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A paradigmatic shift in it-offshoring industry from cost-centric to caring-centric

Our latest whitepaper that discusses how the traditional cost-centric engagement model, in the IT Offshoring industry, has given way to a more inclusive caring-centric engagement model. This new paradigm shift in the industry promises to deliver more value for organizations, by forging stronger, meaningful and sustainable relationship with customers, employees and all other stakeholders in the offshoring ecosystem.

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A paradigmatic shift in it-offshoring industry from cost-centric to caring-centric

  1. 1. Dr. Asim Chowdhury A Paradigmatic Shift in IT Offshoring Industry: From Cost-Centric to Caring-Centric There is a paradigmatic shift in the competitive IT offshoring industry today. Organizations that nurture a strong caring culture have emerged as true leaders who can deliver real value to customers and other stakeholders. By embracing a caring philosophy, offshore service providers can sustain a committed workforce and serve the broader interests of customers, investors and the community, more effectively.
  2. 2. P A G E | 1WHITE PAPER | www.rsystems.com TABLE OF CONTENTS  Introduction................................................................................................. 1  How the Philosophy of Caring Drives the Offshoring Industry?.................... 2  Employees – Fundamental Constituents of a Caring Ecosystem .................. 4  Caring For Customers: Meeting Changing Expectations............................... 6  Caring For Other Diverse Stakeholder Groups ............................................. 7  The Caring-Centric ‘Value Engineering’........................................................ 7  Conclusion ................................................................................................... 9 INTRODUCTION Beginning 2014, the Global IT offshoring industry, has undergone a paradigmatic shift. Leadership, once defined by technology competence and price competitiveness, is waning as offshoring companies have begun asking for more – something that could ensure a far-reaching business value. Today, relationship is the new benchmark of efficiency and business value. Organizational competitiveness is now directly related to how caring relationships are, between offshoring companies and its partners. It is the degree of caringness that is helping distinguish organizations from one another and driving long-term offshoring engagements. In essence, it is the caring index that separates leaders from survivors. The IT offshoring ecosystem is complex and includes diverse global actors, who have to collaborate effectively within fast-changing business landscapes. Relationships form the backbone of this new structure and it runs like a thread throughout the ecosystem – bonding actors, institutions, and the market. Although the idea of relationship management has been treated extensively in Customer Relationship Management (CRM) literature, they are myopic as they fail to adequately instill caring as an organizational culture. This caring-centric relationship is an idea that impacts the overall functioning of an organization. IT service providers who deploy caring at the heart of their engagement strategy are more stable partners. It is with such partners that customers realize business value and purpose. Project-based mindsets are obsolete and relationship-based engagement is in.
  3. 3. P A G E | 2WHITE PAPER | www.rsystems.com In this whitepaper we will explore how a caring-centric engagement model can transform the way organizations engage with diverse stakeholder groups, centered on relationships. We will also try to understand how the caring culture is so central to the offshoring ecosystem and how it helps global customers flourish and stay competitive. HOW THE PHILOSOPHY OF CARING DRIVES THE OFFSHORING INDUSTRY? A rapidly transforming business environment requires that partners are bonded more strongly. This is possible only when a caring culture is deployed across the entire relationship chain by IT companies, consisting of employees, teams, departments, customers and the final end- customer. Employees are the most fundamental constituents in this caring culture. When employees are cared for, they form a caring collective that meets the expectations of customers. The value so generated also goes on to benefit other stakeholder groups in the offshoring ecosystem, such as, investors, community and the society in general. A caring culture unfolds great possibilities. It helps extend the business dimensions beyond simple economics and creates synergy and trust. Several global studies have revealed that relationships based on caring have the potential to transform businesses. The study “Leadership and the Performance of People in Organizations: Enriching Employees and Connecting People” (Won-joo Yun and Frank Mulhern,) conducted in Nov 2009, reframed the concept of business leadership from a people-first perspective and examined it across diverse constituent groups such as consumers, employees, shareholders and the community. The study reframed the concept of business leadership from a people-first perspective and called it “employee enrichment.” In service organizations value is experienced in the form of “intangibles.” This human value is derived from what Yun and Mulhern call, “flow of performance.” For Yun and Mulhern, personal relationships are above everything else and organizations perform better only when they deploy adequate mechanisms for tracking and measuring the flow of performance between individuals. Organizations thrive by managing multiple flows of performance between diverse actors – employees, customers, investors, community and so on. A similar perspective is reflected in the book, Competitive Business, Caring Business (2002), where Daryl Paulson forwards a strong integrated approach for businesses which leads to stability and growth. This, in turn, creates room for innovation and pioneering exploration. Daryl suggests that such an integrated approach is founded on the philosophy of caring that helps individuals and businesses achieve the impossible. Today, “caring about people” and “caring about the business” are not mutually exclusive. They are interconnected. Employees bring labor, innovation, and a host of other things which define an organization’s success in services. Similarly, customers provide revenue, profits, and growth, while investors and shareholders provide capital and stability. The society and the community, in turn, provide moral support and general goodwill that help organizations stay afloat.
