My good friend David Kinnear has been working hard to drive the Global Sourcing Council over the last year, and has some passionate views on how today’s industry should approach global sourcing. David has submitted a compelling argument about how we should look at the longer-term remifications of the global outsourcing climate today. Before I send you over to David, I’d also like to draw your attention to the next meeting for the GSC in New York’s Down Town Association next Wednesday 18th June. For more details click here. Take it away David:
The issue of Legacy has been on my mind for some time and it is on the minds of many just now. Regardless of party persuasion, an older generation gravitates with sadness to the many lives lost in world conflicts and with frustration to the economic immediacy of rocketing energy prices; younger generations move quickly with new forms of social community and communication – and they have been hugely instrumental in bringing world climate change to mainstream dialog. Young and old meet around global change and the drivers behind it.
These are just one or two of many major issues that (like it or not) impact us all – all being everyone in the world – regardless of race, religion, color, gender or orientation. Our legacy will be shaped by our response to these issues. Our many feelings of vulnerability and uncertainty now lead us to ask what lies ahead for our children and grandchildren. We don’t doubt their ingenuity and survival skills – but we wonder what it will be like for them – if this is what it is like now. And we wonder what they will think about what we did.
So it is with legacy. It is about consequences. And learning to deal with consequences is that really hard part of growing up. Legacy is about what we did – or did not do – with the opportunities and resources we had. Who we learned to work with – and what we learned to do. Legacy is like a shadow – there, regardless, and unshakeable. Legacy is not the total measure of a person but it is an important measure of what we did with the particular opportunities and talents afforded us. Our future generations will reflect on this period in history and they will make judgments on our legacy – whether this is flattering or not.
Andrew Carnegie was a very successful businessman – even if, in his day, some thought he was a little ‘nouveau riche’ and not their cup of tea. He was not always Society’s favorite chap. He experienced personal adversity and the scary side of business risk – and overcame all to be a truly successful merchant with no need of funny accounting to turn a profit. He was, as they say, the real deal. And he could have remained this – a happy, successful and prosperous man who owed nothing to anyone – and perhaps none of us would have been the wiser today. But he elected to take what he had created and use this to much greater effect. To be sure, this is why we know who he was and why we reflect so positively on his legacy.
It was the unflinching, authentic, granite-like story of Andrew Carnegie – and what he did with what he had – that inspired the creation of The Global Sourcing Council just over a year ago – together with the message it delivers on the legacy of the global sourcing sector.
If you are reading this article, you are part of the legacy of the global sourcing sector that is evolving as we speak.
The outsourcing industry is not, let’s face it,the most popular – for a whole variety of reasons some more valid than others. It might be easier to be part of the media and entertainment sector. Sorry to say, whether you agree with Lou Dobbs or not, some of the negativity around this industry and some of the questions on the part of investors about the growth and value prospects of this sector stem (I think) from our own actions and complacencies. We stay largely in the shadows; we are known to cut but not as creators. We are seen to take but not to give. We invest in ourselves but do not reinvest. And this is why many journalists and politicians have a field day with the sector. And why shouldn’t they?
One could argue that we are paying the price of failing to lead. If we continue on this path, the sector will pay a far higher price – just as other industry sectors have stumbled in the past. But the greatest price will be paid by those who do not have a voice, who do not have economic leverage and those who can be most productively helped by the actions of this industry if we find our voice.
As an industry, we already have a financial colossus and momentum that is capable (even now) of far more than it has demonstrated to date. That is, beyond the white papers and presentations on process efficiency and cost savings, lies a now critical role in driving socio-economic change at local, national and international level. In prompting and spearheading technology investment and innovation – developing the tools that will create new, future-centric jobs for existing and future generations. Turning an industry that tends to follow – into an industry that leads from the front.
If we stand still, we fall behind. If we do not invest, innovate and reinvest in both our client and domestic communities, we fail. We have missed a compelling opportunity that is ours for the taking.
