Offshore outsourcing Vincent CAYEUX Vincent Cayeux

Offshore outsourcing Vincent CAYEUX Vincent Cayeux

Offshore outsourcing Vincent CAYEUX Vincent Cayeux

1. 2. 3. 4. 4. In the World In France The main actors What? Why? Where? How? The Impacts for the companies 1. 2. 3.

4. The Risks, The Key success factors The hidden costs Savings Vincent Cayeux

The maturity (2001-2005) Software activity SW Maintenance SW development IT production IT administration outsourcing Data centers backup The processes The call centers The Business Process Outsourcing (BPO) Vincent Cayeux

Worldwide market Intentions to use offshore services: More than 50% of the big companies in the USA (+ 5000 employees) More than 40% in Europe 12 to 15 KMUSD in 2005 (2,8% of the IT services in the World) USA: 80% of the offshore World services demand UK: 70% of the European demand India: 80% of the total offshore services revenues

The most important fields of activities are : The SW activities (maintenance, development) The BPO The IT infrastructure outsourcing Vincent Cayeux

A majority of Time and material contracts Rigid Social protective laws Importance of the language and culture Preference of Nearshore (North Africa/Eastern Europe) Local IT services leaders have developed Factories in regional towns Unitary price reduction split of the resources between several projects/costumers industrialization of processes -> Effective cost reduction and productivity improvement Vincent Cayeux

The countries (80 to 90%) Vincent Cayeux

to be answered: What? Why? Where? How? Vincent Cayeux

SW Integration? IT infrastructure? Business Process? Vincent Cayeux

Reduce the costs (20-40%, 19% in average) Increase the flexibility Reduce the delivery time Improve the service availability (24h/24, 7d/7) Improve the quality (CMM,) Look for specific talents Increase the production capacity Global sourcing approach (more suppliers in more countries) Vincent Cayeux

Vincent Cayeux USA, UK) Pro: very experienced (CMM, strong processes, references), large capacity Cons: cultural and language differences, time zone, distance Canada (<-> USA) China (<-> Japan)

Nearshore Morocco, Tunisia, Senegal, Mauritius: Pro: French speaking, same time zone, close, low prices Cons: small qualified population, less experienced Tcheky, Slovakia Pro: cost, Time zone, distance Cons: less experience, language Spain Vincent Cayeux

On-site / offshore Pivotal provider Offshore ressources Vincent Cayeux

Transfer the spec to the B.O Follow the realization Validate the developments Deliver to the Client Back Office Perform the developments Update the documentation Test Deliver to the Front Office Vincent Cayeux

HR aspects preparation Jobs losses, jobs evolution-> heavy training External/Internal image External/Internal communication customers, employees, shareholders, partners Costs control Hidden costs Vincent Cayeux

The pre-requisite Process industrialization Local outsourcing experimentation International experience Telecom and IT infrastructure preparation Clearly define the targets Why and what offshoring? Quantify the expected gains (cost, quality, flexibility, skills) Have a strong support from the management

Work hard the How? And Where? aspects Consider the transfer phase as an investment Start small and grow up smoothly in projects size and complexity Perform a contingency planning Build specific indicators for management dashboard Vincent Cayeux

Risks Hidden costs Communication problem Cultural and language misunderstanding Distance, Time zone Loss of productivity Telecommunication, infrastructure Country risk Geopolitics (Political or Economic instability, War, Natural risks) Laws Taxes

Data security Intellectual property risk Image Change management HR risks Contractual issues Loss of control of the outsourced activity Loss of competence Vincent Cayeux

Hidden costs

Due diligence Contract Transfer costs Project management Loss of productivity Real Menxdays costs Telecommunication, Travels Telecom and IT infrastructure Data security External Advices Reorganization, Process review, Training Job losses Contractual Reversibility clause Vincent Cayeux

Savings Source: Groupe Alpha Average of savings: 19% Source: Groupe Alpha Vincent Cayeux

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