Outsourcing Issue #19 by Sritharan Vellasamy

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PREMIER MAGAZINE ON BUSINESS AND TECHNOLOGY SERVICES INDUSTRY

ISSUE #19, 2010 ISSN

1985-1006

An interview with the CEO of CyberSecurity Malaysia

Under watchful eyes of CyberSecurity Malaysia Branding: Leaving a mark on the minds of buyers

Role of CIO in a competitive global economy

Governments & sourcing: Controversy or opportunity?

CONTENTS 12 8

Opportunities in Singapore public sector

Cover Story: An interview with CEO of CyberSecurity Malaysia

Outsource branding: Leaving a mark on the minds of buyers

Role of CIO in competitive global economy

Easy mistakes to make when embracing LPO

From Global to Local: Increasing reach of learning

Living colours: Similarities and differences in workplace

APAC Service Outsourcing International Conference in Wuxi

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editor’snote sri@wordlabs.com.my

KDN NO: PP14967/02/2011 (029501) MICA (P) 199/06/2010

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PREMIER MAGAZINE ON BUSINESS AND TECHNOLOGY SERVICES INDUSTRY

ISSUE #19, 2010 I SSN

1 9 8 5 -1 0 0 6

An interview with the CEO of CyberSecurity Malaysia

Under watchful eyes of CyberSecurity Malaysia Branding: Leaving a mark on the minds of buyers

Role of CIO in a competitive global economy

Governments & sourcing: Controversy or opportunity?

theteam Founder / 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 resh naTHen amol a. KarKHaniS

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 Fax: +603 9056 4771

“If you don’t get noticed, you don’t have anything. You just have to be noticed, but the art is in getting noticed naturally, without screaming or without tricks.” – Leo Burnett The creation of a strong corporate image and branding is critical to help any company to stand out from the crowd. However, branding is more than just a hodgepodge of logos, images, or snazzy corporate one-liners. Branding often becomes an abused buzzword that refers to anything from corporate visual concepts right up to ad hoc advertising campaigns and whatnot. Essentially, defining your identity is at the heart of branding. It must able to communicate to your clients what they can expect from your products, services and solutions – and why you are different or unique compared to the rivals. In our Feature segment, columnist Jerry Durant explains why a holistic approach to communication is extra important for global services vendors, considering the common negative perceptions that the industry seems to inherit in certain locations and business scenarios. Durant laments that many emerging companies fail to realise the potential of proper branding and commit many mistakes in forming business basics. He stresses that the clients out there are actually interested to know your core beliefs, values and how strong is your overall viability as a business. And they are not easily swayed by some shabby advertising campaigns churned out to illustrate the “merits” of a vendor amidst some technical jargons and chest-thumping. Remember, branding is not about overstating your company’s capabilities and creating reckless fanfare, it’s about the truth and your company’s promise to the world. Meanwhile, our Cover Story for this edition takes a closer look at the Malaysian guardians of the cyber space – CyberSecurity Malaysia. Its CEO Lt. Col. Husin Haji Jazri (Retired) says his agency’s biggest and continuous goal is to ensure the security and well being of the cyber realm that not only benefits Malaysians but also Internet users worldwide. The agency cooperates and collaborates extensively with other national and international agencies as issues relating to cyber security often transcend national boundaries. According to a recent Forrester Consulting global survey, while many IT departments are spending big money on compliance and protection from accidental leaks of “custodial data”, most are not investing enough to virtually lock up their organisations’ “secrets”. The survey explained that the “secrets” include information such as product plans, earnings forecasts, and trade secrets, while “custodial data” includes customer, medical, and payment card information that becomes “toxic” when stolen or exposed. Seems cyber security is as important as your personal security nowadays – a rather uncomfortable fact for many of us. This is the digital age that we live in, so face it. – Sritharan Vellasamy

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news bits

Malaysia Airlines to invest RM320m in ERP Solution Malaysia’s national carrier Malaysia Airlines (MAS) is to invest almost US$100 million (RM320 million) in an ERP solution to help streamline operations and enhance business efficiency. Its Managing Director and CEO Tengku Datuk Azmil Zahruddin said the Enterprise Resource Planning (ERP) system, which will be implemented in phases, will help to centralise all data and boost the airline’s ability to obtain real-time information. “The ERP project will transform our business processes,” said Tengku Azmil. “The centralising of all data and the ability to obtain real-time information will enable greater cost efficiencies, improve decision-making and employee productivity as well as optimise our cash management.” He added: “The total benefit expected from the project is estimated at over RM120 million per annum,” he told reporters after a signing ceremony with partners HCL Axon and SAP on July 12.   “We do expect to get the full benefit once all the modules are up and running. We are doing it in phases. We have the finance procurement phase and the maintenance, repair and overhaul phase,” he said.   “It is one integrated system which will speed up and allow us to make better decisions. We will see that both in revenue and cost saving,” he added.

Infosys shuts down Thai office Infosys Technologies, one India’s biggest software services exporter, has closed down a small outsourcing facility in Bangkok, one of the three it had bought from Royal Philips Electronics. In July 2007, the BPO arm of Infosys had taken over Philips Global’s back-office operations in Chennai (India), Lodz (Poland) and Bangkok (Thailand). A report in India’s Business Standard said it was the first time that Infosys had taken up such a rationalisation exercise after buying Philips Global’s BPO operations. The centre in Bangkok had less than 50 people, and after its closure the work has been transferred to other centres in China, Philippines and India. Infosys has more than 100,000 staff across its facilities in different parts of the world, most of them in India.

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Malaysia aims to become softwaretesting hub

alaysia aims to become a major player in the lucrative software testing market as it seeks to develop a sustainable ecosystem for software testing and certification services. At the launching of the Q-Lab recently, Malaysia’s Science, Technology and Innovation (MOSTI) Deputy Minister Fadillah Yusof said the advanced software testing laboratory was one of the four key elements identified as enablers for the creation of a sustainable ecosystem of the country’s software testing industry. Fadillah said concerted efforts were being carried out with the objectives of developing the nation’s capability in software testing and certification services and ultimately, establish Malaysia as a regional hub and global destination for the outsourced software testing services. He added that the potential economic returns in this market were significant, citing Ovum Consulting’s forecast that the worldwide market for computer software and systems testing services is projected to be worth US$56 billion by 2013. The efforts to develop the country’s software testing industry are spearheaded by the Malaysian Software Testing Board (MSTB), a national body representing the software quality assurance industry interests and

Fadillah (centre) at the launch of Q-Lab. promoting software testing as a profession. Q-Lab is one of the four key elements identified as the enablers for the creation of a sustainable ecosystem of Malaysia’s software testing industry. The Q-lab cost RM11million to set up. A large portion of the investment has gone into equipping the facility with state-of-art in systems and equipment, as needed to support the Lab’s planned services and activities. It offers a wide range of quality testing and related professional services including Laboratory Software Testing; Field Site Software Testing; Product Certification; Laboratory Facilities Rental; and Consultancy Services.

Outsourcing Malaysia goes Down Under Outsourcing Malaysia (OM) is leading a business delegation to Australia to promote partnerships between Malaysian and Australian service and solutions providers. OM Chairman David Wong said that a “smart partnership model” between corporations of both countries will help Malaysian service providers to be globally competitive and to reach out to wider markets. It the first time that OM is organising such an initiative to Australia. The business delegation will also serve as a platform for both Malaysian and Australian service providers to formulate strategies to achieve mutual benefits and collectively target markets beyond the two countries. The delegation will cover two seminars, with one scheduled in Sydney on Aug 3 and the other in Melbourne on Aug 5. Wong added: “As the organisers, OM will put together the seminars and work with relevant parties and bodies in both Sydney and Melbourne to ensure its smooth running

and beneficial to both countries.” Wong also cited Australia’s strong economy as another strong reason for the business mission. “We must look beyond the country if we want to expand and go global and Australia is a logical choice because both countries have strong diplomatic ties and over the years, numerous agreements such as Asean-ANZFTA (Australia and New Zealand Free Trade Agreement) and government-togovernment trade agreements that facilitated trade between Malaysia and Australia,” he said. The programme for the seminars will also feature roundtable discussions and business-to-business meetings to enable both countries’ participants to raise and address each other’s concerns. The business mission is endorsed by MDeC, Malaysia External Trade Development Corporation (Matrade) and the Australian Information Industry Association.

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Opportunities in Singapore public sector

Dc Government Insights projects that in FY10, the overall ICT spending in Singapore is expected to increase year-over-year (YoY). This forecast follows Infocomm Development Authority of Singapore’s (IDA) recent announcement that it plans to invest US$720 million in about 350 new ICT procurement tenders for FY10. More insights are revealed in the study, “Opportunities Abound: Analysis of Singapore’s US$720 Million Public Sector FY10 ICT Procurement Plans” – which provides an analysis of the upcoming public sector ICT projects and opportunities for ICT vendors selling to Singapore’s government. According to IDC Government Insights, more than 50% of the projected infocomm

Manufacturing returning to Britain sMall manufactures are considering shifting production back from the Far East to the UK to save money and provide a better service to customers, the Telegraph reported based on a survey by IDC. The study involving 700 small and mid-sized manufacturers around the world found that companies were struggling to meet customer expectations because the complexity of managing global supply chains. These companies also ranked improving customer service as the most important strategic challenge facing them, with increasing sourcing from lower cost countries ranked last of 12 priorities. “Low-cost sourcing can result in lower responsiveness and poor customer service, higher costs, and additional risk factors such as supply chain disruptions, diminished intellectual property protection and environmental concerns,” said the IDC Manufacturing Insights report for Infor, the business software provider, and IBM. “Manufacturers will continue to focus on optimising manufacturing operations and the supply chain, but they are now consistently prioritising customer fulfillment above all else. This is a remarkable shift from pure cost cutting initiatives of the past as seen in 2009 with the crisis.” North American and European manufacturers were making this change, the report added.

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tenders in FY10 will be under S$500,000 (US$360,000). “This allows for a myriad of business opportunities for participating vendors of different sizes, with a wide dispersion of smaller value contracts expected”, says Gerald Wang, Senior Market Analyst at IDC Government Insights Asia/Pacific. As the public sector continues its governmental computerisation implementations with the iGov2015 masterplan, IDC Government Insights believes that the next few years will be a crucial time for government IT. ICT projects in FY10 onwards are expected revolve around seven key themes: cloud computing, ubiquitous presence, social media, open data and services, sus-

tainable technologies, business analytics, and “OneInbox” and data repository. Wang added: “Overall, the Singapore government is consciously investing in projects such as public services revamp, systems consolidation, and other sustainable business solutions to better manage costs over the long term. As such, proposals that will allow government agencies to reduce the high upfront capital expenditures and to manage operational expenses will be the most well received.”

IBM takes blame for failure ibM took responsibility for a major IT system failure suffered by one of Singapore’s largest banks on July 5, saying an employee’s error caused the outage, IDG News Service reported. In a statement released on July 13, IBM had said the problems started when software-monitoring tools detected “instability” within DBS Bank’s storage system. While the storage system remained “fully functional”, IBM employees initiated a recovery process to fix the issue. “Unfortunately, a failure to apply the correct procedure inadvertently caused the service outage,” IBM said, adding that no data was lost. The outage knocked DBS’ IT systems offline for seven hours, leaving customers

unable to withdraw money from automatic teller machines. All of the bank’s commercial and consumer banking systems were affected, although no data was lost, the bank said at the time. Much of DBS’ IT systems are managed by IBM under a S$1.2 billion (US$868 million) outsourcing agreement signed in 2002. Meanwhile, DBS Group CEO Piyush Gupta has written to DBS customers, personally apologising for the inconvenience caused by the sudden disruption in banking and ATM services on July 5. In a July 13 letter posted on the bank’s website, he said customers have every right to expect uninterrupted services 24/7, 365 days a year from the banking group. He said he’s sorry the group has failed them.

Accenture acquires Acceria technOlOgy gy services and outsourcing company Accenture announced on July 13 the acquisition of Acceria, a privately-held French company. Industrial consulting firm Acceria focuses on business processes and methodologies for after-sales operations of industrial companies. The acquisition is designed to complement Accenture’s strength in providing services to the automotive and industrial manufacturing marketplace globally and further enhances Accenture’s capabilities in management consulting. The acquisition includes Acceria’s staff and assets, which provide business solutions intended to help companies improve and

sustain after-sales performance. “For successful after-sales operations in a competitive market environment, optimising a company’s product and service portfolio and its pricing strategy is key,” said Sergio Colella, managing director of Accenture’s Industrial Equipment group. “Acceria’s after-sales expertise, industrialised assets and innovative solutions can help automotive and industrial manufacturing companies improve after-sales revenues. “This acquisition is designed to accelerate Accenture’s expansion into the automotive and industrial marketplace.”

news bits | Outsourcing

Philippines BPO revenues right on mark

hilippines’ business process outsourcing (BPO) industry has already attained half or US$4.7 billion out of its US$9.4-billion revenue target this year as players reported of as much as 50% revenue growth expansion, Manila Bulletin reported on July 18. BPO Association of the Philippines (BPAP) president Oscar Sanez told reporters

that based on its survey more than half of its members are expanding between 6% and 50% in terms of revenue growth. Sanez is confident the industry is going to hit its full year revenue growth target of US$9.4 billion over US$7.2 billion last year with more revenues coming in the second half of the year. BPAP is aiming for a 26-30% growth in revenues this year over 2009. Last year’s

Fiji to outsource civil service functions

Outsourcing is to be increased in the Fijian Public Service as part of the Prime Minister’s Public Service reform agenda. Prime Minister, Commodore Frank Bainimarama said outsourcing some functions of the Public Service would lead to significant improvements in the standard of service delivery over the next four years. Bainimarama says it is essential to have clear policy guidelines in place for outsourcing certain functions currently performed

by the civil service. He added that such a policy will also contribute to the Fijian government’s efforts in reducing operating expenditure, make more resources available for capital expenditure and encourage private investment for growth. This process has already begun with the outsourcing of road maintenance works earlier this month to a Malaysian company, Fiji Broadcasting Corporation reported.

Wipro and Microsoft ink legal deal The BPO division of Wipro Technologies will provide legal process outsourcing (LPO) to Microsoft’s vast intellectual property (IP) portfolio. In July 2008, Wipro began providing US Patent and Trademark filing and docketing services to Microsoft’s IP and licensing group. Microsoft previously had used a mix of in house resources, outside law firms and offshore vendors to perform these IP services. Moving to Wipro, with its extensive BPO experience, international reach and

global delivery capabilities, ensured not only efficiency but also consistency in the way Microsoft does business, Wipro said in a statement. “The success of this partnership is testament to the innovation and dedication demonstrated by Microsoft’s IP team and Wipro’s LPO solutions professionals,” said Saju A. Joseph, Wipro Technologies general manager. “Wipro will continue to integrate legal expertise with process and technology to reduce overall legal cost for its clients.”

Ericsson in China telco deal In the largest outsourcing deal of its kind to date in the Asia-Pacific Region, Ericsson said it will take over network operations and management for China Mobile in Hebei Province, China. The Hebei province has a population of 70 million and its area is almost the size of the UK. The three-year agreement allows China Mobile Hebei to improve its network quality and operational efficiency, and further increase its focus on its core

business, the subscribers, while Ericsson takes full responsibility for the field maintenance work of all the base station sites. The cooperation between China Mobile Hebei and Ericsson has also gained support from the Government of Hebei Province, which has expressed its hope that Ericsson will make the best use of this opportunity and set a benchmark for field maintenance services in China as well as a base in northern China.

