effective teams: the key to successful offshoring by neal e. laatsch sqs teams
TRANSCRIPT
Effective Teams:The Key to Successful Offshoring
By Neal E. Laatsch
SQS Teams
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Neal E. LaatschNeal E. Laatsch
Led SQA functions for 6 years including:
Created the process improvement pilot program at a major international bank .
Created and ran the SEPG.
Created a multi-cultural SQA team of Indian and American CSQA certified analysts.
Over 25 years of IT experience at Fortune 500 retailers and banks:
Led the development of communications systems between mainframe systems and the first retail electronic cash registers.
Developed the first communications switch for ATM and debit card transactions in Chicago.
Implemented the ability to accept debit cards at the point-of-sale with secure PIN entry
Implemented the introduction and processing of private label bank cards for a major national retailer.
MBA (Systems) DePaul University, Chicago, IL
BS (Economics) University of Wisconsin, Whitewater WI
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Agenda
Offshore Outsourcing Background and
Definition
Savings & Cost Dynamics
Collaborative Model
Summary and Questions
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India vis-a-vis USA
INDIA USA
Population (millions) 1,103 300
Area (square kilometers) 3.3 9.6
DELHI HOUSTON
Rain (centimeters) 703 1,131
Temperature (centigrade) 7-39 4-34
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Similarities
Similarities
Nariman PointMumbai, India
Chicago, Illinois
Bahai Temple,Wilmette Illinois
Lotus Temple Delhi, India
Apartment ComplexMumbai, India
Chicago, Illinois
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Background (India)
Factors Influencing Indian Companies:1) Affordable educational environment that
nurtures core skills required for IT
2) Young, knowledgeable, English-speakinglabor supply
3) Favorable attitude toward ISO9000, CMMI and other standards
4) Growing Partnership with US and UK businesses
5) Aggressive offshoring business model
6) Supportive government policies
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Background (U.S.A.)
Factors Influencing US Companies:1) Time to market often critical.
2) Mainframe technology seems to be less glamorous.
3) Labor costs increasing.
4) Complexity of systems (interfaces) increasing.
5) Training becoming very expensive.
6) Cost-benefit of Process Improvement is not generally understood.
7) Confronted with an aging labor force.
8) Getting little relief from (Mexican and Eastern Europe) Immigration.
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Hence an Opportunity:
Indian companies can satisfy the staffing needs of U.S. companies for software engineers who are:
Young
Disciplined
Educated
Process-oriented
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An Opportunity That Must Be Pursued
This opportunity has become the driving force for many
companies to investigate offshoring, with the obvious goal
to provide a low-cost solution to solve escalating costs and a
shrinking IT labor pool in the U.S. Hence, every company
has to take a look at offshoring.
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What is Offshore Outsourcing (Offshoring)?
It’s when a company (often U.S.) engages a company in a different country (for example, India) to perform IT work that had been done previously onshore.
It’s the migration of part or all of the value chain to a low-cost location.*
It’s the delegation of administrative, engineering, research, development, or technical support processes to a third-party vendor in a lower-cost location.*
* Source: ‘Offshore Outsourcing’ by Marcia Robinson and Ravi Kalakota
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Best Case
COST
TIME
Initialposition
Severance and Offshore ramp-up
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Best Case
COST
TIME
Initialposition
Severance and Offshore ramp-up
Offshoring actualized
Expense
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Best Case
Expense
Savings
TIME
Initialposition
Severance and Offshore ramp-up
Offshoring actualized
New steady stateCOST
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However: You Might Experience the Worst Case Scenario…a Failed Offshore Initiative!
The worst thing that can happen is to start an offshoring initiative and then have to abandon it because it is just not working as originally planned.
Failed initiative turns out to be more expensive.
Loss of time and wasted effort.
Bad reputation for everyone.
Trust is broken between employee and company.
Negative impact on morale.
