Global Networking and Offshoring -HCL

ANKUR VERMA – 40707006ABHINAV PARMAR – 400887001JASDEEP BEDI – 40707014AMIT KALANIYA – 40707004

What is Global Networking for IT sector ??

An international networking methods that spans all departments, offices, and subsidiaries of the corporation. Global networks bring their own set of problems, including those of different time zones, languages, established standards, and PTT (Postal Telephone and Telegraph) companies.

What is offshoring with respect to IT sector?

Offshoring is a natural extension of global sourcing. It refers to the relocation of a business process or entire manufacturing facility to a foreign country.

MNEs are particularly active in shifting production facilities or business processes to foreign countries to enhance their competitive advantages.

Offshoring is especially common in the service sector, including banking, software code writing, legal services, and customer-service activities.

Why to go for offshoring

HCL EnterpriseEvolution And The Journey

Leading global IT enterprise comprising two companies in India :o HCL Technologies &o HCL Infosystems.

Founded in 1976.

A global transformational enterprise.

Its range of offerings includes :product engineering, custom & package applications, BPO, IT infrastructure services, IT hardware, systems integration, and distribution of information and communications technology (ICT) products.

80,000 professionals of diverse nationalities, who operate from 31 countries.

HCL – GLOBAL PRESENCE

OFFSHORING BY HCL

HCL Technologies Ltd on June 1, 2002 announced a 100% acquisition of Gulf Computers Inc, USA.

- HCL Technologies Ltd announced the formation of a strategic technology joint venture with Jones Apparel Group, Inc. Jones Apparel Group, Inc. a Fortune 500 Company,

-HCL Technologies Ltd announced on August 16, 2002 that it has entered into a joint venture with m.a. partners - a management consulting firm - to address software services opportunities in Global Finance Markets, especially in the areas of Investment Banking, Asset Management and Private Banking.

-HCL Tech, leading global IT services company, on August 19, 2002 announced a strategic alliance with Sento Corporation, a US based customer contact solutions Company.

International Business: Strategy, Management, and the New Realities

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The 2005 Offshore Location Attractiveness Index by A.T. Kearney

• Identifies 9 emerging markets in its list of the 10 most attractive offshoring suppliers: India, China, Malaysia, Philippines, Singapore, Thailand, Czech Republic, Chile, Canada, and Brazil.

• In addition to Canada, the other advanced economy in the top 20 destinations is the U.S. (11th).

• The index emphasizes various criteria: – Country’s financial structure (compensation costs, infrastructure

costs, tax and regulatory costs); – Availability and skills of people (cumulative business-process

experience and skills, labor force availability, education and language, and worker attrition); and

– Nature of the business environment (the country’s political and economic environment, physical infrastructure, cultural adaptability, and security of intellectual property).

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MOST FUNCTIONS CAN BE OUTSOURCED AND OFFSHORED TODAY

Source: KPMG, Knowledge Process Outsourcing, February 2008

Offshoring Scoping matrix

Retail Banking Wealth management, life and general insurance

Institutional, Investment & business banking

IT, Infrastructure and administration support (ITO)

Core banking systems Life policy systems maintenance and application development

Loan accounting and equity / Fixed Income trading systems

Application development and maintenance Remote infrastructure management Package implementation and support Database administration, data mining and warehousing solutions Middleware development and support

Product based transaction processing and customer contact centres (BPO)

Mortgage and personal loan origination, processing and servicing collections

eDisputes processing Credit card processing Consumer finance Cash management / Fund transfers and

reconciliations

Insurance claims administration and payment

Policy underwriting Insurance agency management Fraud detection Recoveries Trial balance analysis Brokerage operations Commissions administration

Project finance documentation Support FX, currency ops and derivatives

settlement Trade finance and LCs – advice and

settlement Corporate finance Risk management Securities processing Custody operations and trade

Inbound/outbound contact center Customer query handling Data entry, indexing and content management Customer background verification and finalization Loyalty retention (customer care program) Customer statement and other periodic reporting Regulatory requirements/mandate related support and administration Payment processing

Analytics Outsourcing activities (KPO)

Mortgage and personal loans Portfolio pricing Data warehousing Data-mining Marketing analytics

Fund performance analysis Reporting and accounting Actuarial support Product pricing including Dynamic

Financial Analysis (DFA) models Financial model validations

Equity research and M&A analytics support (valuation and related financial modeling)

Credit proposal analysis, preparation and documentation, portfolio analytics

Library services

PROGRESS BY HCL – IN OFFSHORING

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Offshore Learning Curve

Phase 1:Hype & Fear

Phase 2:Early AdoptersBest & Worst Practices EmergeFocus on Costs

Phase 3: Market MaturesRicher Practices EmergeFocus on Quality

Phase 4:InstitutionalizedFocus on Value-added

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GLOBAL NETWORKING WITH THE HELP OF SAP

HCL Technologies, another large Indian outsourcer, reported on Wednesday revenue of $915 million, up 33.5 percent from the same quarter last year. The company said that net profit had reached $103 million, up 35 percent from the same quarter last year.

SERVICES THEY OFFER FOR GLOBAL MARKET

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Risks in Global Sourcing

• Less-than-expected cost savings. • Environmental factors. • Weak legal environment.

•Inadequate or low-skilled workers•Risk of creating competitors.

International Business: Strategy, Management, and the New Realities

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Strategies for Minimizing Risk in Global Sourcing

1. The focal firm needs to invest in supplier development and collaboration.

2. Firms ought to go offshore for the right reasons.

3. Need to get employees on board.

4. Choose countries and suppliers carefully.

5. Choose between a captive operation and a contract with outside specialists carefully.

Thank you