Monthly Archives: Feb 2018

#NASSCOM_ILF 2018: An industry stuck in #fakenews limbo, desperately needing to change the channel

February 22, 2018 | Phil Fersht

Stability and modest growth should be the best thing that has happened to this industry:  companies can plan for the future with greater predictability and make smarter investment decisions.  Instead, we’re suffering from a culture of endless hype, copycat marketing and an addiction to hypergrowth. 

NASSCOM’s annual India Leadership Forum is always a good bellwether for testing the temperature of the global services industry – and the 2018 rendition this week in Hyderabad served up some real pearls of wisdom (yes, Hyderabad is the world’s leading refiner of pearls).

Getting to the point, the services industry has never found itself in a worse state of bewilderment and confusion.  After last year’s sense of looming disaster with President Trump’s proposed Visa reforms, at least the industry has something collective to hang onto – a common fear of being politicked out of business.  However, with that panic pretty much diluted, what has been left is a conflicting range of moods, ranging from confusion to depression to uncomfortable modest growth, alarmingly untrue #fakenews, and a never-ending plethora of meaningless buzz words, which have become so deepset in the fabric of our industry, most of us are resigned to using them, as it’s the only language left to communicate basic sentences to each other.

So let’s try and shed some light on the confusion, based on some of the terrific conversations we had this week:

The Indian IT industry is struggling to cope with “modest growth”.  With NASSCOM bravely predicting something in the 7-9% range, most credible analysts are predicting 4-5% for the short, medium and long-term.  The reality is, the whole DNA of Indian IT has been borne out of hyper-growth, offering genuine riches to ambitious executives who could project-manage their way to a very nice condo in Bangalore or Gurgaon.  The gravy train has now firmly ground to a halt, and most of the lovely folks remaining are still coming to terms with their salary increases slowing down, or disappearing altogether.  And many are just pleased to cling to their jobs. The level-headed executives have accepted they are now looking at a more modest outlook for their firms and their own futures, and are making some adjustments, while others are still clambering around trying to find the next hype bandwagon to hitch to their next career move (and payrise).  Did I hear the words AI, Blockchain, or RPA anyone?

“Digital” provides a sugar frosting for restating revenues as something that is not traditional IT.  While we managed to have about 30 structured meeting with service providers and tech firms, the term “digital” has become so meaningless, it now ceases to be used in any coherent sentence. It seems to be purely a term now for convincing investors and Wall St analysts that, somehow, traditional services revenues have now become something mysterious and new that will set services firms on a new pathway to returning to hypergrowth… and very soon. Digital is all about designing new revenue channels for customers using emerging interactive technologies.  It’s all about collapsing internal silos within business operations to service customers’ emerging digital needs.  If you’re telling me that 50-75% of IT services revenues are now “digital”, then please tell me where all the billions of dollars of app testing, app management and IT infra revenues mysteriously disappeared? 

Services has fallen hook, line and sinker for its own #fakenews.  Suddenly, every services provider has developed the industry’s leading competency for delivering automation, artificial intelligence and blockchain… overnight.  While, barely a year ago, exactly the same firms were the industry’s leading maestros at serving up “digital transformation”.  Amazing how they could source thousands of experts, and convince so many clients to make this all possible in barely a few months.  Until recently, most providers declared they were adopting a “wait and see” attitude to approaching some of these areas, but now are in there fully-fledged and firing on all their lovely blockchain cylinders.  Puhlease ladies and gents!  At least, in days gone by, most providers would be relatively honest about their core areas of focus and expertise.  Now it seems perfectly acceptable for many just to stare you in the eyes and just lie… what on earth has driven us to this place?

DXC continues to baffle everyone.  Can someone please explain what DXC is supposed to be doing?  I love the Accenture-esque TV ads, but I am still clueless as to what this firm is actually doing to be the next big thing in the industry.  While I was very happy with the DXC branded gifts for writing notes and charging my phones, I would rather just get a little postcard explaining what on earth this new-fangled services business is supposed to be doing that is so special…

Sourcing advisors have just fallen off a cliff.  Yeah – they just weren’t present.  Barely a couple of years ago they still trawled these halls with their promises of big deals (or would try and sell you some “research” to make a few bucks).  Now they have all but disappeared from the equation.  Maybe their absence is the most notable sign that the good ol’ days are firmly gone forever, and it’s high-time to wake up to something approaching a normal, stable industry?

