You may recall the excellent guest post "Upward, Onward, Onsource!" by my good friend Deborah Kops, back in November last year. Deborah is widely recognized as one of the outsourcing industry's foremost thoought-leaders, having led global transformation efforts at Deutsche Bank and Bank of America before helping to establish PwC's outsoucing division. Today, Deborah is Chief Marketing Officer for WNS Global Services, a leading offshore BPO and KPO provider. BPO today is all about governing your service provider relationship, and whether or not you view your vendor as your partner, the whole experience is certainly like a marital relationship (better hope my missus doesn't come here…). Thanks Deborah for sharing this great article with us… over to you:
When I grew up, moms stayed at home and spent their free time between school runs poring over the latest offerings from Good Housekeeping and Women’s Day — recipes, childcare tips and hints to please (and keep) a husband. Before you think this discussion is completely tangential to the implementation of global services, read on.
Those of us baby boomers know that most mothers assiduously read the Ladies’ Home Journal column, “Can this Marriage Be Saved?” My mother was no exception; before I understood the carefully worded root causes of marital failure, my pre-teen sensibilities picked up on the fact that leaving a towel on the floor or coming home late without explanation were not all that good for a marriage.
Fast forward many years and perhaps there should be a similar advice column for outsourcing relationships. We ascribe so much hope for better performance, lower cost and new heights for business value, yet, we have not evolved a way to detect and track those subtle changes in behavior, which taken in aggregate, signal relationship distress. And, when ignored, they can dash the hopes and dreams of the business equivalent of marriage.
The signs and signals are so easy to see, yet … we generally ignore them until the damage is done, and it is much more difficult to put the relationship back on track. We tend to forget that outsourcing arrangements are comprised of a series of complex human transactions — customer to outsourcer, customer’s customer to outsourcer, customer to business line, individual staff to client staff — where the nuance around and tenor of any interaction are as or more important than meeting a service-level agreement.
At no time is a relationship more vulnerable than during transition, especially if there are many moving parts, and the deployment plan timeframe is overly aggressive. By the time, the relationship is on the skids, minor miscommunications, individual disagreements and missed deadlines have been magnified into battles royal.
Because it has been drummed into us that logic and motive drive business relationships, and because we have been sold on the ultimate importance of a logical, comprehensive governance framework as the key to outsourcing success, both parties tend to ignore those subtle behavioral signals that suggest that a relationship is going sideways. Tactics to effectively deal with the behavioral symptoms that indicate relationship distress are not addressed in any governance framework with which I am familiar. Perceptions — fraught with emotion — must be managed effectively in order to make governance work.
Having sat on both sides of the table, here are 10 behavioral signals that, singly or in aggregate, send out the outsourcing relationship equivalent of an SOS.
1. Preparation for executive governance meetings becomes all consuming. Scripting of reviews for executive sponsors becomes time consuming, carefully choreographed pas de deux. Wordsmithing for governance presentations and decks makes bilateral negotiation of nuclear non-proliferation treaties look like child’s play. The goal of each party? Get the point across, but not at the expense of personal or program credibility, hoping that the right orchestration will turn into a skillful game of public gotcha, placing the blame for program blips squarely and publicly on the other party.
And, after the decks are complete, each party spends inordinate time briefing executive sponsors and governance representatives before going into a battle of positioning and specially chosen words.
2. Consultants are brought in by one or each side to take a relationship health check. A new face under the guise of an independent look is analogous to one partner in a marriage going to his/her own counselor. Unless agreed to by both parties, the consultant is by definition partisan; his/her patient is only the one who pays the bill, not the partners in the marriage.
Dueling consultants make relationship repair even more complicated. They are not necessarily dealing with the same fact base; in most cases they are used to justify their customers’ perceptions, not facilitate a real alignment. Only a jointly appointed consultant can have a prayer of getting the relationship back on track.
3.Sudden changes in daily scheduled activities become obvious. This is no different a relationship distress signal than that of a marriage where one party suddenly starts to work late. If longstanding routines, especially those that reflect the rhythm of a tightly controlled transition, inexplicably change, leaving chaos behind, it’s the sign of a problem.
4.Routine discussions are held behind closed doors. At the start, outsourcing relationships bask in the glow of the post champagne period — that time when the sense of achievement coming from signing a contract after protracted sourcing and negotiation leads both parties to believe that all things are possible. Behaviors are relatively relaxed, office doors are kept open and key decisions are easily made around the coffee machine. But when unresolved frustration hardens into formal behavior, suddenly doors are closed and each meeting results in reams of copious notes.
