Best in class professional service organizations not only establish high billing rates but protect them by limiting discount authority. By charging and maintaining premium rates these firms are able to invest in a continuing cycle of excellence. Organizations with the highest bill rates consistently reported significantly greater investments in their employees - more vacation time; higher incentive payments and double the average investment in training per employee.

These insights and many more are provided in “The New Professional Services Maturity Model - A Roadmap to Achieving Professional Services Excellence”, an 88 page benchmark report developed by Jeanne Urich and R. David Hofferberth, P.E. It is available from Adexta and Service Performance Insight for $495 at (spiresearch), or directly at: Click Here

The report provides benchmark data from 52 professional services providers in addition to actionable guidance on how to improve organizational maturity, leading to performance improvements and increased profitability. It shows how professional services organizations can begin the process of establishing their own roadmap to service excellence by comparing themselves to industry benchmarks.

Until now, little if any research examined Professional Service strategies and benchmarks within the context of a rapidly maturing technology environment. Some of the questions around these issues include:

• What are the most important focus areas for professional service organizations (PSOs) as business processes mature?
• What is the optimum level of maturity or control at each phase of an organization’s lifecycle?
• Can diagnostic tools be built for assessing and determining the health of key business processes depending on an organization’s level of maturity?
• Are there key business characteristics and behaviors that spell the difference between success and failure? If so, do they change depending on the maturity of the company or industry?

Service Performance Pillars

This research report benchmarks the correlation between professional service organizational performance and the adoption of “best practices” and business process maturity. Adexta and SPI Research have organized the key business processes required to create and run a professional service organization into five performance pillars:

1. Vision and Strategy: A unique view of the future and the role the service organization will play in shaping it. A clear and compelling strategy provides a focus for the organization and galvanizes action. Effective strategies focus on target customers, their business problems, and how a solution solves those problems differently, uniquely, or better than its competitors. For a service strategy to be effective, the role and charter of the service organization must be defined, embraced and supported throughout the company. Depending on whether the service strategy is to primarily support the sale of product or to drive service revenue and margin; service organization goals and measurements will vary.

2. Finance and Operations : The ability to manage services profit and loss - to generate revenue and profit while and developing repeatable operating processes. Elements of this pillar provide long-term financial stability, which enables PSOs to manage growth and provide an acceptable level of return to shareholders.

3. Human Capital Alignment : The ability to attract, hire, retain and motivate employees. With changing workforce demographics, human capital strategy has increased in importance. As executives work to manage costs, they must assure clients have the best/cost-effective personnel working on projects. As PSOs adopt new staffing models designed to achieve these goals, they must also be diligent to keep their best people on-board and motivated.

4. Service Execution : The methodologies, processes and tools to effectively schedule, deploy and measure the quality of the service delivery process. Service execution involves a number of factors: from assuring utilization rates remain high, to delivering services in a predictable and acceptable time frame, to reducing cost while improving project quality and harvesting knowledge.

5. Client Relationships : (sales, marketing and communications) The ability to effectively communicate with employees, partners and customers to generate and close business and win deals. Effective client management involves improving relationships to better understand client needs, while ensuring clients will provide references and testimonials.

These five pillars identify specific areas in which PSOs of all types (product or service) strive to improve capabilities that will both optimize profitability and improve quality, human capital and client satisfaction - providing the best environment for long-term success. However, maximizing performance in one pillar could lead to performance degradations in the other four. The objective is to optimize the results within each pillar, while driving overall revenue, margin and customer satisfaction.

Professional Services Maturity Model Levels

Within each of the Service Performance Pillars, Adexta and SPI Research developed guidelines for process maturity. These guidelines cut across the five service dimensions to illustrate examples of business process maturity. This study has been developed to measure the correlation between process maturity and service performance excellence.
This model is built on the same foundation as the Carnegie Mellon Capability Maturity Model (CMM), which has been adopted for software development; but is specifically targeted toward billable PSOs, that either exclusively sell and execute professional services, or complement the sale of products with services to optimize a product’s use. The five maturity levels include:

• Level 1 - Initiated: At maturity Level 1, processes are ad hoc and fluid. The business environment is chaotic and opportunistic, and the focus for a PSO is primarily on new client acquisition and reference building. Often professional service employees at this level are chameleons - able to provide presales support one day and develop interfaces and product workarounds the next. Success depends on the competence and heroics of people in the organization, and not on the use of proven processes, methods or tools.
• Level 2 - Piloted: At maturity Level 2, processes have started to become repeatable. Best practices may be demonstrated in discrete functional areas or geographies but they are not yet documented and codified for the entire organization. Basic processes have been established for the five Professional Services Performance Pillars but they may not be universally embraced.
• Level 3 - Deployed: At maturity Level 3, the PSO has created a set of standard processes and operating principles for all major service performance pillars but renegades and “hold-outs” may still exist. Management has established and started to enforce financial and quality objectives on a global basis.
• Level 4 - Institutionalized: At maturity Level 4, management uses precise measurements, metrics and controls, to effectively control the PSO. Each service performance pillar contains a detailed set of operating principles, tools and measurements. Organizations at this level set quantitative and qualitative goals for customer acquisition, retention and penetration, in addition to a complete set of financial and operating controls and measurements.
• Level 5 - Optimized: Maturity Level 5 focuses on continual improvement of all elements of the five performance pillars. A disciplined, controlled process is in place to measure and optimize performance through both incremental and innovative technological improvements. Quantitative process-improvement objectives for the organization are established. They are continually revised to reflect changing business objectives, and used as criteria in managing process improvement. New initiatives for quality, cost control or client acquisition are in place to ensure optimum performance. The rough edges between disciplines, functions, and specialties have been smoothed to ensure unique problems can be addressed quickly without excessive bureaucracy or functional silos.

Building the Professional Services Maturity Model

When the service performance pillars are mapped against process maturity, a Service Excellence Roadmap can be developed. This tool provides insight into where an organization fits within the service maturity model as well as a guideline to move from one level of maturity to the next. It allows organizations to diagnose their performance strengths and develop plans to bring lagging areas into alignment (Table 1).

Table 1: Performance Pillars Mapped Against Service Maturity

Source: Adexta and SPI Research, January 2008

View Large

With increased global competition for business and resources, PSOs must continually improve. These improvements cut across every aspect of the organization, and all departments and individuals must work together to drive service performance excellence. Executives need performance indicators and a plan for continual advancement.

Building a customized PS Maturity Model Report Card

After completing the benchmark survey, Adexta and SPI Research create a unique spider diagram for each respondent to show how their organization’s functional maturity compares to the Professional Services Organizational Maturity Model. The spider charts also provide a visual representation that depicts the relative process maturity or immaturity against each of the Five Service Performance Pillars. It gives insight into areas of relative functional strength and weakness, thus providing a roadmap for future investments. The following figure shows an example of the Spider Chart for one of the respondents.

Figure 1: Example PS Maturity Model Report Card

Source: Adexta and SPI Research, January 2008

This charts shows that the respondent has a well articulated Vision and Strategy, embraced by all functions and employees along with individual goals and metrics to drive that strategy but within the other Service Performance Pillars, processes are immature. Going forward, this respondent should start investing in Human Capital, Service Execution and Client Relationships.

This report provides a glimpse into areas where PSOs can improve by showing statistics for average performance reported by over 50 professional service organizations. It shows how the service performance pillars can be optimized and provides prescriptive advice to help organizations enhance their business process maturity while improving bottom-line results.

About Author:

Jeanne Urich is a principal with Adexta Strategy Consulting. She can be reached at Jurich [AT] jurich.biz

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer.

Thomas Friedman rendered us Indians a huge service when he wrote his now famous bestseller - The World is Flat. It outlined the phenomenon, the advantages and the mechanics of a previously little-known phrase “Outsourcing”, and the rest, as they say, is history.

The first wave of outsourcing resulted in what we all know as the BPO industry—this is now an US$8.4 billion industry, employing roughly 5,53,000 employees. The rationale behind the BPO movement was an understanding that companies could focus on core competencies while taking advantage of labour arbitrage, and hence save costs.

This worked well and, as we know, the BPO industry has been at the forefront of the new ‘Indian Revolution’ resulting in the corporatisation and globalisation of urban India with a completely new face to the world.

As buyers and suppliers became more comfortable with the idea of outsourcing per se, there came the realisation that more and more work could be outsourced, thus honing even further the ability of a business to focus on core competencies.

This got an added impetus with suppliers creating an opportunity to further mine a client for additional work. This was better and cheaper than acquiring a fresh client (classical wisdom states that it is seven times more expensive to acquire a fresh client than work with an existing one). This resulted in the beginning of the Knowledge Process Outsourcing (KPO) industry, an industry that is forecast to grow to a $16.7 billion worldwide industry, employing nearly 3.5 lakh professionals by 2011 .

