Outsourcing magazine Issue#18 by Sritharan Vellasamy

www.the-outsourcing.com

RM12, S$8, US$8

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

ISSUE #18, 2010

PREMIER MAGAZINE ON BUSINESS AND TECHNOLOGY SERVICES INDUSTRY

I S S N

1985-1006

Enabling business transformation through outsourcing practices:

An interview with CIO of MAS

Sustaining virtuous circle of metrics framework

Assign best people for Globalisation initiatives

Picking the mind of service buyers

Malaysian Investment Development Authority

Ad-MIDA.indd 2

5/31/10 7:05:09 PM

CONTENTS

Euro bloc will remain major ITO market: Nasscom

An interview with CIO of MAS: Faridah Abdul Rahman

Picking the mind of service buyers

Sustaining virtuous circle of metrics framework

Assign best people for Globalisation initiatives

Establishing safety in workplace

Roaring success at CDP Roadshow

3-advert-goldenHorse.indd 1

6/2/10 4:04:42 PM

editor’s note sri@wordlabs.com.my

www.the-outsourcing.com

RM12, S$8, US$8

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

ISSUE #18, 2010

PREMIER MAGAZINE ON BUSINESS AND TECHNOLOGY SERVICES INDUSTRY

I S S N

1985- 1006

Enabling business transformation through outsourcing practices:

An interview with CIO of MAS

Sustaining virtuous circle of metrics framework

Assign best people for Globalisation initiatives

Picking the mind of service buyers

theteam FOUNDER / MaNagiNg EDitOR Sritharan VellaSamy CONsUltaNt Sundra Surian

editorial editorial@wordlabs.com.my sUb EDitOR Simon Vella jOURNalist Julia Hoo aRt DiRECtOR Steven CHoo gRaphiC aRtist Shafie oSman CONtRibUtORs Tamyne menon Dorothy llew, mohd arSHaD

sales sales@wordlabs.com.my Vikraman ViSno amol .a. KarKHaniS resh naTHen

contact admin@wordlabs.com.my

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

“If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.” – Lee Kuan Yew (Ex-Prime Minister, Singapore) In this edition, we train our focus on Chief Information Officer of Malaysia Airlines (MAS) Faridah Abdul Rahman, who shares with us the reasons behind her company’s continued trust and optimism with outsourcing. When MAS embarked on IT outsourcing back in 2003, the big target was to transform into a more service-orientated organisation with better end-to-end processes – not just to cut costs. Outsourcing has also paved the way for Faridah’s Group IT department to spend more time towards business enablement instead of being just a support entity. Faridah, who joined the company some 25 years ago, says the cost savings were achieved over time as the Group IT department matured through the projects. Today, MAS boasts better understanding on relevant cost drivers and whether certain costs are necessary to support or enable the business. Recently the airlines inked a five-year outsourcing contract with TATA Consultancy Services (TCS) for end-to-end IT infrastructure services. The engagement was in line with MAS’ Business Transformation Plan (BTP2) to align the role of IT to the airline’s P&L (Profit & Loss). One of the key initiatives includes fine-tuning its IT outsourcing strategy to deliver the required business results at lower cost. During the interview, the CIO also delved on the factors she considers in evaluating vendor capabilities. The Cover Story is part of our continuous efforts to infuse more of “buyer perspectives” in the overall content of this publication. Meanwhile, in another related article – “Picking the brain of service buyers” – regular columnist Jerry Durant explains why an organisation’s readiness is an important component to the success of outsourcing engagements. The main drivers of outsourcing initiatives must be able to manage the organisational change, he writes. Naturally, people’s reaction to change can be unpredictable and irrational. He notes that, somehow, change is difficult even when it’s considered essential to a business. This is because it requires someone to move from a comfort zone, albeit marginally productive, into an arena of uncertainty, but one that has a strong success potential. – Sritharan Vellasamy

3(CIMA-Ad).indd 1

10/20/08 12:43:11 PM

Outsourcing |

news bits

Cisco, MDeC join hands Cisco Malaysia, the Multimedia Development Corporation (MDeC) and University Malaya are working together on a unique undergraduate internship programme, the Cisco Industrial Training Programme (CiTP). “The programme will identify, develop and prepare skilled information and communication technology (ICT) networking specialists for small and medium sized enterprises (SMEs),” said Anne Abraham, Managing Director of Cisco Malaysia. She highlighted that SMEs are the heartbeat of the nation’s economy, constituting over 90% of businesses and accommodating 65% of the total workforce in the country. “This market segment is also expected to contribute 37% to Malaysia’s gross domestic income by year-end, making it significant to local economic growth,” she said in her speech at the launch of the programme on May 20. According to Abraham, the success of the CiTP will determine the scale of implementation moving forward. “Eventually, our ambition is to take it further, widen opportunities and establish it as an ideal model, not only for our peers in the ICT sector, but across industries in the market. “The programme, currently in its pilot phase, will kick-off with a target of 35 selected undergraduates from the Faculty of Computer Science, University Malaya. They will be assigned to designated SME’s,” she said.

Malaysia’s outsourcing industry set to soar “I foresee good growth in the outsourcing industry because it helps to drive down cost.”

– David Toh

Malaysia’s outsourcing industry is expected to grow between 15% and 20% this year, as more companies outsource their services to remain competitive. However, to remain competitive in the outsourcing market in the future, Malaysia will have to focus on segments where it can have an edge, such as the mid-layer segment, says Interactive Intelligence Inc’s regional sales director (Asean), David Toh Yue Heng.    “I foresee good growth in the outsourcing industry because it helps to drive down cost,” Toh told Bernama.   According to Toh, Malaysia’s advantage is its multilingual talents. “We can speak multiple language apart from English, Malay, Chinese

and Tamil, and some even speak Japanese and Korean,” he said.    Asked whether Malaysia was prepared to become a contact centre hub in the future, Toh said Malaysia has “all the ingredients to become a successful hub”. Among them were skilled workers, resources and infrastructure as well as reasonable costs, he said. “Hence, with all the ingredients, it is possible,” he added.    Toh said the government and the people in the industry should work hand-in-hand to achieve their aims and attract external markets. Among the key areas that Malaysia could focus were the government sector, and the inbound and outbound markets, he said.

Outsource halal products manufacturing, Brunei urged Brunei’s halal drive is headed in the right direction, a top executive of the Malaysian agency coordinating all halal initiatives told The Brunei Times, citing the Sultanate’s decision to focus on strict certification and standards and outsourcing production overseas. Dato’ Seri Jamil Bidin, chief executive and managing director of Malaysia’s Halal Industry Development Corp (HDC), said Brunei may not have much natural resources, but it has a lot of capabilities in terms of financial resources. “You don’t really need to produce the products in your own country,” Jamil said. “Go to countries, which have a lot of resources. For example, Brunei buying a farm in Australia, and through this collaboration,

you can work with people in those countries to produce halal products.” He added that Brunei can have ownership of its halal brand, but the product can be produced elsewhere and that is the strategy some countries in the Middle East has adopted because of their desert climate. “I think it’s a correct strategy because certain countries have a lot of natural resources, like Australia’s cattle and Thailand’s food products.” Ghanim International Food Corp Sdn Bhd, the Bruneian firm tasked to market Brunei Halal Brand goods, had said goods under the brand were not only manufactured locally but also from regional and international manufacturers in countries including China, Malaysia and Spain.

Grants worth RM1m up for grabs at MSC Malaysia challenge

Wan Peng … ‘MDeC helping Malaysian content creators move to the next level.’

The Malaysian content development scene continues to grow at a rapid pace, thanks to the MSC Malaysia Intellectual Property Creators Challenge (MSC Malaysia IPCC) Series. The competition is organised by the Multimedia Development Corporation (MDeC) and offers winners, an opportunity to showcase creations and commercialise their works, on an international level. Participants may compete in any of the four categories in this

| Outsourcing | May-June 2010

annual event — Animation, Casual Games, Digital Interactive Comic, and Mobile Games. Prizes in the form of RM1 million in grants are up for grabs. Each winner will receive an RM50,000 grant in all categories, except for the Digital Interactive Comic competition where it is an RM20,000 grant. The winners of the MSC Malaysia IPCC 2010 will also receive mentorship from industry players and be given access to development facilities at the MSC

Malaysia Animation and Creative Content Centre (Mac3). “This is important, as it is a rare opportunity, in a market that is crowded and very competitive. “Through this initiative as well as MDeC’s reach and ability, we are able to help Malaysian content creators move to the next level,” said its COO, Ng Wan Peng at the competition briefing on May 10. The closing date for the submission of entries is July 1. It must be made online at www. mscmalaysia.my/ipcc.

Adv-(gplaces).indd 20

5/31/10 4:10:01 PM

Outsourcing |

news bits

Manpower Vietnam expands Techcombank deal Manpower Vietnam has expanded its agreement with Techcombank to provide recruitment process outsourcing services to help the company meet growth and expansion strategy targets. Techcombank was faced with recruiting 1,500 people and establishing a constant pipeline of new candidates to meet its projected growth plan against the backdrop of a highly competitive market and no available internal resources for recruitment, onboarding and development of staff. The two-year contract sees Manpower manage Techcombank’s complete recruitment and hiring processes, from job profiling to onboarding as well as helping Techcombank ensure that required staffing levels are achieved, performance levels of all permanent hires exceed requirements, and sales targets are met.

Asia e University partners with KellyOCG Kelly Outsourcing and Consulting (KellyOCG) and Asia e University (AeU) signed a Memorandum of Agreement (MOA) on May 24, for a partnership that leverages on the reputation and reach of a multinational university and the expertise of the global corporation to bring the first Global Professional Human Resource (GPHR) course to Malaysia. Estimated to run four times a year, this programme is approved for claims under the HR development fund given by Pembangunan Sumber Manusia Berhad (PSMB) and licensed by the Society for Human Resource Management (SHRM), the world’s largest HR professional association. “This collaboration with Asia e University is instrumental in our on-going commitment to the development of HR professionals in the markets which we serve,” said George Corona, Executive Vice President & COO of Kelly Services Inc.

Work starts on new Baguio BPO campus Work has started on a new IT and contact centre development at Baguio City in the north of the Philippines. The Baguio-AyalaLand TechnoHub is envisioned to be an integrated IT community consisting of five to seven low-rise buildings in the Camp John Hay Special Economic Zone. The office campus development is designed to address the requirements of BPO and IT-Enabled Services. The Business Processing Association of the Philippines (BPAP) has placed Baguio City as part of its top 10 Next Wave Cities. The area has 14 colleges and universities producing about 22,000 graduates per year, which together with the city’s available infrastructure and cost competitiveness add to its attractiveness as a BPO destination. Upon completion, the development is expected to generate more than 20,000 jobs from the BPO offices, retail establishments and support maintenance services.

| Outsourcing | May-June 2010

Euro bloc will remain India’s major market: Nasscom

ndian IT industry’s revenue from Germany, Austria and Switzerland could increase four fold to US$10 billion by 2020, as potential clients mull nearshore and offshore options to overcome cost pressures and resource crunch, a report by Nasscom said. Large Indian tech vendors such as TCS and Infosys currently offer application development, infrastructure services, engineering services, production support, and BPO services to clients in the region, although Indian industry’s total revenue from this market has been less than US$2.6 billion. Business Line newspaper reported that TCS, for instance, serves 65 German and Austrian companies. Some of its large clients include Daimler, Deutsche Bank, Deutsche Börse, SAP, and Commerzbank. Conversely, German majors such as SAP have leveraged Indian skills by setting-up R&D and global services and support units in India. SAP Labs India employs over 4,000 professionals with centres in Bangalore and Gurgaon. “The Germanic nations are facing acute talent shortages in the knowledge based sectors like IT and engineering services. India is a natural partner, with a large technically qualified talent base, global experience and lower cost. “The current European uncertainties are short term in nature and we are confident that the European bloc as a whole will continue to be one

City of Frankfurt … Germany purchases over US$36 billion worth of IT services every year. of the largest markets for the Indian IT and BPO industry,” the Nasscom President, Som Mittal, said. The IT services market in the Germanic countries is estimated to be US$100 billion, of which US$46 billion is purchased (that is outsourcing and offshoring). Close to US$5.6 billion worth of services are offshored, almost US$1.4 billion goes to India. Germany is the largest IT market in the pack, purchasing over US$36 billion worth of IT services, followed by Switzerland (US$7 billion)and Austria (US$3 billion).

Mahindra Satyam BPO extends deal with GlaxoSmithKline Mahindra Satyam, a consulting and IT services provider, said its BPO arm Mahindra Satyam BPO has renewed its existing contract for a further period of five years with GlaxoSmithKline, a research-based pharmaceutical and healthcare company. Mahindra Satyam BPO currently provides high-end artwork and design services to the pharmaceutical company. The Regional Service Center (RSC) at Mahindra Satyam BPO will provide creative logo, production and promotional graphic artwork services to a global customer base of GSK. Vijay Rangineni, CEO of Mahindra Satyam BPO, said: “This contract

renewal is a reaffirmation of the faith placed by GSK in Mahindra Satyam BPO. Our focus on high-end services and our ability to leverage knowledge of the customer’s business have enabled us to offer services that are at the core of the customer organisation. “Mahindra Satyam BPO provides GSK with a fully integrated cost effective scalable model within the high-end Artwork and Design services space.” Mahindra Satyam BPO serves over 100 countries and manages Design and Artwork Shared Services, Supply Chain Management and Logistics Support.

www.simedarbyhealthcare.com Adv-(SimeDarby).indd 20

5/31/10 4:14:21 PM

Outsourcing |

news bits

Ayala’s Integreon clinches US$852M legal deal integreon, a unit of conglomerate Ayala Corp. has bagged a 10-year contract worth US$852 million to provide middle office services to UK-based law firm, CMS Cameron Mckenna LLP. Integreon, which provides research, legal and professsional business solutions, is majority owned by Livelt, Ayala Corp.’s business process outsourcing holding company.

Ayala Corp. and CMS McKenna said in a joint statement on May 18 that the contract is considered as the largest outsourcing agreement in the legal industry. CMS Cameron McKenna said that tapping Integreon will allow it to focus on its core competencies, which include providing high-end legal and tax services to an expanding client base.