5. Requests for data suddenly go through the roof. Like any good marriage, outsourcing relationships are built on trust. And when reams of data are demanded, requesting information that more than proves a point, it suggests a lack of transparency in the relationship that can only be fixed by reams of data.
6. Meetings are held in windowless conference rooms. A sure sign of distress comes from the choice of meeting venue. However, scheduling these rooms has the opposite effect of an invisibility cloak. Where previously meetings were held in the open, with everyone on the floor fully aware of attendees and generally in on the agenda, now windowless interior rooms become the meeting venues of choice, keeping the table pounding and pointing fingers out of sight from the rest of the teams.
7. Meetings, which were formerly attended only by principals, are now standing room only. The solution architect, or the account manager, is no longer left alone in a room with his customer counterpart. Account execs and customer sponsors now insist that any discussion, which affects the critical path, cutover or performance be witnessed by at least three team members on each side. As a result, productivity drops and blood pressure rises from meetings, which have now morphed into confrontations.
8. “Let me come back to you” becomes the stock response to any request, either casual or formal. Where previously decisions — both big and small — could be made over lunch or at the coffee bar, now any suggestion, regardless of cost or impact, is quickly dismissed with one curt sentence. Inability to commit because the ramifications may further exacerbate whatever is wrong quickly strains the relationship.
9. Joint partying ceases. In the lexicon of outsourcing transitions, partnerships mean partying together. Joint milestone celebrations, or team building happy hours are integral to fostering a good working relationship, especially when there is a substantial systems implementation component.
10.Referencing stops, or is tightly meted out. In the first blush of the outsourcing relationship, all parties bend over backward to be accommodating and support each other’s business goals. However, when the relationship starts to experience stress, the global services equivalent of withholding affection happens, and references to potential customers are often stopped or starkly curtailed.
Naturally, there are variations on each of these behaviors; each relationship can spawn its own unique list of hurts and slights. But as in all situations, the little things matter. And the outsourcing relationship is, at its heart, comprised of a myriad of brief human interactions.
Do these distress signals mean that the relationship is doomed to failure? Not at all. Savvy customers and outsourcing providers are sensitive to subtle changes in routine and interaction, and move quickly to source and sort out the root causes that result in the outsourcing version of “acting out.” Outsourcing marriages can be saved.
Deborah S. Kopsis Chief Marketing Officer of WNS Global Services
So HP acquired EDS. Wow. Biggest services news since HP acquired Compaq a week before 9/11? In my opinion it is, anyway.
We discussed here in January the issue of consolidation among large outsourcing suppliers, and the general view was one that we would be unlikely to see acquisition among services firms that were similar in nature:
Outsourcers like to acquire firms that bring something new to the table to enhance their outsourcing offerings – for example new technologies, or a niche expertise that gives them competitive advantage. Too many large outsourcers are too similar… they overlap too much and a merger would often end up as an unprofitable exercise and result in a mass exodus of key talent.
So the HP / EDS merger goes against the grain. We noted some specific areas where there are some strong complimentary offerings – namely in BPO areas – but the overwhelming motive for the merger is one of scale and going-big to compete more effectively with IBM. The increased BPO delivery capability also puts HP on a firmer footing against the other global BPOs, namely Accenture, ACS, Capgemini, Infosys, Wipro and TCS. The newly-merged entity needs to examine how it builds out its business consulting and transformation expertise further if it wants to challenge the both IBM and Accenture’s BPO market leadership.
This merger-event could change the game considerably, and we could see other BPO suppliers to re-evaluate their acquisition strategies to generate more global scale and increase their client-bases. With the cost of client acquisition becoming increasingly prohibitive, the valuations of services firms decreasing in these market conditions, and the desire of many enterprises to move into more rapid outsourcing engagements, the leading vendors need additional scale and capacity. So this begs the question whether we could see some similar-scale outsourcing services mergers in the near-term?
Please vote on the toolbar to the left whom you think is likely to be acquired over the next year – you can have up to three choices. I included major BPO suppliers with revenues under $9 billion and significant BPO client-bases. I would also love to hear your views on how the HP/EDS merger will impact consolidation in the BPO industry.
Update: The polls are now closed: here is how you all voted:
Congrats to ACS, the lucky winner… or should that be TCS?
I am in the throes of writing a series of research articles in this area and welcome any contributions from people in the Knowledge Process Outsourcing (KPO) industry. If you are a user of KPO services, or an outsourcing vendor providing them, I would like to hear from you.
