A raft of luminaries ranging from Stephen Hawking and Steve Wozniak to the figureheads of Artificial Intelligence (AI) at Facebook and Google, Yann LeCun and Demis Hassabis, have signed a petition warning of a “military artificial intelligence arms race” and calling for a ban on “offensive autonomous weapons.”

Meanwhile, among the developer community, the discussion on the ethics and ramifications of AI has been as intense as it has been far reaching. Yet in the discussions around the notions of RPA and process automation, the issue of ethics and the impact on the future of work are (still) largely absent.

A dichotomy of ethics is in play:  Outsourcing is viewed as somewhat evil, while labor elimination via technology is barely an afterthought

One main observation we, at HfS, are beginning to notice is that many enterprise clients are showing an increasing willingness to invest in technology-based (rather than people-based) solutions. You only have to revisit our Value Beyond Cost study, which we ran with KPMG earlier this year, where we asked 168 senior executives about the priorities of their C-Suites with their operations:

Click to Enlarge

What is startlingly apparent here, beyond the fact that well over 90% of C-Suite directives are obsessed with cost and flexible services as operational priorities, is that less than half (48%) view improving their operational talent as important, 65% are exploring efforts to restrict the recruitment of labor where possible, and 62% are looking, with varying levels of interest, at automation and robotics with the specific purpose of reducing their reliance on labor. The bottom

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

John Haworth is Chairman of the HfS Sourcing Executive Council (Click for bio)

So what do you do after a rollercoaster career working in ERP software, HR services, sourcing advisory and finally the BPO lead for one of the largest healthcare insurers?

Where do you next take a career, which was centered on traditional services and outsourcing, when all you want to do is challenge the old model and bludgeon a path towards the new?

Of course, you already knew the answer... come to HfS and make some serious trouble.

John has been intimately involved with the HfS community for several year as a service buyer and has long talked to me about his desire to "saw off the legacy".  So when we reached the size and need to have a dedicated leader of the buyer rebels, armed and ready to hive off the turgid, valueless detritus of yesteryear's transaction-dom, there was noone better to ask to fill the spot.  And he loves it so much he's already written more research pieces than the analyst team in his first month on the job.

So let's find out a bit more about John's plans for the HfS buyers council and a little about himself too...

Phil Fersht (CEO, HfS):  Good afternoon John! You took the decision recently to join us at HfS Research and we'll talk about that in a minute, but first could you could give us a bit of your own background?

John Haworth,Chairman of the HfS Sourcing Executive Council: Like a lot of people I think I'm in this industry somewhat by accident. The reason it wasn't by design is because to some degree the industry as we know it didn't exist, so there wasn’t anything for anyone to aspire to become part of. I think if you go back twenty years you'll find strong BPO examples starting to show up. But the seeds had been planted in this industry before that, largely by ITO players and “service bureaus”

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Posted in: Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices,  Captives and Shared Services Strategies

Infosys CEO Vishal Sikka talks to HfS on his first year in charge

So... one year into the new job and Infosys' Vishal Sikka has managed to perform a task noone thought possible. He's dragged a once-famous Indian-heritage IT services firm - kicking and screaming - out of a maddening tailspin into that dark sinkhole of legacy-ness that is scaring the life out of today's services industry.

The reason for this is quite simple - he never brought with him a baggage of legacy services culture, where the common practice is to:

1) Copy what all your competitors are saying and try to out-bullsh*t them;

2) Hire cheaper, younger staff and gut the middle layer;

3) Sugar-coat every ADM, Infra and BPO renewal with terms like "digital", "transformation", "automation" and "outcomes" etc., when none of these things were really included in the actual contract, but made nice additions to the press release.

Vishal just gets to the point with a refreshing and honest perspective about what his firm needs to do - and is already making shrewd investments in critical areas, such as Panaya (automation) and Skava (digital). He's also been growing the traditional business, with Infosys just reporting its best quarterly revenue growth for 15 months (4.5% year-on-year), and overseeing several new $2Bn+ sized engagement wins in the last 12 months, with the likes of Allied Irish Bank, Deutsche Bank, NSW State Government and ICA Gruppen in the last 12 months).

The business is stable, growing well again in an industry where many competitors are scrambling all

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

If I have to read another article about Uber's disruptive business model, I think I am going to defect to a Trappist monastery and brew very strong beer for the rest of my life...

However, iet's be honest here - who really cares about these taxi drivers being forced to improve their services, clean their cabs,  clean themselves, start using credit card machines and even (on occasion) help you with your bags? The fact is, unless you are a legacy taxi driver, or related to one, you're most likely delighted they are being forced to get competitive and improve their services.

