Pressure from buyers to create more accurate terminology for what we commonly, but incorrectly, term as “outsourcing” for IT and business processes has spurred dictionary publisher, Merriam-Webster, to remove the term from their next edition.
Instead, when firms purchase services from technology or business services providers, these engagements will be termed as “expertise augmentation” services. The heritage dictionary publisher, which has provided language information since 1806, finally made the decision to remove the term, based on the latest survey conducted by HfS Research, where three-quarters of buyers emphatically declared their wish to drop the term:
HfS Research has been agitating to ditch the term since 2008, with our now-famous post “Is it time to dump the term ‘outsourcing?’” which first caught the dictionary giant’s attention. However, it was our recent piece accusing the whole outsourcing industry of being a “sham” which finally forced the issue.
“When HfS first raised the issue back in 2008, we didn’t feel it was the right time, but that last piece, coupled with their latest study, finally forced the issue”, commented Ashley Webster, President and CEO for Merriam-Webster online. “The HfS team has been really helpful advising on these terminology changes with their research and insight into what people want to do with that awful word.”
And the exciting news is that we can give you a sneak-preview of the following changes, to be published for common use in the English-speaking business world:
As you can see, the term “augmentation” has been widely adopted for most of the major business functions that have endured “outsourcing” in the past, with the exception of HR. “When we looked at the data, we found that most companies didn’t want to augment HR, they just wanted to get rid of it”, added Webster. “So we felt it more appropriate to stay with the term “HRO”.
Ashley Webster is President and CEO, Merriam-Webster
We felt this move may be a bit of a political hot-potato, so we managed to catch some time with Republican presidential nominee-hopeful Rick Santorum, while we was canvassing voters in Yankton County, South Dakota. “This is simply Obama painting over the cracks of his failed presidency as our jobs continue to flood out of our country. Removing ‘outsourcing’ from the dictionary is not going to solve the problem; removing Obama will. When I am President, I will make sure these outsourced jobs come back home and the only outsourcing we do will be the current residents of the White House.”
Conversely, Democratic senator, Charles Schumer, whose political brilliance has been frequently lauded on HfS, welcomes the move. “Removing outsourcing from the dictionary is proof that all my proposed policies have worked. Now outsourcing ceases to exist, I can go back to campaigning for the 35-hour working week.”
Just remember folks… you heard it here first!
Oh, and by the way….
Please tell us you didn't fall for it again?
And while we’re reminiscing about falling for April Fools’ gags, here is 2011’s classic:
So we managed to whip up a tidal wave of emotion and opinion when we made the call that the “outsourcing industry”, in its current state is, quite frankly, a sham. When over 30,000 people read something, there’s a reason why… so let’s drill down into what this all means.
Outsourcing has an image problem, not a delivery problem. The intent of the blog was to deplore the shoddy image of outsourcing in today’s economy and the discuss the lousy job the industry – as a whole – has done in defining itself. It wasn’t to slam the premise behind outsourcing, or the performance of engagements: the “industry” produces wads of cash and healthy margins while saving buyers lots and lots of money (our own research emphatically supports this fact).
Buyers and providers are desperate to alter the perception of “outsourcing”, it’s the intermediary businesses profiting from vendor marketing dollars which are afraid of change. I have never had so many “Thank God you called it” emails from buyers and providers this week. The only people we have upset are some of the events firms and advisors/analysts who take money from service provider marketing people, as this paints their whole modus operandi in a bad light. I even got some hate mail from a couple of entities, whose entire businesses survive on extracting marketing dollars from services providers, because they claim they would lose their identity if we stopped lauding the “outsourcing” vernacular. They are worried that if outsourcing gets submerged into the business “mainstream”, service providers will park their marketing dollars with entities who are marketing/promoting/analyzing real business services and not only “outsourcing”. While many intermediaries constantly complain that buyers wary of outsourcing are afraid of change, why don’t they practice what they preach and change their own philosophy – and then their clients will follow?
Buyer networks need to be focused on the business end-game of outsourcing, not the “act” itself. “Outsourcing” as we call it today, really is a component of a business function, not the business function itself. It is a means to an end, not the end itself. It’s not dissimilar from the Cloud computing concept, except it’s about externalizing services, not IT infrastructure. Regardless of business function, Cloud has relevance as an enabler to achieve better things – and it’s the same for “outsourcing”. I would prefer to see us creating broader communities around business objectives and have process-externalization and expertise augmentation as a key part of each discussion. For example, you can’t go to a conference focused on creating better global finance operations, without discussing shared services and offshoring / BPO. However, the core focus of that network is about achieving more productive, relevant and global finance, where senior people can have rational and objective-led discussions on global operating models that can take better advantage of global talent and technology.
