We watched this little movie during the “HfS 25” get-together this week in Dallas… sometimes we have to think a bit more laterally about motivating staff – it’s not only about metrics and money. Enjoy.
Posted in : Sourcing Best Practises, sourcing-change
There are four reasons why you should attend events…
1) Find out things you didn’t already know;
2) Glean ideas on how to do your job better;
3) Meet people who are actually worth knowing;
4) And (heaven forbid) try and do some business.
If you can achieve a smattering of these elements, you might actually return home thinking “that wasn’t such a waste of time and money, now, was it?”
So we were excited to attend the SIG Summit last week–our first event since we signed our partnership. Esteban Herrera, HfS COO, collected his thoughts on how the SIG Summit compared with typical industry shows. Take it away, Esteban…
The SIG Summit in Review
As you might guess, in the analyst world we attend a lot of industry events, but only last week did I get to attend a SIG summit for the first time, to celebrate and introduce our exciting new partnership. I was absolutely not prepared for what I saw. SIG is a true membership organization, whose members are both serious and proud. The “non-commercial” commitment is honored by all attendees. The summit is fun, but real work gets done.
The differences between the typical outsourcing convention and SIG’s Summits are so stark I had to put them in a table:
|
Typical Industry Show |
SIG Summit |
| Trade show atmosphere with booths, and untold environmental damage caused by hundreds of thousands of pages of brochures nobody will ever read | No booths, no brochures, no selling. Even the event agenda and information is available as an iPhone App—death to the paper program! |
| Attendees want business, or a new job | Delegates want knowledge and they like their job |
| Sessions led by salesmen and publicity-seekers | Sessions led by experts |
| Attendees skip most sessions because there is so little to learn | Delegates plan on attending almost every session, and are genuinely disappointed about the ones they miss |
| 80% Sellers and 20% buyers. Oh, who am I kidding, its more like 97/3, and the 3% buyers are all there because they are speakers (or looking for a new job) | At least 75% of Delegates were buyers |
| Sometimes I leave these shows feeling dirty | I left feeling enlightened |
| Sponsorship is King | Content is King |
| Inevitably, someone on the conference organizer’s staff has a Charlie Sheen-style meltdown | Dawn Tiura Evans and her world-class staff are composed, helpful and run a simply flawless event |
| Evenings and networking tend to be—ahem—adult oriented | A family-friendly event through and through |
| Entertainment consists of seeing which young provider sales person will get drunk enough to put his foot in his mouth first | Entertainment consists of a Brian Olsen painting a portrait of John Lennon to his music in real time (as well as Marilyn, Ray Charles and more…) and then raising over $15,000 for a worthwhile charity by auctioning them off |
I have to confess it was fun, also, to have so many delegates approach me about getting their hands on our research, the recently published Latin America report in particular. SIG members now get all our behind-the-firewall research as part of their membership.
Whether you are a buyer or provider of outsourcing services, if you appreciate what we do here at HfS Research, you owe it to yourself to check out a SIG membership as well.
Posted in : Outsourcing Events
We’re going to release our 2011 Finance and Accounting Outsourcing (FAO) industry landscape next week, and one dynamic that has really stood-out over the last three years, is the different competitive strategies going on at the high-end of the market versus the smaller engagements.
Most striking, are the divergent strategies of the market leaders, Accenture and IBM. While Accenture has consolidated its commanding presence with the large-scale enterprise customers, IBM has determinedly gone after the mid-market.
You may recall we highlighted, back in January, that the average FAO engagement fell below $20m TCV for the first time last year, we also pointed out that those providers with scale and flexibility of delivery resources are those best-positioned to pick up the smaller engagements:
Scaling a global BPO business based on multiple small client engagements is wearing on resources – and profit margins, and the providers scrapping for their share of the smaller business, are faced with a simple choice: Either stick with it and view this as a 10-year journey, or if you simply don’t have the patience or appetite to put in the investment, then get out and refocus your services on other activities. For those who stay the course (and we expect most will), they need to keep putting in the grind to win small engagements, and attempt to scale their BPO delivery resources, while trying to turn some sort of profit.
Our deeper-dive analysis shows that exactly this scenario is happening with several providers over the last three years. Let’s contrast both the enterprise-level market performances (engagements over $25m in TCV) and the mid-market (engagements below $25m TCV).
