Succeeding with Business Process Outsourcing

A P P L I C A T I O N S A WHITE PAPER SERIES COMPANIES ARE SEEKING NEW WAYS TO STREAMLINE PROCESSES, REALIZE FURTHER COST REDUCTIONS AND INCREASE TIME-TO-MARKET. MANY ORGANIZATIONS ARE CONSIDERING BUSINESS PROCESS OFFSHORING TO ADDRESS THESE ISSUES. Succeeding with Business Process Outsourcing

1 INTRODUCTION 2 CALCULATING THE RISK 3 SYNTEL S IDENTEON OPPORTUNITY AND SITE ANALYSIS TOOL DETERMINING PROCESSES TO OUTSOURCE DETERMINING WHERE A PROCESS SHOULD BE MANAGED USING IDENTEON TO SUCCESSFULLY LAUNCH A BPO PROJECT 4 CONCLUSION: BENEFITS OF WORKING WITH SYNTEL UNIQUE IT AND BPO MODEL SMOOTH MIGRATIONS TO OFFSHORE COMMITMENT TO QUALITY SETS SYNTEL APART Succeeding with Business Process Outsourcing Due to a variety of market pressures, today s enterprises are looking beyond IT outsourcing to find additional ways to realize cost reductions and enterprise-wide improvements. Many companies are turning to business process outsourcing (BPO) to address these issues. However, business process outsourcing projects can prove disastrous unless companies select processes suitable for developing or maintaining at a remote site, whether domestically or internationally. Yet most companies are challenged to identify and evaluate issues concerning what, how, and where to outsource. This paper describes how Syntel s Identeon assessment tool can help (and has already helped) organizations with this assessment and explains why Syntel is the best choice to help organizations with their business process offshoring.

A strategic assessment of business processes...provides a solid foundation for a sourcing strategy. 1. INTRODUCTION While global corporations have leveraged the cost and productivity gains of IT outsourcing for years, companies are seeking new ways to streamline processes and realize further cost reductions and increase time-to-market. Many organizations are considering Business Process Offshoring (sometimes referred to as transformational services) to address these issues. Business Process Offshoring is a relatively new trend that refers to the delegation of one or more technology-enabled business processes to an offshore service provider who in turn delivers the processes based upon defined and measurable performance metrics. A variety of market forces are driving this trend, including the following: Macroeconomic Factors: Industry consolidation, the need to compete effectively, and the shortage of skilled labor in certain industry sectors have forced organizations to look for business resources around the globe. These companies realize that offshore locations can provide access to highly skilled talent with training in the latest technologies. Furthermore, offshore takes advantage of time zone differences through efficient deployment of second and third shifts, allowing global corporations to truly operate on a follow-thesun basis and take advantage of 24-hour workdays to meet or beat project deadlines. Technological Advancements: The ubiquitous nature of the Internet has been one of the key drivers in the growth of offshoring over the last five years. This coupled with the very highly reliable, available, and secure networks across the globe has enabled the seamless integration of offshore and onshore locations. And leading offshore providers are often domain experts in a variety of technologies companies can leverage these providers extremely disciplined approaches and methodologies to often exceed the quality of work done on-site. Cost reduction: The global downturn, combined with the pressure to reduce costs and increase productivity, has forced corporations to look for offshore destinations with large pools of educated people that can be trained to perform certain service functions at a substantial cost difference. 2. CALCULATING THE RISK The first and perhaps most important step in any business process outsourcing project is to select only those processes suitable for developing or maintaining at a remote site. In fact, according to E-Business Strategies, outsourcing activities that should not be outsourced is number two in the top ten reasons for offshore outsourcing failure. 1 But organizations face challenges in determining the business processes to be outsourced. Decisions on whether to outsource business processes, and on subsequently selecting a service provider, are highly dependent on the specific processes being considered. Although this seems obvious, we see enterprises routinely overlook this fundamental principle. Potential purchasers of a BPO service need to consider carefully what processes are candidates for BPO Gartner, Inc., July 2003

