Monthly Archives: May 2013

IT Resourcing from India and China

India and China are traditionally the best markets for sourcing for most IT requirements, However other countries are not lagging behind – Philippines, Poland, Brazil, Mexico, Canada and other countries are also vying for their smaller share. Come to near-shoring the Caribbean Islands, Mexico, Honduras, Columbia are propping up with creating good infrastructure with readily available English speaking graduates and enticing providers albeit concentrating on call center initially.

There are challenges in hiring from the major markets which are undoubtedly India and China. Contrary to popular belief there is not a huge pool of talented resources that can hit the ground running. The employable pool is actually less than 25% of the available resource pool which his large no doubt. Though both countries produce thousands of graduates every year, they are not truly ready when they walk into their first assignment. Except for some of the top universities many of the private colleges have dismal infrastructure and resources to give the graduates the education they need to be successful once hired. Some of them are like paper mills churning out graduates.

The tendency to hire big numbers from universities bringing in resources that come without any formal training has been an issue that has had several consequences. The bigger firms found this trend early on and invested very heavily on training facilities to quickly train them and move them to billable fold. Some of the training facilities are truly world class, this was fueled by the need to fill the bigger numbers of resources that are needed to fulfill large contracts and keep a bench strength needed to provide a quick response when needed.

The need for large numbers to fill meant IT providers had the upper hand and could put resources that were semi qualified. For clients it meant hidden cost since the efficiencies were not the same.

Here is your check list if you are looking at resourcing :

Don’t settle to just fill the numbers, look for talent you need.
Don’t compromise on your skillset and experience requirements,
If needed the training or re-training, that should come at the providers cost not yours.
Never offer training on technology available in the market at your cost except on legacy or niche technologies not available in the market.
Extend the non-billable time till the resources become efficient enough.
Have a screening policy for onboarding new resources.
Drop resources that don’t fit your needs as you know, don’t keep them on your rolls.
Put checks and balances to review output.
Don’t allow low productivity resources to stay on large teams go un-noticed and bill you out.
Get a upper hand on resource approvals, don’t allow your IT provider to dictate terms.

Managing crisis situations

Crisis situation in IT outsourced environment is common if not frequent. It is more prevalent during the initial stages of the contract or relationship than in an established one. It is important to have a good crisis management team comprising of both sides ready to handle. It is again important to have this from ground up and have all the relevant players and keep it balanced with both client and providers representatives. Identify players who are mature, have prior experience, the knowledge and patience and the understanding of what this means to the business. Roping in Incident Management and problem management teams is important to manage crisis professionally, give it a sense of legitimacy while following the communication and reporting protocol.

The tendency to point fingers should be resisted. Immediate attention should be focused on managing the crisis and restoring normalcy. A lessons learnt is pertinent once the storm blows over.

Most often trivial situation get out of hand and become full blown crisis that need maturity in handling. The tendency to sweep under the carpet initially at the lower levels as the matter gets out of hand is not uncommon. The culture more so in Asian sub-continent is to wait till last minute to see if they can solve the issues is something that needs to be dealt with. It is good to stress an open environment to encourage reporting of situations that could become crisis in the near future and a take a toll on both sides. Keeping a close eye on risks that have become issues will help alleviate getting into crisis situations or atleast know the background when it does become one.

Developing and having an action plan in place to deal with crisis, with names and contact numbers, a toll free number to join, a identified representative who can play the role of ombudsman on both sides will save a lot of time and money when crisis does hit. Also important is to keep the plans utilized during past events with updates from lessons learnt to use it under similar circumstances.

Attrition – Measuring its true cost and impact

Attrition is the key indicator of the health for your outsourcing contract. Outsourced providers like to keep this in check, for their own benefit and for the health of their contract or relationship, however the tendency to camouflage the metrics and downplay the hidden cost to client is high. If this percentage is more than 20% it is an unhealthy sign, you are possibly losing out on efficiencies and cost savings. Up to 5% is considered the best while an average of around 10% is still acceptable depending on the size of your outsourcing resource pool.

Circumstances beyond the control of outsourced providers play into this. It was pretty bad before the recession began couple of years ago. When the job market is scorching hot the tendency to jump ship is very high among the technology resources. The ability to increase your pay packet is the immediate driver, other key reasons are to seek promotions from their existing roles, change skill set from legacy to newer technologies, cut the commute to work, poor reviews, morale or motivation, moving from smaller lesser known firms to bigger ones and look for opportunities to move to client site. There are few more reasons that actively encourage attrition from the resources perspective – poor management, lack of direction at team level, odd working hours, increased work load, unrealistic timelines, poor pay and benefits etc. Personal reasons like moving from one city to another to join spouses, marriage, medical and family reasons also play a smaller part.

The last few years have been a golden period when attrition got itself under some control thanks to global recession and slow down. This meant lesser positions being created which cut down recruitment. Bench strength was being cleared to make sure there were not carrying non billable resources beyond their tolerance. The existing resources even those that were talented were afraid to move out from their existing jobs fearing risk factors and playing the wait and watch game. Major IT players joining forces on this subject meant sharing information on experienced resources and discouraging recruitment of resources that had too many career moves on their resume.

Calculating the true cost of attrition is often a difficult exercise, many clients choose to ignore often and just ask the provider to bring it down via a few escalations or stern notice. Most often the IT outsourced providers respond with few measures only to go back when the memory fades.

Any calculation of true attrition cost involves looking at loss of your resource time that was spent prior and being duplicated every time a new resources joins, the knowledge transition time to bring the resources up to the same levels or anywhere close to where the former resource left, loss of time spent in training on the project or assignment, disruption to normal work, loss of valuable time when replacements are not worthy or qualified enough, impact on quality and loss of efficiencies are major factors. it is easy to factor when projects slip due to attrition based on the hourly cost and the cost benefit analysis for the project based on number of days slipped. Time spent on specific training be it technology or subject matter expertise, training via external vendor are all to be factored while calculating.

