Information Age (IA): By some measures, Reuters is now a veteran of offshore outsourcing, with almost six years experience. I’m sure you can share some insight into the challenges, but what initially drove Reuters down this route?

Dave Weller (DW): The challenge Reuters was facing back in 2001, when we first looked to offshore outsourcing, related to our very heavy dependence on an IBM mainframe-based set of applications. Those basically run the sales, our order processing and billing. And we were finding it increasingly hard to find the right skills to effectively support, maintain and develop those applications. The dot-com boom was still a factor, so finding skills in the likes of CICS, Cobol and Mantis was not easy. They weren’t exactly java and .Net environments.

So the real challenge was more of a business risk issue than about costs – the risk being, could we effectively continue to support and maintain what were business critical applications?

IA: So what gave you the confidence that an outsourced contract could provide those mainframe application skills?

DW: The [offshore] market back then was clearly not as mature as it is now, but there was a clear process for tapping into the high-quality talent coming out of the education system in India, quickly getting it up to a productive level while we shared knowledge about what our systems do. One of the attractions of working with an [Indian] partner was the flexibility it gave us in accessing a much larger resource pool and skills base, not just around the mainframe, but for the other applications that sit round that.

Maintaining that currency of skills in the UK would put quite a strain on any IT organisation, while that is what a company like [our key offshore partner] Satyam does for a living.

IA: So how many people are involved?

DW: It has gone from an initial 70 Satyam staff, mostly working onshore at Reuters, and focused on the mainframe apps, to about 270, with 25-30 onshore and the rest in Hyderabad. At different times, we may have a larger number onshore as a result of some major programme.

Currently, we are implementing some of the Oracle Fusion middleware components as part of a major transformation programme, and Satyam is driving key design and development work there.

IA: But the focus for Satyam is still on core business apps?

DW: They have taken core business applications, some of the ancillary ones, and over the past year to 18 months picked up some of our product development work for some of our business units.

IA: So what roles did you want to maintain internally?

DW: In a general sense, Satyam manage the software development lifecycle and Reuters retains the broader architecture and programme management, governance, and our high level customer relationship management functions with our internal customers.

IA: Six years in to that arrangement, what have been the big challenges Reuters has faced with offshoring?

DW: An obvious one was knowledge transfer: we had built our applications over a considerable period of time and so there was a considerable amount of knowledge in a relatively small number of people’s heads. And that was exacerbated by the age and the investment that had been made in our systems.

There was also a ‘trust in the relationship’ challenge. That is probably the hardest one at an individual level. When, all of a sudden, existing structures went, internal people had to rebuild relationships across geographical boundaries, across company boundaries, across cultures.

There were similar challenges around the way the offshore development team worked with our operations group. The day-to-day running of the mainframe continues to be Reuters' responsibility, so again you have to regenerate some of those relationships as well.

Now trust has been built up and the Satyam group understands the people they are talking to, the way we work and the Reuters culture.

IA: Given the need for such collaboration, have you found staff turnover in India has been a problem?

DW: To start off with attrition wasn’t a major issue at all. But it is interesting looking at it over a five to six year timeline: I am used to handing out long service awards here [in London] to people who have been in the company 20 years; in Hyderabad, and a five year long service award is seen as fantastic.

We have had a comparably low rate of attrition, and that is partly because the account has been growing, providing opportunities for people supporting the [mainframe] environment. Plus, I think Reuters is also regarded as an interesting company to work for, it has a good brand and that certainly helps give people a sense of allegiance.

When you walk into the Offshore Development Centre it is not too different to walking into a Reuters’ office.

IA: How have you tracked the benefits?

DW: The key metric initially was the onshore/offshore ratio – that is a good indicator for cost. What I‘m moving tow-ards now is tracking customer satisfaction.

We track delivery performance – was it on time, on budget – not just by project but by phase? And last year, that was 80%, up from 50% the year before. We also track hard numbers such as incident resolution rates, defect rates, time to recover – typical service delivery metrics.

IA: How has the relationship with Satyam impacted internal customers?

DW: Part of the benefit of working like this is being able to scale up and down – the flexibility to respond to demand. My biggest challenge from my customers is how can I respond more quickly. And it is very hard to be agile if you have got a fixed resource pool.

IA: So how do you see Satyam relationship developing in years to come?

DW: Reuters has been through tons of change, and Satyam now has a unique perspective on our core processes. So the challenge is to tap into that inherent knowledge, seeing how they can help us in a consultative role and drive process change across the organisation.