April 2002

WHITE PAPER

Proven
Outsourcing
Processes at HSS

HSS CONFIDENTIAL

w w w.hssworld.com
Proven Outsourcing Processes at HSS

 2002 Hughes Software Systems Ltd. All rights reserved.

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 1.1INTRODUCTION

1.2HSS: A PROVEN AND MATURE OUTSOURCER

1.2.1Unparalled Technical Proficiency

1.2.2Credibility and Expertise

1.2.3Experienced Management and Leadership

1.2.4Flexible Business Models

1.2.5Synergistic Building Blocks

1.2.6HSS Outsourcing Process

1.2.7Risk-Mitigation Measures

1.3BUILDING A 'WIN-WIN' RELATIONSHIP- A CASE STUDY

1.4OUTSOURCING: A DECISION OF TRUST

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1.1 Introduction
Chapter 1
Outsourcing has becoming an accepted way of functioning for organizations the world over, however
enterprises remain pensive when it comes to entrusting external agencies with critical application and
company information.

This paper enumerates HSS experience while executing offshore outsourcing assignments. It is slightly
technical in nature as it deals with communication software development, with a primary focus on the
Telecom Industry. The telecom-focus should not be misconstrued to imply that Outsourcing is not
recommended for other industries. The document is further supported with a case study detailing our
alliance with one of our clients, where HSS was able to move offshore outsourcing agreements beyond
transaction-based relationships to value-added strategic partnerships.

The purpose of the paper is to stress that offshore outsourcing or insourcing decisions should be based
on a solid business case analysis.

HSS: A proven and mature Outsourcer

HSS is a subsidiary of Hughes Network Systems, USA (GM group company). We specialize in
providing offshore outsourcing services to Fortune 500 companies. Our reputation in the telecom
industry provides immense credibility to the offshore outsourcing-models and offshore services we
deliver.
The following exhibit shows the cost-advantage offered to our clients. The illustration has been
modeled keeping in mind a 50-member team working in an offshore model, supported by onsite
presence. It further takes into consideration the cost incurred by HSS for setting up a dedicated
communication link.

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HSS adds value to the concept of offshore outsourcing by its emphasis on the following key success factors.
HSS' technical capabilities combined with proven project management. This can help you reduce your
time-to-market significantly. We believe that every customer and their needs are unique and we adapt our
way of working and our business model to help you meet your requirements.

1.1.1Unparalleled Technical Proficiency

In-depth domain expertise in a wide arena of communication technologies coupled with skilled engineers
gives you that added advantage of associating with HSS. The team constitution covers all dimensions of
development and testing, offshore as well as onsite. With more than 1600 dedicated employees, we have
built an experience of over 6500 person years in this business in last 10 years.

1.1.2 Credibility & Expertise

HSS' customers include leading computer and communication equipment manufacturers, including
well-known companies like Cisco, Nokia, Armillaire, Ericsson-aheadcom, NEC, Alcatel, Dialogic, ADC and
Tektronix among others. Quality assurance is an integral part of all activities carried out by us. We are
committed to preserving the client's Intellectual Property Rights under a secure organizational environment.

1.1.3 Experienced Management and Leadership

HSS deploys its best practices and processes, built over the last 10 years, into the execution of large
projects so as to deliver quality solutions on time and within cost. To this end, HSS strives to institutionalize
its proven project management experience and skills and is continuously reviewing and upgrading its
methodologies, practices and training programs.

1.1.4 Flexible Business Models

HSS offers innovative business models, which are flexible enough to meet your specific requirements.
Our business models' suite includes Fixed Cost, Time and Material and Dedicated Development Facility
models. Any of these models can be applied to our wide range of services in inventive ways, which
offers you the best value for your money. HSS' Dedicated Development facilities (DDF), equivalent of
Offshore Development Center (ODC) are a virtual extension of the client's R&D centers and are
equipped with 'ready-to-serve' resources.

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1.1.4 Synergistic Building Blocks

HSS' large inventory of pre-engineered building blocks forms one of the key intellectual assets of the
company that provide an unparalleled advantage to customers in cutting down product development time
and cost.

1.2 HSS Outsourcing Process

HSS has a mature process for executing offshore Outsourcing assignments. The model followed by HSS
over the last ten years has been outlined in the following exhibit.

Contract / SLA signing

The outsourcing-contract is the single tangible entity defining all the
parameters in the outsourcing alliance being pursued. Before
formulating a contract, we define the measurement-criteria. We
realize that measurements are the primary means to determine the
success or failure of the outsourcing process. It is further kept in
mind that the type of contract signed will affect the metrics used.
For example, in outsourcing contracts for strategic applications we
encourage using more outcome-based measures, while in technical
support contracts the emphasis is to use a number of performance-
or work-based metrics.
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 At HSS, it is a practice to organize a contract-negotiation team comprising
representatives from the HR, Legal, Finance, Engineering, Quality, MIS and
Technical departments. The essential ingredients of the contract include-
Clearly defined SOW; Price; Deliverables; Performance standards /
guarantees, penalties; Flexibility; Personnel Provisions, ownership of
Data/Software; IPR; Change Clauses, Force Majeure; Dispute Resolution
and Termination. The SLAs are framed in conjunction with the client. In this
phase project-dependencies are clearly stated and a plan identified for
monitoring their progress.

