Check out this video of an hysterical passenger screaming at airline staff and writhing on the floor after missing a flight at Hong Kong airport.

no more said…

Posted in : Absolutely Meaningless Comedy

There’s currently a certain sense of déjà-vu within the IT community, as companies look at shaving even more cost out of a function that has been battered since the 2001 dot-com bust. However, when we look at the lessons of the past, you do have to question companies which decide to sharpen their knives once more when they address their IT costs. Companies need to offset the cost of every layoff with the cost of replacing that talent when the economy improves. It is not so much who is left standing, but rather who is in position to grasp the brass ring of prosperity when it returns.

If economic conditions improve in 2010, then the amount of costs saved by releasing an employee may only be $50-100K by the time all the lay-off costs are incurred. How can you put a price on replacing the inherent business knowledge of that staff member when you re-hire a replacement? It may take another year or two to get the replacement up-to-speed, and will not only end up costing you more, but may also impede your executives from accessing critical data in a timely fashion. The overall cost of replacing that staff member could easily be three times the costs saved by laying her off. And these easily-identified direct costs are only the beginning; the costs incurred to your culture and morale can prove even more damaging.

There are lessons to be learned from those who did it right and those who failed to do so during the recession of 2001. The frequently cited observation by George Santayana warrants consideration, “Those who do not remember the past are condemned to repeat it.” Furloughed IT employees in the RIF of 2001 were often reluctant to return to their previous employer. Having been viewed as expendable, the trust and bond between the two may have become a casualty. Often the company belatedly discovered the employee was not at all expendable.

Companies often failed to realize that internal technology is an ongoing work in progress with parts of the past moving forward into the future. With essential team members no longer on board, projects bogged down due to a loss of internal expertise. If new employees were brought in, there were reduced capabilities with a learning curve to scale brought on by a unique IT environment.

IT is the glue that provides the connectivity within an organization and stakeholders. Every environment is unique, often featuring proprietary software and customized legacy systems. The complexity and diversity that results are best left in the hands of those who understand and are familiar with it. In 2001 firms laid off across the board only to discover that when times improved and IT projects resumed, many key people needed to implement them were no longer available. When entering into new engagements, some companies discovered that the chickens had come home to roost and that they were in the coop.

Whether outsourcing or aligning with business partners, management teams are built involving IT. And while outsourcing provides access to technical skills to support your tactical software support and maintenance, it rarely provides the inherent understanding of your business processes and environment that several of your key staff have.

Companies facing the challenges of 2001 with the foresight to prepare for renewed business opportunities in the future fared well. Instead, being reactive to the recession, they became proactive in their business. As opposed to across the board cuts, they applied due diligence and root cause analysis into their business. They prioritized strategically. In so doing, they were able to make adjustments to reduce unneeded expenses. Much of this involved taking advantage of global labor arbitrage for routine work. They also invested in initiatives to improve the business, often involving technology. It became apparent that the success of these initiatives was very much tied into keeping their key IT in-house people on the team.

There is a form of a parable concerning competitors who are prepared and those who are not. Two friends were walking in the forest when a bear came after them. They both turned and fled. One was not in very good condition and he breathlessly called out to his fit friend who was jogging along ahead, “You need to outrun the bear!!” “No I don’t,” came the reply. “I only need to outrun you.”

The current economic morass will not produce winners, but it will produce companies that are in more favorable positions to take advantage of opportunities at the expense of their more sluggish competitors when times improve. Cutting people that shouldn’t be cut can be cutting your throat.

Posted in : IT Outsourcing / IT Services, Sourcing Best Practises

as a new opportunity and responsibility for NASSCOM members, and reminded the group that NASSCOM’s work is now truly a global affair. Members from 22 countries are participating this year. 

Cisco CEO John Chambers delivered the event’s keynote. Mr. Chambers proved the ideal man for the task, given the ups and downs he’s experienced in his tenure at Cisco. His umbrella topics were global competitiveness and collaboration, accompanied, naturally, by a big plug for Cisco’s TelePresence technology. But it was his anecdote about Jack Welch telling him that “you’ll never have a great company until you have a near-death experience” that probably resonated best with the audience, most of whom have never been through a major downturn.

Indian Minister for Commerce and Industry Kamal Nath came next, charging NASSCOM to use the global economic crisis as a time to look inward to the Indian market opportunity. India’s IT sector has been heavily export focused, the largest players even more so. This has left much of the Indian IT opportunity, especially at the enterprise level, open to rivals IBM and HP. I agree with Minister Nath that Indian IT needs to be stronger domestically for another reason as well: the multinationals we work with all have emerging market IT strategies. Today, Accenture, HP, and IBM are better-positioned to advise on and support these operations than Indian service providers.

