Why offshoring is hotter than ever

While we’re all getting carried away with robots and sexy SaaS solutions replacing our rules-based transactional labor (and all the lovely buzzwords that come with it), something else is going on that is taking these dynamics in a different direction for thousands of Western enterprises’ operations: IT and business processes are increasing their extension offshore at a breathtaking pace.

Offshoring is an increasingly large component of business operations. Clearly, the offshore option offers immediate savings and firms are getting much more adept, confidant and experienced at managing their processes remotely – whether by an outsourcing provider or their own offshore shared service center.  And – as we’ve lamented on this site since the days when ACS was a market leader and people still used Yahoo! – enterprises are just obsessed with driving out cost – and then figuring our things like “transformation of processes” at some future point in time.

However, the difference today is that most of the perceived “risk” of moving offshore has gone and enterprises are simply doing it as part of their day to day operations.  The evidence from 312 major enterprises in our brand new State of Outsourcing Study, conducted with KPMG, is startling:

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The extension of process to offshore delivery is almost as prevalent in shared services as outsourcing.  While a small number of firms are pulling their application development and maintenance back (one-in-ten), close to a third are increasing the offshore component with their service providers, and a fifth with their shared services – a similar trend to IT infrastructure.  Moreover, where the new traction is clearly occurring is with business processes, which are clearly reaching a level of maturity with offshoring – almost three out of every ten enterprises are increasing their offshoring of finance processes with both their service providers and their own shared services operations.  We also seeing similar dynamics with industry specific processes, procurement, HR and customer services.

The Bottom-line:  The story today is about managing integrated services across global operations

1) The game has switched to integrated global operations management.  It was barely 2-3 years’ ago (click to view some older survey data) that the trend was very much moving towards outsourcing, with offshoring as a key component, for many enterprises looking at more radical measures to drive out cost.  What’s clearly transpiring is that many enterprises are clearly also investing in their own internal capabilities to run processes offshore (stay tuned for more hard evidence of this trend shortly).  They can hire offshore staff at wages rates frequently far cheaper than their own providers charge (i.e. not paying their margins), which is nothing new, but clearly they are far more determined and confident to govern their own offshore internal resources themselves.  What’s more, many organizations are clearly not very impressed with the quality of their providers’ resources (again, stay tuned for more hard evidence of this), and have made the decision to look at a more integrated services model to deliver their services to their organization. This is why we’re seeing a heavy push from several of the Big 4 consulting shops, such as Deloitte, KPMG and PwC, to push their own managed governance and Global Business Services options, while Accenture is marketing its own flavor of integrated services management called “Integrated Business Services”.  We are even seeing providers with deep offshore specialization, such as Genpact, eager to push their service models and capabilities to clients, often as separate engagements from their existing bread-and-butter outsourcing relationships.

2) Offshore delivery will impact the rollout of the disruptive technologies, such as robotic process automation and SaaS.  While it’s not rocket science to see how impactful these disruptive technologies will likely be to labor-based services (read earlier post), the more that gets extended offshore, the more challenging it may become for enterprises to shift the model away from these linear labor-based services that are so dominant today.  Quite simply, offshore outsourcers with predictable FTE-based annuity contracts are in no hurry to disrupt their own sources of recurring revenues, while enterprise operations leaders may not have genuine incentives from their leaderships to substitute their own offshore labor for technology driven alternatives.

Net-net, offshoring provides a very durable BandAid for many organizations, and we’re still yet to witness a slowdown in the amount of offshoring that is taking place – in fact, the data shows quite the opposite trend is happening. We actually predict it will be more those organizations which have yet to do a lot of offshoring, which will look to move straight to automation and SaaS models as the ROI to reduce high onshore costs, as opposed to much cheaper offshore costs, is going to be so much higher.  Eventually, competitive pressures will force all (surviving) leading providers to shift a much larger proportion of their labor-driven models onto technology-based platforms (where IBM has already placed its bets), however, the attractiveness of the high cost-savings benefits that locations such as India and the Philippines can provide is still on an upward trajectory and likely to remains this way for several years to come, despite the hype that screams otherwise.

