Post on 15-Jan-2015
description
Cultural challenges in outsourcing
Presentation 6.May 2010
Per Reinboth- Innovasjon Norge
22
33
CHAOTIC DEMOCRACY
44
FUNCTIONAL ANARCHY
55
21ST CENTURY HEAD
66
19TH CENTURY BODY
77
HIGH TECHNOLOGY IN SOFT SKILLS
8
Talent Pool for Knowledge Based Economy
India has one of the largest education systems in the world
• 311 Universities with over 15,600 colleges
• 3 million graduates every year
• 200,000 engineers every year
• 300,000 other technicians every year
• 150,000 R&D professionals every year
• 2,000 Graduates from Indian Institutes of Management and other top 10 Business Schools every year
• 84,000 Graduates from other Business Schools every year
9
Indian IT Industry
• ITES exports grew from 17.7 bn US$ (2004-05) to US$ 23.4 bn(2005-06) – 32% growth
• As per NASSCOM review for 2005-06 revenues from US totalled 67%, Europe 25% and rest of the world 7.7%.
• Share of IT Software and Services Industry in GDP –
• Raised from 1.2% (1999-00) to 4.8% (2005-06)
• Majority companies adopted international standards: ISO, CMM,, etc.
10
Global Comparison
11
Major Players
India's Top Software companies
1 TCS
2 Infosys
3 Satyam
4 Wipro
5 IBM
India's Top BPO firms
1 Genpact
2 WNS
3 Wipo BPO
4 HCL BPO Services
5 ICICI One Source
6 IBM Daksh
7 Progeon
8 Aegis BPO Services
9 EXL Service Holdings
10 24/7 Customer
Top 4 companies have 80% market share
12
India Based Service Provider Landscape
Category No. ofplayers
Share of India’s totalIT/BPO exportrevenues
Performance
Tier I Players 3-4 45% of IT Services4-5% of BPO
Revenues greater than USD 1 billion
Tier II IT Players 7-10 25% of IT Services4-5% of BPO
Revenues USD 100 million-USD 1 billion
Offshoreoperations ofGlobal IT majors
20-30 10-15% of IT Services10-15% of BPO
Revenues USD 10 million-USD 500million
Pure play BPOproviders
40-50 20% of BPO Revenues USD 10 million-USD 200million
Captive BPOunits
150 50% of BPO Revenues USD 25 million-USD 150million (top 10 units)
Emergingplayers
>3000 10-15% of IT Services5% of BPO
Revenues less than USD 100 million (IT)Revenues less than USD 10 million (BPO)
13
Future Trends
• Increasing Labor costs
• Moving up the value chain
• Consolidation
• Manpower Shortage
• Outsourcing Backlash
• Engineering Services Outsourcing (ESO), Avionics and other opportunities
14
Risk factors when you outsource to India
Time is not always an important element
Indians seldom express diagreement. Only done in an indirect manner. Avoid expressing direct disagreement.
Your priority can be changed according to the total business picture
Even if English is understood and spoken , the meaning can deviate
15
Risk factors in outsourcing to India
Loyalty can be with the best paying party.
•Often solutions are 90% - good enough but not perfect.
•Your contact persom may change often
•Competence in your special field may be insufficient
•Direct communication difficult if you want to solve a problem
16
Risk factors in outsourcing to India ctd.
• Secrecy agreements
• IPR could possibly be a problem
• Work processes different . India often has a hierachical system but ICT companies tend to change this to a flat or project oriented system.
• Communication. The remote working model
17
Reduce risk and cost
Define the deliveries. (Terms of Reference)
Prepare yourself thorughly. Learn about the business culture and make quality control of your potential partners. You might be more dependant on your partner more than he will depend on you. Use Innovation Norway, delhi or other local adviser in the process.
Treat your potential partners with respect. This also goes for the potential key personell you will cooperate with.
.
18
Reduce risk and costs ctd.
• Think long term and see the process in this perspective. You might have to offer some training to get the people on the right level of undrstanding.. Be prepared and plan for good people changing position and companies
• Travel extensively to get a first hand impression on both the the company and the environment it is working in. Invite personell to your company to give them a impression of your company how you work
19
How can Norwegian companies use this advantage?
Work with the specialists! Get in touch with:
•Indian partner with a daughter/ company in Norway
•Norwegian partner with a daughter /majority ownership in India
•Go on your own and find a possible Indian partner directly.
2020
In general
Use common sense and show respect.
Accept that the culture is different and try to adopt.
Take your time to experience and understand the market and the culture before expecting big results. This investment will pay back
later.
Be patient