workforce preparation in an outsourcing worldtechnical services – accounting, auditing,...
TRANSCRIPT
Workforce Preparation in an
Outsourcing World
Thomas J. KadelbachDirector THE INFORMATION COMPANY TM
Offshore Outsourcing
Offshore Outsourcing Overview & ImpactCTE in an Information Age
$28,000 $37,000$1,600 $2,500
How much will you pay?
$75/hour $20/hour
Accountant
What is offshore outsourcing?
The migration of part or all of the value chain to a
low-cost location outside the US
Source: “Offshore Outsourcing: Business Models, ROI, and Best Practices” by Marcia Robinson and Ravi Kalakota 2004
Criteria: Successful Offshoring
High level of information content that can be standardized and digitizedJob processes that can be separated and documented step by stepNo face-to-face customer service requirements
Source: “International Trade: Current Government Data Provide Limited Insight into Offshoring of Services” GAO-04-932
Job Categories Impacted
Software programming and designCall center operationsSoftware research and testingArchitectureEngineering
Business and financial operationsOffice and administrative supportMedical transcriptionistsParalegals and legal assistants
Customer Care Example
Complaints
New customerregistration
Account activation
Order taking
Billing queryresolution
Customer service
Support
Customer win-back
Campaign management
Inbound e-mail
Surveys &polling
Telemarketing
Outbound e-mail
Marketing
Co-browsing
Web chat andweb callback
Outbound Sales
In-bound sales
Sales
Problemresolution
Help desk
Address update
Applicationsupport
Data verification
TechnicalSupport
Complaint analysis
Reporting
Quality auditing
Profitability analysis
CustomerAnalytics
Offshore Customer Care Chain
Source: “Offshore Outsourcing: Business Models, ROI, and Best Practices” by Marcia Robinson and Ravi Kalakota 2004
Customer Care Example
Complaints
New customerregistration
Account activation
Order taking
Billing queryresolution
Customer service
Support Marketing Sales TechnicalSupport
CustomerAnalytics
Offshore Customer Care Chain
Source: “Offshore Outsourcing: Business Models, ROI, and Best Practices” by Marcia Robinson and Ravi Kalakota 2004
Finance & Accounting Example
Credit Management
Payroll
Travel & expensereimbursement
Accounts payable
Accounts Receivable
TransactionProcessing
Bookkeeping
Accountreconcilliations
General ledger
Fixed asset Acct.
GeneralAccounting
Cash Management
Capitol Planning
Cost Acct.
Budget &forecasts
Management Acct.
Financial analysis
FinancialManagement
Quarterly/year-endreporting
External audit support
Statutory/externalreporting
Consolidations/eliminations
Variance analysis
Financial statements
FinancialReporting
Payroll tax
Foreign exchange
Federal tax returns
Quarterly tax
Unemployment
Internal audit
TaxProcessing
Offshore Finance & Accounting Chain
Source: “Offshore Outsourcing: Business Models, ROI, and Best Practices” by Marcia Robinson and Ravi Kalakota 2004
Finance & Accounting Example
Credit Management
Payroll
Travel & expensereimbursement
Accounts payable
Accounts Receivable
TransactionProcessing
GeneralAccounting
FinancialManagement
FinancialReporting
TaxProcessing
Offshore Finance & Accounting Chain
Source: “Offshore Outsourcing: Business Models, ROI, and Best Practices” by Marcia Robinson and Ravi Kalakota 2004
Offshore Drivers
Cost pressures on US/European Companies and expansion into global marketsRapid decline in communication and computing costsDramatic improvements in Internet reliability and functionalityAccess to low-cost, highly skilled employees, especially for labor intensive tasksQuality suppliers for offshore servicesA proven business model i.e. GE, American Express
Source: “Offshore Outsourcing: Business Models, ROI, and Best Practices” by Marcia Robinson and Ravi Kalakota 2004
The Value PropositionOnshore
100%30%
20%
20%
30%
Offshore
US/EuropeCosts
LaborCosts
AddedTransaction
Costs
AddedMonitoring
Costs
OverallSavings
Source: “Offshore Outsourcing: Business Models, ROI, and Best Practices” by Marcia Robinson and Ravi Kalakota 2004
2003 Salary Comparisons
0102030405060708090100
Graduate from top-tieruniversity
IT Professional 5years exp.
