1. technology and computing

ISSUE #38, 2014
How To Do It The Right Way
Inside
• Startup Nation: Building
Resilient ICT Ecosystems
• Data, Data, Everywhere …
Not A Drop of Insight
• Business Simplified:
Removing Financial
Process Complexity
contents | Outsourcing
10
14
26
34
10 Cloud: How To Do it the Right
Way
14 Why Chief Digital Officers
Should Imagine Talent
Without Borders
26 Building Resilient Ecosystems
30 Opportunity Knocks With the
Rise of ASEAN Economic Zone
34 Malaysia: Emergence of a
New Outsourcing Destination
36 Hitachi Sunway Trains Sights
on Data Centre Market
42 Automation: I Am Robot
42
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editor’s note | Outsourcing
ISSUE #38, 2014
How To Do It The Right Way
Inside
• Startup Nation: Building
Resilient ICT Ecosystems
• Data, Data, Everywhere …
Not A Drop of Insight
• Business Simplified:
Removing Financial
Process Complexity
theteam
Founder / Editor
Sritharan Vellasamy
Consultant
Sundra Surian
Members of Editorial Advisory Board
bobby varanasi
Jerry E. Durant
Martin Conboy
editorial [email protected]
Sub Editors / Writers ESTHER CHEW,
Jamilah Lim, Nicolette Ng
Graphic Artist ISMAIL MORTHAR
Photography A. Arumugam
Contributors vikraman visno nair,
Simon VELLA
INFO & SALES [email protected]
Bill cooper
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C
loud-based activities are emerging as one of the biggest
changes underway in the outsourcing business models
today.
So, it’s transition time. Or is it just a passing cloud?
Just a couple of years ago, most outsourcing activities
revolved around dedicated infrastructure, but now, industry
players are moving towards integrating Cloud-based offerings
in their overall delivery models.
Our Cover story by regular columnist Deepak Bharathan
provides an overview of Cloud technology and analyses its
current value proposition as well as future potential.
The brave new frontier in this arena is moving technology
infrastructure to a managed services model using the Cloud,
says Deepak – and he asks if this technology has delivered all
that it has promised thus far.
Despite the over-hyped benefits, Cloud is indeed a disruptive
technology and will, rightly so, impact enterprise businesses
now and in the future. As a business leader, you should position
your company to be able to take advantage of this disruption,
says Deepak.
So, be sure to check out the analysis in the inside pages.
I also would like to take the opportunity within this space
to call on all our readers to attend the upcoming Asia-Pacific
Outsourcing Summit. This two-day event takes place from Sept
23-24, at the Mandarin Orchard in Singapore.
The Summit brings together the world’s top outsourcing
practitioners and business leaders for a oneof-a-kind gathering to explore and set the
future of the outsourcing industry in the
Asia-Pacific region. The event also aspires
to go way beyond the prescriptive “howto-operationalise” stories, since such
conversations are limited to functional
deliberations or experiences of a few
organisations.
So mark your calendar – and join globally renowned leaders in the Lion
City to debate, network, share
your knowledge and explore
opportunities.
More information about the
event is available in the next
few pages. Alternatively, log
on www.asiapacificoutsourcingsummit.com – the official
website, to register online
and see the latest updates.
– Sritharan Vellasamy
Partner OrganiSations:
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July-August 2014 |
5
Outsourcing
| Advertorial
6 | May-June 2014
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May-June 2014 |
7
News
Survey
bits ||Outsourcing
Outsourcing
Declare ITO services, says
Bank of Thailand
Financial institutions operating in
Thailand are required to report their
IT outsourcing services to the Bank of
Thailand to enhance information and
system securities as well as increase
greater cost management efficiency,
the Bangkok Post reported.
Somboon Chitphentom, senior
director of the regulatory policy department, said both domestic and foreign
financial institutions have to declare
their critical IT outsourcing services at
least 30 days before commencing an
operating system or changing service
provider.
Financial institutions are also re-
quired to submit an annual report on
all of their IT outsourcing services and
report any problem affecting their basic
financial services that stems from IT
outsourcing services within 24 hours,
he said.
“Technological trends have changed
constantly and commercial banks have
increased their IT outsourcing services,”
said Somboon. The central bank sent
a letter of circulation to all financial
institutions recently to inform on latest
regulations about their IT outsourcing
services.
He reiterated that financial institutions bear the responsibility of reporting
to the central bank and the reporting
process should not be initiated by IT
service providers. Since service providers on cloud computing technology
have offered their services to interested
financial institutions, this could lead
to unnecessarily information leakage
and financial institutions should be
cautious with this, said Somboon.
Cloud computing could lead to
important data storage, considered as
critical IT outsourcing, or a concentration of a sole IT service provider. Financial institutions must therefore report
to the central bank on IT outsourcing
services on cloud computing.
Tata-SIA
Airlines
takes the
Outsourcing
route
Wipro appoints
new BPO Head
Microsoft to
establish data
centre in India
Tata-SIA Airlines Ltd, the joint venture
(JV) between Tata Sons Ltd and Singapore
Airlines Ltd, is pursuing an outsourcing
model for its operations in India and has
tied up with state-owned Air India Ltd
to execute parts of the strategy before
its expected takeoff in October, India’s
Mint reported.
Air India will manage groundhandling and engineering services for
Tata-SIA, said two executives at the
national airline who spoke on condition
of anonymity. “Their ground-handling
and engineering checks will be done
by us. For the big checks, they already
have an MRO (maintenance, repair and
overhaul facility) in Singapore,” one of
the officials said.
The outsourcing strategy adopted by
Tata-SIA sets a sort of precedent in India, where most airlines have their own
staff to perform engineering checks
on their fleet and for ground-handling
functions. Airlines have even taken
the government to court in the past for
forcing them to hire external ground
handlers, the business newspaper said.
Air India Engineering Services Ltd,
a subsidiary of the national airline,
will provide engineering services to
Tata-SIA. Staff of Air India SATS Airport
Service Pvt. Ltd are expected to perform
ground-handling duties for the airline
at major airports; Air India Air Transport
Services Ltd will look after ground
handling at non-metro airports.
Wipro has a new BPO head. India’s
third-largest IT services company has
appointed Nagendra Bandaru as the VP
and global head of its BPO business. He
replaces Wipro veteran Manoj Punja who
quit the company in early August, 2014.
Bandaru will report to the company
CEO TK Kurien and will continue to be
based in the US, the company spokesperson said. Till recently, he was heading the insurance vertical in Wipro’s
Finance Solutions business unit. Prior
to that, Bandaru was the global sales
head at Wipro BPO.
Punja was the CEO of the BPO business since June 2012. Prior to that, he
was the chief sales and operations
officer for Latin America, Africa, France,
Germany and Canada. “After spending
23 years with the company, Punja has
decided to move on to pursue interests outside of Wipro,” the company’s
spokesperson said. He was also the
chief sales and operations officer for
the Americas from 2008-10.
Microsoft is looking at establishing a
data centre in India that would allow it to
offer its cloud solutions more seamlessly
to Indian businesses, and especially
to the banking, financial services and
insurance (BFSI) sector.
BFSI is the biggest consumer of technology worldwide, but governments,
including the Indian government, mandate that banking data should not go
out of the geographical boundary of the
respective country. Concerns around
this have risen since US whistleblower
Edward Snowden disclosed the extent
of US spying on the rest of the world.
Microsoft CIO Jim Dubois said on
a visit to Bangalore recently that the
company was considering the move,
but declined to share details. “We are
considering a data centre in India. It
will help us accelerate. There are a lot of
companies that are looking at us now in
anticipation that Microsoft will at some
point have a local data centre,” he said.
Honeywell outsources SEA services to Genpac
Global technology and manufacturing
company Honeywell has signed an
outsourcing deal for Genpact to handle
its finance and accounting (F&A) in
South East Asia (SEA).
Genpac’s Patrick Cogny said the
manufacturing industry continues
to be a priority investment market
for his company. “Our Dalian (China)
centre has grown during the past 14
years to more than 4,000 associates
serving 40 clients across the Asian
region,” Cogny said. “The centre offers
an extensive array of solutions for the
manufacturing industry across F&A,
customer service and supply chain
through a unique blend of process, IT
and analytics capabilities.”
Honeywell’s John Koller said the
company has been a long-standing
client of Genpact. “Their unique Asia
footprint will continue to be a strong
asset in supporting Honeywell’s finance
strategies in the region,” he said.
July-August 2014 |
9
Outsourcing
| Cover
Cloud:
how to do
it the
right way
By Deepak
Bharathan
C
Will Cloud
deliver the
specific benefits
that you are
looking to
realise for your
business?
10 | July-August 2014
loud. That’s the answer.
If you are a leader in
the technology area of
your company, you have
heard this many times.
Suppliers, service providers and analysts have
all pitched for the Cloud. Lower costs,
improved transparency and greater flexibility are all benefits promised by Cloud
computing. Outsourcing providers have
launched multiple service lines around
Cloud and managed services.
The brave new frontier in this arena
is moving technology infrastructure to
a managed services model using the
Cloud. Though, has the Cloud delivered
all that it promised? More pertinently,
will it deliver the specific benefits that
you are looking to realise for your business?
At one level, the Cloud paradigm is
disarmingly simple to understand. Data
restoration is one of the best examples of
the power of the Cloud. Even as recently
as a decade ago, tapes were the de-facto
standard in data backups. For a company’s
technology infrastructure to be backed up
after an adverse event, execution of a
detailed Business Continuity Plan (BCP)
which specified effective management
The future is inherently difficult
to predict. For instance, will a
service like Amazon Web Services
(AWS) become the standard Cloud
computing platform the same
way Microsoft Windows became
the standard desktop computing
platform a generation ago?
Outsourcing providers
have launched multiple
service lines around Cloud
and managed services.”
of physical media was the norm.
Today, while BCP remains an important function of any technologyrelated business, the process has been
simplified many times over. Cloud based
products and services have now allowed
for cheaper and redundant data centers.
Automated failovers to a backup site
and quicker restorations post adverse
events have become the expected standard across many industries. The whole
process has become more predictable
and the promise of the Cloud, so to say,
has been kept.
But the narrative of the Cloud in the
larger infrastructure services arena has
had a tougher journey. Infrastructure-
as-a-Service (IaaS) has been around
for many years now. The widespread
commercialisation of Cloud has enabled
a level of self-service and transparency that has historically eluded IaaS
offerings.
To create a new virtual server or
to host an application, a click on the
dashboard has replaced a lengthy Software Development Life Cycle and the
interrelated approval process. This sort
of efficiency, true to the marketing brochures of the vendors, has the potential
to transform your business. But, like
most other enterprise technologies, the
barrier to using IaaS effectively has very
little to do with technology. Creating
the right operating model to manage
this service is where many companies
stumble.
OPERATING THE RIGHT MODEL
As a leader in your organisation, you
need to constantly ask if the governance model you have in place is fit-forpurpose as more services move towards
a managed service model. By design, a
managed service – especially one that
leverages Cloud extensively – cannot
be managed like traditional outsourced
services. The concepts of high-touch
account managers, dedicated resourcing,
and customised solutions which
underpin traditional outsourcing
July-August 2014 |
11
Outsourcing
| COVER
deals, are not part of managed
service deals (and if they are, it is
not a managed service deal no matter
what the vendor calls it).
