Infosys CEO Vishal Sikka talks to HfS on his first year in charge
So… one year into the new job and Infosys’ Vishal Sikka has managed to perform a task noone thought possible. He’s dragged a once-famous Indian-heritage IT services firm – kicking and screaming – out of a maddening tailspin into that dark sinkhole of legacy-ness that is scaring the life out of today’s services industry.
The reason for this is quite simple – he never brought with him a baggage of legacy services culture, where the common practice is to:
1) Copy what all your competitors are saying and try to out-bullsh*t them;
2) Hire cheaper, younger staff and gut the middle layer;
3) Sugar-coat every ADM, Infra and BPO renewal with terms like “digital”, “transformation”, “automation” and “outcomes” etc., when none of these things were really included in the actual contract, but made nice additions to the press release.
Vishal just gets to the point with a refreshing and honest perspective about what his firm needs to do – and is already making shrewd investments in critical areas, such as Panaya (automation) and Skava (digital). He’s also been growing the traditional business, with Infosys just reporting its best quarterly revenue growth for 15 months (4.5% year-on-year), and overseeing several new $2Bn+ sized engagement wins in the last 12 months, with the likes of Allied Irish Bank, Deutsche Bank, NSW State Government and ICA Gruppen in the last 12 months).
The business is stable, growing well again in an industry where many competitors are scrambling all
over the place trying to find renewed direction and focus. What’s more, the management bleeding has stopped and there is a distinct new energy and passion around the place from everyone you meet.
However, where Vishal is really impacting the culture of Infosys is by driving a renewed culture, based on his Design Thinking principles, that is exciting his staff. Design Thinking is real – it’s something delivery staff, account managers and senior executives can all relate to, understand and embrace. Rather than confuse the living daylights out of people, he talks about real business challenges and how they need to be addressed. And this coming from a guy who has a Phd in Artificial Intelligence… talking real business issues to real people is quite the achievement. So we caught up with Vishal is his Silicon Valley start up-esque collaboration offices in Palo Also to hear first-hand his year one Infosys experience, and where he wants to take things next…
Phil Fersht (CEO, HfS): Vishal, it’s good to be with you here at Infosys. You’ve been CEO now for about a year, so I thought it would be a good time to check in. HfS has done a considerable amount of research into Design Thinking and how it aligns with services outcomes. Can you bring me up to speed on how Infosys is faring, with your own brand of Design Thinking?
Vishal Sikka, CEO and MD, Infosys: Thanks, Phil. It’s great having you here. We started teaching Design Thinking at Infosys back in October of last year. We brought some of our trainers here to the Institute of Design at Stanford—the d.school. Then members of the d.school faculty went to our corporate university in Mysore and started training our people.
When I say training—this is not like some guy watching a video on Design Thinking. These are one or two-day immersive sessions, where people are hands-on and actually build things. As much as possible we try to get the d.school faculty directly involved. This class has now been taken by 36,000 employees. I’m told this is by far the largest rollout of Design Thinking education in history. The d.school said this is like many times the total number of students that have taken the course at Stanford. I don’t know what the exact number, but 36,000 is just insane.
So it is not a center of excellence, where you have three, four people who understand Design Thinking. This is 36,000 employees of the company who understand what it is and practice it.
We are now creating customized training for project managers in our delivery organization. 22,000 of our 36,000 people are in delivery, and 3,000 are project managers in delivery. So we’re creating a special program for project managers to be able to bring Design Thinking into the ongoing work that they do. So in my view we are by far the biggest adopter.
Design Thinking is happening with clients, too. This morning before you came in here, we were doing some Design Thinking work with the German utility. We’ve had about 36 or 37 customers for workshops here in our Palo Alto office in the last nine months, and of course others around the world. In fact, I would have liked for you to meet Sanjay Rajagopalan who heads up our Design and Research team, but he is doing Design Thinking workshops with clients in Australia this week. We have a pipeline of 100 clients interested to do this.
These workshops are not focused on best practices. When we think about “best practices,” hidden behind that phrase is the reality that this stuff is already known. Known problems are really yesterday’s.
But then there are things in life that are unknown. So how do you go after the unknown?
We had a very, very large consumer products company here, which among other things is very famous for chocolate, and we talked about how to deal with the demonization of sugar. There isn’t a demonization of sugar package available for SAP or from Salesforce.com. There isn’t a best practice sitting there somewhere. You have to think about this.
