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Whenever possible, it is wise to learn from others’ mistakes when planning a significant transition of IT within an organisation. History is littered with outsourcing and digital transformation projects that went over budget, over deadline and, in some cases, over and out, pulling the organisations concerned so far down that they never recovered.
Taking account of where and how such projects went wrong can be a good starting point for other organisations hoping to get it right. However, it is also possible to learn from others’ successes, although these are not necessarily as newsworthy as the failures.
According to Asbjørn Eide, head of IT at Swedish debt resolution firm Hoist Finance, outsourcing for digital transformation is one of the success stories of Nordic IT – albeit still with a few hiccups along the way. Hoist Finance serves individuals, companies and banks in 11 European countries. It is based in Sweden and has operations in Italy, Poland, France and the UK. Its prime area of operations is buying loan portfolios from banks and guiding in-debt people and companies to meet their obligations and rebalance their finances.
Eide, who joined the company last year, said: “I soon realised that the IT infrastructure was not in good shape, that we needed to fix it quickly.”
A single-source tender process was initiated, with Hoist going to some trouble to invite several suppliers to ensure the tendering process was balanced and fair. But this didn’t end well. “It was like a near-death experience,” said Eide. “The winning bidder refused to sign the contract we had negotiated.”
So Hoist had to bring another outsourcing company into the game. “We could then take the ready-made contract from the other negotiations,” he said. “This process gave us a good understanding of the vendors and an improvement in the outcome for us, commercially and in terms of what the vendors could offer and how that would be delivered.”
The winner of this process was India-based global IT services provider LTI, which scored highly for strategic alignment, commercial value, security, experience of digitisation of companies in the financial industry, and focus on delivery. From then on, things moved quickly.
“We signed the contract in September 2019 and LTI took over in January 2020, which is record time,” said Eide, who was impressed by the commitment shown by LTI’s management. “At one point, they flew in their global heads at 10.50pm to meet our midnight deadline,” he said. “It’s fair to say they have delivered on their promise, have gone live, taking over our infrastructure in record time, and are ready to engage in helping our effort in digitisation.”
Read more about Indian IT services providers in the Nordics
- Norway’s biggest bank has outsourced IT operations to Indian service provider HCL in a seven-year deal worth $400m.
- Wipro, one of India’s big four IT services providers, is to expand its workforce in Scandinavia and has appointed a local executive to lead its operations in the region.
- HCL has established a team in the Nordic region, one to cover Germany, Austria and Germany, another for France, a team to look after the Benelux, as well as an Italian outfit.
- A rising tide lifts all ships when it comes to outsourcing in Norway, Finland, Sweden and Denmark, but some ships have risen faster than others.
Sudhir Chaturvedi, president at LTI, said: “LTI has completed operational responsibility for Hoist Finance’s IT environment, including infrastructure and application operations. Enabling Hoist’s strategy to be a digital industry leader, LTI also partners on digital transformation projects. We support engagements from our delivery centres in India and Poland and collaborate with IT and business teams for Hoist.”
For Hoist Finance, the goal of the outsourcing process was not so much to save money, but to have a better user experience internally and to stabilise and modernise its IT infrastructure. “In addition,” said Eide, “because the competition had become so fierce, we ended up with a lucrative business case, so the board was happy.”
Although much of Hoist’s IT has been outsourced to LTI, some elements remain in-house. “On our own, in parallel, we recently launched self-service portals to the market, and we now have an AI [artificial intelligence]-based chatbot handling 60% of our customer interactions,” said Eide.
Channels such as WhatsApp for Business are used for customer interaction and for making payments. Eide added: “Most of our users haven’t chosen to be our customers, so there’s less patience for complicated login methods, and nobody really wants an app on their phone with our logo on it.”
Goals for the future include greater use of digital channels for collection, he said. “If you go one year back, we had pretty much close to zero digital. As of Q4 last year, we’re now at 15% of our goals. We believe the digital channels are ideal for our customers, and also a lot more cost-effective for us. So our ambition is to move to 50% digital collections within the next couple of years.”
Eide added: “From being kind of late to the party, I do think that during the last year we have leapfrogged most of our competition. The next step with LTI is to increase our analytical capabilities and machine learning, so we can analyse our data, treat customers better and be able to help them find solutions to their problems.”
Problems inevitably happen during IT transformation programmes and Hoist’s was no exception. “With one of the projects we got into problems,” said Eide. “On Friday at 9am, I escalated to LTI management, saying that the project wasn’t making progress. At midday, the project manager left the building and a new one arrived, with three new technical experts. They spent the weekend working on the problem and by Monday were back on track with a new plan, all working perfectly.”
One of the fears expressed by companies considering outsourcing their IT to non-local service providers is the risk of cultural problems. LTI has a lot of Indian workers, and some European companies have concerns about the potential for misunderstandings or other cross-cultural issues. But these concerns are largely unfounded, as is apparent from the success of India-based outsourcing companies in general.
But there was a surprising twist for Hoist. “You might think there would be a lot of cultural challenges – in fact we expected that,” said Eide. “But we were surprised to find some aspects of Nordic culture at LTI, such as more female project managers and greater focus on similar values that we are used to in Scandinavia.”
It transpired that Larson and Toubro, the parent company of LTI, took its name from two Danish men who were stranded in India during the Second World War, and went on to launch the company. It now has 350,000 employees – and almost 80 years later, that Nordic presence can still be felt.