Here is one way to think about your
operating model for infrastructure
managed services: the service provider
should be ‘hot-swappable’. In other
words, if, and when, you decide to swap
out a service provider – then the operating model that you have in place should
enable you to do it rapidly with minimal
disruption. This is not to say that you
need to swap your suppliers every
two years or that you should not form
strategic relationships with your service
providers; just that you should have the
legitimate option to do so.
When your service provider creates
a high-touch and customised Cloud
solution for you, it might seem like
you are getting preferential treatment,
but it is actually making your life more
difficult. A hard to replace incumbent
infrastructure service provider means
that you have not obtained the benefits
that the Cloud has promised. The more
customised a service provider’s solution
is, the more difficult it is to manage,
benchmark, or replace. All of which are
inherently essential to make your business more competitive in the market.
When your
service provider
creates a hightouch and
customised
Cloud solution
for you, it might
seem like you
are getting
preferential
treatment, but
it is actually
making your life
more difficult.
WHO ARE THE ‘STRATEGIC’
SUPPLIERS?
As business leaders you know that a long
term strategic relationship with your
suppliers is essential for successful long
term business value. If anything, this
adage is truer in technology sourcing,
wherein your business directly depends
on the output of your sourcing partner.
But choosing the right strategic partner
has become an increasingly difficult task
in the Cloud based outsourcing.
Traditional outsourcing providers
have all launched services and platforms
that take advantage of the Cloud.
But in the consumer space traditional
product companies like Amazon, Google,
Microsoft and host of start-ups like Dropbox have revolutionised Cloud storage
and collaborative working through Cloud.
So what will the long term picture be like?
The future is inherently difficult to
predict. For instance, will a service like
Amazon Web Services (AWS) become
the standard Cloud computing platform
the same way Microsoft Windows became the standard desktop computing
A hard to replace incumbent infrastructure service
provider means that you have not obtained the benefits
that the Cloud has promised.”
12 | July-August 2014
platform a generation ago?
That picture might seem quite
radical today to some. You might think
a traditional security-sensitive government agency is the perfect place for the
old business axiom, “Nobody ever got
fired for buying IBM”.
And you would be wrong. Amazon
recently won a US$600 million deal
against IBM to supply Cloud computing
capability to the CIA. The boundaries
between the enterprise and consumer
changed. Identifying strategic suppliers
has always been tough in the technology industry where even big titans
have fallen out of favor with stunning
pace. In the still evolving arena of Cloud
computing, it is going to be tougher. So
your Cloud strategy needs to be fungible
enough to be able to succeed even if
you have to swap Cloud partners in the
future. This, again, points you to the
less customisation route to embracing
the Cloud.
THE RIGHT WAY AHEAD
Cloud, even with the peak of inflated
expectations, is undoubtedly a disruptive
technology. Enterprise business will be
impacted by it in ways we are now only
starting to realise. As a leader, you want
to position your company to be able to
take the advantage of this disruption.
But you should concentrate the tangible
benefits that the model will bring to
your business. There are a number of
advantages of the Cloud that your suppliers may tout that have limited value.
solutions have blurred in the fast moving Cloud computing space.
New relationships that companies
are forging further muddle the landscape. For most of its existence Apple
has been (or at least tried to be) the polar
opposite of IBM. In a surprise move,
IBM and Apple recently announced a
strategic partnership for enterprise
solutions. This partnership is just another indication of how dramatically the
enterprise technology landscape has
The favourite “fringe benefit” is about
the split between OpEx and CapEx.
While financial engineering does have
its occasional use, this is definitely not
an advantage of the Cloud. Money, no
matter where you put on your ledger, is
still money. To focus on the right benefits
from the Cloud is the right way ahead:
Speed, Transparency and Overall Cost
(OpEx plus CapEx).
Specific parts of your technology
landscape could deliver better outcomes
as managed services. Technology infrastructure, which now includes a heavy
dose of virtualisation, is a ripe frontier
for Cloud to disrupt the status-quo. But
the zeal for innovation should also be
tempered with the realisation that there
are certain parts of your technology
landscape that are not yet prime for a
managed service. For instance, Application Development has not yet achieved
the scale and automation that would
lend itself to a fully managed service.
As enterprise adoption of Cloud based
The more customised a
service provider’s solution
is, the more difficult it is to
manage, benchmark, or
replace.”
Cloud, even with
the peak of inflated
expectations, is
undoubtedly a
disruptive technology.
Enterprise business will
be impacted by it in
ways we are now only
starting to realise.
solutions increases, expect innovations
both in technology and ways to manage
the technology to appear. Positioning
your business to take advantage of these
innovations is a prudent move. For your
Cloud strategy, to tread lightly, but surely
is the right way ahead.
Deepak Bharathan is an expert in business
and technology strategy at PA Consulting
Group, a global strategy and management
consulting firm.
July-August 2014 |
13
Outsourcing
| Digital Landscape
Why Chief Digital Officers
Should Imagine Talent
Without Borders
At the core of today’s digital landscape are 2.5 billion internet users, 1.9 billion
active social network users, and 6.5 billion mobile phone users. With existing
digital channels growing in popularity and new channels emerging constantly,
building an effective digital strategy is quickly becoming a key objective for
business leaders. For those who are able to overcome the challenges of a
constantly advancing technology frontier, this period of transition and change
presents a growing heap of opportunity.
One way to surf at the forefront of the technology tsunami rather than be
swallowed up by it is to leverage global talent. In this point of view, SHOM BISWAS
& ATUL VASHISTHA FROM NEO GROUP illustrate how tapping into global talent can
be a strategic means to meet key digital objectives and address common business
challenges in today’s rapidly evolving technology landscape.
R
egardless of industry, location and
size, there are certain business challenges that affect all digital leaders
when it comes to implementing a
successful digital strategy. These
include addressing the technology talent gap, understanding and
responding to resource limitations, and perhaps
most critically, decreasing the time to market.
Some organisations are responding to these
challenges more effectively than others. At the
helm of their digital success is a unique leader,
increasingly called a Chief Digital Officer (CDO),
whose areas of expertise often span business
growth, technology and marketing. The logic
is that a unified strategy behind a multi-skilled
leader will help the enterprise to more effectively
reach and engage customers and outperform
competitors profitably.
In addition to a comprehensive strategy and a
strong digital leader, leveraging global services and
sourcing can also be instrumental in overcoming
these challenges and achieving these objectives.
In advising clients in Media & Entertainment,
Publishing, Advertising, Financial Services, Retail,
and Consumer Goods, we have seen how a
successful global sourcing strategy can benefit
companies across all industries in finding the
right talent, overcoming resource limitation and
reducing speed to market. From this point of view,
we focus specifically on the role of global talent in
overcoming these challenges.
DIGITAL VISION & CHALLENGES
The task for this new breed of digital leaders is
to respond to a rapidly changing environment,
14 | July-August 2014
producing ever more content, apps, customer engagement and revenue – and
often doing it with talent and budgets that can’t possibly keep up.
The volume and speed of change in the digital environment is astounding.
Every second, there are 11 new Twitter accounts, five new Facebook
accounts, and two new LinkedIn accounts. Every month, there are over
3.5 billion mobile app downloads.
A Gartner study shows that the total public cloud services market is
expected to grow from US$76.9 billion in 2010 to US$210 billion in 2016. A
2013 International Data Corporation (IDC) study forecasts the worldwide
business analytics software market to grow at a 9.7% compound annual
growth rate (CAGR) through 2017. Any way you look at it, the SMAC market
(Social, Mobile, Analytics & Cloud) is growing at phenomenal pace globally,
making it challenging for CDOs and other digital leaders to develop and
staff an effective and comprehensive digital plan.
Mobile Penetration by Region
Source: US Census Bureau, ITU, CIA. Graphic courtesy of WeAreSocial, Singapore
Any way you look
at it, the SMAC
market (Social,
Mobile, Analytics &
Cloud) is growing
at phenomenal pace
globally, making
it challenging for
digital leaders to
develop an effective
and comprehensive
digital plan.
TALENT GAP
The competition for digital and technology talent is at an
all-time high. For example, in Financial Services, the growth in
mobile banking and the increased regulatory and compliancerelated requirements has led to a surfeit of digital resources
being required in those areas.
Similarly for Consumer Goods, the increase in e-commerce
and mobile sales, and the changing dynamic of consumer
relationships (led by social media/digital advertising) have
also led to a need for resources with digital skill sets. A Gartner
research study showed that over 4.4 million IT jobs will be
created around Big Data by 2015 (Gartner, October 2012). A
similar increase in demand for technology talent can be seen
across industries and verticals.
RESOURCE LIMITATIONS
Especially difficult is to find resources to support the digital
infrastructure; resources who are a hybrid of technical and
business skills, who understand both business challenges as
well as the opportunities of technology. A research conducted
by the MIT Centre for Digital Business said that 77% of companies considered a lack of digital skill-sets as a key hindrance
to their “digital transformation”.
The scope of digital technology is vast, and required skillsets
are changing almost every day. To be ready for this ecosystem,
which is driven by continuous change, and to be ahead of the
curve, organisations need to plan for the resource limitations
that will invariably be encountered.
SPEED TO MARKET
One of the key facets of the role of the CDO is the ability to
reach the market before others do. It is a critical problem in the
rapidly changing digital marketplace, where speed to market
very often dictates success and failure.
Companies that take too long to commercialise their product
or to make their product available and visible to the consumer
often fail to capitalise on the window of opportunity before
competitors do so. Just to extrapolate further: a substantial
part of marketing is already digital and it will become even
more increasingly so.
In a B2C environment, it is of paramount importance that
the benefits of a new product can be communicated to the
audience/consumer. Therein comes in the role of the
CDO, and the importance of speed to market.
July-August 2014 |
15
Outsourcing
| Digital Landscape
CREATING GLOBAL RESOURCE ENGINE
The growth in the ICT markets has been stronger in emerging markets. With
the burgeoning of technology hubs throughout Latin America and the Asia Pacific,
the opportunities to expand your talent acquisition model to a global framework can
begin to take shape if you know where to look.
Successful global talent
managers embrace
a global and flexible
mentality and constantly
look for opportunities to
improve – whether those
opportunities present
themselves in Michigan,
Mexico, Malaysia or
anywhere in between.
Figure 3 (Source: IDC)
Take the case of Brazil: Did you know that half of Brazil (i.e. 100 million people) is
connected by the internet? Did you know that there are 86 million active Facebook
users in Brazil?
Figure 3 illustrates the growth of Brazil as a major ICT market. A digitally oriented
population of this magnitude also produces strong IT graduates and a sizeable IT
labour pool. As of Q4 2013, Brazil boasted an ITO industry size of US$21 billion with a
projected industry growth rate of 35%. Combine that with an average annual salary
comparable to about half to a third of the USA and it becomes clear to see why foreign
companies are looking to Brazil to source their IT and other digital requirements.
As can be seen in the Global Talent MonitorSM infographic below, similar opportunities await in other sourcing destinations around the world.
BRIDGING TALENT GAP
This phenomenon of going global to seek out digital talent is not without precedence;
companies such as Amazon, Facebook, Google, Yahoo and Thomson Reuters have
explored the global digital support system with a great amount of success, especially
India and China. Leveraging global talent by tapping into the Service Provider ecosystem
enables digital leaders to bridge their talent gap.
