The Sourcing Raj Part II: “You don’t have to be Indian to be a global outsourcing provider!”

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The main feature of 2011 was all about the demise of quick cost reduction as prime driver behind global sourcing, and the focus on enterprises establishing a flexible global operational framework that can be effective in today’s environment.  

Yes, cost prudence is always an ongoing concern, but it’s no longer the differentiator; today it’s embedded in all forms of operation strategy and planning. Hence, this means enterprises’ prime focus is fast becoming global and not solely about being low-cost.  This also means providers need to service their clients as global partners with global delivery capability.

To this end, HfS Research Fellow and Sourcing Change protagonist Deborah Kops completes her investigation into the dominance of India in the world of outsourcing, and whether or not the game’s up for non-Indian providers to come back into the picture.  Over to you, Debs…

You don’t have to be Indian to be a global outsourcing provider!

In The Sourcing Raj Part I, I ticked off the reasons why non-Indian providers have had a hard time cracking the offshore outsourcing market. Indian players not only have a good 10 years’ head start penetrating the market, a brand that makes India and outsourcing virtually synonymous, and an unparalleled onshore network of buyers and influencers that all know the secret handshake. But the good news for non-Indian providers is that the global economic map will continue to evolve, making it imperative to implement a portfolio approach in response to changes in markets, availability of talent, cost and other considerations. Those players with the stomach to check nationalism at their borders and follow a few simple rules can nip at the feet of the Sourcing Raj.

You may not be familiar with the iconic 1970’s ad featuring a Native American in full regalia eating a sandwich on dark bread. The tagline, “You don’t have to be Jewish to love Levy’s,” did more to get Americans to eat something other than squishy packaged white bread than giving out samples in bakeries. Non-Indian providers have a legitimate role to play in global delivery, but it means they must approach the market differently. The market has evolved since the first Indian firms came onshore, requiring a different approach to an industry where offshore is frankly synonymous with India. It’s up to the others to convince the market that it’s possible to be a viable provider without a home base in India.

Brand as a global, not a (name that country) provider. Take a page out of the book of several leading Indian providers. They no longer call themselves Indian; they proudly declare they are global players. They push very hard to emphasize their network of operations in a range of geographies, of which India is just one. Their mission statements no longer contain the aspiration to be India’s number one (or two or three). They focus their messaging where their clients are, at the same time paying sufficient attention in their home markets to build enough brand to attract the right talent.

Yet many offshore players doggedly play their country card in their branding. While having pride in the home office location is important, understanding that parochialism is the enemy of globalization is critical to getting on a revenue growth trajectory. Clients seek good delivery from markets with sufficient scale, talent and reputation to underwrite their decisions, and that perform as strong cogs in a global delivery model. At the end of the day, that’s what matters. Providers that shed the trappings of their legacy location have a good chance to grow and prosper.

Rapidly devolve management control. To be honest, it has taken the Indian firms far too long to realize that true globalization is more than locating cheeks in seats in other geographies, retaining tight control in India. Even today, look up some of the Indian majors and note that every key management position is occupied by someone in Gurgaon, Chennai, Mumbai or Bangalore. Many Indian providers talk the global talk, but often when it comes to making a decision, it requires a call to country code 91.

Non-Indian providers have an opportunity to send the right globalization message now, leapfrogging the Indian providers by quickly devolving control into exporting markets. Clients increasingly look for leadership across geographies, signifying that the company’s management is truly global, evaluating the provider on the extent to which there is local decision making authority. Take a page out of the books of the global majors such as Accenture or IBM—locate key execs with real decision making authority in a range of geographies. It’s the smart way to grow a business in a global world.

Move quickly to develop a strong base of local sales and account management staff. For years, Indian providers parachuted in sales and account management staff, thinking they were saving money, or even believing that local hires were incapable of understanding and selling the offshore value proposition. However, the industry now “gets” offshore; there is increasing recognition that one no longer had to grow up in India to sell or manage clients.

The non-Indian player should aggressively seize the “glocal” high ground, declaring we’re both global and local by hiring prodigious indigenous talent. Clients still prefer to do business with people they believe are fundamentally like them so putting a local face on the client interface goes a long way in establishing credibility.