US$7.2 billion reflected a lower 19% growth over 2008. Sanez said the BPO sector now accounts for 60% of total services exports of the country. To further promote the industry to the world, the BPAP is lining up an aggressive campaign in the second half of the year including a pitch at the World BPO forum in New York, it was reported.

Aon ‘hits on’ Hewitt with US$4.9b deal

THE world’s largest insurance broker is to buy the human resources consultancy Hewitt Associates for US$4.9 billion Reports suggest that Aon could combine Hewitt with its Aon Consulting unit to create Aon Hewitt, a consulting and outsourcing business with combined revenues of US$4.3 billion. Aon has a global workforce of 36,000. Hewitt employs 23,000 worldwide. Hewitt is one of the world’s biggest human resources consulting and outsourcing companies with over US$3 billion in annual revenue and 23,000 employees in 32 countries. Aon CEO Greg Case said on a conference call with news agency AP that his company, based in Chicago, aims to be the pre-eminent professional services firm in the world. “As we continue to grow our business, this merger will give us a broader portfolio of innovative products and services,” he said.

Saudi firm-HCL pact HCL Technologies recently announced its seven-year total IT outsourcing services agreement with Al Majdouie Group, a leading conglomerate based in Kingdom of Saudi Arabia (KSA). The end-to-end IT services agreement undertaken by HCL will enable streamlined business processes and seamless integration across all group companies and points of presence of Al Majdouie Group. Found from website Modify PMS The engagement involves HCL to blend all its outsourcing strengths – applications and infrastructure capabilities, industry knowledge and expertise to help Al Majdouie achieve fundamental transformation at the enterprise level. The scope includes developing infrastructure, implementing Oracle e-business suite with 70+ modules, managing and running the IT infrastructure. The agreement also includes commissioning and management of Data Centre and Disaster Recovery services.

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leadership

Leadership is what Leadership does

BY ADITYA BHALLA

eadership development programmes in some organisations are narrowly focused on imparting soft skills or behavioural related inputs to staff in leadership positions. There appears to be a tacit assumption that subject matter expertise complemented with inputs on soft skills would make for a holistic leader. This can be a fallacious choice, as technical specialisation may not equip individuals with the right skills and orientation to launch, test and revise business strategies as necessary. Market dynamics are exerting greater pressures even on managers with no explicit sales targets to possess the skills to identify growth opportunities, streamline operations and develop their team potential. The new age leaders are expected to possess the necessary skill sets that correlate with the business challenges and exigencies of the enterprise. Soft skills are necessary but no longer sufficient criteria for success

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Soft skills are necessary but no longer sufficient criteria for success in a leadership position.

in a leadership position. Leadership development for staff in leadership position is best designed and implemented when it occurs as a process embedded within the larger contextual frame of organisational strategy. Till recent past, leadership development was considered by CEOs as a top area of concern for organisation growth. It has been recently replaced by the pressure to innovate to revive lagging EBIDTAs (earnings before interest, taxes, depreciation, and amortisation) and eroding market share. The skills imparted in leadership development programmes must accordingly adapt to equip the leaders with the ability to innovate in different aspects related to revenue generation, customer experience, cost reduction or efficiency improvement and maximising the potential of team members to generate elegant solutions to day-to-day issues. The 4-D Model of Leadership (refer image, right) is based on this changing landscape and captures the four critical aspects that make for effective leaders. These dimensions

leadership | Outsourcing

are briefly explained here.

Deliver Revenue Potential

Leaders possess the skills to crystallise the market potential into meaningful offerings that can sustain the revenue growth of an organisation. Some of the necessary skills to master are: • Understanding critical parameters of value to the customer: Critical Parameters of value are those characteristics or features of a product or service for which the customer is willing to pay. Leaders must understand the process of scientifically assessing the critical parameters of value and using that information to assess: – Over-served markets – Under-served markets – Appropriately-served markets

Leaders possess the skills to crystallise the market potential into meaningful offerings that can sustain the revenue growth of an organisation.

• Understanding the objective laws of evolution of systems (markets/technology) Leaders are able to perceive the objective laws of evolution within the context of the changes in the environment (societal/ technological/business). This helps in establishing the structured roadmap of offerings (products or services) to guide the growth of the business.

Drive Operational Excellence

An organisation that grows rapidly risks setting up of inefficient practices and / or practices that are no longer scalable. This provides customers with an inconsistent or poor experience at different touch points such as call centre, store, email, website, inter-departmental handovers and similar others. Effective leaders are able to drive out the inefficiencies in their organisation.

4-D Mode of Leadership Deliver Revenue Potiental

Discover Self-balance Being/Doing

4-D Model of Leadership

Develop

Team PotientalNext Generation Leaders

Develop team potential

Leadership is about developing the potential of the team to take on leadership positions within the organisation. Team members have to learn to be effective change agents to manage the Drive communication and Operational coordination process Excellence with greater dexterity than lesser skilled staff. Change agents excel in identifying the differing and sometimes conflicting perspectives of key stakeholders, the potential failure points in proposed solutions and the ability to tap into readily available resources to achieve the change management objectives. The complexity of organisation struc-

ture and the inter-team communication requirements place a lot of strain on those who are relatively unskilled. Ineffective communication leads to downstream issues such as product defects, defective customer service and loss in employee productivity and morale. This phenomenon is referred to as “Coordination Deficit” in an organisational context.

Discover self-balance between ‘Being’ and ‘Doing’

It is equally important for leaders to understand the origin of their behaviours and use that knowledge to guide their responses to the environmental changes. The key tasks of inner leadership are to become aware of the mental map of reality, determine if it is giving what the leader wants, and update it to reflect both the innermost desires and the latest technological thinking. To lead consciously, then, means becoming aware of both the content and structure of the mental map, its origins and nature, and taking full responsibility for making sure it yields the desired results in the organisation. Leaders also have the responsibility for observing their effect on others due to the internal map.

Conclusion

The new age leaders need to develop a more holistic skill set that goes beyond the conventional inputs on soft skills and behavioural aspects. The 4-D model of Deliver on revenue potential, Drive operational excellence, Develop team potential and Discover self potential as a leader – can serve as a framework for designing more well rounded leaders. Aditya Bhalla is QAI Innovation Practice Lead and consults clients on product and process design and improvement. He can be contacted at adityabhalla@yahoo.com

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cover story

Under the watchful eyes of CyberSecurity Malaysia By Simon Vella

yber threat is a serious matter that has come to define the times in which we live in. Cyber security is no more an option – it is a primary requirement – as any lapse would provide major threat not only to commerce but also the Internet, which has become one

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of the principal means for communication today. CEO of Cybersecurity Malaysia Lt. Col. Husin Haji Jazri (Retired) stresses that cyber security has become a vital foundation for a country’s national and economic security. Husin said thus far, cyber security in Malaysia is at a safe and manageable level. He observes that most companies have

made substantial investment in technology and ICT hardware and security solutions. “The concern is mostly on the users (the employees) Internet habits, especially with regards to the social networking phenomenon. Most companies ban sites such as Facebook and YouTube, but the employees still access these sites at home using the same laptop computers that contain com-

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Husin … We are neither a cyber police, nor a cyber space regulatory body. We do uphold the law and we support regulators and law enforcement agencies. But our focus remains on providing technical specialist services.

pany data. Such habits make company data vulnerable even with the step to ban certain sites during office hours. “Then, there are Blackberries and other smart phones that are perpetually connected to the World Wide Web. Add to that SMS scams that target employees. So basically, the issue is not so much on the technology side but more on the social side of cyber security,” added Husin, who has dedicated his entire career to information and communication systems security – extending from a long-time military career to his work with research institutions and government agencies in Malaysia. A not-for-profit organisation, CyberSecurity Malaysia is the national specialist centre for cyber security – under the purview of Malaysia’s Ministry of Science, Technology

Internet security impacts the business climate rating of a country, just as political stability does. and Innovation (MOSTI). “Basically, we are tasked to look after the safety and security of Malaysian cyberspace whether from the technical aspects, research, human resources development or outreach and other specialised services in the field of cyber security,” said Husin, who became only the second Asian to have been honoured with the Harold F. Tipton Lifetime Achievement Award this year. CyberSecurity Malaysia also cooperates and collaborates extensively with other national and international agencies as issues relating to cyber security often transcend national boundaries. “We are well known within the information security circle, hence, it is not a problem to get cooperation from our international counterparts. “For example, we are the co-founder of Asia Pacific Computer Emergency Response Team (APCERT), which now has 25 members comprising Computer Emergency Response Teams (CERTs) and Computer Security Incident Response Teams (CSIRTs) in the Asia Pacific region.” In addition, the agency is the founder of the Organisation of Islamic Conference, Computer Emergency Response Team (OICCERT), which currently has 18 OIC countries as members. Furthermore, the agency is a member of the Forum of Incident Response and Security Teams (FIRST), which has a total of 222 members across 48 countries. Husin said: “We are also a member or affiliate of many other associations in the field of Internet security such as the Anti-Phishing Working Group (APWG). Having friends in the right places gives us the advantage of cooperation and fast response in times of needs.”

The agency has also been actively participating in various conferences, seminars and workshops either locally or internationally. “With these presence in the local and international arena, we are no longer strangers to the ICT industry, particularly in the information security and cyber safety field.” Husin said CyberSecurity Malaysia’s biggest and continuous goal is to ensure the security and well being of the cyber realm that not only benefits Malaysians but also Internet users worldwide. “Through international cooperation, Malaysia could seek strategic partners overseas in the event foreign hackers threaten the nation and vice-versa.” Asked if there are any misconceptions the public and private sectors have about CyberSecurity Malaysia and its work, Husin said his agency is often mistaken for “cyber police”. He said: “We are neither a cyber police, nor a cyber space regulatory body. We do uphold the law and we support regulators and law enforcement agencies. But our focus remains on providing technical specialist services.” Cyber security is indeed vital to the growth of the Malaysia technology and business process services sector. He said: “The security of private information networks is the foundation for today’s global economy. This is also and, indirectly, the foundation of global trade in IT-enabled services and in the global supply chain.” Husin added that it is important to reduce and eliminate cyber security violations that could affect local and international business confidence with regards to Malaysian outsourcing vendors. “Internet security affects

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cover story

CyberSecurity Malaysia also cooperates and collaborates extensively with other national and international agencies as issues relating to cyber security often transcend national boundaries.

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the business climate rating of a country, just as political stability does. Countries with strong and effective cyber security measures are deemed more attractive as a hub for IT and Business Process Outsourcing activities.” The agency also creates many initiatives to establish safe and favourable cyber environment that will, in turn, help boost economic growth. Malaysian Common Criteria Evaluation and Certification Scheme (MyCC Scheme) is one of the efforts towards this goal. MyCC Scheme is a systematic process for evaluating and certifying security functionality of ICT products against defined criteria based on ISO/IEC 15408 standard, also known as Common Criteria (CC). CyberSecurity Malaysia is providing financial assistance under the Economic Stimulus Package 2 (ESP2), which promotes the MyCC scheme. Malaysian companies developing ICT products are eligible for the MyCC Financial Assistance (MyCCFA) to help them obtain the Common Criteria ISO/ IEC 15408 Certification. Husin is confident that the Common Criteria certification will improve the competitiveness of Malaysian ICT products in the global market, besides also broadening and providing access into new markets. “In the long run, it will collectively translate into job creation, revenue generation and economic upsurge.” At present, Husin says, the agency is also extensively promoting Information Security Management System (ISMS) ISO/

IEC 27001 certification for public and private companies alike, besides other professional certifications such as Certified Information Systems Security Professional (CISSP) targeted for cyber security practitioners and individuals. “These certifications are on top of the MyCC Scheme targeted for ICT product developers.” Besides, CyberSecurity Malaysia also provides the quality seal and recognition for the security features for businesses and industry to help enhance quality and add value to products and services that they provide overseas. “Therefore local hardware and software developers have the opportunity to sell the products overseas with their security features guaranteed.” Additionally, the agency has established two main programmes for Malaysian organisations and the public at large – namely the Cyber999 Help Centre and CyberSAFE. Husin said: “The establishment of the Cyber999 Help Centre is in line with the Malaysian government’s initiative to make ‘999’ as the number to call for emergency assistance. Hence, whenever Malaysians need emergency assistance in the cyberspace, Cyber999 is the place to go.” Some of the services provided by Cyber999 Help Centre include assisting Internet users in dealing with computer security incidents and providing the subsequent recovery and eradication steps. The help centre also assist in communicating and escalating security incidents to relevant service providers, computer security emergency response teams (CSIRTs) and law

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Countries with strong and effective cyber security measures are deemed more attractive as a hub for IT and Business Process Outsourcing activities.

Securing our Digital City As information and communications technology continues to push the frontiers of innovation, the relevance and dependence on technology becomes our way of life. At this juncture, we all live in Digital Cities; where the community combines broadband communications infrastructure and innovative services to meet the needs of governments, businesses and the public. “Securing Our Digital City” is a proactive initiative to address national security concerns and to build community confidence by mitigating the multi-dimensional cyber security challenges in critical infrastructure, economic and cyber crimes. The vision is to create a cyber-secured community that is engaged at local, state, national and international levels. This will be a holistic approach towards cyber security. The “Securing Our Digital City” initiative will provide the “community” or digital cities with the knowledge and awareness in cyber security and best practices needed to secure our digital cities. This project’s concept will be introduced and discussed during the upcoming CyberSecurity Malaysia Awards, Conference & Exhibition (CSM-ACE) 2010 to be held from Oct 25-29, this year.

About the CSM-ACE 2010

enforcement agencies, besides producing regular security advisories and alerts on the latest cyber threats. Husin says Cyber999 also lends a hand in providing analysis on post-incident artifacts such as malicious codes and system logs. He added: “There are nine major category of incidents that are handled by Cyber999. They are Content Related, Cyber Harassment, Denial of Service, Fraud, Intrusion, Intrusion Attempt, Malicious Codes, Spam and Vulnerabilities Report. “The public can get more information about Cyber999 Help Centre by visiting our corporate website www.cybersecurity.my. They can report any cyber threats to Cyber999 Help Centre by email to cyber999@cybersecurity.my or via CyberSecurity Malaysia Customer Service Hotline at 1-300-882999.” Meanwhile, as part of the CyberSAFE programme, short for Cyber Security Awareness for Everyone, the agency has established an outreach portal www.cybersafe.my and the CyberSAFE ambassador programme. Husin said: “Under the CyberSAFE, we also conduct exhibitions, road shows, talks and awareness seminars for children, adult, and organisations. The public in general or organisations may request for speakers or even register to be CyberSAFE ambassadors via the www.cybersafe.my portal. “We see school students as one of our main target audiences too. Thus far, we have reached to more than 150 schools all over the country.”

The CSM-ACE 2010 is an annual industry conference that shapes the regional information security landscape. Expected to draw over 1,000 participants from around the world, the CSM-ACE 2010 will bring together some of the most influential and innovative minds in business, government, academia and key information security players to exchange policies, ideas and technology. Among the objectives of the event are: • To build a foundation for innovation to drive transformation in ICT security. • To act as a catalyst in driving transformation through creativity and innovation for the ICT security industry. • To create a thought-leadership platform venturing in the new cyber security frontiers. • To create networking as well as trade and investment opportunities.

