I've been avidly following Robert Peston's coverage of the economic crisis. Peston is the BBC's business editor and has built a stellar reputation for reporting the key facts on what went so massively wrong and what we can do to emerge from this crisis. His recent BBC radio discussion with Robert Wolf, Financial Times's chief economic commentator, Richard Lambert, director general of the CBI and Roger Carr, the chairman of Centrica and Cadbury, is well worth hearing. Key points discussed:
The UK is the most vulnerable economy, due to its unprecedented housing bubble and over-reliance on the financial services sector.
The strong sense of denial is fading – there aren't going to be any winners out of all this, just relative advantage.
Not everyone yet grasps this is a massive structural change – we're not going back to 2006. The massive consumer-led debt boom cannot be repeated. We might go back to fast growth, but the whole pattern of global demand will have to be different for that to happen. The world economy will have to be re-balanced in different ways.
We've done a very good job of driving short-term stimulus and saved the banking system, but the long-term solution has to be the restoration of healthy private sector demand across the world: that is the next stage of getting back to a healthy economy…but does the private sector understand this? There is an increasing awareness that we are interdependent. Unless the strong support the frail we will have continuing difficulty.
We must protects the emerging economies now and change the way we finance them. The IMF resources need to be bigger to protect developing economies.
We need to have serious intelligent dialog with the Chinese on how to make their growth more compatible with global stability.
All-in-all, you can really start to guage how crucial the role global sourcing has to play as we emerge in a new economic structure. The inter-dependencies across economies and businesses can be managed more effectively by firms adopting multi-cultural, multi-lingual and multi-regional delivery models. Both governments and businesses need to embrace both local and global talent to restore private sector demand over the long-term. What is abundantly clear is that we don't fully realize how this structure will ultimately develop, but we are quickly understanding the basics of what needs to change. The next stage is for both governments and business to work together on stimulating long-term demand and making these inter-dependencies really function effectively.
Folks – it's challenging cherry-picking which events are worth going to this year with everyone cutting back on the travel costs, but one you should definitely have on your calendar is IQPC's Shared Services Week, where I am hosting their F&A BPO session entitled Going Beyond the Letter of the Contract: Deriving Business Value From Your F&A BPO Experience, where I will be joined by my industry BPO friends Graham Russell (Astrazeneca), John Transier (Unilever), Mike Monaghan (Wells Fargo) and Sunil Narang (Level 3). Check out the session at 3.35pm on March 24th.
And even if you can't make the week, you can still catch the highlights here, with the Horses being the official blog for the show.
IQPC have offered Horses readers a discount offer: 2-for-1 Special – Bring a colleague FREE when you purchase a main conference pass at standard pricing. Reference code IUS_HFS_#1 to receive this discount. *Open to end-users only.
So why attend?
*A focus on quick wins for your shared services organization, with highlights on meeting short-term immediate gains and cutting costs without jeopardizing service levels
*An expert speaker faculty, including 4 Chief Economists, to demonstrate how to use survive the economic downturn and come out stronger on the other side
*Easy-to-customize conference experience: Choose between 7 tracks, including HR Transformation, Sourcing, Talent Management and Blue Sky Innovation Room, 3 Master Classes, 4 site tours and 16 workshops
*Expanded Exhibition Hall, networking opportunities and an exciting new year for the Annual Shared Services Excellence Awards.
4 Chief Economists will be speaking
Gregory Miller, Chief Economist, Sun Trust Banks Brian Fabbri, Chief U.S. Economist for North America, BNP Paribas David Wyss, Chief Economist, Standard & Poor’s W. Michael Cox, Chief Economist, Federal Reserve Bank of Dallas
I was stupefied to observe Alliance Global Services, a privately-held IT services shop, join the Satyam ambulance-chasers by promoting it's "IT Partners Bill Of Rights". Alliance is hoping to get 100,000 signatures supporting some version of its bill of rights and to have the document serve as a platform to establish a "global ethic consortium for IT services vendors":
The right to demand transparency throughout every step of an engagement — from sales to contracting to delivery and termination
The right to fully understand the nature and character of an IT partner and the service that it provides to them
The right to fully understand the financial viability of an IT partner
The right to be made aware of any impending legal charges against an IT partner, should they arise, as soon as they occur
The right to arrive at a mutually agreed upon definition of the term "trusted partner"
The right to expect a clear contract that defines fees and expenses up front before any agreement is signed
The right to terminate a relationship with no financial penalty in the event of any admitted fraudulent activity
The right to demand the existence of a truly independent board of advisers
The right to expect the presence of an independent financial auditor accompanied by a set of checks and balances
The right to demand accountability for any actions taken within the scope of a technology project or as part of a firm's broader business practices
While I cannot argue with any client requesting any of the above from an IT vendor (or any client of any services supplier in any industry for that matter), this media-marketing is shamelessly exploiting the Satyam situation to market its own services and take advantage of media-hounds hungry to add fuel to this controversy. One vendor cooks the books and suddenly the whole world of offshore outsourcing is crooked? Would this action really have prevented Ramalinga Raju doing what he did? Puh-lease!
