By Jagdish Dalal

George Santayana once wrote: “Those that fail to learn from history, are doomed to repeat it.” I also like what Albert Einstein wrote, “Insanity is doing the same thing over and over again and expecting different results.”

So it is for many providers who do not have a structured process for learning from their past performance. Customers expect their providers to continuously improve their performance. In a competitive world of outsourcing, providers benefit by reducing service defects, thereby improving customer satisfaction and their bottom line. After all, failure to meet performance levels ends up costing them in their margin – directly or indirectly.

Working with providers, I have encouraged them to use a formal “lessons learned” process. I advocate that this be an ongoing, established program rather than a periodic event.

Lessons Learned Process

It is a formal process and a foundation for quality review. It provides a method for clinically dissecting performance, documents factors impacting the outcome and creates a framework for learning. It is not a “witch hunt” or “who shot John” game. The intent of a successful lessons learned process is to identify factors influencing results and delve deeper into the root cause for each of them. Therefore, the process is designed to evaluate both failure – missed performance –and success– expectations met. In quality process, this is often associated with creating a “fishbone” (or Ishikawa) diagram. Let’s look at how to design and successfully conduct a lessons learned process.

Creating Lessons Learned Framework

A structured framework for the lessons learned helps not only in identifying factors but also as a learning tool for future performance. A typical “fishbone” diagram describes the outcome and then creates a set of categories for factors that affected the outcome. In a structured lessons learned framework, it is important to have these categories standardized, so that over a period of time, we can establish patterns and trends. The following diagram shows one of these standards that I have recommended to providers with whom I work.

Conducting Lessons Learned Exercise

It is essential that a lessons learned exercise is formal, consistent and involves all people that are directly, and at times, indirectly, engaged in the activity. As mentioned earlier, these exercises should be for both successful and unsuccessful outcomes, so that learning can be analyzed from both perspectives. I recommend the following seven step process:

1. Assemble the team that will conduct the exercise. A discussion leader and a scribe need to be appointed so that the meeting rules and etiquettes are followed. Ideally, the conference room is organized so that there are seven category flip chart pages and a separate flip chart for documenting brainstorming items. I have found that a conference room without chairs (where everyone is standing) is more conducive to brainstorming than people sitting around a large table.

2. Agree on the “head” of the fishbone, describing the outcome as specifically as possible. For example: “project metrics were not met” or “project completed ahead of schedule and under budget.” Clarify categories for everyone involved, so that they do not become a matter of interpretation later during the exercise.

3. Conduct brainstorming session. Typical brainstorming process is:

a. Each person (on a round robin basis) lists the contributing factor. These factors should be as factual as possible and not just “here-says” or opinions regarding the cause. Causes will be determined later.

b. As each person contributes a factor, no discussion takes place (except for clarification purposes only).

c. Round robin process continues everyone has exhausted factors to contribute (people can “pass” during the round robin if they have no new factors to contribute).

d. Document all of the factors on a flip chart (as they were stated).

4. Once brainstorming is complete, each of the factors are discussed, categorized and placed on the appropriate flip chart. Discussion can lead to adding more factors or eliminating ones discussed.

5. Once all factors are categorized, each category is studied to see common causes and a more thorough “root” cause analysis done. Root cause analysis is conducted by asking the question “why” until there can be no further drilled down. Typically it will take at least five “whys” to get to the root cause. These root causes, by each category are documented separately and if necessary, prioritized by their perceived influence on the outcome.

6. Final steps in the lessons learned exercise is to document these root causes, and projects created, to either reinforce their impact (if they resulted in a positive result) or come up with a solution to avoid/mitigate them on future projects.

7. Final outcome, lessons learned categories and root causes are then stored in a single document so that others can study them later and learn from past mistakes or accomplishments. When I worked at Xerox, we called this our “book of knowledge” and each project manager was required to study the book prior to launching a new project. This is a process that allows one to learn from history.

Honest, open lessons learned exercises and in depth assessment of root causes, helps create an environment where past performance becomes a guide for future improvements. As George Washington wrote in a letter to Fielding Lewis (July 6, 1780): “To rectify past blunders is impossible, but we might profit by the experience of them.”

Jagdish(Jag) Dalal is Founder and President of JDalal Associates LLC (JDA) and Managing Director, Thought Leadership for IAOP and a world-renowned consultant in the field of outsourcing. Dalal is a Certified Outsourcing Professional (COP®). He can be reached at JDalal@JDalalAssociates.com

glendonTodd Capital LLC, a private equity firm that focuses on investments in business services companies and investments in real estate, announces the acquisition of Toutatis Inc. by glendonTodd Capital LLC and Performa Partners.

Based in São Paulo, Brazil, Toutatis Inc. is a full service business process outsourcing (BPO) provider in Latin America and offers a wide variety of BPO solutions in human resource outsourcing, finance and accounting outsourcing and procurement outsourcing. The firm has offices in ten countries throughout Central and South America, including: Argentina, Brazil, Chile, Columbia, Ecuador, Mexico, Paraguay, Peru, Venezuela, and Uruguay, giving it the ability to serve international clients with operations throughout the region. The company’s unique ability to deliver BPO services across Latin America from its shared service center in Uberlândia offers flexible and cost-efficient solutions by providing user-friendly, accurate, seamless execution.