Recent high profile failures in outsourcing relationships have highlighted the need for companies to carefully assess their options and develop a sourcing strategy that ensures processes are handled where the work can best be done. However, this is easier said than done, especially in large organizations where many processes are interlinked or dependent on one another. In these instances, identifying and evaluating issues concerning what, how, and where to outsource becomes increasingly daunting. Most of the outsourcing process selection is based on gut feel and cost reduction potential only, not taking into account other important parameters such as process linkages and criticality of the process. In the absence of a careful and systematic evaluation of these issues, companies that enter into an outsourcing engagement will find themselves with sub-optimal processes or outright failures. Companies need to evaluate their business processes and not only identify the right ones to outsource, but also determine the delivery model that will best support these (identified) processes. For instance, certain processes that involve high levels of confidentiality could be outsourced to a joint venture/captive center as opposed to a shared services or external vendor. The first step, then, to any business process outsourcing initiative is to determine the following: 1. What processes can be outsourced? 2. When (or in what relative order) should these processes be outsourced? 3. Where can they be outsourced (for instance, can the process be moved to a remote location or should it remain in close proximity to the organization)? 4. How should they be outsourced (for instance, whether through a captive unit or a vendor or any other business structure)? 3. SYNTEL S IDENTEON OPPORTUNITY AND SITE ANALYSIS TOOL A strategic assessment of business processes, covering the above objectives, provides a solid foundation for a sourcing strategy. Syntel has devised a proprietary tool called Identeon to assist with this evaluation. The results of the assessment provide the customer with a high-level outsourcing and site potential analysis, which can be used to determine which processes will be outsourced, in what order, and in what manner. To fully assess a customer s situation, Syntel analysts consult with the customer about various factors, such as the organization s objectives, legal and physical constraints, personnel issues, and the significance of these factors to each process. In addition, the maturity of the process is considered to determine the ideal outsourced location. As enterprises evaluate the suitability of projects for offshore delivery, they should apply a framework that is composed of quantitative and qualitative factors. This framework will help minimize the risks of early pilot offshore projects and will lay the foundation for future success. Gartner, Inc., January 2003 Through a predetermined set of parameters, the Identeon tool measures the processes against various elements to determine its location on the Opportunity Site Assessment Chart (see figure 1). Syntel can customize parameters to fit the customer s business requirements (i.e., can discount

...Today decision makers benefit from the efficiencies that BPO firms are able to provide through domain expertise, resources, and technology. Figure 1: Processes are mapped onto the Opportunity Site Assessment Chart parameters not considered relevant by the customer). The tool rates various elements for two main factors: opportunity analysis, which helps identify the processes that can be outsourced and the prioritization of outsourcing these; and site analysis, which helps identify the appropriate location for the process (onsite, offsite, nearshore, or offshore). Determining processes to outsource The Opportunity Analysis calculates the Opportunity Priority Number (OPN) on a scale from 1-5. The OPN helps identify the business processes that can be outsourced. Business processes with a higher OPN can be easily outsourced and should be outsourced first. For instance, Type of Function is one such attribute that is rated on the core/non-core nature of the business process. Similarly, Manual Component is another attribute, which rates the degree of manual work involved in the process under consideration. A total of 15 such attributes with multiple rating factors are used to arrive at the final OPN figure. Determining where a process should be managed The Site Analysis calculates the Site Priority Number (SPN), again on a scale of 1-5, with each parameter being rated for its location attributes. For instance Time Constraint, i.e. time available to deliver the business process results, is one such parameter. Similarly Availability of Skill Sets by location is another parameter. A total of ten such parameters are used to arrive at the SPN figure. The SPN is used to identify where and how a process should be outsourced. The processes with a higher SPN can be easily offshored while the ones with a low SPN should be kept onsite.

However, lacking any formal assessment tools, the client s operations managers and process owners were struggling to identify which processes should be outsourced to offshore and in what order. Instead, they were relying on gut feeling to come up with a list. At the same time, the operations managers were a bit reluctant to identify their own processes for offshoring, as they feared the impact on their own jobs. This is a common misperception. In reality, outsourcing ultimately helps these operations managers focus on their core functions and other strategic initiatives. At the same time, they gain an extension of their internal team without adding incremental headcount. Figure 2: Assessment results provide outsourcing recommendations The results The results of the assessment (OPN and SPN) are mapped onto an Opportunity Site Assessment (OSA) matrix (see figure 2), which indicates the final recommendation for each process considered, specifically: Process 1 should be offshored but not outsourced ( Joint Venture with a offshore Vendor, Captive Unit), Process 2 should not be outsourced and kept at the onsite location, Process 3 should be outsourced but kept onsite or onshore for outsourcing, and Process 4 should be outsourced offshore. Using Identeon to successfully launch a BPO project Syntel has worked with a number of companies to help them successfully launch and implement BPO projects. In one such instance, a leading investment management bank successfully utilized Syntel s Identeon tool and methodology to evaluate and identify processes for offshoring. The client s management team had specified a deadline by which time the company needed to implement an offshoring/cost reduction initiative. Finally, realizing that it was not equipped to determine the processes best suited for offshoring, the company called in Syntel. Two consultants from Syntel worked with the client s stakeholders and studied the candidate processes to make a recommendation. The assessment, consistent with all Syntel offshoring assessment consultations, consisted of the following steps: 1. Cataloguing the business processes 2. Identifying business objectives 3. Narrowing down the list of processes under scope based on business objectives 4. Detailed analysis of the processes based on Identeon parameters 5. Analyzing the opportunity for outsourcing using the Identeon tool along with the client stakeholders 6. Analyzing the site opportunity using the Identeon tool along with the client stakeholders 7. Charting the results on the Opportunity Assessment Matrix 8. Presenting the results to the client The assessment was conducted within one week, resulting in a list of recommended processes reconciliation, tax reclaim, and income processes for offshoring, and the order in which they should be outsourced. The client was pleased with the efficiency and soundness of the Syntel recommendations, and immediately began the transition to offshore the first process.