Also watch out for manufactured attrition, when there is a tendency to move people out to bring down their costs. I have been witness of atleast couple of instances where the outsourced provider discovered their margins were at stake and slowly allowed senior resources to move out and brought in fresh graduates to drop costs. At times moving from particular location to consolidate operations to reduce cost for providers also is one of the reasons for attrition from provider side.

As a best practice it is advisable to have the provider maintain a dashboard to show attrition numbers and at the client end maintain a template / report with key factors to calculate the true cost and publish every month and review at the appropriate forums at a regular cadence. It is equally important to align with the definition of attrition on both sides. The tendency to keep certain reasons mentioned above out of the purview of attrition to keep the numbers low needs to be avoided. For the client any loss of resources other than those originating from the client is an attrition – simple enough.

Performance Measurement in IT outsourced Environment

Lord William Thomson Kelvin said “If you cannot measure it, you cannot improve it “

Measuring the performance of your outsourced arrangement is extremely important. Not just from financial perspective, there are many other considerations involved here ranging from measuring productivity, contribution of your employees, morale and motivation, project and deliverables at stake, time to market, security amongst others. Transparency is the key, don’t ignore the right team members that need to see the metrics, again different metrics for various levels of audience is fine. Insist on showing action taken where appropriate.

Some best practices to adhere are :

• Invest in looking at all metrics together at a glance – many of these are related and helps to look at the overall health of the outsourcing arrangement.
• Review at different levels, pick a cadence weekly, monthly, quarterly and of course yearly overall.
• Look for amber and red not just greens. Reject the all green report, it means nothing. Look for false claims
• Dashboard with historical data and trends would be of immense help to see the pattern whether you are improving or going south
• Constitute special teams to tackle the toughest metrics needing remedial actions
• Conduct / facilitate reviews at appropriate level – make it in person if feasible. Over the phone conversations don’t tend to go well more so when the metrics are mixed
• Distribute widely among those that are not in attendance or don’t get a seat at the table while metrics are reviewed and solicit feedback
• Don’t have too many levers to measure – measure what is important to you and in that order
• Avoid too many numbers –focus on essentials. Have a crisp summary for the period under review
• Don’t delay looking at reports – for example monthly reports should be reviewed the first week of following month likewise – no point looking at metrics after a long pause, the damage is perhaps done already
• Look for noise that tops the bad metrics, eliminate those metrics that you don’t care but the outsourced providers cares and induces it into the mix
• Encourage showing what is not green – after all that is what needs attention. Discourage the “All green” reports, they mean something is wrong

Don’t lose out on averages…..or statistical lies, imagine the famous sentence attributed to Mark Twain “Lies, damned lies, and statistics” describing the persuasive power of numbers, particularly the use of statistics to bolster weak arguments.

Working the devil’s shift

If you are in outsourced arrangement, it is important to know the time difference of your offshore pool and the impact it can have on your operations before you select your IT outsourcing provider. Once selected upon due diligence it is equally important to sensitize your staff on what this means and how they need to work with resources often on the other side of the globe. Near-shoring helps with this aspect immensely however it comes at a price given the huge pricing difference from the Asia pac and other outsourcing destinations.

Due to the time difference between main outsourcing hubs be it India or China with the times sizes in United States this becomes an issue more so when client needs 24/7 support. One of the primary requirements for employment in a transnational call center—besides fluency in English—is working the night shift. Typical night shift hours range from 10p.m.to 6a.m.or 8p.m.to 4a.m.

Mobility is vitally important to those who seek to work in this industry. In other words physical mobility (getting to and from work) and temporal mobility (going out when one is expected to stay in) are job requirements. Transportation is often provided as part of recruitment to enlist talent. Not all providers provide the requisite support to keep resources 24/7, the late night shift often called the devil’s shift.

For some type of contracting like call centers, KPO it is required to keep a 24/7 operations often tapering off the numbers to shift more calls towards office in day light hours where feasible. However for Technology outsourcing except for support of critical systems most clients prefer their outsourcing resources work in their regular shifts. It is not an exception where clients have asked resources to be available in the offices during the late night to match their counterparts onsite which often comes at a disadvantage for the outsourcing vendors. The better model is to target couple of hours every day to bring teams together to ensure there is continuity.

Heath concerns do weigh in here. Imagine going against the routine human body is accustomed to is never a healthy alternative. Night shift work can have a significant impact on an individual’s health because of the way it affects the body’s circadian rhythms. These rhythms fluctuate throughout the day and night to regulate many of the body’s biological functions. Night shift work causes these rhythms to be out of sync with their regular timing. As a result, night shift workers sometimes experience sleep problems, fatigue, weight gain and digestive problems.

Security is another angle. Security is a major issue as well. There have been multiple cases of high profile crimes against women working in late night shifts as they commute to offices or back homes. Men are often subject to harassment by law enforcement officials asking for identify and questioned for being late on the roads as they commute.

These are some of the causes for attrition as well which adds to additional costs to hire, retrain and become your hidden costs. Avoid where you can to bring in resources offshore at odd times, move them to general shift where feasible. Merely asking them to shadow your own resources onsite doesn’t make perfect sense in all cases, that is just trying to feel comfortable with having backup there, imagine a resources coming day after day at night and if that resources ends up not having a meaty role to play alongside his onsite counterparts, it becomes a recipe for problems. Call centers based on volume seem to make the right choice, similarly for technical support as well, however when you are in purely development projects unless you have a situation or exigency to meet timelines it doesn’t make sense to bring resources in the devil’s shift or a better word graveyard shift. You will see the ramifications soon.