Archive for October, 2014

700 Internet cafés to be utilized as BPO service centers

October 31st, 2014

The 700 internet cafés in the city are eyed to be utilized as service centers for job recruitment of business processing outsourcing (BPO) .Outsourcing57

So far, only 400 of them could be harnessed for this activity, said lawyer Samuel Matunog, president of the Information and Communications Technology – Davao Industry Development (ICT-DID), He said the 400 cafes are the ones still active.

“We are thinking that maybe we can qualify these internet cafés to farm out jobs for the unemployed especially those from rural and urban poor communities that we usually thought of them as not part of ICT community,” he said.

He said the internet cafés will be transformed as service delivery centers and as a work space for the workers.

“After the conversion of internet cafés into service centers there will be training for the owners of the cafés for them to be able to handle BPO services and also to train their clients after,” Matunog said.

He said he was glad that the city’s Information and Communications Technology Office (ICTO) spearheaded this project and already trained and developed service centers where unemployed sectors are tapped to be part of the ICT industry.

This will help maximize the operators of internet cafés to generate jobs for the communities near them, he said.

Part of the training that Matunog mentioned is content-handling for the government’s database.

Industry leaders are looking forward to jobs which could be done outside City Hall to the internet cafés or barangay halls.

“These are simple tasks but someone could earn with minimum wage,” he added.

There are problems expected to arise though, during the preliminary implementation of the impact-sourcing in the city. Matunog said that most of the workers are not familiar with the tasks that they are doing, “therefore there must be more trainings to be done.”

He admitted that the challenge is the training part.

“It will take longer time [for the training] given that the targets are from the unemployed and retired sectors from urban poor up including Indigenous People in the rural areas who are under-educated people in terms of knowledge in ICT.”

Matunog’s group is looking forward in generating 600 trained workers from unemployed sectors.

He said that the local government, through the city’s Information and Communications Technology Office (ICTO), is already giving its support by spearheading in the training provided for the target sector.

This project is part of the 6th SummIT which was held in the city last October 24 wherein part of the discussion is the utilization of impact-sourcing outside Metro Manila “as a tool for economic development of the least-developed communities and to connect them to the global economy”.

According to Monchito Ibrahim, deputy executive director on eBusiness of Department of Science and Techonology – Information and Communications Technology Office (DOST-ICTO), impact-sourcing could be defined into two models:

“First is people doing BPO jobs at home and second is partnership between the large BPO companies and small-local BPO companies for them to re-outsource some of the projects that the larger companies are doing,”.

“Instead of the big companies investing in the regions, the work will be given to the small business present in the region,” Monchito said.

He added that it would definitely have a “big impact in the region” especially that, according to him, “Davao is one of the biggest players in the information technology and business process management (IT-BPM) sector.”

The said conference was attended by about a hundred ICT experts from Association of Southeast Asian Nations (Asean), ICT practitioners, academe, and students under the ICT programs.


De Beers selects HCL for IT infrastructure transformation engagement

October 31st, 2014

HCL Technologies, a leading global IT services provider, today announced that the company has signed an IT Infrastructure transformation contract with The De Beers Group of Companies, the world’s leading diamond business.Outsourcing56

Leveraging its Enterprise of Future (EoF) offering, HCL will deliver end-to-end IT infrastructure solutions including data centre operations, multi-lingual service desk, LAN management, security services, service management including tools, desk side support and project services to transform De Beers’ IT Infrastructure across the globe. HCL already manages the IT Infrastructure of Anglo American, the majority shareholder of De Beers and the current deal allows a tighter integration across the two companies with common technology platforms and IT service management.