Key Resource Identification

In this phase a group of HSS key consultants are identified along with the
core technical team for the project. A meeting is fixed (audio / video) with
the customer to kick-off the project. This forum is used to sought
clarifications on contract, NDA, plan for the initial activities and
travel-plans. The Offshore Development Center(ODC) Manager identified
in this phase works in conjunction with the counterpart manager to
formulate a Responsibility Matrix between different sites.

Onsite Knowledge Acquisition

A group of key HSS consultants are posted at the client's site for gathering
knowledge on the application. HSS consultants are sent offsite for this
endeavor. They document all the information gathered and follow the
methodology mentioned below:

- Analyze the existing system architecture details

- Study the methodology & tools specific to the partner

- Examine the existing documentation

The documentation so collated helps in understanding clients' quality

standards, which is followed by a gap-analysis. In general, a small project
is identified that can be taken as a pilot-project.

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Offshore / Lab Infrastructure Set-up

In this phase details on asset-transition is worked on. Every minute detail
related to the Offshore Development Center(ODC) infrastructure
setting-up including the provision of a workstation / PC, a telephone
extension and adequate closet-space for storage is looked into. If the
project involves working on special hardware / software, the logistics for
the same are worked in conjunction with the customer. HSS also
recommends setting up dedicated high-speed communication link with the
partner's location. HSS has installed 128 kbps or 64 kbps leased lines for
its existing Offshore Development Center(ODC) clients to ensure
dedicated communication-link between the parties. The phase further
includes planning layouts as per security, staffing, lab and IT needs.
Training Phase
Here in this phase, mechanisms are put in place for ensuring transfer of
knowledge acquired onsite to the offshore project team. This phase also
includes arranging for some special project-based training that might be
required. HSS training policies of identifying consistent training-needs
identification system; encouraging role-based approach to training for all
employees are applied to these Offshore Development Center(ODC) as
well. The Offshore Development Center(ODC) team has access to HSS
training infrastructure - elaborate library, automated learning center etc.

Offsite Team Mobilization

This phase normally starts in congruence with the team ramp-up and
technology transfer phases. The core team imparts project-specific team to
other team members. The interfaces between customer's side and HSS are
further defined in this stage- prime ones being PMT (Project Management
Team); Technical and Test Leads and Support Team-leads. The offsite
team organization structure; roles and responsibilities of team-members
are shared with the client for their feedback.

Project Plan / Milestone signoff

Following the transfer of existing product architecture, design and
implementation details to HSS, process-deliverables are discussed with
the client. The important deliverable of this phase is the framing of
schedule of deliverables / milestones, which is shared with the client. The
quality-norms, coding standards, configuration management and
defect-management tools are discussed to ensure smooth project
execution.

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 Offshore Project Execution
The most critical phase of the project is the Project Execution stage. It
includes deciding on mutually convenient Project Tracking mechanisms,
Reporting mechanisms and calendar of conference calls. HSS further
commits to Project monitoring measurement criteria and frames
Escalation Matrices for the client. The execution of the project usually
follows HSS process-life cycle and at the end of the schedule time, HSS
delivers the executable with well-documented source code and
documentation including test plan.

1.3 Risk-Mitigation Measures

Risk identification is an essential part of the offshore outsourcing process. Risk affects priorities of the
project, its costs as well as its benefits because of its impact on the success of the project. For example,
using internal personnel who are more knowledgeable of the applicable goals, objectives and strategies of
the organization's project helps to assure that the project will meet the need of the agency. Risks must be
identified, understood, and prioritized. The identified high-risk areas (having high impact and having a high
probability of occurrence) must then be addressed with suitable mitigation measures.
In the following table, HSS has tried to capture all possible risks and their mitigation-measures.

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1.4 Building a 'win-win' relationship - a Case Study

Background
Our client, a high tech. startup based on the East Coast wanted to provide advanced integrated voice and
data based services to a customer base that has traditionally sourced these two services from independent
sources. Leveraging its expertise in Next Generation Switching, a 'ready-resource backup' and proficiency in
providing product-consulting services, HSS was able to take complete technology and product evolution
responsibilities. HSS' prime responsibility was to evolve the new proprietary switching fabric firmware;
multi-service switch and embedded application software.

Genesis of the alliance

After a very long and exhaustive process, the customer chose HSS to be the chief technical partner with
them in architecture and development of the new switch. HSS henceforth built a strong technical team with
highly qualified managers and engineers to work along with the customer in giving shape to their concepts for
next generation switching software.

Involving just 10 HSS engineers initially, the partnership grew to 98 engineers during peak-time. The
relationship deepened to the extent that HSS worked on some of our client's core technology developments.

