outsourcing issue #10

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PREMIER MAGAZINE ON BUSINESS AND TECHNOLOGY SERVICES INDUSTRY

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www.the-outsourcing.com>> ISSUE #10

ObamaandOutsourcing

Has Change Arrived? Probably Not Much

Satyam’s fall from grace

Cultivating perfect team leader

Do you value what your customer values?

Tech firms keep polluting planet

Soft skills are vital – that’s a hard fact!

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Satyam’s fall from graceIndia reels over accounting scandal at outsourcing giant

Malaysian ICT sector remains upbeat

Mumbai second most dangerous location after JerusalemIndia had two regions ranked among the top five most dangerous places for outsourcing

Obama and OutsourcingHas “Change” arrived? Probably not much



The Next 5 in 5A list of innovations that will change the way people work, live and play over the next five years

Top security concerns Cybercrime and outsourcing top the list in new study

Global Sourcing An achilles heel or panacea in today’s challenging times?

Fine art of managing external partners

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The New Year has begun with a shocker in the form of Satyam scandal.

Perpetrated by founder Ramalinga Raju, one of the prodigal sons of

India’s IT revolution, the episode has shown the dark side of Indian

capitalism.

Raju had admitted that his company’s accounts and assets had been

falsified over a period of several years, with profits inflated to the tune

of more than one billion dollars.

At press time, with Raju languishing in Hyderabad prison, the

Indian government has formed a special fraud team to investigate the

scandal.

It remains to be seen if the IT outsourcing giant will bounce back from

this financial and legal quagmire, and surely it will depend heavily on

a rapid liquidity infusion and the faithfulness of its clients and staff.

Then, there’s this issue of the scandal’s trickle-down effect on the

credibility of Indian outsourcing industry.

Perhaps now, services companies from other outsourcing hotbeds will

hope that the fiasco may convince clients to bypass India when looking

to outsource their operations.

Wishful thinking? I leave that to you to ponder over.

While Raju has been hogging the limelight for all the wrong reasons

in the recent weeks, we have another personality on the other side of

the spectrum, Barack Hussein Obama, whose campaign message of

“Change” landed him into the Oval Office recently.

What would be his administration’s impact on the industry?

Well, our Cover Story takes a in-depth look at this interesting issue.

Be sure to find it out. – Sritharan Vellasamy

Managing Editor/Publisher: Sritharan Vellasamy

Consultant:Sundra Surian

editorial [email protected]

Sub Editor: Simon VellaArt Director: Steven ChooGraphic artist: Shafie OsmanContributors: Tamyne Menon, Dorothy Llew, Mohd ArshadCoordinator: James Wee

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Vikraman VisnoResh Nathen

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� | Outsourcing | January – February 2009

Outsourcing | news bits

INDIA reeled over a false accounting scandal at outsourcing giant Satyam, likened to that at US energy giant Enron, amid fears for jobs, foreign investment and the country’s economic credibility.

The irony, you ask? – “Satyam” is Sanskrit for “truth”.

The Satyam affair could not have come at a worse time, analysts said, with growth in India slowing and the government struggling to revive the flagging economy.

News agency AFP reported that were even fears the Hyderabad-based company – India’s fourth-largest IT exporter – could go to the wall, as existing clients run scared and potential bidders shy away from being associated with a tainted firm.

As news of the billion-dollar fraud broke, Satyam’s advisory consultants DSP Merrill Lynch, which had been scouting for merger bids, said it had ended its engagement with the firm, citing “mate-rial accounting irregularities”.

Satyam, India’s fourth largest software company, built single-handedly by entre-preneur B. Ramalinga Raju, plunged into a financial quagmire last week, after he confessed to fudging figures to the tune of Rs7,000 crores (RM3.5 billion) over the last five years.

Raju resigned in early January, admit-ting in a letter to the industry regulator and stock exchange that company ac-counts and assets had been falsified and profits inflated.

He said he had tried to cover his tracks but was unable to as the situation spi-ralled out of control.

India’s media picked over the scandal, suggesting parallels with the fall of Enron, where executives hid company losses and hyped the stock’s value while secretly selling their own shares.

However, Raju insisted that neither he nor senior officials profited from the fraud.

With the company’s future uncertain, and its reported 53,000 employees uneasy about their jobs, a potential merger or takeover of Satyam appears difficult as the deal may not be approved by shareholders of the potential buyer, analysts said.

Earlier, commentators suggested that the affair would hit the Indian economy and foreign investor confidence, denting the perception that corporate governance in the country was better than in China, which has also seen rapid growth.

Malaysia has expressed concern over Indian computer giant Satyam’s financial fraud issue, as it could affect its worldwide operations, including that in Malaysia.

Satyam Computer Services,a software outsourcing firm, has a sizeable number of workers in Cyberjaya, Malaysia.

“Things are just unfolding, the company is unsettled and unable to give a clear picture on its direction but its current status is definitely an issue. We are concerned of the subsequent direction of the company as it will affect its presence in Malaysia,” Human Resources Minister Datuk Dr S. Subramaniam told Malaysian reporters.

Satyam is one of Cyberjaya’s biggest employers and has an estimated 800 employees at its newly built office, named the Global Solution Centre.

It has also been very supportive of Malaysia’s IT ambitions and has trained dozens of students and university lecturers under a special programme with the government in a bid to raise IT competency levels in the country.

Meanwhile, IANS news agency reported that top Satyam Computer Services officials were busy meeting the company’s more than 400 clients in Singapore, including several government agencies, to reassure them that the company would continue to fulfill its contracts and that it would be business as usual, a senior company official said.

IndIan authorities has installed three prominent business leaders to run scandal-hit software giant Satyam Computers in an effort to salvage the country’s international business image.

The government appointees replaced the company’s own interim board of directors who took charge after Satyam founder and

chairman B. Ramalinga Raju admitted that his company’s accounts and assets had been falsified.

The new board would “provide necessary vision and accountable leadership in this hour of crisis to restore credibility, customer confidence and employee morale,” Company Affairs Minister P.C. Gupta told reporters.

india names new board for fraud-hit giant

tremors in south east Asia over fiasco

satyam’s fall from grace

Earlier, commentators suggested that the affair would hit the Indian economy and foreign investor confidence.”

Raju … confessed to fudging figures.

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� | Outsourcing | January – February 2009


MSC MAlAySIA will make more efforts to pave the way for local ICT industry to explore more opportuni-ties in China and the Middle East.

Multimedia Development Corporation’s (MDeC) CEO Datuk Badlisham Ghazali said: “MSC Malaysia’s presence in the Middle East and China over the last few years had begun to yield positive results for local ICT companies.

“MSC Malaysia has found a niche demand for ICT solutions and services in these regions and there are plenty opportunities for local ICT companies to do well there,” he said in a statement.

Badlisham said local ICT compa-nies were ready to face global chal-lenges as demonstrated by several companies already successful in the two regions. He said the ventures to the Middle East and China were focused on software and e-solutions for e-government as well as for the financial and telecommunication industries.

He said MSC Malaysia made its The inforMaTion and communications technology (ICT) industry in Malaysia remains upbeat in the face of lackluster growth in technology expenditure expected in 2009.

Most ICT companies are confident that the government’s RM7 billion stimulus package will help boost the economy throughout the year.

ICT will continue to be the key enabler and strategic tool for cost savings and productivity improvement during challenging times, according to the Association of the Computer and Multimedia Industry of Malaysia (PIKOM).

Its chairman David Wong Nan Fay told Bernama that PIKOM has projected ICT growth next year to be lower at 5% compared to its forecast of 7% for 2008.

The organisation expects some spending to take place within the Malaysian Islamic banking sector, given that liquidity flowing in from the Middle East to Malaysia could increase ICT spending.

Wong said the government and telecommunication companies (telcos) will continue to lead in ICT investment in education and e-governmentas well as consumption activities in education and e-government projects through the roll-out of the High Speed Broadband Infrastructure (HSBB) and WiMAX nation-wide.

“We see an increase in contributions from shared services and outsourcing, content development, e-commerce solutions and Internet-based services activities to be new generators of the industry,” he said.

NetworkINg company Cisco will launch its first products developed specially for small businesses in January.

The new products are for video sur-veillance, data storage and wireless office communications, the company said in a statement recently.

Cisco said to reach small and me-dium businesses (SMBs), the company will embark on a campaign focusing on business capabilities and the benefits of complete solutions rather than on products and technologies.

The six-month integrated cam-

paign called “One Voice” comes on the back of Cisco’s recent announce-ment of a US$100 million invest-ment in its global small business initiative.

“Small businesses are the lifeblood of today’s economy and in today’s challenging economic environment, it’s critical that small-business own-ers have a technology partner that they can trust to help them find and deploy the right solutions to grow their businesses,” said Cisco Malaysia’s managing director Anne Abraham.

Cisco targets small businesses

eyes on China, Middle east

Malaysian iCt sector remains upbeat

presence known at the Malaysia Services Exhibition (MSE) in Sharjah and Global IT Exhibition (GITEX) Dubai this year and showcased 30 MSC Malaysia Status companies.

“In total, the companies secured RM300 million in sales and invest-ment opportunities over the next five years,” said Badlisham, adding that more deals were expected to materialise when the companies begin to explore the market.

MSC Malaysia has found a niche demand for ICT solutions and services in these regions and there are plenty opportunities for local ICT companies to do well there.”

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10 | Outsourcing | January – February 2009


Thailand is one of four new countries in Gartner’s Top 30 in its latest survey that assesses the suitability of 72 coun-tries as offshore locations. The analysis shows that the dynamic nature of the market has seen a number of countries position themselves as credible alter-natives to the BRIC countries (Brazil, Russia, India and China).

“Countries such as Mexico, Po-land and Vietnam have continued to strengthen their position against leading alternatives, while others have forced their way into the Top 30,” said Ian Marriott, research vice president at Gartner. “These countries will be seeking to take advantage of the op-portunity created by the increased focus that many organisations now have on cost optimisation, as a result of the current economic crisis,” he added.

In summing up the results of its survey, Gartner said that during the past year there had been significant activity in many countries to consolidate or grow their positions as leading locations for offshore services.

“As a result of this, four countries have dropped out of the Top 30 and have been replaced by four that were just outside the ‘Top 30’ 12 months ago. This does not mean that the four “rel-egated” countries have underperformed this year, but the dynamic nature of the market has seen others making strong progress,” Marriott said.

The four countries leaving the Top 30 this year are Northern Ireland, Sri Lanka, Turkey and Uruguay. Along with Thailand, the other new entrants as leading countries for offshore services are Egypt, Morocco and Panama.

Ten countries from the Asia-Pa-cific region were represented in the 30 leading countries. These included the undisputed leader in off-shore services India and China.

The rest were a mix of mature envi-ronments that offer limited cost benefits such as Australia, New Zealand and Singapore and emerging countries with a variety of challenges, but attractive costs such as Malaysia, Pakistan, the Philippines, Thailand and Vietnam.

VOiCE-BaSEd business process outsourcing (BPO) companies in Philippines expect to grow by a fifth this year despite the threat of a global economic crisis.

But industry leaders said call centres should enter 2009 with caution, noting that the local offshoring industry was not immune to the negative effects of the economic crunch.

“You never really know what’s going to happen,” Bene-dict Hernandez, president of the Call Centre Association of the Philippines reportedly said.

“Despite the forecast, we still have to be more careful ... We cannot say that there won’t be an impact.”

Hernandez noted that according to a survey by the group, call centre companies, which make up around 70% of the local BPO industry, expect to grow by an average of 23% this year.

