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Also in this issue:Capitalizing on Software-as-a-Service

Why Microsourcing is the Next Big Trend

The IAOP “World Connection”

(page 16)

WE SURVEY THE THOUGHT LEADERS OF OUTSOURCING

www.IAOP.org

The 2011 IAOP Latin American Outsourcing Summit, taking place May 26-27, 2011 in Cartagena, Colombia, is a first-of-its-kind global event bringing the thought leadership and global network of the International Association of Outsourc-ing Professionals® (IAOP®) together with leaders from across the Latin American business community. The result is an exceptional opportunity for individuals and organizations involved in outsourcing as customers, providers and advi-sors to both understand and leverage the explosion of outsourcing taking place across the region.

Organizations such as Accenture; Avianca; Bancolombia; Booz & Company; CB Richard Ellis; Colliers International; Colombia’s Ministry of Commerce, Industry and Tourism; Duke University; Johnson & Johnson; Kirkland & Ellis; PwC and many others are already slated to participate. The newly elected president of Colombia, Juan Manuel Santos,

has committed the support of his office and, schedule permitting, expects to personally participate and address delegates.

Whether you think of Latin America as an outsourcing destination, as a market for your company’s services, or as the region you call home, this is a not to be missed global business gathering.

For information on attending, speaking or sponsoring, please visit www.IAOP.org/LATAM.

LEARN HOW TO BEST LEVERAGE LATIN AMERICA’SOUTSOURCING EXPLOSION.

The 2011 Latin American Outsourcing Summit

Produced in partnership with ANDI

globalizationtoday.com

INSIDEFebruary 2011

7 PUBLISHER’S NOTE

8 NEWS FEED What’s new and noteworthy in global commerce.

28 EMERGING NATIONS & GLOBALSOURCING: THE CASE FOR INORGANIC GROWTHby Bobby VaranasiHere’s an examination of how mergers and acquisitions have become key drivers of growth for many global service providers.

35 BRIDGING THE GAPSby Kevin ParkerWant to know how applications are at the heart of business? Read on.

36 CAPITALIZING ON SAAS IN ANY ECONOMY by David SmithSmith explains that the arrival of cloud computing and Software-as-a-Service [SaaS] will allow software companies to accelerate their development cycles, decrease their end user costs, and provide new feature sets.

40 WINNING THE RACE WITHMICROSOURCINGby Erran Carmel and Evgeny KaganerThe two authors reveal that “microsourcing” is speeding forward. Why hasn’t microsourcing spread further? This article answers that vexing question.

42 IAOP WORLD CONNECTION

46 SCRAPBOOK 2010: The Year in Pictures

OUTSOURCING’S THRESHOLD MOMENTby Michael F. Corbett

Corbett, Chairman of IAOP, looks at the results of the latest survey of IAOP members. These findings will challenge your assumptions about outsourcing.

16

3

www.IAOP.org

The 2011 IAOP Latin American Outsourcing Summit, taking place May 26-27, 2011 in Cartagena, Colombia, is a first-of-its-kind global event bringing the thought leadership and global network of the International Association of Outsourc-ing Professionals® (IAOP®) together with leaders from across the Latin American business community. The result is an exceptional opportunity for individuals and organizations involved in outsourcing as customers, providers and advi-sors to both understand and leverage the explosion of outsourcing taking place across the region.

Organizations such as Accenture; Avianca; Bancolombia; Booz & Company; CB Richard Ellis; Colliers International; Colombia’s Ministry of Commerce, Industry and Tourism; Duke University; Johnson & Johnson; Kirkland & Ellis; PwC and many others are already slated to participate. The newly elected president of Colombia, Juan Manuel Santos,

has committed the support of his office and, schedule permitting, expects to personally participate and address delegates.


For information on attending, speaking or sponsoring, please visit www.IAOP.org/LATAM.

LEARN HOW TO BEST LEVERAGE LATIN AMERICA’SOUTSOURCING EXPLOSION.

The 2011 Latin American Outsourcing Summit

Produced in partnership with ANDI

AD2011

™

2011World’s BestOutsourcing Advisors

Accenture Aditya Birla Minacs

Advanced Technology Services Aegis

Amdocs Aon Hewitt API Outsourcing

ARAMARK Artezio Auriga Bleum

Capgemini Cassidy Turley CB

Richard Ellis Ceridian CGI Group

China Talent Group ChinaSoft International CIeNET International Colliers

Convergys CPA Global CPM Braxis CSC Cushman & Wakefield Cybage Software

DATROSE Dextrys Diebold Donlen EMCOR Group Emerio GlobeSoft EPAM

Systems Ericpol Telecom Extensya Firstsource Freeborders Genpact

Global eProcure Globant Grupo ASSA Grupo Prominente HCL Technologies

Headstrong Hewlett-Packard Hinduja Global Solutions hiSoft Technology

International HOV Services IBA Group ICG Commerce iGATE Global Solutions

Infosys Technologies Insigma Inspur Intetics ISS ITC Infotech Itransition

Johnson Controls Jones Lang LaSalle Lionbridge M&Y Global Services Mastek

Nagarro NCO Group NCR NCS Neoris Neusoft Océ Business Services

Oracle Financial Services Patni Computer Systems PCCW Solutions

ReSource Pro RR Donnelley Global Services Scicom SEI Sitel Sodexo

SoftServe Softtek SPi Global Stefanini IT Solutions Stream Global

Services Sutherland Global Services Syntel Synygy TEAM International

TeleTech Holdings TIVIT Towers Watson transcosmos Unisys

VanceInfo Vertex Group Williams Lea Wipro Technologies

Xceed Xchanging Zensar Technologies

Alsbridge Archstone Consulting

Avasant Baker & McKenzie

Booz & Company Deloitte

Outsourcing Advisory Services

EquaTerra Everest Group

IAOP Founding and Corporate Members (as of print date) are in bold.

On behalf of outsourcing professionals worldwide, IAOP congratulates the 2011 “Global Outsourcing 100” and “World’s Best Outsourcing Advisors”

Gartner Kirkland & Ellis KPMG Mayer Brown Morrison

& Foerster Pace Harmon Pillsbury Winthrop Shaw Pittman

PwC Quint Wellington Redwood Sheppard Mullin TPI

Zinnov Management Consulting

The 2011 rankings will

be announced in a special

advertising feature in the

May 23 Fortune 500 issue

of FORTUNE® magazine.

For more information

on the program, visit

www.IAOP.org/GO100.

International

FOUNDER & PUBLISHERAli Comelek

[email protected]

CO-FOUNDERLarry Genkin

[email protected]

EDITORIAL and PRODUCTION

EDITORIAL DIRECTORJohn Persinos

[email protected]

AD PRODUCTION MANAGERDonna Eastman

[email protected]

GRAPHIC DESIGN AND PRODUCTION Webstaze Design Studio

www.webstaze.com

EDITORIAL ADVISORY BOARD

Dr. Bruce Greenwald Prof. Asset Management and Finance

Columbia Business School

Dr. Matt Waller Prof. Marketing and Logistics

University of Arkansas

Dr. John Hindle Sr. Manager - Accenture, Adjunct Prof

Vanderbilt University

Mike Corbett Chairman - International Association of

Outsourcing Professionals

Matt Shocklee CEO & President - Global Sourcing

Optimization Services

Arijit SenguptaCEO of BeyondCore, Inc

Chair of the Cloud Computing Chapter of IAOP

Address:6501 E. Greenway Pkwy., Ste 103-494

Scottsdale, AZ, 85254, USAPhone:

1-602-492-4194

GlobalizationTodayPromote Your Business in

for FREE!

Get Listed in Globalization Today’s Buyer’s Guide

All Globalization Today subscribers have complete access to our Buyer’s Guides that allow them to quickly find and purchase outsourcing and offshoring related products and services. Globalization Today offers a free basic listing to providers in the following categories:

• Information Technology• Internet & Web• Consulting• Business Process• Human Resources• Art & Design• Medical & Billing• Printing & Publishing• Writing & Editing• Engineering & Architecture• Finance• Virtual Assistantship

Go to www.globalizationtoday.com to get your FREE listing!

2011

™

2011World’s BestOutsourcing Advisors

Accenture Aditya Birla Minacs

Advanced Technology Services Aegis

Amdocs Aon Hewitt API Outsourcing

ARAMARK Artezio Auriga Bleum

Capgemini Cassidy Turley CB

Richard Ellis Ceridian CGI Group

China Talent Group ChinaSoft International CIeNET International Colliers

Convergys CPA Global CPM Braxis CSC Cushman & Wakefield Cybage Software

DATROSE Dextrys Diebold Donlen EMCOR Group Emerio GlobeSoft EPAM

Systems Ericpol Telecom Extensya Firstsource Freeborders Genpact

Global eProcure Globant Grupo ASSA Grupo Prominente HCL Technologies

Headstrong Hewlett-Packard Hinduja Global Solutions hiSoft Technology

International HOV Services IBA Group ICG Commerce iGATE Global Solutions

Infosys Technologies Insigma Inspur Intetics ISS ITC Infotech Itransition

Johnson Controls Jones Lang LaSalle Lionbridge M&Y Global Services Mastek

Nagarro NCO Group NCR NCS Neoris Neusoft Océ Business Services

Oracle Financial Services Patni Computer Systems PCCW Solutions

ReSource Pro RR Donnelley Global Services Scicom SEI Sitel Sodexo

SoftServe Softtek SPi Global Stefanini IT Solutions Stream Global

Services Sutherland Global Services Syntel Synygy TEAM International

TeleTech Holdings TIVIT Towers Watson transcosmos Unisys

VanceInfo Vertex Group Williams Lea Wipro Technologies

Xceed Xchanging Zensar Technologies

Alsbridge Archstone Consulting

Avasant Baker & McKenzie

Booz & Company Deloitte

Outsourcing Advisory Services

EquaTerra Everest Group

IAOP Founding and Corporate Members (as of print date) are in bold.

On behalf of outsourcing professionals worldwide, IAOP congratulates the 2011 “Global Outsourcing 100” and “World’s Best Outsourcing Advisors”

Gartner Kirkland & Ellis KPMG Mayer Brown Morrison

& Foerster Pace Harmon Pillsbury Winthrop Shaw Pittman

PwC Quint Wellington Redwood Sheppard Mullin TPI

Zinnov Management Consulting

The 2011 rankings will

be announced in a special

advertising feature in the

May 23 Fortune 500 issue

of FORTUNE® magazine.

For more information

on the program, visit

www.IAOP.org/GO100.

International

AD

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kellyocg.com/rpo

WINNER HROA 2009 Customer

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WINNERHRO Today’s RPO Bakers

Dozen

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executive seaRcH

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WINNER HROA 2009 Customer

Relationship of the Year

WINNERHRO Today’s RPO Bakers

Dozen

HRO Today’s Global

Leaders List

Innovators in end-to-end RPO

and Sourcing Excellence

KellyOCG and Ge MOney 7 years runninG 2010 rPO

sOMe rPO PrOviders say they’ll GO where yOu need theM.we’re already there.

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An Equal Opportunity Employer © 2011 Kelly Services, Inc. W0028A

PUBLISHER’S NOTE

globalizationtoday.com

The View From The SummitI’m writing this column from IAOP’s 14th annual “World Outsourcing Summit”, held February 21-23 at Indian Wells, California. Estimated at-tendance at the 2011 Summit stands at about 700, compared to roughly 500 the year before.

During the Summit, I’ve spoken with scores of outsourcing execu-tives. From these many conversations, a consensus emerged: the out-sourcing profession is on an upward trajectory, propelled by an improv-ing economy and the introduction of innovative outsourcing practices.

To learn more about the Summit, go to our web site and click the leaderboard ad that’s hyperlinked to our daily show blog: http://www.globalizationtoday.com. Our editorial director, John Persinos, assidu-ously worked the show and submitted several blog dispatches every day, right from the show floor. Reading his insightful blog will get you up-to-date on what transpired here.

Our February issue also offers plenty of insights into outsourcing. Here’s a snapshot:

•Outsourcing’sThresholdMoment looks at the results of the latest survey of IAOP members. Written by Michael F. Corbett, Chairman, IAOP, the article finds that outsourcing is entering a new phase. (To read about Corbett’s provocative and enlightening presentation at the World Outsourcing Summit, turn to John’s blog.)

•WinningTheRaceWithMicrosourcing reveals that, when it comes to global outsourcing, “microsourcing” is speeding forward. What’s puz-zling is why microsourcing has not moved faster in the last decade. Authors Erran Carmel and Evgeny Kaganer answer that question.

•CapitalizingonSaaSinAnyEconomy, by David Smith, explains that the arrival of cloud computing and Software-as-a-Service [SaaS] will allow software companies to accelerate their development cycles, de-crease their end user costs, and provide never-before-seen feature sets.

•Emerging Nations & Global Sourcing: The Case for InorganicGrowth, by Bobby Varanasi, examines how mergers and acquisitions have become key drivers of growth for many global service providers.

•BridgingtheGaps, by Kevin Parker, discusses how applications are at the heart of business, whether it is a banking system that runs ATMs, online tools that power sales and support, or public sector organizations using web-based services to inform constituents when they need it most.

You’ll find a rundown of the rest of our issue, in the Table of Contents.As always, don’t hesitate to contact me with your feedback, story ideas and suggestions.

CEO and PublisherGlobalization Today Magazine“Official Publication of IAOP”www.GlobalizationToday.com1-602-492-4194

7

Ali ComelekCEO and Publisher

NEWS FEED

GlobalizationToday February 20118

BOEING EXEC ADMITS 787 OUTSOURCING STRATEGY BACKFIREDwww.interconnectionworld.com

As reported by The Seattle Times, in a January appearance at Seattle University, Boeing Commercial Airplanes Chief Jim Albaugh talked about lessons learned from a disastrous three years of delays on the 787 Dreamliner. In the university talk and a subsequent interview, Albaugh was extremely candid about the 787’s global outsourcing strategy -- specifically intended to slash Boeing’s costs -- which, essentially, he admitted had backfired. “We spent a lot more money in trying to recover than we ever would have spent if we’d tried to keep the key technologies closer to home,” Albaugh told the large audience of students and faculty.

As noted by Seattle Times, “Boeing was forced to compensate, support or buy out the partners it brought in to share the cost of the new jet’s development, and now bears the brunt of additional costs due to the delays. Some Wall Street analysts estimate those added costs at between $12 billion and $18 billion, on top of the $5 billion Boeing originally planned to invest.”