It’s no secret that there are nearshore and offshore global locations with large pools
of technology talent, and many organisations are already leveraging these digital
16 | July-August 2014
hotspots both in their captive centres
and wholly owned subsidiaries, as well
as through third-party outsourcers.
As for resources, in India alone, more
than 100,000 IT graduates are added
to the talent pool every year. In terms
of absolute numbers, India has some
of the highest levels of social media
penetration, mobile device ownership
and internet connectivity in the world.
The availability of affordable talent
and the potential to easily and quickly
scale operations make India an attractive sourcing destination for many of
the large technology players, including
Accenture, TCS, Cognizant, HP and IBM.
Figure 4 (see next page) shows some of
the largest technology service providers,
and their scale in India.
The logic is
that a unified
strategy behind
a multi-skilled
leader will help
the enterprise to
more effectively
reach and engage
customers.
BRIDGING RESOURCE LIMITATION GAP
India, China and Mexico all have well-developed digital resource pools. As large,
developing economies where the population is becoming more digital at a faster
rate and in greater volumes than most other locations, the need for strong internal
B2C digital infrastructure is critical to reaching their increasingly more mobile and
social consumers. As a result, there are large numbers of IT professionals employed in
roles requiring such skill sets. For example: China is already the second largest digital
advertising market in the world (eMarketer’s Global Media Intelligence Report 2013).
For today’s digital leaders and Chief Digital Officers, effectively leveraging global
talent enables their organisations to take advantage of, not only lower labour costs,
but also diverse intellectual capabilities as well as growth and quality enhancement
opportunities.
Successful CDOs and global talent managers embrace a global and flexible mentality and constantly look for opportunities to improve – whether those opportunities
present themselves in Michigan, Mexico, Malaysia or anywhere in between. Much
more than bottom-line labour costs and longer workdays, tapping into global talent
can mean a more successful business, period.
As for resources, in
India alone, more than
100,000 IT graduates
are added to the talent
pool every year.”
• Adopt a Lifecycle Approach
This requires management of the
entire sourcing lifecycle and due
diligence from the first step of
understanding where services globalisation fits within the business
to managing offshore supplier
relationships and performance
on an ongoing basis.
• Align Business and Globalisation
Objectives
Leaders ensure that their business
strategy is driving globalisation.
A globalisation strategy is not a
substitute for a business strategy.
Rather, it should complement the
overall business strategy to help
achieve key business objectives
and overcome key challenges.
BRIDGING SPEED GAP
Globalisation in itself will not automatically reduce time-to-market. However, successful globalisation requires process transformation and optimisation of resources, cost
and time. Successful globalisation of a digital organisation can significantly improve
the speed-to-market, because of a few levers that are inherent in global projects that
allow reduction in the development time. These are:
• Utilising the time gap between locations and ensuring round-the-clock resource
utilisation;
• Sharing best practices and ensuring parallel activities;
• Risk management through detailed documentation and back-up requirements
for individual skillsets.
Leveraging these levers effectively enables an organisation to achieve better
efficiency and quality.
Successful ‘Global Talent’ Leader
So what does it take to successfully source talent globally in today’s digital world?
Not surprisingly, the companies and leaders that are successful at managing a global
workforce engage in similar practices – key practices that other companies, regardless
of size or industry, can emulate. Based on a study focused over a decade of working
with global leaders, seven successful global practices were identified (Excerpt from
book, Globalisation Wisdom: The 7 Secrets of Great Globalisers, Vashistha):
• Embrace Globalisation
Leaders ensure a global mindset within their organisation. They focus on why
it can be done and what needs to change to make it happen. They focus on the
potential and the art of the possible.
• Welcome Globalisation as a Transformation Lever
Leaders see globalisation as much more than a cost-saving tool. They help
others understand and leverage the deeper benefits of globalisation, including
access to new talent, process improvement and complexity reduction, operating
excellence and speed-to-market.
• Assign the Best People
Globalisation can be challenging.
Ensure that the right leaders with
resilience and change management
competencies are at the helm of
this process to ensure success.
• Governance
Leaders implement a detailed
multi-level governance programme to ensure focus,
oversight, communication and
delivery, thus fostering success.
• Continuous Improvement
Leaders invest in human capital;
tools and technology, and ensure
proper measurement and monitoring processes are created and
implemented to enable continuous improvement. They look to
create a learning organisation.
CONCLUSION
As demand for digital talent continues
to grow, the impact of the shortage of
talent will escalate as well. Globalisation
and global sourcing, when leveraged
effectively, can give an organisation a
competitive edge by tapping into the
global talent pool. Effectiveness requires
a well-researched, thought through and
disciplined process led by knowledgeable
leaders.
Neo Group is a Globalisation Advisory
& Analytics company headquartered in
Pleasanton, California.
July-August 2014 |
17
Outsourcing
| Advertorial
VADS: Driving Continuous
Improvement
Through Lean Six Sigma
L
ean Six Sigma is a synergised concept of Lean and
Six Sigma that results in
the elimination of waste
(classified as Defects, Overproduction, Transportation,
Waiting, Inventory, Motion
and Overprocessing) and long-term
defect level below 3.4 defects per million
opportunities.
It combines Six Sigma Quality with
Lean production speed to achieve major
cost, inventory and lead time reduction.
Lean Six Sigma methodology follows
the Define, Measure, Analyse, Improve,
Control (DMAIC) roadmap for process
improvement. It delivers sustained
defect-free performance and highly
competitive quality costs over the long
run.
In its contact centre, VADS Berhad
deploys a mix of Kaizen initiatives
and Green belt projects. So far, it has
managed to shift performance on
many areas of contact centre and ICT
operation such as procurement process,
service delivery complaint performance,
Sales processes and many other op-
18 | July-August 2014
Solid learning
platform …
VADS empowers
employees to
drive continuous
improvement
culture.
portunities.
VADS is one of Malaysia’s leading
Integrated Managed ICT/BPO Service
providers. Its main activities are Managed Networks Services, Contact Centre
Services (which has now evolved to
Business Process Outsourcing) and
Systems Integration Services.
KEY TAKEAWAYS
Every year, VADS kicks off a gap analysis
across the organisation to gather key
takeaways from all aspect of its operations. These are carried out by analysing
key operational metric performances,
customer satisfaction data, leaders and
front-liners most talked about issues.
The key issues were then included
in a project selection matrix to help
identify the high priority projects. The
category with most concerns or issues
were the ones the company ranked as
the most important to change. Hence,
this year VADS have identified eight
major critical projects called 2014 BPO
Turnaround Plan.
This Turnaround Plan which has
been kicked off will become a new
business culture that will further improve the company’s operations and
performance.
IMPLEMENTING CHANGES
The company’s project review committee will have constant engagement
with Lean Six Sigma project managers
to facilitate the training, coaching,
Every year, VADS kicks off
a gap analysis across the
organisation to gather key
takeaways from all aspect
of its operations.”
providing support and Tollgate reviews
to ensure successful completion of all
projects in the pipeline. By utilising
the tools and techniques, the project
managers will be able to narrow down
to the most prominent root causes and
solutions that will turn the performance
around.
Once everything was finalised and
the changes was approved by the business; it was time to embrace the new
culture. With any process changes, it is
important for the management team;
not only to be supportive, but to make
it visible.
CONTINUOUS IMPROVEMENT
CULTURE
After the new processes were in place
for six months, VADS conduct a sensing
session to gauge its impact on the business. The Lean Six Sigma and Kaizen
event was a start of a new culture
to include all employees with major
changes in the company.
The Lean Six Sigma and
Kaizen event was a start
of a new culture to include
all employees with major
changes in the company.”
The employee who was part of
this process excellence projects not
only learned new ways to implement
changes but they also received their
Kaizen expert (Yellow Belt) and Green
Belt certification. This encouraged other
employees to come forward with new
ideas and the desire to be part of future
projects and changes to help business
to be more successful.
July-August 2014 |
19
Outsourcing
| Advertorial
Business Simplified:
Removing Financial
Process Complexity
A
s a global market leader in the realm of
Accounts Payable (AP) and Document
Process Automation, ReadSoft specialises
in automating all paper and requestdriven processes for medium to large
enterprises and Shared Service Centres
(SSCs). ReadSoft solutions seek to simplify
and automate any transactional or business processes by
consolidating visibility and control of data input and approval workflows, thus enabling users and administrators
to take on new processes with minimal training effort,
Question: Tell us about the background
of ReadSoft.
Answer: ReadSoft is a Swedish company,
going into its 24th year of operations this
year. We are dominant in Sweden and
have a strong foothold in Europe with
large enterprises as our clients. One such
big client is Siemens.
More and more of our enterprise
clients have setup operations in Asia
and we’re rolling out ReadSoft solutions
to this part of the world as they require
more intimate support.
But more importantly, Asia still is the
fastest growing economy and a market
that cannot be ignored. Our research
indicated that although the enterprises
here are expanding globally, they still
need to maintain competitiveness,
which will require them to invest in
paperless, electronic processing and
centralisation to keep operational costs
low. ReadSoft solutions enable organisations to achieve this with reasonable investments and quick implementations.
Tell us more about ReadSoft Asia’s
impressive portfolio in AP (Accounts
Payable).
ReadSoft is recognised as one of the
world’s leaders in providing automation
solutions especially where processes
have a lot of paper pushing and manual
20 | July-August 2014
making it highly ideal for SSCs environments. A detailed
audit trail also proffers transparency and visibility of the
entire process, from inception through to finalisation,
thereby enabling strict business process governance
and control. With operations in over 17 countries and
qualified partners in 70 more, it is no wonder that over
12,000 clients seeking to improve control, efficiency and
effectiveness choose ReadSoft as the preferred solution
for business process automation. Outsourcing magazine’s
SIMON VELLA speaks to TUNG KAM KAI, President &
Managing Director of ReadSoft Asia.
steps – and Accounts Payable (AP), or, Invoice Processing, falls into this category.
Apart from that, AP requires more
scrutiny and compliance as it involves
the outflow of funds. ReadSoft solutions
provide very comprehensive audit trails
and built in checks that strive to meet
these requirements and exceed it.
So, how did the push for AP automation
come about?
Well, organisations are looking into
centralisation and the streamlining of
processes, especially Finance operations,
which give rise to the setting up of
Shared Service Centres (SSCs).
ReadSoft solutions fits SSCs operations
like a glove – allowing paperless processing, electronic workflows and central
control regardless of where the operating units are located. For the reasons
mentioned above, AP is usually the first
process or service absorbed by a SSC.
That is why ReadSoft Asia was focused on introducing our AP automation
solutions first when we set up roots
here in 2007. I would say almost 90% of
ReadSoft Asia’s clients are SSCs. You
can say that ReadSoft Asia is the “Iron
Chef” when it comes to “cooking and
serving” for SSCs.
Apart from having a world class
solution, we also bring best practices.
We share with our clients what we have
experienced with other leading organisations that have taken the journey,
stabilised and moved on to the next
step in achieving operational excellence. There is no need to reinvent the
wheel, ReadSoft will help to smoothen
and shorten the journey to reach the
required efficiency levels.
Can you share with us your best practices for AP automation and what is
unique about ReadSoft’s approach in the
market and what are the differentiating
factors compared to other vendors?