Todd Furniss, Managing Partner of glendonTodd Capital explains, “We focus on those industries and companies located in favorable macro-economic environments where we can help create disproportionate value, and we think that Brazil has a very bright economic picture for at least the next five years. Toutatis has a robust services platform and customer base in key markets throughout Latin America that we can leverage for growth. Together with Marcelo Franca, and our great operating partners at Performa, we have the ability to execute on our vision and realize significant stakeholder value creation.”

Marcelo Franca, CEO of Toutatis stated, “Our relationship with glendonTodd, allows us to take advantage of world class operational insights and financial execution capabilities to propel Toutatis onto the global stage.”

The company’s unique value proposition and delivery capability, reinforced by glendonTodd’s and Performa’s strategic capital and operational insights, position Toutatis well for growth and shareholder value creation.

By Steve Mezak

Are you interested in exploring the agile methodology for developing software at your company, but you’re worried that it feels like writing a blank check to the developer? It’s a commonly held belief among companies looking for outsourced software development that agile could potentially cost more than traditional methodologies. However, the nature of how agile development works, combined with a well-defined structure for funding it, ensures that you can produce a great piece of software without breaking the bank.

Two approaches to funding Agile – Fixed Budgeting Approach

The first step to ensuring that your company’s agile development meets your budget requirements is deciding upon whether to go with a fixed budget or continuous funding. A fixed budget is exactly what it sounds like–your company sets the maximum amount that they’re willing to spend for the software, and the development team works on the project until they hit the budget ceiling. Fixed budgeting is a good funding approach for companies that are not entirely familiar with the agile development process, and they want to make sure that there is a distinct budget cap.

Because the agile development process insures that you have a finished piece of software at the end of every sprint, you’re saving time and money with either continuous funding or fixed budgeting.

A fixed budget doesn’t mean you end up with an unfinished project. Instead, agile development works hand-in-hand with fixed budgeting because stages of the project (or sprints) are each completed within a set amount of time; at the end of every sprint you have a complete piece of software as well as an update on how much of the budget is left.

The development team covers the most important and critical features in the first sprint, shows you the result, and you give the  green light for the second sprint to add more features, work out bugs, or even take the software in a different direction if that’s what market conditions require. Though it may not be as comprehensive and feature-rich as you might want in the future, it’s still a solid version 1.0 that you can beta-test since the most critical features are already developed.

Funding Agile – Continuous Funding Approach

Continuous funding is typically used by more experienced companies that know how agile works and are confident in the development team. The company outlines what they need, the team figures out how long it will take, and they create a detailed prioritization of the product backlog of features, separating those features into a smaller backlog for each sprint. If they reach the end of the sprint without fully completing all the features, they take it out and move on with what works instead of dragging out the deadline for who knows how long trying to figure out just one bug. The difference between continuous funding and a fixed budget is that continuous funding allows the development team to work on critical and non-critical features at the same time because the budget allows for more time to continue working on various features rather than focusing only on the mission-critical ones.

The Best Part About Agile? You Save Money Either Way

Because the agile development process insures that you have a finished piece of software at the end of every sprint, you’re saving time and money with either continuous funding or fixed budgeting. Instead of waiting for months or years to see the end result, you get a real, workable update within a specific period of time, giving your company the opportunity to evaluate and decide whether the project is moving in the right direction. Having these mini releases also allows you to gather more funding because you can release the software, get feedback from your users (or the market), then see if it’s worth getting additional funding for an improved version, or determine whether it’s time to go back to the drawing board. Either way, the agile development process helps you make sure that your company doesn’t sink too much money into software development. The agile methodology does quite the opposite, in fact.

Steve Mezak is founder and CEO of Accelerance, Inc., which helps customers engage the right development team to create high-quality software. Read more and watch videos about using the agile methodology for nearshore software development on the Accelerance blog.

Capgemini, one of the largest multinational IT companies in the world with presence in 40 countries and more than 50 years of experience, will open a subsidiary in Bogotá to offer its services to local clients and subsequently to clients based in other Latin American countries while using Colombia as its regional base of operations.

“Colombia is a key country in our regional expansion strategy; it’s a country experiencing strong growth that has a very capable workforce and a very competitive cost structure. For that reason we decided to open offices here,” said Peter Kroll, Senior Vice President of Capegemini North Latam.

Proexport Colombia facilitated Capgemini’s landing in Colombia; the company will generate 400 jobs in the next two years. “’We look for computer scientists that have graduated from Colombian universities and we train them to provide Capegemini services to national clients and to other clients in the region,” explained Kroll.

“More and more companies from all sectors are requiring IT services, it is a growth industry in Colombia. According to the figures of the Superintendencia de Sociedades y el Ministerio de Tecnologías de la Información y las Comunicaciones, the principle companies in the sector earned around $550 million USD in revenue during 2011,” declared Maria Claudia Lacouture, president of Proexport.