Albaugh avoided directly criticizing the decisions of his predecessors. The report notes that the 787 outsourcing strategy was put place in 2003 by then-Boeing Chairman Harry Stonecipher, who was ousted in 2005, and Commercial Airplanes Chief Alan Mulally, now chief executive at Ford. “It’s easy to look in the rear-view mirror and see things that could have been done differently,” Albaugh was quoted as saying. “I wasn’t sitting in the room and I

don’t know what they were facing.”And yet, the report goes on to examine

how at least one senior technical engineer within Boeing predicted the outcome of the extensive outsourcing strategy a decade ago, in a paper presented at an internal company symposium -- described as “a biting critique of excessive outsourcing [and] a warning to Boeing not to go down the path that had led Douglas Aircraft to virtual obsolescence by the mid-1990s.” The 2001 paper laid out the extreme risks of outsourcing core technology, predicting that it would bring massive additional costs and require Boeing to buy out partners who could not perform.

Albaugh said in the interview that he read the paper, authored by former Boeing Senior Technical Fellow and and world-renowned airplane structures engineer John Hart-Smith, six or seven years ago, and conceded that it had “a lot of good points” and was “pretty prescient.”

WHAT YOU NEED TO KNOW IN THE WORLD OF OUTSOURCINGNEWS Feed

NEWS FEED

globalizationtoday.com 9

As turmoil in Egypt continues, the head of the Egyptian government agency charged with developing the nation’s tech sector, Yasser ElKady, has been heading into work, speaking on conference calls with tech firms, and planning for the future. ElKady, the head of Egypt’s Information Technology Industry Development Agency, recently assured the press via telephone that he and his team are in their Cairo office Those workers who can’t get to the office are able to work via their homes, he said.

“We have this ambition and we are not going to let it go – we are here to grow and we are a believer that Egypt is the proper and right place in the Middle East, not just for offshoring and outsourcing, but to provide the ICT ([nformation and communications technologies] in the rest of the region,” Elkady said.

Egypt wants to develop its tech economy, promote innovation and entrepreneurship, grow its offshore outsourcing industry — estimated by the government at about $1.1 billion — and foster the adoption of IT throughout the local economy. Home to roughly 80 million people, Egypt’s population is roughly the same size as Germany’s. “ICT is a real catalyst for economic growth,” he said.

As ElKady discussed his plans, there were reports of foreign journalists being detained and harassed, and new images of violence on the Web and on television. But those protests are somewhat removed from ElKady’s offices in Smart Villages, which is a 600-acre high-tech office park on Cairo’s outskirts and home to government IT agencies and several U.S. companies such as Microsoft and Hewlett-Packard.

The roads leading to Smart Villages are being protected by the army, and the area itself is secure, said ElKady. The protests being shown around the world

are downtown. Egypt has seen a relatively rapid rise in investment by tech firms, and has won largely positive reviews from IT analyst firms for its workforce and government support of IT. But with uncertainties ahead, analysts are now less than sanguine about the outlook.

Ovum’s lead analyst Peter Ryan, in a prepared assessment, said that for “nearly 10 years, executives, consultants and site selection specialists have been fed a steady diet of positive rhetoric from Egypt’s government, quasi-government affiliates and the Egyptian private sector, touting the country’s political and economic stability in order to secure BPO and IT service investment. It is unlikely that these same investors will be quick to take such declarations at face value in the future.”

ElKady was appointed CEO of the agency three months ago. Before that, he was managing director for Cisco Systems for the Middle East and Africa. “There is a big expectation that everything is going to settle down slowly within the next 10 days or next week,” he said. For now, “people are very interested in protecting their jobs and their businesses in the country.”

As the protests continue, ElKady has been on conference calls with the general managers of many of Egypt’s tech firms and multinationals, and said none have plans to relocate elsewhere. Many of these firms are focused on developing the Egyptian market, he said. The country has been partnering with multinational companies, and “the talent pool is not going to go anywhere,” ElKady asserted. He said he knows there will be work ahead to smooth over recent problems, such as the government’s decision to cut off access to the Internet, so he plans to focus on ensuring business continuity and meeting telecommunications, infrastructure and security needs. Said ElKady: “We are here to stay.”

Yasser ElKady, head of Egypt’s Information Technology Industry Development Agency

EGYPT’S TECH CHIEF HOLDS ON TO AMBITIONS: “WE ARE HERE TO STAY” www.computerworld.com

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achieve growth by deploying advanced technology and services to enhance the customer experience and strengthen overall brand image

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For more information, including a new white paper that addresses the operational efficiencies that can be achieved by outsourcing, visit: www.diebold.com/outsourcingefficiency

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NEWS FEED

HINDUJA GLOBAL PLANS TO SET UP TWO CENTRES IN CHINA, LATAM www.economictimes.com

CA TECHNOLOGIES AND CAPGEMINI ANNOUNCE BPO PARTNERSHIP www.outsourcing-alert.com

Hinduja group company and leading outsourcing solutions provider, Hinduja Global Solutions , plans to set up two centres -- one each in China and Latin America -- next fiscal, a top company official said today. “We are looking at China and Latin America and plan to set up two centres there in the next fiscal (FY 12),” Hinduja Global Solutions’ CEO, Partha De Sarkar, told PTI here today.

The one in China would be a 500-seater while the one in Latin America would be a smaller one with about 300-seats, he said. “There is a good demand across the board in both these regions and we intend to capitalize on this,” he said.

CA Technologies and Capgemini unveiled a new jointly managed Business Process Outsourcing (BPO) operation. The partnership, which brings together the expertise of Capgemini’s rapidly growing and successful BPO business unit and CA Technologies leading CA ecoSoftware solution, will help customers better manage complex sustainability data collection and increasingly challenging reporting demands, enabling them to focus on sustainability strategy and carbon reduction activities.

“The global alliance between CA Technologies and Capgemini is among the first of its type for energy, carbon and sustainability management services,” said Stuart Neumann, senior manager at Verdantix. “Capgemini’s reputation for business process outsourcing is well-suited to complement CA ecoSoftware, which Verdantix recently identified as a leading solution in the carbon and energy management software market. This alliance between CA Technologies and Capgemini delivers a strong sustainability management capability to the market.”

The managed service will provide customers with “actionable insight” into their level of sustainability, which will help support and accelerate the achievement of their environmental objectives. Internally,

Capgemini UK already benefits from this new BPO service to manage its energy and sustainability data.

Historically, spreadsheets were used to collect and manage data. However, the increasing complexity of data requirements, multiple reporting and the need to provide different levels of user access meant that a new auditable software solution was required. The new managed service – powered by CA ecoSoftware – captures all energy and carbon data and provides web-based reports to the UK Sustainability Board and operational dashboards to the Environmental team. It is estimated that this service will reduce sustainability operating costs by 30 percent while providing improved data quality.

Tony Kelly, New Business Services Director at Capgemini BPO said, “Capgemini has always embraced innovation in its BPO services development and we are finding our clients’ back office needs increasingly include Sustainability Data Management and Reporting. So a new managed service is a logical extension of our strength in Finance and Accounting and Supply Chain Services BPO. Capgemini selected the CA ecoSoftware solution because it can meet the needs and scale of our global enterprise clients.”

Sonny Maero, VP of Sustainability EMEA at CA Technologies, CA ecoSoftware, asserted: “Forward thinking organizations like Capgemini not only demand smart, efficient solutions for measuring and reporting energy and carbon data, but also realize they can benefit from significant cost savings and focus more on improving their sustainability performance and less on managing data. Together with Capgemini, we are delivering this new energy, carbon and sustainability outsourced managed service to give customers the freedom to clearly focus on their sustainability strategy and carbon reduction.”

CA ecoSoftware works by providing accurate, auditable sustainability data to meet the needs of global client operations. By providing insight into sustainability operations data, organizations are better equipped to comply with regional regulation and to increase operational efficiency. This helps enterprises reduce carbon emissions, manage natural resource consumption, cut energy costs and deliver on environmental goals. Through bundling the CA ecoSoftware solution with Capgemini’s managed BPO service, customers gain an informed position on their sustainability via a cost effective managed business process delivery model.


NEWS FEED

MAURITIUS GOVERNMENT SIGNS MOU WITH QUATRRO www.globalservicesmedia.com

Board of Investment (BOI), Government of Mauritius have announced a Memorandum of Understanding (MOU) to build the job infrastructure in Mauritius through a strong partnership with Quatrro, a BPO firm. The MOU will focus on accelerating job opportunities by utilizing innovative work processes for the people of Mauritius.

“This MoU allows Mauritius to showcase its world- class service at a price-point projected to be over 50 percent lower than current processing costs in the United States, reflecting the superior efficiency of the state-of-the-art technology platform coupled with the cost-effective offshore service solution. They will also be pursuing opportunities to service customers and Companies from French speaking countries. BOI and Quatrro will extensively work together on providing ongoing support, enhancing domain expertise and business development, to these initiatives.” said Dr. Ramakrishna Sithanen, VPM and Minister of Finance and Economic Empowerment.

The Minister of Finance and Economic Empowerment of the Republic of Mauritius, in the budget speech of 2010 has laid special emphasis on creation of job opportunities for people in Mauritius both full time and part time basis. This initiative will especially focus on women who want to work from home while attending to other responsibilities at home.

BOI, Mauritius, Managing Diector, Raju Jaddoo, said, “The work from home BPO being deployed by Quatrro in Mauritius is a landmark not only for the fast growing BPO industry of Mauritius but also for the empowerment of people willing to take advantage of the flexibility of working from their domicile”.

Quatrro BPO Solutions (Quatrro), founded by Raman Roy (Quatrro) and the Board of Investment Mauritius are partnering together to implement the ‘Work from home BPO scheme’ in Mauritius. This project is the first of its kind in the outsourcing arena in Mauritius will be a major stepping

stone for Mauritius, helping them ride the next wave in the ICT/BPO industry. This initiative also enhances Quatrro’s capability of end-to-end processing of high volume transactions using an onshore-offshore model.

“We are delighted to partner with BOI in this unique initiative. This coming together of successful organization with talented people and great business acumen is in line with our creating value by innovation strategy. Quatrro’s depth, the experience and talent of their professionals coupled with BOI’s initiative will empower and ever increasing workforce and make Mauritius an even stronger force in the industry. We look forward to a long relationship with them. This initiative will be a catalyst to further accelerate growth and work opportunities, while empowering the citizens of Mauritius”, said Mr. Raman Roy, Chairman & Managing Director, Quatrro.

Following this launch, the Board of Investment, Government of Mauritius proposes to take advantage of Quatrro’s expanded processing expertise and cost savings to showcase the service efficiencies from Mauritius for customer across the globe.


Raman Roy, Chairman & Managing Director, Quatrro

NEWS FEED


OKLAHOMA HEALTH CARE AUTHORITY SIGNS $281 MILLION MEDICAID CONTRACT WITH HP www.globalservicesmedia.com

HP Enterprise Services today announced the Oklahoma Health Care Authority (OHCA) has extended its long-time service agreement with the company. The $281 million, seven-year contract, which contains a one-year renewal option, adds new information technology services to help prepare the state for healthcare reform and make services more accessible to SoonerCare (Oklahoma Medicaid) members. As Oklahoma’s fiscal agent since 2002, HP will continue providing systems support and business process outsourcing services for its Medicaid Management Information System (MMIS).

The agreement adds applications development services to enhance OHCA’s systems. Improvements include a web-based member portal allowing Oklahomans to apply for and track benefits online as well as an upgrade to OHCA’s provider portal. HP also will assist the state in its efforts to add new International Classification of Diseases–10thRevision(ICD-10)medical coding features and adhere to the federal HIPAA 5010 requirements.

“Oklahoma, like most states, is preparing for healthcare reform by streamlining costs and getting ready for a significant influx of new members,” said Mike Fogarty, chief executive officer, Oklahoma Health Care Authority. “HP has been a trusted partner for a decade and has the expertise to keep us on the forefront of technology so we can provide the best, most cost-effective service to our SoonerCare providers and members.”

OHCA manages SoonerCare benefits for more than 750,000 Oklahoma residents through 29,000 providers while processing about 40 million claims per year. The state expects as many as 240,000 additional SoonerCare members after healthcare reform takes effect. HP’s services include SoonerCare online enrollment, eligibility determination and claims processing as well as call center and internet helpdesk support for members and providers. HP also recruits and trains the state’s providers on navigating the MMIS process.

In addition, HP provides member application processing, eligibility and call center support for the Insure Oklahoma program, Oklahoma’s premium assistance program. Under the previous contract, HP worked with the agency to develop processes for online member enrollment with instant eligibility determination, online provider enrollment and streamlined prior authorization workflow. The new provider process reduced the approval time for new healthcare providers from several weeks to days. HP also developed the Newborn-1 website, another state vision, giving SoonerCare-qualified mothers of newborns easier access to healthcare and improving efficiency for providers.

“Medicaid is so vital for so many that it’s imperative for OHCA to strive for

the most efficient system possible for members, providers and taxpayers,” said Susan Arthur, vice president, U.S. Healthcare Industry, HP Enterprise Services. “We apply the knowledge and experience from managing Medicaid programs across almost half of the United States to the applications development and other services we provide to OHCA – all with the objective of providing better service and compliance.”

HP is the nation’s largest provider of Medicaid and Medicare process management services, administering $95 billion in benefits a year. It also serves as the fiscal agent or principal IT provider for Medicaid in 21 states. HP’s global healthcare experience spans payer, provider, government and life science communities.

Mike Fogarty, Chief Executive Officer, Oklahoma Health Care Authority

NEWS AND COMMENTARY FROM BLOGGERS AROUND THE WORLD

A discouraging word in the outsourcing world is insourcing (or backsourcing). Although insourcing is a reality, it’s important not to view this kind of activity from a sky-is-falling perspective. While the “insourcing trend” described in the Goodbye Outsourcing article published today in cio.com rightfully took a journalistic view and didn’t necessarily intend to raise an alarm, attention to the article has spread like wildfire in just a few hours. (Even a hint of bad news always spreads quickly.) From my view, the article missed some important perspectives on insourcing.

First of all, some outsourcing deals are planned from the outset with insourcing/backsourcing as the exit strategy.

In these deals, services are not brought back in house because of the provider’s poor service/performance. Sometimes companies take a staff-augmentation approach in their outsourced IT strategy, outsourcing functions that are “in the way” of their in-house IT staff being able to take on new, more strategic projects right away.

