Best Practices in IT Outsourcing William Liu Chairman, Stream Global Pte Ltd

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Best Practices in IT OutsourcingWilliam
LiuChairman, Stream Global Pte Ltd
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What Is Outsourcing?

• Outsourcing is contracting with another company
  or person to do a particular function
• The external firms that are providing the
  outsourcing services are third-party providers,
  or as they are more commonly called, service
  providers
• Outsourcing is sometimes referred to as Business
  Process Outsourcing (BPO) Off-Shoring

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Types of IT Outsourcing
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Why Do Organisations Outsource?

• Lower total cost of ownership (lower permanent
  headcount cost)
• Access to a larger skilled IT workforce than what
  is available in-house
• Focus on Companys Core Buisness
• Tap Into Innovation/Ability To Respond
• Ensure consistent delivery via Service Level
  Agreements (SLA)
• Manage Outcome versus Resources
• Overall, to reap better value

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Stages of Outsourcing
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Criteria For Selecting Outsourcing Partner

• In depth understanding of customer requirements
• Value for money
• Able to deliver quality service on time
• Cultural match Responsive easy to work with
• Proven track record
• Strong change management methodology
• Use of world-class frameworks and tested
  methodologies such as CMMi, ITIL, ISO, etc
• Global Footprint

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Key Ingredients For Successful IT Outsourcing

• Top management commitment
• Clearly defined Service Level Agreements
• Trust between customer and supplier
• Track changes measure outcomes
• Open and timely communication knowledge sharing
• Integrated customer and supplier team that works
  together as one team form a customer-supplier
  partnership e.g. before the contract is
  awarded, customer and supplier are on opposite
  sides of the table, but once the contract is
  awarded, they are on the same side facing the
  end-users

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Some Case Studies From Singapore
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(1) Singapore Government IT Infrastructure
OutsourcingAwarded February 2008(SOEasy)
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Standard ICT Operating Environment (SOEasy)

• Largest public sector information technology
  project in Singapore
• Effort by Government to standardise desktop
  computing system is a world first
• Users 60,000 civil servants in 74 government
  agencies
• Expected savings 28 of operating costs or S500
  million over 8 years
• Consortium EDS, Singapore Computer Systems
  (SCS), Alcatel-Lucent, Cisco Systems, Microsoft,
  FujiXerox, SingTel, Frontline, Avanade

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Features of SOEasy

• Harmonising desktop, messaging and network
  environments across all government agencies
• Introduction of collaborative tools such as
  instant messaging, desktop video conferencing
  services and whiteboard sharing
• Greater mobility as officers can seamlessly
  access government resources from anywhere, at
  anytime
• More regular and non-intrusive security updates

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(2) Web-based Electronic Business / Company
Registration Filing System For Singapore

• ACRA outsourced the BizFile application,
  infrastructure, hosting and helpdesk to IT
  Service Co, Singapore Computer Systems
• Reduces business/company registration filling
  times from days to minutes due to streamlined and
  automated processes
• Improves compliance by enabling monitoring of
  statutory disclosure requirements

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(3) Call Centre Outsourcing

• Organisations outsource call centre building and
  management to service providers such as Singapore
  Computer Systems (SCS) NCS
• SCS designs builds fail-safe telco-grade call
  centres
• e.g. StarHub (Singapore), StanChart (Singapore),
  Samart (Thailand), Hutchinson (Indonesia)
• Managed call centre services
• Over 200 seats
• In-bound and out-bound calls
• State-of-the-art technology
• Real-time service tracking
• High service availability
• Sample customers ACRA, MOM, MINDEF, Temasek Poly
• Enhance customer interaction experience through
  multi-channel touch points (Phone, Email, Fax,
  Web, Online Chat, etc)

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(4) Business ContinuitySingapore is the first
in the world to have a Business
Continuity/Disaster Recovery Standard
SCS is Asias Top Business Continuity Provider of
the Year (2007)

• SCS Business Continuity Centre
• Established since 1987
• Over 100,000 sq ft of space
• Over 150 customers outsource BC/DR to SCS
• First batch to be certified as Full BC/DR
  Provider based on Singapores Standards (2005)
• First in Singapore ISMS Certified for BC/DR

First in Asia Pacific to launch Mobile Business
Continuity Office (Feb 2007)
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(5) Application Outsourcing to Singapore by
Global Publishing House
Business Times, 9 July 2007
Wiley-Blackwell was looking for a partner with a
successful track record of implementing
Microsoft-based applications and integrating
systems in diverse domainsSCS seemed to be the
best fit in terms of understanding who we were
and what we required
Singapore was first of all selected as the best
place to conduct businessexcellent
infrastructure, strong legal framework,
reputation as a trusted business hub
Application management and development services
for Wiley-Blackwells core publishing
applications in UK USA
SCS Confidential
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Outsourcing vs Best Sourcing(Adopted By
Infocomm Development Authority (IDA) of
Singapore)
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Outsourcing ? Best Sourcing

• Finding the Best Source of Provider
• Engage Private Sector Provider if it is more
  effective and efficient

