what is outsourcing? outsourcing is contracting with another company or person to do a particular...
TRANSCRIPT
What Is Outsourcing? Outsourcing is contracting with another
company or person to do a particular function
The external firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers
Outsourcing is sometimes referred to as Business Process Outsourcing (BPO) & Off-Shoring
Why Do Organisations Outsource? Lower total cost of ownership (lower permanent
headcount cost) Access to a larger skilled IT workforce than what is
available in-house Focus on Company’s Core Buisness Tap Into Innovation/Ability To Respond Ensure consistent delivery via Service Level
Agreements (SLA) Manage Outcome versus Resources Overall, to reap better value
Criteria For Selecting Outsourcing Partner
In depth understanding of customer requirements
Value for money Able to deliver quality service on time Cultural match; Responsive & easy to work with Proven track record Strong change management methodology Use of world-class frameworks and tested
methodologies such as CMMi, ITIL, ISO, etc Global Footprint
Key Ingredients For Successful IT Outsourcing Top management commitment Clearly defined Service Level Agreements Trust between customer and supplier Track changes & measure outcomes Open and timely communication & knowledge
sharing Integrated customer and supplier team that
works together as one team – form a “customer-supplier partnership” [e.g.: before the contract is awarded, customer and supplier are on opposite sides of the table, but once the contract is awarded, they are on the same side facing the end-users]
Standard ICT Operating Environment (SOEasy) Largest public sector information technology project in
Singapore
Effort by Government to standardise desktop computing system is a world first
Users: 60,000 civil servants in 74 government agencies
Expected savings: 28% of operating costs or S$500 million over 8 years
Consortium: EDS, Singapore Computer Systems (SCS), Alcatel-Lucent, Cisco Systems, Microsoft, FujiXerox, SingTel, Frontline, Avanade
Features of SOEasy
Harmonising desktop, messaging and network environments across all government agencies
Introduction of collaborative tools such as instant messaging, desktop video conferencing services and whiteboard sharing
Greater mobility as officers can seamlessly access government resources from anywhere, at anytime
More regular and non-intrusive security updates
(2) Web-based Electronic Business / Company Registration & Filing System For Singapore
ACRA outsourced the BizFile application, infrastructure, hosting and helpdesk to IT Service Co, Singapore Computer Systems
Reduces business/company registration & filling times from days to minutes due to streamlined and automated processes
Improves compliance by enabling monitoring of statutory disclosure requirements
(3) Call Centre Outsourcing Organisations outsource call centre building and management to service
providers such as Singapore Computer Systems (SCS) & NCS
SCS designs & builds fail-safe telco-grade call centres e.g. StarHub (Singapore), StanChart (Singapore), Samart (Thailand),
Hutchinson (Indonesia)
Managed call centre services Over 200 seats In-bound and out-bound calls State-of-the-art technology Real-time service tracking High service availability Sample customers: ACRA, MOM, MINDEF, Temasek Poly
Enhance customer interaction experience through multi-channel touch points (Phone, Email, Fax, Web, Online Chat, etc)
(4) Business Continuity:Singapore is the first in the world to have a Business Continuity/Disaster Recovery Standard
SCS’ Business Continuity Centre: Established since 1987 Over 100,000 sq ft of space Over 150 customers outsource BC/DR to SCS First batch to be certified as Full BC/DR
Provider based on Singapore’s Standards (2005)
First in Singapore – ISMS Certified for BC/DR
SCS is Asia’s Top Business Continuity Provider of the Year (2007)
First in Asia Pacific to launch
Mobile Business Continuity Office
(Feb 2007)
(5) Application Outsourcing to Singapore by Global Publishing House
SCS Confidential
Business Times, 9 July 2007
Application management and development services for Wiley-Blackwell’s core publishing applications in UK & USA
Singapore was first of all selected as the best place to conduct business…excellent infrastructure, strong legal framework, reputation as a
trusted business hub
Wiley-Blackwell was looking for a partner with a successful track record of implementing Microsoft-based applications
