Warning:  This is a rant.  

The author is not is a particularly good mood and may say things that are not entirely objective, not completely rational and potentially insulting to some readers.  His opinions are based entirely on tons of research and his own experiences - and prejudices. Do not read this if you have a thin skin or hate reality checks... otherwise read away, nod vociferously and weigh in :)

One fact I would challenge anyone on is the abject failure of the outsourcing industry to brand and market itself to corporate society at large.

Lousy events, third-rate publications, meaningless jargon that only "outsourcing people" actually understand, poor branding and too many old white dudes who remain lost somewhere in the 80's and 90's, are culminating in a directionless mess that used to be an emerging industry, but is now becoming a confusing collection of activities, business strategies and provider offerings.

Where's the fresh thinking, the new ideas, the spark of youth and enthusiasm for what we do?  I don't think I can remember sitting on a call with anyone under the age of 40 for quite some time now.

This business needs a complete overhaul with how we approach outsourcing careers, how we communicate what we do and - most importantly - how we define ourselves.  I hate to say this, but we really haven't created an "outsourcing" industry, more a functional capability that only a select few people understand and care about.

One of the biggest problems facing the services and outsourcing industry today, is the constant failure to market the use of third party services providers as value-added services for enterprises.  Good Lord - is it really that hard to promote the fact that our enterprises today should drive down their operating costs and improve how they do their IT, finance, procurement, HR, supply chain management, etc?

While business leaders are falling over themselves to blow more corporate moolah on the sexiest new SaaS solutions or the latest ERP upgrade, when it comes to soliciting real help to drive down costs, improve technology and service quality, suddenly every excuse under the sun is used to delay decisions and investments.  Buying new tech is about automating processes - and ultimately eliminating unnecessary tasks and jobs, while engaging with services is more often about improving the way that processes are delivered... so clearly the tech industry does a far better job marketing itself that the services industry does.  Why is this?

Very poor and boring communication to corporate society about the benefits of services and outsourcing.  We've done the "O" debate to death and there isn't much that can be done to mask the term, however, that is no excuse for the poor job most people in the services and outsourcing industry do to communicate what we do. Complicated, badly-written and (frankly) boring white

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Posted in: Business Process Outsourcing (BPO),  Cloud Computing,  HfSResearch.com Homepage

Charles Sutherland is EVP, Research at HfS (Click for bio)

On this week's HfS Podcast, we're talking robotics. Hot on the heels of his seminal report, Framing A Constitution for Robotistan, and his presentation at Blueprint 3.0, HfS EVP Charles Sutherland sat down with Mark Reed-Edwards to dig into the key issues around robotics and automation.

What are the five reasons automation may replace BPO as we know it today? What trends will we see over the next year to five years? Who’s leading the way? This podcast will give you the answers to those questions and more.

Charles has a webinar coming up on April 7 (The Ultimate Robotic Automation Debate), so give the podcast a listen and sign up for his webinar here.

[podcast]http://www.horsesforsources.com/wp-content/uploads/2014/03/HfS-Podcast-Sutherland-Robotics-03-31-2014.mp3[/podcast]

Posted in: Analytics and Big Data,  Business Process Outsourcing (BPO),  HfSResearch.com Homepage

Reetika Joshi is HfS Research Director, BPO and Analytics Strategies (click for bio)

On this edition of the HfS Podcast, Mark Reed-Edwards talks with Reetika Joshi, Research Director, BPO & Analytics Strategies at HfS.

Reetika recently published the HfS Blueprint Report: Insurance BPO, which evaluated the innovation and execution capabilities of service providers in life and annuities, property and casualty, and other segments.

In the podcast, we examine the following questions: What data is behind the report? What are the key highlights from the report? Which providers made it into the Winner’s Circle? Which ones were close? What does it take to make it into the Winner's Circle? Listen below for answers to those and other questions.

[podcast]http://www.horsesforsources.com/wp-content/uploads/2014/03/HfS-Podcast-Joshi-InsuranceBPO-03-24-2014.mp3[/podcast]

Posted in: Business Process Outsourcing (BPO),  Financial Services Sourcing Strategies,  Knowledge Process Outsourcing & Analytics

If I had a rupee for everytime someone had told me that Indian based providers are...

a) Running out of steam;

b) Just offering staff augmentation at lower prices;

c) Suffering from such bad wage inflation that the house of cards is about to come down;

d) Providing services of such low quality that everyone is following Randy Mott's lead and backsourcing everything;

...I would have at least a month's worth of app testing at my disposal right now.

