by:
Ronald Escanlar
Friday, February 03, 2012 |
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Outsourcing Research / Trends
The rise of Anonymous and LulzSec, two of the most notorious hacker groups in the world today, had shown that cybercriminals are increasingly becoming sophisticated in their attacks against government and corporate websites that host sensitive data.
The breaches in security that happened last year to Sony’s PlayStation network, when thousands of user info were compromised, and the hack attack that happened on Internet security firm VeriSign two years ago, show that even with the best tools and the best people, cybercriminals work 24/7 to exploit vulnerabilities in the virtual world.
With money to hire Internet security specialists to manage and protect precious, virtual assets, large companies have the resources to defend themselves from cybercrimes. What about small and medium-sized businesses? How will their websites, their information assets, fare against hackers?
Outsourcing has given birth to specialty firms that provide knowledge-based services to other companies, such as accounting firms, human resources agencies, and even IT services. Small and medium-sized businesses that do not have the requisite resources can immediately set up virtual defenses against cybercriminals by outsourcing their IT services.
According to Small Business Center of Fox Business, an increasing number of small companies are turning to managed-security services providers for their IT security needs. These providers, composed of IT security veterans armed with the latest Internet security technologies, offer cost-effective solutions - a more viable alternative to establishing an internal IT security department.
Companies are also expected to increase their budget for managed-security services - from $8 billion in 2011 to $14.9 billion in 2015, as quoted by the article in a report by research firm Gartner, Inc.
Contracting the services of a managed-security services provider only involves the cost of the service. On the other hand, even if a company has the budget to create its own IT security department, the decision would be cost-prohibitive due to the steep cost of equipment and the high demand for IT security experts.
Outsourcing security services also enables a company to focus on their core services. Instead of shifting resources towards protecting their virtual assets, the same resources can be used to improve product lines or strengthen service offerings.
Managed-security services providers offer a set of services that can be customized for a client. A customer can take advantage of cloud technologies, opt for equipment installed to their sites or even go for an effective combination of cloud services and equipment to get the service they need. Aside from customized services, providers also offer flexible rates - this can help a company quickly adjust their operational budgets relative to market conditions.
Protection against cyberhacking does not need to be expensive. Outsourcing IT security to a managed-security services provider is cost-effective as it provides flexibility in managing expenses and more time to develop core services.
by:
Sarah Joson
Tuesday, January 31, 2012 |
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Outsourcing News
NetworkWorld.com recently released an analysis of Information Services Group’s (ISG, previously TPI) 2011 quarterly statistics report, where data revealed that the sizes of contracts in the information technology outsourcing (ITO) sector are shrinking for the past decade. Moreover, smaller contracts, which are valued at around $100 million or less, are believed to have ballooned three times their size since 2002 and have now surpassed medium to large deals.
The report from ISG likewise showed that since 2009, the smaller IT deals-bracket has been accounting for 70 percent of the total contracts, a trend that started years back. Furthermore, even if the number of signed deals during 2011 jumped eight percent from the previous year and has increased 85 percent since 2005, the overall values of signed contracts decreased marginally every year during the fourth quarter and for the whole year since 2010. The total decline was at six percent or $66 billion.
John Keppel, ISG’s Partner and President of research and managed services, said those who are new to the business process outsourcing (BPO) industry favour smaller contracts as the clients are more vigilant of the quality and capability of organizations. In fact, those who know their way around in the ITO sector are now more inclined to ink smaller contracts. He added that clients nowadays are trying to apply multisourcing or the process of isolating their ITO processes into several sections, and outsource each vertical to a different provider, instead of hiring just one provider.
Keppel warned that even if multisourcing is an ideal model, it comes with several major challenges:
Poor Management of the Multisourcing OperationThere are several problems in an ITO operation which can be brought on by the clients. Some of which are mismanagement of hired providers and having no sense of ownership of responsibilities whatsoever.
This is where service integration comes in handy. It means collectively managing multiple IT service providers internally to streamline the entire ITO process. The process should be able to alleviate performance, quality, and cost issues that may affect an operation’s objectives. It can either be rendered by a third party provider or managed internally.
ITO clients who are already established in the industry are likely to develop a system in managing different IT providers. Control over the multisourcing model is very crucial, which is why proper delegation of tasks and responsibilities should be worked out long before the operation starts. The providers should also align their processes with the clients’ goals and expectations should be discussed before drafting a contract.
