October1,2002OutsourcingBestPracticesFactBook©2001CapGeminiErnst&Young-AllrightsreservedOutsourcingBestPracticesFactBook/Page2BusinessProcessOutsourcing(BPO)OutsourcingBestPracticesPage3ITServiceProvidersPage5BPOServiceProvidersPage9FinanceandSupplyChainManagementPage23HumanResources/PayrollPage30IT–InfrastructureManagement(IM)Page43IT–ApplicationsManagement(AM)andApplicationsDelivery(AD)Page76CallCentre/CRMPage86TableofContents©2001CapGeminiErnst&Young-AllrightsreservedOutsourcingBestPracticesFactBook/Page3ExhibitmoredesiretobeprofitablethanadesiretowinbusinessAccuracyandconsistencyinunderstandingmarginperformancearemandatoryLeveragepartneringopportunitiesUnderstandthedynamicsofcompetition,valueandrelationshiplengthAdoptbestpracticesincontinuousperformancemanagementandmonitoringofmarginsacrossyourITservicesorganizationControlfixedcoststoprotectprofitsInvestinautomationwhereappropriateManagelabourpoolsandavailablefor-feeworkExecutiveSummary:OutsourcingBestPractices©2001CapGeminiErnst&Young-AllrightsreservedOutsourcingBestPracticesFactBook/Page4Formultiyearoutsourcedengagements,managetheblendofservicestoensurethatthebundledservicescollectivelyprovideadequateprofitlevelsLonger-termITservicesengagementsmustbecarefullymanagedtoaccuratelyprojectmarginperformanceBeselectiveonthedealsthatyoupursueControlprojectlengthstocreateabalanceddeliveryscheduleBenchmarkcontinuouslyWorkcloselyandcontinuouslywiththeclient'sdecisionmakerstocommunicatevaluedeliveredforprofitreceivedManageserviceemployee'sbillingratesbasedonperformancelevels;billforvalue-thebestshouldcommandthepremiumfeesExecutiveSummary:OutsourcingBestPractices©2001CapGeminiErnst&Young-AllrightsreservedOutsourcingBestPracticesFactBook/Page5ITServiceProvidersOutsourcingBestPractices©2001CapGeminiErnst&Young-AllrightsreservedOutsourcingBestPracticesFactBook/Page6OutsourcingBestPractices-ITServiceProvidersMajorFindingsOutsourcersareaggregatingmoreandmoreITservices—Signsoftheemergingservicesvaluechainwereapparentfromresponsestoquestionsconcerningdirectandindirectsales,sourcingofservices,andmixofservicesincontracts.Asmuchas10percentofdirectsalestoclientswillshifttoindirectsalesthroughotherservicesproviders;directsalestoothervendorswillincreasewithmanagement,ITconsultantsandfull-serviceoutsourcers;and17percentofthevendorsservingasleadorprimecontractorsorbusinesssolutionaggregatorsexpectthat,withintwoyears,between41percentand80percentoftheservicestheydelivertoclientswillbesourcedfromotherservicesproviders.Inaddition,moreandmorerespondentsareexpectedtoincludecontractsfromotherITservicesvendorswithintheircontractmix.ThepercentageofrespondentswithcontractportfoliosincludinghalformoreoftheircontractswithotherITserviceswillrisefrom68percentto89percent.Contractsaregettingshorter,withshortersalescyclesandmoreinnovation—Tenyearsusedtobethestandardlengthofdatacenteroutsourcingcontracts,butnomore.Today,theaveragedatacentercontractisjustfour-and-a-halfyears.Similarly,salescyclesfordatacenteroutsourcingaveraged8.9monthstwoyearsago.Today,theyaredowntosix-and-a-halfmonthsandareexpectedtoaveragejust5.7monthswithintwoyears.Typesofcontractsarealsochanging.Fixedprice,andtimeandmaterialsareusedfor66percentofalloutsourcingcontracts.Butoverthenexttwoyears,48percentand32percentoftherespondentswi...