He noted that this would not be as fast as the 30% to 40% growth the sector had been experiencing in the past three years.

IBM announced that it has signed a seven-year agreement with Sara Lee Corporation to manage and maintain pieces of the consumer products company’s global back office operations. IBM will manage a portion of Sara Lee’s North American and European Finance (transaction processing) and Global Information Services (applications development and maintenance) groups, as well as the company’s global indirect procurement activities.

As part of its long-term strategy, Sara Lee is building on leading market share positions, leveraging opportunities in emerging markets and driving efficiencies to spur worldwide growth.

The company is simplifying its organisation to achieve efficiencies through process discipline, functional centers of excellence, integrated supply chains and outsourcing work where appropriate. Through IBM’s proposed integrated approach, Sara Lee will look to drive additional cost and efficiency improvements. The transfer of activities will happen in a phased approach in accordance with local consultation requirements.

big blue’s sweet deal with sara Lee

Philippines’ call centres cautiously optimistic

thailand enters Gartner’s top 30 list

January – February 2009 | Outsourcing | 11

news bits | Outsourcing

MuMBai has been ranked second to Jerusalem on a list of the most dangerous places for outsourcing – even before the recent terrorist attacks plunged the city into chaos.

In fact, India had two regions ranked among the top five most dangerous places for outsourcing, according to a survey of 448 corpo-rate development and outsourcing destination specialists conducted by Black Book Research and Brown-Wil-son Group. The survey ranked 50 of the largest established and emerging offshore locations - from the safest to most dangerous - based on threat of terrorism, crime, climate hazards, and other factors (locations in the US and the UK were excluded).

The results were not overly sur-prising. Jerusalem, Mumbai, Rio de Janeiro/Sao Paulo (Brazil), Ma-nila/Cebu/Makati (Philippines) and Delhi/Noida/Gurgaon (India) were ranked as the most dangerous places for outsourcing in the report.

The safest outsourcing locales? Singapore, followed by Dublin (Ireland), Santiago (Chile), Kra-kow/Warsaw (Poland) and Toronto (Canada).

The terror attacks in Mumbai, along with the prospect that Presi-dent-elect Barack Obama could follow through with policies that could penalise outsourcers with tax disincentives, have many US corporate executives rethinking their offshore outsourcing strategies.

That could spell trouble for several

outsourcing locations, particularly India. American companies alone are expected to spend around US$25 billion this year on IT out-sourcing contracts with vendors on the subcontinent.

Study authors Doug Brown and Scott Wilson noted that the risks involved with many offshore

locations may begin influencing corporate decisions to outsource to vendors at home or in locations that are closer to home.

“Outsourcing buyers are now keenly aware they can no longer justify offshore cost savings where their business continuity is in jeopardy,” they noted.

Mumbai second most dangerous location

The MosT Dangerous 101. Jerusalem

(Israel)2. Mumbai (India)3. Rio de

Janeiro/Sao Paulo (Brazil)

4. Manila/Cebu/Makati (Philippines)

5. Delhi/ Noida/Gurgaon (India)

6. Kingston (Jamaica)

7. Kuala Lumpur (Malaysia)

8. Johannesburg (South Africa)

9. Bangkok (Thailand)

10. Bogota (Colombia)

The safesT 10

1. Singapore2. Dublin (Ireland) 3. Santiago (Chile) 4. Krakow/

Warsaw (Poland)

5. Toronto (Canada)

6. Prague/Brno (Czech Republic)

7. Budapest (Hungary)

8. Monterrey (Mexico)

9. Beijing (China)10. Cairo (Egypt)

in another blow to India’s already-reeling technology industry, the World Bank disclosed it had barred two Indian outsourcing firms, Wipro Technologies and Megasoft Consultants Ltd, from doing work with the bank’s headquarters.

Earlier, the bank revealed it had blacklisted Satyam Computer Services Ltd. for eight years.

The World Bank said in a news release that Wipro Technologies, a unit of Wipro Ltd, had been banned in June 2007 for four years for “pro-viding improper benefits to bank staff”.

The company, in 2000, had provided the Bank staff

option to purchase its Ameri-can Depository Shares at its Initial Public Offer (IPO) price through a Directed Share Pro-gramme. However, the Bank in June 2007 determined that this was a conflict of interest.

M e a n w h i l e , I n d i a n industry body Assocham today threw its weight behind Wipro.

“Wipro did nothing wrong,” Assocham Secretary General D S Rawat said in a statement.

He said companies such as Wipro, TCS and Infosys practice the highest standards of business ethics and “India Inc would back the leading software firm”.

us beverages group Dr Pepper Snapple has extended its IT outsourcing contract with Unisys.

The two first began their partnership in 2005 and have increased their collaboration for another year, with Unisys managing IT services for 5,000 Dr Pepper staff.

It will provide IT support in areas such as equipment maintenance, installation, moves, adds and changes, as well as hardware and software assistance.

“Partnering with Unisys for outsourcing services helps Dr Pepper Snapple Group keep IT costs in line and streamline operations,” said Virginia Guthrie, chief information officer at Dr Pepper Snapple Group.

By outsourcing the IT operations to Unisys, the firm can focus on improving efficiency and helping staff to better serve distributors and customers, she added.

Unisys and Dr Pepper extend it deal

wipro business: world bank cracks the whip


Outsourcing | Cover Story

By Alan G. Downe

Bernard Chin is the founder and CEO of BPOA-sia in Kuala Lumpur, a recently-launched provider

of call centre and business process outsourcing services in the IT, telco, financial services and gaming in-dustries.

Over on the other side of the planet, Joseph A. Barna is the founder and CEO of CDE Services Inc, an Atlanta-based company that repairs and manufactures point of sales and office equipment. CDE designs and manufactures its own plastics, lenses, keypads, overlays and other components, with much of the work outsourced to its facility in Shanghai, China.

Bernard and Joe have some-thing in common. They’ve become Obama-watchers.

And, they’re not alone. Since Barack Obama’s historic victory in November’s American presidential election, world-wide attention has been focused on the 47-year-old attorney and former Illinois senator whose campaign message of “change we need” catapulted him into the Oval Office.

Keen among these observers has been the global sourcing industry. While the previous American election in 2004 turned outsourcing into a point of bitter debate between Demo-crat and Republican candidates, policy positions were significantly more muted in 2008.

But, still they persisted. During a June 27th rally in New Hampshire, then Democratic candidate Obama made it be known that he would oppose the outsourcing of jobs – “We can keep giving tax breaks to com-panies that ship jobs overseas, or we can give tax benefits to companies that invest right here.”

That theme was repeated several times in debates with presidential hopeful Hillary Clinton, who said in February that, “We’re going to stop giving a penny of your money to anybody who ships a job out of Texas, Ohio or anywhere else to another country.”

With President Obama moving into the White House and Clinton becoming the new US Secretary of State, it is not surprising that jittery outsourcing proponents have taken to scrutinising policy statements and analysing the political positions of Cabinet appointees.

“The new administration in the

Has Change arrived? Probably not much

obama and outsourcing


Cover Story | Outsourcing

US could definitely be a concern,” said Chin. “Not so much to me as a business owner, but in terms of how it shapes American views about the shared services industry around the world. This could have a long term impact on how we position Malay-sia, and on the extent to which we’re successful in promoting ourselves as an outsourcing destination.”

An All-out Attack on outsourcing? Since January, views have differed on the likelihood of direct anti-outsourc-ing policy. The day after the election, India’s then Finance Minister, P. Chidambaram, stressed that, “A comment here and a comment there should not bother us. Once Obama is in office, he will realise that it is an inter-connected world and countries have to work together.”

NASSCOM’s Ganesh Natrajan echoed the same sentiment in a post-election television interview: “We should not worry about any ban on outsourcing; it is just not going to happen … At the same time, all of us have to realise that job creation must happen in the United States and there will be different measures to take that up.”

So, what is likely to happen? With US public sentiment leaning toward protectionism and with expectations primed for action by campaign promises, inaction may not be an option for the new President. He and his Democratic colleagues are going to come under severe pressure from labour unions and from American workers worried about seeing their jobs going overseas.

Yet, the mechanics for effecting change, particularly during a re-cession, may be limited. Here are some strategy proposals from the anti-outsourcing toolbox:

>> the New American Job tax CreditOne option is to provide a new temporary tax credit to companies that add local jobs. The proposal is that, during 2009 and 2010, existing businesses will receive a US$3,000 refundable tax credit for each ad-ditional full-time employee hired in the United States.

The new administration will probably try to proceed with this plan. But, the reaction on Capitol Hill has not been entirely supportive, even from Senate Democrats. “If I’m a business person, it’s unlikely if you give me a several thousand dollar credit that I’m going to hire people if I can’t sell the products they’re producing,” said Senate Finance Committee member Kent Conrad of North Dakota.

Reaction by business leaders has been lukewarm, also. Atlanta CEO Joe Barna points out that the

tax credit idea would just not be effective. “While commendable, obviously this was made without any idea of what it takes to actually run a business here. A one-time tax credit is just that, one time. With all the regulation and taxation here now, what happens in succeeding years? All I see as a business owner is more overhead and little or no benefit.”

>> ending tax BreaksClosing tax loopholes and elimi-nating government subsidies for companies that outsource offshore was one of President Obama’s strongest campaign messages. But, an initiative to reform a tax system that has been around since the 1900s could turn into a massive undertaking fraught with policy and

legal headaches. Usually, when people talk about

tax breaks and outsourcing, they are referring to the ability to de-fer, and often never pay, taxes on foreign-earned profits. Attempts to float policies that would tax such “unrepatriated earnings” have gen-erally involved higher bureaucratic costs and government red tape that would eat into whatever revenues could be reclaimed.

Besides, it’s not at all clear that they would work. The assumption is that by making it more difficult to offshore, jobs will stay (or grow) in the US.

It’s just as possible that growth could just stop and jobs would be lost anyway. And, anyway, there is no really good evidence that closing tax loopholes would increase the outsourcing proposition to a level that outbalanced labor and facilities savings abroad. Study after study has shown that incentives are generally not one of the main drivers motivating the decision to outsource.

>> economic PrioritiesPresident Obama is going to have to hatch his plans in the midst of the worst economic conditions in over fifty years. And, to be candid, the economic crisis hasn’t been altogether bad so far for outsource service providers.

As cost pressures have tightened, big firms have slashed expenditures, using outsourcing contracts to help reduce labor spending. A recent survey by Everest Research Institute predicts that BPO from the financial services sector alone could increase 40 to 45 times over the next five years.

The President has already prom-ised stimulus packages aimed at refurbishing aging infrastructure

Closing tax loopholes and eliminating government subsidies for companies that outsource offshore was one of obama’s strongest campaign messages. But, an initiative to reform a tax system that has been around since the 1900s could turn into a massive undertaking fraught with policy and legal headaches.


Outsourcing | Cover Story

and by “putting Americans to work in new jobs that pay well and can’t be outsourced – jobs building solar panels and wind turbines; constructing fuel-efficient cars and building; and developing the new energy technologies that will lead to even more jobs, more savings and a cleaner, safer planet in the bargain.”

This plan may give America the same sort of boost that Franklin Roosevelt’s “New Deal” did in the 1930s. But, it is unrealistic to expect that it can all be done at today’s prices without any outsourcing. If everything else is being designed and manufactured less expensively in Mexico or Asia, why won’t wind turbines, energy-efficient schools or Intelligent Transportation Systems?