Keppel said since globalization has paved the way for ITO and BPO, multisourcing will be one of the foremost models that will be used by customers.
Vague SLAsContract ambiguity will remain an issue as customers are still getting used to the idea of multisourcing and only a handful have had the experience of making use of the model. This will also result to ineffective service level agreements (SLAs).
Security IssuesTrepidations over intellectual property and data security can affect the growth of an operation. More often than not, further development in a multisourcing operation is hampered if service providers disagree with one another.
Expectations and Job Descriptions are not Properly IdentifiedUsually, when plans miss the mark, the providers blame each other or the customer. This often results to precious time lost in trying to find a proper remedy for the situation, which also costs money.
by:
Sarah Joson
Thursday, January 26, 2012 |
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Category:
Outsourcing News
Since technology is constantly evolving, companies - especially small to medium enterprises (SMEs) - have a hard time coping with the latest trends. Keeping technology up-to-date and having what the big players have not only empower the smaller organizations but also keep business offerings fresh and more marketable to consumers.
For SMEs, having to upgrade the technology means more overhead costs as it is always changing. But most players in the SME division cannot afford to continuously invest on temporary features, which is why some of them consider outsourcing minimal or their entire IT operations.
Clive Longbottom, Service Director at Quocirca, shared with
executivebrief.com other alternatives that can be adopted by SMEs to resolve their IT needs.
Weighing in on the Outsourcing Option Companies that do not outsource have one thing in common - they have full control over the entire operation, which means triumphs and downfalls will be credited to them. The downside of not outsourcing, however, is they should be able to provide ample facility to accommodate IT equipment. The other one is having adequate technological know-how in managing the operating systems and maintaining the facility. Lastly, keeping everything economical and congruent with the business’ needs is also considered a struggle for SMEs.
Segmented Outsourcing for SMEsOutsourcing a segment of an operation, like support, to a third party provider is probably the easiest way to alleviate issues internally and maximize the potential of a company’s IT infrastructure. Larger organizations are often the ones that make use of this by hiring systems integrators like IBM, CSC, and HP to manage their data center fully or otherwise.
By doing so, they can have a flexible IT environment and lesser issues to deal with because they now have a supplier that will shoulder the tasks for them. In outsourcing, service level agreements (SLAs) are also customized according to the needs of the company, usually covering recommended and basic processes like replacement and repair of equipment, root cause analysis (RCA), and base problem identification, along with remediation where possible and the overall asset life cycle management from the installation, regular systems checkup and replacement, depending on the coverage of the warranty of the kit.
SMEs are still accountable for the Data center and IT Equipment.When SMEs outsource the IT function, they will be given the option to keep the equipment in-house or be located in a shared facility for all the SMEs’ IT equipment. But since they are sharing the space and in fact, the owners of the IT equipment and software, SMEs are still accountable for them. SMEs are also given the option to adopt the design presented to them by the provider. This reinforces the fact that SMEs need to have basic knowledge in creating the appropriate environment for their IT infrastructure. If an SME decides to outsource IT and opt for the co-location setup, third party providers are expected to manage the facility, power distribution, uninterruptable power supplies (UPS), cooling, internet connectivity, and physical security of the data center.
Have the Service Provider do it All for You.Another popular model is the hosted one. SMEs can also acquire the services of a hosting supplier, which will provide the location (whether shared or private) and IT equipment.
One of the most talked about versions of hosting is the cloud where it acts like a virtual data center, which means it is accessible almost anywhere, although the leading model is still SMEs renting IT equipment, along with the operating system like Linux or Windows, and gradually adding applications as the operation goes. The host manages the facility, equipment, and operating system, while the SME only looks after the applications. Granted SMEs opt for this model, they can acquire or rent physical or virtual equipment (depending on the needs of the business) and even hire popular providers like Memset, Rackspace, UK2, and 1&1.
by:
Ronald Escanlar
Friday, January 20, 2012 |
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Category:
Outsourcing Research / Trends
Outsourcing as a business strategy continued to mature last year as companies faced challenges in the global marketplace. However, outsourcing, just like any business strategy, is not capable of solving a company’s woes by itself. As a tool, outsourcing is only as good as the organization that wields it.
