noventum supports provider check in India
// Cloud Computing, IT-Outsourcing
After the strategic ground work of each outsourcing deal, there is the decision for a new provider
Motivation and added value of outsourcing activities nowadays differ from those in the early years of this important business segment of the world of IT. Originally, the purpose often was to unburden the IT budget. Through standardisation of platform or implementation of ITIL processes throughout, providers were able to achieve considerable cost-savings, which initially even made one or the other bumpy start into the outsourcing business forgivable.
Outsourcing has changed the world of IT and today, internal IT landscapes are often also leaner, and tried and tested processes of the service provider are also an in-house standard.
Everywhere where networks, storage, servers or whole data centres work smoothly over long distances, be it in-house or at an external provider, the prerequisites for potential outsourcing deals are undergoing change. The quality of the provider offers is once more factored via the price and here the providers from India, China or Malaysia are at the forefront in the ranking.
It‘s not all about the money
Cloud computing and other virtualisation techniques ensure that mixed models become practicable. Specifically, this means that individual important processes may remain completely within the company or are only placed with very secure providers in a domestic context, while other components of IT operations can be catered to from international offers.
Despite all the consolidation and growing experience in dealing with the different outsourcing components, in the end, the basic situation is the same for the customer: Outsourcing is the exception, learning takes place with a specific individual case, and the result is individual.
In addition to the process security of the outsourcing process, one essential aspect is the actual expertise and selection of the provider. Due to the market in transition, it becomes necessary here that a detailed, expert and timely pre-selection and selection of the providers take place.
Detailed country overviews, such as they are presented, for example, by international analysts time and again, take into consideration a few basic facts. Essentially, these are:
- Costs (labour costs, operation of the infrastructure, taxes, but also the spread of corruption, i.e. indirect costs)
- Workforce (expertise of the specialists, share of academics, language skills)
- Business environment (investment climate, ability to interact in specific cultural context, political situation, telecommunications and Internet infrastructure, energy supply, legal situation)
With this, an initial foundation may be created, based on which the selection of the circle of participating providers can be performed. But the country overview can only identify which regions of the world can provide the services. The quality of each provider has to be assessed in the specific individual case for the respective task. Often, this assessment requires an analysis on-site.
Exact knowledge is prerequisite to provider change
noventum consulting has been working in the IT outsourcing context since 1996. In addition to detailed process knowledge that is nourished from a multitude of sophisticated outsourcing deals, the analysis of specific global providers has also increasingly become the topic of consultation by noventum.
Testing is performed by both sides
Outbound Due Diligencene
The location of the provider can have a significant impact on the success of the outsourcing and should therefore be taken into consideration when selecting a provider. The analysis should pay attention to the „cultural fit", but also to factors such as availability of resources, costs, stability and reachability. The due diligence is intended to provide the client with certainty that the provider fulfils the prerequisites at the planned locations to supply the service in the necessary quality. Typically, this is done by calling references and conducting on-site visits. During the on-site visits and/or tours [of the facility] the focus then is on the infrastructure (telecommunications and Internet infrastructure, energy supply, physical access control, cleanliness …).
Inbound Due Diligencene
As part of requests for quote, especially in the IT and BPO area, in a lot of cases providers perform a due diligence of the client. Important aspects are, e.g. the number, profile and salary of employees to be assumed, efficiency of the processes, age and value of the IT assets such as hardware (servers, network components) or maintenance contracts. Generally, the quote requestor can be provided with a binding offer only once this has been done.
The current examples outlined below document projects in which noventum consulting was selected as the leading consultancy for the support of the outsourcing project. Within the context of these client projects, the critical assessment of providers in India was repeatedly on the agenda of the noventum consultants.
Example 1: Infrastructure outsourcing
This outsourcing dealt with the support of the complete data centre infrastructure (several thousand servers and databases, >5 PB storage and the corresponding monitoring and backup platforms). In this case, the on-site visit was performed immediately prior to the final decision. Visited were various delivery centres of the providers in North and South India participating in the request for quote. Here, the focus was on meeting the planned teams and testing their subject matter qualification as well as ensuring that the providers are equipped with strictly separated work areas for individual customers. In this context, it was also checked whether the provider can ensure that, for example, no documents can be taken out of the delivery centre and that no cameras / camera phones can be brought into it.
Furthermore, another focal point was on the availability of the building infrastructure such as Internet connection, power supply, etc.
Example 2: Outsourcing of application development and support:
In this scenario, the task consisted of moving the application development and support for a large company group to India. Here, the due diligence had already been performed at a very early stage of the project in order to identify, in advance, those providers that did not fulfil the prerequisites to be taken into consideration in the further progress of the request for quote. Several providers in the Indian growth regions were visited. Here, important aspects were the work environment on-site as well as the functioning of the teams. Also checked was whether the company culture was a match for the culture of the ordering company.
Asking the right questions
The outsourcing market is international, and as such the practices and conventions in the interaction of client and provider also [have to] conform to international standards. In addition to the process planning of the outsourcing project, the noventum outsourcing consultation also ensures a detailed knowledge and experience in dealing with providers both domestically and abroad. Various checklists that were developed based, among other things, on the noventum governance and compliance testing know-how (ISO 20000/27001 etc.) and the practical experience, serve as tools for checking the providers‘ qualification. The support in the pre-selection and selection of the correct providers as well as a continuously updated view of all important trends and changes in the outsourcing market are therefore part of the noventum IT outsourcing consultation offer. This also includes that noventum is participating in defining and establishing international standards for the outsourcing market (c.f.: novum 12/2012 „Benchmarking is an acquired skill").
Large international providers seek to be close to their customers
Economic and political developments in the highly industrialised countries of the world do already today have a strong impact on the offshore outsourcing business. The protection of workplaces is one of the topics of discussion in the European Union. In the area of technical jobs, the remuneration differential between industrialised countries and newly industrialised countries will become increasingly smaller in the decades ahead. For the large international providers, the alternative will be to move closer to the customers. This is, in part, already happening, but does not yet include the delivery centres on a large scale. For the foreseeable future, it will therefore remain important to take a look at the „production facilities" on-site in each individual case, and check how they are organised and how much performance capacity they have available.