Yes, quite how this ramshackle outfit today celebrates its first birthday is quite beyond me. Exactly one year ago, we bravely declared we were a research company, with a bunch of friends, stringers and part-timers.
Today, we are a fully-loaded experienced research organization with depth and breadth of analyst talent across North America and Europe – with further expansion plans imminent. Hell, decisions used to be so much easier when we had no money…
But seriously, all I can say is a big fat thank you for all your support, encouragement and belief in us as we’ve built something truly game-changing in our industry – and one stat says it all: One year ago we had 16,000 subscribers; today we just surpassed 50,000. One can only guess where we’ll be in another 12 months.
Here’s a shout out to a few of you who’ve played your part…
Amber Wagenknecht (Accenture): For the warning signs (and my ignoring them)
Anthony Calabrese: Just being a sourcing beast
Bill Kutik: Making me laugh – out loud
Bob Cecil and Lowell Williams (EquaTerra/KPMG): Being awesome to work with
Brian Robinson (HfS): From tenant to employee… a truly loyal chap: )
Bruce McCracken: Being there at the start
Chris Barney (Genpact): For Cardiff…
Chris Gattenio, Don Schulman, Bill Payne and MSR (IBM): Believing in us
David Poole and Carina Smith (Capgemini): Believing in us, oh and making the Magic Kingdom bearable
Dawn Evans (SIG): For your super confidence
Deb Kops (Sourcing Change & HfS): Sounding-board and under-rated marketeer
Dennis Howlett: Just being Dennis
Derek Sappenfield (PwC): For believing in us
Ed Nair (Global Services Media): Being a great supporter and simply a great guy
Emma Beaumont and Sarah Clayton (SSON): Making some super cardboard cutouts – and all the plugs during lift-off
Esteban Herrera (HfS): For raising our game
Euan Davis (HfS): For the blind leap of faith
Frank Casale (Outsourcing Institute): For finding a reason to call me everyday
Frank D’Souza (Cognizant): Being our first client
Google Apps: For a cheap, reliable IT platform
Graham Russell (Astrazeneca): The guaranteed entertainment
Jamie Snowdon (HfS): For choosing HfS to make his comeback
Jason Busch (SpendMatters & HfS): For showing how to run a small, feisty business
Jay Desai (Northern Trust): Just calling it how it is
Jeanne Achille (Devon Gp): Giving us a professional veneer (when we really needed one!)
John Hindle, Sarah Thomas, Shari Wenker, Mike Salvino and Kevin Campbell (Accenture): Believing in us from the start, oh and plenty of Pink Champagne and Formula 1
John Transier (Unilever): A great sport
Jolie Newman: Just being helpful
Jonty Woodhouse: For making us legal!
Lee Coulter (Acsension Health): Making me laugh – from the start
Mark Reed-Edwards (HfS): For putting up with me
Michelle Liukin (HfS): The invoice queen
Mike Atwood: Being there in the early days
Mum and Dad: For having complete confidence this would work
My wife: For putting up with all this cr*p
Peter Allen (CSC): Being such a great thinker
Pramod Bhasin, Tiger, Gianni Giacomelli and Bob Pryor (Genpact): Great contributors and supporters
Prof. Leslie Willcocks and Dr. Will Venters (at the London School of Economic): For flouting establishment and partnering with us
Ray Wang (Constellation): Fellow analyst rebel
Ritesh Idnani, Pranay Juyal and Wendy Shlensky (Infosys): Believing in us, and teaching us how to negotiate!
Roxanna Wall (UBS): For always believing in us
Simon Newton (Kimberly Clark): A great sport and a great guy
Stan Lepeak (EquaTerra/KPMG): Keeping the faith
Stephanie Overby (CIO Magazine): For giving us media-cred
The Enterprise Irregulars: For providing a remarkable amount of entertainment and value
The old AMR team (now Gartner): Providing such a great platform for HfS – and not suing us!
The ValueNotes team: For being reliable
Tony Filippone (WellPoint): The vendor governor
TPI: Being good sports…I know I give you a hard time : )
EquaTerra, or “EQ” as they are commonly known in the trade, has formed part of the heartbeat of the sourcing industry over the last eight years. When three frustrated TPI consultants had finally despaired of their employer ever “getting” BPO, they snuck off to set up their own shop, coined a goofy name, convinced all their buddies to take a leap of blind faith with them, before stripping off at a Luau and shaking their booties at their unsuspecting followers. Yes, these guys were clearly on a path to building a multi-million dollar global advisory outfit that would be submerged into a highly respected auditor and management consultancy.
What was amazing, was the sheer speed with which EQ caught up their industry to become, initially, the leading advisor for HRO and F&A BPO engagements, while quietly developing its competency in ITO. From there, the firm had excited Glen Davidson so much, he publicly resigned from his Accenture job during an awards dinner acceptance speech to announce the establishment of “EquaTerra’s Public Sector” organization. From that moment on, the firm knew no bounds, establishing its software process evaluation tool, EquaSiis and taking over Morgan Chambers’ European advisory organization. They even reached the spectacular heights of doing some research with us!
