Outsourcing: Who Needs It? Who Wants it?

1. Outsourcing: Who Needs It?Who Wants it? How outsourcing can affect people and processes in your company. TAWPI November 16, 2006 (c) Graber Associates LLC 2006 www.graberassociates.net

2. Today’s Agenda • Outsourcing as we know it • Why outsource? • What to outsource? • What happens – or should happen - when you do? • Who are we? (c) Graber Associates LLC 2006 www.graberassociates.net

3. What is Outsourcing, Anyway? • Outsourcing vs. Offshoring • Some facts and figures • CapGemini paid $1.3bn for Kanbay (6,900 workers, majority in India). • IBM $160m for Daksh. Fujitsu adds 800 staff at two Indian development centers thru purchase of Rapidigm. EDS $380m takeover of Mphasis. • Six of top ten vendors have > 20% of workforces in low-cost delivery locations. • To compete with India's major software services firms. • India huge, China not yet. Top ten firms have 109,000 staff (14% of workforces)based in India . They have 6,000, or <1%, in China. • Other continents’ hot spots: Brazil, Costa Rica,Hungary, Czech Republic, Poland, and Philippines. • Like LogicaCMG, successful firms can blend onshore, near shore, and offshore support for optimum balance of quality and savings. (c) Graber Associates LLC 2006 www.graberassociates.net

4. Why Outsource? • Outsourcing is an overall strategy • Not a tactical decision to fix a problem • Can always come “back in-house” later • Mantra: “Better faster cheaper” • Try to maintain core skills inside the company versus outsourcing • Outsource to bridge personnel gaps (c) Graber Associates LLC 2006 www.graberassociates.net

5. What to Outsource • Potentially any function can be outsourced • What We Outsource and Why • Financial and accounting functions • Design and layout • What Our Clients Outsource to Us and Why • When our experience, skills, and interests complement them • Examples • Some of the Things We’ve Learned Along the Way • Not to assume clients really know what we do and why • Importance of “being managed” • Not to be pigeonholed (c) Graber Associates LLC 2006 www.graberassociates.net

6. Potential Outsourced Functions (c) Graber Associates LLC 2006 www.graberassociates.net

7. What Not to Outsource • The importance of “brand” and acknowledged affiliations • Political appointment tiers; Sony and Intel • They are your values. It’s your reputation • Recent consumer experience • Everyone Must Keep Control of: • Planning and Budgeting • Policy Setting • Supplier Management • Performance Management and Reporting • Customer Relationship Management (c) Graber Associates LLC 2006 www.graberassociates.net

8. People Issues • How will staff react to outsiders? • Consider taking an “educational” approach • Maintain open and frequent communications with employees • Outsourced assistance most likely more experienced – not junior people • Staff can learn from more experienced, temporary workers • If both sides open minded and willing • Mr. Fernwell, Nerlman, and “Bob” (c) Graber Associates LLC 2006 www.graberassociates.net

9. Process • Managed vs. informed • The importance of trust • “Yes, Mr. General Secretary – trust, but verify” • Create workable Service Level Agreements (SLA’s) • Quisquis custodiet custodes • (SLA report cards; green-yellow-red; the limits to usefulness of such reports) • Knowledge sharing • The higher the skill level, the more it’s necessary • Our client’s example of knowledge sharing; the auto mechanic • Outsourced services need little oversight • Outsourced workers do need to be involved and informed • Both sides need to see outsourced workers as “part of the company” (c) Graber Associates LLC 2006 www.graberassociates.net

10. Some Creative Examples • Wendy’s Call Center:“Thinking Outside the Bun” • Drive thru order taken in Nashua,NH call center • Oregon Prisons Call Center • “Win win” behind bars • Printing Supply Company’s Quest for Lower Costs • Ship to Vietnam in containers, get work done, have shipped back. Still cheaper than doing it here…seeking ever-lower labor costs • But it’s for commodity items & services; price-driven • Accounting Auction • Pros : cost certainty, transparency of qualifications • Cons: Job hopping, lack of backup and commitment (c) Graber Associates LLC 2006 www.graberassociates.net

11. Summary • Outsourcing “outside the box” • Any company can outsource if required • Strategic versus tactical justification • Outsourced workers and employees work hand-in-hand as teammates • Maintain open and continuous communications with employees and outsourced workers (c) Graber Associates LLC 2006 www.graberassociates.net

12. Sources Consulted for This Session • Boston Globe: Nov. 5, 2006 – Wendy’s • E-Week: Oct. 2, 2006 – Peter Coffee on Branding • Info Week: Oct 24, 2006 – Paul McDougall on Outsourcing, Quoting Workers • Computer Weekly: June 21, 2005 – Anna Cook opinion piece on redressing the outsourcer-client balance • E-Week: November 16, 2005 – Martha Young on the High Costs of Outsourcing • Sourcing Magazine: September 1, 2005 – Dian Schaffhauser on Nine Tips for Outsourcing Your Software Testing • CFO.com: November 13, 2006 – Laura DeMars, “Accountants, Going Once, Going Twice” • Deloitte and Touche: April 2005 report, “Calling a Change in the Outsourcing Market” • …and of course, our own hard-earned wisdom born of experience (c) Graber Associates LLC 2006 www.graberassociates.net

13. Graber Associates LLC • Founded in August 2002 • Public Relations • Press releases Message development • Press and analyst tours Press kits • Press training • Marketing • Collateral Trade show support • Web site content Sales sheets • Company backgrounders • Research • Vendor reviews Potential partners • Customer satisfaction surveys • Contact information • ray@graberassociates.net tom@graberassociates.net • 781-221-0018 617-323-5694 (c) Graber Associates LLC 2006 www.graberassociates.net

14. Thank You How outsourcing can affect people and processes in your company. TAWPI November 16, 2006 (c) Graber Associates LLC 2006 www.graberassociates.net