“Outsourcing” common interests should be segmented into two “industries”: 1) Labor Arbitrage and 2) Business Services:
1) The Labor Arbitrage Industry. Let’s face some home-truths here – much of “outsourcing” as it exists today really is labor arbitrage for most of the lower value work in IT, F&A, Procurement, CRM etc. The common thread among buyers is more how to manage LABOR ARBRITRAGE effectively, than anything else. So why doesn’t that industry simply call itself the “labor arbitrage industry” and focus itself on how to improve processes once part (or all) of them have been moved offshore – essentially, “we’ve done our lift and shift, now let’s see how we can make it better, as opposed to running the same cr*p for less”. For some buyers today, all they really care about (sadly) is labor arbitrage and making a few adjustments here and there to make the experience more bearable for themselves. Hence, if achieving little more than operational efficiency and low-cost delivery is all they care really about, then let’s have them flourish in their very own industry focused on this very practice. A spade is a spade, so let’s stop bullsh*tting around the bush here.
2) The Business Services Industry. Conversely, when we get into the new generation of expertise augmentation engagements, the focus is on a broader range of processes where – in many cases – labor arbitrage isn’t really possible. For example, with pharmacovigilance, the chances are that “buyers” need added help with compliance and quality measures that they simply do not have, and there really aren’t any staff that can be laid off to offset the cost of the incremental services. Moreover, with even more commonly-used horizontal processes such as procurement and HR, most “buyers” don’t have excess fat to burn – they have already trimmed their inhouse teams to the bone (i.e. many firms have one HR rep to as many as 200 staff). They need new services and help, not a replacement of inhouse labor. So… for those of us who care about achieving new value and new productivity and feel we have a pretty strong handle on labor arbitrage these days, let’s focus on Business Services and the process acumen, domain expertise, technology and global delivery required to make this all happen.
The key is to bring the global services discussion to the real business table, and not create some oddball assortment of offshoring experts who are alienating themselves by creating their own little siloed network.The more the “outsourcing” industry (as we have been calling it) remains in its silo, the harder it’s ever going to be to have the global business model discussion with the real business function leaders. We have to move the needle on this issue, or we’re going to become part of a dying breed. However, we need to start setting the new agenda on how business function leaders approach expertise augmentation. They’re the people we have to be talking to. Join us in our cause!
Too many people scan headlines and don’t absorb the real facts – you know who you are. Yes, we sensationalized the headline to get the eyeballs this critical issue warrants. However, if you actually read the bloody piece, you’d realize we were not debating the pros and cons of outsourcing itself, we were highlighting what the industry needs to do to become more relevant to the real business decision makers (i.e. less wedding-dress and more marriage).
When God created “outsourcing”, she/he/it clearly had a sense of humor. I mean, how do you encourage people who offloaded a chunk of their low-end processes offshore to get together and form an “industry”?
Sure, you can pull together those providers and consultants who’ve made a fortune orchestrating the “offloading” to get together and feel good about what they do (or at least convince themselves they should feel good about it) but the reality is, outsourcing “networks” are strange concoctions of individuals striving to feel part of a “community” that doesn’t really exist.
Let’s cut to the chase here – “outsourcing”, for most buyers, is like purchasing a wedding dress – a one-time transaction followed by seven years of relationship struggles and future legal wrangles. I mean, when was the last time the missus went to a wedding dress convention?
In this context, how can you encourage buyers to get together to spend days-on-end reliving that one-time purchasing experience with the fervor of a civil war battle re-enactment? Do service providers really think they are going to meet hordes of “outsourcing buyers” in wedding-dress selection mode when they splurge forty grand sponsoring the room keys at some event? Of course they don’t – they just like the fantasy that if they flash their brand everywhere, something positive will happen.
What’s broken here is the fact that “outsourcing” is broken terminology and isn’t a real industry. Most of tomorrow’s deals are not going to involve major staff transitions from buyer to provider as part of the deal – today those engagements are on the wane as most of the bloated buyers have been progressively trimming their fat in recent years. Moreover, most of the providers today have the capacity they need to service their clients and will only entertain major “lifts and shifts” of employees if these deals are strategic to their growth ambitions, and involve the transition of both domain expertise and technology assets.
If your firm decides to select a new marketing agency, you don’t automatically declare “we outsourced marketing”. Instead, you make the point that your firm is augmenting its expertise in marketing. Noone alludes to the fact that your firm may have discretely offloaded a few marketing staff in the process, as they weren’t relevant with many of today’s marketing demands, such as advanced analytics and social business strategy.
Exactly the same applies with processes such as procurement, finance, claims management, software development etc. Most firms rarely transition out more than a quarter of their functions in an outsourcing engagement, they are simply increasing their focus on being relevant with today’s needs.
At HfS, we are proud to boast a vast array of networks which actually total 130,000 individuals – but you can hardly classify the commonality across these people as “outsourcing” – that is just one component of many, which constitutes the orchestration of global operations. We have broad groups of shared services specialists, outsourcing governance pros, finance and procurement executives, business analysts, customer services managers, IT leaders, systems architects and functional heads etc. We have clusters of Big-5 consultants who focus on anything from outsourcing to tax advice and service providers who’d do anything to remove the term “outsourcing” from the Oxford English and Webster dictionaries.
The Bottom-line: Are you an outsourcing pro, or a global business pro?