Then, finally, the session I had been anticipating the most: a panel discussion featuring Vineet Nayar, Nandan Nilekani, and S. Ramadorai, top executives of HCL Technologies, Infosys, and Tata Consultancy Services, respectively. TPI’s Dennis McGuire was there for buyer insight and color commentary as well. I was less interested in what the panel had to say than in how they would said it. Indeed, it was fairly predictable, if reassuring stuff – there is no question these companies will be around for the long haul. All agreed that there is a lot of efficiency to be wrung out of current operations and that uncertainty and volatility are the new normal. Mssrs. Ramadorai and Nilekani talked about deepening client relationships and helping them leverage existing scenarios while Mr. Nayar made no bones about aggressively seeking market share, i.e. “eating someone else’s lunch.”

Presumably it is Satyam’s lunch that we are talking about. But we didn’t talk about Satyam — none of the panelists even mentioned the company’s name, though the moderator did in a few joking asides. Of the ten or so questions from the floor, none were about increased client concerns with vendor financial transparency and viability.  The panel missed a major opportunity, perhaps the event’s only main stage opportunity, to address the biggest elephant in the room.

And so, while NASSCOM’s first day was reassuring, even inspiring, on many levels, there’s a lot more that needs to be said. I look forward to your comments and questions as the event unfolds — tomorrow brings the likely emergence of said elephant as I’m having breakfast with NASSCOM leadership and participating on two panels. Stay tuned.

Posted in : Business Process Outsourcing (BPO), IT Outsourcing / IT Services, Outsourcing Events

IBM is now offering employees, who would otherwise face layoffs from their North American jobs, the chance to work abroad through 'Project Match'. Destinations include Argentina, Brazil, China, Czech Republic, Hungary, Mexico, Poland, Romania, Slovakia, Slovenia, South Africa, Turkey, and United Arab Emirates. IBM will also help with moving costs and provide visa assistance. While some cynics will sneer at this scheme, at least Big Blue is doing something proactive to support at-risk staff, and also promote moving much-needed onshore talent into their emerging country delivery centers. Furthermore, maybe they'll pick up some good work habits and bring them home to the States when the economy improves?

Posted in : IT Outsourcing / IT Services

As we discussed last month, the Business Process Outsourcing market is maintaining double-digit growth as we move into 2009, fueled by increased uptake of source-to-pay, analytics, finance and accounting, HR and industry-specific services. WNS Global Services, one of the largest pure-play BPO providers, with revenues in excess of $500m, has posted a 15.9% increase in revenues for Q4 2008, over the corresponding quarter in the prior fiscal year.  WNS's main competitor Genpact is due to report on 18th February, and I would expect to see a similar revenue increase from them.  It really appears that BPO is finding its feet and

the troubled economy is not impeding growth, although you would expect some sectors, namely retail and manufacturing, will be delaying long-term commitments until the economic outlook stabilizes in the coming months.

Key contributors to WNS's growth included:

• Acquisitions in July and April 2008 of Aviva Global Services(AGS) and Call 24/7 Limited, respectively;

• Contract renewal for five years with SITA, a global specialist in air transport communication and information technology solutions, to enhance supply chain management and customer service;

• Contract renewal forthree-years with Centrica, to provide BPO services for its subsidiaries, British Gas and Direct Energy;

• Contract renewal for six years with SAS Airlines, the largest airline company in Scandinavia, to deliver passenger revenue accounting processes.

New research from AMR already indicates 20% growth in procurement and source-to-pay in 2008, and continual double-digit growth in both Human Resources and Finance and Accounting BPO domains.

Reasons for this uptake are primarily cost-savings on offer from lower-cost offshore labor, largely in India and Philippines, but also increased maturity in delivering BPO services underpinned by common technology platforms, which enables better process efficiencies. Moreover, the uptake of customized offshore services, namely in analytics and data management services has contributed to this market growth.

As the US recession deepens, and downward pressure is applied on US wages, we anticipate increased BPO uptake in lower-cost US locations, for example Albuquerque (New Mexico), Cincinnati (OH) and El Paso (TX), which are already benefiting from outsourcing service providers providing onshore BPO services that are primarily customer, employee and supplier-facing. I also believe the Obama administration will deliver legislation that encourages US firms to source work to onshore locations, which may slowdown BPO adoption, but will provide new employment opportunities to the flagging US economy.

