Monthly Archives: Sep 2013

Fancy yourself as a sourcing Master Black Belt?

September 29, 2013 | Phil Fersht

Ready to govern your operations?

Hold onto your seats everyone, but- at HfS - our ambitious enterprise clients want to achieve much more with their governance capability than simply meeting cost metrics and tactical operational targets.

This why we acquired Selah Group earlier this year to launch a governance training and certification capability that today's sourcing industry is sorely lacking (see press announcement here).  This Governance Proficiency Certification Program (GPCP) is designed to help today's sourcing executives approach service provider relationships and governance strategy with a sophisticated and pragmatic approach that will help them advance their careers, their skills and their experience.

We caught up with HfS' lead, Mike Beals, to discuss the HfS Governance Academy initiative in greater detail...

Phil Fersht, CEO, HfS Research: Good Afternoon, Mike. So you have recently come onboard HfS to take on the HfS Governance Academy. Can you just give us a quick overview on what the academy is and the key objectives?

Mike Beals, Managing Director, Governance and Training, HfS Research: Well, Phil, the Academy is really an attempt to provide more structure around the governance of shared services, outsourcing and global business services environments. And the reason for it is really that most organizations, almost all large organizations, are leveraging one or all three of these different service delivery models. And there really isn’t a program or a curriculum that’s structured to provide the training and the education across the enterprise that most companies need.

Phil: What do you think is unique about the training that we are providing compared to other offerings on the market?

Mike: Well, I think it’s unique in a couple of respects. One of them is that it’s based on very practical experience over more than a decade working with clients. So that’s first. The second is that I think most training that’s available is somewhat ad hoc in nature. You might find a tool here or a template there. And what we have done is put together a very systematic and scalable approach to the training so that the curriculum, as you go from one concept to the next, really builds.  This lets us progress students from the very basic fundamentals of governing and managing these complex relationships to very advanced concepts in a very systematic fashion.

Phil: And you’ve been instrumental in developing some certifications (that we’ve just announced) that people can look at doing. Can you talk a bit about  what they entail, and how applicable are they to our members?

Mike: Well, the first thing we know in governing these complex environments is that not everybody needs to have the same level of proficiency. And so we wanted to have a program that started out with the fundamentals, and was generally applicable to everybody that participated in managing an external service provider, a shared service center or, a global business services environment.  But then we also wanted to have higher level tiers to layer on more complex concepts, tools, and capabilities for more advanced resources.

Ultimately, we patterned our Governance Proficiency Certification Program after the belt levels within Six Sigma. So we have the Yellow Belt that is generally applicable, as I mentioned, to each of those resources involved in outsourcing, shared services, GBS environments.

The Green Belt is applicable to resources that are running small governance organizations or are the functional heads of larger governance organizations. We have the Black Belt that’s intended for resources that are managing multi-provider environments, very complex, or multi-geographic outsourcing relationships. And then we have the Master Black Belt which is an enterprise-level resource that looks at the overall capability of governance across the enterprise and makes sure there aren’t any gaping holes in individual teams. The Master Black Belt training also incorporates pretty sophisticated joint planning and innovation management techniques.

Click for more details on HfS' Governance Proficiency Certification Program

Phil: Typically, is this going to be for individuals or entire functions/groups within organizations?

Mike: Well we really look at this program at two levels. One of them is the enterprise level where we offer capability assessment tools that assess the capability/maturity of a company’s governance

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



Was this the first ever song about outsourcing?

September 25, 2013 | Phil Fersht

You'll want to turn up the volume for this one...

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Posted in: Absolutely Meaningless Comedy



Can Salesforce and Workday’s hook-up genuinely hurt the SAP and Oracle empire?

September 23, 2013 | Phil Fersht

Last week,’s Chairman and CEO Marc Benioff, and Workday’s Chairman, Co-Founder and Co-CEO Aneel Bhusri held a press/analyst conference where they unveiled a unique partnership between the two leading independent SaaS application vendors on the planet.  The partnership involves a commitment to co-engineer an integrated SaaS offering between the two providers, resulting in a “complete, end-to-end, enterprise cloud solution.”  The solution will include “deep integration” which is “what everyone is looking for.”

