Outsourcing and the Technology Business

1
Outsourcing and the Technology Business

• Presented by
• Soufi Fazai
• Syed Khurshid
• Alex Lai
• Christie Martinez

2
Organizational Background

• History
• Industry
• Services
• Structure
• Financial Situation
• Competition
• Customers

3
History

• Founded in 1995
• Privately Held
• Filed S-1 on February 12,2007 to become public
• The largest independent screening providers
  focusing on employment background screenings for
  large and mid-sized organizations

• Delivering more than 50 service offerings in more
  than 200 countries and territories
• Developed the first Internet-based background
  screening solutions for its customers
• Comprehensive domestic and international coverage
  

4
Industry

• Reasons behind the growing demand for background
  screening solutions
• Increasing public awareness of potential security
  threats
• Laws and regulations that governments and other
  regulatory bodies have established to identify
  and minimize potential threats.

• The background screening market estimated to be
  4 billion in size and to consist of more than
  1,000 screening firms.

5
Services

• Background Screening
• Drug Health Screening
• Pre-Integrated Solutions
• Employment Application Solutions
• Industry Solutions
• Global Verifications

6
Source for Employment Screening Services

• Criminal Records Searches
• Sex Offender Registry Searches
• Social Security Number Trace
• Social Security Number Validation
• Employment Verifications
• Education Verifications
• Credit History Examination
• Motor Vehicle Records Checks (MVR/DMV)
• Professional License Verification
• Professional Credential Verification
• Professional Reference Checks
• OFAC / Prohibited Parties Searches

• FDIC and Financial Industry Searches
• Civil Court Records Searches
• Military Record Verification
• Workers' Compensation History
• International Background Checks
• Volunteer Background Checks
• Industry-Specific Searches
• Drug and Health Screening

7
Global Verifications

• HireRight Global Services
• Criminal historyEducation and credential
  verificationsEmployment verificationsLocal-langu
  age media/public domain searches and integrity
  checkingDriving records checksCredit
  reportingDue diligence checkingProhibited
  PartiesIndustry- and country-specific
  verifications

8
Other Services

• Policy Development Collection Site
  Identification On-site Collection Training
  Medical Review Officer (MRO) DOT Controlled
  Substance Abuse and Alcohol Form DOT
  Pre-Audits DOT Audit Assistance Expert
  Witness Testimony

9
Structure

• Corporate Headquarters Irvine, CA, USA
• Major Shareholders Robert W. Baird Co., DCM -
  Doll Capital Management, Goldman Sachs, Split
  Rock Partners
• Notable Individual Investors David Duffield,
  founding CEO and Chairman of PeopleSoft Peggy
  Taylor, co-founder of PeopleSoft
• Management TeamEric Boden - President and
  CEOJeff Wahba - Chief Financial Officer Lisa
  Gallagher - Vice President, Operations

10
Financial Situation

• HireRight ranked number 169 on Deloittes 2006
  Technology Fast 500, a ranking of the 500 fastest
  growing technology, media, telecommunications and
  life sciences companies in North America.
• From 2001-2005. HireRight grew 1,034 percent
• Significant revenue growth over the past five
  years
• HireRight ranked 7th on the 2006 Technology Fast
  50, which is a regional ranking of the 50 fastest
  growing technology firms based in Orange County,
  CA

11
Competition

• Other Employee Background Screening Firms

12
Competitive Advantage

• Reasons for Hire Right's success among
  competitors
• Industry-leading employment screening solutions
  developed in direct response to market needs
• Real-time access to all background screening
  reports via the Internet anytime, from anywhere.

