Landed Staff vs Local Staff

One of the big differences in the delivery and staffing model of offshored based providers against traditional onshore based providers is the use of landed staff. Aside of the whole issue around immigration and its impact on economy which has been widely discussed, these present an interesting contrast in operating model --- the landed resources are almost certainly working from client premises and are more connected to IT teams by sheer physical proximity. The local in-country staff may not always be in-premise all the time which impacts their connect.

Also, since the landed staff is in the country only for that work, and are more culturally tuned to the offshore based teams, they often have a not so busy social life which along with the work culture they are mostly tuned to, end up working more in terms of sheer hours.

There are several other interesting aspects that I have seen at closed range as I have worked in both models and will discuss those in some future posts.

CSAT Programs for Outsourced IT Services

Enterprises and service providers alike have not been able to find a consistent way to really tap into the the user perception of IT services that are outsourced to external providers. There are only a handful of them who have a well oiled framework to regular mine feedback from users of outsourced IT services, siphoning it back to the delivery teams and tracking the progress against the areas of improvement. Even there, the process is at best reactive. 

There are several variants of doing this but a lack of a consistent framework stands out --- and is so surprising that no one has really been making moves across the industry in this space, moreso with the growing trend of moving work to several countries outside the base country, multi-sourcing and other emerging trends which adds several moving parts to what was earlier a simple support model with in-house and mostly local IT support.

In most IT shops where CSAT programs run, these are mostly around service desk where a % of users whose tickets are closed are served with a 5-8 question survey to gather feedback on that experience. However there is need to include resolver groups in this or separately and also to track trends of root causes and teams scoring lower scores consistently. However this is mostly the B2C kind of CSAT if you may. The other is the qualitative feedback on a provider's ability to deliver the intended goals, service improvement and support for business which are more of the B2B kind of CSAT. These are more crucial to gather what the customer leadership team thinks of the provider and are most often modulated due to the "in-band" nature of information gathering. The teams which collect such information are part of the account relationship team and have a conflict of interest in collecting such feedback on performance which reflects their own. Also, it is not easy to standardize such B2B CSAT feedback as each client has its own unique set of requirements.

An ideal CSAT program covers both B2C and B2B CSAT feedback and analyzes these and finds trends to assess how the services are trending. A great area to improve and grow for both enterprises and service providers alike.

This news article has pegged UK as the second largest IT outsourcing market after the US:

The government has put a huge FOR SALE sign over the country’s public assets and services. According to the sharedserviceslink.com website, the bulletin board for “leaders in finance shared services”, the United Kingdom is the world’s largest out-sourcing market after the United States. The number of contracts in the UK has increased sharply by 47 per cent to 148 contracts a year since 2010. The annual contract value for this country jumped 16 per cent in 2012 to $3.75 billion! All this before the major sale drive about to take placein the NHS.

The International Services Group (ISG) states that the UK accounted for 80 per cent of all contracting out across Europe, the Middle East and Africa, making our government alone among the major European economies in using out-sourcing  as a key element in its response to austerity. Richard Vize, ofOutsourcer Eye, says that the application of cuts is dominated by “short-term thinking”. The effects of all this activity on quality or cost is unclear and there is no reliable information on the impact of cuts or out-sourcing – though these effects are visible, for example, in local government, the NHS and government agencies such as the Inland Revenue.

While EMEA was always considered the second largest ground, UK taking that cake on the back of a strong government driven initiative speaks of the growing importance of the country in the global marketplace. While the scale and growth rate are still lower than that of US, this demonstrates the prominence of the region not just in the European context but overall in the global IT market context.

Cultural Sensitization

Anyone who has been involved in offshore based outsourcing for some time, in any way, will surely have interesting stories of how lack of cultural awareness led to serious and some times just hilarious incidents. Fact of the matter is that while the common denominator that drives work to remote locations is the fact that at least in technology services, these are finally technical stuff which can be delivered by anyone technical, these closely linked to cultural aspects too.