The Bottom-line: There are some seriously cool things going in in the world of technology services; we just need to unearth them and change the narrative

There is a lot of goodness this industry is capable of achieving if we can just get out of our own way.

For starters, we're seeing the fastest revenue growth from several middle-tier providers who are big enough to go after some large complex deals, small enough to work on new concepts with clients and lack the legacy business to focus on going after greenfield disruptive opportunities that the big guys cannot consider.  We are seeing some of the major providers unearth new gold by taking ambitious clients to new places of business value, with a high-risk / high value mindset, using technology that is here today and working with them as a trusted long-term partner.  We’re seeing real advances in automation, machine learning and digital enablement that are here today – they are now a reality, not some future innovation that is still some years away.  We are also seeing a feverish desire from many clients to experiment with blockchain, despite the fact it’s still a long way from providing many meaningful business applications today. 

The present is now the future and this should be the most exciting time ever to be innovative, courageous and entrepreneurial.  So let’s stop trying to pretend to be something we’re not and focus on the real potential that is staring us in the face.  Everyone’s tired of the #fakenews… it’s time to change the channel!

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT Services



There's no FTE hell with Chris Caldwell

February 19, 2018 | Phil Fersht

The good old customer BPO business has taken quite a battering in recent years, where the same old usual suspects have embarked on selling predominantly the same old voice services, with most choosing to compete with ever-cheaper global locations to prop up their fragile profit margins. While many of the services majors have chosen to steer clear (or quietly exit the market), the importance of creating an amazing customer experience has never been so critical to customer-facing businesses.  Something has gone sorely wrong here...

In an era where every firm aims to be "digital" (and has a Chief Digital Officer to boot), the focus on engaging customers with both digital and voice communications has taken center stage... yet, these legacy call center practices continue to hound the services industry as most of the call center firms continue to fight it out to the lowest common denominator: who can delivery average customer service as cheaply as possible?  But you can't just blame the service providers alone for this behaviour:  many of the FORTUNE 500 propagate this behaviour by playing everyone off to squeeze every last drop of cost (and subsequently value) out of their delivery capability... preferring to talk a big digital customer experience game than truly investing in one.  

One leader in the space who has taken it upon himself to declare war on these legacy practices is Concentrix President Chris Caldwell, who has masterminded the impressive growth of the firm over the last 12 years, which has included some major acquisitions, notably, the IBM contact center business, BPO firm Minacs and the Australian digital outfit, Tigerspike.  The company today boasts annual revenues greater than $2bn with over 100,000 employees globally.  Having observed this rapid rise, I thought it high time to invite Chris on here to share a bit more about his story and his views on why this industry needn't be an FTE hell any longer...

Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Chris. It's great to finally get you here on HfS. I would love to hear about your journey on how you wound up running the Concentrix business.

Chris Caldwell, President, Concentrix Corporation: Of course, Phil, It's bit of an interesting story. I’m not sure if anyone starts out saying that they are going into a career to beat your business, or a call center business. But I worked for a parent company, SYNNEX where I was looking after M&A and the diversification of their business model from the core distribution business. One of the businesses that we bought, very small at the time, was a BPO business, about 30 people which was barely doing over $1m a year and had begun to lose money after some time. And my boss who was the CEO of the other company, said to me, 'you bought it, you fix it.' That was the start of the BPO business and that's when I took over Concentrix at the time. I then had to learn the call center business very quickly; figure out how to grow it and do something with it, which happened in approximately 2005.

Phil: Chris, you then went through this much, much larger acquisition of the IBM call center business in 2013. Can you talk a bit about how Concentrix got to that point, the relationship with SYNNEX, and how things have really progressed since you made that major acquisition?

