FSA publishes report into off-shore outsourcers’ business continuity arrangements Entitled ‘Offshore operations: industry feedback’ the report considers business continuity options and arrangements amongst other areas. According to the report, the market for warm site recovery facilities in India is “non-existent at present as the cost of such facilities is comparatively high”. This has forced firms to develop alternative strategies for business continuity. “Options that have been pursued,” states the report, “include repatriation to the UK (which is the most popular option given that very few companies offshore 100% of any process), development of a joint site with other companies/suppliers, and, if the operation is large enough, spreading processes across more than one site or city within India. At least one group has a worldwide business continuity strategy so their presence in more than one continent provides reciprocal back-up capability. “As processes ramp up and new processes are migrated, firms increasingly need to monitor the potential for business disruption and its likely impact, and assess the most appropriate countermeasures for the group.” More detailed business continuity and contingency planning points from the report include: * All of the operations visited had contingency plans in the event of a serious problem. The size of operation examined influenced the business continuity planning and disaster recovery planning arrangements. Companies with larger operations have already been able to spread to multiple locations. * Some suppliers have a policy not to employ more than 3,500/4,000 in any one city. Some firms already have offices located in more than one city (either as captives or via their suppliers) and others are considering this. This enables them to attract different skill sets as the nature of the work undertaken in India broadens, but also gives them some local business continuity opportunities. This minimises risk through multiple delivery locations. * Others are experiencing significant problems organising local business continuity options. There is no external market for warm sites as the cost of buildings is prohibitively high in comparison to the cost of labour. (Conversely, in the UK, labour cost is higher so companies want full utilisation of staff, which is one of the reasons for having a warm site.) Propositions to resolve this include having a joint site with other companies. Others are considering developing their own warm site once their operations get to a critical size. * In most cases building evacuations are tested regularly. Most test their business continuity plan at least annually and business continuity forms part of the initial migration project planning. As ramp-ups occur business continuity requirements generally change in line with the business needs. The priority of most processes are defined along with their time criticality. Of those suppliers and subsidiaries that have a warm site option, at least one felt that the warm site is the last resort as resource is flexed between India and UK first, where appropriate. * Most companies still have the capacity in other parts of the world to pick up critical workloads from India should the need arise. The fact that the data storage and main systems are outside India, with data only passed there as necessary for processing, makes this easier. However, firms do have to ensure that staff remain suitably familiar with the processes to be able to fill in. At least one firm has a deliberate bi-polar business continuity strategy. As several other firms do, they conduct tests at least annually to ensure that the UK can undertake work on behalf of India and vice versa (i.e. the UK also tests its BCP in reverse with India taking the calls, etc.). This highlights an added benefit from offshoring, which is to maximise business continuity between the UK and India. Exit strategies * Some companies had multiple strands to their exit strategy depending on whether the requirement to exit was due to the operation or supplier failing and therefore another option offshore needing to be pursued. Exit requirements (e.g. transition support and penalties) are generally built into the contracts with third party suppliers. The speed with which processes can be transferred to another supplier or repatriated back will depend on the type of process and amount of work offshore.
•Date: 10th May 2005 • Region: UK/Asia •Type:
Article •Topic:
BC general |