These kinds of deals are sometimes not on the radar screen of businesses that track “outsourcing” growth because, in the past, these staff-augmentation deals often were not considered true outsourcing. But the days of drawing borders and boxes around what is outsourcing versus what is contracting versus what is staff augmentation versus what is a “project,” etc. are coming to an end – if not completely over.

Staff augmentation deals, or one-time “project” deals such as a technology implementation, historically have led to the planned/expected insourcing or have evolved to the “outsourcing” model (meaning it evolved to ongoing services instead of a temporary or one-time project service). To gain a true picture of whether insourcing is now becoming a trend, one would need to separate the deals that were planned with insourcing from the outset.

Secondly, the growth of on-demand, hosting, and cloud services over the past year has led to some companies switching their previously “outsourced” arrangements back in house to regroup and leverage the benefits of these new service delivery models.

I’ve always advocated that outsourcing is an effective strategy to achieve business objectives – but ONLY if there is a strong business case and only if the relationship is structured for win-win success at the outset and modified as need be later on to sustain the win-win outcome.

Taken from a business-case perspective, a company that once had a preponderance of Oracle applications and outsourced maintenance of those apps over the over the past few years to reduce costs and risks of not upgrading, would now have a strong business case for switching to Oracle On Demand for a totally hosted model managing the same apps plus even more benefits and services.* And some companies, especially those that have a multisourcing environment (with various IT functions or apps outsourced to various service providers) insource their IT before switching to a hosted or cloud model.

So is insourcing a trend? In reality, it always has been. However, I believe

what we are seeing these days is more evidence of companies switching and moving to services models that have a stronger business case for a particular business objective at a particular point in time. The external-services strategy is no longer a one-way street. More and more, companies are using hybrid strategies, moving in and out of various service models. But it’s not a rejection of “outsourcing” as a business model; rather, outsourcing is morphing into a blending of strategies for services from external third parties.

There are, however, some instances of insourcing that do result from the service provider not meeting the required or expected service performance. This, too, is not a “trend” in that this has always been the case with many third-party service arrangements. However, I believe that the strategy of enhancing the “partnering” aspect in services deals can have an unintended consequence of insourcing – and this is true in BPO as in ITO.

Here’s why. Buyers that are happy with their existing outsourcing arrangements often add more processes/function or scope to the arrangement to strengthen the partnership (both parties view it as a reward for the service provider’s performance). But sometimes companies do this without first doing due diligence and ensuring the business case is strong enough. Along with the cost savings/avoidance evaluation, the business case should always include a realistic assessment of risks and possible negative outcomes to other service areas.

During the past year and a half, I have noticed an increasing number (dare I call it a trend?) of outsourcing relationships that added scope to enhance the relationship (and achieve further cost savings), and then the buyer took that portion of the scope back in house (often in less than a year).

In some cases, the buyers told me they added the scope on an assumption that the provider would be able to ramp up to expectations even if the provider had no previous experience in that function or process. In these cases, developing a business case would have avoided the relationship and cost problems that ensued and the subsequent insourcing.

In other cases, the buyer and provider mutually did the business case analysis, acknowledged the risks if the provider did not have the level of experience/expertise necessary at that point in time, and mutually agreed before adding the scope to do it on a temporary basis for a set period of time (and sometimes at a smaller volume or in some manner that did not involve the buyer losing IT and people for a temporary experiment) to make sure the added scope would turn out to be a win for both parties. In these cases, insourcing was planned from the outset as a potential exit and was not an indication of the provider’s poor services, nor did the insourcing wound the relationship.

So is insourcing a trend? Yes and no. It’s been happening for years. But there is a new twist with the hybrid use of service models and the efforts to enhance relationships – and from my perspective, both of those drivers are strong indications of a thriving services industry. What’s your opinion?

PERSPECTIVE ON WHETHER INSOURCING IS BECOMING A TREND IN OUTSOURCINGwww. cio.com

BLOG BEAT

By Kathleen Goolsby


It’s not too bold to state that we are about to witness a “Golden Age” of outsourcing. Perhaps when Peter Drucker penned his now famous op-ed piece for The Wall Street Journal, entitled “Sell the Mailroom”, he envisioned the globally interconnected business community of today.

Here’s a relevant excerpt from Drucker’s prescient column, which first ran in July 1989:

“If clerical, maintenance and support work is done by an outside independent contractor it can offer opportunities, respect and visibility. As employees of a college, managers of student dining will never be anything but subordinates. In an independent catering company they can rise to be vice president in charge of feeding the students in a dozen schools; they might even become CEOs of their firms.”

This world of opportunities described by Drucker is not only here, but based on the results of IAOP’s most recent member survey, we stand at a threshold moment for the profession and industry of outsourcing.

Outsourcing is on the verge of a rapid expansion across the enterprise, enabled by cloud-based solutions and driven by internal teams of “A-list” professionals. An analysis of our most recent member survey sheds light on this fortuitous confluence of trends.

IAOP’S ANNUAL MEMBER SURVEY

IAOP annually surveys its global membership, with the support of the management consulting firm Accenture. The most recent survey was conducted from mid-December 2010 to mid-January 2011, eliciting 329 responses from a roughly equal number of customers, providers and advisors.

Virtually every region of the world was represented. The United States represented the most mature market, dominating the globe in terms of where most organizations have their primary operations (see Figure 1) as well as almost every industry segment (see Figure 2).

In what region does your company primarily operate?

Customers:

Outsourcing’s Threshold MomentThe latest survey of IAOP members finds that outsourcing is enteringa new phase in its development. This phase will be characterized by rapid expansion across the enterprise and cloud-based solutions, led by internal teams of well-trained and seasoned professionals.By Michael F. Corbett

TRENDS AND PREDICTIONS


Australia/New Zealand 4

40

0000

00

09

52

012

68

South East AsiaIndia

JapanChina

AfricaMiddle EastCentral Asia

RussiaEastern Europe

Western EuropeUnited Kingdom

South AmericaCentral America

MexicoCanada

U.S.

0 20 40 60 80

It’s also interesting to note that these respondents are seasoned veterans of outsourcing. Seventy-one percent are from organizations with more than five years experience with outsourcing and 47 percent are from organizations with more than 10 years of experience.

Insight #1: The Recent Economic Crisis has been Good for Outsourcing

The 2008-09 economic crisis – which certainly has rocked the world – also has tested many facets of the economy and

many assumed “truths” in our business. Entire asset classes have been revalued. Highly leveraged business models are far less attractive. Risk is once again seen as something quite real, not simply a buzzword used to justify unsustainable returns. The world’s economies are seen as far more interdependent than ever before. And, employment as a measure of size and success will never be thought of the same way.

Against this backdrop, outsourcing has

not only survived, but expanded as both a management practice and as an industry. Over the past 12 months, IAOP’s customer members report a significant expansion in both their current outsourcing programs and in their plans for the future.

Only 15% of our members report that over the past 12 months their current outsourcing programs have either been significantly curtailed or cancelled (2%); continued but with reduced services (2%); or continued with reduced volumes (11%).

Figure 2:

In what industry does your company primarily operate?

Customers: Providers & Advisors:



Providers & Advisors:

Australia/New Zealand 2

2612

06

32

02

725

4

73

2

4129

South East AsiaIndia

JapanChina

AfricaMiddle EastCentral Asia

RussiaEastern Europe

Western EuropeUnited Kingdom

South AmericaCentral America

MexicoCanada

U.S.

0 50 100 150

Other OtherTechnology Technology

Retail and Consumer Goods Retail and Consumer GoodsUtilities Utilities

Government GovernmentReal Estate Real EstateEducation Education

Services ServicesHealth Care Health CareHospitality Hospitality

Air Transportation Air TransportationEntertainment and Media Entertainment and Media

Telecommunication TelecommunicationPharmaceutical Pharmaceutical

Automotive AutomotiveOil and Natural Gas Oil and Natural Gas

Discrete Manufactoring Discrete ManufactoringFinancial Services Financial ServicesFinancial Services Financial Services

510

28

258

39

483

5413

10

310

5

10

410

25

72

00

32

91

24

38

22

615

14

15 201050 0 10 20 30 40 50 60 70

ADEasily Transform Your Back-Office Process

to a More Advanced Level of Efficiency

A Common Problem

Companies can’t meet the challenges of today with yesterday’s tools. However, many are reluctant to upgrade their back-office processes and technology because they fear service interruptions, missed deliv-ery dates, cost overruns, and poor customer service.

Yet, companies that haven’t made the transition find it’s harder to meet deadlines, cut costs, increase efficiency, and improve customer service.

Outsourcing these processes provides the answer to many of these challenges.

Finding the Answer

After 20 years of helping Fortune 100 companies transition to a business process outsourcing model, DATAMARK has developed a framework that addresses common transition challenges and provides a step-by-step plan to help companies evolve to a more advanced level of efficiency, productivity, quality, and cost-effectiveness.

This framework is called The Evolution Solution.

The Evolution Solution

The Evolution Solution consists of:

1. Process Analysis – DATAMARK’s experienced outsourcing team assesses your current back-office process to identify opportunities for improvement, define your requirements, and benchmark your current level of operations to prepare for outsourcing.

2. Process Migration – Using our Process Migration MethodologySM (PMM), DATAMARK implements best practices and quality control techniques to ensure a smooth, seamless transition of your back-office process to an outsourcing operating model.

3. Process Improvement – Once the process is transitioned, it is leaned, documented, stabilized, and standardized using Lean and Six Sigma techniques. Metrics are developed to measure and report key process drivers for real-time remote monitoring and management.

After key performance indicators are met, DATAMARK re-analyzes the process for continued improvement in efficiency, speed, and quality.

4. Process Replication – Now familiar with company processes, operating procedures, and needs, DATAMARK can easily transition other back-office processes to the outsourcing model or relocate these processes to one of our global delivery centers that offers the required skill-sets at more attractive labor rates.

Signs of a Successful Transition

The Evolution Solution ensures that the delivery of outsourced ser-vices remain on time, on budget, and at the same quality levels—or above—as an in-house process.

The Evolution Solution provides complete visibility from start to finish with identified functions/steps/roles, a clear understanding of inputs and outputs, constant monitoring, and open communication.

The Evolution Solution allows you to:

• Improveefficiencyinyourback-officeprocesses

• Increaseproductivityofexistingresourceswhileminimizingcosts

• Deliverconsistent,highqualitycustomerserviceinacompetitiveenvironment

• Improveprocessscalabilityforcorporateinnovationandgrowth

• Successfully integrate people, processes and technology

Finding the Right Balance

Using DATAMARK’s Evolution Solution and one or more of our five operating models—on-site, near-site, on-shore, near-shore, and far-shore—you can select the strategy that best meets your requirements while achieving the best balance between costs, risks, and rewards.

Join the EvolutionFind out how The Evolution Solution can take your back-office process to the next level of business excellence. Call our Solution Specialists at 800-477-1944 or visit our site at www.DATAMARK.net.

DATAMARK, Inc.43 Butterfield CircleEl Paso, TX 79906 USAwww.DATAMARK.net800-477-1944

We take you from where you are to where you want to be...

Business Process Evolution

It is not the strongest of companies that survive, nor the largest, but the one most responsive to change.

Services:• Document Processing• Document Management• Finance & Accounting• Customer Care • Web Research• Consulting

Industries:• Banking & Financial Services• Freight & Transportation• Government• Health Care• Insurance• Manufacturing• Marketing Fulfillment

DMI-GT-FEB2010.indd 1 2/18/2011 9:02:05 AM

ADEasily Transform Your Back-Office Process

to a More Advanced Level of Efficiency

A Common Problem

Companies can’t meet the challenges of today with yesterday’s tools. However, many are reluctant to upgrade their back-office processes and technology because they fear service interruptions, missed deliv-ery dates, cost overruns, and poor customer service.

Yet, companies that haven’t made the transition find it’s harder to meet deadlines, cut costs, increase efficiency, and improve customer service.

Outsourcing these processes provides the answer to many of these challenges.

Finding the Answer

After 20 years of helping Fortune 100 companies transition to a business process outsourcing model, DATAMARK has developed a framework that addresses common transition challenges and provides a step-by-step plan to help companies evolve to a more advanced level of efficiency, productivity, quality, and cost-effectiveness.

This framework is called The Evolution Solution.

The Evolution Solution

The Evolution Solution consists of:

1. Process Analysis – DATAMARK’s experienced outsourcing team assesses your current back-office process to identify opportunities for improvement, define your requirements, and benchmark your current level of operations to prepare for outsourcing.

2. Process Migration – Using our Process Migration MethodologySM (PMM), DATAMARK implements best practices and quality control techniques to ensure a smooth, seamless transition of your back-office process to an outsourcing operating model.

3. Process Improvement – Once the process is transitioned, it is leaned, documented, stabilized, and standardized using Lean and Six Sigma techniques. Metrics are developed to measure and report key process drivers for real-time remote monitoring and management.

After key performance indicators are met, DATAMARK re-analyzes the process for continued improvement in efficiency, speed, and quality.

4. Process Replication – Now familiar with company processes, operating procedures, and needs, DATAMARK can easily transition other back-office processes to the outsourcing model or relocate these processes to one of our global delivery centers that offers the required skill-sets at more attractive labor rates.

Signs of a Successful Transition

The Evolution Solution ensures that the delivery of outsourced ser-vices remain on time, on budget, and at the same quality levels—or above—as an in-house process.

The Evolution Solution provides complete visibility from start to finish with identified functions/steps/roles, a clear understanding of inputs and outputs, constant monitoring, and open communication.

The Evolution Solution allows you to:

• Improveefficiencyinyourback-officeprocesses

• Increaseproductivityofexistingresourceswhileminimizingcosts

• Deliverconsistent,highqualitycustomerserviceinacompetitiveenvironment

• Improveprocessscalabilityforcorporateinnovationandgrowth

• Successfully integrate people, processes and technology

Finding the Right Balance

Using DATAMARK’s Evolution Solution and one or more of our five operating models—on-site, near-site, on-shore, near-shore, and far-shore—you can select the strategy that best meets your requirements while achieving the best balance between costs, risks, and rewards.

Join the EvolutionFind out how The Evolution Solution can take your back-office process to the next level of business excellence. Call our Solution Specialists at 800-477-1944 or visit our site at www.DATAMARK.net.