Chris: Sure, It’s interesting. When we originally invested in Concentrix it was to provide additional services to SYNNEX vendors. SYNNEX is an IT distributor and I can still remember

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Posted in: Business Process Outsourcing (BPO)CRM and MarketingDigital Transformation



The digital worker survival guide: it's much more about attitude than skills

February 12, 2018 | Phil Fersht

Yes, people, as we inch towards the dreaded singularity, we will continue to be bored silly with arrogant diatribes describing how “humans can stay relevant”.

Do we really need to hear this daily splurge of pontifications from business leaders in Davos about reskilling the workforce, without any real practical advice on what that reskilling is?  I would argue this is more about culture and attitude, than training students to learn new programming languages and data analyst skills. The latter will come naturally as the needs of the workplace change, my view is that it’s the former which poses the real challenge: how can we enlighten people to change their working attitudes to make them much more valuable and irreplaceable to their employers?  Anyone can fix a line of code within hours, or slam in some new software, it’s what you actually do with the tech that really counts. 

It's what you do when your boss isn't looking, that makes you less predictable and more valuable 

It’s not just about performing predictable tasks, it’s also about helping your firm devise new ways of doing things – that is the magic that makes staff valued.  The truth is the singularity is a gimmick to jazz up advances with intelligent computing capability; the reality is the present and the future of the workplace are converging before our very eyes, and the survival of the digital worker depends on our ability to be looking constantly at where our firms are going, and being part of that journey.

The future of every type of ambitious commercial business, whether it’s a factory making products, a bank loaning money, an IT support shop helping users, a grocery store selling goods, a law firm prepping available information for its client cases, an analyst firm producing insight… is to perform its business operations with the optimum balance of talent, so it can maximise its immediate profits, with an eye on the future to stay ahead of the competition. As soon as someone’s output is predictable, taking inputs from various sources to produce outputs, you can start to figure out how to program software and machines to perform said tasks – and computers will always be cheaper than humans, once they are functional and can do the job.  So our goal has to be about furthering our abilities, not only to get the basics of our jobs done, but to immerse ourselves into helping our colleagues and bosses figure out the what next.  Because if we only focus on the now, we are eventually going to render ourselves predictable and replaceable.

Xerox and Zume: Two ends of the comfort/innovation spectrum

However, not all businesses are ambitious – some just want to milk what they have, squeeze as much as they can out of their current product and then exit.  Just look at Xerox – the firm developed a tremendous product for many years (and was the most patented and innovative workplace technology alongside the emergence of the IBM computer back in Don Draper time), which literally dominated a market in such a way that their brand became a verb.  However, Xerox just couldn’t find a way to become something else as copying documents became a commodity practise, and recently took its final payday before becoming part of Fujifilm

Maybe some firms and some boards just aren’t destined to do anything else, and those who made millions and retired off their stock can sip their martinis and congratulate themselves on their success (and luck).  However, for every millionaire, there will be a thousand mid-career folks rendered practically unemployable with a legacy skillset servicing a legacy product. So often we see people clinging onto the past with their careers, when it's abundantly clear their train has left the station. Good money today doesn’t always mean a healthy long-term decision, and there are so many people facing that predicament. What of the bank teller facing branch closures and their role being BPO-ed?  Or the insurance inspector being replaced by flying drones with webcams?  Or the call center agent being phased out for an intelligent chatbot?  Or the investment analyst being replaced by smart algorithms?  We can just go on and on and on… and there are so many more examples, such as the case of Zume pizza.

Zume, a typical Californian disruptive business, makes its pizzas with robots, and can deliver up to 200 at a time thanks to remotely controlled ovens inside their delivery trucks, their patented “Cooking en Route” system. It’s secret sauce is literally automation (not tomato purée) which speeds pizzas to market more cheaply, efficiently and at scale (and delivered freshly cooked ant hot).  Instead, it can invest its profits in hiring creative people to think of clever occasions with which to personalize and sell pizzas (i.e. during The Superbowl and Game of Thrones).  In short, tasks that are automatable such as rolling out the dough, adding on the sauce and toppings and placing the pizzas into and out of ovens are much more cost effective to use machine labor.  And when predictable intelligence is needed, such as forecasting weather conditions and popular events can benefit from a machine learning algorithm, the supply chain mechanism can be astutely optimized to get products to hungry customers quickly and profitably as possible.  Hence, the human skills are being pushed further and further up the creative value chain, such as designing a Philly cheese steak pizza for Eagles fans, or a lobster roll pizza for new England fans (OK I just made those up, but you get the picture). 

