Wipro and Oracle partner to blow-up the BPO delivery model

Wipro-Oracle2Folks – I can exclusively reveal to you today that Wipro BPO and Oracle are shortly going to announce a partnership dubbed "simPlify", whereby Wipro will deliver PeopleSoft HR to both mid-market and high-end clients via a hosted utility BPO service, that will cater for 20 major countries.  They will also partner with The Hackett Group as part of the arrangement to provide performance benchmarks for HR processes.

The mid-market play is a true move towards "one-to-many", whereas the enterprise play will be a more customized approach.  Clients will need to invest

a minimal initial outlay to move into a "pay as you drink" model, based on a per-employee-per-month pricing, to receive PeopleSoft-based HR delivery services, most notably payroll.  The industry has been crying out for this for years, and Wipro and Oracle have broken the mold by putting together a delivery model for the mid-market that clients can move onto without huge upfront costs. 

Moreover, the yawning chasm of mid-market HR service delivery, which has been under-serviced for PeopleSoft-based HR services in a utility BPO model, is now being filled.  ADP, Ceridian, NorthgateARINSO and others will look warily at this move, which threatens to blow-up the traditional model, that has been often plagued by expensive implementations, long inflexible contracts and poorly integrated software.  Not to mention Wipro's services competitors which are vying for increased share in the HR BPO market, namely ACS, HP, IBM, Infosys and TCS. Clients in this environment simply cannot shell-out multiple millions to get global payroll and HRMS – managed services with limited Capex is their only real choice today.  Bringing hosted software into the BPO model is the answer, and this is a true game-changer in the industry. 

Wipro will absorb much of the client implementation costs as they move onto this solution, which they will host across their delivery hubs in India, Latin America, the USA and the UK.  They will look to roll-in China and Japanese delivery later in the year.  Wipro will provide clients with Level 1, 2 and 3 support, with Oracle level 4.  The pair have also incorporated benchmark data from The Hackett Group to help clients assess their performance levels, which is embedded in the software at no additional fee.

More to follow with this trend… the next question is how the incumbent service providers will react, and, interestingly, whether this will put more urgency on Workday to make its BPO partnership move.  In addition, we can certainly expect similar BPO/hosted software partnerships to spring up in other BPO disciplines, notably supplier management and finance.

Pictured left-to-right:  Puneet Chandra (Wipro), Tibor Beles (Oracle) and Ashwin Bhatia (Wipro) announcing the partnership to a certain analyst at the European Shared Shared Services and Outsourcing Week show in Budapest earlier today.

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10 Comments

  1. Eric
    Posted May 13, 2009 at 7:56 pm | Permalink

    Phil,

    Do you really see buyers being able to avoid large iimplementation costs with this solution? Sounds too good to be true,

    Eric

  2. Posted May 14, 2009 at 4:45 am | Permalink

    Eric,

    For these BPO/SaaS type offerings, the service partners have to help their clients onboard with limited Capex outlay and absorb their costs over the course of their longer-term client engagement. Yes, the client will have to incur what ever resource requirments are pertinent to transform their internal processes to work on the hosted solution, but the immediate cash outlay for the technology/service delivey has to be minimized, or buyers will simply keep delaying their initiatives,

    PF

  3. Tarini
    Posted May 14, 2009 at 5:34 am | Permalink

    Eric,

    To your point below, I know Infosys BPO has already onboarded a few of its HR clients on a shared platform. Infosys BPO has demonstrated visible results for these clients by moving them from Capex to Opex model and variablizing IT infrastructure costs.

  4. Posted May 14, 2009 at 5:41 am | Permalink

    Thanks Phil,
    A good strategic move by Oracle and Wipro. Would this, in your opinion, mean a new life for PeopleSoft’s global payroll solution?

    Synco

  5. Posted May 14, 2009 at 6:32 am | Permalink

    Synco – yes, I believe this will. Service provides such as Wipro will be investing to run it across multiple clients. We are also seeing this with several other providers.