Craig Charlton, Group CIO, De Beers Group said: “Where we have previously had several service providers in each local region, this agreement affords us more comprehensive management of our underlying IT environment and enables us to run a more industrialised infrastructure service that underpins our broader IT strategy.”
“This deal marks HCL’s continued expansion in emerging markets like South Africa and many locations across Africa, Latin America and Asia. It further strengthens HCL’s presence in the mining vertical,” said Ashish Gupta, Executive Vice President & Head – EMEA, HCL Technologies ISD. “This deal is also a reaffirmation of the work HCL has done over the last 18 months with Anglo American to move them from a Gen 1 outsourcing contract and significantly improve services while driving a relationship culture focussed on delivering work beyond the contract.”

The engagement involves supporting De Beers’ global presence in Botswana, Namibia, South Africa, the United Kingdom and elsewhere around the world with HCL taking responsibility for eight data centres across five regions. The scope of the work includes some extremely remote locations such as offshore diamond mining vessels along the Namibian coastline and Snap Lake mine in Canada, accessible only via ice roads in winter.

De Beers will benefit from reduction in operating costs, improved processes and SLA-driven services, integration with the Anglo American environment, and benefits of advanced IT frameworks and processes such as HCL’s EoF, Cloud-based Service Management tool – Service Now, a common platform for all service providers within the De Beers environment; migration to cloud-based e-mail service and Office 365.

HCL established its South African operation in 2009 and is a level-three BBBEE contributor. Through a highly targeted focus on specific business, the company has gone about establishing a foothold in the southern African marketplace and made significant inroads into leading South African and multi-national organisations.


Health care IT: When outsourcing makes sense

October 31st, 2014

Hiring managed IT services is a decision many executives at health care organizations regard as favorable, but there are times when doing so to satisfy a temporary or long-term need isn’t financially advantageous. Outsourcing55

A large part of what procurement management services do is scrutinize how investments in third-party vendors will play out in the long run. Thorough investigations into these entities’ previous customer relationships must be undertaken. By approaching outsourcing from this angle, those in the medical industry will develop clear perceptions regarding the following factors:

Which technology companies are known for falling back on their promises

Whether certain firms offer a diverse range of provisions on top of a flat or flexible rate

How successful previous clients were after hiring particular IT services businesses

Overall, a comprehensive financial breakdown of each vendor’s program will be provided to those who hire purchasing officers. That way, health care organizations can enter service-level agreements with a clear perception of what to expect.

Is outsourcing really that popular?

Apparently, professionals in the health care industry are deducing their institutions are better off relying on third parties than in-house departments. Nearshore Americas cited a study conducted by Everest Group, which discovered the global health care IT outsourcing market is increasing at a compound annual growth rate of 12 percent and will likely be worth $68 billion in 2020. A number of elements are influencing this activity, such as:

The consumerization of IT, which involves employees accessing company networks through personal devices and leveraging easy-to-use applications with out the workplaces’ consent.

The need for accuracy and transparency when presenting patients with finances pertaining to certain treatments and insurance plans.
New regulations are obligating medical organizations to become more IT-heavy, causing them to switch to electronic systems.

“Two significant forces are fundamentally altering health plan business models. First, the health care industry is grappling with the uncertainty of reform mandates such as the [Patient Protection and Affordable Care Act] and the transition to ICD-10,” said Everest Group VP Jimit Arora, as quoted by the source.

What to outsource, what to provide training for

There are some technologies and IT-related processes that in-house departments should handle, but there are others that must be carried out by third parties. Steven Heck, a contributor to InformationWeek, acknowledged two “obvious” areas in which health care enterprises should look for assistance:

Software development: It will likely take a long time for in-house staff members to learn everything there is to know about C++, Java or some other programming language. If software must be adjusted, customized or developed, rely on a proprietary manufacturer or a group that specializes in creating new systems. Assigning this task to system or database administrators will only make development more arduous than it needs to be.

Data centers and business continuity: Heck noted that a lot of resources are required to implement, maintain or expand data centers. Hiring a colocation provider to host data centers allows such facilities to receive the attention they require on a consistent basis, allowing in-house capital to be directed toward more constructive endeavors.
With outsourcing considered, it’s important health care professionals consider the benefits associated with training in-house IT employees in certain aspects of IT. Database and network administration are two fields that must be handled independently, as this enables departments to better architect systems based on changing business needs.

