Capgemini has emphasized its global delivery acumen, by showcasing its expanding European delivery center in Krakow, Poland, to industry analysts and advisors.  

This dovetails with Capgemini's strategy of positioning its delivery centers in Latin America (see earlier post), Guangzhou (China) and India, to present a compelling global delivery capability, based on a network of  proven locations, where educated, multilingual talent is readily available to support its clients' global General and Administrative (G&A) processes.  However, while the firm is clearly focused on investing in quality nearshore/offshore delivery resources, does this enable it to compete aggressively with low-cost offshore-centric providers for BPO/ITO engagements? 

Capgemini is one of the largest and most well-known European IT/BPO service providers and consulting firms, with revenues of $10.3 billion, but has struggled in the past become a household name in the US.  However, its recent aggression in the BPO market, resulting in notable client wins such as Bunge and Coca-Cola Enterprises, has helped elevate Capgemini as a serious contender for global enterprise BPO engagements.

Read More »

Posted in: Business Process Outsourcing (BPO),  Finance & Accounting BPO,  IT Outsourcing / IT Services

Pramod Bhasin, President and CEO of Genpact

At long last, we come to the final part of our interview with Genpact's President and CEO, Pramod Bhasin.   

In Part II, Pramod talked about "integrating IT and BPO and not getting blown up into small pieces", where we discussed the convergence of SaaS, BPO and Cloud Computing.  In our final chapter, we discuss the future of process consulting, where labor arbitrage is heading, more about the Cloud (of course), and a little piece of advice for today's budding sourcing masochists, er, I mean executives.

Phil Fersht (PF):  There's no doubting Genpact as a great business process expertise company, but when we get into the mid-market and these more "leveraged" solutions, there's clearly a lot more need for consultative support.  How's Genpact, moving forward, going to build out its consultative capabilities? Are you going to develop a consultative arm, or are you going to bed more consultative expertise into your managed services offerings - how are you going to tackle this?

Pramod Bhasin (PB):  We have a very strong re-engineering focus, so I try to stay away from calling myself a consultant, because people see us differently, and I worry about that being a label that attaches to us, when clients don’t recognize us as that.  We have a very strong re-engineering team with all of the black belts and Six Sigma people, and we are adding, in terms of domain expertise, as well as relationship managers, We are hiring people with much better consultative skills.  That is a clear roadmap that we have put into place.  Our relationship managers need to be significantly upgraded in many cases, so they are part of the consulting skills-setting. That is an ongoing process that we have put into place and it will take some time.  We probably have300 master black belts at this time and we will go above that.  We need to change the DNA in many of our cases, though.  We have very strong operating backgrounds, but now we need to find people who can provide solutions. The re-engineering folks are fantastic, the black belts are fantastic, but I still think that we need to add another layer of skill to our people, particularly focused on industries, such as healthcare, pharma, or whatever it may be.

Read More »

Posted in: Business Process Outsourcing (BPO),  Cloud Computing,  Finance & Accounting BPO

I feel like we've been here before.  Oh wait - we have!  Remember the heady old days of HR BPO, when a couple of hundred enterprises shifted multiple HR functions over to service providers, with the hope of saving money and - perhaps - find a few smidgens of improvement with their HR strategy?

While a couple of service providers failed to get their delivery model right and ended up losing money, HR executives screamed from the rooftops to ensure every single negative view of HR BPO was expounded in all the HR media, and anyone else who would listen.  They got their wish, as firms such as Convergys and Hewitt got crucified by Wall St, and most of the providers made a hasty retreat from the business.  In fact, it proved such a grueling experience for Convergys, it recently jettisoned one the industry's largest HRO businesses for loose change.

Now enter the latest threat to HR:  Recruitment Process Outsourcing.  And this time, our HR friends will have to try a lot harder to throw this one under the bus. 

Firstly, most of the providers in this space have been dealing with recruiting for years, and, secondly, the newer providers have been getting their feet wet with a host of successful pilots and early client engagements, which our forthcoming HfS Research report will discuss at greater length.  And thirdly, these providers are fulfilling a badly-needed service for many enterprises today:  helping them source new pools talent, get a handle on managing the talent pipeline, access new recruiting technology and social networks, while helping drive out cost by running various back office recruiting tasks offshore.  

