Contracts worth many millions of dollars, plus long-term customer relationship management (CRM) deals, are classic features of the outsourcing business. However, accomplishing the work that comes with them demands skill, a strong business sense, experience and excellent project management ability.
Outsourcing's main objective is to help companies save costs and achieve their business goals through the use of technology, explains Dominic Wong, a strategic outsourcing engagement executive with IBM for Greater China. Traditional IT outsourcing includes the management of a client's IT infrastructure and applications such as network and desktop utilities, data centres and e-business applications.
Personnel transfers have become an important aspect. For example, as part of deals with DBS Bank and JP Morgan, IBM has taken over about 500 staff from both clients, providing comparable packages in terms of both roles and compensation.
A further emerging trend is that of business transformational outsourcing. While undergoing re-engineering, a company may make outsourcing part of its business process. It may then decide that procurement, CRM or even human resources management should be handled by a third party. By utilising the related technology, ways can be found to streamline processes and manage the business more cost-effectively. In the case of CRM outsourcing, for example, a company is assisted all the way from planning to implementation and in running the CRM application.
Today, the outsourcing market sees stable growth which, to a large extent, is stimulated by international deals, says Mr Wong. According to him, there are projects in Hong Kong but they are comparatively small in scale. The larger scale projects, with the potential for a higher degree of consolidation and broader scope of contract, are those organised on a regional basis. These give the chance to maximise the full value of cost savings as well as achieve gains in productivity and improvements in efficiency.
Up to now, the local outsourcing market has mainly been driven by the banking and finance industries and the public sector, while demand in mainland China has come more from the industrial side. Since the mainland is a global manufacturing centre, there will be increasing opportunities for companies to outsource and standardise their procurement operations, Mr Wong believes.
In the emerging China market, outsourcing services grew strongly in 2002, reaching a value of US$348 million - an increase of over 60 percent compared to 2001, according to technology consultancy IDC. It is predicted that the mainland market will reach a total value of well over US$2 billion by 2007, increasing at a compound annual growth rate of 47.8 percent.
Engagement and delivery
The outsourcing business involves two major steps: engagement and delivery. Working on the front line are engagement managers and offering managers, responsible respectively for the securing of projects and the sale of standard outsourcing packages.
The engagement manager is a deal-maker, leading a team to bid for projects. He or she is supported by a technical solution manager, whose main duty is to develop IT solutions for individual customers. An offering manager, on the other hand, develops appropriate packages, bridging the gap between market demand and the outsourcing company's deliverables. Usually, the engagement team's professional support staff include contract and negotiation specialists, pricing officers and legal consultants.
An ideal engagement manager, according to Mr Wong, is a chief information officer with access to senior management. Strong sales abilities, technical expertise and an understanding of the service delivery process are a must. An offering manager, in contrast, has to possess strong market knowledge and be creative at developing solution packages. In addition, both should have over ten years' work experience.
One of the key roles on the delivery side is that of transition manager, responsible for transferring projects from the engagement team to the delivery team. Every deal also includes a project executive, in charge of contract delivery and customer servicing. He is assisted by cross-project staff, such as server management, desktop and technical support personnel and should be experienced, with particularly strong relationship management and customer service skills.
Fresh graduates or candidates with only two to three years' work experience should first accumulate specialist knowledge in sales and support roles for companies providing general IT solutions and services. "They may focus on outsourcing business later, by starting with some small projects," says Mr Wong.
Being an outsourcing executive requires a high degree of maturity, self-confidence and general competence. "One must have wide exposure and the sort of in-depth business knowledge that can only be acquired from experience," he adds.
The work is undeniably interesting. "It allows you to gain exposure to different industries and business processes by taking part in a wide variety of projects," Mr Wong notes. And, ultimately, the career is financially rewarding, since outsourcing projects are usually of higher value than general product or service sales.