Finding Outsourcing Vendors through Consultants

Consulting companies are limited to biases as most outsourcing companies (in India ) atleast have a big degree of ex consultants.

So each consulting company seems to have a prid quo quo arrangement or a favourite partner.

Outsourcing companies themselves have a lot of churn/attrition in senior management. So nearly everyone knows what the other rates /details are.

The industry average attrition is 40% and thats the annual growth as well.

The best way to choose a consulting/outsourcing company is to

a) ask for previous case studies as for your EXACT process

b) ask them about billing/salaries ratio for their staff for the outsourcer.

c) Ask about risk manaagement or change control processes in place for terminating or transitioning ownership, or even scenarios for changing vendors .

Why Do Indian BPO companies struggle more than Indian IT companies ?

1)different sales cycle and methods of evaluation- cost is the reason to outsource in BPO, capability AND cost is the reason to seek technology outsourcing. Sales cycle are longer and much bigger in IT companies, while BPO companies have a shorter sales invetment hence push for faster sales than a long sales cycle with mega deals

2)consultants are very good at generic processes, outsourcing requires a detail orientation and dealing with lower middle management to get the transitions requirements done correctly….

3) Most BPO’s hire the bottom half of top consulting firms or star salesmen who used to be stars. Sad but true .Ex consultants join PE funds if they are good, start ups if they are ok, BPO’s get the worst in that lot as they pay the least. Same for technology salesmen .

4) BPO is yet to mature in sales, pre sales processes and have a longer term view. It is a younger industry and I am sure IT outsourcing struggled in its initial days too.

5) Internal BPO HR practises-

Much higher levels of attrition in BPO lead to lower quality of delivery than in technology. Also experienced BPO delivery people,with zero sales experience, who stick around sometimes get to partner the new sales people onsite not because its good for the firm but only way to retain these people

6)Competition in BPO is quite ridiculous with rates touching 14-15 $ per hour for large deals, and quite many salesmen end up making discounts just to make that quarter or undercut the competition for strategic reasons.”

Margins are higher in IT companies in India .

Genpact and WNS are exceptions to this rule  due to sheer size and parental pedigree (GE and BA respectively), but most Indian BPOs/BTOs/KPOs less than 4000 people will suffer the above issues

Outsourcing Analytics:Attrition Silver Bullets

Use an analytical tool called common sense and think like the little guys.

1) Have a minimum core team of employees rather than over hire is your enthusiasm

2) pay them well…about 10 % above market rates.

3) give them appropriate designations 🙂 not the ones they manage to haggle for
4) for fluctuating demand/work use sub contractors rather than hire employees /build huge empires of people…..(e.g A VP once told me proudly “I lead 500 people”…as if he was going to fight for Sparta)

5) employees who have periods of very less and sometimes hectic over activity..leave.

attrition is easier controlled in smaller teams, and a lot more work can be sub contracted at economic terms….

6) be flexible and nice  to your people..

as long as they get the work done ,any time they want to come in should be fine as long as they meet deadlines…

7) use tele commuting,work from home , internet conferences etc ,it is safer and the IT industry uses it more than ITES. It also saves costs….

this will act as a substantial barrier to exit……

8) and find work,training ((skill enhancement etc),new developments  to keep young people from getting bored..rather than quarterly off sites. Give them a quarterly cash amount than the offsite .

9) Use predictive attrition control, based on survey based attributes and rate employees in red,yellow,green. Focus on the reds, high attrition threats. Some companies are even coming up with a response model to predict attrition.

Boredom makes people quit faster than anything at least in Indian analytics that I have seen.

Keep em happy and they will return the favour

Outsourcing Analytics:Some Trends

1) Eastern Europe has definitely come up and so is China in basic outsourcing processes. For more complex processes India remains the primary destination and sometimes act as managers to East European and China new outsourcers.EU countries delivery centers enjoy less stringent data norms. The Chinese speak much worse English and are better mathematicians. So are the East Europeans.

Some of this out sourcing 2.0 is driven by Indian companies who want to mitigate risks of rupee and have global delivery 24 * 7 and also enjoy EU norms of data protection.

2) Cutting costs through open source software like R, better solutions like WPS could also get big.

You can also see fragmentation to consultants as technology like remote desktop and skype allows low risk  remote working.

Consolidation of KPO and BPO has been problematic and disappointing in expectations at least in India.

Next big big trend depends on how 2008 US Recession and politics plays out as USA remains the biggest source of outsourcing business and trends in this field

Indian Outsourcing :Opinions on–Why Bad Experiences

some of the recent reasons are-

1) Inadequate transition times – Transition is done faster and faster due to keeping less bench strength , while prices and competitions seem quite competitive.

2) Cost vs Quality tradeoff – Cost tradeoffs will lead to quality tradeoffs. The expectation on client side is we negotiated a hard mean deal , but we still should get the quality had we been prepared to pay more. Not true.