DATAMARK, Inc.43 Butterfield CircleEl Paso, TX 79906 USAwww.DATAMARK.net800-477-1944

We take you from where you are to where you want to be...

Business Process Evolution

It is not the strongest of companies that survive, nor the largest, but the one most responsive to change.

Services:• Document Processing• Document Management• Finance & Accounting• Customer Care • Web Research• Consulting

Industries:• Banking & Financial Services• Freight & Transportation• Government• Health Care• Insurance• Manufacturing• Marketing Fulfillment

DMI-GT-FEB2010.indd 1 2/18/2011 9:02:05 AM

The latter percentage is arguably more attributable to the changes in customers’ business volumes, as to any conscious decision to reduce the amount of work outsourced.

This means that 85% of IAOP’s members report that the current level of outsourcing within their organizations has stayed the same or increased over the past year. In fact, 24% report increased volumes and15%, increased services; 31% have kept their current contracts in place with some renegotiating, and 16% have continued their current programs essentially unchanged.

Even more importantly, a full 80% of customer organizations indicate that their future outsourcing plans have been expanded to pursue more, new opportunities; 19% report that their plans will continue unchanged. Only 20% indicate that they have curtailed future outsourcing plans. The charts flesh out the numbers in greater detail.

At the same time, these professionals are reporting a significant recasting of the reasons that companies outsource (see

Figure 3 – multiple responses permitted). Reducing costs is now seen more in terms of increasing business flexibility (59%), achieving long-term savings (56%), and achieving short-term savings (40%).

Using outsourcing to support future business opportunities is now more important to 62% of respondents and accessing skills and talent are more important to 40%.

Separately, data provided by outsourcing service providers as part of IAOP’s annual review and ranking for the world’s best outsourcing service providers – The Global Outsourcing 100 – shows that the industry not only continued to grow throughout the economic crisis, but returned to a quite healthy 10% rate in 2010.

However, revenue growth no longer equates to employment growth, as providers learn to become more efficient. Employment growth in the outsourcing industry was 4.5% in 2010 versus 6% in 2009. Nonetheless, the top 200 outsourcing companies employ about 4 million people globally.

FULL QUESTIONS READ:

• More focused on supporting our company’s plans for growth • More focused on increasing our business flexibility • More focused on creating new business opportunities through partnerships with our providers • More focused on accessing skills and talent not otherwise available to us

INSIGHT #2: NEW APPROACHES TO OUTSOURCING ARE EMERGING

So not only has outsourcing expanded and become more linked to future business needs over the past 12 months, the very way companies are outsourcing is changing as well.

The most notable of these changes is cloud-computing (or perhaps better called Internet-computing). The term “cloud”, of course, has become all the rage over the past year, making its way into investment advice, product advertising, and even a popular TV

Figure 3:

Over the past twelve months has your organization’s reasons for outsourcing become

More focused on accessing skills and talent not

More focused on creating new business opportunities

More focused on increating our business flexibility

More focused on supporting our company`s plans f...

More focused on monetizing assets

More focused on conserving capital

More focused on long-term cost savings

More focused on immediate cost savings

0

38

19

56

40

4

7

53

38

10 20 30 40 50 60 70

Business areas I`m aware of plan to...

Real Estate and Capital Asset Management

Information/Communications TechnologyHuman Resource Management

Document ManagementCustomer Relationship Management



show or two. But make no mistake about it, when it comes to outsourcing, the cloud is a lot more than a mere buzzword.

Two-thirds of IAOP’s customer members report that their organizations have either implemented or plan to implement cloud-based outsourcing solutions over the next year. In fact, of those, two-thirds either have or intend to implement cloud-based outsourcing solutions in more than one functional area of the business. Figure 4 shows the percent of organizations implementing cloud-based outsourcing solutions by functional area, alongside the percent of providers who either are or intend to offer cloud-based outsourcing solutions in those areas.

Not surprisingly, information and communications technology, which include infrastructure as well as common business applications, is the top area for cloud’s incursion. However, the range of functional areas already being addressed through cloud-based solutions may surprise many.

Cloud-based outsourcing solutions have or will be implemented most commonly in the areas of customer relationship management, human resources

management, transaction processing, financial management, document management, and administrative services – essentially, across the entire enterprise and especially within areas where outsourcing already is commonplace. It appears that the provider community is in good alignment with where their customers are leading them (see figure 4).

The factors driving cloud-based outsourcing generally mirror what we’ve seen for outsourcing overall for many years. (figure 5). That said, there perhaps is one area that stands out as unique: speed, or as IAOP’s survey called it, “Faster Implementation”. This speed of implementation nosed out volume flexibility and, taken together, really highlights the big benefit customers see in cloud-based solutions: speed and flexibility.

But don’t be fooled into thinking that customers are rushing headlong into this new delivery platform. Risk and performance concerns dominate a lot of the internal customer dialogue and it’s fair to say that full adoption can’t take place until the risks of cloud-based outsourcing are fully understood and mitigated to the customers’ satisfaction. The point has been

made for some time: companies that don’t outsource are typically so concerned about the risks, they’re unable to see the potential benefits.

Although cloud-based outsourcing is probably the biggest change in the outsourcing delivery model underway, it’s not the only one.

Fifty-seven percent of IAOP’s customer members tell us that they are looking for more contracts with greater flexibility. Forty-six percent are moving toward more knowledge-based activities in terms of what they’re outsourcing and 38% are looking to reduce their provider portfolio through more bundled relationships.

Finally, offshoring is increasingly becoming “allshoring”. While 32% of customers say they are looking more at offshoring today than a year ago, 27% say they are looking more at nearshoring (11%) and onshoring (7%) options.

Providers are listening here as well. Based on the data provided for the 2011 Global Outsourcing 100 ranking, the average outsourcing service provider now has multi-client service centers in 11 countries.

Figure 4:

Customers: Within your organization, which of the following business areas either have or are highly-likely to implement one or more cloud-based outsourcing solutions over the next 12 months (check all that apply)?

Providers: In which of the following business areas is your company either currently offering or planning to offer cloud-based outsourcing solutions over the next 12 months (check all that apply)?

Providers & Advisors:Customer Data:

Other OtherBusiness areas I`m aware of plan to... Business areas I`m aware of plan to...

Transaction Processing Transaction ProcessingSales Sales

Product Manufactoring Product ManufactoringResearch and Development Research and Development

Real Estate and Capital Asset Management Real Estate and Capital Asset ManagementMarketing Marketing

Logistic LogisticLegal Legal

Information/Communications Technology Information/Communications TechnologyHuman Resource Management Human Resource Management

Facility Services Facility Services Financial Management Financial Management

Document Management Document ManagementCustomer Relationship Management Customer Relationship Management

Corporate Services Corporate ServicesAdministrative Services Administrative Services

0 033 33

12 1210 10

2 24 44 4

8 83 34 4

40 4019 19

12 129 9

12 1221 21

5 511 11

0 010 1020 2030 3040 4050 50



Some months ago, a New York City court convicted 13 people including six medical professionals who had, over several years, milked auto insurance companies of millions in fraudulent claims. How did they do it - by staging ‘fake’ accidents in rental cars and then ‘treating’ the alleged victims to a battery of unnecessary tests including expensive EKGs and MRIs.

Auto fraud is clearly on the rise in the U.S. Consider this

According to the Insurance Research Council (IRC), auto insurance fraud has added between USD 4.8 billion and USD 6.8 billion to auto claims in 2007

Fraud claims lead to higher premia for honest customers, costing consumers an additional USD 200 - 300 in premiums alone according to Edmunds.com. According to the IRC, one third of all bodily injury claims for auto insurance contain some degree of fraud.

The concern is that detecting auto fraud, already a challenge, will only worsen for the following reasons

Scarce resources - The underwriting resources necessary for detecting fraud claims are falling in numbers. A Deloitte Consulting report has forecast a likely shortfall of 84,000 in insurance claims workforce by 2014. It is believed that

n

n

n

North America alone will experience a 40 to 50 percent shortfall in underwriting resources across all lines of the insurance business

Overworked staff - Existing staff of investigators are already overburdened by the number of claims that they track. Therefore, their ability to manage a larger number of claims efficiently is a challenge

Undetected fraud - Less than one percent of all claims are typically referred to for further investigation, implying that not enough number of claims are being scrutinized, and of that too, less than 0.5 percent of all claims are dismissed as fraudulent

Changing buying behavior - Increasing numbers of new auto policies are being purchased online. As the sales channels become more diversified, an insurance company's underwriting resources requires more expertise to track claims from a growing number of sales channels.

There are two traditional approaches for fraud detection.

Alerted to fraud through whistle blowers - Typically, this is someone in the know who informs a company of a fraud case which is often in the form of an anonymous call

Using a rules-based approach - Such an approach attempts to derive execution instructions from a starting set of data based on ‘if this, do that’. For example, a computer-based system might help a doctor choose the correct diagnosis based on a cluster of symptoms.

One way to trace likely fraud is by analyzing the information silo'd in companies on a person’s claims history, payment of premiums and residential addresses. By using computing power and statistical tools, it is possible to analyze information in order to throw up trends or profiles of potential fraud. Unlike traditional approaches, an approach that deploys analytics will provide.

n

n

n

n

n

The challenge is to detect and combat auto fraud in a cost-effective and speedy manner. So let's see how investigators in insurance companies typically trace fraud and then ask whether or not these methods are relevant today.

n

n

Information on anomalous patterns that can help insurance companies investigate cases that would otherwise miss scrutiny

Objective analyses of information that allows for the processing of larger volumes in a transparent manner.

As an example, WNS has worked closely with a leading auto insurance company that wanted to minimize fraud by understanding the profiles of fake customers, identifying patterns, and putting in place a proactive early warning system to support their investigation and fraud management teams.

Using analytics, the company was able to improve the rate of genuine claims and significantly reduce costs associated with fraud claims investigation.

Business has become increasingly aware of the need to tackle fraud in cost-effective ways. For example, health insurance companies have taken a leaf out of the books of credit card companies and begun to analyze information that lies silo'd within their domains in order to be able to identify potential fraud cases, and tag them upfront. Auto insurance fraud costs genuine consumers, companies and the economy at large. Combating fraud with a well-thought out analytics plan will help insurance companies conduct their business efficiently, increase customer satisfaction and enhance their overall brand image.

How analytics helped an auto insurer detect fraud

Talk to a business process outsourcing service provider with a strong track record for delivery.

Need to improve operational performance?

With over 21,000 employees located in 21 delivery centers around the world, WNS extends the enterprise of over 200 organizations by improving their business performance.

To learn how we can help extend your enterprise, visit wns.com.

Rakesh Pande, Head - Insurance Analytics, WNS Global Services

Outsourc ing Ins ights by WNS

Call-to-Action

For more insights on outsourcing or our service offerings, visit wns.com. Alternatively, you can write to us at [email protected]

Some months ago, a New York City court convicted 13 people including six medical professionals who had, over several years, milked auto insurance companies of millions in fraudulent claims. How did they do it - by staging ‘fake’ accidents in rental cars and then ‘treating’ the alleged victims to a battery of unnecessary tests including expensive EKGs and MRIs.

Auto fraud is clearly on the rise in the U.S. Consider this

According to the Insurance Research Council (IRC), auto insurance fraud has added between USD 4.8 billion and USD 6.8 billion to auto claims in 2007

Fraud claims lead to higher premia for honest customers, costing consumers an additional USD 200 - 300 in premiums alone according to Edmunds.com. According to the IRC, one third of all bodily injury claims for auto insurance contain some degree of fraud.

The concern is that detecting auto fraud, already a challenge, will only worsen for the following reasons

Scarce resources - The underwriting resources necessary for detecting fraud claims are falling in numbers. A Deloitte Consulting report has forecast a likely shortfall of 84,000 in insurance claims workforce by 2014. It is believed that

n

n

n

North America alone will experience a 40 to 50 percent shortfall in underwriting resources across all lines of the insurance business

Overworked staff - Existing staff of investigators are already overburdened by the number of claims that they track. Therefore, their ability to manage a larger number of claims efficiently is a challenge

Undetected fraud - Less than one percent of all claims are typically referred to for further investigation, implying that not enough number of claims are being scrutinized, and of that too, less than 0.5 percent of all claims are dismissed as fraudulent

Changing buying behavior - Increasing numbers of new auto policies are being purchased online. As the sales channels become more diversified, an insurance company's underwriting resources requires more expertise to track claims from a growing number of sales channels.

There are two traditional approaches for fraud detection.

Alerted to fraud through whistle blowers - Typically, this is someone in the know who informs a company of a fraud case which is often in the form of an anonymous call

Using a rules-based approach - Such an approach attempts to derive execution instructions from a starting set of data based on ‘if this, do that’. For example, a computer-based system might help a doctor choose the correct diagnosis based on a cluster of symptoms.

One way to trace likely fraud is by analyzing the information silo'd in companies on a person’s claims history, payment of premiums and residential addresses. By using computing power and statistical tools, it is possible to analyze information in order to throw up trends or profiles of potential fraud. Unlike traditional approaches, an approach that deploys analytics will provide.

n

n

n

n

n

The challenge is to detect and combat auto fraud in a cost-effective and speedy manner. So let's see how investigators in insurance companies typically trace fraud and then ask whether or not these methods are relevant today.

n

n

Information on anomalous patterns that can help insurance companies investigate cases that would otherwise miss scrutiny

Objective analyses of information that allows for the processing of larger volumes in a transparent manner.

As an example, WNS has worked closely with a leading auto insurance company that wanted to minimize fraud by understanding the profiles of fake customers, identifying patterns, and putting in place a proactive early warning system to support their investigation and fraud management teams.

Using analytics, the company was able to improve the rate of genuine claims and significantly reduce costs associated with fraud claims investigation.

Business has become increasingly aware of the need to tackle fraud in cost-effective ways. For example, health insurance companies have taken a leaf out of the books of credit card companies and begun to analyze information that lies silo'd within their domains in order to be able to identify potential fraud cases, and tag them upfront. Auto insurance fraud costs genuine consumers, companies and the economy at large. Combating fraud with a well-thought out analytics plan will help insurance companies conduct their business efficiently, increase customer satisfaction and enhance their overall brand image.

How analytics helped an auto insurer detect fraud

Talk to a business process outsourcing service provider with a strong track record for delivery.

Need to improve operational performance?

With over 21,000 employees located in 21 delivery centers around the world, WNS extends the enterprise of over 200 organizations by improving their business performance.

To learn how we can help extend your enterprise, visit wns.com.