So isn’t it high-time we stopped convincing ourselves there really is an outsourcing industry? If you base your entire career living in a perpetual outsourcing transaction-cycle involving hordes of staff transfers and staff re-badging, then, fair enough – YOU REALLY ARE AN OUTSOURCING PROFESSIONAL. However, if you want to focus your career on improving processes, finding new and creative ways to improve companies’ productivity and growth, and leverage today’s availability of global talent into the bargain, aren’t you probably what we are calling a GLOBAL BUSINESS SERVICES PRO?
This week’s webinar included the ‘A’ Team of experienced, handsome and fun-loving outsourcing attorneys. In fact, these guys are so handsome, we chose an audio format to have the ladies focus on their brains, and not their brawn. Oh dear…how low are we stooping for a cheap laugh these days?
Anyway, a special thanks to Esteban Herrera (HfS), Akiba Stern (Loeb & Loeb), Jeff Harvey (Hunton & Williams) and Jeff Andrews (Thompson & Knight) for one helluva lively discussion in the state of today’s outsourcing contracts.
Missed out on the legal ear-candy? Click below for the re-play.
And if you want to enjoy a fully interactive experience of having the slide deck to accompany their dulcet tones, click here.
Nothing makes HfS’ own Esteban Herrera happier than helping save our clients obscene amounts of moolah when it comes to negotiating a service contract, especially when all that was needed was a prod in the right direction, and a couple of days of smart discussions…
Don't hang your advisor just yet…
I’ve been reflecting on the last three outsourcing contracts where we were asked to coach the clients (a partial answer for those of you who keep asking: how does HfS Research make money?)
As the resident complainer about stagnation and lack of creativity in our industry, I am immediately encouraged, but at the same time also dismayed, by what I’ve recently witnessed. Encouraged because I see clearly where we add value and I’ve been around long enough to see some things change for the better, dismayed because I see so many things still staying the same.
Without further ado, here is the good, bad, and ugly of recent deals where we’ve coached clients, with some critical names and dates obscured to protect the, er… guilty.
The Good
We have job security. The average savings on TCV for the last three deals we helped negotiate was 29%, as measured by total price of the winning bid on day 1 of negotiations and total price of the same bid upon completion of negotiations. This doesn’t even take into account improvement in positions like SLA risk pools and service credits, limitation of liability, indemnification, key personnel commitments, and the other myriad terms that matter to providers and buyers alike. All kidding aside, this shows that a competent advisor armed with data and a sound negotiating approach can still make a huge impact on an outsourcing deal. As a buyer, if your deal size is $50 million on November 15th and $35 million one week later, the money you probably paid the advisor who worked that deal will seem like peanuts.
Even better, each of these deals has been negotiated in about a week, meaning we’ve saved clients money (attorney and consulting fees) while we save them even more money (provider fees). And even the providers are not that upset with us because at the end of the day they close their deal much quicker and save oodles of time and costs on protracted discussions, allowing their deal teams to focus on winning other business. Of course, this speed is predicated on following a certain process that we’ve used over years and years, but if an advisor tells you its going to take a ten weeks or more to negotiate your deal (as many still do), please, please call us!
At the end of the day, our clients are happy because they saved money, but just as importantly, all the finalist providers feel we treated them fairly and gave them every opportunity to put their best foot forward and win. In an industry where win-win is always talked about and rarely achieved, I get to go home with the knowledge that my company did right by everybody.
The Bad
Reflecting on this last batch of deals, I still see lots of room for improvement. To begin with, why the $%^& do some providers still lob in bids that are 30% higher than what they will ultimately take to do the work? Do they still naively hope clients are that dumb? Why do we spend so much time negotiating benchmarking when less than a quarter of the deals in the industry ever get benchmarked, and more importantly, when zero-termination fees has become the norm? Why is the contract still thousands of pages when the paper from one deal to the next resembles each other so much? And why are providers still insisting on shirking data privacy and protection accountability?
Buyers aren’t immune to irrational behavior—like double dipping on transaction-based pricing (where they pay only for successful transactions) and still expect SLA credits for failed transactions, or requesting levels of insurance that would have saved Enron. Or requesting exuberant and unnecessary SLAs. The industry could have fairly standard paper (in fact, it already does) if buyers did not insist on bespoke clauses and contracts for things that are at this point de facto standards.
Inevitably, someone will get emotional. While this makes for great happy hour conversations it’s a clear indication that an opportunity to take a valuable break was missed. Emotion always, always compromises leverage, so it’s not even a good business move—some people think that getting angry is intimidating to the other party. It is the job of the advisor (or a designated even-keeled colleague) to diffuse the situation with humor, mediation, and/or a break in the action.
The Ugly
While “the bad” is passable and even to be expected, the ugly is a case-by-case example of incompetence. In the last few deals, I’ve seen the following:
Provider’s lawyer refused to get on a plane to meet with the client and their attorneys, insisting on a conference call instead. When client insisted that he attend, provider answered that their attorneys “never” travel to negotiation sites. The advisor had sat in another client’s boardroom with that very same attorney eight weeks earlier.
Provider insists that their delegation (an entire two people) is fully empowered to make all decisions, but negotiations drag on twice as long as with the other provider because almost every position has be “run up the flagpole”
The lead provider executive had never met the client executive. He doomed his chances by addressing the (male) CIO the whole time when the decision-maker was clearly the (female) head of infrastructure
Provider: “We cannot accept that position as a matter of corporate policy—we just don’t do that”
Advisor: “How long has that policy been in place?”
