Transcript Outsourcing and the Technology Business Presented by: Soufi Fazai Syed Khurshid
Outsourcing and the Technology Business
Presented by: Soufi Fazai Syed Khurshid Alex Lai Christie Martinez
Organizational Background
History Industry Services Structure Financial Situation Competition Customers
History
Founded in 1995 Privately Held Filed S-1 on February 12,2007 to become public The largest independent screening providers focusing on employment background screenings for large and mid-sized organizations Delivering more than 50 service offerings in more than 200 countries and territories Developed the first Internet based background screening solutions for its customers Comprehensive domestic and international coverage
Industry
The background screening market estimated to be $4 billion in size and to consist of more than 1,000 screening firms. Reasons behind the growing demand for background screening solutions Increasing public awareness of potential security threats Laws and regulations that governments and other regulatory bodies have established to identify and minimize potential threats.
Services
Background Screening Drug & Health Screening Pre-Integrated Solutions Employment Application Solutions Industry Solutions Global Verifications
Source for Employment Screening Services
Criminal Records Searches Sex Offender Registry Searches Social Security Number Trace Social Security Number Validation Employment Verifications Education Verifications Credit History Examination Motor Vehicle Records Checks (MVR/DMV) Professional License Verification Professional Credential Verification Professional Reference Checks OFAC / Prohibited Parties Searches FDIC and Financial Industry Searches Civil Court Records Searches Military Record Verification Workers' Compensation History International Background Checks Volunteer Background Checks Industry-Specific Searches Drug and Health Screening
Global Verifications
HireRight Global Services
Criminal history Education and credential verifications Employment verifications Local-language media/public domain searches and integrity checking Driving records checks Credit reporting Due diligence checking Prohibited Parties Industry- and country-specific verifications
Other Services
Policy Development • Collection Site Identification • On-site Collection Training • Medical Review Officer (MRO) • DOT Controlled Substance Abuse and Alcohol Form • DOT Pre-Audits • DOT Audit Assistance • Expert Witness Testimony
Structure
Corporate Headquarters: Irvine, CA, USA Major Shareholders: Robert W. Baird & Co., DCM - Doll Capital Management, Goldman Sachs, Split Rock Partners Notable Individual Investors: David Duffield, founding CEO and Chairman of PeopleSoft; Peggy Taylor, co-founder of PeopleSoft Management Team: Eric Boden - President and CEO Jeff Wahba - Chief Financial Officer Lisa Gallagher - Vice President, Operations
Financial Situation
HireRight ranked number 169 on Deloitte’s 2006 Technology Fast 500, a ranking of the 500 fastest growing technology, media, telecommunications and life sciences companies in North America.
From 2001-2005. HireRight grew 1,034 percent Significant revenue growth over the past five years HireRight ranked 7th on the 2006 Technology Fast 50, which is a regional ranking of the 50 fastest growing technology firms based in Orange County, CA
Competition
Other Employee Background Screening Firms
Competitive Advantage
Reasons for Hire Right's success among competitors Industry-leading employment screening solutions developed in direct response to market needs Real-time access to all background screening reports via the Internet anytime, from anywhere .
Competitive Advantage
Single web-based order interface Consolidated user-friendly reports Privacy and consent forms in the local language where required Around-the-clock multi-lingual verifications staff Worldwide research network Compliance expertise in verifications and employment law as well as European Union and Asia-Pacific data privacy requirements 24x5 customer service
Customers and Partners
Health Care Financial Services Transportation Education Oracle PeopleSoft Vurv VirtualEdge PeopleAdmin Deploy Solutions Taleo Peopleclick Previsor Hewitt DDI VisaNow
The Interview
Wednesday, March 7 th , 2007 Lisa Gallagher, Vice President of Operations Joined the company October 2000 Responsible for all aspects of Hire Right’s operations, including occupational health services, background verification and customer service departments Cal State Fullerton Alumnus After she began working with the Indian market, she joined the Hunger Project to end chronic hunger in Bangladesh, Sub-Saharan Africa, and the smaller villages in Latin America.
Outsourcing Activities
HireRight, Inc. strongly believes in offshoring and outsourcing and has activities in Estonia Russia India
Estonia
Production – parts of software production is sent to Estonia to be produced but more security related software production is sent back to the US for finalization. Does product development and testing Over 50 employees
Moscow, Russia
Builds software solutions Mostly does modular pieces of production to keep intellectual property in the US Equivalent to 10 full time employees working for Hire Right, Inc.
India
This is the largest part of Hire Right’s outsourcing and requires the most attention Subcontract to company in India which has approximately 150 full-time employees working for Hire Right Majority of Hire Right’s entry-level work-load is done in India India works to verify employment & education through the internet and will handle other screening processes for Hire Right
United States
Screeners in U.S. handle the calling for verifications (due to Indian accents which might turn off customers and applicants) All server information stays in the U.S.
Production of intellectual property and sensitive aspects of software done in the U.S.
All administration takes place in U.S.
U.S. provides specs to Estonia and Moscow for production
Outsourcing by Competitors
Less than 10% of the competitors outsource Reasons for not outsourcing: Lack of control Cultural issues Fear of what customers will think Fear of the unknown Takes a great deal of work to outsource Companies have experienced problems with outsourcing sometimes because they do not take careful, measured approach Hire Right, Inc. made a partnership with their subcontractor so all are committed to success
Benefits of Outsourcing
Substantial financial benefits and cost savings Has brought down the cost of doing business significantly High quality of output Outsourcing has allowed Hire Right, Inc. to increase their customer base in other countries.
Started with 42 countries but now providing services in over 200 nations.
Benefits of Outsourcing
Able to get college graduates who will work for less Cannot find this in U.S. very easily – most graduates do not work for that little of money or the turnover is very high More aligns with what the customer is willing to pay and what Hire Right is willing to spend Culture in India is to follow directions thoroughly To ensure this, Hire Right created processes
Issues with Outsourcing in India
Original CEO of the subcontractor is Indian but has worked in the U.S. before therefore he understands the issues faced by the U.S. firms and is easy to deal with.
Production issues led to renegotiation of the work contract.
Workers wanted to reduce the production quota New contract allows for payment per piece of output This secures the profitability of Hire Right, Inc. Factored in incentives and penalties
Issues with Outsourcing in India
Lower production output Seems to not do as well with problem solving or thinking for themselves High turnover, especially for woman who are unmarried and still live at home Work hours contribute to this: they work US business hours
Impact of U.S. Economy
Believes that there is a positive impact Most US multinationals are outsourcing now Lowers costs to businesses are passed on to consumers More purchasing power Unemployment is at an all-time low Many positions available in growing retail sector for those displaced by outsourcing Most outsourcing affects entry-level workers