This credit-crisis-fueled recession is testing us far more deeply than merely everyone shaving a few costs while we ride this sucker out. And while it hurts, a little pain should bring about some positives that go far deeper than mere penny-pinching. We need to dig deeper to understand more about what makes us good people: fun to be with, smart to do business with, and decent returners-of-favors. I have always (somewhat naively) operated on the “what goes around comes around” principle, but I truly believe these times will help many of us get what we deserve. I don’t mind doing people favors – I just don’t do them twice if the first one never got returned when I needed it.
But we will come out of this, and we will emerge a bit smarter, a bit leaner, a bit more streetwise, and I firmly hope this will bring the best qualities out of us. We may emerge a few percentage points poorer than when we went into this, but the world we will be living in should be one where we help each other out more, and appreciate what we have.
When I look at the way many corporates and people behaved during the greed years, I sincerely hope these experiences bring a degree of humility to us all. I live and die by my friendships – whether personal or work-related, and I know many of you who have the same principles will get through the next couple of years. However, we all know people who just focus on what they can get out of others and rarely put back – those are the people I fear for in this economy, and I hope learn to act with more humility as a result.
Anyway, I will finish this little diatribe with a couple of points about how to treat our friends and colleagues:
People: remember who your friends are. Stop thinking just about your career and your self-interest, but take some time to get to know people a little better – and not simply those aspects that can further your own goals and ambitions
Work: use this episode to get smarter at what we do. Focus heavily on providing value and put in a little extra time and effort. If you are lucky enough to be in a job, remember the unluckier folks who helped you along the way, and take some time to see if you can help them out. If you are one of the unlucky ones, call in your favors – you will quickly learn who your real friends are…
I write this piece at 37,000 feet above the Atlantic, it's my birthday… and I need a break from this presentation, so forgive me this little opinionated indulgence…just this once 🙂
Taking a detour from the Satyam fiasco, I have much better news for the Indian services sector based on brand new data on the procurement business process outsourcing (BPO) market. Only a couple of years' ago, barely a small fraction of procurement work was sourced from offshore locations such as India. However, it has now reached almost 70% for all current procurement BPO engagements. Read the full post at Think Global.
When we talk about "change", we're not just talking about Washington or Detroit. We also need to include OURSELVES.
The events of the past couple of months have given us all pause for thought with our careers and what we're going to be doing in a couple of years' (or weeks' / months') time.
We had a great discussion a few months' back when we talked about the challenges of staying relevant in today's corporate climate, and this current economic shift is driving this need for relevance right down to all employees in the organization. The "relevance" discussion now goes far deeper than roles and responsibilities, it goes right into demonstrable value-add, and the ability to impact revenue. Whether you work in sales, operations, finance, marketing etc., you need to be able to tie what you do to your company's mission and revenue stream.
Bad recessions bring out different reactions from companies with their approaches to steadying the ship and readying themselves for sustained profitability. These reactions nearly always result in staff reductions, reorganizations and aggressive means of reducing both variable and fixed costs. Past recessions have resulted with most companies "snipping" costs without changing their business models, and several firms even kept hold of all their staff and rode out the downturn in anticipation of recovering much quicker and stronger than their competitors. Most of the snipping was focused on low-performers.
This time is different. Most companies – right now – are snipping staff who do not directly impact their revenue, whether they be a low or high performer. Staff who may be incredibly talented, but focus on activities that are peripheral to the company's core revenue-generation, are at risk in today's corporate environment.