All our lives our education system teaches to do problem solving. Nobody teaches us problem finding.
And Design Thinking is a methodology for problem finding. So that is how we see it.
Phil: So you’ve done this all in a year?
Vishal: Nine months, actually!
This space (pointing to the colorful Palo Alto office which sports writable walls and modular works spaces) and all the new spaces that we are building, they are all designed like this. These are design spaces. These are flexible. In the Bay Area, we have 3,000 people working at various clients. And we had a long conference call about Zero Distance on Monday night. This whole area was opened up and all those tables were moved here, people were working from this corner and there were a 100 people in that area. We had a giant video conference in there.
Phil: Can you talk a little about “Zero Distance”, Vishal?
Vishal: Zero Distance is about innovation. Innovators aim to maximize their relevance by reducing the distance to the user, to code, to value. I have asked everyone at Infosys to focus on getting to Zero Distance, and bring innovation to every ongoing project.
For example, Abdul Razack has a team that is doing IIP, the Infosys Information platform, which is based on Hadoop. Abdul shared with me yesterday some incredible things that they have achieved on open source technology, solving some extreme analytical problems. We have the Infosys Edge team doing new product development. And we have many teams that are doing innovative things. And they will continue to do their thing and bring breakthroughs to life.
But if innovation is done in these small pockets—like in Abdul’s team, Sanjay’s team or Sudip’s team—we’ve missed the point of innovation. Innovation has to come from everybody. It has to come everywhere. And this is why I say, “The Innovation Department in Infosys is Infosys.”
Right now we have 8,500 master projects that are going on in the company. This is the lifeblood of the company. Infosys at the end is a project company. So these 8,500 projects represent the work that we do. And we started this program to basically bring innovation to all 8,500 projects. The 8,500 projects break down into 35,000 sub-projects.
I made a straightforward five-point template about how to bring innovation to every project. And it has just taken off virally. And we do these sessions with teams where we share some amazing thing that our team did. And customers are already starting to see that.
Phil: So when you look at everything you’ve achieved in Design Thinking so far, what would you say is the critical ingredient to finding what’s not there?
Vishal: First of all, you have to have the desire—the instinct—to look for it.
I did a survey when we crossed 25,000 Design Thinking-trained members of the Infosys team. I knew at that point that this was a big moment. When we hit 25,000, roughly 12,500 were freshers—young minds just out of college. And 12,500 were the senior folks.
It was astonishing to see the spreadsheet. I was reading this thing and I was just moved. Of course one thing that was shocking was they had put this in two tabs, the freshers and non-freshers. And the older folks, their responses were always three or four lines long. And the one’s from the freshers were terse—less than one line long. Like text messages.
But the sentiment is exactly the same. There were only three questions. How do you bring Design Thinking to your work now? What has it changed, etc.? The answers from the senior folks, said it had opened up their creativity: “It is like I have seen the light, it is like I can think again. I forgot that I had a brain,” stuff like that. Amazing responses.
One fresher wrote that he went and fixed his mother’s sofa because he had done Design Thinking and because the sofa was broken. And he said, “Let me think about how can I fix the sofa.” I was reading that thing and I said, My God! It was astonishing: this is actually changing not just how people work, but how they live.
Of course it is too early to know what all this means. In the last two months, we met a few clients who tell me that there is something going on. One of the huge banks on the East Coast told me that suddenly because of the Zero Distance thing, innovation is inserted into every project. They said that it appears that the quality of work has just gone up.
We are also by the way bringing Design Thinking to our RFP process. Every response that goes to an RFP of more than $50 million now goes through this team.
Our HR team works like this. They redesigned our performance process. We just finished our promotions and they went through this thing. So it is everywhere.
It is very early, but the result of all this will be quite fundamental I believe.
Phil: So clearly, Vishal, this is having an impact on Infosys. Do you think this will have a ripple effect on a lot of the other Indian-heritage service providers?
Vishal: It will have to, it will have to. I think it is inevitable, because this thing about problem finding and problem solving, I personally went through this when I first came to Stanford.
