Posts Tagged ‘Business’

Is outsourcing bad for business?

October 14th, 2014

Recently, a story arose in the media that shed somewhat of a negative light on the idea of outsourcing in the mortgage industry. Flagstar reached a settlement of $37.5 million for improper handling of its foreclosures. The CBFP found that its full-time staff of 25 and its outscourced partner in India were inadequate to handle the 13,000 foreclosures it was processing.Outsourcing19

Many have grabbed this story and latched onto the detail about the firm partnering with a company in India. Flagstar engaged in unscrupulous behavior and it also outsourced much of its operations to India. Does that mean that outsourcing itself is to blame for the failures? I don’t think so.

Suppose a study found that a high number of drownings occur during a particular time every year in a certain area. In seeking to find an explanation, the researchers also uncover the fact that there is also a high degree of ice cream sales during that time and in that region. Could we then conclude that consumption of ice cream is causing people do drown?

That would be silly, wouldn’t it? When we dig deeper, we’ll find that the time period is summer and the area in question contains a beach or a public pool. My point is this: just because two things occur together, that doesn’t mean one is to blame for the other. Correlation doesn’t equal causation.

Outsourcing can be good for business and it can be bad for business. It all depends on what you outsource, who you choose as a partner, the level of communication you have between one another, and dozens of other variables. Outsourcing may not be for everyone, but we can’t rule it out just because it is loosely associated with one negative story in the press.

Outsourcing: The Importance of Choosing the Right Partner
The recent news about Flagstar paying a $37.5 million settlement for its failures in properly processing foreclosures has really got me thinking lately about outsourcing as a business practice. As you probably know, many have pointed to the fact that Flagstar partnered with an Indian firm as the root cause of its misgivings. Is this true? Is outsourcing the enemy?

I don’t want to speak too specifically about Flagstar’s situation but, within any situation in which a company outsources, the main problem will most likely occur in who the organization chooses as a partner. Why zero in on the fact a firm is from India, or any other country for that matter? Perhaps it’s just that the firm is poorly managed. Unfortunately, we have plenty of those in the U.S. as well. Perhaps it’s an issue of miscommunication between the client and the vendor, and expectations for each party were not clearly drawn.
There can be a number of reasons why outsourcing fails, but companies who choose to outsource with a great partner can achieve great benefits. The partner can bring technologies to the relationship that the firm doesn’t have. The partner can bring cost savings to the firm. The partner can bring synergy to the firm and compliment that talents and expertise of its people.

The main point isn’t where the vendor is located, but rather who the vendor is. You want to choose a partner that can align with your strategic objectives and grow with you as you grow. Whether it’s right down the street or halfway around the world, the right partner can give you the edge you need to succeed and the wrong partner can send you over the edge to your doom. Choose wisely.

The One Thing You Should Never Outsource
In thinking about outsourcing over the past few weeks, I got the opportunity to interview Rajan Nair, President of Indecomm Global Services–a vendor in India that helps mortgage companies process loans in various ways. The conversation was exciting and enlightening in view of the recent failures of Flagstar and the fact the company had been outsourcing to a firm in India.

Rajan told me, among other things, that the most important thing in outsourcing is choosing the right partner. Whether foreign or domestic, the right partner can be an extraordinary driver for success. We talked a great deal about the benefits of outsourcing, but I think one of the most interesting insights was what he shared with me about what he thought shouldn’t be outsourced.

When asked about the one thing that should never be outsourced, the president of a large and growing vendor in India had this to say: loan origination. Rajan advised keeping loan origination within the organization, because it is the initial touchpoint with the consumer.

Like any business, the mortgage industry is about relationships. Keeping that initial point of contact within the organization is essential. The behind-the-scenes processing of the applications can be outsourced effectively. But, when it comes to interacting directly with the consumer, it’s usually best to keep it in-house.


