Euan Davis, Managing Director, European Practice, HfS Research
Many of you sent us mail today regarding the new HfS RAPIDInsight on CSC’s new services integration strategy (see earlier post). Our European research lead, Euan Davis, was at the unveiling of the new strategy in Prague a few days’ ago, and outlines his thoughts further...
I liked what I heard at CSC’s European analyst event. The provider outlined two strategies dealing with the short and long term realities of how you, the customer, buys IT and business services:
1. CSC’s cloud strategy is a short-term play, and I liked it because it recognizes the realities that many customers running down their existing contracts face today –i.e. to radically lower the cost of service delivery and create more flexible sourcing strategies. CSC offers a clear adoption path with lots of tools and support for its customers so they can begin shifting manageable chunks of their existing contracts to the great data centre in the sky. Nice.
2. The more intriguing long term play is CSC’s positioning to be your “Service Integrator.” As a service integrator, CSC would marshal an eco-system of IT/BPO providers on your behalf, setting predefined delivery roles, mutual commitments, swim lanes and incentives for all your providers. CSC sets the model up so each provider shares, collaborates and innovates together and then ensures everyone pulls in the same direction. Nice. Sounds great in theory, right? However, running this model is hugely complicated and it hardly pays out for a player the size of CSC. The revenues accrued for setting up and driving the model for example, can never match what one of CSCs smaller, profitable service lines delivers today, so it begs the question, why? Because they want control and being a service integrator offers them a leg-up as a partner. Moreover, if CSC doesn’t step to the service integrator role, one of its competitors will, and it will get boxed-in as a second tier provider lower down the client food-chain and wind up scrapping for lower-value business with other second tier – and often cheaper – competitors. The real question to ask, is will customers buy into it?
Many will see risks in handing CSC such a vital part of their governance function. Business processes underpinned by IT, need service orchestration to work, no doubt, but would you hand this over to CSC? Some can – and will – always want to do this piece themselves (read our earlier piece on different approaches to service cultures). Others think they have the skills and capabilities needed to quantify risk through an extended services supply chain, and can manage all the moving parts but with cloud it’s only going to get harder and harder.
I do feel the wind is blowing in CSC’s direction however. My conversations with clients point towards more systematic sourcing models built around multiple providers emerging, a phenomenon that all things cloud will drive. Who, or what, does the service integration—in-house or outsourced—is the interesting question. Outsourcing service integration needs some guarantees (or policing) so customers know that the integrator isn’t going to feed its own business but mark my words with ever more sophisticated deal making and governance controls emerging on the buy-side and ever more risky services from the cloud we’re going to see some very interesting set ups emerge over the next few years.
Love to hear your views – either here, or you can email me at euan dot davis at hfsresearch.com
CSC recognizes the need to move away from "old world" thinking… but can it change with the times?
CSC has struck out in a new direction sketching out a long-term position as a “service integrator” and laying out a cloud strategy that goes beyond the usual hype.
CSC needed to realign and refocus as the large outsourcing opportunities declined and its customers transform and trigger demand for new, agile services. It’s a step change for the company— and the right one—as it looks to ditch the baggage from its large outsourcing business and emerge as a trusted partner for its clients. It understands that customers are sourcing cheaper and faster in a fragmenting market and that they want to consume services, while minimizing risk. The real test is whether CSC can channel its pricing and engagement models, its service management frameworks and—critically—its sales team in the same direction as the new IT services ecosystem emerges.
CSC has struck out in a new direction sketching out a long-term position as a “service integrator” and laying out a cloud strategy that goes beyond the usual hype.CSC needed to realign and refocus as the large outsourcing opportunities declined and its customers transform and trigger demand for new, agile services. It’s a step change for the company— and the right one—as it looks to ditch the baggage from its large outsourcing business and emerge as a trusted partner for its clients. It understands that customers are sourcing cheaper and faster in a fragmenting market and that they want to consume services, while minimizing risk. The real test is whether CSC can channel its pricing and engagement models, its service management frameworks and—critically—its sales team in the same direction as the new IT services ecosystem emerges. The vision is right but the implementation is critical…
Download our latest HfS RAPIDInsight to read our full analysis of CSC’s challenges and opportunities ahead.
We all make curious decisions in life, like when you accepted your mum’s Facebook invitation… or when Bill O’Reilly decided to be born.
However, these pale in comparison when one of Europe’s finest services analysts traded the corporate upper-echelons of Forrester Research to help kick-start a quirky little feisty research upstart, that was launched out of a blog – with a name no-one the left side of the Atlantic understands. But it happened: Euan Davis really did join HfS Research!