Even though I had gone to Syracuse for my Bachelor’s degree, I still had grown up in India and was trained to do what I was told. So when I came to Stanford and I went to my advisor, and I asked him, “What do you want me to work on?” And he said, “I have no idea.” And it was a shock to me, so I said, “What do you mean? What will my PhD be on?” He said, “You figure it out.” And I told him, “No, you are supposed to tell me what problem I work on and I am supposed to work on that.” He said, “No, if this is what you thought then this is not the right place for you. You are supposed to find your own problem, we are supposed to tell if the problem is good enough or not. Then you solve that problem and then we tell you if the solution is good enough or not. This is how it works and if this is not what you thought, then you are in the wrong place.” He said this to me bluntly within one month of coming to Stanford.
And I thought they had a catalog of open problems and I would work on one of these. So that really put me into a tailspin.
Narinder Singh was a research associate there and he told me, “Yeah, people spend years looking for a problem.” He said, “Remember that guy Andrew?” Andrew was in the seventh year at the time. He said, “He still doesn’t know what his topic is going to be.” I said, “What the hell has he done for seven years?” Turns out this happens all the time. Either you luck into it and you find one right way or sometimes you spend years finding it.
So then I saw a talk by John McCarthy, the father of AI. And in that talk he made a very interesting statement. He said, “Articulating problem is half the solution.” So I talked to him after his lecture. I said, “What did you mean by that?”
He explained. He said, “Look, you know, most of the time we don’t articulate the problem right. And he was talking about it in the context of AI search. He said that when you frame the problem right, you have basically an idea of how the solution is going to work. I though this was very interesting.
And I talked to Bob Floyd who was another professor in Computer Science, also an A.M. Turing Award winner. He wrote the Floyd algorithm for graph traversal. So Bob Floyd told me that, “Oh, that is not enough.” I said, “This is what McCarthy just said—that articulating a problem is not the solution.” He said, “Of course, he’s absolutely right but it is not enough. I articulate the problem, I solve it, then I go back to see if I can rephrase the problem now that I have solved it. Then I re-solve it. And then I go back and rephrase it until I can no longer improve the solution. That is when I know that I have found a beautiful solution.”
I realized that there is so much to this problem finding, problem solving thing that I never thought about. In those days I read the books by George Polya, called How To Solve It. And actually Floyd’s algorithm that Bob Floyd wrote, was his seventh attempt of solving the same problem.
As an Indian kid, who grew up dutifully doing what I was told, this was my introduction to opening up your mind to see.
And here’s how I found my problem. I found it within a year.
Somebody told me to look at what interests you, what excites you. And I was reading many PhD theses that I found interesting. I quickly realized that at the end of the PhD thesis, people will write about the things that they left unfinished. I was reading Karen Myers’ PhD thesis and she wrote three things that her approach could not do. And I thought that this was something interesting. I was very excited by her area anyway, which is why I had read her whole thesis. When I saw those three problems, I went and I talked to my advisor and I said, “I want to solve these, I want to find an approach that doesn’t have this three problems.” He thought it was a good idea. That is how I came to my PhD thesis, based on the weakness of Karen’s approach. And one of the projects that was a part of my PhD work was Center For Design Research in Stanford.—the precursor to the d.school.
It was a part of the mechanical engineering program, and Mark Cutkosky was the professor there. He used to collaborate with my PhD advisor, and we did a bunch of projects. One of the projects we worked on in 1992 was called Design World, which was about how do you design things. So that is how I got into this whole thing. And I brought into wherever I could.
So you see I had been through this experience of problem finding and its importance myself. As important as it is to see what is there, it is as much or more important to see what is not there. This is why we’re doing what we are doing.
Phil: Vishal, thanks for sharing your current views with our readers – am sure many will appreciate them!
If I have to read another article about Uber’s disruptive business model, I think I am going to defect to a Trappist monastery and brew very strong beer for the rest of my life…
However, iet’s be honest here – who really cares about these taxi drivers being forced to improve their services, clean their cabs, clean themselves, start using credit card machines and even (on occasion) help you with your bags? The fact is, unless you are a legacy taxi driver, or related to one, you’re most likely delighted they are being forced to get competitive and improve their services.
