1. Outsourcing to Synechron Outsourcing positioned as “strategic partnership” ACOM began with Pilot/Beta run with fraction of work passed to Synechron –HTML development –Quality Assurance (QA) testing Contracts Finalized and Signed –Hourly Rate / Minimum quota of hrs per month –Outlined Platforms and Browser Compatibility requirements –No formal SLA parameters –Ad hoc turnaround time – project based

2. Initial Oursourcing Work Process Include Diagram of process Challenges: Tech director overworked and bottlenecks created PMs attemp to bypass process to complete their projects on time Re-work is necessary as PMs don’t always communicate tech work in apropriate tech specifications

3. Process Breakdown PMs “too cool” for a project plan Timing Issues –Creative design team took up too much time –Trickle down of stress to developers –Created a “NOW” culture a Agency.com Internal developers were seen as a bottleneck PMs began communicating directly w/ Synechron coders –Created misunderstandings & frustration –Communication Chaos – Inefficient –Quality of work declined – outsourcing not transparent to Agency.com clients Agency.com hired 2 more IDs (Associate Tech Managers) to coordinate between PMs and Synechron

4. Working with Synechron PROSCONS Significant cost savings Minimul 70K annual salary for NY-based experienced tech developer vs. $25/hr outsourced 24 hour development shop due to time differences Excellent quality of work Change of process challenges Management overhead Communication difficulties Echo & static over telephone Primary method was Instant Messaging (IM) Cultural Issues Accent difficult to understand “Yes” men & women Language barriers: misinterp

5. Externalities & Outsourcing Expansion External Environment –Economic downturn –New CEO at Delmonte – lost largest account ($3 mil revenue) –Lost new business pitch for Zagat –Budget cut by MARS for Fling candy bar Cost cutting strategy via outsourcing expanded –Began to outsource Flash &.Net development work –Layoffs of 7 employees (Tech Directors & Associate directors) –1 Synechron QA employee moved to Chicago - $50/hr

6. Case Synopsis Via OSM. Stage 4 Stage 3 Stage 2 Stage 1 StagesStages Leverage Offshore Cost Strategy Experimental Stage Offshore Bystander  Management at Acom followed the Offshoring Stage Model created by Carmel and Agarwal  Now Acom is between Stage 3 and Stage 4  Have Speed, Agility and Flexibility  Took advantage of time zones differences  Have Deeper Localization  Have not built Global Network of Knowledge

7. Process Improvement Opportunities Acom Management executed the first 4 steps of Robinson and KalaKota’s offshore strategy with proficiency. –Analyzed offshore goals and set strategy –Created offshore delivery model –Negotiated offshore contract –Designed Service Level Agreement (SLA)  Improvements: o Managing the Transition: Specifically Acom needs to improve Communication Management. o Manage the Relationship for Maximum Value o Measure Performance Improvement