HfS Research's latest study, conducted in conjunction with Human Resources Executive Online, gleaned the views and dynamics of 238 HR executives towards RPO, of which 34 percent were senior VPs or VPs of HR.  And the first factor that was apparent, was that RPO was low down the list of recruiting services HR executives are going to take a look at this year.  Let's examine this further... 

Read More »

Posted in: Business Process Outsourcing (BPO),  HR Outsourcing,  HR Strategy

The key to achieving innovation, is to nurture today's young talent, teaching new and creative methods...

Posted in: Absolutely Meaningless Comedy

Asia/Pac: only 60% of the global population...

When you're looking at the future development of the global sourcing industry, you need to look hard at the diversity of the Asia/Pacific countries to understand from where much of the future demand - and supply - of technology and BPO services will arise. 

With much of the US and Europe's economic leaders coming to terms with paying for their years of spending excesses, their financial bail-outs and tethering themselves to basket-case economies, the next decade represents a real shift in the balance of economic power.  No longer can enterprise leaders afford to view Asia/Pacific myopically as a single region, requiring a single go-to-market strategy for a "region" that houses 60% of the world's population.  

When we were developing our research agenda at HfS, we made the concerted decision to focus resources and attention firmly on Asia/Pac, so we can help our clients better understand how to organize themselves for growth across the region though their sourcing strategies.  Our newest analyst at HfS, Andrew Milroy, discusses further some of the incredible diversity across that region.  You can also listen to Andrew discussing key outsourcing dynamics in the Asia/Pacific region with our networking partner, SSON, by clicking here.  Over to you, Mr Milroy:

Read More »

Posted in: IT Outsourcing / IT Services,  Sourcing Locations

New York Senator, Charles E. Schumer

Thanks for so many of the comments, calls and emails we received after our recent post discussing "Why Senator Schumer’s proposed call center tax is detrimental and unproductive for the US economy".  The majority of the viewpoints convey concern and confusion regarding the  implications of the proposals - I'll let you read on for yourselves.  However, one opinion did standout, coming from a gentleman called Skip Womack, who heads up the US onshore IT outsourcing provider, Advantage Outsourcing, based in Wichita, in the Midwest. 

Now, you really wouldn't blame guys like Skip for supporting Chuck's anti-offshoring measures, but it's refreshing to learn that many of them (and it's not only Skip), believe the US onshore outsourcing industry - and not only call center - can prosper without such punitive attempts at firms leveraging offshore services:

Read More »

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

Now there's some significant innovation potential...

When it comes to achieving innovation when outsourcing, buyers need to identify where real innovation is possible, and where they only really need operational efficiency.  

Innovation is about deploying creative and unique methods to drive new productivity or top line growth into the company.  In reality, some processes have that potential, while others, quite frankly, only offer a means to an end.  

Our new innovation study, conducted in conjunction with our BPO networking partner, the Shared Services & Outsourcing Network, reveals some staggering results from 136 senior BPO buyers, when we asked them where they were achieving significant innovation today, and where they saw the potential to achieving significant innovation within a two-year time frame: 

Determine the ceiling of innovation value 

This data reveals an awful lot about outsourcing today.  Essentially, most business processes can be improved to a certain extent when they are outsourced, whether it be through better workflows, application of new technology, and domain knowledge from experts.  And most buyers today still feel most - or all - of their outsourced processes can benefit from further innovation. 

However, some processes clearly have a ceiling of innovation value that can be attained, which is where the move towards standardization comes into play.  For example, once you've got a benefits or payroll solution that delivers the required functionality, is delivered via a hosted / SaaS model, and the provider has the costs and service quality performing to an acceptable level, is there really a whole lot more value your business can gain from them, to increase productivity further and drive new top-line growth?  Cloud Computing and SaaS can further help drive down the operating costs and optimization of delivery, but once you're happy with the processes and the service, that may be the limit of future innovative value that you can expect to attain. 

