Composition of a PMO
The PMO can have as few as two to three people or as many as 100 depending on the size of the outsourced operations. This number will also vary depending on whether the operations are being managed by a third-party provider or by a captive setup. For a 1,000 person outsourced operation, the PMO will typically have 10 people, while for a 1,000 person captive site, the PMO will require 50–80 people.
Third Party: Here is a typical composition of a PMO for managing third-party offshore operations:
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Global PMO: The global PMO leader orchestrates the operations of all outsourcing projects. If based in the U.S.A., the PMO chief is also typically responsible for operations in the Americas, including onshore outsourcing. He is a relationship manager, who evangelizes outsourcing internally and collaborates with providers and the industry externally. He should be an MD-level executive, who will operate out of the corporate headquarters in the U.S.A., but will travel extensively to locations where work has been outsourced.
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The Global PMO leader’s office should include five to eight people depending on the size of offshore operations. There will be one to three Coverage Officers (one officer for about 200 people offshore), who will be Director or VP level executives responsible for operations. There will also be people who will oversee areas of finance; transition; marketing, communications and training; contracts, metrics and SLAs and administration.
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Regional PMOs: If the Global PMO is also responsible for the Americas, consider having two Regional PMOs, one for Europe, Middle East and Africa and the other for Asia. The Regional PMO should be a senior-level person who has the background of a Coverage Officer. Overseeing the outsourced relationships will not be his primary job, and will be an addition to his daily job.
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Country Managers: Companies will need one or two Country Managers depending on the number of service providers in a particular country and the size of offshored operations. Two to three service providers and an outsourced staff approaching 1,000 workers will require one Country Manager. This person should be a senior executive (VP level) from the corporate office who has sound domain knowledge of the area that has been outsourced and understands the company’s culture well. The person’s prime role will be to transfer domain knowledge and the company’s culture to the provider, manage the day-to-day relationship and be the company’s eyes and ears on the floor. The Country Manger will operate out of the country to where the work has been offshored.
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The composition of the PMO in the case of captives is slightly different. Since a captive is an extension of a company, the PMO to support captive operations is usually larger in size. Most of the team is placed onsite at the overseas captive location. Transition, too, becomes a larger role as compared to outsourcing.
“A PMO for a captive is more complex [than that for a third party]. It is a lot bigger,” says Nag who set up the PMO for both of Lehman’s third-party offshoring and captive operations.
Captive: The people involved in a captive PMO are broadly:
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Global PMO leader at the corporate headquarters. This person’s role is to work in tandem with the captive CEO to ensure the overall success of the operations. He is expected to sit at the corporate office and report to the COO/CFO.
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Captive CEO. The captive CEO could report to the Global PMO leader or to the corporate COO/CFO. Often, this person is an ex-pat from the corporate office and not a local hire. Companies that have burned their fingers by hiring locally advise against it. The captive CEO is expected to align with the corporate office because a large part of his role is to ensure continuous support from the organization. He must also understand the company’s culture and transfer that to the captive site.
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Unfortunately, senior managers are often reluctant to re-locate offshore. They choose to be close to the revenue stream and the center of decision making. The reason for that could be the apprehension that after the overseas assignment is completed, they may not have the same job back home. So, companies are often forced to send a less suitable candidate to oversee the offshore initiative.
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COO (at the captive site). This person is responsible for the operations at the site and reports into the captive CEO.
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Core team at the captive site. Since the captive is like a branch office, in a sense, it is supported by departments that any company has: HR, finance, audit, legal, compliance, corporate services, IT, infrastructure and facilities.
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