges who spend countless hours over six months to rank the world’s best 100 outsourcing service providers and 20 advisor firms, and create more than 80 diverse sublists. That’s some of what goes on behind the scenes to get to the moment of truth every spring when the final results of the Global Outsourcing 100 are released by the International Association of Outsourcing Professionals. The buzz surrounding the unveiling of the results is high as leaders compete for the coveted top spot, rising stars hope to climb up the list, and smaller companies seek recognition in their industries and geographies by earning spots on sublists. “It’s very exciting to release the rankings,” says Kristin H. Weitz Rammer, vice president-technology of MAXIMUS, who served on the evaluation panel. “It’s good to see the reaction in the industry. The Global Outsourcing 100 is a well-respected list from a wellrespected organization that is embraced professionally by the entire industry.” “Being on the Global Outsourcing 100 carries a certain cache,” says Jagdish Dalal, COP, president, JDalal Associates, LLC and IAOP’s managing director of thought leadership, who headed the evaluation panel for its first five years and served as judge on it for the past two. What started seven years ago as another noteworthy Forbes list by the custom publishing department has today evolved into much more. The Global Outsourcing 100 has become a trusted go-to resource creating tremendous value for both the companies on it and those looking to do business with them. “The recognition the list has received and its use by customers has led the world’s leading companies to participate and for the list to grow in importance each year,” says IAOP Chairman Michael Corbett, who led the judge’s panel. Number one ranked provider firm Accenture, who has held

INDUSTRY SURVEYS THE 2011 “GLOBAL OUTSOURCING 100”

2011 Group

2011 Judges’ Rank

Accenture

ISS

Sodexo

Infosys Technologies L

Convergys

CB Richard Ellis

CSC

NCR

Wipro Technologies

Johnson Controls

Amdocs

ARAMARK

Genpact

Capgemini

Aegis

Colliers International L

PCCW Solutions

Diebold

CGI Group

HCL Technologies

Ceridian

Williams Lea

CPA Global

Océ Business Services

EMCOR Group

ITC Infotech

Neusoft

Aon Hewitt

Sutherland Global Services

TIVIT

Xchanging

Jones Lang LaSalle

VanceInfo

Inspur

Hewlett-Packard

Marketing Name

g the World’s Best

e Global Outsourcing 100 the top title for four consecutive years confirms its value. “Clients and prospective clients consider the ranking an important and credible third-party validation of the market,” says Sarah Thomas, global lead for BPO marketing at Accenture. WHAT DOES IT TAKE TO BE #1?

Companies who are winning the top spots on the Global Outsourcing 100 are not getting there by luck. These companies have likely made ranking highest a strategic goal and in many cases dedicated teams across the business with marketing, sales, finance, HR and other departments working together to produce applications that set them apart. For example, ISS Group, among the world’s largest privately held concerns, made being ranked the top facilities services provider a strategic goal – one that it achieved while also ranking number two overall in this year’s list. Accenture even produced a digital magazine for its application in prior years, featuring interviews with the CEO, customers and others. “The first year it was hard to get excited about the applications,” says Dalal. “But now we see videos and specific letters from customers. Companies have gotten much more sophisticated in how they apply.” Global advisory firm Alsbridge Inc.

really focused its efforts for 2011 after internal email issues about deadlines caused it to rush the application process the year prior but still place number three on the Top Advisors List. For this year’s application, they assembled a cross-functional team from across the geographies it operates in representing all of its service lines – outsourcing consulting, outsourcing benchmarking, network outsourcing and software. “We really started the year prior thinking through the requirements of IAOP and where the business was going,” says Ben Trowbridge, founder and CEO. “The actual responses and nomination form took quite a bit of effort. The team worked really hard. It was a very exhausting but good process that was worth it in the end.” The efforts paid off with Alsbridge being named the number one advisory firm for the first time this year, which Trowbridge says is an honor for the company, the team and himself. “The role of the sourcing advisor has morphed and evolved over the last couple of years to be very data driven with deep benchmarking and a focus on organizational change,” he says. “Alsbridge has evolved to that new role. We are pleased to be recognized by the judges for our leadership role.”

Continued to page 20 »

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Agile IT, Agile Business By Jimmy Harris and Stephen Nunn No doubt about it: cloud computing is hot these days. It’s hard to read a newspaper or magazine without seeing something about the topic. As big as it is, however, cloud computing is actually part of an even bigger story: the fundamental re-creation of the traditional enterprise operating model. A whole panoply of technologies, applications and architectures is creating a way to scale the IT function up or down immediately to meet the near-real-time needs of any large organization. Tap into only the service you need, when you need it, for as long as you need it. The result is a far more agile and cost-effective IT function.

Agile workplace Agile IT is also transforming the way business is done by making it easier for people to use the right computing or communications device to access the information they need, when they need it, and to collaborate more effectively with others both inside and outside the organization. The traditional way companies have thought about linking workers with information has generally been device-specific. Now, mobile applications available at app stores are revolutionizing how consumers use their mobile devices, and we can expect similar developments at the enterprise level.

But if such a model for delivering IT capabilities is as compelling as it sounds, why not extend it beyond IT and apply the same model to any combination of people, process and technology? Because the cloud is more than a new IT architecture. It’s actually a new business design as well—a new, more flexible operating platform.

Eventually, CIOs will be able to think about an entirely different IT model: provisioning services by linking multiple providers and applications in a reconfigurable, end-toend manner to meet the ongoing needs of workers and the entire business.

The ultimate benefit and competitive advantage delivered through this new platform and design is greater organizational agility. An agile operating platform, enabled by outsourcing models and by an IT infrastructure that expands or contracts to meet demand, can help organizations be more responsive to the marketplace and create a more open environment for innovation.

The cloud model becomes even more compelling as one moves from hardware to software to processes and functions. In this third area affected by the cloud model, we find providers offering software or services that enable an entire function or workforce. Often called “software as a service,” this aspect of the cloud model begins to point to more radical changes in how businesses operate.

This newly enabled agility will transform business in several key areas:

Agile IT With traditional IT services, a company signs a multi-year contract for infrastructure support with an outsourcer or other provider. Once the ink is dry on the contract, those services are locked in for the specified period. With a cloud model, by contrast, IT services can be reconfigured quickly in support of new strategies and opportunities. When the needs of the enterprise change, a company isn’t saddled with irrelevant IT support or obsolete infrastructure. This kind of technology elasticity and scalability is fundamental to agility.

Agile processes

Cloud computing and software as a service present IT capabilities to companies on a pay-as-you-use basis. It’s an agile operating infrastructure that enables executives to make sourcing decisions in a rhythm that is more attuned to business cycles, rather than decisions that will result in a fixed condition over a period of many years.

Agile business But it is at the enterprise level where the use of the cloud model truly gets interesting. Here we find an enterprise operating platform that takes the app store approach to configuring IT capability and applies it to the business as a whole.

In this model, chief executives not only manage their organizations; they help design and redesign them too. They are managing, in fact, a virtual enterprise—an ecosystem of cloud providers, IT and business process outsourcers, and a host of other parties, both internal and external. We are some years away from this kind of enterprise operating model on a large scale, but the harbingers are already here. Consider “bundled outsourcing.” By having a single provider responsible for several related functions—human resources, finance, procurement, learning and so on—an organization gets the equivalent of the interoperability of technologies and processes at the enterprise level.

A new era The cloud model represents another stage in the relentless disaggregation of the business—breaking up the organization and its functions into logical components, keeping in house those that cannot be done more efficiently or effectively by an outside specialist, and letting someone else run everything else. This model requires new kinds of management styles, new ways of managing people and new ways of valuing the enterprise itself. Certainly these are significant challenges. But in a world where responsiveness and agility increasingly mark the difference between high performers and also-rans, agile IT and agile business will continue to be a distinctive feature of marketplace success. This article is based on “Agile IT: Reinventing the Enterprise” which originally appeared in the June 2010 issue of Outlook, an Accenture publication. Used with permission.

