Next & Best Practices in Global Sourcing

From the NASSCOM India The 21st Century Employee Global Services LIVE!
Leadership Forum 2011 Pg22 Incentive Program Pg24 Case studies Pg26

globalservicesmedia.com

February 2011

NEXT & BEST
PRACTICES IN
GLOBAL SOURCING
Thought-leading Practitioners’ Viewpoint
The State of the Outsourcing Industry .............. Pg 8
Key Imperatives in Global Sourcing ................. Pg 11
Collaborative Sourcing................................. Pg 13
Supply Risk Monitoring ................................ Pg 16
Cloud and its Implications on Service Delivery ... Pg 18
Business Process Integration In The Cloud......... Pg 18
Accelerating Transformation through BPO.......... Pg 19

GLOBAL SERVICES A CYBERMEDIA PUBLICATION
An integrated media platform which connects the
various constituents of the global technology and Pradeep Gupta
business processing services industry ecosystem. Chairman & Managing Director
Cyber Media (India) Ltd.
E. Abraham Mathew
DIRECTORY OF SERVICES
President
NEWSLETTER Ed Nair
Editor
A regular digest of key industry happenings.
ed@cybermedia.co.in
DIGITAL MAGAZINE Satish Gupta
The fortnightly digital magazine features research Associate Vice President
reports, articles and experts’ views. Available on satishg@cybermedia.co.in
www.globalservicesmedia.com Smriti Sharma
smritis@cybermedia.co.in
WEBINARS
Sruthi Ramakrishnan
Global Services’ web-based seminars aim to impart sruthir@cybermedia.co.in
useful information related to outsourcing indus-
try in the form of presentations and discussions Niketa Chauhan
niketac@cybermedia.co.in
by industry specialists.
Virendra Kumar
RESEARCH virendrap@cybermedia.co.in
We deliver indepth analysis and research reports
on sourcing subjects. OFFICES
Global Services
MICROSITES
Cyber Media (India) Ltd.
Online resource center designed to provide CyberHouse, B- 35, Sector 32
focused content on special subjects to the out- Gurgaon-122001, India
sourcing community. Tel: +911 24 4822222
Fax: +911 24 2380694
EVENTS
Contact:
From multi-day, high-level, resort conferences to globalservices@cybermedia.co.in
intimate breakfast discussions we offer a number
of opportunities that connects the outsourcing Disclaimer
community. All rights reserved. No part of this publication may be reproduced
by any means without prior written permission from the publisher.
CUSTOM PROGRAM
Customized services rendered through different LETTERS TO THE EDITOR
media platforms. Send letters to ed@cybermedia.co.in, or to
any of our writers. We reserve the right to edit
OSOURCE BOOK all letters. Postings submitted to our blogs and
A directory of global outsourcing service providers. letters to the editor may be published in our
www.osourcebook.com digital magazine or Website.

February 2011

FEATURES

8
NEXT & BEST PRACTICES IN
GLOBAL SOURCING
Taking the VMO from Endangered to Empowered 8
Rewriting the Rules of the Outsourcing Industry 11
Negotiating a transformational Deal 13
How to Manage Supplier Risks 16
Managing an Outsourcing Relationship 18
Assessing and Understanding Cloud-based Models 19

22
FROM THE NASSCOM INDIA 24 xperts
LEADERSHIP FORUM
By Sruthi Ramakrishnan & Smriti Sharma DESIGNING THE 21ST CENTURY
INCENTIVE PROGRAM TO DRIVE
EMPLOYEE ENGAGEMENT
26 By Allan Schweyer,
GLOBAL SERVICES LIVE! Center for Human Capital Innovation
Where and even whether incentives and rewards programs have
NEW IT & APPS PLATFORM 27 a place in the modern workforce is being questioned, because
Client: Verso Paper Corp Provider: Dell Services skeptics believe the program outcomes and impacts are becom-
ing increasingly more difficult to measure, manage, and control

SOX COMPLIANCE 28
Client: Unilever Provider: Capgemini

G
GLOBAL SERVICES DIGITAL MAGAZINE
N
Next Issue:
T
The Truth about the Contact Center Rebound

here to stay? What is behind the rebound- pent up demand or
h
n
new growth areas? Which will be the market sweetspots for
this industry?
t
F
Find out these and other contact center truths and trends in this
March special story.
M

EDITOR’S NOTE
The Tale of Two
Conferences
I attended Nasscom’s annual India Leadership Forum, NILF 2011, after a
gap of six years; years that were quite eventful in shaping the outsourc-
ing industry.
The event continues to be one of the best business conferences in the
country. I have three measures for a good conference: how physically tired
I get, the net number of business cards I exchange, and the number of
pages I fill in my notebook. The NILF 2011 scored very high at least on
the first two and I did take back some good notes.
Six years later, the Indian outsourcing industry’s optimism and enthu-
siasm seems intact. The mood was certainly upbeat with global companies
like Accenture and CapGemini also joining the celebrations. It has always

ED NAIR has been Nasscom’s intention to get the leaders of the Indian industry
come together to celebrate the success of Indian outsourcing. Nothing
Editor wrong with that, but the industry could do well with a bit more intro-
ed@cybermedia.co.in spection and roadmapping for the future.
In the intervening years, I got to see the global dynamics of the indus-
try evolving and got a closer look at the buy-side perspectives. Looking
through that lens, India’s optimism needs to tempered. There is the need
Client priorities are to understand that not all answers lie here nor do all opportunities.
shifting and there McKinsey’s Noshir Kaka was dead right in pointing out that there is
is no consistent no cause for ‘India Shining’ anymore. He cautioned that client priorities
are shifting and that there is no consistent correlation of the benefits of
correlation of outsourcing to business impact. He added that we have been focusing on
the beneﬁts of areas like SLAs, price, and cost that do not seem to matter and ignoring
outsourcing to areas like outcome, innovation, and customer satisfaction that we do
need to care about. In summary, it is time to have the right priorities, the
business impact. This right incentives, and the right metrics.
is the opportunity for This is not to say that India’s future is bleak or its days numbered.
India to reinvent and Rather this is the opportunity for India to reinvent and innovate once
again.
innovate once again. Cut to another conference that happened late January in New York.
This one had a buy-side focus. The predominant flavor here was the need
to look for transformational benefits from global sourcing, the need to
manage supplier risk, the need to scan continuously for new offshore
locations, and the need to measure and manage vendor performance on
far more sophisticated metrics beyond cost and SLAs.
It is for anyone to check the match between the two sides of the story
and decide the priorities. .GS

Key Imperatives in Global Sourcing

Taking the VMO
from Endangered to
Empowered
Building an empowered VMO (vendor management ofﬁce) is
becoming a key imperative in the global sourcing of services

