Basman | Explore: IT Outsourcing

If you want to build a ship, don’t herd people together to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.

Antoine de Saint-Exupery

I’m quite busy with some strategic and exciting projects so blogging is pretty slow these days …

In an interview with Nayan Chanda of YaleGlobal Online, N.R. Narayana Murthy, founder of Infosys, discusses the challenges and opportunities for firms operating in India, and also identifies the factors required for success in a global market [24 min 27 sec - April 28, 2006]. For transcripts of the interview, please visit: YaleGlobal Online.

Listen to Mr. Murthy’s opening words to the first question:

How do you account for this meteoric rise of Infosys in the context of India?

Murthy: Well, you’re right. We celebrate our 25th year this year. On 2 July of 2006, we will have completed 25 years. First of all, I must say that God has been very kind to us because, as Louis Pasteur once said, that when God decides to announce his presence, he comes in the form of chance. Having accepted that, let me say this, right from day one, when we founded the company, when we sat for four hours to discuss what we should seek in this journey, we were all unanimous that we would seek respect. We would seek respect from customers, from our employees, from our investors, from our lender departments, from the government and from the society. And we said, if we seek respect from each of these stakeholders, we will do the right thing for them. And if we do the right thing for them, then everything will fall into place. So I’m happy that the company has not swerved from that part of taking respect right from day one to now. And that is perhaps the reason we have had what little success we have had so far.

Respect. Humble and impressive. Now listen to the complete interview:

And here is Azim Premji, Chairman, Wipro and in the second segment Nandan Nilekani, CEO, Infosys Technologies [56 min 40 sec - Mar 1, 2006].

See, hear and read more interviews here at Basman’s.

Yes. For sure. Paul A. Strassmann, takes Hewlett-Packard, the $98.5 billion company, which makes PCs, servers and printers and offers consulting services, as an example and shows 7 places to clean the clutter in IT:

• Simplify applications
• Reduce development sites
• Shrink the workforce
• Consolidate data centers
• Implement an enterprise data warehouse
• Embrace service-oriented architecture
• Reap the reward

Write this on the wall, CIO! This is your definitive mission and essence of your future company IT program! Read his short article (PDF) and put it under your pillow, fellows! In my own experience I can absolutely confirm his advice. Everything else is for sissies. I show you.

Mr. Strassmann is one of the most experienced and notable pragmatic IT executives people in the world. He was a former technology executive at General Foods, Kraft, Xerox, the Department of Defense and NASA.

Peter Allen has started a fresh blog today: Consider The Source. I hooked him instantly on my feed reader. I’m looking forward to an informative and entertaining blog where we can share some experiences and insights on sourcing. Read his bio and you know what I mean …

Peter Allen is Partner and Managing Director for Market Development at TPI, one of the most renowned international sourcing advisors. He is responsible for TPI’s strategic planning, marketing, business development, industry relations and market intelligence. Peter leads the TPI Index, a leading indicator of trends and developments occurring in the global sourcing industry, monitored quarterly by global equity analysts, media and industry observers.

An innovation a day keeps competitors away

Ibrahim Evsan (Ibo), founder of sevenload.de, the media platform from Germany

The Economist says in its Global Technology Forum:

Indians point to the advantages that they bring to the market. They work while the West sleeps; they speak (splendid) English; they can throw huge numbers of people at a job. But at the heart of the boom is a simple sum. The cost of an Indian graduate is roughly 12% of that of an American one. Indian graduates also work more: an average of 2,350 hours a year compared with 1,900 hours in America and 1,700 in Germany. The bottom line is that you can buy almost ten Indian brains for the price of one American one.

Simply said: The entire known universe is now your competitor. Do you complain about Indians, Chinese or Eastern Europeans threatening your jobs? Don’t complain. Think twice:

1. Rapidly emerging countries and regions are your best customers. The faster they grow the more they are demanding for your goods and services. They are in fact creating jobs in your home country, too. That’s a fact.
2. In return: When you offer new services, products or even ideas always produce, deliver and offer to the the entire world - not only to your neighbourhood. You are now a global competitor, too.

That’s the internet for you. You can interact with anybody, anytime, anywhere at no cost.

So, think about it again before complaining.

Deal or no deal?

“When I see an expensive deal, and they say it was a ’strategic’ deal,” says Craig Tall, vice chair of corporate development at the diversified financial services firm Washington Mutual Inc., “it’s a code for me that somebody paid too much.”

[Source]

Mike Rundle, creative head of businesslogs and 9rules, hits the mark:

There are essentially two ways to innovate, and if you’re lucky, then you do both of them at the same time:

• Innovate in your business model, do what others haven’t done before.
• Innovate in your execution, produce things that others have not produced before.

When you’re producing an application that’s been done 20x over before you started (web-based calendar) you have no choice but to pick #2 and innovate in your execution.