You can read the full article at: accenture.com/agileIT

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INDUSTRY SURVEYS

THE 2011 “GLOBAL OUTSOURCING 100”

Marketing Name

2011 2011 Judges’ Group Rank

Firstsource

Stream Global Services

Softtek

hiSoft Technology International

Insigma

TeleTech Holdings

Lionbridge

Cushman & Wakefield L

SPi Global

Unisys

transcosmos

CPM Braxis

Syntel

Donlen

NCS

Cassidy Turley

Zensar Technologies

iGATE Global Solutions

NCO Group

Sitel

Cybage Software

EPAM Systems

RR Donnelley Global Services

IBA Group

Stefanini IT Solutions

Headstrong

Mastek

Aditya Birla Minacs

Neoris

Towers Watson

Advanced Technology L Services

Patni Computer Systems

Continued to page 22 »

GlobalizationToday May 2011

IN THE BACK ROOM WITH THE JUDGES

The process for determining the ranking is just as time intensive for judges and begins as soon as applicants lock in their online applications every Nov. 1. In the first stage, IAOP scores each application with a score of 0 to 8 against the criteria that is published in the Application Process and Scoring Methodology document. “Nothing is secret about the criteria,” Corbett says. “We publish the scoring system and everyone knows it going in. We have made every effort to be more and more transparent in explaining our scoring.” Companies opting into the voluntary process fill out a three-part online form with sections on basic contact and company information. The evaluation criteria section includes numerous questions broken into four sections: size and growth, customer satisfaction, depth of competence and management capabilities. This is where companies have the opportunity to submit supporting documents and shine with the judges. In the fourth optional bonus area, companies can submit supplemental information to show how they excelled and explain why, in their opinion, they deserve to be included as one of the best outsourcing companies in the world. After being scored by IAOP, applications go before the judges who are outsourcing buyers with extensive experience in selecting companies based on RFPs. Many of the panelists also hold the prestigious Certified Outsourcing Professional® (COP) certification. (See sidebar box for 2011 panel) The judges bring their own personal judgments, insights and expertise of individual specialty areas into the review of each application to validate or adjust the scoring as needed. The evaluation criteria is weighted and the scores from the judging panel are aggregated to arrive at the final score. “There’s a lot more work than most people realize reading through all the materials,” says Jalal, “But it’s also rewarding to see the progress the individual companies make from year to year.” To Weitz Rammer, taking this independent view is essential for the

Global Outsourcing 100 to be the successful ranking it is. “It’s important for me to take a look at the data and outcomes, and the initial evaluation and compare it to my personal experiences with the vendors,” she says. “I go through as much as I need to feel comfortable and I look for significant changes from prior years. I’m trying to get a good feel for the ranking and want it to fair and objective.” Applicants who have been through the process say it is truly objective. “The judges and the ranking organizers have created a transparent process, a fair assessment methodology and provide detailed feedback,” says Federico Ferreres of Softtek. “The ranking has evolved to become the trusted industry reference.” The process also is valuable for the judges, says Manish Sahai, vice president of world service for American Express. “It promotes leadership within the world and industry of outsourcing,” Sahai says. “Every year I participate, I learn and grow from the experience that covers a variety of companies across different verticals.” SIZE DOESN’T MATTER

When Fortune custom projects group first approached IAOP who it had a long relationship with about doing a top outsourcing list, the association didn’t want it to be another ranking of the largest firms based on revenues alone. “The last thing the industry needed was another revenue ranking list,” Corbett says. “The membership and the board believed a list that looks at the qualities and capabilities of meeting customers’ needs would have greater value.” As a result, the evaluation criteria for both the provider and advisor list is weighted to ensure that smaller and midsized firms have as much of a chance to be selected as a large, recognized name. The service provider ranking is organized into two categories: “Leaders” and “Rising Stars.” Leaders (ranked #1 to #75) are companies with more than U.S. $50 million in revenue for their most recent fiscal year or more than 5,000 employees. Rising Stars (#76 to #100) are those companies below this threshold. In particular, for Rising Stars, revenue

For nearly 30 years Amdocs Global Strategic Sourcing has been a strategic partner for leading communication and media service providers worldwide. Let us accelerate your business growth, enhance your customers’ experience and reduce your costs. Learn more at gss.amdocs.com.

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strategic partner for leading service providers, enabling them to accelerate business growth, reduce costs and enhance their customers’ experience.

We deliver cost-efficient business and operational management services by combining flexible financial and delivery models with industry-specific expertise and an unmatched delivery record. Amdocs Global Strategic Sourcing provides a wide range of managed services to support business and operational support systems (BSS/OSS), service delivery platforms (SDP), and directory publishing for the communications, media and entertainment industry. Our flexible and tailored outsourcing solutions include support for IT infrastructure management and hosting, application management and business process operations (operational and IT- oriented). In addition, Amdocs provides IT optimization and enhancement services which enable service providers to adapt their systems and processes to changing business and operational needs, from optimization to full transformation, while saving on operational and capital costs. Our services are designed to provide value across all environments, based on Amdocs or legacy in-house or third-party systems. For more information, please visit http://gss.amdocs.com. Company Contact:

Eitan Gelbaum Vice President for Marketing and Strategy Harborside Financial Center

THE 2011 “GLOBAL OUTSOURCING 100”

2011 Group

2011 Judges’ Rank

Oracle Financial Services

Vertex Group

ChinaSoft International

Hinduja Global Solutions

SEI

Dextrys

HOV Services

ICG Commerce

Intetics

Scicom

Auriga

CIeNET International

Globant

Marketing Name

GlobalizationToday May 2011

Plaza 5, Suite 2700 Jersey City, NJ 07311

growth is more important than total revenue, but even here, other factors will receive just as much, if not more, weight. “It’s amazing how many people don’t realize the Global Outsourcing 100 list of service providers is actually two lists combined into one,” says Pam O’Dell, director of corporate and professional development. “In the end, the lists are intended to reflect the best companies, not necessarily the biggest.” The list also reflects the entire spectrum of outsourcing services, showing the diversity and size of the outsourcing industry. From IT, HR and R&D to real estate, food services, facilities management and document management, you’ll find it on the Global Outsourcing 100, making it an interesting list to read and use. SECRETS FOR SUCCESS

So how does a company increase their chances to rank well on the lists? It sounds simple but following all the instructions, knowing how many points you get for what, and meeting all the requirements is key.

TEL: +1 (201) 631 – 3200 Email: eitan.gelbaum@amdocs.com

Interested companies should know they don’t have to be IAOP members to apply and companies need to re-apply each year for inclusion. A nominal processing fee covers the application process and promotion. Rammer recommends that applicants look closely at the list of what is considered a valid credential and certification for the company and its leadership to ensure that you make the mark in this area. She also advises that the company makes sure it has the right person or team completing the application that has the needed access to the information and data required for the application to rank well. Customer references and third party endorsements are a crucial area that companies sometimes overlook that really make a difference, according to the judges. Recently written customer letters of recommendation, for example, are given the highest weight, while selfpraising company press releases score low. In its application, Alsbridge took the time to ensure its client references and examples really checked out, Trowbridge says. Companies on the Leaders List of

INDUSTRY SURVEYS

providers that ranked well for their customer references included such firms as Sodexo (#3), CSR (#7), Genpact (#13) and Aegis (#15). Applicants also should think carefully about their executive leadership, Corbett says. Companies are asked to profile their top three executives and should list at least one that has direct responsibility for the outsourcing business unit. Profiling someone who has impressive credentials but doesn’t really work in outsourcing won’t get you points. Another thing to consider is participating in a free Webinar IAOP presents each year revealing what the judges look for which surprisingly few companies take advantage of, Dalal says. Companies also should be aware of the value of IAOP’s more than 80 sublists that lists top firms by geography, services provided and industry focus. IAOP also includes other honors and categories of special note in an effort to ensure that everyone who applies is recognized in some way. MARKETING IT!

The release of the unranked alphabetical list of firms every February at IAOP’s annual Outsourcing World Summit, followed by the notification of companies on their rankings in April, and the final release in the Fortune 500 advertising section in May is met with great anticipation. O’Dell receives plenty of phone calls from applicants asking for a “sneak peek” of the list, which is always kept top secret until the published release dates. Once the word is out, companies are anxious to see how their competitors ranked against them and take to the Internet to search the results. The Global Outsourcing 100 ranks #1 to 3 out of more than 10.3 million search results for “outsourcing lists.” There’s a celebratory mood among winners who acknowledge the efforts of their employees with parties and share the accolades with customers. “The IAOP Best Outsourcing Provider ranking is a recognition of our people and

a testimony to the strength of our offering and delivery capabilities,” says Accenture’s Thomas. “The number one ranking has been, and will continue to be, a great internal motivator and source of pride and recognition for our people.” Accenture, for example, includes the judges’ assessment in RFIs and proposals; cites it in its corporate brochures, credentials and presentations; features the ranking on its Web site; uses it as a signature block on e-mails; and references it in its contacts with media and analysts. Companies agree that inclusion on the list is an excellent marketing tool. Applicants benefit by the promotion the Global Outsourcing 100 receives through global media coverage of it, the IAOP Web site and other communications, as well as being included in Fortune magazine’s supplement seen by over 5 million business readers. New this year also is inclusion of the list in a special China issue of Fortune that will be published in Mandarin Chinese. CUSTOMER VALUE

Since the application is designed to replicate an early stage evaluation process buyers would use to select vendors, applying helps a company gather the information that will be needed in a RFP and sharpen their presentation skills. “Companies that have been through the Global Outsourcing 100 process do a better job of profiling themselves when working with customers,” Corbett says. “They understand what customers are looking for and are able to articulate it, so it’s easier to do business with these companies.” American Express’ Sahai says the quality of the applications show that successful companies are differentiating themselves more aggressively in the marketplace. “The dial and the focus are turning in favor of effectiveness from an endcustomer experience perspective versus efficiency or a cost play,” he says. “Successful companies are making it easy to do business with them, recognizing the customer and solving the problems their clients face.”

