Monthly Archives: Jul 2012

It's time for YOUR vote... should we drop the word "outsourcing"?

July 28, 2012 | Phil Fersht

The debate's been raging for years, since we first broached this topic over four years ago, where the common consensus was pretty much "we're stuck with it, so might as well live with it".

However, while the outsourcing industry has (largely) matured, with many new clients focused on achieving value that isn't merely derived via cost-savings from lower cost labor, the political rhetoric has stood still, with the vast populous still associating the "O" word with shipping jobs abroad.

So... it's time for YOU to have your say, whether you buy, sell, advise, analyze or influence IT or business services.

Please spend five minutes of your time adding your own viewpoint on whether or not the industry known as "outsourcing" should reinvent itself:

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



Make sure you don't lose control when you outsource your global business portfolio...

July 28, 2012 | Phil Fersht

Posted in: Absolutely Meaningless Comedy



Happy birthday, Dodd-Frank!

July 21, 2012 | Phil Fersht

Whoever said we weren't stimulating new growth in the professional services industry?

Every few years there comes along a piece of regulation, or enforced change, from which hoards of management consultants, service providers and tech companies can prosper.

The Y2K bug created an unlimited ATM for the whole software and services industry, and the infamous Sarbanes Oxley which created more audit partners than eHarmony. And just as you thought that well was running dry, we now have Dodd-Frank Act, designed to:

"Promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes."

With Michael Koontz, our new lead analyst for banking and financial services, now fully bedded-in, he's found half his time is already being spent talking to clients about how to get ahead of these new regulations.  Let's hear his initial thoughts...

Dodd-Frank turns Two

Please join me in wishing Dodd-Frank “Happy Birthday.”  This is the largest financial reform act in U.S. history, amassing 884 pages when it was finally signed in 2010, designed to enforce the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression.

Dodd-Frank was implemented to address the financial services meltdown, that began back in 2007.  In the political aftermath, Regulators were quick pass this legislation which has now morphed into

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Posted in: About UsBusiness Process Outsourcing (BPO)HfS Surveys: State of Outsourcing 2011



Doctor Disruptive joins HfS to lead Social Business research

July 17, 2012 | Phil Fersht

Jonathan Yarmis (aka "Dr Disruptive") is Vice President, Social Business Research at HfS (Click for Bio)

Social media and collaboration has been the heart of HfS, ever since we began as a wee blog in 2007. And while "social" has provided an obvious catalyst for helping some analysts and industry influencers share their insights and develop their networks with incredible speed and hapless abandon, we are now seeing the beginnings of social business playing a truly disruptive role in influencing the way global organizations are evolving.

Today, managers, employees, provider staff and even consultants can have access to data, insight, infinite networking  and crowdsourcing opportunities that simply didn't exist even a couple of years' ago.  Global business practices are starting to become disrupted in ways that are frightening many firms into retrenching, while others are realizing they have little choice but to embrace the change, otherwise get left behind.

People no longer have to pay thousands of dollars every-time they need help or information these days, especially when dealing with business and IT processes that no longer require some "secret sauce" to become common practice.  "Best-in-class" industry process workflows, which many organizations have historically paid hundreds of thousands of dollars to acquire in the past, can now be accessed and shared, within minutes, by visiting many of these social networks - and some are even facilitated by providers themselves.

Buyers, providers, consultants, lawyers, analysts, investors... all of the industry stakeholders, need to wake up to what is happening in the world, as our skillsets, best practices, trade secrets and the like, are much more easily accessible at a global level. Remember how similarly disruptive delivery models blew up the media, entertainment and PR industries in recent years?  Well, the same is happening to all industries that thrive on collaboration and information - and none more so than global sourcing.

To this end, we are compelled at HfS to focus intensely on social business and its disruptive enablers, such as mobility and cloud, in order to stay ahead of the curve, with how our global operations industry is being impacted.

