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OFFSHORE OFFSHORE OUTSOURCING OF IT-OUTSOURCING OF IT-

ACTIVITIESACTIVITIES

Carla KiburgCarla Kiburg

Union Official IT-sectorUnion Official IT-sector

The NetherlandsThe Netherlands

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WHO AM I?WHO AM I?

• Union Official: Union Official: – negotiations on collective negotiations on collective

agreements in IT-companiesagreements in IT-companies

• Rep. in UNI EU IT CommitteeRep. in UNI EU IT Committee• Country coordinator MOOS Country coordinator MOOS

projectproject

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PROGRAMPROGRAM• New trend or normal practice?New trend or normal practice?• Definition Definition • Where to & WhatWhere to & What• Job losses Job losses • Growth in employment & exportGrowth in employment & export• Role Works CounselRole Works Counsel• New jobs New jobs • Union response:Union response:

– FNV Bondgenoten NLFNV Bondgenoten NL– UNI Europa: MOOSUNI Europa: MOOS

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NEW TREND OR NEW TREND OR NORMAL PRACTICE?NORMAL PRACTICE?

• ““Old” industries: textiles, Old” industries: textiles, mechanicsmechanics

• Fabrication of new industrial Fabrication of new industrial goods: radio, television, goods: radio, television, mobilemobile

• So, what’s new? :So, what’s new? :Service SectorService Sector

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DEFINITIONSDEFINITIONS

• Offshoring ~ Oil business??Offshoring ~ Oil business??• Bestshoring = EDSBestshoring = EDS• Rightshoring = CapGeminiRightshoring = CapGemini• Global sourcing ~ Global sourcing ~

MultinationalsMultinationals• Nearshoring ~ former Eastern Nearshoring ~ former Eastern

EuropeEurope• OECD:OECD:

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DEFINITION OECDDEFINITION OECDIn-houseIn-house OutsourceOutsource

dd

DomesticDomestic Domestic Domestic supplysupply

Domestic Domestic outsourcingoutsourcing

InternationInternationalal

OffshoreOffshoreinsourcinginsourcing

OffshoreOffshoreoutsourcingoutsourcing

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JOBS OFFSHORINGJOBS OFFSHORING

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WHERE TO & WHATWHERE TO & WHATRussia:Russia: High-High-

end software end software engineeringengineering

PhillippinePhillippines:s:• BPOBPO• Contact Contact CentersCenters• AnimationAnimation

China:China:• Embedded Embedded softwaresoftware• Hardware Hardware servicesservices

India:India:• BPOBPO• ITOITO• Application Application OutsourcingOutsourcing• Contact Contact centerscenters• Product Product developmentdevelopment

Israel:Israel:• High-end High-end softwaresoftware• Learning Learning systemssystems

Eireland:Eireland:• Pakkaged Pakkaged applicationapplicationss• LocalizatioLocalizationn• Product Product developmedevelopmentnt

•Canada:Canada:• BPOBPO• Contact Contact centerscenters• Application Application outsourcingoutsourcing

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JOB LOSSESJOB LOSSES

• IDC : 2003 1% - 2007 9%IDC : 2003 1% - 2007 9%• Forrester: 493.000/12 years (8%) in USAForrester: 493.000/12 years (8%) in USA• E&Y : 15.000 in 2004 NL onlyE&Y : 15.000 in 2004 NL only• GPI NL: 5-10.000/yr in 10 yrsGPI NL: 5-10.000/yr in 10 yrs• OECD:OECD:

ANECDOTICALANECDOTICAL

NO OFFICIAL STATISTICSNO OFFICIAL STATISTICS

DEFINITIONALDEFINITIONAL

MEASUREMENT PROBLEMSMEASUREMENT PROBLEMS

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GROWTH IN GROWTH IN EMPLOYMENTEMPLOYMENT

DKDKRORO NLNL

LVLVSESE IEIE UKUK LULU BBGG

ESES BEBE

FIFI ITITFFRR

DEDENONOCZCZ

LTLT CHCH

EEEE SLSLSKSK ELEL

HUHU CYCYPTPT ATAT

Growth in employment in computer and related activities in Europe, 2000-2003 (%)Growth in employment in computer and related activities in Europe, 2000-2003 (%)

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EXPORT GROWTH BCI EXPORT GROWTH BCI SERVICESSERVICES

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HIGH FAILURE RATEHIGH FAILURE RATE

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Offshore Outsourcing

ET

UC

O/I

BIT

S s

emin

ar C

ypru

s 20

04• High failure rate

– in 2003 Gartner estimated € 6 bn wasted

– almost every second project failed

– Flop rate of 40-50% (clearview consulting)