THE 2011 “GLOBAL OUTSOURCING 100”

Marketing Name

2011 2011 Judges’ Group Rank

Xceed

Global eProcure

Synygy

Bleum

Grupo ASSA

M&Y Global Services

Grupo Prominente

SoftServe

ReSource Pro

China Talent Group

Freeborders

Itransition

Emerio GlobeSoft

Artezio

Ericpol Telecom

Extensya

Nagarro

API Outsourcing

TEAM International

DATROSE

100

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Expert speakers include:

Shared Services

Keith Butterfield General Manager, Global Business Services Caterpillar Inc. Judith Craw VP Financial Shared Services Marriott International Bill Johnson VP Global Shared Services Coca Cola

Exchange

Edward Martinez VP Shared Services Wendy’s/Arby’s Group

Gary Walker Senior Director, Global Shared Services Molson Coors

Increasing Efficiency, Enhancing Performance and Strategically Preparing for Evolving Business Needs

D. Kevin Horner Chief Information Officer Alcoa Pittsburgh

June 5 - 7, 2011 • PGA National Resort & Spa • Palm Beach, Florida

The Shared Services ExchangeTM is an exclusive networking forum strictly for senior shared services professionals. Delegation will be comprised of shared services executives from all functions, with the following job titles: • • • • • • • • •

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The Shared Services Exchange's unique format includes senior level, 'peer-to-peer' networking, strategic conference sessions, interactive BrainWeaveTM discussions, roundtables, case studies of successful projects and pre-scheduled, private meetings between senior shared services professionals and solution providers.

To request your delegate invitation, or to participate as a solution provider, contact: exchangeinfo@iqpc.com | +44(0)207 368 9709 | www.sharedservicesexchange.com

INDUSTRY SURVEYS

Referencing the list can save buyer’s time and help them make more informed purchasing decisions. It also can help applicants establish their credentials against competitors, strengthen existing relationships and open doors for providers that companies may not have previously considered. “Existing customers value the Global Outsourcing 100 as a kitemark of excellence that their chosen provider is recognized as the industry leader based on a wide range of criteria – the same criteria that they used in making a selection. So, it confirms and validates their judgment and selection process,” says Thomas. “For prospective customers, it is a mark of industry recognition and distinction that carries weight with companies who may not have worked with Accenture previously and encourages prospective clients to consider Accenture for their needs.” For a smaller advisory firm like Alsbridge with some 1,000 employees that is competing against giant leaders leveraging the Global Outsourcing 100 can help. “It gets us in the game,” says Trowbridge. “We compete against the big four strategy

companies and it gives clients comfort to give us our fair due, and allows us to compete head to head.” Regardless of how a company ranks, there’s still great value in the experience of scrutinizing your company in such detail, answering the hard questions you might not have thought about, and making such a corporate presentation. Each applicant company receives feedback showing how the company scored in each critical judging area of its application and a comprehensive independent analysis of the company in relation to the other applicants. “It keeps companies grounded,” said Rammer. “What they believe to be true is validated through user experience and the process helps them to continue to determine how to do things better. It functions as a continuous improvement process for vendors.” As for the next year’s rankings, the game is already on. “To hold the top honor, you have to work even harder,” Trowbridge acknowledges. “The competition is good and you have to fight to earn business every day. This sets the standard of what everyone will hit so we have to raise our game.”

ABOUT THE AUTHOR

Sandy Frinton, Staff Writer at IAOP

Sandy Frinton is a staff writer at IAOP. She is an experienced PR and media specialist with a strong journalism and writing background, with a combination of nearly 20 years of PR and journalism experience. Sandy has written bylined news and features stories, traditional and Web 2.0 press releases, employee communications, e-newsletters, corporate letters from CEOs, annual reports and other communications in a wide range of business sectors. She also has managed communications and media relations for international businesses for major acquisitions, plant closures and business restructurings in the U.S. and globally. You can reach her at: sandy.frinton@iaop.com

globalizationtoday.com

REGIONAL HOT SPOTS

Tigers, Bears and Dragons…Beware! Here’s why aerospace outsourcing in Latin America Is flying high and challenging other fast-growing areas By Oscar S. Garcia The aerospace industry has emerged from the brutal 2008-2010 global recession unscathed, relative to other capital intensive industry sectors. Excluding some of the lower segments of the general aviation sector, small private aircraft, the 2010 industry wide production and financial results were robust. The 20112030 forecast consensus from both private and public sector project global growth two to three times the global GDP’s. A lot has been said in the media regarding Boeing growing pains due to the new 787’s “extreme outsourcing” fiascos, resulting in more than two years of delays, cancellations, revised profits projections and break even points. Indeed, if a picture is worth a thousand words, looking at the one to the right clearly shows how outsourcing has exponentially grown on Boeing’s 787 programming as compared with previous Boeing programs in less than two decades. It would be wrong, however, to extrapolate from this singular case that the aerospace industry has gone too far in its globalization efforts. Indeed, the aerospace industry is in its infancy in terms of globalization and outsourcing volumes. Indeed, only a mere 3% of the major vehicle programs are outsourced

GlobalizationToday May 2011

to foreign, emerging and low cost economies. Thus aerospace outsourcing opportunities and growth abounds, but not at less than the speed of flight, which means, slower than other mature

outsourced intensive industries such as consumer electronics, automotive and large industrial equipment, which outsource 85%, 33% and 18% respectively, as per the following chart.

Aerospace’s less than flight speed of outsourcing and shallow growth is due mainly to its inherent industrial DNA traits such as the intense startup capital, high customization, relatively low production volumes, thin financial margins, unforgiving-complex regulatory environment (the aerospace sector is the highest regulated industry only second to nuclear power and more than 10 times more strict than other such as the automotive world). In addition, last but not least, aerospace needs an outsourced labor “culture” of excellence, creativity and innovation, even for the simplest of tasks, such as small component manufacturing or sheet metal maintenance and repair. Let’s not forget that one of the main 787 program delays was caused by the lack of a small part called “fasteners”, a very small yet specialized part used to join structural wing and fuselage panels, something like a bolt to hold composite material parts together. Yet, these very inexpensive small parts caused a very expensive program delay and logistics bottleneck.

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Whether you think of Latin America as an outsourcing destination, as a market for your companyâ&#x20AC;&#x2122;s services, or as the region you call home, this is a must attend global business gathering.

With the support of:

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5 for er and $37 b m e m P O . $375 for IA and non-members te ia c asso gister. ATAM to re /L rg .o P O A w.I Go to ww

The 2011 Latin American Outsourcing Summit, taking place May 26-27, 2011 in Cartagena, Colombia, is a first-of-its-kind global event bringing the thought leadership and global network of IAOP together with leaders from across the Latin American business community. The result is an exceptional opportunity for customers, providers and advisors to both understand and leverage the explosion of outsourcing across the region.

For information on speaking, sponsoring or attending, visit

www.IAOP.org

REGIONAL HOT SPOTS

RESOURCE BOX

Oscar Garcia, CEO, InterFlight Consulting

Shifting gears to aerospace outsourcing geopolitics, the world has heard of recent large orders from airlines and armed forces in India, China and Russia, which in turn have given the impression in both mainstream media and aerospace industry circles, that those Tiger, Dragon and Bear economic powers are jointly shifting aerospace consumption center of gravity their way. But indeed, they only account for 15% of the global market; their growth numbers are very large, as compared with mature economies like the USA and UK, but small in total numbers as they draw from a comparatively small aircraft and other flying vehicles established base. Moreover, and going to our point in this article, what is less known is that the Latin American “axis”, comprising of Mexico, Central America, The Caribbean and South America, account for a good 10% of the global aerospace market, both in air transport as well as in defense, security and special mission programs. Lodged squarely within South America is Brazil, which by some aerospace metrics and accounts is large enough to be characterized as a sub region in the Americas. Now, I must mention that from a global perspective, the Americas region hosts three of the four leading aerospace aircraft Original Equipment Manufacturers (OEM’s); Bombardier (Canada), Boeing (USA) and Embraer (Brazil) with a combined market share of close to 75% of gross aircraft OEM output. An interesting picture commences to emerge for the outsourcing executive and strategic minds. Brazil is the clear leader of the emerging BRIC countries block in mainstream economics. However, when it comes to

aerospace, most studies and analyses exclude it from the emerging aerospace economies statistics and outsourcing trends and characterize it as an established economy. In my opinion, this is “plane” wrong, and steals a lot of the aerospace outsourcing “thunder” that the region has to offer. The reason is that, just like Russia, which is considered an aerospace emerging country albeit its industry dates as far back as that of the US, Brazil should be even more so. Brazil’s aerospace industry is for example, about half as old as Russia’s or roughly 50 years old. Now that we have set some of Latin America’s aerospace record straight, we can objective look at the very enticing aerospace outsourcing opportunities in Latin America from a level playing field. We must use Brazil as the benchmark of what is possible, which is a lot and growing rapidly. Looking at the chart below, one can quickly see that Brazilian aerospace outsourcing advantages. In my opinion, these can be confidently extrapolated to the rest of Latin America. As mentioned before, please move Brazil to the right of the matrix with the emerging economies, and then you have a clear competitive outsourcing growth and excellence picture for the Latin American region. The outsourcing basis apply well for the region given its low jet-lag, NorthSouth within 10 hours flight time, well developed air-ground-sea logistics, this is nothing new and makes a lot of sense when comparing the East-West alternatives to work with our friends the Dragons, Tigers and Bears.