• To create a networking platform for ICT security professionals, policy makers, industry players, researchers and ICT security buyers from around the world. • To allow the ICT Security industry players to promote their products and services through exhibition. Hence, creating cross border trade and investment opportunities. • To expedite the implementation of Securing Our Digital City initiative • To gather feedback from the ICT security industry on Securing Our Digital City initiative. • To provide a platform for the different key stakeholders, ie Government, industry players, NGOs and public, to voice their opinions on the implementation of Securing Our Digital City initiative. • CSM-ACE 2010 incorporates a two-day conference, an exhibition of information security technologies and the Malaysia Cyber Security Awards 2010. The conference will run on three focused tracks: • Policy, Legal and Governance • Technical • Information Security Management System

Key Topic Highlights

• Securing Our Digital City: Towards 2020 • e-City: Towards a Resilience Society • People – The Missing Link Factor in Inculcating Information Security Culture in Organisation • Treating Information Related Risks – What Control Do I Need to Know? • Answering the Question “Does my Organisation Handle Information Security Risks Effectively?” • Balancing Information Security Compliance with Operational Efficiency • What Works in Penetration Testing and Vulnerability Assessment? • e-Discovery: Do it the Right Way • Integrating Trusted Computing Technology in the Enterprise • Securing and Data Protection in the Cloud • Unified Content Security: Securing Borderless Enterprise For more information, please visit www.csm-ace.my

A concise look at CyberSecurity Malaysia It acts as the technical agency conducting analysis and activities to protect the nation’s cyberspace especially in terms of technology and expertise. For example, when the authorities need the advanced technical systems to analyse digital evidence, the agency will help them out. CyberSecurity Malaysia also holds activities and training programmes for Critical National Information Infrastructure (CNII) to enhance the security of IT systems in the public and private sector. The services provided by CyberSecurity Malaysia can be broadly categorised as follows: • Cyber999™ Help Centre

• Malaysia Computer Emergency Response Team (MyCERT) • Digital Forensics (CyberCSI™) and Data Recovery Services • Security Management and Best Practice Advisories • Security Assurance Services • Vulnerability Assessment Services • Malaysian Common Criteria Evaluation & Certification (MyCC) Scheme • Information Security Professional Development • Cyber Security Awareness Programmes through CyberSAFE (Cyber Security Awareness For Everyone) Programme • Cyber Security Policy Research

July-August 2010 | Outsourcing |

Outsourcing |

branding

Outsource branding Leaving a mark on the minds of buyers Outsourcing By Jerry E. Durant

utsourcing is a hard business in so many ways. The mere presence of outsourcing providers and practitioners stir intense emotions at every level of society. These conditions create impressions that have lasting effect on the outsourcing brand. As we all know our profession isn’t always viewed in a positive way and as a company you need to find ways to reverse (or at least reduce) these perceptions. Branding is more than a logo, it reflects everything that your business stands for. Companies who think they can win sustainable business purely based on referrals will reduce their long-ter m growth. This is due largely to the lack of strategic repeatability and control. Yo u r b r a n d must: • Overcome negative perceptions, • Reflect your best virtues, • Identify your inclusion as a part of the outsourcing community while establishing a definitive difference of importance to consumers, and • Credibly understand the values that buyers make decisions on.

Outsourcing culture brand

You would think that a buyer would have already overcome the negative aspect of outsourcing given their interest in your services. However, they may not realise that their exploration, further expansion, and activities are getting the attention of others. Employees, shareholders and even governmental regulators, in today’s economy, are quick to get involved and place added

| Outsourcing | July-August 2010

pressures on the buyers to seek popular alternative (in-source or source domestically). Brand defence is not about providing a convincing argument supporting “why” – it’s about providing a brand atmosphere that eases concerns. As outsource suppliers, what can you do to overcome the outsourcing brand challenge? First and foremost, your brand needs to promote an understanding and respect for the societal issues confronting buyers. If your brand is all about your business, it leaves little support for the consumers as they attempt to address the challenges

is to have a brand that has a negative connotation associated with it, due to some unfavourable past events or dealings. Both companies and individuals emit brand value and these can be both positive as well as negative. These values can change over time simply because society (and customers) take a different retrospective on historical events. There are, however, companies that can be at the top of their game and still not have significant brand recognition. This can be caused by: • Little or no market promotion efforts, • Narrow or niche service offering, • No brand development, and • Confusing and loosely defined brand statement.

Some might contend that branding is a waste, why bother when revenue success has been established? True, but has this success be developed from coincidence or from hidden brand emission? E v e n though we accept opportunities based on coincidence, it is a phenomenon that cannot be relied upon. Changing market conditions further complicate our ability to repeat these success stories. Isn’t it easier to create the possibility Show it! … how strong is your of success based on your overall viability as a business? deliberate and controlled they face. actions rather than hoping for Strong probabilistic luck? brand values involving your strengths as a Yes, there is also positive brand value as provider (viability & capability), safe location positioning and strong knowledge resources observed through the eyes of the customer. must shine through. Better brand resolution Positive brands radiate warmth and have is an area where outsource trade bodies and lasting impressions that captivate your government can take a leadership role to consumer and lead to a lasting interest in improve the image of outsourcing. Until you. There are six aspects to branding: this relief is provided, outsourcing firms will Identity: Company traits have to bear the burden on an individual Image: Consumer view Character: Values relative to stability, inbasis. tegrity, honesty, commitment Culture: Fitting into service sector (part Positive and negative branding or separate form) It is just as bad to have no brand as it

branding | Outsourcing

Personality:Who the brand appeals to within the consumer community Essence: Emotion promoted The effectiveness of their implementation is directly influenced by the appropriate use of graphics, adequate contextual content and style in which it is presented.

Let’s talk specifics …

Whether you are a startup or a huge set-up, your brand needs attention. As will be discussed later, brand management and governance are an essential part of the branding responsibilities. When was the last time that you did a general consumer survey to see if you were easily identifiable and what your brand represented to them? If your company is recognised but cannot be connected to your services, could this be attributable to branding problems? We consistently hear the outsourcer’s lament about wanting business, needing help and suffering from a lack of interest in services. These conditions are attributable to brand immaturity and lack of credible visibility. A website must be viewed as simply a storefront to your business. It should not be held as the only means to establishing brand visibility. Although your web storefront may be on Main Street, it can be easily distorted by other brands and the potential customers may easily bypass you by without knowing that you exist. This reminds me allot of the children’s puzzle game, “Where’s Waldo”. From the very first day of existence, your business is accumulating brand value. Many emerging companies fail to realise this and commit other faults in forming the business basics. Focusing on delivery, feeble campaigns are mounted to expound upon the virtues of the company and its technical bravado. Overlooked is the drive of consumers to form credible working relationships and these are not based on self-promotion or shallow claims on delivery excellence. Buyers want to know your core beliefs, values and how strong is your overall viability as a business. These are essential entry point; further discussions will not take place until these aspects have been properly ascertained. Companies sometimes fail to understand their customers. This is often reflected in mix value messages being sent, lack of appropriate listening skills, limited research and formative relationship building effort. Characterised by an “it’s all about me” mentality, outsourcing companies continue to promote a brand that follows a similar suit. Does your brand statement and the related implementation of the brand talk more about you and less about the proposition that you are putting before the customer? Does the client feel engaged or entertained by your promotion show (aka dogand-pony exposition)? There is a time and place for facts and supported proofs, but when it comes to brand and brand motion,

Branding is not easy and sometimes we cram too much into a single message.

it isn’t about the details – it’s about the life and breath of the organisation.

Mixed message: Pathway of confusion Branding is more than a logo, it reflects everything that your business stands for.

From the very first day of existence, your business is accumulating brand value.

Branding is not easy and sometimes we cram too much into a single message. In doing so we create a confusing, bewildering and sometimes “hard to believe” brand statement that ultimately lose buyer interest. To prove this point is the effectiveness of the “elevator speech”, a brief but lasting message capable of being delivered in the time an elevator travels to a desired floor. Talking faster may provide more information but the message gets lost with the intended audience. This also applies to your branding message, so less is more. Buyers need to know the critical high points about your business and what is being represented. They don’t need a maze of capability, technologies, history and poorly vetted terms that seem to lead nowhere. For example, what is the BPO (Business Process Outsourcing) scope comprised of and what additional information might be needed in order to reach the desired buyer community? Are call centres a part of BPO segment or CCO (Call Centre Outsourcing) segment?

July-August 2010 | Outsourcing |

Outsourcing |

branding

There are a number of other examples such as Finance Accounting Outsourcing (FAO), Human Resource Outsourcing (HRO) and so on that create buyer confusion, resulting in misbranding. Forming a brand at the proper level of detail (for example BPO vs. FAO) must be considered through an understanding of how potential clients get to us. If they are looking for accounts payable services it is more likely that they will relate to FAO rather than the broader BPO term. Brand management is important as it is viewed as a corporate asset.

The craft of branding

Where do you get started? As was mentioned earlier there are six aspects to branding. Each carries with it three possible delivery alternatives. Fundamental to this is the need to gain a solid understanding about your customers, both historically and those that have eluded your capture. Information that is used must be reliable and with sufficient content in order to minimise conjecture. The more you know the better equipped you are to craft a brand that attracts customers. Outsourcing demands an inward selfevaluation that can be used to uniquely set us apart from others. Maybe it’s a particular employee who is renowned or has a qualification attained through an independent certification body. Remember that these attributes are invaluable and carry objectivity and credibility (not to

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mention the value that the qualification imparts). Armed with credible information about your target customer and objective insight about your own strengths, you must tackle identity, image, character, culture, personality and essence elements. Appropriate application of contextual content, graphics and style will produce a holistic brand for your company. Do not overlook the matter of establishing the scope for your brand. Often brands attempt to reach a global market create a degree of dissolution. Had brands been crafted to fulfill specific markets, the potential for more business might have occurred. Even global brands may require adaption to attract specialised interests. This can be seen in consumer brands such as Coca Cola or McDonalds where the brand is tooled to fit local needs but at the same time retain vestiges of the global brand representation. Be cautious too, if you outsourcing business has been predominantly local as it will require adaption to fulfill a global market setting.

Hitting the mark

Did your message hit the mark? Not all brands will provide instantaneous feedback. Depending on average buying cycles, brands that get introduced outside of these periods may experience a lag in buyer response.

To alleviate anxiety, outsourcing companies could selectively introduce itself to a cross section of buyers. Brands should leave a lasting (positive) impression. Great brands will produce a pipeline of new opportunities resulting from your value statement. Exemplary branding will raise your outsourcing business above the competition without prejudicial commentary. Such brands provide value to the consumers by reducing buying and delivery risk, increasing return-on-investment and improving closure speed. This provides additional justification value for buyers.

‘Strong-arm tactics’

Want something to fail? Then put it out there and hope that it will develop on its own. Branding requires a nudge and a push. Branding efforts should involve great fanfare especially if your company has been in hiding as the result of branding neglect. A three-stage introduction may include: Pre-Introduction: Interest stimulation Introduction/Rollout: It’s here! Care & Feeding: Yes, we are here … and growing too How you facilitate this will influence the brand longevity and loyalty. During the dotcom era, fledging companies took advantage of the Super Bowl to make their one big splash. Amid the noise of much larger companies like Budweiser, Bridge-

branding | Outsourcing

Branding efforts should involve great fanfare especially if your company has been in hiding as the result of branding neglect.

Whether you are a startup or a huge set-up, your brand needs attention.

stone and Gillette were smaller companies like Go Daddy and Monster.com that made their branding debut. At that time, not much was known about them and even less about how their services might be used. But their clever and innovative approach – based on understanding the buyer profile – captivated interest, which was built upon over the subsequent years. Unlike so many others who fail to attain sustainable business velocity, these organisations went on to become globally credible enterprises. Good brands bring with it opportunities with prime avenues such as top billing at conferences, access to keynote speaking slots, and opportunities involving media announcements. All of these provide invaluable extensions to brand value.

Responsible brand behaviour

Anthony Mitchell, a customer relationship management buyer, concluded that there are 10 commandments to branding. Some of these have been mentioned previously, which emphasises their importance: • Focus on Target Markets • Don’t Covet Another’s Brand (and this includes brand portrayal) • Match Brands Exactly with Domain Names • Don’t Use Silly Prefixes (dilutes and creates identity confusion) • Escape the Background Noise (including personal self-acclaim, use of popular words like innovation and trying to be global

when you are regional) • Obey Rules of Grammar • Avoid Negative Connotations (including suggestive or potentially offensive) • Make Brands Memorable and Easy to Spell • Obtain Internal Understanding and Acceptance • Test Prior to Deployment It was once said that a smart man does not need to possess all knowledge, he only needs to know where to get it (and possibly when). Branding and effective promotion may require expert guidance. The question is whether the expert needs to be supplier or buyer centric. In most cases it will be both. There are parts of branding that are not influenced by geography and there are some (such as presentation form) highly affected by local factors. This is one of those rare occasions, where vantage point diversification is invaluable. When more is at risk relative to brand success and failures, the value of expert diversification becomes more important.

Your fate is in your hands

Business does not come easy even when there is an abundance of magic cookbook solutions. Purposeful and deliberate implementation of critical business foundation points must encapsulate credible service delivery. Overlooking or ignoring fundamental principals will hinder business growth and put at risk the long-term health of your business. We have all heard of companies that have failed not because of their world-class products or solutions but because the market was simply unaware or misinformed about them. Don’t be disillusioned by thinking that a sale makes for a success story. Sustained and controlled repeatability reflect success and the effectiveness of your brand message. Coincidence is accepted as a gift and not as a basis for business development maturity. Branding is the keystone in business. Without a definitive and unique brand, representing the core values of your business, a company will constantly face the same nagging

questions from buyers. Your competition may know your weaknesses and are already mounting campaigns to capitalise on them. Taking a decisive branding initiative will pay dividends for many years to come. 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.

Even though we accept opportunities based on coincidence, it is a phenomenon that cannot be relied upon.

July-August 2010 | Outsourcing |

Outsourcing |

CIO

There a number of concurrent roles the successful CIO must play to gain the confidence of the business unit managers and other key stakeholders.