3) Offshore capability has often moved in tandem with the globalization of the revenue for an enterprise.  Part of the offshoring movement over the last twenty+ years has been in support of the increasing globalization of enterprises in their pursuit of the next Dollar, Euro, Peso, Yen or Yuan.  Shared services delivery capability has often been co-located with manufacturing, distribution or sales facilities whether in Latin America, Asia, Central Europe or Africa.   As global revenues have risen and more complex operating models for tax management have emerged in the last several years, there is little incentive to pull back from offshored business process or IT delivery when the rest of the business is staying put.


Time to stop the buzzword balderdash and become meaningful again

Am I smoking something illegal, or has our industry really started to lose the plot with the amount of buzz terms that – quite frankly – only mean something to the sellers and advisors trying to make their wares sound that little bit savvier than their competitors. And even then, I am not too sure whether many of them even fully understand what they are buzzing about either, more simply regurgitating what their competitors are saying.

I’m not trying to be a fuddy-duddy here, and I do empathize with the exuberance of so many sell-side individuals who are simply starry-eyed at all the disruptive technology and evolving business models that are on the horizon, but c’mon folks, can we find a sensible balance between vision and reality?  Why has it become so uncool to talk about where we are, as opposed to where we think things might evolve in 5 years’ time?

I mean, wasn’t it barely six months ago when we were still having (relatively) meaningful debates about things such as:

  • “What is innovation, and how can I get some of that?”
  • “How can I find a provider to do something more for me than provide cheap labor”
  • “I really would like some visibility over my order-to-cash process chain”
  • “Our provider still can’t figure out how to automate our accounts payable processes”
  • “Do we really get value from outsourcing all this stuff – are there other options to consider?”

Instead, suddenly it’s become terribly untrendy to have meaningful conversations about what we’re actually trying to achieve… like improving processes, trying to do a better job than merely maintain status quo operational performance, and accessing meaningful data to help us get more value from our day to day operations.

Yes, folks, if we aren’t creating Digital Services on SMAC platforms, we’re going to fail with Big Data and the Robots will come to replace us… so let’s see what 312 major buyers – in the brand new State of Outsourcing Study we conducted with KPMG – really understand about today’s latest slew of sexy savvy-sounding soliloquies:

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All joking aside, there is a serious message here: too many buyers are getting lost in the verbiage and the lack of relevance to their businesses and simply don’t understand exactly what is being sold to them. Let’s be honest here, SMAC doesn’t mean anything to 70% of buyers beyond being a concoction of new technologies lumped together… finance executives have been talking about “Big Data” for four decades and nothing is really new except the fact there is better technology to help them analyze it… I can go on.  Oh – and nearly a third of buyers don’t know what “transformation” means to their business? Seriously?

The Bottom-line:  Our industry is simply terrible at communicating to clients and needs a major reality check

There is an abject communication problem in our industry, when such vast numbers of operations executives are baffled by the BS their providers and advisors are lobbing at them via boring white papers, instantly-forgotten PPT decks and thousands of automated inane tweets.

It’s time for the industry side to start tying all this buzz to the reality of operations – where we can educate how enterprises can learn more about where the world is heading, how they can start to evaluate the pace of change that will impact them and develop change programs and new operations strategies that make sense to their businesses.

We have got to stop jumping on the bandwagon of spewing poorly communicated rubbish that has little meaningful relevance to businesses today, and instead explain in plain English how processes and interactions can be digitized, how robotics could one day enable our business systems to become more cognitive and less reliant on manual steps, how new analytics tools and expertise can help our staff become more relevant and valuable, as opposed to turning widgets and updating spreadsheets. Most of the stuff I read today is focused 95% on flashy terminology and only 5% on the actual substance on what businesses can do with all this stuff.

It’s time to get meaningful people and stop this feeding frenzy of confusing jargon…


Accenture, Wipro, TCS and ISGN make the Winner’s Circle for Mortgage Services BPO

The residential mortgage services market is one of the most established and competitive segments of the global BPO industry. Most of the major service providers have been in this market for a considerable time providing services across the process chain of mortgage origination, mortgage servicing and the (sadly more significant these days) area of loan default and foreclosure management.