Oscar Garcia is the founding partner, Chairman and CEO of InterFlight Global Corporation (IFG), which he started in 1992. InterFlight Consulting (IFC) is a wholly owned subsidiary of IFG, formed in 2002. In addition, he is a senior consultant, board advisor and project manager in the areas of strategy, finance, sales and operations, with experience in setting up and expanding production, design and sales networks for aircraft, aerospace components and avionics in Europe and the Americas. Oscar holds a Bachelor’s Degree in Aviation Science and Technology from the Thomas Edison State College with an Aerospace Engineering specialization from San Diego State University, as well as a Masters Degree in Aviation and Aerospace Business Administration (MBA) from Embry-Riddle Aeronautical University. He holds FAA/JAR Airline Transport Pilot and Flight Instructor licenses as well as Instrument and MultiEngine certificates with a total flight time of over 8,500 hours in a variety of aircraft and flight simulators. Oscar serves on the Space Florida Board Advisory Committee and the EmbryRiddle Aeronautical University Business School Industrial Advisory Board. He is the immediate past President and Chairman of the Aerospace Committee of the prestigious Greater Miami Aviation Association (GMAA). Through IFC, Oscar is also a shareholder and former Managing Partner of aircraft lessor Ocean Blue Management, LLC and former President of an FAA 135 airline named Seaplanes of Key West, Inc. Oscar is affiliated with and an active participant in ICAO, IATA and other aerospace trade organizations with global reach.

globalizationtoday.com

REGIONAL HOT SPOTS

--We are coming now to a final, yet, very interesting insight in terms of aerospace outsourcing rules of the game, which I call the need for “aerospace cultural affinity”. Aerospace’s commerce chain is possibly on of the most demanding in terms of in person-on the floor creative collaboration, rigor, documentation and quality control and discipline. These outsourcing traits hinge highly on crystal clear written and oral communications, sense of right-wrong and mature creativity at all levels of production, design and engineering. This cultural affinity element, is one of the keys for program success, as we know, the smaller vendors’ errors have a large multiplier effect through the supply chain as per the fasteners 787 supply chain

GlobalizationToday May 2011

earlier example. For illustration purposes and my personal experience, let’s say that a factory worker in Mexico’s Bombardier’s assembly plant for the all new Lear 85 all composite aircraft, detects a simple, yet effective angle change in a tool that could improve on the process whilst not affecting the quality control and standard operating protocols. Would he be able, motivated and capable of telling his supervisor maybe two levels up in the organizational ladder? and who is older and more experienced. Would the supervisor be losing face in front of headquarters if his young employee shows him a way to do things better? Moreover, would the supervisor accept the suggestion, mention where it came from and clearly communicate

in aerospace English upstream to headquarters in Canada?, and would headquarters accept the feedback and make all the changes required to make this change a new standard quickly and effectively? The answer is yes, as more and more the aerospace “cultural affinity” in Latin America is getting closer and closer to their counterparts in North America and Europe. Would the same be true for, let’s say a Russian aircraft OEM and its outsourced factory in India or China, the answer here is a hesitant maybe. The aerospace commerce chain is known for its intense need for crystal clear communications between designers, engineers, and design-manufacturing integrators…and did we mention the

REGIONAL HOT SPOTS

need for intellectual property protection. For anybody following the aerospace industry, the Embraer-Harbin factory near fiasco a couple of months ago coupled with the surprised announcement of AVIC-Bombardier cooperation, is a tale in cultural, should we say “disconnect” where it concerns intellectual property and commercial ethics and legal

interpretations, but I am digressing. It is well known in aerospace circles, that the cost advantages of aerospace outsourcing to emerging countries have a 10% “hidden” buffer to account for these intangibles; cultural, yet subtly powerful supply chain cultural traits. It is my educated opinion, that Latin American aerospace outsourcing takes no more than

5% of that buffer, whilst some of the other emerging powers, such as those using symbols rather than words (yes, I have seen interesting Chinese symbol laden aircraft performance, engineering charts and graphs!) might well exceed the 10% buffer and take a bite of the already tight 15-20% gross cost advantage outsourcing margins.

It should be clear by now that I am bullish in the aerospace outsourcing capabilities of most Latin American countries, and perhaps the best example to support the closing of my case is Mexico. In less than two decades, this country has become a true aerospace outsourcing powerhouse, climbing through commerce chain supplier tiers at a phenomenal speed, partly fueled by the NAFTA dynamics and partly by the know-how and the aforementioned workforce “aerospace cultural affinity” to the industry and its production processes. The Queretaro cluster is worth a detailed outsourcing model review, and the new clusters in Chihuahua and Monterey are starting to emerge as champions. The bottom line is that a half dozen

outsourcing start ups are landing every year in Mexico. Clients are not only the usual OEM suspects to the North, but Western European gorillas such as EADS, BAE. One would think that as new Russian, Chinese and Japanese entrants are coming to the market, Mexico could be an outsourcing mature and yet low cost option for them. The Mexican wave is now moving south to Central America, where the recently formed Central American Aerospace Association (ACAE) is beginning to harness the couple of hundred plus aerospace companies in the CAFTADR countries, and also benefitting from its neighbors’ successes; the already mentioned Mexican cluster success as well as Panama’s sea and air logistics

passengers and cargo hub. It also helps that foreign direct investment to Latin America is growing as fast or faster that to Asia and last year hover around 225 US$ billion. Last but not least Embraer’s most recent program, the KC-390 tactical military airlifter has launched with an unprecedented cadre of program risk partners, and outsourced work from neighboring countries such as Chile, Argentina, Colombia. I suspect this could be the beginning of something bigger in the North to South aerospace outsourcing axis. In closing, may I also say that the International Civil Aviation Organization’s official top two languages are English and Spanish?

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MANAGING PARTNERSHIPS

Develop a Prescription that Fits the D

In last month’s issue, we offered some guidelines for spotting and diag outsourcing relationship. In this article, we share some advice on how challenges to achieve the value you seek in your arrangement By Joseph Bubman and Sara Enlow Some call it persistence, and others call it insanity — relying on the same old set of fixes, like swapping out personnel, demanding more reporting and meetings, and imposing penalties, and doing it all over again when problems persist. Unfortunately, these unilateral actions often come closer to exacerbating problems than fixing them. There are a number of different cures at your disposal to address underperforming relationships, but problems will recur if the prescription doesn’t fit the diagnosis. For example, penalties have their place. They can certainly send a message to providers about what is truly important to the buyer. However, they are rarely significant enough to compensate for poor business results and time wasted due to underperformance. And penalties don’t automatically lead to better quality or on-time delivery. Similarly, changing account managers or other key personnel might provide a “fresh start” and help rid the arrangement of truly toxic personalities that can inhibit progress. But when people don’t trust one another because they haven’t clarified decision making rights and accountability (with each side feeling the other acts unilaterally and doesn’t consult them when they should), bringing on someone new won’t necessarily result in greater trust. Likewise, you and your partner organization might hear more about problems after instituting more meetings and more reporting, but simply talking about problems doesn’t solve them. New reports should aid problem diagnosis or earlier problem recognition. More meetings should focus on creating better dialogue and understanding.

GlobalizationToday May 2011

Take these steps to choose your prescription: 1. Align on a desired future state — that is, how will both sides (jointly) know if the problem is getting better or is fixed? What will you see? What won’t you see? Agreeing on the end state helps prevent the frustration of one side feeling the problem is solved and the other seeing it persist. 2. With your end goal in mind, brainstorm a variety of general approaches to addressing each of your diagnoses from the last section. Consider things both sides can do to contribute. 3. Narrow the list to a few approaches that seem most beneficial — as you narrow the list, ask yourself: Does this approach directly address our diagnosis of the problem? Should it get us to our desired end state? 4. Consider the costs, risks, and benefits of your narrowed list before settling on one or just a couple. Be mindful of solutions that could create new problems. 5. Agree on a detailed set of action steps for implementing your fixes. Who will do what? By when? SOME COMMON AND SUGGESTED PRESCRIPTIONS

DIAGNOSES GENERAL

The economics are just wrong: the provider can’t make money in this contract The simple answers to this problem feel unsatisfying — the provider could serve out the contract at a loss (which would likely lead to them cutting resource as much as possible and performing only to the letter of the contract to minimize their losses).