So ask yourself how you can innovate your outsourcing and offshoring business model. What would you do to break the reign of the Big Six outsourcers? Do you have a global chance as a niche player and specialist? If you are innovative - sure. It is your only chance you have. Find and create new ideas, methods or devices. Discover and explore new markets.

IT Outsourcing is an extreme virtual team play on a very high level. It is played between customer and service provider, between management and enduser, between subcontractor and contractor, between specialist and generalist, and last but not least between all the individual team members, their languages, cultures, moods etc.

We all know how ineffective these plays are and how counterproductive it can be. We all know how complex it can be in large operative projects, too. With the growing size of operations the problems and risks are growing exponential faster. The key to the solution of all these problems is all about communications. It’s not about tools. It’s about your mindset.

Recently I rediscovered an article I read a while ago: “Virtual team productivity - three action rules from nature” written by Ken Thompson and Robin Good. In essence the authors describe that we could learn a lot from Mother Nature’s teams. I recommend you to read this short article. Think about it. Here are their conclusions:

Organisational teams are Virtually Networked Teams which need a radically different approach to technology and operations than the traditional teams.

Virtually Networked Teams can benefit hugely from an approach I have called “bioteaming” where they model their operation on natures most successful teams.

You can immediately start to create a basic bioteam technology environment for your virtual teams by using the three action rules

Rule 1 - Send out timely information
- Communicate Information not Orders
- Use 1-way messages
- Develop member autonomy and self-management

Rule 2 - Everyone must broadcast
- Enable “every member broadcasting” to and from any device
- Define Teams “Vital Signs”
- Establish Team Etiquette and “Bio Behaviors”

Rule 3 - Act don’t Ask (Permission Granted)
- Permit but log and track actions
- Challenge “Permission Structures”
- Regular team review sessions

You can start to achieve the overarching bioteam principle “Treat all members as leaders” if you adopt these three action rules. As direct result you will significantly increase the productivity, effectiveness and member satisfaction of your organisational teams - in most cases without having to acquire any new technology whatsoever.

Once your teams embody the principle “Treat every team member like a leader” you will have be ready to explore and experiment with the more advanced bioteaming concepts.

It is worth to try it. I know it takes hearts and guts to take the road less traveled by - And sometimes that makes all the difference in a project. Just to commemorate the immortal Robert Frost.

Surfing the blogs you'll find a lot of gems of wisdom like these two. Now, listen to this here:

Whirlpool's top-of-the-line front-loader washing machine retails for $ 1.200. It's produced in Germany where the hourly wage is $ 32. In the US it's $ 23, in Mexico $ 3, and in China it's $ 1.
And Whirlpool has factories in all four places.

The interesting thing is that only one - 1 - hour of such manual labour goes into the $ 1.200 machine.

Further in the same blog you read some simple (but true?) management pearls in another posting:

You Know Something Is Wrong…

With management theory when the Roman army established that ten subordinates per boss was the right number (decurions, centurions..), and now 2,000 years later, 100 years of management schools and 40,000 management handbooks in print we believe the right number is eight.

Almost all of the management literature is rubbish. There is only one and only academy where you learn management: The Business Life. And your teachers are always the best managers in practice. So, ask yourself who is the best and than go there for learning …

Read what IAOP Executive Director Michael Corbett has to say about sourcing strategies: 

The process of outsourcing has been around far too long to be thought of as a revolutionary concept—but it is revolutionizing the way business is done. For many years, small businesses and large organizations alike have hired outside contractors to provide products or services they either couldn’t provide for themselves or simply chose not to provide based on factors such as cost-effectiveness, timing of deliverables to market, the decision to focus on the organization’s core competencies, or a variety of other factors.

Explorers, traders and mercenaries are all early examples of the outsourcing model. And professional service providers like attorneys, accountants, medical practitioners and consultants of all types are usually retained on an outsourcing basis.

Today, CIOs of large companies often outsource more than half of their organizations’ information technology—and call center outsourcing is fast becoming more the norm than the exception for larger organizations.

(more…)

"Man cannot discover new oceans

unless he has the courage to lose sight of the shore."

André Gide, 1869–1951, unconventional French novelist

Vivek Seal, 23, is a technology reporter for Global Services, specialized in outsourcing news, based in New Delhi, India, blogs as a guest Roger Cadenhead's Workbench:

I just wanna ask one thing: If some American company invents a machine that can replace 100 laborers working in India, does it mean that the Indian company should not buy that machine which is economical and efficient? Just because the situation is the other way around, there is a such a hue and cry about it — that we should make a policy to retrain those displaced and provide them employment.

Good point, Vivek.

Update: There was too much controversy about Vivek's guest postings. The blog owner Rogers Cadenhead says: "Outsourcing: Not Safe for Work - I've taken Workbench back from Vivek Seal." … But don't forget: The world is flat.