How to get the best IT support for your business

September 16th, 2014

Finding the best IT staff, sourcing the best outsourced support company and getting the right mix of both is crucial to run a business today. When things go wrong, when you need help and advice at short notice, when you absolutely have to get that proposal in by the deadline, you need IT. So how do you make sure you are either hiring the right IT staff or the right IT support company?outsourcing52

Personality counts
You can teach people a certain level of IT skills but you can’t teach personality. Whether you have an in-house or outsourced IT company remember that ultimately your technical people are dealing with human beings. Often clients can feel under pressure when they have an IT problem and it is the job of the technical staff to make them feel better not worse. That doesn’t mean over-promising but it does mean being polite, calm and helpful. Also you have to have team members, so although there are generalisations about IT people being a certain type, ie unsociable, that doesn’t mean you should excuse people if they can’t mix with other staff. In the main it is IT developers who tend to fit the stereotypes and they generally don’t have access to clients.

When we recruit we look for good apprentices as that way we can mould them into our way of working. Outside of that we look at CVs and post our own adverts on websites. We do work with many recruitment agencies supplying their IT needs so that helps us when we are looking for people. However I still have to go through all the CVs and that can run into thousands. Interestingly we have had people fill in their CVs online and found they have sent it to us four times. Obviously we are not going to interview someone who can’t manage their own IT!

Temporary contracts
This is another way of ensuring you are getting the right staff whether it is IT or in other areas. If people come in as temps then you can get a feel for how they work and how they will fit in with the company. It also gives them the same opportunity. All businesses need IT so temporary or fixed contracts give you the chance to see how they fit in with your team.

Taking the test
We give potential recruits a simple technical test when they come for their interview. It is five to ten questions. They range from the technical through to problem solving. For example how do you troubleshoot xyz to what would you say to a client who called and said their internet had gone down? We are looking for people who can offer solutions and can give examples of what they have done in the past or how they think things should be done. As mentioned we need to be sure they have the personality to deal with clients too.

Outsourcing vs in-house IT
Generally when a business has grown to 150 plus staff that is a good time to have in-house IT. However that doesn’t necessarily mean you have to have a whole team as there are many options which involve a mix of in-house and outsourcing. I would not advise companies to have just the one in-house person to look after their IT needs. That person will obviously have to take holiday, may have sick days and even with the best will in the world, they can’t be in two places at the same time. Someone working on their own also may become set in their ways. They don’t have the opportunity to learn new ways of working from a colleague.

For smaller companies outsourcing makes sense, particularly as we would recommend using the cloud. That way companies always have a back up of all their essential data should any of their systems go wrong. They have a helpline and support when they need it without the expense of an in-house team, which most small businesses simply can’t afford. At my company Keybridge we help companies set up their IT and if they move office we even go in and move their computers (usually over a weekend) so when they come in on a Monday they are ready to go. This way no working days are lost.

A mix of in and out
You don’t have to have one or the other though. Whether you are a small or bigger business you can choose to have a mix of both in-house and outsourced support. For example, we have clients who have someone on staff who looks after their IT but we look after the system when they are on holiday or they need additional help. We also supply a technician to companies who don’t want to hire a member of staff but want someone on hand. Again they have the IT professional on site but they also get the back up of our team too if that person is on leave or sick. The only problem we have had in the past is that sometimes the client ends up wanting to recruit our staff member. We make sure there is a clause in the contract that says they can’t do that!

Location, location, location
Ideally if you do choose to outsource your IT support then make sure the company is as near to your office as possible. You may think this doesn’t matter with IT, however if there is a problem which requires someone on site then you have to factor in travel time and travel cost for a technician to come to your office and fix the problem.

Finally check the references and qualifications of any outsource company you plan to employ just as you would with an in-house staff member. Are they, like us, Microsoft partners, do they offer hosted desktops, and if so what is their security like? Find out if they are G-Cloud certified, which means their system has been approved by the government.


New sourcing norms key to IT turnaround

July 21st, 2014

The government needs to rework procurement norms for IT services to reboot the sector.Outsourcing30

Besides the slow pace of decision making, mounting dues from government agencies have slackened the growth in domestic IT business.