MANAGING PARTNERSHIPS

Diagnosis

gnosing issues in your w to address those

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MANAGING PARTNERSHIPS Or the buyer could pay more — which feels unsatisfying, since they’re not actually getting more. A better way out: Change the scope or delivery model so the provider can make money, without injuring the buyer’s business case. Consider together: ••What’s driving costs? ••Are any cost drivers unnecessary? ••Contract provisions that require the provider to deliver in a certain way and that constrain the provider’s ability to work creatively toward the same desired ends ••Performance metrics that may increase cost without increasing value ••How can we move to a different solution (perhaps one that is less costly and more standardized) without sacrificing desired results? We’re measuring the wrong things and it’s driving the wrong behavior ••Determine how metrics are affecting behavior — for example, in a call center deal, representatives might be escalating too many calls because they’re measured primarily on handle time. In a deal intended to be transformational, people might not be getting around to projects because their metrics emphasize daily operations so heavily. ••Be clear about the purpose(s) behind your metrics — what business results truly matter? What behaviors contribute most directly to those results? ••Apply what you have learned about working together — what drives your respective organizations? ••Think about which kinds of metrics are most relevant, given your purposes: ••Leading vs. trailing indicators ••Tangible/objective vs. intangible/ subjective measures ••Ends/value vs. means/activities ••Provider performance only? Bilateral metrics that measure buyer and provider activities? The provider just doesn’t have the capabilities they said they did (e.g., skills, technology, infrastructure) ••You may consider: ••Just ending it (but termination for cause can be sticky)

••Trying to train them (but training them may be expensive and endless) ••Try to diagnose why they lack capability — the provider may have intended to build out a platform with this engagement; why is that not working? How much of it is actually the buyer and what the buyer is requiring of the provider? Can they backfill by hiring or acquisitions? ••Consider redefining the contract to limit the provider to what they can do; take back or re-source other pieces. “People problems”: ineffective communication, sloppy followthrough on commitments, inadequate consultations ••Hit this problem from multiple angles. Think about how to put in place: ••Right people with the right skill sets ••Process simple enough to be implemented (e.g., articulation of decision-making roles and responsibility, joint issue escalation process) ••Mechanism to ensure each party follows the process ••Appropriate tools to follow the process TEST HOW WELL THE PRESCRIPTION IS WORKING, AND ADJUST AS NECESSARY

If you’re like many buyers or providers, your team sometimes emerges from a long, tough series of meetings thinking, “That was great — we have a plan,” only to revisit the problem some time later to find that nothing has changed. Rather than wait until your next SLA review, customer satisfaction survey, or health check, take stock along the way of how well your prescription is working. With an agreed view of what success looks like and a defined action plan, review your desired outcomes at the agreed intervals. How is it going? If things aren’t progressing as you hoped, watch out for a few common culprits: The prescription implemented

wasn’t

actually

…because it was too vague Action plans that include items like “communicate more effectively” and “build trust” are difficult to act upon and hard to measure. Redefine your action plan to be more specific. What type of communication

ABOUT THE AUTHORS

Sara Enlow Principal Vantage Partners

Sara Enlow is a Principal with Vantage Partners, and co-lead of the firm’s Outsourcing practice. Sara works with buyers and providers across a range of industries to help them get greater value from their relationships. She has written and published several articles, studies, and white papers on negotiation and relationship management-related topics, and is a frequent speaker at major outsourcing conferences and events. She can be reached at senlow@ vantagepartners.com.

Joseph Bubman Senior Consultant Vantage Partners

Joseph Bubman is a Senior Consultant at Vantage Partners, and a member of the firm’s Outsourcing practice. He has helped leading companies across a range of industries to negotiate and manage their strategic relationships more effectively. He can be contacted at jbubman@vantagepartners.com is needed that isn’t happening today? What will enable more effective communication? How will you know parties trust one another more? Who’s actually going to do something differently and what should we expect to see? …because we didn’t have the resources to follow through Effective remediation generally requires support, both in terms of people and dollars. Clarify the investment required to implement your solution. If it feels too risky, Continued to page 41 »

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TECHNOLOGICAL INNOVATION

THE TAG GAME By John Persinos, Editorial Director

As supply chains become more extended around the globe, the use of RFID tags is becoming ubiquitous. Here’s what the outsourcing community needs to weigh before implementing this sophisticated technology Once considered the stuff of science fiction, Radio Frequency Identification (RFID) chips are now all around us. They’re used in toll booths, at the gas pump, at airports, in retail stores — even on the farm to keep track of animals. They’ve become a standard technology in the manufacturing and pharmaceutical industries. Even the U.S. Defense Department mandates their use, for the provision and monitoring of spare parts and equipment in far-flung war zones. As the global economy pushes into once unthinkably remote regions, supply chains are becoming more attenuated. Items are moving at lightning speed from Xinjiang to Singapore to Seattle, and they need to be tracked with precision. The use of RFID tags for highly precise tracking in supply chains is one of the biggest trends in outsourcing. Supply chain managers increasingly use RFID tags as a vital tool, to keep track of everything from raw materials to finished products. However, despite the proven efficacy of RFID, it’s important for outsourcing professionals to fully understand the ramifications — and limitations — of this still evolving technology. Worldwide sales of RFID-related technology exceeded $6 billion in 2010, up from about $4.7 billion in 2008, according to ABI Research, a consulting firm in Oyster Bay, N.Y. ABI expects worldwide annual RFID revenues to grow +12% a year through 2014. Following the path of major retailers such as Wal-Mart, organizations in the public and private sectors are embracing RFID, a “paradigmshifting” innovation that is generating operational efficiencies and enhancing corporate security. Simply put, RFID tags automatically identify a “tagged” object or person by storing and remotely retrieving information from small transponders, or tags. Each tag features a built-in antenna that allows for the transmission and reception of radio waves from an RFID transceiver. RFID is applicable anytime that a unique identification system is required. The tag can convey information as simple as the location of a product on a warehouse pallet, or as complex as instructions on how to assemble an automobile.

GlobalizationToday May 2011

MAKING THE BUSINESS CASE

It’s important to make a business case for RFID. The technology is still undergoing a rocky transition from broad theoretical applications to real-world practicality. The technology offers enormous potential and benefits, but it remains surrounded by unrealistic expectations. RFID technology one day will live up to – and exceed – the hype. But first, a lot of hard work remains. For example, Wal-Mart has started backing off many of its plans and applications for RFID. That’s because the technology, as developed, doesn’t work well in several applications, and until the company finds out how to synthesize the data into actionable information, there’s just not a good enough business driver in terms of ROI. A major hurdle is the limitation of current technology. The problem is that RFID physics don’t always allow end users to easily synthesize the data, and that’s what many companies are running up against right now, including Wal-Mart. That said, RFID already is proving its mettle in many niches, especially automotive manufacturing. RFID is working extremely well in Detroit, where automotive plants are adapting RFID at many production and assembly facilities. MORE THAN “BARCODES ON STEROIDS”

The fact is, RFID must be applied in a strategic way. It’s not just an operational, tactical, and technological bolt on; it must be holistic to the entire enterprise and embedded in all processes. For a lot of users, particularly the folks that are driven to do it early, there isn’t a clear business case. However, at the same time that some managers can’t justify it financially today, a great many of them can also look down the road and realize that it will pay off in the future. The situation is akin to the way that bar codes didn’t do much but add cost in the early days. Now, we can’t imagine living without bar code technology. RFID is likely to experience the same evolution, from “early adoption” to maturity.

TECHNOLOGICAL INNOVATION

End-users also are recognizing the value of RFID in non-RFID areas, where they can leverage that intelligence to perform other database translation. For example, RFID tags are playing a greater role in airport security, allowing transportation authorities and counter-terrorism experts the ability to not only track bags but also cross-check the data with police files. Outsourcing managers shouldn’t look at RFID as a project in and of itself. Instead they should ask: “How can we embed its capabilities within our overall systems architecture?” They must look at RFID holistically, to determine the value-add for other processes that could be enabled outside of RFID. RFID needs to be granular and embedded throughout the enterprise. It must be made inherent in all processes, a quality that requires, before deployment, a front-end assessment of the user company’s strategy. An outsourcing enterprise must define the value that RFID provides to customers and to products. RFID requires a strategic reevaluation, because it’s not just a tactical band-aid. Technology by itself will not add business value. Companies that have successfully adopted RFID have been the ones

with the “courage” to change their processes. Everyone recognizes the value, but depending on the strategic nature of what the company is trying to accomplish, managers could be looking at changing significant processes to implement RFID. In that sense, RFID is more than just “barcodes on steroids.” It’s a whole new way of doing business. ABOUT THE AUTHOR

John Persinos is our magazine’s Editorial Director. He formerly served as Editor-inChief of Aviation Maintenance magazine and Online Publisher for Aerospace & Security Media. He also served as Publisher and Editorial Director of AviationToday. com. You can reach him at: 301-385-7211, or john.persinos@globalizationtoday.com.

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MANAGING PARTNERSHIPS

TURNING AROUND A FAILING PROJECT By Eddie Kilkelly

The proliferation of IT has massively increased the need for effective project management, yet a significant number of IT projects are regarded as failures. Here are the common pitfalls and how organisations can help turn around a failing project. IT industry expert Roger Sessions estimated the total annual cost of worldwide IT project failures at $6.2 trillion dollars, in spite of the availability of best practice models specifically developed for IT environments and the rise of professional project managers. However, it’s true that IT projects suffer from particular challenges; large scale projects are costly so they are subject to stringent and lengthy approval processes. Meanwhile, technology continues to change, the competitive environment changes and in response the organisation’s priorities change. So it is unsurprising that even a carefully specified and wellrun project has the potential to be unfit for purpose by the time it is implemented. BE VIGILANT

To avoid this, it is essential to check regularly whether the project still meets the organisation’s needs. It’s better to recognise a discrepancy in the desired deliverables, radically amend the project plan and deliver the project late if that will deliver organisational benefit. If that is not possible, it is better to cut your losses by cancelling the project. Many corporate cultures need to change to view failure as an opportunity to deliver success. At an individual level, too, managers and employees need to be able to flag problems. It is human nature to persevere and think that throwing more resources at a problem will help to fix it. If the original problem is a lack of appropriate resourcing then that may be true, but in most cases it is just likely to increase the costs associated with eventual project failure; therefore the corporate culture must make it easier for employees to take that difficult step and flag potential problems.

