Proven Outsourcing

April 2002 WHITE PAPER

Proven Outsourcing Processes at HSS

HSS CONFIDENTIAL

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Proven Outsourcing Processes at HSS

 2002 Hughes Software Systems Ltd. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic or otherwise, including photocopying, reprinting, or recording, for any purpose, without the express written permission of Hughes Software Systems Ltd. DISCLAIMER Information in this document is subject to change without notice and should not be construed as a commitment on the part of Hughes Software Systems. Hughes Software Systems does not assume any responsibility or make any warranty against errors that may appear in this document and disclaims any implied warranty of merchantability or fitness for a particular purpose. TRADEMARKS All company, brand, product or service names mentioned herein are the trademarks or registered trademarks of their respective owners.

Hughes Software Systems Ltd. Plot 31, Electronic City Sector 18, Gurgaon – 122015 Haryana (INDIA) Tel: +91-124-6346666/6455555 Fax: +91-124-6342415/6342810 E-mail: [email protected] Visit us at: http://www.hssworld.com

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1.1INTRODUCTION 1.2HSS: A PROVEN AND MATURE OUTSOURCER 1.2.1Unparalled Technical Proficiency 1.2.2Credibility and Expertise 1.2.3Experienced Management and Leadership 1.2.4Flexible Business Models 1.2.5Synergistic Building Blocks 1.2.6HSS Outsourcing Process 1.2.7Risk-Mitigation Measures 1.3BUILDING A 'WIN-WIN' RELATIONSHIP- A CASE STUDY 1.4OUTSOURCING: A DECISION OF TRUST

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Proven Outsourcing Processes at HSS

1.1 Introduction

Chapter 1

Outsourcing has becoming an accepted way of functioning for organizations the world over, however enterprises remain pensive when it comes to entrusting external agencies with critical application and company information. This paper enumerates HSS experience while executing offshore outsourcing assignments. It is slightly technical in nature as it deals with communication software development, with a primary focus on the Telecom Industry. The telecom-focus should not be misconstrued to imply that Outsourcing is not recommended for other industries. The document is further supported with a case study detailing our alliance with one of our clients, where HSS was able to move offshore outsourcing agreements beyond transaction-based relationships to value-added strategic partnerships. The purpose of the paper is to stress that offshore outsourcing or insourcing decisions should be based on a solid business case analysis.

HSS: A proven and mature Outsourcer HSS is a subsidiary of Hughes Network Systems, USA (GM group company). We specialize in providing offshore outsourcing services to Fortune 500 companies. Our reputation in the telecom industry provides immense credibility to the offshore outsourcing-models and offshore services we deliver. The following exhibit shows the cost-advantage offered to our clients. The illustration has been modeled keeping in mind a 50-member team working in an offshore model, supported by onsite presence. It further takes into consideration the cost incurred by HSS for setting up a dedicated communication link.

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HSS adds value to the concept of offshore outsourcing by its emphasis on the following key success factors. HSS' technical capabilities combined with proven project management. This can help you reduce your time-to-market significantly. We believe that every customer and their needs are unique and we adapt our way of working and our business model to help you meet your requirements.

1.1.1Unparalleled Technical Proficiency In-depth domain expertise in a wide arena of communication technologies coupled with skilled engineers gives you that added advantage of associating with HSS. The team constitution covers all dimensions of development and testing, offshore as well as onsite. With more than 1600 dedicated employees, we have built an experience of over 6500 person years in this business in last 10 years.

1.1.2 Credibility & Expertise HSS' customers include leading computer and communication equipment manufacturers, including well-known companies like Cisco, Nokia, Armillaire, Ericsson-aheadcom, NEC, Alcatel, Dialogic, ADC and Tektronix among others. Quality assurance is an integral part of all activities carried out by us. We are committed to preserving the client's Intellectual Property Rights under a secure organizational environment.