13
Competitive Advantage

• Single web-based order interface Consolidated
  user-friendly reportsPrivacy and consent forms
  in the local language where requiredAround-the-cl
  ock multi-lingual verifications staffWorldwide
  research networkCompliance expertise in
  verifications and employment law as well as
  European Union and Asia-Pacific data privacy
  requirements24x5 customer service

14
Customers and Partners

• Health Care
• Financial Services
• Transportation
• Education

• Oracle
• PeopleSoft Vurv VirtualEdgePeopleAdminDepl
  oy SolutionsTaleoPeopleclickPrevisorHewitt
  DDIVisaNow

15
The Interview

• Wednesday, March 7th, 2007
• Lisa Gallagher, Vice President of Operations
• Joined the company October 2000
• Responsible for all aspects of Hire Rights
  operations, including occupational health
  services, background verification and customer
  service departments
• Cal State Fullerton Alumnus
• After she began working with the Indian market,
  she joined the Hunger Project to end chronic
  hunger in Bangladesh, Sub-Saharan Africa, and the
  smaller villages in Latin America.

16
Outsourcing Activities

• HireRight, Inc. strongly believes in offshoring
  and outsourcing and has activities in
• Estonia
• Russia
• India

17
Estonia

• Production parts of software production is sent
  to Estonia to be produced but more security
  related software production is sent back to the
  US for finalization.
• Does product development and testing
• Over 50 employees

18
Moscow, Russia

• Builds software solutions
• Mostly does modular pieces of production to keep
  intellectual property in the US
• Equivalent to 10 full time employees working for
  Hire Right, Inc.

19
India

• This is the largest part of Hire Rights
  outsourcing and requires the most attention
• Subcontract to company in India which has
  approximately 150 full-time employees working for
  Hire Right
• Majority of Hire Rights entry-level work-load is
  done in India
• India works to verify employment education
  through the internet and will handle other
  screening processes for Hire Right

20
United States

• Screeners in U.S. handle the calling for
  verifications (due to Indian accents which might
  turn off customers and applicants)
• All server information stays in the U.S.
• Production of intellectual property and sensitive
  aspects of software done in the U.S.
• All administration takes place in U.S.
• U.S. provides specs to Estonia and Moscow for
  production

21
Outsourcing by Competitors

• Less than 10 of the competitors outsource
• Reasons for not outsourcing
• Lack of control
• Cultural issues
• Fear of what customers will think
• Fear of the unknown
• Takes a great deal of work to outsource
• Companies have experienced problems with
  outsourcing sometimes because they do not take
  careful, measured approach
• Hire Right, Inc. made a partnership with their
  subcontractor so all are committed to success

22
Benefits of Outsourcing

• Substantial financial benefits and cost savings
• Has brought down the cost of doing business
  significantly
• High quality of output
• Outsourcing has allowed Hire Right, Inc. to
  increase their customer base in other countries.
• Started with 42 countries but now providing
  services in over 200 nations.

23
Benefits of Outsourcing

• Able to get college graduates who will work for
  less
• Cannot find this in U.S. very easily most
  graduates do not work for that little of money or
  the turnover is very high
• More aligns with what the customer is willing to
  pay and what Hire Right is willing to spend
• Culture in India is to follow directions
  thoroughly
• To ensure this, Hire Right created processes

24
Issues with Outsourcing in India

• Original CEO of the subcontractor is Indian but
  has worked in the U.S. before therefore he
  understands the issues faced by the U.S. firms
  and is easy to deal with.
• Production issues led to renegotiation of the
  work contract.
• Workers wanted to reduce the production quota
• New contract allows for payment per piece of
  output
• This secures the profitability of Hire Right,
  Inc.
• Factored in incentives and penalties

25
Issues with Outsourcing in India

• Lower production output
• Seems to not do as well with problem solving or
  thinking for themselves
• High turnover, especially for woman who are
  unmarried and still live at home
• Work hours contribute to this they work US
  business hours

26
Impact of U.S. Economy

• Believes that there is a positive impact
• Most US multinationals are outsourcing now
• Lowers costs to businesses are passed on to
  consumers
• More purchasing power
• Unemployment is at an all-time low
• Many positions available in growing retail sector
  for those displaced by outsourcing
• Most outsourcing affects entry-level workers

27
Thank you!

• Source www.hireright.comFor more information,
  visit the company's web site at www.hireright.com