As outsourcing industry stakeholders, we could do nothing and achieve modest financial success (and be largely forgotten over time). Or we can achieve memorable levels of accomplishment – by doing more with what we have than we do now. We can be leaders and drivers of change and investment in people and technology – taking the initiative to invest wisely in future generations, not just for immediate returns but also for longer-term returns and the knowledge that we have invested in our fellow global citizens.
As we consider the implications of global warming and the inter-dependencies of economies around the world, we must surely realize that there is an epic historical change underway and – ironically – the outsourcing sector is right in the middle of it. This industry is as global as it gets. This industry is all about human capital – the extraordinary, wonderful and invaluable asset common to all countries, people.
It is all about people just like you and me – who typically aspire to work to feed themselves, their families and their communities. Who fear many of the same things but who perhaps speak different languages and will never actually meet.
This industry is all about people connected by technology and change WILL impact us all. If we stand still, we will fall behind. Technology will make many redundant all around the world and the issues we face of how to train and redeploy people will be widespread. We must plot a forward course that engages in dialog and concerted investment in enabling technologies that create new and far-reaching employment opportunities.
This takes the employment debate beyond job elimination to an urgent focus on innovation and job creation. Not job insurance or unrealistic job protectionism – but bold exploration into new untapped areas of job generation, applying new creativities and new technologies that advance all participants and assist those that are most at risk of being left behind.
OK, what does that mean? It means we should be looking at ways to eliminate process-heavy, manual tasks – but while also investing in technology, education and training in new products, services that can provide a forward-stable working environment for MORE people, not less. It means that there are new opportunities all around us – even in our global warming crisis there are design, consulting, engineering, manufacturing, mining and construction work opportunities – that also help us save energy and reduce the impact of our economy on future generations.
Work brings a sense of purpose and hope to people. It is an extraordinary source of pride and grounding for many. Without it, many find basic survival becomes reality – very painfully. And it is a shortcut to many deep social problems.
Our industry stands at a crossroads – and we can elect a passive, self-centric path that benefits some but offers little to broader numbers of people. Or we can take the path less trodden – a distinct and bold alternative. On this path, we acknowledge what we can do – just by doing it. Just by trying.
This is surely good news. It takes some thinking about – and it takes some doing. But the alternative is forever to be regarded as the industry that ‘takes but doesn’t give’ – the bad guys who take jobs and propose few if any solutions for future growth. The people that talked, the folks that ran analysis – but that was all.
The sector has saved – and generated – a lot of money for a lot of people. It has extraordinary growth potential ahead. But its history of reinvestment is shorter than this article. Herein lies the issue.
Any industry has to learn to give back – and the sooner the better. This is different from creating jobs to carry out the work. This is the over-and-above reinvestment in social advancement that sets good business apart – and reflects well on clients and providers alike. That puts legs on thoughts and ideas. That gives life and substance to thought-leadership. That generates fresh water in wells and healthcare for developing communities where a little goes a very long way. And, my personal favorite, provides education for the next generations and desperately needed investment in technology that will create new and vital opportunities for generations to come. We have such a compelling education opportunity here. The next Einstein could be sitting just about anywhere in the world and this industry might be the connector we all need to releasing that genius for everyone’s benefit.
If we do not invest in our communities and if we do not reinvest in our socio-economic infrastructures, we have failed one of the critical tests of our time. Quarterly results, white papers and all the good intentions in the world will mean little or nothing if we do not take the opportunity which is ours (now) to be a catalyst for long-term change.
Tomorrow’s building blocks lie at our feet. We have a legacy to build and the time is now. Beyond the talk, there is the walk.
Our legacy is still ours to make. Or it will be written for us.
What’s (y)ours?
David Kinnear is a co-Founder and Research Chair of The Global Sourcing Council (GSC). The GSC is a global business forum addressing both the emerging business issues and also the socio-economic implications of global sourcing. David’s past experience includes serving President and CEO for DDC HRO, a Director at Credit Suisse First Boston, and was an attorney for Linklaters and Paines prior.