USUKIndia
US
$ in
Tho
usan
ds
75K
96K
26K
45K 48K
6.5K
Captive Shared
Services
Shared Services
Internal Delivery
Offshore Development
CentersCosourcingN/A
Offshore Outsourcing
Pure Outsourcing
Contracting Staff
Augmentation
1st Generation Business Models
Onsite Offsite samecountry
Offshoreforeign country
Third-partyvendor
Joint venture(collaborative)
CompletelyOwnedsubsidiary
Geographic location
Rel
atio
nshi
p st
ruct
ure
Source: “Offshore Outsourcing: Business Models, ROI, and Best Practices” by Marcia Robinson and Ravi Kalakota 2004
Build-Operate-Transfer Model
2nd Generation Business Models
Onsite Offsite samecountry
Offshoreforeign country
Third-partyvendor
Joint venture(collaborative)
CompletelyOwnedsubsidiary
Geographic location
Rel
atio
nshi
p st
ruct
ure
Global Shared Services
Global Delivery Model
Source: “Offshore Outsourcing: Business Models, ROI, and Best Practices” by Marcia Robinson and Ravi Kalakota 2004
Offshoring Gets Noticed
Growth of OutsourcingImpact on jobs
US Gross Domestic Product 2002
Total GDP = $9.2 Trillion
Goods22%
Services78%
Source: “International Trade: Current Government Data Provide Limited Insight into Offshoring of Services” GAO-04-932
US Imports & Exports 2002
Goods84%
Services16%
Total imports = $1.4 trillion
US imports
Goods30%
Services30%
Total exports = $974 billion
US exports
Source: “International Trade: Current Government Data Provide Limited Insight into Offshoring of Services” GAO-04-932
Increased Imports of BPT
Business, Professional, and Technical services
– Accounting, auditing, bookkeeping
– Architectural, engineering and other technical
– Computer and data processing
– Database and other information
– Legal– Management, consulting,
and public relations– Research, development
and testing
0
10
20
30
40
Import of services inbillions
1997 2002
$21.2
$37.5
Source: “International Trade: Current Government Data Provide Limited Insight into Offshoring of Services” GAO-04-932
Employment Environment
2.51.8
0.50.2
-1.2-2.9
-4.5-5.7-6.1
-7.2-7.2
-7.9
-10 -8 -6 -4 -2 0 2 4
Accounting and Bookkeeping (760)
Telecommunications (1,048)ISPs, Search eng & data proc. (408)
Payroll (132)Computer sys design & related (1,122)
Software publishers (241)Telephone Call Centers (367)
Business Support (753)
Total nonfarm (132,325)Architectural and engineering (1,281)
Scientific R & D (562)Legal (1,162)
Annual average percentage change in private sector employment inselected industries, from March 2001-June 2004
Percent
Source: GAO-04-932 Notes: June 2004 employment level is given in thousands in parenthesis.
Macro Level - Becoming airport buildersMicro Level – Rigor, Relationships, and Relevance
CTE in an Infomation Age
Becoming Airport Builders
Move away from being Air Traffic ControllersAreas to make stronger and more accessible
– Education & skills– Infrastructure– Social & Legal– Research & Development
Rigor, Relationships, Relevance
Source: www.careerclusters.org
TrainingField Services
Customer Requrements
IT Outsourcing
Help desk supportApplication testing
Remote diagnosticsApplication maintenanceApplication DevelopmentApplication Customization
Application hostingPrototype development
Documentation development
ITStrategy
GovernanceProject Office
Stra
tegic
High
Low
Send Offshore
No
Yes
What should students be learning?
Teach these concepts in a real-world context with increasing sophisticationTranslationCollaborationHighest quality thinkingGlobal and Local World ViewBoldness - “Fortune favors the Bold”
What version of software?It doesn’t matter
http://academy.oracle.com
THE INFORMATION COMPANYTM