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Managing Global Processes

and Remote Teams

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2004 GIT All rights reserved 2

IT Challenges

IT Departments worldwide are challenged tosimultaneously:

Realize Cost Savings/Containment

Ensure the Stability/Availability of ProductionEnvironments

Enable New Business Strategies

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IT OutsourcingStrategies

Companies are: Reshaping according to core competencies, bringing

greater value to the customer and higher productivity tothe company

Making outsourcing a long term strategy instead of atactical solution

Hoping to achieve numerous benefits from appropriateoutsourcing

Increase Agility Rapidly Capitalize on Emerging Opportunities Get Products to Market Faster Realize Tremendous Cost Savings Mitigate IT Risk

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Offshore OutsourcingTrends

META Group, October 2004 (Penni Sanchez, Alan Katz)

By 2006, Most IT Organizations will have an OffshoreStrategy

Offshore Outsourcing Market Exceeds $10 Billion

Average Enterprise to Offshore 60% of Application Work by2006

Political Backlash Toward Offshore Not Deterring Market

Adoption Offshore Outsourcing Market to Grow 20% Annually

Through 2008

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Indian IT Servicesthe Main Player

0% 10% 20% 30% 40%

India

China

Mexico

Ireland

Canada

Malasia

Philippines

Russia

Singapore

Computerworld Surveyof IT Managers in US

June 2004

US Managers Currently Outsourcing IT Workto the Following Countries

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Top IndianVendor Growth

TCS Infosys Wipro*

Comparative Parameters (FY04)

Sales Growth % 32.6 36.7 35.1

Profit Growth % 27.5 25.5 N/A

Operating Margins % 27.3 25.5 22.0

*Only for Global IT Services

Source: META Group, July 2004

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More OutsourcingPredictions

Some Changes on the Horizon

TPI (Greg Blount and Paul Schmidt, 2004) - We believe that theIndian market will continue to experience increased competition.What India has done is to create a blueprint for other countries toemulate so it should be expected that other locations such as

China, the Philippines, Eastern Europe, and South America willincrease their capabilities and become more competitive.

Also:Managing risk through multi-sourcing through multi-geographies will continue and grow

Competition will provide more downward pressure on ratesand pure play Indian companies margins will continue to erode

Giga Research predicts that attrition will skyrocket in the Indian ITservices arena in 2004.

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Prominent Causes ofOutsourcing Failures

23%

13%

11%8%

3%

15%

11%

11%5%

Buyer's unclearexpectations up front

Poor governance

Poor Communication

Provider's poorperformance

Buyer's multi-supplierenvironment

Interests becomemisaligned over time

Not mutually beneficial

Other

Poor cultural fit

Source: Outsourcing Center 2004 Survey

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Other OutsourcingInhibitors

Geopolitical Risks

Time Zone Differences

Lack of Infrastructure

Readiness of Client

Clients Fear of Losing Control

Loss of Critical Skills

Clients Fear of Loss of Confidentiality

Lack of Understanding of Business

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Client Challenges

Clients that understand the success factors of outsourcing, andcan also mitigate the inhibitors, will achieve significant benefits

Companies need to be ready - which means experienced,

capable internal Project Management and standardizedprocesses

Top down management support required for successfuloutsourcing relationship

Companies need to be flexible and embrace mixed modelsaccording to project objectives

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Provider Challenges

Providers of outsourcing must understand the challenges of ITdepartments to reduce costs, support business strategies, andmaintain aggressive technology agendas

Providers must eliminate many of the inhibitors to successful

outsourcing

New providers need to differentiate themselves from the usualoutsourcing paradigm by combining:

Compelling Low Cost Same Time Zone Communication Collaborative End-to-end Perspectives Cultural Affinity Scaleable for Small/Medium Companies Strong Local Project Management