We’ve had some pretty spicy debating this year about the role and importance of third-party sourcing advisors. In addition, we’ve had lively discussion on the boutique advisors which are proving to be an active low-cost channel for many buyers. As part of my ongoing research into this market, I am very interested in what today’s buyers and providers of outsourcing services are experiencing with the sourcing advisor medium. Please take a few minutes to add your opinion here. And yes, you can remain anonymous if you prefer.
We are privileged to showcase the following incisive article from my good long-time friend Graham Russell, who leads Global Transaction Processing for pharma giant AstraZeneca.
Graham has been a long-established and respected authority on shared services and outsourcing for many years, and is one of a rare breed of executives who has had many years of experience managing both models. I can’t think of many other people in the industry more qualified than Graham to discuss the merits and shortcomings of both captive and outsourced delivery models. Over to you Graham:
Birth of captives
Once upon a time, global and pan regional companies operated as a collection of single country businesses. Their back-office financial support was organized in the same way, with processes and systems being developed at a local level in each country.
In the nineteen-eighties, new global companies such as Microsoft entered the scene and were able to quickly organize their businesses and their back-office support services in a different manner since they were able to start with a clean sheet of paper, making them appear very lean and nimble. By the late eighties, the more progressive companies, which were now often being challenged to compete with new market entrants, began to realize that they had been diluting the effectiveness of their Information Technology spend and perhaps more importantly, had become unable to respond consistently to their new, more global customers who were frustrated by different billing systems, account collection approaches and settlement methodologies. Similarly, on the supply side, these companies realized that they were struggling to take advantage of their global spend with global suppliers due to their inability to easily consolidate the information on their spend patterns. Meanwhile, they often had resale inventories stranded in countries, with each country business being unable to view that held by other countries leading to overall inefficiency in the supply chain. In addition, it became apparent that country based financial organization structures, required like pyramids, typically with sub-optimal spans of management and insufficient specialization due to the variety of tasks being performed by the relatively small country based staffs.
The pioneers in this area set about creating accounting centers usually at a regional level, which eventually grew up to become full-fledged Shared Service Centers, now referred to as captives. These centers operating with one support structure, quickly learned the value of standardizing processes, which offered one face to the internal and external customer. In time with the advancement of technology and introduction of networks, the islands of information quickly became the information readily available in one regional server, further enhancing the value to the business. The organization structures at these new centers, flattened out the structures of old, allowing specialization in the various functions and an improved management span due to the critical mass created. Over time, these centers began to move to locations often with lower cost and usually a pool of multi-lingual talent allowing them to serve broader geographies, for example Singapore, Poland, Ireland and Canada. With experience and maturity, it became clear that internal control was also being strengthened as a consequence of the one way of working, and after the passage of some time, the most forward thinking companies started to move their regional centers to global centers to further enjoy the benefits.
Birth of outsourcing
In the seventies, many companies realized that there was value in outsourcing functions, which were not core to their business and payroll, was usually the first of these functions to be performed outside of the business. Companies such as EDS applied the outsourcing approach to Information Technology support and so the models began to form.
In the early nineties, British Petroleum (BP) often labeled as the godfather of business process outsourcing (BPO), entered into an arrangement with the then Andersen Consulting (now Accenture) to outsource many of its back office financial functions from its quickly developing North Sea Operations Center in Aberdeen Scotland. BPO as we know it today, was born!
Outsourcing offered many if not all of the benefits identified under the captive models described above, but introduced the new notion of service performance levels being defined with the external provider. Moreover, the service provider would often have greater experience hiring and retaining local talent, the ability to offer round the clock support with its global delivery infrastructure, and could also take on the risks associated with running remote service centers, for example currency fluctuations, wage inflation and local political, legal and tax issues. Over the last decade, the outsourcing providers have expanded their BPO offerings, with finance as the “hub” function, offering HR, inbound customer support and industry-specific processes, such as insurance claims processing or clinical data management, in addition to finance support. The leading providers are also offering “hybrid” solutions that include the management of the software applications underpinning the business processes being outsourced, where they can help deliver the synergies of having IT and business processes tightly aligned in an outsourced model.