• Main reasons:– poor management

• „low balling“ leads to bad contracts

• saving potential vastly over estimated

• underestimation of communication/coordination needs

• short term approach instead of long term relations building

• mishandling of human resources;

• misjudgement of intercultural differences !• Failed projects are worse from an employee perspective than

successful ones

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WORKS COUNSEL IN NLWORKS COUNSEL IN NL

• Right of advice by lawRight of advice by law• No right to avoid/stop No right to avoid/stop

offshoringoffshoring• Process supportProcess support• Collective agreements Collective agreements

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NEW JOBSNEW JOBS

RWI (government, employers, RWI (government, employers, unions):unions):

1.1. Growth independent of offshoringGrowth independent of offshoring

2.2. Difficult to predict how muchDifficult to predict how much

3.3. Moderate scenario nt growth 13% Moderate scenario nt growth 13% in NLin NL

4.4. Shortage IT-professionals Shortage IT-professionals expectedexpected

5.5. New competences:New competences:

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NEW COMPETENCESNEW COMPETENCES

1.1. High customer intimacyHigh customer intimacy

2.2. Complex business processesComplex business processes

3.3. Commercial skillsCommercial skills

4.4. Communicative skillsCommunicative skills

5.5. Innovative ICT-solutionsInnovative ICT-solutions

6.6. Custom made solutionsCustom made solutions

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FORSEEABLE FORSEEABLE PROBLEMS BY FNV PROBLEMS BY FNV

BONDGENOTENBONDGENOTEN1.1. Time gap: loss old – new workTime gap: loss old – new work

2.2. Mismatch competences: nowadays Mismatch competences: nowadays - tomorrows work- tomorrows work

3.3. 50% failure rate: Loss of employees 50% failure rate: Loss of employees prospects, here and thereprospects, here and there

4.4. Too many middle too few highly Too many middle too few highly educated IT-pro’s (NL)educated IT-pro’s (NL)

5.5. Still 13.300 unemployed IT-pro’s Still 13.300 unemployed IT-pro’s (NL)(NL)

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NEW POLICY NEW POLICY PROPOSALS FNV PROPOSALS FNV BONDGENOTENBONDGENOTENPreventive and pro-activePreventive and pro-active

1.1. Employment policy: Employment policy: Position individual on Position individual on labourmarket; education/employability; certification of labourmarket; education/employability; certification of knowledge by experienceknowledge by experience

2.2. Efficiency test: Efficiency test: usefullness/ necessity/carefullness/social usefullness/ necessity/carefullness/social dialogue in-company dialogue in-company

3.3. Economical structure NL: Economical structure NL: innovation/execution ICT-innovation/execution ICT-plansplans

4.4. Social plan: Social plan: 1.1. local: local: next to 1.: substitutional work next to 1.: substitutional work

incompany/education/outplacement/no-time-gap-strategy/self-incompany/education/outplacement/no-time-gap-strategy/self-employment programs/employment programs/

2.2. International: Code of conduct: International: Code of conduct: ILO/OECD/chain responsibility of ILO/OECD/chain responsibility of economical partnerseconomical partners/ / (related to UNI Offshore Outsourcing Charter)(related to UNI Offshore Outsourcing Charter)

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UNI EUROPA IT UNI EUROPA IT COMMITTEE:COMMITTEE:

MOOSMOOS

www.moosproject.bewww.moosproject.be

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UNI EUROPA IT UNI EUROPA IT COMMITTEE:COMMITTEE:

• Active for 12 yearsActive for 12 years• Yearly IT fora Yearly IT fora • TrendsTrends• Offshore outsourcingOffshore outsourcing• MOOS:MOOS:• 9 affiliates, 7 countries9 affiliates, 7 countries• 2 year project2 year project• Quality & quantityQuality & quantity

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OBJECTIVES MOOSOBJECTIVES MOOS

• Understand whyUnderstand why• Understand process Understand process

mechanismsmechanisms• Support UNI affiliates and Support UNI affiliates and

membersmembers• Support and tools for activists Support and tools for activists

and union officialsand union officials• Develop strategies to Develop strategies to

anticipate on changesanticipate on changes

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MOOS TOOLSMOOS TOOLS

• Research reportsResearch reports• Website: info/tracker/documentsWebsite: info/tracker/documents• Offshore management handbookOffshore management handbook• Workshops and conferencesWorkshops and conferences• Develop common positionsDevelop common positions• Exchange best practicesExchange best practices• Training seminarsTraining seminars

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QUESTIONS & THANK QUESTIONS & THANK YOUYOU