Playing CIO in competitive global economy CIO needs to constantly search how business units can use technology to enable business, says Dr Wendell Jones in this first of a two-part series

Outsourcing By Dr. Wendell Jones

echnical skills alone may have made IT managers successful in an earlier era, but in this rapidly changing and competitive global economy, CIOs today must be constantly

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searching for innovative ways that technology can be used to move the company forward. To do this, the CIO needs a broad business knowledge, a deep understanding of technology, and an awareness of what constitutes success for the business. To lead and influence others, strong negotiation and communication skills are important. Placing the CIO in the executive suite was an important development, but to be effective at the CXO table, the CIO needs to understand the ends and outs of the

business and be constantly searching for how the business units can use technology to enable the business. And when change is required, the CIO is typically in the best position to lead the change as an architect and integrator. There are a number of concurrent roles the successful CIO must play to gain the confidence of the business unit managers and other key stakeholders, and to effectively manage, influence and integrate. We need to first think of the CIO as a relationship builder with different stakehold-

CIO | Outsourcing

ers, but most importantly with business unit management. Line managers are the users of IT services, for they are the heads of the business units and departments responsible for exploiting business opportunities and achieving competitive advantage. The CIO must create and maintain open communications with business unit managers, but clear communications channels can’t be developed instantly. Effective communications requires performing consistently, and building a trustful relationship. The success or failure of any company’s use of information technology depends on line managers at all levels understanding what IT can or cannot do. However, a CIO who can’t consistently perform as a project manager and deliver projects on schedule and within budget usually does not get an opportunity to build positive relationships. The days of long development time, inflexible schedules and cost overruns are over. The IT organisation must quickly develop applications and integrate ERP systems and other purchased packages within budget and on time. Many companies turn to offshore service providers to not only reduce costs, but to gain access to software engineering skills and disciplined processes. But whether developed in-house, outsourced or some combination, it is essential that the IT organisation develop systems that meet requirements and deliver on schedule and within budget. A contemporary CIO must also have the ability to plan the IT architecture.

Lateral leadership requires communication and negotiation inwardly within the company and outward across organisational boundaries and national borders. Simply issuing directives downward will not get the job done in today’s economic environment.

The software and hardware standards that define the shape of the architecture are responsibilities of a CIO and should not be outsourced. It is unlikely that the service provider has the business knowledge necessary to ensure that technology is aligned with the business direction. Another important responsibility of the CIO is to build a top performing IT organisation of highly motivated professionals. Rapid technology change is resulting in gaps in the skill sets of IT staffs. The answer to having the right mix of skills is a combination of investing in the existing employees and using outsourcers selectively and wisely. Lateral leadership is another of CIO’s role. Lateral leaders play a vitally important role in managing outsourcing and alliance and partnership relationships with suppliers and inwardly across the organisation. A key finding of a new study, “Leading Laterally in Company Outsourcing”, by Michael Unseem (Wharton) and Joseph Harder (Darden Graduate School of Business) that appeared in a recent Sloan Management Review found that successful supplier relationship management requires a blend of leadership skills different from traditional management. Lateral leadership requires communication and negotiation inwardly within the company and outward across organisational boundaries and national borders. Simply issuing directives downward will not get the job done in today’s economic environment. In summary, the successful CIO must be able to think big picture while still focusing on the details. The CIO should foster a win-win approach to issues and emphasise “we”, not a “we-they” attitudes. An effective CIO today demonstrates good communication and negotiation skills, an shows an ability to embrace and champion change and the capacity to think strategically, while still comfortable with detailed technical analysis.

CIO must be able to think big picture while still focusing on the details.

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.

July-August 2010 | Outsourcing |

Outsourcing |

Legal process outsourcing

Easy mistakes to make when embracing LPO By Danny Ertel

egal process outsourcing (LPO) is a reality. Legal work is starting to move from law firms to LPO providers around the world. There are those who prophesise the end of (large) law firms and those who are just as certain that this is all just a passing fad that will surely be shown to be unsustainable, if not unethical. Given all of the noise, it seems worth setting out a few relatively safe assertions, and then building on those premises: • LPO is today about repetitive, highvolume tasks of low to medium complexity. LPO providers are doing the kinds of things for which many law firms have long relied on paralegals, temp agency lawyers, or junior associates. While there is some legal research, contract summarisation, and drafting, most of the work being carried out by LPO providers today is document review for litigation and work around the early stages of patent clearance. • In-house law departments are leading the way in exploration and experimentation with LPO. Most law firm experience is limited to serving a particular client that has insisted on the use of a lower-cost resource for some of the work. Even the firms that have made the investment to set up a captive service centre in a lower-cost location (onshore or offshore) are currently using those centres much more for back office services than for legal work. • The LPO industry is still relatively immature, populated by many small providers that may not have significant staying power and that do not, in fact, offer the usual outsourcing benefits in terms of scale, technology investments, or process expertise. • Lawyers will generally be unable to shed responsibility for the quality of the work carried out by the LPO provider, even when the client has selected the provider and foisted it on the law firm. Whether bound by ethical or court rules, or simply because they value their reputation, law firms will have to take steps to assure the quality of their client deliverables. Many law firms are feeling pressure from their clients to take a hard look at LPO and develop some kind of offering that significantly reduces the cost to the client. That pressure is not going to go away. Having been trained, like most lawyers, to learn

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Although law firms certainly should remain firmly in control of the higher-value level services, refusing to dig into what LPO could or should mean for your practice is to ignore what is happening in every other part of the economy.

by studying things that have gone wrong, let’s consider some of the mistakes law firms make when they consider LPO.

Failing to understand your clients

When a client asks (or demands) that the firm make use of an LPO provider for high-volume, repetitive tasks, at least one of the things they are asking is that you show them that you understand that they

are under pressure to become more efficient, to deliver value for their spend, and to work with outside counsel who can help them not just meet today’s budget cuts, but to think more creatively and strategically about how to manage their legal and regulatory risks. They want you to understand that legal fees cannot continue to increase year after year after year. While the general counsel’s office was for a long time insulated from the pressures that Sourcing & Procurement have brought to bear on other parts of the organisation, that is no longer the case. RFPs, preferred provider panels, and volume discounts for legal services have become a matter of course. Responding to a client’s question about LPO with any kind of answer that does not acknowledge the pressures clients are under to demonstrate that they are being responsible in how they spend their budget just misses the boat.

Legal process outsourcing | Outsourcing

This mistake is at best a lost opportunity to improve the relationship and address one of the inherent tensions between inhouse and outside counsel, and at worst a confirmation of the client’s most negative perceptions about the firm.

Ignoring LPO as an option

Remaining uninformed and disengaged from discussions about what kinds of tasks should or should not be automated, delegated, or even dispensed with altogether is another common mistake. Although law firms certainly should remain firmly in control of the higher-value level services, refusing to dig into what LPO could or should mean for your practice, as if absolutely every task could be done only by partners and associates of the firm, is to ignore what is happening in every other part of the economy. Clients have experience and comfort with outsourcing a broad range of services throughout the corporation to providers that can deliver quality at a lower cost; it is an increasingly hard sell that legal services are, categorically and in their entirety, different. Rather than burying your head in the sand and hoping it will just go away, a much better stance is one that is open to the discussion, perhaps even proactively so, and that demonstrates knowledge of the available options and adds value in helping the client make informed choices and manage the associated risks.

Grudgingly accepting LPO

A common mistake many firms are making today is allowing clients to feel that they are twisting their lawyers’ arms to explore LPO. If you are essentially “caving in” to client pressure to make use of the provider the client has vetted and selected, you will certainly get no credit for any savings. But even if you get no credit when you “go along” with a client’s request to use an LPO provider, you do not avoid the responsibility for their outputs. Like it or not, ethical duty (and in some cases, court rules) requires that if you take on the representation, you have to make sure that the use of an LPO provider does not diminish the quality of the results. It is easier to obtain quality outputs from an LPO provider if you enter into the relationship in a collaborative fashion rather than as the result of being coerced by your mutual client. It is much easier to

deliver high-quality legal representation to your client if you have been an active part of the process of identifying what activities should be outsourced and defining criteria for the selection of a provider (instead of inheriting a selection that may have been made primarily on the basis of price). It is even easier to do a quality job and get some credit for being responsive and innovative if, when asked by a client about

Some law firm partners are convinced that, whatever the firm does, it should own the delivery centre.

July-August 2010 | Outsourcing |

Outsourcing |

Legal process outsourcing

Support service … LPO is today about repetitive, high-volume tasks of low to medium complexity.

LPO, you can identify some providers with whom you have already established a relationship and perhaps even have run some successful pilots.

Trying to appear as innovative

Using an LPO provider is not without risks. Starting to use LPO providers without fully understanding from an operational, regulatory/ethical, and economic perspective, which activities should be done where and by whom, is a mistake. For example, sending document review work to an Israeli law firm for US$150/hour to be done by qualified lawyers may feel safer than sending it to India or the Philippines to be done by more junior staff, and it may seem like a good deal compared to what your own firm charges for document review work. But what you charge clients and what it costs you to have documents

reviewed are two different things. If you are ready to abandon your profit margins on document review, one way to lower your client’s costs is to outsource the work and treat it as a disbursement. Another way is simply to charge a lower rate for doing that work internally. Whether or not this is a good deal depends a lot on your staffing model (would you use attorneys or paralegals? Are your costs for those resources mostly fixed or largely variable?) and your utilisation rate at any given point in time. Similarly, it would be a mistake to entrust client confidential materials to a provider ill-equipped to protect those materials, or whose hiring, training, and monitoring practices do not give you sufficient comfort on the issue. With over a hundred small, newlyestablished providers out there sharing what is still a modest amount of total industry revenue, it is unsafe to assume that all providers really are fully capable of deliveri n g

Ideally, a decision to use LPO should be made strategically, more than just enthusiastically.

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quality outputs. Ideally, a decision to use LPO should be made strategically, more than just enthusiastically. How you use LPO in your practice should fit with how you are positioning your firm with your clients. For firms seeking to focus on high-end advisory work, for example, LPO could be one of several options to consider when you discuss the kinds of work you should (or should not) be doing for them. Other options would include helping them become self-sufficient for some tasks, or using quality regional or specialty firms. On the other hand, if you are positioned as a full-service firm, LPO could play a very significant role as part of a portfolio of services you provide, even as it raises questions about your leverage model and how you recruit, hire, and train associates.

Thinking you have to ‘own it’

Some law firm partners are convinced that, whatever the firm does, it should own the delivery centre. Whether coming from fears about quality control and confidentiality, or from an optimistic view on the strategic importance of such assets, the instinct to build a captive is not an unreasonable one. The mistake comes in thinking that owning the facilities is the only way to address the need to unbundle services, consider where and by whom each piece should be done, and assure that each is done well. There are “best friends” relationships or networks that can serve as good alternatives and don’t require a large capital investment. There are providers that can leverage economies of scale and process expertise to deliver a reliable and more flexible managed service and who do so under fairly stringent service level agreements. There are hybrid alternatives that can capture many of the benefits of both the captive and the outsourced model,

Legal process outsourcing | Outsourcing

giving law firms some control over hiring, for example, while still allowing them to leverage a provider’s multiple locations for business continuity planning.

Many law firms are feeling pressure from their clients to take a hard look at LPO and develop some kind of offering that significantly reduces the cost to the client.

Ignoring change management challenge

In seeing how some firms have struggled to make effective use of lower-cost resources, whether their own or those of a third party, we have noticed a common set of change management challenges: • Out of sight/out of mind: Partners responsible for particular engagements tend not to think of the offsite resources as readily as they do the more familiar, locally based resources. • Resistance to the unfamiliar: Even when they are reminded of such resources, some partners resist relying on teams that may be across the country or across the globe, working in a different time zone, who may communicate with a different accent, or who may simply feel less under their direct control. • Failure to adopt new processes: When the delivery centre is responsible for meeting quick turn-around times and demanding quality metrics, they tend in turn to require from users some standard lead times and specificity with regard to the task. Those kinds of “form-filling” requirements often feel counter-cultural, like something of a bother to partners and senior associates. • Lagging metrics and incentives: There is huge variance among firms about what is measured, what is reported to whom, and what is rewarded (both formally, in terms of compensation and promotion, and informally, in terms of status and praise from the most influential partners). Many firms fail to think carefully about what metrics and incentive levers need to change to integrate the use of LPO in their offerings. The problem is not only one of partner behaviour. The messages that the firm sends about its commitment (or not) to the use of alternative resources for low-complexity, repetitive, high-volume tasks will impact how associates and other staff view those resources, and whether they consider that developing the skills and capabilities to manage engagements that make use of such resources is a good, or not-so-good, career move.

Climbing learning curve

This is certainly an interesting time to be practicing law in a large firm and there is no simple answer to the question of outsourcing legal processes. As you embark on a consideration of these issues, here are a few things to keep in mind and questions to pose: 1. Engage key stakeholders early: People respond much better to being included in the consideration – even of things they may believe should not be done – than to being excluded and surprised later. 2. Define a path for your investigation: What questions do you need to answer first, second, third? What do you need to validate right away and what can you “wait and see?” 3. Keep an open mind: Although we seem

The LPO industry is still relatively immature, populated by many small providers that may not have significant staying power. to have passed an initial tipping point, there are still lots of moving parts. The answers may not be what you expect when you set out to explore our options. 4. Consider the following issues: • Which of our clients are likely to be interested in LPO, for what categories of work? • For that work, which specific tasks can be done substantially more efficiently elsewhere, by others? • What kind of quality assurance mechanisms do we need to meet or exceed our current levels of accuracy? • What kind of ownership or contractual arrangements could support our business and professional objectives? • Is there value in moving quickly to gain momentum and experience?

• What are the risks of waiting and learning from the mistakes of others? • Should we focus across the firm, on the “bottom 10%” (from a value perspective) of the activities we currently do, or should we make narrower, practicespecific choices? • Whatever choices we make, how do we prepare our firm for the changes required of us, if implementation of any such programme is to be successful? Danny Ertel is a founding partner of Vantage Partners. A spin-off of the Harvard Negotiation Project, Vantage Partners helps customers and providers enter into, manage, and remediate working relationships. July-August 2010 | Outsourcing |

Outsourcing |

conversation

MDV: The visionary financier Since its foundation eight years ago, Malaysia Debt Venture (MDV) has proven time and time again that there is money to be made from lending to the ICT, biotechnology and other emerging technology sectors in Malaysia. While banks and other financiers were shunning these growing sectors, MDV made all the right turns to arrive where it is today. With the current fund size of RM4.1 billion, MDV acts not only as a financier for these high growth sectors but also aim to be a

development facilitator. A fully owned subsidiary of the Ministry of Finance, the agency received a big shot in the arm when the government of Japan – through Japan Bank for International Cooperation (JBIC) – provided RM1.6 billion seed funding to help facilitate its inception in 2002. In this interview with the Outsourcing magazine, its CEO Mohd Zubir Ansori Yahaya explains why the organisation prides itself with fast loan approvals and hassle-free processes in various of its financial offerings.