Meanwhile, the leading management consultancies were still raking in so much coin selling shared services advisory engagements, it was easier for many of them to advise their clients against outsourcing, than actually help them through a sourcing evaluation process. Why risk your $20m-a-year engagement doing shared services improvement for a $1m project to look at outsourcing?
However, the boom in outsourcing had really taken hold by 2006, and the management consulting firms realized they were not equipped to deal with these complex, stressful operational deals (to quote the CEO of one of the boutiques, “This is real workman’s consulting”). AT Kearney, Deloitte, KPMG, PwC – to name a few – started hiring consultants in earnest to win outsourcing advisory work, hoping their superior brands would be enough to swat away these pesky boutiques and their fancy methodologies. “We’re focusing on the strategy side” said one management consulting partner, “And leaving the transactional work to the specialists”. However, the management consulting firms quickly were discovering they could rake in a cool $1m-$3m+ managing an outsourcing transaction cycle,whereas a “Phase 1” strat evaluation rarely netted them more than $500K. Plus, there was never much action with the governance work, as buyers were not resourcing for “change management” (more on this topic to follow soon).
So the management consultancies realized they need to poach the specialists from the boutiques, but were in for a rude awakening when they discovered how much the top talent at Alsbridge, EQ, Everest, TPI et al. were raking in. Plus, these guys were a unique breed – they actually liked the boutique culture, along with the specialism and IP their firms were generating. Bottom-line, these boutiques didn’t fit their compensation models or their cultures. Add to this the fact that “outsourcing” had always been something of a dirty word, and poorly understood by the other consulting practices. Hence, it was pretty clear, as long as five years’ ago, that the best route into the outsourcing game for some of the management consultants was to do the unthinkable and actually acquire one of these boutique firms.
So why didn’t any of them bite the bullet and snap-up up a boutique?
Quite simply, the top consulting brass have struggled with the “build versus buy” decision for the following reasons:
They have persisted with the MBA-model, which just doesn’t work with complex outsourcing deals. Several management consultancies have struggled to understand why they can’t stick a team of 26-year old MBAs onto their clients to crunch through a deal, while the boutiques have a cost structure that enables them to put experienced “workmen” with genuine deal experience, whose rates are often cheaper. And while you can get away with some juniors on ITO deals, with BPO you actually need experienced process experts – not kids.
Outsourcing is still something relatively new and foreign to their classical consulting practices. Outsourcing of IT, and more recently business processes, has grown rapidly over the last decade and many of the consultancies have been slow to adjust. Only now are they recognizing they need this competency, or risk getting edged-out of long-standing clients who are morphing into global outsourcing operating models.
The “hire the leader” tactic to build competency has largely failed. In years gone buy, if niche consultancies were overpriced, the large shops would simply hire the top one or two partners, safe in the knowledge their main delivery guys would follow. This just hasn’t worked too effectively with boutiques, as the top outsourcing advisory talent is well-paid and happy in their boutique environment. Plus the fact there are literally only a couple of dozen real “market makers” in the outsourcing advisory space worth hiring.
The boutiques have wanted too much money. Some of the boutiques today will be wishing they took offers on the table before the Recession, as the consolidating and commodotizing market has knocked down the market value considerably. However, with EQ now out of the frame, there are only a small handful remaining with sufficient scale and IP, and these firms will have renewed hope they can cash-out sometime soon.
So… has KPMG made a wise move purchasing EquaTerra, and how will this impact the industry?
*The outsourcing advisory business is all about talented people, experience and relationships. What has impressed me most about this deal is the fact that KPMG has created 17 new partners from the EQ organization. These people have stuck together for years, have considerable IP, experience and relationships, and are moving over to this new environment together.
*It would have been extremely messy if KPMG had tried to hire away these folks one-by-one. They have retained the top talent and have created careers for them within their organization.
*Quite simply, there is a really bad (and worsening) talent shortage in our industry, and KPMG has just snapped up a good portion of it in one full swoop.
*Now their challenge is to integrate EQ and create a culture the new partners and their teams can get used to. Retaining the core team is critical to the success of this venture. If they can do that well, they will likely have recouped their investment in a few short years, not to mention the new client relationships they can forge as a result of their extended competency.
*If KPMG can’t keep it’s new partners happy and there is a mass exodus, then this acquisition will have failed. Having hired a close-knit group, it does run that risk, and needs to work hard to integrate the EQ people. This merger is all about talent and IP – and they are intertwined.
*KPMG is also very excited about this and took a long, hard look before they took the plunge – it is a big, big deal to them and they have put a stake in the ground to show how serious they are about this business. The firm has clearly chosen this space as the one they want to lead, and should be applauded for making a bold move that none of their competitors have (so far) chosen.
