Serbia as an Offshore

destinationPetar Kocovic

e-razvoj konference

March 27, 2015

Kolarac Foundation

Bangalore IT park India

What Will Global Delivery Look Like in the Future?

Low(er) Cost

Global Resources

High Quality Local

Talent

Industrialized Low

Cost Services

Global Delivery

Network

Global

Management

Teams

Business Geo-

Footprint

Global Insourced

Centers

Labour Intensive

(Customized)

More

Locations More

Vendors

Broader

Services

Greater

Integration

Global Delivery Risk and ChallengesCountry Risks Cost Related Risks

Natural disasters (earthquake, tsunami)

“Arab Spring”

Riots/Demonstrations/Civil unrest

Drug violence

Terrorism and physical security

Bribery and corruption

IP/Data protection

Internet/Web censorship

Email interception

Country debt crisis

e.g. Salaries, Real Estate, Currency

Fluctuations, Hidden/Peripheral Costs

Workforce Related Risks

e.g. Attrition, Staff Rotation. Quality, Visa

issues, Quantity/Sustainability, etc.

Skills-Related Risks

Vendor-Related Risks

Delivery Model-Related Risks

Every Location Is Not “One-Stop Shop”

Poor Availability Fair Availability Good Availability

Argenti

naBrazil Mexico

Czech

Republi

c

Poland RussiaSouth

AfricaChina India

Phillipp

ines

Application Services

Remote Infr. Mgmt

Service/Help Desk

Contact Centers

Back Office BPO

Skills-Related Risks

Finding the “Right-fit” Provider is Tough

Vendor-Related Risks

Global Providers

Even the biggest

aren’t everywhere:

- Significant scale

- Process expertise

- Global delivery

networks

- Domain expertise

- May lack flexibility

Local Providers

Can be hard to find:

- Flexible, responsive

- Location savvy

- May lack scale

- Immature processes

- May not be onshore

Cultural Differences

Multi-

Active

Linear-

ActiveReactive Vietnam

China

Korea, Thailand

Indonesia, Malaysia,

Phillipines

India

Iran, Turkey

Saudi Arabia, Arab countries

Sub-Saharan Africa

Brazil, ChileHispanic America,

Argentina, Mexico

Italy, Portugal, Spain,

Greece, Malta, Cyprus

Russia, Slovakia

France, Poland, Lithuania

Belgium

Australia, Denmark,

IrelandAustria, Czech Republic,

Netherlands, Norway,

Slovenia

USA

Germany, Switzerland,

Luxembourg

UK

Sweden,

Latvia

Finland,

Estonia

Canada

Singapore

Taiwan,

Hong Kong

Japan

Key:

blue - linear-active-cool, factual

decisive planners

red - multi-active-warm, emotional

loquacious, impulsive

yellow - reactive-courteous, amiable,

accommodating, compromiser,

good listener

Source:

Richard Lewis:

When cultures collide

Loquacity

Generosity

Impulsiveness

Tendency to deceive

Boastful manner

Unpredictability

Stubbornness

Openness

Low legal consciousness

Flamboyance

Hospitality

Charm

Machismo

Volatility

Nationalism

Romanticism

Unpunctuality

Managing Vendors with Offshore Resources

- The Cost and Workforce Challenges

Labor and real estate costs grow as demand overtakes supply of

quality resources

Exchange rate fluctuations require planning and flexibility

Quality and consistency challenges will continue, due to attrition

and staff rotation.

Buyers must agree on “Key personnel” clauses, active succession

planning and concurrently working with vendors.

Linear growth of offshore service providers is not sustainable

Providers will increasingly turn to alternative delivery models to manage

continued growth.

Where to Locate Resources?

What delivery personnel

should be locally based?

Should any of your staff be

located in the offshore

delivery centre?

When/how often should

offshore staff visit your

premises?

Who/how often should you

visit at the offshore delivery

center?

Strategy Management

Demand Management

Services Management

Relationship Management

Performance Management

Program Management

Contract Management

Financial Management

People Management

Risk Management

Some Offshore Locations

Gartner 30 Leading Locations for

Offshore Services, 2013

Latin America

Argentina

Brazil

Chile

Colombia

Costa Rica

Mexico

Peru

Uruguay

EMEA

Belarus

Bulgaria

Czech Republic

Hungary

Mauritius

Morocco

Poland

Romania

Russia

Slovakia

South Africa

Turkey

Ukraine

Asia/Pacific

Bangladesh

China

India

Indonesia

Malaysia

Phillipines

Sri Lanka

Thailand

Vietnam

Globally: 63% of buyers use Latin America,

55% use EMEA, 63% use APAC

What Countries Are Most Commonly

Used, 2013

Latin America %

Mexico 50.2

Brazil 46.8

Argentina 22.1

Chile 16.4

Costa Rica 11.0

Columbia 10.7

Uruguay 6.5

Peru 6.1

Other 5.7

EMEA %

Poland 25.3

Russia 19.2

South Africa 16.6

Czech Republic 15.3

Romania 14.0

Morocco 12.2

Hungary 11.4

Slovakia 9.6

Turkey 9.2

Mauritius 7.9

Bulgaria 7.4

Belarus 6.6

Ukraine 3.1

Other 10.5

Asia Pacific %

India 48.5

China 45.9

Malaysia 13.9

Phillipines 10.9

Indonesia 8.3

Thailand 6.8

Bangladesh 5.6

Sri Lanka 4.1

Vietnam 3.8

Other 1.9

Additional Countries with Potential

Americas: Cuba, Dominican Republic, Ecuador, El Salvador,

Guatemala, Honduras, Jamaica, Nicaragua, Panama, Puerto Rico,

Venezuela

Asia Pacific: Pakistan

EMEA:Algeria, Armenia, Bahrain, Croatia, Cyprus, Dubai, Egypt,

Estonia, Ghana, Isle of Man, Kenya, Kosovo, Latvia, Lithuania,

Macedonia, Madagascar, Malta, Moldova, Nigeria, Saudi Arabia,

Senegal, Serbia, Slovenia, Tunisia, Uganda

EMEA Ratings

Country LanguageGovernme

nt supportLabor Pool

Infrastructu

re

Educationa

l SystemCost

Pol & Econ

Environme

nt

Cultural

Compatibili

ty

Global and

Legal

Maturity

Data/IP

Security

and

Protection

Belarus

Bulgria

Czech R.

Hungary

Mauritius

Morocco

Poland

Romania

Russia

Slovakia

South

Africa

Turkey

Ukraine

Serbia

Poor Fair Good Very Good Excellent

One More Thing…

Determine the Effectiveness of Your

Service Provider’s Global Delivery Model

1 Range of Services

2 Quality and Professionalism

3 Domain Expertise

4 Responsiveness

5 Innovation

6 Pricing

7 Delivery Process/Methodology

8 Knowledge Management

9 Contracting Practices

10 Commercial Flexibility/Maturity

Sources

CIA Factbook

US Department of State

UNESCO

OECD

Asian Development Bank

International Labour Organisation

Federation of International Trade

Association

Business Software Alliance

US Agency for International

Development

Vision of Humanity

Factiva DB

OneSource DB

IHS Global Insight

Economist Intelligence Unit

EBSCO Information Services

World Audit

Transparency International

IMD World Competitiveness Yearbook

US Dept of Commerce

ISI Emerging Markets

Multiple Government Resources

World Bank

Serbia as an

OffshoredestinationPetar Kocovic

e-razvoj konference

March 27, 2015

Kolarac Foundation