Next Level International

1
Outsourcing Reaping the Benefits, Managing the
Challenges

• Frances Grigsby
• April 15, 2005
• Key success factors
• Risks
• Preparation

2
Outsourcing Taxonomy
Supply Chain Planning Worldwide
presence Economies of transportation and
manufacture
Customer-driven Create presence for market
access Respond to customer requirements
Start-Up Inherent to company formation Fundamental
to structure and strategy
Customer Base
Early Adopter
Mainstream
Conservative

• Other Motivators
• Vertical or horizontal integration
• Balancing currency and economic cycles
• Opportunistic politics, major order

3
International Software Outsourcing Industry
Total Software Exports
Average Annual Wage
Number of Trained Professionals
Country
6 billion
5,000-8,000
300,000
India
1 billion
6,000-8,000
400,000 35,000 highly skilled
China
Unknown
5,000-8,000
3,000-4,000
Russia
120 million
3,600-6,120
23,000
Pakistan
Unknown
8,000-10,000
30,000-50,000
Philippines
Sources Forbes, National Association of
Software and Services Companies, Software
Association of Pakistan, Software Outsourcing
Research. Average annual wage is first-year
salary for a highly trained professional.
4
What Can Be Outsourced?

• Good candidates for offshoring
• Web sales
• Accounting
• Order processing
• Transaction processing and documents
• Transcription
• Telesales/telemarketing
• Benefits administration
• Tax processing
• Human resources administration
• Biotech trials
• Claims processing
• Product updates and migration
• Defined product engineering
• Manufacturing
• Questionable candidates
• Customer service and inquiry handling
• Help desk
• Telemarketing

5
Options

• Turn-key nearshore
• Turn-key offshore
• Joint venture
• Build-operate-transfer
• Wholly-owned
• Local provider

6
What Goes Wrong?

• Over-expectation
• Sloppy preparation
• Employee resentment
• Intellectual property theft
• Quality deterioration
• Price escalation

7
Key Success Factors

• Strategic evaluation
• Strong, comprehensive agreements
• Disciplined planning and control
• Direct personal contact with supplier, expert
  outsiders to shorten learning curve
• Patience about cost savings
• Expectation of mixed success at beginning
• Frequent communication and monitoring
• Keeping core skills internal
• Enhanced opportunities for employees
• Protecting the customer experience
• Consistent and appropriate procedures
• Supplier and country with long-term capabilities

8
Evaluating a Supplier
Value proposition Flexibility Implementation plan
Strategy and Goals
Business Practices and Documentation Reporting HR
practices Documentation IP protection
Market Position Client management Cost Reputation
in marketplace Focus
Environment Compensation trends Political
stability Legal and regulatory Education
Internal Assets Capacity Financial
viability Operational skills Quality
9
Next Level International

• Market entry for technology companies
• Specializing in
• Business development
• MA preparation and integration
• Outsourcing/supply chain

I99 Independence Road Concord, MA
01742 978-369-0012 www.nextlevelinternational.com