Best Practices in IT Outsourcing William Liu Chairman, Stream Global Pte Ltd

1. Best Practices in IT OutsourcingWilliam LiuChairman, Stream Global Pte Ltd

2. What Is Outsourcing? Outsourcing is contracting with another company or person to do a particular function The external firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers Outsourcing is sometimes referred to as Business Process Outsourcing (BPO) & Off-Shoring

3. Types of IT Outsourcing

4. Why Do Organisations Outsource? Lower total cost of ownership (lower permanent headcount cost) Access to a larger skilled IT workforce than what is available in-house Focus on Company’s Core Buisness Tap Into Innovation/Ability To Respond Ensure consistent delivery via Service Level Agreements (SLA) Manage Outcome versus Resources Overall, to reap better value

5. Stages of Outsourcing

6. Criteria For Selecting Outsourcing Partner In depth understanding of customer requirements Value for money Able to deliver quality service on time Cultural match; Responsive & easy to work with Proven track record Strong change management methodology Use of world-class frameworks and tested methodologies such as CMMi, ITIL, ISO, etc Global Footprint

7. Key Ingredients For Successful IT Outsourcing Top management commitment Clearly defined Service Level Agreements Trust between customer and supplier Track changes & measure outcomes Open and timely communication & knowledge sharing Integrated customer and supplier team that works together as one team – form a “customer-supplier partnership” [e.g.: before the contract is awarded, customer and supplier are on opposite sides of the table, but once the contract is awarded, they are on the same side facing the end-users]

8. Some Case Studies From Singapore

9. (1) Singapore Government IT Infrastructure OutsourcingAwarded February 2008(SOEasy)

10. Standard ICT Operating Environment (SOEasy) Largest public sector information technology project in Singapore Effort by Government to standardise desktop computing system is a world first Users: 60,000 civil servants in 74 government agencies Expected savings: 28% of operating costs or S$500 million over 8 years Consortium: EDS, Singapore Computer Systems (SCS), Alcatel-Lucent, Cisco Systems, Microsoft, FujiXerox, SingTel, Frontline, Avanade

11. Features of SOEasy Harmonising desktop, messaging and network environments across all government agencies Introduction of collaborative tools such as instant messaging, desktop video conferencing services and whiteboard sharing Greater mobility as officers can seamlessly access government resources from anywhere, at anytime More regular and non-intrusive security updates

12. (2) Web-based Electronic Business / Company Registration & Filing System For Singapore ACRA outsourced the BizFile application, infrastructure, hosting and helpdesk to IT Service Co, Singapore Computer Systems Reduces business/company registration & filling times from days to minutes due to streamlined and automated processes Improves compliance by enabling monitoring of statutory disclosure requirements

13. (3) Call Centre Outsourcing Organisations outsource call centre building and management to service providers such as Singapore Computer Systems (SCS) & NCS SCS designs & builds fail-safe telco-grade call centres e.g. StarHub (Singapore), StanChart (Singapore), Samart (Thailand), Hutchinson (Indonesia) Managed call centre services Over 200 seats In-bound and out-bound calls State-of-the-art technology Real-time service tracking High service availability Sample customers: ACRA, MOM, MINDEF, Temasek Poly Enhance customer interaction experience through multi-channel touch points (Phone, Email, Fax, Web, Online Chat, etc)

14. (4) Business Continuity:Singapore is the first in the world to have a Business Continuity/Disaster Recovery Standard SCS’ Business Continuity Centre: Established since 1987 Over 100,000 sq ft of space Over 150 customers outsource BC/DR to SCS First batch to be certified as Full BC/DR Provider based on Singapore’s Standards (2005) First in Singapore – ISMS Certified for BC/DR

15. (5) Application Outsourcing to Singapore by Global Publishing House

16. Outsourcing vs Best Sourcing(Adopted By Infocomm Development Authority (IDA) of Singapore)

17. Outsourcing ? Best Sourcing

18. Competitive Considerations for Best Sourcing

19. Best Sourcing Drivers & Obstacles

20. How IDA built the IT Outsourcing Industry in Singapore

21. IDA’s Industry Development Efforts Promote Singapore as a global outsourcing hub for high value and mission critical activities Focus on attracting shared IT services & BPO operations via supporting product development/pilots The hub and spoke model Ensuring a conducive business environment Ensure competitive overall business cost Includes Intellectual Property protection, security, data protection, etc Efficiency in preventing defects/re-do Develop manpower competencies Support development of industry standards, e.g Singapore standard on BC/DR