Pinpoint where future growth and productivity can be attained with a BPO provider 

Where there is significant opportunity to achieve innovation, is where there is significant room to improve process flows, add domain knowledge, creativity and technology into the mix to achieve impactful business outcomes.  This is especially prevalent with those processes that are often a long way from standardization, and can benefit from consultative business partners to develop a specific innovation agenda (see Part II).  Analytics innovation clearly represents a major opportunity for providers and buyers to work together to make better use of information to drive results, in a cost-efficient manner.  It also encompasses a much greater need for consultative support from the provider.  And it's the same story as you go through those processes where the innovation opportunity is significant, for example, P2P (massive productivity and cash flow); supply chain (driving product to market quicker); customer--care (driving new income), recruiting (reducing time-to-hire and improving talent selection), and so on.  Each innovation gap tells a story of where the future value lies. 

The HfS Viewpoint: The key lies in determining  and achieving the right balance between operational efficiency and innovative value.  Both are crucial.  

That means, when selecting BPO partners to drive new business value, buyers need to focus on identifying which ones can genuinely help them innovate, versus those who can keep the machine cranking.  In most cases today, buyers are increasingly finding they can source to multiple BPO and consulting partners - those to help them innovate in processes that have real value-potential, and those which can keep the costs down and the operations functioning.  Many buyers today with some BPO experience, are now seriously considering adding more competitiveness to their provider mix to get more creative value. 

On the flip-side, providers need to determine where they add the most value.  For example, ADP has the lion's share of the managed payroll business - so does it need to broaden beyond that into adjacent processes, for example P2P, that requires greater innovative and consultative support?  Cognizant has a strong portfolio of industry-specific offerings in verticals such as life sciences and banking - does it need to broaden more aggressively into more horizontal processes, such as F&A or procurement?  Accenture and IBM have strong offerings across many of these processes, so where should they choose to invest more of their resources in a tightening market? 

Buyers and providers need to work out a game-plan whereupon they determine what innovation is possible, and how it needs to be achieved.  Some buyers feel they don't need a hell of a lot of innovation, and some providers are happy delivering standard services with little innovation impetus, beyond a few basic requirements.  In the future, we'll be drawing up illustrations of the innovators and the operational players.  There is room for both - the key is to determine how much focus to put into each area. 

All-in-all:  Both buyers and providers need to be honest with themselves to determine whether they are truly prepared to invest in either achieving or delivering innovation.  If not, stick to being operationally efficient and stop talking about an innovation game-plan that will never happen.

Posted in: Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices,  Cloud Computing

The new Mahindra Satyam: open for business

Mahindra Satyam recently staged it first analyst conference as a new entity, to announce to industry that its new structure was complete,  and was  a serious IT/BPO services competitor.

Resurrecting itself from the biggest scandal in Indian outsourcing history, a renamed Mahindra Satyam has quietly been going about its business to rebuild trust and confidence in the firm.  In the last year, it expanded business with the base of Satyam customers that remained with the company, despite the scandal, with 54 new customer contracts, although several of these are relatively small-scale engagements.  It has also formed a new senior management team by injecting some Tech Mahindra leadership, in addition to hiring liberally from its competitors.  This new blood joins the existing Satyam leadership that weathered the storm to form an energized and dynamic leadership team.

Noticeably absent was much of the sales glitz that Satyam was famous in the Raju days, with the presentations communicating a more down-to-earth and fact-based approach to services, indicating the engineers are now in charge.

Read More »

Posted in: Business Process Outsourcing (BPO),  IT Outsourcing / IT Services,  Knowledge Process Outsourcing & Analytics

In its first industry analyst conference, BPO provider Genpact emphasized its business, today, is much broader than supporting General Electric’s back office and primarily delivering finance and accounting (F&A) services. 

“Tiger” Tyagarajan (COO - see earlier interview) and Bob Pryor (EVP for global sales, marketing and business development ) co-hosted on May 18-19 in Cambridge, MA in what Genpact billed as its first analyst and advisor conference. The event was well attended by all thekey analysts and many of the consulting firms which regularly help clients hire BPO firms such as Genpact.