Provider: (possibly remembering another deal with the same advisor in which the position had been accepted) “Um, well, I don’t know—our policies fluctuate from deal to deal”
Provider attempts to “educate” client and advisor on the IT outsourcing business when both have been in it for longer than he has. Even if he’s right, it’s an arrogant, offensive position
Again, clients aren’t immune from negotiating mistakes:
After a tough two hour discussion in which the attorney and advisor secured an important concession, the client sympathetically gives it back.
Client invites a provider to the negotiating table that has no chance of winning but doesn’t tell anybody that until negotiations are over. Or a similar one which hasn’t happened recently but happens all too often—after a grueling selection process the client executive’s boss overturns the decision to favor a fraternity brother/relative/neighbor/golfing buddy.
Decision-maker pops in and out of room forcing the team to rehash and occasionally re-open closed (often hard-fought) positions
These are just some of the more recent “WTF” moments in over a decade of advising clients on outsourcing deals. There are many more, and some I won’t tell until we’ve had a couple of drinks. The good news is that there is still value in my profession for buyers and providers. The bad news is that a lot of advisors out there are taking advantage of both.
The Bottom-line: It’s time to speed up deals and build some mutual trust into the experience
"Go ahead… just one more bid 30% over the street price… make my day"
Outsourcing deals are still complex beasts, and savvy buyers can clients can capture tons of value by engaging experienced advisors and attorneys, but that advice need not have a six or seven figure price tag. Providers still make far too many mistakes at the negotiating table—things that cause their prospects to lose trust, which is the single most important buying criterion to begin with. There’s a lot to be done to simplify deals, but even if we don’t get there, as an industry, quickly, there are key behaviors and positions on either side of the transaction that can speed up the deal while building trust and creating a more strategic relationship.
Esteban Herrera (pictured here) is COO for HfS Research and leads the firm’s buy-side deal coaching. You can hear him this coming Thursday at 11.00am ET at our Outsourcing Super Lawyer Web-Summit (click here for more details).
As our research has emphatically revealed, peer networking is the preferred medium of choice for today’s outsourcing decision makers. So when executives are putting considerable time, cost and effort into spending multiple days at these gatherings, they hope to get some serious value out of the networking and education.
So who better to send to the International Association of Outsourcing Professionals (IAOP) annual summit in Orlando than HfS’ research head, Tony Filippone, who has attended this event for several years running in his previous role heading up BPO for healthcare payor giant WellPoint. Here’s his report on the proceedings…
Lack of Thought Leadership Leads to a Rerun Performance
After attending the 2011 and 2012 World Summits hosted by the International Association of Outsourcing Professionals (IAOP), we were left with a feeling that event organizers were ignoring the opportunity to assemble top-notch thought leadership to drive community discussion. While keynotes were remarkably better than 2011, the educational sessions seemed similar to discussions had at every other event and last year’s 2011 World Summit. Presenters share a background on their company, their journey to success, challenges overcome, and lessons learned. Service providers stand beside their clients as their clients endorse the service provider’s services. Panelists who are CEOs for different service providers argue for the viability of regions, niche categories of services, and the need for better contract terms.
Time to change that channel?
The formula for events has become rote. Lectures and panel discussions are the dominant format, which drives little communication among attendees. Sessions rarely focus on the need for our industry to change and instead focus on repeating what has already happened or promoting sponsor interests. In lieu of tools and templates, presenters provide business cards and collateral. There is an exhibition hall full of booths staffed by marketing leaders handing out tchotchkes. Sales people meet between sessions to assemble lists of leads.
IAOP events, in particular, create the impression that the event is formulaic. Awards are given to individuals and companies. Many of the same people moderate or lead IAOP sessions each year. New lists of top service providers and advisors are announced. In fact, for the second year in a row, these “top” lists exclude the likes of industry leaders Cognizant, IBM and Xerox.
It leaves us wondering whether the IAOP really intends to be a voice of the industry, or just another event company bent on rehashing the same themes. With a hefty $1,900 dollar price tag for the 2013 World Summit, we asked ourselves, “If I attended the 2012 IAOP World Summit, would I learn anything new in 2013?”
Billed as “The Largest of its Kind”
Over 780 “delegates” attended the IAOP 2012 World Summit held in Orlando, Florida. Roughly one third of delegates were customers or buyers, one third of delegates were service providers, and the last third were a mix of advisors, regional governmental representatives, academics, and press. The event spanned roughly two and half days, which were divided into the following types of content.
» Main session presentations where keynote presentations were given to all delegates. These made up roughly eight hours of the World Summit. Three of those hours were held at the same time as other content.
» Seven “educational” tracks where companies presented theory and experiences. These tracks focused on customer experience, outsourcing tools, “management science”, transition and governance, the “human side” of outsourcing, globalization, and the future of outsourcing. There were six 50-minute presentations in each track, which totaled nearly six hours of content.