Euan spends so much of his life writing analytical stuff, that he’s never been so nervous as when he’s had to (gasp) put analyst protocol aside and actually write a blog post for the bagel-and-coffee delights of the interested sourcing onlooker. So over to you Mr Davis, to tell us…
Why I decided to Run with the Horses
At the start of April every year my fellow Brits gather in their homes (and the lucky ones, in the pubs) to enjoy one of the greatest spectacles in the horse racing calendar: The Grand National.
Horse racing may well be the sport of Kings, but compared with the Kentucky and Indian Derbies or the Melbourne Cup, the Grand National is the most royally gruelling race, with 30 fences set over a distance of four and a half miles.
Days gone by saw horses and their riders suffer terribly on the National’s staggeringly high jumps. I remember watching in 2001 as only 4 horses finished out of a 40 strong field as the bad weather coupled with the course’s treacherous jumps took their toll—that year a 33/1 outsider won and by luck I liked the name so I backed it. Last year, the bookies favourite won but plenty of times I’ve seen upstarts enter the race and collect the trophy after a spell-bounding 10 minutes later….
In my eyes I see HfS as the young upstart in the research business with its analysts (horses) full of vim and vigour and chomping at the bit to challenge with leading content, robust analysis and long reach into the crowds that come to watch us. But enough of the horse analogies—I have made (and heard) enough already—let’s just say I am delighted to beat HfS.
Readers of my blogs here will find collective thinking into how the evolving services landscape will shape demand and how service providers will respond. I intend to connect tech savvy business leaders, enterprise architects and sourcing executives together with the wider universe of IT/BPO providers to explore the key issues impacting the demand and supply of IT services. HfS provides a platform to share ideas, in addition to broadening the debate.
My research here will focus on three themes that we feel really matter for buyers and sellers of IT/BPO services—
1) Making multisourcing and service integration work. Those of you that have read my research will know how fascinating I find multisourcing and the governance needed to enable it. We are moving to a multi-provider eco-system and customers want their providers to share, collaborate and cooperate together rather than upselling and competing with one another.
My thinking is that some of the larger IT/BPO services firms will morph into collaboration hubs for their clients. They will become “service integrators” and drive the collaboration and cooperation between providers that effective multisourcing needs to drive value. And, as Cloud grows in its maturity—and it will—the role of the service integrator will become really important in minimizing risk, and guaranteeing operability and performance.
2) Sourcing through the Cloud. What analyst worth their salt is going to ignore the biggest game changer in the IT/BPO services industry?! Through all of the jumbled thinking customers get it. New and fresh buyers are emerging from business rather than IT that are keen to experiment. I reckon we’ll see a new generation of business leaders navigating through all the security, risk and compliance issues to create new revenue models based around agile processes that hang around the cloud. As a jaded ex-ASP analyst (remember that?), I was dubious when I first saw the vendors all jump at once, but you know what changed my mind? The iphone….Voucher Cloud changes how and where my family spends its money and the possibilities are endless for other location based services. So many companies are asking questions concerning how they can “Cloudify” their contracts that it’s right that I focus here. We’ve just finished a cloud survey with the London School of Economics to over 1000 IT and business professionals and the results are startling…I will be running excerpts of this study over the next few weeks.
3) IT and BPO services. As a “BITs” analyst (BPO and IT services) of many years I will be continuing coverage of the European IT and BPO landscape. Expect to see HfS cover the main markets for readers that want a global view. Infrastructure and application services, business process outsourcing, and transformation services fall under my European coverage. I will support customers with their service provider evaluations to figure out which the right global delivery acumen for their needs. I will be developing new tools for HfS customers that will allow you to select the right provider for an engagement in an open and easy way.
Euan Davis, Managing Director, European Practice, HfS Research
HfS gives me the opportunity to connect with so many IT and business professionals be they enterprise architects, sourcing practitioners, CIOS on the buying side but also with the IT/BPO providers and I would invite you to contribute your thoughts as you see fit. Expect to see my new research highlighted here, interesting articles that I find and insightful Q&A with those that are grappling with these mega trends and whose experience can deepen our collective understanding. I am very excited to be joining HfS and working with you all.
Cheers!
Euan
Euan Davis (Pictured) can be reached at euan dot davis at HfSResearch.com. He can also be found on twitter: @euandavis. You can read his bio here.
Mike Salvino, Group Chief Executive for Business Process Outsourcing, Accenture
Many of you were wondering what happened to Sal since we kicked off our discussion last month. Well, he’s been on a shopping trip for Ariba’s services organization, in between his tour of the North Carolina junior basketball circuit.
Anyhow, we caught a time-out from Accenture’s BPO overlord to get a glimpse of his vision for the future of the BPO industry..
