Keys to Success: Stability of Partner, Maturity of Processes & Industry Focus

You—the insurance company—need to first identify the driver for an offshore outsourcingrelationship and map it to the appropriate outsourcing model and partner. Drivers for offshore outsourcing could be:

-- To plough back cost savings into new investments that provide you with a competitive edge;

-- To utilize experienced employees for improving business efficiencies;

-- To manage fluctuating workloads;

-- To reduce the risks of person-dependency, instead focusing on well-defined processes;

-- To maximize productivity and quality;

-- To try out new technologies at reduced costs;

-- To integrate systems from acquired business at a manageable cost;

-- To have the ability to increase IT capacity at a very short notice without having to invest in it.

Contrary to popular belief that offshore companies are suitable for low cost labor-intensive work alone, companies like Patni who have been in this business for over two decades possess great depth when it comes to servicing insurance corporations. As a case in point, Patni today supports over 20 million policies 24x7, has considerable experience with conversions and migrations, proven experience in introducing new (insurance) products, as well as the design and development of state-of-the-art straight through processing systems.

Based on the driving force and the capability of the partner, the outsourcing relationship model can be one-off engagements like Y2K or HIPAA remediation, a project-based relationship, a global development center or as a Build-Operate-Transfer model.

Initiating the Process:

Critical success factors at this stage include a buy-in from the executive leadership and a continuous propagation of the message in a top-down approach within your organization. Offshore outsourcing can be a challenge to implement internally from a cultural standpoint. This distance needs to be bridged through effective communication within your organization, with focus on the benefits, as well as providing a short- and long-term vision for your employees. Discussions with offshore vendors like Patni and other carriers who have successfully implemented this strategy will help you in the creation of an internal business plan that measures the ROI and clearly defines the criteria for success.

Prior to outsourcing, Patni can carry out a diagnostic evaluation for you to determine applications that could be outsourced based on project suitability and perform a risk assessment. This will set the stage for an RFI/RFP that could then be distributed to multiple vendors. A look at the top 10 offshore providers will provide little to choose from in terms of quality certifications, technical ability, delivery models and infrastructure. It is the depth of business domain knowledge that sets them apart.

Continuing the Engagement:

With time, you must expect to see productivity gains and optimization in processes that provide direct benefit to you, but that which also provide gains for the offshore partner. Patni assumes and shares your risks by means of fixed-price projects. Or, for that matter, maintenance on fixed price with defined service levels. The service levels here should be tied directly to the services/service levels that you need to provide to your internal and external customers. Visits by the relationship champion/alliance office to the offshore facility helps with bonding the two entities, provides an opportunity for the offshore teams to be updated on the long-term goals of the carrier, and contributes to building a stronger relationship. It creates an environment of team spirit, trust and openness.

Risk Mitigation:

Prior to offshore outsourcing, the offshore partner's capability to operate from multiple development centers that are geographically apart must be tested. The partner must have well-defined disaster recovery and business continuity plans as per your requirements. In addition to providing the above, Patni also provides physical and network isolation and data security considerations that are open for audit by you.

While offshore companies are well suited to develop and/or support mission-critical applications, Patni advocates you maintain management control of the applications. Also, it is always advisable to retain a percentage of the partner's staff onsite for the sake of accountability and to facilitate communication between you and the offshore team.

When transitioning applications to the offshore partner, a careful and well laid-out plan for knowledge and responsibility transition must be adhered to. It is also to be realized that not all projects and not all tasks in a project are "offshore-able." Attempts to move them offshore for cost benefit alone may prove to be counterproductive.

Multi-vendor strategies work well when managed properly. To ensure the highest level of quality with the work and that the optimum value is delivered to you, the key to success is stability of the offshore company, the maturity of its processes and, most importantly, the partner's focus on your industry.