HP's extensive outsourcing plans unveiled

HP HAS A LONG history of being economical with the truth, especially when it comes to bad press. Remember the Colorado layoffs, followed by the corporate version of pants around ankles? Well, when we said HP might end up screwing its customers yesterday, we didn't know how right we were, and HP has been denying it up and down. This one is precious, pull your pants up and call Dell at 1-877-671-3355 or IBM at 1-800-IBM-4YOU.

We said that HP was going to move its world class service and support team to poorly trained n00bs in Bangalore and Costa Rica, especially in VMS and storage. Internal HPers told us were were too late, the transition was underway already, and the customer suffering had begun, followed by a rash of bitter complaints. If you followed HP during the Australia debacle ( 1, 2, 3, 4, 5, 6), all I can say is it hasn't learned a thing.

For the record, there is nothing wrong with outsourcing if done correctly. HP is not, it is making the laughably named 'Centers of Excellence', code for what may well be poorly trained people in over their heads. HP, by all accounts, is giving its people the corporate IT equivalent of a buzz cut and an M1, off to war you go. Replacing 10-20 year veterans with people who have barely a three month training course is reprehensible, to the customer that is. HP sees no problem here. To make matters worse, HP then lets go anyone with experience, so the corporate knowledge base and memory is gone for good.

While you can't get much worse than that from the HP side, you can still rub salt in the customers' wounds. They have already paid for service and support contracts, and from everything I heard, were not consulted or even told this was happening. Same for 'partners'. Surprise, we just saved money on your back, and if your service stinks, call sales, they can help.

From what a deep insider told us, the plan is simple. If you minimally train people and hire fresh graduates without much experience, they cost less and you save money. When customers howl in protest, you upsell them on premium support where they can have the old level of access back with the few remaining clued in people.

If you notice, this is the same strategy that ran Dell into the ground. Make support suck and upsell. When customers complain, ignore it until it hits the bottom line. By then you have moved on to a different company, and Dell 2.0 - The Repair, is someone else's problem. It is almost like the same people are running the show at HP. Oh wait, they are.

That brings us to the latest memo, or Drawer Statement as it calls itself. This one is a good one. HP has spent the last couple of weeks denying what the INQ has reported to anyone who asked, but it looks like it has egg on its face. If you've an 'INQ is full of excrement' letters, please be sure to send it along.

Anyway, here is a top secret HP memo, retyped from the original and HTMLised for easy reading. You are really not supposed to know about this. Analysis of the memo follows.

This statement has been prepared for use in a:

___ Broad fashion - Use with one and all as appropriate.
___ Narrow fashion - Use with select reporters, refer to press contact above.
_X_ Reactive fashion (the traditional “drawer” statement) - Use only in response to an inquiry.

Sensitivity: HP Confidential: This information cannot be printed or shared in any written manner with customers. With customers, this information is to be used orally only and is not to be printed, emailed, faxed or duplicated in writing.

Background - for internal use only

This drawer statement was drafted to assist customer-facing employees in conversations with customers and colleagues when questions arise regarding HP's global support strategy.

HP is a global company with customers in 176 countries. In an effort to achieve an optimal mix of flexibility, cost control and service excellence—24 hours a day, 7 days a week—HP has a network of support locations and service partners located across the globe.

In line with HP's strategy to provide high quality and high value services for our customers, HP is moving remote English language support on select products from North America to HP's Global Centers in India, Costa Rica, and China. The transition of support for these selected products will evolve over time.

Statement - for External use

To enhance business efficiencies and continue delivering high quality customer support, HP is transitioning some of its remote product support on English language support calls from North America to its Global Centers in India, Costa Rica, and China.

Our intention is to keep this transition transparent to our customers. The method you use for contacting and communicating your support needs to HP will not change. Please know that HP employees around the globe are committed to providing our customers with the highest quality support experience possible.

Anticipated Q & As

HP's Global Support Strategy

Q1: What is HP's global support strategy?
To provide a global delivery model with resources and facilities in multiple countries, with uniform processes and methodologies, and supported by a worldwide infrastructure.

Q2: Why is HP implementing this global delivery initiative and moving some support to Global Centers?
We launched our “Global Delivery Initiative” last year in response to the competitive factors and underlying economics in the services industry.