Phil Fersht: Picking up from where we left off last time, how are you seeing this kind of cross-over between this thinking around Cloud and companies pushing forward with business-focused offerings – what we’re calling business-process-as-a-service, (BPaaS)? If you take out your crystal ball, how do you see this ultimately coming together when you to look at the way this industry is going to be in a couple of years time? Do you think we are going to see deals happening where business processes are literally running in the Cloud?
Mike Salvino: I think it’s going to be longer than a couple of years. Everybody wants to throw away the existing offerings and talk about the future, but the existing offerings still work. There will still be a lot of demand for core horizontal offerings, and there are still companies that are doing it at a scale. Now, having said that, you can’t ignore the cloud. It’s going to be like the Internet. Somebody is going to figure out how to exploit it, and it’s going to give people increased computing power.
So look at our premium technology support business. We’ve hired very smart resources in our offshore delivery locations, given them access to information, and within a 24 to 48 hour period we can start debugging calls for clients. That’s compared to saying to clients, “Yes, I can put in a little call center business, here is what we are going to do and here is your six-month transition plan.” That’s a game changer. Not all processes can be on-demand, but invoice processing, sourcing, e-auctions, debugging computers and mobile devices, answering customer complaints all can be on-demand. Now, how you actually get there, or what kind of service to provide, that’s what we as an industry need to very quickly sort out.
Again, this will evolve over the next several years. Some niche plays, like premium technology support, will really take off. But the old reliables, such as F&A, procurement and HR, will still be around. And I don’t think you can look at the future without really understanding the past. You can make all the promises you want, but if you are not delivering on the client’s business case it will be a short-lived contract.
Phil: Looking to the future, I think in a relatively short time we’ll be able to bracket the innovators and the operators in this space. And the winners will be those who can really do both well. Right now, several providers in the market are clearly pushing a very operational agenda, but they are also pushing a thin veil of innovation. Do you think that’s going to continue, or do you think that clients are wising up now and looking much more realistically at what can happen? How do you see that playing out?
Mike: This game is no longer just about cost reduction and better processing transactions using Six Sigma. You have to do both of those, but assuming past data will help you predict the future, you also have to analyze the transactions, analyze the data, and then take what we call “industry insights” and help the client to change its business so it can run its business better.
If we can say to a client, “Based on what we’ve seen processing your invoices, or based on doing your procurement, we can tell you where to make more money in the next two quarters,” they will love us. I’m pushing my team to combine this type of data along with their industry knowledge and have the “past history will tell you a story” discussion with their clients, which is a very rare occurrence in this industry.
When contracts come up for renewal, we’re always asked, “Were you guys innovative enough?” What this really means is, “Did you press us to do something we couldn’t have done ourselves, and couldn’t have seen ourselves?” As providers, we need to be able to find ways to help our clients generate revenue based on the processing we are doing today.
There’s a whole bucket of providers trying to get into the cost savings and Six Sigma game. There’s another set of providers in the middle ground who’ve figured out the cost savings and Six Sigma game, and are now trying to figure out what the next step is. Many of them talking are about analytics, which is fine, but if you don’t have industry insights on top of those analytics, the data’s not going to be any good. And then there is a group of providers who are delivering the insights and have referenceable clients around them.
Phil: So where are you folks are placing your bets for the future of your BPO business?
Mike: We’re focusing on three things: industry wrappers, alternative delivery models and technology.
First, we’re wrapping industry flavors around our horizontal offerings to make them more relevant to a specific sector. For example, F&A for the retail or telecommunications industry.
Second, we’re coming up with hybrid models to help clients get things going quicker and faster by moving consulting projects into small BPO projects. It could be processing invoices to help a client deal with its backlog, or turning a sourcing project into a multi-year commitment – essentially making it easier for our consulting clients to buy BPO.
We’re also putting all of our self-service, metrics and analytics under one tool to show how HR, F&A and procurement can all play together to drive insights. While many of our competitors are going even deeper in one area, we’re trying to push the areas together to see what kinds of insights this provides us. And in terms of the cloud, I’m getting to see all the neat things Kevin Campbell, our Group Chief Executive of Technology, and his group are working on, and then working with my team to figure out how to apply this to BPO. Clients love sharp and innovative technology.
Mike Salvino (pictured) is Group Chief Executive for Business Process Outsourcing at Accenture. He is responsible for the firm’s BPO growth platform, and its comprehensive portfolio of cross-industry and industry-specific business process outsourcing (BPO) services globally. He rejoined Accenture in 2006 from Hewitt, where he served as global sales and accounts co-leader for Hewitt’s HR outsourcing group. He also served as president of the Americas region for Exult Inc., responsible for the company’s business in the United States, Canada and Latin America, prior to that company’s acquisition by Hewitt. You can access his full bio here.
