Managing Offshore IT

A while ago, I had blogged about innovation and an Infosys colleague being granted a patent. Over the weekend, I came across an interesting blog post on Slashdot that talks about how “IBM Seeks US Patents For Offshoring US Jobs” The blogger says "IBM and other corporations are seeking patents for inventions covering the offshoring of US jobs. The USPTO is considering IBM's patent application for Outsourcing of Services, a 'method for identifying human-resource work content to outsource offshore of an organization' to 'countries where cheaper labor prices and/or cheaper materials are available.'

Here’s an abstract of the patent application from USPTO’s website: “A method for identifying human-resource work content to outsource offshore of an organization. The method is provided on a computer readable medium and includes the steps of identifying at least one task being performed by an organization; associating each identified task with a functional group within a plurality of functional groups related to the organization; determining information about individual human resources spent on each task; determining task information about human resources spent on the plurality of tasks, the task information based on the determined information about individual human resources spent on each task; using the determined task information to determine a value of each task; and outsourcing tasks having a value lower than a predefined limit to at least one of offshore and to a low cost supplier.”

bloggers seem to be having a field day with the catchy title of the application. [Just a small sampling of viewpoints: Slashdot, nakedcapitalism.com, boonika.net]

The thread of discussion on the blogsphere reminds me of the (in)famous patent for “One-Click Shopping”  by Amazon during the dot.com heyday or the Microsoft lawsuit over the patent for scroll mouse  or the patent for “sending software applications over the Internet”

I am neither a legal expert nor an expert on patents but the even a cursory look at the IBM’s application abstract doesn’t sound like they are patenting ‘Offshoring US Jobs” as many bloggers seem to be claiming. It looks like they are applying to patent a software application to leverage a ‘process’ to manage people. Well, this is something many service companies, especially those with globally distributed teams do as a matter of day-to-day business of managing human resources. Many, including Infosys leverage complex, albeit proprietary, systems for this and other activities and the patent application in question seem to pertain to IBM’s proprietary process.

Note to self: send a note to Infosys’ patent cell gurus to ask for their viewpoint.

Update: "Offshoring Patent: Big blue withdraws application" Thanks to inputs from bloggers (self included), Bob Sutor, IBM's vice president of open source and standards, is quoted saying "We’re glad the community pointed this application out so IBM could take swift action." [in withdrawing the patent application in question]

Posted by Mohan Babu K. at 11:35 PM | Permalink | Comments (4) | TrackBacks (0)

Infosys Rumored To Eye Bid For Capgemini ran a headline in Forbes and other business media, earlier this summer, causing a bit of a buzz in the stock-markets. Quoting the forbes article “They’re both denying it, but the markets are abuzz with rumors that Indian software giant Infosys will attempt to acquire a controlling stake in European tech consultancy Capgemini”  Another news, this time about a real merger in the offshoring space [Wipro completes cash tender offer for Infocrossing] was also watched closely by analysts and technologists alike.

Now, I am not given to rumors, but in my day job as an Architect, consultant and advisor to CxOs and technology leaders, I come across my share of smoke-and-mirrors on various aspects of technology management, including on Mergers and Acquisitions. I have to be cautious in voicing my opinion as I am bound by my employment contract, but then, it is hard for me to totally abstain from analysis of ‘hypothetical’ possibilities, the ‘what if’ scenario planning as management gurus call it.  And this is certainly a trend that media is closely watching. [Example, #1 among the “Five outsourcing trends to watch” Consolidation … also blogged online ]

A few facts about Mergers and acquisitions (Wikipedia: M&A) in the software services arena.

• The world continues to get flatter (apologies Tom Friedman), which means that M&A or buyout of firms in hi-tech is not restricted to a few western nations alone
• Global software services firms that have been growing at a steady pace, thanks to the interest in offshoring services are bound to consider merging, getting acquired or buying other firms to expand their footprint.
• IT is integral to operations of business [‘IT Does matter’] and a seamless integration is the Raison d'être of a successful M&A. 
• M&As –even of technology firms - also involve many business dynamics -- financials, legal, regulatory, and other ‘softer’ ones like cultural fit etc. Now, such dynamics become more pronounced when we are talking about merger of organizations operating across cultural and geographic boundaries.

Should an M&A matter to clients of sourcing firms? Yes an no. Yes because any significant transition at your partner’s business could indirectly impact you too. However, in most cases such impact can be mitigated with checks and balances and well crafted Service Level Agreements (SLAs)

• Most relationships between client and service firms are governed strategically, though the operationalization may be tactically be managed by account managers and leaders on  a one-on-one basis, so a M&A of service firm would typically not impact clients. This said, after a merger, there could be a transition of people, account managers and the like. But there again, such transition of people across projects is nothing that is generally out of the ordinary, even in the normal course of doing business; right?
• If anything, clients should benefit from synergies that M&As promise, especially if the merger is between <their> firm and another that provides specialized service in the client’s domain, geography etc

Note, here I have not even begun to discuss the impact of M&A among clients of software services firms… which is a different story in itself. Footnote: [just to make it obvious :-) ] viewpoints in this blog entry are mine personally and are not based on any ‘rumor’ of M&A that I may/may-not be aware of.