The announcement happened at the 2012 ANDI Outsource Services conference where Kroll emphasized the potential of Colombia as an export platform to the countries that it has free trade agreements with and the opportunity to enter new markets such as the United States.

Capegemini has 108,000 employees worldwide and already has subsidiaries in Brazil, Argentina, Mexico, Guatemala and Chile. They specialize in maintenance of infrastructure and process applications, the implementation of business intelligence systems and ERP among other services.

Proexport, the entity in charge of attracting foreign investment to Colombia, offers services to interested investors such as tailored information in the form of contacts in the public and private sectors, accompaniment and scheduling related to country visits, and continued support to foreign investors that choose Colombia.

By Kirk Laughlin

Seemingly out of nowhere, Medellin is sweeping onto Latin America outsourcing’s center stage in a dramatic flourish, winning deal after deal and – by beckoning to the world – totally reshaping what the city stands for by openly confronting the wreckage of its darkest days. Medellin’s dramatic transformation is easily one of the most captivating stories in all of Latin America IT.

A City in Bloom

Due to a series of favorable conditions – including highly engaged and deep-pocketed corporate institutions (starting with Bancolombia), a rich array of universities many of which have engineering and computer science programs, the establishment of policies and agencies focused on nurturing the right conditions for BPO/ITO services and a stunning physical environment where “Eternal Spring” and large amounts of greenery make for a lot of happy souls – Medellin may be the ultimate ‘hidden gem’ in the Americas’ sourcing marketplace. Very simply, Medellin functions. Mass transit – including a metro that extends from the south to the north basin of the metro area – is clean and efficient. Traffic is a non-issue, unlike its big brother, Bogota.

But of course there are no guarantees for Medellin. Its positioning as a mountain, interior city has done little to enable international exposure, unlike thriving BPO port cities of Cali and Barranquilla. This is one of several reasons many knowledgeable observers express concerns about the bilingual talent available among the city’s 3.5 million inhabitants (in the larger metro area).

Investment in Full Flow

While much has been made of the watershed decision by HP in 2010 to set up in Medellin, a wave of new investment is potentially setting the stage for a formidable tech ecosystem that in the next few years could mirror – on a smaller scale – the strides of major hubs such as Guadalajara and Sao Paulo. Kimberly Clark recently named Medellin one of three global innovations centers, a huge coup that demonstrates a deep confidence in science/tech human capital. The organization expects to launch a 200-person operation in the next few months in the “Rionegro” area not far from the airport.

Existing operators in the area include multionationals like Tata Consultancy Services, Unisys, Allus, Teleperformance and Infosys, which has a small team focused exclusively on supporting Bancolombia’s core banking / ERP operations. In fact, it was Infosys’s Gita Jayanth, a senior finance executive working in Medellin, who instituted a program to take the 100 top computer science students attending EAFIT university in Medellin every summer to Bangalore for specialized training. The program is now in its third year running. “This is an outstanding program with no strings attached,” said Helmuth Trefftz, Chair of EAFIT’s Computer Science Department.

The timing of HP’s official move into Medellin is producing an increasing amount of head-scratching. The company has started paying month rent on its sparkling new facility in the new “Ruta N” area – as part of a 15-year lease. But sources tell us that the timing of HP’s installation of staff into the offices is still in question while others are skeptical that HP will actually open the facility despite all the planning that has already gone on. The company has maintained a small staff in a building within the EAFIT campus, but many believe that restructuring in the wake of CEO Meg Witman’s late 2011 arrival at HP has shifted its offshore services priorities.

The $50 million Ruta N facility will opens its doors within the next few weeks.

Ruta N is the name of a three building complex in an area of the city that used be blighted by crime. The city financed the project – worth $50 million – which is seen as a symbol of the new focus on global engagement and tech innovation, combining public and private interests.

City leaders are quick to point out that Medellin may look like it’s hell-bent on making a name for itself globally, yet there is still a cautiousness that prevails. The city is extremely aware of how it’s perceived from the outside and still seems somewhat wounded by the global condemnation wrought by years of drug-related violence that tore deep into the heart and culture of the “Paisa” people. The homicide rates of the early 90s, where as many as 500 people were getting killed a month, is nowhere near what it is now. But according to statistics from ACIMedellin, the city’s trade promotion group which facilitated a visit last week by Nearshore Americas, homicides have inched up some from their lowest point – during 2006-2008.

The city remains one of the world’s fifty most violent cities, but it should be pointed out that US cities – New Orleans, Detroit, St. Louis and Baltimore are also in the top 50 ranking by Mexican organization, Consejo Ciudadano para la Seguridad Pública y la Justicia Penal.

Social Inclusion

Medellin’s leaders, grounding their efforts on social inclusion aimed at fostering economic equality, are persistently focused on reaching out to the long-isolated “comunas” to become part of this new, knowledge-driven era. It’s a big and complex job. David Escobar, Medellin’s City Planner is deeply involved with the efforts and sees many signs of change. “The city has reclaimed its self-esteem,” said Escobar who credits much of the city’s transformation to former Mayor Sergio Fajardo (who is now governor of the state of Antioquia) who set in motion heavy spending on education, the arts and the installation of multiple new libraries sitting in once battle-ridden areas.

