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Introduction

Industry trends

Engagement models

Governance

Innovation

Case Study

Summary & Wrap Up

Agenda

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Industry Trends

Project-based Outtasking SUPPLIER

Project-based Outsourcing VENDOR

Programmatic Outsourcing BUSINESS PARTNER

Strategic Sourcing STRATEGIC

PARTNERSHIP

1980s 1990s early 2000s 2010s

Evolution of Outsourcing Vendors

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The offshore outsourcing trend and practice is due for a transformation.Client concerns about changing business objectives, the proliferation of “as-a-service” offerings, and demand for deep industry specialization suggest that only the most collaborative, innovative, and trusted vendors will succeed.

Forrester

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• The number of external IT service providers that buyers use, on average, is already too high.

• Organizations continue to show a wider interest in outsourcing.• Organizations are looking for better ways to manage strategic

providers. • Clients are less tolerant of finger pointing in a cost-focused

market. • Alliance offerings from outsourcers are gaining traction.

Outsourcing Trends - Gartner

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Key ThemeEngagement Models

• Time and materials (still the most common). • Portfolio-based pricing based on SLAs. • Managed Services (Volume-based). • Managed Services (Metrics-based). • Co-Innovation.• Hybrid.

Engagement Models

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This allows the client IT to engage with the organization better, as an enabler of business results, going beyond the traditional role as a procurer of services

Areas which can provide high

returns in terms of business

alignment for time & effort

invested

Activities which can be

competently performed by

mature vendors with some

oversight by the Client IT

Organization

Typical Split of IT Organization focus in Staff-augmentation

Typical Split of IT Organization focus in managed services

IT Direction Setting

Vendor Performance Management

Business Liaison

IT Project Management

IT Direction Setting

PartnerPerformanceManagement

IT Project Management

10%

15%

25%

50%

35%

20%

35%

10%

Technology visioning, Architecture direction

Relationship metrics, Value monitoring and management

Business value monitoring and management

Day-to-day monitoring of project progress

Business Liaison

Enables the IT organization to focus on areas where it can add value vs. primarily monitoring

Managed Services

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LOB 1

Consolidation is the natural evolution of most outsourcing strategies

Pre-Outsourcing

In House

Arbitrary Outsourcing Logical Outsourcing

Outsourcing adoption timeline80’s/90’s 2000’s 2010’s

• Minimal use of contractors

• Local work• High cost• Lower

productivity, e.g. no global delivery

• Widespread use of contractors

• Adoption of global delivery

• Contract awards largely driven by hourly rates

• Ad hoc selection of vendors

• Peak benefits achieved within several years

• Focus on handful of key “strategic vendors” to do vast majority of work

• Adoption of new commercial models focused on results, not inputs

• Contracts awarded based on work history, capabilities and synergies with existing work

In -House

In House

In House

LOB 2 LOB 3 LOB 1

LOB 2

LOB 3

In -House In -House

Vendor A

Vendor B

LOB 1

LOB 2

LOB 3

In -House In -House In -House

Vendor A

Vendor C

Vendor Consolidation

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Key ThemeGovernance

• An ability to adapt effectively in a rapidly-evolving high-pressured environment

• Effective management of program scope

• Effective management of program stakeholders

• Efficient resolution of problems and addressing the “gray areas” of the contract

• Ability to review and provide approval to explore new avenues for innovation and improvement

• Reduced coordination costs

• Less time wasted due to poorly-managed conflict

Effective governance leads to both value creation and reduced cost of coordination for the Client and Sourcing Partner

Value of Governance

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Poor transition deliverable quality

Transition teams not ready at cutover

Missed transition deadlines

Insufficient knowledge transfer and testing (unit, system, service, process) prior to go-live

Poor personnel on-boarding/transfer process between the client and service provider

Insufficient transition management (skills,tools, knowledge) by both parties

Inadequate transition project planning and due diligence

Ineffective relationship and programme governance during transition

Lack of understanding of the deal/scope by transition teams and client business units

0% 20% 40% 60% 80%

4%

7%

9%

9%

15%

33%

40%

58%

73%

Source - EquaTerra

Governance - Root causes of Transition Failure

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Key ThemeInnovation

Improved cost savings, customer service, revenue, and productivity, require innovation

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MOBILE WALLET

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DIAGNOSTICS ON MOBILE

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Case Study

THANK YOU

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