The process of vendor selection in the offshore IT outsourcing market frequently involves a deep look at the level of quality standards implemented by service providers. With so many destinations to choose from worldwide and the fact that Latin America is getting a whole new wave of interest from sourcing decision makers, the quality standards discussion can be very influential in whether to choose certain locations and providers. Frankly, the Nearshore region does not compare well to other parts of the world in quality standards, according to a recent analysis by Nearshore Americas contributor Jane Siegel.
With Chile being one of the premiere locations for offshore IT services, we decided to do our own analysis on the level of maturity in this important qualifications area. And, we brought in one of our favorite guest editors, Mariana Pernas (a leading IT journalist from the Southern Cone), to drive the report.
IT standards: Quality and Maturity
The off shoring business has been growing in Chile at a steady pace. Common questions arising in the Chile ITO industry are: Why do offshoring companies need quality and security certifications? Are they a customer requirement? What improvements and benefits do the certifications bring?
Cristián M.Garrido, Performance & Technology Services Director of KPMG Chile, points to the main quality certifications of the local market, which are commonly used in global services practices: ISO 27.000 (IT security) ISO 20.000 (IT services administration), ISO 9000 (quality), ISO 25.777 (business continuity), CMM (software development maturity) and ISO 38.500 (IT government).
According to him the process of improvement never finishes. “Once the companies have certificated their processes, it is important for them to consolidate a structure that functions all the time in order to control and establish these good practices”, Garrido says.
“In Chile enterprises, the certifications are evolving”, KPMG´s director points out. “The customers are conscious of the relevance of that kind of international standards. In offshoring, particularly, the enterprises know how important this is.”
A Serious Focus
The enterprises who we spoke to for this report acknowledged the seriousness of the issue. ”During these last years there has been an important effort and interest placed on quality”, says Carlos Lewitt, general manager of Kiteknology, an enterprise that has annual revenues of $25 million, employs 60 people and provides software development, advisory services, hosting and maintenance. “Several enterprises have their certifications and others are about to obtain it”, he affirms.
In 2003 Kiteknology started to evaluate CMM level 1 and, later, in 2008 the firm obtained CMM2 and some areas (of management process) of CMM3. They invested U$ 100,000 in CMM maturity model. Besides, in 2008 Kiteknology certificated ISO 9000. “The work is permanent. We plan to achieve CMM level 5 in 2015”, Lewitt confirms.
He says that the CMM maturity model allowed them to develop software differently. What were the results? “Now we can work with a clear methodology, efficiency and formal processes. Internally, we are organized better and the company is more productive. As a result, customer loyalty improved and the enterprise is more profitable”, Lewitt says. The company plans to grow its sales to Unites States, which now represent 7% of its revenues. “To compete in the American market is necessary to have standards such as CMM because the customers demand them. ”
Sonda, the Software and IT Services company which has sales of U$ 356,000 million in Chile (2009) and employs 10,000 people in different locations, has certificated several ISO standards: ISO 9001, ISO 27.000, ISO 20.000, ISO 14.000 (environment), OHSAS (human resources) and CMM level 3. “Additionally, in the field of professional certifications we have several employees who have ITL V2 and V3”, says Raúl Véjar Olea, Sonda general manager.
The company started the process of standards certification in 2003. “Since then, we went on working, widening the scope and the rules”, he assures. “We could differentiate in the market through the world class quality services we deliver to the customers. We also improved productivity and customer satisfaction.”
On the other hand, Véjar Olea remarks: “The major investment has been assigned in professional training, revision and process improvement”, he concludes.
The Brazilian company Stefanini (employs 150 professionals in Chile) delivers infrastructure and software outsourcing, SAP consultancy and BPO solutions, among other services. The company has also several standards, as ISO, CMMi (in Chile), Six Sigma and MPS.Br, “Which is very popular in Brazil”, remarks Décio de Barros Junior, Software Factory Director of Stefanini.
Luiz Carlos Prestes, Stefanini Business Director, points to the challenges that the process of certification implies for the enterprises. “One of the main difficulties to apply quality standards is breaking the organization culture: it is a long and slow process to have maturity in management and control practices”, he admits.
The offshore professional services company Evalueserve, whose delivery sites are located in India, China, Chile and Rumania, provides services to American, European, Latin-American and Asian markets. “Knowledge Process Outsourcing (KPO) industry gives particular importance to information security certifications. So, in 2006 we were one of the first companies of KPO business to have ISO 27001 in India”, says Mohit Srivastava, Country Manager of EvalueServe in Chile, were the company employs 180 people.
“The certification is the key issue to our business sustainability because customers demands confidentiality and information security. It´s an added value and our more significant quality measure”, he remarks. And confirms that he expects to certificate ISO 27001 in Chile –requires a U$ 60,000 investment- by the end of this year.