So who better to onboard, than the services of a man I actually named "Doctor Disruptive" in 2007 (he's probably forgotten I did that), who was lauding the future business impact of mediums such as Twitter, when a colleague of mine at AMR research.  The only difference was - in those days - most of the analyst industry thought Jonathan Yarmis was plain nuts. Well, they were right about the nuts, but not about the fact that he was onto something three years' ahead of his time.

Jonathan is a rare breed; someone who has an encyclopedic knowledge of technology, having been one of the original "Gartner Greats" in the 1990's, before spending time as a lead executive in the hi-tech PR world for Hill and Knowlton, and finally returning to the analyst industry with AMR Research.  Yes, Doctor Disruptive has crafted a trade where he combines an intimate knowledge of technology, media and global business dynamics to bring to you a unique research practice dedicated entirely to covering the impact that social media and disruptive technologies are having on global business dynamics and operations.  Jonathan today resides in Stamford CT, a stone's throw from his old Gartner stomping ground, where is the proud Dad of Sam, who is going into her junior year at at Oxford University, England, and Ben, who's an aerospace and mechanical engineering major going into his senior year at George Washington.

So after the longest-ever introduction to an new analyst hire, I hand you over to the notorious Jonathan Yarmis, who waxes lyrical on...

Disruptive Technologies:  The Sourcerer’s Apprentice

Today’s outsourcing leaders broadly proclaim that the broad deployment of a new generation of disruptive technologies (social, mobile and cloud) offer new vistas and new opportunities for their businesses to add customer value. Their bold assertions of opportunity ignore the fact that these new platforms actually represent a significant challenge to their businesses.  The water is rising and it will take a wizard’s deft hand for them to survive the floodwaters that have been unleashed upon their castles.

Disruptive technologies have been a hallmark of the technology landscape since the advent of the minicomputer and, more profoundly, the personal computer.  (I began my career in technology back in the early PC days of 1979, before IBM entered the market.) However, successive generations of these disruptive technologies have all been constrained by the fact that they lacked enterprise scale

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Posted in: Business Process Outsourcing (BPO)Cloud ComputingGlobal Business Services



Caught in the xeno-bamia crossfire, these are dangerous times for the "outsourcing" industry

July 15, 2012 | Phil Fersht

What's in a word?

The industry known as "outsourcing" is currently under its greatest-ever attack.  President Obama has made attacking Bain Capital's promotion of itself as a "one stop outsourcing shop" as the focal point of his campaign.  And this is a serious attack - he has $512m in campaign money left to burn, and only $25m a month is currently being spent on attack-ads from both parties - the worst is yet to come (from both sides).

Without getting (overly) sucked into the politics, this election is becoming so nasty, so vehement and so contentious, that common sense is taking a backseat to negative politics, as many of the anonymous donors of hundreds of millions of dollars of Super PAC money demand victory at all costs, regardless of the collateral damage along the way.

Worryingly, for the business and IT services industry, we are all now caught in the crossfire.  This is quickly developing into an attack on "outsourcing" that is going mainstream, where many pundits and voters, not familiar with the complexities of global business, are jumping on the bandwagon. As a British subject observing these shenanigans in amazement, I am increasingly wishing this election process could hurry up and be concluded, so this country can finally get back to creating policies, as opposed to this civil war of partisan politics, which is focused almost entirely on negativity, where winning at any cost seems to be the order of the day for both parties.  I sincerely hope the global economy can hold up through November, as we endure this painful - and, quite honestly, rather shameful period in our history.

"Outsourcing" is the symptom of an increasingly competitive global economy, not the cause of America's economic woes

To cut the chase, Obama is appealing to the fear from protectionists and the masses that US jobs are being "shipped overseas" and he will "insource" them back to the US if he is re-elected.  What he is glossing over is the fact that 97% of US organizations today, with over $1 billion in revenue, are already outsourcing some piece of their business or IT operations and - in most cases - some degree of overseas labor is used by the service provider.  What he needs to focus in on is why service providers use overseas labor:  because it is cheaper, and there is a lot more of it available.  Our current survey is exposing this fact in spades, which we will reveal soon.

