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					MOOS Workshop Amsterdam 30-31/3/2006

Making offshore outsourcing sustainable

Tom De Bruyn – HIVA-KUL - 1

MOOS Workshop Amsterdam 30-31/3/2006

Making offshore outsourcing sustainable

MOOS Management Manual

Tom De Bruyn – HIVA-KUL - 2

MOOS Workshop Amsterdam 30-31/3/2006

Objective of Manual

Making offshore outsourcing sustainable

•

Target group: is addressed at employee representatives in IT and business services sector Objective: – Information necessary to understand OO process – Identification of bottlenecks which can render OO unsustainable from employee perspective – Advice on what target group can do to address these bottlenecks

•

Tom De Bruyn – HIVA-KUL - 3

MOOS Workshop Amsterdam 30-31/3/2006

Strategy of Manual: content

Making offshore outsourcing sustainable

• Handbook:
– 3 chapters: elaborate information – Checklist: summary of handbook

• Cd-rom and website: background information

Tom De Bruyn – HIVA-KUL - 4

MOOS Workshop Amsterdam 30-31/3/2006

Strategy of Manual: planning

Making offshore outsourcing sustainable

• • •

28 March: first draft of handbook 30-31 March: evaluation of handbook in workshop End of May:
– – – Final version of handbook Lay-out CD-rom and website

•

1-2 June: development of training strategy (workshop Copenhagen)

Tom De Bruyn – HIVA-KUL - 5

MOOS Workshop Amsterdam 30-31/3/2006

Content of handbook (1)
  Introduction The Basics of Offshore Outsourcing
      What is Offshore Outsourcing? What is offshore/outsourced? Who offshore/outsources? What are destination countries and regions? Why do companies offshore/outsource What is the impact?

Making offshore outsourcing sustainable

Tom De Bruyn – HIVA-KUL - 6

MOOS Workshop Amsterdam 30-31/3/2006

Content of handbook (2)

Making offshore outsourcing sustainable



Analysis & Risk Assessment OO Processes:
     Different phases in OO process Economic & financial issues Organizational dimension Cultural issues Legal issues

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MOOS Workshop Amsterdam 30-31/3/2006

Content of handbook (3)

Making offshore outsourcing sustainable



Participation & Social Issues
   Involvement of employees Social issues Strategies for destination countries



Glossary?



Checklist
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MOOS Workshop Amsterdam 30-31/3/2006

Many faces of Offshore Outsourcing

Making offshore outsourcing sustainable

• Offshore: geographic dimension • Outsource: legal dimension

• Offshore outsourcing: legal & geographic dimension

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MOOS Workshop Amsterdam 30-31/3/2006

Many faces of Offshore Outsourcing
External provider
Making offshore outsourcing sustainable
Ownership structure

Joint venture

Contracting / staff augmentation N/A

Pure outsourcing cosourcing

Offshore outsourcing Offshore development centres Captive shared services Foreign country

Completely owned subsidiary

Internal delivery Shared services onsite

Offsite in same country Geographical location

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 1

Making offshore outsourcing sustainable

1. Signs to identify potential OO initiatives
– – – – – – – Prior OO initiatives Restructuring Jobs and activities Research Business trips Investment Career development

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 1: activities

Making offshore outsourcing sustainable

• • • • • •

All jobs are at risk Characteristics of activities Value chain Wages OECD list Information Week list

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 1: activities

Making offshore outsourcing sustainable

Knowledge intensive services Infrastructure services Services with customer contact Operative services
Transaction administrator Insurance matters Credit applications Credit card administration IT administrator Document administrator Administrative clerk Accounting Invoicing Pay system administration IT-support technician Call-center Support on Internet Market researcher Communication expert Telemarketing Network technician Database technician Systems administrator Software maintainance Tester IT-programmer IT-security responsibility Process analyst Customer management Sector analysis Soft-ware developer R&D Innovation Design System designer Project manager Risk analyst

The value chain

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 1: activities
Offshore IT categories

Making offshore outsourcing sustainable

Application Development & Maintenance New Feature Development

Quality Assurance

IT Support Services

Implementation Services

New Product Engenieering

Application testing

Help desk support

Product lifestyle management Consulting services Prototype development

Product specifications

New application development Old release maintenance

Compatibility testing Regression analysis and bug testing Building test suites

Problem resolution Remote diagnostics

Implementation services Version management

Packaged application customization

Documentation support

Technology evolution

Professional services

Application maintenance

Application hosting

Documentation

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 1: activities

Customer facing

Enablers IT or business architects Business analysts Business technologists

Infrastructure jobs Security

Making offshore outsourcing sustainable

Application developers

Web-apps programmers Data warehouse & business intelligence specialists ERP & CRM pros

Data modelers Network managers & engineers

Business-process modelers Project managers

Wireless engineers & administrators Software engineers

Database developers & analyst Help-desk specialists

Disaster-recovery specialists System auditors & integrators Storage administrators

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: questions 2 and 3

Making offshore outsourcing sustainable

2. Preventive labour market policy 3. Motivation to OO
• Management level • More information • Use of existing tools and organisation to obtain info

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 4

Making offshore outsourcing sustainable

4. Possible options and analysis
• • • • • Ask different options Check analysis Carry out own analysis Evaluate options Hire experts

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 4: organizational costs

Making offshore outsourcing sustainable

• Communication • Coordination

• Control
• Organisation of knowledge transfer

• Cohesion
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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 4: economic & financial issues

Making offshore outsourcing sustainable

• • • • • • • • • •

Wage differentials Search & information costs Negotiation & contract costs Restructuring costs Personnel costs Travel costs Infrastructure costs Costs for transferring knowledge Efficency costs Governance costs
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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 5

Making offshore outsourcing sustainable

5. Evaluation of strategy and plan
• • • • • Time frame Budget Other resources Division of tasks Social plan

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 5: social plan • No compulsary redundancies
Making offshore outsourcing sustainable

• If redundancies inevitable, then:
– – – – Continuation of work until other job Otuplacement within company Outplacement outside company (temporary) outplacement to intermediary

 FNV Bondgenoten example

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 6 & 7

Making offshore outsourcing sustainable

6. Pilot project 7. Analysis of selection of provider and destination country
• • • • Due diligence Legal issues Cultural issues Knowledge of destination country

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 7: legal issues

Making offshore outsourcing sustainable

• • • • • • •

Intellectual property protection Labor & employment rights Export control restrictions Privacy & data transfer retrictions Government approval Taxes currency

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 7: cultural issues

Making offshore outsourcing sustainable

• National / regional differences
– Language – Language use – Negotiation and discussion customs

• Corporate differences

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 7: knowledge of destination country
Poor Fair
Israel South Africa

Good
Northern Ireland

Very Good

Excellent

Making offshore outsourcing sustainable

India China

Czech Ireland Republic Poland Hungary Russia

Language Government Support Labor Pool Infrastructure Educational System Cost Political Stability Cultural Compatibility Data/IP Security Overall Climate

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 8

Making offshore outsourcing sustainable

8. Strategies for destination countries
• Find information on destination company • Code of conduct in compliance with OECD Guidelines • Contact point • Implementation and monitoring of code and/or guidelines

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MOOS Workshop Amsterdam 30-31/3/2006

Checklist: question 9 & 10

Making offshore outsourcing sustainable

9. Negotiation of contract
• Service level agreement

10. Transaction management and evaluation

Tom De Bruyn – HIVA-KUL - 27