Global Delivery is about making optimal use of our resources regardless of where they are located. It's about transforming to a global services organization which operates on consistent, global processes supported, or enabled by global systems. It's about a common global footprint.
- Call logging and dispatch
- Parts logistics
- Service contracts
- Resource management and other foundational processes

Q3: Why is HP using a global workforce?
HP's goal is to hire the most talented resources - regardless of location or background. We select individuals who we believe are most capable of delivering to the needs of the business and customer.

Customers are increasingly demanding globalization, requiring global consistency and presence. It's good for HP's customer retention; creates new opportunities; and provides access to new markets.

Q4: What is HP's current outsourcing strategy?
HP continues to work closely with various support partners around the globe to further augment our overall support capabilities.

Impact on Customers

Q5: How do customers benefit from HP's global implementation?
Taking advantage of HP's Global Delivery infrastructure provides customers:
• High quality delivery
• More efficient global processes and tools
• Best return on your IT investment

As our Global Delivery capabilities mature, customers benefit from higher quality and a cost- advantaged Global Delivery model.

Q6: Do customers receive price reductions as a result of HP's lower cost model?
HP is able to remain cost competitive with a lower cost model. Customers benefit with HP being cost competitive.

Q7: Will customer service levels be impacted?
Our goal is to seamlessly implement our global delivery initiatives while maintaining TCE service levels.

Q8: Will this affect customer deliverables?
No, our contract deliverables will not change as a result of GDI.

Q9: Where do I provide feedback about this model?
Your account team would be the best avenue to provide feedback on the delivery model.

About the Global Centers

Q10: What are the Global Centers? What do they support?
The HP Global Centers (GC) in India, Costa Rica, and China are designed to provide high-tech solutions with high quality customer support. Through a single-point-of-contact approach, the GCs can deliver quality services, with the agility to meet customer demands and excellent project management skills, to help customers reduce the risks associated with complex, global projects. All of these centers are well connected and are moving towards a homogenous environment with consistent tools and methodologies that enable us to provide a single face to the customer. The result is customers receive a better return on their IT investment.

HP has more than 15 years of experience in delivering solutions from global centers to our customers. Our focus on using the global delivery model to deliver services helps both our customers and HP by creating a win-win situation.

Q11: Where are the HP Global Centers? What do they support?
HP Global Centers are in India, Costa Rica and China. Our centers are strategically selected to provide the best RoIT to our customers. We support a broad range of products across our global Centers (Enterprise, SMB, Volume). Examples include:

Server Storage
Tape Storage
Extended Hours Disk
PARisc
True64
OpenVMS
Enterprise & Mission Critical PSA
Desktops
Notebooks
Tablets
Monitors

Q12: How does HP ensure the technical quality of the support provided in the Global Centers?
Support and solutions provided by our service professionals are continuously monitored and improved by HP. In addition, every support agent who works for our domestic and international service partners completes a rigorous training program, which includes language training, customer service training, and technical training. At the end of this training the agents are evaluated on the effectiveness of their communication skills, service and interaction skills, and of course, technical expertise. This training is a demanding program administered by HP to ensure that its support agents have the end-to-end support skills that meet HP's high expectations.

Q13: Do the employees in the Global Centers speak English?
All HP employees who support North American customers speak English. Our global support teams are audited on a regular basis by HP's internal quality team. We measure communication effectiveness considering English proficiency levels and phone skills. As a result, we provide continuous training, emphasizing skills of English and phonetics.

In addition, highly qualified HP technical resources are close at hand for every customer interaction. These HP resources are technical and process experts ready to answer any question and to provide additional support if necessary. HP's priority is to provide the best total customer experience in the industry.

Q14: Will call center support continue to take place in North America?
Yes, we will continue to maintain a support organization within North America.

Q15: How do you ensure call quality and customer support are not affected during and after the transitions?
We strive to ensure that quality of service and the overall customer experience are satisfactory and consistent regardless of location and cultural differences. We have a number of controls in place to provide customers with award-winning support and professional assistance, delivered in a timely manner, with a high degree of accuracy and professional communication.