The President should be bemoaning the fact that US labor costs are far too high and the country is not currently blessed with millions of people in urban or rural concentrations who are prepared to take on lower level white collar jobs at $25-40K per annum.  He should be bemoaning the fact that the US education system isn't producing hordes of graduates qualified in ABAP programming that can compete with the Indian factory model.  He should be bemoaning the fact that the 8% of the US workforce currently  unemployed aren't filling the jobs that are being "shipped overseas".  Our data already shows that most US business would love to move work to onshore locations, and would be prepared to make much less significant cost savings, if it was available.

Organizations outsource because it makes them more competitive and it pleases their shareholders. If Obama truly wants to be the "Insourcing President", then he has to figure out how to make the US labor force competitive with the rest of the world. That is where he should be focusing, as opposed to pandering to the xenophobia of the masses by claiming other countries are stealing their jobs because evil corporate leaders, which he claims Mitt Romney supposedly once was when at Bain, shipped them away in the first place.  "Outsourcing" is a symptom of America's continuously spiraling cost of living and lack of available talent, which is the real cause.

And what really gets my goat is the fact that "outsourcing" is always the whipping boy for corporate greed.  How about the software industry?  Forget shipping some jobs overseas, these guys want to automate  all corporate support activities and eliminate jobs altogether!  Why aren't we seeing Larry Ellison, Jim Hagemann Snabe or Marc Benioff being demonized as job eliminators?  SAP just announced their best ever quarter - how many jobs have been eliminated because of the evil corporations plowing millions into their ERP platforms?  Why don't we just call the software industry the "unnecessary job elimination industry"?

So how should the "outsourcing" industry deal with this?

For years, we've bemoaned - but ultimately ignored - the negative emotions that outsourcing incites, with which customers of outsourcing services really struggle (remember this piece?).  Most of have reluctantly agreed that we could never change the dreaded term, so we might as well be resigned to live with it.

And just when we were finally thinking that most of the mainstream IT and business process work, that uses some degree of offshore support, had become commonplace in today's modern organization, the old "outsourcing is a dirty word" scenario has returned - and returned in spades.  This time, outsourcing is a really dirty word.  Just ask Bloomberg!

We all know Obama is pandering to the xenophobia of the masses to avoid losing votes to Romney.  We all know he's not openly tackling the real causes of the US' economic woes in his campaign... but he is the President.  And when the President is personally appearing on TV every 15 minutes, whipping up more fury about evil outsourcing, the services industry has, I'm afraid, now got an image problem that is worse than we've ever had.

We've made our feelings pretty clear, at HfS, that it's time to evolve how we approach and promote global services.  Yes, it makes great conversation, but now the Pres is forcing the industry into a corner. We have to match the misperception of how the business and IT services industry operates with reality of what we really do - it's clear these prejudices are not fading with time, the flames are always there to be fanned when it suits the purposes of protectionists and politicians.  Stay tuned, we'll give you the opportunity to cast your vote soon about what we should do with "outsourcing" terminology, but in the meantime, I'd love you to share your feelings with us,


Posted in: Business Process Outsourcing (BPO)Confusing Outsourcing InformationHR Strategy



What would convince you to "outsource" to the United States of America?

July 12, 2012 | Phil Fersht

We are inviting you to share your views and experiences, in the strictest confidence, on the pros and cons of outsourcing IT and business processes TO the United States of America, compared with other global regions:

Essentially, we need your deep opinion on:

  • Is the USA a viable outsourcing location?
  • How successful have your company's efforts been?
  • And if you haven't tried the US yet, then why not?

It's more important than ever to gather the candid views of business executives like yourself to understand how the USA can be more competitive as a global location for accessing talent and improving business operations.