Many of the earlier BPO pioneers, such as BP, Unilever and Proctor and Gamble, saw outsourcing as an opportunity to out-task non-core back office processes, such as payroll, accounts receivable, accounts payable and reconciliations and re-focus their inhouse staff on managing service levels, higher-value controllership activities and other functions that had greater alignment with their core business. However, as several of the earlier BPO pioneers ventured into outsourcing relationships, they also found several challenges with the model, namely getting constant ongoing value, cost-reduction and innovation from their service provider, which would often provide a reactive service based solely on the contractually-agreed terms. BPO adopters quickly had to learn how to manage their outsourcing providers effectively, and acquire the right skills and experience to do so.
Over time as the outsourcing providers matured, and technology advanced, they were able to take their new-found critical mass into markets like India which had only previously been tested in a significant way by companies such as General Electric (GE) who were providing in-house support for some of their companies in their conglomerate business.
Markets like India and the Philippines offered significant cost advantages over the typical European locations like Dublin and Amsterdam which flourished in the early captive days. In time, GE became an outsourcing provider through the creation of its GECIS subsidiary (now Genpact), and there were new entrants to the market such as Hewlett Packard, ACS, Cap Gemini, IBM and more recently a number of more newly-established providers that have rapidly grown with outsourcing boom over the last decade, namely Indian owned companies operating the services from India, such as Infosys, Wipro and Tata Consultancy Services. We are even seeing a further wave of offshore outsourcing providers making attempts to enter the global BPO market, for example Satyam, Cognizant and Patni.
Operating Models
These models have grown up in parallel and can be the answer to many companies looking to improve their effectiveness, reduce their costs and improve internal control. Over time the functions being handled by these models have also moved up the value chain from simple accounting or transaction processing to most back and front office support functions.
For those companies not quite sure about outsourcing, hybrid or “virtual captive” models have been developed by the outsourcing providers allowing for a middle ground which selects from some of the benefits from either model.
It is not unusual for companies to start out with a captive model, and over time move to an outsourcing model. Other companies which started their transformation journey late, often skip the first step and go straight to outsourcing. However, those companies which have had significant experience with developing a captive model have clearly found the transition to a fully-outsourced model less complex and arduous, as they typically have some degree of standardization of their processes and technology already established. In many cases, moving from a captive model to a fully-outsourced scenario has proven to be a straightforward advancement in optimizing efficiencies, as outsourcing offers the logical next step for companies with captives to strip out further costs and find further efficiencies.
The key drivers to selection of the appropriate model include the following:
• Availability of talent
o Company size – is the company large enough to attract, retain and develop the best work force in a given location?
o University access – does the company have access to the best universities to attract the new graduate population in a given location?
o Retention programs – can the company offer sufficient career opportunities either in the Shared Service center environment or in the business in the given location? The outsourcing providers have in cases 10,000 seats and more and multiple clients, which almost guarantees an exciting career path for the successful young graduate.
• Given their size, the outsourcing provider usually had the advantage here in the most popular offshore or nearshore markets such as India and Eastern Europe, but the captive can usually hold its own in the onshore markets.
• Business Control
o Flexibility – many companies require a degree of flexibility, which may not be available in a strict outsourcing scenario, and so propensity for control and flexibility becomes a key selection factor.
o Process documentation – although Sarbanes Oxley has helped improve this for everybody, again the outsourcing provider tends to be more rigid in process and control documentation for no reason other than it is the basis for training the outsourcing provider employee on how to support the client
• Degree of flexibility required will be the key determinant in this area.
• Continuous improvement capability
o Lean/Six Sigma skills – this has become a core competency for outsourcing providers and been necessary to drive the productivity improvement s and consequent cost reductions which are designed into outsourcing contracts.
o Organizational culture around improvement – while many companies have a like appetite for continuous improvement, it is not the norm for all companies.
o Best practices across client base – the outsourcing provider has the advantage of being able to draw upon the best practices from multiple clients.
