Well, another year goes by and HfS yet again escapes any legal action, terrorist attacks at our office, or disappearing bodies, for being thoroughly unafraid to call the industry on its issues. So let's reflect some of the defining outsourcing moments of 2011...
Deb Kops began the year in feisty fashion by declaring war on the procurement function... Is traditional procurement deeply involved in M&A activity? Corporate strategy? Business transformation? Not a chance. While our friends in the CPO’s office have an important role to play in procurement process and governance, they cannot be the major arbiter of taste when it comes to sourcing true corporate change.
RIP Joe Vales
The nicest guy in sourcing - and one of the best marketing guys you'd ever met - Joe Vales, sadly passed away... An avid fan of HfS, he will be sorely missed by us, and am sure many of you will be equally saddened by his passing. He was a sweet and lovely guy, who loved his work.
Impatient Premji plays catch-up
You won’t see a CEO being removed after achieving a double-digit growth rate too often, but that’s just what happened, when Wipro’s co-chiefs Suresh Vaswani and Girish Paranjpe were replaced by TK Kurien... So will Premji’s impatience to produce numbers as stellar as his competitors be rewarded, or has he already missed this phase of hyper-growth in offshore services?
EquaTerra + KPMG – a new era, or a new error for outsourcing advisory?
KPMG became the only "Big 5" management consultant to buy a boutique sourcing advisor... The outsourcing advisory business is all about talented people, experience and relationships. It would have been extremely messy if KPMG had tried to hire away these folks one-by-one. They have retained the top talent and have created careers for them within their organization. Quite simply, there is a really bad (and worsening) talent shortage in our industry, and KPMG has just snapped up a good portion of it in one full swoop.
So what on earth does the future hold for sourcing advisors?
Esteban Herrera doesn't hold back when he declares, "Twenty-five years at EDS may have made you an expert at outsourcing IT, but it did not teach you how to run a recalcitrant back office environment that is just plain hard to optimize."
HfS takes a deep look into Latin America's sourcing capabilities
Clients attest to lower attrition levels and fewer site visits, and when they were required, these site visits as part of the governance were much easier to do—these and other soft factors impact the total cost of ownership. Download your copy of the report here.
How 10-year-olds explain Cloud Computing
The most concise way anyone has succeeded in describing it. One has aspirations to make a video game that features a villain with a head made of cheese puffs.
Are you ready for… The HfS Private Cloud Challenge? Answer = No
Not a single provider or buyer could answer Esteban's warcry to prove they had a "Private Cloud". Private Cloud makes my blood boil. Private Clouds are a cynical oxymoron. The whole point of a Cloud is that you share resources and don’t have to own the capacity you need, because its available on demand, so you can pay by the drink. Well, if you own the resources and the capacity, it is inherently limited to what you own, and you’ve already paid for everyone’s drinks at the bar whether they consume them or not!
Forget the Magic Quadrant, you can now get covered in the HfS Research Painsharing Paradox
At HfS, we’d had enough of service providers and their clients raving about how bloody wonderful they all are. Enter the Painsharing Paradox. We figure out which providers have the biggest budgets, and then produce a draft PP – the bigger the marketing budget, the further they are positioned over to the upper-right corner of the grid. Then the bidding process starts. Depending on how much we like them, how many first class boondoggles we’ve been treated to, and how much hard cash they’re prepared to pony up, we’ll maneuver them down the grid towards that hallowed lower-left quadrant, where everyone wants to be.
HP’s strategy: is it plotting, or losing the plot?
Phil Fersht takes no prisoners when questioning Léo Apotheker's curious decisions. Was he onto something? If HP isn’t plotting a radical move to buy SAP, or some other ERP business, it seems to be letting itself down badly – the firm needs new thinkers who can drive innovation and a new direction into the business, because right now, most industry observers are left scratching their heads trying to figure out what the game-plan is.
Buyers are saving money, but aren’t seeing a whole lot more
Our "money slide" of 2011, where 347 buyers revealed they were happy with their outsourcing cost-savings, but the other business benefits were proving elusive. A defining chart for the outsourcing industry. Our concern at HfS is that costs are like hedgerows - once trimmed they always grow back. Providers cannot afford their clients to struggle. After their transition to a working operational outsourcing model, corporate leadership isn’t going to keep reminding their shareholders about “that stellar 30% we took off the bottom-line three years ago”. They are going to be looking for their next improvement metric
It’s hard to be CSC
A perennial subject of acquisition chatter, CSC has built in poison pills in the form of gnarly government contracts with lots of limitations on who can own them and what can be done with them. It lacks the scale of IBM and HP, the brand and loyalty of Accenture, and the relatively low overhead of the leading Indian IT providers. It is, effectively, stuck in the middle. It’s hard to be CSC...
Will the industry analyst business be dead in five years?
Phil Fersht rocked the troubled analyst world with this defining post that even inspired Gideon Gartner to chime in. I’ve seen analysts ride waves and become rock stars, and then lose the plot somewhere along the line before either exiting the industry altogether, or plodding along on the vendor-briefing circuit, eking out their paychecks towards retirement. I also know level-headed analysts who quietly go about their job and produce decent stuff – never making a lot of noise, but effectively doing their job. I’ve also worked with egomaniacs who pander to paying clients and scare the living daylights out of anyone who dare criticize them – or refuse to buy their services. I’ve also worked with absolute numb-skulls who somehow remain employed, despite knowing very little about anything. And I’ve worked with analysts who really know very little, but somehow persuade the world they are visionary thought-leaders.