The early pioneers of this industry were the following:

Segment I: Existing multinationals that used cheaper destinations with readily available knowledge oriented talent pool for setting up captive knowledge units—GE with Genpact is the best example of this phenomenon.

The kind of work that this breed of ‘KPOs’ did was a little more ‘high end,’ and analytical; less transaction oriented, but more business oriented

Segment II: Erstwhile BPOs that logically extended offerings to include higher end / analytical / knowledge-oriented services. In many cases, these companies took / are taking the acquisition route to acquire the expertise that a knowledge organisation should possess.

Segment III: Almost at the same time, the industry saw the rise of ‘pure play’ KPOs—those that specialised in the knowledge game. These are boutique operations, very often still start-ups, specialising in niches of the knowledge research and analytics spectrum.

These operators have all contributed to the growing realisation amongst clients based in the western world—that India has a talent pool that goes beyond mere proficiency in the English language—that the educational standards are similar to those in the West, and the analytics that arise out of the Indian pool is actually adding value beyond merely saving costs.

Emerging sector

The KPO industry is currently just past the “introductory” stage of its Life Cycle Curve, and is now stepping into the next phase - growth.

Following the classical ‘S’ curve, this phase now entails many more players, many more clients, higher ramp ups of existing organisations, many more services offered. In fact, in some ways the industry is already showing atypical behaviour—it is seeing many consolidations / buyouts as well, a phenomenon typically characterising the maturity phase of the Life Cycle. These acquisitions are motivated sometimes by the desire of the Segment II players to acquire knowledge-related expertise (recent news talked of Infosys and Wipro eyeing a possible buyout of MarketRx; WNS recently acquired Marketics Technologies); and sometimes by the sheer realisation by clients that this is a useful service offering to have in-house rather than outsourced (R R Donnelley’s acquisition of Office Tiger).

But as the industry enters the growth phase, it has to start thinking of some scalability related questions - How do I grow faster? How do I make sure that productivity increases? And, most importantly, what will make me different from other players in this space - i.e., what is my edge, in other words, my sustainable competitive advantage?

If you look at the BPO industry, in the beginning the standard value proposition was obvious—cost (due to labour) and time arbitrage, aided by linguistic abilities. But, to derive sustainable competitive advantage, the players in the industry had to do the following two things:

- Set in place processes (to improve productivity)—

hence repeatable hence the emphasis that you see on a processised organisation. There are various certifications in place for precisely this (software organisations have the CMM certifications, which maps, at various levels starting from 1 to 5, where has the organisation reached - initial, repeatable, defined, managed, optimised)

- Acquire scale to prorate investments

Similarly, in the KPO industry, the players have to move from providing great insights/ R&D, etc, to a model where they develop proprietary, yet repeatable properties. This, of course, is a challenge. KPO, by definition, have services as offerings. So, the effort has to be to “productise” revenue—how does an organisation make sure that entry barriers are so high that what that organisation offers is not replicable by another organisation. At the same time, internally, what that organisation offers, continues to be repeatable and scalable.

EmPower Research, a pure play start up in the business research space, rode the introductory phase a while back. It has a stellar list of clients; it has repeatedly proven the value of its offerings to these same clients who keep coming back for more. However, the challenge as it scales up in the growth phase is the classical one of productising revenues, and of ensuring repeatability of its service offerings.

The dilemma here is that one of the main reasons for its continuing success is that one of the divisions delivers consulting quality research and analytics, for that, read very creative / customised solutions to business processes. This process is highly people focused—so how do you convert it to repeatable/ scalable revenue?
The management has resolved this problem in two ways—for its more process business, by investing in a lot of automation - proprietary automation, so people keep getting better and quicker at their jobs.

For the more customised business research part, the organisation is looking at building products - offerings that can still leverage its core strength, which is fast, cheap, insightful research and analytics, and yet enable a syndicated/ licensed / “one-to-many” revenue model rather than a project (or retainer) “one-to-one” based model.

Hedging risks

This two-pronged approach allows the business to hedge its risks, at the same time to build in entry barriers.If you were to go back to Michael Porter’s famous Five Forces model, “entry barriers” and “threat of substitution,” as well as “competition” get tackled by this move. But, companies have to continue to look at other “forces”:

Suppliers:

In this case, use it as a proxy for employees - the business is all about people. The industry has a lot to offer in terms of the kind of work, learning and exposure that employees receive. But, at the end of it, this is the real world—attrition is as much an evil as it is in other industries, and the drive to make sure your people capital is not eroded is as important as making sure your clients are yours.

I think the most innovative examples of initiatives to achieve retention are empowerment related, leveraging on the inherent strengths. In a BPO, you are a cog in a wheel, a Jack or Linda in a “body” that operates on shifts. In sharp contrast, KPOs that are smart, specially the pure play ones, actually empower their employees to become mini entrepreneurs—ideate branding for their organisation/ are involved in training and recruitment. In short employees in KPOs have a far higher span of control than what their peers in other organisations have.

Buyers:

For most KPOs, in their introductory stages, clients have been an exclusive domain—there just hasn’t been enough competition to worry about. But, in the growth phase, it will all become an open field—this is where engagement models / annuity-based revenues, and proprietary yet productive tools and models become important. For EmPower Research, the very vertical that they serve (professional services) is a source of competitive advantage. It is a space where they were pioneers and therefore have tremendous early mover advantage. But, they are constantly working at spreading their eggs across different baskets to undermine the power that a single client will have.

In sum, what the above implies is that unlike a BPO where you need to “sweat the assets” a smart KPO needs to work at both. This is what will drive sustainability, client advantage, people empowerment and make the KPO industry really a force to reckon with.

About Author:

Sangita Joshi is the managing partner of Empower Research, a Business Research and Information Consulting firm headquartered in New York City, with an offshore model. Sangita has a rich experience of 13+ years in Sales, Marketing, Product Development, Teaching. She has done her B.E from Delhi College of Engineering and MBA from IIM Bangalore. In the recent past she has been associated with Whirpool as Sr. Manager and as a brand Manager, Gillette.She has also been writing articles for the English Daily ” Deccan Herald”.

Sangita can be contacted at : sjoshi [AT] empowerresearch.com

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer.

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The prime objective of a PE firm is to obtain controlling interest in a target company and restructure the target company over a period of 3-7 years such that its value enhances and sell it once the market value is more. It can be reasonably concluded that the value of the PE firms is a function of value of their portfolio companies.

This objective is achieved by deploying best management practices and cutting on flab in the operations of the target company. Usually, in a PE firm, a partnership’s investment activities can be divided into four stages: selecting investments, structuring investments, monitoring investments, and exiting investments .

ITIL v3 fits well at the stages of structuring investments and monitoring investments. The PE firms can leverage the best practices in the only written IT Operations’ guide. The beginning of a v3 project is resource intensive. However, it starts yielding benefits within 6-12 quarters depending on how it was deployed.

The prime reason that v3 is a good fit for PE is due to its business service management approach for the IT services. Besides, v3 introduces the much needed dimension of Financial Management and portfolio approach, a dimension that was missing from the earlier versions but was of high significance. The address to value creation, value capture, and value networks makes it well-aligned with the objectives of the PE firm.

The concept of market spaces discussed in V3 helps the IT department think beyond the immediate internal customer. If the IT arm of a particular portfolio company can start providing services to external customers, the value of the portfolio company will be enhanced.

Also, V3 adopts a lifecycle approach, which is pragmatic as compared to the earlier modular approach, which discounted the fact that the business place is constantly evolving and that IT needs to adapt. When a portfolio company is being restructured by a PE firm, there are significant changes, which can be addressed on the IT side only by a lifecycle approach.

On one hand, most of the IT shops find V3 abstruse and hence, either delay the adoption and/or are too busy putting out fires in order to adopt it. V3 will act as a shaman between those who worlds. The resistance is easier to overcome in case of a PE portfolio company than in case of a regular company. The structuring of the organization is in such a way that the partners can exert significant pressure to get initiatives off the ground quickly. Besides, the managers of the portfolio companies must not oppose the adoption of v3 in these environments as they gain an experience, which sells for a higher rate in the market, if they can prove a successful deployment.

If I were a stakeholder in the third version (popularly known as v3), I would pitch it to the PE firms, in order to have increased adoption for my Operations’ guide.

About Author:

Manik Patil is a management consultant, who specializes in Service Management and advises leading US companies for the same. He possesses good knowledge in the fields of Corporate Finance, International Finance, and Corporate Strategy.

Manik completed his graduate management education from Carnegie Mellon University and engineering education from Mumbai University.

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer.