    Tarini – yes, I have heard some noises from Infy, please feel free to elaborate further…

    Cheers
    PF

  6. Posted May 15, 2009 at 9:12 am | Permalink

    HRO Superstar Phil Fersht says “Wipro and Oracle go Fersht and Foremost”

  7. Naomi Bloom
    Posted May 16, 2009 at 3:34 am | Permalink

    Phil, why on earth aren’t these folks taking advantage of the multi-tenancy capabilities being unleashed in Oracle HCM 12.1, its more modern architecture, and the far greater likelihood of a path to Fusion for this new offering. PeopleSoft’s architecture and underlying HR object model are pretty long in the tooth and have NO multi-tenancy foundation. ACS, Infosys, CaliberPoint now Wipro are, IMHO, putting their eggs in an aging basket by baking PeopleSoft so deeply into their HR BPO strategy. I wonder how this decision will look three years from now when, assuming they’ve all onboarded lots of clients, the industry’s price point, user experience, and expected level of integrated talent management and social collaboration technology are all changed rather dramatically by those providers to the mid- and higher-end markets who have taken the newer architecture/object model/multi-tenancy paths? What’s most important about this new offering is that there’s still a lot of action in the HR BPO competitive landscape, presumably because providers believe that on-premise is dying for HR/IT foundations and that end-users want out of the surrounding process responsibility, at least for the regulated/high-volume processes.

  8. Posted May 16, 2009 at 6:55 am | Permalink

    Naomi – you raise excellent points here, and there are already moves afoot from other service providers to push the Oracle EBS module (including one major provider yet to enter this market). Bottom-line, the onus is on Wipro to deliver some form of multi-tenancy under the arragement. Are they (or is anyone) looking out further than a couple of years right now? I doubt it… we’re in the midst of a land-grab and it’s all about deals right now.

    And while we can discuss the technology guts of these platforms at length (and I hope we can hear more from you on this issue Naomi), the sea-change here is the move from Capex to Opex models. If clients can move onto a decent HRMS at miminal capital outlay, then the focus shifts to how they can transform internally to do it.

    This means that as more service providers push harder into the mid-market BPO space (and they already have/are), they have to find ways of differentiating themselves. If they are simply doing and offering some basic BPO processing and helping them onboard into the service, this space will quickly commodotize. Throwing in Hackett benchmarks is a good idea, but ultimately the service providers need to offer real HR skills and competency as part of these offerings. Bottom-line, Wipro et al. look at ADP and like what they see. The question now is whether they can truly deliver a funtional HRMS at lower cost and make a profit…

    Interesting times
    PF

  9. Sanal Kumar
    Posted May 21, 2009 at 11:11 am | Permalink

    One comment here is on the target market being “Mid Market”..I do not know of any Service provider in this category who has successfully launched and sustained a Mid Market strategy. In my opinion and from research it takes a different sales as well as a different service model to address that market space. From a technology perspective the mid market plays like Netsuite, Workday etc are going after that market (and successfully so), not sure if Peoplesoft is seeing traction compared to the mid market plays. It might also be helpful to study feature comparisons between Peoplesoft and mid market products and put this in context of the cost to deploy/host/run the solution for a mid market company. Even though Wipro says the upfront costs will be low, they are surely backloading it into their Opex pricing.

  10. Christian Baader
    Posted May 27, 2009 at 2:34 pm | Permalink

    Phil,

    re your comment “… ADP, Ceridian, NorthgateARINSO and others will look warily at this move, which threatens to blow-up the traditional model, that has been often plagued by expensive implementations, long inflexible contracts and poorly integrated software” I would like to point out, that both ADP and NorthgateArinso have based their HRO-offerings for multinational customers since more than five years on SAP’s HCM-platform. SAP ERP HCM is a highly integrated solution (well over 200 integration points) and by design multi-client enabled. All of these features are leveraged by ADP and NorthgateArinso fully in their best-practice-standards-based deployment strategy – an approach which obviously Wipro now sets out to imitate.

    Best regards,

    Dr Christian Baader

    VP BPO
    SAP AG

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  1. [...] an outsourced environment.  Many BPO “partnerships” have been announced such as Wipro with Oracle and Netsuite with Genpact, however, we’ve yet to see significant evidence of clients chomping [...]

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