In addition, it’s advisable those in the medical industry resist the urge to outsource cybersecurity responsibilities. Heck maintained that consultation and third-party reviews are beneficial, but ensuring data and network protection is a task that should be undertaken holistically, by specialists who are familiar with the infrastructures.

If there are particular skill sets in-house IT professionals need to possess, enrolling them in instruction programs is the best course of action.


Ontario attacked for IT outsourcing

October 31st, 2014

Outsourcing can be a sticky issue, particularly when it involves government. Which explains why the Ontario NDP launched an attack this week on the Liberal government’s spending on IT consultants.5Outsourcing54

According to CBC, party finance critic Catherine Fife complained the province is spending $700 million a year on outside help.

The province has $130-million worth of fee-for-service deals with nearly 1,500 IT consultants, the CBC quoted her as saying, and another $570-million in contracts with large tech companies, on top of its own staff of 3,600 IT professionals.

“Many of these private IT contractors perform the same tasks as the IT staff currently employed directly by the government, except they cost two to three times more,” Fife, who represents Kitchener-Waterloo, told the legislature.

“Significantly reducing private outsourcing of IT could save this government $200-million. It’s almost like you are willfully wasting money.”

The CBC said Finance Minister Charles Sousa replied the province is trying to reduce its use of the private sector, but needs it “for short-term and non-reoccurring projects like a one-time contract to get new programs up and running for cyber security upgrades,” and for outside expertise.

“We’re living in the Internet age and Ontarians expect their government to be accessible digitally,” he was quoted as saying. “We have a strong record of reducing the use of consultants across the government” Sousa also said that since the Liberals were first elected in 2003, more than 1,500 IT consultant positions were converted to OPS staff jobs, resulting in ongoing savings of about $60 million a year.


Is Outcome-Based Pricing in BPO Here to Stay?

October 30th, 2014

The recent rise in the number of contracts containing outcome-based pricing models provides obvious benefits for buyers in the contact center industry. These agreements, which reward service providers for meeting specific objectives, can prove mutually beneficial by encouraging better results and enabling sellers to increase their earnings, but that is not always the case. Although this model is evidence of a closer strategic relationship between clients and service providers, its continued growth may be stemmed by the fact that the sellers have to assume almost all of the risk involved.Outsourcing53
The aim of outcome-based pricing is to provide incentives for service providers to achieve certain goals, while reducing risk from the buyer’s perspective by limiting costs if their aims are not met. “Outcome-based pricing is a very fast-growing area within contact center contracting models and I think that’s important because it tells you that the goal of the contracts has changed and that the perception of service providers is better aligned with the business outlook of the client organization rather than being just a cost-saving mechanism,” Katrina Menzigian, Vice President of Research Relations at Everest Group, told Nearshore Americas. “This whole concept of outcome-based pricing has been growing in the BPO space for about five years and in contact centers we’ve noticed a bigger pickup in the last two to three years.”
Bob Dechant, Chief Sales and Marketing Officer at Qualfon, believes that this trend has emerged because the prices of outsourcing contracts have dropped as far as they can. “People have been offshoring now for a long time and there’s not much room for negotiation for lower price points,” he told Nearshore Americas. “The outsourcers and their clients have gotten to the point when they realize there’s no more room to take the price-per-hour down any lower and have the outsourcer make a profit, which they need in order to reinvest in the business. There’s no more wriggle room so what you’re seeing now is people trying to be creative.” In this context, outcome-based pricing is growing more popular because it enables buyers to pay even less if their vendors are not performing well, while guaranteeing that they only have to pay top dollar if their goals are being met.
Measuring the Metrics
The outcomes that buyers typically want to achieve differ depending on whether they are outsourcing sales or customer care, Dechant said. “The three key metrics on the sales side are close rates, average order spend, and the other one is revenue-generating units, which is very common in the telecom world. They’re all really based around generating revenue.” On top of these are the typical call center metrics like service level, handle time, quality experience, but “those are just a given, you have to do them to be effective,” he added.
“The metrics on the care side are a little bit harder to define, but they’re often more around quality experience,” Dechant said. “Again clients are moving away from the more one-dimensional metrics like handle time and service level and towards the important ones as they see it, which include quality, customer experience, net promoter – all similar things around enhancing the value that the customer has with their brand.”
Such metrics must be very clearly defined in the contract because measuring them can be complicated. Service providers must agree with their clients whether the outcomes are to be measured internally or externally, through surveys for example, Dechant said. While the metrics on the sales side are easily definable and measurable, some of those on the customer care side can be somewhat ambiguous. For this reason, incentives account for anywhere from 10% to 100% of pricing in sale contracts, but in care they are typically limited to around 10%, he explained.
Other outcomes typically linked to financial incentives in outcome-based contracts include churn, growth in a particular product line, client satisfaction levels and collection achievement, Menzigian added. Many of these metrics are measured in ranges “because business outcomes typically involve some fluidity,” she said. Most contracts involve hybrid payment structures rather than 100% outcome-based pricing, Menzigian said, explaining that “part of it needs to be fixed to cover the expenses that the service providers are incurring and then part of it is incremental.”
Who’s Buying?
According to Everest research, 34% of all contact center contracts signed in the last two to three years used some kind of hybrid pricing model. Of these, 69% included some kind of outcome-based component, Menzigian said. This means almost one in four of all contact center contracts now contain some degree of outcome-based pricing.
“The range of buyers involved in outcome-based contracts is fairly broad,” Menzigian noted. But they tend to be companies that “are very mature in their outsourcing processes” and that want to improve their customer experience.