The call to come to the capital of Antioquia is being heard around the world, including in King of Prussia, Penn. where local company Yuxi Pacific set its sights on Medellin during the last year after seeing its operations in China falter due to rising inflation and hard-to-find English speaking talent.

Medellin is 25% cheaper than labor in Costa Rica, says Michael Puscar, CEO of Yuxi Pacific. (Far right)

“The English ability is way better than I thought,” says CEO Michael Puscar, who runs a 50-person software and Q/A studio for content publishers looking to exploit new “Big Data” management tools. Puscar examined Argentina, Peru, Costa Rica and Mexico before settling on Medellin, which has a city population of 2.5 million. “Salaries here are 25% less than Costa Rica or Mexico. It was a no-brainer,” says Puskar, who does stress that the value proposition of Colombia could be in serious jeopardy if the Peso continues its rise. The currency has risen nearly ten percent since early January, putting pressure on the margins of foreign operators.

The availability of English-speaking talent is potentially one of Medellin’s biggest vulnerabilities. While exciting US-owned firms like Yuxi have had little trouble finding bright, bi-lingual professionals – most Colombian-owned operators worried to us that the demand for English speakers could quickly outstrip supply.

“We have a huge gap with English speaking people. I consider it a big issue,” says Carlos Castro, the CEO Enlace Operativo, a BPO and ITO services company headquartered in Medellin, with 1,700 employees in Bogota and Medellin. Almost all of Castro’s firm relies on Spanish-only speakers, but that could change in the longer term should the firm decide to pursue BPO business in the US. “It’s going to take a lot of years to address the issue,” he says.

In terms of attracting investment, Castro gives credit to the long-term planning focus of the national government. He says the work of ANDI, which is effectively the ‘chamber’ for the country’s BPO / ITO sector, along with Proexport and local investment promotion agencies spread across the country work closely together.

In fact, the close coordination of seemingly ‘rival’ cities shows just how much Colombia is making BPO a priority and continues to reflect back to the long-term thinking of former President Alvaro Uribe who partnered with Minister of Trade and Industry Luis Guillermo Plata to engineer what is looking like one of the best prepared BPO markets in all of the Americas going into the next stages of market expansion.

Michael Cooper, a US native who has lived in Medellin for 30 years said the city’s transformation during the last 8 to ten years has been “unbelievable.” Cooper is executive director of Medellin’s Centro Colombo Americano, a cultural and educational institution, which provides English instruction to over 6,000 students in the Medellin area per year.

Looking to make connections in Medellin or get deeper insight into the market’s potential? Contact Kirk Laughlin

By: Linda Tuck Chapman

Developing and implementing consistent, actionable performance metrics for your Application Development and Maintenance and Testing program is one of the best ways to ensure you get value for money. One of the most important aspects of developing effective metrics is to resist measuring everything that can be measured. Focus only on measuring what matters.

According to CORE (Centre for Outsourcing Research and Education) research conducted in 2011,  one of the largest weaknesses found was that almost half of the organizations struggled to identify a compact set of metrics that aligned with business priorities. Over-abundance of metrics often obscured the core set and made it challenging for clients to aggregate relevant information and derive intelligent insights. Others recognized the issue not as a problem of quantity but of quality; stating that metrics were being tracked, but did not link to the organization’s ultimate goals.

This is an area where there is a tendency to try to measure too many things, often resulting in lots of data, plenty of noise but not much actionable information

No matter how complex or far reaching your metrics are, most managers pay attention to only a few metrics. In addition to simplifying the metrics measurement process, this guide to “best practices” will help you develop metrics that marry the relationship and performance information you really need with the information vendors can readily provide.

There are three types of Metrics that you should consider creating to measure the success of your program and vendor relationships:

1) Relationship level – these Metrics focus on how the relationship between the two companies is working, and how satisfied you are with their responsiveness and your access to their thought leadership and innovation.

2) Customer level – these Metrics focus on how well the vendor is performing tactical, “table stakes” tasks, like invoice accuracy and incident management.

3) Statement of Work (SOW) level – these Metrics focus on how well the vendor is delivering quality outcomes, on time and on budget, against each Statement of Work.

Measuring Performance

Relationship and Customer level Metrics are performance management tools and controls that are not unique to ADM and Testing vendor relationships. A good way to simplify governance processes and reduce workload associated with managing multiple vendors is to develop and deploy a generic set of Relationship and Customer levels across the population.

The primary focus of this article is on the SOW level Metrics. This is an area where there is a tendency to try to measure too many things, often resulting in lots of data, plenty of noise but not much actionable information. The best way to simplify your thinking about what to measure is to establish an overarching framework that addresses expected and important outcomes. By this I mean deciding how to group everything you want to measure into a few overarching categories. Three or four categories are simple to remember, easy to manage and simplify the communication process.

