Overview: CTOs/CIOs base their Technology Outsourcing decisions after careful weighing of many parameters. The major driving factors at the most basic level have usually been Cost Savings, access to Global Talent and the ability to focus on Core Strategic areas while hiving off Technology needs to a Third Party or Global In-house Centre(GIC).
However, a recent Deloitte Survey that surveyed over 500 CXOs indicates a shift in thinking. Findings demonstrate that key decision makers are now closely looking at how external (and in-house) providers can work in close tandem with them -to innovative and disrupt. This shift in thinking emphasizes the critical need for two powerful underlying factors in Outsourcing that have so far not been given their due attention-Trust & Transparency.
Without these two factors in place no model of Outsourcing will provide even the most basic of desired outcomes(in this case, Cost Savings)- let alone address today’s CTO/CIO’s more advanced needs for an innovative, strategic partnership.
The Trust & Transparency Deficit Challenge: ScrumStart conducted an in-depth survey of over a hundred CXOs operating within the Outsourcing ecosystem. Results revealed that there was a considerable Trust Deficit between Customers(Internal/External) and their respective Offshore Providers. In addition, there were significant operational transparency and control issues that were perceived to be unaddressed.
What makes up the DNA of Outsourcing Trust and Transparency ?
1. An Open Channel of Communication: Most offshore engagements fail at early stages due to the customer and service provider simply not being on the same page.
Studies such as this one by Researchgate have found that optimizing technical communication at every stage of executing an IT outsourcing contract reduces associated risks and establishes Trust in an outsourcing relationship.
2. Establishing Trust by Delivering on Cost Saving Promises: Customers find too often that they have not derived the promised/expected level of cost saving within the timelines assured. This could be attributed to a variety of factors, including poorly structured pricing models, padded/inflated pricing, rate fluctuation/volatility or unethical practices.
In addition, in the case of GICs, the Capex investment involved is high and often goes out of the budgetary scope due to low reliability of the various external entities that facilitate the set-up of the Captive Centre. Companies such as Sun, Oracle, Cisco, Ford and GE who have set up GICs/Captives in India have all faced these challenges and issues.
Providers must therefore develop a pricing structure and a well-defined model of set-up, investment and operation in place to ensure customer satisfaction on this parameter.
3. Building Trust by via Innovation: Many Vendors and internal IT teams(in the case of GICs) will accept a mandate to develop solutions in an innovative and disruptive manner, and/or claim the potential to do so. However, this often does not happen due to lack of capability and reluctance to put in value-added effort, thereby leading to customer dissatisfaction.
Only an R & D focused approach can enable continuous innovation and improvements across the value delivery chain.
4. Assured Control over Talent: A sizeable chunk of the Customer’s investment goes into Talent. However, at the same time he has low control over sourcing, deployment, development and retention of the same when dealing with Third Party Vendors.
This state of flux in the resource pool needs to be urgently addressed via a stable and flexible model of Talent Management.
5. Process Transparency and Control : Processes at the provider-end are often opaque in nature, with low operational control and visibility for the remotely based customer. This leaves no leeway for mutual discussion, analysis and process improvement.
Steps need to be taken to bring full Transparency back into all processes within respective systems.
6. Relying on Flexibility: Outsourcing as a genre is based on the underpinnings of being flexible-yet is sometimes found to be rigid and slow to respond to the customer’s dynamically evolving needs and demands.
Enabling engagement and operational models such as Proof Of Concept Projects, Customized High-end Consultancy services, Scalable Resource models and Build-Operate- Transfer options are all key to addressing this challenge.
BUILT ON A DNA OF TRUST AND TRANSPARENCY
The ScrumStart Virtual Captive (SVC) is a highly innovative, cost-efficient, transparent and hassle-free model of Outsourcing/Offshoring that has Trust and Transparency embedded in its DNA, thereby addressing all of the above challenges.
Open Channels of Communication: ScrumStart ensures open. fluid & transparent channels of communication with each customer throughout the Business-Technology relationship lifecycle. These include:
•Clearly defining & establishing information flow requirements
•Developing a common understanding on what, when, and how information should be shared
•Establishing standard protocols and procedures for communication at every stage
•Evolving them into established Best Practices for Communication
A Transparent Cost-based Pricing Model with Zero Capex:
ScrumStart provides each of its partners with a Transparent Cost plus-based Pricing Model after carefully analysing their needs. Every single element of costing is shared, and the extent of mark-up is pre-defined.
In addition, our turnkey model covers the entire process of GIC/Captive setup and 24*7 daily operations – with Zero Capex investment and faster speed to ROI breakeven(within 1 year as compared to 3 to 5 years for a GIC).
Building Trust by Delivering on Innovation:
ScrumStart is committed to continuous exponential improvement across Process and Delivery with Time and Scale. This is enabled by ScrumStart’s own dedicated R&D Labs in Finland (Helsinki) and India (Surat, Pune & Bangalore). This ensures a paradigm of perpetual innovation via:
*Process Automation & Optimization options at scale
*Continuous quality improvement and cost reduction
*Increased speed to delivery with time
*Digital enablement to improve processes
Trusted returns on Talent Investment:
ScrumStart manages end-to-end Talent Building, Engagement, Growth & Retention activities. This includes Sourcing and incorporating a highly skilled talent pool specialized in technologies as per your specific project requirements. In the event of Transfer of operations, ScrumStart works with you to ensure that key talent is retained and attrition risk mitigated.
Clear Process Visibility and Control: ScrumStart incorporates Best Practice based Processes that are transparent in nature and functioning, with high levels of operational control and visibility. This enables continuous analysis & discussion with our partners & course correction as required.
Trust backed by Reliability & Flexibility:
POC: The ScrumStart Virtual Captive engagement model enables our partners to start with a simple, no-cost/low cost Proof-of-Concept service model. This enables them to grow in an optimally paced manner. Rapid Scale-up/Scale-Down is possible at any stage of operation.
Transfer option: In addition, Clients also have the option to completely transfer ownership of all assets of the incubated, fully functional Virtual Captive including resources, infrastructure as per pre-decided Contractual agreements.
Knowledge Hub: Read Our Blogs to explore how we have established a paradigm of innovative change in the Outsourcing Industry
Related Blog: Fixed or Transparent Pricing for Technology Services
View our Media coverage
Try a Low cost/No cost POC now: Speak with one of our senior executives at
+1 (630) 826-9754 or email us at letstalk@ScrumStart.net
About the Author:
Mr. Santosh Panicker, CEO ScrumStart, is a specialist in setting up business processes and has established himself as an inspirational leader in the corporate world. Mr. Panicker has demonstrated his capabilities in setting up end- to -end HR, legal, and business process operations for 9 start-ups through his career years. He has over 22 years of experience working across diverse industries including IT, FMCG, Retail, Automobile and consumer durables with blue chip companies