The unfettered growth of metrics tends to lead to false productivity gains. For example, he said, customers seeking technical support might be redirected from one staff person to another, each of whom could mark down a short call time without ever actually solving the caller's problem.

At BT Exact, the IT division Ramji runs, the transformation -- part of a larger initiative called 21st Century Networks -- is still a work in progress. The telecom company has been able to retain much of the IT staff that had worked on the company's voice phone business by retraining and shifting workers to higher-margin network and Internet-related projects.

For jobs that BT already outsources, Ramji insists that 90% of it be done offshore to get maximum savings. Many managers, he said, don't realize that they are not saving as much as they could from offshoring projects because a larger-than-expected percentage of workers actually remains onshore.

On another front, Ramji is trying to downsize nearly 3,700 systems into just 14 platforms and offering bonuses to employees whose teams devise solutions to customer problems. The winning teams get bonuses worth 10% of their three months' salary.

After a few initial quarters in which few bonuses were paid out, workers are getting on board, Ramji said. 'This gets them out from hundreds of layers of requirements and gets them excited about doing the right thing,' he said.