Employees at risk in today's corporate climate:
1) Staff working in new product lines which are yet to have matured, or are considered discretionary in this environment;
2) Staff in management roles that are largely administrative and have limited involvement in direct sales / client relationships;
3) Staff who are unpopular and considered to have a negative impact on revenue development;
4) Low-performers, which the company has wanted to shed for a while and now see the long cold winteras a chance to ease them off the payroll with limited reproach.
And if you are unlucky enough to get caught in the cross-fire, your next challenge is to understand why this happened. Most likely, you were unlucky and need to find a new opportunity that aligns you with another firm's core revenue channel. But if you dig really deep, you may have to concede that you need to develop your skills and knowledge to make yourself attractive to future employers, so you can directly impact their core businesses. I believe we'll see many people seeking career changes in the coming year as they concede their current skills and experience are no longer as relevant as they once were.
New growth and investment areas, such as health-care, renewable energy, new technology development, are going to be the lucky recipients of an influx of talent willing to retrain for long-term career security. Moreover, jobs in the public sector and education are now appearing far, far more attractive than they were a couple of years' ago.
All-in-all, we're moving into an environment where some industries will find their feet, others will decline and some may die altogether. Many people will be refocusing their careers in new areas that they may not have envisaged in the recent past. One thing is clear – we are in new era where people are going to have get used to change and learn to adapt themselves to new job roles, new routines… and new expectations.
Amigos – I'm excited to announce the launch of a sister-blog to Horses for Sources : here ariseth "Think Global", with focus on global delivery strategy, BPO, supply chain and IT services trends. My firm, AMR Research (God bless 'em) has admirably tolerated the Horses for a long time now, until finally asking if I'll consider extending my verbosity to our research content, to which many of you do not gain access. I've kicked this off with complimentary access to a new research article entitled "Beware of Myopic Cost Cutting: Use Outsourcing To Be More Competitive in This Economy".
I've always used the Horses platform as an outlet to knock around views, cultivate ideas and take the industry temperature. So many of you have been part of that. And, while we might not always have been 100% accurate, we've collectively generated so many gems of insight that I frequently read our commentary to add some color to what I am thinking – and I know many of you do the same.
The power of the blogsphere is truly extending to the analyst world. And while some of the other analyst firms have pushed their blog strategies for a while now, I am (for once) going to brag that none of them have come close to cracking the blogging code. Over here we have, and it's time to take it mainstream.
Horses will not be going away, but will run in tandem with Think Global. I hope you take a little time to pay a visit.
While you're there, please also check out the blogs from a couple of AMR's industry legends, Bruce Richardson and Kevin O'Marah. I'll see you over there…
When we look at the carnage of our economy, it's not too hard to come to one hard conclusion: we're at rock bottom. And we may even get worse than rock bottom, but fortunately the English language has yet to cater for an expression of such depths of bottomness, so we'll just stick with "rock".
The consequences of the next few months' policies are going to shape how we recover from this. And while many have tried to devalue the importance of the US as the epicenter of the world economy, noone can escape the fact that the US is tasked globally with dragging us out of our current predicament.
The Chinese have long-boasted that they can shut themselves off from the problems of the West and thrive on their domestic and regional dominance, but the world's second-largest economy is now suffering from more severe recessionary problems than those which Western countries are going through (Iceland aside). They thrived on the US economic prosperity and its free-spending of the last two decades.
And having just spent three days with the leading retailers at the NRF show, all I can tell you is we're in dire need of an economic stimulus package and some new leadership. What a time for a new President to take the reigns – and what a mandate he has to make some bold new policies. Just when we're running out of hope, here comes the audacious one. Over to you Mr O… you couldn't have dreamed of a better platform to change the world.
This credit-crisis-fueled recession is testing us far more deeply than merely everyone shaving a few costs while we ride this sucker out. And while it hurts, a little pain should bring about some positives that go far deeper than mere penny-pinching. We need to dig deeper to understand more about what makes us good people: fun to be with, smart to do business with, and decent returners-of-favors. I have always (somewhat naively) operated on the “what goes around comes around” principle, but I truly believe these times will help many of us get what we deserve. I don’t mind doing people favors – I just don’t do them twice if the first one never got returned when I needed it.
When we look at the carnage of our economy, it's not too hard to come to one hard conclusion: we're at rock bottom. And we may even get worse than rock bottom, but fortunately the English language has yet to cater for an expression of such depths of bottomness, so we'll just stick with "rock". 