The reality is that many countries have already moved ahead of the US in these emerging technologies. Some of the best carbon re-capture projects are in Canada, for instance. Brazil has made great strides in bio-fuel production, and several European countries lead the way in wind and tidal energy.

Professional engineering services for building and roadway design are widely available throughout Asia at high quality and lower prices. In order to succeed, at least some of the expertise for President Obama’s massive infrastructure initiatives will need to be sourced from offshore locations.

>> talent Pool DevelopmentTo a large degree, the outsourcing revolution has been driven not only by lower offshore costs, but by shortcomings in the American labour market. Joe Barna says: “I can hire a person with a political sci-ence degree in the US, but I cannot find qualified people to set up and run injection molding equipment. The opposite is true in places like China.”

continued use of an increasingly criticised business practice. Over the long run, though, the outsourcers who do best during the Obama years will be ones able to focus on strategic outcomes.

Integrated end-to-end solutions, build-operate-transfer, joint ventures and other sophisticated, flexible approaches based on alliance build-ing are going to thrive; those based simply on “work transfer” won’t.

Other likely changes? American outsourcing will stay closer to home. There will be more rules and regulatory barriers, especially for public services outsourced by state governments. Offshore voice-based projects are in for a rough time. Security concerns will be a priority. And small- to mid-sized outsource service providers in Asia will shy away from chasing the single windfall American contract.

That’s the direction in which Chin is taking his business development plan for BPOAsia. “There’s more regional opportunity than ever before and we’ll also be going after global contracts which may or may not have an American component,” he said. “We’ll probably target American deals less aggressively than we might have in the past, given the weakened US dollar and a less supportive Presi-dent. Barack Obama’s influence is going to be enormous.”

“After all,” said Chin, “he’s not just the President; he’s the Person of the Year.” Maybe the decade.

Alan G. Downe is a senior lecturer in the Department of Management & Humanities at Malaysia’s Universiti Teknologi Petronas. He specialises in operations and strategy related to BPO and call centre environments.

Not so easy … Indian Minister Chidambaram says that once obama get into the oval office, he will realise that it is an inter-connected world and countries have to work together.

We should not worry about any ban on outsourcing; it is just not going to happen … At the same time, all of us have to realise that job creation must happen in the United States and there will be different measures to take that up.”

President Obama’s priorities include a rapid ramping-up of university research and education in science and technology. But broad educational transformations take time and businessmen like Joe Barna aren’t going to be able to wait. Even if President Obama were to take a different route and expand the H-1B visa programme to bring high-level technology grads from India and other countries, the outsourcing of innovation, research and develop-ment would still be a necessity. This is especially true in allied health services, human resources, engineer-ing and pharmaceuticals.

Looking Ahead to obama yearsSo, what does it all mean? In a re-cent Hong Kong interview, Thomas Friedman – author of “The World is Flat” and “Hot, Flat and Crowded” – said “outsourcing is smart … as long as outsourcing companies are providing innovation advantage and financial advantage, they will never die”.

Very true, Tom. But, promises are promises, even when they are made in the heat of a political campaign and it’s still probable that the new administration is going to proceed with some combination of tax re-structuring, stimulus initiatives and education reform.

Will these efforts “stop” outsourc-ing? Nope. But, they will change the playing-field. There will be an initial wave of client demand for price re-negotiation, rationalisation and stringent SLA enforcement to justify

Crumpled ... the new President is going to have to hatch his plans in the midst of the worst economic conditions in over fifty years.

Create an Outsourcing Strategy that Maximises Revenue and Global Business Opportunities through

l UnderstandandidentifywhatITservicestooutsourceaccordingtoorganisation’sneeds

l Strategicsourcing

l KeysuccessfactorsofIToutsourcing

l Securityconsiderationswhenoutsourcinginfrastructureandoperations

l Costsavingstrategiesthatworkusingstrategicoutsourcing

l Outsourcingofe-commerceandcontentactivitieswithinanenterprise

l ITinfrastructureoutsourcingforgovernmentsector

l StrategytodriveReturnofInvestment(ROI)throughITOutsourcingprojects

l ITstrategyfortheeconomicdownturn:DoesrecessionimpactOutsourcing?

l Offshoresoftwaredevelopment–Howtodoitright?

l GlobalmarketingstrategiesfortheITindustry

Key Issues to be Addressed:

15-16April2009lHotelIstana,KualaLumpur,Malaysia

AhmadNoorbinSulongCorporate Counsel & SecretaryHeiTech Padu Berhad

ArunAugustine,Vice PresidentEmerio

BillyLee, CEOFree Net Business Solutions Sdn. Bhd.

BobbyVaranasi,Chairman & CEOMatryzel Consulting incandChairman,IAOP Malaysia ChapterandMember,IAOP Asia Pacific Advisory Board

ColinWhiteheadGroup Chief Executive Officer and ShareholderRentwise Group

GerardPillai,Content Evangelist & CEOiContent Group

JonediMohamed,Managing DirectoriTechSolv Sdn. Bhd.

MarcPerrineau,Regional Technical AuthorityAtos Origin Services (M) Sdn. Bhd.

MarkVedel,Managing DirectorVedel IT Services Sdn. Bhd

MichieldeBoerManaging Director Malaysia/Hong Kong/SingaporeQuint Wellington Redwood

RodneyLeeYatNamDirector, Information Security ServicesTime Quantum Technology Sdn. Bhd.

RomAgustin,CEOCallbox Sales and Marketing Solutions

SaifulKhairiZainuddin,Executive DirectorSkali Group

VikSubramaniam,Group Managing ConsultantITX International (Asia Pacific)

Our Distinguished Panel of Speakers:

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Tel: (603) 2070 3299, Fax: (603) 2070 3369 or Email: [email protected]

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Outsourcing | AnAlysis


By Shree Phadnis and Aditya Bhalla

The voice of the customer is the primary driver for many initiatives linked to product development, process design and process improve-

ment.Many organisations in the outsourcing

industry rely on their clients to obtain the

voice of the customer or end user as the case may be. They are contractually forbidden from obtaining the voice of the customer in their direct interactions with the end-customers. The clients are closely involved in the design and administration of customer surveys through third party agencies.

They share the summary findings with their vendors. Managers at the vendor site envy the clients for having direct access

to the end-customers. They believe that it provides their clients the insights to design products and services aligned to the customer.

But could it be that even though clients have complete control over the customer satisfaction process and full access to the findings they may still not have true insights to help them align products and services to what the customer really values?

Loud and clear … Customers want to get their job done elegantly. From a customer’s point of view the tangible drivers of value – quality, cost, and speed – are simply means to an end.


AnAlysis | Outsourcing

Consider the scenario of a process from an insurance company. The customer of the company submits the insurance ap-plication form along with the payment for the premium. The application is forwarded by sales to operations. Operations consist of an entire chain of sequential steps that may involve scanning the application, entering the data in the system, financial and medical underwriting, policy issuance and dispatch.

The entire process or parts of it like underwriting may be outsourced to external agencies. Both the clients and their vendors run multiple continuous improvement projects to provide faster turn around time, increased productivity of staff, automation through imaging and workflow systems and so on. End-customers are sent survey forms at regular intervals to rate their satisfaction on the quality of the service provided.

Let us for a moment pause to consider the situation from the end-customer’s point of view. Customers want to get the job done elegantly. From a customer’s point of view the tangible drivers of value – quality, cost, and speed – are simply a means to the end.

Main Parameters of Value (MPV) are those attributes for product or service that will have the greatest significance in the customers purchasing decision.

For an insurance customer one of the main parameters of value would be in-stant activation of the policy (or instant protection) the moment the application form and the payment is handed over to the sales representative. The customer is not interested in the elaborate steps that his application has to traverse within the organisation.

Focusing on the internal steps takes away the customer’s perspective of eliminating all steps that prevent us from reaching the desired end state. Viewing the process from the main parameters of value of the customer will help senior management drive improvements across the enterprise.

That will have much greater impact than

the sub-optimal incremental improvements brought about by increasing productivity of the scanning process or increasing the typing speed of data entry opera-tions.

Determining the main param-eter of value however, is only half the job. The other half is to get that value to the customer without complexity creeping into the internal processes. The customer satisfaction survey should check for satisfaction on the ability to deliver the value.

If instant protection is one of the main parameters of value to the customer then the surveys should check for satisfaction on the ability to provide that. Attempts to collect any other voice is not reflective of what the customer truly values, even though he may rate the organisation high on the quality of the service provided. It also puts the organisation at a risk of being outma-neuvered by smarter competition.

ConclusionMain parameters of value are those attributes for product or service that will have the greatest significance in the custom-ers purchasing decision. If organisations make a conscious attempt to capture voice linked to main parameters of value then it will provide them the true insights to design products and processes that achieve their growth objectives.

Shree Phadnis and Aditya Bhalla are Senior Consultants with QAI Innovation Practice. They are Six Sigma Master Black Belt, and MA TRIZ Level 3 certified. They can be contacted at [email protected] and [email protected].

Not a full picture … Determining the main parameter of value however, is only half the job. The other half is to get that value to the customer without complexity creeping into the internal processes.

Many organisations in the outsourcing industry rely on their clients to obtain the voice of the customer or end user as the case may be. They are contractually forbidden from obtaining the voice of the customer in their direct interactions with the end-customers.


Outsourcing | analysis

Much has been written about the role of Team Leaders in the Contact Centre world. Say what you may, the bottom line is

having good, dependable Team Leaders in place to help you run your company is the difference between growth, expansion and success, and fundamentally losing it all.

The Team Leader plays as high of an impact role in the Contact Centre as any other part of the management. Make no mistake, as a role model, the call centre Team Leader (or TL’s as they are sometimes referred to by their adoring teams of agents and CSR’s) must demonstrate exception-ally good judgment, excellent work habits, thorough knowledge of procedures and processes, as well as strong retention skills when it comes to the different products and services that they will be teaching and coaching their staff on.

Above all this, however, the modern-day call centre TL should possess excellent motivational and interpersonal skills for handling their teams of staff and external customers alike.

We recently did a survey with our Out-bound Telemarketers and Virtual Assistants. The simple question we asked was “What do you want in a Team Leader?”. Some of the comments we obviously expected, but


there were also a few that we didn’t see coming, and we now appreciate doing this little exercise more than ever.

First up, almost all of the staff members surveyed said that they wanted their Team Leader, first and foremost, to be enthusiastic when working with them. To have their support and to be inspired and motivated by their TL. This gives them the energy and enthusiasm they need to be able to get fired up and ready for work every day.

They also want to know that their TL can do the job that they, themselves, are doing. “To be able to stand there and say ‘do this and do that’ is no good unless they can do it themselves ...” points out Marie, one of our more seasoned telemarketers.

The one big revelation that came about on this survey was that the biggest fear the agents had, in relation to working with their TL, was that they would not do what they needed to, to help them get better. We asked why they even thought this would be an issue – thinking logically, a TL will basi-cally get commended and receive that all important pat on the back (along with the bonuses and pay increases!), based on the performance of their team. Why wouldn’t they help their team get better? Simple – because of the fear of being replaced by one of their own team members.

This led us to look a lot more deeply into the mind of the call centre TL. Based on our findings, I now present to you the Top 10 Tips to finding, hiring, training, motivating and cultivating the perfect TL.