If you are an employer looking for creative talent, would you rather hire a successful Xerox executive who's kept that beast trundling along for the last couple of decades, or someone who's been immersed in the exciting growth of Zume over the past 18 months?  Hmmm...

The secret sauce to an ambitious business lies in energizing its culture and mindset to focus on the now and the next

As we have discussed, predictable is not the secret sauce – the secret sauce is what you do when no one is looking, the less obvious tasks that make you irreplaceable.  The key is to immerse yourself into the personable side of the business to become part of how the company drives value.  This means making your value less simple to put on a spreadsheet  - successful companies are those that create a culture that is unique to them, where its people are engaging in an enthusiastic way to find new sources of value for their firm, while enjoying being part of that journey.  People who love what they do and energize those around them are rarely fired.

In the case of Zume, once you have your intelligent pizza supply chain perfected, the human differentiator lies in marketing the product to drive the customer experience, which means having teams of smart people who love the product and work enthusiastically to come up with ideas to win in their marketplace.  It’s the same analogy with many insurance firms, where the whole process of managing an insurance process and developing smart algorithms to predict risk are increasingly digitizing (with the help of outsourced support), and the human edge lies with insurance firms out-marketing and out-thinking each other to offer the customer something that is more appealing to them?  Do we really care whether Geiko or Progressive insures our cars?  Probably not, but we will buy with whoever targeted us most effectively and made it easiest to get the transaction done.  Or it may be as simple as which TV commercial appealed to us to the most – the frog with the British cockney access or the friendly Flo who just seems to trustworthy and nice.  The simple reality here is as routine tasks become automated and the data becomes increasingly predictable with the use of advanced analytics and machine learning, the human skill lies in establishing the culture of a firm and the creativity in connecting and engaging as impactfully as possible with a customer base which just wants to be served as quickly and touchlessly as possible.  Do we really care about talking to a pizza order-taker or an insurance customer rep on the phone, when we can just order something on an iphone app?  I bet we’d hardly care if a drone rang our doorbell with a piping hot pizza at out front door, as long as it tasted great and was delivered quickly.  And you wouldn't have to tip either =)

The Bottom-line: Future workplace success is as much about  attitude as it is skillset, where we need to focus on this convergance of the present and the future

If I have to hear yet another “we need to fix the skills gap” diatribe from some plastic HR analyst I am going to become a Belgian trappist monk and brew very strong beer all day.  But I think you already knew that... so hear are some takeaways:

Get out of your silo. Get to know your colleagues and get them excited about what you do.  Even if your work areas don't converge that much, how hard is it to give up some time to get to know who you're working with, and exploring how you can help each other.  While we are all becoming digitally lazy with our social interactions (and many other activities) we need to focus harder on our people relationships to energize those around us.  So get back to having lunch with colleagues... call them up to air ideas.  Don't be unafraid to get people to explain what the hell it is they actually do (because they are likely clueless whay you do also...). 

Get to know some useful tech.  Whatever you do, where are cool apps to enhance your job, whether its collaborative apps and social software, graphics and content packages, data visualization and analytics tools, CRM tools, RPA/RDA/BPM and easy-to-use process configuration software... you don't need a computer science degree anymore to use this stuff. If you mastered that beast called PowerPoint, you can certainly use some of the sexier tools in the market and... and evaluating them is almost always free.  If you're not using some form of new tech in your job, then something is going amiss... or you're just too busy selling your next photocoper to care.