V
endor management capabilities play a big part 1. Identifying and reducing maverick
in ensuring a successful sourcing relationship. spend
Satisfaction with a vendor is generally much This requires some introspection on the client side- ‘Who
more aligned with the buyers’ ability to govern are my vendors? How much am I spending with each? Are
that relationship than with the vendor, the contract signed there inconsistencies in pricing across business units? Are
or the way the contract was negotiated. Thus building an there opportunities to consolidate? What percentage of
empowered vendor management office is becoming a key spend does not map to an order, an invoice, or a contract?’
imperative in the global sourcing of services. “Ability to Vendor consolidation research by Forrester shows there is a
succeed in new (business) models has a lot more to do with lot of low hanging fruit– paying maintenance on hardware
your governance than with some of the other things that the client does not own anymore, several vendors doing
we may be starting to think about,” says Christine Ferrusi the same project– especially in large complex organizations
Ross, VP & Research Director, Forrester Research. that use a lot of services.
But vendor managers– the crucial cogs in the vendor
management machinery of a buyer organization– are now
becoming an ‘endangered’ lot, according to her. She cites “If all you are to
three reasons for this. Firstly, vendor managers are now
fewer in number. Multi- billion dollar vendor manage- the supplier is
ment organizations today have only 2- 10 vendor manag-
ers on an average, leaving too few people to handle too
a contract, and
many sourcing projects. Secondly, new business models that’s all they
like cloud and SaaS (Software as a Service) are making
sourcing portfolios smaller and smaller, thereby increas-
are to you, then
ing the number and changing the type of suppliers to be you’ll be won-
dealt with. Finally, post- recession, everyone is saying that
the VMO will become more powerful within a sourcing
dering if it (the
organization. But business units, the sourcing group- when relationship) is
it is sometimes different from vendor management- and IT
are all putting hurdles in the way of this relationship. “So,
even worth improving,”
though a lot has been done, we are not out of the woods
yet. There are some structural and organizational issues
which still remain,” Ross says. Christine Ferrusi Ross
Shifting the VMO from the ‘endangered’ to ‘empow- VP & Research Director,
ered’ category is not very difficult. All it requires is some
clear and focused thinking on the clients’ part. Ross gives Forrester Research
a three- point formula for this:

8 GlobalServices www.globalservicesmedia.com February 2011


Another very important question is– ‘How are you technology solutions? More importantly, do the buy-
tracking against your savings goals?’ One tool which could ers let them do so?
help in tracking this is procurement software specifically Here too software can help measure the performance of the
with the ability to manage services procurement. vendor, but falls short on risk analysis, like measuring the
financial stability of the provider and what criteria should
2. Tiering (grading) vendors based on be used for it. These are things that the buyers have to do
performance and based on risk- themselves as the software is not there, and the data is not
Most buyers have a model to track vendors, financial available in a cohesive way yet.
viability, etc. It can be used to track things beyond finan- Risk can be a very amorphous concept; there are spe-
cials, like relationship and service, and innovation. The cific kinds of risks. Data is required in certain specific cat-
latter being a variable concept, it can be tracked through a egories to understand the risks associated with the supplier,
scorecard with questions like- and the risks he might put the client at.
Does the vendor participate in strategic planning ses-
sions? This is more about whether the client wants 3. Streamlining the contract management
them there in the first place, and whether they added process
value when they were part of these sessions. CLM (Contract life-cycle management) software is a good
Does the vendor make innovative and actionable way of offsetting cycle-time bottlenecks. It is a big part
recommendations? of ensuring compliance, because the buyer can measure
How well does the vendor bring industry-specific the vendor’s compliance against a contract. “Teaching
expertise to bear? Offshore vendors are not considered everybody who comes in contact with the vendor consist-
to bring industry-specific expertise, as compared to ently on vendor governance practices is really important;
traditional global multinationals. Also, a lot of provid- because a lot of times, it is really just a matter of people not
ers are getting good at this, but buyers need to under- knowing what to ask for,” says Ricci.
stand what is it that they want when they demand Sometimes, it is possible for contract life-cycle manage-
industry-specific expertise from their vendors- is it a ment to actually be an inhibiting factor. Typically, that’s
technology capability that the industry uses a lot, or is when:
it some business value? There is no CLM tool in place.
How well does the vendor drive collaboration Paper-based processes dominate in the organization.
across your company to streamline processes and/or

Fig1. Types of Vendor Risk Data Required for Vendor Tiering

Source: Forthcoming, “Supplier Performance Management Trends, 2010 To 2011” Forrester report



Limited standards, templates, and best practices are in BUILDING AN EMPOWERED VMO
place.
Focus on improving supplier master data.
Getting Innovation from (Existing) Service Measure vendor innovation.
Providers Selectively use tools and 3rd party data
for risk management.
Once the above mentioned VMO backbone is in place,
Create a next-generation playbook.
focus should be on building relationships with the ven-
dors, and the specificities therein. Especially where the
buyer does not have the luxury of starting over with a new BUILDING VENDOR RELATIONSHIPS FOR
provider, rebuilding relationships to include innovation INNOVATION
should be a priority.
1. Refocus the relationship on mutual needs- what you can personally do to make them more
Rather than being simply contract- based, the cli- successful at your company.
ent- provider relationship should be based on mutual
needs, more personal than coldly business- like. “If their latest security assessment was completed within
all you are to the supplier is a contract, and that’s all the past 12 months.
they are to you, then automatically you are two arms
lengths away from each other. Then you’ll be wonder- with the biggest footprint and ensure the information
ing if it is even worth improving,” says Ricci. tells you the true story of what those vendors are
Once both the parties are clear about each others’ needs, doing for your company.
it is fairly easy to align them. What the vendor wants
is to be profitable and to have a big relationship (large 3. Set performance metrics together-
contract) with the client; what the latter wants is to be Expectations from both sides should be realistic. Only
able to have fewer providers. “It is really about mini- those aspects which are mission-critical should be
mizing those areas where you are different and maxi- measured and tracked. Vendor managers can be really
mizing the areas where you are the same,” says Ricci. helpful in deciding which these aspects are.
For this, articulating your expectations, especially when Also, making buyer- vendor objectives shared will
it comes to innovation is imperative. Once the provider make both sides want to succeed. “Making them (ven-
is clear about what the client thinks innovation is, how dors) want to help you (clients) succeed has got a lot
the business is going to measure innovation, then they to do with helping them be proud of the great things
can have a much more productive conversation. they did, getting them recognition internally for that.
2. Meet your compliance requirements- But ensure they address failure as well,” says Ricci.
Prevention is the new wave of protection, considering Verbal appreciation can help boost vendor morale too.
its easier to upgrade to current compliance and secu- “Everyone wants to be valued. Saying ‘that’s what I
rity requirements, than to lose money and business paid you for’ isn’t the most motivating thing”.
efficiency due to compliance or security failure.
Security is everyone’s responsibility, just like gov- Bringing the VMO from ‘endangered’ to ‘empow-
ernance. Right from making sure that the con- ered’ needs focus not just on a vendor, or the VMO,
tractor doesn’t bring in a sub- contractor without but on the whole sourcing ecosystem. “When you (the
informing, the sub-contractors face the same security buyer) think about innovation, think about the new
requirements as internal employees, making sure that opportunities you want to take advantage of. Think of
employees know what they can and cannot discuss the whole ecosystem, think of the program of vendor
with the provider- security is everyone’s responsibility, management, of the way you negotiate with vendors
particularly when it comes to information and data on a day to day basis, of the portfolio of suppliers
security. you work with. Putting this whole ecosystem together
To keep up with compliance requirements, it is will help you innovate and take advantage of the new
necessary to be on good terms with certain entities, opportunities,” advises Ricci GS
like regulators, internal and external auditors, and
corporate and information security. This would also Excerpted by Sruthi Ramakrishnan from the
be helpful for clients to judge how fast their suppli- 2011 Global Services Conference session “Key
ers can keep up with changing regulatory compliance Imperatives in Global Sourcing of Services for the
requirements. Next Decade”