  4. 4. P A G E | 3WHITE PAPER | www.rsystems.com Caring organizations are powerful drivers of innovation and organizational growth. In a caring ecosystem, human relationships are highly positive, which is characterized by speed, collective wisdom, dynamic knowledge exchange, and a strong desire to tread into new horizons. All these helps create a very conducive environment for innovation. Customers stand to benefit from this collective competence and inventiveness by realizing new breakthroughs. Figure 1: The Caring ecosystem that drives IT offshoring services today
  5. 5. P A G E | 4WHITE PAPER | www.rsystems.com The IT Services ecosystem is laden with challenges and opportunities. One the one hand are cross- cultural challenges weaved together with a complex technological milieu while, on the other hand, organizations witness the challenge to sustain growth and profitability. The entire caring ecosystem rotates around three fundamental elements – innovation, growth and transformation – that plays a cyclical role. A change in one leads to a change in the other two, often unleashed through a complex array of elements. Developing a caring culture, therefore, requires commitment to meticulous planning and implementation. Given the complex terrain, deploying a caring culture is best done when it is undertaken in a staggered fashion, across distinct areas of people, processes, and technologies. EMPLOYEES – FUNDAMENTAL CONSTITUENTS OF A CARING ECOSYSTEM Value exchange lies at the heart of the relationship between the employer and the employee. Matured offshoring companies provide employees with a healthy, enabling environment to learn, grow and execute their knowledge. These translate into a strong employee caring culture that can nurture positivity and flow out in all directions, like a fluid, bonding diverse stakeholders onto the ecosystem. New approaches to business economics suggest that a people-first attitude is central to enhancing business productivity. By focusing on the personal growth of employees, employers can ensure a win-win collective growth and performance. Matured organizations deploy a caring culture by addressing two distinct forms – extrinsic motivation and intrinsic motivation. This is since the Self-Determination Theory (SDT) emphasizes on extrinsic and intrinsic motivation that plays a significant role in propelling individuals towards higher levels of performance. Extrinsic motivation drives employees to do things for external pressure and therefore has a lesser impact on motivating employees. Intrinsic motivation, on the other hand, is a better motivator in the true sense since it is something that comes from within individuals. Matured IT service organizations understand this and focus on long-term motivation, primarily intrinsic motivation. Scholars like Skinner (1953) suggest that all behaviors are motivated by rewards. In intrinsic motivation, the activities are motivating in itself since they align individual goals to business goals. Figure 2: The Distinctive Arms of a Caring Ecosystem
  6. 6. P A G E | 5WHITE PAPER | www.rsystems.com An intrinsically motivated workforce enhances the collective performance of organizations in delivering services. In addition, they also ensure that organizations remain stable, competitive and future-ready against technological obsolescence. Another way of looking at employee motivation is to segregate them into Maslow’s hierarchy of needs. Social needs, for example, can be met by organizing family engagement programs. Similar programs can also be devised for work-life balance, enhancing wellness and providing opportunities for innovation and growth. In his book Employee Engagement 2.0 (2012), author Kevin Kruse tracked over 30 studies and discovered that employee engagement has a direct correlation to increase in customer service, productivity, sales and profits. He suggests that engagement is the emotional commitment that employees have with their organizations and its goals, which drives higher levels of discretionary effort. Another global study – the Gallup eighth meta- analysis study – conducted in 2012 provided an in- depth understanding of the relationship between employee engagement and company performance. The study spanned 49,928 work units and involved more than 1.4 million employees, spreading across 49 industries and 34 countries. The study confirmed a strong connect between employee engagement and nine performance parameters, which include customer ratings, profitability, productivity, turnover, etc. Further, it revealed that employee engagement was the most important predictor of company performance even during difficult economic conditions. Human Resource departments play a crucial role in helping develop a caring work culture. At an organizational level, many matured offshoring players also deploy good people practices that are now measured through the prism of globally acclaimed processes such as PCMM. Embracing such holistic and innovative processes help strike the right balance between organizational goals and individual goals wherein employees are able to realize a meaningful existence. Figure 3: How Organizations align employees to organizational goals