Nasscom has projected a flat growth of about 10-12 per cent for the market in the current fiscal, almost at the same levels as the previous year.

Government agencies account for 50 per cent of IT services in the country. ‘

According to the apex body for IT and business process outsourcing in India, an efficient timeline for project execution can restore confidence and fuel a turnaround for the local industry.

While the allocations in this year’s Union budget will give a significant push, the impact, if any, will only be felt next year.

The IT market grew 10 per cent to $32 billion in 2013-14. The 10 per cent growth was in rupee terms even as it was zero in dollar terms.

“The domestic market has been a big disappointment. There are many factors for this. One is the general slowdown in the economy and reduced investments by companies in the private sector. Investments have been delayed over uncertainties in government decision making because of the elections and other economic factors. Companies have huge dues from the government, even for executed projects,” R. Chandrashekhar, president of Nasscom, told The Telegraph.

The current outstanding is around Rs 4,000-5,000 crore from the government, both at the central and state levels, accumulated over the last three years. This has made companies reluctant to respond to government needs.

“In this year, we do not see any significant change in the growth rate of the domestic market. It will be 10-12 per cent.

“In exports, we are projecting a 13-15 per cent growth. But the domestic market will trail… there are huge issues with the whole system of procurement and payment. There are artificial barriers preventing growth from taking place. But the demand is very high,” he said.

Smart cities

The IT industry is betting big on the setting up of 100 smart cities announced in the budget. Such projects will require strong infrastructure such as broadband and adequate use of information and communication technology to manage utilities, power and online government services.

The turnover of the IT industry is slated to reach $300 billion by 2020 from about $118 billion now.

About 80 per cent of the industry’s current turnover of $118 billion come from 150 large companies, while the remaining 20 per cent are from start-ups and product firms.


Simplifying IT Pays Off With Big Savings, Better Business Success

July 9th, 2014

Companies can improve their business outcomes and their technology efficiency – and reap big cost savings — by reducing their IT complexity, according to a new report by IDC.Outsourcing6

Many CIOs are watching their worlds collide. Consumer technologies such as smartphones, tablets and social networking tools as well as new cloud services are coexisting with legacy applications, server rooms and aging network infrastructure. This creates a complexity that IT hasn’t seen before.

IT organizations that support demanding business requirements often find they need to support greater levels of complexity.

The business side wants better accessibility for users and easier access into customer data. Ironically, as technology gets simpler for end-users its gets more complicated behind the scenes. Complexity is a fact of life for IT professionals, but according to a new IDC study, corralling that complexity can save enterprises big-time and improve business outcomes.

The report, which was sponsored by Oracle, is based on a study of nine companies (all Oracle customers) in various industries including government, financial services, retail, medical and others. The average number of users at the companies IDC interviewed is 23,000 and the average annual benefit of reducing complexity is $83 million, which equates to $3,610 per user, according to IDC.

In addition to cost savings, the study participants benefitted from faster time to market, better customer service and the capability to reallocate IT staff to more strategic projects after they reduced complexity, according to IDC.

Complexity can cost both the business and IT side of the company, according to the report. Challenges on the tech side include increased operational costs, IT staff burden and reduced capability to provide high levels of service to the business. As IT becomes more strategic to the enterprise business applications, complexity can leave the business at a competitive disadvantage, according the study.

The IDC report cites the following factors as causes of IT complexity, based on interviews with the companies in the study:

Corporate mergers and acquisitions.
Business decentralization.
Greater needs to support business demands.
Continued use and importance of legacy systems.
Disparate systems and standards.
Supporting fast pace of change.
Mobile /BYOD support.

IDC is quick to point out that complexity doesn’t equate to things done incorrectly, which could have been avoided with more efficient planning. “Our research found the reality is much more nuanced. In fact, complexity is often a necessary price of entry. IT organizations that support demanding business requirements often find they need to support greater levels of complexity,” IDC writes in the report.