• The outsourcing provider usually has the advantage here.
• Technology and infrastructure investments
o This is an ongoing requirement for the outsourcing provider in order to drive its productivity. Technologies such as scanning, OCR etc over a greater population are easier to justify and never suffer from the inevitable capital expenditure squeeze. The majority of today’s top-tier outsourcing providers now offer technology workflow tools that can help integrate financial data actoss disparate systems and grographies and provider dashboards for inhouse financial management to gain quicker access to data.
o Contingency planning and back up-many companies even with Shared Service Models do not invest filly in this area, while for the outsourcing provider, it is an imperative otherwise reputations can suffer and costly contract penalties ca trip in.
• Advantage outsourcing provider.
• Deciding whether finance back office is core
o The finance back office is the business of the outsourcing provider and since it represents its product or service, it has to be good or better to stay competitive.
o If the company decides that it does not want its employees, customers or suppliers dealing with a third party for back office support, then it will have deemed these functions as reasonably core and will most likely find the captive model more appropriate.
• Decision here depends on consideration of what is core.
• Service level-internal v external
o Capability to measure-as outsource contracts often have gain sharing or risk/reward clauses which represent compensation for the outsourcing provider, there is usually a robust set of service levels clearly defined and measured. While many companies are good at doing this internally it is still a luxury for many.
o Reporting forums/mechanisms-in order to share the results of performance measurement, the outsourcing providers tend to have portals and formal monthly meetings to review the findings. This may not be the case at every captive
o Performance penalties/incentives-these usually help influence the right behaviors with the outsourcing provider, and may provide a stick or carrot not always available under the captive model.
o Benchmarking-although not offered or used by all outsourcing providers, the existence of such a clause in an outsourcing contract should allow the client company to stay abreast of market developments and take advantage of new practices such as pricing models or latest cost structures in a given location. This may be much less formal or appropriate in a captive model.
• Advantage outsourcing provider
Conclusions
While I am not a spokesperson for outsourcing, I do believe that with the foregoing selection drivers, outsourcing offers a distinct advantage for many companies today seeking to take full advantage of lower-cost resources and the process acumen being offered by many of today’s maturing outsourcing providers. However, the captive model is still a preferential delivery model for a company deciding that the support function is core to the business, or whether it prefers the support function remain in the same onshore geography, or it does not have an appropriate plan for potentially displaced employees. Each of these factors will need to be considered by the company, along with the cost models and goals for productivity and efficiency improvement, internal control improvement and the service culture.
One of the most interesting discussion points I had on my recent visit to India was centered on the eagerness of some of the India providers to infiltrate the HRO market. I recall the entry of the Indian top tier into HRO three years' ago, and have to admit I was skeptical. Not many people believed you could take broadscale HR services offshore and run them successfully, while saving money for clients at the same time. However, times have really changed since then, with the Indian top-tier now competing aggressively for hybrid IT-BPO contracts. What's more, the Indian providers are very good at working out how to take on back office work remotely. It's their focus – and eagerness – to take on ground-up processes, such as payroll, data management, document fulfillment, which is driving a breath of fresh air into the flagging HRO business.
The old HRO model was focused on providers sub-contracting out a plethora of point-solutions to niche vendors in areas such as payroll, benefits administration, workforce management, recruitment and compensation tools. The value to the client was that they only had to deal with a single “end-to-end” provider for all these services, and the provider managed all these subcontracted services under a portal layer, while negotiating arrangements that would ultimately deliver some cost savings back to the client from its original budget. What resulted was a scale issue – the “end-to-end” providers struggled to find economies of scale for themselves (it’s not easy when most of the work is being subbed out), and in addition to that, too many points of failure emerge, when too many parties are involved in delivering the operations.