The State of the Outsourcing Industry

Rewriting the
Rules of the
Outsourcing
Industry
When the rules change, the game often gets
more exciting and rewarding. So it is with the
global outsourcing industry. Excerpts from
Global Services Conference 2011 keynote by Atul
Vashistha, Founder and Chairman, NeoGroup.

A
fter years of rapid growth, the economic reces- significant change. In the key markets- like Brazil, India,
sion brought in many changes to the outsourc- China- the inflation is close to 8 to 10 percent. In 2009
ing industry. Constrained budgets for technol- and 2010, the raises for employee was near 5 percent or
ogy led to careful spending on discretionary below and in 2011 they are expected to be near 12 to 15%.
areas and reduced scope for new projects. Deal sizes started The cost structure is changing quickly for these suppliers.
to shrink, buyers started to ask for more with less, and One of the key points to be noted is that outsourcing is no
vendor line-ups started getting rationalized. New rules longer being done by functional groups.
started getting written. It is for both the service providers
and buyers to understand these to make global sourcing a The New Uses of Outsourcing
lever for business value. A year back, the CIO of Applied Materials was asked to
lead a program called Future Apply; his job was to leverage
Changes in Supplier Dynamics the knowledge of IT outsourcing and apply it across the
During 2009 and 2010, most suppliers had a significant company. The goal was to look at ways in which is how
reduction in the pace of revenue growth; from 25 – 30 can you significantly transform the way business is done
percent annual growth to just about 5 percent or therea- or function is done using outsourcing.
bouts. However, their profits went up significantly. This In Procter & Gamble, the role of CIO is that of Chief
means that for the first time in industry, suppliers, espe- Business Officer, the goal is how can you leverage out-
cially offshore-driven, learnt how to better manage their sourcing to change the way business is done. The CIO is
business. When they were gaining 25 percent revenue they also Chief Procurement Officer.
paid no attention to their operations, in the last few years When Electronic Arts did outsourcing, the number
the economic downturn forced them to tighten their focus one reason was not to reduce cost, but to take opera-
on operations. They became more efficient, their bench is tions in 20 countries operations and create one single
highly utilized compared to previous years. Thus, the sup- finance function; they felt outsourcing was the best way to
pliers are in better position today. do it.
This transformation that was visible in 2009 and In 2004, when everyone was against outsourcing, E
2010 is not over. Last two months of 2011 have seen a Loan - a company based out of California- gave their


The State of the Outsourcing Industry

customers an option: process their loan in US at cost X 2. Accenture has 72000 people in India, IBM has over
and estimated time of 60 days; or get it processed off- 100,000. Similar scales have started to emerge for
shore for cost less by a quarter and time of less than 60 companies in Mexico and even in Colombia. It is
days. Over 70 percent of the customers chose the offshore starting to see scale happen where gravity is shifting.
option. E- Loan thus found a different way to compete. 3. There is renewed interest in domestic locations, this
doesn’t mean offshore is dead but many companies
What Buyers Want? where culturally offshore may be a challenge, are
Santy Sharma, IT Services Lead- Strategic Sourcing, Cargill starting to find low-cost locations. Locations like
Inc articulated, “Simple factors for us whilst outsourcing Jonesboro, Ann Arbor etc. are becoming more attrac-
i.e. cost optimization is not at the top; cost optimization is tive supplementary centers.
built-in. The first focus is flexibility with resources, moving 4. The biggest change happening in the outsource world
away these resources from day-to-day work and putting about which most people haven’t thought about but
them to work in the area of our core competency. Second most are struggling with is to manage the transition
focus is getting a free access - without investing or chasing from fixed price to managed services, which is con-
the technology - to best practices and best methodology. tracting for services instead of contracting for bodies.
Third and most important factor is business innovation. From staff augmentation to managed services, the
Definitely, cost optimization plays a role, but these three focus is on SLAs and not resources. The focus is on
top our charts as in why we want to go outsourcing.” performance. The significant change that happens
More than 50 percent of new products launched by when this is done is that people are no longer manag-
Johnson & Johnson consumer products are developed with ing the resources on a project. They are focusing on
partners. Highlighting on what J&J looks for in a partner, outcome and to focus on outcome one has to focus on
Julia V. Santos, Head of Global Business Optimization the drivers for that outcome. However, the customers
& Contracting, Johnson & Johnson Group shared, “The have made the switch to managed services, but govern-
way we look at our partners is slightly different. We know ance models have not evolved. Suppliers have to think
that we cannot do business alone, we look at our partners of how can they help the client to transfer to managed
as our extension. Several years ago, sourcing was all about services because it is good for the client. But if you’re
reducing cost. We quickly comprehended that this not the client, then how do you manage this model? One
what keeps one in business. It is quality that comes first, of the best models is ‘balanced scorecard’, it has 2
followed by efficiency and speed and if the job is done kinds of measures— one is the leading indicator and
right, cost comes naturally. We look at our partners for the other is the lagging indicator. Quality problem
innovation above all, because through innovation we have indicates a lagging indicator and high attrition is a
that upper edge over our competitors. If our partners don’t leading indicator that quality problems might happen
come to the table with an innovative product or process in future.
to do things better, faster and within the quality stand- 5. Clients are acknowledging the importance of retained
ards, then they don’t sit at the table. They also need to be organization. In the last few years, clients found that
innovative, they need to bring in quality, speed, and when as they outsource they were forced to give more
negotiating if cost comes out lower, it is great—but cost is and more to the suppliers and in many cases they
not the primarily focus..” gave too much and now they are having a hard time
improving productivity. Definitely, the cost has gone
The Changing Rules of the Industry down but they’ve started to face challenges and are
Atul Vashistha Founder & Chairman, Neo Group stated not being able to improve the productivity because
some upcoming market dynamics: they lost the domain expertise. More companies are
1. IT-BPO convergence is for real, it means is a funda- re-evaluating their decision on what resources they
mental transformation in way services are handled. If should retain
you are thinking of transforming your HR function or 6. Suppliers need to allow career movement from their
finance function, it is hard to do that if IT is not playing side to the client side. Then clients will once again
a role. As per Horses for Sources research conducted in domain expertise on their side. GS
2010, 45 percent have some interest in bundled BPO-
IT opportunities, 37 percent are evaluating BPO-IT Excerpted by Smriti Sharma from the Global
opportunities separately and remaining 18 percent are Services Conference 2011 session “The State of
evaluating bundled BPO-IT opportunities extensively. the Outsourcing Industry”


Collaborative Sourcing

Negotiating a
Transformational Deal
A transformational outsourcing deal is vastly different from accounts
or payroll outsourcing, so is the negotiation process for the two.