GlobalizationToday May 2011

DEVELOP EFFECTIVE TEAMS

Another major problem in IT projects is ensuring the right skills mix. Teams, not individual project managers, deliver successful projects and they will include a variety of people who have been seconded to the project because of their skills or knowledge. However, project failure is often attributed to a lack of context-specific skills. A professional project manager may have the right core skills to manage an IT project, but not the IT-sector specific skills and knowledge that will enable them to employ their skills effectively. The same holds true for all members of the project team – do they have the right skills for this specific project? In the IT sector, where there are significant skills shortages, this can be a particular problem. To overcome this issue, the IT or project manager must specify the roles and skills required for successful delivery of the project. Each team member must be evaluated against these requirements and any gaps in skills or knowledge must be addressed. This strategy is not flawless; a team member may move to a new job or be seconded to another project and need to be replaced, or an existing gap may not be identified. If a project seems to be going off-course, it is worth re-examining the skills mix to ensure that that is not the source of the problem. In addition, the team needs to work and communicate effectively, so it’s essential that team members share a common understanding of what’s required of their roles, what needs to be done in order to meet

MANAGING PARTNERSHIPS

the project objectives, the systems they should use and how they should communicate with each other. Ideally, all team members will be trained to use one common approach in an organisation-specific way, using the correct terminology. Embedding shared methodologies and language is especially important in an increasingly global business environment, where many IT projects are rolled out across geographical borders and time zones. When skills or communication issues arise, online coaching and mentoring or social networking can be useful for building team spirit and sharing guidance. Additional training may turnaround a project that is going off-course much more effectively than increasing headcount, which only serves to increase cost and complexity. However, time is at a premium, so any training should be available remotely, at a place and time of the learnerâ&#x20AC;&#x2122;s convenience, and use engaging, interactive content. WHAT IS FAILURE?

Projects can be turned around if managers act quickly, but equally a project may be labeled a failure because the original timescale or budget suffered modest over-runs, when it actually delivers twice the anticipated level of efficiencies. Is this really a failure or is it time for executives to adopt a more strategic evaluation of failure and success? Ironically, such an attitude in itself may help reduce project failure, if the focus is on outcomes rather than limits.

ABOUT THE AUTHOR

Eddie Kilkelly is Chief Operating Officer for the ILX Group plc. Eddie has been involved in the best practice industry for almost twenty years. During this time he has worked as both a project and IT service manager and more recently as an implementation consultant providing support to organisations who have adopted the use of best practice methods including PRINCE2, MSP and ITIL.

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MANAGING PARTNERSHIPS Continued from page 35 »

think about ways to stage implementation, with less upfront investment. Some early wins can help build momentum and support for additional investment. …because not everyone was on board Not everyone can have a seat at the proverbial table — too many people slows decision making. But on the other hand, involving too few people results in important perspectives being missed and people not as invested in follow through because they haven’t had a chance to weigh in. The more decision roles can be clarified (especially prior to the determination of an actual solution or approach), the easier implementation will be. Sort out roles — who will be a decision maker (with the ability to say yes or no to a plan); who will be consulted for their expertise and/or experience (but ultimately cannot vote or veto); and who simply needs to be informed at appropriate intervals. …because we each thought the other was going to do something Poor commitment management derails a turnaround. Make sure your action plan includes individuals responsible for each step and an agreed timeline. Ensure those responsible for implementation know what they’re responsible for doing, and identify any dependencies to ensure they can move forward. The solution didn’t fit the problem When things go wrong, management often clamors for everyone to just do something — but when we act too quickly, the solution doesn’t always fit the need. Go back to step 3 (Prescribe) and take another look at your diagnoses. Did the solution really fit what you said was the problem? If not, reconsider your action plan to more directly address the identified root cause. You haven’t given it enough time Especially when one side is losing money and the other’s business is suffering, we all want to see quick results. But a complete turnaround may take some time. Rather than just wait for things to get better (which feels unsatisfying to most buyers

and providers), assess whether you are trending in the right direction. Put in place some milestones along the way — what will show you that things are starting to get better, even if you’re not fully there yet? If you’re not moving in the right direction, change the plan! Don’t wait to complete the work you set out to do if it’s not going to get you where you want to go. GET OUT BUSINESS

THE

FIREFIGHTING

As the saying goes, an ounce of prevention is worth a pound of cure. But one of the most common complaints from buyers and providers is that they just don’t have the time to root out the underlying causes of problems because they are so busy putting out fires. While it’s true that the more firefighting you do, the better you get at it, if you don’t make time for prevention, you will always be in mitigation mode. Use a periodic health check as a way to identify problems early. If you create a set of categories that you assess in each health check, you can begin to trend them over time, which will help you identify areas where a systemic fix is needed. And if you use similar health checks across your organization’s portfolio of outsourcing arrangements, you might start to see patterns in what goes wrong across different relationships, which can help you identify fixes that will help you on multiple arrangements (and therefore deliver even greater return for the effort you need to invest). To spur your thinking, below are a few examples of good “preventive practices” — investments you can make early on that tend to prevent a host of future challenges. GOOD PREVENTIVE PRACTICES

Conduct joint contract reviews Following the negotiation of new agreements or modifications or extensions of contracts, plan for the negotiators from each side to jointly brief key individuals on both sides who will be responsible for implementation. Joint briefings like these help ensure that all parties have an agreed picture of scope, milestones, and commitments, which can prevent a lot of fighting and finger-pointing later.

Customize your governance structure Every outsourcing arrangement needs governance — a means for steering and guiding the arrangement in the desired direction — but governance isn’t one size fits all. Think together about the complexity inherent in your deal — are you working across multiple geographies? Are disparate business units coming together for the first time? Are there many integrated processes to consider? Also think about the desired goal — is it significant transformation? Operational improvement? With that understanding, create a governance structure suited to your needs. For example, you might incorporate a “Change Council” with representation across many business units to help define a transformation process. You might streamline and centralize when scope is fairly straightforward and few geographies are involved. Agree on decision roles and protocols When people aren’t consulted as they think they should be, trust can erode quickly. The more decision roles and protocols are defined in advance, the less often people will be surprised by not being included when they think they should be. Brainstorm a series of key decisions, and note who will play what role in making those — who can vote or veto, who will be consulted because of their expertise or experience, and who needs to be informed. Doing so helps ensure that people are more supportive of the ultimate solution (because they feel they’ve been involved appropriately along the way). Align around a joint planning process While significant work often goes into planning the transition process, many buyers and providers don’t plan for how value will be created once the arrangement reaches “steady-state.” As a result, once operations have stabilized, buyers start to ask, “What have you done for me lately?” Innovation and value creation don’t just happen; they need to be nurtured and enabled by both parties over time. This can be part of the regular governance process or a specific initiative. What is key is that you and your partner make clear the Intent of the effort and undertake it together.

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WHAT’S HAPPENING AT THE IAOP WELCOME NEW IAOP MEMBERS IAOP is pleased to welcome new and renewing corporate and professional members from: Accenture; AG Capital; Allstate ; Ancestry. com; Appalachian State University; Baker & McKenzie; B-CONNECT; Blazent, Inc.; BPO Connections; Bristol-Myers Squibb; Carvajal Tecnología y Servicios; Cassidy Turley; Colliers International ; Covidien; CSC; Deloitte; Erevena; Etkin Services Co.; Ferring Pharmaceuticals A/S; First Niagara Bank; Infosys BPO; Integrated Corporate Services Limited; Kraft Foods Global, Inc.; MedNeutral; Missouri Partnership; Nike ; SADe; Scripps Networks Interactive; Strathclyde University; Sunrise Software Solutions Corporation; Sutherland Global Services; The Credit Department, Inc. (TCD); The Dow Chemical Company; TPI; Trench, Rossi e Watanabe; UGT Outsourcing Services; Union Bank; UnitedLex; Universidad Autónoma de Coahuila; VPPerform B.V.; and Zurich Financial Services. For information on IAOP membership, e-mail sales@iaop.org.

IAOP WORLD CONNECTION THE 2011 OUTSOURCING TOOLS SYMPOSIUM – EAST May 24-25, 2011 | New York City

The IAOP New York, New England, Cloud Computing and Tools & Technology Innovation chapters are hosting a Symposium where leading outsourcing customers, providers and advisors will share their experiences and best practices in the use of advanced tools and technologies to improve the value from outsourcing and/or shared services. Speakers will share how they’ve used these tools and technologies to positively impact the financial performance, service quality, capabilities delivered, risk/compliance and overall governance of their existing contracts/relationships. Industry leading outsourcing and shared service center tools providers will come together to demonstrate how their solutions can be put to work quickly and affordably to deliver enhanced business value to your organization. A half-day Tools Provider Workshop will follow the Symposium on May 25, enabling organizations to become intimately familiar with technologies available from these leading tools providers.