More recently, suppliers like IBM have focused on taking more of the HR work into their offshore delivery centers, for example with its recent Bristol Meyers engagement, in order to leverage more economies of scale and lower cost labor resources. They also have the ERP-enablement skills offshore to help develop and manage commonly used HR platforms, namely SAP and Oracle. This is where TCS and Wipro have begun to impress, with some notable inception HRO clients in the last two years. They are willing to develop ground-up competency in areas such as payroll, where many of their western counterparts have opted to subcontract to the likes of ADP and Northgate (ARINSO) in the past. They understand the cost-leverage they can pick up by taking on these processes offshore, in addition to driving their “Platform BPO” approach, where they can take on companies ERP solutions and dovetail the IT services with their corresponding business processes. What’s more encouraging, is the fact that they are prepared to move quietly into client situations, prove they can take on smaller piecesof work successfully, in order to win larger outsourcing contracts in the future. In three short years, we have seen the leading Indian firms break into the top tier of BPO services with a pragmatic approach to taking on routine work and moving up the value chain. Will this provide a new direction for an HRO industry that has suffered from a lack of scalability? You tell me!
TCS and Wipro already making strides into HRO services
As we discussed last week, BPO is rapidly evolving into “Global Services Provision”. Most enterprises ventured into early BPO engagements to take advantage of the quick cost-savings on offer from employee remediation, using low-cost offshore labor on offer from outsourcing service providers. Many enterprises undertook BPO in times of financial distress, their priority centered on their year-end balance sheet and satisfying short-term shareholder demand, as opposed to long-term strategic thinking.
However, this environment is quickly changing, due to the fact that there is a finite number of these employee remediation deals on the table; once a company has transitioned-out many of its onshore administrative staff and moved onto an offshore delivery model, their next challenge is to optimize what they have through better processes and technology, as they are unlikely to keep finding many additional onshore staff they can displace.This new phase of BPO is focused primarily on:
1) Global profession shifts:With tens of tens of thousands of Indian graduates moving into supporting BPO services, such as finance and accounting, India is quickly developing competency in finance in a similar fashion to the manner in which they developed themselves as a hotbed for IT talent over the last decade. While the majority of finance BPO services being delivered from India are currently centred on the routine transaction processes such as procure-to-pay and order-to-cash, the developing talent base is eagerly trying to move up the value chain to take on higher value services such as management reporting, risk management, and financial analysis. In concurrence with the emergence of a high-scale accounting profession in India, many of the leading western accounting firms and enterprises are moving their transactional accounting processes offshore, which traditionally provided a training ground for accountants in Western countries. Instead, newly-qualified accounting graduates in the West will be expected to move straight into decision-making roles, hence, there will be fewer opportunities for accountants in western countries. The profession has started a shift towards India and other emerging offshore nations providing global BPO services.
2)Global industry shifts:In addition to professional practices being developed offshore, Western business should beware of the development of entire industries that could be run from offshore locations, such as India and China in the future. This is especially the case for industries where the majority of the processes can be delivered from remote locations. Let’s take the example of the market research business, dominated by firms such as Taylor Nelson Sofres, AC Nielsen, Harris International and Gallup. The majority of these companies’ business is centered on data analysis, sampling, statistics and survey management. With Indian firms already proving adept at running these types of processes, and with the majority of survey work today being performed online, what is stopping Indian services firms stepping up and going direct to the customers of the incumbents and offering the same services at half the price? For example, Infosys, Satyam, TCS and Wipro are already conducting research services for Western clients – and some already on a broad scale.With their developing reputation as services firms, what is stopping them moving to the next level and displacing many of the established western providers And with many of the Western market research providers already using Indian providers for data and knowledge services; are they simply breeding their future competition for the sake of some short-term cost-savings?