India’s export-driven software services companies have been attracting large outsourcing contracts from western clients, but recession fears in the United States, and skills shortage are major worries. On the other hand industry experts have started sending out signals to be cautious, since the going is likely to get tougher, with Western clients expected to cut back on technology spending as the U.S. economy shows signs of slowing down.

According to Forrester Research the worldwide IT purchase will grow only 2.8%, against the earlier expected 4.6%.

At the back of it, anticipating more global business, most of the IT companies who went on recruiting spree hiring people from all walks of technology are now thinking otherwise.

Yahoo! India, the Indian subsidiary of the global search engine and Yahoo Inc, the news portal has sacked 45 employees across various levels. The reason cited is for their poor performance.

Yahoo! India’s attempt to pack-off the so called non-performers comes close at a time when a similar drama was done by TCS which asked its 500 employees to voluntarily resign. The company claims the action was owing to the fact they failed to clear the company’s employee appraisal system, and has nothing to do with rupee appreciation and U.S. recession.

Earlier last week, IBM, which has the largest headcount outside its US operations with about 73,000 employees, had shown the door to 600 entry-level trainee programmers, after they reportedly failed to clear aptitude tests.

On the contrary IBM sees India as a critical part for their global strategy and it will continue to view the country as a growing domestic and export market. India is already their second largest base of operations in the world. They are planning to invest $6-billion in India despite all odds.

How do we justify these companies move of hire and fire? How will you justify that suddenly one fine morning all the companies decide to sit down at their respective office, and start evaluating the performance of their recent employees? Is it the fear of the Goliath?

Secondly, now how dangerous is the Goliath- U.S recession? Is the economy in a recession or not? One thing everyone seems to readily agree is that, the economy is slowing down. But analyst plays it safe putting it on 30% to 65%. The funny part is Americans will never know if there exist a recession, and by the time they realize this it would had been all over.

Is there an alarming situation? According to NAASCOM, software exports are expected to grow 28%, to $40.8 billion, by the end of March 31, 2008. The domestic market in India is gradually making its presence, and it is likely to generate a princely $23.2 billion in sales, taking the overall growth by 33%, to $64 billion. NAASCOM further adds that last year, Indian IT industry annual growth touched 32%.

The Indian IT industry now accounts for 5.5% of India’s GDP, which is 1.2% up in fiscal year 1998, says Nasscom. It’s another fact that last year, the industry budged less resulting rupee appreciation which was around 12% against the dollar, and this gulped the revenues margins from its largest market, the United States.

Most of the Indian companies might have met the target this quarter year, but the solution lies in Indian Software to counter the need to mend U.S. Growth Problem.

To some extend we can understand that IT revenues India generates is US-centric, maybe that is the reason why India catches flu when US sneezes. But still, a US recession is not something that India need to be worrying about. India is well cushioned and should continue to keep its pace, never mind if it bit slow.

About Author:

Jayan CM is a writer presently working for a outsourcing company in Cochin. He writes on outsourcing and related topics though he is not limited to writing on IT but on every topic. Graduated from the University of Jabalpur, Jayan has 7 years of experience in the field of writing. Jayan CM can be reached at content.j [AT] gmail.com

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer.

This article will examine the driving forces behind the emergence of the LPO industry and how it has developed over the last few years. I will also be offering some insight into the direction the industry will take in 2008 and beyond. Finally, I intend to take a more detailed look at the impact that the recently passed UK Legal Services Bill will have on the offshore legal outsourcing market. I am both delighted and fortunate to have contributions to this article from Ron Friedman, Senior Vice President, Marketing at Integreon (http://integreon.com/) and Neeraja Kandala, Senior Research Analyst with ValueNotes (http://www.valuenotes.biz).

The Driving Forces

The demand for lower cost legal services resulted directly from increasingly cost-conscious U.S. and U.K. corporate clients. The difference between the law and other industries is that outsourcing in the legal market has been client rather than industry driven. In the legal profession, it was not law firms, but corporate legal departments that were the early proponents of the benefits of legal outsourcing. These major corporate clients are now increasing the pressure on their law firms to offer an alternative solution. Historically major law firms on both sides of the Atlantic achieved huge levels of profitability through leveraging their junior associates. The Los Angeles Daily Journal announced earlier this year that pay scales for first-year attorneys rose yet again with a number of firms hitting a staggering $160,000 annual starting salary. Law firm leaders insist that these increases have resulted from U.S. domestic economic forces, necessitating a policy of “Keeping up with the Joneses” in order to retain the top law school talent. The fully loaded cost to the firm of a junior associate at these salary levels will be in excess of $250,000 per annum. Partners look to bill these associates out at hourly rates of $300- $400 plus per hour. These rates simply do not wash any more with major corporate clients when it comes to routine level legal support work such as basic document drafting, litigation support or document review. Over the course of the last 12 months I have spoken to senior executives and managing partners at major law firms who have been advised in no uncertain terms that to retain their corporate client business they must cut their legal fees and offer an offshore alternative. KPMG has estimated that document review can account for between 58% and 90% of the total cost of litigation, and corporate clients view this type of legal work as routine. Law firms are being compelled by their clients to consider offshore outsourcing as a viable strategic solution. 2007 was the year that corporate clients confirmed they were no longer prepared simply to sign a blank check when it comes to paying their attorney’s bills.

Consolidation and Maturation of the industry

Since 2003, in India alone the number of companies offering legal process outsourcing services to both corporations and U.S. and U.K. law firms has grown to well over 100. For further information on the growing number of companies offering offshore legal services check out Ron Friedman and Joy London’s updated list at http://www.prismlegal.com/index.php?option=content&task=viewid=88&Itemid=70#List and the July 2007 ValueNotes report Offshoring Legal Services to India: an Update http://www.sourcingnotes.com/content/view/71/54/.

If 2007 can be categorized as the year when the number of LPO players across India exploded and major law firms began to explore the labor arbitrage benefits available through outsourcing offshore, then the picture will start to change again in 2008. Even while a large number of “mom and pop shops” were clinging on to the major players’ coat tails and jumping on the LPO bandwagon there was evidence of consolidation. This will only increase throughout 2008 and beyond. The dynamic movement within the LPO industry has not gone unnoticed in the private equity and venture capital sectors. The confidence that investors have demonstrated in the industry throughout 2007 illustrates the bright prospects for the coming year. In November this year Infosys, India’s second largest IT company, signaled their intent on entering the legal outsourcing market with the launch of their own legal process outsourcing operation. Established LPOs including Pangea3, Jurimatrix and SDD Global have attracted a significant level of private equity and venture capital funding. 2007 also witnessed the first acquisition of an onshore provider of outsourced legal services, CBF Group Inc, by a company traditionally viewed as being a leading offshore financial and legal services outsourcing company, Integreon. This type of activity has placed legal outsourcing companies in the position to scale up dramatically.
According to the independent research company ValueNotes in their July 2007 report, “Offshoring Legal Services to India - An Update”, the revenues from legal services offshoring are forecast to grow from $146 million in 2006 to $640 million by the end of 2010. The legal outsourcing industry in India currently employs around 7,500 people and this number is expected to rise to 32,000 by 2010. Neeraja Kandala, the analyst behind the ValueNotes updated report, believes that consolidation is inevitable:

“Most Indian legal service vendors are self-funded, and may not have the capability to develop adequate marketing infrastructure without VC funding. For a large number of the smaller vendors, growth beyond a point will be difficult. While a few will manage to grow given their strong onshore presence, several smaller players will be vulnerable. On the other hand, the interest of large BPOs such as Infosys and HCL in this space is growing. As these BPOs look to build presence and scale rapidly, the acquisition of smaller vendors is an option. Though there is not much activity yet, over time we will see consolidation, with large BPOs and LPOs acquiring capacity and capability.”

Ron Friedman, Senior Vice-President of Marketing for Integreon and one of the world’s leading authorities on knowledge support strategies and the legal outsourcing industry generally provides his view on the consolidation of the LPO marketplace.

“As a general rule, industries consolidate as they mature. In the legal market, we see evidence of that now with electronic discovery vendors and large law firms. Even the traditionally fragmented legal software market is consolidating as LexisNexis and Thomson-West acquire smaller software players.

So I expect that the LPO market will not be an exception. Of course, guessing the time frame is always hard, but I suspect it will consolidate in the next two to three years. Whether that is a result of organic growth of some plus attrition of others or by acquisition is too early to say.

