Building on our Collective Experience

1. Meeting the Challenges of Outsourcing Raomal Perera, CEO, Valista Building on our Collective Experience 6th Annual Conference

2. “We’re not lost, we’re locationally challenged”

3. looking back • 20 years ago US software companies were looking to enter Europe • cost was a key issue for them • there was the question of competitiveness • the challenge was how best to achieve success the answer was outsourcing to Ireland – the indigenous Irish industry was born • outsourcing challenges have existed for some time and this led to the birth of Ireland as a hub for outsourcing • outsourcing offered US companies • tax breaks • an educated, English speaking workforce • local presence and market intelligence • market dominance in Europe

4. outsourcing today • now Irish companies are faced with similar challenges • growing service capability globally • steady growth in Eastern Europe, India, China and South Africa • Ireland is no longer a low cost location • key markets are outside of Ireland • outsourcing is the answer

5. key challenges in offshore outsourcing • challenges exist in management of offshore operations: • time zone / communication • cultural differences • travel (time and reluctance) • building business culture • poor management • areas of responsibility

6. outsourcing objectives • build a scaleable offsite presence that delivers high quality products • leverage local resources • achieve significant cost reductions • build a development centre that gives you competitive advantage and not just cost advantage lack of understanding of local issues and culture will cause these objectives to fail

7. have a strategy • agreement of approach and confirmation of objectives • prepare consolidated information on costs and benefits • review current and future requirements • review the marketplace and in-house options • review management approaches • develop sourcing options and scope of possible changes • produce and agree recommendations and short term wins • develop an action plan • identify business requirements • recognise IS/IT requirements and resources

8. build a competitive advantage • software product development is a multi-disciplinary activity: • your offshore organization should be more than an engineering shop • look at it as more than an organization of tech people • create a smart strategy that lets you: • leverage the web as a marketing and lead generation tool • leverage local customers as beta testers and treat them as partners to develop your product • use the Internet to provide sales support via email and IM • develop vertical solutions around your product to market into new segments

9. what to outsource • outsource auxiliary activities and keep the core • treat the development centre as a startup that will learn from your expertise and time • as your offsite operations mature, send more critical work to them

10. who will manage the outsourcing? • choosing the right person will determine success and failure • you need someone who understands your target customer market and the local culture • this person needs to be hands-on and highly respected by the development engineers • should have a mix of technical and business expertise

11. cultural issues • not paying attention to cultural issues can lead to serious problems • their goals and aspirations are not the same as yours – recognize this • professionalism and ethics mean different things in different cultures – get to know their culture

12. sending ambassadors • sending ambassadors between sites improves communications and makes remote staff feel part of the team • alternate ambassadors between different offshore sites and rotate them every couple of months • send people with different skills – developer-oriented and business-oriented ambassadors, project managers • ambassadors help to solve technical and relationship problems and communicate informal information • pay attention to individual needs and preferences in choosing ambassadors (not everyone wants to travel)

13. common mistakes • believing you have all the information you need – it’s knowing what you don’t know, not what you do know • relying on traditional time and budget techniques rather than value – example benchmarking • over focussing on ROI to the detriment of other key determinants (risk) • adopting static models of benefits realization rather than acknowledging that things will change • relying on advice from consultants

14. strengths and weakness of outsourcing market • strengths • knowledge pool / talent • cost • strong industry body • pro-IT government • English skills • large indigenous market • competition which keeps costs controlled • weaknesses • high attrition • hesitancy to criticize • time difference • physical infrastructure • non-English skills • availability of management skills • bureaucratic processes

15. what’s the answer?

16. recommendations • define what your outsourcing plan is • balance risk versus return • be realistic about cost savings • blended solutions can offer the best of both worlds • choose the right person to lead your organization and hire the right team • outsource small auxiliary tasks and scale with time • work with a trusted partner with strong local presence • choose the right culture and strategy to implement it • focus on building a strong brand locally to attract top talent • think as one company across multiple cultures • do post-implementation assessments to track costs and benefits the rewards in terms of quality and cost saving can be significant

17. “Challenge is a dragon with a gift in its mouth. Tame the dragon and the gift is yours”

18. about Valista - some key facts • established in 2003 - merger of Network365 and iPIN • leader in micro and macro-payments, offer management, cash replacement • global, blue-chip customer base • 150 million users have access to Valista in 30 countries • offices in Japan, Asia, Europe, US, Latin America • world-class partnerships and OEM relationships • well funded by leading European, US and Japanese VCs • customer focus on mobile, fixed line operators and ISPs • extensive industry knowledge of global best practices

19. global awards - recognition Best Mobile Application Developer, GSMA Awards 2004 Top 100 Global Companies Gold Award for Business and Business Finance Award, 2003

20. Thank yourperera@valista.comwww.valista.com