1.1.3 Experienced Management and Leadership HSS deploys its best practices and processes, built over the last 10 years, into the execution of large projects so as to deliver quality solutions on time and within cost. To this end, HSS strives to institutionalize its proven project management experience and skills and is continuously reviewing and upgrading its methodologies, practices and training programs.

1.1.4 Flexible Business Models HSS offers innovative business models, which are flexible enough to meet your specific requirements. Our business models' suite includes Fixed Cost, Time and Material and Dedicated Development Facility models. Any of these models can be applied to our wide range of services in inventive ways, which offers you the best value for your money. HSS' Dedicated Development facilities (DDF), equivalent of Offshore Development Center (ODC) are a virtual extension of the client's R&D centers and are equipped with 'ready-to-serve' resources.

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1.1.4 Synergistic Building Blocks HSS' large inventory of pre-engineered building blocks forms one of the key intellectual assets of the company that provide an unparalleled advantage to customers in cutting down product development time and cost.

1.2 HSS Outsourcing Process HSS has a mature process for executing offshore Outsourcing assignments. The model followed by HSS over the last ten years has been outlined in the following exhibit.

Contract / SLA signing The outsourcing-contract is the single tangible entity defining all the parameters in the outsourcing alliance being pursued. Before formulating a contract, we define the measurement-criteria. We realize that measurements are the primary means to determine the success or failure of the outsourcing process. It is further kept in mind that the type of contract signed will affect the metrics used. For example, in outsourcing contracts for strategic applications we encourage using more outcome-based measures, while in technical support contracts the emphasis is to use a number of performanceor work-based metrics.

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At HSS, it is a practice to organize a contract-negotiation team comprising representatives from the HR, Legal, Finance, Engineering, Quality, MIS and Technical departments. The essential ingredients of the contract includeClearly defined SOW; Price; Deliverables; Performance standards / guarantees, penalties; Flexibility; Personnel Provisions, ownership of Data/Software; IPR; Change Clauses, Force Majeure; Dispute Resolution and Termination. The SLAs are framed in conjunction with the client. In this phase project-dependencies are clearly stated and a plan identified for monitoring their progress.

Key Resource Identification In this phase a group of HSS key consultants are identified along with the core technical team for the project. A meeting is fixed (audio / video) with the customer to kick-off the project. This forum is used to sought clarifications on contract, NDA, plan for the initial activities and travel-plans. The Offshore Development Center(ODC) Manager identified in this phase works in conjunction with the counterpart manager to formulate a Responsibility Matrix between different sites.

Onsite Knowledge Acquisition A group of key HSS consultants are posted at the client's site for gathering knowledge on the application. HSS consultants are sent offsite for this endeavor. They document all the information gathered and follow the methodology mentioned below: - Analyze the existing system architecture details - Study the methodology & tools specific to the partner - Examine the existing documentation The documentation so collated helps in understanding clients' quality standards, which is followed by a gap-analysis. In general, a small project is identified that can be taken as a pilot-project.

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Offshore / Lab Infrastructure Set-up In this phase details on asset-transition is worked on. Every minute detail related to the Offshore Development Center(ODC) infrastructure setting-up including the provision of a workstation / PC, a telephone extension and adequate closet-space for storage is looked into. If the project involves working on special hardware / software, the logistics for the same are worked in conjunction with the customer. HSS also recommends setting up dedicated high-speed communication link with the partner's location. HSS has installed 128 kbps or 64 kbps leased lines for its existing Offshore Development Center(ODC) clients to ensure dedicated communication-link between the parties. The phase further includes planning layouts as per security, staffing, lab and IT needs.

Training Phase Here in this phase, mechanisms are put in place for ensuring transfer of knowledge acquired onsite to the offshore project team. This phase also includes arranging for some special project-based training that might be required. HSS training policies of identifying consistent training-needs identification system; encouraging role-based approach to training for all employees are applied to these Offshore Development Center(ODC) as well. The Offshore Development Center(ODC) team has access to HSS training infrastructure - elaborate library, automated learning center etc.