Posted by Mohan Babu K. at 07:44 PM | Permalink | Comments (2) | TrackBacks (0)

In my previous blog, I was musing about the increasing significance of Enterprise Architects. Continuing the thread, it is interesting to see others also striving to Define the Enterprise Architect
There are a lot of different definitions for “enterprise architect.” It can get really confusing, particularly if you follow a lot of blogs written by enterprise architects — and I did.

I came across a few interesting blogs on technology managers and EA. Ed Gibbs  blogs on Moving to Enterprise Architecture, the blogs on successful software architecture and Six Sure Fire ways to Sink your Enterprise Architecture also made for an interesting read.

Fact is that work being offshored to/by software services companies is highly technical in nature. Bulk of such technical work involves translating requirements to workable solutions and also to ensure that such solutions continue working according to Service Level Agreements (SLAs) defined by businesses. It is therefore imperative that initiatives get the required oversight from technical experts and stakeholders. Such oversight includes review of architecture and design for use of industry best practices and conformance with the required Quality of Service QoS. The real skill comes in contextualizing the applicability of technology, validating best practices and reuse in the specific business and enterprise context.

In an offshored context, there is no reason one cannot leverage offshore architects for required architectural inputs, review and governance. Thanks to pervasiveness of information about ‘technology building blocks,’ base frameworks and body of knowledge, best practices can be leveraged from across geographies where technical experts may happen to reside.

Bottomline: one can extend the theme from "A Litmus Test for IT" Just as the blog says "a good IT department should be able to describe the business problem – that the company’s definition of a customer is changing – and explain that the project it’s working on will update the systems to reflect that. If the IT guys start talking about a new data warehouse that can rationalize customer records it might be time to worry" An Enterprise architect too should be able to describe the business problem

Posted by Mohan Babu K. at 04:40 PM | Permalink | Comments (0) | TrackBacks (0)

I read the recent BusinessWeek article “The Comeback of Consulting” with more than cursory interest. Having donned the consultant hat for my employer’s strong technology strategy consulting practice, working with clients across verticals, I can empathize with the resurgence in the consulting services that the author is talking about (though the article does not specifically focus on technology consulting). This viewpoint, when read along with the recent CIO magazine write-up "Hot Jobs Enterprise Architect" gives an interesting perspective. [Tipoff Agile Elephant] The article talks about how "Consultancies and systems integrators are good places to look (for Enterprise Architects), since staff there have honed their IT and business skills on a variety of IT projects focused on different industries and technologies." To this, I will add Offshoring and sourcing perspective as a must-have skill that Architects working for services firms acquire.  

You may be wondering why firms should engage with an offshoring service provider, especially for Architecture consulting services. If you are expecting the ‘obvious’ answer [‘low cost’?] you might want to think again. Architecture consulting is an area where the maxim of ‘working with an offshore service provider is cheap’ gets flipped upside down. Such consulting services are certainly not cheap, especially when provided onsite and when stacked up against conventional ‘offshore billing rate.’ But the real driver for clients to engage with us and other offshore providers is the value, especially when such consulting is bundled with offshoring.

And what is in it for individuals who wish to pursue a career in technology consulting? The answer to this was provided by the CIO article that concludes "Sony was able to get two out of four application architects to jump to the next level and become enterprise architects. The pair who didn't make it only had software development experience, while the two who succeeded had those skills as well as backgrounds as IT consultants."

Note. In case you are wondering what exactly is involved in ‘technology strategy’ consulting: The gurus at Infosys have tried to describe it as “Architecture Services enable you to eliminate the Business-IT alignment dysfunction. We partner with you to address your concerns and develop implementable Enterprise Architecture (EA) solutions to translate your corporate strategy into an effective IT strategy. These services provide you a fact-based evaluation and selection process that best fit your IT roadmap.”

Posted by Mohan Babu K. at 06:43 AM | Permalink | Comments (0) | TrackBacks (0)

In my previous blog, we looked at some of the viewpoints on Insourcing, especially as portrayed in the business/technology media. The recent chatter in the blogsphere [eg: Argolon, Curious Cat, James McGovern, Apu ...] began with Riya’s blog about the company’s insourcing experience. 

The story generated enough online buzz to culminate in a front-page story on the Wall Street Journal [Some in Silicon Valley Begin to Sour on India: A Few Bring Jobs Back As Pay of Top Engineers In Bangalore Skyrockets]. The story focused around how a few like the Silicon Valley startup Riya Inc setup captive Offshore Development Centers (ODCs), only to discover that the overheads were unmanageable. Result: “In April, Mr. Shah shut down the Bangalore office and offered half of its engineers a chance to move to San Mateo, Calif., with work visas.” What the article, and bloggers didn’t focus is on how a few small/mid-size companies also occasionally insource some outsourced work for internal/strategic reasons. I witnessed one such instance with a client of ours recently.