How to Keep It Simple

Another key factor contributing to greater IT complexity is user expectations, according the study. Users expect a consumer-like experience while tapping social networking tools and accessing enterprise apps via mobile devices.

“Public social networks, modern Web sites, mobile applications and popular Android and iOS smartphones and tablets have created the expectation of simplicity in all user experiences while moving complexity ‘behind the scenes’ and out of the way of the consumer experience,” according to IDC.

With all the challenges IT leaders face, how can CIOs reduce complexity? IDC reports that organizations are taking multiple approaches, including the following:

Consolidation and rationalization of applications, systems and data centers.
Application modernization (replacing legacy applications).
Unifying operating systems to a single environment.
Outsourcing to third-parties and cloud computing providers.
Deploying better automation and integration tools and technologies.
Breaking Down the Benefits

Below IDC breaks down the per-user savings in six categories. The amounts are based on the nine companies in the study and IDC cautions that actual benefits will vary by organization and industry.

Knowing you should simplify IT is one thing. Knowing where to begin is another. To help move in the right direction, IDC has developed what it calls a Simplification Road Map, which it says will help companies reduce complexity in their IT infrastructure. Key components of the road map include these four processes:

Start at the top: Secure strong executive support because successful simplification projects require deep-seated change, not only in the IT organization but also often among users and lines of the top, according to IDC.

Embrace an entrepreneurial spirit: IDC reports that companies it interviewed for the study found it best to use an entrepreneurial approach consisting of replacing outdated infrastructure or building out new IT infrastructure to support new business opportunities. IDC writes. “You can’t simplify infrastructure by adding new layers of integration, UIs, or applications.”

Head to the cloud: IDC says that sourcing services from third-party service providers and/or the cloud service providers with the necessary scope, scale and expertise not only can free up valuable resources to focus on core operations but also can improve the quality of services for end users

Be agile: Agile development, IDC says, enables organizations and keeps pace with more rapid change. Key success factors include getting down to the user level and documenting specific processes and pain, collaborating with customers and end users, and adapting quickly to changing circumstances.


Wipro to increase headcount, expand business in Ireland

May 28th, 2014

Wipro is increasing its workforce in Ireland as part of its expanding business in the region. Over the next 12 months, the company will increase the headcount in the centre by up to 50 per cent, the company said.Outsourcing4

The company’s Shannon Development Centre in Ireland, started about a year-and-a-half ago, employs over 200 professionals, and is focussed on delivering services to banks and financial services companies across Ireland and the U.K. Wipro said that it had been seeing a ‘rising demand for services’, which has prompted the expansion.

Rajan Kohli, senior vice-president and head of banking and financial services, Wipro, said that Ireland offered a great talent pool and excellent infrastructure support. “We are seeing a lot of interest from banks in the region for services around business resilience, risk and compliance, simplification, digital, mobility and analytics. Our experience in working on similar engagements with various banks in the UK and other countries is helping us offer Irish banks the right strategy and execution capabilities in these areas,” he said.

Industry trend
Several Indian IT majors have in recent months spoken about a steady increase in business from continental Europe. For instance, Infosys also said, during its annual earnings, that businesses in continental Europe were now, post the downturn in the economy there, opening up to outsourcing to Indian companies.

An industry analyst confirmed that this trend had been getting stronger over the past two years, when several European companies across sectors had been opening up to the idea of outsourcing to Indian companies. “This is driven by the opportunity at hand to tighten budgets, given many of these economies are facing a downturn or recession. The outsourcing is happening across sectors, including non-financial sectors such as power and energy or engineering,” the analyst said.


10 handy tips on outsourcing apps for your business

January 30th, 2014

Whether you’re subscribing to web-based applications, on-demand services, or utility computing infrastructures, there are countless variations on the outsourcing theme – renting software instead of buying it. All offer ways of letting companies balance their internal and external IT investments to meet their business requirements – and software vendors are certainly pushing harder on the rental model (just look at Microsoft with Office 365, or Adobe and Creative Cloud).