Tip #1When looking for a new TL, start with what is already under your nose – your agents. Sometimes TL are chosen solely on the basis of their performance as agents. This also gives the agent pool the ability to see that you are interested in promoting from within, which is always a good thing. Keep the ‘best of the best’ for the first-level

By Chris C. Ducker

Almost all of the staff members surveyed said that they wanted their Team Leader, first and foremost, to be enthusiastic when working with them.”


analysis | Outsourcing

When looking for a new Team Leader, start with what is already under your nose – your agents.


Outsourcing | analysis

supervisor or management roles though. If you have to advertise outside the company, then look for people with a minimum of one year call centre experience, and preferably someone who has been in a similar role already with another company.

Tip #2When interviewing for potential new TL, look for qualities such as a strong, positive attitude, someone that you feel will always be willing to help out – not just in relation to their potential team, but in regards to the company in general. I’ve met some TL that

work 15 hours a day. They quickly move up the corporate ladder, believe me!

Tip #3Once that special someone has been hired and placed in their new position (after any relevant training, if required), its time to go to work. The first thing you must get across to them is that they must demonstrate an amazingly strong desire to contribute towards the company’s goals and overall image. They should also be able to run with tasks on their own, and have the initiative to work in a trustworthy way, with strong business ethics, too.

Tip #4Being able to manage one’s time is about as important as anything else. Especially when you’re focusing on building up a new team. Team Leaders should have the ability to prioritise certain activities and meet dead-lines. Timelines and commitments should be met, always. Your long-term TLs will eventually, hopefully become part of your management team, so get this important point across from the get-go.

Tip #5Flexibility. Lets face it – we work in a very fast moving, hectic and at times, down right stressful industry. More and more agents are quitting nowadays because of stress related illnesses. Your TLs should hone in on their flexibility skills, making sure that they can focus in a positive way to corporate changes and to keep the team in line when it comes to challenging tasks and working towards targets.

Tip #6Having the skill to address the team as well as getting information to them in a clear and concise format (whether is through writ-ten or oral communication) is an endearing and essential quality of high impact TLs. This is especially important when discussing negative information.

Tip #7Being able to build and grow relationships is also an important factor. Working with diverse and different individuals is part of the role. Being able to take a special interest in team member’s personal lives is just as important. What did they do at the weekend?

What is the name of their wife or boy-friend? It is these small details that create strength and loyalty in a team.

Tip #8 Welcome to the world of management, and problem solving! Lets face it, as “leaders” – regardless of how high up the food chain we are! – we are problem solvers. All TLs should have this skill in abundance.

Tip #9The ability to build and drive a team of individuals is paramount. Generating enthusiasm and setting challenging, as well as clear, goals is also important, as well as providing the resources that the team members require to get the job done.

Tip #10A TL should also be a great coach. This is more than just clapping hands and saying “good job” when everything is going well. A coach is more active when things are going wrong. Having the ability to effectively identify problems, such as poor handling time or sales production, and being able to act on these things in a positive, friendly style will enable them to be constructive, encouraging and ultimately get the best out of their team. The balance of negative and positive feedback needs to be handled well, for all of the team.

So, there you have it – your one-stop-shop to finding, hiring and cultivating as perfect of a Team Leader as you possibly can.

Chris C. Ducker is CEO of Live2Sell, which is based in Cebu City, Philippines

As a role model, Team Leaders must demonstrate exceptionally good judgment, excellent work habits, thorough

knowledge of procedures and processes.

Sometimes Team Leaders are chosen solely on the basis of their performance as agents. This also gives the agent pool the ability to see that you are interested in promoting from within, which is always a good thing.

LabsOnlineAD.indd 20 4/16/08 4:14:20 PM


Outsourcing | feature

Unveiled recently for the first time in Malaysia, the third annual “IBM Next Five in Five” is a list of inno-vations that have the potential to

change the way people work, live and play over the next five years. The Next Five in Five is based on market and societal trends expected to transform our lives, as well as emerging technologies.

According to IBM, in the next five years, technology innovations will change our lives in the following ways:

1. Energy saving solar technology Ever wonder how much energy could be cre-ated by having solar technology embedded in our sidewalks, driveways, siding, paint, rooftops, and windows? In the next five years, solar energy will be an affordable op-tion for you and your neighbours. Until now, the materials and the process of producing solar cells to convert into solar energy have been too costly for widespread adoption.

But now this is changing with the creation

of “thin-film” solar cells, a new type of cost-ef-ficient solar cell that can be 100 times thinner than silicon-wafer cells and pro-duced at a lower cost. These new thin-film solar cells can be “printed” and arranged on a flexible backing, suitable for not only the tops, but also the sides of buildings, tinted windows, cell phones, notebook computers, cars, and even clothing.

2. A crystal ball for your health What if you could foresee your health destiny and use that knowledge to modify

The Next 5 in 5

your lifestyle? Even though we are told that things like French fries, potato chips, cheese and wine aren’t good for us, what if you could find out specifically that you are someone who could consume more of those vices without having negative impact on your health? In the next five years, your doctor will be able to provide you with a genetic map that tells you what health risks you are likely to face in your lifetime and the specific things you can do to prevent them, based on your specific DNA – all for less than US$200.

Ever since scientists discovered how to map the entire human genome, it has opened new doors in helping to unlock the secrets our genes hold to predicting health traits and conditions we may be predisposed to. Doctors can use this information to recommend lifestyle changes and treat-ments. Pharmaceutical companies will also be able to engineer new, more effective medications that are targeted for each of us as individual patients. Genetic mapping will radically transform healthcare over the next five years and allow you to take better care of yourself.

3. Looks who’s talking“Going” to the web will change dramatically in the next five years. In the future, you will be able to surf the Internet, hands-free, by using your voice – therefore eliminating the need for visuals or keypads. New technology will change how people create, build and interact with information and e-commerce websites – using speech instead of text. We know this can happen because the technology is available, but we also know it can happen because it must.

In places like India, where the spoken word is more prominent than the written

word in education, government and culture, “talking” to the Web is leap-

frogging all other interfaces, and the mobile phone is outpacing the PC.

In the future, through the use of “VoiceSites”, people without

access to a personal computer and Internet, or who

are unable to read or write, will be

able to take advantage of al l the

benefits and conveniences

the Web has to of-fer. And by the web

becoming more ac-cessible by using voice,

it will become easier to use for everyone. Imagine

being within a phone call’s reach from the ability to post,

scan and respond to e-mails and instant messages – without

typing. You will be able to sort through the Web verbally to find what you are looking for and have the information read back to you – as if you are having a conversation with the Web.

“In the next five years, your doctor will be able to provide you with a genetic map that tells

you what health risks you are likely to face in your lifetime and the specific

things you can do to prevent them.”

Thinking hard … In the next five years, it will become much easier to remember what to buy at the grocery store, which errands need to be run, who you spoke with at a conference, where and when you agreed to meet a friend, or what product you saw advertised at the airport.


feature | Outsourcing

4. Having your own digital shopping assistants Ever find yourself in a fitting room with all the wrong sizes and no salesperson in sight? And what about affirmation from friends that the outfit you’ve chosen truly does look good on you? In the next five years, shoppers will increasingly rely on themselves – and the opinions of each other – to make purchasing decisions rather than wait for help from in-store sales associates. A combination of new technology and the next wave of mobile devices will give the in-store shopping experience a significant boost.

Fitting rooms soon will be outfitted with digital shopping assistants - touch screen and voice activated kiosks that will allow you to choose clothing items and accessories to complement, or replace, what you already selected. Once you make your selections, a sales associate is notified and will gather the items and bring them directly to you. You’ll also be able to snap photos of yourself in different combinations and email or SMS them to your friends and family for the thumbs up … or the thumbs down. Shoppers can access product ratings and reviews from fellow consumers and will even be able to download money-saving coupons and instantly apply them to their purchases.

5. Forgetting will become a distant memory Information overload keeping you up at night? Forget about it. In the next five years, it will become much easier to remember what to buy at the grocery store, which errands need to be run, who you spoke with at a confer-ence, where and when you agreed to meet a friend, or what product you saw advertised at the airport. That’s because such details of everyday life will be recorded, stored, analysed, and provided at the appropriate time and place by both portable and station-ary smart appliances. To help make this possible, microphones and video cameras will record conversations and activities.

The information collected will be automatically stored and analysed on a personal computer. People can then be prompted to “remember” what discussions they had, for example, with their daughter or doctor by tele-phone. Based on such conversations, smart phones equipped with global-positioning technology might also remind them to pick up groceries or prescriptions if they pass a particular store at a particular time. It’s not hard to imagine that TVs, remote controls, or even coffee table tops, can one day be the familiar mediums through which we tap into our digitally-stored information.

Ray of hope … Until now, the materials and the process of producing solar cells to convert into solar energy have been too costly for widespread adoption.


Outsourcing | security

CyberCrime and outsourc-ing were named top secu-rity concerns according to a new study conducted by

The Ponemon Institute. The survey found that 50% of IT operations professionals viewed outsourcing as an imminent and near-time critical risk, while more than 75% of IT security professionals noted cybercrime a major issue – despite concerted efforts to thwart hackers in recent years.

In tandem, survey results high-lighted an increase in shared think-ing between traditionally disparate IT functions within the organisation – IT operations and IT security.

With the emergence of consumer

technology in the workplace, coupled with social networking and Web 2.0 technologies and the increased sophistication of cyber criminals, truly securing an organisation’s IT environment is an uphill battle.

In coming years, these challenges will increase in both the breadth and depth of threats – the compa-nies surveyed made this very clear. The key for both IT operations and IT security is to find the common ground necessary to better-wage this security battle together.

Given the breadth and depth of security breaches spanning the globe this year – all of which have had a long-lasting negative impact on organisations and consumers

alike – IT security and IT operations professionals have an increasingly critical task at hand, to protect sensi-tive data wherever it lives in an organisation.

The survey was developed to bet-ter understand if certain publicised IT risks to personal and confidential data are truly a concern for organisa-tions in the next two years. Based on interviews with IT experts in operations and information security, the following eight mega trends rose to the top: cloud computing; virtualisation; mobility and mobile devices; cybercrime; outsourcing to third parties; data breaches and the risk of identity theft; peer-to-peer (P2P) file sharing and Web 2.0.

Key Findings from the 2008 Secu-rity Mega Trends Survey include:

>> Outsourced IT is a Major Concern: As companies look to reduce costs based on economic factors in 2009, outsourcing will continue to be an attractive option for efficiency gains. The security risks associated with outsourc-ing are tremendous according to survey data. The top risks posed by outsourcing according to IT security (50%) and IT operations (59%) respondents is the exposure of sensitive information to third parties and the threat that that data will be improperly protected in transit.

>> Data Breaches and Cybercrime are on the Rise: Survey results indicated that the biggest concern relative to data loss is the threat of data making it into the hands of cyber thieves (46% for IT security and 24% for IT operations), thus wreaking continued havoc not just on the customers whose data was stolen but also on the organisations responsible for that lost data.

IT survey participants reported that 92% of the organisations have experienced a cyber attack. The injury to corporate brands as a result of a major data loss incident is critical, especially in an economic downturn

Top security concerns

Unknown enemy … With the emergence of consumer technology in the workplace, coupled with social networking and Web 2.0 technologies and the increased sophistication of cyber criminals, truly securing an organisation’s IT environment is an uphill battle.

The survey was developed to better understand if certain publicised IT risks to personal and confidential data are truly a concern for organisations in the next two years.


security | Outsourcing

Malaysians ended the year 2008 less concerned about key security issues according to the latest Unisys Security Index released.

The December 2008 Unisys Security Index now stands at 160 points which is 4 points lower than the last survey conducted in May 2008.