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Worst Case: Failed Offshoring Can Be Very Expensive
COST
TIME
Initialposition
Severance and Offshore ramp-up
Offshoring actualized
Expense
Saving
Expense
Problems with Offshore
Terminating contracts and
hiring local resources
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Top Ten Reasons for Offshoring Failures Are:
1. Unrealistic expectations
2. Not all activities outsourced should be
3. Wrong vendor
4. Poorly written contract
5. Looking for a quick fix
6. Lost control
7. Overlook the hidden costs of offshore outsourcing
8. Lack of an exit strategy
9. Personnel issues
10. Failure to measure actual service levels and ensure alignment
Source: ‘E-Business Strategies’
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Other Possible Reasons
for Outsourcing Failures Focus on cost.
Focus on replacing workers. Not focusing on quality.
Lack of mature processes and a stable environment before offshoring starts.
Misunderstanding of CMMI Level 5.
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The Most Important Reasons for Offshoring Failures…
Lack of…
Collaboration
Teamwork
Respect
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To Minimize the Risk, Use a
Collaborative Model
The Next Big Thing
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The Collaborative Model
Expense
TIME
Initialposition
Severance and Offshore ramp-up
Offshoring actualized
New steady stateMore sustainable, more flexible,less risk.
Expense
CO
ST
SAVINGS
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Collaborative Offshoring…
Retains most U.S. employees. Adds offshore consultants. Forms highly-effective,
diverse, functional teams. Have most workers spend
some time in the country of each team member (where they learn about each other).
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The Collaborative Model: Create a strong team concept…bound by the work
it does. A team that consists of members from different companies.
Not a company/country team, rather a team organized by the type of work they do.
Create a 1 to 1 model. With Leads in all staffing locations.
Ensure that everyone on the team talks to everyone else.
Complementary skills. Holistic team.
Common group identity.
Mutual respect, everyone thinks like a team. Trust.
Create a global team with members from different
cultures and backgrounds…a permanent mix. One team, stronger, more productive, more mature,
One manager, with multiple leads, for the team.
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Collaborative Model: Step 1
Create a strong TEAM CONCEPT…bound by the work it does.
A team that consists of members
from different companies.
Not a company/country team, rather
a team organized by the
type of work they do.
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Collaborative Model: Step 2
Create a 1-TO-1 MODEL. With Leads in all staffing locations Ensure that everyone on the team talks
to everyone else Mutual respect, everyone thinks like a
team Complementary skills Common group identity Holistic team Trust
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Collaborative Model: Step 3
Create a GLOBAL TEAM with members from different cultures and backgrounds…a permanent mix.
One team, stronger, more productive, more mature
One manager, with multiple leads, for the team
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Management Must:
Proactively facilitate a positive, respectful environment.
Coach the team
Facilitate a constructive environment
Solicit ideas from all team members.
Focus on ROI, not cost.
Govern responsibly.
Respect all cultures.
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Meetings/Interactions Make conference calls from 5-10 a.m.
Avoid noisy locations to minimize misunderstandings.
Conduct regular core team meetings with an agenda and minutes.
Assign onshore and offshore team leads.
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Repository
A. Set up a central repository with access by onshore and offshore personnel.
B. Monitor the status of work requested.
C. Maintain a central database for metrics and reporting.
D.Document all work products.
E. Maintain proper version control.
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Benefits of the Collaborative Model
Skills (Indian/American) are complementary and energized.
Jointly developed processes are effective and easy to understand.
More issues are identified and addressed, more quickly.
More perspectives, more vibrant, more fun, and more magic.
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Additional Benefits
Risk of failure is minimized.
Expertise is retained and expanded.
Team is energized.
Team is more productive and can handle an expanding workload.
Blended labor rate is lower.
Provides hedge against natural disasters, epidemics, political events, etc.
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And WOW!!!
Offshoring can create a 24 hour work environment.
No sleep time.
Part of the staff is always working.
Continuous review and improvement.
Faster turnaround.
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In Summary:
Collaboration and Teamwork Will:
1) Minimize the risk that an Offshoring Initiative will fail.
2) Provide a framework to expand the globalization of the work team.
3) Increase Productivity.
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The Future…
It’s up to you!
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Questions?
Contact:
Neal E. Laatsch
847.363.9387
2006 © Neal E. Laatsch