It used to be that most service providers were simply providing domestic or offshored labor to augment the capacity needs of the large lenders, but that old operating model is being changed as a result of the consequences of what happened to our global economies post 2008 – and especially in the US.  Whereas before the crash the entire mortgage industry was going through such a “gold rush” that volume took precedence above all else, now, as a result of increased regulations and reduced volumes that have driven up the cost of completing a loan origination, the focus is elsewhere.

Today, this is an industry looking closely at the processes and technologies that underlie the business and turning to industry savvy service providers which can provide cost effective, compliant delivery that increasingly includes a significant component of sourced technology solutions as well. This mature market is changing and, as a result, so too is the roster of BPO service providers who are meeting those evolving client needs. So let’s take a closer look at the innovation and execution capabilities of the leading service mortgage services BPO providers:

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HfS has evaluated the innovation and execution capabilities of service providers catering to the origination, servicing and default/foreclosure management processes of residential mortgage lenders.  We asked our EVP of Research, Charles Sutherland, who led this blueprint initiative, to share some of his insights arising from this Blueprint Report.

Charles, what are some of the key challenges facing lenders today?

This is a market segment undergoing a profound level of change.  First, of all there is a dramatic fall in customer demand for new loans as post-crash engine of refinanced loans is coming to an end.   Second, is the rise in the overall costs of originating a loan, which are now up several Read More »

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Defying disruption, or a ticking HR time-bomb? How TCS reduces its average cost per employee by 6.3% each year

When we recently calculated the profit margins of top IT service providers in our HfS IT Services Top 10, it was very apparent that TCS enjoys the highest profit margin, by a considerable distance, of 28.4% among the top 10 global IT services providers and also among the leading offshore centric IT service firms. Hence, not only does TCS enjoy the highest revenue growth in the IT services industry, it is also the most profitable – so what’s the secret sauce?

In a world where there is constant downward pressure on services pricing and there is increasingly availability of disruptive alternatives that should begin drive down the reliance on an FTE-based delivery model, how – on earth – does TCS do it?  So we asked HfS Principle Analyst Pareekh Jain, to take a deeper look, and it was quickly apparent that the firm has increased its proportion of “freshers” (recent college grads) has increased from 50% to 80% since 2007:

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The interesting metric to analyze is employee cost per headcount, which has grown from Rs 1.155 Million in 2007 to Rs. 1.240 Million (US $21,200) in 2013 – an annual increase of just 1.2%. This is an outstanding achievement given the high wage hikes in India and other countries. A conservative estimate of 8% annual wage hike in India, 2% hike in developed countries and 4% hike in other Read More »


Europe’s finest enterprise operators take on the USA at the Cambridge University Blueprint Sessions. Who’s sourcing smarter?

HfS Blueprint Cambridge

Forget the Ryder Cup… this June we are assembling the ultimate pool of European and American services talent to duke it out on the hallowed lawns of Cambridge University’s Gonville and Caius College to find our who’s really delivering above par.

Yes, we’re flying over a team of sourcing leaders from the USA to compete for the first ever global sourcing crown against the determined Europeans, who believe they have a strategic approach to their game that will ultimately deliver more value.

Are we finally ready to cross the value chasm?

We’re counting down the final days before the next HfS Blueprint Sessions summit (click here to apply for a place) at Gonville and Caius College, Cambridge University, on 24-25 June this summer.  This will be the the most revealing and intimate discussion yet on the future of integrated enteprise Read More »

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Capgemini’s new BPO General rocks up: Chris Stancombe

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

Christopher Stancombe is Chief Executive Officer, BPO strategic business unit, Capgemini

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 Read More »


Ten make the Winner’s Circle for Cloud Infrastructure Services: Accenture, Amazon, HP, IBM and Wipro lead the pack

Can you believe the HfS Blueprints have been circulating the industry for over a year now since we announced ourselves so modestly last March ?

  • Did you really think our practical method of having over a 1000 of the industry’s key stakeholders weight the core performance criteria to rate provider performance would actually catch on?
  • Did you really think we would succeed in evaluating service providers against the realistic metrics of innovation and execution, as opposed to factors more appropriate for software products?
  • Did you really think we’d conjure up a genuine way to assess services providers, which isn’t reliant on the arbitrary viewpoint of a single analyst, would actually become reality?
  • Did you really think an analyst firm could source their own client references as opposed to begging providers to pony them up for them?

