Released on = January 6, 2006, 1:43 am

Press Release Author = Jim

Industry = Software

Press Release Summary = Decision to outsourceCompanies outsource noncore business
functions to third-party providers for various reasons: to reduce head count, to cut
expenses, and to improve service......

Press Release Body = Cyndi Joiner had been responsible for GMAC\'s Corporate Real
Estate and Facilities Management group for three months when she faced a major
challenge: The large support operation appeared to be at a crossroads. The division
needed to cut costs, manage suppliers\' performance better, and clean up the chaos
engendered by a lack of internal controls, standards, and up-to-date technology.

Joiner presented top management with three options: continue the present course,
reengineer the division, or outsource the entire operation. Management selected
\"Door No. 3,\" Joiner says, primarily to reduce head count and improve processes
quickly. But Joiner got more than she bargained for: GMAC executives were so excited
by outsourcing\'s potential cost savings and apparent ease of execution that they
decided to shrink the standard timeline. Whereas many firms would have allotted more
than six months to complete an initiative of this magnitude, GMAC executives asked
Joiner to do it in six weeks.

In spite of notable obstacles, Joiner met the challenge. In doing so, she and GMAC
learned valuable lessons about launching an outsourcing initiative.

The decision to outsourceCompanies outsource noncore business functions to
third-party providers for various reasons: to reduce head count, to cut expenses,
and to improve service. In GMAC\'s case, the company believed it could not only trim
personnel and other costs during a tough economic time but also might better fulfill
its core purpose: ensuring that customers have a positive home-ownership experience.
That meant focusing more on selling mortgages and properties. Thus, the real estate
and facilities-management arm of the business became an ideal candidate for
outsourcing. \"The talent pool in our core competencies,\" Joiner says, \"was much
greater than in this other function. We needed a deeper \'bench\' in facilities
management, and outsourcing would let us get that.\"

Selecting an outsourcing partner As a first step in selecting an outsourcing
partner, Joiner recommends canvassing your industry to come up with a handful of
candidates. GMAC hired a consulting firm to handle the search, owing to the
accelerated timetable. The consultants served as advisers on several levels:

Suggesting potential partners Helping GMAC develop a picture of what the new
organization should look like after the software outsourcing was complete Offering
recommendations for defining the partnerships Assisting GMAC in interviewing
potential partners\' former and current customers Then look at each company\'s
standing in the industry, its flexibility, and its track record with firms similar
to yours. \"Look for companies that make a good cultural match with your own,\" she
adds. \"Find out what you can about their portfolio of talent. Make sure they\'re
willing to explain the reasons behind both their successes and failures.\" Savings
and speed In proposing an outsourcing initiative to senior executives, managers need
to do more than just stress the potential cost savings. Why? \"Savings come in three
forms,\" Joiner says. \"Immediate dollars on the P&L, eventual improvements in
processes, and avoidance of costs. You won\'t see all the savings show up immediately
on your P&L, and some of them will always be hard to quantify.\"

Moreover, overemphasizing the financial benefits of software outsourcing can cause
firms to set too short a timetable. A rapid execution has pros and cons. As Joiner
discovered, speed enables a company to get through the most painful part of the
change process quickly and minimizes friction created by resisters. It also forces
people to adapt quickly. As Joiner puts it, \"You can\'t know till you jump in the
middle that you don\'t know how to swim. But you learn how-really fast.\"
On the other hand, speedy implementation can deprive the organization and
third-party provider of that all-important \"courting\" stage before the \"marriage.\"
Joiner is hard-pressed to say whether she would aim again for a six-week
implementation. In some ways, \"six weeks felt too short,\" she says. \"We were trying
for too much radical change at one time.\" Joiner speculates that it may have been
better if the process had unfolded in stages rather than all at once; for example,
facilities management first, then lease administration, and finally property
management. Still, she concludes, \"As the owner of an initiative, I\'ll take all my
pain in six weeks rather than have it drawn out over a longer period.\"

Getting past culture shockGMAC\'s software outsourcing initiative reduced staff by 85
percent in the company\'s real estate and facilities-management function and saved
$6.74 million in the first year. \"No doubt, the staff reduction was painful,\" says
Joiner, \"not only for those who left but for those who remained.\"
The staff who found the layoffs the most difficult were often from other parts of
the firm and hadn\'t known the affected workers well. In contrast, teammates of the
laid-off workers were more aware of the division\'s lack of \"bench strength,\" and
they presented Joiner with an opportunity to manage the staff reduction\'s impact on
morale. \"This is all about change management,\" she says. \"As fast as possible, you
have to mesh the newly shaped organization with the old assets still at hand. If you
immediately make the survivors see the benefits of the change and the reasons behind
it, they\'ll become champions of the effort.\"

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http://www.tatvasoft.com/outsourcing%5C2005%5C05%5Csoftware-outsourcing.html

Contact Details = TatvaSoft - Software Development India

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S. G. Road, Nr. Bodakdev
Ahmedabad - 380 052
Gujarat, India

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