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Table of Contents

Insights
Heeding the Siren Call

Customer Voice
Seamless International Outsourcing

Getting it Right on the Third Try

Supplier Voice
Banking on Indian Outsourcing

Analyst Voice
Americans and Indians Tame the Internet Frontier

Legal Voice
International Disputes

Special Feature
What Mistakes Can IT Buyers Make? Let Me Count The Ways

BPO Voice
ASP Adds BPO Offerings for Vertical Markets

Government Perspective
Activity Based Management Drives Government Improvement

Should You Do What You're Doing?

Activity Based Management Governs Government Cost Savings

Academic Voice
Is Outsourcing Research Relevant?

The other day a CIO phoned. He was very upset. His company's future was at stake.

His staff had devised what they thought was the next killer app. Finding funding was relatively simple. He discovered that hiring, recruiting and training programmers was the problem.

Even though he paid a pretty penny to attract the talent he wanted, he still had to contend with an on-going turnover rate of 30 percent. Programmers kept leaving his project, hearing the siren call of more money and better stock options elsewhere. But disaster struck when the entire team gave notice. They had heard the siren call, too. They were starting their own dot.com.

Here at the Outsourcing Center, I hear a variation of this story all the time. American IT experts are a hot commodity and they know it. When the seductive lure of the siren calls, they are gone in a flash.

Fortunately, another siren is calling these employers who are left in the lurch. It is the siren call of offshore outsourcing.

The omnipresent Internet has opened up new talent pools for outsourcing buyers. Now companies in Bangor (Maine) can access talent in Bangalore (India). American companies have discovered deep talent pools on the Indian subcontinent, in eastern Europe and in the Philippines. These programmers are well trained and, so far, underutilized.

The Price is Right

Since they are available, offshore programmers can quickly assemble a team and dive into a project. In this hot market, delays can be more costly than the cost of development.

And the price is right. At last count, offshore programming produced savings of up to 80 percent of the cost of producing the applications in the U.S. And meeting tough deadlines is a hallmark of offshore outsourcing.

Buyers who don't want to travel half way across the world have another option to ensure they purchase quality when they select an offshore outsourcing supplier. They can use the Outsourcing Center's Outsourcing Exchange. The Exchange allows buyers to use the Internet to find an appropriate supplier. Buyers can search the 2,000 member supplier database by geographic region, business process, industry or certification.

The Exchange provides buyers a cost-effective way to contact suppliers, then contract with them. It bridges the distance gap by letting your fingers do the walking because buyers can complete the entire bid process on-line. The Exchange eliminates the cost of traveling halfway across the world to negotiate with a supplier.

Similarly, using the Exchange saves suppliers dollars, too, because they don't have to travel to a buyer's headquarters to study its current way of doing business. The supplier typically tacks these charges onto its outsourcing contract, so buyers end up saving this cost, too.

Exchange Tools

The Exchange allows buyers to download tools to help them prepare all the documentation they need to consummate an outsourcing contract. All the tools are based on the industry's best practice standards. The key tools include the Bid Document (similar to a Request for Proposal), Service Descriptions and Service Level Specifications. The site even includes an outsourcing contract.

These documents are 90 percent complete. Buyers just have to customize the tools to apply to their specific situations. The tools allow buyers to share detailed specifications of their projects with the suppliers. Buyers can specify Service Level Agreements (SLAs) as well as their governance requirements. Intellectual property protections, even requisite hiring practices can be added.

Using the Exchange saves another scarce resource: time. Email is a speedy way to communicate. Most outsourcing contracts take between six and nine months to hammer out. The average contract time using the Exchange totals only three weeks.

The on-line negotiations assures market competition pressure pricing until both sides sign a contract. The tools also place buyers on a level playing ground with suppliers. This is a huge advantage for buyers outsourcing for the first time.

Easy to Find the Right Provider

In today's business environment, buyers can't afford to ignore the advantages of outsourcing offshore. The Outsourcing Exchange makes it easy to find the right provider, even if it is 10 time zones away.

Lessons from the Outsourcing Primer:

• Offshore outsourcing solves the talent shortage in America. Key areas include the Philippines, the Indian subcontinent and eastern Europe.
• Offshore outsourcing allows buyers to complete projects faster since deep pools of qualified talent are available at short notice.
• Offshore outsourcing is cost-effective, saving American companies up to 80 percent of their development costs. This cost savings makes it important to consider outsourcing offshore.
• The Outsourcing Exchange helps buyers find all types of qualified vendors, including offshore, using the Web.
• The Exchange allows buyers to negotiate an outsourcing contract online by providing all the tools needed to consummate an outsourcing agreement.
• Using the Exchange saves buyers time and money.

Publish Date: August 2000

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Copyright © 2000 - Everest Partners, L.P.

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