I
n the post- recession time, a lot of companies are The Real Deal: the Negotiation Process
looking for something radical to pull them out of While negotiating, both the vendor and client teams
the recessionary inertia and set them on the growth should make use of internal and external expertise. The
path again. And many of them are looking at negoti- vendor’s team, especially the sales team, should have
ating transformational deals towards meeting this end. technical expertise in the transformational aspect that the
Choosing the right provider for implementing a trans- client is trying to implement.
formational process is very important, negotiating the On the client side, subject matter experts (SMEs) in the
right deal is even more so. Going ahead with a transforma- organization should be brought to the table, as part of the
tional outsourcing deal is vastly different from outsourcing team, right from the pre- RFP process. Similarly, the nego-
your accounts or payroll function, so is the negotiation tating teams should be part of the business strategy meet-
process for the two. ings of their respective organizations. This will prevent the
contract from falling short at crucial points, and also make
Requirements for negotiating expectations of each side clear to the other.
Firstly, in a transformational transaction, vendors require- When it comes to discussing the finer details of a
ments are ‘softer’, or more specialized. “In such a transac- contract, vendors especially, would rather finish with it
tion, vendor requirements will be ‘softer’, if you will,” says sooner than later, says William A Tanenbaum, Chairman
David Jackson, Partner, Baker and Mckenzie. “You are - Technology, Intellectual Property & Outsourcing Group,
going to need someone with expertise in your vertical. Like Kaye Scholer. Quoting a TPI survey, he says that at least
for Oracle or SAP implementation, you are going to need with respect to large vendors, they would rather have the
someone who’s done that for your vertical because there whole large contract in the RFP, because they would prefer
are regulatory issues which people in your vertical may to answer the questions once. “They would look at the
definitely have to deal with, other practical considerations MSA (Master Service Agreement) and figure out what you
which might run through your vertical.” really want, rather than have a discussion and a general
Such transactions also require communication skills for RFP, have some answers and then do it all over again in
communicating both from the client side to the vendor the MSA,” he says.
side, as well as internally on the vendor side to get the The most important thing in the negotiation process is
implementation done correctly. to be flexible, says Jackson. “The objective of this process is
High level project management skills are essential. to find the value maximization point, and to minimize the
“Project management is definitely important, especially external factors that can shift the value curve in the wrong
during the transition stage. But its even more important direction,” he says.
when you are doing a transformational deal, because From the clients’ side, its not advisable to have a nar-
the sophistication level of the project management skills row vision, he says. They’ll be cheating themselves by not
required is higher,” says Jackson. engaging with the vendors, who have a world of knowledge
Requirements in a transformational transaction will and expertise within and outside the client’s vertical. GS
keep on changing, even after the RFP has been put togeth-
er and a lot of information has exchanged hands between Excerpted by Sruthi Ramakrishnan from the 2011
the vendor and customer. This is true for all outsourcing Global Services Conference session “Collaborative
contracts, but the degree to which they change is greater in Sourcing”
transformational deals.


Supply Risk Monitoring

How to Manage
Supplier Risks
Multiple vendors and globally distributed delivery makes managing
supply risk critical. Read on to know how to capture relevant risks
across various levels and how to manage them.

T
he after-effects of global recession tell us that right perspective and right controls put in place from a
most organizations react to the risks unprepared. service delivery perspective. The procurement depart-
Instead of dealing with risks, minus any home- ment is the area one needs to be in total partnership
work, it is essential to be geared with a strategy with. Information such as what are the processes they
beforehand. A robust risk management strategy is founded are employing to get out to the market, what depth
on the basic framework to monitor and manage various risk of information they need to look for when evaluating
elements. So, the first step is to create the framework. the potential risk from vendors and others need to be
tracked and made available to the stakeholders.
Framework to Monitor the Vendor Risks
One of the speakers at the Global Services Conference 2011 Getting the Right Framework
who is a senior risk and compliance management profes- Charlie R. Miller, VP - Vendor Risk Management, Bank
sional with a global bank shared her insights on how to of Tokyo - Mitsubishi shared the seven criterias they use
create a framework to monitor risks. She said, “Strategy is to get the right framework.
very much at the front center of our framework. Having a i) Financial Check on vendors to make sure they are
good strategy makes one much more agile when it comes to financially stable. We do facts check and other regula-
reacting to threats. In addition to having a strategy, having tory requirements in that nature,
the right resources is important. In my case, 200+ senior ii) Information Protection- What kind of informa-
managers over VP and above have the authority to make tion/ data are the vendors going to have access to and
decision on risk. They are responsible for execution. Another what is the level of criticality of that particular service
thing, is having a governance that consists of co-head of from recovery prospects.
operations risk, head of business continuity, head of infor-
mation security, head of corporate security. Since these are
the people who are in the know, they are well versed with “We monitor
the regulations and what to be concerned about.” different regula-
“Other standard, but significant measures are commu-
nication and awareness. A website which is very content tory requirements
rich - in terms of what a process needs to be, what are some
of their requirements, who are the people they should be
across businesses
talking to, where are they in their risk manage assessment and vendor risk is
process and where they go next- should be available, as this
gives busy executives a direction. Also, training and aware-
obviously one of
ness are a big deal for us. We had to plug in some training those. ”
programs across the companies so that people were up to
speed with their responsibilities,” she added.
The other point to be kept in mind, while crafting risk Charlie R. Miller, VP - Vendor Risk
management framework is touching each and every seg-
ment of the business. Legal and procurement are the key
Management, Bank of Tokyo
ones. Contracts are fundamental to ensuring one has the


