Page 79 - DCAP307_PLANNING_AND_MANAGING_IT_INFRASTRUCTURE

Unit 4: Business Process and IT Outsourcing

Notes
Example: Bangalore, with a population of about 6.5 million, is India’s fifth-largest
metropolitan area. It often is compared with the Silicon Valley in the United States because
many outsourcing service providers have offices there, including Infosys, IBM, Tata Consultancy
Services, and Wipro. India’s outsourcing industry is an important source of national income,
and so it is a prime target of terrorist groups. Indian authorities arrested a suspected member of
a terrorist group for plotting attacks on several Bangalore outsourcing firms in 2006. In October
2006, these outsourcing firms closed their Bangalore facilities due to a public sector strike
related to a border dispute. In January 2007, they shut down operations because of riots between
Muslims and Hindus. In February 2007, they did not open their offices due to a labour strike
over a court decision on water distribution from a nearby river.
Other factors when considering location include the availability and reliability of high-speed
communications networks and power grids, the availability of sufficiently trained workers, and
the effectiveness of the outsourcing firm’s national legal system in protecting intellectual
property, including copyrights, trade secrets and patents. Of course, the challenges of outsourcing
become even more difficult when the work is being done in a country that has significant
language, cultural, and time zone differences. Such considerations may force a firm to change its
initial choice of outsourcing service partner.
Box 4.2 summarises the factors to consider when evaluating service provider locations.

Box 4.2: Factors for Evaluating the Location of an Outsourcing Provider

Factors
Potential for business disruption has been addressed adequately by the provider through
use of effective backup and alternate business recovery sites
Access to high-speed, reliable communications networks is readily available
Access to reliable power grids is readily available
Provider had access to an adequate supply of sufficently trained workes
National legal system supports and enforces the protection of intellectual property

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Chapter%204%20Business%20Process%20And%20IT%20Outsourcing.pdf
4.5.5 Benchmarking Existing Service Levels

Before signing an outsourcing contract, an organisation should benchmark its existing service
levels so that it knows how well the services are being delivered and it knows the associated
costs. This benchmark can then be used to establish a reasonable baseline for negotiating target
results and costs from the outsourcing service provider. The agreed-to targets are then used to
define the service-level agreement (SLA) of the contract.
A key to effective benchmarking is choosing the right measures to evaluate the performance of
the process. Remember, you get what you measure.

Example: Reasonable metrics for a call centre might be to measure average hold time for
customers or the number of abandoned calls. Measuring these parameters and trying to improve
performance would lead to better results for the firm and the customer. On the other hand,
setting a measure for the average number of calls handled per customer service agent may lead
to counter productive behaviour. The agent might not fully listen to the customer and cut the
call short to get to the next call.

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