The single largest decrease occurred in the area of National Security with that Index falling 6 points to 187.

“There has been a demonstrable reduction in the concern level of Malaysians compared to earlier in the year,” said Scott Whyman, Vice President and General Manager of Unisys Asia South.

“Despite the decline, Malaysians continue to demonstrate high levels of concern about important security issues including identity theft, financial fraud and fears of a health epidemic,” said Whyman.

All four of the security indices recorded falls with the largest decline a 6 point drop in the National Security Index.>> National Security – 187 (-6)>> Financial Security – 155 (-4) >> Internet Security – 121 (-1)>> Personal Security – 179 (-3)

“Of the eight questions asked in the Unisys Security Index, the single largest movement was a 5% increase in the number of Malaysians who say that they are extremely or very concerned about their personal safety over the next six months,” Whyman said..

“Interestingly, despite the overall fall in concern levels, large numbers of Malaysians continue to say they are worried about key security issues including:>> An act of war or terror – 69% extremely or very concerned

>> A health epidemic – 70% extremely or very concerned>> Credit or Debit Card fraud – 70% extremely or very concerned>> Unauthorised access/misuse of personal information – 74% extremely or very concerned

“The fact that 7 out of 10 Malaysians have expressed high levels of concern on each of these four separate security questions shows that National Security as well as Identity Theft and related crime remain important public issues.

“Not only are these global issues but they are also very much part of day to day life, particularly identity theft.

“Much is been done to ensure Malaysians enjoy high levels of security in regards to the protection of their personal information and financial assets so it is important that organisations take the time to ensure consumers are aware of these technologies and strategies,” Whyman added.

>> Workforce Mobility Contributes to Data Loss: IT security and IT operations’ respondents (96% and 91% respectively) agree that employee mobility introduces a significant threat to securing corporate data as it diminishes IT’s ability to properly identify and authenticate remote users on the network.

>> Emerging technologies – Web 2.0, P2P, virtualization and cloud computing – are growing in prevalence with Cloud comput-ing causing the most concern: The influx of new technologies – both business and consumer technologies – has opened addi-tional avenues for cyber thieves to steal trade secrets and confiden-tial business information. Cloud computing came out on top with 61% of respondents ranking it as a major security concern among the emerging technology trends.

Virtualisation was perceived as the least concerning at this time, though survey respondents cited all of these types of technolo-gies as key concerns in the next year, where the increased risk to expose sensitive data ranked highest among both respondent groups.

Workforce mobility contributes to data loss, according to the study.

Malaysian public less concerned on key security issues

Malaysians are continuing to demonstrate high levels of concern about important security issues such as identity theft.


Outsourcing | InsIghts

One consistent headline I have come across in the past few months across global and regional me-

dia is the great predictions around outsourcing booming in recession-ary times. Too much has been said and analysed about the impacts of recession on corporations and governments worldwide.

Unfortunately, just about the time when the world is beginning to rework itself out of the financial meltdown mess, we have Bernard Madoff’s Ponzi scheme striking yet another fatal blow on large banking and financial institutions. The confi-dence of investors has been shattered in the recent times and now this blow seems to sound like a death-knell to globalisation in general.

On the one hand many economies with conservative and quasi-protec-tionist approaches from developing economies are beginning to indulge in chest-thumping acts, vindicated by the lesser impact they are feeling in today’s times. On the other hand corporations within such economies are coming under increasing pressure to overhaul their business portfolios in a manner unprecedented in recent history.

In such dynamic and distressing situations where ambiguity seems to have become the norm of the day, what is in store for global sourcing as an industry? Let’s try and address a few of the interesting aspects I have come across, without gainsaying or attesting to other predictions of doom or growth.

Lets discuss thisSo where is the Achilles Heel? Is global sourcing going to lend lost credibility to corporations struggling to keep their balance sheets from going into the red?

Or is there going to be a signifi-cant and palpable withdrawal from the industry in order to clean house internally through conservative adoption of strategic initiatives? It is time we took stock of some of the impacts in the recent past first before we delve into a thorough analysis of repercussions, or predict light at the

By Bobby Varanasi, COP

An achilles heel or panacea in today’s challenging times?

Global Sourcing

So where is the Achilles Heel? Is global sourcing going to lend lost credibility to corporations struggling to keep their balance sheets from going into the red?

Demand for innovating and reengineering business processes and functional applicability without additional investment is increasing, forcing service providers to come up with solutions that go beyond standard infrastructure services.”


InsIghts | Outsourcing

end of the tunnel. There are many impacts, but

I shall touch upon the few most important ones here to ensure the readers’ attention span is not com-promised.

>> CIOs Cutting Down On Tech-nology Spending: Most CIOs across the globe have almost vowed to their boards to completely cut down on new technology spending. They are taking a diametrically opposite view to technology and infrastructure. There were days when CIOs were busy spending on adopt- ing the latest state-of-the-art technologies so as to be – potentially at best – nimble and competitive, without much focus on utilisation or expansiveness of applicability. Today the view is to make more with less.

This in itself is changing the percep-tion that older technologies or infrastructure are just that – old. Demand for innovating and reen-gineering business processes and functional applicability without additional investment is on the increase, forcing service providers to come up with solutions that go beyond standard infrastructure services.

>> Capital Expenditures Being Deferred: Typically the industry has seen significant capital expenditures in business models and services that are deemed core to organisations and their businesses, while non-core services were sourced out to compe-tent third-party service providers. However there is increasing pressure on Boards to defer or reduce capital expenditure. Unfortunately with lack of internal capabilities sourc-ing globally for talent and service competencies is forcing companies to farm out even complex and core services to third-party service provid-ers.

In such scenarios, the old days of simple competitive bidding methods are unable to address concerns around business risk, IP protec-tion and the like. Sourcing methods are increasingly incorporating core services as inherent targets for service to work on, with the caveat that service providers need to take on more risks than they are either ready to, or have the experience with.

>> Business Models Are Being Realigned: Standard fee-for-service based business models are increasingly being seen as low

value. Customer organisations are demanding their service providers to put their “skin-in-the-game” through price entrenchment and ownership for the pass-through impact of such services on the customers’ businesses. This is an inherently fundamental shift in the nature of global sourcing one has seen so far.

While it is appreciable that customers are beginning to trust

their global service providers more than they have done so

before, it is also putting the noose around the necks of service providers

as they are taking on more business risk than ever. While such

entrenched models do offer opportunities for longer-term re-lationships between

the customers and provider organisations, focus on co-creation of solutions is putting

the pressure on providers to transform their view of

their businesses. No longer are customers content

with their providers branding or viewing themselves as IT or BP providers. The demand is for pro-viders to view themselves as “verti-cally-aligned” and “user-oriented” solution providers where industry-specific solutions and innovation are driven in a cohesive manner to create and sustain value.

>> From Cost Arbitrage to Skills Arbitrage: While access to skills and talent has been touted for long in the industry, cost arbitrage still held the highest attention and focus in the minds of customers. “It will be the death of the mile-wide inch-deep outsourcing deals”, says Keith Higgins, VP-Worldwide Marketing for Aricent. I tend to agree with his observations. Too many times has scale been touted as the biggest lever for winning in a fiercely com-petitive marketplace. Not too much emphasis was placed on depth of capabilities.

continued page 32

Credit crunch now … Most CIOs across the globe have almost vowed to their boards to completely cut down on new technology spending.

“Standard fee-for-service based business models are increasingly being seen as low value.”


Outsourcing | cRystal ball

by Phil Ferst (aMR Research)

Yes, it’s that time again folks, when analysts come up with profound verbiage that gets everyone excited for a few days, and hope no-one re-reads in six months. Well ... I occasionally do some research in my spare time, so here are some thoughts on what we can probably expect to see happen with outsourcing adoption this year:

Low-hanging fruit outsourcing with im-mediate cost-savings will be strongIt’s areas where enter-prises can streamline initial costs over a contract and get an immediate impact on the bottom-line. That’s bread-and-butter application outsourcing, high-arbitrage BPO areas such as Finance &Accounting and vertical-specific analytics (that “Knowledge Process Outsourcing” stuff).

I am also expecting increased adoption of procurement BPO models as increased procurement and supply management work is moved offshore, and buyers can benefit from labour arbitrage to underpin the transformation costs that have held back adoption in the past. Many initiatives, which require incremental upfront invest-ment that cannot be tied directly to revenue-metric,s will suffer. The back-end of Q1, Q2 and Q3 2009 will be busy times for outsourcing deal activity.

The onshore/offshore decision-process is reversed to “why should this stay onshore?” The traditional evaluation method-ology for companies’ outsourcing and offshoring opportunities is fast-changing. Rather than companies determining which processes can be carried out from a remote loca-tion, most will be determining why processes need to be carried out onshore.

services firms will be forced to consolidate With deals getting smaller and more plentiful, combined with renewed pressure on services firms to hold-back on hiring, the need for added global scale and staff resources, process and technology expertise, are going to drive consolidation at a much more aggressive pace than we saw in 2008. Most outsourc-ing service providers are currently waiting out to get a firm picture on how to address their go-to-market strategies for 2009. I predict these to take several forms:

>> Large providers going for a pure scale-play: Like HP/EDS, we will see more mega-mergers to ramp up into that “mega IT-BPO” provider bracket. The “big 3” could pull away from the rest of the market for some mega-deals and we will likely see other service providers combine to challenge.

>> Captive cherry-picking: There are some high-quality captives that are ripe for acquisition, that can give providers immediate entry into new industries, or consolidation in existing ones. In many cases, it is

Outsourcing predictions for 2009

There are some high-quality captives that are ripe for acquisition, that can give providers immediate entry into new industries, or consolidation in existing ones.”


cRystal ball | Outsourcing

more appealing for service providers to invest in buy-ing up clients than each

other, but further devalua-tions in the stock prices of many

service providers will create tough investment decisions for ambitious providers.

>> Increased blending of IT-BPO offerings will drive vendor acquisi-tions: In many situations today, BPO is becoming a natural exten-sion of an ITO relationship. This is especially the case where the service provider is willing to take on indus-try-specific processes that augment the IT services, for example supply chain merchandising with retailers,

or check-and-lockbox services in financial services. There are simply not going to be “world-class” cap-tives for sale to fulfill every industry need, which is going to force many providers to seek mergers.

I anticipate some strategic acquisitions between BPO-centric and IT-centric vendors. Those that choose to remain as pure-IT, or pure-BPO will get forced into the middle-market to scrap for smaller engagements.

Global HR strategies are moving to the top of the agendaOne of the most redeeming facets of outsourcing is to become more competitive globally, to use a service

provider’s skills and resources to enter new markets, or divest

from others. One area of note has been

t h e i n -crease

in firms moving onto global HR models where they have a much more integrated view of their global organisation and can make much faster, more informed, decisions about their business and

their workforce. The recent revival in global payroll and HR-IT outsourced services is testament to this growing need for firms to globalise their workforce data.

survival of the fittestLet’s not beat around the bush here ... we’re in for a very tough economy, budgets are being cut across the board and companies won’t be increasing their spending on IT and business operations. They are going to use outsourcing as a vehicle to save money, and – hopefully – increase their competitiveness. So, while we can expect to see increased spending on lower-cost services with a strong offshore element, we are al-ready seeing many areas of planned spending put on hold – for example, costly software upgrades, or business transformation initiatives.