Accenture has developed a commanding position with enterprise engagements, while IBM has gained a lot of ground winning smaller-scale and mid-market clients. As these market share graphs illustrate, all the FAO engagements signed since the beginning of 2008 that have a Total Contract Value (TCV) of more than $25 million, dominate 80% of the total market, with a total expenditure of close to $8 billion. Accenture has been dominant in retaining and developing its client base of enterprise-level engagements, with Capgemini, IBM and Genpact providing the main competition with enterprise-level engagements.
The FAO newcomers, over recent years, have struggled to win many (or, in some cases, any) enterprise-level deals, and have sought to grow their respective market footprints by taking on smaller-sized engagements – many of which fall into the sub-$5m TCV category. The following graphic illustrates the service provider shares of the smaller-scale FAO engagements signed since the beginning of 2008, where the one notable market-mover in the mid-market segment has been IBM, winning the lion’s share of business with a commanding 25% market share.
The onshore order-to-cash specialist, Vengroff Williams and Associates (VWA), also performs strongly in this segment, while there has been a relatively even-spread of business across all the major service providers, such as TCS, WNS, InfosysBPO and Cognizant, in addition to the FAO pure-plays, WNS and EXL. Genpact has proven the most consistent at developing a balanced portfolio of enterprise and mid-market clients over the last three years.
So what do these competitive dynamics mean for the future of the FAO industry?
Essentially, the FAO industry is readying itself for life beyond the simple “lift and shift” deal, where margins were made off labor-scale being shifted offshore. Labor-arbitrage doesn’t amount to nearly as much, when you’re dealing with, for example, a 30 employee transition. What’s more, most of these providers need to start scaling their resources across multiple clients, or face a depressing race to the bottom, where their only real differentiator is their ability to provide low-cost labor. Having scale and flex from ingesting several large-scale clients is extremely valuable for providers, but only if they can leverage those resources to new clients as they take them on, in order to optimize their margins on the new business and remain cost-competitive.
Our take is that providers need a good balance of both large and mid-scale engagements, whereby they can allocate delivery resources and process acumen across their customers in order to develop repeatable process flows with application wrappers to enable them. While small-scale engagements can struggle to be profitable, they do force the provider to develop a utility model that keeps then in the black. Clearly, we’re in a highly-competitive market situation, and this isn’t a market for the faint-hearted.
Posted in : Business Process Outsourcing (BPO), Finance and Accounting, IT Outsourcing / IT Services
Latin America really is emerging as a nearshore powerhouse for both IT services and BPO, and we thought it high-time an analyst firm actually took a close-up look at the region. The result is a broad-ranging study, the results of which were distributed by Softtek today.
Discover how Latin America Powers Global IT Delivery: Download the report now.
We’ve got a quick glimpse a the study’s six key findings:
As customers mature in how they buy their services from providers in the region, so too does the suite of services on offer. As a result, firms can tap into more sophisticated functionality from their nearshore partners—the study found finance transformation and outcome based relationships superseding low-cost staff augmentation.
To give you a further glimpse of the report, this figure provides a profile of the projected growth in sourcing services spending by major service category in Latin America from 2009 and 2014. The report also includes forecasts for each region within Latin America.
Click to enlarge
Discover How Latin America Powers Global IT Delivery:
Posted in : Business Process Outsourcing (BPO), Captives and Shared Services Strategies, IT Outsourcing / IT Services, Procurement and Supply Chain, Sourcing Best Practises, Sourcing Locations
HOVS + SourceCorp… making trouble for Xerox?
SourceCorp and HOVS Services are two companies that rarely make the news. These are blue collar outsourcing organizations who have each been in the marketplace for over 20 years with deep specialization in backoffice transaction processing and document management automation.
However, the announced merger of two competitors into a new entity with combined revenues of almost $500m, a strong positive cash flow, 14,200 employees, and a combined customer segment of half the Fortune 50 is intriguing for several reasons.
Have no doubts – this merger is all about synergies, just as we said about the Patni –iGate merger. These are two remarkably similar organizations operating remarkably similar businesses, but with very few shared customers. There is plenty of opportunity to improve profitability of the combined entity. However, for the merger to be successful in the eyes of current and potential customers, the combined organization has to not only eliminate administrative redundancies, it has to rationalize its core transaction processing technologies in a manner that will improve the value of its clients.