According to HfS analyst Esteban Herrera, he’s seen weeping, object-throwing, suicide threats, uncontrollable roll-on-the-floor laughter, walk-outs both staged and unplanned, and even a handstand.
So let’s hear more from Esteban about about that strange place – the negotiation table…
As an outsourcing advisor for about a decade, my favorite part of any deal was the negotiations phase. Now, I realize that for many of you, that sounds like a serious illness, but it was, without a doubt, where I had the greatest impact in building a healthy relationship between two enterprises that would actually last. I’ve had the opportunity to work with some great attorneys, colleagues, clients and providers. I’ve also worked with some that would not be accurately described by the last sentence. With triple-digit deal negotiations behind me, I’ve learned a few tricks of the trade, including how to manage my famously fiery temper!
There are hundreds of great books on negotiating theory and practice, and HfS is not here to rewrite any of them, but we can shed some light on how to apply these tactics successfully in an outsourcing negotiation. A big part of it comes from saying what you mean, but it also requires accepting that buying outsourcing is not like buying a car, or toilet paper, and that your experience at the local Chevy store or purchasing MRO may not give you enough to be successful.
Negotiations need not be miserable:
I once negotiated an applications deal in a day and a half. There were five people in the room. The entire contract including all exhibits was less than 100 pages. That relationship is in its fifth year, has been renewed, and is working out great by both parties’ accounts.
I may be the only advisor to ever agree to help clients negotiate on a fixed price basis. It can and has been done, and it aligns your interests with the advisors very well.
Esteban Herrera, SVP Enterprise Sourcing Research
That said, I do believe most enterprises undervalue the importance of expert advice at the negotiating table—the people on the other side of the table do this for a living, whereas even the most outsourcing-leveraged enterprise doesn’t negotiate much more than a deal or two per year.
Overall, we’ve made contracts and process to get to them more complicated than they need to be. I once showed an astute client who had been living in a hellish ITO relationship for almost five years the thousands of pages of wonderful artifacts my firm would produce. He said “I had those last time, and look where it got me!” He made an excellent point—it’s not the detail in the agreement that will make a relationship tick—it’s the commitment and the individuals who live it every day. HfS Research is committed to helping our clients conduct simple, productive, relatively painless negotiations.
To read our Best Practice report on Real World Negotiations, click here. And feel free to share your war stories too!
This new HfS report (click here to view) dives into the experiences and expectations of a selection of today’s most experienced enterprise Finance and Accounting (F&A) BPO buyers, when it comes to achieving innovation.
We spoke to a collection of major F&A BPO customers which have achieved some form of innovation as they went through the F&A BPO experience with a major service provider. Here’s what we cover:
– We look at Microsoft’s BPO experience with Accenture, as the software giant leveraged a global BPO model to consolidate and transform multiple global finance and procurement operations.
– Then we examine Cognizant’s work with a major multi-billion dollar grocery retailer, which had doubled in size through an acquisition in June 2007 and needed to make its post-merger finance organization more effective.
– We investigate Genpact’s endeavor with a global manufacturer to deliver process improvements to improve days to pay.
– We look into Wipro being called in after two multi-billion dollar retailers merged, to help consolidate and modernize the disparate financial operations.
– We examine how Infosys worked with McClatchy Newspapers to develop a custom application to manage advertising billing, accounts receivable, and scheduling of ads for newspapers.
– We take a look at how Vengroff Williams & Associates worked with a US manufacturer to improve its collections processes, which were previously held back by its technology.
– And finally, we see how WNS worked with Ally Financial (formerly GMAC) to accomplish dynamic corporate objectives against a backdrop of economic peril.
Ritesh Idnani is Chief Operating Officer for Infosys Airways
When last we left Infosys BPO COO, Ritesh Idnani, in Part I, we were discussing the priorities of businesses in today’s sluggish economy.
In Part II, Ritesh explains the changes in the BPO industry from his perspective – with particular emphasis on the advantages providers can gain by investing in industry-specific nuances to their BPO offerings.
Between parts I and II, he actually purchased an airline with his airmiles account…
Phil Fersht: Some people have joked, in the past, that Infosys is the Indian Accenture. But for our readers, how do you view Infosys as differentiated from your prime competitors? If you have to really put a nail on it in a couple of simple point forms, how do you do that?