and integrating systems in diverse domains…SCS
seemed to be the best fit in terms of understanding who
we were and what we required
Outsourcing ≠ Best Sourcing
Organisations have a choice of whether to Best Source or Outsource
Best Sourcing
Outsourcing In-sourcing
• Finding the Best Source of Provider
• Engage Private Sector Provider if it is more effective and efficient
If private provider is more efficient
• If in-house team is more efficient• Functions may also be in-sourced to other public agencies
Competitive Considerations for Best Sourcing Cost Efficiency
(labour, infrastructure, tax and regulatory costs)
Conducive business and living conditions
(political stability, robust and trusted infocomm infra quality, IPR,
Cultural adaptability, data protection)
Quality of Human Capital(availability and skills,
education and language, attrition rate)
Best Sourcing Drivers & Obstacles
Lack of internal measures
Staff issues
Lack of competencies
Fear of change & unknown
Budget cuts
Focus on core
Limited resources to meet new challenges
Cost savings
Rising public expectations
Fear of loss of control
How IDA built the IT Outsourcing Industry in Singapore
Increase Revenue & Employment
• Leverage the government’s Best-Sourcing Efforts
• Encourage foreign companies to work with local companies
•Leverage inter agencies campaigns (e.g. MOF)
Stimulate Demand Enhance Supply
• Enhance companies’ capabilities through certification programs (e.g. eSCM) & formation of industry associations
• Develop manpower capabilities at all levels through BPO manpower framework, courses & seminars
• Upgrade Infrastructure
Public Sector Demand Private Sector Demand Capability Development
• Demand aggregation
• Work with key verticals to seed projects: Transport & Log, Finance, Healthcare, Manufacturing
• Foreign demand inflow such as shared service centres
• Aggregation of SMEs
IDA’s Industry Development Efforts Promote Singapore as a global outsourcing hub
for high value and mission critical activities Focus on attracting shared IT services & BPO operations via
supporting product development/pilots The hub and spoke model
Ensuring a conducive business environmentEnsure competitive overall business cost
○ Includes Intellectual Property protection, security, data protection, etc
○ Efficiency in preventing defects/re-do
Develop manpower competenciesSupport development of industry standards, e.g
Singapore standard on BC/DR
Sample IDA’s Outsourced Projects
IT ServicesIT Services IT support (including Technical & Applications IT support (including Technical & Applications
Support & Support &
Applications DevelopmentApplications Development○ Tax filing & Assessments Tax filing & Assessments ○ Immigration & Checkpoint ControlImmigration & Checkpoint Control○ Work Permits & Employment PassWork Permits & Employment Pass○ Housing applicationsHousing applications○ Traffic Management & ControlTraffic Management & Control○ Vehicle LicensingVehicle Licensing○ Manpower ManagementManpower Management○ Hospital SystemsHospital Systems○ eGovernment ApplicationseGovernment Applications
System Administration and OperationsSystem Administration and Operations
Sample IDA’s Outsourced Projects
Document ManagementDocument ManagementFile RegistryFile RegistryDigital ArchiveDigital Archive
Library ServicesLibrary Services
Administrative FunctionsAdministrative FunctionsPayroll processingPayroll processingClaims processingClaims processingCheque ProcessingCheque ProcessingCustomer service countersCustomer service countersTraining AdministrationTraining Administration
Market Tested Projects (Feb 03 – Oct 05)
128 Projects(59%) 128 Projects(59%) OutsourcedOutsourced
Value of contracts: S$179MValue of contracts: S$179MAnnual operational cost Annual operational cost
savings: S$25Msavings: S$25M
90 Projects (41%) 90 Projects (41%) In-sourcedIn-sourced
• Tends to involve small Tends to involve small scopescope
• 72 (80%) involve less than 72 (80%) involve less than 10 headcount10 headcount
Outsourcing Market Size The size of the global BPO market by 2007 would
be US$173bn (Source: Gartner)
BPO market in the Asia-Pacific region, excluding Japan, to rise from US$7 billion in 2006 to US$15 billion by 2011, recording a compound annual growth rate (CAGR) of 16 percent (Source: IDC)
Singapore Business Process Outsourcing (BPO) market is expected to grow from US$565 million in 2007, at an average annual rate of 12.7 per cent till 2011 to reach US$900 million (Source: IDC)
