We should change the image of the industry, there are fantastic opportunities for people who want to get involved and we should do a better job of attracting talent
- Chris Stancombe, Capgemini, May 2014
One of the main features of the BPO industry since the Great Recession has been the emergence of several providers with a progressive outlook, which are now driving the market. One of those has been Capgemini, which has captured third spot in market share and made the Winner's Circle for finance and accounting (F&A) BPO.
In addition, the BPO service line has been promoted to a tier one delivery unit for the global Capgemini organization, giving the division added strategic focus and resources. Great credit has to be given to Hubert Giraud who has overseen the growth of the BPO business and has now been moved upstairs to lead HR and transformation of the whole Capgemini company - clearly great recognition of his success leading and growing the most people-centric business unit for the firm.
Filling his shoes has been one of the mainstays of the BPO business, quietly asserting his practical style and approach to operations and global services. Since joining Capgemini in 2005, Christopher Stancombe has overseen the expansion, growth and maturity of the Capgemini F&A BPO business, before advancing to the COO role for the whole BPO division last year and then taking on the full CEO role from Hubert this year.
For those of you who don't know Chris so well, he actually started his professional life as a geophysicist and even ran an African engineering business before venturing into the world global service provision. He's a straight-talking, pragmatic chap who likes to get to the point... so without further ado...
Phil Fersht, CEO, HfS Research: Good afternoon, Chris, and welcome back to HfS. I think it's been three years since we last had you on here (see interview). So I imagine quite a lot has changed. Can you just tell me what you've been up to? How have the last three years fared?
Chris Stancombe, CEO, BPO Division, Capgemini: Thanks Phil, it's a pleasure to speak with you again. This year we are celebrating our ten year anniversary of BPO at Capgemini and I've been here for nine of those now. So it has been a good time for reflection. People always say it, but the pace of change is incredible. Over the last three years I've been very focused on the delivery side as head of global operations, running all of our centres as well as all of our client engagements across the world.
We’ve worked pretty hard, as I'm sure you're aware, on our Global Enterprise Model—I’ve been driving that to ensure we have a standard approach across the globe to deliver transformation for our clients. We also reorganized last year to shift from a service-based structure to an industry-focused organization. I'm a great believer in being more and more client-focused, and our industry-focused organization really helps with that.
Phil: And again congratulations are in order, (or commiserations) now you've been promoted to the CEO of the BPO Division. So what can we expect from your leadership? Are you going to be doing anything different?
Chris: Hubert and I have worked very closely together over the last two or three years. As you know, I used to run our Finance and Accounting service line, which is a big part of what we were about as an organization. I think what you will see from me as CEO is that same energy and enthusiasm across all of our service offerings.
For example, we're increasingly strong in the supply chain area, including our procurement offering, and we've been building more and more capability in our analytics offering. In addition to that, using those capabilities, we continue to build vertical offerings such as the demand-driven supply chain for consumer goods and retail clients, insurance claims for financial services and participations in the media and entertainment sector.
We’re also introducing BPO as a stack, where we’re looking across traditional boundaries between the service, process, application and infrastructure layers. We’re bringing all of those together to reduce the total cost of service for our clients and also improve quality and timeliness. Overall, we will continue to drive the transformation agenda: delivering strong outcomes for our clients built around the Global Enterprise Model as a framework and leveraging more technology.
Phil: So, in our latest research into the future of BPO (see here), we spoke to a couple hundred experienced enterprises with BPO deals that are in varying stages of maturity. And when it comes to the technology enablement of BPO services, the desire to move down this path from clients is actually quite startling; 50% of buyers expressed that they expect to move into a transformational environment enabled by technology within a two-year timeframe. Now, providers said they're even more confident that their clients will do this. Do you think this is realistic, or are you skeptical that this industry is trying to move too quickly for itself?
Chris: I think the half-life of technology is getting shorter and shorter. Cloud is enabling rapid deployment, and the speed at which you can now move from innovation to implementation is quite remarkable. Last year there was a need in one of our clients involving a particular activity that was a subset of one of our service lines. Within six months we had designed, built, piloted and gone into full live, global rollout of the solution on a platform base.
Client expectations are – rightly – increasing all the time. People are used to using their tablet to look up an app, and that app does something for them – they expect that same sort of response from their service provider now. Is the industry ready to handle a full-scale ERP replacement at this kind of pace? I think that's a little way away yet. But certainly, using tools around the outside to facilitate some of the smaller activities, I think is absolutely here with us today.
Phil: So what, in your opinion, needs to change in this industry for buyers to move beyond legacy, lift-and-shift type engagements? Do you think some providers would prefer to stay with the status quo where they can just keep charging clients for hurling more labor at them? Do you think there's going to be conflicting goals amongst providers as we look ahead?
Chris: I think you have different providers offering different things. So if you just want to buy trained labor and it's to supplement what you retain, then I think there are people who will fulfill that need. But increasingly, and we've talked about it for years, clients are focusing on their core businesses. With the maturity of organizations such as Capgemini BPO and others, we now understand that our core business is BPO.
Just take F&A as an example: we employ so many qualified accountants because that is our core business. So why would a client not accept leadership from us related to what it looks like as opposed to trying to maintain and do it themselves? Therefore our clients, are saying, "Great, that's what you're good at. We're good at something else. Let's work together."
And we are genuinely seeing some strong partnerships now whereby the market is segmenting. It’s being more driven by clients than providers because providers meet a need, don't they? But the maturity of the providers is creating a market for clients where they can buy both process expertise and application expertise and implement all of that through cloud deployment. It's really, really fascinating.