Ritesh Idnani: We certainly have a lot of respect for Accenture, we hold them in very high regard. Having said that, we do believe there are three or four things that differentiate us from the rest of the pack. We have a broad array of solutions that we believe will allow us to enable client outcomes that extend far beyond cost reduction and business efficiencies. Our ability to address all ends of the spectrum be it impacting client revenues, gross margin or net margins – these are critical differentiators because a lot of our competitors don’t necessarily claim that state. There aren’t too many companies out there who have been able to effectively converge operations and technology, and demonstrate a business benefit that is tangible. We have more than 90+ proven case studies in the system that quantify the business value that we have been able to drive in the client ecosystem I don’t think our competitors have nearly the same kind of capability that we have in terms of demonstrating this across different ends of the spectrum whether it is technology solutions and process that can address a specific area within a process toPlatform & Cloud-led BPO that addresses an end to end spectrum in the client process matrix.
Our ability to maintain a high degree of nimbleness and responsiveness to the market place despite a rapid growth in size and scale is another key differentiator . I think that’s something that allows us to differentiate ourselves very rapidly because we are able to be much more adaptable to clients needs and yet, at the same time, call a spade a spade if you will. I think that is something that is different from a lot of our competition.
In some sense the first battle was on global delivery and I think that was something that we won on our terms. The question is how do you extend the full suite of offerings that we have and ensure that you can scale the business at a much more rapid pace. So today, in some cases, it’s really up for the incumbents to defend and protect their turf. Can they demonstrate to their clients that business benefits that never materialized in the past can now happen just because there is an Infosys knocking on the doors making it a difficult conversation for them? I think these are some of the things that have helped us.
I think the last piece of it is a very high degree of customer centricity in our interactions and also the very easy access to the leadership of the company.. We are a very flat organization. People are empowered. I think those are some of the things that have helped us as we have grown extremely rapidly. I think these are some of the elements that people saw of our culture that are helping us in our journey to grow at a pace which is faster than the rest of the industry.
Phil: With clients increasingly wanting you to expand your services that require real domain specialization in their industry, how do you plan on accommodating their needs as far as staffing in acquiring the expertise that you need within Infosys?
Ritesh: Actually, one of the things that we were probably first off the block to do as an organization more than five years back was to actually verticalize our BPO. Back then, the industry was predominantly focused on G&A (general and administrative) process – and a large part of our competitors still operate predominantly on the G&A side of the P&L, offering F&A, HR, procurement , offerings primarily on the horizontal side.
I think we ended up doing a couple of things. One is verticalizing our offerings. Our ability to contextualize the G&A offerings from a vertical standpoint holds us in good stead Let me give you a few examples of that and how we manage it in our day to day practices. If you take the media and publishing space as an example, royalty accounting is a big pain point for the industry today, specific only to the media industry. You are not going to run into it in another industry. In the insurance sector as an example, regulatory reporting, whether its yellow book reporting or blue book reporting etc., is going to be extremely critical and those are very industry specific conversations on the G&A side.
Second is the ability to impact the cost of goods sold side and the revenue side of the equation.. We built out a wide variety of offerings – as an example, we have close to about 35 vertical led offerings for different industries that we operate in. Let me give you few examples of that. I gave one example a little earlier in response to a question, the media side. In that industry, for example, we are talking about the long tail monetization that you have in that sector, but not so much in others. On the manufacturing stage, we are talking about how we can assist in the warranty administration side. On the consumer package goods stage, we are assisting companies to improve their field force effectiveness? These are very specific to those particular sectors and because we had the orientation right from the last five years, I think that is something that has helped us stay ahead in the game
The impact of verticalization for instance has a huge import on our ability to leverage domain and build relevant industry skills in our people,.We have also consciously made it mandatory, from a promotion and progression standpoint, for all of our associates, to obtain different industry certifications. For instance in the insurance industry, we look at the types of industry certifications that are there(We have five levels of mandatory training that are specific to each vertical that we operate in so that people get oriented and familiar with the specifics for that industry. So when they walk into a mortgage environment, they are not going out there and asking, “What is origination?”, “What is default management?”, “What are the different rules and regulations that are there?”, “What are the latest norms that are coming in the form a regulatory standards?” These are things that people are already familiar with before they go because of the training that we are providing. It is also a combination of internal and external orientation.
In their performance management systems, people have to list out the trainings they will take for every six months. This is essential because the appraisal system is not complete unless they do it. We have tried to ensure that every employee has a certain amount of training which is vertical led with both internal and external certifications. This mandates the promotion and progress. Managing both of those steps is helping us to provide offerings that are largely differentiated in the market with a very strong vertical orientation.
Phil: So when we talk about verticals, many of your competitors have structured their businesses by very distinct industry segments, with several of them operating almost in vertical silos – there are a lot of differing voices in the industry on this issue. We wrote a report on this, recently, to show that a lot of clients are much more willing to innovate and collaborate with other clients who aren’t in their direct industry sector. How is Infosys tackling this, and what’s your own view here? What’s the best way to service clients across industries in the future, and how should providers really structure themselves to service them?