As companies tackle how to leverage third-party services for activities that require a certain level of customization, we are seeing new and established outsourcing service providers branching into KPO services in areas such as financial, legal, marketing, sales and accounting services. While BPO typifies services that are relatively standardized, KPO represents those that require tailoring to the needs of the customer. The benefits go beyond simple cost-savings and provide resources and skills that many firms simply do not have, or do not wish to employ inhouse full-time. For example, most enterprises today cannot afford a full-time inhouse attorney, so use third-party legal services as and when they need them. But why go to a top-end law firm when you can now get many legal services provided from offshore outsourcers, such as Infosys?
Clearly you have far too much time on your hands if you’re spending time here, so here are more places to go to fill those vacant hours. This is especially for all you sourcing consultants who went out of your way to vote for yourselves as the "top place to go to get balanced advice on outsourcing" – c’mon chaps get real -:)
IBM vs. Tata: Who’s More American? – Businessweek’s Steve Hamm raises some incisive points, namely, TCS, India’s largest tech-services company, collected 51% of its revenues in North America last quarter, while 65% of IBM’s were overseas. Builds upon some of the issues we discussed here last year;
Are You in Personal Branding Prison? Copyblogger raises the burning issue of "over-branding" yourself on the web. Too much personal branding can be damaging to a professional. If you brand yourself too strongly, you can’t take a break, because there’s no one else to fill your shoes. Without you, your business has no value….Start building value into your business so that potential customers think of your business name first and your name second. Get people interested in working with your business, not you;
I know several of you are hounding me for my views here… we’ve put out a couple of pieces on this today at AMR – check out Bruce Richardson’s blog where he raises the discussion.
I have to confess this one came completely out of left-field while I was traveling, but does tally well with HP’s focus on bundled BPO. All-in-all, these are my key takeaways from this eventful day:
No-one saw this one coming, most of us were expecting one of the Indian providers merging with EDS. This now raises the possibility of further mergers in services, even though this was looking unlikely until recently. The incumbent Western providers need scale and depth to compete effectively with the lower-cost Indian firms, and we could see a response from one of the other top tier firms to swallow up one of the vulnerable services firms.
On the BPO side, this is a great move, with the merger filling both companies’ BPO portfolio gaps, most notably in finance and accounting (F&A) and HR processes. As we discussed a few weeks’ ago, BPO market leaders Accenture and IBM have already been aggressively pushing their combined portfolios of finance and accounting and HR BPO services, with increasing emphasis on bundling these services with their application outsourcing services. HP is looking to follow suit, with the likes of Cap Gemini, Infosys, Wipro and TCS avidly observing how they can broaden their global BPO and IT services depth, scale and industry specialization. Now HP has deep HR delivery expertise to draw on, which elevates its bundling capability, in addition to EDS’s $1 billion call center outsourcing and global IT services business.
Culturally, this is definitely an odd one to fathom, but Mark Hurd has the track record and financial discipline to make this merger a success. He also got a good valuation for the firm, so now was probably a good time to strike.
Interesting times… maybe we’ll have some more days like this in the coming months?
I wrote a piece entitled "Blog-culture is ripping up the rule book for the outsourcing services and technology media industry" a few weeks’ ago which raised a few eyebrows. OK, it’s a litttle biased and I was on my high-horse, but it did raise several questions on where people go to get balanced, insightful information on the outsourcing industry that they can rely on. So, please choose your preferred three information outlets on the poll to the left side-bar. And please be honest 🙂
For the results of this poll, please click on the continuation sheet.
Having worked on a large number of "O" initiatives with enterprises over the last few years, the term outsourcing has given me nothing but problems. The minute the "O" word is uttered, staff get defensive, passions get stirred, resistance occurs. Often staff quickly brush up their CVs for a hasty exit before the axe falls. Staff and management tend to associate outsourcing with job losses, and their firms using low-cost labor from service providers.
But what else can you use when you are looking to move into a multi-year engagement with third-party service provider, where you will use their staff, technology and processes and likely reduce your own inhouse overhead? I have experienced companies trying to disguise the fact they are outsourcing by labeling their service initiative as "out-tasking", "co-sourcing", "right-sizing", or even "resource-optimizing" (oh, there is more…). Peter Allen also chips in with his preferred term "services contracting". However you want to spin it, your staff will view it as outsourcing, and the more you try and disguise the taboo term, the more suspicious your staff will be that you are simply trying to ship them out for lower-cost labor.
Personally, I prefer the term "managed services", as staff are not always transitioned out of the organization, and management responsibility for running the contracted services is transitioned over to the third-party provider. However, outsourcing has become ingrained in modern business vernacular, not dissimilar to information technology. It describes the activity a company goes through when it engages a third-party to take on the management of specific IT or business services on a long-term basis. However, I would stress that outsourcing these days describes the activity of evaluating and transitioning the processes and not normally the long-term management of them. For example, if a company decides to engage ADP to take on its payroll services, it will say "we’re outsourcing our payroll to ADP". However, ask the same company how they run their payroll a couple of years later, and it will say "we use ADP for payroll". It won’t say "we outsource our payroll to ADP".