From a competition perspective, this merger accomplishes two marketplace changes. First, it eliminates a tough competitor with a similar approach and cost structure. Second, it creates a $500m competitor to Xerox/ACS (itself dealing with post-merger headaches), Accenture and IBM, but with a simpler story to tell, as SourceCorp+HOVS is an accomplished pure play BPO provider and doesn’t have to talk about copy machines, consulting, or software. Importantly, the combined entity earns 27% of its earnings from the healthcare sector, making it a formidable provider for clients to consider. Also, the organization has almost 100 US domestic locations, which is a considerable footprint for regulated clients or clients that need a vendor located close to their operations.
From an industry perspective, there is little doubt that Xerox’s ACS acquisition was a partial impetus for the merger. Surely pure play BPO providers are an important aspect of the marketplace, but clients who have outsourced are now looking for transformation, and the newly combined entity will have to decide whether synergies and scale are sufficient to carve out meaningful market share, or they will need to reinvest savings into creating transformational market offerings that will compete with the big boys and keep existing companies happy.
One more aspect of the industry is worth noting: SourceCorp and HOVS Services have largely focused on transforming printed material into transactional data. As clients increasingly seek to eliminate manual paperwork and automate transactions, the marketplace for the bread and butter of these two companies’ services will erode. So, this merger may offer an insight into the impact clients’ internal investment activities have on the demand for BPO services.
Despite the promise of a strong future, there are plenty of risks. If core synergies are to be obtained, clients have to be migrated to new platforms as old ones are eliminated, and some clients may be resistant or slow to do so (buyers, you know who you are). Less tangibly, management teams that competed head-to-head for many years will need to learn to collaborate and build a new company. Lastly, potential clients may balk at working with a company deeply focused on internal merger.
Posted in : Business Process Outsourcing (BPO), Finance and Accounting, Healthcare and Outsourcing
‘Nuff said 🙂
Posted in : Absolutely Meaningless Comedy, Cloud Computing
HfS Research VP of Marketing Mark Reed-Edwards got together with HfS Founder and CEO Phil Fersht and Dawn Evans, President and CEO of Sourcing Interests Group, to discuss the new groundbreaking industry research and networking partnership announced on March 8.
Click here to listen in on why on earth they decided to do this:
[podcast]http://www.horsesforsources.com/wp-content/uploads/2011/03/2011-03-10-Podcast-SIG.mp3[/podcast]
You can also read more about the HfS/SIG partnership here.
Posted in : Business Process Outsourcing (BPO), Captives and Shared Services Strategies, Cloud Computing, Finance and Accounting, horses-for-sources-company-news, IT Outsourcing / IT Services, kpo-analytics, Outsourcing Events, Procurement and Supply Chain, Social Networking, Sourcing Best Practises, sourcing-change
In Part I of our interview with Francisco D’Souza, President and CEO of Cognizant, we discussed the rampant growth Cognizant has experienced, the global economic environment as we emerge from the Recession, and Frank’s point of view on the Cloud and the sourcing industry.
Now, in Part II, we get a bit more personal about what makes Frank tick…
HfS Research: Frank – tell us a bit about yourself and your upbringing and how you ended up leading a $4.6 billion global corporation? Did you imagine you’d wind up doing something like this?
Francisco D'Souza, President and CEO of Cognizant (click for bio)
Francisco D’Souza: After finishing my graduate work at Carnegie Mellon University, I took a job as a management associate with Dun & Bradstreet. Early on, I was presented with an opportunity to work with a team to build D&B’s first IT captive in India. I jumped at the opportunity. In 1994, that captive was spun off in to Cognizant and the rest, as they say, is history. I can tell you with a great deal of certainty that I never imagined running a $4.6 billion business! On the contrary, I just focused on doing things along the way that I enjoyed and which provided me opportunities to grow and learn. The rest just happened… I also have to say that we have the best team in the industry at Cognizant and my achievements are a reflection of their work; it was by no means an individual effort.
HfS Research: If you had your time again, would you choose the same path? If you weren’t a techno-preneur what would you choose to be doing?
Francisco D’Souza: I am incredibly happy with where I am today and Cognizant’s trajectory for the future; it is impossible to look back and wish I had taken a different path.
But, if I had to do anything else in life I would have wanted to be an inventor. I am overwhelmed by the power new technologies have on people’s lives – the power to dramatically change people’s levels of productivity or their standard of living. To contribute to that would be incredible. Plus, I love to work with my hands. In my basement, I have a room that’s just for me. Even my wife and kids aren’t allowed in because it’s a mess. I have all sorts of things in there, like a whole collection of old brass telegraph keys that are anywhere from 50 to 150 years old. I love this period; the days of Morse, Marconi and Edison and the beginning of electronic communication.
