Monthly Archives: Oct 2012

HfS spooks the legacy analysts by scooping the "Most Innovative Analyst Firm" award for 2012

October 31, 2012 | Phil Fersht

When better than Halloween, than for HfS Research to - yet again -  spook the analyst industry by winning the new "Innovative Analyst Firm of the Year Award for 2012" by the International Institute of Analyst Relations, ahead of the likes of Gartner, Forrester and IDC.

And not only that, we finished third among independent analyst firms as Analyst Firm of the Year.  I managed to get our hands on the top 10 list so share with you all - and a big shout out to my good friend Zeus Kerravala, whose firm ZK Research, a specialist in communications technologies, topped the 2012 charts.  HfS managed to beat out all the other sourcing and services research firms - most of whom were hawking their wares a decade before HfS even existed:

Posted in: Business Process Outsourcing (BPO)HfS Research Company Homepage



Tiger Tales... Part I

October 28, 2012 | Phil Fersht

NV "Tiger" Tyagarajan is President and CEO, Genpact (click for bio)

If you thought the business services industry was hurtling along at break-neck speed, read our first-ever blog post over 5 years' ago entitled "Beyond Labor Arbitrage: The New F&A BPO Frontier".  However, while it does sometimes feel like it's taking an age for this industry to progress, we have to remember that the widespread adoption of global process sourcing, incorporating remote delivery from offshore and nearshore locations, is barely a decade old.

The good news is that the conversation has clearly advanced, and services buyers today are much, much more in tune with their needs and desired outcomes from business services, than they were in the aftermath of the 2008 crash. Anyone attending last week's HfS 50 Blueprint Sessions in Boston was blown away by the intense level of dialog from 35 leading enterprise buyers, brought together by the common desire to improve their talent and define their careers, move beyond a cost-centric delivery model, and work more effectively with their sourcing partner to foster innovations for themselves.

So...where is the future of business services heading?  

Well... now is a great time to reconnect with one of the great pioneers of the global business services model.  This chap has been personally involved in many of the largest engagements this industry has seen over the past decade and beyond.  Noone has been closer to the buyers over the years to observe the changing conversations, the growing awareness of their needs and apply these to the ever-competitive provider marketplace.  Yes, it's time to touchbase with NV “Tiger” Tyagarajan, now 18 months into his tenure as CEO of Genpact.

Tiger is now settled back into New York – a short train ride from his son’s university in Georgetown, Washington D.C., and also within easy reach of the Wall Street analysts, eager to fathom how his upstart firm continues to outpace the leading providers in the business services industry, with consistent annual growth at the 20% level and shortly going to surpass the $2 billion revenue mark...

Phil Fersht (CEO, HfS Research): Good morning Tiger.  It’s been well over a year in the hot seat. What’s it been like? And did you always want to be a CEO?

NV “Tiger” Tyagarajan (CEO, Genpact): Phil, it doesn’t seem like more than a year has already passed! It seems like just yesterday that I took over. But other times it feels like I have been here

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesFinance & Accounting BPO



A BIG thanks to all of you who took part in the exceptional HfS 50 Blueprint Sessions 2.0

October 27, 2012 | Phil Fersht

A room packed full of buyers and providers... and very little powerpoint

During the first day (buyers only) we revisited the Four Industry Challenges to take the discussions into the weeds of how to address them.

Day two, the providers rolled in to join the discussion - and they quickly dropped their sales facades to get stuck into some great debate and conversation around what we can do as a group to shift the focus of this industry away from its cost-obsession and towards its need to develop its talent.

On day three, we concluded the discussions by peering into the global operating model of the future, before we went Gangnam Style (stay tuned...).

We can't wait to synthesize our findings with the group and share the definitive Blueprint roadmap. Watch this space.

Posted in: Business Process Outsourcing (BPO)Captives and Shared Services Homepage



Our businesses need to perform eons better than our politicians when it comes to CHANGE

October 22, 2012 | Phil Fersht

Imagine running a business where you have no accountability for cost control, achieving your stated objectives and are completely paralyzed to change anything.  

And when you do try and change something, half the organization refuses to even contemplate change? Welcome to The impossible organization.

And, let's face it, many of today's clunky, oversized enterprises aren't a helluva lot better.  

When we look ahead ten years, the successful businesses will be a lot smaller, more agile, and much more focused.  Processes that bring no competitive advantage are likely to be sourced, and consumers via a "pay per use" model.  Boxes of IT hardware will likely be extinct, along with the staff who maintained them.  Delivery centers that house hoards of costly staff with the sole focus on maintaining low-value work will likely be long shut-down, or absorbed into service provider organizations.

We know where the world is headed.  The unknown factor is the time it will take to get there.

While we are caught up in this election furore - one thing is abundantly clear:  whomever gets elected is going to have to contend with the continual paralysis and painful increments of the necessary change needed, to keep the country (and most likely most of the world) somehow functioning.

However, most of today's enterprises do not have the luxury of paralysis.

Far too many of today's business are dragging around these clunking, inefficient infrastructures,

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Posted in: Business Process Outsourcing (BPO)Captives and Shared Services Homepage



Who's rising above the W-I-T-C-H hunt?