22. Sample IDA’s Outsourced Projects IT Services IT support (including Technical & Applications Support & Applications Development Tax filing & Assessments Immigration & Checkpoint Control Work Permits & Employment Pass Housing applications Traffic Management & Control Vehicle Licensing Manpower Management Hospital Systems eGovernment Applications System Administration and Operations The above illustrates some of the projects which were outsourced. And among which, are heavily dependent or enabled by IT. For example, IT services (this is straight forward), other IT services includes Data Center facilities and services. E.g. storage, archiving, BC/DR, security etc. Document mgt includes the entire span of process where information is captured at starting point in digital format, which allows digital archiving, BC/DR, as well as other database administration, and cross databases administration. Even to the scenario of cross agencies. Others such as library services embark upon RFID technologies and database management Some of the administrative functions are also business process re-engineered, to allow digitalisation weaved into the work flow. This reduce human effort, error, and fraud while increasing efficiency and accuracy. The above illustrates some of the projects which were outsourced. And among which, are heavily dependent or enabled by IT. For example, IT services (this is straight forward), other IT services includes Data Center facilities and services. E.g. storage, archiving, BC/DR, security etc. Document mgt includes the entire span of process where information is captured at starting point in digital format, which allows digital archiving, BC/DR, as well as other database administration, and cross databases administration. Even to the scenario of cross agencies. Others such as library services embark upon RFID technologies and database management Some of the administrative functions are also business process re-engineered, to allow digitalisation weaved into the work flow. This reduce human effort, error, and fraud while increasing efficiency and accuracy.

23. Sample IDA’s Outsourced Projects Document Management File Registry Digital Archive Library Services Administrative Functions Payroll processing Claims processing Cheque Processing Customer service counters Training Administration The above illustrates some of the projects which were outsourced. And among which, are heavily dependent or enabled by IT. For example, IT services (this is straight forward), other IT services includes Data Center facilities and services. E.g. storage, archiving, BC/DR, security etc. Document mgt includes the entire span of process where information is captured at starting point in digital format, which allows digital archiving, BC/DR, as well as other database administration, and cross databases administration. Even to the scenario of cross agencies. Others such as library services embark upon RFID technologies and database management Some of the administrative functions are also business process re-engineered, to allow digitalisation weaved into the work flow. This reduce human effort, error, and fraud while increasing efficiency and accuracy. The above illustrates some of the projects which were outsourced. And among which, are heavily dependent or enabled by IT. For example, IT services (this is straight forward), other IT services includes Data Center facilities and services. E.g. storage, archiving, BC/DR, security etc. Document mgt includes the entire span of process where information is captured at starting point in digital format, which allows digital archiving, BC/DR, as well as other database administration, and cross databases administration. Even to the scenario of cross agencies. Others such as library services embark upon RFID technologies and database management Some of the administrative functions are also business process re-engineered, to allow digitalisation weaved into the work flow. This reduce human effort, error, and fraud while increasing efficiency and accuracy.

24. Market Tested Projects (Feb 03 – Oct 05) *The purpose of this slide is to impress the point that most of the projects are on an outsourced basis, Singapore had ran a series of tested projects in Feb 03 to Oct 05 – and it reflected great success. And we had observed that for those being insourced, it is usually those of smaller scale. The outsourcing portion had resulted in tremendous savings. Although it has been reflected as $ value, there are other efficiencies in terms of intangible resources saved. Which translate into usage of these resources for other projects needed.*The purpose of this slide is to impress the point that most of the projects are on an outsourced basis, Singapore had ran a series of tested projects in Feb 03 to Oct 05 – and it reflected great success. And we had observed that for those being insourced, it is usually those of smaller scale. The outsourcing portion had resulted in tremendous savings. Although it has been reflected as $ value, there are other efficiencies in terms of intangible resources saved. Which translate into usage of these resources for other projects needed.

25. Some Outsourcing Statistics & Information

26. Outsourcing Market Size The size of the global BPO market by 2007 would be US$173bn (Source: Gartner) BPO market in the Asia-Pacific region, excluding Japan, to rise from US$7 billion in 2006 to US$15 billion by 2011, recording a compound annual growth rate (CAGR) of 16 percent (Source: IDC) Singapore Business Process Outsourcing (BPO) market is expected to grow from US$565 million in 2007, at an average annual rate of 12.7 per cent till 2011 to reach US$900 million (Source: IDC)

27. Some Global Outsourcing IT Service Providers

28. Top 30 Countries for IT Outsourcing (from Gartner) Americas Argentina, Brazil, Canada, Chile, Costa Rica, Mexico and Uruguay Asia/Pacific Australia, China, India, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Sri Lanka and Vietnam Europe, the Middle East and Africa (EMEA) the Czech Republic, Hungary, Ireland, Israel, Northern Ireland, Poland, Romania, Russia, Slovakia, South Africa, Spain, Turkey and Ukraine

29. Positive Country Factors For IT Outsourcing Conducive and safe business environment; i.e. easy to establish and conduct business Availability of physical (airport, seaport, etc) and IT infrastructure & connectivity Top-class educated talent pool Strong legal framework and protection of intellectual property Vibrant economy & stable government Free from natural disasters Competitive costs

30. Singapore’s IT Profile

31. Singapore’s IT Profile

32. Singapore’s IT Profile

33. Mongolia in IT Outsourcing

34. How Mongolia Can Be A Niche Player? Identify Areas of Strength: costs, focus Investment on Human Capital Continuous Upgrade of IT Skills Investment in IT Infrastructure Learn From and Work With Others Who Have Done It (e.g. Singapore, Korea, India) Market Its Services and Strengths Government Policies & Support

35. Thank You For Your Attention! ?