It’s the same with Spotify / Google music – unless you are in the business of selling music, most people are ecstatic they can now get all the music they desire for $10 a month or less, without having to spend a fortune on CDs, with the hope that there’s the odd good tune. And there’s Amazon versus Best Buy, there’s Airbnb versus Marriott, there’s Netflix versus Comcast, and so on. Moving to our industry, there’s Onesource Virtual versus NGA, there’s ZenPayroll versus ADP, Workday versus SAP, there’s software versus people, there’s offshore people versus onshore people, there are robotically automated solutions versus people, there are self-learning machines versus people, in fact, every advancement in services we look at today is all centered on less people… and delivered As-a-Service.
And like the happy world of taxi customers now getting a better and cheaper service for their money, there are many business leaders who are only too happy to get cheaper and better business operations, because they can reduce their reliance on people. If you’re not an employee who is being replaced by a piece of software (although it’s widely assumed we will be someday), the chances are you’re happy your firm is becoming more profitable and doesn’t need to rely on so many bodies to keep the lights on. Just revisit our Value Beyond Cost study we ran with KPMG earlier this year, where we asked 168 senior executives about the priorities of their C-Suites with their operations:
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What is startlingly apparent here, beyond the fact that well over 90% of C-Suite directives are obsessed with cost and flexible services as operational priorities, is that less than half (48%) view improving their operational talent as important, 65% are exploring efforts to restrict the recruitment of labor where possible, and 62% are looking, with varying levels of interest, at automation and robotics with the specific purpose of reducing their reliance on labor. The bottom line here is very clear – C-Suites are caring less and less about their people, and more and more about their services.
The big question many are facing now isn’t whether to invest heavily in their people – it’s whether to invest in technology to replace staff, or use outsourcing partners to reduce the burden of inhouse staffing cost, while improving their access to flexible services. Or use a combination of the two… or use an outsourcer which is using robotics on itself and is willing to pass on the benefits to its clients desperate to move from a legacy labor-centric operational infrastructure.
The Bottom-line: In the The As-a-Service Economy, we only care about achieving our desired outcomes
Here’s the nub of the argument, while people like Hillary Clinton want to turn back the clock and protect the legacy job-for-life, the vast majority of people really do not care that labor forces are being disrupted, along with legacy business models and obsolete practices. Today’s world is all about faster, cheaper, more accessible services – and to hell with any obsolete process, system or person which gets in the way of convenient and affordable As-a-Service models.
People care most about enjoying the outcomes of what they pay for, not the efforts made to achieve those outcomes. Expenditure on services is increasingly related directly to outcomes, not a fixed tax we have to pay for a standard service. Personally, I always pay a limo driver $10 over the norm to drive me to the airport. He picks me up in a Cadillac, hangs up my suit, gives me a bottle of water and a newspaper – and only makes conversation if I want to. My desired outcome is a relaxing journey and the extra cost is worth it – and he wins my business everytime and I refer him to all my friends and colleagues. Now that’s one way to win over the Ubers of this world – people will pay when the outcome is what they want. Welcome to the uncaring economy where is all about the outcome…
And this isn’t some traditional HRO play, it’s KPMG making a serious investment in Workday delivery across both HR and Finance & Accounting. KPMG already claims to be the transformative partner for 45% of the world’s Workday financials rollouts… now it is playing with the leaders in Workday based HR delivery, namely OneSource Virtual, Deloitte, Accenture, Collaborative Solutions and Meteorix.
Does this mean KPMG is now an HR-as-a-Service Provider?
Yes it does. The firm has realized it has to be in the managed services business to support the emerging SaaS offerings across technology implementation, post go-live support, transaction business processing and higher value services, such as organizational change management, workforce analytics and ad hoc strategy needs… in an on-demand model. It also knows it needs to be in the position to provide these on-demand capabilities around several core HR SaaS product suites, notably Workday, Oracle HCM and, ultimately, SAP Successfactors.
So can KPMG lead the HR-as-a-Service market?
KPMG can certainly compete against the consultative global leaders in HR, most notably Deloitte, Accenture, IBM and Mercer, while also having serious capabilities to spar with the emerging niche service providers, especially where clients have global requirements at scale. With this Towers Watson deal, HfS estimates an additional 150 Workday specialists are being added across United States, United Kingdom, China/Hong Kong, Canada, Singapore, and the Philippines to add to KPMG’s current HR practice of ~600 practitioners across 18 major global countries. This is now a serious global player, which can pivot impressively across both finance and HR domains around the leading SaaS platforms. With this deal, KPMG also assumes ownership of both the famous Towers Watson HR Service Delivery and Technology Survey and Forum, which it can quickly absorb to enhance its own brand credentials and domain leadership in HR-as-a-Service.