Energizer mulls bpo facility the company that manufactures Eveready and Energizer batteries is considering putting up its own business process outsourcing (BPO) facility in the Philippines. Energizer Philippines president and managing director Esteban Vorbeck said support for Energizer’s United States customers were currently being performed out of Manila, through third-party service providers. With more and more locals performing regional roles for the company, Vorbeck said it made sense for Energizer to put up its own BPO facility, the first ever for the multinational firm. “We’re looking at the Philippine BPO sector. We’re thinking of possibly setting up our own facility,” he told Philippine Daily Inquirer. “We have a number of roles here that are being performed for the region. We’re looking at the Philippines as a support or back-office organisation. We hope to align the growth of our business with something that’s already been proven.” Should the BPO plan push through, the facility would be located in the Metro Manila, he said. However, he also did not discount Cebu, since the company’s manufacturing facility was located there. The BPO centre, he said, could handle logistics, finance and marketing and would promote the Philippines as a back support office.

Xerox’s ACS division to buy over HP unit affiliated coMputer ServiceS, now a division of Xerox corp, said recently it has agreed to buy a business unit from hewlett-packard co. for uS$125 million. the excelleratehro llp unit, which helps companies manage their pension programs and other employee benefits, was originally owned by one of acS’s old rivals, plano-based edS. edS was purchased in 2008 by hp. hp according to a release, the transaction is expected to close following the conclusion of the customary closing conditions. the transaction will also be the first acquisition by ACS since it was acquired by Xerox in February this year. “This acquisition clearly demonstrates Xerox’s commitment to invest in human resources services that will ultimately

Mobile phone Manufacturer nokia will restart the use of outsourcing in assembly this year as phone market recovers. nokia last year stopped all assembly outsourcing, while in 2008 it outsourced around 17% of manufacturing volume of cellphones. “last year, the situation was completely different, meaning to some

Seven Star Packing Services We provide services of packing and unpacking of goods for house, office and factory removals. This will be done by our experienced and well-trained staff. We offer high removal service standards at the most competitive rates. Furthermore, safe and secured storage facilities are also provided for removals that cannot be done within a day. Transportation is provided to all parts of Malaysia & Singapore. Contact us: Tel: +603-4041 9058, +603-4042 1173; Email: ssps_1@streamyx.com; Web: www.sevenstar.com.my

| Outsourcing | May-June 2010

benefit all our clients,” said Ann Vezina, acS executive vice president and group president, acS human resource Services. “This acquisition, coupled with our increasing investments in new products and services, broadens acS’ customer base, strengthens our capabilities and consistency to an expanding sector.” “This acquisition will accelerate the pace of an unprecedented level of product and service innovation for clients seeking consistent service in a rapidly evolving human resources market,” said rohail Khan, executive managing director, acS. “this transaction also features the inclusion of a leadership team that will provide additional deep domain expertise to our growing delivery platform.”

nokia to resume assembly outsourcing this year

“With a broad and integrated services portfolio, Integreon will meet our needs as a rapidly growing firm,” said Duncan Eston, managing partner for CMS Cameron McKenna. Integreon has about 2,000 associates operating in North America, Europe, Asia and Africa. Its services also include market and competitive intelligence, discovery and legal process outsourcing.

extent ... we can (this year) outsource work to external parties,” nokia spokeswoman eija-riitta huovinen told reuters. “our own network is still the priority,” huovinen said, adding typically such outsourcing was related to seasonality. handset market volumes are expected to grow 10% or more this year after contracting last year amid recession.

MDEC-ad(out15).indd 1

11/17/09 2:28:29 PM

Outsourcing |

Cover Story

An interview with CIO of MAS

Faridah Abdul Rahman explains how outsourcing practices have helped the national airlines to concentrate more on the business end of things

significant issue to have emerged for many global organisations in the recent years has been the rising relevance of outsourcing to their business. The drive for greater efficiencies and cost reductions has motivated many organisations to only specialise in a limited number of core business areas â&#x20AC;&#x201C; and outsource the rest to capable and cutting-edge vendors. Malaysia Airlinesâ&#x20AC;&#x2122; Chief Information Officer (CIO) Faridah Abdul Rahman recently sat down for a one-on-one interview with Sritharan vellasamy v to answer questions with regards to her opinions and perspectives on outsourcing and how it has helped MAS provide exceptional services and solutions to its clients.

| Outsourcing | May-June 2010

Cover Story | Outsourcing

MAS’ Group IT used to be seen as a supporting entity but now we are seen as an enabler in business. So preparation is key. However, just like the recent Icelandic volcano ash incident proved, certain variables are uncontrollable. From an IT perspective, how has MAS evolved over the years in providing the best services for its customers? IT in MAS used to be seen as a supporting entity but now it is seen as an enabler in business. This is in line with our focus to Save Money, Make Money, Serve Customer (SMS). There is an increased appreciation, support and compliance to corporate governance and this includes IT. Over the years, we have adopted the model of ASP (Application Support Provider), where we have the application hosted externally instead of buying and developing it ourselves. We have also confidently engaged and invested in IT outsourcing, business process outsourcing (BPO) and managed services over the time. We have also leveraged on social networking model. For example, our Passenger Service Systems (PSS) is open, agile and built to seamlessly leverage on Business Intelligence components, total fare management and ancillary services. In 2008, we have also engaged a global managed services vendor to handle our end-to-end Integrated Database Management System (IDMS). All these engagements made business sense and helped us satisfy the expanding user needs. Is there a single work matter that can keep you awake at night? The impact of business disruption caused by prolonged IT systems downtime for an airline can be very costly. This is because we use a number of key applications enterprisewide that is supported by multiple vendors. Just one hour of unplanned downtime can translate to 20-30 minutes of flight delay causing a chain reaction of events affecting passengers, stations and codeshare partners.

What are the key drivers to adopt outsourcing by MAS that go beyond cost savings? Essentially, when you decide to take the outsourcing route, you need to find and analyse the reasons why you want to do it. When we embarked on SITO (Strategic IT Outsourcing) back in 2003, our aim was to transform into a more service-orientated organisation with enhanced end-to-end processes. Since our initial outsourcing engagements, our success in implementing business IT projects improved tremendously. The cost

savings were achieved over time as we matured through the projects. Now, I can confidently say that we have a better understanding on the cost drivers and whether certain costs are necessary to support or enable the business. The recent IT outsourcing engagement with Tata Consulting Services was mainly driven by cost savings and aligning the services to the business Profit and Loss (P&L). We also took the opportunity to fine-tune the outsourcing contracts to include ESM (Enterprise Service Management) with a plan to insource and increase automation to do a predictive, proactive problem management. In the PSS project – the strategic intent was business process (eTicketing dateline) and operational improvement (e-commerce components), and an ASP was chosen to improve delivery and reduce cost. How does MAS approach the portfolio of services that lend themselves as key targets for sourcing out to competent providers? A number of factors drive the decision for sourcing. It’s not just a cost cutting measure. Firstly, the strategic intent must be clear. Is it for cost improvement, operational enhancement or business process improvement? If it’s mainly to reduce costs, then the drivers of outsourcing and the design of sourcing would be very different. If the strategic intent is to enable overall business, different set of factors must be taken into account. So it basically depends on this strategic intent. Sourcing and delivery models are also other aspects to consider. Making the right decision on the sourcing models – such as single vendor, multiple vendor or pay-per-use type – is also very important. You must also know if you want to engage local vendors or offshoring partners or even a hybrid model according to your business needs. The readiness of the organisation itself is also a vital indicator – not many people are ready to go into outsourcing, so we need to be careful on this matter.

May-June 2010 | Outsourcing |

Outsourcing |

Cover Story

Risk management too plays a vital part in this mix for MAS. We need to measure how much risk certain business components will be able to take. We need to also analyse the potential risks in order to mitigate them through proper control and governance, which must be included in the contract. For example, in our initial outsourcing engagement in 2003, we did not outsource our entire IT function to the vendor – it was only the FTEs (Full Time Equivalents). The reason was simple – we were just not ready for major outsourcing engagement due to the risk of the unknown. Later for the IDMS (Integrated Database Management System) function – we purchased the needed hardware due to better pricing. Technology refresh control, software and services were then bundled as managed services. The IT security assurance and incident management were also bundled as managed services where daily real-time security dashboards are made available to MAS. What are the top factors in your evaluation of vendor capabilities? Depending on the size of the projects, weight age to the criteria varies. Firstly, the financial stability of the vendor is very important. Secondly, they must have proven track records – in providing good quality of services with operational reliability and stability – with established airline clients. At the same time, the vendors must have a good product and technology road maps. The fourth factor is the vendors’ presence and support in the countries important to our market. Last but not least, is the cost competitiveness of the suppliers.

We are cost efficient in certain areas, but I believe that there are still ways to improve because the technologies out there today make it possible to do it.

| Outsourcing | May-June 2010

How important is knowledge of the airline industry in your assessment of provider competencies? For us, it is extremely important for vendors to have good airline industry knowledge and experience. For example, in our ERP project, we expect the provider to have the ability to propose to us the Chart of Account, which aids airlines to manage route profitability and other airlines specific requirements. Vendors also must have the expertise to be able to provide solutions to manage overlying charges between airports and advise on how to manage Class A assets, such as engines, that have both fixed asset and inventory characteristics. They must also be well versed with the requirements and standards sets by IATA (Air Transport Association) and AAPA (Airline Asia Pacific Association). Airlines like MAS are governed by the regulations

Cover Story | Outsourcing

and requirements set by both these important organisations. While the need for such in-depth industry knowledge is one step lower for the infrastructure services vendors, nevertheless it is still a prerequisite. How do you evaluate the risk of the unknown with technology providers? This is where due diligence is key to an outsourcing engagement. While there are always risks – I think it’s a question of how you monitor and mitigate them. Sometimes there will be new risks, and at other times there will be risks that had become irrelevant. It is important for continuous reassessment in this aspect. Do you consider sourcing of route management and customer service as feasible? Or are they best served by retaining within the organisation? There are strategic and operational components in route management. For example, through seat avail-

For us it is extremely important for vendors to have good airline industry knowledge and experience.

ability and fare management, we can influence the traffic flows. At this point in time, in my opinion – it should be kept within our organisation, as it’s a strategic function. In customer services area – I suppose it depends on the ‘customer touch points’. It is feasible in certain areas and not at all in others – such as in-flight services, customer complaints department – where personal touch matters and creates service differentiation. These functions have to be kept internally as these are part of MAS’ unique brand identity. However, the IT helpdesks are completely outsourced, as it makes no major differentiation to the MAS customer services. Costs vs. revenues – do you view these separately? Or do you see that vendors have to hold themselves accountable for both components? If so, how? It depends on the type and size of the engagement. If it’s a strategic relationship, both the clients and

the vendors need to be responsible for the revenue. In a JV, for example, both parties need to be responsible for revenue and cost impact. For a contract that extends beyond three years, I think it is fair to expect the vendor to look at ways to reduce costs through consolidation, automation and innovation and share the cost savings with the client. You choose to work with global vendor TCS recently. What are your opinions on Malaysian service providers that go beyond scale? For the record, we have local vendors providing services to MAS. In fact, we have a number of local vendors providing infrastructure services and project management. As I mentioned earlier, as long as the criteria we use to evaluate provider capabilities are met, we don’t discriminate. We are very open and do not differentiate between a global and local vendor – provided they are capable and credible.

May-June 2010 | Outsourcing |

Outsourcing |

analysis

Picking the mind of service buyers By Jerry Durant

ince the beginning of time, suppliers have sought to understand what is on the mind of the buyer. To unlock the answer to this question would be to offer a solution that would be attractive to draw out sales opportunities. However to believe that buyers, experienced or otherwise, know what they want is to open the door for possible engagement failure. While labour arbitrage may be focal to the outsourcing decision, one cannot even assume that this element has been carried out properly. Sourcing isn’t a matter of simple differences in rate, it requires a complete study of the cost and benefit solution choice. By way of this simple example, suppliers who fail to seek insight into buyer thinking will certainly face challenges during the engaged relationship. So why are we still grappling with this question and have not come up with an answer for the Holy Grail of Outsourcing? Is it a failure of buyers to divulge their innermost interests or is it the failing of the supplier to even ask? BPO/ITO/KPO services are not a commodity – they are a solution and solutions involve developing an understanding.

Status

Our quest starts with understanding the various types of buyers that we are dealing with. By all accounts we have three types: > Those that have had no experience and no interest in sourcing, > Companies that have done some sourcing either on domestic, near shore or international basis, and > Experienced organisations, which have used sourcing services as a part of the business delivery model. All three are constantly faced with the question about the value of outsource services. This question is not just based on costs – it also begs deep ethical considerations with regards to the loyalty to country

| Outsourcing | May-June 2010

and employees. In almost every case, a company agonises over the question of whether to employ external suppliers or find ways to further economise internally. Even when considering domestic sourcing (inshore services) – the question of loyalty is raised. Secondly, buyers must support and prove that the outsource solution yields productive monetary results known as ROI (return-on-investment). ROI considerations always take into account benefits and costs, but sometimes ignore the soft ROI elements that cannot be easily quantified but nonetheless exists – such as expanded resource bandwidth, comfort/consistency improvements and escalating cost containment. A truly factual analysis will consider both hard and soft facts and will repeatedly consider these aspects over the extent of using sourcing as a solution. But the question of ROI is in jeopardy. ROI is threatened when corporate culture, internally and externally, challenge the outsourcing decision.

Why the interest?

Today’s economic climate is forcing us to reexamine everything that we are doing and the basis from which our actions are taking place. What may have worked, or not worked, in the past needs close re-examination. For example, if we had been successful in selling into a market and today we are struggling, we need to not only understand why, but also need to make policy adjustment to address current conditions. The most illustrative example is pre-2000 outsource selling vs. today. Prior to Y2K, outsource service selling was easy because there was more demand than supply. After Y2K we enjoyed a brief period of trend continuance but it quickly started to decline because supply was catching up with demand. This shift also found that pure commissioned based selling (which is attractive during high demand periods) was becoming less attrac-

“ROI considerations always take into account benefits and costs, but sometimes ignore the soft ROI elements that cannot be easily quantified but nonetheless exists.”

tive as an employment option. The result is that companies had to move to an employment (domestic to the client) based strategy. Even today some companies, often new organisations, still try to utilise the old commission based strategy and fail to achieve suitable results. Change requires vigilant ongoing examination and adjustment. In this specific example opportunists (sales brokers) have exploited this failing. Preying on the desire for sales, irreputable brokers will offer opportunities that are fraudulent (nonexistent, engagements with low opportunity for success or projects where the broker and client are working together to extort money while still receiving services). Reputable brokers serve as a conduit into a market but will never guarantee sale outcomes since they do not control the buying decision. They can however, illustrate the service and process that will be used and how this

analysis | Outsourcing

will effect opportunities in a fashion that is similar to having sales staff deployed in the marketplace. The supplier needs to know more about the buyer they are dealing with and having domestic representation is key to having success.