Supply Risk Monitoring

iii) Reference Check: A background check to find out Balanced Scorecard helps keep track of the execution of
what is their specific delivery capability, which country activities by staff within their control and monitoring the
are they from, what does their client base look like, and consequences arising from these actions. Also, it helps
whether or not there is any issue with the vendor in terms find out whether you have a recurring theme of poor
of regulatory service delivery, controls in certain places, so that they can be taken care
iv) Annual Spend: What is their annual spend of accordingly.
v) Sub Contract: If the vendor is using a sub-contractor,
that’s a key thing to know of. Tracking Regulatory and Compliance risk
vi) Country and City Risk: What is the location and Miller articulated, “ In my organization, regulatory and
where is the actual service being delivered from, how politi- compliance risk is very high on everyone’s mind. In order
cally stable is the country, what are the social risks in the to make sure we are in compliance with almost everything,
country, what are the economic risks posed by the country, we monitor different regulatory requirements across busi-
what are the geographical and environmental risks, what are nesses and vendor risk is obviously one of those. We align
the risks associated with supply of talent, etc. with different things that are happening in different indus-
vii) Finances: How much money are we spending, try sectors, eg PCI, healthcare and some of the things that’s
whether or not there would be any financial risk to the bank happening in US. We also keep a close watch on things
if this vendor would have some kind of operational issue. that are happening externally especially around privacy
De-scoping some of the services is also helpful. Take the and recoverability requirements.”
example of correspondent banking. There are very tough
regulatory guidances around this service. There are parts of Supply Risk Model
business that did the initial vetting, thus in this case ongo- Speaking about NeoGroup’s Supply Risk Model, Sandeep
ing monitoring resulted in no added value. De-scoping Suresh, Head of Research, NeoGroup said, “We have devel-
such areas that are well-managed or perhaps are low risk oped a model that tracks risk based on various parameters.
to the organization helps one focus on the areas where you If we look at a country level, we will track macro-economic
can add value. Having a documentation to support that for risks and geopolitical risks. In geopolitical, we study the
posterity is also very important. potential for natural disasters and the political scenario in
that country; they have an impact on daily business opera-
Making Your Framework More Robust tions. However, they are not in vendor’s control. Financial
In order to make your framework more robust, apart from risks and industry risks are studied similarly at city level and
providing the complete risk portfolio to executives certain then provider level. This is how we track risks. This program
tools such as ‘Balanced Scorecard’ can also be employed. is customized as there’s the ability for clients to pick and
choose a particular city or a particular
country or a particular provider.”
“We have risk rating on a scale of 1
to 10, one being the least risky and 10
being the most risky. From over 200
parameters in each of risk categories-
where we collect data on every quar-
ter- we come up with a final rating.
That’s the rating score for a particular
location, particular service provider. It
helps clients compare different loca-
tions. If a client subscribes, then they
get a score,” Suresh added.GS

Excerpted by Smriti Sharma
from the Global Services
Conference 2011 session
Source: Neo Group “Supply Risk Monitoring”


Accelerating Transformation through BPO

Managing an
Outsourcing Relationship
Jim Bechtold, Senior Vice President Reimbursement and
Government Affairs of Biomet Trauma and Biomet Spine, Biomet
shares his experience in managing an outsourcing relationship that
helped transform the collections process at Biomet. Some useful
pointers on how it was done.

C
hoice of vendor: We really concentrated on
who we were going to choose based on how “Do not cut corners. To do
they were going to approach the business. It
wasn’t just about saving on labor costs. We
transformational outsourcing
were really looking at who could develop the domain and to do it correctly, you have
knowledge that didn’t exist outside the US; someone who
would partner with us from a gain- share perspective. A lot
to put some capital in it”
of the financials were also tied to gain sharing, as related to
the efficiency of our collection process improvement.
Approach: We decided not to go inexpensive and Jim Bechtold
cheap on the technologies supporting the infrastructure. Senior Vice President
Because it could add costs and unforeseen overheads later
on and also impact efficiency. We didn’t want to change Reimbursement and Government
people, processes and policies all at once. Affairs of Biomet Trauma and
Managing the transition: We intentionally extended
the transition time. We occasionally had issues with attri- Biomet Spine
tion and we learnt how to manage that. When we do get a
complaint or issue, we go back and watch the video to see
whether it was a training issue, or someone just wanted to benefits of the labor savings. But we also had much higher
complain. We are constantly working with our (outsourc- collection rates. So we were able to have that internal ben-
ing) team on the ground, they are pretty well integrated, efit, and still do. Companies might have faced the problem
we are pretty frank with each other. of capex spend during the recession. Many capex budgets
have had to be ratcheted down. Because to do this (trans-
Working the mechanics of the formational outsourcing) and to do this correctly, you can’t
relationship: cut corners. Companies that are in it for the long term,
We’ve kept subject matter experts (SMEs) onshore, they they have to put some capital in it. You are going to have
remain our employees. They have their teams overseas, some below the line cost depending on what kind of tran-
and we work collectively. We also have one of the vendor’s sition you do. It is not insignificant, and they may be
agents embedded in our group. So in that respect, we are considering that as we come out of the recession.GS
joined at the hip. There is no real IP; it’s really a process,
domain knowledge, expertise that we’ve and have shared
with our vendor. It’s an area the vendor wanted to get into
seriously, there is mutual benefit in that respect. Excerpted by Sruthi Ramakrishnan from the 2011
Beating the recession: We had started our (outsourc- Global Services Conference session “Accelerating
ing) process prior to the downturn and certainly had the Transformation through BPO”


Understanding Cloud

Assessing and
Understanding Cloud-
based Models
Gartner Research tells us that cloud-based service revenue is pro-
jected to touch $148.8B by 2014. Yet, not many people-apart from
the consultants- understand what the cloud is and what are its
implications?

C
loud is a business and technology model that hybrid world- where you are dealing with cloud as well
lives on the Internet. So, cloud-based models as on-premise. It becomes difficult to make this useful, as
basically look at ways to dis-aggregate central- cloud by itself is just an island of information and there has
ized data, centralized labor, centralized man- to be a way to integrate between the on-premise world and
agement and distribute it across multiple geographies and the cloud world and even cloud-to-cloud. The integration
it is distributed via the Internet. Thus, one of the biggest gets a lot more difficult when you take into considera-
constraints for cloud is that it cannot go to a place that tion cloud-on-the-premise, as now you are talking about
does not have Internet, so Internet comes first and cloud information that is residing in different locations. You are
comes second. dealing with that issue, you are spanning firewalls, you are
not necessarily in total control of your applications and
The Sourcing Aspect of Cloud downtime can come into play and you are not in control
Does the cloud model imply that the service is outsourced? of when that application is down.
Does it imply that it is offshored? Jerry Luftman, Executive
Director, Stevens Institute of Technology said, “My argu- Problematic ‘Integration’ Aspect of Cloud
ment is it does not matter -you can have a cloud that’s What makes people shy away from the cloud? According
in-sourced, you can have a cloud that’s outsourced – based to one study, obviously, security tops the list, many people
on where it is located. Although, there is a
lot ongoing discussion on whether a cloud
should be centralized, in my opinion, it is not
necessary. When considering cloud, the point
of time to look at it is the initial stages of the
life-cycle of sourcing. At the beginning of cre-
ating IT strategy or IT portfolio, it should be
clear whether you will outsource or insource
your cloud.”
With the adoption of cloud, people are
adding software-as-a-service (SaaS) applica-
tions. They are moving to public clouds or
even private clouds. But, we cannot forget
that most of what is being run today is on-
premise, so it is packaged applications and
home-grown applications. This is creating a
Source: Neo Group