3) Scale and Type of process- India will offer huge scale for time to come as rural Indians get call center opportunities. This is a recent trend to cut costs and yes rural Indians will have worse accents. Complex processes will still come India’s way but here the Chinese will be more formidable competitors as they can’t master the english accent but do just fine on the spreadsheets and maths.

4) Global delivery — Most big Indian BPOs now deliver from India AND Europe, AND Asia (including Indian BPOs with Philippines and China centers, and South American. Like Baskin Robbins , you will choose among the 31 flavors of delivery centers and expect to pay accordingly from same  company.

5) Pragmatic expectations – After millions of hours of interaction, people of different cultures have realized the difference in communication, and assertive behaviour .eg Please do this immediately is different In India and US.

6) I am more worried about the outsourcing (value creation actual vs expected, political sensitivities, long term exchange rate and inflation mechanisms ) and voice industry (with better automated voice recognizability ) than about India in particular.

7) And yes attrition is a concern , but actual reality is attrition helps keep costs low by churning out experienced voice agents with newer boys who stretch more than the shift (Indian outsourcing remains unregulated and labor is non organized ).

I wont take the name but as a Manager I was told to encourage attrition in the name of performance just to keep the Operating margin up.

8) A case study is attached for Indian BPO IPOS (which are mostly owned by Western Investors) and another article written by me on Indian call centres.This should give you more insights than you expected to happen https://decisionstats.com/2007/indian-outsourcing-company-plans-to-take-american-investors-for-a-ride/”

For beginners interested in software

1) For web development , get  into http://www.wordpress.org and its a pretty easy software to start making websites on.

You can maybe spend say 10 $ a month so that you can buy some server space on http://www.bluehost.com and tinker with his own website /blog in the meantime.

For learning language CSS ,PhP and HTML are the way to go.

2) If you knows some languages already, try  to make a Facebook application , and then play with Google’s open social API,or game, as that will get his interest besides giving him a skill thats useful. Ipod developer’s kit is another hot area to experiment.

3)For designing software solutions I would recommend the Microsoft Certification program. Try  to learn 1 language like Visual Basic or into .Net programming.These platforms will still be useful in coming years.

4) For statistical/business software try  to learn a language called R, which is good for data mining (www.r-project.org) . its quite easy to learn and has a good graphical user interface too.

5)For software careers it is best to learn multiple types of softwares to hedge your bets.

For sustaining interest, you  can join and network with fellow programmers using bulletin boards especially boards on http://www.google.com for google code and microsoft developers area..

6) You can also download Ubuntu linux (www.ubuntu.com) , which is a free Linux based Operation System (like Windows) and  be more familiar in it. Also add openoffice from http://www.openoffice.org This gives you perspectives on open source software.

7)I recommend him getting summer internship in a software startup (especially any software company in Silicon valley or Bangalore) ,and with established companies (like http://www.google.com , http://www.facebook.com,www.infosys.com

Software developers are the un-sung heroes of today’s modern world!!!

All the best !

Easy Ways to Secure Network Data

 Easy ways to secure network data without letting your IT team into fooling you in more servers  or certifications than you need.

1 User login passwords can be cracked and even the encryption will eventually need a password too. Most people use rather easy to crack passwords anyways.

2  you can use or even insist on the password feature within office documents , and within zip documents, and within outlook pst files.

The actual practicality is that people rarely keep track of multiple document passwords, and once a password is known /guessed , it compromises the whole system ..say for an ex employee,keyboard loggers, other ways to read data directly from the hard disk etc.

That cant happen for encryption.

So I would first implement a strong password policy , which is the first step for any company. This means using special characters, characters,numbers and automatic changing of passwords after 1 month.

3 Also laptops should have desk locks provided and compulsory before going away from the desk.

4 The next layer is encryption for data using private key/public keys and for login to the desktop/laptop .An inexpensive encryption solution is to use PGP (Pretty Good Privacy ) for encryption. You can also have open source free encryption softwares .

5 Another layer is have closed circuit cameras or motion trigger alarms in the office activated after say 6 pm or after office hours.

6 Implement multiple solutions using a test control approach on various PCs and then evaluate usage for 1 month before deciding with the big contract.

7 ISO 27001 or BS7799 and certifications help make clients comfortable, but do not enhance data security in any special way given the huge costs.

8 Have training videos for social networking used by hackers or people breaking in to system. Eg. Calling Board numbers for cell phone numbers

9 Try and eliminate as much paper as possible. Printouts, faxes etc. A compnay I know replaced all paper with blue paper just to impress clients. Same principles applied when guards were checking senior management bags. No searches etc.

This is also good for environment too (Use that for impressing clients !), and its better to buy bigger monitors or have an encrypted wireless lan than  have tonnes  of paper too.

All systems can and will be broken given time and resources to deviants. Using these steps reduces the ease and probability of laptop loss escalated to data loss in wrong hands.