» Networking events where customers were sometimes separated from service providers and advisors. Besides structured “speed dating” networking where participants moved from table to table discussing different topics (about two hours), there were evening mixers sponsored by service providers who gave away prizes to participants.
» Practicums were held on the morning of the last day where buyers and service providers were separated. Three hours of presentations were given to each group. Buyers heard ITSqc promote its CMI-like capability maturity model and presentations from P&G and McGraw-Hill on metrics. Service providers heard the findings from Duke’s 2011 outsourcing study, ITSqc’s promotion of its capability maturity model, and a sales effectiveness presentation from Pretium Partners.
In addition, several service providers sponsored dinners or drinks in the evenings. There was also a large hall filled with service providers’ marketing booths.
The IAOP also rolled-out the “Summit Hub”, an online portal for attendees to read detailed session descriptions, plan their schedule, and proactively network with other attendees. In fact, the IAOP allowed all participants to update personal profiles and “request” meetings with other participants online.
Benefits of Attending an IAOP World Summit
For the most part, IAOP puts on well-organized events with high attendance of a broad cross-section of industry stakeholders. Expect crowds full of buyers, sales people, and industry influencers. If you are a newcomer to outsourcing, a World Summit is an ideal event because it hosts sessions on nearly every conceivable topic, from contract metrics to outsourcing in China and from contracting for cloud technology to health care services. World Summits are a smorgasbord of outsourcing discussion. You’ll have an opportunity to listen to topics on subjects you may have never otherwise have considered. However, discussion is rarely more than a high-level summary. You’ll need to follow-up with presenters after the event to get the detailed information you need to execute.
Because of the breadth of discussion, there are great networking opportunities. You’ll meet a large number of new people if you introduce yourself to your neighbors in each session, during meals, and take advantage of the structured networking activities. Most attendees find this the biggest benefit of the event. Yet, the busy schedule and predominately lecture-style formats of sessions limit your ability to interact with attendees. See our suggestions below for advice on how to improve your networking activities.
The awards given at the World Summit communicates clearly that the industry is a community and that some industry participants are great examples of outsourcing relationships and skills. To those who are new or have suboptimal relationships, the awards can serve as an aspiration. To those with experience, the awards can remind them that they haven’t yet achieved all that they could. To those who win, awards are a wonderful recognition of hard work and industry contribution. More importantly, the community that assembles is full of people who achieved the same results, but cannot seek out recognition because their organizations do not want public recognition of their outsourcing prowness.
No Event is Perfect – How the IAOP and Sponsors Could Improve the Event
The problem with events as an information source is that event companies don’t vet the content that is presented for quality. Despite “calls for paper” requests and committees that are supposed to vet the proposed content, speakers are selected based on marketing spend instead of quality of content. As shown in Exhibit 1, those influential buyers with significant influence over outsourcing decisions know the game and they find event content far less compelling than other sources.
Exhibit 1: Where Buyers Get Their Information
This is the gist of the main criticism of the IAOP World Summit: The World Summit focuses too much on marketing and connecting sales people with buyers, and less on creating meaningful forward-looking momentum for the industry. World Summits are trade shows, not thought leadership venues. And they lack enough networking opportunities to build strong communities.
In this vein of thinking, here are several key ways the IAOP World Summit could be improved:
» Break with the old, bring in the new. Don’t rehash the same discussions with the same presenters and moderators in 2013. Require speakers to up the ante and bring fresh content. Vet the content for quality so that panel discussions and sessions presenters don’t come-off as marketing shills. Encourage sessions that drive participants to interact, so they come away with new ideas and better relationships.
» Use a venue of the right size or limit attendee numbers. The organizers of the World Summit chose rooms that were too small on several occasions with major negative consequences. For example, the Tuesday lunch had insufficient seating capacity forcing people who paid $1,000 or more to attend the event to go to the cafeteria to eat and miss the keynote given at the same time. The breakout session rooms were almost always too small (or we attended the most popular discussions!). At times there wasn’t even room to stand in the back. Organizers need to do a better job of picking the right size venues or allowing people to pre-register for breakout sessions.
» Shameless freebie giveaways devalue the perception of the event. At a number of sponsored sessions, service providers heavily promoted giveaways of wine, Kindles, portable projectors, and other gifts. While swag is great, its gives off an appearance of street hawkers trying to promote their services, not contribute to the industry’s knowledge. Organizations don’t select service providers or advisors based on the quality or quantity of wine they handout.
» Let people network and stop threatening them when they do. During the Wednesday lunch and afternoon networking session, one speaker took to the microphone and ordered the entire audience to stop talking amongst themselves and instead listen to the droll introduction of chapters (he should have considered the poor quality of content, which was why the crowd ignored him). On at least three occasions, the same speaker threatened to embarrass people who weren’t silently listening to the hard to hear discussion. The speaker, a CEO of an advisory firm, accomplished only one thing: lessening the likelihood of people hiring him. The event organizers could have done a better job allowing time for people to network on their own or providing compelling content.