What will be the competitive reaction and new market landscape?
The one “prize” boutique left on the market is TPI, even though it can hardly be called a boutique anymore, with its new-found alignment with Compass. The outsourcing market will have a solid year and its valuation should start to pick up, so I would surprised if any of the large consulting firms, such as Deloitte and PwC, makes a serious move this year.
My prediction for 2011: we now have 4 major players, and they’re no longer boutiques: Deloitte, KPMG, PwC and TPI. Providers will have to re-evaluate their influencer strategies, as more intricate and finessed relationships are required. The old “referral” model is pretty much dead. The remaining boutiques, namely Alsbridge and Everest, should be able to pick off more business, now they have less competition, and can take better advantage of their more flexible cost structures. Yes, we have a sea-change in the industry, but the buyer still has choice and we have better integration of the traditional consulting model and the boutique methodology.
One of the newest additions to the HfS family is Brian Robinson. Born in Ohio, raised in Florida, educated in Florida and Virginia, Brian was living in the UK when we started talking to him about working for us. In fact, he was renting my London flat, so I was guaranteed he’d give the place a good clean when he moved out to embark on his Italian adventure.
He’s now based in Rome, where he’s starting to learn the language. Give him a few more weeks and he’ll be ordering the Pasta alla Carbonara in the local tongue, while explaining it’ll be far easier to outsource Berlusconi than trying to lock him into a captive. Hmmm… maybe CNN can sign him up for a double-act with Elliot Spitzer?
Brian is an internationalist to say the least, so it comes as no surprise that this Ohio boy uses football (you know, the one where you can’t use your hands) as an analogy for how to nurture leadership teams.
Is it better to build or buy? For the answer, over to you, Brian…
Outsourcing your leadership team: The build vs. buy debate heats up
Were you surprised that Rooney biked home the winning goal in the Manchester derby? I wasn’t. Hands down, the goal was amazing. And it may well go down as one of the best goals ever scored in the Barclays Premiership.
Rooney’s ability to catch the ball at this angle speaks to his unrivalled skill as a footballer. The fact that he was in the match to score the goal speaks to strength and intelligence of the management team running arguably one of the most prolific football teams in the world today. To date, Rooney’s 2010-2011 performance has been lackluster: a mere seven goals in 27 matches. Other players would have been benched or traded by now, but Rooney has something special. He knows it and so does his management.
There are similarities between good companies and good football teams: solid staff employees that consistently make the right decisions at the right time. So if you are the helm of a flagging enterprise, should you nurture management talent internally or go to market for it? A review of several clubs’ performance and related management decisions in the Barclay’s Premiership sheds some light on the subject, but the evidence is far from conclusive.
Take, for example, Manchester City. Today it’s one of the richest clubs in the world, bankrolled at a massive loss by Abu Dhabi’s Sheikh Mansour, which has already changed managers four times in the last five years. Yet, despite all the talent money can buy, they have yet to win a single trophy. In contrast to Manchester City are clubs like Manchester United and Arsenal, which have each kept faith with the same managers for 26 and 14 years’ respectively. Each has a stable and revered management team that coaches some of the world’s best footballers. These two clubs have a combined seven Premiership titles over the last 10 years and are currently ranked number 1 and number 2 in this year’s title race, and have both spent far, far less money on new players than their main title rivals. And then there is Chelsea, who’s spending has been even more magnanimous that Manchester City’s, and results have followed with three Premiership titles and three FA Cup titles in recent years. However, this year, the club is ranked a concerning 5th and is in danger of dropping out of Europe’s elite competition, with an aging team and clear disharmony in their camp. Could changing managers four times in three years be a contributing factor? It certainly has not helped. And the darling club of this year’s season has to be Tottenham.
Consistently strong, but rarely considered a star, the club has been under the management of Harry Redknapp for the last two seasons. Having spent his entire life in the Premiership as player and coach, he has enabled existing players to achieve new heights of performance while attracting new talent to the team on a modest transfer budget and salary ceiling. The result: Tottenham had their highest ever finish in the Premiership last year placing fourth. Moreover, they are in the round of 16 in this year’s Champions League, having beaten both Inter Milan and AC Milan along the way, and are currently ranked fourth in this year’s table. Can Tottenham maintain this level of performance? What is certain, is that decisions both on and off the pitch will contribute to the club’s long-term performance.
I’ve supported a fair share of management teams over the last 13 years, both large and small, and from all parts of the globe. Despite the language barriers and, at times, differences in culture, I have observed that the best managers often share a similar set of attributes. For example, they:
Engender trust among all team members
Reinforce directly and indirectly that no one single player is the linchpin of success
Promote from within the team ranks, more often than not
Empower their team with responsibility and the right to take decisions
Brian Robinson, Senior Analyst, HfS Research (click for bio)
Managers don’t turn these attributes on and off like a light; rather, they build them over time through shared work experiences. More importantly, they give team members the opportunity and time to discover and align shared interests. So why source talent at all if great leadership takes time to nurture? From my experience, senior managers brought in from outside the organization can create a much needed shock to the system. However, when left alone to manage the resulting fall out, they fail. More often than not, it is the tenured managers that adjust, pick up the pieces, and enable the organization to see a new and better day.