This is why the three major SaaS upstarts, namely Workday, Netsuite and SFDC, command up to 40 times their annual sales income in valuation; they threaten the status quo of a much, much larger industry scared stiff of being blown out of the water by disruptive technology that isn’t so dependent on armies of integration bodies to keep the software functional across the enterprise.  And if they can genuinely figure out how to knit together multiple clouds within enterprise clients to create broader suites of enterprise SaaS, then these threat levels to the ERP status quo will rise significantly.

However, with a quarter-of-a-trillion dollars a year being plowed into integrating and managing SAP and Oracle, are the SaaS upstarts truly ready to integrate multiple cloud apps at this gargantuan level of  scale to challenge the status quo? Quite frankly, it seems light years away at this juncture and needs many, many more clouds to come together, supported by immense ongoing integration investment,  to truly challenge with worldclass ERP.

Click to Enlarge

Is the gap between the SaaS "Big Three" and SAP and Oracle closing or widening?

Both SAP and Oracle have made a number of SaaS acquisitions; they have updated their database and middleware offerings to be more cloud-friendly, Oracle reengineering its de facto industry standard enterprise database to run in clouds – Oracle Database 12c and it's brand new "In-memory" database  (unveiled yesterday) that threatens to move data automatically between three tiers: disk, flash and dynamic random-access memory.  Both vendors, to varying degrees, have come up with their own SaaS solutions, home engineered. Both vendors have far richer ecosystems and installed bases than and Workday put together. SAP is approaching $1b in trailing four quarters cloud revenue, and once Oracle pushes 12c through its ecosystem and into several clouds, it will quickly ascend towards that benchmark number.

NetSuite, was limited to companies under $300 million revenues for many years, and its financials still reflects this: very weak multi-currency, very weak consolidations, full support for only a few countries, etc. It works well for small-medium firms, but is unproven at the enterprise level.

Workday, by contrast, is primarily designed for precisely those large-scale enterprises that NetSuite has previously avoided penetrating, and is determined to develop a financials system that would work for those companies. However, that is still seemingly many years from fruition, based on current progress. is the industry-standard sales and CRM solution, but has yet to broaden into other core ERP areas namely HR and financials, and appears to be bent on doing this via co-development initiatives, such as this one, as opposed to buying up more SaaS modules to develop the elusive "enterprise cloud suite".

The Bottom-line:  Having best-of-breed SaaS works for some, but it's the integration of the core functions that's the Holy Grail

The single-cloud app jig is up for and Workday.  The singular SaaS app play is a market that has begun its sunset, as the enterprise app suite monsters have not just caught on, but have turned the corner and are hurtling down the path to the cloud.  To their credit, Mr. Benioff and Mr. Bhusri are joining forces now to be able to battle the rising SAP and Oracle funnel clouds over the coming years.  It might not stop with and Workday, who are likely, just as SAP and Oracle have done for on-premise suites down through the years, need to do many, many more acquisitions to round out their portfolio.

Perception isn’t always reality. Having these major "true cloud" vendors form a partnership helps them promote a market perception that differentiates themselves from their on-premise (or pseudo-on-premise) competitors, but the practical benefits appear to be limited in today’s current environment. will likely become the third major ERP proposition over the long-haul. When we look out five years hence there will likely be 3, instead of 2, monster enterprise app providers, SAP, Oracle, and  But as the data plainly shows, the “deep integration” work never ends.  Just ask the likes of Informatica, Accenture, Deloitte and IBM Global Services.

Posted in: Analytics and Big DataCloud ComputingCRM and Marketing



Time to help those poor Americans understand those British niceties...

September 22, 2013 | Phil Fersht

It's nearly 10 years since I ventured back to these shores, and to celebrate, I decided it was time to reveal to the many unsuspecting Americans what we British really mean when you think we're being nice and polite...

Posted in: Absolutely Meaningless ComedySocial NetworkingSourcing Change Management



Prince Charles of Sutherland joins HfS to lead BPO strategy

September 19, 2013 | Phil Fersht

Growing a research firm is all about attracting the best and brightest minds in your industry and making sure they have food, shelter, a twitter account, and a constant supply of rubber chicken and cheap wine.