What is the role of MDV? One of our main objectives is to establish a blueprint and prove that financing the ICT industry can be a profitable business – provided a proper methodology is established. We believe that funding is one of the key challenges for any start-up or growing companies, more so for the ICT-enabled businesses. At the same time, most banks are not comfortable to fund such ICT-driven businesses due to the “fear of the unknown” – as they are unable to measure the business viability and success rate. Banks have always been contented on commercial lending based upon the strength of a company, and the hard collaterals accompanying it. Hence, you will find the banks to very excited in funding the real estate, oil & gas, construction or even in agriculture businesses due to the solid collaterals. In their perspective, the ICT businesses are still unable provide them with a sense of security with regards to their loans. This was the main reason that the government believed that we need to have a proper and responsible financier to help any ICT companies, provided that they are incorporated in Malaysia, to carry on with their projects as the country moves up the value chain and position itself as a services-based economy in future. We also hope that our success will encourage other financial institutions in the longer term to enhance their understanding of the ICT industry and offer more of their services to companies that have the capability and potential to succeed, but may not be able to meet the traditional terms of lending. Does MDV support start-up companies? Absolutely. For us, a management’s track

| Outsourcing | July-August 2010

conversation | Outsourcing

In the case of direct outsourcing contracts, we will also facilitate the needed funds based on the value of the secured project.

record of a company is more important than the entity’s history. We will consider financing any company that has a strong project or contract irrespective of its number of years in operation or size. Beyond financing, we also extend Nurturing Services to assist start-ups and SMEs to grow their business and develop entrepreneurial skills. How do you evaluate your clients? As an innovative financier, we are always looking at ways and methods to evaluate ICT projects in order to reduce our failure rate and NPLs. For that MDV has devised its own due diligence methodology, which looks at five key areas – management, technical, finance, collateral and legal. In management due diligence, we don’t really look into your balance sheet and the assets but the focus would be on the management skills of the company. We also want to be able to measure the ability and technical know-how of the company. We make sure that there are right processes in place to facilitate knowledge and technology retention in the organisation, even if initial key employees or founders decide to call it quits in future. The technical due diligence takes into account whether the developed technologies has got other commercial opportunities to capitalise on. Also, the technology or solutions created by these companies must be able to stand the test of time and not get outdated too quickly. We do not require hard collateral such as high-value fixed assets. We do also accept Assignment of Contract Proceeds, Personal Guarantees, Corporate Guarantees, Assignment of Intellectual Property Rights, Export Letters of Credit and Debentures as collaterals. Of the five factors in our due diligence, the management and technical aspects

stand tall in our evaluation, the rest three are the usual factors that are taken into account by any other financier. How different is MDV if compared to a Venture Capitalist? We are debt financiers. MDV does not take up equity interest in the commercial entities taking loans from it. Instead, its investment is in the form of debt which is usually structured as a term or revolving loan. What are the payment terms imposed by MDV for its customers? MDV’s average cost of funds is 4.99%, while we offer rates of between 6% and 8%. This depends on the risk profile of the project. However, one needs to understand that we do not impose fixed payment schemes for our clients unlike banks. In some cases, we will even set aside the interest payment during the project period. Basically, it will not be “one size fits all” approach that we take. If your revenue kicks in only after eight months of operation (based on the business model), we will only enforce the repayment after that period. In the case of direct outsourcing contracts, we will also facilitate the needed funds based on the value of the secured project. As such, we ensure the repayments are flexible according to the needs of the customers and capacity to engage the repayment process. We need to also make sure that these clients are able to deliver the goods in the secured projects. Only then, we are assured of the repayments. For us to be able to do this, we put in the required efforts to understand more about their business and secured projects. Please tell us about the second fund which was launched in 2008. To recap, the first fund in 2002 actually

came via the Japan Bank for International Cooperation (JBIC) for the financing of projects in ICT and biotechnology and other high growth sectors in Malaysia. This initial fund has been fully disbursed and also paid back to JBIC, for that matter. In 2008, MDV has been authorised by the government to raise RM1.5 billion for its second fund, which was sourced locally through Islamic Medium Term Notes Programme. With this, we are able to offer our clients a syariah-compliant financing programme – an alternative to our existing conventional financing. How much has MDV allocated for biotechnology businesses through this second fund? For biotechnology, we have allocated RM500 million worth of loans under this new financing programme. The financing facility, which is part of the RM1.5 billion second fund, is intended for biotechnology companies growing beyond the precommercialisation stage, covering the funding of the sector’s equipment and infrastructure, working capital and received projects or contracts. The new financing programme is also in line with the government’s National Biotechnology Policy to utilise the country’s wealth in biodiversity and providing a conducive environment for biotech-driven businesses to grow. Biotechnology is still at its infancy stage so this leaves much room for opportunity to grow and grow it will, with the right environment, assistance and nurturing from the government. It is the hope of MDV to be able to lend a hand in creating a robust industry for biotechnology. It is expected that the biotechnology industry can contribute to 5% of the GDP by 2020. I do believe that we are moving towards that direction.

July-August 2010 | Outsourcing |

Outsourcing |

Government Sourcing

Governments & sourcing:

A controversy or an opportunity? By Bobby Varanasi

et me start with the positive news: Way back in 2002, Thomas Healy, Managing Partner for Government Services with Accenture observed that outsourcing by governments is the fastest growing segment and is likely to overtake commercial outsourcing through double-digit growth estimates. The US federal sector alone saw its outsourcing portfolio grow by over 16% year-on-year since 2002, and continues to do so. The myth that governments cannot outsource is clearly dispelled. One of course would argue that it is possible with capitalist economies like the US and Western Europe to do so, but the fabrics of developing nations are of a different kind, and therefore outsourcing by such governments is a lot more difficult. Having said that, is it really so? The establishment of quasi-governmental organisations (known as GLCs in Malaysiaspeak) have been, and continue to be the harbingers of growth for key economic sectors in most developing nations, where sufficient autonomy exists for such organisations to pursue business models that are focused on value-creation. Also, the success is measured by both commercial goals and social goals. Hence the argument remains – most GLCs seem to have deployed a variety of “partner” models to achieve successes and growth. However this seems to have been undertaken without indulging in aggressive adoption of sourcing models – outsourcing, shared services and other relevant models. So the questions that beg answers are (a) why then do governments need to even consider outsourcing? and (b) are outsourcing and partner models similar? Governments globally in conscientious economies have become very conscious of the need to serve citizens better, put tax-payer dollars to the utmost beneficial use, and consequently improve services and general quality of life for citizens. A holistic goal, with a much-needed reality check, is to determine how best to reduce investments and operations of non-competitive public services (like waste management, mail services, public transport, road infrastructure and others) without compromising on the utility-value citizens derive from such services. On the other hand, a plethora of ICT solutions available have created a significant opportunity for governments to pursue

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Viewing outsourcing in its restricted state of just providing cost savings is very limiting. some additional goals, that of rationalising tax-payer spend through reducing “multiplicity” of cost-oriented back office work, while speeding up citizen access to existing and new services, with a view to enhancing quality of life, increasing citizen productivity and consequently spurring GDP growth and its consequent value accrual (measured as an increased GNI per capita). Of course with the advent, and adoption of new technologies, one big question remains unanswered – will technology replace government human resources? More often than not, in the western world it seems to have. However developing nations have neither the penchant nor the cultural ability to indulge in human resource-slashing initiatives. This is the point where adoption of sourcing models by governments seems to have taken a back-stage.

Regulation vs. Outsourcing

A recent study compared two regimes. In the regulation regime, a utilitarian government decides to set up a regulated firm run by a public manager. The government controls the investment and production decisions of the regulated firm (read GLCs) and is therefore accountable for its profits and losses. Such a combination of control rights and accountability duties is typical of public ownership. The government designs incentive contracts to entice the firm’s manager, who has private information about the firm’s cost, to set the efficient level of production at

some informational cost. In the outsourcing regime, a private investor is invited to serve the market, possibly in exchange for a franchise fee. The private investor gains control and cash flow rights on the outsourced activity, while controlling the investment and production decisions and therefore is fully accountable for profits and losses. As it is, the private firm is allowed to set the laissez-faire monopoly prices. Yet, because laissez faire is not necessarily optimal, the government can improve welfare by offering ex post contracts to the private firm; that is, once investment costs have been sunk and uncertainties have been solved. Ex post contracts are used by governments to entice a private firm to reduce its prices and increase sales. They are designed to fight the deadweight loss generated by monopoly pricing. However, to accept such ex post contracts, the private investor must at least obtain laissezfaire profit, which raises its participation constraint to the scheme. The right panel of Figure 1 illustrates this point; the private firm’s profit under outsourcing (in blue) is everywhere larger than the private monopoly profit (in green). This goes to show that optimal outsourcing contracts are more selective than the contracts under public management; that is, low-cost private firms are offered ex post contracts that lead them to produce the regulated outcome, whereas high-cost private

Government Sourcing | Outsourcing

firm’s profit under outsourcing (in blue) is smaller than the public Output manager’s rent under regulation Output (in red) for most cost parameters. Outsourcing hence generates II a positive fiscal effect because the government is able to terminate II subsidies to those money-losing Q II projects and possibly to collect Q a franchise fee from the private Q investor. Outsourcing also generates an economic surplus effect, Cost parameter Cost parameter as production can be higher under Red: Output and profit under regulation outsourcing than under a publicly Green: Laissez-faire managed firm. Blue: Outsourcing So much for the case of positive benefits with outsourcing, however, firms are not. As a result the level of produc- has this been achieved elsewhere? Yes it has tion under outsourcing is the maximum of been, closer to home in Singapore. Take the the level of production under laissez-faire instance of “consolidation” strategy adopted and regulation. The left panel of Figure 1 by right statutory boards – similar to Maillustrates this point by showing the output laysia’s parastatal agencies like Malaysian levels under regulation (in red), laissez-faire Investment Development Authority (MIDA), Multimedia Development Corporation (in green) and outsourcing (in blue). This result is intuitive. At the contracting (MDeC) etc. These boards were seen to have multiplicstage, the public manager of the regulated firm knows the cost parameter, whereas the ity with common services like procurement, government does not. It takes advantage of human resource management, finance & this information to obtain rents. To prevent accounting etc. In order to initiate intermanagers of low-cost firms from inflating ministry billing while reducing the overall their cost reports, the government must cost overheads, instill a commonality with reduce the output levels it asks to high-cost new technologies deployed, and remove firms. Incentive issues can be so harsh that redundancies across board the governthe output levels of high-cost firms become ment decided it would be best to deploy a smaller than the output levels that they shared service entity under the aegis of IDA would achieve under laissez-faire. The left Singapore (a parastatal agency acting like panel of Figure 1 illustrates this point by the Government CIO) where all services showing the firm with cost parameter β0 described above were consolidated. A host of benefits were achieved – workflow such that output is the same under regulaoptimisation, technology standardisation, retion and laissez-faire. There is no point to offer an ex post con- duced total cost of ownership with IT systems, tract to a private firm with this cost because smooth and faster billing patterns, integrated its output level equals the government’s end-to-end citizen centric processes, outcomepreferred output level. Ex post contracting driven policies, increased emphasis on talent and laissez-faire would yield the same management and risk management and consumer and producer surpluses. Consider others. The consequent savings achieved were phenomenal – S$50 million (US$36.6m) per next a firm with a cost larger than β0. If the government proposes an ex post annum. The resultant model didn’t reflect contract to this firm, it is unable to get any job losses. On the contrary, existing jobs a surplus larger than under laissez-faire were transformed as they moved into the because incentive compatibility obliges it shared service entity. This goes to further reinforce the fact that to distort its output downwards. Moreover, any transfer to this firm also sourcing models, correctly deployed, can add significant value while increases the remaining citizen-centric. rents of all firms The most interesting aspect with lower costs. Of course, with the advent of this model has been the Because the government is and subsequent adoption enhanced ability of the Singaporean government harmed by both of new technologies, one to proactively engage its effects, it offers no big question remains citizens and respond to their ex post contract unanswered – will needs nimbly and empato firms with technology replace thetically. such large costs. government human The governCan this be replicated ment thus has resources? in Malaysia? no obligation Can this be done in Mato subsidise the laysia? Absolutely yes. high-cost firms The questions surrounding under outsourcwherewithal, and willingness ing, and exto adopt sourcing models is pected transfers passé. The recently completed to private firms The National Key Economic Areas are lower. In the right (NKEA) Labs under the Prime panel of Figure 1, the private Figure 1:

Minister’s Office have clearly adopted outsourcing/sourcing for governments as the most appropriate strategy to create citizen value, while continually enabling the larger pool of citizens. This necessarily compliments various initiatives being currently undertaken by specialist agencies like The Malaysia Administrative Modernisation and Management Planning Unit (MAMPU) and Malaysian Institute Of Microelectronic Systems (MIMOS). Recently, I recently engaged in a long and positive conversation with Thillai Raj T. Ramanathan, CTO of MIMOS, who explained how his agency, through engaging competent Malaysian Ph.D graduates and researchers, transformed its citizen services. MIMOS has a portal which focuses on providing a range of services – agriculture, health services, global connect etc – to all citizens at the click of a button. The development of the portal has been a MIMOS initiative; the services and information offered for concerted decision-making comes from a host of private-sector sources (both local and global); the technology supporting these services is vendor-neutral (meaning all technologies are being deployed); while the channel used is cloud computing and free laptops distributed to citizens across the nation. Is MIMOS the generator, aggregator, outsourcer, vendor or provider? I would imagine it has become a combination of all these roles. This is a positive case for bundled outsourcing with technology and delivery models. Viewing outsourcing in its restricted state of providing cost-savings at the cost of jobs is very limiting. It is vital that the private sector engage with government entities in Malaysia, where conversations like the above are undertaken. Mutual value is a consequence of citizen services, increased productivity, higher Gross National Income (GNI) per capita and competitive solutions that can then be globalised. There is sufficient proof that outsourcing/ sourcing can be rigorously and successfully deployed in Malaysia. A host of private sector companies can contribute to the effort. Such models can then be taken to other developing nations and replicated (with local flavours, of course) so as to further enhance competitiveness and happiness of citizens. Malaysia has the ability to make this transformation happen with its government services, and Malaysian companies can aptly contribute to this effort. The emphasis being placed by MDeC and Outsourcing Malaysia on this very aspect clearly reflects the need to rigorously create value, show quick-wins and enable transformation in a manner that government services become competitive, citizen-centric and forward-looking. Bobby Varanasi is the Head of Marketing & Branding of Outsourcing Malaysia. He is also the CEO of Matryzel Consulting. Brought to you by Outsourcing Malaysia.

July-August 2010 | Outsourcing |

Outsourcing |

e-learning

From Global to Local: Increasing reach of learning

By Deepali Sathe

lobal trends indicate that acceptance of e-learning is growing at a faster rate than ever before. The strange paradox is that while the demand is growing, implementation is lagging. Countries like the United States, the United Kingdom, some European countries, Canada and Australia, are way ahead in terms of acceptance, pedagogy, and implementation; there are others across Asia and Africa that are still dealing with infrastructure issues and supply of e-learning modules tailored to fit their requirements. Learning has evolved significantly over the last decade. Globalisation has influenced the way it is understood and delivered. Another primary reason for the evolution is technology. The learning industry has been one of the front-runners when it comes to adopting technology and as learning moves from classrooms into the virtual world, the very definition has changed. Some inherent training requirements are that companies should be able to reach out to employees that might be located remotely, are on the move, are in multiple locations, needing real-time inputs, without interrupting work, etc. Another hallmark of e-learning is innovation. The wide array of requests that it can cater to is impressive. Here is an example that amply proves the point. Close to three million Canadians who stay and work overseas can now make use of ExpatCanada, an online social networking and specialised education support system. This was set up in response to the huge demand for offshore networking and education for expats. The primary aim of this service is to enhance competitive cultural and economic advantages of the Canadian workforce. Expats are educated on acceptable social and professional mannerisms, options available for food and medical help, managing personal security, and being more culturally sensitive. ExpatCanada also enables personnel assessment tools, collaborative e-learning, counseling and mentoring programmes.