GlobalizationToday May 2011

Featured keynotes include: “Outsourcing Accelerated – Service Delivery in the Age of Cloud Computing” Brian Zeve, General Manager, Professional Service Industry, Microsoft “The Cloud Enabled Business” Saideep Raj, Senior Executive, Accenture “Why BPO is Broken and How BPaaS Could Be the Solution” Arijit Sengupta, CEO, BeyondCore Register at www.IAOP.org/Tools_Symposium. To join one a chapter meeting and view a full listing of our current chapters, go to www.IAOP.org/Chapters.

WHAT’S HAPPENING AT THE IAOP

MEMBERSHIP Membership in IAOP provides access to an extensive array of services, and just as importantly distinguishes organizations and professionals as leaders in the field of outsourcing. IAOP membership demonstrates a commitment to innovative thinking, continuous performance improvement, and to the sustaining development of outsourcing as both an industry and as a profession. CUSTOMER CORPORATE MEMBERSHIP Organizations that are currently outsourcing or are considering one or more outsourcing initiatives should become Customer Corporate Members of IAOP. This membership provides organization-wide access to the association’s research, training, certification, and networking programs - all designed to help companies achieve better business results through outsourcing. PROVIDER/ADVISOR CORPORATE MEMBERSHIP Outsourcing service providers and advisory firms should join IAOP as Provider/Advisor Corporate Members. This membership provides the same organization-wide access to IAOP’s research, training, certification, and networking programs as Customer Corporate Membership, but also includes member-only sponsorship opportunities that serve the marketing and business development needs of these companies.

MEMBER SERVICES

IAOP membership provides access to a wide range of services designed to help you and your organization improve outsourcing outcomes. Many of these services are included as part of IAOP’s Professional or Corporate Membership, with discounts available for use beyond the level provided. Some services are also available individually at non-member rates. • Globalization Today - The official publication of IAOP creates the largest and best informational publication on outsourcing by uniting and tapping the collective intellect of individuals from around the world. IAOP Members receive a free subscription plus the opportunity to get published, promote products/services and advertise. • IAOP’s Knowledge Center, Firmbuilder.com® - This online repository houses more than 600 articles, including chapter meeting presentations, conference proceedings, industry whitepapers, research articles and more. • Chapter Network - Through its active and expansive chapter network, IAOP members can share their expertise and find knowledge on best practices for specific industry segments, topics and geographic areas within outsourcing. • Conferences & Events - IAOP hosts the world’s best-known and most highly-respected executive conferences on the topic of outsourcing.

PROFESSIONAL MEMBERSHIP Professional Membership is available to individuals either as part of their company’s corporate membership or on an individual basis. This membership serves the needs of practitioners working in the field of outsourcing whether as customers, providers, or advisors. In addition, it provides these professionals with direct, personal access to association services.

• Certified Outsourcing Specialist Family of Certifications - Receive 50 complimentary COS tests each year.

Special Offer! Sign up by March 31, 2011 and save $75 on Professional Membership. To sign up, go to www.IAOP.org/PMregistration and use the offer code ‘IAOP-PM-NEW11’.

• BestOutsourcingJobs.com - Companies seeking the best talent for outsourcing jobs, as well as professionals looking for employment opportunities, can benefit from this IAOP member service provided through BestOutsourcingJobs.com.

For information on IAOP membership, e-mail sales@iaop.org.

• Value Health Check Survey - This web-based diagnostic tool provides outsourcing customers and service providers with rapid insights to realizing outsourcing value.

For more detailed information, visit www.IAOP.org/MemberServices.

CONFERENCES & EVENTS

LAST CHANCE TO REGISTER! THE 2011 LATIN AMERICAN OUTSOURCING SUMMIT May 26-27, 2011 | Las Americas Global Resort and Convention Center, Cartagena, Colombia

The 2011 IAOP Latin American Outsourcing Summit is a firstof-its-kind global event bringing the thought-leadership and global network of IAOP together with leaders from across the Latin American business community. The result is an exceptional opportunity for individuals and organizations involved in outsourcing as customers, providers, and advisors to both understand and leverage the explosion of outsourcing taking place across the region. Whether you think of Latin America as an outsourcing destination, as a market for your company’s services, or as the region you call home, this is a not to be missed global business gathering.

Organizations such as Accenture; Bancolombia; Baker & McKenzie; Booz & Company; Brasscom; Capgemini; CB Richard Ellis; Colliers International; Colombia’s Ministry of Commerce, Industry and Tourism; The Economist; Ecopetrol; HSBC; InvestChile (CORFO); ITSqc; Johnson & Johnson; Kirkland & Ellis; Matryzel Consulting; Nearshore Americas; neoGroup; PwC; SABMiller; Softtek; Teleperformance; Zona Franca Bogota; and many others are already slated to participate. The newly elected president of Colombia, Juan Manuel Santos, has committed the support of his office and, schedule permitting, expects to personally participate and address delegates. In addition to main session keynotes, three in-depth tracks allow delegates to build an event that fits their particular needs and interests. • Track One features real-life customer experiences — giving delegates the chance to learn firsthand from the experiences of customer organizations across the globe.

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WHAT’S HAPPENING AT THE IAOP • Track Two focuses on how we benefit from outsourcing — geared toward those individuals charged with making outsourcing work for their organizations, the track will delve into the challenges of doing multi-country outsourcing deals, opportunities in global outsourcing and developing globally-competitive talent. • Track Three will explore the future of outsourcing in Latin America with sessions designed to dig deeper into the various countries, what’s happening there today, and most importantly, what the experts expect to happen over the next 24 to 36 months. Pricing: Attend The 2011 Latin American Outsourcing Summit at the low rates of $375 for IAOP members and $400 for associate and non-members.

The COP Master Class is a great option for reaching up to half (75 points) of the Knowledge and Training points needed for certification, or for COPs to earn 20 recertification CEHs, or to fully complete the required training for the aCOP designation. IAOP is actively registering now for the following classes: • JUNE 27-30, 2011: KINGBRIDGE CONFERENCE CENTRE, TORONTO, CANADA (ACT NOW, FILLING QUICKLY!) • SEPTEMBER 19-22: INVERNESS HOTEL & CONFERENCE CENTER, DENVER, CO • OCTOBER 19-21, 2011: HARBOUR PLAZA METROPOLIS, HONG KONG • NOVEMBER 21-24, 2011: KUALA LUMPUR, MALAYSIA

For more information and to register, visit www.IAOP.org/LATAM.

Please visit www.IAOP.org/training_calendar for a full list of classes and current discounts and specials.

For information on sponsoring and exhibiting, please contact Renee Preston at renee.preston@iaop.org.

PROFESSIONAL DEVELOPMENT RESOURCES AVAILABLE!

THE 2012 OUTSOURCING WORLD SUMMIT® February 20-22, 2012 | Disney’s Contemporary Resort, Lake Buena Vista, Florida

Outsourcing Beyond the Horizon: Turning Opportunities into Tomorrow’s Successes

Today’s

Register now at www.IAOP.org and not only will you get the lowest possible rate — a $500 savings — you’ll also get a FREE room night* at Disney’s Contemporary Resort. The financial and economic crisis has reshaped and transformed the outsourcing industry. It has also created never before seen opportunities. The 2012 Summit addresses how to capitalize on these opportunities to maximize success at your organization. • Learn what the latest innovations are and how to implement them • Hear industry best practices and lessons learned from leading practitioners and visionaries • Stay current on the latest outsourcing tools and technologies, including the cloud • Meet and evaluate vendors in the Global Services Mall (or showcase your company as an exhibitor!) • Network with 700+ outsourcing professionals from around the globe Every year, hundreds of outsourcing executives from across the industry and around the world who are seeking the very latest insights and ideas attend the Summit. Educational sessions deliver specific actionable solutions to current challenges faced by experienced professionals. Case studies feature actual experiences and the lessons learned, and discuss new ideas, approaches and opportunities. The Outsourcing World Summit has become the event that executives attend each and every year to stay informed of the latest developments affecting the outsourcing industry and their profession. Hurry! The “Save the Date” promotion ends May 31! *With paid registrations from 5/1-5/31 only. Free room night valid for stays between February 19-22, 2012, and must be booked by January 11. The one free room night will be credited to delegate upon checkout.