It's the same with Spotify / Google music - unless you are in the business of selling music, most people are ecstatic they can now get all the music they desire for $10 a month or less, without having to spend a fortune on CDs, with the hope that there's the odd good tune.  And there's Amazon versus Best Buy, there's Airbnb versus Marriott, there's Netflix versus Comcast, and so on. Moving to our industry, there's Onesource Virtual versus NGA, there's ZenPayroll versus ADP, Workday versus SAP, there's software versus people, there's offshore people versus onshore people, there are robotically automated solutions versus people, there are self-learning machines versus people, in fact, every advancement in services we look at today is all centered on less people... and delivered As-a-Service.

And like the happy world of taxi customers now getting a better and cheaper service for their money, there are many business leaders who are only too happy to get cheaper and better business operations, because they can reduce their reliance on people. If you're not an employee who is being replaced by a piece of software (although it's widely assumed we will be someday), the chances are you're happy your firm is becoming more profitable and doesn't need to rely on so many bodies to keep the lights on. Just revisit our Value Beyond Cost study we ran with KPMG earlier this year, where we asked 168 senior executives about the priorities of their C-Suites with their operations:

Click to Enlarge

What is startlingly apparent here, beyond the fact that well over 90% of C-Suite directives are obsessed with cost and flexible services as operational priorities, is that less than half (48%) view improving their operational talent as important, 65% are exploring efforts to restrict the recruitment of labor where possible, and 62% are looking, with varying levels of interest, at automation and robotics with the specific purpose of reducing their reliance on labor. The bottom line here is very clear - C-Suites are caring less and less about their people, and more and more about their services.

The big question many are facing now isn't whether to invest heavily in their people - it's whether to invest in technology to replace staff, or use outsourcing partners to reduce the burden of inhouse staffing cost, while improving their access to flexible services.  Or use a combination of the two... or use an outsourcer which is using robotics on itself and is willing to pass on the benefits to its clients desperate to move from a legacy labor-centric operational infrastructure.

The Bottom-line:  In the The As-a-Service Economy, we only care about achieving our desired outcomes 

Here's the nub of the argument, while people like Hillary Clinton want to turn back the clock and protect the legacy job-for-life, the vast majority of people really do not care that labor forces are being disrupted, along with legacy business models and obsolete practices.  Today's world is all about faster, cheaper, more accessible services - and to hell with any obsolete process, system or person which gets in the way of convenient and affordable As-a-Service models.

People care most about enjoying the outcomes of what they pay for, not the efforts made to achieve those outcomes.  Expenditure on services is increasingly related directly to outcomes, not a fixed tax we have to pay for a standard service. Personally, I always pay a limo driver $10 over the norm to drive me to the airport. He picks me up in a Cadillac, hangs up my suit, gives me a bottle of water and a newspaper - and only makes conversation if I want to. My desired outcome is a relaxing journey and the extra cost is worth it - and he wins my business everytime and I refer him to all my friends and colleagues. Now that's one way to win over the Ubers of this world - people will pay when the outcome is what they want. Welcome to the uncaring economy where is all about the outcome...

Posted in: Buyers' Sourcing Best Practices,  Design Thinking,  Digital Transformation

Right on cue, after we made the call is was high time for the leading consulting firms to buy into BPO, KPMG makes its first major As-a-Service move, picking up Towers Watson's HR Service Delivery practice, which includes both technology implementation and HR process delivery capabilities.

And this isn't some traditional HRO play, it's KPMG making a serious investment in Workday delivery across both HR and Finance & Accounting. KPMG already claims to be the transformative partner for 45% of the world's Workday financials rollouts... now it is playing with the leaders in Workday based HR delivery, namely OneSource Virtual, Deloitte, Accenture, Collaborative Solutions and Meteorix.

Does this mean KPMG is now an HR-as-a-Service Provider?

Yes it does. The firm has realized it has to be in the managed services business to support the emerging SaaS offerings across technology implementation, post go-live support, transaction business processing and higher value services, such as organizational change management, workforce analytics and ad hoc strategy needs... in an on-demand model. It also knows it needs to be in the position to provide these on-demand capabilities around several core HR SaaS product

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

Like many of you out there, I was floored last night to see Presidential candidate Hillary Clinton openly attack the Sharing Economy in a speech outlining her economic theory.

Clearly taking a swipe at the likes of Uber and Airbnb Mrs Clinton states, “This on-demand or so-called gig economy is creating exciting opportunities and unleashing innovation. But it’s also raising hard questions about workplace protections and what a good job will look like in the future”. Clinton “Vows to crack down on employers who misclassify workers as independent contractors”, which she says is “wage theft”.  Along with globalization and automation, Clinton describes the "Sharing Economy" as “conspiring against sustainable wage growth”. The report says “she will argue that policy choices have contributed to the problem, and that she can fix it.”

