Offshore Outsourcing: The Guardian View
The Guardian Life Insurance Company of America took a slightly different path in its Indian outsourcing endeavor.
CIO — United Technologies and its subsidiaries have worked out a successful strategy for sending IT work to India (read “Inside Outsourcing in India”), but there is definitely more than one way to skin that cat. There are probably more like 50. For another angle on offshore outsourcing management, we talked to IT executives at The Guardian Life Insurance Company of America, a $7.2 billion company.
When Guardian Executive Vice President and CIO Dennis Callahan began outsourcing to India two years ago, his goals were similar to those of UTC’s CIO John Doucette: Replace high-priced local consultants, increase quality, expand the resource pool and retain control through vendor aggregation. And he had just as much experience in India as the folks at UTC did.
But rather than begin in the piecemeal project-by-project fashion that UTC chose, Callahan dove right in, setting up a dedicated development center of more than 100 people at Mumbai-based Patni Computer Systems. Marty McCaffrey, executive director of Software Outsourcing Research, says, “Usually it’s better to negotiate the first project and then get a master agreement in place that allows some flexibility. But today some companies are comfortable with setting up a dedicated center right off the bat.”
Guardian mitigated some of the risk of committing to a vendor by beginning with a pilot project—developing a new variable annuity product—and scaling up from there. The company also decided it was best to split up the work among several large outsourcers and vendors. Again, Guardian diverged from UTC’s tactics (an automated analysis and bidding process) and took a more personal approach. Callahan joined the U.S.-India Business Council, asked peers for advice and went on fact finding missions. Then, supported by Guardian’s IT vendor management office, he and his team narrowed a field of 23 providers down to two, initially selecting Covansys, a Farmington Hills, Mich.-based company specializing in Indian outsourcing, and Patni. Later the insurer added New Delhi-based NIIT, which has multiple locations outside of India, to give itself more global options when tensions flared in Kashmir.
Guardian selected its vendors based on company size, price, Capability Maturity Model level, quality of metrics, complementary business model and collaborative approach. Guardian was looking for companies with experience in the insurance industry and with the enterprise systems it uses. Also key to Callahan was a strong U.S. presence. “I want some of those offshore people working onsite to already be based in the U.S. and not to have to travel back and forth to India,” says Callahan. “I like the notion of strong local management that I can look in the eye