So what does this all boil down to? It is my belief that sustained peak performance comes as a result of a long-term focus on and development of talented management. It’s true – great management capability can be bought. But strong and consistent results cannot. And who needs to spend thousands of dollars and hundreds of hours researching this hypothesis when the answer is unfolding every week on pitches across the UK and Europe. Will the debate surrounding leadership outsourcing continue or fizzle? I know I will be watching the Premiership and Champions League to find out.
In today’s ITO/BPO market, it’s getting harder and harder tell providers apart, when selecting a sourcing engagement partner. Once they can compete on price, have a reasonable track record for operational effectiveness and can transition you to a globally-sourced environment, we really get down the nitty-gritty of how can they really help my business achieve growth and productivity?
HfS is engaging heavily with both buyers and providers of sourcing to understand how buyers can benefit from genuine operational and industry insights to improve their business performance – and we believe the capability offer these analytical insights thought smart governance models is quickly emerging as a major differentiator. And if your main provider isn’t passing muster with their insights, can you find a specialist to add to your sourcing mix that can?
Over the last 15 years, the importance of analytics as a business activity has grown dramatically. While the top brass once used guts and intuition to guide decision making, today, data is the prime weapon in the management arsenal. As data analysis techniques have gotten smarter over the years, analytics have emerged as a specialized function of business employed broadly across industries and functions. Our new HfS Report, imaginatively titled Where offshore analytics is heading in 2011investigates…
Analytics needs today are both horizontal and vertical
When you’re moving major components of your business and IT administration offshore, you need the capability to get rapid data on your global operations. You’d be amazed at the dearth of information many global firms have over the operations, their employees, their supply chain, their finances etc.
However, it’s no longer about having quality “horizontal” analytics. That’s a given, today, as companies increasingly globalize their processes and business functions. Industry-specific analytics techniques are now rapidly evolving, while other, more industry-neutral “functional” analytics services are also gaining popularity due to unified business needs. For example, while a specialized branch of analytics is dedicated to the retail segment (retail sales analytics, merchandising among others), generic supply chain analytics cut across all sectors.
The key verticals for analytics demand today are banking, financial services, insurance, retail, telecom, healthcare and pharmaceutical, advertising, new media and entertainment. Our primary recommendation to buyers is to carefully evaluate their business functions to identify latent areas that may benefit from analytics activity. When a business process (e.g., F&A) is carved out, analytics is easier to apply. But organizations need to seek out hidden opportunities in areas such as risk analytics, buzz analytics and mobile web analytics to compete in the current environment.
Who’s buying offshore analytics?
Fortune 500 companies that have massive data repositories are the most important client group for all service providers: as they sink their teeth into offshore analytics services, its much easier (and cheaper) to add FTEs to existing outsourcing engagements, or existing projects, than create new requisitions for onshore analysts. Enterprises from industry verticals such as consumer goods, financial services and telecom with high exposure and maturity in offshoring are significant buyers for offshored analytics services.
Besides the Fortune 500 companies, service providers are increasingly targeting mid-sized clients to move up the value chain. Some niche service providers are also looking to serve the rapidly growing domestic and regional markets.
Large IT-BPOs and KPOs are trying to cross-sell analytics services to their existing clients, especially as add-ons to engagements in areas such as customer management, F&A, HR and Procurement, where there is a constant ongoing need for better quality and more accessible data. These firms are also trying to focus on creating capabilities in high-value analytics services as value-added differentiators for corporate clients.
Many of the KPOs and smaller BPOs also are also seeking to create specialized capabilities to service parts of analytics projects and eventually take a vertical approach to growth in their chosen niche in order to move up the value chain.
Although both large and mid-sized firms present opportunities for analytics providers, the level of scale and importance attributed to the service differ. Due to the impact of analytics (e.g., efficiency gains, cost savings), the need and savings potentials are more significant for larger buyers in absolute terms, however, as this market becomes increasingly saturated, expect the competition and demand to pick up in the mid-market.
And who’s selling offshore analytics services?
The number of service providers offering analytics services from offshore locations has exponentially increased over the last 5 years. Furthermore, the number of companies with a desire to build an analytics practice will easily be double the number of players in the market today. This huge increase in the number of vendors can be largely attributed to the desire to clone the success of early movers in the analytics space.
