Tag Archives: Outsourcing

3 Reasons to Stay Connected With Your IT Service Provider Teams

Partnership

There are several examples of torn and tarnished relationships between enterprises and service providers in the world of outsourcing. While the best relationships are often touted in shiny case studies and presented in customer forums, there are lessons to be learnt from those that are not showcased but bring as much if not more value in sharing what works best and what does not, in service provider relationship management.

Many enterprises assume that once a service provider has been chosen and entrusted the task of running parts of their IT department, they can leave the provider to deliver the expected outcomes and not worry about being continuously engaged with them. However, in most cases this can result in some disastrous results with the fact being known too late in the game. It is important for enterprises to stay engaged with their service providers and in fact possibly more than they would with their own in-house IT teams to ensure the expected results are delivered for business. Here are the top three reasons from my  conversations with CIOs and service leaders with provider firms:

  1. Business context is prime : Whatever be the nature of work that you have outsourced to a provider, it cannot be stressed enough that it needs to be aware of the business context of your organization and to provide the IT services wrapper around it. Not having the right business context can lead service providers to make costly assumptions which would be difficult to correct at later stages. By being in touch with your service provider teams in regular conversations and performance reviews, you share the insights and business dynamics that may seem commonplace to you but may in fact not be known to the providers at all.
  2. Out of sight, is out of mind : Not being in touch often leads to the out of sight, out of mind syndrome. That change in policy, that new architecture plan and so much more come the way of a CIO and her team and if they are in touch with the service providers’ teams, they will remember to share them or understand when these are required in due course of their interactions. I remember an incident where an offshore service provider team worked over weeks and months to analyze and correct Top 10 “noisy servers” in their client’s environment, only to be informed later that those Top 10 servers that were noisy and often behaving erratically were in fact test servers being put through erratic load for test purposes!! If only the client team was aware of this initiative in advance and had provided their inputs, the teams would have been better placed to leverage their efforts in the  right direction.
  3. Expectations and Requirements Continuously Evolve : In contracts that run over months and years, the initial set of requirement often evolves as business and IT teams address changing market scenarios and company priorities. A continuous dialog helps ensure that these changes and mid-course corrections are effectively communicated and understood by the service provider teams.

The above issues are further magnified with offshore service provider teams where they are few thousands of miles further away from the client locations, across a cultural barrier.

Catacient’s Outsourcing Delivery Assurance service enables enterprises to actively engage with their IT service providers. With its local presence in India, enterprises can have their own on-demand vendor management office in India which can work closely with offshore based provider teams as well. Catacient’s governance framework and focus on delivery management helps ensure service provider teams keep the enterprises high on their priority list too.

Reach out to us (ashutosh@catacient.com) to know more on how this could work for your company (or clients if you are an advisory firm). We could also work out an initial one week no-obligation engagement for you to see the value this service brings.

Increasing Automation and Impact on IT Service Providers

While there is a lot of buzz around automating some of the services at the bottom of the IT services pyramid, on the ground these are visible at varying levels across service providers. However, clearly this is a way offshore based service providers are working to bring greater cost efficiencies (to reduce the impact of declining labor arbitrage), improve revenue per employee and breakout of the linear but unsustainable growth model which requires adding more people to increase revenue. The examples here may be exaggerated but are signs of the times to come for the nature of employment opportunities at offshore based IT service providers.

Read this related article here.

Europe Opening to Offshoring of IT Services

There is an increasing buzz about outsourcing in Europe picking up in the recent months. For several years most of the offshore based service providers have focused on the North American continent for business. Over the years many also found themselves too dependent on the economy in the US and limited geo-politically. Some companies drove a mandate to spread their eggs across new baskets in Europe.

Europe is outsourcing and offshoring like never before. And increasingly, the beneficiaries are India based IT companies, unlike earlier when the preference was for Europe-based ones. Competitive pressures and cost pressures look to be forcing a change in the continent, which often in the past has been referred to as Fortress Europe for its inward looking policies. 

Many service providers were not looking at Europe as a target market with the same zeal as the US because:

1. With the exception of UK, the policies in most countries in mainland Europe and the general business preference was to be outsource to local players

2, In general outsourcing was not big and so offshoring as a next step was even further away from the agenda. Businesses still preferred local support staff even if it cost more money.

3. It has traditionally been difficult to run outsourcing mandates within European companies (like those in the US) due to their different labor laws which required much more business planning when work is displaced from existing European workers to other countries. The obligations on part of enterprises is much more than that in the US and this continues to be a key obligation for businesses.

4. The region is split (unlike US) into multiple operating units for many businesses and so it has never been a single entity as compared to US which is mostly a single business/country entity for most companies. This was an issue esp with companies with European headquarters

5. For some of the touch services and service desk services, the multiplicty of language that was to be supported outside of English made it difficult to have a set up with the same critical mass as was done with the English across the North American continent.

6. Data Protection Laws being different and in some cases more stringent in Europe/EU with restrictions on nature of work that could be done outside of the continent.

7. Strong local players from the continent and other global players stepped in the recent years with a near-shore centric model which was like a good middle path for most of the challenges. The cost efficiency was not as much as that from an offshore location in India but it provided cost reductions with good skills and language support from locations in East Europe.

Times have changed and with the new focus and in many cases with the leadership for many service providers in Europe coming in form of more aggressive leaders, they are gradually getting to decipher the local nuances and identifying regions and verticals to establish base and spread. Also since cost of operations are generally higher in Europe than in the US, the offshoring business case for the CFO is more alluring and they are looking at finding ways to enable these.

Interesting times ahead for both enterprises and service providers as Europe lowers its fortress walls.

 

Managing Remotely Delivered IT Services

As outsourcing has grown, so have the models of engagement and service delivery. In their attempts to be more competitive, cost effective and with the advent of new players, most mid/large IT services contract have some remote IT services play. The “remoteness” has also morphed from being ‘somewhere in the country’ to being few thousands of miles across the globe. Most service providers today have offshore service delivery factories which provide cheaper labor and in some cases more skilled ones. While enterprise clients are glad to see the same work being contracted for less (or more work being done for the same cost), reality strikes soon as the full implications of an offshored service model plays out.

This is not to underestimate their preparedness of most CIOs and IT Directors. Of course they knew that they need to expect differently but reality dawns on the first and second generation offshorers pretty sharply. Collaborating with teams which have a different cultural background is a totally different experience beyond the language and accent issues. In most cases there is a local onsite team which works with the client but in the first few months it becomes clear that there is an internal divide that exists between the teams at onsite and offshore within the service providers’ organizations. Further, when connecting with the offshore based teams, the whole approach to work seems different if not alien. Also, there are fewer opportunities to work with the leadership team at offshore as most of them do not work post local business hours, which is really prime business hours for most clients in the US. European clients do find some overlaps in time zone but the model at offshore is largely built on a pyramid of low cost labor almost like a factory against the boutique experiences of a dedicated balanced team.

Business colleagues of CIOs are not getting any lenient in their ever growing expectations from IT. This makes the job of CIOs, IT Directors and their team challenging in managing the fine balance of high expectations and a different service model. Frustrations early or during a contract cannot always be met with a plan to change the service provider. In making it work, need for specialized skills and deeper understanding of the local nuances of the offshore teams are key for a stronger partnership with IT service providers.