Case study National Grid Transco

British Gas started working with Indian companies in 1994, then continued after it set up the Transco gas distribution operation in 1995. Electricity provider National Grid also had experience of the offshore model since before the merger that formed NGT.

In the late 1990s, Indian providers were used to complement UK staff working on year 2000 compliance projects. And when NGT was formed in 2002, the company decided to rationalise its contracts with three Indian suppliers, and Tata Consultancy Services (TCS) was awarded a seven-year framework agreement that runs until July 2010.

One of the most important initiatives with which TCS is involved is Project Blackwater, the divestment of four of NGT's eight regional energy distribution networks to rival operators.

Three consortia are taking over the networks, so NGT has to ensure each business is segregated from its remaining operations, and that relevant IT systems are updated. Changes are required to 15 applications, and a significant data migration was needed to meet the deadline for handover in June.

The view from the UK

NGT was keen to take advantage of emerging offshore IT companies during the 1990s that were able to demonstrate evidence of quality processes, highly-skilled individuals and lower costs, says Richard Cribb, NGT IS contract and relationship manager.

But the aim has always been to complement - not replace - staff in the UK.

'Our sourcing model is straightforward. If we can source in-house, we will,' says Cribb. 'But we are an energy company, not an IT company, so we can't carry a large IT department. Companies such as TCS allow us to take demand up and down as needed.'

Offshore services cover three areas at NGT: application development, application support, and infrastructure support.

'The sourcing model we use depends on the level of business change involved,' says Cribb. 'If it's a huge business process re-engineering project, backed up by IT, that may determine what sourcing model we use.

'But most can be sourced using an onshore/offshore model. Mission criticality determines the level of onshore versus offshore, but TCS has been able to gradually move work offshore as it becomes lower-risk.'

And the Indian company has played an important role in Project Blackwater.

'We are not selling any systems to the companies buying the distribution networks - they will need to get off our systems and migrate data to their own,' says NGT programme director Carole Connolly.

'TCS has got us ready to the point where we are confident we can migrate when we need to. But using Indian providers was not primarily a cost issue, it was about complementing staff in the UK.'

Cribb says there are still concerns raised about offshoring.

'One of the challenges is convincing people the model can work,' he says.

'The approach NGT has taken more recently is to encourage our project managers to go to India and see how it works out there. It is difficult to see what happens otherwise - they just give work to TCS and they don't see what happens.'

And the international aspects of the relationship has additional benefits for the energy company.

'The NGT merger was about becoming a global business, so flying our people to India has great benefits to us, it helps in our globalisation. The more we do that, the whole barrier breaks down,' says Cribb.

In the early days, NGT admits there were communication difficulties - strong accents and dialects can be a problem, says Cribb. But perhaps the biggest challenge was encouraging the Indian teams to provide more input into projects.

'It used to be the view that Indians would not challenge or push back on what we say,' he says. 'Having had a long relationship with them, we expect them to push back at us, and now they do. We've invested time in making that work.

'TCS says the hardest message to get across to their staff is about challenging the customer. We want to benefit from all their skills and knowledge, and they are getting better at it all the time.'

But there have also been lessons for NGT staff to learn.

'We need to change the behaviour of in-house project managers,' says Connolly. 'At first, they tried to micro-manage the offshore development, which wastes time and money and loses focus on the project. We need them to focus on co-ordination between infrastructure and application development and suppliers.'

Cribb adds: 'We must manage the requirement, and let TCS manage the application development. We measure on the deliverables.'

NGT has no hesitation recommending the offshore model to other companies.

'Any UK organisation with a reasonably-sized IT organisation can benefit from offshoring. There is very little in IT now that can't benefit from using offshore,' says Cribb.

And Connolly adds companies should not be afraid to work with offshore suppliers on even the biggest projects. 'People often say that you should pick something small and low-risk and test the water with offshoring,' she says.

'We did exactly the opposite, with a project that was mission-critical, with tight timescales. But I'd have no hesitation using offshore services again.'

The view from India

TCS has a team of 240 people working on various NGT projects - 110 in India and 130 in the UK.

'Most people are involved in analysis, so need to be on-site, need to talk to users and to the companies buying NGT's distribution networks,' says TCS project manager Murali Ramnath.

'Analysis and requirements capture is in the UK, the rest in India. Support is mostly offshore.'

NGT is an experienced user of offshore providers, and this is a big help, says Ramnath. 'NGT is very familiar with the concept of offshore development centres,' he says.

'They understand how Indians work - for example, we prefer to work late. We were used to working until 7 or 8pm, but we came to understand the UK didn't work like that, so we had to change.'

This experience also affects the planning of project milestones.

'NGT is very mature at handling overseas providers and understands the culture,' says Ramnath.

'For example, they have learned to avoid planning delivery dates around Indian festivals such as Diwali.'

TCS has also created jobs in the UK, recruiting a small number of additional staff locally. But understanding the cultural differences between UK and Indian staff is still a vital part of managing the offshore team.

'Any TCS employee who comes back from the UK shares their experiences with the rest of the team - everything from the weather, the clothes, the food - to help others become acquainted with the place,' says Ramnath.