Top 30 Countries for IT Outsourcing (from Gartner)
AmericasArgentina, Brazil, Canada, Chile, Costa Rica,
Mexico and Uruguay
Asia/PacificAustralia, China, India, Malaysia, New Zealand,
Pakistan, the Philippines, Singapore, Sri Lanka and Vietnam
Europe, the Middle East and Africa (EMEA)the Czech Republic, Hungary, Ireland, Israel,
Northern Ireland, Poland, Romania, Russia, Slovakia, South Africa, Spain, Turkey and Ukraine
Positive Country Factors For IT Outsourcing
Conducive and safe business environment; i.e. easy to establish and conduct business
Availability of physical (airport, seaport, etc) and IT infrastructure & connectivity
Top-class educated talent pool Strong legal framework and protection of
intellectual property Vibrant economy & stable government Free from natural disasters Competitive costs
Singapore’s IT ProfileHouseholds with computers: 78 percent in 2006, up from 74 percent in 2005Households with Internet access: 71 percent in 2006, up from 66 percent in 2005Household broadband penetration: 72.9 percent in August 2007; on track to
achieving goal of 75 percent by year-endBusiness broadband adoption in 2006: Less than 10 staff (44 percent); 10-49 staff (69
percent); 50-249 staff (83 percent); 250 and above (99 percent)
Residential broadband subscriptions: 848,300 in Q3 2007 compared to 546,800 in Q3 2005
Corporate broadband subscriptions: 86,800 in Q3 2007 compared to 59,200 in Q3 2005
Total wireless broadband subscriptions: 2 million in September 2007Mobile phone penetration: 110 percent in August 20073G subscribers: 1.44 million in Q3 2007 compared to 66,200 in
Q3 2005Total SMS sent: 1.02 billion in August 2007IT spending for 2006: US$4.74 billion, projected to hit US$5.03 billion
and US$5.34 billion in 2007 and 2008, respectively
Infocomm industry revenue in 2006: S$45.4 billion (US$31.3 billion), 19.9 percent increase from 2005; domestic revenue 36 percent, export revenue 64 percent in 2006
Singapore’s IT ProfileProjected SMB software-as-a-service spending for 2007:
US$3 million
Per capita public sector IT spending in 2006: US$152.89. In Asia-Pacific, Singapore ranks third after New Zealand (US$198.78) and Australia (US$193.82), in terms of per capita spend on IT in the public sector
Desktop PCs shipped in 2006: 365,084 units, projected to hit 396,881 and 402,014 units in 2007 and 2008, respectively
Portable computers shipped in 2006: 451,990, projected to hit 609,981 and 805,618 units in 2007 and 2008, respectively
x86 servers shipped in 2006: 29,712, projected to top 33,254 and 34,064 units in 2007 and 2008, respectively
PDA/handhelds shipped in 2006: 29,000 units, projected to fall to 20,700 and 17,000 units in 2007 and 2008, respectively
Software vendor revenues in 2006: US$641.3 million, projected to top US$787.8 million and US$728.1 million in 2007 and 2008, respectively
Security vendor revenues (include software, hardware and services) in 2006:
US$129.4 million, projected to hit US$146.6 million and US$162.8 million in 2007 and 2008, respectively
Singapore’s IT Profile
Storage hardware revenues (include tape drives, tape automation, fiber channel switches, external disk storage systems) in 2006:
US$207.06 million, projected to drop to US$175.07 million and US$174.48 million in 2007 and 2008, respectively
Discrete outsourcing market size (where a select component of a company's IT environment is outsourced):
US$351.96 million in 2006, projected to top US$401.84 million and US$436.88 million in 2007 and 2008, respectively
Enterprisewide outsourcing market size (a comprehensive outsourcing contract which includes more than one discrete component):
US$235.07 million in 2006, projected to top US$243.78 million and US$251.94 million in 2007 and 2008, respectively
IT manpower: 130,400 in 2007, 8.9 percent increase from 2006; 119,700 in 2006, 7.5 percent increase from 2005. Government aims to create 55,000 new infocomm jobs by 2015, pushing the total number up to 170,000
Average annual salary of IT professionals in 2006:
S$64,943 (US$41,501), making Singapore IT pros the second-highest paid after Hong Kong, according to ZDNet Asia's IT Salary 2006 survey across seven countries
How Mongolia Can Be A Niche Player?
Identify Areas of Strength: costs, focus Investment on Human Capital Continuous Upgrade of IT Skills Investment in IT Infrastructure Learn From and Work With Others Who
Have Done It (e.g. Singapore, Korea, India) Market Its Services and Strengths Government Policies & Support