Companies that want to explore outsourcing to stay relevant in the marketplace may think about 10 tips that industry website Business Finance says can help organizations in deciding whether to outsource or not.
Results versus process. Outsourcing, according to Business Finance, has two types now - “black box” and “white box”. Black box outsourcing refers to results-oriented outsourcing - SLAs, SOWs, and service deliveries are designed to deliver results, with less emphasis on how the results are achieved. White box outsourcing, on the other hand, is process-oriented - the outsourcing framework is designed to maintain efficient and effective processes.
Create the criteria before issuing RFPs. To maintain an objective approach and at the same time, streamline the outsourcing evaluation process, ensure that outsourcing goals and objectives are set in place before issuing any Request for Proposals (RFPs). The company knows their system best - weaknesses and all - and they should offer this info to any prospective outsourcing service provider.
Take charge of bidding. Do not let the outsourcing service provider dictate how the negotiation progresses through pre-packaged services that do not specifically consider the company’s unique requirements.
Check the resources of the outsourcing service provider. Top service providers even suffer from a varying level of quality among their employees. Choose a service provider not only because of its credentials, but also because of the quality of its staff.
Peg transition costs to real market values. Transition costs of outsourcing are usually underestimated, as change management costs and losses due to transition delays are not factored into cost equations. A comprehensive outsourcing transition plan will ensure that hidden costs are revealed.
Take advantage of innovation. Due to technological innovation and process improvement, most service providers are increasing their profit margins yet offer the same rates to their clients. With a properly-structured outsourcing agreement, clients have much to benefit from their providers.
Be prepared for change. Transitions involve teams of people who may be working with each other for the first time. The complexity of the whole operation may require forming a transition task force and even the hiring of transition specialists. As with any process, the transition phase must be organized with milestones and quantifiable factors.
Create SLAs that are relevant to the organization. Too much metrics can actually complicate Service Level Agreements (SLAs), resulting to lost productivity hours and administrative nightmares. Establish few yet relevant metrics that contribute towards making the outsourcing agreement as productive and efficient as possible.
Do the homework first before negotiations. Clearly outline the role and responsibility of each member of the negotiating team. Identify possible deal breakers, and draw up a list of unfeasible alternatives that the provider may offer.
Don’t lose focus - the negotiation is about to outsource or not. Companies may take up outsourcing without really realizing what they are signing on with a very aggressive outsourcing service provider. The outsourcing solution is not for everyone - it can only be as effective as the company relying on it.
by:
Sarah Joson
Thursday, January 19, 2012 |
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Category:
Outsourcing Research / Trends
Gareth Pritchard, CEO of BPeSA Western Cape, shared with ITNewsAfrica.com his predictions for the business process outsourcing (BPO) industry in 2012. He cited major innovations and of course the economic downturn as key indicators of what lies ahead in the BPO landscape.
India’s no longer the go-to voice hub.
2011 had seen several UK-based customer service companies bringing call center processes back home from India to reduce the risk of losing customers over the quality of service. For them, cutting costs during a bootstrapped economy is one thing, but losing a customer because of a transaction gone wrong is more critical. They are also keen on spending more just to keep their customers. Nearshore providers such as South Africa can also benefit from this as they can use their time zone and cultural affinity to their advantage in the voice-based outsourcing sector.
Unemployment level leads to creation of US anti-outsourcing bill.
With the likelihood of another recession and no evidence of the unemployment levels improving, Republican Tim Bishop (D-N.Y.) and the Communications Workers of America (CWA) are rigorously working on getting a House Bill approved that aims to discourage US firms from outsourcing to offshore locations. It would also restrict government aides such as loans and grants. It is predicted that outsourcing destinations such as India and the Philippines will be affected as these countries mostly provide voice-based and back office services to the US.
In outsourcing, quality comes first before reduced costs.
Outsourcing will still be seen as a valuable tool and will definitely grow in 2012 as businesses brace for the recurrence of another economic depression. Business executives will find ways to cut operational costs without sacrificing the quality of work. In fact, a study from Horses for Sources stated that 25% of organizations will remedy the looming recession with outsourcing as it has proven its worth to the services industry.
The cloud will prevail.
Technology is definitely one of the important components of a company’s success. The cloud is seen by numerous companies, especially by small players, as a viable solution in terms of cutting costs and incurring other ground-breaking benefits. The demand for the cloud will grow, as well as the service itself in 2012.