October 16, 2012 | Phil Fersht

Have you been observing the fascinating scramble going on over in India for supremacy in the IT services space?  By the time this year is out, it's highly likely that Cognizant will have leapfrogged both Infosys and Wipro to take the number two spot behind TCS:

So what's driving this shifting landscape?

Let's take a look at the key market-makers to understand who is breaking out of the pack...

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Posted in: Cloud HomepageIT Outsourcing / IT Services



Captain Cliff of the Sourcing Enterprise Part II... The Death of Outsourcing

October 15, 2012 | Phil Fersht

Welcome back to our interview with KPMG's Captain Cliff who has proclaimed the Death of Outsourcing in a recent white paper.  So without further ado...

Captain Cliff Justice, who happens to be Partner and U.S. Leader, Shared Services and Outsourcing Advisory at KPMG

Phil Fersht (HfS): You’ve spent a good part of your career in the outsourcing business yourself. What inspired you to coin the headline and write a paper entitled the “Death of Outsourcing”?

Cliff Justice (KPMG): Outsourcing has changed dramatically in the last five years. When we saw the megadeal declining, we started asking why. The answer: Companies had become more sophisticated in how they deployed their third-party service provider relationships. When companies were outsourcing everything, they just moved out large parts of their organization, handing them over to third parties to operate. Some of those were successful and achieved the goal, which was pure cost reduction. Labor arbitrage became truly feasible and economical when markets like India became a prime outsourcing destination with the acceptance of offshoring around 2001.

Phil: What changed?

Cliff: Over time, companies realized that the value they can gain from using a service provider extends beyond just labor cost reduction. By offshoring you get a lot more than labor arbitrage. You get good talent and providers with advanced processes that would have been difficult to source domestically under a traditional structure.

Phil: How has the rising cost in emerging markets affected this equation?

Cliff: Today, there is still labor arbitrage. But year-over-year wage inflation of 10-15 percent has started to have a material impact on the business case. There will be a day when we reach an equilibrium. I don’t know if that will be five or 15 years from now. Companies have to start looking at how they get the long-term value out of their service delivery organization. Is labor arbitrage going to be the sustainable answer?

Phil:  What are your clients doing?

Cliff: Many of our clients see it as unsustainable. They are now looking at their services more holistically. They look at their suppliers in a different way, too, not just as a means to lift and shift resources but as a means to add value to their businesses. We work with hundreds of leading organizations and we also work closely with service providers.

Phil: So what part of outsourcing is dead?

Cliff: The traditional perception that outsourcing is purely about offshore labor arbitrage, or simply a race to the bottom. The death of outsourcing as I define it is the death of the simple, traditional, lift and shift offshore outsourcing. That is still going on and there is still a part of the outsourcing community where that is their value proposition. But we’re seeing a major shift in how the entire service delivery model is deployed which is much broader and delivers more value

Phil: How are companies using outsourcing providers instead?

Cliff:  Companies are using third parties in a more sophisticated way to drive value. Outsourcing is now shifting to a race to improve value through the use of third parties. Now labor arbitrage is just a part of that. Enterprises are still interested in reducing cost. But now they are looking for cost reduction through other mechanisms such as technology enablement through the cloud (which they do through a third party). They are also using their own captives and shared services capabilities, then augmenting those capabilities with third parties to improve processes.

Phil: In this brave new outsourcing world, what do the relationships look like?

Cliff: They are beginning to look more and more like true partnerships where both parties share objectives. The service providers win because they are developing depth and breadth in an industry. They are strengthening their long-term relationships and moving up the value chain into business outcome objectives with their clients. They are entering areas of the business that can move stock prices and improve the value of that organization. In the same instance, they are improving their own value.

You can see this by looking at where service providers are moving in their clients’ organizations. Look where their focus is. You can see the satisfaction of the clients themselves. We’re fortunate to see a wide range of these relationships. The way to get true, long-term sustainable value is getting the partnership to align with the business objectives. Labor arbitrage by definition is temporary, so the unsustainable relationships are those that are in the traditional category of “your mess for less.”

Stay tuned for Part III where Cliff shares his views on whether we should drop the "O" Word, among other things...

Cliff Justice (pictured above) is Partner and U.S. Leader, Shared Services and Outsourcing Advisory at KPMG LLP.

Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesGlobal Business Services



Day Three at the HR Technology Conference in Chicago…

October 11, 2012 | Phil Fersht

Wow - HfS’ Peter Ackerson completes the hat-trick.  So without further ado, here is the final installment...

The famous Mary Sue Rogers practically invented HR Outsourcing with IBM, before outsourcing herself to Australia with Talent2

Contrary to Mr. Fersht’s implications that any analyst would desert his/her post before an event is concluded, this analyst was there at 8:00 AM for Mark Hurd’s (Oracle) presentation and remained there until 12:30 for one last discussion. Hopefully my (modest) fee will be doubled for this dedication.

Payroll Gurus speak

For those of you who don’t know me, I am one of those rare individuals who likes payroll as a delivered service. Other than that aberration, I’m a fairly balanced person. So to have the opportunity to talk to senior leaders from ADP and Talent2 was a great event. Well, maybe not great, but at least interesting. This will be a brief recap as I intend to cover payroll as an outsourced service in greater detail at a later time.