According to Dechant, outcome-based contracts are “probably most prevalent in the United States because among the buyers here there are a lot of long-tenured, very sophisticated clients that have been outsourcing for a long time and they’re using this as the next evolution of the model. Those buyers push the vendors pretty hard. That’s not to say you’re not seeing it in other markets, but that percentage of outcome-based pricing is probably highest in the United States.”

Denchant has observed two distinct buyer profiles. “One is the very, very experienced outsourcer that has had a lot of interaction with a lot of service providers and they’re very mature in their relationships and they’re trying to move to the next level,” he said. “Then there are novices who are very early into the game and they might have got some information from a consultant.” These are much riskier potential clients because they have less experience in defining metrics, he noted.

Menzigian agreed that it makes little sense for sellers to enter into outcome-based contracts with new buyers because this is “something that involves a closer working relationship and a sense of mutual gain. I don’t think it’s the kind of thing that you would be using in a brand new relationship, I think it’s something you grow into, so as the relationship matures you can open up discussions around ‘what are we going to tackle next and how can we make it effective?’” Menzigian continued: “If the relationship expands and you have a combination of transactional services and volume-based services and the contract becomes more complex then you’re entering the kind of environment where outcome-based pricing potentially becomes part of the conversation.”

As outcome-based pricing is still only an emerging trend, the major service providers typically find the number of buyers that are interested in adopting the model is much greater than the number that are really able to take advantage of it in the end, Menzigian noted. “There are many cases that we hear about where the clients go through the whole process to do outcome-based pricing, they negotiate prices and everything but they just can’t get to the point of signing the contract,” she said. This is because the model is not suited to all clients, and sellers must be very careful about who they do business with in order to minimize the risk that they are exposing themselves to.

Risk Assessment

There is an inherent degree of risk within all outcome-based contracts, Dechant stated. This means service providers must do a lot of due diligence to understand the metrics and the objectives that they can be held accountable to. “If you’re not performing well then those contracts will mean that you only break even or you’re actually losing money. That’s not a sustainable model so it forces you as an operator to deliver and it forces you to do a lot more diligence on the front end,” Dechant explained.