Social media is now widely integrated into business plans.
In recent years, social media has become a great tool for businesses to address customer-related concerns. It also helps in the marketing efforts of companies, and in making a mark in the online world.
Also, this trend has paved the way for other types of customer support in 2012. Call center services will be a mere addition to a bigger package that includes various platforms such as chat, social networking sites, and micro blogs where customer concerns can also be addressed in a timely manner, just like in voice-based services.
by:
Karen Cayamanda
Monday, January 16, 2012 |
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Category:
Outsourcing Research / Trends
While data security concerns stop some business owners from outsourcing IT-related functions, many remain confident that the process will be beneficial to their operations. Aside from cost reduction, the most obvious reason for outsourcing, clients can utilize talent and expertise that may not be readily available locally. Outsourcing also enables clients to tap new markets and bring their products and/or services closer to their target customers.
Company owners who have been outsourcing IT functions are enjoying the benefits of the process. However, nowadays, many offshore service providers are downscaling their on-site team and resources. Visa application of employees and profit margins are considered common reasons service providers reduce the number of offshore IT employees who coordinate with clients regarding outsourced work.
Stephanie Overby shares at ITWorld.com five tips on how to keep IT outsourcing on track despite the decrease in on-site employees:
Take a look at the process design.
There should be IT professionals who will fill the crucial roles of the operation for it to be effective and successful. For short-term requirements, companies may need to look for employees on a contractual basis, according to Amneet Singh, Vice-president of global sourcing for outsourcing consultancy firm Everest Group.
Develop a communication plan for users.
Singh said companies need to have a change management or communication plan to handle consumer inquiries and needs in case there are changes to the outsourcing delivery model.
How about nearshoring?
Esteban Herrera, Chief Operating Officer of outsourcing analyst firm HfS Research, said there are service providers in other locations that do not have to deal with concerns in visa applications. Companies are advised to look at nearshore options for better knowledge transfer and project management.
Ramp up your in-house technological capabilities.
Service providers may utilize more advanced technological platforms to make up for smaller on-site teams. Singh said outsourcing buyers need to make sure that they have the right setup and proper training on how to use high-end IT tools.
Review contract pricing.
Now’s the time to talk about pricing terms, especially when the service provider is reducing the number of its IT employees. It pays to discuss better ways on how to make IT outsourcing a great business solution for both parties.
by:
Ronald Escanlar
Thursday, January 12, 2012 |
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Category:
Outsourcing Research / Trends
Business processes are often streamlined to thorough efficiency through strategic decisions meant to leverage existing resources and processes. However, these strategies, bound by time-proven frameworks, are limited in scope and effect by the amount of discipline and loyalty to process among stakeholders - from the encoder to the Chief Information Officer (CIO).
A high level of discipline in adhering to IT processes directly translates to improved efficiency in routine IT processes and faster resolution of IT-related challenges. How does a company achieve that level of discipline? Chris Pfauser, Principal Consultant at Compass, shares with sourcing advisor TPI the following tips:
Clear-cut roles and goals. Enable the IT staff to have well-defined roles and responsibilities within the process flow. With a clear set of functions among employees and managers, identification and resolution of issues become faster. This also gives the added advantage of viewing challenges from the perspective of the whole organization, and not just within the isolated context of the IT department.
Process ownership. Accountability emanates from ownership, and when a process is clearly owned by someone, the blame game is stopped. Process ownership can also serve as motivation for results-driven leadership, since accountability is clearly illustrated when it comes to efficiency and improvement initiatives.
Resolution time versus response time. Gone are the days when record-keeping only meant activity tracking. Records are now being analyzed to see what areas of a process need improvement. A quick resolution time is now considered better at improving processes compared to a quick response time.
Catalogued services. With processes outlined and resolution times drawn up to real scenarios, a catalogue of services can be created. Documenting these services is an important task towards realizing an efficiency-driven strategy in managing IT services.
Costing tools. The impact of costing decisions can be immediately derived from a costing sheet. The costing sheet, based on the service catalogue, improves decision-making at all levels, since rising costs affect operational efficiency.