Grouping Metrics

I’d recommend grouping SOW level Metrics into “Quality,” “Efficiency” and “Effectiveness” categories, then creating sub-level metrics that align with each category. When you’re deciding on the sub-level Metrics, which are labeled “Type” in this example, give careful consideration to which metrics are referenced in best practices research coupled with what the vendor already measures internally. If you’re not sure what your vendors measure, just ask. They’ll appreciate your efforts to align your performance reporting requirements with their existing processes.

This is an example of “Quality” Metrics for Application Development and Maintenance. The Type column identifies the type of quality metric being measured; the Description specifies what is being measured; Waterfall or Agile refers to the software development methodology; Reporting periods can be set according to the timing of SOW deliverables, against major milestones or for long term relationships by quarter.

The same approach is taken to develop “Efficiency” and “Effectiveness” Metrics and any other categories you wish to measure. (Click on the chart for an expanded view.)

And here is an example of “Quality” Metrics for Testing: (Click on the chart for an expanded view.)

Conclusion

This approach is extremely useful for managing outcomes for each SOW and every vendor. Over time, you will have a sufficient volume of actual results for each vendor and every SOW. The data can be analyzed for opportunities and issues. You can identify fact-based opportunities for Project Teams and vendors to achieve better quality, higher productivity levels and lower costs. Ultimately, this is the most predictable way to increase the value for money.

Linda Tuck Chapman is a seasoned Outsourcing and Vendor Governance expert. You can reach Linda at (416) 452-4635, lindatuckchapman@ONTALA.com  or visit ONTALA Performance Solutions

By Steve Mezak

The emerging HTML5 standard will make it a lot easier to deliver more graphical and attractive Web pages to more and more devices (especially mobile devices). That makes it a big boon for Web developers, and also a great fit for Nearshore developers with an eye for good design and local tastes.

HTML5 Defined

HTML5, which most browsers already support, is the next step in the evolution of the hypertext markup language that controls how information is presented in Web browsers. It will make it easier for users to access audio and video by integrating audio and video support into the browser, rather than requiring the user to download and install plug-ins. The HTML page essentially becomes a container for other containers, which contains other containers, and so forth; JavaScript can easily access those containers, modifying, updating, and moving them around.

Another capability of HTML5 is that it gives developers greater control over presenting information from different sources on the same Web page. Conceivably, if you have multiple Web apps running on different servers or different sites, you have the capability to select bits of information and then reintegrate and display that information together using HTML5.

Use Cases

Why is that important? On the consumer side, for example, you would have the ability to present a news, entertainment, gaming, shopping or social site to mobile consumers that aggregates content in a new way from multiple sources. On the business side, you could create a Web site for, say, corporate real estate managers that gives them instant updates on demographic, zoning, traffic flow and other information to comparing potential retail sites.

You need graphic designers as well as programmers – two different kinds of skills – that need to work well together when creating a web application.

Such capabilities are especially valuable when they’re available on mobile devices, and this is another area where HTML5 shines. Rather than forcing developers to write a native application for every mobile platform (i.e., Apple vs. Android vs. Blackberry) HTML5 can automatically recognize variables such as screen size and automatically tailor the display to the device. With mobile devices rapidly becoming the “screen of choice” for business users and consumers, that’s a huge benefit.

You need graphic designers as well as programmers – two different kinds of skills – that need to work well together when creating a web application. Good user experience and graphics design requires a cultural component — that is, an awareness of the visual images and metaphors that will be instantly recognizable to the end-user of the web app.

The ability and willingness for a Nearshore developer to assemble a team that has both kinds of talent is critical. The good news is that, if they can create such a team, the Nearshore cultural affinity with the U.S. makes Nearshore developers well-suited to these demands, compared to other places around the world.

Steve Mezak is founder and CEO of Accelerance, Inc., which helps customers engage the right offshore/nearshore software development team to create high-quality software. Read more about HTML5 on the Accelerance blog.

By: Michael Santamaria

There’s little doubt that Business Process Outsourcing is here to stay; the lure of “easy” cost savings is just too powerful for companies to resist. But the truth of the matter is that implementing a successful outsourcing project is hard work and realizing those “easy” savings is by no means a foregone conclusion. While data on outsourcing failure is hard to come by, the Aberdeen Group has reported that 21% of outsourcing projects fail to meet stakeholder expectations, and Gartner puts the outsourcing failure rate as high as 30%. Although neither study defines what constitutes a “failure,” the bottom line is a large percent of projects end with unhappy clients.

When an outsourcing project fails, it’s easy to blame the vendor. But having experienced the situation from both sides of the table, I would suggest that more often than not, the purchasing company lays the groundwork for the poor performance. The onus is on the purchasing company to do an adequate due diligence and to manage the project. Can you really blame the vendor when they were put in the position to fail from the beginning? Ultimately, no one wins the “blame game,” you are better off doing the project right the first time around.

To avoid being one of the Gartner statistics, there are four considerations that need to be part of your outsourcing initiative, 1) set an outsourcing strategy, 2) choose the vendor that best fits that strategy, 3) own the transition, and 4) create the structure to manage the relationship.