Hence, the competition for the outsourcing dollars is going to be increasingly intense as revenue opportunities for services firms are already drying up in other services

markets. Many of the smaller ser-vice providers, which are more

focused on staff-augmentation delivery and discretionary proj-ects, are going to struggle.

At the same time, it’s an op-portunity for the well-resourced providers to edge out smaller

low-cost competitors and in-crease market share using this

tough market to their advantage. Shaving small portions of cost

isn’t going to make a huge difference to many firms – they will have to make bold and radical decisions to survive. – Global Services

let’s not beat around the bush

here ... We’re in for a very

tough economy, budgets are

being cut across the board and

companies won’t be increasing

their spending on It and business

operations.



As Carol Burnett once said, “Only I can change my life. No one can do it for me.” To succeed as a leader in

business today requires keeping pace with rapid changes occurring in our business environment. Two of the key changes and opportunities today are outsourcing and globalisation.

So increasingly, the responsibilities of CFOs, HR executives, procurement executives, and others are becoming dependent on successful manage-ment of third-party partners. This requires executives to add a new skill set: The Outsourcing Competency.

An executive must also be able to govern third-party relationships and ensure delivery from outsourced or globalised operations. Whether the service provider is delivering a project that has a fixed timeline or delivering services for ongoing operations, the ability to seamlessly integrate service providers with an internal team is becoming a critical part of an executive’s resume.

Managing third-party deliver-ables sounds simple, but is wrought with challenges and difficulties when examining it more closely. Deliv-erables must be defined properly, aligned with business objectives, delivered on time, and, of course, within the defined budget. In many organisations, information is cap-tured in employee’s heads rather than a knowledge management system, making knowledge transfer a big challenge. And then, how does one integrate an outside partner or remote location into the process?

Whether outsourcing informa-tion technology, human resources, finance, or procurement, executives must understand the core processes, be able to objectively assess the cur-rent operating level of the internal organisation, and orient the service provider or globalised operation toward the outcomes (service levels). This skill requires an adept ear for listening to what could be done and

Fine art of managing external partners

By Atul Vashistha

Managing third-party deliverables sounds simple, but is wrought with challenges and difficulties when examining it more closely.

balancing it for what should be done, while maintaining a business relationship that should be transparent to end users.

Our experience in outsourcing and global services consulting and research shows that executive that are successful establish the processes as shared above and then pay attention to the following factors:

Life Cycle CommitmentOrganisations tend to launch services globalisation initia-tives rigorously and with the appropriate management involvement in governance. However, the senior level involvement and attention dwindles when the initiative progresses into its second year. Despite comprehensive plans or contractual clauses to enhance productivity, such obligations are neither proactively monitored for positive results, nor are they pursued. It is important to ensure that the attention stays strong throughout the entire life cycle of the project.

Internal CommitmentOrganisations wishing to benefit from services globalisation should undertake a realistic internal assessment of their ability and readiness to pursue such complex initiatives. Aside from cultural and skill differences, other aspects like internal communication structures, resistance mapping, and cultural sensitisation need to be adequately addressed prior to commencing such initiatives.

We have seen time and again, when an organisation is not poised internally to take on services globalisation projects it will face resistance from internal stakeholders resulting in lack of focus on such initiatives. These execu-tives focus on readying their organisations.

Decision MakingOrganisational hierarchy and culture play important roles in defining the decision-making authority within an overall governance organisation. Executives needs to ensure that bureaucracy is not built into this governance structure. The structure should be able to clearly delineate responsibilities across the strategic and tactical, while ensuring that it is flat enough to encourage timely decision-making and ap-propriate controls. At the same time, not enough structure and staffing can lead to problems.

Staffing of Governance TeamsMost global corporations have delegated initiatives to a sourcing division and let it manage the offshore piece, regardless of the level of complexity, spread of global delivery, contractual commitments, etc. By doing so, or-ganisations are yielding to a restrictive approach towards continual and effective program governance that could prove detrimental.



For example, management commitment to a simple single-site offshore delivery initiative has been similar to a more complex, multi-site multi-country multi-vendor offshore delivery initiative.

Leverage Role of InfluencersAnother important facet is to ensure that while nominating managers/individuals to staff appropriate gov-ernance teams within the structure, their ability to influence others is taken into account. Such individuals can become vocal champions and ambassadors of the initiative, result-ing in increased and more impor-tantly, consistent attention through-out the longevity of the project.

Investment in Time and EffortFor governance to be effective, operating staff and managers will need to budget anywhere between 15% to 28% of their time and effort dealing with ongoing offshore initia-tives. The CXO level should budget approximately 5% of their time on

governing services globalisation initiatives year-on-year, consistently. It should be recognized that such investment in time would be on the higher side during the beginning phases of the initiatives.

Adequate Governance BudgetBased on our experience helping leading firms adopt best practices, we recommend companies to budget governance at approximately 8% of their overall initiative expenditure, spread across the life of the entire initiative. This investment pays off both in the short term and the long term.

Successful executives recognise the need for above and thus elevate their outsourcing competency.

Atul Vashistha is Chairman of neoIT, a leading management consultancy based in California, USA. He is also CEO of NeoGroup, a firm focused on outsourced programme and project management services.

In many organisations, information is captured in employee’s heads rather than a knowledge management system, making knowledge transfer a big challenge.

Organisations wishing to benefit from services globalisation should undertake a realistic internal assessment of their ability and readiness to pursue such complex initiatives.”


Outsourcing | feature

from page 27

I think the days of “value-scale” are here now and here to stay. Providers are being forced to create value at the business layer within chosen industry verticals, either through technology or business solutions, and add scale to such value through a concerted spread of such value across industries. In India the BPO providers are beginning to rigorously invest in innovation that could support such value-scale creation, through what is termed as Platform-Based BPO services.

Hence it is not just access to tal-ent, but the ability to leverage and transform the competencies of such talent pools to deliver value. Cost in such cases tends to become an inherent component of value-scale, as cost savings are derived from reduced innovation cycles.

Where to from here?Well, I don’t have a one-size-fits-all

answer to this question. However I think it is important for providers to seriously invest in some “evaluation of fundamentals” thinking with their business and services. The place to start is perhaps to ask these questions – how thoroughly commoditised are my services? How do I transform

them into value-orientation? Which industry can I address best? I would rather focus on what value-scale I am capable of supporting, rather than trying to outdo my competitors, since competition is also in the same seemingly inextricable situations.

On the other hand, I think it is im-portant for customer organisations to work closely with their providers and help them transform. Some-times customers expect providers to jump at the flip of a switch, which isn’t possible. So I believe working through the in-transformation issues enables both organisations establish a stronger pedestal for collective growth.

Bobby Varanasi is the CEO and Founder of Matryzel Consulting. He is also Head (Marketing and Branding) of Outsourc-ing Malaysia and Chairman of Inter-national Association of Outsourcing Professionals (Malaysia Chapter).

The lack of internal capabilities is forcing companies to farm out even complex and core services to third-party service providers.

Cyberview Sdn Bhd, the land-owner of Cyberjaya, has partnered with Cuzzy Media to promote Cy-berjaya utilising Web 2.0 strategies, while simultaneously leveraging the power of selected global television networks namely, CNN, CNBC, MSNBC and Fox News.

Cuzzy Media owns and operates internet tv platform called XBB.TV (Extreme Broadband Broadcast Television) that delivers interactive content to a broadband-enabled audience globally.

In this campaign, Cyberview’s TVC and info-documentaries will also be concurrently screened on XBB.TV to further capitalise on a large Information Technology liter-ate traditional media audience.

Cyberview’s Managing Director Redza Rafiq said, “Cyberjaya is now 11 years old and the past two

years saw us aggressively promoting Cyberjaya, and I am proud to say that we have been successful in branding Cyberjaya as the city to live, study, work and play in.”

Redza said the success is reflected in the number of companies that have moved into Cyberjaya in the last two years. “A total of 172 com-panies moved to Cyberjaya between 2006 and 2007, as compared to the 302 companies from 1998 to 2005. We would like to attribute the increase to informative market-ing exercises coupled with tailor made attractive packages that we offer investors from all over the world.”

Cyberview is the winner of The Brand Laureate Award under Cor-porate Branding category for Best Brand in National ICT Hub for year 2007/ 2008.

Cyberview partners Cuzzy Media to market Cyberjaya globally

A total of 172 companies moved to Cyberjaya between 2006 and 2007, as compared to the 302 companies from 1998 to 2005.

Lion City Beckons

enquiriesemail: [email protected]; web: www.the-outsourcing.com; phone: +603-90564770

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In today’s economic uncertainty companies are challenged by the increasingly dynamic business environments, where

business conditions are ever evolving and technologies change rapidly. Economic uncertainty coupled up with government and legal restric-tions are formidable obstacles in the outsourcing landscape.

A flexible IT infrastructure that is responsive and adaptive to business growth cycles to ease the burden of managing higher cost becomes increasingly important today. This urge will force companies to optimise their IT budgets to support business, in view of the rising resource cost and limited talent pool.

In addition to external factors, there are also internal obstacles that inhibit the effective leverage of IT infrastructure and resources, such as, uncooperative organisational culture, multi-cultural work force issues, process immaturity and rigid IT infrastructure.

ImpactThese external factors and inter-nal limitations converge to force companies to seek for potential IT outsourcing partners that comple-ment their business direction, objectives and values. There are three main Outsourcing Models, namely Business Process Outsourc-ing, Infrastructure Outsourcing and Application Outsourcing. Each of these models is driven by different business objectives under various circumstances.

Business Process Outsourcing: It focuses on the outsourcing of opera-tions and specific business functions, such as Human Resource, Procure-ment, Supply Chain, Finance or Customer Relationship Management process. Some of the key benefits you can expect from this model are:>> Cost savings>> Business process restructuring to

focus on supporting core business initiatives

>> Access to proven business pro-

Models & structures of Outsourcing

A flexible IT infrastructure, that is responsive and adaptive to business growth cycles to ease the burden of managing higher cost, becomes increasingly important today.

In the Hybrid Structure, the outsourcing partner may only provide selective types of tools, business process, IT operations and some potential asset ownership investment.”

By Mah Chor Kiat



cesses and industry best prac-tices

>> Improved deployment of busi-ness processes

>> Enhanced service levels

Application Outsourcing: It is the outsourcing of application mainte-nance, development or hosting, and the resulting benefits may be:>> Revision or integration of exist-

ing or new applications>> Improve cost savings due to

increasing skills resources cost>> Access to skills resources and

technical know-how with limited investment

>> Maintenance of legacy applica-tions due to limited talents and increasing cost

>> Improved functionality of ap-plications

Infrastructure Outsourcing: This may include network managed services, managed storage, desktop or data centre. The commercial benefits resulting from this model are access to quality technical asset, technology and technical resources, such as:>> Access to proven technical exper-

tise and knowledge>> Access to advanced technologies

and research capabilities of IT outsourcing partner

>> Transfer of asset cost with predict-able expense management

>> Allow internal IT department to focus on strategic tasks for competitive edge

>> Improve quality of service to internal IT users

>> Establish a flexible IT infrastruc-ture foundation for transition to the next generation of infrastruc-ture

Traditional ModelIn order to ensure maximum com-mercial benefits, the implementation of Business Process, Application and Infrastructure Outsourcing models should be done jointly as an integrated enterprise model. This will allow you to maximise the cost benefits, which can be reinvested into revenue producing projects and realigning your internal balance sheet through asset transfer.

Such enterprise model gives the strategic IT outsourcing partner end-to-end accountability, thus providing you the access to mission critical systems and applications.

