Best Practices For IdentifyingOffshore Vendors

Arup GuptaMay 4, 2016

ContentsCurrent Scenario

Risks involved in Off-shoring and issues that need to be addressed

Steps to reduce the risks of Off-shoring

Why is vendor selection important

Best practices for Offshore vendor selection

What makes a good vendor?

Top 5 Practical Needs

Training needed at the Client end

Training needed at the vendor end

Program Governance Framework

Top 10 Tips for finding the right vendor

D2E Consulting - PMO Expertise and Leadership Team

D2E Consulting – Offshore Outsourcing Framework

Q and A

Did You Know?

Over 60% of Clients feel they have not achieved the goals of the Offshore Outsourcing initiative • What to expect from the outsourcing initiative?• How to communicate the expectations to the selected vendor?

Over 40% of Offshore Outsourcing contracts are not renewed

• Is the outsourcing initiative adding value to the business?• Is the vendor aligned to the business goals of the customer?

Over 30% of Offshore Outsourcing Engagements in fact have a negative ROI. They lose money.• Is there too much re-work• Is there price escalation

Risks Involved in Off-Shoring

Service Quality• High employee turnover• Loss of managerial control

Data Security• Lack of IP protection• Lack of internal controls

Operational Inefficiency• Lack of internal capabilities/Process knowledge• Wage inflation

What are the issues?

Loss of internal know-how, loss of core group

Poorly articulated requirements

Incompatible development tools and technology

Poor process discipline

Scope creep

Culture

Turnover of key personnel

Steps To Reduce The Risks

Select Right Offshore Vendor

Training needed at the Client End and Vendor End

Set expectations - SLAs

Put a Program Governance Framework in place

Why is Vendor Selection Important?

Right vendor selectionreduces risk of failure

• Management Commitment• Process and Technology maturity• Organizational stability

Right vendor selectionaligns the goals and objectives of the two companies

• Vendor is aligned to the business of the customer• Value driven rather than cost driven

What Makes a Good Vendor?

Reputation and positive track record

Level of proven integrity

Management attitude and compatibility

Relationship closeness and feeling of trust

Technical and managerial competence of project managers

Communication openness

International quality certifications

Basic Process For Selection

Identify a set of vendors

Publish RFP

Shortlist vendors

Proposal Presentation by Vendors

Site visits

Price negotiations

Finalize vendor list for selected areas

Top 5 Practical Needs - CSFs and Performance Measures for Vendors

Integrated solution offering through alliances

Leadership skills and management team

Innovative solution offering

Strong business impact at Customer end / case studies

• Helps Customer generate significant internal efficiencies after solution/product deployment quickly

• Helps Customer identify quick levers of growth through deployment of solution

• Patented solution makes it a unique offering

• Solution offering holistic- scalable and portable

• Strong management team with global outlook and adept with strong communication and influencing skills

• Attractive ROI • Business impact 1.5 x-thro efficiencies

– Improved bottom line• Business impact x through topline

growth

• Solution cannot be replicated/copied easily-entry barriers

• Reduction of overall TCO for enterprise

• Issue Reduction – RCCA• Offers quick deployment-bug free• TCO low and easy to support

• Vision aligned to CSF• Can convert deals 1/8 strike rate

CSF identification CSF drill down Performance measure drill down

1

2

3

4

5Delivery excellence • six sigma rigor , tools and

methodology• CMMI level 3 or higher process rigor

• Reduction of cycle times in enterprise and improved TATs

• Zero defects during implementation/support

Training Needed At the Client End

The Strategists (Senior managers responsible for deciding the right approach) • Understanding Off-shoring in today’ business models• Off-shoring and business strategy• Off-shoring – risk assessment and management• How to produce an off-shoring game plan

Deal Makers (Senior and upper level middle managers who establish specific objectives)• Setting criteria for identifying suitable vendors• Vendor selection processes and methods• Cross cultural communication (with target country guidelines)• Cross cultural negotiations (with target country guidelines)• Establishing Service Level Agreements

Training Needs At the Client EndManagers

Managers (Middle managers responsible for everyday oversight)• Distance management and virtual teamwork• Knowledge transfer techniques• Cross cultural change management and

conflict management• Measuring ROI/Balanced Score card metrics)