“First you need to determine what kind of work it is. Is it sales work or care work?” he continued. “The next thing you need to understand is what the current operating levels are. Are you looking at the actual performance of today’s partners or are you looking at aspirational goals? Are you being held accountable toward unattainable goals? There’s a fine line between improvement and aspiration. (In an outcome-based model) you need a lot more two-way discussion and early diligence in order to understand the objectives.”

When it comes to due diligence, service providers must verify that their “client’s contact center or customer care operations are mature in the core areas. Then you can build on that and tie the contract and the payment to these more emerging outcome-orientated models,” Menzigian said.

“As a service provider you’re looking for a client that you think is reasonably mature in how they work with relationships with their service providers, how they manage the process, the kinds of programs they have in place with their contact centers, because the service provider is looking for a match that gives them some confidence that the client truly understands what they’re getting themselves into and what it involves,” she explained. “The service providers are putting their compensation at risk. It takes two to tango and the client needs to be the kind that can fulfill its share of the obligations and has an environment that is likely to yield the kind of process changes needed in order to make the outcome-based pricing work.”

Simply put, if the arrangement does not have the potential to be mutually beneficial for both parties then it is not going to work out in the long term. “I tend to find that it has to have a combination of benefits, otherwise it doesn’t have longevity, so that’s why the pure outcome-based model is very difficult to make work and it doesn’t really happen very much, because all the risk is being taken by the service provider and not by the client,” Menzigian said. “So that’s why you typically find a hybrid kind of environment.”

Is This the Future?
“It’s important to mention that this is an area that’s gaining attention and the adoption is picking up but it’s certainly something that’s not mainstream right now,”  Menzigian stated. Nonetheless, she believes outcome-based pricing “will become more common because more and more client organizations are really interested in developing compelling analytics and creating closer partnerships with their outsourcing service providers. They understand that you have to look at the whole package of the business impact you’re trying to create and I think that outcome-based pricing is an extension of that thought process.”

For Dechant, the future of this model depends on how well service providers can adapt to it. Outcome-based pricing will become more common “as long as the providers are able to be successful,” he said. “But some aren’t. There’s going to be fallout, there’s going to be some contracts that really impact those outsourcers that are struggling financially and if you have a sizeable contract then that can go upside down and put a lot of strain on your business.”

Service providers need healthy partners who understand that they must be successful financially in order to enjoy a productive relationship with their clients, Dechant added. Do outcome-based contracts facilitate such a relationship? “I think the jury’s still out on that,” he said. “It’s still early, but if it ends up being just another way of getting further price decreases, even for your performing vendors, then the model is going to have to adjust itself. But at the end of the day, if the performing vendors are able to use this as a way to drive more profitability through results then it will continue to grow.”


Can BlackBerry Ltd. Become the Next IBM?

October 30th, 2014

On Monday, BlackBerry Ltd. (TSX: BB)(Nasdaq: BBRY) CEO John Chen outlined “The Keys to Executing a Turnaround the Right Way.”Outsourcing54

Nowadays, no one seems more adept at turning around companies than Mr. Chen. After taking over struggling Sybase, he steered the company back into profitability, eventually selling the company to SAP for $5.8 billion (USD). And less than a year into his role at BlackBerry, his turnaround plan is off to a great start. This is reflected by the company’s stock price, which has more than doubled since December of last year.

So Mr. Chen deserves plenty of credit. But his turnaround plan is far from complete. If he is successful, the stock price will likely see dramatic gains. So is this a bet worth making? Or is this the best we’ll see from Mr. Chen?

The case for BlackBerry

This kind of story is not unprecedented. Back in 1992, IBM was failing in a similar manner, before Louis Gerstner took over. The company was bleeding cash, operating units weren’t working together, and analysts were insisting that he break up the company. Instead, Mr. Gerstner slashed billions in costs – mainly through layoffs – and sold assets. He also dramatically improved the culture, all while focusing the company more on enterprise services.