The client, a player in the insurance sector, began a relationship with Infosys over six years ago, starting with sourcing a small development projects and maintenance of IT systems and went on to engaging with us on higher-end services including working with my team on enterprise architecture and roadmapping exercises. In parallel, client was also working with another vendor to farm out work between us in a multivendor scenario.  A year ago, the client bought out an Insurance service provider and began the process of integrating the systems. About that time, the company also underwent a reorganization of senior management, which led to a shift in the staffing mix and strategy.

They began hiring technology managers, specialists and architects in local market and gradually started Insourcing some of the work that they had been farming to vendors. The process was gradual and not abrupt and probably had a basis in their strategic shift. As trusted advisors and technology partners, our teams – and that of the other vendor -- continued to enable the new-hires, aided in knowledge transition and facilitated this process. And where this ‘case’ is different from the one in the WSJ story is that we continue to do business with the client, which sends work offshore. The only difference is in the mix of work being offshored and the scale of operations.

For technology vendors, instances of business/strategic shift, leading to change in direction is a way of life. Now, will this ‘case study’ make news headlines? Probably not, unless a local journalist puts on her detective hat and adds a dramatic headline like ‘XYZ corp Insources previously Offshored work.’ Now, this is the kind of fodder that the media and bloggers live for… but for sourcing professionals; well, just another side of the coin.

Posted by Mohan Babu K. at 12:55 PM | Permalink | Comments (2) | TrackBacks (0)

The tech media, analysts and bloggers love a catchy title, and of late there are several stories with the ‘I’ word trying to generate some eyeballs. Just a couple of recent titles.

• India firm's 'in-sourcing' creates jobs for Georgia says The Atlanta Journal-Constitution Same story, with a different title: The inevitable: Wipro outsourcing software jobs to US is the title of a recent InfoWorld blog entry. Remember about 4 years ago when everyone was going bonkers over outsourcing and the impact on the US economy? NPR is reporting that Indian software firm Wipro plans to open a software design center in Atlanta and expects to hire around 500 computer programmers in the next three years. That certainly didn't take very long.
  

• Infosys tries out ‘insourced’ staff says a Financial Times article, adding Infosys Technologies will on Friday dispatch its first group of UK graduate trainees to India for a six-month induction course as part of efforts by the country’s outsourcing companies to make their workforce more global.
  The 25 trainees, each of whom has been issued with a copy of the Lonely Planet guide to India to help them orientate themselves in their new home, were hired from 12 UK universities as part of the programme, which follows a similar scheme in place for US graduates.

Now, though the titles are catchy, the articles don't really seem to be talking about Insourcing [as volunteers at Wikipedia would like to define it. Insourcing is the opposite of outsourcing; that is insourcing (or contracting in) is often defined as the delegation of operations or jobs from production within a business to an internal (but 'stand-alone') entity (such as a subcontractor) that specializes in that operation. Insourcing is a business decision that is often made to maintain control of certain critical production or competencies.

And as an observer of sourcing, this is a trend I am inclined to keenly observe. And yes, there are certainly instances of Insourcing that we have been experiencing, and have even facilitated… more in my next entry.

Posted by Mohan Babu K. at 11:44 PM | Permalink | Comments (0) | TrackBacks (0)

Over the long labor-day weekend, I was reflecting on my avtar as a corporate blogger, given that it has been a little over a year since we launched this blog.

The idea for this blog was seeded by Vijay of our corporate marketing group who asked if I wanted to explore some topics based on my book on a platform that would be a blank canvas available to me. I jumped at the opportunity. 

During the course of the year, I have posted on various aspects of sourcing, offshoring and technology management. A few of my blog posts generated several comments and exchanges while others probably ended up in the blogsphere vaccum. As I continue to post, I muse on the business of technology sourcing.

The topics I continue to muse on

1. Strategy vs. tactics of execution. Strategic ‘aha’ moments in offshoring are too few and far between while the daily grind of execution is what leads to execution excellence.
2. ‘Research’ on offshoring and ‘sourcing models’ vs. just-do-it. Again a theme from above with a variation: there is lot more research on offshoring, globalization and sourcing being published by academia and thought leaders. I sometimes wonder if the cart is pulling the horse; i.e. is bulk of the ‘research’ just a collation of what those in the industry are already practicing… if not, the Good-to-great question (3.)
3. What makes some offshoring (especially Tier-1) companies extremely successful, while the tier-2 and smaller players struggle to cut it. Going back to point 2.) if research from the field could be applied by other players, should the playing field not be level; yet?
4. The (mythical)  'move up the value chain' for offshorers. The media and analysts seems to love this theme... but those in the industry sometimes wonder: what's new about moving-up? When do we call out when we have reached the top?
5. Ongoing challenges in the industry: talent-wars, geopolitical challenges, legal challenges of globalization (including travel and visa restrictions). Of course, I will also continue to blog on some of the more tactical observations from the trenches.

Suggestions on topics you wish to see explored in further detail are more than welcome

Posted by Mohan Babu K. at 02:05 PM | Permalink | Comments (2) | TrackBacks (0)