Offsite Team Mobilization This phase normally starts in congruence with the team ramp-up and technology transfer phases. The core team imparts project-specific team to other team members. The interfaces between customer's side and HSS are further defined in this stage- prime ones being PMT (Project Management Team); Technical and Test Leads and Support Team-leads. The offsite team organization structure; roles and responsibilities of team-members are shared with the client for their feedback.

Project Plan / Milestone signoff Following the transfer of existing product architecture, design and implementation details to HSS, process-deliverables are discussed with the client. The important deliverable of this phase is the framing of schedule of deliverables / milestones, which is shared with the client. The quality-norms, coding standards, configuration management and defect-management tools are discussed to ensure smooth project execution.

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Offshore Project Execution The most critical phase of the project is the Project Execution stage. It includes deciding on mutually convenient Project Tracking mechanisms, Reporting mechanisms and calendar of conference calls. HSS further commits to Project monitoring measurement criteria and frames Escalation Matrices for the client. The execution of the project usually follows HSS process-life cycle and at the end of the schedule time, HSS delivers the executable with well-documented source code and documentation including test plan.

1.3 Risk-Mitigation Measures Risk identification is an essential part of the offshore outsourcing process. Risk affects priorities of the project, its costs as well as its benefits because of its impact on the success of the project. For example, using internal personnel who are more knowledgeable of the applicable goals, objectives and strategies of the organization's project helps to assure that the project will meet the need of the agency. Risks must be identified, understood, and prioritized. The identified high-risk areas (having high impact and having a high probability of occurrence) must then be addressed with suitable mitigation measures. In the following table, HSS has tried to capture all possible risks and their mitigation-measures.

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1.4 Building a 'win-win' relationship - a Case Study Background Our client, a high tech. startup based on the East Coast wanted to provide advanced integrated voice and data based services to a customer base that has traditionally sourced these two services from independent sources. Leveraging its expertise in Next Generation Switching, a 'ready-resource backup' and proficiency in providing product-consulting services, HSS was able to take complete technology and product evolution responsibilities. HSS' prime responsibility was to evolve the new proprietary switching fabric firmware; multi-service switch and embedded application software.

Genesis of the alliance After a very long and exhaustive process, the customer chose HSS to be the chief technical partner with them in architecture and development of the new switch. HSS henceforth built a strong technical team with highly qualified managers and engineers to work along with the customer in giving shape to their concepts for next generation switching software. Involving just 10 HSS engineers initially, the partnership grew to 98 engineers during peak-time. The relationship deepened to the extent that HSS worked on some of our client's core technology developments.

Technology overview & expertise involved The client's switch software requirements was very different from the traditional monolithic and highly hardware coupled architecture. Rather, the architecture was based upon open and multipurpose computing resources and a design concept that owes it genesis to a new age Object Oriented design paradigm and advanced Distributed Computing environment. This project offered to architects and developers alike the unique opportunity and challenge to conquer the obstacles of stringent telecom performance and yearly needs with the flexibility and at times computational overhead of networked and distributed architecture.

The assignment involved building Bellcore recommended SPCS specification of Class 5 local exchanges and a comprehensive suite of telecom protocol suites such as ISDN-PRI, GR-303, ISUP and non call associated signaling protocols such as TCAP (for INAP). The core call-processing module shall be based on AIN 0.2/ CS-1 BCSM model. The complete design and implementation is in OO based and would use C++.

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Proven Outsourcing Processes at HSS

Moving towards building a Strategic Alliance HSS has been involved with clients engineering team right from conception phase. HSS worked on an extensive Systems Requirements and architecture phase on a T&M basis. HSS used its extensive expertise in Bellcore standards, in specific, and telecommunications switching architecture and implementation in general, to make a detailed set of documents on the complete SPCS (Class 5 Local Exchange) software requirements. Based on these critical contributions of HSS, customer gave a year long contract to build a 40-member team to join hands with their engineering team to embark on the challenge.