A mature IT process demands a high level of discipline among its stakeholders in adhering to the process. Such a process enables a company to stay competitive and efficient in the global market.
by:
Ronald Escanlar
Wednesday, December 28, 2011 |
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Category:
Outsourcing Research / Trends
Multinational and large companies have their own IT departments due to the big role that IT plays in their business processes. However, IT has permeated our daily lives, from our personal finances to our utility bills. Any important transaction now is recorded beyond mere paper documents - a financial account has a hard copy and a “soft” copy.
In such context, small and mid-sized businesses need IT support more than ever. However, SMBs do not have the budget to spend on an IT department. Thus, many SMBs have turned to outsource their IT needs to a service provider.
Finding the right IT service provider is also akin to finding the right employee - there is a need to thoroughly screen service providers to get the most out of an outsourcing relationship. In an interview with InformationWeek, TeamLogic IT Vice-president for IT Vince Plaza named four questions that SMBs can ask of prospective IT service providers.
What makes you better than other service providers? Being shy of asking the right questions will not give you the best outsourcing deal. It’s also a way to test a provider - providers which know their services well will take advantage of this opportunity to showcase their company.
What will you do to help my business keep pace with the competition? As the global marketplace gets smaller, companies are also becoming more competitive among themselves. Will the service provider be able to enable your company to keep pace with modern technologies?
What will you do to give my business a fast ROI? An IT service provider should provide more than the hardware and software, says Plaza. Quality service providers enable business owners to understand how their investment in technology will help their ROI rate accelerate.
Who will provide support when my business needs help? Working with a service provider means you also have to know how they work. Who provides support when problems crop up? How fast do they act on a problem? Does the person have the right credentials to help you solve an issue?
These are just general questions for a prospective outsourced IT deal - your business will provide you with more specific questions, such as the number of your IT equipment, the scope of work that needs attention, software deployment, among others. Location and vendor partnerships are also major influences in choosing an IT service provider, although most service providers can provide support to major technologies, i.e. from Apple, Google, and Microsoft.
by:
Sarah Joson
Tuesday, December 27, 2011 |
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Outsourcing Research / Trends
Now that we are treading the last days of 2011, the year when the IT outsourcing industry saw smaller deals, customers were doubtful of the process, and cloud computing was talked about a lot, it is believed that 2011 developments might resonate throughout 2012. However, economic issues will still take its toll on the entire sector.
At CIO.com, Stephanie Overby listed down 12 IT outsourcing trends that may be seen next year, according to industry experts:
1) International firms are set to look for other locations besides India.
Phil Fersht, founder of outsourcing analyst firm HfS Research, said India will see slower growth. Cost efficiency will no longer be the main reason international companies outsource offshore. They will now consider expanding their skills and knowledge in back-support and other processes by tapping into countries like Brazil, Malaysia, Mexico, South Africa, Romania, and Bulgaria.
2) Expect sterner IT security.
Mark Ruckman, outsourcing consultant at Sanda Partners, predicts “2012 will be the year of security”. He believes that sooner or later, one of the numerous IT service providers worldwide will experience an embarrassing security breach, which is why he thinks outsourcing firms will definitely find better ways to protect their client’s data.
3) Application development will likely be sourced from the US.
Financial service firms have long sourced fragments of their codes from offshore providers, but will realize that it is actually more affordable to do so by establishing captive centers or acquiring the services of third party providers in secondary US cities.
4) IT outsourcers will try different things.
Everest Group believes IT service providers, specifically the ones offshore, will find new and innovative ways to counter the pressure brought about by pricing issues to reinforce growth and profitability.
5) Failure to put backsourcing words into action.
Steve Martin from Pace Harmon predicts companies that are fed up with procuring IT services offshore will make impulsive decisions to the point of scheming a plan to bring back work in-house, only to realize that it’s too much for them.
6) IT Outsourcing clients might axe account managers.
Phil Fersht of HfS Research believes account managers of IT service providers should not focus on sales to the point that the core requirements are brushed aside. There is a need for account managers to think about not just the revenues but building relationships as well.
7) Opportunities in Infrastructure building.
Offshore IT providers are set to expand their service offerings by trying their hand at infrastructure building. They have actually been working on developing the process and honing it to move past application development and maintenance work.
8) It’s time for small players to shine.
Outsourcing providers will try to bank on smaller enterprises as they have exhausted their leads from the Fortune 1000 pool.