» Increase the quality of content. Buyers sharing experiences and best practices gave only one third of the presentations. This is always the top area of interest to buyers, and more space in the agenda should be allocated to this. However, improving the quantity of high interest is not enough. Event organizers need to improve the quality of breakout session presentations. Some sessions were outstanding, but some sessions were lead by presenters who were not as well prepared and whose slides were too high level to address the level of interest and insight participants seek. Kudos should go to Accenture who used a graphics artist that drew pictures as presenters spoke. It was a fun way of keeping the audience’s attention and stood out among the throng of text heavy PowerPoint presentations that dominated the event.
» Increase interaction among attendees. While the Summit Hub was an interesting social media experiment, it wasn’t actively used during the event. Evening mixers were sparsely attended. Presentations were generally given in lecture format. More can be done to generate interaction and create new relationships among attendees.
» Consider smaller focused events because big events lose focus. Just as buffet-style restaurants lose quality by trying to be everything to everyone, a World Summit can seem overwhelming in the sheer diversity of discussions. Most buyers and service providers have great interest in niches of services and there will undoubtedly be a session or two that meets attendee’s interest. However, the lack of event focus limits the number of sessions that will appeal to attendees. Smaller, themed events can improve the focus and allow attendees of similar interests to network better.
Six Ways to Get the Most Out of Your Attendance
Given the variety of topics and the sheer quantity of presentations, most of which occur concurrently, participants at an IAOP World Summit need a strategy to get the most out of the event. Here are five strategies you can use to improve your experience:
» Network in advance. The problem with an event like this is that everyone you’d likely want to meet is busy scheduling time with people with whom they’d like to talk. Given the sheer size of the event, participants find it hard to serendipitously run into individuals they want to speak with. IAOP’s Summit Hub makes it even harder to find these people because participants felt inundated with requests from individuals they had never heard of – especially individuals who gave their marketing teams access and used the Summit Hub as a lead generation tool. If you want to talk to someone of interest, reach out to presenters and participants in advance of the summit and ask to speak with them. Use the Summit Hub, but also reach out to them using LinkedIn or through colleagues. A particular challenge will be to find time to meet given the busy event schedule. You simply wont have a lot of available time for a meaningful conversation. So, use your meal times as opportunities to meet and greet, as well as offer to meet at mixers or other organized social events.
» Give yourself time for unexpected connections. You will meet a variety of people you hadn’t anticipated to meet. Don’t book yourself solid with event presentations and offline networking discussions. Leave yourself time to meet people and start or continue new conversations. Don’t be shy about meeting people – everyone is there to meet others. Most importantly, don’t spend the time you have with others telling them about you. Instead, ask questions and build a relationship that will allow for a follow-up discussion after the event ends.
» Avoid repeat presentations and veiled sales pitches. If you have previously attended a World Summit, skip the sessions given by the same presenters. There were several presenters who repeated highly similar content presented at the 2011 World Summit. A few sessions were nothing more than thinly veiled sales presentations focused on a portion of a service providers’ capabilities. These discussions do not provide meaningful content that you’ll easily be able to take back to your company. You’re better off to call these companies directly and schedule time to meet with them outside of the conference. Buyers and researchers lead the best presentations, as they generate discussion full of useful information.
» Select panel discussions carefully. One of the great things about the World Summit are panel discussions where three or more experts are supposed to be selected to discuss a particular topic. It theoretically offers an excellent opportunity to hear multiple perspectives on the same topic. However, panel discussions are notoriously poorly prepared and low on content. Panelists usually meet once beforehand to review questions and “coordinate” responses. Attendees hear little more than opinionated soundbytes with little tangible content. Attending a panel discussion should be left for newcomers to the content where the variety of small sound bytes provide introductory content. More interestingly, fellow attendees often have greater expertise than the panelists and are a great source of the same information. So, arrive early and introduce yourself to your neighbors. Alternatively, bring a perplexing issue to the moderator’s attention and request the opportunity to ask the panelists their opinions.
» Manage your business cards. You’ll have a stack of business cards at the end of the event, but you’ll have a hard time matching faces with names. Be sure to write down action items on the back of every card you receive so you don’t forget. When you get back to your office the following week, block out two hours to follow-up with every person you met. This process will make sure you leverage the event for long term networking relationships, not just the content presented in the sessions.
» Meet new talent you can hire. All organizations can improve their talent, and events offer excellent opportunities to network with practitioners at other companies. Use networking opportunities to identify talent your organization can use.
The Bottom-line: Heavy marketing and overt sponsorship may be a sign of the times, but limits serious dialogue on industry challenges
Events are important opportunities to improve attendee general knowledge of industry trends and build broader peer networks. IAOP World Summits achieve that objective and are ideal events for industry newcomers looking to improve their knowledge and networks. World Summits are also ideal opportunities for experienced industry veterans to take a break amidst their busy global responsibility to reflect on their achievements and opportunities to improve. If you prepare properly and apply some basic principles, these well-organized events are goldmines of opportunity.