Understanding Cloud

see this issue with the cloud and are concerned towards
making the move towards it. The second one is integrat-
ing enterprise applications. Integration comes thrice in
the study. So, it actually comes on top above security, as
the top reason why people are worried about moving to
cloud.
Another study by Gartner highlights that integration
is the number one reason making people unhappy using
the cloud. Forrester’s study tells 67 percent of CIOs were
concerned with integration and that is why they were shy-
ing away from cloud.
Luftman adds, “Clearly, the potential pitfall with cloud
is integration. Especially, if you go to multiple clouds, how “At the beginning of creating
do you ensure you are integrating your data. This is where
we in IT get our biggest benefits from integrating across
IT strategy or IT portfolio, it
different business units. Cloud should learn from the mis- should be clear whether you
takes of ASP, the need for open cloud that’s clear for every
part of the world.”
will outsource or insource your
cloud.”
Learning from BPO
Cloud is not new; rather it has been here even before the
name ‘cloud’ was coined. BPOs like ADP have been in Jerry Luftman
cloud business for many years. BPOs are dealing or have
been dealing with the same problems that now people Executive Director,
are dealing with adding applications in the cloud. It’s Stevens Institute of Technology
important to look at how BPOs have been addressing this
problem.
For instance: For payroll, you need to get data from the
company itself. Typically that resides on the on-premise to be able to access data very quickly from the clients, real-
application behind the firewalls. In majority of the cases time and easily, make changes as they have changes to the
flat files are used. BPOs give specifications to the company business process, and what are those changes to the cus-
they are doing business with, stating what information is tomer side with the applications that they are using. IBM
required and in what format. And they send the informa- has been focused on the integration problem, trying to
tion. So, you are relying on the companies that have the bring a cloud solution to this problem. So, being able to
resources to extract the data to provide to the BPO. provide a real-time way to be able to integrate applications
The issue that comes here is that when BPOs are in the clouds to other clouds and as well on premise.”GS
specificating; no matter how good the specification is,
there is always an issue with interpretation. At times,
they end up getting data that may not be exactly Excerpted by Smriti Sharma from the 2011 Global
right. They do not necessarily find that out in the testing, Services Conference sessions “Cloud and its
they might find out in the fifth or seventh run. Implications on Service Delivery” and “Business
Another way they are dealing with this is custom code, Process Integration In The Cloud”
just like the cloud. Having a code created that they put on
the clients’ side, to be able to do the extraction for them,
and send that data over to the BPO, so that they have
access to the required data. In that case, they can make it
more real-time, over flat files to be able to have the data
they need to do the business process.
Jeff Miller, VP, Strategic Accounts & Global Partners,
Cast Iron Systems, an IBM Company told, “At IBM, what
we found is the exact area where cloud comes into play.
Using a cloud platform provides integration, allows BPO


Nasscom India Leadership Forum

Emerging Economies,
Mindset Change to Lead Economic Healing

T
he IT growth in the emerging economies, combined Thus growth will come from emerging economies. For
with a changed mindset, is what will sustain the corporates to be able to cash in on these opportunities, they
global economic recovery need to be flexible. And the greatest flexibility will have to
The keynote session at NILF 2011 focused on under- be in terms of mindset.
standing the changing world order and India’s role in it. The Emerging markets like India, Africa and Latin America
panel moderated by Kris Gopalakrishnan, CEO, Infosys need to focus less on the West and more on each other.
Technologies brought out perspectives from the varied lens That’s where growth will come from. “The winners here will
of a global academic and policy advisor, an Indian business be firms which move closer to demand (that is, emerging
leader, and an economic analyst. markets), decentralize and customize for local markets,” he
The post- recession recovery has been steady, albeit slow holds.
and fragile. But the emerging world order will be nothing Technology has the potential to bring about the econom-
like the existing one. For starters, the traditional industries ic transformation sorely required now, said KV Kamath,
will no longer be able to support the world economy, shift- Non- Executive Chairman, ICICI Bank. “Nowhere has eco-
ing the growth impetus to the IT sector. nomic transformation happened in the presence of ignoring
Besides, the risks which recession had given birth to con- technological change,” he said. Technology which was not
tinue to exist, like the housing and unemployment issues in there ten years ago, when the transformation of the Chinese
the hitherto biggest outsourcing market, the United States . and Asian ‘tiger’ economies took place, are available now, he
State, local and national governments continue to be under pointed out.
pressure to cut costs. This has already slowed growth in the Commenting on the changed global scenario, Kris
developed world, said Raghuram G Rajan, Eric J Gleacher Gopalakrishnan said, “There is a lot of optimism and oppor-
Distinguished Service Professor of Finance, University of tunities. Several initiatives are already underway. These need
Chicago. to be scaled up and sustained.”

Partnership Redeﬁned
T
he IT growth in the emerging economies, combined 1. Increasing prominence of emerging markets as the key
with a changed mindset, is what will sustain the driver of growth demands frugal innovation.
global economic recovery. The age-old mantra about 2. Reduction in financial leverage makes operational per-
the vendor being a partner to the customer got a better spin formance more crucial.
at the Nasscom India Leadership Forum 2011. 3. Increased and prolonged uncertainty in the global
Matt Idle, Credit Operations Director, British Gas economic environment requires more nimble operating
opined, “Today, it’s about strategic flexibility. A vendor has models.
to understand his client’s value creation chain and also real- Citing the new levers of value creation, Nambiar added
ize that he is not a mere part provider; he should be willing the following conditions for partnership to exist:
to take risks and deliver outcomes. 1. Companies need to share their models with their vendors
“Services buyers would want to sit on the table with and not keep their know-how in locks.
a vendor that has the appetite, ability and the capability 2. Strategic flexibility , rather than economies of scale, is
to comprehend its value creation cycle and also drive that the key for managing uncertainties of global economic
value. Service providers need to understand the needs of environment.
the customer’s customer and drive value towards meeting 3. Resource productivity than resource possession is the key
those needs. for delivering value through operational performance.
Clarifying the service provider’s ideas on partnership, Nambiar ended, “Vendors should collaborate with cus-
Rajesh Nambiar, GM Services Integration Hub-East, IBM tomers in strategic decision making. For them, flow of more
listed out the following : work spells sharing of business risk in value creation.”