Charles Sutherland is Senior Vice President, BPO Strategies at HfS (Click for bio)

This is all while having an interested pensive look on their face, whilst nodding occasionally, so people actually think they are listening to them.  It's this philosophy which has propelled HfS to the forefront of thought leadership and the queue to the bar.

When we searched far and wide for a great mind to help bolster our BPO knowledge, we decided to double-down on someone who has lived and breathed every nuance, issue, value proposition, disaster, theory and pipe-dream in the BPO business for sixteen years.

Charles Sutherland will be playing a key role in helping lead many of our strategic BPO assignments across traditional horizontals, such as F&A and Procurement, in addition to driving new coverage in growth areas such as Supply Chain Management and Robotization. So, without further ado, Let's find out more about this intriguing character...

Charles, can you share a little about your background and why you have chosen research and strategy as your career path?

My background is in strategy consulting. The majority of my career to date was with Accenture where for sixteen years I provided strategic support both to external clients especially in the media & entertainment and telecom industries and internally for the Outsourcing and BPO Growth Platform. I chose this career as I really enjoy working with clients to understand their marketplaces, business opportunities and challenges and then shaping implementable plans based on that research which help them to realize their goals and ambitions in new and value creating ways.

Why did you choose to join HfS and why now?

Charles: I chose to join HfS because I think the BPO marketplace is entering a period of radical change in how solutions are designed and delivered which in turn will also greatly change the way that value is created for clients. I wanted to be in a firm where I would have the chance to be a part of all this change, working directly with leading Service Providers and with visionary buy-side clients on their strategies, offerings and needs. I have had a great relationship with HfS over the years and appreciated what you and the team were trying to do to help advance the value of our industry and I think that together we are going to really help bring about that radical change over the next few years.

What are the subject areas and topics that you will focus on in your analyst role?

Well, my role as SVP for BPO Strategy really consists of two parts. The first is leading our custom project initiatives for all our clients and here the topics will vary according to the strategic needs of our varied clients. For the second part, I am going to be our analyst covering Finance & Accounting, Procurement and Supply Chain BPO. For many Service Providers and clients these three process areas are interdependent and overlapping and I think having a view that is individual to each and yet stretches across all of them will be of great value to our clients.

What trends and developments are capturing your attention today?

At the heart of all the trends and development that are capturing my attention today are the roles that analytics, technology and automation have in bringing about the radical change in the BPO business model that I mentioned before. The ways in which these elements are being conceived and implemented across the Services Providers are very different so it’s a great time to be an analyst and an advisor in this market as there is just so much that is new and exciting, to track and understand.

What are you working on first for our clients?

I am just in the process of completing a report on how technology is being deployed by leading F&A BPO Service Providers today and contrasting that to what the common beliefs were ten years ago on how technology might changed that market. I am also wrapping up a follow-on to last year’s HfS report on Robotic Automation “Robotistan” to see how the market for the technology has changed over the last twelve months and what role it may play in the future evolution of horizontal business processes. Both of these initial reports are bringing to live great examples of the types of trends and developments that captivate me and lead me to believe that we are entering this period of change. Now I can’t wait to begin working with our clients on their own custom projects as well with the full breadth of the HfS Research team.

When you’re not drilling into technology enablers and process enhancers, what do you do with your spare time?

Well, with three teenagers in the house, I don’t know how much “spare time” there really is, but I try to get out and golf and go kayaking with them although to be fair finding good water isn’t so easy down here in Texas. Aside from that I am an avid reader and I am dabbling in creating art pieces that have a business theme, something I am calling “cubicleism”.

Cubicleism?  We'll hold you to exhibiting some of this!  Welcome to HfS, Charles.

Charles Sutherland (pictured above) is Senior Vice President for BPO Strategies at HfS - you can view his full bio here, email him here and tweet him here.

Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Cloud Computing



Pankaj ponders, postulates and problem-solves: meet Genpact's analytics guru

September 16, 2013 | Phil Fersht

Data, data everywhere and not enough talent to analyze it? Or talent, talent everywhere and you don't have the tools to get to the data you need?