What is not often factored in, is that these technical services are needed and provided through human interface and these provide the cultural tone to services, through the consumer or provider of these services. If there is no adequate sensitization on both or at least one side of the equation, it can often lead to misinterpretation, service deficiency or frustration. Most companies which provide offshore based services have understood this now, many the hard way, but there is still a big gap to cover and most measures are not comprehensive and do not tend to address the root cause.

Now, it is also true that it is not easy to change the cultural affiliations of people so easily and so, ultimately it comes to making people appreciate the cultural gap and having them be aware of the major socio-cultural aspects through learned behavior in an effort to match what comes naturally and effortlessly to the other party as it is part of human social and behavioral manifestation.

Bottom-line : it is very important to ensure that both enterprises and service providers appreciate this aspect and jointly work to address this in a way so that it at least neutralizes the obvious rough edges fairly consistently and is baked into the fabric of service delivery enablement. 

Pricing Models and Choice of IT Service Providers

Among the various pricing models in vogue with the offshore based IT services providers, the key ones are time and material (T&M) and fixed price (FP) models. While there may not be complete data ( or at least I have not seen), on which ones rule the most --- my personal take is that T&M contracts should be accounting for almost 80% of the contracts if not more. The rest are mostly fixed price. There are some others like device based unit pricing, outcome related pricing which may be there in pockets but mostly T&M rules the chart.

This also shows the nature of engagement --- the customer owns the risk in such contracts -- and probably s/he don't mind it as the nature of work outsourced is chopped and packetized to ensure it follows the technologies, processes and skill requirements that already exist. However as corporations move to a managed services environment, if you can rely on your provider, then to help them realize the full potential of their innovativeness and cost-efficiency, one needs to look at pricing models like fixed price, utility based, transaction based or, outcome based. However, the difference across these models (apart from how you assess the charges and the risk ownership) is also the degree of control you, as the outsourcing enterprise, would wield. So, not only does it require a mature, stable and innovative partner with a track record, but it also needs the outsourcing enterprise to agree to let go control, to varying degrees to completely benefit from outsourcing.

It is not uncommon to see most CIOs embark on a roadmap starting with T&M model, with a stated objective to move to other more deeper models gradually, but somewhere down the road that does not happen -- often fuelled by the outsourcing enterprises' staff's need to retain control or due to the lack of leading-the-curve trait shown by the chosen provider. And then, between the choice of going for a new partner in the hope that it will be different or to continue with the current one but with a lower degree of involvement ( and no transition and a whole lot of other stuff to face) organizations often choose to continue with the chosen provider.

So, it is also important to choose a service provider carefully in the first place before you let them in. It is much more difficult than shifting to a new desktop manufacturer ( which in itself is not easy either!) when it comes to changing service providers for IT services.

Where to Find Dollars in an IT environment

Where are those hidden dollars, those waiting-to-be-unchained values in an IT department? There are numerous nooks and corners where there are hidden opportunities to save. Bad times like these throw lot of opportunities to bring cost efficiency. The role of an outsourced provider is so much more critical in such situations. Of course there has to be the right level of motivation as part of the contract to motivate the provider to help the customer find oppportunities to save.

Outsourced providers present themselves with this opportunity by having a view across their engagements of common such opportunities, plus themselves running the operations of a particular customer, having the requisite information to enable such cost saving.

There can be numerous such opportunities but here is a start to list some of them. Can't cover all in this post but will take a beginning:

• Unused licenses lying in the enterprise (and many find themselves getting budgets to buy more of the same for new requirements). These are more for end user software like MS Project, Visio etc.
• Underutilized hardware in parts or whole
• Spare network bandwidth in tier-2 or tier-3 of the networks off the central network topology which is more closely monitored
• Groups of support teams (in-house and or outsourced teams) providing services very similar in nature as part of different businesses
• Multiple data centers or server rooms
• De-centralized environments making it necessary to have lumpy teams across the country or globe doing pretty much the same stuff.
• De-centralized purchasing of IT assets

This is just the beginning and more are sure to follow.