The headline message was that the majority of Genpact’s business is no longer with its former parent GE (currently about 40 percent). In fact, its GE business actually declined last year as a percentage of total revenues. Furthermore, only a third of its business is now in finance and accounting outsourcing (FAO). As demand in other areas grows, Genpact will continue to verticalize its offerings in areas such as back office processing for financial institutions and healthcare companies, in addition to developing its  IT services, and knowledge process outsourcing (KPO)/analytics offerings.

Read More »

Posted in: Business Process Outsourcing (BPO),  Finance & Accounting BPO,  IT Outsourcing / IT Services

It's all about those regular delights...

We've had a lot of dialog (read here) about why most clients aren't getting much more than they expected, when they signed an outsourcing contract.  And when you have someone one on staff who's been dealing with the same issues for over three decades, you start to wonder what it's going to take to drive customers to become genuinely "delighted" with the service they're receiving. 

 My personal take, based on our extensive research, is that an increasing majority of clients truly want to see some innovation developing in their agreement, but aren't prepared to upset the applecart to make changes that could spoil their operational status quo. 

Our veteran professor of outsourcing, Mike Atwood, has a simplistic view of what needs to transpire for customers to actually receive regular delights... over to you Mike:

Why aren’t I happy with my outsourcer?

How many times have you heard someone say that all our service metrics are green, but the relationship is red?  This sort of non-specific concern about an outsourcer seems to be as old as outsourcing itself. It has certainly existed as long as I’ve been in the field. I recently attended an analyst conference for a major outsourcer andran into an old friend who I’d worked with at EDS andwe got around to discussing a mutual client. This client wasn’t to the point of saying the relationship was red, but he clearly didn’t believe he was getting the value he expected out of his outsourcing relationship.

Read More »

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

Scenes from the front row of NASSCOM BPO, Bangalore, June 2010

1) Which country, promoting its datacenter capabilities, do these fine gentlemen represent?

2) Can you identify this statesmen of the BPO industry (I'd just finished speaking, so forgive him his 40 winks...)

Posted in: Absolutely Meaningless Comedy,  Outsourcing Events,  Outsourcing Heros

It can't be... surely not... is that... is that... a proactive bill that encourages businesses to invest in the US?

When is comes to "bringing US jobs back onshore", we repeatedly seem to get all sorts of legislation that, quite simply, is focused on restricting our busineses' competitiveness, when we should be looking at helping them invest in new talent and entrepreneurship, rather than penalizing them for trying to be competitive in today's global environment. (Read our excellent discussion from last year:  Who’s looking out for the US business these days?)

Senator Charles Schumer's proposed new legislation, if passed, would tax U.S. companies that transfer domestic calls (at $.0.25 per call) to foreign call centers and require consumers be informed when their call is transferred outside the U.S.  I assume by now most of you know the details of this, so let's consider what good this does US businesses and the US economy:

1) The cost differential is not enough to warrant routing call center work back onshore.   If the offshore call center is charging $18.00 per hour for each agent, who takes, on average, 20 calls per hour, this only knocks their costs up to $23.00 per agent/hour.  A US domestic call center would likely charge clients $30 per agent/hour (or higher), so the cost differential still doesn't warrant pulling the work back.  Conversely, offshore providers are more nimble with price flexibility and can easily squeeze rates down if this became an issue.  Benefit to US businesses: none, simply higher taxes.  Benefit to US economy:  additional tax income, but less competitive businesses.

2) There are an estimated 31 million business in the US, according to the latest government stats... er... that's quite a lot of administration needed?  Even the smallest of firms often use offshore call center support.  The administrative organization needed to manage and audit this number of businesses to ensure compliance would be massive.  You are talking multiple millions of dollars in investment that would likely struggle to be offset by the resulting tax returns.  Benefit to US economy:  none, simply government money wasted on bureaucracy. 

3) Customers will be informed where their call is being taken, which will create negative overtones for businesses.  This is probably the only "effective" component of this legislation, solely based on the fact it will educate the US masses that offshore workers are more competitive that they are, and run most of the call center work these days.    However, what good will this do beyond stir up anti-offshoring attitudes?  Yes, it may encourage a small proportion of businesses to move their work to US call centers, but if all calls are revealing the location, it will simply become an expected procedure and quickly lose its impact (such as the adverse side-effects warnings after pharmaceutical products commercials).  Benefit to US economy:  none, simply the creation of negative overtones towards companies offshoring. 

