Strategies to Address Regulation in Sourcing

International Association of Outsourcing Professionals (IAOP)
Copyright © W Group, Inc. All Rights Reserved. | 1|
Strategies to Address
Regulation in Sourcing
Tony Ioele, Managing Principal, WGroup
Domenic Colasante, Chief Marketing Officer, WGroup

About WGroup
http://www.thinkwgroup.com
Management Consulting
 Founded in 2004
 Specialized in Technology and Business Strategy and
Operations
 Support Fortune 1000 across all Industries
 Growing 32% CAGR 2014-2016
People
 Average 25 Years’ Experience
 Former CIOs, COOs, CFOs, & Executives
 Sr. Partner level only – not a leveraged model
 Non-prescriptive and Practical
Value-focused
 Strategic Alignment to Business
 Realization of Business Outcomes
 Revenue Improvement
 Cost Reduction and Containment
 Agnostic (technology, provider and outcome)
Services
 IT Strategy
 IT Service Delivery Transformation
 IT Sourcing and VMO (full lifecycle)
 Transformation (M&A, Cloud, Automation)
 Program Leadership

Tony Ioele, Managing Principal
Prior Roles:
 Interim CIO, SterlingBackcheck
 Interim CTO, Clarient Global,
a DTCC Company
 Head of Shared Application Engineering,
ING
 Head of Service Management, ING
 Head of Solutions Delivery, ING
 VP Applications Development and Integration,
Alliance Consulting
 VP, Citi
Consulting Expertise:
 Shared Services Strategy
 Shared Services Transformation
 Service and Process Assessments
 Sourcing Strategy
 Outsourcing RFP through Transition
 IT Service Transformation
 Process and IT Design and Transformation
 Contract Restructuring and Negotiation
 Service Provider Sourcing Selection
Educational Background:
 Masters Certificate, Applied Project Management, Villanova
 BS, East Stroudsburg University of PA
Tony Ioele has more than 25 years
of experience across the
Information Technology disciplines.
Tony brings strategic direction,
architectural process, customer-
focus and rapid development to the
discipline of Applications,
Infrastructure Services and
Operations. Tony is known for his
astute sourcing and vendor
stewardship focus.

Protectionism and Outsourcing
- Brace for Impact”
Trump's Presidency Could Sound Death
Knell for Offshore Outsourcing
Two Impact Areas
Offshoring Regulation and Tax
Policy
1 http://www.cio.com/article/3180703/leadership-management/protectionism-and-outsourcing-brace-for-impact.html
2 http://www.cio.com/article/3146126/outsourcing/trump-presidency-could-sound-death-knell-for-it-outsourcing.html
H-1B Temporary Worker Visas
4/3: Trump Administration Halts Expedited Processing
of H-1B Visas
4/18: Trump Administration orders government wide
review of H-1B program. Directs several cabinet
secretaries to suggest changes “as soon as practical.”
Possibilities:
 Lowering number of visas granted (85,000 today)
 Random Lottery  Skill / Level Based
 Raising Salary Minimum from 60K  $100K+
 Shift Industry Focus out of Tech
http://money.cnn.com/2017/03/04/news/economy/h1b-visa-expedited-suspended-reaction/
http://www.economist.com/news/business/21714994-it-firms-need-upgrade-face-technological-and-political-
shifts-indian-outsourcing

H-1B Visa Distribution
Rank 2014 2015 2016
1
Infosys Limited
(24,508)
Infosys Limited
(24,334)
Infosys Limited
(25,035)
2
Tata Consultancy
Services (13,371)
Tata Consultancy
Services (14,675)
Tata Consultancy
Services (11,216)
3
Wipro Limited
(8,901)
Wipro Limited
(9,671)
Capgemini America
Inc.
(10,376)
4 Accenture (7,054)
IBM India Private
(9,429))
IBM India Private
(8,452)
5
Deloitte Consulting
(6,370)
Deloitte Consulting
(6,486)
Tech Mahindra-
America
(7,881)
6
IBM India Private
(4,432)
Accenture LLP (6,450))
Accenture
(7,402)
7
HCL America, Inc.
(4,334)
HCL America, Inc.
(4,838)
Wipro Limited
(6,905)
8
Ernst & Young U.S.
(3,949)
Microsoft Corp.
(4,128))
Deloitte Consulting
(5,783)
9
Microsoft Corp.
(3,367)
Igate Technologies Inc.
(4,048))
Ernst & Young U.S.
(4,701)
10
Igate Technologies Inc.
(3,066)
Ernst & Young U.S.
(3,603)
Google
(4,358)
0% 20% 40% 60% 80%
Medicine and Health
Education
Administrative Specializations
Architecture, Engineering and
Surveying
Computer Related
Top 5 Occupations for H-1B Visa Holders in
FY14
http://www.ciodive.com/news/4-things-to-know-about-the-h-1b-program/439570/