Phil: Yes it is, isn't it. Because of many of these higher level incremental improvements, and innovations that clients want, we're hearing a lot of noises now that a lot of the consulting firms are in direct competition with many of the service providers as BPO, as the game becomes much more progressive and transformative. Do you see this intensifying as clients mature and the demand moves to more strategic and complex areas? Do you think we're going to get to this rather gray issue of co-opetition emerging?
Chris: Yes, I think so. Within Capgemini BPO, we've created our own team of consultants—we call it business transformation services. As you say, there's almost been slight competition with our Capgemini Consulting colleagues but we've learned how to work together—to the benefit of both parties and the clients. I think that's one of Capgemini’s strengths, that sense of collaboration for the benefit of both, of working in mixed environments with different delivery partners. We're really quite strong at that. I think we will see more and more transformation being driven by the BPO providers but I do think there is also a place for consultants.
Many of our team in the BTS organization have strong delivery, transition and change management expertise. Some of that experience and knowledge is invaluable, as you're aware. They run engagements, they've worked across global organizations, they know how to deliver service from multiple centers, and they're used to working in a wide variety of different cultures.
Phil: So as you look at your own business and how that's built up over the years, where do you see the main areas of growth coming from as you look out two or three years? Is it just more bread and butter F&A or are you seeing more deal opportunities open up in other areas such as verticals like insurance or analytics? Where are you seeing the big growth opportunities for Capgemini?
Chris: It's very interesting. I think there are big growth opportunities in expanding from our core services. A lot of the analytics solutions that we've developed have really grown out of supply chain or F&A. We’re providing business advice to our clients and really building strong partnerships with them and meeting their demands. Obviously our knowledge and experience, our access to data globally, the fact that we benchmark all of those things, has really helped us provide strong analytics. Another example is looking at controls. We’ve built a controls business, a Governance, Risk and Compliance (GRC) offering that has been a development of the core services. So I think there is a lot of growth around the edges of more and more value-added services.
The renewals market is also quite interesting. So yes, there are more and more people coming to the market but there are a lot of clients coming back to the market as well. We're seeing quite a strong pipeline in that area because a lot of those clients have gone through a first phase and their lift and shift hasn't really put them where they thought they were going to be. So now they're more prepared to go for transformation.
Phil: That's a very good point, Chris. And what is your growth pipeline telling you?
Chris: So I think that we're seeing quite strong growth in the pipeline of the secondary market because it didn't really exist before. Then you're right, the third area really is in those vertical specifics, using our existing capabilities and building out into areas where there are strong capabilities and strong trust levels, for example with participations in media and entertainment.
I hate to say it, but it's similar to accounts payable – it has a lot of the characteristics of accounts payable. Clearly, it's very specific to that industry and it has a lot of nuances that you need to understand, but at its core you are ultimately making payments to people. So it's not entirely dissimilar from accounts payable and we can build on the strengths and capabilities that we already have.
Media and entertainment is a good industry for us, as you know; we do F&A for four of the top five companies in that sector so we're particularly strong. Those are the areas where I think you can really go and build new “appliances”. I don’t really like that word, but I think in some ways it's a good description. You go in and build those appliances and do that up the platform – running and approving the processes that are all designed around delivering world class outcomes.
So I think it's a matter now of choosing which opportunities are right for us. There's a lot of opportunity in the BPO world. For those of us in it, it's probably as exciting as it's ever been and therefore it's like being in a sweet shop, isn't it? It's about choosing your favorites, because you’d be sick if you tried to eat them all.
Phil: So that leads me to a great final question. So if you were appointed as the Lord of BPO for one week by some higher power, some spiritual power, what three changes would you make to this industry?
Chris: I know the first one is I would create a training course for all analysts and advisors to understand the art of the possible. I think some of the providers have fantastic capabilities – I look at what we do and I look at some of our competition. Some of what can be done for clients is outstanding, really.
People like yourself who're very interested and excited and passionate about it, you know what's out there. But there are still a lot of people that don't and I think if there was some way that we could make that information more available and make people more interested in learning, then that would be the first thing I would do. I do think there are a lot of clients out there that are missing out because they're not necessarily being made aware of the benefits that they could be getting.
For the second thing, I still think that some of the commercial relationships that are being put in place don't necessarily reflect the spirit of the partnership or the transformation. Some commercial arrangements are much more suitable for the old-style lift and shift, as you put it. You've got to make sure that the contract is more reflective of the desired transformation. Are you driving the right pricing and if the provider is taking a risk are you enabling them to take a share in it?
I think providers should say, “look, if you want lift-and-shift, here’s the standard contract, if you want transformation here are some of the changes to the standard contract or here’s a different way of thinking that you should be applying."
And for the third area I would change, it would be nice if there was more celebration of what has been achieved in the BPO industry. I think we tend to shy away from the limelight. A lot has been achieved in a record amount of time, not just by Capgemini but by the whole industry: analysts, advisors, clients, suppliers. It's a fantastic success story but sometimes people think about lift and shift and labor arbitrage as if that’s all it really is, just taking jobs from high cost areas and moving them offshore. It's so much more than that.
So, I think we should change the image of the industry - there are fantastic opportunities for people who want to get involved and we should do a better job of attracting talent. People sort of stumble into it to some extent and many don’t realize what a promising career path BPO can offer. For those of us inside it, it's a fantastic place to be and really exciting and full of potential – we really need to change our image to reflect this.
Phil: Good, three very good answers, Chris! I am sure our readers will enjoy reading your views.
Christopher Stancombe is Chief Executive Officer, BPO strategic business unit, Capgemini. You can view his bio here