The Bottom-line: The ambitious consultants are moving into As-a-Service, so what are the next moves we can expect?
Accenture never veered from being a service provider, in addition to a consultant, and now reaps the rewards for dovetailing the best of both worlds – managed services, global scale and scalable skill. Deloitte, KPMG and PwC have claimed, for the last two decades, to be consultants and audit firms – and not managed services providers (even though Deloitte has always had a few discrete offerings that smell a lot like managed services).
Now, KPMG is moving into As-a-Service delivery, with a particular Workday flavor that is clearly the best starting place with the level of global demand for this offering. The next move will surely be it continuing to build a Finance-as-a-Service capability around the emerging Workday financials management suite that is attracting major interest from CIOs and CFOs.
Accenture and Deloitte will be nervously watching this move, not to mention several traditional HR service providers, such as AONHewitt and NGA, which are trying to figure out where (or whether) they truly belong in this As-a-Service business. Accenture has done an impressive job honing its HR-as-a-Service delivery around Workday and SAP Successfactors (among other SaaS offerings), while Deloitte is still clearly stalling on whether or not it is in the As-a-Service HR business, versus merely being a consultant – and may now be thinking that KPMG is stealing its thunder in the space. Meanwhile, we have a whole host of feisty new-generation As-a-Service providers, such as Aason, OneSource Virtual, Meteorix and Appirio, which are unraveling their gameplans to stay ahead of this evolving space.
Consolidation is going to be the next step for many of these service providers – the brave will stave it off, some will take the exit money while they can, while there will be some legacy players who panic and make a move to stay in the race (remember those awful acquisitions during the HRO 1.0 era?). As-a-Service has arrived, and HR provides the early battleground… so sit back and enjoy the show, as this one could get messy 😉
Like many of you out there, I was floored last night to see Presidential candidate Hillary Clinton openly attack the Sharing Economy in a speech outlining her economic theory.
Clearly taking a swipe at the likes of Uber and Airbnb Mrs Clinton states, “This on-demand or so-called gig economy is creating exciting opportunities and unleashing innovation. But it’s also raising hard questions about workplace protections and what a good job will look like in the future”. Clinton “Vows to crack down on employers who misclassify workers as independent contractors”, which she says is “wage theft”. Along with globalization and automation, Clinton describes the “Sharing Economy” as “conspiring against sustainable wage growth”. The report says “she will argue that policy choices have contributed to the problem, and that she can fix it.”
So why does added protectionism of US workers help offshore and nearshore outsourcing?
While the open attack on innovative business models is in itself mind-boggling, the less obvious impact of her focus here is to discourage service providers and enterprises from hiring US talent to provide business support services. As service delivery becomes increasingly focused on higher value needs, such as organizational design, analytics modeling and supporting complex apps development across multiple environments, the opportunity for local US talent to be leveraged is huge.
In addition, the way in which new generation As-a-Service providers want to engage with talent needs to be more “As-a-Service” to be competitive. Virtual support models are becoming critical for BPaaS support functions where clients need quick, on-tap support, and – in many cases – the new generation of service provider isn’t simply looking to stock up hoards of full time employees in a call center somewhere in the Midwest – they are also seeking to engage talent which prefer a flexi-model and do not demand entitlements such as healthcare, 401K etc. Isn’t that what things like ObamaCare are for? Just look at how the new class of Workday service providers, such as Collaborative Solutions, Meterorix, and OneSource Virtual, all of whom are upending the old guard of “Was-a-Service” providers, clinging to costly legacy models that have already been disrupted. These firms are all employers of local US talent in support of innovative As-a-Service delivery. Does Hillary really want to discourage these firms from flexing up with more staff locally as they grow, or would she prefer them to invest more in India, South America etc where talent is more fungible and flexible to manage? Because that is what will happen if more protectionist employment laws are put through.