HfS Research: And finally, being one of the youngest CEOs on the Nasdaq today, what advice do you have to many of us forging our careers in today’s services industry? Are the core traits of success today different than they were 5 years’ ago?
Francisco D’Souza: In my mind, the key to success is the same for anything you do – dedicate yourself to something you love and don’t be afraid to take risks. If it feels like work, or if you are not passionate about what you’re doing, you won’t have the energy to put in the time and effort needed to be successful.
HfS Research: Frank, thanks for your time today – we look forward to sharing this discussion with our readers.
Posted in : Cloud Computing, IT Outsourcing / IT Services, Outsourcing Heros
Deals being done at a recent trade show
If Sigmund Freud was alive today, you might just find him at a sourcing trade show avidly observing some unique quirks of human nature.
And when considering his conclusions, you’d likely find him deep in discussion with HfS contributor and part-time behavioral psychologist from SourcingChange, Deb Kops.
Over to you Debs, for your evaluation…
Goin’ to the trade show, and I’m gonna get bu-i-i-is-ness
All weekend a parody of the 60’s song, “Going to the Chapel and I’m going to get married,” was tripping through my head as a result of spending a few days at an industry meeting complete with the proverbial “exhibit hall.” With so much time and resource spent in order to get the seller’s name out. I can tell you what I took away—dishwater coffee and a few logo’d pens, rubber ducks and thumb drives. What did they get?
Think of a trade show in any industry and the same elements come to mind—booths chock a block with graphically glowing descriptors, a great array of giveaways, a tray of chocolate, the proverbial “drop in your business card and win a Kindle,” bowl, and even in this day and age of online collateral, a few brochures declaiming leadership.
As it’s high season for expos, weeks, summits and what have you, it’s clear that the outsourcing and shared services industry hasn’t veered away from this recipe. With exhibitors keen to get prime booth real estate while sponsors happily take their money, it’s a good time to ponder whether spending all that dosh really moves the dial on brand.
Some of us trip through the hall only to register, while others religiously show up during breaks for muffins and popcorn. Some use the hall as a meeting point, while others traipse around each booth for the giveaways which go down so well with the kids we left at home. And perhaps even a few of us are sincerely interested in finding out more about Outsourcing-R-Us, or the advantages of locating a center in Trans-Mesopotamia or even the latest and greatest software that depreciates widgets automatically. But do exhibitors gain brand by setting up? And do we give them the attention they expect to get?
Walk into any exhibit hall and you’ll see a similar cast of characters:
Software vendors. These folks, generally mature guys, selling both platforms and apps to the sourcing industry, are always in their booths and seem to run in packs. Savvy enough to secure the 100 percent corners in the layout—or the spot directly across from the bar, they conscientiously man their booths both during exhibit hours and sessions. You’ll always see two or more together, proudly wearing their logo golf shirts or button-downs. A crowd is always around—is it the sexy set up, the great giveaways or are the folks in attendance already clients who are stopping by?
Niche providers whose delight at having the marketing money to show up for the first time at a conference is palpably written in their smiles. The shiny new booth is equipped with a backdrop that lists about every service they deliver from any location that any end-user could conceivably want to buy—if they had the inclination to stand there and read the fine print on the list. For the young men who represent these firms, getting a pile of business cards and being able to talk about ‘why they are different’ seems to be the name of the game.
Eco-developers The lady from Latvia or the man from Mauritius, sitting in a small booth, often seems uncomfortable when you stop by to mention that your grandmother grew up on a farm outside Riga, or that you once enjoyed a great holiday on the beach. Unsure of his or her English, and not wanting to let on that s/he did not fully understand, s/he thrusts a brochure extolling the virtues of locating a delivery center in said region/city.
Deborah Kops, Contributing Analyst, HfS Research (Click for Bio)
Consultants Exhibit booths can perform like Venus fly catchers for consultants. Every once in a while some guy who is looking for a sourcing advisor just happens to stroll by, making the effort to set up a booth totally worthwhile. And when there are no buyers in site, the booth will serve as a meeting place for team mates who rarely have the opportunity to see each other.
Established providers put up a booth for brand enforcement, generally manning it with the marketing “gal” or guy whose main job seems to be playing go-fer for the brass who show up on Day Two to deliver the plenary speech. Often the booth is unmanned, perhaps under the assumption that the name in lights speaks enough about brand.