I can’t really go into the details for this
interview to do justice for this topic but
at a high level, ReadSoft would suggest
the following:
• Centralised collection and scanning of invoices
• Convert non PO to PO invoices as
much as possible
• Standardised Limits of Authority
across the enterprise
• Central control centre to track
and monitor each invoice in the
enterprise
• A clear testament of the best
practice is average total invoices
processed per FTE (full time
employee) can be at least 10,000
per annum.
ReadSoft Asia is the
‘Iron Chef’ when it
comes to ‘cooking and
serving’ for Shared
Services Centres”
Tung Kam Kai ... President and
Managing Director of ReadSoft Asia
What other kinds of services does ReadSoft Asia provide?
ReadSoft offers automation solution across the full financial processes, as follows:
Customer/ reference sites ReadSoft have in Asia Pacific?
Some of our key clients are Sime Darby, Petronas, DKSH,
Felda Global Venture, Siemens, POS Malaysia, Wilmar, TOTAL
Indonesia, WR Grace in the Philippines, SingHealth, GARUDA.
These clients are using a variety of our solutions as depicted
in the above infographics.
How is the outlook for other kinds of automation services for
the APAC region? What would you like to focus on?
E-Invoicing and Cloud adoption is already well on its way in
Europe and other western countries. I believe this will be the
next trend for enterprises in APAC to embark on. The world is
getting wireless socially, professionally and organisationally
and ReadSoft Asia will be there to take advantage when the
time comes.
Other than SSCs, how can other businesses reap benefit from
the process automation that you provide?
Although majority of our existing clients are SSCs, ReadSoft
solutions can benefit any organisation that is looking to
simplify business processes through automation, improve
compliance and risk management. That is the flexibility of
ReadSoft solutions; it does not discriminate and it cuts through
all industries, horizontally and vertically.
What are the awareness level of organisations (mainly buyers)
when it comes to AP automation?
AP automation is not new in the market. ReadSoft has been
selling and implementing this since early 2000 all over the
world, especially in Europe, therefore the awareness level is
high. Many large enterprises in Malaysia have already setup
SSCs and AP is normally the first to be automated.
It is a matured market now but when ReadSoft Asia first
started in 2007, many were aware of the need to automate but
were not knowledgeable of how to go about doing it or what
was available in the market.
ReadSoft Asia took baby steps with a lot of our clients here
and grew together with them for the past seven years.
July-August 2014 |
21
Why You
Should Pay
ATTENTION
to HR Technology
Change is constant, and change is good especially in the modern age of technology.
The human resource industry is likewise experiencing the changes in technology that are currently shaping the way you conduct
your business – and always for the better. However not all organisations are adept with these rapid changes, thus making
recruitment of top talents using digital platforms a constant struggle; worse, you face taking on the leftovers in the competitive
marketplace for high-value talent. Seeing this condition therefore, would require the human resource fraternity to face up to the
challenges and quit ignoring the technological advancements that make your work more productive and efficient.
HR Technology Congress Asia returns this year 25-26 September 2014 in Kuala Lumpur, Malaysia, focusing on upgrading your
practice from dealing with basic labour to, instead, real valuable human capital, developing global intelligence in the organisation,
which then enables you as a leading employer to collaborate across cultures, integrate your organisation’s best capabilities, and
build a superior global leadership team that creates a sustainable competitive advantage for your company.
Accelerate your HR transformation today to face the climb up to high income status, and gain insights on how to integrate
technological trends to help you RISE ABOVE the procedural demands of a modernising work environment to deliver REAL VALUE
as a strategic partner
S.Y.S.
ORGANISED BY
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PROMOTED BY
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Survey | Outsourcing
Clients demanding more from providers
Close to a quarter of outsourcing clients
will actively seek to eject their current
provider if they have not effectively
helped them standardise, automate, or
transform their processes within the
next two years, according to the 2014
State of Outsourcing study conducted by
outsourcing analyst firm HfS Research in
conjunction with KPMG.
The survey of 312 companies found
that 37% of outsourcing customers are
likely to fire their providers if they fail to
meet compliance requirements, 28% may
do so if the provider can’t provide greater
flexibility to achieve scale, 27% will show
suppliers the door if they don’t lower
operating costs, and 22% will consider
moving on if their providers can’t deliver better standardised or transformed
processes.
IT outsourcing is at a critical juncture
between being simply a source of low-cost
staff and delivering genuine value to the
business, says HfS Research president
Phil Fersht.
“Many clients are doing a lot more
than having a quiet moan that they aren’t
really getting value beyond very basic
service provision,” Fersht says.
“This time, many are actively looking
to fire their provider if they cannot get
past operational teething issues and
actively begin the process of transforming
the way they do things.”
Clients are beginning to wonder
whether their current providers are capable of achieving the kind of business
benefits promised prior to signing their
deals, Fersht adds.
“This is no longer about achieving
significant cost reduction targets and getting basic tactical operations functional;
it is about moving clients into a future
state that is much more effective than
the current one.”
UK small businesses get in the act
A survey of 2200 small businesses in the
UK for Freelancer.co.uk reveals that the
rate of outsourcing to the developing
world by UK small businesses grew by
35% this year.
Most jobs were outsourced to India,
Pakistan and the Philippines, but China
saw a large growth with an increase in
20% of small businesses outsourcing
to this country. The survey found that
they expect to hire more freelancers
overseas in 2015, with 43% saying they
will outsource more work abroad.
The survey revealed that small businesses outsourced for two reasons: to
have work done that they couldn’t do
themselves, such as complex programming and IT, and to outsource work for
a cheaper price in order to boost their
margins and be able to take on more
work. Of those that outsourced 48% said
they outsourced to boost their capacity,
so they didn’t have to turn away work.
Freelancer.co.uk that released the
survey saw its own profits from UK businesses outsourcing abroad through the
site increase by 43% last year.
The survey also found that 52% said
that outsourcing work to consultants
and freelancers has been central to their
capacity to grow over the past 12 months.
The survey found that 42% of small
business owners were increasingly having to outsource to programmers and web
developers to compete with technological
innovations and the increase in online
trading and e-commerce.
“Small businesses in the UK are looking to outsource overseas to cut costs but
also to increase their own capacity. Rather
than turning away contracts for work,
they are taking it on and outsourcing it for
Procurement Outsourcing
Gains Traction in Asia
and Latin America
The global multi-process Procurement Outsourcing (PO) market registered 12% growth in 2013. According
to research firm Everest Group, the
PO market has tripled in share in the
last three years, widening its footprint
significantly in the emerging markets
of Asia Pacific and Latin America.
Collaboration between HR and
procurement is on the rise, with
nearly 75% of the contracts having HRrelated categories in 2013, compared
to 67% previously.
Accenture is the market leader,
controlling nearly one-third of the
market share. The outsourcer’s market share rose significantly after it
acquired Procurian for US$375 million
last year.
Analysts say the PO market is
highly consolidated, with five players – Accenture, IBM, Xchanging, GEP,
Capgemini – commanding more than
70% of the market share.
“The market is currently in a state
of flux, with record new deal signings
and record number of terminations,
simultaneously. Such volatility, attributed to switching of service providers,
is an indication of reducing stickiness,” the research firm said.
According to the report, deal metrics remained broadly in line with
past trends, however, the average deal
size and term rose marginally during
the year. Around 550 multi-process
PO deals were signed in 2013, with a
minimum of three PO processes valuing over US$1 million and a minimum
contract term of three years.
less abroad to boost profits,” said Bill Little,
European Director of Freelancer.co.uk.
“A majority of small businesses in 2014
realised that rather than ignore work
that they can’t do themselves, they can
outsource it.They are getting in expertise
that they may not have otherwise been
available to them to hire. And when
resources are in short supply, they have
realised that they only pay for services as
they need them,” he said.
“But small business are also outsourcing more because the growth in outsourcing sites gives them confidence and
protection. With freelancers reviewed
for quality of their services and escrow
payment systems ensuring security, small
businesses are now able to manage a
diverse workforce with reliable and easy
to use project management systems,”
he said.
Slower adoption
amongst
Philippine firms
FIRMS with foreign equity or are wholly
foreign-owned are more likely to outsource, a survey conducted by the Bureau
of Labour and Employment Statistics of
the Philippines (Bles) found.
In surveying 26, 253 establishments in
the Philippines with 20 or more workers,
Bles found that the proportions of firms
engaged in off-site outsourcing was twice
higher in firms with foreign partners or
fully-owned by foreigners compared with
Filipino-owned establishments.
The survey, conducted in June 2012,
found, however, that outsourcing, contracting or subcontracting of a business
process to a third party is not widely
practiced in the country.
Survey results showed that only
8.6% of total establishments surveyed
resorted to outsourcing, contracting or
subcontracting.
July-August 2014 |
23
10%
DISCOUNT
FOR
OUTSOURCING
MAGAZINE
READERS
Main Conference: 2 - 3 September 2014 • Workshops: 1 September 2014 • SSO PRO Course and Site Tours: 4 September 2014
WHAT’S NEXT IN YOUR TRANSFORMATIONAL JOURNEY?
Increasing value and delivering outstanding customer experience through innovative process
transformation, critical stakeholder engagement and flexible global governance
THINKING BIG AND OUTSIDE THE BOX
After receiving rave reviews at SSOW USA, SSON
is proud to welcome Ken Segal to Asia.
Ken, the Former Creative Director at Apple
will share his experience on simplicity and its
power for winning the hearts of customer
and colleagues alike.
WHAT ARE SHARED
SERVICES SPENDING ON?
WHAT ARE SHARED SERVICES
SPENDING BILLIONS OF
DOLLARS ON EACH YEAR?…
Earlier this year, the Shared Services & Outsourcing Network issued the 2014 State of the Industry Survey.
This ground breaking report identifies the technology trends Shared Services are looking to spend BILLIONS of
dollars on in the next 12 months.
Some of the most important current technology priorities for Shared Services include governance and audit
improvements through Cloud, a significant push for a mature Business Intelligence strategy, and continuing to
use Automation to streamline through Shared Services and Outsourcing arrangements.
But what about Asia? Given the region’s importance in terms of growth opportunity and services delivery (this
is being billed “the Asian Century”, after all) what are Asian Shared Services looking to invest in as the region
evolves?
CLOUD
• Nearly 30% of Shared Services make use of Cloud for increased governance, better
audit controls and transparency
• 26% of SSOs are looking to invest in cloud, social media, mobile and analytics as
their #1 priority
30%
01
Shared
Service make
use of Cloud
26%
SSOs are
looking to
invest in cloud
BUSINESS INTELLIGENCE (DATA
ANALYTICS)
• 37% of SSOs polled said data mining was their #1 priority in terms of technology investments
• In Asia, 85% of SSOs are already running formal business intelligence strategies, but only 10% of
SSOs have a mature business intelligence
policy in place, 75% are in the planning
or initiating phases of their BI
already running a
75%
formal business
implementations
intelligence
initiating phases of
• In contrast with the global results, a
strategy
their BI
10%
implementations
significant number of Asian-based hybrid
SSOs have a mature
business intelligence
centres are relying on their BPO providers
policy
for Business Intelligence
• 50% of all business intelligence
implementations within companies sit within Shared Services
85%
FEATURED SPEAKERS
using collaboration
software
75%
John Teo
CFO
Singapore Poolz (Private)
Limited
Lee Coulter
CEO Shared Services
Ascension Health
WORKFLOW
AUTOMATION
30%
03
using SharePoint
50%
02
document imaging &
workflow management
software
• Investing in automation technology is the
#1 priority nearly 60% of Asian SSOs,
followed by paperless strategies, and then
technology in support of data mining and
analysis
• Enabling technologies are very popular in
Asian SSOs, with 75% using SharePoint,
50% document imaging and workflow
management software respectively, and
30% using collaboration software
Earlier this year, the
Shared Services &
Outsourcing Network
issued the 2014 State of
the Industry Survey. This
ground breaking report
identifies the technology
trends Shared Services
are looking to spend
BILLIONS of dollars on
in the next 12 months.