Best Sourcing
Outsourcing
In-sourcing
If private provider is more efficient

• If in-house team is more efficient
• Functions may also be in-sourced to other public
  agencies

Organisations have a choice of whether to Best
Source or Outsource
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Competitive Considerations for Best Sourcing
Cost Efficiency(labour, infrastructure, tax and
regulatory costs)
Conducive business and living conditions(politic
al stability, robust and trusted infocomm infra
quality, IPR, Cultural adaptability, data
protection)
Quality of Human Capital(availability and
skills, education and language, attrition rate)
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Best Sourcing Drivers Obstacles
Fear of change unknown
Lack of competencies
Staff issues
Lack of internal measures
Fear of loss of control
Budget cuts
Rising public expectations
Limited resources to meet new challenges
Cost savings
Focus on core
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How IDA built the IT Outsourcing Industry in
Singapore
Increase Revenue Employment
Stimulate Demand
Enhance Supply
Public Sector Demand
Private Sector Demand
Capability Development

• Leverage the governments Best-Sourcing Efforts
• Encourage foreign companies to work with local
  companies
• Leverage inter agencies campaigns (e.g. MOF)

• Enhance companies capabilities through
  certification programs (e.g. eSCM) formation of
  industry associations
• Develop manpower capabilities at all levels
  through BPO manpower framework, courses
  seminars
• Upgrade Infrastructure

• Demand aggregation
• Work with key verticals to seed projects
  Transport Log, Finance, Healthcare,
  Manufacturing
• Foreign demand inflow such as shared service
  centres
• Aggregation of SMEs

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IDAs Industry Development Efforts

• Promote Singapore as a global outsourcing hub for
  high value and mission critical activities
• Focus on attracting shared IT services BPO
  operations via supporting product
  development/pilots
• The hub and spoke model
• Ensuring a conducive business environment
• Ensure competitive overall business cost
• Includes Intellectual Property protection,
  security, data protection, etc
• Efficiency in preventing defects/re-do
• Develop manpower competencies
• Support development of industry standards, e.g
  Singapore standard on BC/DR

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Sample IDAs Outsourced Projects

• IT Services
• IT support (including Technical Applications
  Support
• Applications Development
• Tax filing Assessments
• Immigration Checkpoint Control
• Work Permits Employment Pass
• Housing applications
• Traffic Management Control
• Vehicle Licensing
• Manpower Management
• Hospital Systems
• eGovernment Applications
• System Administration and Operations

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Sample IDAs Outsourced Projects

• Document Management
• File Registry
• Digital Archive
• Library Services
• Administrative Functions
• Payroll processing
• Claims processing
• Cheque Processing
• Customer service counters
• Training Administration

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Market Tested Projects (Feb 03 Oct 05)

• 90 Projects (41)
• In-sourced
• Tends to involve small scope
• 72 (80) involve less than 10 headcount

128 Projects(59) Outsourced Value of contracts
S179M Annual operational cost savings S25M
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Some Outsourcing Statistics Information
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Outsourcing Market Size

• The size of the global BPO market by 2007 would
  be US173bn (Source Gartner)
• BPO market in the Asia-Pacific region, excluding
  Japan, to rise from US7 billion in 2006 to US15
  billion by 2011, recording a compound annual
  growth rate (CAGR) of 16 percent (Source IDC)
• Singapore Business Process Outsourcing (BPO)
  market is expected to grow from US565 million in
  2007, at an average annual rate of 12.7 per cent
  till 2011 to reach US900 million (Source IDC)

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Some Global Outsourcing IT Service Providers
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Top 30 Countries for IT Outsourcing (from Gartner)

• Americas
• Argentina, Brazil, Canada, Chile, Costa Rica,
  Mexico and Uruguay
• Asia/Pacific
• Australia, China, India, Malaysia, New Zealand,
  Pakistan, the Philippines, Singapore, Sri Lanka
  and Vietnam
• Europe, the Middle East and Africa (EMEA)
• the Czech Republic, Hungary, Ireland, Israel,
  Northern Ireland, Poland, Romania, Russia,
  Slovakia, South Africa, Spain, Turkey and Ukraine

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Positive Country Factors For IT Outsourcing

• Conducive and safe business environment i.e.
  easy to establish and conduct business
• Availability of physical (airport, seaport, etc)
  and IT infrastructure connectivity
• Top-class educated talent pool
• Strong legal framework and protection of
  intellectual property
• Vibrant economy stable government
• Free from natural disasters
• Competitive costs

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Singapores IT Profile
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Singapores IT Profile
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Singapores IT Profile
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Mongolia in IT Outsourcing
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How Mongolia Can Be A Niche Player?

• Identify Areas of Strength costs, focus
• Investment on Human Capital
• Continuous Upgrade of IT Skills
• Investment in IT Infrastructure
• Learn From and Work With Others Who Have Done It
  (e.g. Singapore, Korea, India)
• Market Its Services and Strengths
• Government Policies Support

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Thank You For Your Attention! ?