The Players

There are three types of buyers we need to understand better as described previously: > Sideliners: companies who have little or no interest in outsourcing > Novice: companies with a little experience, and > Pro: companies with a history of use and experimentation in outsourcing. Each carries with it challenges and unique interests. These variations force suppliers to better understand their future clients. Getting specific is a part of market scoping that a company must take into consideration. The cost to implement an effective selling programme goes up as the scope increases. All too often suppliers are so anxious to attain sales that the scope remains broad and produces low yield results. Any engagements that are obtained have to be viewed as coincidence and not purposeful, strategy-driven occurrences. One might ask, is this really all that important? Yes, because coincidence cannot be reliably repeated and as a result, companies cannot rely on a consistent flow of work. More opportunities must be kept in the sales pipeline and this requires significant resource commitment (more than focus targeting). The common consideration for outsourcing is regarding cost arbitrage (Attempting to profit by exploiting price differences). Often these strategic buying decisions involve other factors that may range from obtaining specialised delivery resources to expansion of service delivery. With this knowledge, the buyer is acutely aware of engagement risk. Making a wrong choice in today’s economic climate can place decision makers at risk of losing their jobs. With the downturn in the economy and stress placed on companies to cut costs (to retain investor yield), buyers are forcing risk-reduction measures. Often manifested through legal channels (contractual and Service-Level Agreements) – some attention must be given to how the process of sourcing selection takes place. Despite having three distinct types of buyers, all can suffer from thinking that buying from large tier companies or in common regions will insure a reduction in risk. This

Suppliers who fail to seek insight into buyer thinking will certainly face challenges during the engaged relationship.

is totally false and has been consistently demonstrated. Buyers are often inconsistent in their approach and evaluation of suppliers. There is a foundation of qualification that buyers attempt to evaluate by looking at viability (business survivability) and capability of vendors. Any shortcomings would increase engagement risk for them The result is additional engagement attention, which reduces ROI. If there is limited engagement oversight then it will lead to service delivery failure. As suppliers, knowing that buyers may have failings in their assessment of viability and capability, can offer information to proactively provide insights about viability and capability strengths. Proactive information requires confirmed evidential proof – otherwise it may be relegated to marketing hype.

So What is Really on Buyer’s Mind?

Money savings with as little risk as possible is the simple answer. The bigger challenge is how this can be delivered by suppliers without putting in jeopardy their own organisations? A lot depends on the strength of the supplier. Companies

that are desperate for business and inexperienced in forming a credible stream of work are more apt to take on engagements that have thin profitability and require excessive delivery diligence. Under different circumstances more negotiations would take place to reach a healthy win-win compromise that benefits the buyer as well as the supplier. What really turns buyers on is supplier leadership. Outsource suppliers expected to have sound viability and solid delivery, but are also expected to have credible frameworks for operational, engineering and communication disciplines. This level of leadership is something that Western buyers can understand, possibly relate to, and form a basis for growing the relationship. Suppliers can go terribly wrong when they develop frameworks that: > Don’t work, > Are overly complex and difficult to apply, > Are flexible, adaptable and fluid, > Fail to meet fundamental business needs, and > Haven’t been applied. Leading means committed truth that others can identify with and it

May-June 2010 | Outsourcing |

Outsourcing |

analysis

Always keep in mind that a cooperative winwin relationship can overcome barriers.

“R a c epu wil ond tabl ou l ne uit i e br contcomver gnto oke tro es ua a m rs se l th sin ran ark rv e b ce tee et e a uyi the sa but s ng y d le dec o n isio ot n.”

| Outsourcing | May-June 2010

allows the buyer to reduce their prescriptive and oversight levels of attention. By no means does this eliminate them from the need to insure that the basic activities are taking place. It will however, allow buyers to ply their trade without excessive intervention, and to build a relationship that goes beyond delivery to also involve improvement innovation. Simple supplier leadership involves strong situational analytics. Repeatedly, suppliers deliver service quotes based on current buyer behaviour. Leadership takes this knowledge and crafts a way to deliver the same or potentially more services at less cost. Suppliers who chose to fall into line with past practice find themselves defending their honour with buyers often jeopardising their competitiveness. When buyers look outside of their organisations, they subconsciously look for suppliers with similarities. Similarities may be in terms of common goals, commitment, beliefs and even care and attention. It is very easy for suppliers who fail to recognise this primal need to their service agendas disregard client desires (even if vague and unrealistic). Suppliers often push a strong message – self fueled by a rabid drive for business. This approach disenfranchises buyers and creates an atmosphere that is not conducive to the development of a successful sourcing relationship. Understanding clients’ prospects, listening, developing sensitivity and studying right solutions will gain respect and win deals for vendors. If vendors treat their

analysis | Outsourcing

services as a commodity, then they will struggle to win deals that have long term potential.

Conclusion

Outsourcing is lacking innovation and enthusiasm. Buyers seeking the safety of using a lift-and-drop approach reduce ROI potential and do not mitigate risk. Sourcing allows buyers to get innovative and for suppliers to assist in this exercise. Not every buyer or supplier is up to this challenge. Simple needs dictate simple solutions but in most businesses there are few simple activities that would justify overlooking the opportunity for sourcing innovation. No one ever really knows what is on the mind of the other. We can only guess but we run a real risk of being wrong. When we hang our entire strategy on this approach we fail to obtain our goals and put in peril our sourcing businesses. Being humble and admitting to ourselves that we don’t know everything but that we can find out and learn more about our client buyers is essential. Buyers are not dummies, they see these attempts and greatly appreciate that you are placing them first and are making them feel as though they are your only concern. This cannot be thinly veiled and must be sincere and honest. Change is not easy even when considered essential. It requires us to move from a comfort zone, albeit marginally productive, into an area of uncertainty that has strong success potential. This newness can either be greeted with excitement and dedication, or be held in skepticism that produces no results. As suppliers the choice is up to you. Keep in mind that making a buying decision faces these same uncertainty challenges for your clients. Realising this provides an ideal opportunity to work jointly to set aside these concerns. Outsourcing is viewed as an evil business choice. It deprives local citizens of jobs that hinders Western social development. Add to this prejudice about other societies and random failure examples and now you have conditions that are ripe for impassioned chaos. Engagement failures, regardless of cause plays heavily on the psyche of the buyer. Why would any reputable business consider outsourcing even with significant savings? Simply there are measures that can be taken to alleviate some of the risk. It maybe to consult an advisor, to develop the procurement model or resort to “stick” measures like SLAs and strong contract and pricing negotiations. Always keep in mind that a cooperative win-win relationship can overcome barriers. Buyers must be willing to lead and to compromise but not at the potential peril of their business. Jerry Durant serves as Chairman Emeritus (founder) for The International Institute for Outsource Management, a trade organisation dedicated to the assessment, development, and guidance of outsource service providers in the ITO, BPO, Call Centre and KPO domain areas.

Labeling the Buyers Sidelines

This group might also be referred to as the long shots. These are companies that may have little to no interest in alternative service options, let alone foreign sources. Substantial buyer examination is needed to get inside of their minds. Has their sourcing absence been caused by social concerns, lack of implicit value, too busy to consider this option or the lack of a credible discussion with potential suppliers. Maybe other suppliers have been too busy selling their services and have not spent enough time listening to the potential clients. Everyone likes to tell about themselves, even buyers. Sideliners require Outsourcing education 101 that is delivered by the supplier company. They need to understand how you will mitigate risk concerns, form a mutually beneficial engagement relationship, and how this will be done to produce positive economic results. If you are unable to listen, evaluate, propose and insure control then ‘sideliner’ companies may not be the right audience for service providers.

Novice

Best described as knowing just enough to be dangerous but wise enough to know where they stand. Often novice buyers see engagement successes through their commitment and failures through that of the supplier. In fact both are the direct result of a mutual level of participation. If the buyer has made a wrong choice, or the supplier took on work that was outside of their ability to deliver, both are at fault. Suppliers can effect an operational framework that is flexible but is rich in delivery enablers. This measure, combined with viability and capability attention, provides a powerful basis that buyers can gain comfort with. Moreover, this reflects supplier engagement leadership, which is welcomed by buyers. Knowing that you can rely on a supplier takes pressure off of implementation and engagement management. It does not eliminate it, simply it reduces micromanagement and reaffirmation of each step that must be taken. Over the long term a much stronger buyer-supplier relationship will form reducing the potential for “retrosourcing”.1 In addition, suppliers need to determine the status on sourcing with novice companies. Are they in a present relationship and how is it going (this will require further study to determine the legitimacy of any relationship status)? Avoid taking sides and look at all reasons with suspicion. If they are not in a present sourcing relationship, was there reasons why they curtail it? Again be skeptical as no one fully admits the real reasons why things didn’t work out especially when you have had a role to play in the outcome. Novice and Pro buyers have the potential of utilising procurement generalists and legal counsel to form sourcing engagements. While some specialisation has occurred, it remains to be a somewhat generic purchase exercise. This condition creates some of the evaluation problems as previously mentioned and reflects the position that selection can be driven by process (when it really needs to be driven by characteristic comparison).

Pro

Changes in the economy and the increase in buyer risk concerns have caused many companies to re-examine their sourcing portfolio. We have seen a gradual shift from single-source mega engagements to parceled sourcing. Spreading risk does not eliminate these factors, simply it spreads the potential around. Parceled engagements may involve supplier delivery or geographic separation (using a single supplier or multiple suppliers) to enable risk reduction. With this shift buyers are looking to different suppliers and regions. This is great news for smaller companies and emerging sourcing destinations. There is however, the need to again provide evidence of viability and capability. Since many of the mega deals involve large tier-1 suppliers these engagement are entrenched with formality and legalities. This sets a level of expectation that new service providers must take into consideration. Overlooking this will put the supplier at risk of not obtaining the engagement. As for emerging regions they must provide a business case against the gold standard regions of India, Philippines, China and other market leading nations. While a reasonable person understands that market maturity is going to be less based purely on experience, this comparison is often used to steer buyers to established countries. A more suitable standard to support regional evaluation is utilising the Brown & Wilson – Black Book of Outsourcing: Safe Sourcing Destination Report. Under this framework locations are based on such factors as social stability, legal system, environmental exposures, crime rate, terrorism threat, and currency stability (partial list). 1Retro-sourcing the act of removing an outsourcing relationship and either returning internally to the buying organisation or moving it to another service provider. To a limited extent retro-sourcing engagements may include renewal engagement reviews. Def. – IIOM 2008.

May-June 2010 | Outsourcing |

Outsourcing |

Insights

Sustaining virtuous circle of metrics framework BY ADITYA BHALLA AND DEEPAK CHOPRA

ears of research on measures of performance have led to the design of high maturity frameworks for standardising measurement practices in the IT and BPO industry. All frameworks stress on creating metrics aligned to the organisation goals, creation of measurement systems and using the data to make informed decisions. The image (refer Virtuous Circle of Metrics Framework) illustrates the deployment in an IT environment (GQM refers to the Goal, Question, Metric approach developed by V. Basili and D. Weiss). To further enhance the effectiveness of the metrics deployment organisations have adopted process improvement frameworks like Lean Six Sigma that are triggered by the faltering performance of metrics in the performance dashboards. It therefore comes as a surprise that despite years of research and implementation experience, organisations still face challenges and dilemmas in implementing an effective measurement system. There are many unseen traps in the deployment of Metrics framework that can suck management into the vicious circle of spending their energies in the wrong areas:

| Outsourcing | May-June 2010

Virtuous Circle of Metrics Framework Aligning the system

Making informed decisions

Reports & Dashboards

Business/Project Goals

Metrics Framework

GQ(I)M

Metrics List

Measurement collection, analysis system

1) Excessive reliance on conducting post-mortem

Organisations with relatively mature measurement systems and process improvement frameworks like Lean Six Sigma rely on the objectivity of data from performance dashboards. But the culture of analysing data can sometimes be disadvantageous as staff starts relying excessively on metric performance reports of events that happened in the past and not what is happening on a real time basis. It is almost like driving while viewing the rear view mirror. It is not very uncommon to find operational environments in service industry where team leads are unable to identify

Standard processes & procedures

the sources of variation on a real-time basis. The service industry has yet to master the concepts from Japanese organisations such as Toyota (which has inspired others to adopt Lean and Agile Programming) where a strong emphasis is laid on detecting sources of variation live on the floor. The result is a much more proactive response to deviations in day-to-day operations.

2) Misaligned measurement systems

As shown in the image (refer Purpose of Collecting Metric), every metric has a purpose. For organisations that are trapped in the vicious circle, this context is lost over time as they fail to set up programs for educating their staff on an ongoing basis. This shows up in the following two ways: i) Inconsistent understanding of how the metric is computed. >> Wrong formulae are incorporated in the measurement systems resulting in incorrect reporting of information to management. >> Typical examples include measures of performance such as defect density in IT environment (refer Box), Service Level

Insights | Outsourcing

computation in call centres or Productivity measures in service industry. ii) Inconsistent understanding on how to interpret the performance on any metric. >> For large organisations performance is evaluated for departments that exist as independent silos. >> While the intent of management is to view the health of the process from the end-customer’s point of view, for staff working in silos the view is limited to their targets. >> Many large organisations continue to tolerate this ambiguity of interpretation thereby defeating the purpose of measurement.

PURPOSE OF COLLECTING METRIC Measurement Goal “Quantifying Goals”

Question “What do we want to know or learn about the Goal”

i) Targets are set at very low threshold levels. >> The low threshold levels are usually justified through the complexity of departments, processes and transactions handled by the staff. >> At the same time the metrics may be couched in complex sounding statistical terms such as 99 percentile performance. >> Finally incremental improvements are demonstrated on a regular basis to stave off management pressure. >> Typical examples of such metrics are productivity metrics (e.g. transactions processed/day by insurance underwriter) with internal performance benchmarks are set on a non-scientific basis.

Defect Density (total no. of defects/size) can be prone to multiple interpretations Inclusions & Exclusions: Are all defects from non-engineering reviews (Project Plan review etc) also to be considered?

Measurement of Metrics “What will answer the question”

Business Goal “What do we want”

Applicability: Do all type of projects (development & maintenance) need to implement it? Level: Is it Defect Density of a phase or entire project?

3) Putting fear of God in staff

Statistician Prof William Edwards Deming had advocated “Drive out Fear from workplace” but organisations caught in the vicious circle continue to use metrics framework as a handy tool to inspire fear in staff. Since no one wants to look bad (or get fired) the end result is that either the measurement system or the metric is compromised as illustrated below:

Measuring Defect Density in Software Organisations

The service industry has yet to master the concepts from Japanese organisations such as Toyota – which has inspired others to adopt Lean and Agile Programming.”