Proven Success leading to a Dedicated Offshore Development Center(ODC) Facility

HSS was very successful in instilling faith in customer's perception of HSS ability to handle complex telecommunication projects, technically as well as from the management perspective. The customer's executive team decided to go for a Offshore Development Center(ODC) with HSS. Under this arrangement, HSS will have dedicated office space and lab resources setup and a committed minimum manpower resource dedicated for the client. This move also ushered the phase of independent ownership of features and responsibility of development and testing and delivery of high quality software from HSS. Th DDF set-up for the client provided for the following state-of-the-art infrastructure benefits ensuring a secure environment. · The DDF has a separate LAN and access to the DDF facilities is restricted to DDF associates · Dedicated 128 Kbps data and voice multiplexer link connection of DDF to the client is been worked upon, and is anticipated to become functional in near future · In addition, client's software development was mirrored in the DDF · The customer had provided hardware and software · The DDF follows the client's quality process, augmenting it with HSS' SEI-CMM Level 4-quality process wherever necessary · It has dedicated quality support and network administration staff · Special training in relevant technology areas is conducted for DDF members

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Project Management Endeavors For each project, there was a detailed process of project definition and specification development. This ensured that project methodologies, scope, schedule and deliverables were unambiguously defined and understood by both parties, helping synchronizing information and processes. Contract negotiations similarly served as a mechanism for building shared understanding, as well as provided a strategic direction to the relationship. At both senior and project levels, HSS made extensive use not only of the communications facilities available, but also of physical movement to provide for face-to-face meetings. Such meetings proved to be more effective at synchronizing values and informal information, in a way that IT-mediated communication could not. HSS also ensured that traffic was two-way, with customer visiting HSS offices in India as well as having Indian staff going to client's premises. From product-architecture finalization, to guiding the hardware designing, HSS followed what we termed as the 'firmware down-up' approach. Right through the project tenure, HSS' engineering team strength always outnumbered that of the client. The onsite project team further was instrumental in setting up client's lab. From booting up the machines to connecting workstations to network to drafting ISO quality norms, HSS was an indispensable part throughout. The above-mentioned practices built a significant degree of congruence between the two parties. Even today the alliance is still thriving and is on its way of becoming an indelible success-story.

1.5 Outsourcing: A decision of trust Outsourcing can be a viable option when executed with adequate safeguards. The chances for a successful outsourcing decision are maximized when the decision fully incorporates all known costs and benefits of internal versus external resources, according to the type of project under consideration and when the contract is negotiated and managed effectively.

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For moving an outsourcing relationship from transactional to a strategic alliance, the reader is referred to another white paper by HSS, aptly titled 'Outsourcing: A decision of trust'. This white paper emphasizes on undertaking a cost-benefit analysis for deciding on the outsourcing versus insourcing project execution. Many outsourcing relationships commence with optimism and mutual amiability. Both sides profess the client's need to focus on core-competencies and the outsourcer's commitment to leveraging its technical acumen to deliver strategic value. But after the initial phase, client is faced with the challenge of staying focused. The outsourcer, on the other hand struggles to address obscure business objectives and meet aggressive performance targets, all the while focussing on its own profit margins and bottom-line. This white paper suggests a four-step model that must be followed for building strategic alliances. Outsourcing is not a typical buy or sell transaction but a case of building long-term relationships, where both the parties are convinced of mutual benefits. From carefully selecting the right-vendor, to establishing contract measurements, to managing and evaluating contract, to identifying outcome measurement criteria every facet of offshore outsourcing needs planning and diligent execution to make the relationship a 'win-win' alliance. The white paper further proposes a vendor-selection checklist and a nine-step model for managing and evaluating offshore outsourcing contract.

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