Why not make it easy and fluid to hire local talent to scale up – as and when needed? Why not support our service-driven businesses to be more agile and cost-effective with their delivery? Because if services firms and enterprises are being strong-armed into hiring fulltime employees (many of whom don’t even want to be fulltime employees), they are going to evaluate alternative talent models to deliver their services, such as hiring more local people part-time, or outsourcing to service providers which can provide talent from across the globe.
Bottom-line: The US is an increasingly unattractive place to do business. Let’s not make it even worse
For starters, the US has stayed at the lead of the global economy ever since Winston Churchill stuck two fingers in the air because their leadership has embraced innovation in technology and life sciences – and supported their leading firms and academia in the process. Now, rather than staying ahead of the curve and realizing the future of work doesn’t look anything like the past, we are seeing the leading Presidential candidate come down heavily in support of protectionism in order to win a few cheap votes from taxi drivers who overcharge us. Aren’t our wage costs, payroll taxes, healthcare contributions etc already off the scale? Why not give our innovative employers a chance to be successful so they can create new jobs for the future, as opposed to discouraging them from hiring in this country at all? It’s not as if there is a huge unemployment problem in the US these days…
Uber is an easy target for Hillary as it has to rely on local contract workers to be effective and the government can step in to interfere. However, what about all the tech start-ups, As-a-Service providers, major enterprises which can leverage fungible labor from anywhere across the globe to fulfil their needs? Don’t bite off your nose to spite your face Mrs Clinton – protecting a few taxi drivers who overcharge us would have much broader impacts on the attractiveness of US talent at large. Let’s just hope this is a minor aberration as she realizes the consequences of this bewildering campaigning and quickly corrects course to avoid being seen as a dated, legacy politician.
Two CEOs clearly up to no good… Genpact’s Tiger Tyagarajan (left) and Infosys’ Vishal Sikka (right)
One of the great things about HfS is the fact we never partake in gossip or idle speculation. So let’s change “never” to “rarely”…
I was happening to be Uber-ing myself aimlessly around the streets of San Francisco last week when I happened to drop in on Infosys’ sexy new Design Thinking center (I think that’s what they call it) in Palo Alto, where I caught two of the industry’s finest minds having a sneaky cup of coffee.
Now, before you all jump to conclusions that Vishal Sikka and Tiger Tyagarajan are about to join forces, they are actually old friends and neighbors, and this was purely a social call… but it did get me thinking about what if Infosys and Genpact got a little more intimate with each other…
Pros:
Challenging the old way of thinking. Infosys’ fresh Design Thinking approach and Genpact’s re-imagination of business processes are very well aligned. Both firms have jumped on the importance of challenging current thinking and instilling that across their organizations (and not a CoE approach).
IT services meet BPO… on steroids. A great IT services firm meets a great BPO/operations process management firm. This would be a real powerhouse. What’s more, Genpact is the largest “process pureplay” breaking new ground in terms of its sheer scale and size – where it takes the business next, there is no written rule book available.
BPaaS at a global scale? Infosys EdgeVerve + Genpact’s emerging process consulting capability would be very interesting. Scalable BPaaS solutions that could be industrialized at a global level… the mind boggles at the possibilities to realize a long-held industry vision.
Cross-client synergies. Great upsell opportunities across major clients, especially in horizontal process areas where Genpact is market leading, such as finance and accounting solutions or procurement where this combination would create an even stronger challenger to Accenture than they are individually today.
IT autonomics + RPA + AI potential. Interesting combination of automation capability across IT autonomics (Infosys) and robotic process automation (Genpact). Would also be a nice playground for Vishal to put his Ph.D. in artificial intelligence into practice. These two could certainly build a cognitive+autonomics+analytics computing platform that differentiates itself in the market alongside the likes of Watson, Holmes, ignio, Amelia etc.
Digital meets Process. Digital strategies need to bring together real process acumen and technology enablement skills – at scale – in areas such as mobility, analytics and social media/collaboration. The ability to design “digitally-native” end-to-end business processes is core to the future of services and these guys may just be able to pull off something quite special together.
Adds real vertical strength and depth. They would nail insurance and banking in spades, have really strong presence across manufacturing/consumer/retail and Genpact’s life science’s presence would be a fantastic opening for Infosys.
Geographically and culturally. Very interesting spread across India, UK, Central Europe, ANZ and the US. However, still trying to visualize (or is that Vishal-ize) the whole Palo Alto/New York/Gurgaon/Bangalore cultural thing they’d have going on.