So why does added protectionism of US workers help offshore and nearshore outsourcing?

While the open attack on innovative business models is in itself mind-boggling, the less obvious impact of her focus here is to discourage service providers and enterprises from hiring US talent to provide business support services. As service delivery becomes increasingly focused on higher value needs, such as organizational design, analytics modeling and supporting complex apps development across multiple environments, the opportunity for local US talent to be leveraged is huge.

In addition, the way in which new generation As-a-Service providers want to engage with talent needs to be more "As-a-Service" to be competitive. Virtual support models are becoming critical for BPaaS support functions where clients need quick, on-tap support, and - in many cases - the new generation of service provider isn't simply looking to stock up hoards of full time employees in a call center somewhere in the Midwest  - they are also seeking to engage talent which prefer a flexi-

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

Two CEOs clearly up to no good... Genpact's Tiger Tyagarajan (left) and Infosys' Vishal Sikka (right)

One of the great things about HfS is the fact we never partake in gossip or idle speculation. So let's change "never" to "rarely"...

I was happening to be Uber-ing myself aimlessly around the streets of San Francisco last week when I happened to drop in on Infosys' sexy new Design Thinking center (I think that's what they call it) in Palo Alto, where I caught two of the industry's finest minds having a sneaky cup of coffee.

Now, before you all jump to conclusions that Vishal Sikka and Tiger Tyagarajan are about to join forces, they are actually old friends and neighbors, and this was purely a social call...  but it did get me thinking about what if Infosys and Genpact got a little more intimate with each other...

Pros:

Challenging the old way of thinking. Infosys' fresh Design Thinking approach and Genpact's re-imagination of business processes are very well aligned.  Both firms have jumped on the importance of challenging current thinking and instilling that across their organizations (and not a CoE approach).

IT services meet BPO... on steroids. A great IT services firm meets a great BPO/operations process management firm.  This would be a real powerhouse.  What's more, Genpact is the largest "process

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Posted in: #Crazymergerideas,  Analytics and Big Data,  Business Process Outsourcing (BPO)

The HfS show hits the road in 2015... last stop was Dallas, Texas:

See you in Harvard Square this December!

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

If there's one market people have been raving about for the past decade - and still are - but has never quite taken off as quickly as many have predicted, it's the world of engineering services outsourcing.

This market is all about using third parties in the design, analysis, manufacture and augmentation of products.  And in today's world of global labor, the global marketplace, emerging technologies, smarter global sourcing models and the Internet of Things, the potential to embrace outsourcing expertise to bring products to market smarter, faster and cheaper has never been so exciting.

Engineering services has a huge market potential, but - somehow - engineering service providers have had limited success in transforming this potential into the actual outsourcing engagements. Now things are changing, and we believe that engineering services is evolving from a niche offering to the mainstream.  So without further ado, let's hear from HfS Research Director, Pareekh Jain, on the excellent research he's completed that delved deep this this market:

Click to Enlarge

Pareekh, how do you see this market evolving and what are the key drivers for engineering services?

Engineering services outsourcing, over the last decade, has evolved from simple drawing and drafting to complex end-to-end product design. Now an enterprise which wants to enter a new market segment can partner with some leading engineering service providers, that can not only deliver complete new product design but that can even collaborate with manufacturing partners for additional benefits. Some engineering service providers are also collaborating on high-end R&D

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Posted in: Business Process Outsourcing (BPO),  Design Thinking,  HfS Blueprint Results

Most of the outsourcing industry is still trying to figure out what's possible beyond doing labor arbitrage really well - because that's what we do. Sorry, but there I said it - we officially have an identity crisis.

We're trying to forge a new identity for ourselves and re-imagine what our careers, our services and our platforms could be like if we only figured out how we can define, prioritize and realize business outcomes that are valuable, as opposed to merely keeping the same old factory ticking over at the lowest possible cost.

Sexy robotics software, analytics tools, BPaaS platforms and artificial intelligence can only be effective and impactful once enterprises have re-designed their processes in a way that drives them towards their desired business outcomes. This has always been the case with (now legacy) ERP implementations, where thousands of clients have blown billions of dollars on enterprise software they simply never could mold effectively to their businesses. They weren't finding problems to solve, they were creating new ones they didn't need in the first place.

It's the same with the next wave of As-a-Service solutions - they will fail without the right approach to designing processes that produce the desired results. Without Design Thinking, enterprises are really just retrofitting expensive solutions into legacy processes and likely wasting a whole load of

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Posted in: 2015 As-a-Service Study,  Analytics and Big Data,  Business Process Outsourcing (BPO)