Learning in its new avatar

Which then brings us to the point of who is capable of delivering on these different parameters? And the answer quite obviously is â&#x20AC;&#x201C; the experts. These experts or e-learning

| Outsourcing | July-August 2010

providers, as they are otherwise known, are companies that specialise in creation of modules as per client requirements, or have products designed to cater to specific needs, are subject matter experts who completely understand all aspects of any vertical or horizontal. They can guide companies when it comes to learning best practices; have all processes in place for fast implementation and can be depended upon for measuring improvement, execution and delivery. E-learning providers offer different services that may comprise either content or technology or both. They work with companies as partners and are involved right from training need analysis to actual delivery and evaluation. These customised solutions are usually long term engagements and are aligned to strategy decisions. Off the shelf products are usually more cost effective, but confined to very specific and routine tasks. Companies that outsourced e-learning have found it to be effective, fast and changes if needed, are easier to make. The quality o f

traini n g modules has also been found to be better as it is usually the experts that a r e involved in developing the training programmes. Essentially it turns out to be a better experience, considering experts add a lot of value. The demand and the supply both seem to be in tandem. Yet that is not the case. As mentioned earlier, implementation is clearly falling behind.

The learning industry has been one of the front runners when it comes to adopting technology.

Companies have issues and reservations that service providers are sometimes unable to sort.

Learning is much more than technical aspects

Our conversations with e-learning providers indicate that they find it extremely difficult to convert opportunities into real deals. While companies understand the need for elearning, and are convinced that e-learning will eventually help them, they are not very forthcoming when it comes to handing over responsibility of training, more so when

e-learning | Outsourcing

the company and the e-learning provider belong to different countries. While there are a number of reasons for these deals not going through, which include difference in perspectives, cost, quality, scheduling etc., one that often gets overlooked is cultural disparity. Learning needs to be user centric, and if a user feels discomfort or disconnect when applying it, likelihood of the company opting for that training module is low.

Some of the aspects that need attention are:

Localisation of content: If the learning content is something that learners cannot associate with, chances of them reacting to it favourably are remote. Providers must understand that in spite of globalisation, content localisation is mandatory. To quote a very simple example, a module that tells a sales person in India about the new features of a car, may not be very effective if maximum speed is mentioned in ‘miles/ hour’, or talks about fuel efficiency in ‘gallons of gas’! Audio content: Using audio instructions to complement visuals is said to increase the efficiency of the module and retention. While this requirement is usually catered to, it is important that the accent and language are given due attention. An employee in Australia may find it tough to decipher the African accent. The following example indicates how accents are considered important when learning languages: The Japanese Embassy launched an e-Learning facility in Makati City to help Filipinos looking to learn the Japanese language. This centre aims at improving teaching capabilities and further the trade relations between the two countries. The centre was needed due to the relocation of the Japanese Embassy. Rather than use local teachers, the Embassy preferred to have its course move to a technology based platform to retain its success rate. Since the caregivers were to be relocated to Japan, it was important they understood the nuances of the language completely. Socio-political nuances: Being correct politically and socially, literally, can make or break any deal, and the situation is no different in learning. A slightest lack of understanding can create an unfavorable opinion that can eliminate all chances of entry. What may appear like a small error actually reflects the attention to detail, and incorrect references to something as mundane as historical or geographical details, will only lead to one thing ... out of the door.

tomising e-learning to a given geographic region and the devices that are likely to be used. A heavily loaded e-learning module may not work in an environment where Internet speeds are an issue. There are many more issues that need to be looked into before an e-learning company can successfully convince a buyer about the quality and efficiency of its system. It is important that innovative methods be used to deliver value to buyers. To tide over any challenge that may arise on account of cultural diversity, it is important that e-learning providers across the world sensitize themselves to these issues, and take steps to address them. Cultural nuances play a huge role in learning and this is one aspect that globalisation has not affected much. Learners continue to stay strongly attached to their regional and cultural ethos and probably even thrive in them.

Partnering to enhance the local flavour

region that can help e-learning providers bridge the divide between demand and supply. This along with careful scrutiny of the market conditions, prevalent attitudes towards learning will help providers make their presence felt. Such associations will also take care of the language and accent issues. Though learning is like any other business, there are some stark differences too. It revolves around strategic vision and decisions. If e-learning providers display adequate sensitivity when dealing with clients for whom outsourcing itself is a concern, much less than giving it out to someone who may not understand the finer and softer aspects of delivery, they would definitely achieve better success rates. Deepali Sathe is the Lead Analyst – eLearning at ValueNotes, a leading research and business intelligence firm.

One of the most effective methods for e-learning providers to counter cultural diversity is to enter into partnerships with local companies or experts. These partnerships will add and enhance the local nuances and themes adequately to increase effectiveness of the course content. These would not only help in dealing with the differences, but also help in reaching out to prospective clients. Similarly local hires will bring with them the intricacies of the prevalent learning cultural in a geographical

Cultural nuances play a huge role in learning and this is one aspect that globalisation has not affected much.

Technical issues: Another important aspect is cus-

July-August 2010 | Outsourcing |

Outsourcing |

survey

Global engineering R&D market takes flight A new study has found that the global market for Engineering Research & Development (ER&D) services sourcing has defied the economic downturn. Demand from sectors including computing systems, medical devices, energy, and infrastructure is fueling the ER&D market, and providers in emerging economies, led by India, are poised to gain share as multinational corporations seek to invest in innovation and drive future growth. Overall spending on ER&D increased 12% from US$980 billion in 2008 to US$1.1 trillion in 2009 and is expected to expand to US$1.4 trillion by 2020. India remains a dominant player in the global ER&D services market, with revenue growth of more than 40% over the past three years to US$8.3 billion in 2009 and expectations of reaching US$40 billion to US$45 billion by 2020. The study, “Global ER&D: Accelerating Innovation with Indian Engineering”, was conducted by management consulting firm Booz & Company with India’s National Association of Software and Services Companies (NASSCOM). The report sheds light on multinational corporations’ perspectives on ER&D services sourcing, growth trends in the Indian service provider landscape, and competitive positioning of emerging markets as sourcing destinations. The joint report also examines and prioritises 11 key verticals for growth in the global ER&D market. While automotive, consumer electronics, and telecom – all traditionally high spenders on ER&D – continue to lead ER&D spend, emerging sectors include computing systems, medical devices, energy, and infrastructure.

China surpasses India for outsourcing: KPMG

hina has replaced India as the primary destination of outsourcing and shared services for Asia-Pacific companies, KPMG revealed on July 14. The KPMG survey, which covered 280 senior company executives across Asia, showed that China’s outsourcing and shared services are rapidly expanding and winning market share over India and other regional destinations. “Though at the moment the country has still not reached the level of maturity seen in India, the growth of China’s outsourcing market is significant. Many Western companies may still see India as their location of choice, but for executives within Asia Pacific the message is clear – China is now leading the way,” said Edge Zarrella, global head, IT Advisory, KPMG China. According to the survey, 42% of the respondents said their companies have set up one of their shared services centers in China. With regard to outsourcing, 41% said they have a third-party outsourcing provider in China. Singapore stands second as a popular location for shared services at 29%, followed by India at 25%. Figures from KPMG show that in 2007, China’s onshore and offshore outsourcing market stood at only US$7.5 billion. That amount nearly tripled to US$20 billion last year, according to the Ministry of Commerce. By 2014, KPMG predicts that China’s total outsourcing market will stand at US$43.9 billion.

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| Outsourcing | July-August 2010

Moreover, shared services are also expanding rapidly in China. The survey finds that over 80% of senior executives employ an outsourcing strategy, shared services, or a combination of the two. Senior executives across the Asia-Pacific also view China as the preferred destination for setting up shared services centers. The survey also revealed low labour costs as one of the reasons for contracting outsourcing providers (51% of respondents choose low labour costs as the top factor), although it is clear that this is far from the sole determining factor. In addition, when asked about key factors used in determining the location of their shared services centre, respondents once again cited low labour costs, as well as language capabilities (53% each). According to Alan Fung, partner of performance & technology, KPMG China, senior executives should be careful about making location choices based on cost. “They should take into consideration the longer term needs of their business and how employing their outsourcing and shared services approach can align with their wider business growth strategy,” he said. The key rationale driving outsourcing strategies, Fung said, is no longer just cost arbitrage. Equally or even more important is the need to ensure access to a reliable supply of abundant and skilled talent. Language, skills and infrastructure are all critical.

survey | Outsourcing

Cloudy future in store

ales of cloud services are expected to jump 16.6% to $68.3 billion this year and more than double to US$148.8 billion by 2014, according to a new study from researcher Gartner called “Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2009-2014”. Cloud computing refers to a utility-type of computing model, where applications and software are accessed over the Internet and not owned by clients. Companies are said to save huge costs on these products, as they would not have to invest in purchasing them. “We are seeing an acceleration of adoption of cloud computing and cloud services among enterprises and an explosion of supply-side activity as technology providers maneuver to exploit the growing commercial opportunity,” said Ben Pring, Gartner research vice president. “The scale of application deployments is growing; multi-thousand-seat deals are increasingly common,” he said. Pring said that the imminent explosion in cloud computing and cloud services is closely tied to corporate examination of spending. “After many years of germination, most notably in the SaaS arena, the core ideas at the heart of cloud computing, such as pay for use, multi-tenancy and external services, appear to be resonating more

strongly,” he said. “In part, this can be explained by macroeconomic factors,” Pring said. “The financial turbulence of the last 18 months has meant every organisation has been scrutinising every expenditure.” Pring said cloud computing has become more relevant as a material solution for companies grappling to control costs associated with managing sprawling in house IT infrastructures.

‘Affected’ regions

Gartner expects that sales of cloud computing technology and cloud services will come largely from businesses in North American and Europe in the next five years, although other regions of the world will experience growth. The US share of the worldwide cloud services market is expected to shrink over the next five years, reducing from 60% in 2009 to 50% by 2014, Gartner said. In 2010, Western Europe will account for about 24% of the cloud services market and Japan will generate 10% of the segment’s sales. By 2014, the United Kingdom will represent about 29% of the cloud services market and Japan about 12%. Gartner expects the financial services and manufacturing sectors to represent the largest pool of early adopters of cloud services. Other industries involved with cloud services include communications,

Medical devices outsourcing market set to touch US$42.6b

Medical device manufacturers at all stages are face mounting pressures to reduce costs, increase margins, while still delivering product advancements, superior quality, and excellent customer service. Primary drivers for medical device outsourcing include not only the growth pattern of overall medical device market, but also the extent to which device manufacturers choose to outsource their manufacturing and assembly operations. Medical devices outsourcing market is projected to reach about US$42.6 billion by the year 2015, according to a research by Global Industry Analysts. The report titled “Medical Devices Outsourcing: A Global Strategic Business Report” says that the growth in the market is especially driven by factors such as rising demand from device end market, an increased interest exhibited by OEMs on improving productivity and simplifying supplying chain network, emergence of one-stop shops, and ability of contract manufacturing to slash costs, an added impetus for adoption especially during tough economic and financial climate.

Besides these advantages, medical device outsourcing also allows OEMs to direct efforts on specialised areas including technology, R&D, marketing and sales. Simplicity in implementation and low costs are prime factors driving adoption of medical device outsourcing by large and small enterprises alike. Also, the rise in the number and variety of vendor products/ offerings in this space will additionally drive acceptance. The current global economic slowdown is also expected to encourage OEMs from Europe and North America to tap labour from low-cost destinations such as India and China, which offer highly skilled labour at relatively low cost. Key players in this marketplace include Accellent Inc, Advanced Scientifics Inc, ATEK Medical, Avail Medical Products Inc, Creganna Tactx Medical, Greatbatch Inc, HCL’s Life Science, Heraeus Medical Components, Lake Region Medical, Memry Corporation, Minnetronix Inc, Sandvik Materials Technology GmbH, Symmetry Medical, The MedTech Group Inc, The Tech Group Inc, and TriVirix International Inc, among others.

high technology and the public sector. Pring cautioned that while interest in cloud computing is growing, many businesses still are concerned over key issues such as security, service availability, vendor reliability and maturity.

Lower customer satisfaction with CC poses threat: Avaya Avaya, an enterprise communications systems company, revealed that the likelihood of businesses in Asia Pacific to lose customers who are dissatisfied with their contact centre interaction to the competition in 2010 is as high as 47%. Among dissatisfied respondents in Malaysia, 52% said they are likely to switch to a competitor, while another 7% of respondents said they have moved their business elsewhere. These figures come from the annual Avaya Contact Centre Consumer Index 2010 report generated by callcentres. net and commissioned by Avaya. It surveyed 1797 consumers in Australia, New Zealand, Singapore, India, Malaysia and Japan. Respondents were asked about their overall satisfaction with their last call to a contact centre. A good 41% of Malaysian respondents said they were satisfied while 9% said that they were dissatisfied. Across the region, respondents who did not feel strongly happy with their last interaction with a contact centre blamed poor customer service, the inability to resolve their problem or because it took too long to resolve their call.

July-August 2010 | Outsourcing |

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The need for solid governance model This is the sixth in a series of excerpts from Atul Vashistha’s book – ‘Globalisation Wisdom: The Seven Secrets of Great Globalisers’

Outsourcing By Atul Vashistha When I make presentations at client conferences, I often ask this question: What is the single largest factor contributing to the failure of services globalisation initiatives? The answers I receive range from “lack of proper planning”, “supplier incompetence” to “miscommunication” to “internal resistance.” But in my experience, a great percentage of services globalisation initiatives fail because of the client organisation’s inadequate attention to governance. Governance usually gets a lot of attention during the rollout period of the initiative. It’s after steady state has been reached and executives have moved on to new initiatives that governance often gets forgotten – though it’s as important during steady state as it is any other time. The most common problems that I’ve seen plague services globalisation initiatives post-rollout include a lack of executive focus after the contract has been signed, insufficient monitoring of performance and deliverables, contract amnesia and a loss of original objectives. In the 1978 Superman movie, Christopher Reeve’s Superman catches Lois Lane mid-fall and says, “Easy Miss, I’ve got you.” “You’ve got me?” Lois exclaims, “Who’s got you!” The question can be all-too-familiar in business, as everyone assumes that someone else has assumed responsibility. But in a services globalisation initiative, a lack of direct monitoring of performance and deliverables can lead to reduced quality and missed or misaligned expectations. Even if a client organisation is monitoring service levels, there are other performance criteria such as attrition levels that are critical to the continued success of the initiative. Without direct monitoring, the quality of service may suffer. The successful governance model

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operates on three levels: • Organisational • Functional • Operational The top tier in the pyramid reflects organisational governance. At this level, governance activities are primarily strategic and are engaged by the organisation’s senior leaders. Organisational governance is where the big picture is reconciled, where the firm’s business case for globalisation is aligned with the initiative itself. This level of governance focuses on achievement of strategic objectives through ser vices globalisation and monitors that progress. Lenovo’s former CIO, Steve Bandrowczak, describes how governance was structured at the organisational level there. “You’ve got to make services globalisation a business project and you’ve got to make it where the business leaders of all impacted functions are either on the steering committee or part of the regular executive update programme. The worst thing you can do is make your globalisation initiative an ‘IT or HR or Finance programme’. “You’ve got to have the programme where it’s business-owned and businessled, and you’ve got to get the business to buy in.” At the functional level, the role of the governance group is to enable coordination, communication and control among key stakeholders and functional leads. Focus is on functional synergies and coordination rather than day-to-day management. The operational level is the front line of an initiative’s governance activities. This is where individual contracts and relationships are managed. The operational governance team is responsible for monitoring the day-to-day activities within the initiative as well as for reporting from-the-ground information to the functional and organisational governance teams. Because the operational governance team is directly responsible for managing the initiative on a day-to-day basis, large organisations may have several operational governance groups in place

across divisions or functional areas (refer to table, right). At FedEx, tracking performance is a hallmark of the company’s success. “Make sure you have a great tracking system,” Rob Carter, FedEx CIO told me. “At FedEx, we use that data to make sure we understand the variability in our business and to solve problems and to continuously improve the business.” Leading firms are using tools like Oblicore, Enlighta, Digital Fuel or Janeeva to report service levels and create enhanced transparency.