4) US call centers are very good and becoming increasingly competitive.  The Recession has only helped US call centers, with a lot more work being moved to centers in locations such as North Dakota, Michigan and Nebraska.  Why not use some of this cash to give the US call centers tax-breaks to be more price-competitive, than penalize the offshore centers?  Heaven forbid, why not support new center development in US locations?  Benefit to US cell centers:  a little more clout and a little more price competitiveness, but likely to be minimal overall.

5) Large enterprises may simply route calls to their offshore captives.  Most mid-to-large US enterprises can simply shift call center work back inhouse and run from their own offshore/nearshore locations.   Benefit to US economy:  none.

6) This legislation also raises the potential of retaliation from other countries, under the recent Uruguay Round of WTO Agreements.  Taxing international calls and not taxing domestic calls is a form of discrimination against foreign call center service providers that violates the basic principle of “national treatment”, with the exception of specific situations, such as national security, the environment, local labor, police, etc. Benefit to US economy:  zero, and potentially negative.

All-in-all this legislation is reactive, not proactive.  The old days of outsourcing backlashes are well and truly over.  It's clear that the way forward is to make the US an attractive location for call center, and other commonly outsourced work-types.  Furthermore, it's clear that the US needs to be an attractive environment where where firms simply want to function, where they can receive government benefits to help then get established, and to hire US-based personnel. 

Other economies all aggressively support businesses to invest in their own locations (just go through the countries - they all do it, and some very effectively).  This legislation does very little to help US call center jobs and will likely cost the tax payer more in implementing the plan than it can ever accrue from the tax.  Government leaders need to be smarter about "protecting jobs", which means actually helping to create work onshore, as opposed to scaremongering / taxing enterprises into forced activities that do not enhance their competitiveness.  For example, the proposed "Entrepreneur's Visa" is a fine idea - it is encouraging top entrepreneurial talent to set up shop in the US and employ US talent, and they will receive  a Green Card.  We need to see more schemes that drive the global entrepreneurial agenda for the US economy, not hold it back.

Posted in: Business Process Outsourcing (BPO)

It can't be... surely not... is that... is that... innovation?

We get some great emailed contributions over here, and "Sumitb" (remaining anonymous for fear of a lynching from the marketing police) has a great perspecitve on some of the realities of today.

While I agree his educated viewpoint represents many of the the realities of today's innovation "issues", I do believe our new data reflects operational leaderships' increasing onus on delivering new and creative ways to find value.  The focus on innovation is starting to shift – and shift quickly.  Anyway, here's Sumitb's viewpoint:

Innovation in BPO is more of a must-have cliché that features prominently in corporate presentations and RFP prefaces rather than as a delivered reality which significantly impacts business performance.

And the reason for this is easy to figure, but hard to fathom:

Read More »

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

Suresh Vaswani, CEO, Wipro Technologies

If anyone had told you a few years ago that Wipro would have a market cap of more than $30bn, you would have made a few discreet calls to their doctor, or perhaps their math teacher. 

But today, the Bangalore-headquartered  firm has firmly shed the tag of That Indian IT firm which makes the vegetable oil, to become a genuine leading global IT services and BPO enterprise, with 105,000 employees.  And Wipro has not only become a tough top tier IT services competitor, but it also firmly holds its own in the BPO industry, with some landmark client wins in finance/accounting, HR and procurement/supply chain services, in recent times.  The firm loves the process work and getting down to the minutia with its clients - just take a few visits to its delivery centers and you will see metrics you never thought existed.

So when we launched our recent series of Sourcing CEO discussions(more to follow folks), Wipro was on the first round of invitations, and we are flattered that Suresh Vaswani dragged himself away from his beloved TelePresence unit to spend a few minutes talking to us about how the firm has come through the tough times, and what are the plans for the future...

Phil Fersht:  Good evening, Suresh, and thanks for your time today.  How did Wipro tackle the recession when it first hit, and what measures were taken to ensure it came through the worst times?

Read More »

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