Global delivery
- Article 1 of 3
- Global IT Delivery, October 2006
Businesses are getting much more sophisticated in their choice of outsourcing locations, looking to create an optimal balance of both local and offshore capabilities
Page 1 | Page 2 | All 2 Pages
Skills are one of the main reasons for hiring an outsourcer, so is frequently one of the main determinants in the location of a nearshoring office. Access to universities that produce high-quality graduates is one of the reasons why EDS, Fujitsu and LogicaCMG continue to develop their South Wales locations.
Jules Collett, head of consumer helpdesks at Fujitsu Services, says that universities in Newport, Swansea and Cardiff give the company a fresh range of graduates to recruit from each year. But he also cites the advantages offered by another Welsh phenomenon: “One of the other areas we benefit from is that frequently, people will go away to university but return back to South Wales once they graduate.” This provides an even greater pool of resources from which to recruit. The company also finds it easier to retain staff than elsewhere: employees are able to progress their careers more easily, since they can readily move between the company’s offices in Cardiff, Swansea and Bristol thanks to the local transportation links.
Tony Lewis, LogicaCMG’s senior director for Wales, says that his company is equally fortunate: it faces only a 3% attrition rate per annum in its South Wales offices and, like other firms, sees a short-term sickness rate of only 2.9%. “We’re not having to chase recruitment. We don’t have to carry a lot of excess staff to cover sickness.”
Equally, he adds, it would be a mistake to think of nearshore or offshore locations as simply a cheaper option that doesn’t have the skills or facilities of a premium location like London. The company’s Swansea office, for example, is regarded as a centre of excellence and has various accreditations, including ISO14001 and ISO17001. “We’re audited every six months to demonstrate we continue to have the skills.”
To benefit from these near-shore locations, however, requires considerable investment in management structures and processes. While few companies have actually altered their structures to reflect blended delivery, they have, however, gone to considerable lengths to get these geographically separate resources working together.
Explains Infosys’s Chaturvedi, “It’s easy to say I can work in India, the Czech Republic and the UK. But to do the same piece of work in three different locations requires a lot of business skills. It requires the ability to actually be able to break down a project into its parts. Not everybody can do that. It requires process efficiencies and process maturity. We put tools and frameworks around that, of course, but without that intellectual property, you can have all these locations, but you’ll never be able to deliver end-to-end across those locations.” Infosys, Wipro, EDS, Fujitsu, LogicaCMG and others all lay claim to their own particular methods for optimising the blending between offices, the exact methodologies used being their own unique selling points. Forrester Research, which has analysed these different approaches, says that all are unique, with varying metrics and processes with few commonalities.
Determining the right locations for execution also requires more than simple cost calculations. “It depends on very careful evaluation of the client’s needs,” says EDS’ Poree. “In most cases, how we deliver it is at our discretion, but a large number of clients get more involved in the choices and decisions over how we deliver and where we deliver from.” Often, clients may will be unaware exactly how or from where the project is being delivered, only that it is delivered – assuming everything goes according to plan.
Infosys’s Chaturvedi says that the blend will often change over time, with onshoring being prevalent at the earlier stages of an application development contract, for example, but as the application matures, application maintenance is passed to offshore locations where greater cost savings can be made.
A change in the blend may also occur as clients become accustomed to the concept of outsourcing and become less fearful about farshoring. But frequently, the nature of the work will determine fairly readily the optimum location. Says Wipro’s Ten Nijenhuis, “If you’re talking about non-mission critical COBOL work, send it to India. You don’t even have to think about it. But if you’re talking about customisation of SAP, with user involvement and pilots, you keep it in Europe.”
The blended model of delivery is likely only to become more common and sophisticated as outsourcing becomes more mature. Companies will continue look for additional nearshore and farshore locations that will give them greater capacity to meet client needs as well as cost savings. And clients will continue to get more of the best of both worlds from their services providers.
Page 1 | Page 2 | All 2 Pages