Of course you didn’t!  But anyways, we are proud to announce out first Blueprint for cloud infra services, led by the quixotic cloud cryptic himself, Dr Thomas Mendel:

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Thomas, how are we defining “Cloud Services” for the Blueprint?

In contrast to our competitors, we use a buyer view of an end-to-end business process made up of Read More »

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A little bit of HR heaven as Kutik tackles the toughie from Southie

Bill Kutik Talks with Christa Degnan Manning

Bill Kutik (pictured left) Talks with Christa Degnan Manning. Click to listen to the interview!

Last week, our own Christa Degnan Manning, Senior Vice President for Talent and Workforce strategies, was a guest on the revered Bill Kutik Radio Show.

As I have explained to many people, you can’t really claim to have “made it” in HR until Bill has you on his show… it’s that passport to HR heaven to which so many people aspire.  So we’re delighted to share Christa’s debut on the hallowed stage (click here) where she realized her life’s ambition of joining the HR elite, which she could only dream of when trawling the pubs of Boston’s Southie during her student days…

Christa talked with Bill about four key issues:

1. The Extended Enterprise

Looking at the workforce holistically has long been a missed opportunity for businesses. The workforce is not just the people on the payroll. It’s also contractors, and increasingly not just contingent workers that work for an agency, it’s also consultants that do statement-of-work-type engagements, and third-party service providers doing work on behalf of organizations.

Of note, first-generation outsourcing was not as successful as it could have been because no one really thought about the workforce that was left on either side: the staff that had to manage and motivate third-party service providers. And the staff of the third-party service provider had to be inculcated into the culture and the systems. The knowledge management and sharing required for Read More »

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Outsourcing advisors must be governance experts armed with research if they want to survive

Governance? Research? Really?

Thanks to all of you who have (so far) set aside 15 minutes to complete our most probing study yet on the State of Outsourcing in 2014 (and if you haven’t yet done so, please click here NOW).

Anyhow, we couldn’t resist a little sneak peak at the interim data as it rolls in, and one area that peaked my interest was when we asked advisors (161 so far) how their clients’ demands of them were changing. And for the gray-haired old woolly mammoths, this isn’t great news… their clients are now more interested in advisory services that can help them govern their outsourcing engagements better – and they also want more data and research to help them approach outsourcing more effectively:

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While a good number of clients still want more help with their negotiations, it’s clear that most clients with experience of outsourcing also want an advisor who can stick around and provide ongoing support (or at least some project-based support).

So what does this all mean?

Advisors need to do research.  52% of advisors report that their clients have increased (many significantly) their thirst for research and benchmarks. Simply put, buyers want to be more empowered to understand the market, analyze their operations, and compare their performance with other firms. Hence, advisors need to have the ability to arm their clients with data and insight to help them.  If they do not have any research, their clients will likely look elsewhere for help.

Advisors need to understand how to support governance processes.  50% of advisors see their buyer clients wanting more help with governance and their provider relationships.  This means providers need some advisors on staff who have lived the practitioner experience (with the battle scars to prove it) – they can’t just reel out deal guys who used to broker contracts for service providers to craft governance strategies. There is no written rule book for governance – it’s something that clients need to learn through good advice and real-world experience.

Advisors still need to be good at negotiating deals.  Buyer needs for deal help are definitely not decreasing – and close to half are wanting even more help. This means the deal guys can still get paid, but clearly need to up their game if they want to keep winning business with clients. Clients want to hire advisors which can be great at deals, but also great beyond the deal… and we’ve long been at pains, here at HfS, to discuss how clients need the same people negotiating the contract and actually living it after the ink has dried.

Stay tuned for a lot more from this awesome study… coming soon to a web-enabled device somewhere in your life


Why providers must do their due diligence before they merge

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Six market disruptions coming to challenge the Indian services majors

Gravy trains invariably come to a halt at some stage in their journey, and labor-driven IT and business services, fueled by lower wage regions and robust delivery models are poised to change beyond all recognition in the next few years. However, this doesn’t mean today’s winners have to become tomorrow’s also-rans, if they are smart enough to make discreet investments in the disruptive business models of the future, and gradually introduce these into their traditional models.