In the early 1990s, several companies started using analytics as a tool to derive answers to specific business issues. However, the application of analytics was very limited due to the limited availability of exhaustive historical transactions and research data. Some corporate giants such as GE had begun offshoring transaction processing activities during the 1990s. A lot of this data was then used as raw material for building solutions using techniques in analytics. Captives started offshoring low-end analytics activities:
Eventually, as these processes stabilized, companies started offshoring the entire analytics value chain to their respective captive centers. Today, the scope of analytics services provided out of these captive centers goes beyond business process outsourcing. Several captive centers have large and specialized analytics teams providing solutions to internal clients globally.
The offshore analytics landscape has changed over the last decade from one dominated by captives of large companies, primarily in India. Today, the industry features a large number of providers offering end-to-end specialized analytics solutions to specific verticals. High-value third-party analytics solution providers are focused on providing value beyond cost arbitrage by leveraging a combination of onshore-offshore delivery models and the use of technology. Our forthcoming “HfS Form Guide” evaluates the market footprint and potential of the key analytics service providers.
So who are these providers, how are they specializing, and what makes them different? Read on by downloading your copy of our new report “Where Offshore Analytics is Heading in 2011“.
If there’s been one consistent face of the HR Outsourcing industry over the last decade, one stalwart who’s been staying true to the principles of global HR delivery, despite all its bumps and bruises along the way, its been the former shift foreman at a Detroit car bumper factory who left the New World to join upper-crust English society.
Click to listen in to MSR and BK, noon Eastern time on 16th Feb (recording available)
Step up Mary Sue Rogers (known in local circles simply as “MSR”), who’s General Manager for IBM’s Global HR, Learning and Recruiting Process Services organization.
And if there’s one person qualified to find out more about her passion for payroll, who can slow down her machine-gun talking-speed to the firing rate of a semi-automatic, it’s the indomitable Bill Kutik, who hosts his own aptly-named “The Bill Kutik Radio Show”.
Anyway, MSR will share her insights into why full-service HRO has had a mixed scorecard in its first 10 years; what she will be doing differently in the next 10; the unique technologies used in HRO not usually found in a traditional HR environment; and the critical role of third parties and what they do in successful HRO engagements.
Click here at noon Eastern time today to hear Mary Sue Rogers. Recording is available, so don’t worry if you miss it
Is it just me, or is it just really irritating when people start using jargon that’s a load of cobblers?
One of the things I have loved about BPO is that the IT evangelists have always steered clear of the topic by a county-mile, because they really don’t understand it.
When I was an analyst covering BPO in the traditional research world, I was fortunate enough to be left alone to get on with my craft, because there were very few analysts who could tackle anything that wasn’t centered on a piece of software, hardware or communications equipment. To them, BPO is the unsexy grunt work that has to support uncool things like actual business processes.
Then along comes the Cloud, and a few ambitious souls from the IT world have dared to mention that mysterious “BPO” word in tandem with their wonderful, nebulous, ill-defined, confusing world of Cloud Computing. Yes, some IT knuckleheads are starting to use phrases like “Cloud BPO players” and “FAO in the Cloud”, or just plain “Our Cloud BPO strategy”. They’ve been dying to use the BPO term for years – and now they’ve seized their chance. Oh my.
Sadly for them, “Cloud BPO” is, simply put, really a load of nonsense in today’s environment. The core fulcrum processes of BPO are the toughest to move into the Cloud, and only the small-to-medium business sector is going to enjoy any modicum of success of moving genuine “BPO” processes, such as finance and HR, into the Cloud in the near-term. And this is mainly with very standardized and straightforward Internet-hosted apps (i.e. simple interface, no integration requirements), as opposed to genuine Cloud-enabled ERP apps that leverage IaaS/PaaS/SaaS architecture.
Our recent study with the Outsourcing Unit at the London School of Economics reveals both the IT executives, Cloud-providers and consultants all clearly agree that most of the core applications supporting BPO processes are the toughest to move into a Cloud environment:
At HfS, we have been at pains to dissect the potential of business processes that can be provisioned by a BPO provider, where its underpinning software and hosted infrastructure are “in the Cloud”. And we’ve gone to even further pains to differentiate between Internet-hosted and genuine Cloud apps. We’ve even coined the term “Cloud Business Services”, because it’s simply more relevant to early-stage client needs to move processes and apps into the Cloud, and has a tight definition as to what a Cloud Business Service actually is.
Core BPO functions, such a finance and HR, are typically serviced by creaking legacy software that is poorly integrated (if at all), or simply embedded into a complex ERP architecture that’s wrenched into back-end systems and databases. Most firms today would have to transition completely onto entirely new Cloud-enabled platforms before they could even consider outsourcing the related processes to a third-party in a “Cloud BPO” model. It’s generally a lot easier with apps that are either already “in the Cloud”, or where it’s simply more desirable to move quickly onto a standard Cloud model, for example Salesforce.com. But that’s not “Cloud BPO” – that’s really just “Cloud”.