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Key Components of Governance Operating Model Activities Performance management • Analyse trends in management service lines (SLs) • Reorganise work process flow for offshore delivery • Monitor continuous performance improvement efforts • Review workload distribution across resources • Recommend productivity enhancements • Perform monthly operations reviews

Done and dusted … The most common problems plaguing services globalisation initiatives include a lack of executive focus after the contract has been signed.

Globalisation is not just about IT – it’s an enterprise solution.

Benefits • Early indications of problems • Forecast of shift scheduling • Maintain focus on quality improvements • Consistent performance levels • Optimal utilisation of resources • Implementation of global delivery model

Financial • Facilitate renegotiation of pricing management model when triggered by volumes management • Validate one-time expense allocations •Help modify pricing model for moving up the value chain

• Value for money, quality, flexibility • Industry benchmarking of market rates • Proper utilisation of allotted one-time costs • Improved global sourcing

Contract Contract • Track adherence to SLs management • Redefine SLs for relevance management • Review DR/BC planning and testing • Review compliance with insurance requirements • Review HIPAA compliance and data security • Track volume levels for pricing model triggers • Monitor sufficiency of connectivity/ infrastructure

• Contract compliance • Ensuring SLs are a true reflection r of vendor performance • Recommend new SLs for raising the bar • Ensure planning for 24/7/365 operations • Mitigate regulatory risk • Achieve next level of economy of scale globalisation • Ensure offshore centre availability

Relationship • Maintain vendor’s focus on client management as “Client of Choice” management • Ensure continuity of clear organisation escalation path on both sides • Track issue logs and days to closure • Clear up any cultural miscommunications • Facilitate offshore-onsite interactions

• Vendor remains involved in engagement at the executive level • Avoid issue accumulation due to executive-level changes • Early issue resolution • Seamless integration between client and supplier • “One Team” atmosphere

Resource • Review resource profiles for recruitment management • Monitor on-boarding processes management • Ensure smooth transition of key resources • Review attrition figures and retention strategies • Monitor skills/new process training • Assist in employee recognition

• Right resource for the right job • Early on-the-job productivity • Attrition management • Project continuity • Process-specific, not peoplespecific delivery • Knowledge management is built for future transitions, if any • Prepare offshore for growth and moving up the value chain • Increase individual productivity • Generate loyalty to engagement

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In a services globalisation initiative, a lack of direct monitoring of performance and deliverables can lead to reduced quality and missed or misaligned expectations.

Global Programme Manager’s Governance Activities Governance area

Activities

Performance management

• Evolve a robust workflow and process for both organisations • Focus on service levels in the contract that have a direct bearing on success • Focus on gap-closing processes

Financial management

•Manage financial expectations in the contracting phase • Prepare the client organisation and supplier to expand their global engagement into other areas of the business • Create awareness about unbudgeted expenses such as resource transitions, turnover, cultural holidays, etc.

Contract management

• Set up consistent compliance meetings as a regular checkpoint for deliverables, unresolved issues, and service level monitoring • Apply the terms of the contract from the beginning • Monitor adherence to contract terms

Relationship management

• Hand pick the user/IT staff staf that forms the core team from those who have a positive stake in the success of the globalisation initiative • Build trust, relationships and effective partnerships over time • Secure and check executive sponsorship throughout the organisation • Pro-actively manage issues so that they do not snowball • Communicate regularly, especially during periods of transition

Resource management

• Specify those key personnel in supplier organisation who cannot be reassigned without prior client approval • Prescribe a 10% resource buffer • Allow 2 to 3 weeks of overlap to transition resources • Agree on a process for the movement of personnel • Oversee investment in both technical and process training and management and professional training

In the end, the purpose of governance is to ensure that the goals set out for a services globalisation initiative are being met.

(From previous page)

More often than not, the reason these managed service initiatives fail is because there is no single point of contact for the engagement.

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Programme Governance Office

The lack of a single, unified management office is a leading cause of initiative failure, says Ron Kifer, Group VP and CIO at Applied Materials. “More often than not, the reason these managed service initiatives fail is because there is no single point of contact for the engagement – for vendor negotiations, for vendor management, for contract management.” Ultimately, it is the Programme Governance Office (PGO) that is accountable for the ongoing suc-

cess of the services globalisation initiative. That doesn’t mean that the PGO has to bear the weight of governance at all three layers – instead, it means that the PGO is where the proverbial buck stops. “The PGO is key to long-term success. Certainly it’s key in negotiations. You can’t have every business leader in the negotiation – there has to be a single point of contact throughout the entire process and then a single management entity with responsibility across the whole enterprise. This is because globalisation is not just

feature | Outsourcing

Going south … A great percentage of services globalisation initiatives fail because of the client organisation’s inadequate attention to governance.

about IT – it’s an enterprise solution,” Kifer explains. The PGO bears the ultimate responsibility for ensuring that good governance is being practiced within all three layers. A successful PGO will do that by: • Ensuring that accountable resources are identified for individual programme management and execution (expectations should be clearly outlined as well as the consequences of failing to meet responsibilities). • Ensuring that schedules and plans are synchronised for all project constituents. • Ensuring that Client Business and Operations groups are linked and syn-

chronised. • Ensuring executive sponsorship, user acceptance and buy-in throughout the engagement.

supplier’s or an independent local thirdparty oversight organisation. Applied Materials leverages Neo Group to help it manage, monitor and improve IT supply relationships. In most cases, I recommend that client organisations use an independent thirdparty oversight organisation that is in the same location as the supplier to act as the global programme manager. I never recommend that a client organisation rely solely on the supplier for governance, and the do-it-yourself model is usually only effective when a client organisation has a large presence in the location already and can leverage economies of scale. Whichever global programme manager model is chosen, the best global programme manager will understand the cultural and business climate in the supplier country and have experience working with client and supplier organisations in global arrangements. Specifically, a successful global programme manager will have direct experience with and knowledge of supplier methodologies as well as an understanding of the client’s business processes. The table (left: “Global Programme Manager’s Governance Activities”) details the activities that a successful global programme manager will undertake in each governance area. In the end, the purpose of governance is to ensure that the goals set out for a services globalisation initiative are being met. Establishing a strong governance model helps to ensure that globalisation continues to be embraced and welcomed as a transformation lever; that the lifecycle is followed through; that business and globalisation objectives are consistently re-measured and realigned; and that the best people stay on the job. It is only with strong governance that an organisation can secure the continued success of its globalisation initiative.

While the Project Governance Office is a part of the client organisation, a successful programme manager will assign a dedicated on-site manager (a global project manager) to act as a liaison between the client and the supplier organisations. The global project manager may be a direct employee of the client organisation who relocates to the supplier country (the do-it-yourself model), an employee of the

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

July-August 2010 | Outsourcing |

Outsourcing |

Management

Outsourcing By Dr Arlyne Diamond

Tug of war … Most of us have mediocre communication skills and poor understanding of where others are coming from – and that’s the cause of most misunderstandings and conflict between people.

Living colours: Similarities and differences in workplace

had dinner the other night with an interesting couple, both of whom have traveled the world on business. They were: M as a CEO and his wife E as first a salesperson and later a VC. Our conversation ranged over a broad list of topics, including that of the diversity of people. We agreed that the similarities between people all over the world are far greater than their differences. For example, almost all of us came from our mother’s womb, have five senses, need to eat and sleep regularly, want and education and success in life. When we grow up and have children, we desire the same things for them. We want our children to be happy, prosperous and healthy. Most of us are honest and ethical and can be trusted to do what we promise to do. Most of us play fair in life and in business and expect the same of others. Most of us are surprised and feel betrayed if the trust we offer others is broken by their acts or deeds. Most of us want our governments to be honest and ethical as well. We would hope that they would protect us, not cause us harm. When living in societies with governments that cannot be trusted, we live in fear and form our own sources of protection. Most of us have mediocre communication skills and poor understanding of where others are coming from – and that’s the cause of most misunderstandings and conflict between people. Here’s where some of

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In some parts of the world students are expected to recite the lesson, memorise it and never question. In others, questioning, being creative, looking at new ways to think and perform are encouraged.

the differences come in, in my opinion. We anticipate and expect different things based on our prior experiences and values coming from our countries/cultures of origin. So, let’s talk some about the differences. Consider art for a moment. Have you observed that there are great stylistic differences in the paintings and drawings from culture to culture. Many people can immediately identify the country of origin when looking at a work of art. How about music? The sounds and rhythms are different too, aren’t they. We all know about the differences in food and particularly the seasonings used. Many of us love having such a variety available in the cuisine of the world. Clothing and style are of particular interest to me – and it is interesting to see the styles and colours that are the native dress of cultures other than my own. It is also fascinating to see how we here in the USA adopt and adapt our styles incorporating elements of those from other countries and how other parts of the world adapt to western styles, particularly jeans. Think too about the way education is delivered. In some parts of the world students are expected to recite the lesson, memorise it and never question. In others, questioning, being creative, looking at new ways to think and perform are encouraged. Do these differences produce different business decisions? I think so. Now, it is important to issue the disclaimer. I am making a series of generalisations. I am not implying nor assuming that

Management | Outsourcing

all people of any culture are the same. I am neither stereotyping nor profiling. I am merely looking at the overview from a few thousand feet, the statistical average – the generalisation. In business we also see some remarkable differences, although now that the world is flat, we’ve all adapted and taken best practices from other cultures. But, look for a moment at the difference in countries who tend to hire a large group of students from the same school at the same time, and have them all start at the same level, with the expectation that they would all be promoted in the same manner. Compare this to a nationwide – or even world wide selection of candidates, with only specific skills considered and “at will” employment. Is it OK to make a mistake? The Israeli VC who spoke at a meeting I attended said that even bankruptcy is acceptable, because risk is encouraged. However, in other countries, Singapore for example, the demand for perfection is so high that mistakes are to be feared – and thus experimentation and creativity are somewhat stifled. This too is changing, I know. What about the role of women in the workplace? In some countries women as executives and leaders are encouraged and respected. In others it is still rare – and in some countries women are not even allowed to teach, let alone be in the workplace with men. How about age differences? Here in Silicon Valley, where I work and teach, youth are respected, and although it is illegal to discriminate on the basis of age, it is often done. In other countries, we revere and respect the elderly. All of these differences may seem trivial at first reading, but think about how they create expectations and beliefs. Our family, neighbours, religion, education, culture, climate, and country all frame how we think people ought to behave, interact with each other, react to authorities, and do business. I have neighbours and clients who come from Asian cultures and have been taught respect and obedience to authorities. They dare not question, disagree, or criticise. We, here in the West are seen as rude and disrespectful. The same is true about speaking up in meetings unless directly questioned. In some cultures, business is done quickly and immediately and any socialising is considered a waste of time. In other cultures, especially in the Asian cultures, it is critically important to have a social relationship before business is considered. The development of trust and understanding are the honey that allows for the ultimate handshake that cements the contract. Imagine the frustration business leaders of each culture feel about the behaviour of their counter-part in a completely different type of culture. Oh, and lest I forget – the most obvious and conflicted differences come about when right brain people (marketing, art and sales) try to communicate with left brain people (IT, software development and finance). I believe most misunderstandings and conflict come about due to different beliefs and expectations. We all need to learn how to understand where the other person “is coming from”. Our personal way is not the only right and good way. Dr ArLyne Diamond is an Organisational Development and Human Resource Consultant with over 30 years experience. She can be contacted at arlyne@diamondassociates.net

Standing tall … In some countries women as executives and leaders are encouraged and respected. In others it is still rare.

In some cultures, business is done quickly and immediately and any socialising is considered a waste of time.

July-August 2010 | Outsourcing |

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happenings

MDeC to introduce product quality assessment framework

Badlisham … “Stakeholders’ input in prioritising the evaluation criteria is a very important step in the project.”

hat do MSC Malaysia-status companies and camels have in common? No, this is not a trick question. A popular misconception is that a camel’s hump contains water. It actually stores fat to convert into energy. As for MSC Malaysiastatus companies, they face the perception in the market that their products are not of superior quality. That is patently untrue. This misconception is one of the biggest challenges facing the MSC Malaysia-status companies. Despite MSC Malaysia-status companies generating almost RM5 billion in revenue in 2008, of which RM2 billion was from Malaysian-owned MSC Malaysiastatus companies, there is a frustrating feeling of not being able to achieve their full potential in the Malaysian market because of this bias against their products. Enter the soon-to-be introduced MSC Malaysia Product Assessment and Ratings Framework. This is an attempt by the Multimedia Development Corp (MDeC) to create a quality benchmark against which MSC-status companies can measure their products. It will have a robust set of standards and tools that can stand up to any scrutiny and testing for tech products. MDeC is partnering TUV Rheinland, a global provider of technical, safety and certification services, to develop a comprehensive structure for the MSC Malaysia Product Assessment and Rating Framework. TUV Rheinland has many years of experience providing certification for both companies and products across Europe and Asia and is one of the foremost certification bodies in the world. MDeC will also be working closely with various stakeholders and relevant ministries and bodies such as Standards Malaysia to further develop this framework. It will come as a surprise to most that there are no present standards upon which to benchmark and gauge quality standards of tech company products. This is why

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MDeC has partnered with TUV Rheinland. The ultimate aim of this project is to promote and implement quality standards in MSC Malaysia products, thus reducing negative perceptions about locally developed ICT products. However, this still does not ensure that buyers will definitely purchase the products. MDeC is well aware that the framework will not be able to solve all the issues in terms of marketability of a product, as there are other contributing factors such as funding and market access.

Project objectives

The main objective is to develop a framework that enables an objective assessment of various products developed by MSC Malaysia status companies. This will have a ripple effect of promoting the development of higher quality products. A set of user-friendly framework requirements will be developed to efficiently, accurately and quickly assess, rate and if necessary certify products made by MSC Malaysia-status companies. They must conform to international standards and be globally recognised as a true measure of the quality of an ICT product. The benefit for potential buyers comes in the form of pre-qualification quality checks on the products, thus reducing the time buyers have to spend on their own assessment. The framework can also be extended to assess any IT solutions buyers intend to purchase. For product and solutions developers this opens up market opportunities by having their products assessed and rated, and identifying improvement opportunities through the framework.