However, the sustained growth surge of the leading Indian majors is proving much more resilient than the naysayers are claiming and I would argue has created a dynamic where many of the traditional providers may never find a return to prominent growth.  Let's discuss...

Global business is never going back to the way it was 

Many of these people are simply waiting for the world to return the ways of pre dot.com crash days, where clients paid the exorbitant fees of consultants for "transformation projects" and dumped hundreds of millions into dysfunctional ERP projects that often achieved little beyond creating meaningless work to support faltering processes, many of which are now rendered obsolete.

I hate to be the hearer of bad news, but the world really has moved on since then, and the emergence of the Indian majors has been a bi-product of the emerging opportunities for enterprises to shed their bloat and create an environment to do things differently.  Cloud computing platforms, improving analytics opportunities and the advantages of lower-cost global delivery are the three main game-changers in today's business environment - and this isn't going to change anytime soon.

What we've witnessed is the Indian majors literally doubling their share of the global market in barely four years, while the "traditional" onshore-centric IT and business service providers have largely floundered. With the notable exception of Accenture, the onshore-centric major providers have only managed to post growth rates in the low single digits, with both HP and CSC revenues actually lower in 2013 than in 2009. Over the same period, the major Indian-based offshore-centric providers all grew annually in double figures with Cognizant expanding at almost 30% year-on-year over the last four years:

Click on Charts to Enlarge

Nine reasons why the offshore-centric providers have enjoyed their unprecedented growth

It's time to acknowledge one of the phenomenons of the electronically-connected era of global business - brand India and its emergence as a key component of the IT and operations back office for the Global 2000 - and it's done it while using Indian delivery as the hub.  It would be convenient

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Posted in: Analytics and Big Data,  Business Process Outsourcing (BPO),  Cloud Computing

If you get a fleeting moment to wrench yourself away from your twitter feed, formatting that PowerPoint deck that's on its 18th cycle, or that excruciating conference call you are seriously not listening to, then you could do a lot worse that take a gander at our new report glamorously entitled, "BPO on the Brink of a New Generation: Technology Transformation".

In order to attempt to capture your attention, even for said fleeting moment, we analyzed the performance of 189 BPO buyers and the role technology is, could, and will potentially play to help them achieve their desired business goals.

Why BPO clients which have tech-enabled their processes are achieving better performance and outcomes

One of the key takeaways from the research was analyzing the varying performance BPO providers based on the maturity of their client's approach to BPO across the following three categories:

• "Lift and Shift" (49% of the market):  Those BPO clients which have merely shifted their existing people and processes, with very limited transformation or standardization, over to the service provider;
• "Process Transformation, limited Technology" (23% of the market):  Those BPO clients which have performed a genuine transformation of their processes, but have yet to introduce any new technologies to enhance process flows, analytics or delivery;
• "Technology Enabled Transformation" (28% of the market):  Those BPO clients which have invested in a wide-scale technology transformation of their BPO processes.

Click to Enlarge

Buyers with technology-enabled BPO outperform for standard operational delivery

Firstly, those buyers with technology-enabled transformational BPO are reaping much better results from their standard services (80% view their engagements as quite to highly effective). This is indicative of the impact technology enablement can bring to standardizing processes and workflows that underpin process delivery and enable greater visibility and control for clients.

According to one finance executive at a major media enterprise responsible for overseeing a finance and accounting BPO initiative, “Our provider implemented some workflow tools that enabled our

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Posted in: Analytics and Big Data,  Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices

Ned May, Senior Vice President, Research (click for bio)

If you think mobile has transformed your personal life, think about what it's doing to enterprises around the world.

On the latest HfS Podcast, Mark Reed-Edwards talks with Ned May, Senior Vice President, Research at HfS and author of the new HfS Blueprint: Enterprise Mobility Services about the earth-shattering changes impacting the mobile-enabled enterprise.

How have companies started to use enterprise mobility? What’s been behind the great growth? Which enterprises made it into the Winners’ Circle. Listen now to get the answers to those questions... and lots more.

[podcast]http://www.horsesforsources.com/wp-content/uploads/2014/03/HfS-Podcast-NedMay-Mobility-03-12-2014.mp3[/podcast]

Posted in: HfSResearch.com Homepage,  Mobility

Mike Salvino is Group Chief Executive, BPO at Accenture (click for bio)

If there's one face that's been consistent with the growth and maturation of BPO over the last decade you'd have Accenture's Mike Salvino right up there in the Hall of Fame.  (In fact... he did recently get inducted into the IAOP Outsourcing Hall of Fame).

