Welcome to our blog!

Field trip to Vestas's IT organization in Manila.

We are four students: Jesper Larsen and Tue Lassen (Bachelors in political science) & Claus Laustsen and Rasmus Knap (Bachelors in IT) from Aalborg university, who are currently studying IT management as our Master.

As a part of our 9th semester we are writing two scientific papers in collaboration with Vestas. Furthermore an aspect of our 9th semester has been concerning sourcing strategies and project management. Therefore it is relevant for us to visit Vestas's IT organization in Manila. Besides Vestas we are going to visit two other offshored IT-organizations, NNIT and Excitor.

The papers are as mentioned being composed in cooperation with Vestas which offshored a part of their IT organization to Manila back in 2008. The papers concern the following:

1. How has Vestas IT-organization developed their IT-capabilities and structure over time in the efforts to become a strategic (trusted) partner to the business.

2. To describe and define the IT middle managers role in the IT organization.

The purpose of our trip is to collect data for the two papers and in general learn about and experience the practical aspects of offshoring. We are thereby gaining practical knowledge regarding the challenges IT organizations face when they offshore parts of the IT function, that we can compare to the theoretical literature we have been presented to in class.

We consider this a unique chance to explore the different processes in an offshore organization and learn how leadership and management can be performed.

The purpose of this blog is to summarize and reflect upon the experiences gained from visiting three offshored IT organizations.

Ready to go to Manila? Not quite - the economical aspect

As a student everybody knows that one is on a tight budget and consequently we needed resources to cover parts of our expenses. We therefore have petitioned different funds which have responded positively. The realization of the trip became imminent once the petitions were accept, which was a great relief for all of us.

The blog will be updated regularly and pictures will be shared as well.

Tuesday, November 15, 2011

The life of an expatriate

Finn and his wife Jane invited us to dinner Tuesday evening. We went to a lovely French restaurant, which was located in the nearby area. The conversation was informal but it still gave us an impression of what it actually takes for a Danish expatriate and his or her family to go abroad. We’ve faced/heard about some of the challenges regarding the adjustments to a radical new environment.
We were amazed by the amount of social events and close relationships they had managed to establish in such a short period of time. As Jane said: ”I have never been so busy before, even though I’m not working”. Of course over interpreted but giving you an understanding that it is not necessarily lonesome to go abroad. If one actively takes contact and involves in the many different social activities for expatriates, the social network will increase and you will not feel on your own in no man’s land. A fine example of this is that suddenly the live music starts at the restaurant. After a while our hosts realize that the pianist is a close friend of theirs. The pianist is an expatriate from Australia working in the oil industry and at the same time a skilled pianist who, once in a while, is playing for fun at the French restaurant.
After the main dish we were ready for dessert and just as the waiter came to fill up our glasses, we told him we would like to order some desserts. This is where you, as a Dane, would expect him to bring the menu or take the orders right away. What happened was that he went away without doing anything but waiting. Apparently he wasn’t the one to take orders, just to fill up glasses etc. He didn’t even inform the waiter who was allowed to take orders – he just waited in the corner. It took us a couple of minutes before we got to speak with the appropriate waiter, and ordered our desserts (or at least the ones which was actually available). Even with the minor misunderstandings it was a great dinner with tasty food.
Small talking with the pianist we comprehended how strong the bond is among the expatriates, which is also emphasized by their (the different expatriates we have talked to) eager to help and inform foreigners and other firms trying to establish themselves in the Philippines about societal problems and challenges.
In relation to the societal problems it can be mentioned that the boundary between rich and poor is enormous. Of course Manila and the Philippines in general is not a unique case in that matter. But what makes Manila a bit special is the segregation. Makati, which is the business area where we stay, can be considered more or less a huge island in the city wiped for poverty, dirt and beggars. There is security everywhere so you can walk around on your own everywhere anytime a day. This is a total different story when it comes to the squatters outside the business areas, where gangs and criminals are fostered by the dozens because of poverty and lack of jobs.
We ended the dinner at our hosts place on the 23rd floor enjoying a drink on their balcony where you could, which we did, sit for hours and enjoy the magnificent view of the skyscrapers and the city.
A most sincerely thanks from the four of us to Finn and Jane (if they read this) for an incredible evening, which we really appreciate.

Who's the bigger issue?




The traffic always jams when it's raining, because everyone grabs a taxi home.
Working at the office with a view of Manila in the background
We spent the afternoon interviewing two of the managers at Vestas. What we learned from today’s interviews was that even though the hub was established rather short time ago, its employees are experienced, passionate and hardworking. From what we’ve learned from courses, and literature in general concerning establishment of departments in Asia, it is challenging to hire competent employees without a prestigious brand as employer. Here at Vestas it seems like it’s been a great success.

We have experienced some strategic awareness, also conflicting with some of the western prejudices. We see potential for not only outsourcing operations and development, but also strategic functions. It is also interesting to see how the managers in Manila had adopted the corporate visions and used them in understanding their work. One could think that the Manila hub would be an isolated “island”, but due to the matrix organization the Filipinos still have strong connections to rest of the organization.
The attrition rate is a common issue when outsourcing because money typically is the primary concern in the countries where outsourcing usually occur. The Manila hub has managed to keep down the attrition rate at a surprisingly low level. This might be because of the competition to attract competent employees still isn’t that bad in Manila.

In our courses in project management we have learned about three important parameters of concern when outsourcing: communication, time zones and culture. By interviewing managers in Manila we have learned that the greatest challenges are communication and time zone differences. The cultural difficulties have not been subjects for concern for the managers to the same degree as we have experienced in Denmark. They believe cultural issues are overcome by professionalism, and is therefore not a big issue in their everyday work life. Maybe our culture, or lack of understanding of the Asian culture, is the bigger challenge of the two. Here in the Philippines the employees have had courses in the western culture, how to interact and how the stereotypical Dane differs from the corresponding Filipino. Just some food for thought…

If you send me crap, I'll give you crap!

Finally it looks like we have come to an agreement about the breakfastJ. There seems to be some communication issues between the reception and the restaurant.   The Filipinos are very service minded and always smiling. One thing you have to bear in mind though, is that when talking to Filipinos, not aware of western culture, they tend to say yes even though they should have said no, because of their service mindset – they prefer not to disappoint you.
Today we visited NNIT’s hub here in Manila. NNIT is a separate IT division of Novo Nordisk and their main focus is the development of software. The head of the NNIT hub, the general manager actually started his own development company in Manila, which was later bought by NNIT. We got an interview with the general manager and a project manager. From visiting NNIT we learned that the competences of the developers in Manila are equal to developers in DK. The main difference is that it can be harder for the Filipinos to understand the business due to the distance. From the various companies we have been visiting in Denmark, we have heard that some of the main issues for outsourcing are a lack of competences in Denmark. As in it isn’t possible to find people with e.g. specialized SAP knowledge. But as the general manager said: why make a full scale outsourcing project, if you only need specific competences? It would be easier just to get the competences to Denmark.
A typical issue in outsourcing is managing contracts, such as requirements specifications. In software development a requirements specification is the contract that states how a given system should be used and which functions it should consist of. In Denmark, and western countries there have been a lot of issues concerning these specifications both internally (just think of failed IT-projects at governmental level, such as “tinglysning”) and externally (outsourcing). The project manager in NNITs comment to requirements specifications was “if you send me crap, I will give you crap!” - And that might just be the issue about Danish requirement specifications or requirements specifications in general?