For LPOs, scale will drive consolidation. Scale is important for three reasons. First, it supports operating efficiencies. While lower offshore labor costs continue to offer significant savings today, in the future law firms will expect further savings from process improvements. Achieving these requires a large enough volume of work to gain the requisite experience and resources to re-engineer work flows. Second, scale means being able to offer a range of services which law firms will find valuable as they grow comfortable with offshoring and seek to outsource additional functions to a single supplier. And third, scale allows an LPO to recruit the best talent. Though talent is still readily available, the supply is limited, even in India. Larger operations will be able to invest in recruiting and, more importantly, to offer desirable career paths for the best workers.

Size will also help address whatever reservations law firms may have about offshoring. Law firms are always concerned about supplier stability and frequently have reservations about small ones. Larger LPOs will address this general concern and, as important, have both the reputation and references to allay other fears.”

Public Acknowledgement

Given that the majority of the leading LPOs can testify in 2007 to having received projects from AM law 200 ranked law firms, where are the testimonials, quotes, and press releases from the law firms’ managing partners? I am perfectly aware from my own experiences and numerous discussions with both the press and my peers at other LPOs that although major law firms have begun to explore the benefits associated through offshore legal process outsourcing they are also clearly still operating from a standpoint of reluctance to discuss their outsourcing relationships. There is a feeling within the industry that the major firms still view their own offshore legal outsourcing arrangements as a dirty little secret. Attempts by LPOs to include provisions within their contracts that allow publicizing of the deals have generally been met with rejection to date. Over the last 12 months I and many of my peers at leading LPOs have written articles for or been interviewed by journalists for publications as varied as Time magazine, the American Bar Association, Wall Street Journal, the Los Angeles Daily Journal, and the Association of Legal Administrators, to name but a few. The vast majority of these articles are still missing out on the “major firm” perspective. There is an unwillingness to go on record and confirm that the firm is outsourcing elements of their legal functions, whether back-office support or higher value legal work, to India. This is clearly frustrating for the LPOs who want to shout from the rooftops about every major client they have on their books.

I anticipate that this will change over the next couple of years. Don’t expect a tidal wave of confessions; however in the same way that the major firms’ initial interest in exploring legal offshoring was client driven, so will their eagerness to publicize the fact of their involvement. During the last year many of the law firm partners who have contacted both LawScribe and some of the other leading LPOs have been perfectly content to acknowledge that the reason they are approaching an LPO in the very first place is because their corporate clients are starting to demand that they offer an offshore element in their responses to RFPs or they will simply lose their business altogether.

As it was with the first uptake of offshore legal outsourcing, the public acknowledgement of the actual utilization of these services will of course be client driven. In 2007 we viewed the very first signs that an inherently risk-averse legal profession was publicly embracing the harsh reality that no industry was immune to the forces of globalization. Although the majority of the world’s leading law firms are still reluctant to go “on the record” and acknowledge their interest in offshore legal outsourcing, throughout 2007 AM Law 200 firms have been consistently approaching the world’s leading legal process outsourcing companies, submitting RFPs and inquiring about the various services on offer.

The picture has started to change. On occasions representatives from leading firms have joined their LPO providers on panel discussions at a variety of legal conferences that have begun to address the subject in 2007. I believe that in 2008 we will reach the point where having the law firm’s name out in the public domain as one that embraces offshore legal process outsourcing will actually be an attractive bonus for potential corporate clients, hence helping generate new business rather than turning people off.

Ron Friedman provides his own unique insight on whether 2008 will be the year that the major law firms come clean and publicly acknowledge that offshore legal outsourcing is firmly on their agendas:

“There is a common “tipping phenomenon” among large firms where no one wants to be first. Of course, a firm does go first and eventually a couple follow. Once a half-dozen or so have moved, the market tips – then, no one wants to be left behind not doing the new thing. Looking at adoption of e-mail and creation of marketing departments as examples, it seems to take at least five years for a cycle to play out. Today, firms are reluctant to acknowledge publicly that they offshore. Once a few go public, it will likely take little time for the rest to follow. And because of perceptions, more are likely to go public soon…

Law firms have many constituencies but clients come first. Large firm clients are, by and large, cost-sensitive in-house counsel. Firms can gain both a perception and actual advantage with clients by making clear they understand and are responding to the cost pressures facing their clients. Cutting associate or partner rates (whether directly or by discounting) is not attractive. And, talk notwithstanding, fixed and alternative fees have yet to gain significant share. So the number of ways to reduce costs is limited. As firms gain comfort with offshoring quality, they will understand that it is a good way to offer savings without affecting the firm’s core business. It therefore seems likely that market pressures will cause the early law firm adopters of outsourcing to also be the early “announcers.”
Neeraja Kandala, of ValueNotes agrees that public acknowledgement is just around the corner:

“Early adopters among US and UK law firms are gaining comfort with the idea of offshoring. There are several law firms that are inhibited by various concerns. Those who have held back are now seeing the success stories of some of their competitors. I’m quite optimistic that once the law firms and corporates get more comfortable with the idea of offshoring, they will openly acknowledge their participation.”

Regulation, Accreditation and Certification

New companies without any real U.S. or U.K. physical presence or without the requisite legal background and qualifications are springing up all the time. The original ValueNotes report in December 2005 estimated in the region of 40 LPOs. 18 months later the numbers had swelled to well over 100. Many are simply jumping on the legal outsourcing bandwagon, seeing it as the latest “get rich quick” scheme. Last October LawScribe were forced to threaten legal action against a new LPO called LexGenius whose website was a virtual word for word plagiarism of the LawScribe site. It went as far as completely to copy the LawScribe CEO President, Kunoor Chopra’s, profile but simply to substitute in the name of the LexGenius founder!

There have been numerous calls from some of the major players within the industry relating to the formation of trade associations, independent training programs, regulatory bodies and best practice procedures. To date there has been no specific general consensus in these areas. It is likely that 2008 will witness the development of at a very minimum best practice rules for the industry.

2007 saw the first moves from within the industry towards accreditation and self-regulation. Russell Smith from SDD Global Solutions led one initiative with the formation of the first LPO trade association with the inaugural meeting held in Delhi in the summer of 2007. In November, through the forum of the International Association of Outsourcing Professionals, LawScribe led the first Legal Outsourcing Topic Chapter meeting attended by senior representatives from leading LPOs, BPOs, Law firms, academics and other interested stakeholders. 2007 also witnessed LPOs Jurimatrix and QuisLex, in association with one of India’s leading training organizations, develop the Global Legal Professional Certification Test.

Throughout 2008 I anticipate that both at legal conferences and on their own initiative senior representatives from the world’s leading LPOs will continue to meet and discuss these issues. While it is clear that many within the industry are committed to achieving higher standards to inspire confidence among their clients, to date there has been no general consensus as to how best to achieve this.

Deregulation of U.K. Legal Sector and its Impact on the Legal Process Outsourcing Industry.

In the U.K. the Legal Services Bill finally received Royal Assent on October 30, 2007. The true impact of this piece of legislation will only start to be felt in 2008 and beyond. The particular section of the Bill that will have the most far reaching consequences on the legal profession and provide a colossal boost to the growth of offshore legal outsourcing, is the provision allowing the formation of Alternative Business Structures. The summary to the Bill at paragraph 15 states as follows:

“Alternative Business Structures (ABS) will enable lawyers and non-lawyers to work together on an equal footing to deliver legal and other services. External investment will be possible”.

Put simply, non-lawyers can own and invest in law firms. To all intents and purposes this opens the doors to banks, insurance companies, supermarkets and other corporate entities both owning and investing in existing law firms or alternatively setting up their own firms and marketing legal services to the general public.
Tony Williams, a former Clifford Chance Managing Partner, recently penned an article for the Times Online, http://business.timesonline.co.uk/tol/business/law/article2718339.ece referencing ten trends that will shape the legal market over the coming years. At trend number 4 the author commented that:
“Technology will enable projects to be ‘unbundled’. This may mean that parts of the project are outsourced to India and that they are done in a systemized manner. This could have a significant impact on the need for junior lawyers, particularly if they start to price themselves out of the market.”Trend number 6 stated:
“High Street legal services will be fundamentally transformed by the Legal Services Act. A number of major brands will dominate the provision of retail legal services. Will that be law firms, or outsiders such as supermarkets or banks? It is too soon to tell whether existing law firms will be able to develop strong enough retail brands.”
Finally, at trend number 7, the author went on to say:
“If the Clementi reforms (the forerunner to the Legal Services Bill) are broadly successful, one can expect firms higher up the chain to take in outside capital and float on the market.”

Over the coming years there will be an influx into the legal market of major corporate entities that previously were prohibited from providing legal services. I do not anticipate that in the near future banks and supermarkets will necessarily be providing high end, premium legal advice, however I do believe that these corporations will come to dominate the provision of routine, retail legal services. None of these corporations will be bound by the traditional and antiquated existing methods of legal services delivery. They will simply look for the most cost-effective method of providing legal services to the general public. These companies either already have offshore locations or have the capability to scale up significantly quicker than even the world’s largest law firms to provide legal support from offshore destinations. This in turn will have a domino effect and will inspire the world’s leading law firms to look at new operational models for delivering routine legal support, with offshore legal outsourcing being the logical choice.