However, the repetitive format of the event, the too-common lecture-style format of sessions, and repeat topics can lead many attendees to feel a bit like a character in Groundhog Day if they attend year after year. The lack of event focus on any one theme assures attendees that they’ll hear a little about everything and not enough about their specific areas of focus. Heavy marketing and overt sponsorship may be a sign of the times, but limits serious dialogue on industry challenges. In fact, the combination of a jam-packed agenda and lecture-style sessions limits networking opportunities to brief windows between sessions. Because the repetitive nature of events, event goers are probably better off broadening their industry knowledge by alternating between IAOP and SSON events, or even seek out more focused process or industry events, like ProcureCon, SIG, and AHIP or regional events held in Latin America, Europe, or Asia.
Tony Filippone is Executive Vice President of Research for HfS Research. You can read his full bio here
Thanks to Robert McNeill (HfS), Shawn Riegsecker (Centro Media), Paul Roehrig (Cognizant) and Bob Law (HP) for an excellent discussion today on Cloud, BPO and Business Platforms. Here’s the re-run:
And if you really want more, click here for the slide deck.
The world of sourcing advisory has gone through unprecedented change over the last couple of years.
The days of enterprise buyers dropping millions to view their favored (and less favored) providers strut the catwalk and have their contracts hammered out by some baseball-bat wielding former ITO salesman are rapidly fading into the past. That ship has, thankfully, sailed.
However, a new ship is now dropping anchor in the sourcing harbor, promising riches beyond your wildest dreams to re-vamp your shared service centers, re-craft your entire governance framework and ensure those outsourcing engagements fit seamlessly into the overall mix. But are these new-found riches all they appear to be, or another crafty way for consultants to sneak that MBA bus back into the visitor’s car park? Who better than Deb Kops to investigate further…
Source to stay
The aggressive push of the big name management consultancies and the Big Whatever into sourcing advisory is in many respects a good thing. These organizations bring a wealth of resource—from an acute understanding of corporate strategy, incredibly deep domain knowledge, regulatory requirements, organizational design and development, and all shades of expertise in between…plus strong ties to the c-suite (the power of which should never be underestimated when hiring a consultant). After all, the sourcing decision encompasses so much more than a market study, a location analysis, writing a good RFP and implementing a rigorous selection process.
But to any shared services and outsourcing conference these days and you’ll hear many of these white shoe guys express a decided preference for shared services as a model. And the traditional sourcing transaction firms are now following close behind, echoing the same refrain.
The guidance from the podium sounds something like this—“Be safe and smart. Alternative delivery models are tricky no matter what. Consider outsourcing but only after you’ve fixed, consolidated into captive centers, and operated until stable. Then think about outsourcing that transactional stuff to a provider to tap into transaction pricing/gain flexibility/leverage investment/free up management bandwidth.”
What’s the implicit message? “Outsourcing is risky. Outsourcing is not the first step on the journey. If you want to fix the mess, do it yourself (with our help). Outsourcing is not transformational. Outsourcing is a commodity—pursue it only after you ring out every penny of cost, then throw it over the transom to a specialist factory.”
Now, shared services very well may be the right answer for many of current crop of organizations investigating or evolving alternative delivery models. First, despite what the pundits say, Western companies are reacting to pressure (or at least thinking twice) to keep jobs onshore and in-house—ergo a captive. Second, what value outsourcing or a simple shared services implementation is capable of delivering at this point in time is pretty well understood. And some organizations are now getting comfortable revisiting their strategies with the view that the trick is no longer fixing the factory, but getting closer to the business—perceiving shared services as the better ticket. But these trends alone cannot account for the noise from the consultancy bully pulpit, and the number of firms renaming outsourcing advisory “shared services” or “global business” or “enterprise advisory”, putting the “O” word in awfully fine print.
Why the push for shared services rather than outsourcing from some of the biggest consulting names in the industry? It might be driven by the fact that, post the 2008 recession, major corporations invited in consultants by the tens of thousands, asking them to broadly transform their enterprises post a 2008 near death experience. And these good folk, rather than the more deal-oriented outsourcing advisors, had a superb opening to evaluate sourcing as one out of many in a transformation bags of tricks, building up legions of consultants on engagements.
But, as a former consultant, I can’t help wondering whether this trend also results from the need to grow consulting revenue, making it engagements sticky as possible. Is it merely a coincidence that shared services is actually tout the right model for the majority of organizations given their maturity at this point in time–or could it be a manifestation of enlightened self interest on the part of consultants–what I glibly am calling “source to stay.” After all, if full-on outsourcing becomes the model of choice at the beginning of the sourcing journey, chances are pretty high that consultants will be cut out of the equation early unless the buyer has resource or expertise issues, or is looking to for an insurance policy in the event something goes wrong. With providers now equipped with cookbooks full of methodologies, choosing the outsourcing route usually reduces sourcing consultants’ fee earning potential. That means a material difference in fee magnitude—a hundred thousand or two as opposed to engagements closer to the million mark and more.
Deborah Kops, Research Fellow, HfS Research (click for bio)
I’m not saying that consultants push shared services rather than outsourcing merely because they are concerned about growing wallet share and feeding their legions of junior associates. A good consultant—and we are gifted with many in this industry—understands what the client needs to achieve through a sourcing strategy, and helps him understand the benefits and challenges associated with each option accordingly. But when the consultants are falling over each other to differentiate themselves as business services globalizers and enterprises extenders, while the traditional outsourcing advisors are actively rebranding themselves as shared services advisors, it suggests that the “O” word may be falling off the table.