Posted in : Business Process Outsourcing (BPO), Finance and Accounting, HR Outsourcing, kpo-analytics, Procurement and Supply Chain

Like many of you, I have been waking up in the middle of the night wondering what's going on with the global economies and how the world will look in a few months when we adjust to the new economic reality.  I started thinking about about the world when people lived within their means, took a job for a job's sake, and could plan for the future.  It then hit me hard – things have simply fallen out of proportion. 

When I graduated in '94 there weren't a lot of high-powered careers available to graduates – you took what you could get and worked at it until something better came along.  I actually started off in customer relations for a burglar alarm firm… doesn't make my LinkedIn profile, but it actually started me off on a track that somehow got me here (and I did have some hilarious conversations with London celebs with their alarms wailing in the background).

Let's talk about proportion and focus on the two staples in life - food and shelter.  By 1996, I was flying high as an analyst earning a whopping $30K a year (about the same as an Oracle developer in Bangalore today).  I also purchased an apartment for $100K.  In those days you could borrow 3 times your annual salary – that was it.  The cost of groceries was about $40 a week, and a good restaurant meal was never more than $35 a head.  I'll stop there.  While my salary seems terrible by today's standards, I didn't build any debt and I had a mortgage that was manageable for a property that was fairly valued.  Life was good, and I slept well at night.

Take 2008.  The equivalent salary for a graduate-level analyst is about $50K.  The cost of that equivalent apartment is $300K (6 times the salary), weekly groceries $75 and a good meal $60 (if you're lucky and the wine's cheap).  There's no feasible way you can enjoy the same quality of life without mortgaging yourself way beyond your means and delving deep into credit-card debt.  What's worse is that debt has become part of life for so many people.  And that's precisely what happened, and now everyone's paying the price.

The optimum way out of this crisis is for these proportions to be redressed, however painful it may be. 

Posted in : Business Process Outsourcing (BPO)

I've been avidly following Robert Peston's coverage of the economic crisis.  Peston is the BBC's business editor and has built a stellar reputation for reporting the key facts on what went so massively wrong and what we can do to emerge from this crisis. His recent BBC radio discussion with Robert Wolf, Financial Times's chief economic commentator, Richard Lambert, director general of the CBI and Roger Carr, the chairman of Centrica and Cadbury, is well worth hearing.  Key points discussed:

• The UK is the most vulnerable economy, due to its unprecedented housing bubble and over-reliance on the financial services sector.

• The strong sense of denial is fading – there aren't going to be any winners out of all this, just relative advantage. 

• Not everyone yet grasps this is a massive structural change – we're not going back to 2006.  The massive consumer-led debt boom cannot be repeated.  We might go back to fast growth, but the whole pattern of global demand will have to be different for that to happen.  The world economy will have to be re-balanced in different ways.

• We've done a very good job of driving short-term stimulus and saved the banking system, but the long-term solution has to be the restoration of healthy private sector demand across the world: that is the next stage of getting back to a healthy economy…but does the private sector understand this?  There is an increasing awareness that we are interdependent.  Unless the strong support the frail we will have continuing difficulty.

• We must protects the emerging economies now and change the way we finance them.  The IMF resources need to be bigger to protect developing economies.

• We need to have serious intelligent dialog with the Chinese on how to make their growth more compatible with global stability.

All-in-all, you can really start to guage how crucial the role global sourcing has to play as we emerge in a new economic structure.  The inter-dependencies across economies and businesses can be managed more effectively by firms adopting multi-cultural, multi-lingual and multi-regional delivery models. Both governments and businesses need to embrace both local and global talent to restore private sector demand over the long-term.  What is abundantly clear is that we don't fully realize how this structure will ultimately develop, but we are quickly understanding the basics of what needs to change.  The next stage is for both governments and business to work together on stimulating long-term demand and making these inter-dependencies really function effectively.

Posted in : Business Process Outsourcing (BPO)

Folks – it's challenging cherry-picking which events are worth going to this year with everyone cutting back on the travel costs, but one you should definitely have on your calendar is IQPC's Shared Services Week, where I am hosting their F&A BPO session entitled Going Beyond the Letter of the Contract: Deriving Business Value From Your F&A BPO Experience, where I will be joined by my industry BPO friends Graham Russell (Astrazeneca), John Transier (Unilever), Mike Monaghan (Wells Fargo) and Sunil Narang (Level 3). Check out the session at 3.35pm on March 24th. 

And even if you can't make the week, you can still catch the highlights here, with the Horses being the official blog for the show.

IQPC have offered Horses readers a discount offer: 2-for-1 Special – Bring a colleague FREE when you purchase a main conference pass at standard pricing.  Reference code IUS_HFS_#1 to receive this discount. *Open to end-users only.

So why attend?