The Indian majors have defied their critics to sustain their labor-driven model beyond all expectations – and are in a great position to blend their models to cater for the coming disruptions 

You’ve probably been reading from us that we see several of the Indian majors continuing to carve out a commanding position in the global services market, with their market share doubling in the last four years, in addition to their leading revenue and profit generator, TCS, making the HfS IT Services Top 10 for the first time.

And while there are the usual detractors claiming “India will run out of runway and prices are getting too competitive to sustain this growth”, they are still able to maintain their growth numbers consistently in the double-digits.  The disruption and havoc the Indian majors have reaped on the incumbent service providers has lasted much longer than many were predicting, and that tail continues to happily wag for them and enterprises continue to gobble up their wares.  And with 60% of IT services, and 80% of back office business operations still sitting inhouse, this gravy train has a few more stops left to make on its journey.

When change to the traditional outsourcing model comes (and it is coming), there is no reason why some of the Indian majors cannot challenge whatever new wave of disruptive providers come at them. You only need to look back five years to see how quickly the landscape can shift. There is no “new breed” of service provider on the horizon today, which is an obvious candidate to offer services that are lower-priced than the Indian firms, however, I do see a multitude of significantly disruptive forces already at play that are going to change this market beyond recognition in the medium to long term:

Disruptive forces already on their way to change the services landscape indelibly

In short, there are some very real threats to today’s entire services model underpinned by one factor: client needs are becoming less labor-intensive and more focused on higher-value business needs. Let’s look at six examples of how the new breed of services will emerge.

1) Cloud vendors: Firms like Rackspace, Google and Amazon are already subbing to the major providers to deliver data center solutions for enterprise clients. There is nothing stopping them from moving up the value chain to the client end, displacing the Indian majors altogether as more IT operations become automated and less reliant on human intervention.  These firms already have the SME market saturated and can easily move up into the enterprise space once their standardized solutions become “acceptable” at the enterprise level, and less customization is needed. In addition, IBM is making huge bets on selling more cloud-driven platforms to clients, that can replace traditional outsourcing models, which could bear significant fruit for the firm in the future.

2) Robotics-driven vendors: This is more of a threat to current BPO delivery models, where advances in robotic automation software are enabling clients to reduce their “already offshored” services by a further 20-30% by replicating manually operated processes in robotic software Read More »


BPO: Pronounced dead, but still very much alive

If I had a Bitcoin every time someone claimed that BPO is “dead” / “hitting the bottom” / “merely staff augmentation that’s going away soon”, I could commission a whole team of robots to write this blog until the new year. And Accenture’s recent decision to drop outsourcing from its tag-line and submerge “BPO” under the broader term “Operations” felt somewhat like a death-knell for the troubled terminology.

However, I would argue that BPO is just at the beginning of a much more dynamic phase of its existence and is at least three years’ away from the term being put to bed.  BPO will evolve into “progressive operations” in time, but as our research illustrates (read on), the BPO market is still immature and has some room to grow before it becomes mainstream.

BPO is a powerful term – it genuinely implies the transferral of the management of processes

As negative as the connotations of BPO have been in recent years, it has a powerful meaning for businesses today. “Outsourcing” has always signified the transferral of the management of work to a third party, while the broader term “services” just means “work”.  ”They performed services for us” can mean anything, from little projects through to a much larger array of operational delivery.  ”I outsourced my xxxx to them” means you actually transferred work to the third-party to manage for you on a consistent, ongoing basis.

I would also argue that “outsourcing” is appropriate during the early stages of transferring work to a third party.  Once that relationship is fully operational and the management of said work already outsourced, then both the client and provider will naturally start calling it something else.

Outsourcing is the correct term to use when the externalization of operations is nascent

Synonymous to this theory is IT.  Remember how everyone used the term “ITO” in the late ’90s through mid-2000′s to describe their sourcing of IT to the EDSes, IBMs and so forth?  But today, “ITO” is pretty old-hat – people just call it “IT services”, even though so much of it has already been outsourced. Outsourcing was a more appropriate term during those years clients and providers were grappling with all the challenges to make outsourced IT operational and effective.

However, once outsourcing had become the norm with how most enterprise clients received a portion of  their IT services, it was no longer outsourcing – it merely became the way they ran their IT. It’s the same with manufacturing, which has been outsourced longer than anything else, for example, many years ago, Apple outsourced its manufacturing to a Flextronics, but now it’s merely how Apple makes its gadgets.