Workshop to explain objectives, solicit ideas

MDeC conducted a one-day workshop recently for external stakeholders from various industries in Putrajaya to officially

kick off the development of the MSC Malaysia Product Assessment and Ratings Framework. The workshop was facilitated by TUV Rheinland Malaysia Sdn Bhd. It was designed to explain the objectives of the project to MDeC’s external stakeholders, as well as to obtain feedback from participants. About 50 external stakeholders were present, including representatives from software development companies, certification bodies, government departments, and software end-user industries such as healthcare, agriculture, and education. In general, participants agreed that there is a need for this framework to be developed. One key issue that came up was the acknowledgement that it was going to be a challenge in finding a balance in terms of the cost and the compliance to softwarerelated standards. It was noted that the more requirements are being assessed, the higher the cost of the evaluation. Participants felt it was important to ensure that the framework can provide an objective assessment of the products and solutions and at the same time be cost effective. Responding to this, MDeC’s chief executive officer, Datuk Badlisham Ghazali said stakeholders’ input in prioritising the evaluation criteria is a very important step in the project. “Criteria and requirements need to be analysed and prioritised in the framework so that less time and cost are spent focusing on evaluation criteria that are deemed to be less important. “We aim to ensure that the MSC Malaysia Product Assessment and Rating Framework is highly regarded and well accepted, not just in Malaysia but internationally.” Brought to you by Multimedia Development Corp (MDeC)

happenings | Outsourcing

Big Blue builds animation Cloud for MDeC

BM and Multimedia Development Corporation (MDeC) recently announced the development of Malaysia’s most advanced cloud computing animation centre, bolstering the country’s fledging creative content industry. Addressing the rapid increase in creative content companies, both within and outside of MDeC and the increased demand for rendering services, MDeC’s animation cloud will provide centralised facilities and programmes to help Malaysian animators, visual effects artists and multimedia students to bring their ideas to fruition in the digital content space. The new high performance cloud centre supports multiple concurrent users, and is accessible via the Internet for job submissions, monitoring and management. With real-

time testing, the facility is able to perform rendering jobs – a critical part of creative content production and animation – up to 8 times faster compared to rendering on a local workstation. The facility frees creative content companies from the burden of having to outlay a lot of money to install their own rendering systems or pay hefty sums to private service providers. The high performance cloud rendering facility includes IBM’s hardware, software, and cloud computing and consulting services. The centre will facilitate the creation of creative content by local creative content companies and enhance the work of creative companies by reducing the rendering inhouse production time and to produce high quality images for computer-generated content.

Malaysians hold top posts in WITSA The event was declared by Dato’ Dan E Khoo has been WITSA as the best ever in its re-elected as Chairman of WITSA 30-year history with more than (the World Information Technol3,313 delegates registered and ogy and Services Alliance) for 42,659 expo visitors from 92 a second two-year term. The countries. PIKOM (National ICT AssociaWCIT 2008 also raised over tion Of Malaysia) candidate will US$11 million in sponsorships, serve the alliance, which is a the most in the history of the consortium of 70 information World Congress. technology (IT) industry associaWITSA also announced the tions from economies around the appointment of Looi Kien Leong, world till May 20, 2012. a PIKOM advisor, to the Board for Although up against disa two-year period. Looi is also the tinguished candidate Dr Jorge Khoo … re‐elected as President of the Asian-Oceanian Cassino of Argentina, Khoo’s Chairman of WITSA. Computing Industry Organisare‐election comes as no surprise to some industry watchers as he had ably tion (ASOCIO). In addition, David Wong Nan Fay, an exdemonstrated his leadership with the successful organisation of WCIT 2008 (WITSA’s 16th chairman of PIKOM, was appointed to chair World Congress on Information Technology the Global Trade Committee to spearhead ICT trade among member economies of WITSA. 2008) in Kuala Lumpur in May 2008.

Sunway E-Systems and NetSuite inks deal Sunway Group’s subsidiary Sunway ESystems has signed a contract with NetSuite to distribute, resell, implement and support the US-based company’s cloud computing business management suites in Malaysia. The partnership also gave Sunway ESystems an immediate presence in the rapidly expanding cloud computing industry, as well as formidable line-up of cloud business management solutions, the company said in a statement. “As an exclusive distributor in Malaysia, Sunway E-Systems will build and directly

manage a network of resellers, partners and integrators in the three-tiered structure designed for the Malaysian marketplace,” it said. Sunway E-Systems said through the partnership, the company would also be able to capitalise on the growing regional trend for resellers and systems integrators to move customers to the cloud. The company said it planned to extend its regional distribution network in South-East Asia as a non-exclusive NetSuite distributor for Thailand, Singapore, Indonesia and Vietnam going forward.

MIDA hosts seminar for outsourcing opportunities The Malaysian Investment Development Authority (MIDA) held a seminar and networking sessions for outsourcing opportunities on July 27-28.   Themed “Driving Growth Through Innovation and Creativity”, the event was held at the Persada Johor International Convention Centre in Johor Baru, Malaysia.   The seminar focused on machinery and equipment, oil and gas, medical devices and electronics industries. Held for the second consecutive year, the seminar provided the latest updates on government policies, incentives, facilities and support services available to the business community.   Besides, the participants were also provided an opportunity to network with local and foreign businesses, universities and key government agencies and exchange ideas on innovation and creativity to drive further growth.

KRU and Crest take the Ribbit way Malaysia’s KRU Studios recently announced its collaboration with India’s Crest Animation Studios (Crest) on the co-production of its 3D animated feature film entitled Ribbit. Ribbit – with a production budget estimated at US$25 million, according to sources – tells the tale of a frog named Ribbit with an identity crisis. Norman Abdul Halim, Executive President of KRU Studios and Executive Producer of Ribbit, said, “This collaboration marks KRU Studios’ maiden voyage into the full feature animation arena – a natural progression following our expertise in CGI and special effects. “Filled with colourful characters and witty dialogue, Ribbit is feature film that is set to entertain audiences of all ages around the globe,” he said. AK Madhavan, CEO of Crest Animation Studios Limited said, “Crest is thrilled to be part of this exciting project as we believe that Ribbit is a unique one-of-a-kind venture and will redefine the boundaries of animation to come out of Asia. We are honoured to be partnering KRU Studios which has proved itself to be an innovative and progressive company.”

July-August 2010 | Outsourcing |

ADFEATURE

A I S Y A L A M   G N I C R U O S T U O   JOIN

OUTSOURCING 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

• Marketing the capabilities of Malaysian industry to local and global buyers through various trade events, while generating business leads for members.

• 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. • Regular egular Thought Leadership brainstorming sessions. • Access to OM’s Thought Leadership content via Member’s Login on its website.

Business Exposure

• Providing members with tremendous business exposure and visibility through the complimentary listing via OM website and overseas campaigns. • OM as the direct contact point for global buyers. • Affiliations with global outsourcing focus publication such as the Black Book of Outsourcing Global 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 International Association of Outsourcing Professionals (IAOP) Certified Outsourcing Professionals (COP) and Master Class programmes; and working alongside with MDeC on their K-Workers Development Institute (KDI) programmes designed to develop the human resources of the industry.

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

Global Aﬃliations

Through PIKOM’s partnership and membership: • ASOCIO • NASSCOM • 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 Fax: +603 7955 2933 e-mail: info@outsourcingmalaysia.org.my

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happenings | Outsourcing

APAC Service Outsourcing International Conference in Wuxi

he International Institute for Outsource Management – China (IIOM-China) with the partnership of Wuxi Municipal Government, will be organising the 2010 Asia Pacific Service Outsourcing International Conference (APOIC) from Sept 10-16 in Wuxi, Jiangsu. The event themed: ““Leverage the Global Experience to Insurance the Future of Outsourcing in China” aspires to serve as a strong bridge between the buyer and the seller of outsourcing services. The conference will bring together some of the leading minds in the outsourcing arena with the intent of address the challenges in the sourcing industry.

With the broad-based development of China’s ITO and BPO sectors and with continuous governmental support for these pillars of the Chinese economy, the APOIC 2010 is positioned by the organisers as an platform not only for its professional and technical significance, but as an important government initiative to enhance international cooperation between foreign countries and China in the fields of outsourcing and software/IT development. With the direct sponsorship by the People’s Government of Wuxi Municipality, the conference provides an unique chance to interact with various types of parties and candidates, such as Chinese companies, service vendors, and relevant research

Egypt grabs top honours at Euro awards Egypt was awarded the title of “Offshoring Destination of the Year” at the 2010 European Outsourcing Association Awards held in Brussels early July. Dr. Hazem Abdelazim, CEO of Egypt’s Information Technology Industry Development Agency (ITIDA) received the award on behalf of the country during a ceremony held at the Chateau Du Lac, Brussels. More than 100 high-level executives and outsourcing professionals attended this inaugural ceremony, hosted by the European Outsourcing Association (EOA). According to the judges, Egypt won the award because of its language skills, young population and growing list of global sourcing investments. It has soared in the

popularity stakes in the last few years as an offshore destination for Europe. Commenting on the achievement, Dr. Tarek Kamel, Minister of Communications and Information Technology said: “This award recognises the outstanding progress Egypt has made in the last year as a global outsourcing destination. “The country’s credibility is going from strength to strength amongst European companies and has put its mark on the map of favoured global services locations. We recognise the increasing role that Egypt can play in the fast-paced global ICT industry and we are advancing steadily on the way to position the country as a hub for IT innovation and entrepreneurship.”

MOL partners with Facebook

MOL Global announced a strategic partnership with Facebook that will make it significantly easier and more convenient for millions of people across Asia to purchase virtual goods in online games and applications on Facebook. Under the agreement, MOL Global’s wholly owned subsidiary MOL AccessPortal will become a payment provider for Facebook Credits. That will enable Facebook members to buy Credits using MOLPoints on Facebook and on MOL’s website, MOL.Com. In the coming months, Facebook users will be able to obtain Facebook Credits using MOL points purchased through MOL’s network of more than 500,000 outlets, which are mainly

in Malaysia, Singapore, Indonesia, Philippines, Thailand, India, Australia and New Zealand. In addition to outlets such as 7-Eleven stores and cybercafes, customers will be able to purchase Credits through MOL’s network of online banks in these countries.

NASSCOM signs MOU with Delhi University

India’s National Association of Software and Services Companies (NASSCOM) and Delhi University has signed a Memorandum of Understanding for the launch of the Global Business Foundation Skills course. The programme that has been designed

by NASSCOM with contributions from large BPO member companies like Genpact, Accenture, Convergys, Deloitte, Dell and IBM, is expected to help hone the skills of students who want to take up employment with the outsourcing industry. The programme will

institutions. As the most prospective service outsourcing destination in East China, Wuxi was officially approved by the State Council as China’s service outsourcing model city at the beginning of 2009 and successfully edges into the top three of all the twenty model cities in China. In 2009, the offshore contract amount reached US$1.38 billion, accounting for 14.4% of the national total. IIOM China is one of the seven regional offices branches of the International Institute of Outsource Management. For more info on the event, please email Angela at angela.lj@iiomchina.org

Slasscom out to boost BPO industry The Sri Lanka Association of Software and Service Companies (SLASSCOM) has partnered with the Association of Accounting Technicians of Sri Lanka (AAT) to jointly drive capacity building in accounting and finance to cater to the rapidly growing BPO industry in Sri Lanka. A mutual agreement between the two entities was established to collaborate in promoting Sri Lanka as a global sourcing destination for finance and accounting BPOs and to increase the number of qualified accounting and finance professionals in the country. President AAT Sri Lanka T. Dharmarajah said: “The purpose of this MoU is to develop academic and educational cooperation and promote mutual understanding between the two organisations, thereby jointly promoting accounting, BPO and IT as a preferred career choice among the student population and the business community with a view to increase the number of qualified accounting professionals suitable to serve BPO organisations.” AAT Sri Lanka was established in 1987, on the initiative of the Institute of Chartered Accountants of Sri Lanka (ICASL) with the primary objective of producing accounting technicians for the private and public sector.

be deployed as an “Add-on” programme for undergraduate students across universities. The Global Business Foundation Skills course (Add-On) will be available to all final year students across streams on a ‘firstcome-first-serve’ basis.

July-August 2010 | Outsourcing |

Outsourcing |

light takes

When the going gets tough, the tough gets going! “It is only through work and strife that either nation or individual moves on to greatness. The great man is always the man of mighty effort, and usually the man whom grinding need has trained to mighty effort.”

– Theodore Roosevelt

“I didn’t fail the test, I just found 100 ways to do it wrong.”

– Benjamin Franklin

“Failure is a word unknown to me.”

– Muhammad Ali Jinnah (pix)

“Spirit ... has fifty times the strength and staying power of brawn and muscle.”

– Unknown

“Success is never final, failure is never fatal.”

– Unknown

“America was not built on fear. America was built on courage, on imagination and an unbeatable determination to do the job at hand.”

– Harry S. Truman

“The season of failure is the best time for sowing the seeds of success.”

– Paramahansa Yogananda

“Continuous effort, not strength or intelligence, is the key to unlocking our potential.”

– Liane Cardes

“Restlessness is discontent – and discontent is the first necessity of progress. Show me a thoroughly satisfied man – and I will show you a failure.”

– Thomas Alva Edison

| Outsourcing | July-August 2010

Diddy to outsource Sean Jean manufacturing According to a report in New York Post on July 9, Diddy will soon begin outsourcing the manufacturing of his Sean John clothing line. The move comes after the music mogul completed a major exclusive distribution deal with Macy’s recently. Sean John representatives had confirmed the deal, explaining that the contracting of overseas manufacturers would now be handled by LF USA, a unit of Li & Fung, an export trading company with headquarters in Hong Kong. One industry insider referred to the business move as “a next step in expensive reduction as they (Sean John) struggle to remain in the black”, adding that: “Puffy has not been spending any time in the business. The only category doing well is fragrance.” However, a Sean John spokesman sought to quash speculation that the moves were an indication of recent weakness in the business. “The design group is not being outsourced,” the spokesman said, adding that the switch would allow Sean John to focus

more on its strengths in marketing under CEO Dawn Robertson, a veteran of Gap’s Old Navy chain. “The promotion is not being outsourced and the production is not being outsourced,” the spokesman added.

BPO centre for disabled in Bangalore Not-for-profit organisation the Samarthanam Trust has set up a contact centre training group for disabled people in the Indian BPO (Business Process Outsourcing) hub of Bangalore. The group, Samarthanam ‘Shristi’, aims to create a corporate training environment in BPO and call operations to disabled youth. The group has been initiated in association with the Department of Welfare of the Disabled and Senior Citizens, the government of Karnataka and the Ministry

of Personnel and Public Grievances. The training centre and contact centre facilities will be accessible to disabled youth, accommodating around 300 people per year across the state of Karnataka. “At a time, we can train 75 candidates. This will include persons with varying levels of disability, and we will tie up with several corporates to get them placed,” says Swaroopa Venkatesh, Communications Manager, Samarthanam Trust for the Disabled.

Kiwi prisoners’ crime calls to London Inmates at New Zealand’s Invercargill Prison will soon be able to report crime from within jail through the Crimestoppers phone line, but their call will be answered in London. The Southland Times reported that the Crimestoppers phone line will start at the Invercargill Prison as part of a nationwide rollout and calls will be free from prisoner payphones and exempt from the normal telephone monitoring. It replaces an inhouse system previously operated by the

Corrections Department. Crimestoppers NZ chief executive Lou Gardiner said setting up the contact centre overseas helped boost the promise of anonymity for the caller, particularly in a country as small as New Zealand. Gardiner said a large amount of information had been sent to the UK covering a wide range of New Zealand-based scenarios and he was confident the call takers would be suitably equipped.

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8/5/10 8:38:17 PM