Troubling … Despite years of research and implementation experience, organisations still face challenges and dilemmas in implementing an effective measurement system.

this: “boiled frog syndrome”. Here again organisations could take a cue from the team-based measurement systems that relive the stress of individuals and at the same time encourage team-building through tacit knowledge sharing by experienced good performers with others who are relatively raw.

Conclusion

Metrics serve a useful purpose of reporting the performance of an organisation, its products, its operations and its processes. Metrics frameworks can be like a double-edged sword that needs to be handled carefully. If done well management can realise the intent

Formula: Is it defects/size or size/defects? Is it the size of the project or requirements document?

of deploying metrics and avoid the complexities associated with ineffective deployments. The end result will be a cultural transformation without the negative energies associated with the vicious circle. Aditya Bhalla is Practice Manager with QAI Innovation Practice consulting clients on product and process design. Deepak Chopra is Consultant with QAI SPI Practice consulting clients on CMMi DEV/SVC/ACQ (specialising in High Maturity – Level 5) and nonmodel based approaches like AGILE and RUP. They can be contacted at adityabhalla@yahoo.com and deepak. chopra@gmail.com

ii) Aggregated performance is reported to management in summary reports. >> While the reports are meant to highlight the Red/Amber/Green status of any performance metric, the aggregate numbers by default end up in the Green or Good status. >> Management caught in the vicious circle is frustrated but unable to break the circle as it lacks the resource bandwidth to explore deeper. End of the day many resign to the fact: “If it ain’t broke, don’t fix it”. The real loser in the above is the organisation as it is unable to proactively identify the constraints slowing it down till it is rudely awakened by the market realities. Organisation theorists even coined a phrase for

May-June 2010 | Outsourcing |

Outsourcing |

feature

Strong line-up … With the best people at the helm, the Globalisation initiatives can find strong support at all levels of the organisation.

Assign best people for Globalisation initiatives

This is the fifth in a series of excerpts from the newly published book by Atul Vashistha, ‘Globalisation Wisdom: The Seven Secrets of Great Globalisers’

By Atul Vashistha

lobalisation is not about a single action, or even a group of actions. Globalisation, when successful, is about an attitude. Yet even when the CEO of a company embraces Globalisation as a new attitude, it will fail unless their partners – the people who work for them – embrace the attitude as well. But getting others on board is not a job the CEO can do alone; they must recruit the best people to help. That’s what the fifth secret is about: recruiting the best people to help roll out (and guide) Globalisation initiatives throughout the company. With the best people at the helm, the Globalisation initiatives can find strong support at all levels of the organisation. Wim Elfrink, Chief Globalisation Officer of Cisco says that assigning the best people was a key success factor for the company. “Assigning the best people is a

| Outsourcing | May-June 2010

key differentiator between what we did differently from companies that traditionally approach the management of outsourcing. “We had to have the right people empowered as decision-makers on both sides of the house. We insisted on having people who could make the decision in the actual negotiation process. And that was huge in us being able to accelerate the timeline and deliver value. I don’t think that you can afford to do anything else in this process.” Assigning the best people to their Globalisation initiative just makes sense for successful Globalisers. “Our philosophy is – you put your best people on the project and it’s successful. You take your second- or third-level people and put them on the initiative, and you’re going to get a second- or third-rate result. Globalisation deserves the organisation’s best people. It’s a top-priority project within the company,” said Ron

feature | Outsourcing

Individual commitment to a group effort is what makes a team work, a company work, a society work, a civilisation work.”

– Vince Lombardi, American football legend

Kifer, CIO at Applied Materials. As football great Vince Lombardi said, “Individual commitment to a group effort is what makes a team work, a company work, a society work, a civilisation work.” The When former GE CEO Jack fifth secret of Welch was globalising the successful Glocompany in the 1980s, his balisers is about generating that best people were those individual comwho knew how to adapt mitment to the to, and even embraced, group effort. change. Strong participation from the organisation’s C-level executives is important for its role-modeling effects and to help generate buy-in within the organisation’s lower levels. In addition, attention and recognition by senior management make it easier to lure the best talent to lead Globalisation initiatives. And developing the practice of strategic learning will allow the organisation to take advantage of the myriad of opportunities our increasingly interconnected world offers. This secret reminds me of the adage, “You get what you pay for.” If the organisation doesn’t put its best people in charge of services Globalisation – if it sends in the B-team, for example, it will see second-rate results.

Cream of the crop

The best people are not necessarily those who know the most about IT, if the organisation is globalising IT, for example. Instead, they’re the people who are agile, understand change and are globally savvy. All too often, companies trade the sometimes challenging task of finding the best people in favour of the most easily accessible people, even when those people are not right for the job. In many of those cases, the initiative does not reach its full potential. When former GE CEO Jack Welch was globalising the company in the 1980s, his best people were those who knew how to adapt to, and even embraced, change. He defined the best people not as the best

performers, but as the best fit for a globalised, cross-cultural environment. Consider a common example of what can happen when an organisation doesn’t assign the best people: The company decides to globalise its IT processes, so it assigns the IT managers to lead the initiative. Those IT managers are extremely well-versed in IT processes and have a lot of knowledge about the company’s IT system, but are overall more reserved, introverted types. They shy away from high-profile leadership roles and generally dislike change. The organisation thinks that the IT managers can guide the initiative because they know IT, in spite of their shortcomings as globally savvy leaders. Yet the initiative falls short. Why? While the IT managers played an important role in the organisation’s IT department, they were not often the best people to lead a Globalisation initiative. They lacked most of the important “global people” characteristics. The “global people” stars are resilient, embrace change, have a global mindset and an affinity for different cultures, are performance-oriented, take initiative, are admired by others within the company and build consensus. Take another example of an organisation that assigns a number of leaders from different departments within the organisation. These people have a record of embracing, and even spearheading, change. They seek out high-profile roles and enjoy leading others; they’re admired and have proven their ability to build consensus among employees. Despite the fact that most of these people know little about the day-to-day details of the organisa-

Not me, please … IT managers are extremely well-versed in IT processes and have a lot of knowledge about the company’s IT system, but are overall more reserved, introverted types. They shy away from high-profile leadership roles and generally dislike change.

May-June 2010 | Outsourcing |

Outsourcing |

feature

tion’s IT processes, the organisation assigns them to head the initiative. The initiative succeeds. Why? The organisation assigned as leaders those people who had demonstrated the ability to be good leaders and possessed many of the “global people” characteristics. When they needed to understand the details of IT processes, they sought out the IT managers, who were able to do what they did best. Indeed, being one of the company’s “best people” is not necessarily about knowing things, Elfrink explains that it’s more about the right business relationships. “It’s not about knowing the scope of definition of the activities from the start; that’s all detail to be added. Instead, we looked for people who understood proper contextual relationship that we were going to establish with these service providers – people who understood the business relationship and could make obligations to that business relationship.” At Cisco, Elfrink looks for people who have “a never-ending desire to be challenged and to win”. He adds: “I think that it’s a special A-type personality who absolutely enjoys driving these big changes. I always say that at the end of the day, the best people want to leave their mark. Their mark is the big change – the big results that they deliver. I think you’ll find

that consistent with people who are good at Globalisation – they really do enjoy it.”

Fill up those seats … Strong participation from the organisation’s C-level executives is important for its rolemodeling effects and to help generate buy-in within the organisation’s lower levels.

Atul Vashistha is Chairman of Neo Advisory (formerly neoIT), a leading management consultancy since 1999, focused on independent, objective and actionable advice to enterprises that seek to transform their organisations by capitalising on services globalisation. His latest venture is BestOutsourcingJobs.com, an online job portal focused on outsourcing careers. He can be reached at atul@ vashistha.com

If the organisation doesn’t put its best people in charge of services Globalisation – if it sends in the B-team, for example, it will see second-rate results.

Assigning the best people is a key differentiator between what we did differently from companies that traditionally approach the management of outsourcing.”

– Wim Elfrink, Chief Globalisation Officer of Cisco

| Outsourcing | May-June 2010

JOIN OUTSOURCING MALAYSIA ADFEATURE

utsourcing Malaysia (OM) is an initiative of the outsourcing industry and a chapter of PIKOM – the National ICT Association. The prime objective of this organisation is to enhance global visibility of Malaysian service provider capabilities to the global buyers. OM focuses on enabling both buyers and providers of services to work together on addressing service needs, within the aegis of global best-practices and competencies. Officiated by the Prime Minister in 2006, OM aims to represent 80% of all Malaysian outsourcing providers by 2012. Highlights of the benefits our members are enjoying are:

Industry Representation OM represents the local outsourcing industry to the Govt and private sector both locally and overseas. OM is backed by the support of its founding partner MDeC, and consulted by a large number of organisations such as MATRADE, PSDC, Bank Negara Malaysia etc.

Trade Promotions

s Marketing the capabilities of Malaysian industry to local and global buyers through various trade events, while generating business leads for members. s Providing business-networking opportunities for members through networking sessions, inbound and outbound trade missions and industry meets. Industry Information

Providing forum for members to debate important industry issues and promoting conducive business environment through appropriate government policies for the industry. s Regular Thought Leadership brainstorming sessions.

s Access to OM’s Thought Leadership content via Member’s Login on its website. Business Exposure

s Providing members with tremendous business exposure and visibility through the complimentary listing via OM website and overseas campaigns; s OM as the direct contact point for global buyers. s Affiliations with global outsourcing focus publication such as the Black Book of Outsourcing Global V Vendor Directory, Forbes etc. Priority, Subsidies & Discounts OM Members are given priority in OM-organised events in terms of reservations, subsidies and discounts. Members are provided subsidies on Overseas Campaigns and other Capacity Development Programmes. Discounts and complimentary priorities are allocated for participations of seminars, conferences, cocktails, industry talks, surveys, and media promotions.

Capacity Development Programmes OM is responsible in introducing the Internat erna ional ernat Associat ia ion of Outsourcing Professionals (IAOP) iat Cer ified Outsourcing Professionals (COP) and Cert Master Class programmes; and working alongside with MDeC on their K-Wor W kers Development Institute Wor (KDI) programmes designed to develop the human resources of the industry ry. ry y.

Global Membership and Affiliation Global Membership s Sourcing Interest Group (SIG) s IAOP through partnership with MDeC.

Global Affiliations Through PIKOM’s partnership and membership: s ASOCIO s NASSCOM s WITSA

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

Contact: OM Secretariat 1106 Block B, Phileo Damansara 2 No 15 Jalan 16/11, 46350 Petaling Jaya Selangor, Malaysia. Tel: +603 7955 2922 F: +603 7955 2933 Tel: e-mail: info@outsourcingmalaysia.org.my

OutMalaysia-AD2.indd 1

9/24/09 1:15:36 PM

Outsourcing |

Outsourcing Malaysia

OM embarks on Aussie business mission A

ustralia and Malaysia have been enjoying strong diplomatic and historic ties since the independence of Malaysia. With the current paradigm of globalisation, partnership and collaboration between corporations of both countries are imperative to be globally competitive. Over the years, with the ASEANAustralia & New Zealand Free Trade Agreement (ASEAN-ANZFTA), Asia Pacific Economic Cooperation (APEC) and also various government-to-government trade agreements, trade barriers have been lowered to increase trade between these two nations. In light of these developments, Outsourcing Malaysia (OM) will organise two seminars in Australia to help create a solid platform for both Malaysian and Australian services providers to formulate strategies in achieving mutual benefits and collectively target markets beyond the two countries. The seminars will be held in Sydney on June 22 (Sydney Convention Centre), followed by Melbourne (Novotel Melbourne On Collins) on June 24. Malaysia’s Minister of Science, Technology & Innovation (MOSTI) Datuk Seri Dr Maximus Johnity Ongkili will be officiating the events, thereby reflecting highest commitment by Malaysia to the Australian market. The seminars will also create a big opportunity for corporations looking to expand and optimise their business processes and support services, while maintaining high levels of service quality, better cost control and ability to scale. OM Chairman David Wong Nan Fay said: “This is the first time that OM is organising such an initiative to Australia, and we are pleased to have the support of MOSTI. “Our partners for this business mission to Australia are the Multimedia Development Corporation (MDeC), the custodian of the MSC Malaysia initiative, and PIKOM – the National ICT Association of Malaysia.” Wong added: “As the organisers, OM will put together the event, besides working with relevant par-

| Outsourcing | May-June 2010

Ongkili will be officiating the events, thereby reflecting highest commitment by Malaysia to the Australian market.

ties and bodies in both Sydney and Melbourne to ensure its smooth execution to deliver good benefits to the two countries. We have also invited both the New South Wales and Victorian State Governments to address the participants.” Australian Information Industry Association (AIIA) – another partner of the event – will be assisting to promote this event in order to reach out to the right audience in Australia. He said: “OM is aiming for at least five to 10 Memorandums of Understanding (MoUs) to be signed during the mission with Australian service providers who can work well with Malaysian service providers to expand and strengthen our capabilities in high value services.” Andy Yau, OM Head of Business Development & Membership, said

Wong … “We have also invited both the New South Wales and Victorian State Governments to address the participants.”

Malaysian firms must look beyond the country and go global. And Australia is a logical choice as both countries have strong diplomatic ties.”

one of the main objectives of this initiative is to grow the outsourcing business in Malaysia to the next level. Yau said: “We must look beyond the country if we want to expand and go global. And Australia was a logical choice as both countries have strong diplomatic ties.” Yau said the seminars will provide opportunities for Malaysian and Australian service providers to meet and explore ways to work together to achieve a common goal – that of tapping into each other’s strengths and expertise to get more business. He added: “OM members and participants will have the chance to interact with their Australian counterparts to look into the possibility of forging smart partnerships to grow their business and at the same time, to tap into their expertise.

outsourcing malaysia | Outsourcing

“OM is optimistic that this business mission will take us a step closer towards achieving Malaysia’s goal of becoming the global hub for high-value services.” OM Head of Marketing & Branding Bobby Varanasi is also confident that the mission will help Malaysian companies to go truly global. Varanasi said: “Key objectives are to establish partner models between Australian and Malaysian companies for collective value-creation and sustained service delivery to Australian companies. In this context, Malaysian firms will greatly benefit by partnering with more mature Australian partners, and bring back knowledge of working in a developed nation back into their operations, thereby enabling value accrual internally. “In turn, I would imagine such increase in competence will aid Malaysian companies to become globally comparable and competitive as Australian benchmarks of performance are world-standard.” At the same time, Australian vendors will also gain significant visibility to Malaysian service competencies, and determine mostable and complimentary partners, says Varanasi. “This will give them the leverage to spread their service delivery models, price models and service portfolios on offer in a compelling and sustained manner.” Yau says OM is targeting about 100 to 120 delegates, both Malaysians and Australians, for the seminars in each of the two locations.

hether you are a new corporation looking to develop or an established name looking to expand business globally, the Malaysia-Australia Partnership would be the preferred choice to achieve your business objectives. Executives who source, or are planning to source business services will find this event as “Must Attend”.