Four-fifths on business operations are still in inhouse  

I believe the same will eventually happen to BPO as more companies do it, but as our recent study of 343 major enterprises with KPMG discovered, around four-fifths of business operations are still sitting inhouse, either in decentralized business units or in shared services, still burning up the payrolls of the majority of global enterprises:

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On average, close to 40% of IT (apps and infra) is outsourced today.  ”Outsourcing” of IT is pretty mature – it still clearly has a lot more wiggle room to grow, as close to half of IT is still run from shared services operations, but the level of outsourcing of IT is double that of finance, HR, Read More »


Genpact feasts on Pharmalink to take on Accenture in the life sciences regulatory space

When you’re feeling a tad queasy as a service provider and the prognosis is for lower-than-expected growth in the year ahead (4-6% in this case), one of the prescribed treatments is usually a healthy dose of M&A activity to boost market potential and make the competition sweat instead.

This inorganic medicine can be especially effective when the treatment aligns to a client vertical where you have a strong competitive position. So when Genpact announced the acquisition of Pharmalink Consulting earlier today, a global provider of regulatory services to the life sciences industry, it seemed like the patient was on the right treatment regimen.  Charles Sutherland takes a deeper look into the merits of this new acquisition…

Genpact has been a leading performer in the life sciences vertical for several years now, being especially dominant providing finance and accounting BPO for a host of the leading pharma giants such as Astrazeneca, Pfizer, Sanofi and GSK.  In addition to Genpact’s horizontal strengths in pharma and life sciences, the firm has been competing head-on with the likes of Accenture and Cognizant in industry-specific process areas such as Clinical Data Management (CDM), Read More »


HfS unveils the first Robotic Premier League Table

After all the hype… after the endless stream of blogs and articles every woman, man and dog have found irresistible to conjure up (or just cribbed from whatever we’ve already published and passed off as their own, but who cares…), we’re enraptured to publish the first Robotic Premier League Table of service providers delivering robotic-esque automation to their clients.

And congratulations to Sutherland, TCS, HP, Capita and NorthgateArinso for making the early pace in this race for robotic royalty.

So, without further ado, let’s hear from HfS’ own commandant of cognitive computing, Charles Sutherland

Kicking off the first Robotic Premier League (RPL)

At HfS Research, we really enjoy our sport and so with the English Premier League season in its final throes and the Indian Premier League just starting, we thought it would be an excellent time to launch the Robotic Premier League of BPO Service Providers.

While it is too early in the evolution of robotic process automation (RPA) to apply our comprehensive Blueprint Methodology to this market as sufficient reference clients don’t yet exist to feed into our execution criteria, we still wanted to provide our assessment of where the innovation in this market is coming from. Having been the first analysts to start exploring RPA back in 2012, we have had the benefit of dozens of service provider and technology supplier briefings and have taken that insight and applied it to 5 major scoring criteria  (using a 1-5 scale) to create an initial pre-season league table of BPO service providers in RPA.

These five equally-valued scoring criteria are as follows:

  • Credibility of RPA strategy
  • Support of business leadership for RPA
  • Breadth of internal tools and external partnerships for RPA
  • Effectiveness of marketing effort behind RPA strategy
  • Apparent actual client activity underway

Like the English Premier League, we have 20 teams (BPO service providers) in the premier division that we felt had showed some level of interest in RPA so far in 2014. Using our own judgment and experience against these criteria, and some pre-season comments and observations from the providers’ training sessions, here is our initial RPL league table:

We also want to recognize emerging start-up specialist RPA solution provider UK based Genfour which is our current candidate for the mostly likely service provider to be promoted into the RPL over the coming year.

As we said before, it’s still the “pre-season” for RPA in BPO and as we see the first client pilots turn into reference clients in the months ahead this initial league table will likely be turned upside down and around by service provider efforts. In the meantime, reflect on where your service provider(s) are in our rankings and watch to see how aggressive they are in moving up this table as the “real season” of client delivery for RPA begins.