Nasscom India Leadership Forum
NILF

License to Innovate:
Worrying About Things that Matter

I
T acts as a unique differentiator for business. And is a single point of ownership, there is more customer
while providers claim that client requirements and satisfaction. He said that clients themselves agree that
minutely specific SLAs leave them with little room for “when we have a larger wing span, we have more customer
innovation, clients would beg to differ. “If you get your satisfaction.”
basics like cost, risk, etc. right, you suddenly get the license Customer satisfaction is definitely something that
to innovate,” says David Awcock, Group Head, Group companies should be concerned about, given the fragile
Technology and Operations, Standard Chartered Bank. condition of the economic recovery. But the recovery has
Speaking at the NASSCOM track discussion on also provided a good opportunity to innovate, said KAI
Strategic Sourcing, panelists held forth on what defines Beckmann, CIO, Merck KgaA. “Tough times call make
customer satisfaction. While providers are doing what for some really inspirational innovation,” he held. The
they think is right, in terms of meeting customer satisfac- recession has also forced providers to look beyond their
tion, customer priorities are shifting, said Noshir Kaka, traditional markets. For countries like India, this means
Director, McKinsey & Company. So while providers have turning to the domestic market. This, in turn, provides an
been offshoring in the quest for reduced overall costs, they opportunity for innovation, as local clients give a greater
are missing out on what counts most for their custom- push to innovation than the traditional MNC clients.
ers- business impact. Thus, service providers need to align Finally, listening to the customer is what is going to
their priorities, and their SLAs, in keeping with customer drive efficiency, and hence customer satisfaction. “60- 70
satisfaction. percent of what is done by the provider is not used by the
At the same time, he cautioned clients to be concerned client,” says Awcock. So if you can figure out what that 70
about things that matter the most, like management attri- percent is, that is the key to efficiency.
tion, which affects customer satisfaction. Also, where there

Success Mantra for M&As: Put People First

O
n the second day of Nasscom India Leadership emotions of the target company people. “At Aegis, we talk
Forum 2011, business leaders from the Indian of right practice, not best practice,” he said.
outsourcing industry got together to share their Talking about his experience in integrating
insights on how to make M&As work. TechMahindra with erstwhile Satyam, Gurnani said the
Beyond financial due diligence and strategic fit, people best weapon in such a situation and in fact, in any acquisi-
are the key to a successful integration. CP Gurnani, CEO, tion, is a great HR department that realizes the complexity
Mahindra Satyam said, “You not only need the balance of the process and their vital role in the transition.
sheet of the company you are going after, you need the Another vital factor is the understanding of each
people as well.” M&As do not work out if the leadership other’s motivations, aspirations, and internal structures.
does not understand the people and take them into con- Several M&As that started ambitiously failed due to
fidence, he said. lack of understanding of each other’s structure, culture,
Emphasizing the need for cultural and emotional align- and the global market operations, said moderator Kumar
ment of the target company people with the culture and R Parakala, COO, KPMG Advisory. At the end of the
environment of the acquirer, Aparup Sengupta, Managing day, an acquisition requires an understanding of why it is
Director, Global CEO, Aegis said that at the heart of being done, and what will be the outcome. “M&A is the
M&A lies how you do the integration. A veteran of 16 outcome of a strategy. You have to envision the purpose of
acquisitions, Aparup believes in connecting with the core company you are forming,” said Sengupta.

by Sruthi Ramakrishnan & Smriti Sharma


xperts By Allan Schweyer, Center for Human Capital Innovation

Designing the 21st Century Incentive
Program to Drive Employee Engagement
Where and even whether incentives and rewards programs
have a place in the modern workforce is being questioned,
because skeptics believe the program outcomes and impacts
are becoming increasingly more difﬁcult to measure, manage,
and control

I
“Almost certainly…some kinds of outcomes you can incen- t is generally accepted that
tivize and others are much harder to influence through employee engagement and
incentives. I don’t think anyone would argue that we can performance can be driven by
operate without incentives, but what are they going to be the right mix of incentives and
in order to be effective for each situation, task and person? rewards. Until recently, few ques-
The right question is ‘how do we artfully and wisely design tioned the use of incentives in encour-
these programs.” aging behavior change and higher
Dr. Laurie Bassi performance. Research conducted by
Interview with the Author, September, 2010 the Incentive Research Foundation
(IRF) and others over the past twenty
years has established the usage and
performance improvement aspects of
incentives in business.
Yet today, where and even whether
incentives and rewards programs have
a place in the modern workforce
is being questioned, not necessarily
because skeptics believe they do not
motivate workers, but because they
believe the program outcomes and
impacts are becoming increasingly
more difficult to measure, manage,
and control. In new research con-
ducted and released in February 2011
by the Incentive Research Foundation
(IRF), the challenges around 21st
Century Incentive Plan Design were
studied.
According to our research and
the opinions of most of the experts
consulted, the greater complexities
of motivating creative, non-routine
workers using incentives and rewards,
has led to a higher frequency of poorly
designed or misdirected programs.


Advisory

Poorly designed rewards, incentives at end) by using it as a checklist of
and recognition programs can pro- key questions that need answers. Also
duce negative results, lack motiva-
“Extrinsic, contin- consider Dan Pink’s flowchart (see
tional appeal, or cause unintended gent rewards should research paper reference at end) and
consequences. When this happens, it the guidelines we propose in Figure
is likely to cost the organization a sig-
be tied to perform- 1 and Appendix D of the research
nificant amount of wasted time and ance goals rather paper.
money and perhaps lead to a cynical, 2. Articulate and consider what
disengaged workforce, organizational than task comple- is the program trying to achieve or
damage, and, in some extreme cases, tion, solving prob- address? More sales? Lower absentee-
societal harm. ism? Quality? Safety?
Our research (building on that lems, or hitting 3. Think about the program con-
of many others) leaves little doubt specific quantifiable text, including which workers the
that incentive program design and program is targeted to - Factory floor?
implementation, including measure- targets,” Administrative? Sales? Researchers?
ment and ROI, is critically important Executives?
in today’s workplace environment – (And whether they are primarily
considerably more so than in the past. creative or task oriented).
And while the incentive plan designer 4. Think about the unintended
must consider the overall context, consequences and potential adverse
including the type of worker or team impact of the
they are attempting to motivate, it is program. Will the outcomes it
far from agreed that in designing an aims to drive impact other parts of the
effective rewards program – even for organization? Is the program suscepti-
knowledge workers – that one or the ble to “gaming”? Will it encourage
other of intrinsic or extrinsic, contin- undesirable behaviors?
gent rewards must be used. 5. Consider whether the program
We are seeing the evolution of an is in balance with other key drivers of
effective blend of both, or a more performance and employee
inclusive approach of any appropriate must incorporate measurement to engagement.
reinforcer that is contingent, valued, determine its effectiveness. 6. Include communications, well-
and top of mind. What is clear from Extrinsic, contingent rewards planned implementation and on-go-
our research, including the opinions should be tied to performance goals ing monitoring and refinement.
of the great majority of our experts, rather than task completion, solving 7. Build in metrics and ROI meas-
is that incentive, reward and recogni- problems, or hitting specific quantifi- ures from the beginning so that you
tion programs must be more tailored able targets. can credibly evaluate the program and
today than in the past. Careful design In general, designers should bal- make adjustments throughout.
must make allowance for the many ance the best use of extrinsic incen- To download the full research
different ways in which workers are tives versus intrinsic rewards and rec- paper, please visit: www.the-irf.org/
motivated. ognition depending on the type of research. GS
Yet there are also consistencies worker, the assignment, the work
and best practices to guide designers. environment, the desired outcome Allan Schweyer is Principal, Center for
Knowledge workers, for example are and the duration of the program Human Capital Innovation; Chairman,
more likely to be driven and engaged amongst other factors. In every case, Enterprise Engagement Alliance
by recognition (now/that type designers should build in the appro-
rewards) than contingent incentives priate levels of measurement, in many
(if/then rewards). Where incentives cases including ROI analysis.
are used with creative workers they In summary, incentive and reward
should be designed to drive desired program designers should:
outcomes rather than to encourage 1. Take advantage of the PIBI
specific behaviors. And any design Model (see research paper reference