Well, the answer's simple - either spend millions on a high-end consultancy to govern your data for you, or engage with a service provider to help you create your own analytical environment and culture, where you have the tools and capabilities to become... er... more analytical.

Pankaj Kulshreshtha is Senior VP, Analytics and Research, Genpact (Click for bio)

So how about looking at the journey of one of the leading BPO providers, whose own analytics group has exploded from 10 to 6000 people under the guidance of one particular data maestro:  Pankaj Kulshreshtha, who took time away from his beloved job to talk to us.  I would normally have expected to have said "golf course", or "Porsche", however, Pankaj is one of these chaps who barely has time for his own kids once he's wrenched himself from his first love:  analytics.  So, without further ado, let's hear from one of the BPO industry's most committed data scientists himself...

Phil Fersht (HfS Research): Hi Pankaj, To start with, would you please tell us a bit about your background, and how you ended up in a career driving analytics as a function at Genpact?  Is this something you trained for? How did you end up in this space?

Pankaj Kulshreshtha (Genpact): Phil, having received an engineering degree, I went to a management school to do a Ph.D. in what was formally called “Quantitative Methods & Information Systems”. So, in essence, I do have a formal qualification in Analytics. After the doctorate program, I took the unlikely corporate route to get some real life experience on the applied side. The original plan was to return to academics in future.

Then, with the explosive growth we saw at GE at the time, I had an ongoing opportunity to grow, learn, manage more relationships, manage more people, learn new areas of work, new applications of analytics, etc., and the idea of returning to academics took a back seat. After about seven years of doing that, since the start of Genpact, I actually went to GE Money (now GE Capital) in UK. I did

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Global Business Services



Are you "crowding it" in NYC this week? HfS has some free tickets...

September 15, 2013 | Phil Fersht

Carl Esposti is CEO of Massolution

We got some face time with flamboyant Massolution CEO, Carl Esposti (and founder of the community platform) about next week's first-ever crowdsourcing & crowdfunding conference.

Phil Fersht, CEO HfS Research: Good morning, Carl, we've been keeping tabs on your firm's development over the last few years in the enterprise crowdsourcing and crowdfunding space. Can you give us a quick snapshot of the company and the premise behind it? 

Carl Esposti, Founder and CEO Massolution: Yeah, absolutely Phil. Thanks for the discussion. So growing up in outsourcing, offshoring and shared services, I realized few years ago that a big shift was underway, one that was much greater than the shift off-shoring had on outsourcing. The next stage of the globalization of services was occurring and work was now being distributed more broadly through the development of online communities where you can tap into workers to do a whole bunch of different things. Whereas offshoring just made outsourcing cheaper,

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Posted in: Business Process Outsourcing (BPO) HomepageKnowledge Process Outsourcing & Analytics



Concentrix buys its way into the customer experience management Winner's Circle

September 11, 2013 | Phil Fersht

Concentrix's investors, SYNNEX, were clearly so impressed with IBM's performance to reach the Winner's Circle for customer experience management, they wanted a piece of the action for themselves.

So what does this mean - wasn't IBM such a stalwart call center BPO provider?  And wasn't Concentrix a small player?

In short, IBM is exiting the customer  services call center arena, which began with its purchase of Daksh in 2004.  It will focus on its core business of providing the enabling technology services and tools for customer experience management.  Concentrix increases its footprint massively and becomes one of the significant providers in the customer experience management industry.  The big question, now, is whether Concentix can maintain IBM’s vaunted position in the Winner's Circle for customer experience management services.

IBM has stated that it wishes to focus on its higher-value BPO businesses, namely finance and accounting, supply chain management, procurement, HR, and mortgage services, with specific focus on its analytics and Smarter Workforce initiatives.  During the analyst call, IBM has stated it wants to move more into cloud-based service provision, where it is steadily spending its way through its $20 billion war-chest.