Training Needs At the Vendor EndImplementers

Onsite• Working across distance via technology• Cross cultural communication

Offshore• Working across distance via technology• Understanding client requirements and standards• Cross cultural communication

Program Governance FrameworkObjects

Contract Management

Risk Management

Business Process Management

Program Management

Change Management

Program Governance FrameworkContract Management

Obligation Capture (One time and/or

repititive)

Dependency Mapping

(interrelated obligations)

Acceptance criteria for deliveries

Program Governance FrameworkRisk Management

Performance track record

including CSAT

Policy and Regulatory Compliance

Privacy, Confidentiality and Security

Supplier Audits

Program Governance FrameworkBusiness Process Management

Application development

and maintenance

processes

Standards and Tools

Configuration Management

Release Management

Program Governance FrameworkProgram Management

Preparation of work plans and schedules

Management of Deliverables

Scope control

Reporting to steering committee

Issues and conflict resolution

Program Governance FrameworkChange Management

Institutionalization of knowledge

from past engagements

Retention of knowledge from

current engagement

Reuse of knowledge for

future engagements

Quality & Process improvement track

• Peer reviews• Final inspection• Check point controls deliverable

adherence• Defect prevention• RCCA• FTR • Compliance and configuration audits• Adherence to quality goals and KRA

Vendor Management/Contract Mgt/Risk

&Controls track

• FMEA and Risk Analysis• Adherence to contract and

deliverables• Adherence to SLAs if any• Vendor escalation matrix and key

stakeholder connect

Delivery /execution track

• Program baselining•Work plan& schedule•Management of deliverables •Scope control•Scheduling steering committee meetings and status reporting to steercom.

•Weekly status reporting and dashboard reporting for overall project health.

•Issue, Risk and conflict resolution-Mgt alerts

•Check point and control reviews (CCR)• Escalation framework and ops reviews

Change Management/KM

track

•Stakeholder mapping and analysis•Stakeholder engagement•Expectation setting of user teams•Change Management workshops•Newsletters and Program updates•Institutionalization of knowledge from past engagements

• Retention of knowledge from current engagements

• Reuse of knowledge for future engagements

PMO Services- Key tracks to monitor Program Governance and Controls

Top 10 Tips for Finding the Right Vendor

1. Right Size– Find a vendor who is not so large that you are a small fish, but also find a vendor large enough to

handle growth and issues.2. Make sure the values, cultural dynamics and styles match.

– How -by randomly selecting a few of the staff and question them about the culture of the vendor. 3. Look for Thought Leadership

– More than just a technical resource, a business value partner– Do they blog, write whitepapers, teach, etc.

4. Find a Partner who asks about your business objectives and Goals, not just technical needs

– They should understand what you are trying to accomplish. If not it is doomed to failure.5. Ensure communications and reporting is consistent among teams

– How by auditing an ongoing project or two to see if process is being followed6. Look for a region that fits what you need

– AGILE vs. Traditional, 27/7 operations, and other business needs7. Hire an independent company (D2E) to evaluate the facilities of the shortlisted

companies. – Someone with experience running quality centers.– Have them do periodic audits of the facility and team.

8. Visit the city and visit the location. – Is it accessible, safe, would you want to work there?

9. Find out who your resource manager will be at the offshore site. – Why? This position carries great weight. Get a powerful resource manager.

10. Don’t cheat the process. – It takes longer, but it is proven

D2E ConsultingOffshore Outsourcing Framework

Establish processes and structures

• Application rationalization and prioritization• Tools finalization• Knowledge transition and knowledge retention• Value delivery to client’ business

Execution to set up ODC and deliver value

• Infrastructure• Organization structure• Capability assessment and capability building

Deliver value to customer’ business using D2E’ Governance and program management frameworks

D2E ConsultingLeadership Team

Arup Gupta, CEO and Chairman-Ex President TCS North America

Alan Kocsi, Director, Ex-GE

Subrata Dutta, Director, Strategy, Planning and Operations –Ex VP General Electric

Hugo Yepez, Ex VP Johnson&Johnson US

Pavan Krishnamurthy, Director Investments - Ex PwC

Bill Aimetti and John Hammitt, Advisors

Krishnendu Sengupta Director Global Sales

Q & A

Thank You