So all-in-all, if you are looking to outsource processes, be upfront with your staff and tell them you are looking at outsourcing opportunities. Explain they are a key part of making this outsourcing initiative successful and you need them onboard to support the initiative. It will be good for their career, and they will have the chance to take on new tasks that are more core the the business – for example vendor and service-level management and higher-level business activities that directly impact senior management decision-making. The more upfront you are with what you are doing, the more your key staff will appreciate the honest communication, and the more likely they will be supportive and proactive in making it work. If they still resist and try to derail the process, at least you know who the dissenters are and who may not be onboard the train once it has left the station.
If you have any preferred terms for outsourcing, I’d love to hear from you…
I’ve been enjoying some great comments from people these past months and thought it time to highlight the occasional contribution that got me thinking "good point!". The recent post entitled "Is it time to dump the term outsourcing?" has – and still is – produced some superb discussion, in particular one comment from Robert Jakobson, a program manager and 15-year veteran with IBM, Microsoft and Sun Microsystems, who puts forward a great argument on why some enterprises use the "O" term in the first place. Enjoy.
I’m going to give you several magic terms. They’re accurate, they’re descriptive, they’re honest and they’re truthful.
Work. Team Assignments. Teams. Project(s).
Why are you calling it outsourcing in the first place? You’re hiring people to perform a job. You don’t need to give them a name. Haven’t for years. If the people involved on the project(s) you’re doing don’t understand that all that is happening is that certain portions of the work in the over all project are being performed by contracted or vendor assignments then you’ve already blown it.
People fear outsourcing for one reason … if the work is being sent "outside" then it’s not being done "in-house" and that means that "in-house" is not benefiting the project. What part of the project is being done by in-house resources? Focus them on the work they need to be doing instead of making them wonder why they’re not doing the other work.
The people (the Team) on the project needs to know what they’re supposed to be doing. And you need to specify this in advance and let everyone understand their role. If someone says, "Hey why are we doing <blah> in house?", be honest. "Because it’s not beneficial to do it that way. We get more benefit out of having our in-house team members working on <blah>".
Don’t sugar coat it. But don’t be all gloom and doom either. Just tell them the truth why – and show them what their roles are. If they worry about long term roles in the company – then you need to show them the work you have for them and reduce those fears. If on the other hand … they have a reason to be worried then you need to let them know that as well.
If people are going to be outsourced – if their jobs are going away you are not doing them a service by candy coating it or deflecting the question. There is a reason why Doctors tell patients the truth even if it’s brutally painful. It’s easier on the patient.
Be honest – if you are often enough, people trust you regardless.
Calling it outsourcing isn’t accurate. It’s just a vendor – a contractor. And the work being done is just work. You’re not "outsourcing" it. The work is no different if it’s done in India than if it’s done in the next state. If it’s not "in-house" it’s still just work. Pointing out that it’s being done somewhere else globally should not make a difference.
You may recall the excellent guest post "Upward, Onward, Onsource!" by my good friend Deborah Kops, back in November last year. Deborah is widely recognized as one of the outsourcing industry's foremost thoought-leaders, having led global transformation efforts at Deutsche Bank and Bank of America before helping to establish PwC's outsoucing division. Today, Deborah is Chief Marketing Officer for WNS Global Services, a leading offshore BPO and KPO provider. BPO today is all about governing your service provider relationship, and whether or not you view your vendor as your partner, the whole experience is certainly like a marital relationship (better hope my missus doesn't come here…). Thanks Deborah for sharing this great article with us… over to you:
I am in the throes of writing a series of research articles in this area and welcome any contributions from people in the Knowledge Process Outsourcing (KPO) industry. If you are a user of KPO services, or an outsourcing vendor providing them, I would like to 
Clearly you have far too much time on your hands if you’re spending time here, so here are more places to go to fill those vacant hours. This is especially for all you sourcing consultants who went out of your way to 
I know several of you are hounding me for my views here… we’ve put out a couple of pieces on this today at 
I wrote a piece entitled "
Having worked on a large number of "O" initiatives with enterprises over the last few years, the term outsourcing has given me nothing but problems. The minute the "O" word is uttered, staff get defensive, passions get stirred, resistance occurs. Often staff quickly brush up their CVs for a hasty exit before the axe falls. Staff and management tend to associate outsourcing with job losses, and their firms using low-cost labor from service providers. 