In addition, the potential floatation of some firms “higher up the chain” only reinforces my belief that this will give the offshore legal outsourcing industry a huge boost. When major firms also have responsibility to their shareholders, as well as their clients, then the salaries that they pay their junior associates to perform relatively routine, offshoreable level legal work, will raise more than a few eyebrows. When corporate clients increasingly demand that law firms provide an offshore solution in responses to Requests for Proposals, shareholders will not be happy if the firm is incapable of responding to these requests.

The face of the legal profession in the U.K. is changing dramatically. These changes will have far reaching, cross-Atlantic repercussions. The U.K. and U.S. legal markets are inextricably linked, with many of the world’s leading law firms having offices on both sides of the pond. Together the U.S. and U.K. account for over 90% of the world’s $250 billion legal services market. What happens in the U.K. does not stay in the U.K. but will soon be felt all around the Western legal world.

The Future – What can’t be done?

I firmly believe that within 5 years, in a much consolidated industry, offshoring routine level legal work will have become the norm for the world’s leading law firms and corporations. Of the current 100 plus LPO providers, many will have ceased to exist and have been swallowed up by BPOs or will simply have gone out of business. We will have witnessed the development of clear and unequivocal ethical standards of practice and procedure relating specifically to the industry. New destinations and talent pools in Africa and South America which are currently virtually untapped will be in the process of being developed as the rupee continues its rise against an ever-decreasing dollar. I believe that as advances in technology continue to grow exponentially and the quality of the offshore attorneys improves that the question will move beyond what can offshore employees do to what can’t they do?

About the Author :

Mark Ross is a professional member of the IAOP, and Chapter Chair of the IAOP Legal Outsourcing Topic Chapter. He was formerly a partner at the UK law firm Underwoods Solicitors Underwoods is referred to as “a highly influential flagship firm and model for other firms…It has pioneered offshoring of legal work.”

Mark also developed a case management system for the offshoring of personal injury cases to South Africa. He immigrated to Los Angeles and joined LawScribe in 2006. He has been a regular speaker at legal conferences on outsourcing and offshoring and have had numerous articles published in legal journals on subjects as varied as: death of the hourly rate, liberalization of the Indian legal sector and the ongoing salary hikes by the US and UK’s top law firms. Mark can be contacted at mross@law-scribe.com or (818) 442-4615.

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer

SaaS has both pros and cons.

Some of the advantages of SaaS

1. Smaller IT resources.

2. Quicker implementation and faster training for the employees and thus reducing TCO (total cost of ownership).

3. Faster ROI due to lower up-front cost.

4. Lower hardware/software cost due to reduced investment in installing, upgrading and sustaining of enterprise system.

SaaS has some challenges that vendors have been successfully trying to address -

1. Loss of control: Because of Reliability/Uptime

2. Data security: This is a tough pill to swallow for the corporate executives. Can they trust third party vendors with the data?

3. Privacy of data: Who owns the data now?

4. Different integration need: How will the SaaS application integrate with the existing systems?

But, it’s not the cons of the On-Demand delivery model that is holding back the CIO’s of the large organization from joining the SaaS bandwagon. But, believe it or not, its one of the advantages of SaaS that is stirring up a political problem for the CIO. The main advantage of the SaaS delivery model is that it needs a smaller IT team. No need for large IT resource to integrate and sustain the traditional Enterprise application. Smaller IT department is great for reducing IT costs, but it creates the illusion of loss of power for the CIO. Typically, larger the department the more perceived power the executive possesses.

CIOs pretend that they need complex application, so that they can justify bigger budget and larger IT resource. If the enterprise application is outsourced (SaaS is a unique way of outsourcing) then suddenly there is no justification of a large organization. This development, in the tribal world of executives, leads to diminished power for the CIO (because he now has a smaller army).

In my view CIO should not fear the reduction of size of IT department. If the software systems that support tactical and non core businesses is outsourced then it frees up the resource to focus on the strategic aspect of the business. Identifying and implementing software systems that enables core competency of the organization will make the role of CIO more relevant to corporation.

Making a major impact on the business strategy the CIO can thus showcase real power in the boardroom even with a small organization.

About the Author:

Raj Sheelvant, Project Manager at Intel is passionate about aligning Information Technology with business needs. Business Process Re-engineering, IT Change Management, Management Training, IT Management, Globalization, IT Strategy, Leadership Development, Public Speaking are some of his wide area of interests.
Raj Sheelvant has served as A Project Lead at Intelidata and also as a Software Engineer at Braun Simmons, prior to his occupation as the IT Project Manager at Intel, Phoenix, Arizona Area.
Educated at the BDT Engineering College, he joined the University of Toledo to earn his MS, Engineering, 1990 - 1993. He is an MBA, International Management, 2005 - 2007, from the Arizona State University, W. P. Carey School of Business.

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer

I think it’s not only important for the managers but for the organization’s culture to recognize the importance of enabling the collaboration among employees with diverse background. But without proper training the HR department or the management do not have the right tools to maximize the productivity and take advantage of diversity within the organization. Most of the HR departments have diversity initiative that targets the issue only superficially (based on the skin color). That may be counterproductive and no one knows how to translate diversity initiative into maximizing profits for the organizations. Hence the diversity initiative end up being only one of the many ‘HR policies’ and managers don’t get very enthusiastic in implementing it. Hence they will try to do the minimal that is mandated by the corporate HR department.

According to Martha Maznevski, professor of organizational behavior and international management at IMD, Lausanne, Switzerland, only way to leverage diversity in the organization is for individuals to develop Cultural Intelligence. According to Martha, Cultural intelligence is an ability to look at situation from both business and cultural perspective simultaneously. The link to her video where she talks on how to leverage Cultural Intelligence to manage global (in other words diverse) resource is here. If you would rather read, here is the link to the transcript of that video.

The gist of it is: There are three components of Cultural intelligence that one need to master to manage people and thus enable lateral and bottom up communication globally

Knowledge: Ability to engage in learning other’s culture, getting historical and different perspective of a nation, religion, culture or ethnicity.

Skills: Ability to master Cross cultural communication and become an effective communicator

Mindfulness: Capacity to continuously learn from our own actions and to reflect on them.

Of the 3 components of Cultural Intelligence, I personally think being Mindful is the only way one can change their behavior or communication style over the period to time but ‘Mindfulness’ is a very hazy concept that cannot be quantified. The ‘Knowledge’ and ‘Skills ‘ can be taught. How does an organization influence and provide incentives to be ‘mindful’ or become ‘reflective’? Its this sticky aspect of embracing diversity which makes it very difficult for organizations to monitor progress. That is the primary reason when the organizations talk about diversity they are more focused on attaining superficial goals (i.e. X% of minority workers). They cannot coerce employees or manager to be ‘mindful’.

There is a tremendous potential if the organizations harnesses the collective intelligence of its work force that transcends every cultural barriers, but there is no easy way for organizations to provide incentives to change those behaviors. Mind you, being mindful is a powerful ability that will differentiate individual employee from crowd. As the Globalization of Labor continues, individuals that can fine tune their communication to be culturally sensitive will no doubt succeed.

About the Author:

Raj Sheelvant, Project Manager at Intel is passionate about aligning Information Technology with business needs. Business Process Re-engineering, IT Change Management, Management Training, IT Management, Globalization, IT Strategy, Leadership Development, Public Speaking are some of his wide area of interests.
Raj Sheelvant has served as A Project Lead at Intelidata and also as a Software Engineer at Braun Simmons, prior to his occupation as the IT Project Manager at Intel, Phoenix, Arizona Area.
Educated at the BDT Engineering College, he joined the University of Toledo to earn his MS, Engineering, 1990 - 1993. He is an MBA, International Management, 2005 - 2007, from the Arizona State University, W. P. Carey School of Business.

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer

Srikanth Velamakanni, an MBA from Indian Institute of Management (IIM), Ahmedabad and a BS in Electrical Engineering from the Indian Institute of Technology (IIT), Delhi is the young CEO and Co Founder of Fractal Analytics. He has led several assignments for Fractal Analytics assisting leading banks in carrying out their Retention Programs and Cross Sell Programs. Thinkingstreet got an opportunity to talk to Srikanth on Fractal Analytics is specific and his view on analytics industry is general. Here is the excerpt of our discussions.

ThinkingStreet: Business Analytics is increasingly becoming integral to marketing strategy especially for industries like banking, finance, retail, telecom etc. What is the future of business analytics and what are the upcoming sectors that are taking to analytics?