It’s just not going to happen anytime soon – the ROI’s not there and the legacy ERP firms aren’t chomping at the bit to derail their license models that have served them so profitably for so many years. Yes, they can outsource their SAP support to an ITO and have them process their paychecks and invoices as part of the contract, but that’s not “Cloud BPO”. That’s “bundled BPO”, or possibly “Platform BPO” (which doesn’t, quite frankly, mean a hell of a lot either).
I’m not trying to be a merchant of doom here, and we do passionately believe in the future potential of the Cloud – as do the vast majority of today’s business and IT executives. However, it’s time to move away from stupid jargon that’s designed to do little more than sound like puff. We are seeing the early beginnings of true “Cloud services / BPO” partnerships around core ERP processes, for example Genpact and Netsuite’s early efforts to offer “F&A BPO in the Cloud” for medium-sized business. We’re also seeing encouraging advancements that both Accenture and IBM are working on, to offer HRO on Workday, which (ahem) could be the true beginnings of “HRO in the Cloud”. But we’re miles away from these offerings being widely adopted, so let’s stick to reality and refer to these services as business services that have elements of Cloud delivery potential. Or just simply “Cloud Business Services”.
Anyhow, enough of my little jargon rant – hopefully you’ll join me, Euan, Prof. Leslie Willcocks and Jimmy Harris for a little chat about Cloud Business Services this coming Thursday – just sign up here. Hey, it’s free, what more do you want?
We’ve known each other for a while, haven’t we? You’ve seen us evolve from a blog to a research analyst firm over the last four years. Now we’re taking the next step in our evolution and launching our official company website for HfS Research (gasp): HfSResearch.com
Don’t worry, Horses for Sources will remain right here (and with these HuffPo multiples, it’s going nowhere for a while!), but we’ve created a spiffy new home for our research. A special thanks to our marketing chappy, Mark Reed-Edwards and our developer/designer Melanie for burning the late hours these past few weeks. Over to you, Mark, to explain more…
We’ve created an entirely new website for our research content. HfSResearch.com, featuring our new logo (which you may have already seen here and there), went up quietly last week. After working out a few of the bugs you expect (and get!) with a new website, I want you to rush over there right after reading this post. First, though, let me tell you a bit about the site.
The homepage
From the homepage, you’ll be able to access the latest research from HfS, as well as other hot topics, including the latest Horses for Sources blog posts and featured studies, such as the Cloud Business Services study we conducted with the Outsourcing Unit of the London School of Economics.
You’ll also get an overview of our research services for buyers and providers and links to our rich archive of published research, which we encourage you to browse. And that brings us to that section of the site.
The Research page
On the Research page, you’ll see the wealth of work we’ve done. have the ability to browse the research type, and the subject area.
We’ve got you covered on the following subject areas: Benchmarking, Business Process Outsourcing (BPO), Cloud Business Services, Deal Advice, Europe, Middle East & Africa, European Strategies, F&A BPO, Financial Services Sourcing Strategies, Governance Government and Politics, Healthcare/Pharma Outsourcing, High Tech, HR Outsourcing, HR Strategy, Innovation, IT Outsourcing (ITO), IT Services, Knowledge Process Outsourcing/Analytics, Latin America, Legal Process Outsourcing (LPO), Manufacturing and Retail Sourcing Strategies, Media & Entertainment, Mergers and Acquisitions, Multisourcing, Negotiations, Procurement and Supply Chain Sourcing, Service Provider Coverage, Social Media, Software-as-a-Service (SaaS), Sourcing Change Management, State of the Industry, and Utilites and Energy.
Review our Research Agenda, have a look around and tell us what you think.
The rest of the site
The pages that cover our services for buyers and providers give you an overview of how we’re helping our clients navigate the sourcing industry. You’ll also be able to read more about the HfS 25, our exclusive Sourcing Executive Council. Plus, you’ll get a look at the handsome global team we’ve assembled, and learn a little bit more about HfS and what makes us tick.
If you are a member of this site, you should’ve gotten an email instructing you on how to set yourself up on the new site. If you didn’t get that, drop us a line and we’ll make sure you get sorted right away. I am thrilled to be able to share HfSResearch.com with you. We hope it will serve you well. Like everything on the web, it’s a work in progress. We’ll never really be done with it. But we do want your thoughts. So kick the tires and take the site for a spin. Then give us your feedback so we can continue to improve it.
So, what about the blog you’ve come to know and love?
With AOL buying HuffPo for $315 million, we’re not about to give up on our dream of world content dominance here on the Horses for Sources blog. And we know how much you rely on, and enjoy Horses for Sources. With Valentine’s Day approaching, dare we say, you love it?
So, look for us to make the blog an even more compelling destination in the months to come. In the meantime, continue to enjoy Horses for Sources as well as HfSResearch.com.
