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IT OFFSHORING: AFTER THE GOLDRUSH

By IT4me

You might expect Shell IT people to bitterly resent their offshored rivals. The reality is more subtle. Many of those expecting to be replaced actually weren’t. They were quietly absorbed by the business, or re-engaged further up the food chain as “architects”, a new IT role which seemingly emerged just in time. Also, RDS was once 40% British and many Brits have an odd attitude to India – a lingering sense of guilt from the days of empire nicely caught by comic Alexei Sayle when he apologised for the massacre at Amritsar while ordering a takeaway curry. Offshoring may be India’s just reward.

When the goldrush started, there was immediate concern for Shell’s Business Systems. These depend a great deal on KNOWLEDGE held in people’s heads, a quirky Shell-specific mix of business/technical understanding gained over years. The CIO’s empire had never run Business Systems before, so did they even understand this ? Their answer was “KNOWLEDGE TRANSFER”. To this day, nobody knows how it works, yet all the “KT” boxes were ticked after just a handful of international phone calls. I suspected use of the “Vulcan Mind Meld”, but according to the Star Trek website, this requires face-to-face contact, which almost never happened.

These box-ticks anyway count for little, given the phenomenal offshore “churn” rates. Half of any Wipro/IBM team you put together today will be gone within 2-3 months. Insiders are now fearing the demise of “FASTER”, the cheap and effective publisher of Downstream Financials since around 1998. The knowledge needed to implement the annual structure changes in 2010-Q1 has apparently been lost.

Back among the marble palaces of Bangalore’s business district, trade continues despite the recession. A hotel-night here can cost USD 400, more than almost anywhere on the planet. Indian Offshoring is no longer cheap, and now depends on sub-contracting to China and elsewhere to keep prices down. In 2007, Wipro made the headlines and brought us full circle by announcing a new development centre in a low-cost location nobody had ever thought of, one where the inhabitants even speak pretty good English: Atlanta, Georgia !

Can we blame the CIO for not thinking beyond the goldrush ? Perhaps not, given so many other execs had the same idea. But the destruction of all that knowledge is another matter…

Time Article: India Inc.: Bombay’s Boom

Comment by “shellwaarbenjijnu”
on Nov 15th, 2009 at 11:02 am

IT4me – interesting post but in response to your point regarding “destruction of all that knowledge” my question is – so what’s different with the rest of the business? Shell is about to dispose of several thousands of staff with heads full of knowledge and in any case appears to have developed a view that development / preservation / dissemination of petroleum knowledge is of secondary importance in the great scheme of things. I have heard it said by disappointed recently retired Shell staff that the company has no interest whatsoever in enabling transfer of their knowledge to less experienced staff despite all the blah blah about the “big crew change”, loss of knowledge, etc. The reason given that of cost & contractor management. In terms of knowledge destruction then does that indicate a company which knows the cost of everything and the value of nothing?

IT4me
on Nov 15th, 2009 at 2:52 pm

Shellwaarbenjijnu – No argument from me! Obviously knowledge loss in EP is a much more worrying than IT (a background service function you wouldn’t normally even hear about). It’s perhaps even a shareholder issue.

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1 Comment on “IT OFFSHORING: AFTER THE GOLDRUSH”

  1. #1 rwilliamson
    on Nov 18th, 2009 at 20:41

    Matula’s past is littered with Big Ideas that have never materialized. GSAP is simply the latest. He was the mastermind behind SAP Megacentre which was an attempt to standardize the hardware platform used to run the various SAP systems within Shell. He could not even get Lubricants to use it (they continued to use the Pennzoil / Quaker State platform).

    Matula, like many other leaders within Shell, hasn’t stayed in the same position very long. He moves on and someone else has to come in and deal with the Big Ideas and Promises that he made. I wouldn’t be surprised to find out he has spent longer in the CIO role than he has in any of his previous assignments. How much longer will he last?

    And his Big Ideas extend beyond IT. While in Corporate Planning in the US, he was a leader to push governance and autonomy out to the various business units. This led to total chaos and was the beginning of the commercial model for IT with Shell (Shell Services International) which was a total disaster that took years and years and millions of dollars to correct.

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