HfS sees Concentrix quickly becoming the new “IBM of contact center services”. This deal represents a significant play for Concentrix, increasing its footprint from 5,000 to 45,000 in one full swoop. Concentrix has strong customer lifecycle management capabilities, and, combined with IBM’s enterprise CEM clients, experienced delivery organization and leadership, strong account management team and technology integration capabilities, Concentrix will be a significant company to watch in all things customer care.

The Bottom-line:  The end of an era for IBM and the dawn of a new one for Concentrix

So many of the leading BPOs started off in the call center business, before evolving their offerings across the back office into HR, finance, supply chain and industry specific areas.  IBM was no exception, making a concerted play with Daksh nine years ago.  But - today - the firm's leadership clearly sees limited value (and profit margin) continuing to grow its footprints in CEM, despite an encouraging series of client wins and high-end customer marketing focus in recent years.  IBM wants to focus elsewhere... especially with its dedication to the cloud.

Our question, simply, is where IBM's focus will be in another couple of years.  Call center alone is completely commodotized, and it's understandable why IBM decided it was time to exit, while retaining its technology enablement opportunities.  Will the same happen eventually with finance or HR?  Will IBM tire of processing paychecks and invoices, like it has done with taking customer service calls?  With significant client investments, such as Cemex (F&A) and Kraft (HR), it doesn’t appear that the firm will do a 180 anytime soon, but with this decision to exit CEM, it does raise doubts as to the company’s long term focus outside of technology services and software.

Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Cloud Computing



Teleperformance, IBM/Concentrix and Convergys make the Winner's Circle for transforming the customer experience

September 09, 2013 | Phil Fersht

With the intense proliferation of customer communications channels, there's a huge strain on CMOs, like never before, to keep up and stay ahead of the competition.

Management of an omni-channel environment that is effective across all customer touch-points is a brutal, but necessary, reality for competitive success in today's business world.  Leveraging service providers which can deliver the customer-centric marketing savvy, the business processes, global scale and technology capabilities to support these secular changes to the customer environment is critical to the success of so many organization's today.

We are proud to reveal our first Blueprint report that has gone deep into the innovation and execution capabilities of today's leading service providers in the customer experience management industry - and many congratulations to Teleperformance, IBM/Concentrix and Convergys for making the inaugural Winner's Circle:

Here are the top 3 factors necessary to create a valuable customer experience in the future:

*Capabilities to Monitor, Understand and Proactively Serve the Expectations of Customers are the Crucial Ingredients. The elements that touch the customer are increasingly originating from the digital realm. Organizations will need to adapt to this change and develop competencies to understand the expectations of customers and align each touch point with brand expectations. This is critical now, and becoming even more so in the future.

*Understanding the Customer is becoming More Complex, but Creates Competitive Opportunities for Ambitious CMOs. Although more channels need to be developed (social and mobile) if an organization utilizes monitoring technology and builds models around the flow of customer data, more complete pictures of the customer will become available that were not previously available. This can enable organizations to align marketing activities better to customers through more specific segmentation, as well as to understand, and proactively address, customer sentiment and customer trends.

*Customer Experience Alignment Across All Customer Channels is Imperative for many Brands. Aligning expectations to an organization’s brand image across all channels is a make or break proposition. For example, many organizations are fighting to align traditional brick-and-mortar stores with online and mobile experiences. There are increasingly more channels to contend with, including SMS usage in emerging economies such as Africa.

Getting customer experience management right will matter to all organizations, especially larger organizations that have sizable product portfolios across multiple geographies. Organizations will need to monitor, understand, and align their brand to the right customers, at the right time. The three service providers that we found best placed currently to service organizations with customer experience management services are Teleperformance, IBM (whose call center assets have been recently acquired by the Concentrix division of Synnex), and Convergys.

The CEM Blueprint utilizes our Blueprint Methodology (click here to read in detail), which measures both execution and innovation against a set of crowdsourced criteria derived from the State of the Outsourcing Survey 2013. We assessed data from over 130 live multi-process CEM BPO engagements to ascertain provider market shares, depth of client base, breath of execution and geographic scope of delivery. We examined the CEM value chain (consulting, product design, marketing and sales, and service and support) and interlaced what we know will be important to CEM buyers in the radically evolving CEM sector with the capabilities and vision of the service providers in our assessment.

