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The American Advantage:
Keeping IT and Business
Services Onshore Dr. Mary Lacity,
Curators’ Professor:
Visiting Professor:
I am not anti-offshoring; I am a proponent of
global sourcing of business and IT services
Although I am an Information Systems
professor, most of my research time is
spent in business operations.
Caveats
Finance &
Accounting
Human
Resources
Policies &
Claims
Procurement Legal
Customer
Support
Agenda
Overview of country location attractiveness
Three trends that improve the location
attractiveness of US:
Rural sourcing
Impact sourcing
Robotic process automation
Location Attractiveness
A location’s business environment attractiveness is the
degree to which a location is attractive because of favorable
business factors such as economic stability, political stability,
cultural compatibility, infrastructure quality, and security of
intellectual property.
Dedrick et al. 2011; Hahn et al. 2011; Malos 2009; Mehta et al. 2006; Willcocks et al. 2013; 2013
A location’s financial attractiveness is the degree to which a
location is attractive because of favorable financial factors
such as labor costs, taxes, regulatory, and other costs.
A location’s people skills and availability attractiveness is
the degree to which a location is attractive because of
favorable people skills and availability factors such as size of
labor pool, provider maturity, education, language skills,
experience, and attrition rates.
2014 AT Kearney Global Services
Copyright © Mary C. Lacity 2015 6
2014 AT Kearney Global Services
3.14 2.71 1.19
.49 2.88 2.19
1 India
14 US
Financial People Business
Rural & Impact
Rural sourcing reduces costs by
locating delivery centers in rural areas
Impact sourcing reduces costs by
training and employing marginalized
populations to provide business and
IT services who are paid less than
experienced BP workers
Rural & Impact
Onshore Outsourcing
Onshore Outsourcing
2005 2010 2015 2020
Macon 10 50 175 ~250
Glennville 0 0 70 ~300
Texas???
The vision: bring 1,000 new jobs to rural America
between 2011 – 2016
Founded in 2005
Organic workforce development aim:
“to allow people to see beyond their current situation
toward a better way of life.”
Boot camps, internships
A taxidermist, priest, cashier, stock boy, and waitress
walk into a boot camp….
Onshore Outsourcing
Onshore Outsourcing
Fewer than 25% of Macon and 10% of Glennville entry
level people at Onshore are college graduates…
Customer Value
VALUE: low-cost, high-quality service to
keep outsourcing jobs within U.S.
Agile- ambitious -reasonably-priced
“Rural America is resolute and fueled
with can-do spirit and dogged
determination”
Software
Development
Application
Support
Testing
Services
Data
Services
BPO
Services
Help Desk
Services
Testing
Services
15
For large clients, rural/impact will be part of a global sourcing
portfolio…
Client Sourcing Portfolios
Degree of Business Criticality
Low Medium High
Degre
e o
f W
ork
Com
ple
xity
Low
M
ediu
m
H
igh
Impact
Strategic ITO & BPO
Partnerships
Robotic Process Automation
RPA automates processes that were
previously performed by humans.
RPA reduces costs by substituting
labor with technology.
Robotic Process Automation
Copyright © Mary C. Lacity 2015 17
Robotic Process Automation
$60,000 $7,000 $20,000
United States
Offshore
Software
Manufacturing
Automation makes re-shoring economically valuable. In the
US, about 100 companies brought manufacturing back to
America in the past few years, but the new factories are nearly
fully automated. More manufacturing no longer means more
jobs…
Copyright © Mary C. Lacity 2015 19
IAOP Feb 2015 Survey 63 clients & 80 provider/advisors
Copyright © Mary C. Lacity 2015 20
Clients and providers STRONGLY agreed that service
automation will increase significantly in their
organizations
The majority of clients
(48%) indicated that
between 26 and 50
percent of their existing
services are suitable for
some automation…
14%
48%
24%
9%
5%
% of Services Suitable for Automation N = 63 clients
0-25% of services
26-50% of services
51-75% of services
>75% of services
Do Not Know
Telefonica O2
Let’s begin at the end as of April 2015:
• Automated 15 core processes (about 60 sub-processes) in about 4 years
• Deployed more than 160 robots
• Robots process 400,000 to 500,000 transactions per month (~35% of work)
• Better SLAs (response times from 24h to minutes; 50,000 fewer calls to help
desk)
• 3 year net benefit of £950,000
• 3 year return on investment between 650% and 800%
Copyright © Mary C. Lacity 2015
21
• 2nd largest tcom provider in UK behind EE
• 24 million customers
• 450 retail stores
• £5 billion in revenues
Telefonica O2
Copyright © Mary C. Lacity 2015 22
2010 Proof of Concept on two processes—automated SIM swaps & credit checks in two weeks
Organization insisted on an RPA vs. BPMS—both were technically great but BPMS produced
0% ROI in 3 years
After RPF, selected Blue Prism
Trained only 2 internal people! Provider came onsite for 3 weeks, then just weekly check-ins..
20 robots to 76 robots to 160 robots…
SIM swaps, order processing, credit checks, reassignment, unlatching, porting, customer
disputes, cash management, refunds, ad hoc amendments to customer data
2004 >300 FTEs ~0 FTEs
2005 98 FTEs ~200 FTEs
2009 50 FTEs ~ 400 FTEs
RPA vs. BPMS
Wipro announced in Sept 2014 it will reduce headcount
by one third over next three years because of disruptive
technologies like automation and AI1
Infosys recognizes labor arbitrage will be increasing
difficult to sustain; spun off its technology into a
subsidiary Edgeverve2
TCS will layoff between 5,000 and 25,000 workers (may
be driven by high cost of experience—laying off +8 and
may hire “freshers”)3
But India will adapt…
2015 Service Automation
Project
Copyright © Mary C. Lacity 2015 25
We are looking for additional research sponsors:
• Sponsored case studies of more mid-to-mature adopters
• Potential book launch in 2016
Leslie Willcocks
Professor of Technology,
Work & Globalization at
25