Now I’m the last person to say that building brand is not important. Indicating that an organization is part of the sourcing industry by showing up is a good thing. Walking through an exhibit hall is a quick way to see the latest and greatest in apps, new providers, which countries want your business, and, as importantly, meet old friends. And even the coffee is drinkable when it’s free. But do exhibitors get real business? You tell me.
Posted in : Business Process Outsourcing (BPO), Captives and Shared Services Strategies, IT Outsourcing / IT Services, Social Networking, Sourcing Best Practises
The biggest issue in today’s sourcing industry is the need for a truly independent and high-value environment for sourcing and outsourcing practitioners to collaborate and share knowledge.
The type of environment where buyers and industry folks can meet with each other, share their pain and success, access research, knowledge and data, and have the coaching, education and the advice they need to help their organizations cope with one of the most complex issues facing them today – how to source value from their global business operations.
At HfS, we’ve been micro-focused on helping the sourcing industry get past the puff and fluff to help them access and share research, knowledge and best practices, ideas and views. Oh – and have a bit of fun at the same time.
Today, we are delighted to announce an exclusive industry partnership with the premier membership organization that has served sourcing and outsourcing professionals from Global 1000 companies throughout a 20-year history: the Sourcing Interests Group.
Having personally been associated with SIG for many years and attended many of their events, it has always set itself apart as a venue where senior practitioners feel comfortable sharing their experiences and knowledge. The quality of their events, the detailed effort to develop superior content, debate and speaking line-ups, and its “family” atmosphere has always stood-out. You always came away wanting to be part of the SIG family and planned for their next gathering, as opposed to that “one off” feeling you get at so many other industry gatherings today.
And when their dynamo leader, Dawn Evans, took over the organization a couple of years ago, you could immediately sense the renewed energy and determination within the organization to establish SIG as an innovative networking environment.
So what does this partnership mean?
* SIG’s members have access to HfS Research’s extensive published research and knowledge. HfS has a prolific library of published research covering business process outsourcing (BPO), information technology outsourcing (ITO), cloud business services, shared services and governance strategies in addition to deep coverage of industry trends across financial services, manufacturing, utilities, energy, healthcare, retail and media sectors. HfS’ service provider performance evaluations, pricing strategies, market forecasts and sourcing best practices will also be available to SIG members.
* SIG will host the HfS 25 Sourcing Executive Council during its Global Leadership Summit in Seattle this October. The “HfS 25” is our exclusive research network of leading buy-side sourcing practitioners who meet regularly to share knowledge and experience to help shape the future direction of the sourcing industry. SIG provides the right type of professional environment for our council members to meet a broad network of sourcing practitioners and industry-side executives.
* Other benefits of the partnership include analyst time for members at SIG events, HfS research presentations, workshops and state-of-the-industry discussions at SIG events, and SIG member webinars led by HfS analysts.
Bottom-line: The sourcing industry now has the collaborative environment it has craved. Together, the SIG and HfS teams are providing the collaborative vehicle where sourcing executives can meet, collaborate and extend their learnings – both physically and from their PCs. This is Networking 2.0 – the new collaborative environment where the sourcing industry can create some value for itself – that is sticky, ongoing, self-perpetuating and educational.
We’ll see you all at 2011 SIG Global Sourcing Summit, March 15-17 on beautiful Amelia Island in Florida. If you haven’t already, I encourage you to register today. HfS COO Esteban Herrera will be one of the many speakers at the summit, which features a keynote by Steve Forbes, Chairman of Forbes Media and Editor-in-Chief of Forbes Magazine. We look forward to great year with SIG and many more to come after that.
We have always enjoyed your interaction at support at HfS and are excited to involve so many of your with our broader networking family. Stay tuned for many new ways you can all get involved. I want to personally welcome Dawn Evans and her great team to the HfS family.
Phil
Phil Fersht | CEO and Head of Research, HfS Research | Tweet @pfersht
For more information in the HfS-SIG partnership, please email us at [email protected]
Posted in : Business Process Outsourcing (BPO), Captives and Shared Services Strategies, Finance and Accounting, Financial Services Sourcing Strategies, Healthcare and Outsourcing, horses-for-sources-company-news, HR Outsourcing, HR Strategy, IT Outsourcing / IT Services, kpo-analytics, Outsourcing Events, Procurement and Supply Chain, SaaS, PaaS, IaaS and BPaaS, Social Networking, Sourcing Best Practises, sourcing-change