Ritesh: I think a lot of innovation that is out there can come from the business and operations mandate in one industry and how you reflect and imbibe that in another industry sector is something that’s a very important question. For instance, today you look at the marketplace; we are focused on basically a few strategic themes to an organization. We believe these seven strategic themes cut across industry sectors.
The first one is centered on what we call the power of one. Our belief is that our clients’ customer is increasingly getting micro segmented and therefore you need to have specific product offerings, which are geared towards that particular consumer. How you actually create offerings which are addressed to that particularly individual rather than treating everyone in a uniform way is something that is going to be extremely critical. I think that’s a common challenge that a lot of our clients across industry sectors are facing.
I think the second piece of it is the changing demographic of the work force. The fact that you have a lot more Gen Y people coming into the work force is creating a lot of challenges in how people orient themselves to a new work environment and the fact that people are used to doing things in a different way. That’s a common challenge that we end up seeing across industries. The third one that we are seeing out there is centered around the impact of social media.
How do you monetize the impact of social media? I think it’s again a common challenge that a lot of our clients across industries are facing. While technology is buildings various solutions to address this, our ability from a BPO standpoint to monetize information through the complex social media space helps clients drive deeper industry understanding or analyse diverse stakeholder feedback. That knowledge is critical to drive business impact enabling differentiation in the market place.
The fourth one is mobility. Again, if you look at the impact of mobile technologies today, you can do all kinds of transactions whether it is using the iPhone, the iPad, the Internet, any medium that allows access remotely. How do you create applications and solutions that are geared for that is something of a challenge that a lot of our clients are facing across industry sectors. (We may want to add seamless mobility into this. For instance our ability to load on applications that can impact business not only from our customer;s point of view but also enhance client;s brand experience )
The fifth one is that as organizations have grown, they have become more complex and not as smart as they ought to be. How do you actually simplify these organizations from an operations, process and technology standpoint? I think that’s a challenge that a lot of our clients are facing.
The sixth one is centered around what I would characterize as the potential of emerging markets and the ability of clients to penetrate and create relevant differentiation in these markets.. This is where a lot of our clients today are looking to operate given that the rates of growth are slowing down in the more mature markets The requirements in emerging markets BRIC countries are widely different from the more mature markets. There are also industries in the BRIC countries that are growing not just at the GDP level at the seven to nine percent rate, but also every company that has its operations out there is growing at 30 to 40 percent. I was with a client recently in Sao Paulo and that client has grown in the last three years in the Brazilian market at 40 percent compounded and they expect their business to grow to being a ten billion dollar business from one billion dollars in the next ten years. That’s the kind of potential that’s there and providers need to be able to modify their solutions to build scale and account for locational business complexity We have built solutions that allow them to tap into the specific needs of emerging markets
Last but not the least is the entire question on sustainability. Every organization is trying to say “How do I do all of these themes, yet be environmentally conscious, in a manner which is sustainable in the longer term?” I think we have got solutions that are addressed to that.
These are the seven broad areas of focus that we believe will address the question on, “How can we take practices from one industry sector to another, and be able to apply them successfully to enhance the business value of the equation.
Phil: Are you getting more involved with your clients’ customers?
Ritesh: The nature of outsourcing has evolved to being very strategic especially in conversations that we have been having with clients where either the duration of the relationship has achieved considerable length or where there are large areas of business operations being outsourced . This I believe is the second level of innovation, in that that we find ourselves a lot of times at the center of the ecosystem. For instance, you may be working with a consumer goods package company, but that company has a bunch of retailers who are its customers. We end up finding ourselves supporting both the consumer package goods company as well as the retailer and, therefore, be at the center of the ecosystem. We can see supply chain inefficiencies on both the consumer package goods side as well as on the retailer side. How do we actually tie these together being at the center of the ecosystem and how do we get them to talk to each other? So we can be in a very unique position today from an industry standpoint because we are working with our customers and their customers at times, especially in a B2B context. We may have visibility having worked on applications and processes at both ends that a lot of our clients may not be able to directly see.
That, in turn, raises different states of innovation that might become visible. So those are some of the things that we are working on very well, very consciously with our clients. We believe that there may be opportunities out there for benefactors sharing across industries as well.
In the third and final part of our interview, Ritesh expands on communication, networking through social media, and career advice for those entering the industry. Don’t miss the conclusion.