As a thank you for your time, we will share an executive report of the study findings and give you the option of entering you into the prize draw for an iPad3.

Please click here to start the survey which'll take 15 minutes to complete

Your candid views and experiences are always so important in supporting the research we conduct at HfS, so please spend a few minutes with us on such a hot topic.

We are also grateful to our friends at the Sourcing Interests Group for supporting the study.

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesSourcing Locations



Now for something completely different... Outsourcing Provider Merit Badges

July 10, 2012 | Phil Fersht

However you like to wile away those sultry summer hours, we can be pretty sure it's not dreaming up merit badges for outsourcers.  Maybe it's time to introduce our notorious Deborah Kops to the local bridge club, or growing vegetables or something...."Lord, no!" I hear you cry.  In that case, take it away DK...

Outsourcing Provider Merit Badges

Given the demographics of the industry, it’s probably as stretch to think that many of us know that this year marks the 100th anniversary of the founding of the Girl Scouts. As someone who was a Girl Scout until she was 18 (because co-ed canoe trips were relatively unsupervised—I was not good at knots), and still has her badge sash, I think it’s only appropriate that outsourcing providers have their very own merit badges, too.

Let’s cut the hype about training and certifications—the reality of the outsourcing industry is that you’re not truly a member of the club until you’ve earned sufficient stripes to join the pantheon of those who are battered, bruised, tested and tried—and inextricably dedicated to making outsourcing the model of choice for global—and not-so-global--enterprises everywhere for functions big and small; core or non-core; rules-based and complex;  offshore, nearshore, and even onshore;  automated or leveraging labor arbitrage, regardless of domain.

So, providers of the world, examine your experience to see if you’ve earned Deborah’s top 10 merit badges. And if you can suggest some that I’ve missed, I’ll ask my personal badge maker to

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



It’s a miracle we're yet to see any BPO/ITO security disasters

July 04, 2012 | Phil Fersht

Name the one person who's never present in an outsourcing business case evaluation, provider down-selection or contract terms meeting, but has a real vested interested in the discussion?  And no, it's not your shrink.

Having the Chief Security Officer (CSO) show-up during your outsourcing meetings is akin to your inviting a cardiac specialist to a no-holds-barred steak dinner with all the trimmings.  The CSO is the ultimate party-pooper, the much-derided control-freak who cares little for business outcomes, only the potential disasters that may arise along the way.  Why bring them along to put a spanner in the works (unless that's your agenda....)?

HfS Research Director, Jim Slaby, never shy to call out the inanities of today's quirky corporate cultures, has been working under cover to find out how the CSO party-poopers were being engaged in the whole outsourcing experience....

Managing Security and Risk in BPO Engagements

The most overlooked, swept-aside and brushed-under-the-carpet issue in outsourcing is the lame effort most buyers make to manage their exposure to security risk in outsourcing engagements. As a self-styled security nerd, I’m frequently horrified by the lip service that many outsourcing buyers and providers give to security. Bring up the “S” word with buyers and their eyes glaze over; ask providers for a briefing on the security capabilities of their outsourcing offerings and they run a mile. Why is this topic so eagerly avoided in today’s global business environment? In an increasingly regulated world full of increasingly sophisticated security threats, aren’t buyers and providers alike courting disaster here?

If you work in the enterprise security space long enough, you come to understand Scott Adams’s Dilbert parody of an evil, sadistic Chief Security Officer (CSO), a pointy-eared fellow called Mordac, the Preventer of Information Services. Mordac embodies the stereotype of intrusive, overly arcane IT security regimes, the kind that seem designed to hinder useful business processes and add layers of complexity to simple tasks, to say nothing of inflating costs and frankly boring you to death.

For instance, why exactly does your password need to be at least eight characters and include a mix

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



Never fear, HR is here...

July 03, 2012 | Phil Fersht


Posted in: Absolutely Meaningless ComedyHR StrategySourcing Change Management