OM is optimistic that this business mission will take us a step closer towards achieving Malaysia’s goal of becoming the global hub for high-value services.”

Attend and Find Out About: > Government-to-Government partnership > “Smart Partnership Model” between service providers > ASEAN countries as the strategic delivery location for high value services > The formula towards wins for all parties > Leveraging on Australia & Malaysia’s Historical Strong Ties > Collaboration opportunities between Malaysia & Australia, especially in the Shared Services & Outsourcing (SSO) Sector Who Should Attend? Senior management, decision makers and advisors from: > Listed companies > Medium to large companies > Multinational Corporations > Shared Services Organisations > Domestic sourcing service providers For further enquiries, please call Azreel Aswad or Victor Low at +60379552922, or e-mail to azreel@pikom.org. my. or victor@pikom.org.my

Outsourcing Malaysia Members > IT Consulting and Outsourcing

> Business Process Outsourcing

> Associate Membership

May-June 2010 | Outsourcing |

Outsourcing |

adfeature

Leveraging on the growing halal market With the world’s Muslim population reaching three billion people, the halal industry has become one of the fastest growing industries in the world. One out of every four human beings consumes halal products, thus contributing significantly to the growing industry, which is estimated at US$2.1 trillion, of which the food sector alone is worth US$547 billion. Asia, in particularly Malaysia, Thailand, Philippines, Indonesia, Singapore, Brunei, China, Pakistan, Bangladesh, India and West Asia with collective population of approximately one billion Muslims, is a prime target market for halal products and services. Over the years, Malaysia has made a head start in the global halal market. Malaysia’s halal certification is an “extraordinary” branding for local products to compete with export from other countries in the foreign markets. Nonetheless, obtaining the logo of confidence alone does not guarantee sales. It is indeed an added advantage but other pre-requisite should not be neglected in order to “win” in the market. Among the aspects needed to be followed through is the “classic” 4Ps strategy: Product, Pricing, Promotion and Place. It is vital for the halal producers to identify their market segments and cater to these markets needs in order to stand out in the market place. Other aspects relating to the standard of quality and the country’s legal requirements and issues, the technological aspects, and the production capacity, are equally important to remain relevant and competitive in the market. Manufacturers must fully understand the manifestations of the halal certification and strive to gain the widest possible market outreach for Malaysian halal products. In 2009 alone, exports of these halal products to the Organisation of the Islamic Conference (OIC) countries amounted to RM3.7 billion (US$1.15b). Malaysia’s leading position in the halal industry makes it an ideal trading platform to draw the world’s halal players in facilitating the sourcing and selling of global quality halal products. The Government has put into place necessary incentives, infrastructure, programmes and halal-related events to assist local manufacturers in developing necessary competitive advantages. Programmes are also devised to facilitate local companies to expand their business network and find their niche in the halal market. One such effort is the confluence

| Outsourcing | May-June 2010

of three major events – International Halal Showcase (MIHAS), World Halal Research Summit (WHR) and World Halal Forum 2010 (WHF) all under one roof. The Halal Malaysia Week – a joint effort of three parties, namely Malaysia External Trade Development Corporation (MATRADE), Halal Industry Development Corporation and Kasehdia Sdn Bhd – is an excellent example of publicprivate sector initiatives to provide supportive platforms to showcase Malaysia’s Halal industry . The Halal Malaysia Week will firmly position Malaysia as a beacon of the Global Halal industry, highlighting Malaysia’s thought leadership in this area and its strong intentions to be known as the world’s leading Halal Hub. “Through Halal Malaysia Week, this country is setting an example to the international community by uniting three instrumental platforms to help focus the industry and to drive it to the next level of effective trade and business,” said Dato’ Noharuddin Nordin, CEO of MATRADE during the launch of Halal Malaysia Week recently. Noharuddin added that this move highlighted Malaysia’s commitment in promoting the Halal industry on a global scale and seriousness to consolidate all resources in marketing the industry. The seventh edition of MIHAS will take place from 23-27 June 2010 at MATRADE Exhibition and Convention Centre, Kuala Lumpur, Malaysia. MIHAS has grown to

“Asia, with collective population of approximately one billion Muslims, is a prime target market for halal products and services.”

be the largest halal trade fair in the world where the return investments are substantial. The consistently large numbers of local and foreign delegates attending the annual halal trade fair organised by MATRADE in past years, reflects a growing interest in the global halal market and an increased awareness on halal products. Clearly, there is much potential for Malaysian halal products to seek wider market outreach, regionally and globally. Noharuddin said this and other other halal-related showcase, conference and forum are targeted to draw thousands of delegates and more than 600 exhibitors from over 50 countries. These participants will facilitate trade and drive the global halal industry and discuss issues and share advancements in halal research among other activities. Therefore, halal products entrepreneurs should take advantage of MIHAS, the platform which, for the past six years, succeeded in drawing the world’s halal players under one roof to meet, network and trade. MIHAS 2010 presents the spreading influence of halal that will inspire the halal industry to move further and beyond. It is the global halal market place where both Malaysians and international halal producers can take full advantage to market their products in the local and international markets. Companies seeking to expand or diversify into the halal industry should leverage on MIHAS 2010. To find out more about what MIHAS offers for your businesses, please contact the MIHAS SECRETARIAT at Tel: +603 6203 4433 or Fax: +603 6203 4422. Email to enquiry@halal.org.myy or log on to www.halal.com.my

adfeature | Outsourcing

Enhancing your quality of life with travel “Travel experiences around the world served by Malaysia’s best loved travel brand”

Reliance, an established travel brand in Malaysia, has helped business travelers and holidaymakers find charming travel and serving up delightful travel experiences worldwide for over 40 years. A small travel company way back in 1969, Reliance Shipping & Travel Agencies Sdn Bhd is today part of a leading travel group of companies under Reliance Pacific Berhad. Not surprisingly, this travel group of companies are also well represented overseas with business interests in many countries including Singapore, Thailand, Indonesia, Australia, Hong Kong, and China.

Flagship Store

The Reliance Travel flagship store in Sungei Wang Plaza remains ever popular with steady streams of customers looking for true value travel products. Many of us would remember Reliance not only as a travel agency operating from within Sungei Wang Plaza, but also as a centre of higher education for travel – The Reliance School of Tourism. The “school” today has since moved on to occupy larger premises elsewhere in Kuala Lumpur with branches in Pulau Pinang and Johor Baru.

Products & Services

Product and services include Airline Ticketing, Visa Application, and Travel & Tour Packages; although a great many travelers would recognise Reliance more so as a reputable brand for Travel & Tour Packages. This may well be as Reliance has guided tours throughout the world and they know what is important to have a successful tour from their very personal experience. It could also perhaps be due to the innovativeness of products such as Reliance Signature, Reliance China Classic Series, Reliance Riang Ria Muslim Tours, and Reliance Europe “Beyond the Norm”. Extreme importance is placed on offering the highest level of service with attention to the smallest of details. To Reliance, the value for the customer’s money is a top priority with on par quality and this has led to many customers coming back time and time again for wonderful holidays and travel experiences tailored to well-researched needs and

AWARD WINNING COMPANY … Mr. Tan Sin Chong (Third from left), Managing Director for Travel Division, Reliance Pacific Berhad receiving Malaysia’s “The Brand Laureate” Award for Best Brand in Services – Tours & Travels 2009/10. interests. Close to 50% of Reliance customers are repeat customers, and 90% are seasoned travelers.

Nationwide Network

A nationwide network of over 20 Reliance Travel Centres and over 200 Travel Agent Partners serve our clients, ensuring easy accessibility and convenience. Most of the Reliance Travel Centres are members of the Reliance Travel Franchise Programme. A Travel Franchise Programme open to those passionate about travel & tourism and desirous of owning a successful travel business that is built upon the Reliance brand values of Trust, Speed, and Choice. “Trust” in service delivery within the comfort of a relaxing travel shopping ambience backed by over 40 years of personal experience in the travel & tourism industry. “Speed” in servicing and delivery of information through multiple channels nationwide and online. “Choice” in an endless variety of products and services and from multiple choices of channels for customers to choose and buy.

Brand Success

Part of the reason why Reliance remains strong and resilient is because of its deep knowledge of the industry. It serves over

20,000 holidaymakers year after year and this low estimate does not even include customers for its other regular products such as Airline Ticketing! The Management remains humble despite its growing success and attributes it to a tried and proven system of constant gathering and assessment of customer feedback to help the business improve as it works hard in trying to serve the customer the best it can. Raymond Lee, General Manager of Reliance Shipping & Travel Agencies Sdn Bhd, says: “We are where we are today because of the strong trust and confidence our customers place in our credibility as an established travel company. Without our customers’ support we would be just another travel agency on the street, struggling to make a difference and selling whatever travel products available. “We are extremely fortunate that our customers love us for our true value – which is apparent in always having more choices, more reasons and more offers for them.” For more information on Reliance Travel please visit www. reliancetravel.com or send in your e-mail to marketing.reliance@rpb.com.my

May-June 2010 | Outsourcing |

Outsourcing |

study

Significant traction from UK legal market By Neeraja Kandala

Share by geography

Rest of the World 5% UK 20%

US 75% Source: ValueNotes’ report on Legal Process Outsourcing (LPO): Crisis creates opportunities

| Outsourcing | May-June 2010

urrently, offshore service providers earn a large share of their revenues from the United States market. The US based buyers make up for a significant portion of the total contracts. About 75% of the current Indian offshore business is generated from customers based in the US while 20% of the business comes from UK and the remainder (5%) comes from the rest of the world, including Asia Pacific and Middle East. There are also several service providers catering to “other markets”, which include Australia, Canada, South Korea, China and Japan. A majority of the work from the other markets comes from corporations and is related to contract management and patent services. The UK market is gradually opening up with law firms such as Eversheds, Osborne Clarke, among others exploring the offshore option. Several service providers are now taking keen interest in other markets with reportedly increasing number of inquiries from the UK market. “UK companies have traditionally been open minded when it comes to international business models, and they are comfortable with the legal education and training in India, as well as with the quality of English spoken in India. Accordingly, they are highly enthusiastic about working with Indian LPOs”, says Suchorita Mookerjee, Director – Legal Operations, Bodhi Global Services Pvt. Ltd.

Increasing activity

Over the last two years, several other firms have started giving offshoring a serious thought. Some of the well-known names in this area are Allen & Overy, Linklaters,

study | Outsourcing

Recent contracts Client

Deal detail

British Telecom

British Telecom (BT) recently announced its decision to shift work from its captive legal services centre (located in India) to UnitedLex. A team of 15 professionals from UnitedLex will provide commercial contracting and antitrust regulation services to BT legal teams in UK, US, India, Singapore and Hong Kong.

Simmons & Simmons

Integreon will provide document review, due diligence, document production, and research services to the law firm.

Rio Tinto

CPA Global will provide contract review and drafting, legal research and document review services to the mining giant, Rio Tinto.

Eversheds

Exigent will provide documentation processing services to Eversheds.

Osborne Clarke

Integreon will provide technology and business intelligence services, knowledge and information management, transcription, secretarial and word processing services to Osborne Clarke.

Pinsent Masons

As per the deal, Exigent will provide document review services to Pinsent Masons.

Source: ValueNotes Research

Lovells, Eversheds. Interestingly, several large contracts have been announced by the UK-based law firms over the last one year. While most of these firms have primarily outsourced their IT and F&A functions, few of the recent deals include the legal services component along with support services. Even within the legal services, activities offshored by law firms so far are limited to services such as word processing, legal transcription, coding, indexing and scanning documents, contract drafting, legal research and trademark searches. According to Matthew Banks, Senior Vice President, Legal KPO, Integreon: “The US corporate market remains a key source for growth in LPO revenues across a range of services, particularly litigation, contracts and regulatory/compliance. We expect the UK corporate market to follow suit. “On the law firm side, 2009 has already witnessed major activity from UK law firms who, in terms of offshoring, are some margin ahead of their US counterparts and from a service line perspective we expect them to build beyond the initial successes of litigation document review outsourcing.” Although this will not affect the dominant US focus in the LPO sector, increasing number of UK law firms and corporations will consider the offshore option. While most firms are concerned about data privacy and confidentiality, the situation will change considerably once the firms that are offshoring reap the competitive advantages of lower costs/ higher capacity. Further, unlike in the US, in the UK there are not many domestic

based service providers offering large scale document review services or litigation staffing firms. “In the UK, the move towards outsourced legal services has been led by corporate clients, who are under pressure to cut costs and are demanding that their external counsel support them in this area. Like it or not, law firms are having to respond. “Some are more responsive than others, although it’s interesting to see that many of the UK’s biggest law firms are now being increasingly linked with outsourcing, either as part of a three-way relationship between the corporate client, their external counsel and the legal outsourcing provider or directly with outsourcing providers”, says Paul McGolpin, CPA Global’s Director, Legal Services Outsourcing. As businesses globalise, UK law firms are looking to cut costs of maintaining their international networks, to be able to compete with the US law firms. Cutting costs (especially in these challenging times) and better utilisation of in-house lawyers by outsourcing low value tasks is a compelling reason for law firms as well as corporations to consider outsourcing/offshoring in their strategy. Neeraja Kandala is the Lead Analyst at ValueNotes, a leading research provider focused on the outsourcing industry.

In the UK, the move towards outsourced legal services has been led by corporate clients, who are under pressure to cut costs and are demanding that their external counsel support them in this area. Like it or not, law firms are having to respond.”