Ritesh Idnani is COO for InfosysBPO
Ritesh Idnani is COO for Infosys BPO. During his time with the firm, the BPO business for Infosys has scaled ten-fold from a $40m business in 2005 to a $400m+ business in 2010 (the forecast is for Infosys to report revenues anywhere between $405m-$420m by end of current fiscal). He has led two of Infosys’s largest acquisitions in the last 4 years, McCamish Systems, a leading provider of life, annuity and retirement services products in 2009, and the shared service centers of Philips in 2007.
Prior to Infosys, Ritesh has held exec roles with PwC and Citigroup. He lives in Basking Ridge NJ with his wife and twin boys.
Wake up chaps! Rocket-fuel Frank has saved the day…
It’s been quite a few days in the world of New York outsourcing events… first-off, the Global Sourcing Forum was cancelled over the weekend when the organizer had some sort of to-do with the Marriott hotel venue (I’ll never forget how they downgraded my status while I was on my honeymoon…).
Then, the most unlikely of heros, realizing everyone had already bought non-refundable flights, stepped in to save the day. Yes, Frank Casale, the rocket-fuel behind the Outsourcing Institute, has pulled together a last-minute event this Wednesday (tomorrow). I didn’t write this, so please forgive me in advance for the self-promotion 🙂
The details are as follows:
Date: Wednesday, October 13, 2010
Time: 9:30 Registration; 10:15 Start
Place: The law offices of Kelley Drye, 101 Park Avenue, New York, New York 10178-0022
Program Fee: Waived (that means free)
Exchange Best Practices, Exchange Experiences , Exchange Business Cards
Keynote Speaker: Phil Fersht, CEO for HfS Research, well-recognized outsourcing analyst, strategist, blogger, advisor, and practitioner across BPO and IT services worldwide. Phil will kick off the day with an industry insider’s commentary and analysis: “Desperately Seeking Innovation.”
ITO/BPO Case Studies: Actual Case Studies and Lessons Learned, from the people who lived them
Outsourcing Trends and Opportunities, and How your Company Can Leverage Them
Cloud Computing: Realities and Fantasies
Built-in time for networking and learning with senior level executives
If you would like to reserve your spot, please RSVP – ASAP by simply dropping an email to [email protected]
Ritesh Idnani is Chief Operating Office for InfosysBPO
Several people at Infosys have told me that noone spends more time traveling across the globe than the COO for their BPO business… Ritesh Idnani.
So when we teed up an interview with him, I asked him how many airmiles he has racked up, and his response was simply “am getting close to George Clooney’s character in the movie Up in the Air.” I assume he’s referring to the airmiles account…
Ritesh has been a constant energy behind Infosys’ development as a BPO provider for a number of years, leading both the sales and operations for the group, which has multiplied its revenues 10-fold during his five years tenure for the business.
It must have proven quite a ride to be involved with an aggressive market entry, a mini-boom, a Recession, and now a quickly-maturing business. We managed to divert Ritesh from his very fine single malt collection to talk about his experiences and where he sees this all heading down the road.
Phil Fersht: Thank you so much for spending time with us, Ritesh. I think we have come off the initial good feeling of coming out of the Recession, and a lot of the companies are grappling with the reality of today’s business climate. Are you seeing lethargy on the buy-side or are you beginning to see some momentum being built from your customer base with regards to growing business?
Ritesh Idnani: If I look at the last18-24 months, most of our clients have essentially focused on the cost side of the P&L quite extensively and done some of the standard things that they would do whether its around work force reduction, sale/ leaseback of real estate etc., all of which has contributed tremendously to the bottom line if you will. But if I would look at the one factor that is still a question mark for a lot of firms, it is the fact that the revenue side of the equation is still very sluggish for them. The new normal in some ways is the fact that unemployment still continues to be hovering around double digits.
The macro economic data still is a mixed-bag.. We saw some of the data on the the housing side, which came out last week that wasn’t very good.. The fact that revenues are still not growing meaningfully for our clients has meant that a lot of these folks are still struggling for where they are likely to get their next big jump. What that has meant is that service providers who have a suite of offerings that stretches beyond the G&A side of the P&L have been very, very relevant. So all the conversations we have been having are focused on the revenue maximization side and on impacting the cost of goods sold.
I think from that standpoint, while a lot of the firms have looked at what they can do, I think the revenue side of the equation is certainly something that they are looking forward to having discussions on. So we have been having many more conversations now on that than we did.. Fortunately, there are going to be people who are going to be listening to you at the C-suite of our clients
Phil: So where do you see the continuing challenges that are happening in the market right now when you look around the conversations you are having, both from the Infosys perspective but also from the clients’ perspective when it comes to BPO?