9) IT vendors will remain fixated on labor arbitrage.
Outsourcing buyers will be looking for more factors other than low costs before signing deals. Service providers, on the other hand, will still focus on keeping costs low.
10) The cloud will be more defined.
The hype around the cloud will definitely mellow down as IT providers shift their focus on improving the service by calculating the risks and providing the service in areas where clients need it most. Stricter regulations for the cloud will also be implemented by 2012.
11) Outsourcing buyers will be on guard for another recession.
The decisions for improvements and expansions by outsourcing buyers will most likely be put off until they are confident enough in the economic situation. Most of them will see large contracts as a business solution that entails a lot of risks, said Everest Group, and added that there may be slow activity during the first half of 2012. However, there’s a great chance that it’ll gain stride in the following months.
12) 2012 will be made up of M&A combos.
Fersht of Hfs Research said providers will avoid large mergers due to scarcity of the business model that they actually need and want. One example is a flexible structure that can accommodate expansions and reductions.
In the US, Fersht sees large providers that have merged are making use of cloud-based tools. According to Ruckman, there’s also a possibility that three mid-sized companies will merge and make up a large IT service provider.
by:
Ronald Escanlar
Thursday, December 22, 2011 |
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Outsourcing Research / Trends
Many IT outsourcing service providers today are offering innovative, highly customizable solutions for companies that seek to use outsourcing as a strategic business tool to remain relevant and competitive in a global marketplace.
However, some of these service providers market their services using irrelevant and outright archaic marketing tools - tools that came out of a traditional and static marketplace. Industry website CIO compiled ten of the worst marketing strategies used by IT outsourcing service providers in making sales.
Solutions packaged for the provider’s own benefit. Instead of offering clients with solutions that specifically solve their problems, some IT outsourcing service providers present packaged deals that only solve part of the client’s problems. Outsourcing consultancy firm Pace Harmon principal Marc Tanowitz says providers must propose solutions that are parallel with what the client wants.
Sales that talk too much. Clients come to an outsourcing service provider to seek solutions from experts, not from sales people who focus on hollow statements on EBITDA impact and other irrelevant issues. According to outsourcing analyst firm HfS Research COO Esteban Herrera, although salespeople are critical in the process, they should let the subject matter experts directly speak with the clients.
Boring PowerPoint presentations. Everybody now does a sales pitch with slides. It may pay to stand out from the crowd - a straight, nonchalant conversation with clients about what their companies need and what the service provider can do to fill those needs. Herrera says clients remember those who actually spoke with them and started a conversation.
Misleading introductions. Some outsourcing service providers bring along a VIP on an initial client meeting, creating the impression that the VIP will be working on their project. Sadly, the impression is wrong from the start, and the client feels short-changed. Herrera suggests bringing along to the meeting a customer who can personally testify to how the service provider has helped his or her company.
An expert in everything. Sanda Partner Founder Adam Strichman comments that industry-specific expertise is 85% marketing - some sales teams peddle expertise that is actually a label only instead of actual experience. Strichman says supplying answers to a client’s business headache is better than proposing solutions that are off-target.
Closing a deal to be changed by the legal department. Usually, outsourcing deals begin as fair, verbal agreements between client and provider, until the provider’s legal department draws up the document. IT service providers can include lawyers early on during the negotiations to thresh out key definitions and only include what is needed for the contract.
Big discounts just to close the deal. Intelligent clients know that surprise price drops are not exactly healthy for the business. Two things come to mind when big discounts are suddenly laid on the negotiating table - either service levels will suffer due to the lower profit margin or the sales team was playing them. Transparency in negotiating the contract, especially in pricing services, contributes a lot towards a healthy business relationship.
Slow presentation for a big finish. A company executive wants to quickly know how an outsourcing service provider can help. Do away with all the excess information drawn up on documents - a business wants to know how to be more efficient and competitive.
Persistent calls and visits. Repetitive follow-ups are annoyingly unproductive, says KPMG Advisory Services Principal Ron Walker. A simple rule of thumb - three calls will do. If they are interested, they will definitely call back.
Selling the deal to the higher-ups. Most salespeople spend more time selling a deal to their executives rather than to their clients. Experts say the smarter thing to do for a sales team is to familiarize themselves with a client’s need in order to draw up a deal that effectively delivers solutions.