– Paul McGolpin, CPA

May-June 2010 | Outsourcing |

Outsourcing |

perspective

Challenges of By Wendell Jones

Filtering refers to the ways a sender manipulates information so that it will be seen more favourably by the receiver. Telling the boss what one thinks the boss wants to hear is an example of filtering.

| Outsourcing | May-June 2010

n the first part of this article (published in the previous issue of this magazine), we explored first five challenges of offshore outsourcing. We noted that offshore outsourcing connects people in the customer organisation with people in the supplier organisation, and both groups usually come from diverse backgrounds and national cultures with different norms, values, languages and practices. Needless to say, working effectively together in a new offshore outsourcing relationship is not easy and some companies fail as they encounter more mine fields than rose gardens and discover that offshore outsourcing introduces complex and perplexing challenges of its own. This second and final part examines two additional offshore outsourcing challenges. A sixth offshore outsourcing challenge is maintaining the necessary flow of information. Enlightened and progressive organisations in the best of circumstances usually find it difficult to maintain open communications channels. Offshore outsourcing introduces the added difficulty of getting information to flow up and down the organisation and laterally back and forth with the outsourcing suppliers. A related challenge is predicting the effect of actions or inaction on another organisation. What the outsourcing managers anticipate may not be what they get and what solved yesterdayâ&#x20AC;&#x2122;s problem may create new problems tomorrow. In the individualistic US culture, communications tend to be oriented to the individual and clearly spelled out. US managers rely heavily on memoranda, announcements, position papers and other formal communications to state their position on issues. Supervisors at the next level may hoard information in an attempt to make themselves look good (filtering) and as a way of persuading their US employees to accept (or reject) decisions. For their own protection, lower-level employees also engage in these practices. In collectivist countries, there is more interaction for its own sake and the manner of interpersonal contact is more informal. In contrast to the US manager, the offshore Asian manager first engages in extensive verbal consultation with employees over an issue and then later draws up a formal document to outline the agreement made. In Asia, decisions by consensus and face-to-face open communications are a natural part of the work setting. These cultural differences can affect the way people in the outsourc-

ing client organisation communicate with the people in the supplier organisation. These differences can hamper communications quality and understanding. As seventh challenge is communications barriers. Human-to-human communications can surface significant barriers. The barriers include: >>Â Filtering >> Selective perception >> Information overload >> Emotions >> Language >> Gender Filtering refers to the ways a sender manipulates information so that it will be seen more favourably by the receiver. Telling the boss what one thinks the boss wants to hear is an example of filtering. Factors which tend to increase filtering include number of levels in the organisation and the extent to which organisational rewards emphasise style and appearance and thereby

It is important to avoid slang and jargon when communicating with offshore counterparts.â&#x20AC;?

perspective | Outsourcing

offshore outsourcing encouraging managers to filter communications in their favor. Selective perception is selective hearing of communications based on one’s own needs, motivation, and other personal characteristics. People from different cultures and backgrounds perceive the same events and messages differently. Information overload is the result of information available exceeding ones processing capability. Information overload causes people to ignore, select out, pass over, forget information, and/or just stop processing it all together. In any case, the result is lost information and ineffective communication. Emotions also play a part, for how a person feels when a message is received or sent influences how it is interpreted. Feeling happy or depressed impacts how a message is received and interpreted. Finally, gender and language are two more potential barriers to effective communications. Men and women communicate differently. Women often communicate to develop a relationship with the other person, while men tend to

In Asia, decisions by consensus and face-toface open communications are a natural part of the work setting.

communicate to solve a problem or demonstrate power. Language refers to the different meanings for words. Age, education and background are three obvious variables that influence the language a person uses and the definitions he or she applies to words. The meanings of words are not in the words, they are in us. Jargon and technical language are two other examples. Senders of messages should not assume that the receiver interprets words and phrases with the same meaning. It is important to avoid slang and jargon when communicating with offshore counterparts. Indians learn British English, not American English; Chinese software workers learn the formal written language, but usually not the jargon, acronyms and slang. Given that these communications barriers are possible wherever two or more humans gather together, outsourcing managers need to know how to overcome the barriers. Feedback is one way, which means checking the accuracy of what has been communicated or what was

heard by restating the words. Simplifying the language is a second way. It is essential to use words that the intended audience understands. Active listening is a third way. We should listen actively and attentively for the full meaning of the message without making premature judgment, quick interpretation, or thinking about what to say in response while the other person is still talking. A fourth way is to communicate only when neither person is emotionally charged. If emotions are running high, it is best to calm down before attempting to communicate. Dr Wendell Jones is a Professor of Management and a former senior executive at Compaq, NASDAQ, and McDonnell Douglas. He is recognised as a leading outsourcing practitioner, advisor and thought leader. He is the co-author of “Outsourcing Information Technology Systems & Services” – recognised as one of the best outsourcing references. The book was recently released in a Chinese edition.

What the outsourcing managers anticipate may not be what they get and what solved yesterday’s problem may create new problems tomorrow.

May-June 2010 | Outsourcing |

Outsourcing |

conversation

Innovation key to business growth

n any challenging economic environment, to be ahead of competition needs foresights and vision as well as strong and sound management. Today, as things and people move in light speed, so too has the challenge in creating new solutions and products for business continuity and growth. Gary R. Blough, the Executive Vice President (Worldwide Sales) of Interactive Intelligence, shares his insights on how to become a successful innovative global player.

How do you define the word “Innovation”? Innovation is a multi-stage process and plays a vital role in the development of new business concepts. For an organisation, innovation means a process of transforming ideas into new and improved services and processes in order to advance, compete and differentiate ourselves successfully in the marketplace. Innovation, like many business functions, is a management process that requires specific tools, rules and discipline. Business innovation involves a wide spectrum of original concepts, including new ways of doing business, new business models, business application of technology and communications, new management techniques and environmental efficiency. How does ININ implement innovation? As an example, we’ve taken our proven communications technology (first launched in 1997) and applied it to the business process automation. The result: an offering that gives you everything you need to capture, prioritise, route, escalate, and track every step in a work process. The value of Interaction Process AutomationTM (IPA) is to improve the efficiency and consistency of one’s business processes, while minimising process latency and human error. That’s a ROI that any CFO can appreciate. The solution can be applied broadly to all types of horizontal and vertical processes. We also provide a comprehensive method of managing all businessrelated content. When you see it, you’ll realise that this goes way beyond dial tone. What kind of challenges has been faced by ININ along the way? As we founded Interactive Intelligence Inc. (ININ) in 1994, we believed there was a revolution coming in business communications and we wanted to be part

| Outsourcing | May-June 2010

of it. The early years were tough. Imagine trying to sell a Windows NT-based ‘unified’ communications system against Lucent, Nortel and the other legacy telecom giants. Back in ‘95, ‘96 and ‘97, people said it would never work and would never sell. Well, more than a decade later, the world looks a lot different! We’ve sold thousands of systems. Gartner has declared the PBX dead. And the telecom giants like Siemens and Nortel don’t look quite so tall. In fact, the same competitors that derided our system 10+ years ago are now scrambling in an effort to stitch together multiple products and re-label them as ‘unified’. However, we haven’t looked back. With our continued focus on R&D, rapid revenue growth, and consistent profitability, we’re now recognised by Gartner as a global leader in IP contact centre solutions; by Datamonitor as the most trusted unified communications vendor among large enterprises; and by Software Magazine as the 196th largest software company in the world. Our technology innovation –backed by more than 4,500 customers globally and over 300 value-added partners around the

Innovation, like many business functions, is a management process that requires specific tools, rules and discipline.

world – gives even the largest organisations solid, proven alternatives when selecting new communications technology. We’ll continue to raise the bar by building on our base technology for even greater scalability, reliability, and broad market acceptance. We’re now offering all of these proven technologies as a “cloud based” set of on-demand contact centre services (we call it CaaS – Communications as a Service), and we’ve introduce the world’s first communications based solution for business process automation (IPA, Interaction Process Automation). How does ININ overcome those challenges? There are always obstacles in doing business. Successful businesses view those challenges as opportunities. Most importantly, we meet those opportunities through people. We pride ourselves on recruiting and hiring very talented and creative thinking people. We’ve always believed that if you hire the right people and provide the right working environment you’ll get positive results. The innovation we’ve spoken of is the result of the people that work here. In your opinion, what kind of recommendation or suggestion can you give to start up companies? I think more startups should explore ways to reinvent traditional business models to differentiate themselves in the competitive world. This can be through innovative technology ideas or creative business models. Simply choosing a business model because “it has always been done that way” may be very limiting to new companies. Think about wildly successful startups like Google or Amazon, they broke the mold and found their success. When one is innovative and creative, one will be able to drive new, high-value sources of growth. These are the key drivers for any companies to re-engineer itself and to compete in the global market.

Outsourcing |

adfeature

MIDA: Promoting Domestic Investment for Economic Growth

alaysian Investment Development Authority (MIDA) continues with its efforts to further promote domestic investments in the manufacturing and services sector. Among the activities undertaken includes the organising of the national and regional domestic seminars. It is for this reason that MIDA collaborates with SME Corp. Malaysia to organise domestic investment seminars throughout the country. MIDA and SME Corp. Malaysia are supported by the Ministry of International Trade and Industry and other related agencies such as the Malaysian External Trade Development Corporation (MATRADE) and the Malaysia Productivity Corporation (MPC) when organising these seminars. The objectives of domestic investments seminars are to provide the local business community with the latest updates on government policies, incentives, facilities and support services available in Malaysia and highlight investment opportunities available to the local business community. Domestic seminars are also aimed at increasing awareness on the functions of agencies under the Ministry of International Trade and Industry in assisting local investors

and provide a forum for the business community to network with key government agencies. The local businessmen are encouraged to take advantage on opportunities available in the manufacturing and services sectors in Malaysia. It also aids in opening the door to local businesses that are unaware of the incentives, opportunities and facilities offered by the government to companies participating in the country’s industrial development. Domestic investment seminars are officiated by the Minister of International Trade and Industry who delivers a keynote address and subsequently takes questions from the floor. Key speakers from the public and private sectors are invited to present papers during these seminars.

Vast opportunities … the seminars will provide t local business community with the latest updates on government policies, incentives, facilities and support services available in Malaysia.

FUNCTIONS OF DOMESTIC INVESTMENT PROMOTION DIVISION • To organise Domestic Trade & Investment Seminars at national and regional levels, Sabah and Sarawak. • To organise Specific Industry Investment Seminars together with the Industries Division. • To plan and arrange meetings and dialogue session with Chambers of Commerce and Industry Associations. • To maintain and monitor the Enterprise Connect (E-Connect) web-based facility to assist and facilitate business matching services.

“The local businessmen are encouraged to take advantage on business opportunities available in the manufacturing and services sectors in Malaysia.”

• To plan and arrange visits of delegation from domestic companies/ Chambers of Commerce and Industry Associations. • To plan and arrange dialogue/ briefing with Government Linked Companies (GLCs). • To conduct briefing outside MIDA. • To address enquiries related to Domestic Investment. • To provide inputs relating to Domestic Investment (MITI Dialogue/ Annual Report/ Budget/ Parliament). For more information these initiatives please log on to www.mida.gov.my

May-June 2010 | Outsourcing |

Outsourcing |

survey

Talent is elusive, says Manpower M anpower Inc. released the results of its fifth annual Talent Shortage Survey, revealing that talent is elusive – it’s everywhere yet nowhere, as talent shortages persist in many countries and industry sectors. Thirty-one percent of employers worldwide report having difficulty filling key positions within their organisation – a rise of one percentage point from 2009, amidst a perpetual global pool of available workers. The top hardest to fill jobs are Skilled Trades, Sales Representatives, Technicians and Engineers according to the survey of more than 35,000 employers across 36 countries. These are the same top jobs that employers have reported struggling to fill for the past four years, demonstrating that there is an ongoing global mismatch in these key areas. “As the global economy slowly recovers, employers will remain focused on maintaining financial flexibility and doing more with less,” said Jeffrey A. Joerres, Manpower Chairman and CEO. “Applying the same mindset to their workforce, employers have gotten more specific about the

combination of skill sets that they are looking for, not only seeking technical capabilities in a job match, but holding out for the person that possesses the additional qualities above and beyond that will help drive their organisation forward. “This conundrum is upsetting to the ubiquitous job seeker, who will need to take more responsibility for his/her skills development in order to find ways to remain relevant to the market.” Manpower’s Fresh Perspectives paper, “Teachable Fit: A New Approach for Easing the Talent Mismatch”, released coinciding with the study, details how employers should broaden their search for suitable talent by considering industry migrants, location migrants, role changers and workforce entrants. Companies must identify those workers who are best positioned – thanks to their skills and their personalities – to benefit from training and development in order to successfully tap into these talent pools and fill gaps in their capabilities. “Employers, need to recalibrate their mindsets to consider candidates who may not have all the specific skills a job requires and identify people that are teachable,”

added Joerres. “Candidates may not present the perfect fit right now, but they may possess the flexibility, intellectual curiosity and personality to be able to fill the gaps in their capabilities.” Globally, Employers having the most difficulty finding the right people to fill jobs are those in Japan (76%), Brazil (64%), Argentina (53%), Singapore (53%), Poland (51%), Australia (45%), Hong Kong (44%), Mexico (43%), Peru (42%), Taiwan (41%), China (40%) and Panama (38%). Compared to 2009, employers are reporting that talent shortages are considerably less pervasive in Romania (down 26 percentage points), Taiwan (down 21 percentage points), and South Africa (down 19 percentage points). .

As the global economy slowly recovers, employers will remain focused on maintaining financial flexibility and doing more with less.”

ITO set for continued European growth IT outsourcing is set to grow in popularity during 2010, according to a report by the International Data Corporation (IDC). The technology market specialist has predicted European IT services expenditure will increase in 2010 and 2011, with IT outsourcing being the main driver behind this. The study revealed the industry could record a growth rate of 2.2% next year. It showed that IT budgets have stabilised along with the easing of economic conditions, resulting in some firms beginning to invest again. Laura Converso, research manager at IDC European Software and Services, said: “Demand for projects and outsourcing will pick up towards the second half of 2010.” She added that the need for IT services will be most prominent this year in the UK, Germany and the Nordic countries.

| Outsourcing | May-June 2010

- Jeffrey A. Joerres,

survey | Outsourcing

CIOs all set for SaaS switch C hief information offiCers (Cios) need to keep abreast of the latest developments in the realm of computing, including the latest storage and deployment breakthroughs. One thing found to be on the agenda for many CIOs is the adoption of software as a service (SaaS), a study has been found. Recruitment agency Harvey Nash and advisors PA Consulting have recently conducted a global survey of more than 2,600 CIOs in businesses of various sizes. Their research found that 34% of those surveyed planned to employ SaaS solutions. Additional findings showed that a greater number – 50% of respondents – planned to use some form of cloud computing as an IT or storage solution in the coming year. “Cloud is a major game-changer, but how they use it appropriately is the real question,” said Rupert Chapman, IT special-

ist for PA Consulting. He added that CIOs must ensure that their businesses stay ahead of the curve when it comes to the latest technologies in the marketplace. The information was compiled for an article in Computer Weekly, where various experts advised on maturing the capabilities of CIOs as a whole. An additional finding was the shift in IT services being outsourced, and maintaining staff to facilitate these moves. “For many, the ability to manage multiple suppliers is a very difficult task. Therefore, businesses should be really proactive and invest in skills in contract management, which are harder to find,” said said Alex Blues, head of IT outsourcing at PA Consulting. “It is no longer a backwater – you should put your best people to manage those contracts, not whoever is left.”