Report Author, Adam Luciano, Principal Analyst, HfS Research (Click for bio)

Our analyst team conducted exhaustive interviews with multiple buyers and market advisors to help score providers against each other across all the sub-categories of the Blueprint using ExpertChoice, an advanced statistical analytics platform. We also received a tremendous amount of cooperation from (almost) all of the providers above, as we went through this exhaustive process to understand their concrete plans for the future, get really deep with their current client relationships, their overall vision and their appetite to evolve and invest into higher-value areas of CEM BPO.

HfS subscribers can access their CEM Blueprint report here

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



Welcome to the Lechner lectures: Why partnering strategies matter

September 07, 2013 | Phil Fersht

Rich Lechner is tasked with defining IBM's sourcing strategy (click to access his new research paper)

When you have over $100 billion in software, services and systems revenues and 440,000 staff worldwide, what can be simpler than running sourcing engagements for clients?  Meet the man tasked with formulating a sourcing strategy for the firm:  Rich Lechner, another one of these tech guys who should probably have become an industry analyst after 10 years of writing code, but somehow found himself piecing together the many facets of the world largest computing company to help devise this roadmap.  We were fortunate enough to drag Rich away from his electric powered Tesla to spend a few minutes sharing his experiences with us from over three decades with Big Blue...

Phil Fersht, CEO HfS Research:  Rich, great to have you talk to our readers today.  You’ve been in IBM for over 30 years - did you ever expect to stay at one company for so long.. and how have you winded up doing what you’re doing today?

Rich Lechner, Vice Business & IT Services Marketing, IBM:  First of all thanks for having me. It’s hard to believe it’s been that long. I will say that I feel like I’ve worked in many different parts of the industry but had the luxury of working for one great company. In the sense that I started out as a microprogrammer working on ATM’s and check processing machines and then went into a range of software development, strategy and sales roles for mainframes, OS/2, distributed systems management, Linux and eBusiness. I then moved to the hardware part of our business where I had the privilege of leading sales and marketing for mainframes for several years globally as well as working in our storage business. I then had responsibility for IBM’s broad portfolio of sustainability capabilities including green datacenters, water management, supply chain optimization, smarter traffic or smart buildings. And then finally coming to services. The common theme has been leveraging technology and innovation to address real world challenges and bringing differentiated value to clients.

Phil: In your recent research study "Why Partnering Strategies Matter" (HfS readers can download their copy here), where you surveyed 1350 participants, you talk about sourcing motivations and how they’ve shifted and why sourcing strategies need to shift with them. Can you expand on this some more?

Rich: As a leader in business and IT services, IBM works with many clients around the world and increasingly we were encountering customers who were looking not just to shed cost or to outsource some component of their environment, whether it be infrastructure, process or application, but

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Cloud Computing



Forget business outcomes and innovation for now... most enterprises just want to get beyond adequate first

September 02, 2013 | Phil Fersht

Outcomes, outcomes, analytics, analytics, innovation, innovation... Outcomes, outcomes, analytics, analytics, innovation, innovation... Outcomes, outcomes, analytics, analytics, innovation, innovation...  Hurry while stocks last folks!

Buyers wants to shift from the basics first...

Well, we have some shocking news for you all... these things are only making the "nice to haves" category when it comes to provider selection, as buyers look at more immediate, tangible benefits from providers.

Our seminal State of Outsourcing Study, conducted with the support of KPMG, where we delved into the views and dynamics of 399 enterprises, has revealed that today's wizening outsourcing buyer is looking at industry experience and the provision of talent that can do more than just the basics, when it comes to choosing between their providers:

Click to Enlarge

The answer's simple - most providers are tooled up to deliver what was contracted, not what the client really needs.  Most large outsourcing deals today were (and many still are) initially negotiated and brokered by different teams, on both the provider and buyer sides, than the teams which ended up running the engagements. Too many enterprise outsourcing relationships, today, were (and many still are) brokered to solve yesterday’s challenges - namely, driving out labor costs, mitigating risks, and achieving a basic level of operational performance.

These are now “table-stakes” - or should be - for any serious enterprise buyer or provider. However,

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