Strategize Wisely

Setting your outsourcing strategy is the all-important first step. To a certain degree, outsourcing strategies can be classified as either tactical or transformational. The tactical model is designed to take advantage of labor arbitrage and often employs what is referred to as a “lift and shift” approach. Work is lifted from your company and shifted to one in a lower cost area. Vendors of lift and shift models typically use existing processes and work in your existing systems, requiring little change on the part of your company. Essentially, the location of the worker changes, but the work itself does not.

On the other hand, a transformational model almost always involves a software implementation, which leverages optimized workflows. Under a transformational model, your company replaces existing processes and technology with the vendor’s processes and technology. As such, an IT project is embedded within the implementation. Clearly, implementing a transformational model is more involved than lift and shift, but it yields some notable advantages.

So, how do you decide which approach is best for your company? While there are no pat answers, I have found that companies often shy away from “yet another IT project” and end up following the tactical path, which is a mistake. My advice is to start assuming the transformation/software dependent solutions. Many of these solutions are very sophisticated, their processes and technologies successfully encapsulating industry best practices, and they have a large installed base so you can take comfort knowing that most of the bugs have been worked out. In addition, most solutions have a relatively streamlined and formalized client onboarding process, mitigating many concerns about implementing the solutions. In some cases, of course, there are no transformational options that fit your needs, forcing you to go the tactical route. This approach is workable, as each model has its benefits.

Figure 1 below breaks down the strengths and weaknesses of each.

Choosing the Right Vendor

The next step in implementing a successful outsourcing project is choosing the right vendor. If your company’s strategy employs the transformational approach, the process of choosing a vendor will be driven by the software solution, actually making selection easier. Comparison of tactical vendors is more difficult, because, for the most part, you will be comparing intangibles.

Regardless as to the approach, it is necessary to spend adequate time on due diligence checking all references, asking the hard questions, and arranging to visit reference sites in order to observe the process in action. Observing the process in person provides a better understanding of the processes, handoffs, potential issues related to team integration, and challenges communicating across distance. A vendor demonstration cannot compare to an onsite visit. A trip to one or two reference sites will prove to be money well spent.

Once vendor selection is complete, the planning stage begins in earnest. Generally, vendors will provide the overall implementation work plan. That said, since this is ultimately your project, you have the responsibility of owning it! Your company should remain integrally involved in the transition, which means dedicating the appropriate staff, assigning a sponsor, and holding senior leadership governance and gate reviews. It is also necessary to spend time developing a comprehensive risk mitigation plan. Your company needs contingency plans to address potential obstacles, including negative employee-client reaction to temporary performance dips, the PR response if contacted by the local press, transition plans for the local staff, and most importantly, plans to deal with unforeseen departures.

Regardless of severance packages or retention bonuses, once job eliminations are made public, employees begin searching for new opportunities. Needless to say, their departures don’t always align with your company’s staffing needs. Recently, I had the opportunity to experience this issue first hand, when my client on a six-month outsourcing project announced to me that we needed to go live in one week, three months early, because they no longer had the staff in the department to process the work. It goes without saying that the next few weeks were not exactly smooth.

Manage the Vendor

The last factor to consider for your outsourcing project is post-implementation vendor management. Unfortunately, this step tends to go overlooked until problems arise. Communication is one of the most vital elements in making an outsourcing relationship work. I recommend you plan to over communicate at the beginning of the project. The communication plan should include daily supervisor calls, monthly management reviews, and a quarterly sponsor meeting. Over time, if this proves cumbersome, you can dial it back. At the beginning, though, plan to over-communicate.

The daily calls should occur at the supervisor level, last no more than 10 minutes, and address yesterday’s challenges and today’s expected volume. I try to keep the daily calls informal to help forge a relationship between the team’s supervisor groups. Monthly management meetings should focus on the service level agreement (SLA) and performance metrics. It is critical to agree on what will be measured, how it will be measured, and what performance levels are acceptable before going live. In my experience, failure to exercise rigor in this step is where many outsourcing initiatives go wrong. Finally, the sponsor meeting should be a review of monthly trends and discussion of performance issues.

For these meetings, it is important that sponsors treat the two teams as unified and hold them jointly accountable. When issues inevitably arise and a “blame game” begins, sponsors need to be able to cut through the noise and force the teams to work together towards a solution. After all, one team cannot be successful if the other fails.

Outsourcing is not easy. But if you start with a sound strategy, leverage the right vendor, and are prepared to manage the project and relationship you can achieve significant savings. Let’s face it, those savings are hard to ignore.

Michael Santamaria is a director at ScottMadden. His consulting experience spans a number of areas including business process outsourcing, process redesign, organization design, operations improvement, and project management. Prior to joining ScottMadden, Michael ran operations for a business process outsourcer, consulted for Clarkston Potomac Group and Emerson Consulting, and held several positions with General Electric. Michael received an M.B.A. from Case Western Reserve University, Weatherhead School of Management and his undergraduate degree from Washington and Jefferson College. He is a certified GE Six Sigma Master Black Belt.