Platinum Sponsors

22 GlobalServices www.globalservicesmedia.com January 2011

VERSO PAPER CORP MANUFACTURING

New IT & Apps Platforms
Dell customized and applied its well-established transition
methodologies for Verso Paper Corp

The Client: IT solutions to the business. At A Glance
Based in Memphis, Tennessee, Verso � After the RFP process, only 4½ CLIENT
Paper Corp. is a leading North months remained to complete the Verso Paper Corp
SERVICE PROVIDER
American producer of coated and spe- project, which would serve rough-
Dell Services
cialty papers used in magazines, ly 3,000 employees dispersed INDUSTRY
catalogs, and commercial printing among facilities in 11 U.S. states. Manufacturing
applications. SERVICE PROVIDED
Verso Paper Corp. was spun off by its Solution: New IT & Applications Platforms
multinational parent in 2006. As part Dell Services applied its well-estab- SOLUTION
of the divestiture, the parent company lished transition methodologies, An integrated program manage-
agreed to provide IT services for one which were then customized to meet ment office for the transition project
year. The former parent would provide Verso’s specific requirements. Project
only very limited transition support. teams were quickly formed recruiting SUCCESS METRICS
the most knowledgeable leadership
Situational Analysis: from across both companies. Dell � Avoided financial penalties. Verso
Verso’s challenge was to establish an personnel included dedicated on-site was not assessed substantial fees
entire IT infrastructure and all applica- team members and leveraged exper- that would have been imposed for
tions in just 12 months or face severe tise from delivery centers in the U.S., continued support from the for-
financial penalties from the parent India, and Mexico. mer parent company.
company for continued support. The creation of a single, integrated � Cost identification at a service-unit
As a $1.6 billion “startup” company, program management office proved level. Allows better utilization and
Verso conducted a rigorous review to be a key element for the project’s total cost of ownership management
process with three primary objectives ultimate success. This office provided to reduce overall expenses for IT.
for the review process: highly structured oversight of multi- � Improved engineering control
� An on-schedule separation from ple concurrent projects. Success technical infrastructure. Better
the former parent. required constant focus on the pro- definition for levels of redundancy,
� A high-value solution over the ject schedule, reprioritization of work failover, virtualization, and disaster
term of the contract. as required, risk management, rapid recovery.
� A tightly integrated team in which escalation of issues, and clean � Incremental savings opportuni-
Verso IT and the services provider cutovers of critical services during the ties. Dell Services has identified
would collaborate to deliver new transition period. efficiencies that are expected to
generate $600,000 in additional

“
savings annually.
“Dell Services and Verso IT work so closely
and seamlessly together that to our end-
user community, IT services are seen as coming For more information on how Dell can help
from a single organization. There is no ‘us and your organization, please contact
Sujata_Rakhra@Dell.com or
them’ – it is just the IT team.” Savitha_Lakshman@Dell.com. Please also visit
dell.com/services for more information on their
capabilities.
BEN HINCHMAN, VP AND CIO, VERSO PAPER CORP

34 GlobalServices
27 Globalservices www.globalservicesmedia.com
www.globalservicesmedia.com December 2011
February 2010

CONSUMER PACKAGED GOODS UNILEVER

SOX Compliance
Capgemini transformed SOX compliance from project to
process for Unilever
The Client: Solution:
Unilever deals in 400 brands span- The entire process mapping, docu- At A Glance
CLIENT
ning 14 categories of home, personal mentation and management attesta-
Unilever
care and foods products. Every day, tion process were outsourced to SERVICE PROVIDER
150 million people choose the Capgemini’s Management Assurance Capgemini
brands of Unilever such as OMO, Services (MAS), a service line within INDUSTRY
AXE, Dove, Lux, Knorr, Lipton, Walls Capgemini’s Business Process Consumer Packaged Goods
and Ben & Jerry’s. Unilever employ Outsourcing practice. The MAS SERVICE PROVIDED
over 174 000 people in around 100 SOX framework serves not only as a Management Assurance Services
countries worldwide. Unilever man- cost-effective compliance method SOLUTION
ages a number of strategic partner- but also incorporates process remedi- Put together a comprehensive,
ships globally which includes al work, and through Business adaptive program for management
of SOX compliance requirements
TESCO, Carrefour, Ahold and Wal Insight drives continuous improve-
Mart. They have strong brand pres- ment and best practice. In 2006,
ence in home care, personal care, Capgemini worked in close collabo-
foods and ice creams. ration with Unilever to put together SUCCESS METRICS
a comprehensive, adaptive program The Capgemini MAS team leveraged
Situational Analysis: for the management of the SOX com- onsite/offshore delivery that operates at
Unilever was concerned about its pliance requirements, accommodating offshore rates along with their
SOX compliance processes. With the specific needs of the client’s envi- Compliance Center of Excellence net-
yearly turnover of over €5B ronment while exploiting the benefits work to drive client savings of over 40%.
($6.65B), Unilever’s US operations of Capgemini’s proven SOX compli- These cost savings resulted from reduc-
were organized into four units with ance framework. In 2007 and 2008, tions in labor costs and from the central-
some corporate functions (such as thanks to the established SOX frame- ized delivery method that successfully
treasury, tax, employee benefits, risk work and by gradually shifting process strips out project management overhead.
and insurance management) central- support to an on-site/offshore delivery In short, an annual project was industri-
ized at HQ and provided as a shared model, Capgemini was able to drive alized into a repeatable and sustainable
service. The units were not co-locat- down the client’s costs of compliance process. The SOX compliance frame-
ed and many business processes were and concurrently increase quality and work program provided the following
not homogeneous. In addition, they timeliness. Today, Capgemini’s solu- sustainable benefits:
had their own manufacturing plants tion is an integral part of the client’s � Overall improvement in the control
and distribution centers that were SOX compliance program, yet the environment
common in only a few instances. The client retains overall program gover- � Readily available process documen-
challenge for the CFO was to initiate nance and control. tation and standard operating proce-
a comprehensive service compliance dures for business units with a view
program which would be both cost- to harmonizing processes across the
effective and annually sustainable units
from the outset. � Reduced effort and freeing up of
For more information on this service from
Capgemini, write to Jean Christophe Ravaux,
internal resources
Global Sales Officer, Capgemini BPO at jean- � Cost advantage of offshoring of over
christophe.ravaux@capgemini.com
a third of the program

28 Globalservices
17 GlobalServices www.globalservicesmedia.com
www.globalservicesmedia.com February 2011
December 2010

Next & Best Practices in Global Sourcing

More Related Content

Similar to Next & Best Practices in Global Sourcing (20)

More from Niketa Chauhan (17)

Next & Best Practices in Global Sourcing