Rakesh Pande, Head - Insurance Analytics, WNS Global Services

Outsourc ing Ins ights by WNS

Call-to-Action

For more insights on outsourcing or our service offerings, visit wns.com. Alternatively, you can write to us at [email protected]

Figure 5:

When considering cloud-based outsourcing solutions, which if the following are key factors in your organization’s evaluation (check all that apply)?

Providers & Advisors:

Figure 6:

Are the outsourcing professionals at your organization responsible for (check all that apply)?

Michael F. Corbett is the founder, chairman and chief strategy officer of IAOP. He is one of the best-known experts in the field of outsourcing. He is the author of outsourcing’s definitive guide, “The Outsourcing Revolution: Why It Makes Sense and How to Do It Right” (Dearborn Trade Publishing, September 2004). As a pioneer and visionary, Corbett has for the past 20 years contributed globally to the growth and development of outsourcing as a management profession and an industry. You can reach him at: [email protected]

RESOURCE BOX

Michael CorbettIAOP Chairman

Other

None of the above

Risk concerns

Performance concerns

Ease in storing and accessing data

Standardization of applications and processes

Flexibility to increase or reduce services

Flexibility to increase or reduce volumes

More provider options

More solution options

Faster implementation

Lower costs

0

2

16

47

37

12

26

25

39

3

19

40

46

10 20 30 40 50 60

Other:

Implementation

Management/Governance

Selection

Strategy

0

1

85

74

72

65

20 40 60 80 100


INSIGHT #3: OUTSOURCING IS INCREASINGLY DRIVEN BY INTERNAL TEAMS OF PROFESSIONALS

When IAOP was launched a little more than five years ago, it was the first organization to popularize the term “outsourcing professional.” To be sure, advancing the profession and industry of outsourcing is the association’s core mission. That vision is today’s reality.

According to this most recent survey, the average client-side organization now has between 10 and 50 outsourcing professionals on staff. Twenty percent have more than fifty outsourcing professionals and almost 10% have more than 100. Moreover, 43% report that the number of outsourcing professionals at their organization has increased over the past 12 months, with 24% indicating that the growth has been by more than 10%. This would appear to be one profession where job loss is not a concern.

The increased number of outsourcing professionals is being matched by increases in compensation, as the value of their work and the competition for real experience and knowledge increases across the field. Only 6% report lower wages for outsourcing professionals, while

53% report wages holding steady and 40% report wage increases.

These professionals are now being deployed as teams across the organization. Fifty-five percent work within the functional areas themselves, 25% operate

out of centers of excellence supporting the entire organization, and 19% are within the company’s shared services operation. These professionals work across the outsourcing life-cycle from strategy development (68%) to governance (89%). (Figure 6.)


Figure 7:

What are the top priorities when considering Corporate Social Responsibility (CSR) in the design of your outsourcing offerings (check all that apply)?

Other

Community involvement

Enviromental issues

Consumer issues

Human rights

Fair operation practices

Labor practices

0 50 100 150


INSIGHT #4: SOCIOECONOMIC TRENDS ARE POSITIVE – NOT NEGATIVE – FOR OUTSOURCING

All the overheated political rhetoric lately about how outsourcing exacerbates domestic unemployment might foster the notion that outsourcing’s negative reputation will ultimately overshadow its positive impact on business and society. However, there’s nothing in the survey data to suggest that this is actually the case.

In fact, 95% of customer respondents indicate that the political controversy and subsequent protectionist initiatives have exerted no negative impact on their organization’s actual outsourcing decisions. Twenty-two percent do say that they are more careful to avoid awareness of their company’s outsourcing activities, making the matter one of messaging and not reality.

What is happening, however, is that outsourcing customers and providers are working even harder to make their programs socially responsible. Seventy-nine percent of customers and 71% of providers say that Corporate Social Responsibility (CSR) is an important to critical part of their outsourcing programs.

Within this broad area of CSR, customers care most about labor

SUMMARY: THE FUTURE IS NOW

All the overheated political rhetoric lately about how outsourcing exacerbates domestic unemployment might foster the notion that outsourcing’s negative reputation will ultimately overshadow its positive impact on business and society. However, there’s nothing in the survey data to suggest that this is actually the case.

In fact, 95% of customer respondents indicate that the political controversy and subsequent protectionist initiatives have exerted no negative impact on their organization’s actual outsourcing decisions. Twenty-two percent do say that they are more careful to avoid awareness of their company’s outsourcing activities, making the matter one of messaging and not reality.

What is happening, however, is that outsourcing customers and providers

practices (75%); operating practices (62%); environmental issues (46%); and human rights (44%). Providers generally match-up with those same concerns with an additional focus on community involvement, because attracting and retaining talent within their respective communities is so critical to their long-term business interests. (Figure 7.)

Despite their occasional grandstanding on the issue, even politicians are beginning to grudgingly acknowledge that outsourcing – when equated to

are working even harder to make their programs socially responsible. Seventy-nine percent of customers and 71% of providers say that Corporate Social Responsibility (CSR) is an important to critical part of their outsourcing programs.

Within this broad area of CSR, customers care most about labor practices (75%); operating practices (62%); environmental issues (46%); and human rights (44%). Providers generally match-up with those same concerns with an additional focus on community involvement, because attracting and retaining talent within their respective communities is so critical to their long-term business interests. (Figure 7.)

offshoring – is a two-way street that creates economic prosperity and jobs. U.S. President Barack Obama made that exact point during his recent trip to India.

More vividly, no one can watch the events in the Middle East of January 2011 without recognizing that an underlying driver of unrest is unemployment among educated and non-educated youth alike. One study suggests that the Middle East and Northern Africa will need to create 100 million jobs by 2010, just to stabilize their employment situations.

Despite their occasional grandstanding on the issue, even politicians are beginning to grudgingly acknowledge that outsourcing – when equated to offshoring – is a two-way street that creates economic prosperity and jobs. U.S. President Barack Obama made that exact point during his recent trip to India.

More vividly, no one can watch the events in the Middle East of January 2011 without recognizing that an underlying driver of unrest is unemployment among educated and non-educated youth alike. One study suggests that the Middle East and Northern Africa will need to create 100 million jobs by 2010, just to stabilize their employment situations.


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Let me start with the positive news: Since 2008 and through the economic crisis, mergers and acquisitions have become key drivers of growth for many global service providers. This particular trend has been spearheaded by providers from India, as its IT services industry surges ahead in its quest for capturing larger deals, as also creating compelling value that goes beyond commoditized services.

Targeting and acquiring small, boutique or value players with compelling technology solutions has become a route to creating muchneeded front-end consulting and solutioning approach to their robust and proven back-end service capabilities. These deals cover both software and services, but are typically oriented toward garnering “vertical/ domain” competencies that could be layered around technology services. While one may assume that this is the route a new industry takes as it surges toward maturity, in a globalized world, the assumption that

this trend sets the case for cross-border acquisitions alone can be quite restrictive. In fact domestic acquisitions – treated as industry consolidations by many – have grown in tandem with cross-border mergers and acquisitions. Will this trend continue? Will it create increased dexterity among industry players from emerging nations? Do local and regional economics contribute positively to a cohesive play in the globalized marketplace?

ENTER THE COMMODITY ERA

Yesterday’s value is today’s commodity - a fact that has been proven time and again across a host of industries. Is that reflective of maturity, or competition, or both? In the global services marketplace almost non-existent entry barriers have enabled companies from a plethora of emerging nations – struggling at the one end to sustain whatever’s left of non-competitive old-school industries, while pooling

scarce resources and creating new ones – to enter into play through offering lowest-level commoditized services that touched the bottom end of the services pyramid, and had only one leverage – a lower econo-commercial cost base [typically manifested by way of labor arbitrage]. While some nations have moved from labor to skills/ capability arbitrage, not much has translated beyond creating higher scale for the very same commodity services. Small and medium-sized companies across emerging economies – from Malaysia to Brazil, from Poland to South Africa – continue to be plagued by one question – that of increasing irrelevance with both their service models and lack of market spread. Interestingly, they continue to view organic growth as a way to grow, a fact that has been proven to be both difficult and unsustainable, in the context of services that continually chase costs in the absence of any other value-creator. What are the pertinent reasons



Emerging Nations & Global Sourcing - Case for Inorganic Growth?An influential outsourcing analyst makes the case for governmental inorganic growth strategies. By Bobby Varanasi


for providers staying away from efforts surrounding internal consolidation or going global through deploying inorganic strategies?

Most small and medium-sized companies have been formed by entrepreneurs who leveraged the technology boom of the 90s, thereby creating product-oriented companies that sold software –more often than not beginning their businesses as resellers or distributors of products. Moving on to offering services around the very products they sold has been the most common claim for capabilities in the outsourcing area. While this enabled many firms from South-East Asia and Latin America to lay claim to their position in the global services marketplace, other emerging nations from Middle East, Africa and Central / Eastern Europe haven’t had that flexibility, thereby leaving them with the only way to enter the industry – leveraging their language capabilities [read call centers].

Neither of the two seemingly distinct models have been able to withstand the complexities of this industry, resulting in such companies becoming irrelevant quickly. Entrepreneurs got themselves into a bind – fighting the emotions of having to survive in an industry that’s more complex than their models could accommodate, and fending off the demons of competition through demanding protectionist measures [localization barriers] or through restricting themselves to the local marketplace where outsourcing hasn’t yet penetrated sufficiently enough for organizations to make sense of its value-propositions.

A lesson from India will perhaps make the point succinctly. Realizing the restrictions placed by commoditized services where differentiation is nigh impossible, the only way to remain relevant was to create compelling value with an industry – read business layer. This realization helped move firms from

technology centricity toward acquiring capabilities that enabled them to speak the client’s language in a compelling manner. Enter acquisitions – creating the required differentiation by going after firms that already had such a value and market recall. Within the ITO and BPO industry, over 320 M&A deals were signed in 2009-10 worth over $18 billion. Nearly 61% of these deals were domestic acquisitions, accounting for well over 56% of the overall deal values. While US still is the dominant leader in this area, firms from India and China are starting to lead the marketplace in terms of the wider nature of such deals that are industry/ vertical-centric. India alone saw cross-border acquisitions worth well over $ 8.6 Billion in 2009. While deals in the areas of virtualization – SaaS and cloud computing – are beginning to become dominant especially in the US, deals in vertical areas – healthcare, insurance, transportation & logistics – are the core areas of focus for offshore service


It was a textbook problem in the volatile world of retail. In the summer of 2009, a major US music distributor experienced a sudden spike in demand for the CDs of one of the artists in its back catalog. How could it ramp up production to meet immediate needs without creating excess inventory in the future?

This company had an edge, however—a longstanding outsourcing arrangement in place that, over a period of several years, had turned its supply chain into a finely tuned, industrialized engine. Moreover, the engine came equipped with a predictive analytics capability that could do more than just tell the company that manufacturing could not meet supply. The analytics could also identify how to solve the problem, leveraging insights across multiple domains beyond the supply chain, including finance and CRM.

In short order, the music distributor had pinpointed the source of greatest demand. The company was able to make informed and timely decisions about where to boost production and where the most cost-effective and profitable locations were to locate inventory. Net result: Instead of the costly alternative of increasing production everywhere in the world—which would have resulted in excess inventory and expensive shipping to redistribute products later—the company had an accurate, just-in-time, precisely targeted delivery approach that met customers’ needs for a dramatically lower cost.

Sophisticated toolsThis is one of a growing list of examples where the intelligent use of analytics in business process outsourcing environments is making a significant impact. As with all applications of analytics, it leverages sophisticated tools and techniques for statistical surveying, root-cause analysis and optimization. Unlike many advanced analytics applications at some companies, however, BPO analytics begins on what is already a strong foundation of comprehensive data about a business process and how it’s performing.

Where does such a foundation of high-quality data come from? From outsourcing relationships in which providers are already highly motivated to produce timely data that helps them know, nearly in real time, how efficiently a supply chain, a procurement function, a global finance organization or other business processes are performing.

Three ways analytics drives business advantageThe analytics capabilities built on the existing foundation of data from a BPO relationship help companies realize significant benefits in at least three ways.

1. Improving the operational engine The first advantage in building an analytics capability on the back of a BPO relationship is that companies can go to a single source for high-quality data about the performance of a process or function—data that is measured and recorded consistently.

An outsourcing provider that is helping to deliver essential business processes such as finance and HR is well placed to analyze the performance of a process end to end, across both client and provider, discovering where inefficiencies and risks exist, then working to drive time and waste out of the process and standardize wherever possible.

2. Discovering hidden insights A second critical area where analytics can deliver greater value as part of a business process outsourcing arrangement is in generating additional insights by tracking data across different parts of the organization. Such a capability can optimize results or help balance apparently competing or contradictory objectives.

A common example is the balancing act companies face in reconciling the needs of the procurement and finance organizations. A procurement professional will want to push for early payments to get discounts from suppliers. But a finance professional will look instead to hang on to cash as long as possible. How can both sides of that equation win?

The answer is that they cannot—not exactly. But with an analytics capability in place as part of an outsourcing arrangement that bundles procurement and finance, a company can be assured of finding the precise point at which the benefits on both sides of the equation are balanced, helping to generate as much business value as possible by improving cash management.

3. Innovations to drive revenue The third area where BPO analytics offers distinctive value is in helping companies manage data—from the front office, the back office or both—in such a way as to generate innovations or improve time to market to increase revenue

For example, one major company in the health and life sciences industry has established an outsourced center for the testing and assessment processes known as pharmacovigilance. This approach has helped the company to increase productivity by as much as 40 percent. The outsourced analytics capability has enabled the company to collect and analyze data faster, shaving significant time off the approval cycle, more readily identifying drugs with no marketplace potential and getting approved drugs to market faster.

Hard to duplicateIs an outsourcing arrangement the only way to make business process analytics effective? Certainly not. But the foundation of data and process industrialization upon which an outsourcing provider works, using highly sophisticated tools and talent, is hard to duplicate using internal resources alone.

Companies that effectively use an outsourcing relationship to embed analytics into their business processes have an opportunity not only to reduce costs and improve process efficiency but also to generate the insights that can lead to market breakthroughs faster and with greater assurance. Outsourcing providers gain enormous insight into the way a client company works, at extremely detailed levels. It would be a missed opportunity if organizations failed to use those insights for competitive advantage.

This article is based on ‘The analytics advantage,’ which originally appeared in the October, 2010 issue of Outlook, an Accenture publication. Used with permission.