Other industries where we can already see this “creeping competition” happening are insurance, life sciences, and even legal services, where a plethora of Indian firms are already moving up the value-chain. The Indians have already succeeded in developing a highly competitive IT services industry, so what’s stopping this happening across of the services and professions? Ten years is a long time in globalization and outsourcing, and we can expect significant shifts of industry development towards the emerging economies over the next decade. All-in-all, developing nations like India are not going to be content focusing primarily on delivering routine, transactional, low-margin services, and they will be trying hard to move up the value chain to deliver higher-value business services over time. However, while there has clearly been very high demand for these BPO services in recent years, much of this has been fuelled by Western enterprises seeking quick cost-savings from labor arbitrage, as opposed to their wanting higher-value services. The Indian BPO vendors will push hard to move up the services value-chain, but they are going to find it much more challenging to take on more complex solutions that require a deep alignment to enterprise decision-making. However, when you look at how far they have come in three short years, you have to expect that in another ten years, some of Indian service providers will have achieved much of what they are setting out to today.
Time to get on a 16 hour flight… see you Stateside. And yes, I am yearning for Pizza -:)
Have just listened to the inaugural NASSCOM address delivered by Som Mittal (President, NASSCOM), Ganesh Natarajan (Chairman, NASSCOM), Shri Jainder Singh (Secretary for IT and Comms Department for the India Government) and Pramod Bhasin (CEO Genpact). My main observation is the level of energy, passion and enthusiasm for the industry by the speakers – a far cry from some of the tired, jaded speeches I have been subjected to in the States and Europe recently.
Som Mittal talked about India's resourcing issues, with companies across different industries now competing for the same talent. He discussed the fact that 85% of India's outsourcing services are delivered from the main 7 cities, and even if they achieve a split between the tier 1 and tier 2 cities of 60/40 my 2018, that still represents a 250% growth for the tier 1s. He also discussed the influence of social networking tools, such as Facebook and YouTube, on India's youth and the influence it is having on their career development.
Shri Jainder Singh, revealed BPO exports for 07-08 totaled $10.9 billion, a 30% growth over 06-07. He also discussed the huge importance of KPO (Knowledge Process Outsourcing) as a driver for India's development as a provider of higher-value business services. He also cited the major infrastructure challenges ahead for India, namely creating new urban centers, educational reforms and a robust information security environment.
Finally, Pramod Bhasin, Genpact's CEO stormed into action declaring unprecedented growth in BPO – 33% overall (I think that one came from me), and 28% in BPO exports. He then went on to declare that we are "now past the era of BPO", and that we're now entering the "Globalization of services and building a full-scale services industry". Bhasin sees BPO as a convenient catchphrase that doesn't represent the depth of services. He also discussed the need for real process expertise and real domain expertise: companies today don't ask for "BPO", they ask for "finance solutions", or "HR services". Bhasin also discussed the fact that wage inflation was now under control, citing a 10-12% increase on a $4,000 annual salary being far preferable to the same increase at a much higher wage. He also mentioned that currency fluctuations were smoothing out and the real disease threatening india was attrition. He finished by emphasizing the need for massive public and private partnerships to develop their entire ecosystem, reform their healthcare and education systems. I hope someone sends a recording to Messieurs Obama and McCain…
Anyway… must run to a meeting. Nothing like blogging from the spare laptop in the speakers' room.
Welcome to a rather cool and cloudy Bangalore in June. Indians have no concept of how to slowdown in traffic: cars, motorbikes, trucks and buses all focus on where they are headed, and, as opposed to their looking around to check the way is clear, they hoot their horns to tell others to get out of their way, with a fearless disregard of the risks and consequences. The same can be said of their rampant services industry, where their businesses have refused to slowdown, check their wing mirrors or pad their brakes, in fear that their revenues or profit margins will be seriously derailed. Here's the evidence:
My good friend David Kinnear has been working hard to drive the Global Sourcing Council over the last year, and has some passionate views on how today’s industry should approach global sourcing. David has submitted a compelling argument about how we should look at the longer-term remifications of the global outsourcing climate today. Before I send you over to David, I’d also like to draw your attention to the next meeting for the GSC in New York’s Down Town Association next Wednesday 18th June. For more details click here. Take it away David: 