Carlos Slim has over 170,000 followers, but his twitter production surprises many.

By James Bargent

With close to 90% of Latin American internet users engaging with at least one social media platform, the region ranks second only to North America in adoption of this passing fad turned digital revolution. There are now over 118 million Facebook users and more than 55 million Tweeters in Latin America’s social network and where the internet-savvy have led, politics and business have followed.

The most popular Latin American political tweeter by some distance is Venezuelan President Hugo Chavez, with 2.8 million followers. Before his recent travails, Chavez’s tweets were as likely to be passing comments on the weather as mini-rants against the bourgeoisie or new policy announcements. However, as the socialist firebrand now finds himself fighting an election campaign from his sick bed in Havana, Twitter has become his main tool for communicating with the electorate, a tool predominantly used for attacking his opponent and fighting the rampant rumors about his ill-health.

After Chavez, the most popular tweeters are the leaders of the countries with the region’s highest internet usage and deepest internet penetration; Brazil, Mexico, Argentina, Colombia and Chile. Among those, perhaps the least skilled management of Twitter comes from the leader of the country with by far and away the most internet users and with 4.3 million tweeters, more than double the number of twitter users than its nearest rival. Brazilian President Dilma Rousseff, an infrequent and sporadic tweeter, has 1.3 million followers on an account that hasn’t been used since she took office at the start of last year, yet just 8,000 following her new official presidential account.

In Colombia, tweeting by public officials has drawn the ire of the Inspector General, who has criticized politicians for the “overuse” of twitter as a forum for making announcements. The Prosecutor General’s Office has drawn up a list of legally and ethically questionable tweets by ministers, governors, mayors, secretaries and councillors, who prematurely released sensitive or even inaccurate information, including the dismissal of public officials, the release of prisoners and details of combat deaths.

Despite the near-universal take-up of Twitter or other social media among the region’s leaders, those hoping for serious policy or economic insights or hoping to catch leaders letting fly in unguarded moments will be disappointed.

A Tool to Rattle

Twitter talk in Colombia though, is dominated by the public fall out between ex-President Alvaro Uribe and his successor Juan Manuel Santos. While Santos (900,000 followers) utilizes Twitter with typical in-office caution, Uribe (1.1 million followers) primarily uses it as a tool to attack his former ally for betraying his presidential legacy. Uribe also uses twitter to launch legally dubious broadsides against officials and journalists investigating the former president and his allies over alleged paramilitary ties and abuses of power. Santos, for his part, claims he “doesn’t lose any sleep” over Uribe’s Twitter torrent.

Despite the near-universal take-up of Twitter or other social media among the region’s leaders, those hoping for serious policy or economic insights or hoping to catch leaders letting fly in unguarded moments will be disappointed. Most tweets rarely stray far from trumpeting the government’s achievements, publicizing new policies, imparting (nearly always) positive economic and trade information, or passing grandiose but generally bland presidential comments on the issues of the day. Some, like Chile’s President Sebastian Piñera (760,000 followers), also like to complement their political communications with humanising comments describing family dinners or their deeply felt pain at the latest poverty figures. Nevertheless, the tweets emanating from Latin America’s political leaders rarely amount to much more than 140-character press releases or campaign propaganda.

Little Bravado from Businessmen

Those turning instead to the region’s business leaders may be patchily rewarded.  While the world’s richest man Carlos Slim has yet to send a single tweet to his 170,000-plus followers (or the two people he follows), the man who says it his intention to become the world’s richest man, Brazil’s Eike Batista, has tweeted over 19,000 times. Batista (helped by his tweet team) has amassed 800,000 followers with tweets dealing with business, politics and even individual communications with his followers, all written in a smart and playful style.

Latin American businesses themselves have yet to fully engage with social media, according to the largest study on the subject to date – the rapidly aging Burson-Marsteller’s 2010 Latin America Social Media Study. According to the study, only 49% of Latin American companies used at least one social media platform, in comparison to the global average of 79%.

Facebook was the most popular tool, used by over 39% of companies, followed by Twitter, where 32% had an account. The study also showed 53% of those companies were being talked about on Twitter by stakeholders, suggesting a serious communication failure on the part of the businesses. However, those that did use Twitter did so actively and had on average garnered twice the number of followers than the global average.

Startup Fever an Engine for Social Media

Nevertheless, throughout the region there exist examples of IT trailblazers utilizing social media’s potential. In Argentina, the name “Palermo Valley” began to be bandied about by Twitter users in 2008 as an ironic term for the high concentration of IT start-ups in the Palermo neighbourhood of Buenos Aires. Early take-up of Twitter was dominated by IT sector workers, so when one such entrepreneur decided to try to bring together the people behind those start-ups, Twitter allowed him to locate and communicate with the right people in a way never previously possible.

Sixty people showed up for the first meeting, 150 to the second and over 400 to the third. Out of those meetings grew the organization Palermo Valley, a non-profit collective run by IT professionals who have helped fuel the Argentine tech sector by bringing together IT workers and entrepreneurs to create professional, commercial and educational connections.