You can read the full article at: accenture.com/analyticsadvantage

BPO and the Analytics AdvantageBy Mike Salvino and Barbara Duganier

© 2011 Accenture. All rights reserved.



providers [esp. from India] as they notch up their vertical capabilities.

DICHOTOMY OF PURSUITS

The important question to ask is this – why are companies from emerging nations [ex-India, ex-China] not pursuing this proven model for growth? The answers lie in their ecosystems. I shall delve into the four most important factors:

An Unproven Location: Most emerging nations haven’t been able to – as yet – position themselves as compelling value destinations. On the contrary they are busy trying to insert themselves into global listings of competitiveness – based on assessment parameters that are sometimes irrelevant or meaningless in their own national context. But then that seems to be a trend no one’s willing to question. In this melee, providers from such marketplace are given short shrift, as governments have taken it upon themselves to speak industry language they are neither good at nor comfortable with. The rankings –

consequently – take a beating when it comes to a reality check, much to the chagrin of the domestic providers themselves who lament that government shouldn’t be in the driver’s seat. Hence providers have no other option but to pursue their growth strategies within the limited information they have about the industry’s trends, with services that are commoditized to the point of zero comparisons, reating a vicious cycle of irrelevance!

Sweat & Equity: Single-entrepreneur led firms are aplenty in most emerging nations, struggling with single-service models and a few domestic clients acquired through relationships, not via showcasing value accrual. Such firms find their leaders significantly reluctant to give up equity for growing inorganically. They would rather raise funds from non-interest non-risk bearing sources [read government grants] that allow them to “go global” without the risk of more sweat. In pursuit of such strategies, service capabilities – enhancements, sustenance – takes a raw beating, since leaders are trying to protect

their turf, rather than trying to accept the fact that their firms are irrelevant, and non-competitive. This in turn results in “propping up mediocrity”, a blame that is squarely fixed on governments whoare unable to increase their market contributions. Is it the government, or the industry to blame?

Lack of Private Capital: Traditional financial institutions have – and continue to – stay away from providers who have neither the intellectual capital nor hard-assets that could be collateralized for raising capital. Private sources – VCs and PEs – do not support this industry in many nations given that providers are stuck in a bind with thoroughly obsolete service models, thin balance-sheets, and a “how-to-do-without-help” mindset [diametrically opposite to the “can-do” mindset that VCs expect]. No capital indicates a debilitating inability to invest, further leading entrepreneurs to the point of driving companies that have neither the competence, not the ability to take on competition.



Lack of Trust: Given similar business models exist within a single market/ nation most providers are small and seemingly insignificant. Their ability to create scale through domestic consolidations is a clear and present opportunity, but an initiative that gets little attention, as ownership issues become more important than “value” questions.

THE OPPORTUNITY

There is no denying the opportunity cross-border acquisitions presents. Providers investing in their clients, or viceversa transcends all boundaries, and tends to focus on pursuing collective growth strategies, where value is accrued and sustained by both. Given the inherent limitations placed on domestic service providers in developed markets – their need to go global, their clients’ needs to reduce / rationalize on high price points, their needs to increase waferthin margins – and the latent opportunity offshore service providers can offer – lower price

points, competent workforce, reduced client acquisition costs, higher margins – cross-border acquisitions seem to be the most rational strategy. Considering them in the first place itself has been a challenge [for factors mentioned above]. However don’t see any other way out for commoditized service providers. The tendency to indulge in conversations of “scale” vs. “value” is a moot point - both needs to be achieved, and achieved quickly. Competitive pressures have not only manifested - exponentially - to the point of unmanageable complexity, they have resulted in blurring the lines between providers and clients, software and solutions, services and processes, technologies and products. A bundled view to these components, with the end-goal of creating a measurable and tangible set of business benefits is what should drive providers if they are to remain in the industry. In pursuit of such an end-goal, cross-border acquisitions become a meaningful and sustainable approach where co-creating and co-ownership for outcomes become key drivers of growth.

Bobby is the [founding] Chairman & CEO of Matryzel Consulting Inc, a strategy consulting, sourcing advisory and management firm headquartered in New York. Matryzel advises corporations and governments worldwide adopt concerted strategies aimed at enhancing competitiveness while focusing on their core competencies. He advises federal governments across four continents on ICT sector development with particular emphasis on policy development, industry-government partnerships aimed at creating GDP growth and enabling positive economic impacts. Bobby has advised Fortune 500 customer organizations on Strategic Planning, Mergers & Acquisitions, JVs, Private Capital Investment Evaluations, Process Reengineering, Pricing Strategies, Sourcing Relationships, Business & Financial Modeling et al, contributing immensely to global sourcing for clients. He is a sought-after speaker in conferences and round-tables worldwide where he moderates panels and presents content on thought leadership. He has been quoted and published in Forbes, fDi, Economist, The Outsourcing, ZDNet, CIO Africa, Brazil Exportati, Times of India, Business Week, New Straits Times, Malaysian Business, Technology Inquirer, Logicall Worldpress etc.

RESOURCE BOX

Bobby Varanasi

ADIT training and professional development services from BCS, The Chartered Institute for ITSetting standards and raising the level of IT competence globally

By building a business partnership with us you can:

• access a wide range of professional development services designed to support organisations and individuals to develop their IT skills and capabilities

• demonstrate a commitment to helping to raise standards in IT and truly establish IT as a recognised and respected profession

• join our international network of high quality accredited training and examination providers• grow your revenue opportunities through our wide range of internationally recognised qualifications

which focus on career development

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The development and delivery of applications has to change. As companies wake up to the opportunities that new device platforms and delivery methods can offer, their existing application development strategies will face greater levels of demand than current processes and systems can support.

The rise of new development methodologies - from agile and scrum through to Kanban - is one approach that developers are using to boost their productivity and meet these changing business requirements. But these methods have their own consequences and impacts on the overall process. There are still challenges to be faced around how demand for application functionality and updates is managed within the business, and also how this new development work is released out into the organisation.

These junctions where business requirements meet developer demands and IT operations can become gaps are where costs creep in and delays are experienced. These gaps can be caused by many things, but ignore the most common in the customers that I am speaking to are differences in how workflow and results are described, the management of handover processes and the use of manual support.

The first challenge is the traditional ‘business versus developer’ argument. While there are still some organisations where business does not get IT or development, this is shrinking rapidly. IT is no longer seen as a mystic and arcane practice in the back office, and an understanding of how to get the best out of technology has been growing steadily. At the same time, developers have also had to learn how to express themselves in business terms and think through how requirements are managed in more detail. This trend of the ‘consumerisation’ of IT can naturally make it easier to bridge the gap between development and the business as they begin to speak the same language.

The second challenge is the handover between different stages of the development process. While many businesses have invested in automating their development, few have the ability to actually connect all of the critical components of the application lifecycle and bridge the gap between application development and operations. Gaining confidence in application delivery requires organisations to marry the creation of better apps with improved processes to get this software into the hands of users.

According to research from Gartner, ‘As teams grow larger or have to deal with larger volumes of software, siloed paper-based practices for the management of each stage of development and operations are evolving to more automated interconnected processes.’ This evolution, to a more orchestrated approach to application development, does not mean throwing out all your existing tools and solutions; instead companies should look to integrate what they already have.

This links into the third problem that I see customers struggling with: manual processes. At the moment, this is the worst problem, as developers are currently focusing on how applications can streamline their business services while not taking advantage of this technology themselves. Release

management is a prime example here: instead of automating the process so that each lovingly crafted application is distributed properly, it can rely instead on either manual distribution or scripts that are written from scratch each time. Either way, it makes it more likely to introduce both wasted time and effort into the release process, as well as having the potential for errors or botched deployments.

To make the most of their application delivery strategies for the future, enterprises need to ask some tough questions. Are we getting better, faster and more efficient with application delivery? Where are our bottlenecks? What dependencies are elevating our risks? Are our costs tracking to plan? And will we release our apps on schedule? Visibility into these and other key performance indicators are essential for any development organisation to constantly track and improve upon.

The next area to ask questions around is how the approach that the development team takes can affect other areas of the application lifecycle. A good example of this is how take-up of agile affects release management. One customer that I spoke to recently said that using agile made his development team much more effective, and they were happier as well with their work. However, this change from quarterly updates to more frequent ‘sprints’ means that the number of releases have gone up by a factor of ten. The release management team were therefore under much greater pressure, and without extra budget to deal with the problem.

This example of unintended consequences can therefore drive greater automation of processes, particularly at the start and end of the development lifecycle. When faced with issues like this, automation is the only way to cope with the increased productivity without spending significant sums. One customer put it to me this way: ‘Releasing applications into production environments is a critical part of application development. Instead of relying on manual processes, we have implemented a repeatable, reliable procedure that is not only saving everyone headaches, it also reduces cost.’

Looking at the overall lifecycle of applications across the organisation is the natural next step for application delivery. This involves making the whole process of application delivery more transparent for the business and also less painful for the development team. Orchestration paired with solid application delivery processes can deliver the efficiency needed to address the budget squeeze that exists around development, while also continuing to power the delivery of killer apps to the business.

BRIDGING THE GAPS By Kevin Parker

Applications are at the heart of business,whether it is a banking system that runs ATMs, online tools that power sales andsupport, or public sector organisations

using web-based services.

ABOUT THE AUTHOR

Kevin is a 30 year industry veteran, holder of three technology patents and today is VP and Chief Evangelist at leading application development vendor Serena Software (www.serena.com). In the past three years he has been crossing the globe working closely with analysts, the press, customers, partners and employees to exchange ideas about industry direction and business issues.

In the past year Kevin has spoken at numerous conferences and seminars on a range of leading IT topics, including methodologies, business analysis, quality assurance techniques, governance, open source issues, tool interoperability, from the mainframe to ‘distributed to the web’ and embedded systems.


THOUGHT LEADER

IT training and professional development services from BCS, The Chartered Institute for ITSetting standards and raising the level of IT competence globally

By building a business partnership with us you can:

• access a wide range of professional development services designed to support organisations and individuals to develop their IT skills and capabilities

• demonstrate a commitment to helping to raise standards in IT and truly establish IT as a recognised and respected profession

• join our international network of high quality accredited training and examination providers• grow your revenue opportunities through our wide range of internationally recognised qualifications

which focus on career development

Find out more at www.bcs.org/prodev

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CAPITALIZING ON SAAS IN ANY

ECONOMYBy David M. Smith

Below, we explain that the arrival of cloud computing and Software-as-a-Service [SaaS] will allow software companies

to accelerate their development cycles, decrease their end user costs, and provide

never-before-seen feature sets.

The vulnerability of modern capital markets has caused every company, both large and small, to rethink their capital investment approach and limit leverage from their balance sheets. As companies become acutely aware at how quickly their credit lines can be frozen, their financial executives quickly become tasked with “Less is More” and start finding ways to streamline the company expenditures.

Because Enterprise Resource Planning (ERP) software is the life-blood of any global corporation, those fees are normally considered non-negotiable and are quickly glossed over at financial review time. This was certainly the case 5 years ago, but now that every line item is being scrutinized, companies are starting to enforce aggregation at every level. If a function is not part of the core value chain for a company, all of the capital liability required to complete that function should be extracted and outsourced, to allow the company to increase its internal abilities to serve clients.

Consequently, a small introductory question becomes an important one:Q. How many of the Fortune 500 companies retain maintenance of

their ERP system?A. The vast majority.

Now when we think about this in comparative terms, a new question emerges:Q. How many of the Fortune 500 companies retain ownership of transatlantic routers?A. Very few.

Google, for example, can use the Internet 24 hours a day to generate revenue without being an Internet Service Provider. Likewise, any

similar corporate function can be extracted and left to those that do it better, which also is more affordable.

With the birth of cloud computing, we have finally seen the last piece of the puzzle drop into place, allowing these elements of the enterprise

to be run “as a service.” The six main components of modern ERP systems are:

The largest and most adaptive companies have already identified “Infrastructure” as a non-core function. We’re now seeing them progress toward identifying and transferring Platform, Software, Configuration, Identity and most recently Data into the most cost efficient and capable hands, opting for control rather than ownership of core software systems.

BACKGROUND CONCEPTS

Cloud computing can be confused with its predecessors because the “server rooms” might look identical. The precursor technologies were: Server Farms – A series of servers working in concert to host applications, most of which evolved into web services and web applications.

Clustered Computing – A “Farm of Farms” that provided redundancy and scalability but fundamentally left the inherent disadvantages of distributed applications intact.

Grid Computing – A form of distributed computing whereby a cluster of loosely coupled computers are mutually solving a problem. For the first time, processes were tailored for the poly-server architectures, but the underlying platform still assumed optimization of the code to achieve scalability.

Cloud computing is born when the host platform can innately

•Data • Infrastructure

• Identity •Platform

•Configuration •Software

THOUGHT LEADER


accommodate large scale and redundancy. That leaves the application code to simply address the platform in a known way, and automatically scale from a single user to a global user base.

The development team is able to ignore Internet availability; the cloud guarantees it. The team is not concerned with performance tuning of database since the cloud is designed from the ground up to store, search, and retrieve vast amounts of information, and guarantees rapid response times. In the future, all applications will natively support “Google-like” infrastructure and adaptability, or better.

SUPPLY CHAIN OPTIMIZATION APPLIED TO SAAS

Cloud computing is the convergence of all previous technologies. It allows for higher efficiency, massive scalability and faster programming. As an added benefit, companies will no longer have to buy software and hardware to deploy their applications. They will now have the option to pay only for computing resources that they utilize because

the applications, hardware, and data will reside somewhere in the cloud. Therefore, as a company’s computing requirements increase, the associated problems and capital expense become someone else’s issue.

As we run toward the leading edge of a specific technology, best insight can be gained from using historically successful strategies focused on componentization and optimization. Some exciting parallels to changes in software models that are currently being experienced can be seen in the Supply Chain transformations from just 5 years ago.

The near-perfect supply chain configuration designed by Jeff Immelt, president of General Electric, for General Electric Medical Systems (GE MS) is a leading indicator in this regard. As such, the advantages and ramifications of optimizing SaaS are strikingly similar — the challenges even more so.