All agents are provided continued training to ensure they provide customers the best support. Their performance is closely monitored and reviewed to ensure that skills and knowledge are in line with requirements.

Q16: Do you have any future plans to transition more customer support to the Global Centers?
Our current plans include transitions that will allow us to maximize the benefits of Global Delivery for our customers.

Q17: How do I escalate if I have an issue?
Tactical operational issues should be escalated to the “manager on duty.”
Delivery model issues should be escalated to your account team.

Individual Contributor Questions

Q18: Where are you located?
I am an HP employee in the {Bangalore, Costa Rica, China, GSCA} Support Center. How may I assist you today?

Q19: Do you work for HP?
Yes, I am an HP employee in the {Bangalore, Costa Rica, China, GSCA} Support Center. How may I assist you today?

Where to begin, where to begin. Let's just start at the preamble. It is obvious that HP does not want the 'Centers of Excellence' bit to be known, and wasn't planning on telling you until you complained. Note the "Use only in response to an inquiry", I would toss in something about corporate integrity, but if you saw the Congressional hearings last week, you know that one is dead and buried.

The 'Background' section confirms what we have been saying for weeks, and what HP will not say voluntarily. It is gagging canned employees, so don't expect them to sing much. In any case, it added China to the previous sites we told you about.

The 'Statement' part is all light and happy, it doesn't mention service going into the toilet like customers are telling us, nor the fact that it is doing it purely for money, like insiders tell us. I wonder why? At least it is honest about the employees being committed to excellence, I think they are. Management is another story.

Then it is on to the questions, which I will refer to as Q followed by a number. Some of them are truly priceless.

Q1: Completely fair and understandable, in fact a laudable goal.

Q2: Again, I agree, the idea is a good one.

Q3: Oh bull. They had all the things they are supposedly striving for, but are laying those people off and replacing them with barely shaved graduates to save money. If you buy that this is for the good of the customer, I have a transcript of testimony to sell you.

Q4: Yup, agreed again, and it is a good network.

Q5: The customers I talk to are not touting the benefits yet, all say something akin to 'why does service suck now', but are being far less polite.

Q6: Wow, what flowery excrement. We save money by lowering the quality of service you get. They don't even try to spin it as good for the paid customer, true art.

Q7: I got news for those of you without access to the numbers, they have already failed on this one. Customers are not happy and service from what I am told is not good.

Q8: True, from what I am told, this whole debacle is only about support, or lack thereof, not product.

Q9: Note the sales bent here, I wonder what is on HP's mind, other than legal problems?

Q10: It is amazing how PR can spend so many words to say nothing, but make it sound inoffensive.

Q11: This is the deeply scary part. Tape Storage, PARisc, True64, OpenVMS and Enterprise & Mission Critical PSA? What is HP thinking? This is not XP Home support you know, these customers pay millions to get answers now, and expect things to work perfectly almost 24/7/365. This is how HP lost Australia, and it is doing it again.
Enterprise customers with Superdomes do not find humour in hearing "I'm not sure, let me look it up, please hold sir" when their transaction processing system is down. With the level of training I am hearing going into these 'Centers of Excellence', it might be cheaper and more efficient to just send the customers an unindexed set of manuals. It would certainly be more effective. What are you thinking HP, are you this desperate to lose marketshare?

Q12: According to people who train these new workers, that is not the case, but it certainly sounds good when they tell it to customers.

Q13: "HP's priority is to provide the best total customer experience in the industry." They failed. They also don't mention money, a curious thing.

Q14: Until the next round of cuts, currently we are hearing Q1/07, but that is not solid. You can take our word or theirs.....

Q15: Translation, when customers realize how bad things are and howl, keep the old veterans on for a bit longer until the new people reach a predetermined bare minimum competence level. I mean bare minimum.

Q16: All goes to India, Costa Rica and China, at least it is admitting it now.

Q17: Standard pablum.

Q18: At least it is not pretending it is New Jersey anymore.

Q19: We will round it out where we began, nothing new, and I agree.

So, where does this leave us? As usual, HP seems to back us up now a few weeks later, but somehow still denies it all. We must be damn good guessers to have picked its plans out of thin air before they even made them up. µ