Having begun his career with Accenture’s ITO business in the late 80's and 90's, Mike spent time on the BPO front lines with one of the industry’s first pureplay BPO providers, Exult and its eventual acquirer Hewitt, before finding his way back to Accenture in 2006 where he led their F&A business before taking full responsibility for the company’s entire BPO function, where, today, BPO proudly stands as one of the firm's major divisions and strategic focal areas, alongside the firm's technology growth platform and consulting businesses.

So we managed to lure "Sal" away from his son's basketball practice and his beloved North Carolina golf course to discuss the BPO troika - people, processes and technology - and the progress BPO is making to create new career tracks for millions of employees and a long-term sustainable industry of which we can all be proud...

Phil Fersht (CEO, HfS): Good afternoon, Mike, thanks for joining us. So your focus on “BPO Generations,” has really become written into BPO industry lore since you articulated it three years' ago. You were one of the first to map out the stages the industry needs to go through to be successful with your “Generations” continuum and our new research (see report) shows that buyers are carrying stock in what you call “Generation Three” (Opex) and around half of them expect to be in “Generation Four” (Insight) in a couple of years. Is this realistic, in your opinion, based on the quality of today's relationships and can both buyers and providers to up their game?

Click to Enlarge

Mike Salvino (Group Chief Executive, BPO, Accenture): Yes, Phil, I do think it's realistic. Let me first start with where we've come from because I think that will help us understand why I think it's possible for the industry to move into the fourth generation in the next few years. We have achieved a lot over the last 25 years and we’ve finally built the industry that we wanted way back in the early 90s.

If you think about the industry as a mountain range—we've climbed to the peak of one mountain and at that peak I think that we can give ourselves credit for a trillion dollar industry. We can give ourselves credit for global operations – and that's really third generation BPO. We've achieved silent running, we've achieved the ability to process transactions and we've been able to do it with a 24x7 mind set. The other thing that's really key at the top of that first mountain, and with third generation BPO, is that we have achieved client confidence. Clients now can look at providers and say "Yes, I can count on them for cost savings."

Clients today can also depend on this sourcing model to be scalable, meaning we have the ability to scale up and scale down while managing risk. And last but not least, I think we have proven out that third generation BPO works for back office functions like F&A and procurement and also industry-

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Posted in: Analytics and Big Data,  Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices

Since the divestment of its voice business to Concentrix, IBM’s medium-term strategy with its BPO business lines has been squarely under the microscope.

From our standpoint at HfS, it's abundantly clear that an ambitious 49% of enterprise BPO clients are shifting towards a two-pronged requirement of both operational and transformational (what HfS terms as “Progressive”) service needs. With this in mind, is Ginni Rommety's revamped IBM corporate strategy geared towards the firm's long-term success as a BPO provider?

IBM has been evaluating areas of its business where it may be losing its competitive edge and/or profit margins are simply getting too squeezed, which explains its other recent sell-off of its x86 server business to Lenovo. Two years into the job, it is clear that Ginni is focusing on high-margin cloud software, analytics and services, as opposed to commodity computing and storage. So if the cheap, low-margin businesses are becoming no-goers for the firm, where does this leave their BPO business, which has grown up on the transactional, highly scaled and fungible, low-wage employee model?

The winning BPO providers in today’s market are those which have proven credentials to run standard business services at competitive prices, with the business transformation, analytical and IT enablement capability to take ambitious clients to new thresholds of value.  Not dissimilar to the development of the IT outsourcing business over the past two decades, the capability to run the standard operations for clients has become commoditized at increasingly low-margins, while the higher margin work lies with the integration and consulting areas, tied to those outsourced operations.

However, the major distinction between BPO and ITO that we, at HfS, are seeing with maturing BPO delivery is that it simply is not as easy to separate the “transactional” from the “higher value, progressive activities”.  Simply put, if you outsource your cash apps, invoice processing, collections and general ledger consolidation operations to one provider, it is nigh-on impossible to bring in another provider to run financial planning and analysis, auditing, treasury, risk compliance activities, if that second provider does not have an institutional knowledge of your ground-up bread and butter processes.

Can providers like IBM prosper in BPO if they sell-off their lower-margin operation services?