However, while the case is not isolated it is far from the norm and it seems that while the people of Latin America’s have caught on quickly to the social media revolution and its politicians are rapidly catching up, the business sector is lagging behind and has yet to fully exploit the opportunities social media present.

By Luke Bujarski

Last week’s Bloomberg Latin America Investing conference in New York City was a sobering reminder of Brazil’s precarious economic balancing act hinging on foreign investment, consumption, government stimulus, and inflated commodity prices. Yet, despite mixed signals over the future macro outlook, Brazil’s IT services industry will continue to rage forward. Antonio Gil president of BRASSCOM shrugged off pragmatic panel concerns with confidence, reassuring the audience that IT will expand aggressively at ten percent annually, to reach $210 billion USD by 2020. We believe Antonio’s assertion is correct: Considering this country’s infrastructural challenges and consumption-driven expansion, the public and private sectors will turn to information technology to squeeze greater efficiency out of their operations.

This year’s Bloomberg Latin America Investing conference showcased the top brass of LatAm policy and investment experts, including our very own Alvaro Uribe who keynoted Nearshore Nexus 2012 the week prior. Two camps developed with pariah states Argentina and Venezuela in one corner, and tiger economies Mexico, Chile, and Colombia in the other. The “Nascent Giant” Brazil took center stage driving the conversation around macroeconomic stability and domestic market investment opportunities across the region.

Brazil’s Long-Term Macro Outlook Uncertain

An overvalued real was the major source of debate as investors wondered how long Brazil’s recent local bond rally can last. “The six interest rate cuts [Banco Central do Brasil] since July of 2011 proved to be a risk that paid off,” explained Chris Garman, Latin America Director at Eurasia Group, referring to a steadfast inflation rate. Despite the positive short-run returns on Brazil’s debt market, the country’s fundamentals were put into question. Brazil GDP grew only 2.7 percent in 2011 compared to 7.5 percent in 2010. Panelists and audience inquiries also challenged Brazil’s trade balance with the US, which swung from a $6.4 billion surplus in 2007 to an $8.2 billion deficit last year, as the real rallied and growth in Brazil spurred demand for imports. Moving beyond the impacts of monetary policy, attention swung to government spending and the deep-rooted infrastructural challenges facing Brazil.

“The long-run problem for Brazil is structural and nothing that short-term monetary policy can fix,” argued Joaquin Cottani, Chief Economist for Latin America at Citi Investment Research and Analysis. There is not enough investment in infrastructure, education, and health care.” Brazil is expensive relative to other emerging economies which puts a premium on the cost of labor, impacting the competitiveness of its manufacturing and professional services sector.

Will Argentina’s takeover of YPF kick off a new wave of government takeovers in Latin America and send foreign investors scurrying?

An overvalued real – arguably driven by US fiscal policy and quantitative easing – brings down the cost of imports sending Brazilian consumers into feeding frenzy. While China is an export economy, Brazil’s growth feeds on domestic consumption spurred on largely by a growing middle class and government programs targeting poverty reduction. Any fundamental change to fiscal policy is also unlikely, as long as economic growth is perceived as strong. “The Brazilian people have a positive and trustful relationship with government,” expressed Ernesto Araujo Minister Counselor of Economics at the Embassy of Brazil – which puts into question Dilma Rousseff’s ability to make hard choices when it comes to corporate taxation, public infrastructure spending, and direct subsidies for the country’s poor.

High Costs Will Drive IT Automation and Innovation

According to Antonio Gil of BRASSCOM, “pressure on enterprise to bring cheaper and better products to market will fuel IT demand for the foreseeable future.” Brazil’s expensive operating environment will propel IT as an enabler of enterprise agility. In a high cost and consumer-driven market like Brazil, companies look to cut costs across supply chain, back office, and procurement. Government will also look to IT to make health care delivery, education, and transportation more affordable to the masses. Brazil’s high labor costs also leave less room to ignore the value of IT-driven automation and operational efficiency. “Every week I have international IT investors coming to our offices inquiring about new acquisition targets and new market opportunities,” explained Gil.

Cate Ambrose Executive Director of the Latin America Venture Capital Association (LAVCA) also pointed to consumer-focused verticals for new market opportunities. “Anywhere where there is a direct connection to the consumer is where we see new companies and new applications for IT.” Ambrose pointed to retail, health care, and education as the hot sectors with the most startup and innovation activity.

Not Out of the Woods Just Yet

Brazil finally appears to be on the right track toward sustained economic expansion, even if GDP growth rates slumps below Wall Street investor expectations. By all accounts, the days of rampant hyper-inflation seem to flicker in the review mirror. This new epoch of stability should keep IT investment dollars flowing. Yet, Lawrence Goodman, Founder of the Center for Financial Stability warned to never underestimate the power of global economics and the impacts of external shocks. Will China’s slowdown prove to be a hard or soft landing and how will that impact Brazil’s commodities exports? Will Argentina’s takeover of YPF kick off a new wave of government takeovers in Latin America and send foreign investors scurrying? Will a growing European crisis derail global economic progress?