The Bottom-line: Buyers must identify the right model for their particular organizations, and not fall prey to source to stay
Be honest about speed to implementation. If you want to move fast and have the skills to outsource, you can move the dial more rapidly. Shared services implementation often moves at a tortoise’s pace as compared to tapping into the existing infrastructure and network of a provider. But if time is on your side, perhaps a first foray into shared services is optimal given other considerations.
Evaluate how your organization will best take on the change culturally. If the organization will not take kindly to, or have much trust in, third party delivery of any stripe, outsourcing might be better staged later in model evolution.
Gauge the value of a commercial relationship in moving the dial. Some organizations are better off moving right to outsourcing because the formality of a contract gives them the discipline they need to make any sort of change.
Be honest about what the rub is in outsourcing. Assuming you select the right provider, getting to better for the business is rarely the problem. Given the evolution of providers, it’s not the quality of the delivery, it’s the business’s ability to adopt new ways of working and get over their loss of control. Recalcitrant business lines don’t discriminate—they’ll resist both outsourcing and shared services.
Think about whether your organization is more comfortable as builder or buyer. My research indicates that buyer companies are better managing providers as part of a supply chain, while builder companies like to make change internally, seizing any opportunity to innovate by inventing and implementing new models.
At the outset of any sourcing advisory engagement, it’s important to be very clear about what you want out of it—a true design exercise, air cover to underwrite the decision, handholding through the process, or deep expertise (and arms and legs) from strategy through implementation. Pushing a one size “fix-it-first-internally-than-flip-it-over-the-transom-to-a-provider-when-there-are-a-few-more-pennies-to-wring-out” approach is like prescribing heart surgery without first assessing the patient’s history and symptoms. Consulting expertise can be critical to making the right decision, but the best consultants never source to stay.
Jui Narendran is Research Director, Business Services, HfS Research (Click for bio)
We’re really excited to announce that respected business services analyst, Jui Narendran, has joined the fulltime HfS team as Research Director, based out of Pune, India. Jui’s been a good friend of HfS for a couple of year’s now, having worked on several research projects with us… but that still didn’t discourage her from joining our rumbustious rabble of research reprobates.
Prior to joining HfS, Jui headed the outsourcing research team at ValueNotes, a boutique research firm in India, leading several custom engagements and also worked on creating thought leadership research in the BPO and KPO domains. Jui has also worked for advisory organization TPI, where she led the offshore research team, which supported the consulting team with real time research and insights into the client industry and business issues. Additionally, she has worked for service providers Accenture and TCS. Jui brings a deep knowledge of the business services domain and will be focusing on several specific areas of BPO, namely the retail industry, KPO and legal services outsourcing. And when she’s not cranking out content for HfS, she is spending much of her spare time honing her new found talent for oil painting… but before we start airing her fledgling masterpieces, let’s hear about her recent analysis of the legal services outsourcing market.
Legal Services Outsourcing: India’s next growth market?
We’ve been doing some funky math over at the HfS data factory, and we’ve estimated that corporates splurge at least $1 trillion a year on legal services, which includes their internal General Counsels and their lawfirm partners. We’ve been keeping tabs on this space for a few years now and we believe the time is ripe for this market to really start kicking into gear.
Traditionally, the law firms engaged with Legal Process Outsourcing (LPO) providers for specific services, such as document review and other litigation support. However, over the last three years, large corporations have been signing comprehensive deals with LPO service providers. The following are some examples:
» In 2009, Microsoft engaged with Integreon, one of the larger pure play LPO services providers to provide exclusive e-discovery and document review services. The contract was subsequently extended to include contract review services.
» Also in 2009, Rio Tinto signed up with CPA Global, another large legal services provider, to provide contract review and drafting, legal research, and document review services. The engagement is also geared to expand to additional services.
» Pinsent Masons, a leading UK based law firm, signed up with South Africa based LPO firm, Exigent in 2009 to provide initial data review and e-disclosure services.
» Clifford Chance, a UK based law firm and member of the “Magic Circle”, procures legal support work from its shared services center in Gurgaon, India.
» Nixon Peabody, a Global 100 law firm outsourced its e-discovery review work to Pangea3, an LPO and a part of Thomson Reuters.
To learn more about why we believe Legal Services Outsourcing is poised for significant growth you can click here to access Jui’s new RapidInsight “The Exciting Evolution of LPO” at the BPO Resource Center (for a limited time only).
Jui Narendran (pictured above) is Research Director, Business Process and KPO Services, HfS Research. You can access her bio here and email her at jui @ hfsresearch dot com.
Pressure from buyers to create more accurate terminology for what we commonly, but incorrectly, term as “outsourcing” for IT and business processes has spurred dictionary publisher, Merriam-Webster, to remove the term from their next edition.
When God created “outsourcing”, she/he/it clearly had a sense of humor. I mean, how do you encourage people who offloaded a chunk of their low-end processes offshore to get together and form an “industry”?
The world of sourcing advisory has gone through unprecedented change over the last couple of years. 