Don Weinstein, SVP- Product Management met with us to give an overview of their model and plans. ADP has broadened their offerings over the last few years through acquisitions as well as organic

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Posted in: Business Process Outsourcing (BPO) HomepageHR Outsourcing



Day Two at the HR Technology Conference in Chicago…

October 10, 2012 | Phil Fersht

Naomi Bloom brings HR into the Cloud

And, for the first time ever, an analyst has managed to write a "second day" blog at an industry event.  So, without further ado, here's HfS' Peter Ackerson with Day Two...

Events of the day - ignoring the 12 miles I walked around the Cook Convention Center

Contrary to Phil’s comments about spirituous liquids being imbibed at the behest of certain vendors; this did not happen…of course none were offered, so my morals remain untested. I did frequent The Twin Anchors restaurant with the best ribs in Chicago and where there is Positively No Dancing. There was also Day Two of the conference.

Naomi’s Master Panel

Naomi, of course, is Naomi Lee Bloom, technology guru extraordinary, who assembled a rather formidable panel of senior technology leaders from: Oracle, ADP, SAP,, Workday, and Ultimate Software. The topic was Bringing HR into the Cloud. The session was interesting in

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Posted in: Business Process Outsourcing (BPO) HomepageHR Outsourcing



Day One at the HR Technology Conference in Chicago...Who are these people and what are they doing here?

October 09, 2012 | Phil Fersht

And now over to Chicago, where HfS roving analyst Peter Ackerson is trying to fathom what on earth is going on in the world of HR technology.  This could be the first post of several, however, it will probably depend on how many drinks get forced down his gullet tonight, so make the most of this one...

Who are these people and what are they doing here?

The first day of this event begins with obligatory thank-you to the sponsors, exhibitors, press, and probably some long-lost relatives. Next was the really obligatory keynote speech pitching “Cloud

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Posted in: Business Process Outsourcing (BPO) HomepageHR Outsourcing



Captain Cliff of the Sourcing Enterprise... Part I

October 07, 2012 | Phil Fersht
Danny Justice and his dad Cliff, who happens to be Partner and U.S. Leader, Shared Services and Outsourcing Advisory at KPMG

This man is calmness personified.  He's steadied more ships, weathered more storms, diffused more bombs than, well, practically anyone in the sourcing business.  He's literally grown up with the industry and today is the most sought-after consultative mind for enterprise leaders trying to figure out what on earth to do with their global morass of technology and business operations.  However, what's most compelling about this chap, is that he started life flying places, running an emergency-response 911 service, before (somehow) finding his way into the sourcing industry.  In other words, he was already used to dealing with hazardous situations and dealing with hysterical people... on a constant basis.  This was, clearly, highly appropriate training for what he was about to do next...

So without further ado, please allow us to introduce Cliff Justice, KPMG's very own kingpin of the extended enterprise, who's calmly building out one of the most impressive collections of experienced sourcing operators and thinkers in the global shared services and outsourcing industry.

Phil Fersht (HfS): Cliff, you were in outsourcing advisory before we were even calling it "outsourcing". How on earth did you get started in this business?

Cliff Justice (KPMG): In the early 1990s I started a private ambulance company. The idea was to contract with the smaller cities and municipalities in the area to provide them with better technology and services around non-emergency ambulance transportation and emergency dispatch. A year and a half later, my partner and I sold that company to a larger company; so I joined that company, Rural/Metro, as an operations manager.

I performed numerous roles over a seven year period. I was director of marketing. I ended up in Seattle running a multi-state operation providing emergency 911 and non-emergency services to municipalities, healthcare organizations and hospitals. We were an outsourcer, it just wasn’t called outsourcing back then. It was called managed services.

Phil: How did that experience morph into outsourcing consulting?

Cliff: Shortly after that I was part of a consulting firm start-up called neoIT. We helped other

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCloud Computing



Shock, horror! Some vendors have bought the right to ''edit'' analysts' research...

October 07, 2012 | Phil Fersht

Mark Smith is CEO, Ventana Research, and doesn't hold back...

Ventana Research CEO, Mark Smith, convincingly blogs that some major vendors actually have contracts with some analyst firms that give them rights to review, edit and approve research written about them.

Mark should know, having made third place in the analyst of the year in 2011 and boasting an impressive analyst resumé that spans SAP, META Group (Gartner) and Oracle, before starting his own successful analyst venture, Ventana Research, 10 years' ago.  In his industry exposé, he claims:

The dirty secret is that some of the largest technology vendors have forced industry analyst firms to contractually agree to the right to review, edit and approve any written research that references their name or products before it is published.

So this means that some vendors actually have the right to alter, or even veto, analyst insight on them, if they don't like it. I have no reason to believe why a veteran analyst of Mark's standing and experience would make this claim if he did not have irrefutable evidence that it was true.

The fine line between influence and coercion

Having worked for some of the traditional research firms myself in my earlier career, I can recall

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Posted in: Confusing Outsourcing HomepageOutsourcing Heros