Cost-cutting the top priority

Companies have reduced their spend on IT services and business transformation by almost one fifth by turning to outsourcers, claims a survey. Businesses canvassed by outsourcing advisory firm TPI have saved about US$50 billion by turning to third parties to help deliver their IT services and improve business processes.The firm surveyed 120 companies it had advised on sourcing over the last five years. TPI found its clients saved on average more than 33%. After one-time and ongoing

management expenses, the savings aver-aged more than 17%. According to TPI chairman and CEO Michael Connors the majority of businesses, 60%, said that reducing costs was “their number one reason for implementing sourcing strategies”. Last year Europe became the world’s highest spender on outsourcing,with companies based in Europe spending more on IT outsourcing than those based in any other region of the world.

growing dissatisfaction over outsourcing partners: Informationweek w week ouTsourcIng Is a Key parT T of every modern IT group, but is still an area in need of improvement, a study claims. Twenty-nine percent of the 530 business technology professionals in the Informationweek analytics 2010 outsourcing Survey have fired a vendor within the last 12 months. The growth of cloud computing, outsourcing of high-end skills, and dissatisfaction with the results in some conventional outsourcing segments all point to the need for better outsourcing management. Below are some of the other findings of the report: > Nearly 6 of 10 IT shops outsource some critical function—management, engineering or development. However, nearly one-fourth keep executive and management functions inhouse but look to outsource everything else. > With end user support and development of customer-facing applications, more than half of survey respondents say outsourcing has delivered lower quality. However, cloud computing and saas get more favourable reviews, with the majority saying it has delivered better quality and 44% planning to expand use. > ONly 17% say they directly monitor the performance and uptime of all of their cloud and saas applications. a quarter monitor only mission-critical items and 59% rely on their vendors to monitor themselves. > ClOud computing extends vendor relationships further than ever for some companies, and customers must stretch their management practices to cover it. according to business technology professionals, unforeseen costs, communication problems, and lack of industry expertise are three leading concerns to evaluate before selecting a partner.

May-June 2010 | Outsourcing |

Outsourcing |

management

Establishing safety in workplace

A By Dr Arlyne Diamond

Carpal Tunnel Syndrome – which affects the nerves in the hands and wrists – is one of the major disabling injuries in the workplace today caused by prolonged use of computer keyboards at improper heights.

ll too often employers hire highly specialised experts to come into their companies, do an evaluation and make recommendations for improved safety and ergonomics. I’d like to suggest another approach. I consider safety one of the components of employment legal compliance and so when conducting workshops for my clients, I add a two-hour safety component. What I do in those two hours is engage the workshop participants in what I term a scavenger hunt, asking them to go in teams and observe their site and come back with a list of areas needing improvement. I make a friendly competition of it and send them off to look, listen, and report back. The process I use is simple. My instructions are to go everywhere in the building and see what needs fixing, changing, improving that will improve ergonomics, safety, and working conditions. Perhaps I ought to digress here and mention that ergonomics is the discipline of matching people to the work they do. In other words, it is having the right fit in chair, in height of computer, in keyboard at the right height for comfortable typing. It is finding the right size equipment for the size of the person, and teaching them how to use it properly. It is positioning the seat of the car or truck for maximum support and comfort. It’s how you bend and lift and sit and stand and walk. Back to my theme: I give each team of two or three people a different direction in which to start – randomly assigned – and off they go. They have a fixed amount of time in which to

| Outsourcing | May-June 2010

conduct their research and report back. When they return, I have them share their lists with each other, but using flip charts and having everything they’ve discovered listed on the flip charts. Next, I ask them which of the items they’ve listed could be fixed by members of the team. We mark those off and get volunteers to commit to making the necessary adjustments. Interestingly enough, we discover that most safety violations have been caused by laziness or carelessness and can easily be rectified. Our list gets reduced to the few items requiring management improvement and resources. Typically my workshop participants find things like: >> Extension cords not taped down. >> Boxes in or near doorways and aisles. >> Safety measures already in place being ignored. >> Monitors not positioned properly on the desk. >> Keyboards not lowered to prevent carpal tunnel syndrome (Carpal Tunnel Syndrome, which affects the nerves in the hands and wrists, is one of the major disabling injuries in the workplace today). >> Poor lighting. >> Junk taking up spaces. >> Safety goggles not placed on hooks near where they are needed. >> Bookcases and shelves not properly secured. >> Laziness around “clean room” requirements. >> Lifting improperly.

“Interestingly enough, we discover that most safety violations have been caused by laziness or carelessness and can easily be rectified.”

We also receive suggestions from the participants who are now actively thinking about ergonomics and safety. They tell us things like: >> We should create safety-first posters with pictures of how to sit, stand, move things properly. >> We should do what some companies do and provide frequent mandatory stretch breaks. >> We should have safety monitors, who remind people of their commitment to safety, and correct them when they are doing something improperly, such as not wearing safety goggles. Frequently members of the group will ask if we could allow them some extra time to fix some of the problems they have identified. Where ever possible, I do so that day. If not, we schedule some additional time and deadlines for the completion of the “fixes”. I really like empowering the team members to make whatever changes and corrections they can themselves. I do this for several reasons. The first and foremost is because they have made the discoveries and decided to make the changes themselves. That reduces resistance to change considerably. It is no longer someone else mandating they clean up their areas, or sit properly, etc. They have made the

management | Outsourcing

Ergonomics is the discipline of matching people to the work they do. In other words, it is having the right fit in chair, in height of computer, in keyboard at the right height for comfortable typing.

discovery and commitment themselves. They start to notice things and correct themselves and each other in a friendly manner. They help each other improve. The changes they make are almost always very noticeable and management responds with surprise and delight. That makes it that much easier to ask for budget and commitment to make whatever major changes are necessary. I get far more cooperation from upper management than if I were merely making a series of recommendations. This new level of awareness and coopera-

tion leads to higher morale, productivity, and yes, creativity as well. There is also an on-going commitment to keeping the areas safer. This is so different from the average consultant to upper management to mandate that I see happening elsewhere. And, finally, the workplace becomes safer. Dr ArLyne Diamond is an Organisational Development and Human Resource Consultant with over 30 years experience. She can be contacted at arlyne@diamondassociates.net

May-June 2010 | Outsourcing |

Outsourcing |

Happenings

Roaring success at first CDP Roadshow in Cyberjaya T He presence of distinguished speakers coupled up with a series of quality dialogues and workshops have ensured that the first leg of MSC Malaysia Capability Development Programme (CDP) Roadshow 2010 in Cyberjaya was a rousing success. The CDP Roadshow 2010, themed “Your Knowledge Hub to Maximise Your Potential”, was held recently at the Cyberview Lodge Resort & Spa and attracted over 200 companies and ICT professionals. Organised by Multimedia Development Corporation (MDeC), the two-day event was the first of three legs planned by its Capability Development Department across the country. The next two legs will be held in Penang and Kuala Lumpur. While previous CDP events were conducted as small and stand-alone occasions – this year the department has decided to take a giant step to consolidate the workshops and conduct three main events targeting both ICT professionals and MSC Malaysia Status Organisations. Dr Karl Ng, the Head of Capability Development Department, said the event proved to be a better approach in providing choices to participants as compared to previously adopted approach of separate sessions at different times of the year. Ng said: “We are in the midst of introducing many more exciting programmes and initiatives this year and this is the best platform to share and receive feedback from

| Outsourcing | May-June 2010

our MSC Malaysia Status organisations and the ICT industry in general.” He added the event provided a good opportunity for the department to share with the participants on latest CDP announcements and assistance provided to them through its incentive schemes, online knowledge centre, besides workshops and awareness dialogues. The keynote speaker for the occasion was Howard Kendall, Founder and Chairman of Service Desk Institute of UK, who delved into the subject of IT Service Management (ITSM). Kendall said managing the customer experience, from the business point of view using IT facilities is the way forward. He stressed that having a strong Service Management framework is not enough, as the “challenging socio-economic background of new generation socio-media tools”, such as Twitter and Facebook, are making evaluation ever harder. He said such rich media gives instantaneous feedback and evaluation to the service provider – meaning they have to improve their services as soon as possible – and this may prove to be the hardest part. “The main reason I am here is to help grow the skills together with the MSC Malaysia Capability Development Programme. It’s very much about developing quality standards for Service Desk. That’s something we will do together with Malaysian companies,” Kendall promised.

The keynote speech was followed by Awareness Dialogues focusing on selected areas such as Leadership, Project Management, Software Development and Strategy. Four workshops were also held in the area of Information Security Management Service (ISMS), IT Service Management (ITSM), Service Desk and Capability Maturity Model Integration (CMMI). ITSM Experts Managing Director Tony Albert – who conducted a workshop on Service Desk Certification at the event – was delighted with the response at the event. Albert said: “We got more participants than what we earlier expected – so that’s something very encouraging and we would like to see more companies participating in similar programmes in the future.” He added: “We want to take this opportunity to help organisations to raise the quality standards of their service delivery to their clients which will eventually make all MSC Malaysia Status Companies in Malaysia very competitive to become a global player. So we do look forward for more workshops in the future.” The event in Cyberjaya also saw CDP’s announcement of the Software Testing Guidebook. The handbook is intended to assist professionals involved in Software Testing to adopt more structured processes in order to improve their software testing capabilities and product quality. For more information on these events please visit: www.mscmalaysia.my/cdp

happenings | Outsourcing

Microsoft Malaysia joins hands with Cradle Fund M iCroSoft MalaySia and Cradle Fund Sdn Bhd (Cradle) announced a joint effort for a unique commercialisation funding project in a continuation of the highly successful BizSpark programme. Under this partnership, budding Malaysian start-ups with innovative solutions will stand to gain from technology and commercial mentoring from Microsoft coupled with funding support from Cradle of up to RM500,000 to attain commercialisation. Microsoft BizSpark is an initiative launched to accelerate the success of local Malaysian technopreneurs and early stage start-ups through professional and software supsup port. This complements Cradle’s objecobjec tives of managing the Cradle Investment Programme (CIP), Malaysia’s first develdevel opment and technology commercialisacommercialisa tion funding programme for budding innovators and new technology-based businesses. The partnership between Cradle and Microsoft brings together some of the most valuable resources in technology for local technopreneurs to leverage on. Through the partnership, Microsoft will identify companies through a rigorrigor

ous selection process. Ten quality start-up companies will be recommended to Cradle for consideration over the next two years. Depending on the maturity and potential of the company, entrants may be eligible for funding under the CIP 500, Cradle’s technology commercialisation fund which can provide up to RM500,000. At the same time, Microsoft will also identify and refer technopreneurs at the ideas stage for consideration for the CIP Catalyst programme, which will offer funds of up to RM150,000 for prototype development. According to Azli Jamil, General Manager (Local Software Innovations) of Microsoft – the global software giant has long been passionate about helping local businesses meet their potential. “Globally, over 30,000 start-up comcom panies have signed up for BizSpark. In Malaysia, more than 250 start-up companies have come on board since it was introduced less than two years ago. From our estimates, there are quite a number of quality start-up companies that are ready to go to market and this is where the commercialisation grant of RM500,000 from Cradle would be most useful,” said Azli.

Harsh Manglik named Nasscom chairman india’S naSSCoM (National Association of Software and Services Companies) has announced that Harsh Manglik has taken over as the Chairman of its Executive Council for the year 2010-11. Manglik, who replaces Pramod Bhasin, will take on the role as the country’s IT sector recovers from the impact of the global economic slowdown. Manglik is currently serving as the Chairman and Geography Managing Director for Accenture PLC in India. Previously he has also been a member of Nasscom’s Executive Council, Nasscom said in a statement. Nasscom has also appointed NIIT Technologies CMD Rajendra Pawar as the Vice Chairman of its Executive Council. “I am extremely honoured to be elected the Chairman of NASSCOM at a time when the industry is designing a new trajectory for its next level of growth over the next 10 years,” Manglik said. “The majority of this new growth will come from new areas such as public services/e-Governance, R&D, engineering, healthcare and by creating new opportunities/markets driven by innovation and IT-based growth engines with strong contributions from start-ups and SMEs.” He added: “To set the stage for this growth, NASSCOM will continue to drive greater engagement with the government and its members to address the industry issues of inclusion, education, infrastructure security and corporate governance,” he added.

CSS Corp announces two acquisitions

Chinese outsourcer hiSoft acquires Salesforce.com partner Echo Lane

CSS Corp, a global provider IT convergence services to its of technology solutions, anofferings through the acquisinounced it has acquired Glow tion of Glow Networks. Based Networks, a telecommunicain Richardson, Texas, Glow tions services and engineering Networks is a US$30 million company providing end-to-end privately held company that network services, and the Remote has been consistently ranked Infrastructure Management amongst the fastest growing Services (RIMS) business unit of companies in North America InteQ, a leader in On Demand Sharma … “These by Deloitte. The company acquisitions are an IT Service Management. was founded in 2000 and “These acquisitions are an important milestone currently has nearly 400 important milestone in the in the growth of CSS employees in the US. growth of CSS Corp, scaling our Corp.” “With telecommunication revenues and adding significant and IT convergence afoot, technical capabilities,” said Nick Sharma, our customers are looking to us to help CEO of CSS Corp. “Our customers increasincreas them manage this transformation,” ingly seek critical end-to-end solutions to said Krish Prabhu, telecom veteran and help them manage complex technology Senior Advisor to Glow Networks. “By environments. The acquisition of two leveraging CSS’s expertise in platformindustry leaders positions CSS to be a based managed services and emerging strong and trusted partner of choice for technologies such as cloud computing, our customers.” we are positioned strongly to meet our CSS will add telecommunication and customers’ transformation needs.”