Technology overview & expertise involved

The client's switch software requirements was very different from the traditional monolithic and highly
hardware coupled architecture. Rather, the architecture was based upon open and multipurpose computing
resources and a design concept that owes it genesis to a new age Object Oriented design paradigm and
advanced Distributed Computing environment. This project offered to architects and developers alike the
unique opportunity and challenge to conquer the obstacles of stringent telecom performance and yearly needs
with the flexibility and at times computational overhead of networked and distributed architecture.

The assignment involved building Bellcore recommended SPCS specification of Class 5 local exchanges and
a comprehensive suite of telecom protocol suites such as ISDN-PRI, GR-303, ISUP and non call associated
signaling protocols such as TCAP (for INAP). The core call-processing module shall be based on AIN 0.2/
CS-1 BCSM model. The complete design and implementation is in OO based and would use C++.

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Moving towards building a Strategic Alliance

HSS has been involved with clients engineering team right from conception phase. HSS worked on an
extensive Systems Requirements and architecture phase on a T&M basis. HSS used its extensive
expertise in Bellcore standards, in specific, and telecommunications switching architecture and
implementation in general, to make a detailed set of documents on the complete SPCS (Class 5 Local
Exchange) software requirements.
Based on these critical contributions of HSS, customer gave a year long contract to build a 40-member
team to join hands with their engineering team to embark on the challenge.

Proven Success leading to a Dedicated Offshore Development Center(ODC)

Facility
HSS was very successful in instilling faith in customer's perception of HSS ability to handle
complex telecommunication projects, technically as well as from the management perspective.

The customer's executive team decided to go for a Offshore Development Center(ODC) with
HSS. Under this arrangement, HSS will have dedicated office space and lab resources setup
and a committed minimum manpower resource dedicated for the client. This move also
ushered the phase of independent ownership of features and responsibility of development
and testing and delivery of high quality software from HSS.

Th DDF set-up for the client provided for the following state-of-the-art infrastructure benefits
ensuring a secure environment.

· The DDF has a separate LAN and access to the DDF facilities is restricted to DDF associates

· Dedicated 128 Kbps data and voice multiplexer link connection of DDF to the client is been
worked upon, and is anticipated to become functional in near future

· In addition, client's software development was mirrored in the DDF

· The customer had provided hardware and software

· The DDF follows the client's quality process, augmenting it with HSS' SEI-CMM Level
4-quality process wherever necessary

· It has dedicated quality support and network administration staff

· Special training in relevant technology areas is conducted for DDF members

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 Project Management Endeavors
For each project, there was a detailed process of project definition and specification
development. This ensured that project methodologies, scope, schedule and deliverables
were unambiguously defined and understood by both parties, helping synchronizing
information and processes.

Contract negotiations similarly served as a mechanism for building shared understanding,

as well as provided a strategic direction to the relationship.
At both senior and project levels, HSS made extensive use not only of the communications
facilities available, but also of physical movement to provide for face-to-face meetings.
Such meetings proved to be more effective at synchronizing values and informal
information, in a way that IT-mediated communication could not. HSS also ensured that
traffic was two-way, with customer visiting HSS offices in India as well as having Indian
staff going to client's premises.

From product-architecture finalization, to guiding the hardware designing, HSS followed

what we termed as the 'firmware down-up' approach. Right through the project tenure,
HSS' engineering team strength always outnumbered that of the client. The onsite project
team further was instrumental in setting up client's lab. From booting up the machines to
connecting workstations to network to drafting ISO quality norms, HSS was an
indispensable part throughout.

The above-mentioned practices built a significant degree of congruence between the two
parties. Even today the alliance is still thriving and is on its way of becoming an indelible
success-story.

1.5 Outsourcing: A decision of trust

Outsourcing can be a viable option when executed with adequate safeguards. The chances for a
successful outsourcing decision are maximized when the decision fully incorporates all known costs and
benefits of internal versus external resources, according to the type of project under consideration and
when the contract is negotiated and managed effectively.

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Proven Outsourcing Processes at HSS

For moving an outsourcing relationship from transactional to a strategic alliance, the reader is referred to
another white paper by HSS, aptly titled 'Outsourcing: A decision of trust'.

This white paper emphasizes on undertaking a cost-benefit analysis for deciding on the outsourcing versus
insourcing project execution.

Many outsourcing relationships commence with optimism and mutual amiability. Both sides profess the
client's need to focus on core-competencies and the outsourcer's commitment to leveraging its technical
acumen to deliver strategic value. But after the initial phase, client is faced with the challenge of staying
focused. The outsourcer, on the other hand struggles to address obscure business objectives and meet
aggressive performance targets, all the while focussing on its own profit margins and bottom-line. This
white paper suggests a four-step model that must be followed for building strategic alliances. Outsourcing
is not a typical buy or sell transaction but a case of building long-term relationships, where both the parties
are convinced of mutual benefits. From carefully selecting the right-vendor, to establishing contract
measurements, to managing and evaluating contract, to identifying outcome measurement criteria every
facet of offshore outsourcing needs planning and diligent execution to make the relationship a 'win-win'
alliance.

The white paper further proposes a vendor-selection checklist and a nine-step model for managing and
evaluating offshore outsourcing contract.

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