This is exactly what has happened at BlackBerry as well. Much of the layoffs occurred before Mr. Chen arrived, and he has sold off assets — such as most of the company’s real estate – to generate extra cash. Costs have further been reduced by outsourcing manufacturing to Taiwanese handset maker Foxconn.

Meanwhile, Mr. Chen has also diverted the company’s attention toward enterprise services, again taking a page out of IBM’s book. This is an area, unlike consumer handsets, where BlackBerry still has a competitive offering.

At this point, it’s practically impossible to know how far the company can go. But history has shown there’s plenty of potential.

The case against BlackBerry

Mr. Chen’s job is much harder than Mr. Gerstner’s was, for a couple of reasons. For one, BlackBerry is like a minnow in a shark tank. Rivals such as Google, Apple, and IBM itself all have far deeper pockets than BlackBerry, and are not accustomed to losing. Mr. Chen talked about innovation being a key in this industry, and the giants all have the upper hand in this department.

Secondly, IBM still had a viable mainframe business as it turned itself around. In other words, it is able to offer clients both hardware and software. And the ability to offer a complete solution is certainly an advantage. BlackBerry’s handsets are not nearly as popular. Worse yet, there is a growing trend of employees brining their own devices to work (known as BYOD), meaning that if BlackBerry can’t appeal to the consumer market, its handset business is further threatened.

So at this point, BlackBerry’s future is still very much up in the air, and it shouldn’t account for more than a small slice of your portfolio.

There are much better options than BlackBerry. One of them is featured in the free report below.

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How do you manage the risks of IT outsourcing?

October 30th, 2014

Charles Sturt University research student Andrew Mournehis has found a gap in the literature of IT risk management. Actually it’s more of a gaping hole. “The policies and practices real world organisations are implementing to manage the risk of outsourcing remains largely undocumented,” he says.

Outsourcing, Mournehis says, “can potentially come with a large number of inherent risks that threaten the prosperity of an organisation. These risks have been well documented in the literature yet little is understood about how organisations protect themselves when entering into outsourcing ventures.”

This is despite the huge popularity of outsourcing, especially for IT requirements. Outsourcing is the contracting out of a business function to another entity, the main motivation being to obtain benefits from the expertise and economies of scale of a specialist outsource service provider, to reduce costs and to increase efficiencies.

Mournehis aims to address the lack of understanding by surveying senior IT professionals to determine what impacts they believe outsourcing has on their organisation’s ability to safely manage its risk.

He is doing his research as part of CSU’s Doctor of Information Technology course. It’s offered only by distance education and is designed to give students maximum flexibility in their study schedule.

This is one of a number of research projects Mournehis has undertaken as part of the course. “I have enjoyed being able to execute my research on different topics each session which has allowed me to focus on multiple facets of business in IT,” he says.

Last year he completed a study on project management in the technology industry. “I concluded that common processes could be established that are compatible with all of the most regularly utilised project management methodologies, eliminating the need for an enterprise to commit to one particular methodology,” he says.

In CSU’s Doctor of Information Technology course students complete the coursework component in part-time mode and then can choose from full-time and part-time study options for the thesis component.

During the coursework component students develop a series of IT industry white papers then, for their final thesis, choose “a real world issue or innovation that delivers tangible benefits to the information technology industry.” To ensure industry relevance supervisory teams include an industry based adjunct supervisor who is an expert in the area the student is researching.

Students who do not want to go the whole hog, produce a thesis and earn a Doctorate of IT can still gain either a Graduate Certificate in Computing Research or a Master of Computing Research, thanks to the structure of the course. It provides exit points at which students can either take a break or leave the course altogether.

CSU says successful completion of the Doctor of IT course should prepare students for middle to senior level ICT roles such as chief information officer, chief information security officer, chief technology officer, development manager, enterprise architect, IT manager, IT strategist, IT policy managers and ICT consultant.


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