We’re excited to announce a couple of terrific new additions to the core research team at HfS. Our goal is to provide our research clients with a unique blend of “real world” sourcing expertise, backed up with real-time research, market data and analytics. We’re also working with multiple buyers to develop the industry’s first realistic transaction-based BPO pricing model.
To achieve these lofty ambitions, we’re pulling together a blend of quantitative analysts with sourcing experts who “get” what this industry is all about, which takes us to our two new analyst hires, Brian and Jamie:
Brian Robinson
Brian Robinson joins HfS as senior analyst covering sourcing strategies and price benchmarking. With more than 12 years of consulting and industry experience, Brian has lived and worked on four continents, where he’s served clients across a number of industries, including energy, banking and insurance, consumer products, and automotive.
Brian spent the last four years with the outsourcing advisory firm the Everest Group. Progressing from Consultant to Senior Consultant and then to Engagement Director, Brian advised a number of the world’s largest outsourcing buyers and providers. During extended engagements, he served clients onsite in the US, Australia, India, Japan, Canada, the UK, and the Netherlands. Brian holds a B.S. degree in Industrial and Systems Engineering from the University of Florida and a MBA from the Darden School of Business at the University of Virginia. You can read more about Brian here
Jamie Snowdon
Jamie Snowdon joins as Principal Analyst, Market Sizing and Forecasting. Jamie focuses on developing market size data models and forecasting, supporting ITO and BPO price benchmarking analysis, in addition to contributing to HfS written research. Prior to HfS, Jamie spent seven years at analyst firm IDC, where, as Director for IDC’s European services group, he managed all of IDC’s bespoke services research and market modeling and forecasting processes. Jamie specialized in delivering custom market forecast models and forecasting tools for a host of clients. In addition, Jamie ran IDC’s European outsourcing research, covering both IT and business process outsourcing.
Since 2006 Jamie has taken time away from the analyst world studying to complete his law degree, before making his return to the analyst fold with HfS.
Anyone on the analyst circuit knows the larger-than-life antipodean, Phil Hassey, who’s spent countless hours on soul-destroying coach-class slogs from Sydney to the US to expound the virtues and opportunities in the Asia/Pacific region.
Phil Hassey is HfS Research's new analyst contributor for the Asia/Pacific region
I personally got to know Phil when I was working in Singapore for analyst firm IDC (before I became a cynical blogger), when Phil led the Australian / New Zealand coverage for the firm’s IT/BPO research. I learned quickly that Aussies always make good “whinging” analysts – how many cultures do you know complain all bluddy day long, before hopping off to catch a few waves on Bondi beach at 4.30pm in the afternoon?
Anyhow, Phil’s no-nonsense style led him to establish the Asia/Pacific services research for Springboard Research, before branching out on his lonesome to start his own research venture, “CapioIT”. Well, we couldn’t let a good Aussie slip our gaping need to cover the Asia/Pacific markets, and we’re thrilled that Phil’s thrown hit hat in the horse’s ring to pony up a couple of BPO appraisals of the region for us in 2011. Let’s hear more straight from the Hassey’s mouth…
Phil Hassey muses over the Asia/Pacific BPO market landscape
I am very excited to have the opportunity to work with HfS and the team that Phil has successfully pulled together. As mentioned, I have known Phil for a long time now and have admired the work he has undertaken to drive research innovation in the BPO marketplace.
My first BPO research was undertaken in 2000, when I wrote one of the first reports on the Asia Pacific BPO market focused on CRM BPO. The future was bright at that time as the big offshore providers of CRM services such as Teletech and Sitel increasing investments in offshore centres, particularly in the Philippines with a plan for focus on delivery of services to local Asia Pacific clients. At the same time in late 2000, IBM stated at an AP analyst briefing that they would not be interested in the BPO marketplace.
Whilst a lot has changed in the 11 or years since, embracing of BPO has not been as strong as anticipated. BPO across the Asia Pacific is still a market with clearly unfulfilled potential both in terms of market demand and service provider capability. Obviously the two are linked. IBM, driven by CRM outsourcing through the Daksh acquisition is now a leader in non transactional BPO in the Asia Pacific region alongside Accenture. The call centre/CRM outsourcing market did not mature nearly as quickly as expected.
In Australia, the AP BPO market is at its most mature, however by US standards, unlike IT Outsourcing, it still clearly lags in terms of customer uptake. The last five years have seen a lot of interest in BPO, but ultimately limited commitment from enterprise. I like to joke that 2-3 years ago, there were more BPO pilots in Australia than at Heathrow or JFK airports. The reasons for the lack of enterprise commitment are varied, they include more organised labour forces in Finance and HR and customer care, and outsourcing fatigue through publicised IT Outsourcing problems. Highlighting the opportunity that exists in the market, the lack of providers means that supply side issues are just as important as buy side issues. Accenture and IBM aside, there are very limited services providers that have the requisite scale to successfully provide capabilities in markets in Asia Pacific. This is of course a chicken and egg situation. The deals need to be there to get the investment and I believe the deals will not happen until the investment is made. Some bold calls will be successful if researched well enough.