H-1B Distribution
Fortune, 2017
http://fortune.com/2017/04/19/h1b-visa-applicants-wages-locations/

Service Provider Impact
2017 Layoffs: Cognizant, IBM, L&T, Capgemini, Wipro, Infosys, TCS… : 57,000+
Market Consolidation
Atos/Xerox, Capgemini/IGATE, HPE/CSC, NTT/Dell
Increasing CompetitionDownward Pricing Pressure
Declining Benefits of Labor Arbitrage + Cloud + Automation
http://www.hindustantimes.com/business-news/cognizant-layoffs-2017-may-not-be-the-best-year-for-jobs-in-
it-and-tech-companies/story-gqlAvyhP2eZ9bFGB7pV8SI.html
http://zeenews.india.com/companies/cognizant-to-layoff-6000-employees_1988237.html

2017 Layoffs: Cognizant, IBM, L&T, Capgemini, Wipro, Infosys, TCS… : 57,000+
Market Consolidation
Atos/Xerox, Capgemini/IGATE, HPE/CSC, NTT/Dell
Service Provider Impact
Increasing CompetitionDownward Pricing Pressure
Declining Benefits of Labor Arbitrage + Cloud + Automation
Tax Policy
http://www.hindustantimes.com/business-news/cognizant-layoffs-2017-may-not-be-the-best-year-for-jobs-in-
it-and-tech-companies/story-gqlAvyhP2eZ9bFGB7pV8SI.html
http://zeenews.india.com/companies/cognizant-to-layoff-6000-employees_1988237.html

Service Provider Reactions
Changes to the Visa program could shave
as much as 300 basis points off our
margin.
Milind Kulkarni CFO, Tech Mahindra
We are not overly concerned because we have already
increased local hiring.
Vishal Sikkah Chief Executive, Infosys
TCS, Infosys, and Wipro gathered in New Delhi to discuss a plan
to address the skill shortage in the U.S. by setting up schools in
the U.S.’s Rust Belt towns to train local workers to do simple IT
jobs.
Wall Street Journal
January 2017
We are moving towards "Hyper
Automation”
Abidali Neemuchwala, CEO, Wipro
June 2016
India’s outsourcing giant Infosys is hiring
10,000 American workers
Reuters
May 2017
January 2017
March 2017
The new Ignite My Future in School will roll out to 10 US
school districts and will include 3,000 TCS employees to build
local collations.
Tata Consultancy Services (TCS)
March 2017
https://qz.com/973316/infosys-hiring-giving-in-to-trumps-bullying-indias-outsourcing-giant-is-hiring-10000-american-workers/
http://economictimes.indiatimes.com/articleshow/56881815.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
http://www.cio.com/article/3162427/careers-staffing/it-service-providers-prepare-for-potential-h-1b-visa-changes.html
https://www.pressreader.com/india/business-standard/20170309/281496456080820
http://www.indiatimes.com/news/world/3000-software-engineers-might-get-fired-at-wipro-after-artificial-intelligence-learns-to-do-all-their-
jobs-256519.html
https://www.tcs.com/tcs-and-discovery-education-partner-to-prepare-one-million-students-for-21st-century-careers

Strategies for Action
Issue Probability Impact Mitigation
Offshore Sourcing Regulations High Medium …
Competitive Pricing Change Low Medium …
Supply Chain Disruption Medium High …
Security Breach High High …
Define Your Risk Profile
 Evaluate your exposure (Scope, US Activity, Spend, Contracts, Vendors, Headcount, etc)
 Challenge your Sourcing Assumptions Based on a different Risk profile
 Vendor Management Must Own
 Manage in the same way as an Enterprise Risk

Active Contract Review

Focus on Flexibility
 Eliminate minimum revenue commitments
 Ability to terminate by service or tower by convenience, or if
deal is uneconomical
 Flexibility to shift locale of work delivery location,
within existing contract
 Get protection for change in laws. Do not
agree to price increase clauses.
 Change pricing models from labor-based to
resource unit and outcomes based.

Understand the Current Labor Delivery Model – Can it be Modified?
 ASK to understand how the resources are sourced
 Be wary of “Landed” resource contracts leveraging high numbers of H-1B Visas
 Alternative visa mechanisms
– F-1 OPT Visa for students during degree completion efforts (27 month working max)
– L-1 Visa for transferring specialized workers from other corporate-owned
international locations to US.
– H-2B Visa for seasonal work lasting
less than 1 year
– O-1 Visa for extraordinary talent
that is “best” in their field
– Green Card submission

Diversify Vendor and Delivery Location Mix
 Question your assumptions for the service delivery mix.
 Reduce dependence on models with exclusive
dependence on offshore labor.
 Adopt hybrid and multi-vendor sourcing strategies.
 Does your vendor lead with automation, or selectively add
it to protect margin?
 Consider leveraging a multi-shore service provider,
with broader capabilities than one region alone.