HfS Subscribers can click here to download the 2014 HfS Robotic Premier League report


Cogny cogitates on a new industrial revolution

Patrick Cogny is Genpact's Global Business Leader for Manufacturing (Click for Bio)

I think it was back in 2006 sometime that I was working with a major global enterprise which was deliberating a wild swathe of BPO deals, and there was this upstart little Indian company, which had just shed its weird name (“Gecis”), and was vying to win the F&A business, in spite of fierce competition from the likes of the traditional establishment that included Accenture, ACS, IBM et al. The conversation quickly turned to “which one of these providers can actually do supply chain accounting for multiple European destinations”.

“Not to worry everyone, we have ze perfect set up in Romania for you” piped in a dashing young Frenchman. And there closeth the deal, at the time one of Genpact’s largest, and I first met Patrick Cogny.  Since then, Patrick has quietly developed a very strong reputation as a deep thinking and very personable executive, helping first grow Genpact’s European capabilities before taking on the role of leading one of G’s largest industry practices, manufacturing and services,almost three years’ ago.

Anyhow, we managed to lure Patrick away from his newly-formed habit of wandering aimlessly around the streets of his adopted New York City to get some lowdown on the crazy early days of Genpact, and how the firm is approaching the manufacturing sector with what he calls the “New Industrial Revolution”…

Phil Fersht (CEO, HfS): Hi Patrick, thanks for spending time with HfS today. You’ve been one of the real characters behind Genpact’s rapid growth, both in Europe, and now in the States. However, before we get into your current role and plans, can you give some insight into your background – how you started your career and why you found your way into the Genpact organization.

Patrick Cogny (Genpact): I started my career with GE a long time ago – disclosing details would betray my age – I spend 12 years in the Healthcare business of GE, most of them in a high-tech division designing and manufacturing X-ray sources. I held roles there in supply chain, sourcing, Read More »


TCS breaks into the HfS Global IT Services Top 10, with Cognizant poised to follow

As we predicted last year, TCS has now become the first of the Indian majors to break the Global IT Services Top 10 for revenues, replacing CGI.

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Talk to any incumbent  Western service provider today, and the one making them all tremble from the sub-continent is TCS.  So what’s the secret sauce?

TCS’ aggressive targeting of renewals and new business, particularly in continental Europe is an important factor in driving its assault on the leaders. Moreover, TCS is frequently seen as being the most flexible service provider on pricing and terms, and has a developing reputation for winning any deal anywhere in the world at any price, if it really wants: it depends on what its leadership thinks is important, what its perception of the market is, and what it needs to tell its stock-holders.

The firm is increasingly being perceived by many today as an alternative provider to the Western Tier 1s, that can come in and fix messy contracts and implementations; it has shown an appetite and willingness pick up a lot of the low margin, low value work that seemingly every Western Tier 1 wants out of and make the deals profitable and leverageable across clients. Not only that, TCS is having much more success de-linking the direct correlation of revenues from FTEs: the firm has a Read More »


Learn all about neocortical cloning of the dynamic core… you know you want to

No joke, but where else can you hear a discussion about reproducing the cerebral cortex in a piece of software?  Where else can you truly understand how paychecks will be processed and IT systems will be remotely operated by robotic human clones in the near future?

Had something better to do than be one of the 800+ registrants for yesterday’s Ultimate Robotic Automation Debate? Or, were you so enthralled with the debate that it’s left you hungry to devour more information on how and when to deploy your very own, round-the-clock robot?

Well, fret no further as HfS Research’s powerful, little, semi-automated, back-end assistant makes it a practice to disseminate our webinar slides and replay for your robotic revelry.

Oh – and a special thank you to our excellent panelists:  Lee Coulter (Ascension Health), Pradip Khameni (Blue Shield of California), Chetan Dube (IPSoft), Alastair Bathgate (Blue Prism), Ian Barkin (Sutherland) and Charles Sutherland (HfS).

Click here to access our slides

Click here for the replay


Accenture de-emphasizes the term “outsourcing” – is this the final death knell for the O word?

A momentous event quietly occurred on Friday which could well have significant ramifications for the business practice that calls itself “outsourcing”.

Accenture dropped the term from its strategy line, “Consulting, Technology, Outsourcing”, which it had been using for more than a decade, changing it to “Strategy, Digital, Technology, Operations”. In addition – and perhaps more significantly – it renamed its BPO growth platform “Accenture Operations”.  The BPO term is still used when you drill right down to the specific business service lines, but Accenture wants to emphasize to its clients that it provides end-to-end services that go beyond just BPO.