In essence, the industry shift from “Lights-on” to “Progressive” Outsourcing requires a two-pronged delivery approach from providers:  transactional process services and higher-value transformation services. At HfS, we believe that this shift from a world of “Lights-on Outsourcing” to one of “Progressive Outsourcing” entails a massive degree of change for both clients and service providers if this is to be successful.  So many of the elements of Progressive Outsourcing are so significantly different from where this marketplace has been languishing for the last twenty years, there is, in essence, a chasm to cross in terms of the level of change management needed to discard legacy enterprise practices that are still so entrenched in so many organizations. The following exhibit shows the before and after picture for outsourcing buyers and providers faced with the BPO chasm:

Click to Enlarge

Hence, the big question for IBM is whether the firm will continue to invest in its "Lights On" BPO business lines in order to profit from the higher value fruits on offer with the "Progressive" business and IT needs of maturing BPO clients.  With its key top tier BPO rivals, namely Accenture, Capgemini and Genpact, clearly moving along this two-pronged path of operational and transformational delivery, IBM needs to demonstrate a similar commitment to the BPO industry.

Clearly, IBM wants to deliver cloud software, consulting and integration services in HR, finance, supply chain and marketing areas where it can reap the rewards of the tastier margins, but HfS is concerned those incumbent providers of the BPO operations will get first bite at the higher-margin

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Posted in: Analytics and Big Data,  Business Process Outsourcing (BPO),  Cloud Computing

HfS SVP, Research, Christa Degnan Manning (click for bio)

HfS SVP, Research, Christa Degnan Manning just published some scorching hot new research (Doing Less With More) on what it will take to make workers more productive and engaged. Based on research of nearly 5,000 employees worldwide, the survey also assessed human resources service providers in rewards, remuneration, and recognition (including payroll, benefits, and employee contact center outsourcing), interviewing enterprise buyers, users, and multi-process HRO providers of these services.

To learn more about this research, HfS' Mark Reed-Edwards talked with Christa in the latest episode of the HfS Podcast.

Listen here:

[podcast]http://www.horsesforsources.com/wp-content/uploads/2014/03/Degnan-Manning-03-07-2014.mp3[/podcast]

Posted in: Business Process Outsourcing (BPO),  HfSResearch.com Homepage,  HR Outsourcing

At long last... this April we have everything you've ever wanted to know about Robotic Process Automation and never dared to ask, in a sponsor-free, puff-free hour of open, undiluted interactive argument, debate, tomfoolery an enlightened nonsense, from the most knowledgeable group of robotics junkies we could muster.

We've heard the hype and the bravado, and listened to the whining doubters... so surely it's time to get to the real issues around Robotic Process Automation (RPA) on the table. So, without further ado, HfS has assembled the ultimate panel of robotic genii to ramble rambunctiously about the realities of robotics.

Posted in: Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices,  Global Business Services

One of the recent phenomena of the BPO business over the last couple of years has been the growth and improvement of the mid-tier competitors to emerge as genuine rivals for major enterprise deals.  As many of these engagements become more specialized and complex, they need increased attention and focus from the provider - and, in many cases, buyers feel they are getting the red carpet treatment from some of the smaller pure-play providers.

When you look at the hyper growth of the ITO business over the last decade-plus, it was this "penetrate and radiate" strategy that  propelled the likes of Cognizant and TCS to the forefront of the IT services business.  Their clients would start with 20 FTEs, then that would increase to 100, then 300, then 1000.... and before you knew if they'd eaten the lunch of the HPs and IBMs and were already checking out the dessert menu.

So why is BPO any different?  The mega deals of pre-recession days are long-gone and we are now entering a phase of solid, steady industry growth in the 5-10% range.  These are the times the ambitious BPOs need to develop relationships with clients that will probably start small, but can snowball to have huge potential in the future, once they have figured out the right model and have learned to work together.

Keshav R. Murugesh is the Group Chief Executive Officer of WNS Global Services (click for bio)

One such firm that rode the early BPO wave, survived the recession, and has just enjoyed its best ever year, where it almost reached the $500m revenue milestone and grew 8% (well above the industry average)... is WNS. Competitors hate it when WNS appears on the bake-off roster as they know how determined and competitive the firm is, while many clients hear from other WNS clients that the firm really works hard for its business and puts tremendous energy and focus into its delivery.