Some of the most
important current
technology priorities for
Shared Services include
governance and audit
improvements through
Cloud, a significant
push for a mature Business Intelligence
strategy, and continuing to use Automation
to streamline through Shared Services and
Outsourcing arrangements.
MOBILE AND SOCIAL
MEDIA
• 35% of Asian respondents say that mobility will be
a requirement for new technology deployed in Shared
Services
• Nearly 25% say they do actively use social media to
engage stakeholders and internal customers, and to
gather feedback on shared services delivery
25%
actively use social
media to engage
stakeholders and
internal customers,
and to gather
feedback on shared
services delivery.
04
LOCATIONS AND
RE-LOCATION
05
• Nearly 20% of Asian respondents indicate that they are
considering alternative locations in the region, mainly for the
purposes of labour arbitrage, time zones and “people
capability.”
• Sourcing models are still predominantly in-house captive
(60%)
20%
They are considering
alternative locations
Vinod Bidarkoppa
Chief Information Officer
and Group Director (IT),
Member of Board
TescoHSC
Duncan Howorth
CEO
JLT
Sanjay Patel
Head of Financial Shared
Services
Rio Tinto
Ruoyu Bao
Director of Global
Analytics Hub
Lenovo
But what about Asia? Given the region’s
importance in terms of growth opportunity
and services delivery (this is being billed
“the Asian Century”, after all) what are Asian
Shared Services looking to invest in as the
region evolves?
Anil Bhavani
Operations Director,
Global Financial Solutions
Pfizer
Alice Ling
Head of HR Shared
Services
Maybank
Access our Knowledge Centre at
www.ssweekasia.com and download the full
report to find out what are shared services
spending on.
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17-19 Sept 2014, Kuala Lumpur Convention Centre
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cooperation and much more. !
This conference is a gathering of more than 500 business delegates
including Asia’s leading national Chambers of Commerce, business
leaders and policy makers from 26 countries in the Asia-Pacific
region.
View the complete list of
speakers at:
!www.cacci.2014.micci.com
Outsourcing
| Start-up Nation
Building Resilient
ICT Ecosystems
By Bobby
Varanasi
D
eveloping and emerging nations globally are
struggling to contend
with the fast-paced
changes technology
and communication
channels have wrought
upon us. Coupled with significant demographic shifts within national populaces,
nations are struggling to make ends
meet, particularly as it manifests in the
resilience of economies.
Productive capacities are often being
ignored at the cost of consumerism. So
long as a certain level of productivity
was attained, most nations didn’t really
emphasise on inclusive development,
as the fear of losing out on foreign
investments is real. However, the time
has come to ensure that equitable
development of economies takes into
account not just the provisioning of
enablers for foreign investors to thrive,
but for homegrown entrepreneurs to co-
Need for organic growth … So long as a
certain level of productivity was attained,
most nations didn’t really emphasise
on inclusive development, as the fear of
losing out on foreign investments is real.
26 | July-August 2014
exist alongside. Such a collective endeavour at enhancing the production ecosystems
within nations calls for significant shifts to the erstwhile populist incentive models
that permitted nations to attract FDI.
While refraining from going into the details of the ecosystems itself, I present a
core structure of how an ecosystem could possibly be constructed. The premise for
such a system is based on sequential learning, and enabling without taking over or
interfering with entrepreneurial pursuits.
The goal is that a thriving entrepreneurial ecosystem results in creation of new
jobs, and localising revenues as well. It is of course crucial to appreciate that such
ecosystems do not presume crowding out FDIs or establishing barriers to trade
(hard or soft). On the contrary, the basic presumption is that such ecosystems will
thrive alongside the traditional ones, with inclusive economics being the end goal.
SEQUENTIAL FLOW-THROUGH
There are three distinct parts to creating such an ecosystem, premised on the lifecycle of an idea through to its desired and logical conclusion – that of a successful
money-making and value-creating enterprise. This life-cycle, though sequential in
its basic structure, does not presuppose the need for adhering to all components or
steps in the cycle.
There have been many instances of leapfrogging within the life-cycle. We believe
that the greatest (and usually the least tapped) of opportunities is in enabling
environments to an extent that leapfrogging becomes a mainstay pursuit for many
entrepreneurs. The positive fallouts of such leapfrogging are too many to name.
However, it may suffice to state that such leapfrogging reflects the presence of a
resilient and highly entrepreneurial, competitive and value-aligned marketplace.
Such pursuits are in themselves sustainable because of a constant positive feedback loop that gets established between producers and consumers. The snowballing
impact then is the active encouragement that other (hitherto non-participatory)
individuals begin to aspire to gain from such pursuits. This in essence is what an
ecosystem needs to be able to create – the promise of an unfettered opportunity,
limited only by one’s participation and contributions.
Delving further into this ecosystem, one may note three distinct and sequential
stages (as reflected in the figure below):
Stage A – Nurturing Ecosystem: This
stage essentially enables the pursuit of
“creation”. From encouraging ideation,
to establishing dedicated centres where
such ideas could be incubated are at
the crux. It is crucial to appreciate that
the participants would be many – from
various entities. Of particular note is
the importance of government, and
other organisations (entrepreneurial
development organisations, non-profits,
and associations et al).
Their involvement is premised on
ensuring that the nurturing takes place
in a non-threatening environment, but
with a view to value creation, as well
as sustainable development. Crucial
support levers would principally take
the form of “fiscal grants” manifested
as pre-seed or seed capital, alongside
R&D and mentoring. One without the
other is a failed pursuit.
As an idea moves through the stage
to its desired conclusion – of a viable
start-up - the ability to focus on market/
client acquisition and not get pulled into
the details of operating an organisation
will demand some level of support
systems (that could be provisioned
from the external marketplace, where
the intent is to ensure that startups get
the maximum time to go and stay in the
marketplace).
Stage B – Commercialisation Ecosystem:
This stage premises itself on the fact that
an organisation, past its start-up mode, is
now a viable entity. Yet competitiveness
and the threat of obsolescence remain
high contenders for attention. Hence, sufficient support and an external outlook
need to be incorporated. More often
than not, a successful startup tends to
fail when it enters a business-as-usual
stage, since resting on past laurels tends
to be the norm, rather than the exception.
Hence, such ecosystems need interventions and enablers from the private
sector (and marketplace participants)
where growth, repeatability and ongoing management in a competitive marketplace become steadfast components
of the business.
Principal (but not exhaustive)
levers in this stage include support
for innovation and continuous R&D
endeavours, access to markets and
access to growth-linked risk capital (not
working capital). The intent is that this
stage enables incorporation of resilience
and a competitive management ethos
within the organisation. Eventually,
expanding into new markets and gaining new businesses or clients become
key success factors.
Stage C – Growth Ecosystems: This
stage is quite interesting, and perhaps
the most complex of all. Many privatesector driven economies in the world
would argue that this ecosystem is not
created by government, but established
by marketplace dynamics surrounding
The time has come to
ensure that equitable
development of economies
takes into account not
just the provisioning
of enablers for foreign
investors to thrive, but for
homegrown entrepreneurs
to co-exist alongside.
free-market economics. I have no argument with that rationale.
Unfortunately however, many nations do not boast of robust private
sector environments where opportunity
pursuits have emboldened individuals
to create business models that assist
each other in their pursuit of collective
growth.
In such instances, the need for partial
support initiated by their governments
becomes crucial for entrepreneurs.
Only then can one appreciate that
growth is not stunted owing to lack of
a viable domestic consumptive marketplace, but that the global marketplace
is there for the taking. Such ecosystems
need to be carefully crafted, with the
basic assumption that “markets know
best”. Hence any interventions need
to necessarily be “supportive” and not
“leading” in nature.
Of particular importance is to ensure
that policy levers provide flexibility to
market participants – Private Equity
firms, Venture Capitalists, Investors,
other competitors pursuing inorganic
growth models – with a level playing
field. Any levers that impede competitiveness or private-sector ownership
would result in a lackluster (or in many
cases, non-existence) environment.
Without growth, there is no opportunity,
without which there are no economic
enablers (since jobs don’t get created).
July-August 2014 |
27
Outsourcing
| Start-up Nation
APPRECIATING
COLLABORATION
As reflected in the above argument, it is
evident that as an ideator moves from
the left to the right side of the spectrum,
his or her support ecosystems change;
participants come more from the private
sector; while their ability to collaborate
would always remain a function not of
the ideator’s idea, but of the ideator’s
business model premised on inclusive
growth, (or exclusionary monopoly over
the marketplace, sadly).
Sources of capital, ideas, mentors
and inorganic growth pursuers are all
united when it comes to their consideration of opportunities – does the
opportunity create new ones, or stunt
existing ones? If it is the former, you
28 | July-August 2014
Many nations do not boast
of robust private sector
environments, so the
need for partial support
initiated by government
becomes crucial for
entrepreneurs.”
have a thriving ecosystem. If it is the
latter one could then kiss the entire
environment goodbye. Protectionism
then becomes the de facto behaviour
(highly undesirable and uncompetitive).
It is, therefore, imperative that as a
government embarks on establishing
an ecosystem, it take into account two
key factors: (a) the environment needs
to be participatory, not exclusively
the domain of the government, and
(b) the ecosystem may presuppose
leapfrogging but not by enforcing such
a behaviour; rather encouraging such
behavior in the presence of the sequential ecosystem may result in more
successes.
Successful examples of such ecosystems, in brief:
• Taiwan – with a core emphasis on
high-tech electronics, and computing
environments, nano-technologies,
materials management and manufacturing ecosystems, the nation has
established a sequential ecosystem
with ownership dovetailed in a pyramid structure from four to sixteen to
sixty-four companies.
All IP creation had to be shared,
all sub-contracts to involve compulsory technology/ knowhow transfer,
and shared pursuits of outcomes.
Educational ecosystems were created
to nurture and support the need for a
knowledge-enabled workforce. The
past 25 years has resulted in Taiwan
boasting of some of the world’s most
enterprising growth organisations like
Acer, Asus, HTC etc.
• Malaysia: With a core emphasis on IT
and IT enabled services, and creative
multimedia, the nation embarked on
a model of ecosystem development
that reflects all the three stages in
ample measures (though stage C
continues to languish owing to lack of
participation from the private sector.
Here government’s exclusionary policies and monopolistic practices have
significant roots in thorny inhibiting
issues).
Nevertheless the country’s emphasis on nurturing an ecosystem
and provisioning the appropriate
elements for ideators has resulted
in a significantly large and thriving
entrepreneurial ecosystem. The intent
to rationalise and enhance domestic
productive capacities is bearing fruit.