Across Asia more broadly, strategic BPO is even further from Australia in terms of maturity. The same issues as Australia remain, in a positive note increasing numbers of enterprises are becoming more familiar with the benefits of BPO. Many of the individual country markets do take their lead from a targeted number and type of companies, vendors should firstly identify these enterprises, then focus on them in order to drive BPO adoption more broadly.
Naturally enough, It must be repeated regularly that Asia Pacific is a large and incredibly diverse market that does not take kindly to being generalised in sweeping statements. We have half the world’s population and workforce. A strategy that works in Singapore may not work in neighbouring Malaysia; something that works in India will definitely not work in China. Understanding these subtleties is critical and without practical experience, my experience has highlighted that it takes time and several false steps before success can be enjoyed.
You can read more about Phil’s background here, email him at [email protected], or even find him on the Aussie twitter @phassey
Egypt's crisis: The sticky topic of political risk with outsourcing is firmly back on the table
Like everyone else, I’ve been glued to the news the past few days trying to comprehend the enormity of the Egyptian crisis and the possible repercussions across the global sourcing industry.
Without dragging us into a political debate, what’s alarming is the dependence global sourcing has on the Internet and political stability. When the first response of the government, in times of political crisis, is to shut down the Web, this has a massive impact on the nation’s global sourcing infrastructure to support global businesses. While China clearly has the capability to regulate its Internet, you have to ask the question whether smaller, less affluent nations have that level of sophistication.
This is a major concern for businesses when they invest in critical support services in the region. While top-tier providers, such as IBM, Verizon and TCS rely on Egyptian resources, largely for call center work and software support and development, it’s hazardous when the government shuts off the Internet and all hell is breaking loose. What really concerns HfS is the unpredictability of problems like this surfacing, that can seriously impact the security and availability of key support services in areas such as IT services, finance and accounting, payroll, customer services etc.
Egypt, as an example, has proven capable as a good quality resource location for the Middle East, Africa and European regions in areas such as IT, BPO and call center services, and has invested significantly in promoting its capabilities worldwide. For example, Egypt’s Information Technology Industry Development Agency, ITIDA (website currently down) had planned to have a delegation at the forthcoming NASSCOM conference in India, and has invested heavily with McKinsey to support and help develop its capabilities. The country has invested millions to promote its sourcing capabilities – and now, that investment is looking under threat.
The rampant, viral proliferation of social media is clearly fueling unrest in many nations that have high unemployment and undercurrents of dissatisfaction among their younger people. If situations, such as what is currently happening in Egypt, proliferate to other countries with sourcing support services, the first reaction of governments now seems to be to “shut off the Internet”. You have to question how this impacts ITO / BPO services that are hugely reliant on a robust Internet to succeed – not to mention a stable political environment. The Egypt situation is a serious blow to many of the developing nations seeking to take their share of global services, which have potentially questionable political stability.
Advice to organizations with globally-dispersed support operations
1) Ensure your service provider has proven rapid response strategies to cater for unexpected political and geographical risk. In the case of Egypt, this could entail transitioning services to emergency back up units in locations that can service EMEA countries, such as Jordan, Israel, Dubai, or even Poland, Hungary, Czech Republic, Romania or Bulgaria.
2) Ensure you know exactly how and where your provider backs up all your critical data and protects it in the event of a government coup.
3) Ensure you have financial provisions to compensate for business impact as a result of unforeseen political and geographical risk. Ensure these provisions are clearly structured, with appropriate metrics to compensate for business downtime and associated lost revenues.
4) Invest in a political risk analysis of countries where critical business and IT processes are being supported. Compare the risks of occurrences, such as the Egypt situation, with the cost-savings and business benefits of using these locations. Saving 30% from your bottom line will be moot, if you can’t run your business properly for long periods of time!
The bottom-line
What is clear, is that Twitter, Facebook etc. are rapidly inspiring large numbers of people in nations with high unemployment to protest, where they feel their governments don’t “listen” strongly enough to their grievances, and aren’t pushing political reform at the same pace as economic reform. There is real fear now that the uprisings in Iran, Tunisia and now Egypt will continue to exacerbate in other nations, and this is going to have consequential ramifications on global sourcing decisions. Surely, this puts those nations with more mature political systems in a much stronger position to develop their services delivery industries. And in today’s post-recession global environment, this also includes onshore/nearshore/rural shore locations in countries such as the US, UK and Ireland, which have become more attractive in terms of labor costs.
Yes, quite how this ramshackle outfit today celebrates its first birthday is quite beyond me. Exactly one year ago, we bravely declared we were a research company, with a bunch of friends, stringers and part-timers. 
*It would have been extremely messy if KPMG had tried to hire away these folks one-by-one. They have retained the top talent and have created careers for them within their organization.