Immelt mastered the art of dividing complex value chains into small sections, and then identifying the core advantage available for that piece. He would then organize and align all of the constituent pieces into similar advantage groups, and finally connect the groups based on their

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Aggregated Services

ArbitragedServices

Adaptable Services

G.E. Medical Systems

R&DMarketing

Administration

ManufacturingWarehousingDistribution

SalesSupport

Cloud Computing

Systems

DaaS [Data]IaaS [Infrastructure] User Interface

IDaaS [Identity]

CaaS [Configuration]PaaS [Platform] User Feedback

SaaS [Software]

David is the Founder and CEO of Axos Technologies, a firm responsible for creating innovation platforms for Fortune 500 companies.

Previous clients include Verizon Wireless, Nielson Media, AEGON and ABN AMRO. He serves on the board of several small cap industrial and technical firms and is Managing Director of Boggess Capital a buyout focused private equity firm. He is currently studying for a joint M.B.A from both Columbia Business School and London Business School. His academic honors and awards include Columbia’s prestigious Patrick J. Dalton Private Equity Mentorship Program and KPMG’s PhD Project Award.

ABOUT THE AUTHOR

THOUGHT LEADER


advantage types, as seen from an enormously high level in the diagram above.

By using history as our guide and building on the shoulders of such giants as Immelt, we can sustainably overcome the major challenges faced by software providers today.

EXTRACTING PROFIT FROM SAAS

The first objection most executive teams have to the transition of complex software systems into the new SaaS platform is that the revenue from the service architecture should initially be dramatically less in terms of real dollars per license. This of course has the natural tendency of pushing the shareholders, general management, and sales team away from the adoption of the new technology, in the hopes that they can hold on to the unsustainably priced “decentralized” license model.

This is clearly short sighted, and is the intellectual equivalent of trying to own a horse stable at the turn of the century when industrialization was just peaking over the horizon. I am aware that the following examples are mildly exhaustive, but the true network effects of output transformations must be realized to overcome the short term “fear” of declining market size.

Just for some relative insight, the initial automobile boasted almost 23 horsepower and was sold for around $800 at a time when the average transport horse sold for around $268. This was an 87% reduction in the revenue generated on a per horsepower basis.

An interesting critical change occurs at this point in the U.S. economy; that is a direct byproduct of the generation of cheaper than before power. Consumers begin demanding horsepower on scales never before imagined. Car sales quickly dwarf previous horse sales and new emerging markets are created. These emerging “service” markets drive new segments of growth that circularly also need more horsepower.

Take the gas station, for example. This new creation also needs a system of trucks, which use gas and requires automotive manufacturing to produce the brand new supply chain required for distributing enough fuel for all of the cars. Distance increases with travel, creating larger physical distances between consumers and their points of employment and consumption, which further drive up the needs for both machinery

(road construction, highway towing services and patrol vehicles) and the need for the fuel to accommodate those inventions.

There also is a newly emerging sector of agricultural equipment that is created when farmers need to adapt to their excess crops generated by the immediate drop in demand for hay, wheat, and oats consumption normally driven by horses. This point of necessity spurs an increase in land available for consumer food production, which leads to the ability of the economy to sustain a population boom, which again creates additional needs for automobiles and their support services.

Any rational investor should clearly see the trends created by this type of exponential growth; and as dangerous as hanging on to the “typewriter” at the birth of the information age was to mechanically orient firms, we can clearly observe that a similar risk is embraced when firms focus on “physical” implantations over scalable globally connected systems.

RADICAL CHANGES

SaaS and its partner technologies will radically change the landscape of IT. They will aggregate the most high end and complex technologies to a point that the price-to-feature ratio will decrease dramatically. In fact, most tasks that require “Enterprise ERP” will be reduced to common place and will spur an entire technology integration revolution of new emerging services and support services.

For companies willing to take the “plunge,” the payback will be enormous levels of efficiency and productivity that will show up in their bottom line. For companies that chose to ignore the benefits of corporate agility, the cost will be severe; and in fact will probably be similar to the “PC” revolution changes that occurred when Dell® mastered the rapid distribution of computers. The incumbent players will fade into the far distance in terms of profitability and market share much in the same way that once household names Tandy® and Gateway® were rapidly supplanted by innovative newcomer Dell.

The value of architected synergy cannot be over-hyped. The profitability and elegance of these systems will emerge quickly once having the ability to implement “pay as you go” enterprise scalability for their core back office functions.

ACKNOWLEDGEMENTS

This article would not have been possible without the instruction and guidance from the following people:

Prof. Jordan SiegelAssociate ProfessorHarvard Business School

Prof. David J. CollisAdjunct ProfessorHarvard Business School

Jordan Siegel is an associate professor in the Strategy group at Harvard Business School. He teaches Global Strategic Management in the M.B.A. program and Economics of International Business in the doctoral program.

For the past twenty years David J. Collis has been a professor at the Harvard Business School, where he is an Adjunct Professor of Business Administration within the Strategy Unit - only the second fulltime Adjunct Professor appointed at HBS.






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WINNING THE RACE WITH

MICROSOURCINGBy Erran Carmel and Evgeny Kaganer

When it comes to global outsourcing,‘‘microsourcing” is speeding forward.

What’s puzzling is why microsourcing has not moved faster in the last decade.

We answer that question here.

Microsourcing takes place when buyers “pass the baton” of paid services, small projects or fractional tasks among a dispersed and fragmented global workforce of small providers.Microsourcing is still a small slice of the global sourcing landscape, but we see it significantly growing in the future. Our rough estimate is that in 2010 this segment exceeded $350 million in volume. There are hundreds of thousands of firms and individuals around the world that buy and sell microsourced services every year through microsourcing platforms. Many have labeled microsourcing with the label crowdsourcing, but while the latter term is useful, it is much broader in scope and doesn’t capture the contractual, or some of the dynamic, nature of microsourcing.

THE FIVE KEYS

What attracts buyers to microsourcing? We see five key reasons:1. simplicity2. large supply3. price4. immediacy5. qualityThe concept of microsourcing through marketplace intermediaries is

simple and rather intuitive, for anybody who’s been on the Internet, or used eBay. Second, there is a huge global supply of workers. On many sites, when you post an individual task or project, you get dozens of bidders within just a few hours.

The large global supply of providers, many of which are from low-wage nations, drives the price down significantly. Immediacy is provided by the same reason: the enormous global supply.

Finally, and controversially, is the quality. From our data, we did not see unusual failure rates. For example, on vWorker, 85% of projects are paid. This means that 15% of projects failed. This might not sound like a good grade but it compares favorably with the failure rate of more established services. (The famous Standish Group’s CHAOS reports consistently show high failure rate in IT projects: in the 2009 report, only 32% of projects were successful).

If microsourcing seems like such a good idea, why hasn’t it grown much more? Quite simply, microsourcing can grow through two mechanisms: the old-fashioned approach of building volume, or the more strategic approach of aggregating and scaling. Until recently, both have been hindered by a number of factors.

BUILDING VOLUME

For microsourcing to build volume, we will need to see either more buyers joining platforms, or more projects per buyer. One obstacle to the former has certainly been lack of awareness. For example, we are repeatedly surprised that whenever we explain and demonstrate microsourcing to our business students in the United States or Europe, be they MBAs or executives, awareness tends to be quite low.

But even buyers that are aware of microsourcing use it on a limited basis, or are wary of it. Microsourcing is perceived to be risky -- it requires “a leap of faith” -- as we heard from one of our executive buyers. In her organization, she has to work hard to convince colleagues to start working with suppliers they can neither shake hands with, nor train.

“I get lots of pushback when I propose microsourcing,” she told us. “As a result, in many organizations microsourced projects remain limited to work that is low-budget and non-critical in terms of completion time.”

AGGREGATING & SCALING

Traditional microsourcing models are based on dyadic relationships, consisting of one buyer, one supplier, and a well-defined final deliverable. This model is easy to monetize — the payer, the payee, and the subject of payment are all clearly identifiable — but difficult to scale. It is focused on connecting the parties but provides little collaboration or coordination support.

Therefore, the traditional microsourcing model can only handle limited short-term projects that can be completed by a single supplier. Yet, many types of sourcing involve work comprised of multiple interconnected tasks and requiring diverse supplier skill sets. Other types are not project- or task-based at all but rather engagement-based, such as support, helpdesk, and infrastructure. All this work cannot be sourced through the traditional one-on-one eBay-for-services type marketplaces.

TAKING STEPS TO GROW

The microsourcing platforms are addressing the issue of reducing risks to buyers, by making the search less anonymous and more trustworthy. Today, the platforms have built frameworks for suppliers to share their professional and personal backgrounds, show off their portfolios and earning history, and

THOUGHT LEADER


up with much thicker layers of project governance. This usually includes a combination of actual human project managers working inside the platform and a sophisticated software-enabled framework for monitoring and coordinating individual tasks. TopCoder and its community-based model of software development provide perhaps the most advanced example.

Another approach is to build communities and let members self-organize into teams to take on more complex projects. This is what an open-innovation platform Innocentive has tried to do with its global community of “solvers.”

We led this article with the question “why hasn’t microsourcing grown much faster in the last decade?” There are now many new microsourcing sites, partially inspired by the crowdsourcing notions, and together they are implementing the solutions that we described in this article. As a result, microsourcing will change the sourcing market and will begin to have significant impacts on global labor markets.

demonstrate credentials through standardized skill tests. Buyers now can also interview suppliers before making the final decision.

Next, the platforms have made the supplier work processes more visible and transparent to the buyer. Elance, for example, offers project management tools. oDesk has a sophisticated system of remote work management that monitors individuals’ online work activity and tracks how much time has been spent on each task.

Finally, the microsourcing platforms have capitalized on the natural risk reduction opportunities of multiple providers: TopCoder and Crowdspring leverage competitions where multiple suppliers work on a project for a chance to win a monetary award.

AGGREGATING FRACTIONAL TASKS

Moving to the next stage: How does microsourcing enable sourcing of services that are comprised of a large number of interdependent tasks and require more than a single provider to be completed?

The most interesting new aggregators are not on the IT side, but rather on the business processes side, such as LiveOps, CloudCrowd, and others. These sites not only serve as the middleman, but as general contractors and aggregators. They source contract labor, usually on a per hour/unit basis, and ensure selection, training, and quality control to build broad attractive service offerings for the buyer.

Moving further down the long tail, on the fractional — almost nano — scale are Mechanical Turk from Amazon and txteagle which operates in Kenya. Txteagle allocates small tasks to the mobile phone, the common interface of the developing world. These tasks can be, for example, price collection or surveys. Individuals then receive payment via a mobile money service such as the M-PESA.

TAKING STEPS TO SCALE COMPLEX TASKS

Next, comes the mightiest challenge: How to enable sourcing of more complex projects, such as those requiring highly unstructured tasks and/or significant coordination. Tackling this challenge means that microsourcing can move up the outsourcing food chain and encroach traditional outsourcing.

A number of different models exist today. For one, platforms are stepping

Erran Carmel is a Professor at the Kogod School of Business, American University in Washington D.C. and specializes in the globalization of technology work. His 1999 book “Global Software Teams” is considered a landmark in the field helping many organizations take their first steps into distributed tech work. His second book in 2005 about – what was then-- a new kind sourcing: “Offshoring Information Technology”. Since 2005 Carmel has been an evangelist for using microsourcing in business schools around the world, requiring his own students to use microsourcing in order to gain first-hand experience with sourcing. His research on microsourcing sites, using an archive of all transactions from the mircosourcer Vworker, was published in 2008 in the leading journal Management Information Systems Quarterly. He and Kaganer joined forces to study microsourcing, interviewed many microsourcing platforms, buyers, and sellers and analyzed activity on microsourcing sites.

Evgeny Kaganer is an Assistant Professor at IESE Business School in Barcelona where he teaches MBA and executive courses on IT strategy, online business and Enterprise 2.0. His research focuses on online social technologies and their impact on individuals, organizations, and business models. He has published in the Journal of the Association for Information Systems and the European Journal of Information Systems. His research on the enterprise use of social media has also been widely cited in major news outlets and blogs, including CIO Magazine, San Francisco Chronicle, and ZDNet among others. Kaganer has studied microsourcing and crowdsourcing models since 2008. In 2009 he conducted multiple in-depth interviews with executives from all major microsourcing platforms and visited a fair number of them throughout the US. He is currently working on developing a teaching case on one of the microsourcing platforms Crowdspring.


THOUGHT LEADER

ABOUT THE AUTHOR

WELCOME NEW IAOP MEMBERS

IAOP is pleased to welcome new and re-newing corporate and professional mem-bers from: Absa Bank; Accenture; ADV ; Apple; Ar-dour Consulting Group GmbH; Astra-Zeneca; Avasant; Bancolombia; Bank of Canada; BCBSF; Best Buy; Biz Plus; Booz & Company; CA Technologies; CB Rich-ard Ellis; Colliers International ; Compass America; Co-operative Financial Services; COPC; Covidien; CustomerServ, LTD; Data Control Group Inc.; EquaTerra; Estee Lauder; Eurest Services; Expedia Inc.; Fer-rovie dello Stato; Firstsource; Freedom Communications, Inc.; Freescale Semi-conductor; Genpact; Germany Trade & Invest; Hinduja Global Solutions; IBM Cor-poration; Infosys BPO; Intuit; JANUS Asso-ciates; KellyOCG; Kleward Consulting Pvt Ltd; Kraft Foods; LiveOps, Inc.; MediCall; Metlife; Michigan State University; Morri-son & Foerster; Mylan, Inc.; NetApp; North Fork Holdings; Oracle; Orange Business Services; Patni Americas, Inc.; Pillsbury Winthrop Shaw Pittman LLP; PwC; RDI; Rio Tinto; RT Enterprises of NY; RTM Con-sulting; Rural Sourcing; Softtek; Steinbeis University; Targecept; TATA Communica-tions; TEAM International; TPI; TeleTech; The Beryl Companies; The Shelby Group; ThinkSolutions, Inc; Thomson Reuters; TPI; TransUnion Interactive; T-Systems; UBS AG; Unilever PLC; Universal Music Group; University of St. Thomas; VSI USA LLC; Wells Fargo; Work at Home Vintage Employees; and Xchanging.

For information on IAOP membership, e-mail [email protected].

CLIMB THE SUMMIT!

RECENT IAOP ANNOUNCEMENTS

COLOMBIA TO HOST FIRST LATIN AMERICAN OUTSOURCING SUMMIT: IAOP AND ANDI EVENT TO FOCUS ON REGION’S CONTINUED GROWTH AS AN OUTSOURCING MARKET AND DESTINATION

With Latin America as one of the fast-growing outsourcing markets and destinations, the International Association of Outsourcing Professionals® (IAOP®) has joined with ANDI, the National Business Association of Colombia, to host the region’s first 2011 Latin American Outsourcing Summit.