Get to know your firm's business better.  Your bosses should be driving themselves nuts trying to get one over the competition and come up with new ideas for disrupting your market.  Insert yourself in that conversation... everyone has a few good ideas in them somewhere.  By showing you care about the business adds to your value and inclusion... and you'll learn more about the business model and help people think through some clever options.  If you just don't care about the business your work in and really can't be bothered to support your firm with its future, your current career track may be getting very limited...

Include others in what you do, even if it's boring.  Everyone loves being included in what others are doing... inclusion far out-trumps boredom.  If someone enthusiastically shows you how he RPA-ed some workflows together, you'd just be happy he showed you how he did it, even though he may be dis-invited to your next pool party.  

Being smart about data is no longer geeky, its career-critical. If you can’t automate and digitize your rudimentary processes, you will quickly run out of value to any organization. Plus, every siloed dataset restricts the analytics insight that makes you a strategic contributor to your business. You really can’t create value or transform a business operation without converged, real-time data.  You don't need to have a mathematics masters to understand your customers and the markets in which your operate - you just need to explain to your colleagues what you need and make sure it gets done.  

Tune up your cross-cultural intelligence.  We need to do a lot more than merely understand cultural differences - we need to adapt and modify our behaviors as the situation dictates as our workplaces and business environment continues to globalize. That means we need to get smarter about different senses of humor (and different sensitivities), widely differings levels of political correctness, different styles of engagement (most Americans tend to like to talk a lot more than most Europeans, for example and their meetings often last longer).  Also be sensitive to time zones - the days of expecting people to take 4.00am calls are pretty much over.  And be prepared to talk more about geopolitics - many people just want to talk about the big issues more openly these days (even Americans where political discourse has been taboo in days gone by).  My only advice here is to try to listen, even if you are in violent disagreement with someone... 

Posted in: Design ThinkingDigital TransformationSourcing Change Management



Automation to impact 750,000 low skilled Indian jobs, but create 300,000 mid-high skilled jobs by 2022

February 03, 2018 | Phil FershtJamie Snowdon

A lot has changed in the last year... especially when it comes to automation: it has now become the broadly-accepted efficiency tool for cost leverage with operations.

Every customer has RPA project managers and automation leads hungry for data, advice, and ideas. Every service provider has RPA embedded into their service delivery models, and every credible advisor has a practice that is working with multiple clients to make this happen. The Armageddon days of talking about robots taking our jobs are over - these are now the reality days where we can see exactly what's going on with automation and AI, and accurately estimate how it's going to impact the services industry in the next few years.

There will be impact, but it's manageable provided we focus on new skills and value.  

In short, the global IT and BPO services industry employs 16 million workers today.  By 2022, our industry will employ 14.8 million - a likely decrease of 7.5%* in total workers (see our research methodology below).  This isn't devastating news - we'll lose this many people through natural attrition, but what this data signifies is this industry is now delivering more for less because of advantages in automation and artificial intelligence.  The new data also shows how job roles are evolving from low skilled workers conducting simple entry level, process driven tasks that require little abstract thinking or autonomy, to medium and high skilled workers undertaking more complicated tasks that require experience, expertise, abstract thinking, ability to manage machine-learning tools and autonomy.

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The low skill routine jobs are getting increasingly impacted, and our new demand data shows an acceleration in RPA tools (a 60% increase over the next year) where service providers are the largest adopters into their own service delivery organizations.  We expect to see a more rapid impact on routine job roles which is most notable in 2022 as companies take time to build the impact of RPA into service contracts and figure out how to turn work elimination into hard savings than merely soft efficiency savings.  With barely a 50% satisfaction level, this will take 4-5 years to see the real cost benefits in terms of job elimination.  Most of the short-medium term benefits are being seen in increased efficiencies and more digital process workflows.  All major service delivery locations are expected to be impacted at the low-end, but the higher the wage costs, the higher the expected role elimination (750,000 roles in India and a similar number in the US):

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Medium skilled roles are picking up across the board, especially in roles that are customer/employee facing with the need for more customized support, the ability to handle

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Posted in: Cognitive ComputingRobotic Process Automation