Fertile grounds
… The past
25 years has
resulted in Taiwan
producing some
of the world’s
most enterprising
growth
organisations like
Acer, Asus and
HTC.
• Colombia: With a core emphasis
on multiple industries – agriculture,
tourism, logistics and financial services – the nation (that didn’t gain
the world’s attention or support in
the past 30 years) took it upon itself to
create domestic competencies. Local
entrepreneurism – fueled by an import
substation mindset – helped create a
significantly resilient and contributing
populace. It was all about channeling
their endeavours in a structured manner without much outside help. The
result is there for all to see today.
Colombia boasts of a US$250
million IT industry – bulk of it being
domestic production and consumption; backed up by a national strategy
to enable seven key pockets of the
nation (driven in turn by seven key
cities that are responsible for various
hinterlands of the nation alongside
their own urban boundaries) with
emphasis on local economics, local productive capacities, and an
integrated digitisation model to bring
together variegated productive faculties into the national fold.
There are many more such examples.
However it is crucial to appreciate that
In for a hiding … More often than not a
successful startup tends to fail when it
enters a business-as-usual stage, since
resting on past laurels tends to be the
norm, rather than the exception.
while the three-stage ecosystem isn’t
crafted in stone, the existence of a
flexible yet structured, sequential model
of inclusive production results almost
always in a cohesive growth model. It
is also quite evident that an end-point
needs to be envisaged upfront.
As with the three nations above, one
notes that each nation chose a distinct
and non-comparable end-point as its
measure of success. Without such an
end-point the pursuit is more of a
forecasting model, instead of the “Backcasting” model driven by end-points
first, and structures next.
(Backcasting is a term coined by the
world renowned economist Dr. Jeffrey Sachs,
in his treatise on Sustainable Development.
Dr. Sachs is the leader of the UN Sustainable
Development Solutions Network and also
the Head of the Earch Institute in Columbia
University, USA).
We firmly believe that Backcasting
has more advantages than forecasting
as the ability to modify, modulate and
incorporate changes to the pursuit is
always measured as a function of proximity or divergence with the end-point.
As a parting thought, I encourage
that all participants and enablers stay
focused on appreciating a crucial reality … “there is a virtuous cycle where
production creates income, which in
turn creates consumption, which in
turn creates production”. Hence any
and all policy levers need to ensure that
such a virtuous cycle is not diluted or
damaged.
Bobby Varanasi is CEO of Matryzel Consulting and is one of the top 25 Global Powerhouse leaders in the sourcing space. He is also
Global Ambassador and Strategic Advisory
Board member of International Association
of Outsourcing Professionals (IAOP).
July-August 2014 |
29
Outsourcing
| ASEAN
Opportunity knocks
with the rise of ASEAN
economic zone
A
s the economic power
of the world shifts towards Asia away from
the traditional epicentres of Europe and the
USA we will soon see
the development of
The ASEAN Economic Community
(AEC). It is due to come into existence
in 2015.
This exciting new market and mega
economy will emerge on Australia’s
doorstep with the aim of promoting the
economic growth of the ten member
30 | July-August 2014
By Martin Conboy
nations of ASEAN (the Association of
South East Asian Nations). As well as the
tremendous opportunities for growth
and development, these nations will
also face significant challenges.
What will this new trading bloc mean
to the rest of the world?
The 10 member states of ASEAN,
dominated by Indonesia, have over 600
million people and by 2018 it is expected
that their combined economies will be
growing as fast as China’s. In this “Asian
Century” this is globally significant, it’s
a super economic zone that has major
implications for the growth, diversity
and development of the Outsourcing
and BPO industries.
The formation of AEC was prompted
by the dominating size and growth of
the Chinese and Indian economies.
ASEAN is a group of ten smaller diverse economies separated by different
tariffs, customs, product standards and
regulations – and not to mention that
the market is fragmented by different
legal systems, industrial structures,
anti-competitive practices of local firms,
and inadequate connections between
Each individual country
has its own individual
advantages and
challenges it needs to
overcome.”
national infrastructures.
To become more attractive to investors, be able to compete against its two
major competitors (China and India)
and improve its prospects for economic
growth, ASEAN embarked on the path
for closer integration with the ultimate
goal of forming the ASEAN Economic
Community (AEC) in 2015.
AIMS OF AEC
The AEC aims to transform ASEAN into
a region with free movement of goods,
services, investment, skilled labour, and
a freer flow of capital. AEC envisages the
following key characteristics:
• Single market and production
base,
• Highly competitive economic
region,
• Region of equitable economic
development, and
• Region fully integrated into the
global economy.
In 2007 a blueprint was established
for cooperation on a number of key
areas including human resources development, recognition of qualifications,
closer consultation on macroeconomic
and financial policies, trade financing
as well as enhanced infrastructure and
communications across the region.
THE CHALLENGES
For foreign investors, doing business in
the region can be exceedingly difficult.
A key problem for foreign firms is the
varying welcomes they receive across
the region: Indonesia recently increased
the restrictions on foreign investors
in retail and banking, while in Vietnam – despite a generally welcoming
government—foreign firms have been
the target of violent protests.
ASEAN has numerous strengths
to draw upon that could allow it to
play a much larger role on the global
economic stage, taking advantage of
the respective strengths of each of its
member nations. But the challenge lies
in how to integrate the newer members
of ASEAN, while bridging the social
and development gaps between the
individual states as they move towards
closer integration.
Greater efforts are required, particularly in the areas of poverty, family planning and human capital development to
narrow development gaps in the region.
Cecilia Reyes, chief investment officer
of Zurich Insurance Group commented
recently at the “Asian Business Conference: 2015 Approaching” event in Manila that “it is difficult to imagine how
integration could happen in a region
that includes the mature economy of
Singapore and less developed countries
like Laos and Myanmar”.
The six most advanced ASEAN
economies (Brunei, Indonesia, Malaysia, the Philippines, Singapore and
Thailand) should address the common
challenges of improving their capacity
to provide the education, relevant training and job skills that will be needed to
develop greater productivity within the
knowledge economy and technologyintensive industries.
The fostering of inclusive growth and
greater resilience to natural disasters
and climate change are also becoming
increasingly important priorities.
For the less developed economies of Vietnam, Cambodia, Myan-
If the concept is
to be a success
then the poor and
disadvantaged
must be brought
along and be able
to participate in
the gainshare.
July-August 2014 |
31
Outsourcing
| ASEAN
mar and Laos, sustainable
development of natural
resources and agriculture are key
priorities. They also need to focus
on strengthening institutional
capacities for preserving macroeconomic and financial stability.
Clearly corruption will need to be
addressed if business confidence
is to be underscored.
Each individual country has its
own individual advantages and
challenges it needs to overcome.
Though abundant in natural
resources such as oil and gas, Indonesia needs to improve access
to education and the development
of its human capital. The Philippines, the BPO and outsourcing
powerhouse, needs to maintain
sustainable job growth and address poverty issues and family
planning in regional areas
Paulius Kuncinas, Asia regional
editor of the Oxford Business
Group recently was quoted as
saying (at the “Asian Business
Conference: 2015 Approaching”
event in Manila) that the Asean
is “a very efficient and very ambitious trading bloc but it somehow
got stuck on the path of reaching
full economic integration.”
Kuncinas stressed that the two
factors hampering the transition
are the divergence of cultures and
the inability of the “elite” to sell or
explain the benefits of the integration to other stakeholders. If the
concept is to be a success, then
the poor and disadvantaged must
be brought along and be able to
participate in the gainshare.
Though abundant in natural
resources such as oil and gas,
Indonesia needs to improve
access to education and the
development of its human
capital.”
ment and building infrastructure, especially
roads and high-speed trains.”
Economic and trade relations between
ASEAN and Australia have steadily expanded
in the past years, where two-way merchandise trade between ASEAN and Australia was
valued at US$67.9 billion in 2013.
Foreign Direct Investment (FDI) from
Australia to ASEAN grew by 11.1%, from
US$1.8 billion in 2012 to US$2 billion in 2013.
THE REST OF THE
WORLD
Other countries and foreign
investment are certainly
keeping an eye on opportunities in the region. ASEAN
has surpassed Australia, the
US and Russia to become
the fourth-largest destination for China’s outward
investment and is China’s
third-largest source of foreign
direct investment.
Bruce Alter, Head of Global
Trade and Receivable Finance,
HSBC, says: “In 2012, China invested US$4.42 billion in ASEAN
economies, up 52% in a year. By
the end of 2012, Singapore had
become the destination where
Chinese companies invested
most, followed by Cambodia,
Myanmar, Indonesia and Laos,
according to the China-ASEAN
Business Council
“In the coming decade, Beijing
is set to deepen economic links
and integration in ASEAN, focusing on increasing direct invest-
32 | July-August 2014
Zoom in
… ASEAN
has surpassed
Australia, the US
and Russia to become the
fourth-largest destination for
China’s outward investment
With a share of 1.67 per cent of total
inward investment to ASEAN in 2013,
Australia is the seventh largest source
of FDI of ASEAN.
As the ASEAN market forms and
the economies for the respective states
grow there will be an increasing demand for agricultural products, natural
resources and the development of the
services sector, which offer Australian
companies numerous opportunities in
the coming decades to expand into this
large and fast growing economic bloc.
Improved infrastructure and communications, greater cooperation between state economies, greater effort
developing human capital and alleviating poverty, including family planning
should make ASEAN more attractive
for foreign and investment. Combined
with its current low costs, ASEAN it
set to be more attractive for the BPO-IT
and outsourcing industries, with the
Philippines leading the pack.
Martin Conboy is the Co-Founder of the
(theoutsourcing-guide.com) – a partner
media outlet of Outsourcing magazine (www.
the-outsourcing.com)
Outsourcing
| Malaysia
Malaysia: Emergence
of a new outsourcing
destination
By Samanvay
Sharma
R
ecently when I was
in Kuala Lumpur for
one of my projects,
I had a tryst with the
developmental saga of
Malaysia. Whether it was
the infrastructure or the
economic sentiment within industries,
the country left an impact on my mind.
Malaysia, the third largest economy
in South East Asia and the 29th largest
in the world, is emerging as one of the
most stable economies in the Asian
region.
Its GDP has been growing steadily for
the last 10 years at 5-6%. The government is playing a significant role in
34 | July-August 2014
shaping the growth path of the country
by taking progressive economic measures and investing a lot in the growing
industry sectors. Through its Economic
Transformation Programme, the government is undertaking structural
reforms to augment the entrepreneurial
environment and legal transparency in
the country.
Malaysia has gradually reduced its
dependence on agriculture, and the
economy is now largely driven by the
service sector. Outsourcing is one of
the emerging sectors in the country,
and is expected to grow at a rapid pace
in the near future. The following is the
evolution of Malaysia’s outsourcing
industry:
BEGINNING: Initially, the objective of
the industry was to make it attractive
for large, international players to invest
in IT services and support centres. A
few of these companies are DHL, Shell,
HSBC and Standard Chartered whose
primary objective was cost reduction.
MATURITY: As the industry evolved,
the focus shifted from low-end service offerings to high-end and more
complex services such as application
development and infrastructure management in IT, and CRM services in BPO.
Also, small, independent companies
began to grow.
Today the Malaysian outsourcing
industry provides discrete as well as
integrated services. The older and more
established firms have continued to
grow and expand their operations. On
the other hand, smaller firms continue
to crop up with lower revenues and
number of employees.
ITO dominates the industry, accounting for more than a third of the
total market in terms of number of
players. This is followed by BPO.
KPO accounts for a very small share
of the overall industry, but shows potential for growth in the coming years.
Through its Economic
Transformation
Programme, the
government is
undertaking structural
reforms to augment
the entrepreneurial
environment and legal
transparency in the
country.”
Also, the major chunk of the work
currently comes from domestic demand, and a significant part from
neighbouring nations like Singapore,
Hong Kong and China. These are the
territories where the regular future
demand is expected to come from.
As a part of the MSC (Multimedia
Super Corridor) initiative launched in
Malaysia, designated areas known as
Cybercities and Cybercentres were established. They were set up “to provide
the ecosystem to attract ICT investors
and promote the growth of local ICT
companies”. To a large extent, this has
been a successful initiative. 114 designated premises have been established
with areas ranging from about five acres
to 6,900 acres.
However, late entry into the outsourcing industry continues to haunt
Malaysia along with various other
challenges to outsourcing. Firstly, there
is a lack of thought leadership in the
industry that companies can emulate.
Another challenge to growth has been
the lack of qualified talent pool at
lower rates. Malaysians often tend to
be more expensive than Indians and
the Chinese. They also lack effective
soft skills, which is a serious concern.
With growing BFSI (especially Islamic
banking), the outsourcing services
catering to the sector are expected to
drive the industry. Other industries
like oil & gas, logistics and telecom
are right behind BFSI in terms of the
growth trajectory. But unlike India or
the Philippines, where skilled manpower is abundant, Malaysia will have
Malaysia has
gradually reduced
its dependence on
agriculture, and
the economy is now
largely driven by the
services sector.
to look at developing niche capabilities,
like Poland.
Future
The next step is to continue along the
value chain and move towards offering
higher end services such as knowledge
services. Moving from offering mere operational services to more strategic ones
is a challenging task for any outsourcing
supplier. This is especially magnified
in Malaysia’s context, because unlike
a mature player like India, they do not
have the opportunity to scale up easily.
Thus, the focus will need to be on niche
services that depend more on quality
of manpower, than on the headcount.
Identifying these services, aligning
manpower development and developing thought leadership are now the
key determinants of the progress of
Malaysian outsourcing. Consolidation
of small firms will also be important,
because it will determine the capacity
of the industry to absorb large value
contracts.
Future growth is conditional on
a variety of factors with respect to
investment strategies, developmental
plans and government initiatives. There
is clearly a growth opportunity for
Late entry into the outsourcing industry
continues to haunt Malaysia along
with various other challenges to
outsourcing. Firstly, there is a lack of
thought leadership in the industry that
companies can emulate.
Malaysia, especially given its current
small scale. But to make this happen,
the Malaysian IT & BPO industry needs
to be active in executing its action plan
for the future growth of industry.
* This article has referenced data from the
report, titled “Malaysia’s Global Business
Services Outlook” prepared by ValueNotes
and Outsourcing Malaysia in October 2013.
Samanvay Sharma is a strategic account
manager with ValueNotes, a firm that
specialises in market research and business
intelligence.
July-August 2014 |
35
Outsourcing
| Happenings
Hitachi Sunway
Trains Sights on Data
Centre Market
JV company makes a splash in SEA REGION with new acquisitions
H
Masato Saito, Chairman &
Director, Hitachi Sunway
Information Systems
(left) and Cheah Kok
Hoong, Group CEO &
Director, Hitachi Sunway
Information Systems.
36 | July-August 2014
itachi Sunway Information Systems Sdn
Bhd, a leading onestop IT services and
solutions provider in
Southeast Asia (SEA),
recently announced
its latest corporate maneouver in a bid
to become a major data centre player in
the region.
Cheah Kok Hoong, Group CEO and
Director of Hitachi Sunway announced
that these include the acquisitions of two
privately held Malaysian companies –
Free Net Business Solutions Sdn Bhd and
Powerware Systems Sdn Bhd in strategic
investments that instantly positions
the Japanese-Malaysian joint venture
company to be the next powerhouse
player in the region’s data centre sector.
Cheah says: “Hitachi Sunway has
fully acquired FREENET and 30% shares
of PWS, in our latest corporate investment to leverage the strong demands
for regional data centre services as the
Cloud Computing trend experiences
continued growth throughout SEA’s ICT
markets.”
FREENET has over 15 years of experiences in system integration, backup
and data recovery, data centre facility,
managed services, network services
and IT outsourcing businesses, whereas
Powerware Systems has presences in
Malaysia and Middle East focusing in
Data Centre Design and Build over a
span of 10 years.
Prior to the acquisitions, Hitachi Sunway already has a data centre business
that runs under its Infrastructure Managed Services (IMS) division that offer
data centre services, data management,
IT outsourcing managed service, data
centre design and building solutions.
“These two strategic acquisitions
come in timely as Hitachi Sunway is
underway to complete the building of its
newest 5000 sq. ft data centre located at
The Pinnacle Sunway by October 2014,”
added Cheah.
With the acquisition of FREENET, Hitachi Sunway instantly gains two additional
ISO-certified Tier III compliant data centres within Malaysia located at Cyberjaya and
Kuala Lumpur; and to a total of 18,500 sq. ft, while its third data centre at The Pinnacle
Sunway is currently under construction.
He adds that the Japanese-Malaysian JV intends to be a top player in the region with
comprehensive data centre services, Cloud infrastructures and solutions to support
multinational customers, especially Japanese-oriented businesses looking to expand
their businesses in SEA via ICT support partnership with Hitachi Sunway.
GOVERNMENT CALL
Cheah says that this emphasis of Hitachi
Sunway’s corporate business direction into the data centre market aligns
with the Malaysian government’s drive
towards greater developments for the
country to be SEA’s preferred data centre
hub.
“Invest KL and Multimedia Development Corporation (MDeC) is in close
support of Hitachi Sunway’s acquisitions
and the revelation of our latest data
centre at The Pinnacle Sunway, as this
is also exemplary of the kind of strategic
foreign investments that is sought after
to boost Malaysia’s ICT sector,” he says.
As a country, Malaysia has already
seen its economic revenue from the
data centre market growing by over
RM500 million last year, up by 25%. At the
same time, the Cloud Computing trend
has taken off as an increasing number
of conglomerates and SME businesses
are adopting this ICT delivery model to
manage data and deploy technology.
“As Cloud Computing is a major
growth strategy for Hitachi Sunway, it
is only logical for us to invest to be a
stronger player as data centres are the
fundamental infrastructure and ICT
architectural support for Cloud to be
delivered,” explains Cheah.
PINNACLE SUNWAY
Located at The Pinnacle Sunway, Hitachi
Sunway’s latest data centre facility is
certified with the Green Building Index
As Cloud Computing is a
major growth strategy for
Hitachi Sunway, it is only
logical for us to invest to
be a stronger player.”
Prior to the acquisitions,
Hitachi Sunway already
has a data centre business
that runs under its
Infrastructure Managed
Services division.”
to compliment its data centre services
to customers from a cost perspective.
Cheah says: “Hitachi Sunway’s newest data centre will be handling higher
demands from local corporations, who
want to outsource their IT and call centre
operations, yet at the same time prefer
their data to be residing closer to them.”
Hitachi Sunway has also officially
relocated its Headquarters at The Pinnacle Sunway recently.
In conjunction with the acquisition
announcements, Masato Saito, Chairman & Director of Hitachi Sunway also
shared that Hitachi Sunway has been
growing steadily with a significant
increase in revenue of over 50% in the
past 12 months.
Saito said: “The remarkable business
growth is a testament of the conducive
collaboration between Hitachi Systems
and Sunway Technology. Especially IMS,
which is one of the three core business
divisions of Hitachi Sunway has recorded
more than 100% growth in revenue. This
will continue to be fuelled by the force of
the new acquisitions.”
The JV intends to
be a top player in
the region with
comprehensive data
centre services, Cloud
infrastructures and
solutions to support
multinational
customers.
July-August 2014 |
37
Outsourcing
| ADVERTORIAL
Going Beyond
Malaysian Shores
Score+ Acceleration Programme Event Series
F
ollowing the success of
this year’s first MSC Malaysia Score+ Acceleration
Programme event series
entitled “Bull’s Eye: How to
Target the Domestic Market
Effectively” that took place
in May, the Multimedia Development
Corporation Malaysia (MDeC) had organised yet another round of event in June at
the Tech Mahindra Building in Cyberjaya.
This is part of a series of six events
held throughout 2014 and co-hosted
by the Outsourcing magazine and supported by Outsourcing Malaysia.
The half-day event entitled “Up and
Away: Going Beyond Malaysian Shores”
featured prominent speakers and panellists consisting of service providers who
have walked the distance and perceived
“buyers”, sharing their experiences in
bringing their businesses to the regional
or global level. The esteemed speaker list
comprised:
• Alan Fung – Head of Outsourcing,
SSO Cluster, MDeC
• Liew Choon Lian – Chairman &
38 | July-August 2014
CEO, MDT Group
• Dato’ Nelson Kwok – Founder
& Managing Director, Nelson’s
Franchise (M) Sdn Bhd
• Mohamed Shaharuddin – CIO,
UMW Corp Sdn Bhd
• TJ Singh – VP Research, Gartner
Malaysia
• Sean Ng – CEO, Ming Medical
• Jeffrey Fok – MD, eProtea Finexus
• Eugene Ng – COO, Cuscapi
Officiating the event, Head of
Outsourcing, Alan Fung delivered the
welcome note on behalf of MDeC Vice
President (SSO Cluster) Michael Warren before giving an overview on the
MSC Malaysia programmes lined up
under the Malaysia’s EPP2 (Entry Point
Projects) for 2014. EPP2 focuses on the
areas of business process outsourcing
(BPO), IT process outsourcing (ITO) and
knowledge process outsourcing (KPO),
with the view of creating a globally
competitive outsourcing industry and
establishing Malaysia as an offshoring
and outsourcing hub.
The first guest speaker of the day was
Chairman and CEO of MDT Group, Liew
Choon Lian, who gave insights on the
experiences and hardships faced when
building a business. He started off by
introducing his MDT Group and how
it has grown from a startup into a high
growth company.
Liew said: “It is important to face the
reality in order to bounce back from a
failure. Business owners should also go
the extra mile, know the importance of
branding and IPs, learn to leverage on
their partner’s strengths and not focus
on only one market.”
Speaking next was Founder and Managing Director of Nelson’s Franchise (M)
Sdn Bhd, Dato’ Nelson Kwok. Presenting
the topic “Corn Story: Planting Success
in the Global Market”, he started off
with a video presentation on Nelson’s
Franchise, the importance of the five
Ps in a business – product, price, place,
people and promotion.
Next was a special Q&A session that
was hosted by Fung with the CIO of UMW
Corp Sdn Bhd Mohamed Shaharuddin,
that delved into project management.
In his presentation, TJ Singh, VP of
Research at Gartner Malaysia revealed
where the business opportunities are
heading to in 2014. Concluding his presentation with some recommendations,
TJ said, “Since business opportunities
are growing in ASEAN markets, business should re-configure their sourcing
strategy to support a broader geographic
footprint. It is also important for businesses to develop a strong understanding of the optimal location for their
sourced activities – and not to forget
that this includes lower cost onshore
and nearshore.”
