“Outsourcing and cultural challenges”, Per Reinboth, Special Advisor Fairs and Delegations, Innovation Norway.

1. Cultural challenges in
outsourcing
Presentation 6.May 2010
Per Reinboth- Innovasjon Norge

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3. CHAOTIC DEMOCRACY
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4. FUNCTIONAL ANARCHY
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5. 21 ST CENTURY HEAD
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6. 19 TH CENTURY BODY
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7. HIGH TECHNOLOGY IN SOFT SKILLS
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8. Talent Pool for Knowledge Based Economy
India has one of the largest education systems in the world
• 311 Universities with over 15,600 colleges
• 3 million graduates every year
• 200,000 engineers every year
• 300,000 other technicians every year
• 150,000 R&D professionals every year
• 2,000 Graduates from Indian Institutes of Management and
other top 10 Business Schools every year
• 84,000 Graduates from other Business Schools every year
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9. Indian IT Industry
• ITES exports grew from 17.7 bn US$ (2004-05) to US$ 23.4
bn(2005-06) – 32% growth
• As per NASSCOM review for 2005-06 revenues from US
totalled 67%, Europe 25% and rest of the world 7.7%.
• Share of IT Software and Services Industry in GDP –
• Raised from 1.2% (1999-00) to 4.8% (2005-06)
• Majority companies adopted international standards: ISO, CMM,,
etc.
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10. Global Comparison
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11. Major Players
India's Top Software companies India's Top BPO firms
1 TCS 1 Genpact
2 Infosys 2 WNS
3 Satyam 3 Wipo BPO
4 Wipro 4 HCL BPO Services
5 IBM 5 ICICI One Source
6 IBM Daksh
7 Progeon
Top 4 companies have 8 Aegis BPO Services
80% market share
9 EXL Service Holdings
10 24/7 Customer
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12. India Based Service Provider Landscape
Category No. of Share of India’s total Performance
players IT/BPO export
revenues
Tier I Players 3-4 45% of IT Services Revenues greater than USD 1 billion
4-5% of BPO
Tier II IT Players 7-10 25% of IT Services Revenues USD 100 million-USD 1 billion
4-5% of BPO
Offshore 20-30 10-15% of IT Services Revenues USD 10 million-USD 500
operations of 10-15% of BPO million
Global IT majors
Pure play BPO 40-50 20% of BPO Revenues USD 10 million-USD 200
providers million
Captive BPO 150 50% of BPO Revenues USD 25 million-USD 150
units million (top 10 units)
Emerging >3000 10-15% of IT Services Revenues less than USD 100 million (IT)
players 5% of BPO Revenues less than USD 10 million (BPO)
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13. Future Trends
• Increasing Labor costs
• Moving up the value chain
• Consolidation
• Manpower Shortage
• Outsourcing Backlash
• Engineering Services Outsourcing (ESO), Avionics and other
opportunities
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14. Risk factors when you outsource to India
Time is not always an important element
Indians seldom express diagreement. Only done in an indirect
manner. Avoid expressing direct disagreement.
Your priority can be changed according to the total business
picture
Even if English is understood and spoken , the meaning can
deviate
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15. Risk factors in outsourcing to India
Loyalty can be with the best paying party.
•Often solutions are 90% - good enough but not perfect.
•Your contact persom may change often
•Competence in your special field may be insufficient
•Direct communication difficult if you want to solve a problem
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16. Risk factors in outsourcing to India ctd.
• Secrecy agreements
• IPR could possibly be a problem
• Work processes different . India often has a hierachical system
but ICT companies tend to change this to a flat or project
oriented system.
• Communication. The remote working model
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17. Reduce risk and cost
Define the deliveries. (Terms of Reference)
Prepare yourself thorughly. Learn about the business culture and
make quality control of your potential partners. You might be more
dependant on your partner more than he will depend on you. Use
Innovation Norway, delhi or other local adviser in the process.
Treat your potential partners with respect. This also goes for the
potential key personell you will cooperate with.
.
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18. Reduce risk and costs ctd.
• Think long term and see the process in this perspective. You
might have to offer some training to get the people on the
right level of undrstanding.. Be prepared and plan for good
people changing position and companies
• Travel extensively to get a first hand impression on both the
the company and the environment it is working in. Invite
personell to your company to give them a impression of your
company how you work
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19. How can Norwegian companies use this
advantage?
Work with the specialists! Get in touch with:
•Indian partner with a daughter/ company in Norway
•Norwegian partner with a daughter /majority ownership in India
•Go on your own and find a possible Indian partner directly.
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20. In general
Use common sense and show respect.
Accept that the culture is different and try to adopt.
Take your time to experience and understand the market and the
culture before expecting big results. This investment will pay back
later.
Be patient
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