Srikanth: Management is moving from Art to Science. Organizations today are relying on data-led decisioning to scale-up and build competitive advantage. Use of analytics is seen as one of the key differentiators to compete in the fierce marketplace today and get the maximum return out of every marketing rupee spent.

Financial Services firms have been the first one off the block. It has been partly because of “risk management” being a critical function and analytics is the answer to that. But, they are also now using Analytics to identify their best customers, most profitable customers, most responsive customers, so on and so forth.

Now, Telecom companies are now getting into use of Analytics. Retail sector is still in the process of growing square footage in India and managing that process. Though there are few retailers with foresight to include the use of analytics as part of their business model itself.

ThinkingStreet: The major prerequisite for superior analysis is quality data. Considering a market like India where most of the transactions are cash in nature and adoption of concepts like credit cards, loyalty cards etc. is still in infancy; do you think we are covering just a small part of the story. How can analytics help in predicting the consumer behavior that is still out of the data loop?

Srikanth: Data build-up within a business goes through phases. There are three key drivers helping analytics today - businesses are now becoming more aware about the analytical power. Customer transactions are moving in data-friendly manner (e.g. transactions are moving to credit cards) and advancement in data warehousing technologies

One common myth within businesses is that “We cannot do analytics, as we do not have data”. Our experience is that businesses typically have huge data, but they are not in clean shape. Example - customer data or transaction data. Firms like ours are experts in managing dirty data. We convert seemingly unusable data to structured, analyzable shape by using advanced analytics.

ThinkingStreet: On the outsourcing front; analytics is a high end service for the global customer. What is Fractal’s experience with their international clients; especially in terms of acceptability of services provided from India?

Srikanth: Analytics is a mature industry especially in US. Clients are far more clear about what they are looking for. This makes it far more amenable to outsourcing. We have many Fortune 100 clients that are outsourcing analytics in a big way.

Another key driver for outsourcing analytics to India is the presence of mathematical talent in our country. Indians are far more quantitative friendly and is an ideal location to base Analytical engines for top organizations globally.

About Fractal

• Fractal works with more than 40 clients in 15 countries
• Every year Fractal builds over 200 customer behavior models that get implemented at businesses across the world
• Fractal works with 5 out of the 10 largest banks in Asia
• Fractal works with 3 of the largest Credit card issuers in India
• Fractal has grown at over 100% per annum for the last 2 years
• Fractal has consistently provided at least 20% reduction in delivery timelines through the usage of our data models, tools and processes
• Pioneered the development of Debit Scorecards, which is a scoring product for customers without adequate credit history
• Fractal has a global presence with offices in New York, Singapore and Mumbai
• Fractal has client presence in USA, Japan, Singapore, India, South Korea, Taiwan, Malaysia, Indonesia, Thailand, UAE

ThinkingStreet: To provide valuable insights to the client any team will need deep domain experience. In catering to international clients, do you see this requirement as a constraint for Fractal; especially for the industry where developed markets work in a very different way than India, when it comes to Analytics?

Srikanth: Domain expertise is critical for solving the kind of problems that we face. Fractal has been working in this area for more than 7 years now. We have a robust mechanism of synthesizing all our learning from hundreds of projects that we have executed in Financial Services, Retail, Telecom & CPG domains. We have our proprietary “Country specific data models” that help us in pulling together all our learning for solving that business problem in that country.

Organizations are becoming global today. The fact that we are working for banks in Asia, US & India actually helps us in transferring learning from one region to another.

ThinkingStreet: From the global sourcing perspective, in analytics, what kind of work can be easily off-shored and which ones are the most challenging?

Srikanth: Analytics straddle across Data Management, MIS reporting, predictive models development, through Business Consulting.

Generally, except for pure Business Consulting, we have been successfully executing analytical projects across the spectrum for our clients.

ThinkingStreet: How are the billing rates and margins in your industry, say in comparison to other outsourcing industry like IT services or equity research?

Srikanth: Analytics is considered a specialized service and is not commoditized as much say IT services. Specialized analytics consulting can command very good rates.

ThinkingStreet: What are the challenges your industry is facing; especially in global sourcing context?

Srikanth: Some of the challenges we face are the outsourcing mindset within US businesses and the talent shortage in the country.

ThinkingStreet: With Cognizant paying 135mn USD for MarketRx which is in a similar space as yours, how does the industry’s future look to you?

Srikanth: Very bright!

ThinkingStreet: What are Fractal Analytics business growth plans?

Srikanth: We have very aggressive plans to consolidate our strong position. We have opened two new delivery centers in India - one in Delhi, one in Kolkata. Our business plans is to grow more than 100% for next 2 years.

For Indian outsourcing providers, their business is evolving towards securing partnerships for innovation with their customers. It is therefore no longer only about cost-savings and taking on non-core activities. Now here is a challenge for them: How to go about obtaining enough specific internal knowledge from their customers in order to produce relevant value-adding innovation?

The reason why this is a challenge is that most organizations today still fail - or don’t even attempt - to build a knowledge based culture where knowledge sharing between all their employees is the norm.

If a customer’s key representatives only share knowledge and experience with their colleagues when they have to, why would they share more freely with external consultants?

In my experience, consultants usually obtain more information on a specific issue than internal managers, but that is usually due to their - justified or not - “impartial” and “more objective” status. It is also because employees are told to assist the consultant in any way they can because… hem… they are not cheap. But this actually only reinforce my point: For a true value-adding cooperation between an outsourcing firm and a customer organization, you cannot rely on people sharing knowledge only because they are told to do so, you need much more willing and systematic involvements.

To truly understand the issue, one must realise that the type of partnership that we are talking about here is of a new breed. It is not the classic consulting time-bound project with consultants walking in, gathering information, analysing it, developing then submitting a solution, and finally walking out. What is suggested here is a long-term relationship requiring systematic access to relevant information and sharing of knowledge and experience between the customer and the service provider.

Innovation does not happen in a vacuum but is very context-dependant. Furthermore, innovation is nearly always the product of collaboration between individuals/ teams/ companies.

Ok, so what is my point then? I do not claim to know all the consequences of this problem (I count on you all reading this to help out). I would only suggest this: Outsourcing firms should steam ahead offering new collaborative services to their most “knowledge focused” customers. With them, there should be no problem in co-generating innovation and value.
However, with the other customers still stuck in, pre-Knowledge economy, pre-Web 2.0 era with Industrial Age management methods, my advice is either stay clear of making too many promises, or alternatively first offer to assist them in transforming their organizational culture and foster knowledge-sharing.

To support the second option, I will quote a report on the recent KM India 2007 Summit

Comparing the current Knowledge Management (KM) movement with the Quality movement of [the] 80s, noted IT entrepreneur and Chairman & Managing Director of Mindtree Consulting Mr Ashok Soota said “Knowledge movement is the next important movement. It is like the Quality movement of past. CII and industry will promote this like we did with quality movement.” The Summit is being held in New Delhi from Nov 14-16.
Highlighting the importance of KM in today’s corporate world, quoting management guru Peter Drucker, Mr Soota said, “Today there are no poor countries, only ignorant countries! The same is true of companies.”

About the Author:

Peter-Anthony Glick is a French/American leaving in London, UK, and currently the UK IT Director for the Richemont Group. He joined Richemont in 1993 and held various IT positions since then.Peter-Anthony holds an MBA with the Open University Business School obtained in 2003. He has since grown a passion for Knowledge Management or how to leverage Organizational Knowledge to foster innovation and add value. He is a moderator of the ActKM listserve, an active participant of the David Gurteen Knowledge Cafés and online Forum and a member of the Systems Integrator KM Leaders group.

Peter-Anthony writes in a blog on Organizational Knowledge since Nov 2005 that has gained popularity among KM academics and practitioners.

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer

One of the challenges facing India for last mile connectivity to homes and offices is the stranglehold that the government owned telcos (BSNL and MTNL) have. While both are now pushing DSL to the home, the pace of deployment is not as rapid as India needs. In this context, what is interesting are the plans by many cities in the US to deploy wireless networks to provide a blanket of connectivity. This has two implications for India: first, we should be looking at similar technologies and plans; and second, the US deployment (along with usage in other international cities) will drive the cost of equipment lower making it much more affordable. Given India’s lack of legacy network infrastructure, city Wi-Fi networks make a lot of sense.
Recently, even as San Francisco announced that Google and Earthlink had won the bid to provide Wi-Fi across the city, Intel announced that it is working with Pune Municipal Corporation towards building the first Wi-Fi Indian city. The Economic Times wrote about the initiative:

The Pune municipality and Intel have reportedly teamed up to envelop 400 sq km of the town in Wi-Fi connectivity. That it will make Pune the first city to be so enabled is just one aspect of this development.
What is more important is the implication this development holds for telecom policy and regulation and for competition between different cities fighting to be the most attractive IT destination. This proposed Wi-Fi network, in one stroke, forces home the message that it is foolish to bet solely on traditional telecom networks.
Not only does a Wi-Fi enabled city offer subscribers wireless access to the internet all over, it also opens the doors to a widespread voice network based on voice-over-internet protocol (VoiP). Handsets that tune into Wi-Fi networks for VoiP calls have already been launched abroad. For traditional access networks, whether fixed or mobile, this surely is bad news.
That the Pune project will start off with an initial investment of just Rs 7 crore clearly implies that newer technologies such as Wi-Fi and Wi-max can perhaps be a cheaper option for rural telecom expansion.