As many of us universally lamented last weekend, the outsourcing (so-called) industry has long been struggling to create a clear, meaningful identity and establish recognized career paths for almost two decades, and much of this is because so many of the service providers, advisors and enterprise customers have failed to create a positive brand perception – and communicate effectively – the value of partnering with service providers to improve and extend operational capability and productivity.

Accenture was one of the last bastions of the outsourcing term, and its de-emphasis of it may be the final nail in the coffin for the dwindling band of outsourcing diehards still clinging to the fantasy that an “outsourcing industry” actually exists. In fact, the term IT Outsourcing is already practically dead, with only a couple of advisors and IBM (oddly) still using it, so let’s see which of the providers actually still use BPO as their official terminology:

Well – there you have it – most have actively distanced themselves from the term, with only Capgemini, Dell, Infosys, Wipro and Sutherland still wed to it. Oh – and for some inexplicable reason, the major HR services firms like ADP still use it, even though the HR profession looks more negatively at outsourcing than any other.

The Bottom-line:  It doesn’t ultimately matter what the providers call it, more how the enterprise clients view it

In my view, “outsourcing” really describes the initial act when an enterprise moves the responsibility for processes and operations over to an external party. Once that act is complete, those processes being executed form part of an externalized service or operation for the customer.  ”Operation” signifies more than merely a service, but the orchestration of an end-to-end suite of processes, so I give Accenture credit for the being the first provider brave enough to use the “operation” term.  Now we can sit back and observe many of the above providers also slip that word onto their websites and marketing copy.

However, whatever these providers name their offerings, the real litmus test is going to be whether the buyers of services will start approaching service partnering as a genuine opportunity to improve their capabilities. Ultimately, they are the ones who would need to drop the O word and view services as what they are:  services.

Accenture’s move is the most significant yet in terms of rebranding the outsourcing business – my best guess is that O will be pretty much gone from our business vernacular within a year.


Moving Mountains with Mike, Part 2

If we’re going to cross the chasm and seize the opportunity before us to grow the industry, we need to make outsourcing a career people are attracted to

- Mike Salvino, Accenture, March 2014

Mike Salvino is Group Chief Executive, Operations at Accenture

And finally it’s time for the long-awaited second tranche or our interview with outsourcing hall-of-famer, and the man who’s steered Accenture’s BPO juggernaut these past few years, Mike Salvino. During Part 1, we talked about the challenges and opportunities facing enterprises striving to move up the “BPO Generations” continuum and Mike’s philosophy about how BPO can provide a genuine career opportunities for such a broad diversity of people.  We finish our discussion talking about how companies can drive change and what Mike would do if he  is ordained as the Lord of BPO for one week…

Phil Fersht (CEO, HfS): Mike, you’ve talked a lot about what needs to change within companies, to move towards more value and away from these transactional engagements. But what do you think really can drive change within enterprises? What do you think has got to happen within themselves to alter the mindset and their approach to developing their governance teams and their staff?

Mike Salvino: I think we will get people to change based on delivering business outcomes. Remember, business outcomes mean that you’re helping clients increase revenue or further decrease their cost –beyond the normal cost savings of outsourcing.

And when we do that, people step up and take notice. They want to understand how you did it. The first step in delivering business outcomes is doing global operations and achieving silent run. That eliminates any discussion amongst ourselves about “Are the transactions getting done?” Then because of that silent running Read More »

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This week on the HfS Podcast: Major Trends in IT Operations and Service Management Software

Dr. Thomas Mendel, SVP IT Services Research, HfS (click for bio)

The ITOSMS market is in transition, so Mark Reed-Edwards got together with Dr. Thomas Mendel, Senior VP, at HfS Research to discuss it in the HfS Podcast.

Dr. Mendel’s new report on the ITOSMS market (Market Overview: IT Operations and Service Management Software) is available at HfSResearch.com now.

So, how big is the market? What’s the provider landscape? Who are the major players, and where is the market headed? Listen to the podcast and you’ll know the answers to those questions. Then download the report and learn the rest.


Download the HfS Podcast here (right click for options).

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