'Also the customer expectations, how to deal with the customer, how to take calls and so on. We run cultural courses in the UK for our staff as well as in India before they go. Staff spend a maximum of 18 months in the UK, some just three or four months. We want to transition their knowledge offshore.'

TCS runs what it calls a 'Living Workshop' - short for 'learning, innovation and working' - to ensure knowledge is shared. This involves formal meetings, each person spending two or three hours discussing experiences and problems, and best practices.

'We take recurring problems and try to find solutions to them,' says Ramnath. 'Now NGT wants to do a similar thing for themselves, so they are also learning from us.'

Case study Forth Ports

Forth Ports owns and operates seven ports in Scotland, as well as London's Tilbury docks. As the company grew, partly through acquisitions, each site developed its own IT systems. To improve efficiency and management reporting a single, unified system was needed.

The ports' selection process for a new supplier started in May 2002, and Indian IT services provider Tata Consultancy Services (TCS) was selected in April 2003.

TCS was contracted to produce software based on a package developed by the vendor's CMC subsidiary for a project at Adani, a port in the Indian state of Gujarat.

The project involves providing remote application hosting and support and a 24x7 helpdesk service, from two sites in India, at Mumbai and Hyderabad.

The two-year implementation plan was originally scheduled for completion in April this year, but has been extended to October. It covers the three main areas of Forth Ports' business: marine services, general cargo and container cargo.

The £1.5m deal will provide Forth with a single view of all shipping traffic and cargo entering its ports, improving management information and increasing productivity.

The view from the UK

TCS was one of seven suppliers shortlisted for the contract, and first impressions were not great, says Forth Ports group MIS manager Bob Devlin.

'The original bid was horrendously over-priced,' he says.

'We run seven ports in the UK but some are not fully working, and they hadn't fully understood that. To be honest, I dismissed them. I could see where they had things wrong, but the cost was outrageous.'

But others on the selection team wanted to give TCS a second chance.

'Our project manager was keen on some of what they said, so we decided they could talk further on condition of reducing the cost by 70 per cent,' says Devlin.

The Indian supplier had to prove to Forth Ports it was willing to allay any commercial or contractual concerns.

'TCS had to agree to a special arrangement with us,' says Devlin. 'Both sides recognised an opportunity - us to get the system, and them a site in the West. The nature of the deal is about risk-sharing. I think that's new to them and to the offshore model. They had to give us things the market leader couldn't.'

Devlin says both sides learned lessons about how to make the most of offshore services.

'It's about both sides working together. TCS has been very honourable and their guys are very good,' he says.

'We appear to be better organised, and have better managers. Some of their methods and organisation was a bit weak. We are good at objectives, they can get a bit lost in the detail. But where we have not been so good, they have understood and stayed with us.

'They are hard working, a very high percentage of their staff are of a very high calibre, they are keen to do well and have a respectful culture.'

Devlin says it is important to recognise there may be initial communication difficulties, but these can be easily overcome. In particular, signs of agreement from the Indian team do not necessarily mean they have the same understanding of the agreement - a small cultural difference is that Indians often shake their head to say 'yes'.

'There can be communication problems - they speak English but need to get the understanding. So we use flipcharts, we write it down,' says Devlin.

And to get the best out of the relationship for both sides, Devlin says it is important to make sure everyone feels part of the same team.

'There are not many extroverts in their team, they stay within their boundaries,' he says. 'That comes across in the work environment. My advice is you have to interact with them. Take them out, buy them a meal, look after them.

'You get used to them being very work-oriented. They could learn from us to be more proactive. But we could learn from them too - they are very hard-working and respectful.'

But any such challenges can be overcome, and the effort is worth it, says Devlin.

'We would go offshore again. It's not always been easy, but they are very flexible. I have 25 years' experience of knowing that nobody gets it right all the time. If they get something wrong, they can put people onto it at a low cost,' he says.

'The end result is excellent - because of a great effort from both sides.'

The view from India

When TCS won the contract, a team of five was sent to the UK to prepare a functional specification for the customisation of the port management application.

'We formed a team in India based on that specification, and identified the changes needed to the software,' says TCS project manager Srabani Ganguli.

As a result of the initial study, a 15-strong offshore project team was established to complement the on-site presence.

Ganguli says the India-based staff have to stay in regular contact with their colleagues working in the UK.

'We need to be in constant tandem with the on-site team, and we have to meet the expectation of Forth Ports,' she says. 'The onus is on us to keep the show going at top quality.'

The offshore provider has to manage the cultural differences between employees of the two companies.

'When we work with Indian customers, culturally we are on the same wavelength,' says Ganguli. 'In the UK the culture is different. There is more commitment and deadlines have to be taken more seriously.

'But we take constant feedback from the on-site team. I spent time in London on a previous contract, so I had experience of the UK and fed this back to my team. The team initially finds it difficult but can adjust to it.'

And the supplier makes sure that the valuable on-site experience gained by its staff is shared.

'We rotate the on-site team - three have been permanently in the UK so far, and three have come back and are training up the others,' she says.

'After team members have been on-site I can see a difference in people, they are more mature and more stable.'

But the most important factor is the Indian team's confidence in its own previous experiences.

'We have a very good domain understanding and always are curious to find out more,' says Ganguli.

'We are already working in a service industry. We have clients in India demanding high levels of service. The cultural difference takes only marginal time to train people.'