Francois Zielemans's Blog (16)

A while ago I was asked to give my opinion on the proposition “when outsourcing is benchmarking required to prevent a failure” by an editor of an IT magazine. My first thought was: of course it is, as including a benchmark clause in a contract was standard practice when I drafted a contract. But then I thought again and come to a less back-and-white conclusion.



Benchmarking before or during the contract period is common good and big business for companies like Gartner, Alsbridge and… Continue

A while ago I wrote a blog on sustainability and how it might provide BPO vendors a competitive advantage. I see a lot of activities within Europe and U.S. in that area and thus wanted to share some of my observations. Especially on how technology will increasingly be an enabler of increased energy efficiency. A topic which is also becoming of increased importance to offshore BPO vendors with…

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Car manufacturers started in the seventies with optimizing their value chain by outsourcing activities and has since then progressed into almost every aspect of our economy. Think of Indians analyzing x-ray pictures for European/American hospitals, South Africans administering mortgage requests and Philippine’s doing the salary administration. The main drivers behind this wave of outsourcing are technological advances and the breaking down of national trade barriers.



The same…

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Getting outsourcing contracts to comply with Solvency II is not rocket science, but requires a certain amount of attention. Here are some practical guidelines.



Where within banks the Basel II implementation projects come to an end, are insurers burning the midnight oil to get Solvency II implemented before the end of 2012. The Solvency II legislation is aimed at improving risk management practices within insurance companies and providing better protection for policyholders. For this…

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One of the effects of the recent economic meltdown is American and Western European consumers looking for cheaper products. Many are shaken and struggle to pay off existing loans, let alone feel comfortable to engage new ones. At the same time are billions of consumers in Asia, South America and in a lesser extent Africa, entering the middle class. But a middle class which can only afford cheap products. Companies react to these developments by producing cheaper products and services, like…

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Centralization of IT or processes like finance, HR administration offers the ability to rationalize and standardize processes, allowing for lower cost, more consistent quality level and faster decision making. As voters expect their ministries and other government agencies to eat as little as their tax money as possible (especially in these times of economic hardship in the US and Europe), is sharing resources and processes a useful vehicle to achieve that goal.



As a result many… Continue

I recently started to write a book and I will share some parts of it on BPOVoice. In the first chapter of the book I write about business and IT trends and globalisation is ofcourse an important trend which shaped current sourcing practises. Because I worked and lived for a year in India (Bangalore) I also wrote a small piece on the effects of globalisation on India. This text I want to share in this blog.



After the fall of the Berlin Wall, countries such as India, China and Russia…

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Usually sustainability is thought of as cutting down CO2 emissions and planting more trees. But sustainability is more than just acquiring a green image. It is another way to look at your own company, the external environment and thus also your sourcing strategy. Organizations can actually profit from better financial results by a smart application of the modern aspects of this theme. Two situations as examples.



A large oil and gas company outsourced a part of its BPO activities to… Continue

Many outsourcing contracts are still driven by the aim to cut cost. Cutting cost can be achieved by economies of scale and standardization of similar activities and assets. This means that the scope of typically outsource contracts is defined in terms functional area’s or processes (e.g. IT infrastructure support, payroll, logistics).



Many of the functional area’s or business processes being outsourced can often indeed be split off without large consequences for the retained… Continue

Centralisation, either in a shared service center or another form, promises lower cost, a more consistent quality level and faster decision making by consolidation of responsibilities. Putting theory to practice is however not always that simple.



Cultural difference, disagreement over the new process standard and lack of governance by the internal ‘clients’ towards the SSC are well known issues which may limit the realization of benefits. As these issues have been discussed already… Continue

The use of financial business cases to guide sourcing decisions is common practice. And with the current pressure on lowering cost, needs even the smallest investment to be accompanied with a business case showing a solid financial return. The effectiveness of the typical financial business case can be further improved in two key area’s. These are:

-Monitoring whether the expected return and investment envisioned in the business case materialize and,

- The limitations of the standard… Continue

Due to the economic crisis many companies deployed aggressive scenario’s to cut cost. This resulted among others in stretching the definition of ‘non-core’ activities in order to outsource them to an external party (including selling off offshore captives to cash rich vendors).



The pressure to cut cost thus resulted in a substantial volume of small to medium sized outsourcing deals which were a) focused on cost only and b) closed in record time. Deals were therefore executed with the… Continue

Amy Chua (professor at Yale University) investigated how countries become so called ‘hyper powers’ and than fall. She investigated the rise and fall of the Roman empire, Persian empire, Tang empire in China, Mongolian empire, Dutch empire and the English empire. The main finding of her is that tolerance towards people with other believes and culture is one of the main preconditions to become a hyperpower. One of the reasons the United States was/is a hyperpower is their tolerance towards its… Continue

Usually sustainability is thought of as cutting down CO2 emissions and planting more trees. But sustainability is more than just acquiring a green image. It is another way to look at your own company, the external environment and thus also your sourcing strategy. Organizations can actually profit from better financial results by a smart application of the modern aspects of this theme. An example:



A large oil and gas company outsourced a part of its BPO activities to Asian supplier.… Continue

Companies outsourcing activities to a third party need to think about suitable mechanisms to understand the control environment of the service providers. A popular, expensive and often misused tool to achieve this insight is by a Statement on Auditing Standards number 70 (SAS 70) report.



SAS 70 is based on SAS 55 (Consideration of Internal Control in a Financial Statement Audit) and on the Committee of Sponsoring Organisations of the Treadway Commission (COSO) framework. SAS 70… Continue

A recent survey by Colemen Parks shows that 90% of senior decision makers believe that the business cycles remain very volatile in the coming years and 80% believe that their organizations should become more flexible in their approach of business and technology.



Business agility and common sourcing practices in IT are two words which are drifting apart. And the gap between both worlds increases only with the current pressures on cost (see also this… Continue