*A focus on quick wins for your shared services organization, with highlights on meeting short-term immediate gains and cutting costs without jeopardizing service levels

*An expert speaker faculty, including 4 Chief Economists, to demonstrate how to use survive the economic downturn and come out stronger on the other side

*Easy-to-customize conference experience: Choose between 7 tracks, including HR Transformation, Sourcing, Talent Management and Blue Sky Innovation Room, 3 Master Classes, 4 site tours and 16 workshops

*Expanded Exhibition Hall, networking opportunities and an exciting new year for the Annual Shared Services Excellence Awards.

4 Chief Economists will be speaking

Gregory Miller, Chief Economist, Sun Trust Banks
Brian Fabbri, Chief U.S. Economist for North America, BNP Paribas
David Wyss, Chief Economist, Standard & Poor’s
W. Michael Cox, Chief Economist, Federal Reserve Bank of Dallas

For more information, please contact: Kim Vigilia, IQPC || Ph: 212-885-2753 || [email protected] || www.linkedin.com/in/kimvigilia

Posted in : Captives and Shared Services Strategies, Finance and Accounting, Outsourcing Events

I was stupefied to observe Alliance Global Services, a privately-held IT services shop, join the Satyam ambulance-chasers by promoting it's "IT Partners Bill Of Rights".  Alliance is hoping to get 100,000 signatures supporting some version of its bill of rights and to have the document serve as a platform to establish a "global ethic consortium for IT services vendors":

1. The right to demand transparency throughout every step of an engagement — from sales to contracting to delivery and termination
2. The right to fully understand the nature and character of an IT partner and the service that it provides to them
3. The right to fully understand the financial viability of an IT partner
4. The right to be made aware of any impending legal charges against an IT partner, should they arise, as soon as they occur
5. The right to arrive at a mutually agreed upon definition of the term "trusted partner"
6. The right to expect a clear contract that defines fees and expenses up front before any agreement is signed
7. The right to terminate a relationship with no financial penalty in the event of any admitted fraudulent activity
8. The right to demand the existence of a truly independent board of advisers
9. The right to expect the presence of an independent financial auditor accompanied by a set of checks and balances
10. The right to demand accountability for any actions taken within the scope of a technology project or as part of a firm's broader business practices

While I cannot argue with any client requesting any of the above from an IT vendor (or any client of any services supplier in any industry for that matter), this media-marketing is shamelessly exploiting the Satyam situation to market its own services and take advantage of media-hounds hungry to add fuel to this controversy.  One vendor cooks the books and suddenly the whole world of offshore outsourcing is crooked? Would this action really have prevented Ramalinga Raju doing what he did?  Puh-lease!

Posted in : Confusing Outsourcing Information, IT Outsourcing / IT Services

This credit-crisis-fueled recession is testing us far more deeply than merely everyone shaving a few costs while we ride this sucker out. And while it hurts, a little pain should bring about some positives that go far deeper than mere penny-pinching. We need to dig deeper to understand more about what makes us good people: fun to be with, smart to do business with, and decent returners-of-favors. I have always (somewhat naively) operated on the “what goes around comes around” principle, but I truly believe these times will help many of us get what we deserve. I don’t mind doing people favors – I just don’t do them twice if the first one never got returned when I needed it.

But we will come out of this, and we will emerge a bit smarter, a bit leaner, a bit more streetwise, and I firmly hope this will bring the best qualities out of us. We may emerge a few percentage points poorer than when we went into this, but the world we will be living in should be one where we help each other out more, and appreciate what we have.

When I look at the way many corporates and people behaved during the greed years, I sincerely hope these experiences bring a degree of humility to us all. I live and die by my friendships – whether personal or work-related, and I know many of you who have the same principles will get through the next couple of years. However, we all know people who just focus on what they can get out of others and rarely put back – those are the people I fear for in this economy, and I hope learn to act with more humility as a result.

Anyway, I will finish this little diatribe with a couple of points about how to treat our friends and colleagues:

People: remember who your friends are. Stop thinking just about your career and your self-interest, but take some time to get to know people a little better – and not simply those aspects that can further your own goals and ambitions

Work: use this episode to get smarter at what we do. Focus heavily on providing value and put in a little extra time and effort. If you are lucky enough to be in a job, remember the unluckier folks who helped you along the way, and take some time to see if you can help them out. If you are one of the unlucky ones, call in your favors – you will quickly learn who your real friends are…

I write this piece at 37,000 feet above the Atlantic, it's my birthday… and I need a break from this presentation, so forgive me this little opinionated indulgence…just this once 🙂

Posted in : Absolutely Meaningless Comedy, Sourcing Best Practises