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BPO Journal

Wednesday, December 27, 2006

Justice outsourced

News is always more newsworthy in India - corruption scandals, hostile neighboring countries, and just yesterday, a uranium-based ash analyzer went missing in Jharkhand with no action reported so far. However, over the last few days that I've been here, there's something else that's grabbed the attention of the masses that's all over the news.

Two high-profile criminal cases. Priyadarshani Mattoo, a young law student, who was killed by Santosh Singh, the son of the commissioner of Police in Delhi after years of stalking and harassment. Jessica Lal, an aspiring model, who was killed by Manu Sharma in a fit of rage, when refused a drink after hours in a local pub. In both cases, the accused had managed to secure their acquittal in the lower trial courts for their heinous crimes. And everyone mouthed resigned sighs. This was India, after all. Such justice was their fate, wasn't it?

But that was not to be. Given the gross inefficiency of the legal and judicial system in the country, there was only one thing the stakeholders could do - outsource the judicial process. And that's exactly what they did. The jury of nine in the United States that uses rules of common sense to judge cases was replaced by a jury of several millions to try these high profile cases. Youth activists groups such as "Justice for Priyadarshani" and "Justice for Jesicca" were established, SMSs turned into protests, angst ridden letters were published in leading dailies and millions took to the streets in quiet protest. Several candlelight vigils, vehement newscasts, undercover investigations and outpourings of outrage later, the high court responded. The denouement was quick and prompt dispensation of justice.

In the case of Santosh Singh, the judges took just two-and-half months for admitting the appeal of the Delhi police, hearing the arguments on day-to-day basis and pronouncing a guilty verdict.
Similar was the fate of Manu Sharma, who was pronounced guilty for murdering model Jessica Lall by the same Bench.

Are there pitfalls to cases being tried in this manner in the media and the general public? Of course, but that's the subject of another post. And given the dearth of efficient alternatives, justice by the people, for the people, of the people is being taken very seriously here in India.

Tuesday, December 12, 2006

Outsourcing Contracts - Old wine, new bottle

Feel like I've been living my life in conferences this past week. After the International Conference of Information Systems in Milwaukee last week, it's the Indian Symposium on Information Systems at the Indian School of Business in Hyderabad this week.

The subject of my presentation at both places is the governance of outsourcing relationships. In particular, I make the point that as outsourcing initiatives become more strategic and collaborative, the outsourcing contract, in addition to its traditional function of resolving incentive conflicts between the firms and protecting the client from possible adverse behavior of the provider, takes on a more interesting role. The allocation of risk embedded in the outsourcing contract facilitates information sharing between the client and the vendor to address cognitive conflicts, develop a shared understanding of the outsourced process and related interdependencies and effectively execute the process across firm boundaries.

I explored this premise in the context of two dominant outsourcing contract forms - fixed price and time and materials. The client shares risks and rewards with the provider in time and materials contracts but the provider primarily bears risks and reaps rewards of cost saving efforts in fixed price contracts. I found that concomitant with this incentive structure, there was increased information sharing in time and materials contracts.

Practitioners that I met at the conference stated that this finding is aligned with the broader shift in the practice from penalties to rewards and from transactional pricing to incentive pricing structures. Thus, even though fixed price contracts protect the client maximally from risk, it is inclined to choose time and materials contracts that yield maximal information sharing and coordination of actions across firm boundaries.

So, a fundamentally new role for contracts in the evolving outsourcing landscape. Old wine, new bottle.

Wednesday, December 06, 2006


Refers to "a conference where the content of the sessions is driven and created by the participants, generally day-by-day during the course of the event, rather than by a single organizer, or small group of organizers, in advance".

Well, me, am off to a regular ole' conference - the doctoral consortium at the International Conference of Information Systems. Will mull and present on value creation in outsourcing relationships.

Updates from the experts in the field next week. Check this space for updates.

Tuesday, December 05, 2006

Green Outsourcing Cometh

Global warming and shifting weather patterns may take a few decades to wreak their touted havoc - the end of Shishmaref, climatic refugees et al. - but the business opportunities are clearly here. And why not? A report by Germanwatch, a German environmental group, finds that among 56 industrialized nations, the United States ranks third-worst in dealing with climate change. China and Saudi Arabia are rated worse.

California democrat, Sen. Barbara Boxer has said on several occasions that legislation on climate change will be her top priority as chairwoman of the Senate Environment and Public Works Committee. She plans to hold discussions and hearings early next year with scientists, environmentalists and religious leaders who want to address climate change. She also will ask business leaders to testify about their efforts to limit greenhouse gases.

And the business leaders are in agreement. In a recent Business 2.0 article, which asked "25 of the brightest minds in business", how to succeed in 2007, Vinod Khosla urged companies to compel their investors to go green, and Howard Schultz and Laura Scher asked firms to dare to be social entrepreneurs who don't cover up mistakes with growth. Schwartz of Sun Microsystems too, over the past couple of years, has been very vocal on the need to shift to an efficient model of business computing. He, very eloquently, points out that this does not necessarily translate into reduced volume of business:

"...If you double the performance of a machine, customers don't buy half as many, they tend to double their order. Same goes for utilization, if you can double server utilization via Solaris containers or VMWare, people don't buy fewer computers - they buy more. The value of innovation, at least to our core customers, is growing so fast that if the price declines, the overall return (value/price) goes through the roof - encouraging a feedback loop. Moore's Law and free software drive relative pricing down, and customers accelerate their growth..."

And this is very pertinent to the case of outsourcing. Technology is a key enabler of coordination of outsourced tasks between the client and the vendor, including developing shared understanding of process tasks and interdependencies, efficient responses to changes in the process environment, and controlling and monitoring process outputs and performance. Also, modern information intensive business change rapidly in response to changes in the environment and value chain exchanges, rendering the ability to process new information a key source of efficiency and firm competitiveness. Thus, technology and efficient computing is central to process performance.

However, studies show that in leading technology companies, performance per watt has remained roughly flat over time, even after significant efforts to design for power efficiency. In other words, every gain in performance has been accompanied by a proportional inflation in overall platform power consumption. This represents a significant opportunity to service providers. If they nail the recipe for energy scale efficiencies in computing through better products and processes, they buy themselves growth, credibility and an investment in what Al Gore likes (that's gotta be good!).

Not to take away from the process and managerial capabilities that leverage these technological resources to create value. When 70% of the respondents to Deloitte's offshoring survey indicated dissatisfaction with their outsourcing arrangements, it was not efficient computing that was getting in the way. But, make no mistake - I am not selling this issue as the gravy. It is clearly the meat in efficient outsourcing.

Dare to compute green.

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