Furthermore, such tightly coupled enterprise outsourcing model through a strategic IT outsourc-ing partner allows for a focused single point-of-contact in obtaining a more effective governance and

risk management processes, while maintaining a consistent quality across the IT enterprise environment with direct access to industry and technology leadership.

Outsourcing StructureIn addition to the outsourcing model approaches, it is important to consider the structure of outsourc-ing from the traditional In-source Outsourcing, Hybrid Outsourcing to Dedicated Outsourcing Structure.

In the In-source Structure, the IT outsourcing partner has limited influence to provide hardware, soft-ware, implementation and consult-ing service. While you have much greater control, the IT investment is significantly larger with lengthy (business process, application or infrastructure) implementation process with changing priorities or focus depending on your internal organisational shifts.

In the Hybrid Structure, the IT outsourcing partner may provide only selective types of tools, business process, IT operations and some po-tential asset ownership investment. The benefit of this is that the IT outsourcing partner will own more responsibilities for the outsourced services. However, you will retain the primary responsibilities for end-to-

end enterprise service delivery. The other extreme of the

spectrum would be a Dedicated Outsourcing Structure where the IT outsourcing partner provides complete business process, applica-tion and infrastructure services as described above. Thus an end-to-end enterprise service level responsibility will be handled by the IT outsourc-ing partner, whose performance in providing the agreed service level will be monitored by your side.

Pay as you use The various outsourcing structures mentioned here provide the manner in which the outsourcing service is established between you and the IT outsourcing partner. There is an added layer of commercial complex-ity with the introduction of the “pay as you use” methodology.

This “pay as you use” operating environment (which is broadly de-fined by the automatic abstraction of resource layer serving as the platform for rapid reconfigura-tion and re-assignment of physical resources), enables the IT enterprise environment to meet changing business requirements and busi-ness processes. This methodology,

In order to ensure maximum commercial benefits, the implementation of Business Process, Application and Infrastructure Outsourcing models should be done jointly as an integrated enterprise model.

continued on next page


Outsourcing | survey

continued from previous page

if implemented correctly, is very effective in:>> Reducing time of development and

deployment of business process, applica-tion or infrastructure;

>> Reducing IT cost by standardisation of infrastructure and systems management tools; and;

>> Creating an integrated, autonomic, and virtual “pay as you use” operating environment.

The key to successful deployment of an outsourcing initiative is the governance model, which guides the interactions be-tween various business units, the IT retained

organisation and IT outsourcing partner organisation.

The governance model is a combination of organisational structure, joint processes, and relationship between both partners to sustain focus on the business needs at all levels of the organisation, and establish strategic, functional and operational inter-faces between both partners. The baseline is a reconciled strategic direction and aligned IT governance principles towards agreed service levels.

The adequate allocation of activities and responsibilities between both partners is the rationale for the design of the governance organisation. Responsibilities, which should be shared, must be documented through established committees and processes. Both

partners should be jointly responsible for the IT strategy and partnership align-ment.

While the IT outsourcing partner will have the obligations to maintain the agreed service level through IT innovation, trans-formation tasks, optimised architecture and proven processes, you need to govern these expectations through periodic committees of the business strategy, strategic initiatives, business programme management and service level control mechanism.

CK Mah specialises in the area of infrastructure outsourcing, application outsourcing and business process outsourcing; and has written numerous articles on these subjects.

Large companies are accelerating their use of offshore outsourcing, and as many as a quarter of IT jobs at Global 1,000 firms may be moved offshore by 2010, according to The Hackett Group.

According to the Miami-based firm’s research, those large companies – which have revenues of at least US$5 billion – will move about 350,000 corporate jobs offshore over the next two years. More than half of those jobs will be in IT, with the remainder in finance, human resources and procurement

The data “is a confirmation of a mega-trend” similar to what happened in the manufacturing sector several decades ago, said Michel Janssen, Hackett’s

chief research officer. And while 25% of the IT jobs may head overseas in the next two years, over the longer term that figure could hit 60%. In some organisations, it could reach 80%.

Earl ier this year, a study based on data collected from 10,000 people estimated that as many 8% of all IT work-ers have been affected by offshore outsourcing. That study was conducted by researchers at New York University’s Stern School of Business and

the University of Pennsylvania’s Wharton School.The Hackett Group collected data from 200 companies worldwide. Of those

organisations, 40% have headquarters in the US and a similar percentage are based in Europe. The IT head count at each of the companies is about 1,600.

This big shift in jobs to low-cost offshore locations may be accelerating, in part, because companies are more experienced – and comfortable – with offshoring and have developed standardised practices, according to Erik Dorr, Hackett’s senior IT research director.

The emergence of Japan as an alternative destination for IT outsourcing and allied services seems to have found favour with the IT conglomerates as Kanji, Katakana and hiragana symbols are replacing the Texan, californian and British accents as the ‘in-thing’.

reason: The recession is eating into the volume of outsourced IT work from the US; and after the US, Japan is an important market from the IT perspective, more so during the current period.

The Japanese IT services market is valued at $108 billion, according to a recent survey by nasscom and Pricewaterhousecoopers.

Japan gets into the game

One in four IT jobs moving offshore


survey | Outsourcing

According to The Black Book of Outsourcing 2008 Green Report, among 4200 sur-veyed global outsourcing

users, just 20% of outsourcing clients has seen any substance from the environmental change promises made by their offshore suppliers in the previous year.

Fatigued with budget and staffing cutbacks, 91% of outsourcing users expressed intense dissatisfaction and growing impatience with their offshore service providers, which claimed they would help shoulder the financial and operational bur-dens of green technology yet done nothing.

Despite a focus shift caused by the financial crisis, 94% of American corporate leaders still consider eco-friendly computing as an important element in their technology strat-egy. After the challenges of budget management, 26% rated finding demonstrated green outsourcing partners as their top IT priority.

The lack of comprehensive global standards and enforceable regulation has allowed offshore tech outsourcers

to dodge environmental accountability beyond simple low hanging fruit programmes according to the survey results. Several named Indian and Chinese tech vendors, in particular, have been identified for non-compliance in meeting even simple efforts to reduce their clients’ carbon footprints.

“US and UK businesses have risked their corporate accountability for the environment on offshore outsourcers without seeing any substantive efforts,” said Doug Brown, Managing Partner in Brown-Wilson Group, the survey sponsor.

A concerning number of offshore vendors have reacted to the need for sustainable IT processes in a way Brown-Wilson Group terms green washing – the practice of boasting a pro-environmental stance that’s purely superficial. In the past, it was easier for offshore vendors to say, ‘we’re doing our best’, and placating clients. “But now they’re being called out for polluting and bringing humiliation back to their clients. It’s a position US and UK corporate leaders can not tolerate any longer,” said Brown.

US and UK businesses have risked their corporate accountability for the environment on offshore outsourcers without seeing any substantive efforts.”

Tech firms keep polluting planet

AmId the continuing drumbeat of big company layoffs, small and medium-sized businesses are still focused on retaining and recruiting quality workers in the year ahead, according to a new survey.

While significant concerns about the contracting economy were reflected in the survey, more than two-thirds of smaller businesses still plan to hire talent in 2009 due to attrition or growth.

even as the recession began a year ago, more than 80% of respondents said they tried to hire in 2008, according to the survey conducted for Trinet, an American provider of human resources outsourcing and hr consulting services to small and medium-sized businesses.

“In good times or bad, a talented workforce is essential for small firms,” said Burton M. Goldfield, president and chief executive officer of TriNet. “While the months ahead are sure to be turbulent, business owners realise that finding and keeping star employees is the key to their long-term success.”

Small businesses seek talent despite economic slowdown


Outsourcing | management

I grew up in the cutthroat business world in New York City. The firms I worked for were all privately owned and the bottom line profitability was of the

utmost importance. Managers were expected to meet their

responsibilities with as few staff as possible. They knew what they were doing – and knew what the people reporting to them needed to know. Managers had been seasoned and trained over a long period of time.

It has changed. Businesses have become huge and managed by those who have quickly climbed the corporate ladder – not necessarily seasoned, and not necessarily knowledgeable about either managing, or the responsibilities of the staff they manage.

Many are highly skilled technical people who are promoted into management as a reward for technical competence – not people skills.

It’s easy to think about cutting back management training and process im-provement when times are tough – like now. But, in my opinion that’s one of the worst things you could do. Businesses need to increase training so that managers are more effective. They need to increase process improvement (quality, continuous improvement, etc.) so that more gets done more effectively with less.

Too, many companies are publicly held, and venture capi-tal funds replace profit. This has led to great waste – similar to how big government operates. VC funds are pulling back some and companies need to be less wasteful.

Managers aren’t rewarded by their accomplishments. They are rewarded by how many people they man-age. Thus, it now takes twenty people to hammer in a nail.

But, times are tough. Cutbacks are here. Downsizing is necessary. Public companies are privatising – because of Sarbanes-Ox-ley*. We need to do more with less.

My clients know that they have to streamline their systems, motivate their employees to pay attention, look for creative solutions to current problems, and reward accomplishment. They also know (because I’ve told them a zillion times, and written about it as well) not to take away the small perks like coffee and Friday’s pizza party, but to reduce the big expenses like first class seats on the airplane.

Efficiency is utmost – use less people to

By Dr ArLyne Diamond

get the job done. This often meets getting layers of bureaucratic middle-men out of the way. It certainly means simplifying the systems and getting rid of layers and layers of over-protective and redundant safeguards.

We tend to believe that the overly layered safeguards exist only in large government bureaucracies. But, that’s not so. I see small companies, as well as huge tech companies emulating the same process.

Besides having too many steps to write a cheque, there are the CYA**, the “inbox phenomena” – where documents go into the inbox and sometimes stay there for weeks before being worked on – and the inability to defer decisions to one or two people that

also add to the waste.Couldn’t we get back to basics? Hire only

trustworthy people and create the simplest processes necessary to get the job done. Allow simple checks and balances.

One example: I was consulting to a large transportation company and one of the problems was the process by which refunds were given to customers who had difficulty with the computerised ticket process at the train stations. The agency was forcing the accountant in charge to verify the veracity of each complaint, and to process the payment in the same manner a US$50,000 payment to a vendor would be processed.

We simplified the process. We gave him a dedicated chequebook, set him

Soft skills are vital – that’s a hard fact!

Businesses need to increase training so that managers are more effective.


management | Outsourcing

up on Quicken (a commonly used bookkeeping software system) and authorised him to accept any complaint under US$10 without verification. Quicken allowed him to produce reports which had the same level of accountability as the large relational database the accounts payable department was using.

It allowed him to write and mail cheques quickly, thus increasing customer goodwill. It gave him a quick and easy way to see if he had a repeated complainer – or a frequent problem at a particular station. In short, with all the protections the big system created, we created a quick, cheap and easy solution to a frequent problem, thus improving efficiency, customer service, and the bottom line.

Another example: One of my clients had a process in place so that all decisions, large or small, had to be approved by three levels of manage-ment.

We created a stratified process whereby each person along the ladder had permission to make decisions within parameters we established with them and upper management.

Thus individuals were em-powered to decide how to solve problems, where and when to work, and the processes they used com-mensurate with their knowledge, experience, and the parameters

pre-set. Managers were bothered far less. Creative solutions were found and the people involved assumed ownership of their jobs.

Finally, let me emphasize that proper management – in other words management that understands the people he or she manages, the man-ner in which they learn, the expectations they have based on prior experiences (and the countries in which they live or lived), and how to motivate and hold people accountable for deliverables – increases productivity, reduces turnover,

improves morale and adds tre-mendously to the bottom line.