Declare your hand. The market’s far too mature and competitive to entertain provider neophytes who are continuously and publicly testing the market. The market looks for providers who can draw a line in the sand, saying what they can do, why they can do it, and for whom they have already delivered results. Do your homework, pick your service offerings and industries, and settle on an approach before you blitz the market. Trying to be all things to all people is a recipe for disappointment.

Invest in marketing. Jobs exporting markets cannot be conquered with a website that says little, an exhibit booth staffed by a smiling young lady,  a thumb drive with a logo, or an occasional banner ad in a third tier industry publication. Assuming because you as a provider are the best in Wroclaw or Wuxi that the market will beat a path to your door is massively misguided. Sitting offshore and second guessing your target market is not only revenue-limiting, it’s sheer hubris. Spending marketing funds sporadically tells the market you are not serious players.

If it is not important enough to invest the right amount of money in effective marketing, why bother to enter a market? There’s a direct line of sight between spend and results—spend little, especially in the wrong areas, get nothing. Spend a lot on the wrong approaches, get little. Spend the right amount on channels that matter and it’s a game changer. Figure out the right channels, the right approaches and spend the right amount of money, and the payback can be more than 25 times investment over time.

Develop superior English language skills. It’s not enough to rely solely on state investment in English training when the provider’s future is dependent on speaking the world’s premier business language. Ensuring that everyone who interacts with the client at every level has a command of clear, contextual business English is not only an imperative and differentiator, it eliminates unspoken objections inherent in client teams. Playing the non-language dependent card no longer works.

The Bottom-line: many non-Indian providers have the opportunity, but have a lot of work to do

Deborah Kops, HfS Research Fellow

Deborah Kops, Research Fellow, Sourcing Change Management, HfS Research (click for bio)

Can non-Indian outsourcing providers end the sourcing raj? Certainly geopolitics, the state of the global economy, currency movements and, more specifically, the positioning of the IT/ITES industry within India will affect the course of events. And it will take some time before the Chinese or Brazilian equivalent of the sourcing network becomes as insidious as that of the Indians. But much of the answer lies within the direct control of the non-Indian players. Will they play a global game? Will they place a bet on a few services, and make the requisite investment? Will their nationals start to appear on the rosters of client teams? Will they devolve management to other geographies? Will they spend the amount of money necessary to create a brand? Will they invest in training superior English speaking capability? Only time will tell.

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16 Comments

  1. Sheila Harrison
    Posted January 10, 2012 at 10:45 am | Permalink

    Deborah,

    I enjoyed this piece. While you don’t have to be Indian, it’s surely advantageous to be!

    Sheila Harrison

  2. Paul McCullough
    Posted January 10, 2012 at 2:49 pm | Permalink

    As it gets harder to tell these service providers apart, surely following your advice and developing truly global organizations is the best way to differentiate.

  3. Posted January 11, 2012 at 11:00 pm | Permalink

    Thanks for taking the time to comment, Sheila and Paul. Sometimes I think this business has such simple rules that are so rarely followed, that those that do will prevail. And Sheila, you’re right about the advantage of being Indian. Indians have in great part defined our industry.

  4. Paul Halpin
    Posted January 17, 2012 at 9:04 pm | Permalink

    Great piece Deborah. India’s rise as a global power is someone else’s demise. I wonder who missed the boat!

  5. Posted January 17, 2012 at 10:02 pm | Permalink

    Paul, need I ask–Mauritius?

  6. Rekha
    Posted January 17, 2012 at 11:22 pm | Permalink

    Great article, Deborah! From India’s perspective – we need to continuously evolve and keep providing game changing services to retain our stronghold.

  7. George Brashnarov
    Posted January 18, 2012 at 1:52 am | Permalink

    Interesting piece, Deborah
    India did a great job last 20+ years, but let not forget who was paying for all those services ;-)
    And you’re absolutely right – Indian companies are continuously coming and investing in Eastern Europe not as Indian, but as Global Players – Tata, Infosys, Sutherland….to mention few and this way they are trying to serve European clients from their own European base and (don’t forget) with 20+ European languages (not English only).
    However local and international players are also active – to mention HP GDS in Sofia with 5000+ people on board….and this creates ecosystem, which will be interesting to watch next years – Bulgaria, Romania, Hungary can produce an interesting alternatives.