4. CONCLUSION: BENEFITS OF WORKING WITH SYNTEL Syntel has provided outsourced IT services for over 20 years. In fact, Syntel was the first US-based firm to launch a Global Service Delivery model in 1992 and leverages this model today to deliver increased time-tomarket, enhanced efficiencies, and quality improvements for a majority its Global 2000 customers. While in the past companies looked to IT outsourcing mainly for cost arbitrage, today decision makers benefit from the efficiencies that BPO firms are able to provide through domain expertise, resources, and technology. Unique IT and BPO model More recently, Syntel has combined its IT outsourcing expertise with its business process outsourcing service to deliver a unique model. Because Syntel is primarily an IT organization with extensive experience in software development and processes, it quickly automates and digitizes customers processes. For instance, it develops online tools to help customers reduce manual labor, which helps increase productivity and improve quality. Furthermore, since Syntel is able to provide all necessary services, customers are relieved of the burden of managing multiple vendors. Its global delivery-based engagement model even incorporates disaster recovery and business continuity plans to address disasters that occur at the global level. And because Syntel is a US-based company, customers can be assured of compliance with US laws and that projects are managed according to US standards. Smooth migrations to offshore Syntel uses a standardized migration methodology to manage the transition of processes from the client site to offshore. This proven methodology ensures a quicker transition without disruption and covers all stages from transition planning to operations readiness. As part of the migration, Syntel has devised an approach called KARP to identify, plan, acquire, maintain, and manage its customer s knowledge assets. Commitment to quality sets Syntel apart Any successful corporation understands that the quality and dedication of the people behind the processes and technology are what stands between success and failure. Quality focus and commitment is a key characteristic that distinguishes Syntel from many other outsourced providers. This focus extends throughout the Syntel organization, and impacts its people, processes, and technology. Syntel follows the widelyrecognized Six Sigma methodology to continually measure and improve performance and processes. As an integral part of this methodology, it adheres to the DMAIC Define, Measure, Analyze, Improve, Control framework to guide process improvement. Syntel s Global Development Centers in India are assessed at both ISO 9001 and Level 5 of the SEI CMM (Carnegie Mellon Software Engineering Institute Capability Maturity Model), making it one of just a handful of organizations in the world assessed at this level. Its delivery performance is benchmarked against the highest capability standards of this model and achieving Level 5 is the ultimate recognition in the IT industry for the maturity of Syntel s software processes. This means Syntel s solutions have been proven to deliver: Faster project timelines Greater costs savings Reduced risks Increased work efficiency Constant work process improvement Greater situational awareness Syntel s Project Management practices are based on the Project Management Institute s (PMI) Project Management Body of Knowledge, which emphasizes communication, risk management, and leadership. Most of Syntel s Project Managers are PMI-certified, or are in the process of pursuing certification, and all project managers are leaders empowered by Syntel to act in the best interest of the customer s success. Those companies seeking to reap the benefits of business process offshoring should take advantage of Syntel s outsourcing recommendation consulting. By leveraging its proven Identeon tool, Syntel can help your organization reduce the risk of failure as you consider which business processes to outsource. And once you ve determined the appropriate processes to outsource, Syntel provides the breadth and depth of services you need to confidently outsource your business processes offshore. References 1 E-Business Strategies, Top Ten Reasons for Offshore Outsourcing Failure, http://www.ebstrategy.com/bpo/offshore_out/failures.htm

aboutsyntel: Syntel provide custom outsourcing solutions to Global 2000 corporations. Founded in 1980, Syntel's portfolio of services includes BPO, complex application development, management, product engineering, and enterprise application integration services, as well as e-business development and integration, wireless solutions, data warehousing, CRM, and ERP. We maximize outsourcing investments through an onsite/offshore Global Delivery Service, increasing the efficiency of how complex projects are delivered. Syntel's global approach also makes a significant and positive impact on speed-to-market, budgets, and quality. We deploy a custom delivery model that is a seamless extension of your organization to fit your business goals and a proprietary knowledge transfer methodology to guarantee knowledge continuity. SYNTEL 525 E. Big Beaver, Third Floor Troy, MI 48083 phone 248.619.3503 info@syntelinc.com v i s i t S y n t e l s w e b s i t e a t w w w. s y n t e l i n c. c o m