Europeans love money, but hate change
We managed to upset some Europeans with this one. Ah… mes amis! Let’s rip out ze costs, but for ‘eaven’s sake, don’t make any changes to our mother-ship. By all means, sack all the expensive foreign staff in the vorldvide offices and sheeft ze vork to India or Les Philippines, but – we repeat – don’t CHANGE anything! Judging by the Eurozone paralysis, how wrong were we?
Is the outsourcing industry really still that clueless about cultural issues?
Esteban lets loose once more, this time at Brandi Moore's revelation in Outsource Magazine that the outsourcing industry doesn't understand cultural issues. She manages to disparage an entire industry, ignore the facts, offer tired examples as brilliant self-aggrandizement, and demonstrate a poor understanding of her supposed field of expertise (culture). Brandi declined Outsource Magazine's offer to host a debate between Esteban and Brandi to discuss the issues openly.
Just because buyers aren’t always in a rush to outsource, doesn’t always mean they are too “short-term focused”
Our latest research revealed that many buyer executives are, in actuality, in violent disagreement with many provider and sourcing advisor executives that their business leaders are too “short-term focused". You do start to wonder whether many advisors and provider executives really have much understanding of their clients’ business pressures beyond cost-reduction – and our recent survey data, discussed above, supports this viewpoint.
70% of buyers are sitting on the fence with their outsourcing plans in the current climate
The rocky economy isn’t helping drive definitive behavior, with seven-out-of-ten buyers expecting either little change in focus when it comes to outsourcing, or they simply do not know what they are going to do. Are companies panicking and screaming: ”Help! We must hurl as many of our fixed administrative costs out of the window asap and deploy as much low-cost service delivery as we can, regardless of the consequences”? Of course they aren’t...
The major driver behind outsourcing is no longer immediate cost reduction
New research reveals what is motivating buyers to outsource in this current climate, and while eliminating cost is still is a core fundamental, buyers are even more focused on achieving greater flexibility to scale their global operations. Many buyers have some version of "failed lift and shift" on their unofficial outsourcing resumés today – they’ve realized that once they’ve shifted it, there’s little money, or board-level volition, left to invest in improving process and technology. They know that their chance to rip out the rot is with the lift and shift – not at some divine point in the future when corporate leadership is suddenly going to issue a holy decree that they are going to make process optimization their number one prority..
HfS is awarded IIAR Analyst of the Year for second year in succession
HfS Research won the individual award for “Analyst of the Year” for a second year in succession (some individual called Phil Fersht now sporting an ego so insufferable, it’s rumored he can’t even stand his own company). In addition to the individual analyst award, HfS Research topped the charts for “Outsourcing, BPO and Maintenance Analyst Firm of the Year“. And this time, HfS Research was a runner-up for the overall “Analyst Firm of the Year”, behind the formidable Gartner. Over 260 analyst and influencer relations specialists took part in this year’s survey – by far the greatest number to date, who voted on all the major research analyst organizations, such as IDC, Forrester, Ovum and so forth. We would like to offer anyone who voted for us a cocktail on us when you see us at some upcoming conference, which we will be able to pay for out of the 20% price hike we’re gonna add to our services.
Eight top tips to prevent outsourcing providers committing harakiri
It simply had to be said... Dear Providers - we love you. Without you there would be no outsourcing industry and we would not have jobs. More than anything, we want to see you succeed. Why, oh why, must you insist in compromising your own success by practicing death by PowerPoint on your prospects?
HfS and Sylvan advisory launch HfS Consulting
HfS Consulting is a unique coming together of acclaimed research, benchmarking analytics, market insight and strategic consulting expertise. It is revolutionary in the fact that enterprise clients can access ongoing analysis, data and expert advice via an annual, affordable and on-demand subscription relationship model, as opposed to solely buying costly “hourly billable” consulting services. We lead with our proven research brand and analytical capabilities and have the ability to apply these to our clients with consultative advisory programs. So we strategize, we apply our unique data and insight and then we execute.
Why outsourcing professionals must stay in touch with the 99%
Phil Fersht fires a warning shot to the outsourcing industry that it faces a backlash if outsourcing executives are overly-complacent. These issues are going to move beyond buyers simply improving business processes and cutting costs – they are going to become centered on how companies are managing their workforces. Governments are very capable of passing measures very quickly to restrict outsourcing if things get really bad – and they won’t have much choice if the 99% demand it.
@The_Whole_Outsourcing_Industry: Labor arbitrage built your house of cards. #Bubble What’s next?
And what better way to cap off 2011 with HfS' EVP of Research, Tony Filippone, simply calling it how it bloody is. The road to our future is unclear. As buyers begin to line up for higher value services, their shift in demand will dramatically affect the marketplace. Service providers that cannot develop IT-enabled BPO platforms, provide insightful analytics, or drive high value business outcomes will lose market share and be relegated to second tier “tactical” supplier status.
Well... that's pretty much all from HfS Research for 2011. Hopefully, we can continue to keep you entertained, and drive more topical debate in 2012.
The HfS Research team