  8. Posted January 18, 2012 at 6:13 am | Permalink

    Interesting observation Deborah, but I would disagree with the fact that its only Indian providers who are successful at this offshore outsourcing scenario, in my opinion both IBM and Accenture are two global players that are extensively leveraging India advantage. On the other hand India is no longer a front runner on voice based BPO process.

    A truly global player can never have a single geography focused operation, be it in terms of sales or operations. In fact large India based provider have still not taken on the role of global player as a significant part of the revenue is US driven and delivery is India centric.

    On a sidenote Cognizant has long been investing significantly in hiring local resources for sales and account management and that has been a reason for their growth rate being much higher than some of there peers.

    Mrinal Singh

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  9. Posted January 18, 2012 at 10:32 am | Permalink

    Mrinal, thanks for your comments. To clarify, the focus of the articles was not on the global players such as Accenture and IBM, but the country-branded providers –”Indian,” “Chinese,” “Russian,” that started out by pushing their homelands as a sourcing destination.

  10. Manuel Adame
    Posted January 18, 2012 at 11:30 am | Permalink

    Deborah,

    Enjoyed your article. How do you view the prospects of suppliers from the Latin countries?

    Manual Adame

  11. Posted January 18, 2012 at 4:17 pm | Permalink

    Thanks for pointing this out Deborah, in my opinion, we will come to a point when we see a convergence of strategies, where providers like IBM and Accenture imbibing some of the business strategies of India based providers and India centric providers trying to step into the shoes of IBM and Accenture which we are seeing by there moving into consulting engagement, onsite driven sales processes.

  12. Posted January 18, 2012 at 5:38 pm | Permalink

    Manuel, it is my view that Latin American providers have a long way to go. Firstly, they do not yet have a brand that gets them to the same table as the globals and the Indians. Second, they’ve not made the right moves to change that, delivering a consistent message. Third, Latin America in the minds of the buyers is a language, not a process play…and so forth. Not impossible to fix with time, conviction and resources, but I would not wait very long. The market is fast closing in.

  13. Posted January 18, 2012 at 6:15 pm | Permalink

    Mrinal, i would posit that some of Indian providers are already alongside the likes of Accenture and IBM–already converged!

  14. Yugal
    Posted January 19, 2012 at 8:55 am | Permalink

    Interesting thought Deborah. In my interaction with competitors of Indian providers one common thread appears that most MNCs despise Indian providers being so “Indian,” yet they believe this monolithic structure gives them the needed advantage to act quickly and adapt to change. May be distributed management appears seductive though it may not always work on ground. If it works, it may work beyond a critical mass and perhaps Indian providers are realizing that they are getting heavier and acquiring that critical mass. Till now, the Indian providers are managed by Indians based largely out of India, and it will be interesting to see whether they diversify, apart from creating some quick sales offices at buyer geographies.

  15. Posted January 19, 2012 at 9:11 am | Permalink

    Good points, Yugal. thanks for sharing. Will be interesting to see whether in an increasingly diverse world, monolistic providers can actually act faster.

  16. Posted March 1, 2012 at 5:22 am | Permalink

    Very nice and Interesting article. The Bottom line is always Sincerity, honesty and willingness to share your benefits with others will always succeed and should succeed. We may be born anywhere , but if you can contribute by your hard work value or benefit to others anybody will be welcome to any part of the world. Indians have started thinking global and the stats are More global people are coming to work in india is the trend. If somebody emu;ates and copies , it is good to the world. Think Global Act Local. Plan for the future , Take action in the present

3 Trackbacks

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    [...] The Sourcing Raj Part II: “You don't have to be Indian to be a global … To this end, HfS Research Fellow and Sourcing Change protagonist Deborah Kops completes her investigation into the dominance of India in the world of outsourcing, and whether or not the game's up for non-Indian providers to come back into the picture. … Read more on Horses for Sources [...]

  2. By Latest Local Sourcing News on January 19, 2012 at 3:49 am

    [...] The Sourcing Raj Part II: “You don't have to be Indian to be a global … Clients increasingly look for leadership across geographies, signifying that the company's management is truly global, evaluating the provider on the extent to which there is local decision making authority. Take a page out of the books of the global … Read more on Horses for Sources [...]

  3. By Cost is no longer the differentiator « on January 30, 2012 at 6:56 am

    [...] as in http://www.horsesforsources.com/sourcing-raj-part-ii_01091  [...]

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