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Outsourcing Enablers

Client/Provider Relationships, Trust, Flexibility

Comprehensive Contract/Project Management

Large Pool of Highly Skilled Resources

Advanced Infrastructure, Telecommunications,Facilities

Mature Delivery Models

Business Oriented People Offshore

SLAs/Metrics Well Defined and Understood

Clear Objectives Top-down Support

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Premise for NewOutsourcing Model

Successful IT outsourcing does not have to belimited to the big tech centers in India

As long as the provider country has:

Large technically educated middle class

Stable, modern infrastructure

Business experience

If providers can be from anywhere that satisfies aboverequirements, why not reduce inhibitors such as time zonedifferences, cultural misunderstanding, communicationissues

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New Model Differentiators

Cost Equal to or less than competition

Solution Oriented Interactive, collaborative, and end-to-end business perspective

Time Zone Work day corresponding to that of the US

Culture Westernized culture and values correspond to that of the US,facilitating communication and understanding

Geography Provides geographic alternative

Communication English speaking dialect, culture similar to US

Scope Services are scaleable and available for small and medium companies

OffshoreDifferentiators

On-site Support Local staffing, project management and bench strength throughstaffing company partnerships

US Project Management Experienced, US-based management team for effective projectmanagement

OnshoreDifferentiators

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IT OutsourcingCost Model

Application DevelopmentSourcing Cost Model

AD ProjectPhases Efforts ona Phase

Billing RatesAdditionalProject Costs

Effectiveness Communication

External/MarketAdjustment

Technology

ExpertiseProjectManagementExpertiseBusinessDomainExpertise

LanguageCollaboration

Project Sourcing Cost Factors Project Sourcing Cost Adjustments

Source: Gartner 2004

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GITs Value Proposition

Compelling Low Cost and

Low Total Cost of Ownership (TCO)Rates equal to or less than Eastern companies and with less

overhead required due to local presence

Same Time Zone CommunicationWork day corresponding to that of the US, facilitating communication

and providing geographic alternative to Eastern companies

Collaborative, End-to-end BusinessPerspective

US and International business/technology experience of executives

provide mature, interactive, big-picture business view

Measurable, Agreed Upon ExpectedResults

Project and life cycle processes ensure collaborative

measures of success and prompt delivery of expected results

Exclusive, Dedicated ResourcesFlexible staffing models allow assignment of committed resources

to client projects and ongoing engagements

Strong Local Project and RiskManagement

US based executives with extensive project management and risk

management experience ensure project control and success

Accessible to Small/Medium SizeCompanies

Scaleable services allow access by small and medium

size companies unable to attract the attention of large providers

Cultural AffinityWesternized culture and values similar to that of the US, facilitating

communication and understanding

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Global Intelligence TechnologyLLC

USA Sales, Liaison and Delivery

USA Clients

Development CentersIT Factory and Staffing

SpecializedSubcontractors/Partners

(when necessary)

Service MasterAgreement

Global Intelligence Technology, LLC (GIT)

Service Master

AgreementMirroring

LA Clients

Argentina

USA

GIT CorporateStructure

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Latin America ShowsOutsourcing Promise

Study by Jones, Lang, LaSalle, Inc., reported by the WallStreet Journal, Oct. 2004, (Ryan Chittum)

Latin America comes out ahead of India and China in theoffshoring equation when factors like labor quality, labor

supply, and time-zone differences are taken into account.

Increasing need for work forces that speak Spanish couldmean more jobs for places like Mexico City and BuenosAires.

Ranked by the size of the labor pool and the quality of labor,the top city was Manila, the Philippines. Sao Paulo; MexicoCity and Buenos Aires were next.

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Why Argentina?

Cost Among lowest countries for global outsourcing

Superior location advantages: time zone,distance, responsiveness

Infrastructure Solid communication and power-supply

infrastructure development over the last tenyears

2001 most significant renewal of PCs andservers in Latin America

Commitment to innovation and ongoinginvestment in infrastructure

Human Resources Large, highly skilled IT work force Proven competencies in developing and

maintaining large-enterprise infrastructuresand programs

Workers possess a wide range of technologyskills, business background, and clientinteraction skills

Available Skill Sets

University Students per 100.000 inhabitants

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14

35

38

40

36

Knowledge Jobs

Globalization

Economic Dynamism and Competition

Transformation to a Digital Economy

Technological Innovation Capacity

Ranking of Argentina according to Meta patterns

Overall Ranking 32

Argentina is ahead of:Poland 40Turkey 36Slovenia 36

Russia 34China 34Philipines 34India 33

Argentina is behind:

Czech Rep. 28Brazil 27Hungary 27Estonia 27

Best Ranking 1

Worse Ranking 49

Source: Meta Group, March, 2003

Argentina is at the same level of many of todays outsourcingleaders in terms of its infrastructure, workforce, and countryscommitment to change.

Why Argentina?

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Outsourcing Agreements define Statements of Work (SOWs), Service LevelAgreements (SLAs), Operating Principles and Metrics

Project Management Processes and Tools used offshore/onshore

Standardized Development Life Cycle being used offshore with phasedeliverables defined in detailed schedules

Risk Assessments and Contingencies produced as early phase deliverables

Onshore/Offshore Architecture: VPN or Frame Relay connection to US allowing offshore developer access to shared

files

Same firewall rules apply as currently in place at company

Repository file servers may be required onshore if deemed appropriate by client

Reporting

Detailed Project Status Report weekly Executive Status/Early Warning Report monthly/ad hoc

Ongoing Issue Log maintained and reported

Tools

MS Project, Configuration Tools, Collaboration Tools (as required by client)

Processes/Methodologies

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Contract/AgreementStructure

MasterContract/Agreement

OperatingPrinciples

SOW 1 SOW 1 SOW N

SLA 1 SLA 2 SLA N

MetricsDefinitions

Defines the legalterms of theagreement

Defines theprocedures sharedbetween client and

outsourcer

Specifies the metricsto be used (context

and content)

Defines theacceptance

criteria

Defines the workto be performed

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ProjectOrganization Sample

Project Director

CUSTOMER

Project Manager

PMO

Business Systems

Technology

Project Manager

PMO

Business Systems

Technology

PROVIDER

Projector Director

Communication

Reporting

STEERING COMMITTE(weekly)

Project Directors

Project Managers (Ad-hoc)

Project Plan

Issue Log

To Dos

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Risk Management

Early Risk Assessment with Impacts/Mitigators

Robust Project Management Processes

Software and Data Backup and Recovery

Physical Site Security

Business Continuity Protection

Infrastructure Redundancy

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Knowledge Transfer

Create Knowledge Transfer Plan with detailed responsibilities

Start with pilot

Maintain employees offshore

Understand cultural differences

Visit offshore facilities - establish relationship

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Global OutsourcingModels

Offshore

Onshore

Mixed

Completely outsourcedto single offshoreprovider

Riskiest

Bring offshore resourcesto local geography

Costlier, moreoverhead

Combination of onshore/offshore

Most effectivemodel

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On-site/Off-siteResource Mix

On-site/off-site mix varies by project:

Size of project

Complexity of project/technology

Level of specificity of requirements

Duration of project

On-site team is critical and must be skilled in

global projects

Technical translation

Cultural differences

Compliance with quality standards

Commitment to plan

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Choosing theRight Partner

Agile MethodologiesUnique/Creative

Efficient/Repeatable

Low/Freestanding High/Interactive

Required Client Interaction

TaskCharacteristics

Source: Clarity Consulting, Ian Hayes

Offshore Delivery Model On-site Staffing Model

More Open Culture

Robust Project Management Processes

Hierarchical Culture

Offshore Delivery Model Mixed Delivery Model

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Thank You!

Carlos DElia CEORobert MorganEVP & COO

r Morgan

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