Before the event was adjourned, a
panel discussion was conducted to
discuss what it takes for a business to
go regional. The panellists consisted of
pioneers from the industry – Sean Ng,
Jeffrey Fok and Eugene Ng. The panellists
started by introducing their business and
business models before moving into the
discussion.
Ng answered an intriguing question
on ways to start a business in China and
explained about the nuances needed
to be succesful in the vast Chinese
market. The panellists also shared
their experiences of doing business in
other countries – taking time to explain
their strategies and the efforts taken
to counter the challenges in a foreign
environment.
July-August 2014 |
39
Outsourcing
| Big Data
Data, data,
everywhere …
not a drop of
insight
40 | July-August 2014
By Arun
Jethmalani
T
hese days it appears next
to impossible to ignore
big data and analytics.
Big data is the next big
thing, and analytics will
provide answers to all
our problems. When
we’re stumped, big data will tell us
what to do! And if big data doesn’t have
the answer, then don’t worry – we can
look at “small” data! And if we have no
data, we can always mine it from social
media or the Internet. We will make
better marketing decisions, acquire
more customers, improve profitability
and beat the pants off competition. So
what are we waiting for?
Is this real, or hype promoted by
people who want to sell us expensive
hardware, software or services?
The answer is in between. Yes, big
data and analytics can have an amazing
impact on customer acquisition and
retention, growth and profitability. But
it can’t answer every question – and
there is a real danger of companies
spending tons of money, only to end up
with white elephants.
Organisations like banks or insurance companies or e-tailers or retailers
have access to enormous amounts of
customer information, or can derive
brilliant insights from the mass of
consumer data available across social
and non-social media. But does this
apply to every company?
Is this real, or hype
promoted by people who
want to sell us expensive
hardware, software or
services?”
had taken the trouble to call in) was
simply being ignored. At the same time,
they wanted to spend a lot of money
on collecting fresh data, from people
chattering on the web.
The same thing has happened with
business intelligence software. Touted
as a revolutionary tool for decision making, many companies bought software
that could pull data from ERPs or CRMs
and provide magical answers. Unfortunately, most companies don’t know
how to use the software, or even what
data is available. We were asked to do an
analysis of likely target segments for an
HIGH VOLUME GAME
Generally, big data solutions make sense when
volumes are huge (millions
of customer records and
transaction data); velocity of data addition is high
(thousands or millions of
transactions/data changes
happening every day); and
when all this data comes
from multiple, non-integrated sources.
For companies in more
mundane B2B businesses
that deal with a small number of customers, and generate fewer transactions,
big data may not even exist.
Also, corporate customers
usually don’t talk about
their likes and dislikes on
social media or the www.
Data, if available, is more
finite and analysis may not
require sophisticated databases or analytical tools.
However, the biggest
factor that leads to failure is that companies (and managers) don’t make
good use of information in the first
place. Even information they already
have! This is usually due to the lack
of a culture where data is constantly
or regularly being analysed to deliver
insights, which in turn guide decisionmaking. This culture and set of associated competencies don’t develop simply
because a company spends millions on
a big data or analytics solution. Unfortunately, over-emphasis on technology
is drowning out the insight piece.
Two years ago, a large consumer
goods manufacturer approached us to
help them analyse web (social media)
data for customer perceptions of their
products and brands. The brief was
Yes, big data and
analytics can
have an amazing
impact on customer
acquisition and
retention, growth
and profitability.
But it can’t answer
every question.
wonderfully vague – no thought about
questions the research should answer,
or the nature of insights sought. It was
clear that there was a directive from
the top – let’s do social media analytics,
but nobody had thought through what
or why.
CLUELESS APPROACH
During our efforts to devise a solution, we asked to see typical customer
feedback data already collected by their
call centre. To our surprise, the data was
in a huge mess – full of errors, wrong
categorisation, important fields were
blank or incorrectly filled in. Nobody
was even looking at this data, forget
about analysis! Valuable (existing) data,
provided by actual customers (who
The biggest factor that leads to failure is that companies
don’t make good use of information in the first place.”
IT products company – and
this was to be based on an
extensive (and fairly expensive) customer survey.
While designing the
study, we asked for existing
CRM data – and discovered
a treasure trove of information. There
was data for more than a thousand
past interactions with prospects and
clients, which hadn’t been cleaned or
even looked at. Eventually, we were able
to provide actionable insights without
spending a lot of money on acquiring
new data.
In the final analysis, it’s always good
to go back to first principles. Start with
business needs or objectives, and what
insights or information will help decision makers achieve these objectives.
Then drill down to what answers are
needed, and therefore what questions
need answering (key intelligence questions). It’s only after this that one can
decide on tools, methodology and data
availability.
Data analytics can surely provide
profound insights and answers, but only
if you know what questions to ask – and
how to ask them!
Arun Jethmalani is the Managing Director
of ValueNotes, which specialises in the
management of competitive and market
intelligence, information and research.
July-August 2014 |
41
Outsourcing
| Trends
I am Robot
Will Robotic Process Automation revolutionise the BPO industry?
By Martin Conboy
“Millions of people are
working in back office
functions for the BPO
industry, repeating the
same processes and
procedures daily.”
42 | July-August 2014
T
he next big thing predicted for the BPO industry in 2014 is Robotic
Process Automation or
RPA. Robotic Process Automation is the next wave
of innovation that will
dramatically change the way business
and BPO service providers deal with their
customers.
One only has to look at the flower
market that has four peaks a year: Valentine’s Day, Mothers’ Day, Christmas
and Easter. In order to handle the bursts
of activity, BPO service providers have
to ramp up with hundreds of additional
workers, and with all that entails recruitment, training and deployment. It’s
a very costly exercise for a very short
window.
The marginal cost of additional software robots is minimal if not zero. Thus,
for services with varying or seasonal
demand, robotic automation can be an
efficient means of scaling an operation
at a fixed and consistently uniform level
of service and quality.
Robotic Process Automation (RPA)
aims to reduce costs, improve efficiency
and productivity by removing repetitive
and manually intensive tasks. As a result,
organisations are able to respond quickly
to new markets and regulatory demands.
RPA is expected to have a significant
impact on the outsourcing and BPO
industries in the next few years as BPO
providers and their customers look at
further ways to reduce costs and improve
profitability.
Frank Casale, founder of The US-based
Institute for Robotic Process Automation
(IRPA), defines RPA. “Robotic process automation is the application of advanced
software and algorithms to complete
routine tasks and operations previously
performed by humans. This technology
is able to capture and interpret existing
applications for processing transactions,
manipulating data, triggering responses
and communicating with other digital
systems”.
Casale alerts outsourcing buyers and
sellers to “brace for impact” as process
automation creates the next wave of
innovation that will dramatically change
businesses and the global economy.
“Robotic process automation will force
IT and business executives to completely
rethink the way they plan, source and
budget for their most critical projects,”
says Casale.
Robots have been used extensively
in manufacturing to perform tasks that
humans have found boring, repetitive
and dangerous. Robots can do this with
consistent speed and precision. They
never call in sick, go on strike or violate
company rules.
As a result, robots have allowed
organisations in manufacturing and
supply chain industries to become more
efficient and responsive to customer and
market demands.
Millions of people are working in
back office functions for the BPO industry, repeating the same processes
and procedures daily or being asked
to respond quickly with resources and
process to support ever changing business demands.
Like their manufacturing counterparts, Software robots operate at a
fraction of a cost of a human, and can
work all the time without any breaks
or complaints. A robotic FTE costs on
average a third of what it costs to hire
an off-shored FTE. That is why industry
analysts such as Datamark and Ovum
are predicting how this technology will
completely transform BPO.
One firm that’s leading the charge in
developing RPA solutions and applications is UK based company, Blue Prism.
Blue Prism defines RPA as process automations involving computer software
driving existing enterprise application
software in the same way that a user
does.
This means organisations can build
virtual back offices staffed with robotic
FTEs that can handle millions of back
office tasks quicker, cheaper and more
efficiently than humans can.
That being said, machine intelligence
will never be able to replace the intelligence, judgement and communication
skills of a human. The likely role of humans in these service market workforces
of the future will be in high level roles
that require complex and subjective
decision making— value added activities
that require complex analysis by skilled
and highly trained personnel.
Robotic Process
Automation will
dramatically change
the way business
and BPO service
providers deal with
their customers.
July-August 2014 |
43
Outsourcing
| Light Takes
Russian hackers may have your
email passwords!
A Russian crime ring has amassed the largest
known collection of stolen Internet credentials,
including 1.2 billion user name and password
combinations and more than 500 million email
addresses, security researchers say.
The records, discovered by Hold Security, a
firm in Milwaukee, include confidential material gathered from 420,000 websites, including
household names, and small Internet sites. Hold
Security has a history of uncovering significant
hacks, including the theft last year of tens of
millions of records from Adobe Systems.
Hold Security would not name the victims, citing nondisclosure agreements and a reluctance
to name companies whose sites remained
vulnerable. At the request of The New York Times,
a security expert not affiliated with Hold Security
analysed the database of stolen credentials and
confirmed it was authentic. Another computer
crime expert who had reviewed the data, but was
not allowed to discuss it publicly, said some big
companies were aware that their records were
among the stolen information.
“Hackers did not just target American companies, they targeted any website they could
get, ranging from Fortune 500 companies to very
small websites,” said Alex Holden, the founder
and chief information security officer of Hold
Security, told the newspaper. “And most of these
sites are still vulnerable.”
No appetite for Apple at China govt offices
China has prohibited government
agencies from purchasing Apple
hardware products due to security
concerns, Bloomberg News reported
recently, citing government officials
familiar with the matter.
Ten Apple products, including versions of the iPad tablet and MacBook
laptop, have been omitted from a government procurement list distributed
by China’s National Development and
Reform Commission and Ministry of
Finance, Bloomberg News said. They
were included in a June draft, according to the report.
The ban would apply to all central
and local agencies in China, Bloomberg
News said.
Reuters could not immediately
reach officials at the NDRC and finance
ministry for comment. Apple spokespeople in China did not immediately
respond to requests for comment.
The report comes after the Chinese
government published a software
procurement list last week that excluded foreign anti-virus vendors
like Kaspersky Lab and Symantec,
which had previously sold software to
Chinese agencies.
China, citing security concerns,
has increasingly sought to limit the
use of US technology over the past
year following revelations by Edward
Snowden of widespread US government spying.
Britons spend more time on tech than asleep
Britons spend more time using technology devices than they do sleeping,
research suggests.
Communications regulator Ofcom
said UK adults spend an average of
eight hours and 41 minutes a day on
media devices, compared with the
average night’s sleep of eight hours and
44 | July-August 2014
21 minutes.
Almost four hours a day are spent
watching TV according to Ofcom’s
survey of 2,800 UK adults and children.
TV and radio remain popular despite
the growth of digital media, it found.
One analyst said this proved that
“it’s still early in the digital revolution”.
Propel forward.
Together.
By working together, we’re helping executives turn
challenges into opportunities. Turn information
into insight. And turn insight into advantage.
Discover what HP business process services can
do for your organization.
hp.com/go/bpo
© Copyright 2013 Hewlett-Packard Development Company, L.P.
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