Ritesh: I think from a buyers’ standpoint there are two shifts that are there. One is that they want to start realizing business benefits very quickly and I think that is one part of the conversation that is there. Its not a question of saying lets give this four to eight quarters to kind of stabilize and then lets figure out how we are going to start realizing the benefits on our business case. Sometimes this has got a very close correlation with the fact that cash is king. It is also reflected today in the fact that you have 2.3 trillion dollars of cash sitting on the balance sheets of all of our clients. That says something in terms of how we are affording and preserving cash in this environment, which also means that our clients want to realize the business benefits sooner rather than later.
I think the second piece of it is the entire value equation itself. I think this has probably been more prominent as a discussion point than it ever has been in the past. I think discussion beyond labor arbitrage, beyond process improvement, is very much on the table. The ability to demonstrate business value far beyond these two value levers is certainly something that is relevant to a lot of buyers today. They want to understand how technology can influence a business outcome, “How can we leverage technology to drive a certain outcome itself? How can that impact and influence the business profits?” I think these are conversations that are very much on the table, much more so now, because everyone is looking at ways and means to variablize the cost structure to the maximum possible extent, and to the extent that you have solutions which address that, I think that is going well. It is one of the reasons why we believe that our strategy of converging operations and technology, and the things that serve the next big thing will drive a force to multiply the effect. One example of that is the heavy success that we have seen on the platform BPO side with the offerings that we have been taking to the market. One of the clear propositions with that is the fact that clients with minimal upfront investment are able to variablize their cost structure and they are able to realize the business benefits. It goes far beyond the traditional labor arbitrage and continuous process improvement.
Phil: One of the things that have been coming up in the recent conversations has been the tendency from a lot of the incumbent providers to over-complicate, be too difficult to deal with, try and always do things on their terms. We are seeing some of the emerging providers keeping it simple, really help the client understand what they are trying to do, and start off a contract in a much more simplistic fashion. Do you think that’s the case in BPO, where clients get scared of this our way or the highway approach, or they prefer an easy-to-work-with style?
Ritesh: A lot of it is really a function of the value drivers that are impacting the buy side at this point in time. For instance, if you find a particular company which is owned by lets say a private equity firm and there isn’t a quarter on quarter pressure out there around, there are interest covenants that need to be paid back etc., then the pressures to impact the business in a certain way may be higher. That could result in an all or nothing approach where what they are doing is to actually open the keys to the house and say, “See where you can impact me.” I think that kind of conversation has a significant play because they are looking to try and see what they can do in a fairly short period of time.
I think however it’s fair to say for most people, it is still a question of trying to improve the model. We want to still test the efficacy of the model in a small simplistic fashion, and then grow from there. Having said that, people also want to see the end of the road map. So you may end up starting with the head-count based model but I think people clearly want to see the path you will take to get them to a business outcome driven model where there is a greater skin in the game, where there is a higher risk shared with the service provider or the partner is willing to assume.
I think it’s important for the service provider to lay that out upfront, rather than just trying to play on head count or price because I don’t think that’s a winning proposition. I think that the other thing that the buy side is certainly looking at is. “Is this a partner for the long haul as opposed to the short haul?”
So you might look to outsource a process like AP to start with. But the question that the firm is asking is, “Do you have the capability to service me across both revenue and cost and not just on the F&A side for a particular process?” So as an example, a consumer packaged goods company today might be saying, “Can you assist us with great trade promotions from a field force effectiveness stand point?” A media company is saying, “How can you assist us on the long tail monetization side?” These are revenue side conversations rather than cost conversations.
They want to know that you have a way to support them on that at any point in time in the journey. They want to have the flexibility to accelerate the pace at which they do it, once the efficacy of the model is proven. I think those are probably the key things on the table. I think at the end of the day, it comes down to balancing out risk, economics, flexibility and scale, and assuming the right trade off between all of these elements.
Ritesh Idnani is Chief Operating Officer for Infosys BPO
In the second part of our interview, Ritesh elaborates on how clients want increased partnerships with their providers and specialized expertise in vertical industries
Ritesh Idnani (pictured here) is COO for Infosys BPO. During his time, the BPO business for Infosys has scaled ten-fold from a $40m business in 2005 to a $400m+ business in 2010 (the forecast is for Infosys to report revenues anywhere between $405m-$420m by end of current fiscal). He has led two of Infosys’s largest acquisitions in the last 4 years, McCamish Systems, a leading provider of life, annuity and retirement services products in 2009, and the shared service centers of Philips in 2007.
Prior to Infosys, he has held executive roles with PwC and Citigroup prior to Infosys. He lives in Basking Ridge New Jersey with his wife and twin boys. You can contact him by calling American Airlines and asking for “George”…