CORPORATE & PROFESSIONAL DEVELOPMENT

GlobalizationToday May 2011

No matter what industry you are in, IAOP has resources available for all outsourcing professionals. For the latest titles from IAOP, ITSqc and others please visit www.iaopbookshop.com, and get 15% off of any title you order. Also new from IAOP are titles from the American Bar Association found at www.ababooks.org/affiliate/iaop. CORPORATE PROGRAMS

IAOP’s private master class calendar is filling up with Corporate Companies taking advantage of educating their employees in-house! With the dramatic cost savings, there is no better time than now to use up your training budget. Host an in-house class for between 10 and 25 employees, partners and customers and save on time and travel. Classroom training will be delivered by an IAOP Authorized Trainer at your facility with each student who successfully completes the COP Master Class provided with a Certificate of Completion noting that they have earned 75 points toward the COP designation and fulfilled the aCOP training requirement. Human Resource departments may now endorse various IAOP certifications by partnering in our new IAOP Certification Enabled (ICE) designation that would enable leading outsourcing service provider, customer and advisory companies to highlight their adoption of international best practices in hiring their workforce by endorsing IAOP certifications. This designation can help differentiate participating companies in the marketplace, and help promote awareness of the certification programs and encourage adoption across the industry. Find out how to engage this program with your hiring practices at www.IAOP.org/Content/23/193/3116 Executives interested in bringing the COP program division- or company-wide are invited to contact your account executive or email sales@iaop.org. TEST YOUR OUTSOURCING PROFESSIONAL SKILLS (GET A FREE GIFT IN THE PROCESS)

Are you prepared to successfully manage outsourcing initiatives? Do you have the knowledge and experience needed to the industries most elite Certified Outsourcing Professionals? Begin your journey to earning one of IAOPs most distinguished designations by testing your outsourcing professional skills with IAOPs 10 question quiz.

WHAT’S HAPPENING AT THE IAOP (please download it here: http://www.iaop.org/Download/Default.aspx?ID=1595 Once you have completed the quiz email it to copprogramservices@ iaop.org for your results. Those who submit the quiz will receive a complimentary electronic sample Outsourcing Professional Body of Knowledge (OPBOK) print version from IAOP partner Van Haren Publishing. IAOP’s Corporate Development programs address the growing need for organizational-wide outsourcing expertise through standards covering the end-to-end outsourcing process and training and certification programs to enhance the skills and abilities of the individuals who design, build, implement and manage outsourcing initiatives as well as those who are skilled in the delivery of outsourced services. Training and certification through IAOP reflects the highest industry standards and achievement criteria, and are the de facto programs recognized by customers, providers and advisors of outsourcing services. For more information on any of IAOP’s programs and services, email info@iaop.org. NEWSWIRE INTERNATIONAL ASSOCIATION OF OUTSOURCING PROFESSIONALS CHAPTERS ANNOUNCE 2011 TOOLS & TECHNOLOGY SYMPOSIUM – EAST Unique Event Being Held at Microsoft Briefing Center in New York City May 24-25, 2011

IAOP and its New York, New England, Cloud Computing and Tools & Technology Innovation chapters will host the outsourcing industry’s 2011 Tools & Technology Symposium – East on May 24-25, 2011. The event will be held in New York City at Microsoft’s Briefing Center, located at 1290 Avenue of the Americas. Event sponsors include Accenture, BeyondCore, Infosys, Microsoft and other outsourcing thought leaders. Technology is transforming outsourcing, and this symposium brings together leading outsourcing customers, providers and advisors to share best practices in the use of advanced tools and technologies to improve the value obtainable through outsourcing and shared service relationships. Industry leaders will discuss how these tools impact outsourcing financial performance, service quality, capabilities delivered, risk/compliance and overall relationship governance. A halfday Tools Provider Workshop included in the symposium will enable attendees to gain additional hands-on experience and insights. “Where labor arbitrage was a key contributor to the financial impact of outsourcing in the late 1990s and early 2000s, technology arbitrage will likely be a key differentiator in an organization’s ability to impact the financial performance of outsourcing relationships in the future,” said Michael Corbett, chairman of IAOP. Matt Karlyn, attorney at Foley & Lardner LLP and chair of IAOP’s New England Chapter added, “today’s outsourcing customers and service providers require enhanced transparency into real-time performance of their outsourcing relationships on a global basis, and there’s no better way to accomplish this and meet increasingly stringent regulatory requirements than by using advanced tools and technologies.” The 2011 Tools & Technology Symposium – East will commence with a continental breakfast on Tuesday, May 24 at 8:00 am. Tuesday’s program will conclude with a networking reception from 5:00-6:30 pm. On Wednesday, May 25, the symposium will reconvene at 8:00 am with

a continental breakfast, followed by tools provider workshops until noon. Key speakers include Professor Audrey MacLean from Stanford University as well as thought leaders from Microsoft, Accenture, Infosys and BeyondCore. Admission to the event is free, but advanced registration is required: www.IAOP.org/Tools_Symposium. “We are witnessing a fundamental shift from traditional business process outsourcing to cloud-enabled business process as a service. The symposium brings together leading players in the outsourcing ecosystem as they try to jointly understand and navigate this shift,” said Arijit Sengupta, CEO of BeyondCore and chapter chair of IAOP’s Cloud Computing Chapter. Matt Shocklee, chair of IAOP’s Tools & Technology Innovation Chapter noted that “organizations can no longer remain competitive by managing their global sourcing relationship portfolios on Excel spreadsheets.” A wide range of global sourcing professionals are expected to attend the 2011 Tools & Technology Symposium, including CIO, COO, VP and director level management from disciplines such as procurement, finance, IT, risk management/security, audit and service delivery. Julian Millstein, senior counselor at Morrison & Foerster and chair of IAOP’s New York Chapter commented, “for the first time on the East coast we’re bringing together leading next generation providers of advanced tools and technologies, enabling outsourcing users from across the enterprise to get hands-on experience on how to use these new technologies.” IAOP SPREADS BEST PRACTICES WITH SUPPORT OF ESOURCING CAPABILITY MODELS Certification and Development are the “Two Pillars for Outsourcing Success,” Association Says

IAOP continues to expand its professional and organization development offerings with its support of the e-Sourcing Capability Models (eSCM) and certification. Developed by IAOP’s corporate and professional development partner ITSqc, LLC -- the Carnegie Mellon spin-off created to promote best practice models for the global IT-enabled services industry -- these standards include models for service providers and client organizations. Aligned with IAOP’s Outsourcing Professionals Body of Knowledge (OPBOK), the models are used globally to improve organizational performance, appraise organizational capability and certify the capablity of organizations based on their use of and adherence to the best practices. ITSqc is working with strategic partners and authorized organizations to support global adoption of the eSourcing Capability Models. Callingprofessionaldevelopmentandcertification,andorganizational development and certification the “two pillars of outsourcing success,” IAOP said the partnership represents its continued focus on delivering an ever-expanding offering of certifications for professionals at every step along the career pathway. “Outsourcing is a complex undertaking that requires true professionals,” said IAOP Chairman Michael Corbett. “These professionals need to be brought together into effective teams with responsibility for the end-to-end outsourcing process and operate using a common playbook.” In addition, teams need to manage effective organizational processes that ensure consistent, repeatable, high-quality results and benchmark both professional skills and knowledge and organizational processes against rigorous industry standards, according to Corbett. For a paper on the “Two Pillars of Outsourcing Success,” go to www. IAOP.org/Content/23/193/3134/.

globalizationtoday.com

SCRAPBOOK

Outsourcing Professionals around the World Gather for Learning and Networking g courses and From chapter meetings and webinars to trainin have spent world the around conferences, outsourcing professionals rking. netwo and g learnin s the last few month was presented IAOP’s annual event, The Outsourcing World Summit®, – to a sell-out crowd - in California. Global Human The following chapters held meetings: Switzerland, (Pune and India es, Scienc Life Capital, Legal Process Outsourcing, Center, Call t Contac st, Midwe , Nordic Kong, Hong Bangalore), o. Chicag and ty, Securi Malaysia, Transboundary Sourcing, Data s took Certified Outsourcing Professional® (COP) Master Classe US. Hong Kong and the

place in

logy Symposium Join us this month at the Outsourcing Tools & Techno England, Cloud New York, New the of ration collabo a East, tion chapters, Innova logy Techno & Tools Computing and Outsourcing Outsourcing an Americ Latin 2011 The and York New in 24-25 on May ues to contin IAOP as bia, Colom Summit on May 26-27 in Cartagena, peers. your with you ct conne and edge knowl ry share indust From chapter meetings and webinars to training cou rses and conferences, outsourcing professionals around the world have spe nt the last few months learning and networking.

world’s largest Thank you for helping build, and being part of, the community of outsourcing professionals.

Certified Outsourcing Professional® (COP) Master Classes took place in Hong Kong and the US.

Outsourcing Professional Certification FrameworkTM (OPCF) The OPCF is designed to address the needs of individuals who work across the global outsourcing industry from entry level positions focused on the delivery of outsourced services through to senior executives leading global outsourcing programs at customer, provider, and advisor organizations. At each stage in an individual’s career there is an opportunity for both professional development and professional recognition. The OPCF is made up of three families of certifications:

 Certified Outsourcing ExecutiveTM (COE)  Certified Outsourcing Professional® (COP)  Certified Outsourcing SpecialistTM (COS)

BENEFITS OF CERTIFICATION  Certification establishes a level of professional recognition essential in a field as complex and risk-based as outsourcing.  When working together across the customer-provider relationship, certification brings a common framework for success that benefits both organizations involved.  Certified individuals command greater respect within the industry and their companies, higher compensation levels, and expanded and enhanced career opportunities.

I’M A COP

*Expect better, more consistent results with me.

Training programs are available at the individual and corporate level. For more information, visit

www.IAOP.org/OPCF.

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