The Summit will bring together IAOP’s thought leadership and global network with leaders from across the Latin American

WHAT’S HAPPENING AT THE IAOP


business community to better understand and leverage the explosion of outsourcing taking place across the region.

The event will be held May 26-27 at the Las Américas Global Resort and International Convention Center in Cartagena, Colombia, and has the support of the newly elected president of Colombia Juan Manuel Santos who, schedule permitting, expects to personally participate and address delegates.

Tailored to outsourcing customers, providers and advisors, the educational and networking event will feature three tracks: real-life outsourcing customer and provider experiences; the future of outsourcing in Latin America; and practitioner sessions exploring cloud sourcing, knowledge process outsourcing (KPO), the growing role of analytics, and how to design, implement and manage outsourcing for success.

“Outsourcing is booming in Brazil, Chile, Colombia, Costa Rica, Mexico, Peru and many other countries across the region,” said IAOP Chairman Michael Corbett. “We are pleased to be partnering with ANDI with the support of the Colombia government to host this first-ever event that will unlock the power of outsourcing for all of Latin America and for the global community of outsourcing professionals.”

Latin America’s growth is being driven by the attractive mix of cultural and language compatibility, size and quality of the labor pool, and strong government support for the industry among other strengths, says Santiago Pinzón, chair of IAOP’s Latin America Regional Advisory Board and Executive Director of the Chamber

MEMBERSHIPMembership in IAOP provides access to an extensive array of services, and just as importantly distinguishes organizations and professionals as lead-ers in the field of outsourcing. IAOP membership demonstrates a commit-ment to innovative thinking, continuous performance improvement, and to the sustaining development of outsourcing as both an industry and as a profession.

CUSTOMER CORPORATE MEMBERSHIPOrganizations that are currently outsourcing or are considering one or more outsourcing initiatives should become Customer Corporate Mem-bers of IAOP. This membership provides organization-wide access to the association’s research, training, certification, and networking programs - all designed to help companies achieve better business results through out-sourcing.

PROVIDER/ADVISOR CORPORATE MEMBERSHIPOutsourcing service providers and advisory firms should join IAOP as Pro-vider/Advisor Corporate Members. This membership provides the same organization-wide access to IAOP’s research, training, certification, and net-working programs as Customer Corporate Membership, but also includes member-only sponsorship opportunities that serve the marketing and busi-ness development needs of these companies.

PROFESSIONAL MEMBERSHIPProfessional Membership is available to individuals either as part of their company’s corporate membership or on an individual basis. This member-ship serves the needs of practitioners working in the field of outsourcing whether as customers, providers, or advisors. In addition, it provides these professionals with direct, personal access to association services.

For information on IAOP membership, e-mail [email protected].

MEMBER SERVICES IAOP membership provides access to a wide range of services designed to help you and your organization improve outsourcing outcomes.

Many of these services are included as part of IAOP’s Professional or Corporate Membership, with discounts available for use beyond the level provided. Some services are also available individually at non-member rates.

•Globalization Today - The official publication of IAOP creates the largest and best informational publication on outsourcing by uniting and tapping the collective intellect of individuals from around the world. IAOP Members receive a free subscription plus the opportunity to get published, promote products/services and advertise.

• IAOP’s Knowledge Center, Firmbuilder.com® - This online repository houses more than 600 articles, including chapter meeting presentations, conference proceedings, industry whitepapers, research articles and more.

•Chapter Network - Through its active and expansive chapter network, IAOP members can share their expertise and find knowledge on best practices for specific industry segments, topics and geographic areas within outsourcing.

•Conferences & Events - IAOP hosts the world’s best-known and most highly-respected executive conferences on the topic of outsourcing.

•Certified Outsourcing Specialist Family of Certifications - Receive 50 complimentary COS tests each year.

•Value Health Check Survey - This web-based diagnostic tool provides outsourcing customers and service providers with rapid insights to realizing outsourcing value.

•BestOutsourcingJobs.com - Companies seeking the best talent for outsourcing jobs, as well as professionals looking for employment opportunities, can benefit from this IAOP member service provided through BestOutsourcingJobs.com (BOJ).

For more detailed information, visit www.IAOP.org/MemberServices.

CALENDAR OF EVENTS

IAOP CHAPTER MEETINGSIAOP chapters provide a forum for members to collectively focus on professional development, networking, and the advancement of outsourcing within specific areas of common interest. Each chapter is led by chairs and co-chairs with deep knowledge in the area covered. IAOP members are members of the association, and not of a specific chapter, and are encouraged to participate in as many chapter meetings as they wish. Non-members are welcomed to attend any chapter meeting as IAOP’s guest to learn more about the association and its work.

• FAB 15 SAN FRANCISCO CHAPTER AND GLOBAL TECHNOLOGY INDUSTRY CHAPTER JOINT MEETING ON “APPROACH TO BUILDING A SOURCING STRATEGY AND BUSINESS CASE”

• FEB 16 PACIFIC NORTHWEST CHAPTER MEETING ON “MOVING FROM OUT-SOURCING TO A 360-DEGREE PARTNERSHIP” AND “MANAGING GLOBAL VIRTUAL TEAMS: THE TRUST PARADOX”

• MAR 17 GLOBAL HUMAN CAPITAL CHAPTER WEBINAR ON “BUILDING A WORLD-CLASS HR BUSINESS INTELLIGENCE CAPABILITY THAT IS SCALABLE AND SUSTAINABLE”

• APR 19 MIDWEST CHAPTER MEETING ON “OBTAINING VENTURE CAPITAL FOR MIDWEST ITO AND BPO ENTREPRENEURS”

To join and view a full listing of our current chapters, go to www.IAOP.org/Chapters.

of BPO&IT at ANDI.“With service providers and outsourcing clients looking for all

means to save on costs, geographical proximity as another means to cut travel expenses and minimize remote management risks, the



Latin America region joins the ranks for the competition of the growing global outsourcing market,” he says.

Many of the top 10 providers of Business Process Outsourcing (BPO) and IT outsourcing as well as a growing number of multinational corporations in the high-tech sector have successfully established or are planning to expand their operations in the region, Pinzón noted.

Companies from India and Philippines also are realizing the benefits of the nearshore location to serve the U.S. market, particularly the Hispanic segment, and increase their share in the Latin America region, he said.

IAOP is now accepting nominations for its hall of fame award to be presented at The 2011 Latin American Outsourcing Summit. Open nominations are accepted via online registration form at www.IAOP.org. Nominations may also be made directly to Pam O’Dell, IAOP committee liaison at [email protected]. The nomination should include contact details as well as a short biography emphasizing the nominees’ accomplishments in the outsourcing industry.

THE 2011 GLOBAL OUTSOURCING 100 AND WORLD’S BEST OUTSOURCING ADVISORS

The application process for the 2011 Global Outsourcing 100 and World’s Best Outsourcing Advisors was opened on September 1, 2010 and applications were accepted through November 1, 2010. The top Global Outsourcing 100 companies are announced (in alphabetical order) at the 2011 Outsourcing World Summit, and rankings will be announced in the May 23 Fortune 500 issue of FORTUNE® magazine (May 9 on sale date). Potential advertisers may find a prospectus of The 2011 Global Outsourcing 100® FORTUNE® sales prospectus for the May 23, 2011 Fortune 500 issue at www.iaop.org/FORTUNE. Or, you may contact Vic Asselin at the Fortune booth in the Summit exhibit hall or via email at [email protected].

Companies apply for inclusion on the list by completing an online application. Applications are then judged by an independent panel of experienced outsourcing buyers on four critical characteristics: size and growth; customer references; organizational competencies; and management capabilities. Applications for the 2012 rankings will open again on September 1, 2011.

CONFERENCES & EVENTS

THE 2011 OUTSOURCING WORLD SUMMIT®

February 21-23, 2011 | Renaissance Esmeralda, Indian Wells, California

EMBRACING CHANGE: HOW OUTSOURCING PROFESSIONALS LEAD THEIR COMPANIES TO SUCCESS IN THIS NEW OUTSOURCING LANDSCAPE

More than 50 industry leaders and visionaries, including Laura Unger, former acting chairman of the U.S. Securities and Exchange Commission and Sandy Ogg, former Chief HR Officer, Unilever, will delve into topics critical to your success including globalization, rural sourcing, corporate social responsibility (CSR), cloud computing, multi-vendor provider environment, knowledge process outsourcing (KPO), today’s tools & how tos, vendor management, outsourcing as a procurement discipline, transition and governance, exploring new geographies, and transboundary outsourcing and government outsourcing.

For more information on The Summit or other IAOP events, visit www.IAOP.org.

THE 2011 LATIN AMERICAN OUTSOURCING SUMMITMay 26-27, 2011 | Las Americas Global Resort and Convention Center, Cartagena, Colombia

The 2011 IAOP Latin American Outsourcing Summit is a first-of-its-kind global event bringing the thought-leadership and global network of IAOP together with leaders from across the Latin American business community. The result is an exceptional opportunity for individuals and organizations involved in outsourcing as customers, providers, and advisors to both understand and leverage the explosion of outsourcing taking place across the region.


Organizations such as Accenture; Avianca; Bancolombia; Booz & Company; CB Richard Ellis; Colliers International; Colombia’s Ministry of Commerce, Industry and Tourism; Duke University; Johnson & Johnson; Kirkland & Ellis; PwC and many others are already slated to participate. The newly elected president of Colombia, Juan Manuel Santos, has committed the support of his office and, schedule permitting, expects to personally participate and address delegates. EarlyBird: Register by March 14 to receive the early bird rate of $350 IAOP member/$375non-member.

For information on sponsoring and exhibiting, please contact Renee Preston at [email protected].

WELCOME ABOARD NEW SPONSORS!Atlantic Canada Atlantique Fortune Custom ProjectsJanus AssociatesInvestGDA and Genpact.



facility with each student who successfully completes the COP Master Class provided with a Certificate of Completion noting that they have earned 75 points toward the COP designation and fulfilled the aCOP training requirement.

Executives interested in bringing the COP program division- or company-wide are invited to contact your account executive or email [email protected] GOVERNANCE WORKSHOP NOW ONLINE

IAOPs Certified Outsourcing Professional Online Master Class now has a new companion, the Online Outsourcing Governance Workshop! Don’t have the time to attend our on-site Governance Workshop, but don’t want to miss out on gaining the cutting-edge knowledge it entails? No worries, this highly sought after one day intensive is now available online!

The Online Governance Workshop is for those who want to lead their firms in navigating the seas of high risk and increasing global government regulations.

Whether your goal is to earn 15 points toward the Certified Outsourcing Professional (COP) designation, 6 points towards recertification or simply learn all aspects of creating and sustaining successful relationships with your outsourcing partners — this workshop is for you! Register now at www.iaop-cop.com.

CERTIFICATION & PROFESSIONAL DEVELOPMENT

COP MASTER CLASS SCHEDULE

The COP Master Class is a great option for reaching up to half (75 points) of the Knowledge and Training points needed for certification, or for COPs to earn 20 recertification CEHs, or to fully complete the required training for the aCOP designation. IAOP is actively registering now for the following classes:

• MARCH 7-10, 2011: PAUL J. RIZZO CONFERENCE CENTER, CHAPEL HILL, NC• MARCH 24-27, 2011: KUALA LUMPUR, MALAYSIA• JUNE 20-23, 2011: KUALA LUMPUR, MALAYSIA• JUNE 27-30, 2011: KINGBRIDGE CONFERENCE CENTRE, TORONTO, CANADA• SEPTEMBER 19-22: INVERNESS HOTEL & CONFERENCE CENTER, DENVER, CO• OCTOBER 19-21, 2011: HARBOUR PLAZA METROPOLIS, HONG KONG• NOVEMBER 21-24, 2011: KUALA LUMPUR, MALAYSIA

Please visit www.iaop.org/training_calendar for a full list of classes and current discounts and specials.

CORPORATE PROGRAMS

IAOP’s private master class calendar is filling up with Corporate Companies taking advantage of educating their employees in-house! With the dramatic cost savings, there is no better time than now to use up your training budget.

Host an in-house class for between 10 and 25 employees, partners and customers and save on time and travel. Classroom training will be delivered by an IAOP Authorized Trainer at your



YEAR IN REVIEW

In 2010, IAOP’s members and affiliates grew to more than 110,000 and came

from 50 countries.

Sixty-five chapter meetings were held around the world; 28 meetings were

face- to-face and 37 held via webinar, enabling thousands more outsourcing

professionals to attend.

Certified Outsourcing Professional® Master Classes took place in the U.S.,

Canada, Italy, Hong Kong and Malaysia, with hundreds of outsourcing

professionals either certified or on the road to certification. In 2010, IAOP also

introduced the Outsourcing Professional Certification FrameworkTM (OPCF)

and several new certifications.

The Outsourcing World Summit drew nearly 600 outsourcing professionals

from 35 countries.

IAOP’s partners include organizations and associations from regions including

Russia, Denmark, England, India, China, Jordan, and across Latin America.

IAOP launched Regional Advisory Boards in nearly every part of the world.

Thank you for joining IAOP in this journey. Here’s to continued growth and a

successful 2011!

2010: The Year in Pictures

The IAOP Team

PAGE # COMPANY NAME URL

30, 31 Accenture www.accenture.com34 BCS www.bcs.org/opportunity0 COPC Quality Process Outsourcing Inc. (COPC QPO Inc.) www.copc.com18, 19 DATAMARK, Inc. www.DATAMARK.net10, 11 Diebold www.diebold.com2, 4, 47 International Association of Outsourcing

Professionals (IAOP)www.IAOP.org

6, 39 Kelly Outsourcing & Consulting Group (KellyOCG) www.kellyocg.com26, 27 SENCOR www.sencor.net22, 23 WNS Global Services www.wns.com

ADVERTISER INDEX

Find a Job or Post a Job at BestOutsourcingJobs.com Today!

Companies seeking the best talent for outsourcing jobs, as well as pro-fessionals looking for employment opportunities, can benefit from this IAOP member service provided through BestOutsourcingJobs.com.

The mission of BestOutsourcing-Jobs.com is to help customers source and hire the most qualified outsourcing professionals and to provide those professionals with the best job opportunities in their respective fields.

Documents

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