As a technology or business manager, how can you cut through the hype to tell whether and where application outsourcing might be right for your organisation? And what caveats should you bear in mind? We’ve got some advice for you in the form of 10 handy tips.

1. Define your expectations

Outsourcing applications has real benefits if you map out your objectives clearly. View outsourcing as a business solution to augment your current operations and create efficiencies, not as a rip-and-replace technology. Translate your expectations into financial terms, then calculate the savings in reduced cost and complexity or better time to market.

2. Be realistic

Web-based apps may not have interfaces which are as smooth or customisation options as plentiful as those of desktop applications. Can you live with the level of support provided? Figure out your workflow requirements and move forward when you find an app that addresses them all.

3. Assess yourself

Quantify your baseline bandwidth, storage, and reliability requirements and usage. A hosted service can offset the costs of underutilised resources. Establishing that you’re rarely hitting peak usage levels will go a long way in determining whether you’ll achieve benefits from flexible hosted services.

4. Identify your strengths and weaknesses

Can you isolate the highest impact but lowest risk projects in your operation? This will help you determine which noncore lines of business are best suited for outsourcing.

5. Follow the money

Make sure that a subscription fee is cheaper than traditional software. Get your finance gurus to come up with valuation metrics and fiscal models that will quantify your current payment model compared to that of a hosted service. Also take into account your current infrastructure, maintenance, administration, and upgrade costs, and compare them against the cost of migration and subscription fees.

6. Do your due diligence

Just because you go the hosted route doesn’t necessarily mean that all vendors will have identical service delivery formats and infrastructure requirements. Consider a third-party audit, which should include security of transactions and data. Evaluate the vendor’s experience, technical expertise, and scalability options.

7. Plan migration paths

Have a path for data migration and integration with other systems from the start and a plan for termination. This will help avoid locking you into a single vendor.

8. Involve your legal team

Make sure a lawyer is on board to review the licensing issues and intellectual property rights. Legal representation will also be of value during contract negotiations.

9. Control your services

Assign yearly budgets and resources. Establish ongoing ROI and performance metrics to determine whether the service achieves efficiencies. Apply the same disciplines of management to your other internal resources as you do for your hosted services.

10. Maintain open communication

Keep everyone apprised of goals and listen to their concerns. This way, you will build trust and ease the cultural migration to hosted services. Bear in mind that your provider and its reps are now an integral part of your business, so treat them as members of your team.


Nigeria: Etisalat Partners Huawei On Business Outsourcing to Boost Services

January 3rd, 2014

Etisalat has announced a strategic partnership with Huawei Technologies, a global Information and Communications Technology (ICT) solutions provider, for the provision of Information Technology (IT) services for its growing customers.

The partnership is designed to continually improve the Etisalat network for the purpose of providing the highest possible service quality to its subscribers.

Under the arrangement, Huawei will be responsible for the operational management of Etisalat Nigeria’s IT services across Technical Infrastructure, Application Management and User Support. However, the Business Planning, Architecture and Governance shall still be retained by Etisalat Nigeria.

Announcing the outsourcing partnership, Acting Chief Executive Officer of Etisalat Nigeria, Mr. Matthew Willsher, said the decision to outsource aspects of the company’s IT function followed the adoption of a new model which was effectively aligned with the corporate vision of creating more value for customers by improving quality, reducing costs, embedding innovation, and increasing the speed of delivery.

“At Etisalat, we are dedicated to providing innovative and best quality telecommunications services to our customers Outsourcing our IT services to Huawei is part of the fulfillment of our promise to continuously deliver excellent communication experiences to our customers at all times. The outsourcing arrangement will in no way lead to the lay-off of IT staff as is often feared under such circumstances,” Willsher said.

He added; “Our overall aim is to improve efficiencies, leverage capabilities and improve training and development for our employees. About 75 per cent of the current IT staff will be transferred to Huawei with comparable terms of employment and compensation, so that no one will be worse off,” Willsher explained.


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