  7. 7. P A G E | 6WHITE PAPER | www.rsystems.com CARING FOR CUSTOMERS: MEETING CHANGING EXPECTATIONS Today, the way global customers look at IT offshoring relationships has undergone a sea change. They are no longer impressed with attractive pricing or lofty sales pitches. Instead, they seek partners who can walk the extra mile and help meet their needs in diverse technology, function and industry domains and have the ability to ward-off pressures of technological obsolescence. Here’s a snapshot of changing customer expectations over the years: Experienced offshoring partners understand this changing nature of customer expectations and deploy a strong caring component in their operational philosophy. TRADITIONAL PROJECT-CENTRIC MINDSET THE CARING-CENTRIC MINDSET What do you want us to do? We will evaluate your pain areas and give you a complete solution. The product will be running fine. The product will be running fine. We will be there for you, 24x7. What else do you want us to do? We are ready to handhold you through your entire technological journey. Tell us what technologies you want us to use. We will work out the best technologies for you that can address obsolescence and help you stay ahead of the race. Sorry, our resources do not have the ability to go beyond this. Don’t worry, our resources have a steep learning curve and they will go to any extent to help you realize a great application/product. Our costs are fixed. We are sorry we cannot negotiate that further. Don’t worry about costs. We value our relationships and we will work out best ways to meet your expectations within the limited budget. Sorry, we do not have competency in this technology. We are focused on a specific set of technologies. We agree that we have no competency in this new technology but we can develop that in the next couple of months. We can also engage a partner with expertise in this new technology area. The dimensions of caring have a broad scope when applied to offshoring relationships. They spread across project management, quality, infrastructure, people management, resource mobilization, research & development, adoption of new technologies, time-to-market, scalability, Early 2000s Mid 2000s Late 2000s 2013 onward
  8. 8. P A G E | 7WHITE PAPER | www.rsystems.com etc. All these elements broadly form the “Caring Index,” the new determinant of excellence in IT Services. When offshoring partners discard the traditional provider-customer relationship and adopt a holistic relationship-centric engagement strategy, they emerge as strong market leaders. In addition, such a model of engagement is disruptive in nature and helps create a stronger brand identity in the industry. CARING FOR OTHER DIVERSE STAKEHOLDER GROUPS All organizations operate within a broad ecosystem and therefore the culture of caring extends to other stakeholders groups. These groups include investors, industry, community and the society, each impinging on businesses in interesting ways. When organizations fail to extend the culture of caring to these stakeholders it risks being isolated, powerless, and insignificant. For investors, the idea of caring signifies effective financial management, to ensure a steady return on investments (ROIs). Financial prudence cushions the organization from unforeseen market shocks. Similarly, in caring for industry associations, organizations forge a strong bond with diverse groups which helps create a positive impression across the ecosystem. In caring for the community and the society, organizations embrace community development activities, such as CSR etc., that helps stabilize the business environment around them. The goodwill and positivity it generates echoes far and wide and builds a strong support base. It also helps sustain a strong brand equity, which in turn, generates immense goodwill about the business. THE CARING-CENTRIC ‘VALUE ENGINEERING’ Deploying a caring culture in engineering services can help us realize a new kind of engineering excellence. Such an engineering model seeks to balance the social and technical dimensions of engineering, that can be best termed as “Value Engineering.” Value Engineering is a holistic engineering framework that enhances engineering output and gears it to provide lasting customer value. Here, transactions give way to a strong relationship-based engagement. Such reformulation, in turn, generates trust, builds confidence and provides long-term value. Value engineering in IT Services emerges from every aspect of organizational functioning, such as, people, technology, infrastructure, communication, project management and so on. Every small restructuring impacts other areas since relationships operate in a network. For instance, if an organization focuses on competency enhancement of its resources, the benefits passes on to the entire value chain. A continuous generation of value also requires investments in innovation, R&D and improvisations in a host of other areas of organizational functioning.