It’s soft-skills that matter most.

* Sarbanes Oxley is a very restrictive

reporting system that was put in place in the United States due to mis-man-agement and fraud practices by some big companies, such as Enron. It takes government accounting practices and adds many other checks and balances to it. It also makes directors of boards, and executives accountable. Since they can now be sued – or arrested – for mis-representations by their companies, they are reluctant to get involved.

** Stands for Cover Your Ass-ets, or protect your position by noting that you received and carried forward the data lists.

Dr ArLyne Diamond is an Organi-sational Development and Human Resource Consultant with over 30 years. She can be contacted at www.diamondassociates.net

Visionary … Efficiency is utmost – use less people to get the job done.

Key to success ... Hire only trustworthy people and create the simplest processes necessary to get the job done. Allow simple checks and balances.

It’s easy to think about cutting back management training and process improvement when times are tough – like now. But, in my opinion that’s one of the worst things you could do.”


Outsourcing | ConferenCe

The recenT three-day inaugural Outsourcing Malaysia Conference held in Kuala Lumpur Convention Centre proved to be a rousing

success with more than 40 global leaders in business, government and academia confronting a range of pressing issues within the aegis of global best practices and competencies.

The event focused on the importance of outsourcing for the ICT industry and is the brainchild of Outsourcing Malaysia (OM), a chapter within PIKOM (Malaysia’s As-sociation of the Computer and Multimedia Industry).

Aptly themed: “Outsourcing as a Strategic Imperative” – the event saw the

participation of many industry icons such as Philip Carter, Associate Research Director for Asia/Pacific Services Group, IDC; Avinash Vashistha, Chairman and CEO, Tholons; Gerry Clark, Partner & Director, Southeast Asia and Hong Kong, TPI; Dr Pradeep Mukherji, President & Managing Partner, Avasant Inc, and Edge Zarrella, KPMG Global Partner in Charge.

OM Chairman David Wong said: “OMC’s timing is perfect to capitalise on the outsourcing boom. There is actually increased demand in outsourcing services during tough economic times and even in a recession, as companies look at outsourcing as a way to bring down overall costs without sacrificing productivity and quality, as

Outsourcing Malaysia Conference


ConferenCe | Outsourcing

Outsourcing Malaysia Conferencewell as to allow them to focus on their core competencies.

“Through this conference, we are provid-ing a platform for our members to meet with potential customers and educate them on the merits and needs for outsourcing and shared services.”

At the conference, OM announced partnerships with India-based business research and competitive intelligence firm, ValueNotes, on market intelligence and locally-grown multinational educational institution, Asia eUniversity, on human resource and development.

Wong added: “Our Shared Services and Outsourcing (SSO) sector is growing at twice the global rate of 15% and has

the potential to hit US$2bil (RM6.4bil) by 2012,” he said.

Worldwide, the SSO market is expected to hit US$1.4 trillion (RM4.48 trillion) by 2009, he said.

The huge growth is due to the fact that Malaysia is an attractive outsourcing des-tination.

OM executive director Alan Fung, stressed that this was because Malaysia has an educated workforce that speaks up to four languages — English, Malay, Tamil and Mandarin.

Fung also believes that the current finan-cial downturn in the United States could be viewed as positive for the local outsourcing industry.


Outsourcing | happeningS

IBM announced its collaboration with Malaysia’s KBU International College (KBU) targeted at increasing the knowledge and skills on main-frame for Information Technology (IT) jobs, locally and globally. With the global resurgence in Mainframe Computing, the demand for skills on Mainframe technology outweighs the supply of talent pool in the marketplace today.

A survey conducted by the MSC Malaysia K-Workers Development Institute (KDI) in 2008, also shown that in Malaysia, the demand for skills on Mainframe Engineering supersedes the supply talent pool.

IBM and KBU signed a memo-randum of understanding (MoU) to jointly work together under IBM System z™ Academic Initiative programme where IBM will provide the college’s academic members with access to IBM software, hardware, courseware, faculty education, contests, and many other valuable resources. Ou Shian Waei, Manag-ing Director, IBM Malaysia said, “IBM seeks to incorporate innovation into practical learning. We want to make learning and talent building easy and accessible to everyone, at any where and time. We strive to plug the gaps in the supply of knowledge workers by collaborating with academia such as KBU.

“More importantly, we take on the responsibility of being the central driving force at implementing and administrating programmes towards

ICT Solutions Provider HeiTech Padu Berhad (HeiTech) has launched Padu*Mobile, its very own unified communication tool that supports seamless mobility through secured connectivity on a virtual private network.

“One of the most frustrating challenges in conducting and running a business today is the lost opportunities due to ineffective communication and business applications,” said Abdul Halim Md Lassim, Senior Vice President & Chief Financial Officer of HeiTech Padu Berhad, at the launch in Kuala Lumpur recently.

“HeiTech saw an urgent need for a ubiquitous communications tool that encompasses distinguished features which

is also cost effective and easy-to-use.” “We have in the last year developed

and perfected a unified communications solution supporting seamless mobility that is enhanced with built-in security on a virtual private network. We call this product Padu*Mobile,” said Halim.

Padu*Mobile was developed and enhanced with the needs of the end-users in mind. A key component is the unified communications solution. It enables users to communicate with others instantly, across the office or around the world.

It uses a single, unified platform that converge all communication channels and provides real time exchange.

developing human capital and build-ing a skilled workforce.”

The objectives of the programme are to assist and enable educators to teach the fundamentals of enter-prise systems, incorporate examples through the use of practical ap-plication and lab exercises, connect educators and students with IBM’s clients, and aid in establishing last-ing relationships with the business community.

Universiti Teknologi Malaysia (UTM) and Mimos – Malaysia’s centre for applied research on frontier technologies – have established collaboration on the development of wireless communication technology.

Both parties will conduct researches, defined by Mimos, in the field.

The research covers wireless protocol, information technology and multimedia sub-systems, microwaves, antennas and basebands.

UTM vice-chancellor Prof Datuk Dr Zaini Ujang and Mimos president cum chief executive officer Datuk Abdul Wahab Abdullah signed a memorandum of understanding on the collaboration at the university campus in Johor Bahru.

Zaini said that UTMs electrical engineering faculty was appointed as the centre of excellence for Mimos’ Wireless Communication.

Sealed … From left: See Hoon Peow, Principal, KBU International College, Dato’ Professor Dr Teo Chiang Liang, Chief Executive, KBU International College, Ou and Brian Lee, General Manager of Software Group, IBM Malaysia.

IBM partners KBU to spur mainframe local talent

Seamless mobility with Padu*Mobile

UTM, Mimos work together on wireless tech


happeningS | Outsourcing

MultIMedIa Development Corporation (MDeC), the custodian of MSC Malaysia, recognised recently the achievements of 47 MSC Malaysia Status companies that earned global standards certifications in 2008. At a gala dinner held in Kuala Lumpur, representa-tives from the companies received letters of recognition from Deputy Minister of Science Technology and Innovation Y.B. Tuan Haji Fadillah bin Haji Yusof and MDeC CEO Dato’ Badlisham Ghazali.

In 2008, through the MSC Malaysia Ca-pability Development Programme (CDP), 15 MSC Malaysia Status companies were awarded a CMMI Maturity Rating; 19 companies earned certification in software testing; four firms achieved the ISO 27001 certification, an Information Security Management Standard; and five earned ISO 9001 certification, a Qual-ity Management Standard. Four more MSC Malaysia Status companies were honoured for sending their personnel to earn individual professional certification through the MSC Malaysia CDP Professional Development

MDeC fetes firms at gala dinnerRecognition for 47 local MSC Malaysia companies earning global standards certifications

programme (CDP PD). “CDP’s goal is to raise internal

competencies among MSC Malaysia Status companies to ensure their continuing competitiveness in global ICT markets,“ said Badlisham. “In this year alone over 900 compa-nies have benefited through the various seminars, workshops and programmes run by CDP and more than 300 ICT professionals have benefited from CDP PD. This is a particular noteworthy achievement because CDP PD only began five months ago,“ he added.

“It is not a coincidence that in 2007 MSC Malaysia Status com-panies that had participated in CDP programmes achieved export growth of 79.18%, which is more

that three times the 23.40% export growth of all MSC Malaysia Status companies for that year.”

“Through the efforts of CDP a June 2008 Software Engineering Institute report ranked Malaysia 1st in South East Asia and 14th in the world for the number of CMMI rated companies in our country.”

CDP not only assists companies achieve certifications. Participating organisations also enjoy additional benefits from monthly dialogues, seminars, clinics and workshops de-veloped to gear them up to achieve certifications and later ensure business continuity. Upon comple-tion, the successful programme participants are partly reimbursed from the total project cost.


Outsourcing | last word

Satyam Computers head honcho Ramalinga Raju, one of India’s ten richest men, was enjoying the

lifestyle to match his US$1.3 billion fortune – today he shares a hold-ing cell with 40 other inmates in Chanchalguda Central Prison.

>> Prison authorities said there were ‘clear and strict’ instructions that Raju should not be shown any preference and treated ‘equal’ with other remand prisoners.

>> In the jail, Raju would be eligible for 650 grams of rice provided thrice a day along with 250 grams of vegetable curry and 125 grams of dal as per the jail manual.

>> Tea would be served twice a day. He would be given a dhurrie, a blanket and a bed-sheet. There would not be any television in the barrack and only one newspaper would be provided in the entire admission block.

>> Raju and his brother Rama Raju neither showed any interest in newspapers nor watched the news on TV which is all about them. Instead, they requested the jail officials for “some good books’’.

>> They did not have tooth brushes and paste. As they did not come out and ask, jail officials, who were constantly monitoring their high-profile guests, purchased them with their deposited money and gave it to them.

>> As part of the dedicated secu-rity for Raju brothers, a deputy jailor was assigned the task of keeping round-the-clock vigil at the enclosure of the barrack, keeping in mind the killing of notorious criminal Moddu Seenu in Anantapur prison recently.

>> Raju is staying in a barrack that is 60 feet away from that of another white collar offender Kosaraju Venkateshwar Rao, former chairman of the Krushi Bank.

“Yes! Finally captured Martha Stewart. You know, with all the massive and

almost completely unpunished fraud perpetrated on the American public by such companies as Enron, Global

Crossing, Tyco and Adelphia, we finally got the ringleader. Maybe now we

can lower the nation’s terror alert to periwinkle.”

– Jon Stewart (American Comedian)

“It is a fraud to borrow what we are unable to pay.”

– Publilius Syrus (Roman writer)

“There are some frauds so well conducted that it would be stupidity

not to be deceived by them.”– Charles Caleb Colton

(English writer)

“Fraud and falsehood only dread examination. Truth invites it.”

– Samuel Johnson quotes (English Poet)

“It is possible that the scrupulously honest man may not grow rich so fast as the unscrupulous and dishonest one; but the success will be of a truer kind, earned without fraud or injustice. And even though a man should for a time

be unsuccessful, still”– Samuel Smiles (Scottish author)

“Rather fail with honour than succeed by fraud.”

– Sophocles (Greek playwright)

“All men are frauds. The only difference between them is that some

admit it. I myself deny it.”– Henry Louis Mencken (American journalist)

“Do not be too moral. You may cheat yourself out of much life so. Aim above morality. Be not simply good; be good

for something.”– Henry David Thoreau

(American Poet)

said & done: Fraud

Glimpse: First few days in prison

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