ChineSe outSourCer hiSoft Technology International has acquired Echo Lane, a solutions provider for Salesforce.com and other SaaS CRM applications. Echo Lane will remain a wholly owned subsidiary of hiSoft and the firms will join forces to expand their dominance in the cloud computing market. They will serve more than 2000 customers in the United States, Asia and Europe. With the acquisition, hiSoft leads China’s expansion into the global IT outsourcing services market. hiSoft CEO Tiak Koon Loh said the acquisition of Echo Lane is an important step in hiSoft’s strategy of strengthening its global SaaS capabilities, as well as its CRM consulting practice. Tiak added that as one of Salesforce. com’s elite partners, Echo Lane brings an impressive portfolio of cloud computing knowledge and experience.

May-June 2010 | Outsourcing |

Outsourcing |

happenings

First international summit for Data Centres International consulting firm BroadGroup, together with the Malaysian Multimedia Development Corporation (MDeC), which directs and oversees Malaysia’s National ICT initiative, has announced the launch of the first international summit for data centres. The event will take place in Kuala Lumpur from Sept 29-30. Data Centres Malaysia Summit 2010 will include a special focus on regional and international enterprise customers of data centres and their outsourcing needs as emerging private clouds, new technologies

and market shift impact across the sector. “We are delighted to be involved in the Inaugural Summit of Data Centre event as the Patron. The data centre industry is experiencing big growth, buoyed by rising demands in mobile transactions and usergenerated content such as M-Commerce, 4G, video usage, data transfer, storage requirements and other factors,” said Datuk Badlisham Ghazali, the CEO of MDeC. Badlisham added: “This first Data Centre conference will bring together a number of enterprises that are providing data centre-

related facilities and services, and at the same time act as a promotional platform for Malaysia to be a preferred hub for data centres around the globe.” “We are especially delighted by the participation of MDeC as Patron of this first international summit in Malaysia,” said Philip Low, CEO of BroadGroup. “The programme will provide compelling content, an exciting line-up of expert speakers, and will be a stellar networking event in a market that is poised to experience substantial growth.”

New PIKOM president named

Iskandar Investment shines at Cityscape Asia Real Estate Awards Iskandar Investment Berhad has been named Best Developer in the Commercial/Office/Retail Development (Future) category at the 2010 Cityscape Asia Real Estate Awards for its Lifestyle Mall@Medini. The 2010 Cityscape Asia Real Estate Awards recognises and rewards companies whose projects have shown outstanding performance and achievement in Asia’s real estate industry. Arlida Ariff, President and CEO of Iskandar Investment, said, “This award is testimony to Iskandar Investment’s strength in setting standards for sustainable and visionary developments in Asia. The Lifestyle Mall will not only be a superior retail and entertainment destination in Medini

North, it will also be a catalyst of growth in Iskandar Malaysia and the region.” Iskandar Investment aspires to set a new standard for sustainable urban planning in Iskandar Malaysia, raising the bar for urban development in Southeast Asia. In doing so, Iskandar Investment offers a diversified range of investment opportunities across six clusters in the region, which will be strengthened to enhance and support the development of Iskandar Malaysia. These are namely; education, financial advisory services, leisure and tourism, trade and logistics, healthcare and wellness, and creative industries. For more information on Iskandar Investment, please visit www.iskandarinvestment. com

PIKOM, the National ICT Association of Malaysia, has appointed Shaifubahrim Mohd Saleh, as its President effective May 14 after a six-month extensive search where shortlisted candidates were assessed by an international executive search firm. An ICT veteran with 27 years’ experience, Shaifubahrim is no stranger to PIKOM, having served as its Chairman from 1997 to 1999 and as its Advisor since then. Shaifubahrim obtained his Bachelor Degree in Computer Science, University Sains Malaysia (USM) in 1983 and began his career at IBM Malaysia before joining Logica Plc in 1988. He was also attached to Oracle System and Data General before serving Banyan Systems, Asia Region as Managing Director. He was appointed Managing Director of Aironet Wireless Communication Inc in 1999 and following the acquisition of Aironet by Cisco System Inc in 2000, he became the Managing Director of Cisco System (Malaysia) Sdn Bhd. Currently, he’s the President of the USM Alumni Association. “Shaifu, with his vast knowledge of ICT in the government and commercial sectors, will be an invaluable asset to PIKOM. His extraordinary spirit and strong commitment is set to further boost the ICT industry,” said Wei Chuan Beng, Chairman of PIKOM. The Presidency was previously held by CJ Ang who was appointed in January 2008. PIKOM has appointed CJ as its Advisor effective May 14.

Connxion completes acquisition of Kaz Singapore Australian IT services firm Connxion as finalised the acquisition of outsourcer Kaz Singapore from Telstra International. Kaz Singapore provided IT infrastructure support, outsourcing and contact centre

| Outsourcing | May-June 2010

services. Under the acquisition, Connxion will internally house its core data services that are presently outsourced to IBM among other data centres. Connxion will also be able to cooperate with Telstra International

on new business opportunities in Asia and India. Connxion – which has traditionally provided data centre and network services – is moving into integration and application of “Customer Intelligence Services”.

happenings | Outsourcing

International speakers lined up for SOFTEC 2010 Malaysia is keen to produce globally competitive software testers and position itself as a regional outsource hub for the lucrative software testing industry. The Malaysian Software Testing Board (MSTB) will host SOFTEC 2010 conference, themed “Bridging the Gap,” from 19 – 21 July in Kuala Lumpur, headlined by leading international speakers to share the latest findings on software testing.

MSTB is organising the SOFTEC conference for the third consecutive year. “Our primary aim is to drive the software testing industry, to benefit Malaysian industries, and concurrently turn it into a high income economy,” says Mastura Abu Samah, MSTB’s President. She adds that the immediate implementation of software testing as a critical component in across all industries that

Frost & Sullivan kicks off Customer Contact summits The challenge of stretching limited resources has been a continuous concern for the contact centre industry. While this challenge continues, enterprises are constantly on the lookout for innovative ways to engage, interact, retain and attract more customers. Though crucial to learn of the collective challenges within the contact centre industry, each market faces varied propositions that are unique to the country. In an attempt to learn these minute challenges and strengths to orchestrate a more successful tailor-made operation, Frost & Sullivan will be hosting a series of Customer Contact summits in 2010. The first in this series was held in Kuala Lumpur on May 12-13. Themed “Next Generation Customer Contact – Driving Customer Experience through New Strategies, Technologies & Processes”, the summit drew over 100 senior delegates who represent key players primarily from the Malaysian contact centre industry along with regional practitioners with a keen eye on the outsourcing market in Malaysia. The summit started with a case study presentation by Travis Mason, General Manager of Salmat, entitled “Home Agents deliver better Customer Experiences”. He

presented the route that the company had embarked in reaching its current success point and the obstacles and windfalls that it experienced in that journey. This was followed by David Toh, regional director for Interactive Intelligence, who addressed the session on the how to outpace the competition by harnessing the power of customisable applications, including multimedia queuing, skills-based routing, interactive voice response, and more. Titled “Differentiate your Contact Centre while Reducing Agent Costs” the sharing was the first in a series of presentations – “Communication Enabled Business Processes: Break the boundaries by integrating Communications into Business Processes” and “Provide faster, more responsive Customer Service across every Channel” – was lined up for the rest of the day. The second-half of the summit showcased in-depth interaction via concurrent tracks titled People Management & CustomerCentricity And Business Strategies, Innovation & Technology. Prominent speakers from Tenaga Nasional, GN Netcom, Shangri-La Hotels & Resorts, Teleperformance, Datacom, COPC Asia Pacific along with senior Frost & Sullivan analysts shared detailed insights with attending delegates at these interactive track sessions.

ICT push to help Malaysian SMEs Small and medium enterprises (SMEs) throughout Malaysia will have an opportunity to learn how ICT and e-commerce can help them trade with greater efficiency and widen their market reach through a series of seminars initiated by PIKOM, the National ICT Association of Malaysia. Co-organised by Malaysia’s Ministry of Science, Technology & Innovation (MOSTI) and supported by SME Corp Malaysia, the “SME Business Success With ICT Series” of seminars are backed by the SMI Association of Malaysia, Kuala Lumpur Malay Chamber of Commerce, Associated Chinese Chambers of Commerce & Industry Malaysia and Malaysian Associated Indian Chambers of Commerce & Industry.

This is the first time that various SME-related associations have banded to participate in an event to encourage their members to adopt and employ wider usage of ICT. There are close to 900,000 SMEs, which make up about 99% of the total number of enterprises in Malaysia. It’s believed that about 52% of SMEs do not have a person assigned to handle ICT functions in their operations. The ICT Series of 1-day seminars will be held over seven months from June till December in 15 locations in Peninsular and East Malaysia. Those who are interested can contact Denise Hooi at denise.hooi@pikom.org.my or call +603-7955 2922.

use embedded software in their products will enhance product quality and value. Quality assurance, she explains was a precursor to what is commonly referred today as software testing. “The detection rate for flaws and bugs in products is much higher through early software testing which is what we are advocating. Better quality products translate to an increase in the export value of Malaysian products.”

New Chief Executive for SIM Society for Information Management has recently announced Dr Wendell O. Jones as its new Chief Executive. Jones will report to the SIM Board Chair. “Earlier this year, SIM has changed its structure to an eight-person Policy Board elected by SIM Members. This allows the Board to appropriately focus on matters of strategy and growth for SIM,” its Board Chair Pat Coffey said in a statement. “The position of Chief Executive was created to direct the operations of SIM and to enact these strategies to achieve our goals.” Wendell’s most recent role has been as an outsourcing consultant and as Professor of Management at the University of Southern Nevada. He has also served previously as a practitioner in senior IT management positions for profit and not-for-profit organisations. His senior management positions included Senior Vice President of  Technology Services, National Association of Securities Dealers; Vice President Global Outsourcing Services, Compaq Computer Corporation; General Manager, McDonnell Douglas Information Services Company; and Chair of the Computer Science Faculty at West Point. Jones, a regular columnist in the Outsourcing magazine, is also the author and co-author of a number of management and IT articles and an IT outsourcing book published by Prentice Hall that was recently published in Chinese.

May-June 2010 | Outsourcing |

Outsourcing |

Light takes

The Best Buys! “Certainly there are things in life that money can’t buy, but it’s very funny – Did you ever try buying then without money?” – Ogden Nash (Poet) “Lives, like money, are spent. What are you buying with yours?” – Roy H. Williams (Author, marketing consultant) “Marrying a man is like buying something you’ve been admiring for a long time in a shop window. You may love it when you get it home, but it doesn’t always go with everything else in the house.” – Jean Kerr (Playwright) “Many an optimist has become rich by buying out a pessimist.” – Robert G. Allen (Financial writer)

“I do a lot of curiosity buying; I buy it if I like the album cover, I buy it if I like the name of the band, anything that sparks my imagination. I still like to go to record stores, I like to just wander around and I’ll buy whatever catches my attention.” – Bruce Springsteen (Rock star )

Prison plans BPO unit

Hyderabad’s Cherlapalli Central Jail, one of the most modern prisons in India, will soon run an outsourcing unit from its premises. Authorities, in collaboration with a local IT company, are planning to set up a business process outsourcing (BPO) unit at the jail that will be staffed by the jail’s inmates. The initiative will increase the prospects of the criminals in getting jobs after they are released from the jail. C. Narayanacharyulu, director of Bangalore-based IT company Radiant Info Systems, said the proposed BPO will execute tasks such as data entry, processing and transmission. However, inmates will be barred from using telephones. “There will be no security hazard involved as those manning the BPO will have a limited access

to the internet,” he said. The idea of a BPO in jail, a first in India, is the brainchild of Dr C.N. Gopinath Reddy, Andhra Pradesh director-general of prisons, who sees a golden opportunity for educated convicts. “About 200 to 250 inmates will be chosen for the training to handle the job of BPO. They will be selected on the basis of their aptitude and interest”, he was quoted as saying in . “Once they become experienced in this work and go out after completing their sentence, a whole new world of opportunity will wait for them,” he said. Gopinath Reddy said this was a pilot project that will be replicated in other jails subsequently. “Of the total 13,000 inmates in all the jails in the state, 2,000 people are well educated (and) will have a good future in such BPOs,” he said.

“When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” – P. J. O’Rourke (Political satirist) “When buying shares, ask yourself, would you buy the whole company?” – Rene Rivkin (Aussie stockbroker) “The buyer needs a hundred eyes, the seller not one.” – George Herbert (Poet) “Many a man thinks he is buying pleasure, when he is really selling himself to it.” – Benjamin Franklin (Scientist, statesman) “Never give anything away for nothing. Never give more than you have to give (always catch the buyer hungry and always make him wait). Always take everything back if you possibly can.” – William S. Burroughs (Author) “A woman telling her true age is like a buyer confiding his final price to an Armenian rug dealer.” – Mignon McLaughlin (Author) “Basically what they’re saying is, if you want to be on TV, if you want to be a credible candidate, you’ve got to buy ads. And if you’re not buying ads, you’re not a credible candidate, we don’t cover you.” – Robert McChesney (Media critic, professor) “Buying books would be a good thing if one could also buy the time to read them in: but as a rule the purchase of books is mistaken for the appropriation of their contents.” – Arthur Schopenhauer (German philosopher)

| Outsourcing | May-June 2010

Contact centre, monks to cut suicides at iPhone factory Taiwan’s Foxconn Technology, which manufactures iPhones for Apple has recruited 100 counselors and Buddhist monks to reduce stress among workers after a spate of suicides at its Chinese factories this year, Bloomberg reported. Foxconn, which has had at least seven employee suicides this year, has set up an “emotional support hotline” and instituted prayers from Buddhist monks. The company said the contact centre and prayers have so far prevented more than 30 suicide

attempts. Foxconn spokesman Edmund Ding declined to comment on why workers may be taking their own lives. “It’s not just related to Foxconn; there’s a lot of pressure on young workers in factories all over China,” Geoffrey Crothall, communications director at the Hong Kong-based China Labour Bulletin, told reporters. “Very few people pay attention to other factories. Foxconn is always in the spotlight, largely because of its relationship to Apple.”

Very few people pay attention to other factories. Foxconn is always in the spotlight, largely because of its relationship to Apple.

starHill-ad.indd 1

6/3/10 12:30:28 PM

The Leading Financier for ICT and Biotech Projects We provide funding from RM250, 000 up to RM120 million, with flexible repayment of up to 5 years for ICT, and 10 years for Biotech, with fixed interest rates from 7% - 8% at daily rest. Our products are tailored to finance contracts and business of ICT, Biotech and high-growth companies. Talk to us today.

Secure a future for your contract or business. Click www.mdv.com.my or contact us at +603 2617 2888

Ad-MDV.indd 1

5/31/10 6:53:16 PM

Outsourcing magazine ­ Issue#18

Outsourcing magazine Issue#18