India needs to leapfrog into a world of ubiquitous broadband connectivity and we need all the options we can get. Whether the last mile is DSL, cable, Metro Ethernet, fibre, or Wi-Fi, the next 12-18 months need to see Indian cities enveloped in connectivity. This digital infrastructure is as important as the physical infrastructure that is being developed. It is in this context that we need to look closely at Wi-Fi and its mesh variants.
TECH TALK: CITY WI-FI NETWORKS: THE US SCENE
The Economist discussed municipal Wi-Fi networks in a recent article (March 9):

Small municipal wireless networks, typically built for local-government use, have been up and running in some parts of America for some time. The far bolder idea of building citywide networks available to all took flight in August 2004, when plans for such a network were announced by John Street, the mayor of Philadelphia. Stringing transmitters across the entire city would create the world’s largest Wi-Fi hotspot, providing access both indoors and out.
This would extend low-cost broadband access to existing users frustrated by the slow speed and high cost of dial-up internet connections.
…
Mesh networking allows large areas to be blanketed with wireless coverage quickly and inexpensively. As its name suggests, a mesh network consists of an array of wireless access points, only a few of which are actually connected back to the internet via high-speed links (known as ?backhaul? connections). The trick is that all of the access points double as relays, passing packets of data to and from their neighbours. This connects up the mesh, so that users can access the internet at high speed at any of the access points. If the nearest access point does not have a backhaul connection, the packets of data that users send and receive simply make one or more hops across the mesh.
As well as being cheap and fast to set up partly because many of the access points can be attached to utility poles mesh networks have several other merits. They can provide coverage in areas, such as sprawling suburbs, where fast copper or fibre-optic connections are hard to come by.

The advantage of using Wi-Fi is that it operates in the unlicenced frequency bands. (In India, there may still be some licences required for the use.)
The Wall Street Journal (March 20) wrote: ?Most of the municipal networks use the same wireless technology, Wi-Fi, that provides Internet “hotspots” at coffee shops and airports. Small radio transponders are deployed on public buildings, street lamps, and streetlights, creating a network that consumers can connect to with their laptops almost anywhere in a city. That network itself is connected to the Internet. The cities often charge users around $15 a month for the service, though cities such as St. Cloud, Fla., are opting for free access. That compares with cable broadband bills that typically run around $40. DSL services from the large phone companies can run as low as $15 a month for slower speeds, but speeds closer to cable are roughly $30…EarthLink inked a deal with Philadelphia on March 1 to offer service there by putting radio transponders on 4,000 of the city’s street lamps. The service will be about $10 a month for low-income people, $20 a month for the general public. The company is bidding in a partnership with Google in San Francisco to offer a service that would be free at slow speeds, and would go for a moderate fee at higher speeds.
TECH TALK: CITY WI-FI NETWORKS: TAIPEI’S LEAD
Even as US cities consider and start rolling out Wi-Fi networks, one Asian city that has already started doing it is Taipei. The Wall Street Journal (January 19) wrote: “The network, initiated by the Taipei city government and built by a private company, already includes more than 3,300 wireless “access points” that cover half the city’s 106 square miles. The devices use the wireless Internet technology known as Wi-Fi to let Taipei’s 2.6 million residents surf the Internet or send emails from the privacy of their living rooms or the public comfort of their favorite park benches. Although the project has encountered some glitches and delays, city officials say that when it is completed around midyear, it will cover more than 90% of Taipei.”
The Taipei network is not cheap. The WSJ article adds: In August 2004, the government approved Q-ware Systems Inc., which beat out another local company in bidding. Construction started the following month. Q-ware, in turn, hired Nortel Networks Corp. of Brampton, Ontario to build, equip, and maintain the system…Q-ware says it is investing about $93 million to build the network.
An article in Forbes in 2005 provided some additional information:

The city of Taipei, Taiwan, is currently deploying a mesh network that will eventually blanket the city, installing wireless mesh antennas on street lamps, in train stations and on the side of buildings. “This is the first time a city of 272 square kilometers could be wholly covered by a wireless LAN,” says Mayor Ying-jeou Ma.
…More than 10,000 wireless access points will be in service, providing coverage to 90% percent of Taipei’s 2.65 million citizens.
The mesh technology provides an easy way to deliver broadband Internet access to every citizen of Taipei. “Wireless LANs solve the problem of the last mile, particularly in a metropolitan area,” says Ma. When completed, the wireless network will be used for everything from public safety applications to providing a pervasive network for Internet telephony and Wi-Fi cell phones. “The business models remain to be invented, but this is a trend that is inevitable,” says Ma.

Additional details of Taipei’s network are available here. The network, dubbed WIFLY, costs NT399 (Rs 550, $12) per month.
In many Asian cities, Wi-Fi co-exists with multiple other solutions. But in countries like India, it can become the primary form of access. With the government in India reluctant to open up the last mile access of the telcos to competition, wireless mesh networks using unlicenced spectrum are what the country needs.
TECH TALK: CITY WI-FI NETWORKS: MESH TECHNOLOGY
A technology overview of wireless mesh networks is provided by Wikipedia:

Wireless mesh networking is mesh networking implemented over a Wireless LAN.
This type of Internet infrastructure is decentralized, relatively inexpensive, and very reliable and resilient, as each node need only transmit as far as the next node. Nodes act as repeaters to transmit data from nearby nodes to peers that are too far away to reach, resulting in a network that can span large distances, especially over rough or difficult terrain. Mesh networks are also extremely reliable, as each node is connected to several other nodes. If one node drops out of the network, due to hardware failure or any other reason, its neighbours simply find another route. Extra capacity can be installed by simply adding more nodes. Mesh networks may involve either fixed or mobile devices. The solutions are as diverse as communications in difficult environments such as emergency situations, tunnels and oil rigs to battlefield surveillance and high speed mobile video applications on board public transport or real time racing car telemetry. The best mobile networks are those such as Motorola’s which provide a seamless handover between the mobile device and the fixed infrastructure points.
The principle is similar to the way packets travel around the wired Internet data will hop from one device to another until it reaches a given destination. Dynamic routing capabilities included in each device allow this to happen. To implement such dynamic routing capabilities, each device needs to communicate its routing information to every device it connects with, “almost in real time”. Each device then determines what to do with the data it receives either pass it on to the next device or keep it.

An article in Business Communications Review (January 2006) discussed the pros and cons of wireless mesh networks (WMNs). David Axner wrote: “A WMN is easier to install and is less expensive than wired networks, since it uses radio signals instead of cable to connect nodes. Resiliency is a key atrribute of WMNs…Mesh networks also have their down side. WMNs can suffer from bandwidth degradation, radio interference, and per-hop latency as networks grow. The BCR articles also discusses various technologies from companies like BelAir, Firetide, PacketHop, MeshDynamics, Motorola, Nortel, SkyPilot, Strix and Tropos. [Google and Earthlink are planning to deploy Tropos’ technology for San Francisco.]

TECH TALK: CITY WI-FI NETWORKS: THE INDIA OPPORTUNITY
In emerging markets like India, there are five elements that need to come together to provide an end-to-end solution for computing and connectivity.
First, build a city-wide wireless mesh network. This will provide the connectivity fabric and provide an alternative to getting DSL or cable (or waiting for WiMax). The key price point for this connectivity needs to be around Rs 200-250 ($4.50-$5.50) per month.
Second, use a variety of access devices to connect to the network. These could be PCs or network computers. (One of the companies I have helped co-found, Novatium, has just such a solution the Nova NetPC.) We will also see mobile devices like the Nokia 770 and phones with Wi-Fi built in connecting to the mesh network.
Third, provide a backend computing and storage grid. This helps centralise computing and provides for seamless mobility for users. It also makes computing much more affordable and manageable.
Fourth, provide applications and content from a centralised grid to users over the wireless mesh networks.
Finally, use advertising to reduce the price that users have to pay for the service.
The key is to be able to offer the base service for no more than $10 (Rs 450) a month for the entire solution (device, connectivity and services), with additional revenue possible through value-added services.
This is what will make computing and the Internet take off in India. At Rs 450 a month, computing will become much more affordable. The wireless mesh networks help in rapid deployment. Customers can buy the access device (PC or network computer) independently and ‘plug’ it into the wireless envelope.
India needs to rapidly proliferate broadband and computers across homes, schools and small- and medium-sized enterprises. The use of network computers along with city wireless networks is a giant step in bringing tomorrow’s world to life. From a laggard in broadband and computing, India can be a leader in this space and a beacon for other emerging markets.

