Risk Mitigation in Offshoring

Transcription

1 Risk Mitigation in Offshoring TiECon Bangalore 2003 November 2003 Avinash Vashistha Managing Partner neoit

2 Content! State of Offshore Maturity! Pre-Contract Offshoring Risks! Post-Contract Offshoring Risks! Client Impact! Lessons Learned Agenda

3 State of Offshore Maturity Clients Labor Arbitrage; Competition Offshore Inexperience Ownership Models, Supplier Portfolio, Governance Models Suppliers Client Due Diligence Offshore Knowledge Advisory Firms Client Inexperience As firms plunge into more ambitious offshore strategies, train wrecks will emerge. As with any fad moving too fast, accidents are bound to happen. State of Offshore

4 Pre-Contract Offshoring Risk Decisions Pre-contract risk mitigation is about knowledge and strategy:! Risk Distribution: Ownership Model, Multi-Shore, Multi-Supplier! Geopolitical Risks: Political & Economic Condition of Offshore Location! Supplier Risk: Financial Status & Supplier Viability! Legal Risks: Laws in Host Country & Offshore Destination; Safe Harbor Compliant But What About Post-Contract Risks? Pre-Contract Risks

5 Post-Contract Offshoring Risk Decisions! Resource Risks Knowledge Loss through Staff Attrition De-allocation of Key Personnel Experience Base! Infrastructure & Technology Risks Quality of Infrastructure/Ability to Scale Up Communication Network Power Back-up! Security & DR Risks Security of Client Sensitive Data/ IP Protection Security of Physical Assets DR & BCP! Transition & Program Governance Risks Transition Support Governance Model Program Management - Contract, Performance, Financial, Relationship, Resource Post-Contract Risks

6 Resource Risks Risk Factor Client Impact Attrition Movement of Key Personnel Lack of Domain & PM Expertise Higher training costs Inconsistent quality Knowledge loss Delays Delays/cost over-run Decreased productivity Knowledge loss Delays/cost over-run Inconsistent and/or poor quality Longer ramp up time Resource Risks

7 Infrastructure & Technology Risks Risk Factor Quality & Scalability of Facility Client Impact Loss of productivity Low morale of staff Staff coordination problems Communications Power Service level deteriorates Project deliverables suffer Delays/cost over-run Engagement stops Loss of productivity Infrastructure Risks

8 Security Risks Risk Factor Client Impact Data Theft/ IP Loss Loss of data External access to sensitive data IP theft Physical Capital Loss/Damage of whole or part of the facility Disaster Recovery Loss of customers Chaos during recovery Security Risks

9 Transition & Program Management Risks Risk Factor Client Impact Transition Lack of Wave Strategy Not Business As Usual Resource Flight Governance Model Lack of Control Program Management Unrealized ROI Program Mgmt Risks

10 Lessons Learned! Good Governance: Independent PM Office! Benefit of Independent Advice: Visibility into the offshore engagement Resource Management Offshore Assessment Transition Management Governance Techniques Lessons Learned

11 Risk Mitigation in the Future! As client s become more savvy, offshore management will become part of the overall offshore strategy budget! Suppliers will be forced to address more of the risks as clients become more engaged and savvy about the management of their offshore programs! Advisors will play a role in fixing unrealized objectives as we begin to see the results of poor program governance over the next few years Looking to the Future

12 Outsourcing/Offshoring Resources Outsourcing/Offshoring Knowledge! neoit: The Offshore Knowledge Center: Firmbuilder: TPI: Outsourcing Institute: Outsourcing Journal: NASSCOM: Philippines: Global: To outsource through neutral parties! Offshore: Global & Domestic: Offshore Resources

13 Contact Information Avinash Vashistha Managing Director (925) Allisson Butler Marketing Director (925) Contacts