Look for On-Shore Sourcing Opportunities
Nexient a domestic pure-play technology services provider,
with a core strength in agile software development. HQ in Ann
Arbor, Michigan.
IAOP Phila. Chapter Sponsor
https://www.nexient.com/
Rural Sourcing Inc, RSI, is a US-based IT outsourcing
company that provides a cost effective, agile approach to
software development, support and maintenance.
https://www.ruralsourcing.com/
Onshore Outsourcing provides Americans and veterans in rural
communities stable and rewarding IT careers.
http://www.onshoreoutsourcing.com/
Saturn Systems is a 100% US-based company providing
custom software development, quality assurance and staff
augmentation services across all industries.
http://www.saturnsys.com/
QAT Global’s Rural Sourcing Centers provide enterprise
solution development services: legacy modernization, cloud
computing, big data & analytics, web & mobile apps, and
integrations.
http://www.qat.com/

Invest in Recruiting Capabilities
 Will you be able to find US-Based resources if you need to?
 The war for talent is accelerating - expect an aggressive market for
top talent resources.
 Form relationships with US-Based staffing firms.
 What is your brand? Have you looked at social media (i.e. Glassdoor,
Indeed, Vault). Are you an employer of choice? What can be done to
improve your image within the job market?

New Service Delivery Approaches, Automation, and New Technologies
 Labor arbitrage is over. Look for opportunities for labor elimination.
 Top process candidates – repetitive,
highly standardized, areas with
high turnover
 DevOps delivery models that
require less offshore labor

Automation
 Standard and Repetitive Functions
 Virtual Customer Assistants
 Smart Advisors
 Virtual Personal Assistant
 Automated Diagnostics and Repair Agents
 Predictive Analytics
 Sentiment Analysis
 Dynamic Upsell/Cross-sell Recommendations
 Knowledge Management and Organization
 Language Translation
 Natural-language Question Answering
 Data Entry and Data Cleansing Automation
 Workflow Process Automation
 Test Automation
Pricing varies among all, from “Per Robot,” to “Per Process,” to “Per Outcome.”
Solutions must be evaluated in connection with the business case for improvement.
Pure Play Automation Technologies:
Service Provider Automation:
Partnered with Pure Plays, or with their own
Automation has potential to allow headcount reassignment.
However, we see its value predominantly as an optimization and functional acceleration technology.

Bill Gates on Automation
https://qz.com/911968/bill-gates-the-robot-that-takes-your-job-should-pay-taxes/

Robot Tax
WGroup Perspective – Do not let the potential ‘Robot Tax’ impact decision making.
 Benefits will be positive, even with a tax.
 Automation drives process efficiency and forces standardization.
 Automation accelerates speed of operations and can improve the customer experience.
 Automation contributes to reducing security risk.
 We are in a Tax Abatement period now, take advantage of it.
While Gates is right that robots–not just traditional industrial robots,
but all sorts of artificial intelligence applications–are indeed likely to
automate a lot of work over the next 20 years, computer automation
is actually increasing employment in most industries, so taxing
robots would just slow job growth and limit economic
opportunity for millions.
Fortune, February 2017
Tax revenue is essential for training and for
making new, irreplaceable jobs available to
human workers.
CNBC
February 2017
http://www.cnbc.com/2017/02/17/bill-gates-job-stealing-robots-should-pay-income-taxes.html
http://fortune.com/2017/02/25/bill-gates-robot-tax-automation-jobs/

WGroup is a Differentiated Advisory Firm
 Modernize while Maintaining
 Pervasive Automation
 Cloud Orchestration
 Metrics Aligned to Outcomes
 Other Firms:10-15%
 WGroup Minimum: 20%
 WGroup Average Save: 48%
 We’ll Put Our Fees at Risk
 Execution in Weeks,
not 6+ Months
 Agile Approach without an RFP
 Data Driven Analysis
 Flexibility
 Location Rebalancing
 Hybrid Delivery & Multi-Sourcing
 Eliminate Min. Rev. Commits
 Provider Upfront investments
 Amortize Transition
 Share in Value Delivered
 Strategic Financing
Experienced Financial
Engineering Advisory
All engagements are delivered by our staff of former CIOs, IT leaders, and sourcing leaders.
Speed to Value
Industry-Leading Savings
Actionable Strategies to Address
Regulatory Risk
Service Delivery Transformation

Tony Ioele
Managing Principal
+1 610-854-2700
tioele@thinkwgroup.com
www.thinkwgroup.com
Contact Us
Domenic Colasante
Chief Marketing Officer
+1 610-854-2700
dcolasante@thinkwgroup.com
www.thinkwgroup.com

Strategies to Address Regulation in Sourcing

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (20)

Similar a Strategies to Address Regulation in Sourcing

Similar a Strategies to Address Regulation in Sourcing (20)

Más de WGroup

Más de WGroup (20)

Último

Último (20)

Strategies to Address Regulation in Sourcing