About Author:

Rajesh Jain considers IndiaWorld, to be one among his successful venture which was launched by him in 1995 and was acquired by Sify in November 1999 for USD 115 million. Today IndiaWorld is the largest collection of India-centric websites, comprising Samachar, Khel, Khoj .

Rajesh is a member of Sify’s Advisory Board, and Managing Director of Netcore Solutions, an Enterprise Messaging Solutions Company.

Rajesh has done his M.S. in Electrical Engineering from Columbia University, New York in 1989. Having worked at NYNEX Science and Technology for 2 years he returned to India in 1992 He currently writes his personal blog at Emergic and looks forward to offer cost-effective technology solutions for small and medium enterprises (SMEs) in emerging markets like India.

Views expressed here belong to the author and do not represent those of Thinkingstreet or the author’s employer.

What next in offshoring? Different folks will give different responses - Analytics, KPO, CRO, Moving up value chain, Product Development, Engineering Services, Consulting, Higher domain knowledge, Channel Development etc . This is like few blind men trying to describe an elephant. All are probably right in their own way but all are missing the big picture. This big picture in my opinion is offshoring for growth and innovation.

To understand future, we need to step back in past. The decade of 80’s was the decade of operation improvement in manufacturing, which was initially propagated by Japanese - JIT, Kenzen etc.

Later in 90’s, this operational improvement movement transformed into business process reengineering and six sigma, which was adopted by likes of GE and Motorola. The manufacturing out sourcing and later offshoring were logical extension of operations improvement exercise as it gave equivalent or even better quality at less cost. IT services outsourcing and later Business Process Outsourcing emerged as a next step in operation improvement after manufacturing outsourcing and offshoring. There is no wonder that pioneers in outsourcing and offshoring were once again companies like GE etc. The influence of six sigma and GE culture was such that GE top executives were in top demand for CXO level openings in the corporate world.

Now, companies having squeezed the maximum out of operations improvement for last few years , are facing their biggest challenge ever : how to grow in this complex and globalized world ? The signs of this shift from operations improvement to growth and innovation are visible all around us. The ousting of high profile GE culture CEO’s such as Robert Nardelli (Home Depot) and James McNerney ( 3M), and the reorienting of companies such as Home Depot and 3M back to growth and innovation is the sign of things to follow.

So, having established itself as a tool for cost cutting and operational improvement, if Offshoring is able to help companies in growth and innovation, then that will be next big thing in Offshoring.

How to distinguish between offshoring for operations improvement and offshoring for growth and innovation? Offshoring for growth and innovation is offshoring that directly helps in new revenue generating activities instead of reducing cost of existing revenue generating activities. However, skeptics may question, in a way we are reducing cost only so what is the difference? The difference is of orientation, end results, measurement criterias and most importantly, who is the buyer of these services? In offshoring for growth and innovation, end results are new products and insights, measurement criterias apart from cost and quality are time to market and end customer needs and buyers are sales and marketing, product development and channels folks rather than operations and IT folks.

Some of the examples of offshoring for growth and innovation:

• New products that were not financially viable earlier can now be done using offshore resources such as offshore equity research, which helps research houses to increase research coverage of more number of target companies ( KPO)
• Companies can use offshore resources to generate more insights about customers and develop better offerings , thus generate additional revenue ( Analytics )
• Companies can use offshore resources for doing market research on customers, competitors, markets and new technologies and developing their growth strategies accordingly ( Market Research )
• Companies can use offshore resources for reducing cost and time of new product development , thereby increasing products and chances of revenue growth ( Engineering Services, CRO )
• Companies can use offshore resources to provide consulting services about growth markets, which can help companies in developing and executing growth plans ( Consulting )
• Companies can use offshore resources in developing new low cost products especially for new customer segments and markets ( Product development )
• Companies can use offshore resource in developing new cost effective channels for selling products and services at low cost such as web enablement for traditional companies ( New Channels )

Further, offshoring for growth and innovation can act as a leveler for SME’s. Apart from big companies, SME’s can also leverage some of the services for growth and innovation using offshoring such as Consulting, Analytics, New products and Channels , which SME’s couldn’t afford earlier.

Is this the real big picture of what next in offshoring or am I another blind man with my own version of elephant? Only time will answer.

About Author:

Pareekh is currently handling business planning in a large MNC. Earlier he has worked as a management consultant advising on globalization and as a geek software developer. He has seen the industry from all three perspectives - Buyer, Service Provider and Advisor. What next in telecom, technology and globalization? He constantly seeks answer to this. He is alumnus of IIT Delhi and IIM Bangalore and can be reached at pareekhjain[AT]gmail.com

Views expressed here belong to the author and do not represent those of the ThinkingStreet or the author’s employer.

Why Consider Outsourcing?

All software companies and corporate IT departments are faced with the challenge of increased demands to produce quality software faster. At the same time, they are pressured to reduce costs, either to become more competitive, or because of budget reductions. In short, everyone wants to do more with less. And most of these organizations consider outsourcing as a means to increase their capacity while reducing overall costs.

Those companies that decide to outsource some of their software development must determine how much work to outsource,

who to outsource with, and how to adapt their processes to meet the new-to-them challenges of managing geographically distributed teams.

This article focuses only on the different team structures and communication methods. We also limit the analysis to teams that utilize outsourcing to teams that are in a significantly different time zone. This temporal distribution has a greater affect on communication that geographic disbursement.

Process Overview

There are many ways to structure your development process, but they all share a common description at a high level.

Steps in a software development process

1. Someone identifies market opportunities and captures the results.
2. Someone determines which of those opportunities should be addressed in software and creates captures the results of that analysis.
3. Someone designs a software solution based upon those software requirements.
4. Someone implements a software solution (writes code & tests) that realizes the documented design.

Diagram from Software Requirements - Process and Roles (Tynerblain)

Given this general process flow can be summarized as:

• Determine what is worth doing
• Decide what to do in software
• Decide how to do it
• Do it

And the challenges of doing it are primarily challenges of communication. Certainly individuals need to be capable of doing the individual jobs, but if people don’t have sufficient skills, then no process will yield success. So we’ll assume that people are good - and they usually are - and address the places where process might get in their way.

The Biggest Challenge for Software Teams

In any process like this, where each step relies on the previous step (implementation requires design, etc), you have to focus on communication. There is a lot of communication in a well-functioning software organization - so a lot can go wrong. This article focuses on the communication of intent.

• Why are we doing what we’re doing?
• What is it that I should be doing?
• How do I know if I’ve done it right?

Each person on the team will ask these questions, and each person will have a different answer. As the following diagram shows, a lead developer / designer will answer “Why?” with “Because it is in the requirements”, while a developer on the team will answer the same question with “Because it is in the design.” The following diagram shows how different members of the team define why, what, and how.

Diagram from Communicating Intent With Implementers (Tynerblain).

Different Outsourcing Models

There are basically four different models for organizing your software development team.

1. Insourcing - all of the team members are in the same time zone.
2. Low-level Outsourcing - only the simplest implementation work is outsourced.
3. High-level Outsourcing - some of the higher value technical work is outsourced.
4. Complete Technical Outsourcing - all technical work is outsourced

We make one simplifying assumption - that technical implementation work involves both testing and development. Some teams will outsource only testing efforts, which is a viable approach. And those teams could outsource their quality assurance efforts in any of the four models above. The same basic ideas apply, and we are consolidating our descriptions - primarily because there are benefits to having the same team responsible for both QA and development of the “same level of work.”

In each of the following diagrams, each area surrounded by a dashed-line border is the responsibility of the person (or people) within that area. All of the maroon arrows represent communication or transfers of responsibility among team members within that area. Maroon arrows represent communication across area boundaries, but still between team members who are co-located.

When areas of responsibility are outsourced, they are drawn with a pale blue background to indicate that the team members are not co-located with other team members. Communicating across these boundaries is drawn with blue arrows - indicating that this communication is across the geographic and temporal boundaries that are created when outsourcing.

All of the diagrams show the flow of information in only one direction. This is only to simplify the diagrams. There are feedback loops throughout the process, and they are importa