However which way you look at the firm, it has emerged in its own right and is challenging the elite for deals it would never have got a sniff at even three years ago. So let's hear from the man at the helm who has overseen this transformation, Keshav Murugesh, who graciously took some time out from his batting practice to speak to us...

Phil Fersht (CEO, HfS): Keshav, we’re really pleased that you’ve found time to talk to us, as WNS has been making quite a lot of noise in the marketplace, especially since you came on board in 2010. Would you please start by giving us an intro to your own background and how you ended up running a BPO business?

Keshav Murugesh (CEO, WNS): Well, I was an accountant at one point in time, and knew I had to make my life a little more interesting. So I worked with the Indian affiliate of British American Tobacco for about 13 years. But rather than focusing on the traditional tobacco business, I actually helped the company change its entire market positioning and increased its market capitalization by creating several new businesses. As a conglomerate, it had various divisions -- edible oil seeds, financial services, real estate and so on.  And, finally I stepped into the information services division of the business and helped create a company called ITC Infotech.

At the end of those 13 years, I had learned a lot in terms of creating new businesses and value for shareholders. I also realized that the next 50 years was going to be driven by progress around the IT and the IT-enabled side of the business, and that's when I decided to make the big move to a company that had IT as its focus.

So in 2002, I joined Syntel, an IT services company as CFO, and very quickly became its COO and then CEO. During my time there, the focus was on becoming an end-to-end services company that covered both IT and business processes. Consequentially, the company saw a surge in revenue and market capitalization.

When I was approached in 2010 for the WNS role, frankly, I did not know much about the company. But as I conducted my research, I came to understand that it really was the pioneer in the BPO space given its British Airways lineage, had a great culture and a fantastic roster of clients. I also realized that it seemed to have lost its way and hadn’t really focused on its long-term strategy over the preceding three or four years. Hence, it seemed an exciting challenge for any CEO to take up! Since then, we have been highly focused on creating a differentiation, establishing a new story in the marketplace and driving value for all stakeholders.

Phil: WNS has been around for a long time in the BPM/BPO space, but it seems like things have changed a bit recently. The company seems to be a little more aggressive and there seems to be a lot of good thinking coming out of the business. What is changing in the company?

Keshav: We have focused on three key differentiators that are resonating well in the marketplace and driving business momentum for us.

First, we launched an end-to-end, vertically aligned go-to-market strategy three-and-a-half years ago. In each of our carefully selected verticals we have a leader who comes from the industry who

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Posted in: Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices,  Finance & Accounting BPO

"Rewritten by machine and new technology, and now I understand the problems you can see"

Source: "Video Killed the Radio Star" by the Buggles, 1979

Yes, even back in '79, when a portly Christian Bale wore a hairpiece and the first nudist beach was established in the United Kingdom, the world was already beginning to zone in on the power of automation.  Well maybe it wasn't, but we were trying to find a clever way to connect the Buggles, American Hustle with Automation and BPO... so let's have HfS' own automation star, Charles Sutherland, shine some light on this one...

The Stagnation of Gamification

It wasn’t that long ago that in certain circles of the outsourcing market, there was a great deal of excitement about how gamification was a trend which would have a real and meaningful impact on how work was done in delivery centers around the world.   Books were written, conferences like GSummit were organized and in general there was an emerging belief that if you made even the most routine work more “fun” organized around mini-games, competitions, points and leaderboards rates of employee engagement and retention would rise and with that overall productivity in the outsourcing market.  A full disclosure now, I believed in this at the time and in many respects still due although as I’ll explain, I no longer see this as a wide-sweeping trend and instead as a niche approach for certain roles and workforces now in the future.  So while the books still reside on my Kindle, I’m now moving to the belief that at least in the world of BPO and GBS, it won’t be the gamification of roles rather it will be the process automation of roles that will define this world over the next several years.

While it’s true, that gamification may not have made it into the standard discourse in the BPO and GBS marketplace, our recent study of technology trends in BPO suggests that by comparison to process automation and the members of the SMAC stack (Social, Mobility, Analytics and Cloud), Gamification is at best the present, likely the past and certainly not the future technology trend.  What has emerged in its place is process automation.

Click to Enlarge

Why and Why Not Gamification in BPO

Gamification was attractive in BPO as a possible solution to some structural challenges in the industry.  How do you keep employees engaged and retained when their daily work isn’t always interesting and rarely varies?  How do you appeal to new millennial and Gen-Y employees who live

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Posted in: Analytics and Big Data,  Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices