Posted on April 21, 2014 by Atul
The war for talent with digital skills is on.
In today’s digital world, technology talent is no longer reserved for IT firms. With industries across the world revolutionizing their business strategies in order to reach the increasingly more mobile and social consumer, competition for digital talent is at an all time high. How can you rise above the competition and bridge your talent gap?
Consider global talent. With burgeoning technology hubs throughout Latin America, and well-established destinations throughout Asia Pacific, the challenge may not be in finding digital talent but rather in knowing where to look. This phenomenon of going global to seek out digital talent is not without precedence; companies such as Amazon, Facebook and Thomson Reuters have explored the global digital support system with a great amount of success, especially in India and China.
For today’s digital leaders and Chief Digital Officers, effectively leveraging global talent enables organizations to take advantage of not only lower labor costs but also diverse intellectual capabilities, growth and quality enhancement opportunities, as well as the ability to get products to market more quickly. Successful CDO’s and global talent managers embrace a global and flexible mentality and constantly look for opportunities to improve—whether those opportunities present themselves in Michigan, Mexico, Malaysia, or anywhere in between. Much more than bottom-line labor costs and longer workdays, tapping into global talent can mean a more successful business, period.
Not surprisingly, the companies and leaders that are successful at managing a global workforce engage in similar practices—key practices that other companies, regardless of size, can emulate. Based on observations, trends and patterns identified over years of advising and working with global leaders, we have identified seven best practices of successful global leaders:
• Embrace Globalization
• Welcome Globalization as a Transformation Lever
• Adopt a Lifecycle Approach
• Align Business and Globalization Objectives
• Assign the Best People
• Implement a Strong Governance Model
• Embrace a Continuous Improvement Mindset
These 7 best practices are explored in detail in Atul’s second book, Globalization Wisdom: The 7 Secrets of Successful Global Sourcing], as well as in white papers www.neogroup.com
Contact a Neo Advisor to learn how global talent can be leveraged to meet your key digital objectives and address your business challenges in today’s rapidly evolving technology landscape.
Posted on February 15, 2014 by Atul
An overview of global sourcing Risks & Opportunities in El Salvador, Nicaragua & Peru.
Posted on October 17, 2013 by Atul
The following summarizes some of Q2’s more interesting developments from around the world as extracted from Neo Group’s Global Supply Risk Monitor℠ (GSRM℠), which tracks hundreds of the world’s leading Countries, Cities and Suppliers in the global services and sourcing realm. From thousands of observations, we’ve filtered a number of key highlights from Q2 with potential impact in the periods ahead.
1. The Rupee x Three? Perhaps the biggest ongoing news was the continued currency slide in the world’s largest offshore destination as the Indian Rupee hit lows of 60.76 per US Dollar. Paired with a high fiscal deficit and continued heavy capital outflows, the trend points to 2013 becoming the third straight year of net Rupee/USD depreciation with the accrued 2013 slide fast approaching 2011′s 18.8% overall decline. In the short run, the trend helps boost some suppliers’ results, but in the long run it may lead to buy-side clients seeking contract concessions. To read more, check out this recent article by CIO Magazine, How IT Outsourcing Customers Can Benefit from Weak Rupee.
2. Shanghai Goes Free. In China meanwhile, the State Council approved Shanghai’s newest Free Trade Zone. Don’t hold your breath for instant action, though – the new zone won’t be completed for another 10 years. Once finished, it could prove an alternative to the Hong Kong Free Trade Zone; although the latter has been highly desirable due to its sound legal system and market openness. In any case, a new Free Trade Zone is always an attractive option for opening new supplier delivery- or company-owned centers. Not content to stand still on the SEZ front, the Indian Government did away with the minimum land requirements for SEZs and has agreed to exempt service tax charges on developers and units operating within the country’s special economic zones (SEZs). The moves should benefit India’s IT industry.
3. Philippines Uptick. Over in the Philippines, strong government stability compelled rating agency Fitch to upgrade the country’s debt ratings from a ‘BBB-’ to ‘BBB’. That move should help prompt more investors to enter or enlarge their presence in the market. Over time, this will lead to a more mature outsourcing market.
4. Visas Down Under. During the quarter, Australia proved that the US is not the only buy-side location exhibiting anti-sourcing sentiments on the Visa legislation front. On June 28th the Australian Government passed changes to its ’457′ temporary work visa programs. These changes include a requirement that companies must hire Australian workers before considering immigrant workers for open positions, and they must pay Australian market salary rates to any foreign workers they do employ on a 457 visa. This could invariably increase supplier rates, as suppliers will end up spending more on offshore personnel traveling to Australia on 457 Visas, similar to the current US situation.
5. Split City. Country risk alone never accounted for all location risk, and India’s Hyderabad provided perfect evidence this past quarter. Political uncertainties again rose towards the end of the quarter, as the Telangana issue gained momentum ultimately leading to the bifurcation of the current state of Andhra Pradesh. Hyderabad is likely to serve as the joint capital. Tax revisions may be on the horizon. Hyderabad may adopt the VAT rate of either Telangana or AP. For a kicker, the city also faced increased power outages and an overall power deficit. While investors will explore coming back to the state, there remains much uncertainty around distribution of revenues, natural resources (power, water), tax rates, etc.
6. Mind Thy Neighbor. Q2 also offered us a reminder that Location Risk may not be a function of only the offshoring country in question. Pollution hit a peak in Malaysia, caused by smoke fog from Indonesian forest fires (??). That’s right, Indonesia. Malaysia had to declare a state of emergency in Johor. Schools and colleges were closed as the air pollution index in two districts exceeded 750 points, versus an acceptable level of 350 points. This is likely to bring down the Quality of Life rating in the country, always closely watched by ex-pats.
7. Vietnamese Boost. Vietnam’s software development industry posted strong growth in Q2 2013. The primary driver was Japan shifting from Chinese to Vietnamese providers (maybe they couldn’t wait around for that Shanghai Free Trade Zone). Moreover, economic recovery in the US, France and Germany also had a positive impact on the Vietnamese outsourcing industry. Despite these advances, the industry still faces difficulty in identifying new markets; evident in the fact that 70% of the total software export is attributable to Japan.
8. Enter Mother Nature. Geo-political risk was seemingly everywhere in Q2. India witnessed devastating floods in Uttarakhand in mid-June with over 6,000 feared dead, while Mumbai experienced monsoon rainfalls that disrupted trains, planes, automobiles and busses, stranding thousands of industry commuters. A major earthquake in the Sichuan Province of China killed 194 people and injured more than 12,000; while metro-Manila experienced massive June floods that paralyzed parts of the city. As if to again prove Geo-Political Risk is not limited to developing nations, torrential rains and severe flooding tormented Western Canada, and severe thunderstorms and snowstorms affected other parts of the country including Newfoundland, Saskatchewan, Manitoba, Ontario and Alberta, all leading to massive power outages. In Brazil, people proved as disruptive as Mother Nature herself as nationwide strikes brought millions of people to the streets over several weeks in a fight against corruption.
9. Bigger Pay Days. In Supplier news, no fewer than three Tier-I provider companies – Infosys, Wipro and TCS – announced wage hikes in the range of 6% to 8% for offshore employees and 2% to 3% for on-site employees. Meanwhile attrition rates ranged from 11% to 17% across GSRM covered suppliers. The equation means more stability, but perhaps some forward margin pressures, too. We’ll have to wait and see.
10. Inorganic Growth. Acquisition activity was significant during Q2, with Accenture agreeing to acquire Mortgage Cadence, closing on the acquisition of Acquity Group and Fjord, while IBM closed acquisition of SoftLayer Technologies and CSL International. Not to be outdone, TCS completed the acquisition of French enterprise solutions provider Alti SA. Perhaps more interesting than these acquisitions is WIPRO’s minority investment in Opera Solutions as well as its investment of $5 million in Leading M2M Platform Axeda. Investments in Big Data Analytics and cloud-based machine-to-machine companies may speak volumes about where the industry is heading.
11. The Tax Man Cometh? (Why stop at 10 when there’s an incident with potential impact to the industry’s future dealings?) On the heels of Vodafone, Nokia and Shell, industry provider WNS is the latest multinational that has come under the microscope of tax authorities on the subject of transfer pricing practices. Tax authorities in India are seeking an additional $101.9 MM, stemming from WNS’s acquisition of the UK-based Aviva’s BPO services. The company, however, has challenged the Income Tax (I-T) notices in the courts of law. Stand by for more.
These, and many other developments in the second quarter ending on June 30, remind us that the countries, cities and suppliers we turn to for effective global delivery are ripe with constantly changing risks – and constantly changing opportunities – that require proactive monitoring in order to achieve program success.
Global Supply Risk Monitor (GSRM) is the leading cloud-based supply data, analytics and monitoring subscription tool. GSRM monitors location and supplier risks and opportunities on more than 350 parameters across 50+ Countries, 100+ Cities, and 200+ Suppliers. To learn more about GSRM visit us at http://www.GlobalSupplyRiskMonitor.com or contact us at email@example.com.
Authors: Neo GSRM Team
Posted on August 26, 2013 by Atul
Corporations are part of the community. They are an essential participant in the community, especially where their teams work and where their products and services are used.
Neo Group has incorporated corporate social responsibility into its core values: People First, Customer Next, Better Place 360. Not only is it smart business, more importantly, it’s how our responsibility as entrepreneurs and business people.
of the things we do at Neo Group, for example, is donate our slightly used (but still in good condition) laptops to schools. It costs nothing but provides technology to kids in schools that didn’t have access to it before. The reality is that providing access to technology is a great way to develop the future workforce. It’s not just charity but really making a meaningful contribution. It’s absolutely incredible what technology has done to improve human life. It’s significantly transforming lives and families.
Recently brought to our attention is the amazing work of AidMatrix and Techbridge. These two groups put together the 2013 Silicon Valley Digital Ball, an evening event that doubles as an opportunity for networking with technology industry leaders and supporting a philanthropic effort to bring technology solutions to nonprofits around the world. “Proceeds from the event enable Aidmatrix and TechBridge to collectively impact the lives of more than 70 million people across the U.S. and globally, by empowering the nonprofits that serve the communities in which we work and live through technology innovation.”
Given Neo Group’s deep appreciation for technology and corporate social responsibility, participating in this event was a natural extension of our Core Values. As proud sponsors, we look forward to joining other technology innovators and thought leaders at the 2013 Silicon Valley Digital Ball on October 1, 2013.
We hope to see you there!
Posted on June 7, 2013 by Atul
“Its more fun to be a pirate, than to join the Navy,” - Steve Jobs
Global sourcing has developed into an intricate web of complex professional relationships that span oceans and continents alike, as companies seek to optimize their operations through outsourcing, offshoring, and cloud-based services. This increase in complexity in globalization is accompanied by a new tide of risks, greater than ever before in volume and variety.
As one example, cyber risk continues to grow, as modern day pirates are drawn to attacking companies wherever in the world they may let down their guard.
Far from seeing the glass as half empty, there is no reason for companies to turn the clock back on globalization or give up on further gains. The need of the hour, instead, is a proactive and effective risk-monitoring mechanism and strategy to manage these new levels of risk and complexity.
The unity and diversity of risks
So who’s to blame for the growing risks in globalization? The simple answer is: geography and scale. It is this unity that binds globalization risks, while the diversity of the risks comes from the distinct vulnerabilities of each location and the scale at which sourcing is performed.
A decade ago, outsourcing was largely dominated by giant nations such as China and India. Today, the globalization landscape has expanded to include over 50 countries with at least modest scale in regions such as Latin America and Eastern Europe. These offer lower costs as well as a proximity and increased time-zone overlap for developed markets in North America and Europe respectively. Important factors for such things as agile development in the software patch. This geographic sprawl is partially responsible for the higher risks.
Geographic risks encompass much more than natural disasters, regional politics, regional financial policy, local (city- or region-specific) culture, and legal risks. Despite the increase in the variety of risks even the worst of risks can be fully assessed in advance, avoiding service disruptions, financial losses and, potentially, brand dilution.
In our Neo Group model, for example, risks are monitored by continuously collecting data in real-time across 500+ parameters at the Country, City and Supplier levels and analyzed using an analytical engine to help inform critical decision-making. And the types of risk monitored must be constantly updated: last year we added cyber attacks and corresponding changes to jurisdictional cyber crime law to the parameters we watch.
We don’t advocate our model exclusively, but over the past two years clients have used it in the real world with encouraging results. In one case, this model helped pick up early warning signals on a policy decision in India – termination of the Software Technology Parks of India (STPI) scheme, which offered tax breaks. Based on the recommendations one of our clients, a leading semiconductor company proactively renegotiated a deal with a partner to locate in a Special Economic Zone (SEZ), ahead of the policy announcement. This “operational arbitrage” helped the client realize annual approximately 11% savings.
For global minded companies, the point is that the world has changed, becoming abundantly more complex, and the tools we use to manage it should therefore change too.
Firms leveraging global services can help avoid a different kind of anxiety by adapting a risk management approach and system to ensure the stability of operations and avoid significant disruptions.
It may not be as fun as being a pirate, but monitoring and managing global risks continuously is the new norm.
Atul Vashistha is Chairman and Alan Hanson is SVP of Neo Group Inc., a leading Global Advisory and Supply Analytics and Monitoring firm that provides Global Supply Risk MonitoringSM as a service for dynamically monitoring, managing and predicting country, city and supplier risks. Please visit www.GlobalSupplyRiskMonitor.com for more details on GSRMSM.
Posted on May 30, 2013 by Atul
As the global outsourcing industry matures, we see some major gaps. Most lag presence in growing locations outside of the USA and India. The other gap is that there are too many players and there is greater separation happening between the Tier 1 and Tier 2 players.
As Tier 1 suppliers look to grow, they will have to follow the acquisition path. They will look to acquire firms that are local, regional or niche leaders. So, expect firms like Globant, Ness and similar firms to be likely targets. On the other end, expect consolidation to get growth volume. What does that mean? Expect an iGate, Hexaware, Collebra or an HCL to be acquired. Yes, even HCL!
Who are the likely acquirers? Accenture and IBM! Most India based firms are not likely to acquire large firms but will focus on niche acquisitions – regional or niche leaders.
Why am I talking about something that has been discussed many times over the last 10 years.
It’s because I smell “Acquisitions”. Stay tuned!
Posted on December 21, 2012 by Atul
This is the time of the year when I am asked by analysts, magazines and clients to predict trends for the upcoming year.
Each year, as I reflect on this in December, I always think about what we experienced in the current year and what clients told us about their plans for the next year. The reality is that what they said to us in Q1 and Q2 often changes. This is when reality meets well laid plans. I have found though that what we hear in Q4 and Q3 is a good indicator of what the clients plans are for the upcoming year. But then, we don’t have an impending “fiscal cliff” every year!
My firm and I are not industry analysts. We are a team of advisors and operations executives focused on buyers of outsourcing and shared services. I think the state of the industry can be best read through the tea leaves of the buy-side. So, here are my top thoughts (probably not a statistically significant sample) from discussions in 2012 with over 100 C-level buy-side executives ………
Peek 1: Spend for IT will rise. There is a need to invest in revenue generation and so need to provide better data and mobile solutions will lead to investments in increased applications outsourcing. But is the decision-maker here the CMO or the CIO?
Posted on December 19, 2012 by Atul
De 11% a 3,5% se redujo la retención en la fuente para las empresas que realizan actividades relacionadas con el desarrollo de software en el país.
Yes, from 11% to only 3.5%. A commendable move by Minister Diego Molano Vega and the Colombian government. A move in the right direction to improve the software industry and IT market.
Posted on May 1, 2012 by Atul
ProNicaragua named world’s best investment-promotion agency.
KUDOS!!! Great achievement and of course, solid effort!
Recognized for their Good Work: ProNicaragua
April 23, 2012
(posted April 23, 1:00 p.m.)- After helping deliver monstrous 91% growth in foreign-direct investment in 2011, Nicaragua’s investment-promotion agency ProNicaragua was rewarded for its hard work by being named the top investment-promotion agency in the world, according to Global Investment Promotion Benchmarking (GIPB), a comparative study put out by the World Bank, the International Finance Corporation and the Multilateral Investment Guarantee Agency.
Of 189 investment-promotion agencies evaluated on a global level, ProNicaragua was the only one in the world to receive “Best Practice” ratings in all three categories: “Overall Performance;” “Inquiry Handling Performance” and “Website Performance.”
Gen. Alvaro Baltodano
The GIPB study evaluates each agencies’ activities to promote investment, facilitate investment and provide detailed, precise, and necessary information to investors to establish a business in that country.
“ProNicaragua is an example for all investment-promotion agencies in the world in terms of best practices in facilitating investment,” said Joe Phillips, the head consultant for the group that conducted the global study.
Gen. Alvaro Baltodano, presidential delegate for foreign investment, said the honorific is, “An achievement for the people of Nicaragua, because it demonstrates that there is a national consensus about the importance of investment for the country, which generates employment for Nicaraguans and energizes the national economy.”
In 2009, ProNicaragua’s second-best year in the GIPB ranking, the Nicaraguan investment-promotion agency finished second in Latin America and 11thoverall worldwide. This year’s results were announced last Friday in Doha, Qatar, and today in Managua.
Read the Nicaragua Dispatch’s recent two-part series on ProNicaragua’s performance last yearhere and here.
Posted on April 23, 2012 by Atul
UBS Sourcing Head: Make Vendor Selection Process “Visible and Transparent” | Nearshore Americas.
Do take a look at this. Vishal is a friend and a leading authority on outsourcing and globalization!
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