  9. 9. P A G E | 8WHITE PAPER | www.rsystems.com Value Engineering can also be best managed by deploying “Value Stream Mapping,” a technique initially used in manufacturing. In the IT Services sector Value Stream Mapping can be used to improvise processes and meet organizational goals. This technique is extremely flexible and can be used across diverse areas by deploying diverse formats. Communication plays a crucial role in developing a caring-centric organization. Communication serves as the catalyst that helps develop relationships with different stakeholders. Robust, well-defined and continuous communication strengthens collaboration between individuals, teams and functions and also helps address cross-cultural challenges. However, value engineering is an ever-shifting goalpost in the offshoring industry. What is of value today may not be valuable tomorrow. An effective way to manage this change is to benchmark value continuously, by deploying powerful techniques such as Value Stream Mapping. Following are some crucial aspects of caring-centric “Value Engineering” w.r.t. IT offshoring services:  THE DELIVERY ROBUSTNESS Delivery robustness is determined by evaluating the maturity of processes. Experienced partners deploy several efficient and robust models, systems and matrices that seek to continually enhance delivery performance. Some examples of these include measuring customer feedbacks, streamlining client visits, and offering real-time remote visibility of teams.  THE CONTINGENCY PLAN Contingency plans are integral to offshoring services and they relate to a wide area of operations, including Disaster Recovery, IPR security, infrastructure backup, resource management etc. These contingency plans are defined and guided by changing customer expectations and are therefore subject to timely revisions.  FUTURE READINESS Caring organizations have robust plans to withstand technological obsolescence and competition. Today, the velocity of technological obsolescence is extremely high. It is estimated that the rate of external and functional obsolescence of technology has become faster several times over the past one decade. IT offshoring players who want to stand out of the crowd, deploy effective strategies that are derived and enhanced through experience. Future readiness in IT services is best assessed by mapping changes in people, processes and technologies. Figure 4: The tenets of Value Engineering
  10. 10. P A G E | 9WHITE PAPER | www.rsystems.com CONCLUSION Today, buyers and sellers in the offshoring industry appear to have lost their intimate relationships, which are strongly impinging on organizational growth. This is largely because of the inability of offshoring partners to manage complexities in offshoring relationships, in the IT Services space. Business sustenance calls for offshoring partners to move away from older transaction-centric relationship model and instead invest on relationship-centric engagement models. A caring philosophy should form the backbone of all offshoring relationships as it can unleash long- term value in the offshoring ecosystem. Motivated workforce, business stability, guaranteed growth, and increased ROIs are some of the many accruals from such a caring ecosystem. It also helps cushion offshoring engagements against market fluctuations and challenges of obsolescence. A caring culture can be begun with a “people-first” mindset, since employees are the cornerstone of the services ecosystems. There are ample number of global studies that suggest how employee engagement can enhance the productivity of organizations. Employees form the value chain that extends to the customer and other stakeholders. Eventually, the offshoring ecosystem settles around a new kind of engineering excellence, “Value Engineering.” The new Value Engineering model signifies a meaningful, holistic engineering engagement founded on strong human relationships. How can organizations embrace a caring culture? While there are no definite mechanical strategies to transform organizations into a caring entity, it is best when deployed in a time-bound fashion, across different stakeholder groups. Ideally, it should be deployed in a staggered fashion in small measurable steps within an organization, across diverse functions. The positivity and goodwill developed therein will automatically flow out to customers and other stakeholders. However, the strategies deployed by individual IT Service organizations, to transform themselves into caring entities, vary widely. These strategies largely depend on the organization’s size, nature of services, engagement model, services delivery model and so on, which leaves ample scope for developing contextual plans to best fit needs of individual organizations.
  11. 11. P A G E | 10WHITE PAPER | www.rsystems.com ABOUT THE AUTHOR: Asim Chowdhury is the Global Head of Marketing and Communication of the R Systems Group. He has more than 17 years of experience in marketing, communications, business strategy, journalism, and research. Asim earned a Ph.D from the Delhi School of Economics, Delhi University, and has also been a European Union research scholar under the Indo-European research program. ABOUT R SYSTEMS R Systems is a leading OPD and IT Services company, which caters to Fortune 1000, Government, and Mid-sized organizations, worldwide. The company is hailed as an industry leader with some of the world’s highest quality standards, including SEI CMMI Level 5, PCMM Level 5, ISO 9001:2008, and ISO 27001:2013 certifications. With a rich legacy spread over two decades, we generate value that helps organizations transcend to higher levels of efficiency and growth. Quite like the Oyster delivering the Pearl. For more information, visit www.rsystems.com or Email: rsi.marketing@rsystems.com © 2016 R Systems International Limited. All Rights Reserved. All content/information present here is the exclusive property of R Systems International Ltd. The content/information contained here is correct at the time of publishing. No material from here may be copied, modified, reproduced, republished, uploaded, transmitted, posted or distributed in any form without prior written permission from R Systems International Ltd. Unauthorized use of the content/information appearing here may violate copyright, trademark and other applicable laws, and could result in criminal or civil penalties R Systems Inc., 5000 Windplay Drive, Suite #5, EI Dorado Hills, California 95762, U.S.A. | Tel: +800 355 5159, +916 939 9696, Fax: +916 939 9697