Timing. This market is ripe for some aggressive moves to change old habits and shake up the apple cart. This one would certainly set the big cat out loose among the pigeons, when investors are hungry for new ideas, bold moves and aggressive plans. With Vishal enjoying a healthy dose of momentum as he reaches his first anniversary at the helm of Infy, there are worse moves he could make… surely? And this would likely be at a similar size to Capgemini / IGATE…
Fashion. Tiger could clearly show Vishal a thing or two about designer New York business attire, while Vishal could certainly help Tiger get with the West coast tech-nerdy thing.
Cons:
Who would run the show? These are two fiercely proud firms with very strong cultures and very dynamic leaders. Could you really fuse these together?
What methodology would they follow? Would Smart Enterprise Operations win out or would the Process Progression Model lead the way? Come to think of it does that even matter.
Limited time to integrate. In this market, no-one can afford to take their eye off the ball. Prices are at an all-time competitive low, several ambitious providers are eager to “buy” their way into strategic deals to develop out their offerings and maintain market share and there are emerging As-a-Service contenders willing to disrupt the old model with new disruptive approaches.
Doesn’t wholly address the consulting gap. While there is some excellent talent across both firms, this is nothing near the scale of an Accenture, Deloitte, PwC or KPMG on the strategy/consulting side. We would like to see both firms up their consulting talent pools – at scale – as the As-a-Service Economy continues to unravel. While the expertise-as-a-service model emerges, there does need to be the right blend of managed services and consulting acumen to really get ahead in this market.
Big isn’t as beautiful these days. Just looking at the efforts the likes of IBM, HP and CSC have made to make their business more manageable with more clearly defined business units, getting to monster size for the sake of being just bloody huge (and this one would become one of the largest services firms on the planet) is not a reason to do this.
The old IT+BPO thing isn’t washing as well as it used to. Up until recently, the whole talk in the services business was always about IT services firms offering BPO as there were so many great synergies between developing and maintain apps and being able to deliver process solutions. Hey – you not only could you support a legacy ERP platform, but why not milk the dollars processing invoices and paychecks off the back of it? With As-a-Service, that isn’t so appealing. When you can get much of the IT you need in the cloud, the ambitious BPO these days is pushing “Finance-as-Service” or “Revenue-Cycle-as-a-Service, or “Insurance-operations-as-a-Service” as so on… The future isn’t about buying IT services, but more buying a business outcome delivered As-a-Service. If a credible BPO can enable and deliver business services in the cloud, who cares who is developing and supporting the underlying apps… especially when they are standardized?
The Bottom-line: This could be a match-made in Heaven, Palo Alto, Gurgaon or Hell…
It’s fun to speculate, and this one is especially interesting. When we looked at IBM+TCS, there were clear service line synergies, but the cultural gap between those firms is huge – and the sheer sizes involved make this too unappealing for so many stakeholders. However, in this case, Infy (we think) has just about enough cash if it really wanted to take a serious look at G, and there is clearly a closer set of synergies in terms of cultures and less overlap. These are also two ambitious firms who are clearly not ready to rest on their laurels and want to break new ground if they can. They are also led by two popular and visionary guys who are in tune with their people and the market. However, at the end of the day the bankers do the real talking and these may just be too many complexities to make something of these sheer scale and size pay off.
If there’s one market people have been raving about for the past decade – and still are – but has never quite taken off as quickly as many have predicted, it’s the world of engineering services outsourcing.
This market is all about using third parties in the design, analysis, manufacture and augmentation of products. And in today’s world of global labor, the global marketplace, emerging technologies, smarter global sourcing models and the Internet of Things, the potential to embrace outsourcing expertise to bring products to market smarter, faster and cheaper has never been so exciting.
Engineering services has a huge market potential, but – somehow – engineering service providers have had limited success in transforming this potential into the actual outsourcing engagements. Now things are changing, and we believe that engineering services is evolving from a niche offering to the mainstream. So without further ado, let’s hear from HfS Research Director, Pareekh Jain, on the excellent research he’s completed that delved deep this this market:
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Pareekh, how do you see this market evolving and what are the key drivers for engineering services?
Engineering services outsourcing, over the last decade, has evolved from simple drawing and drafting to complex end-to-end product design. Now an enterprise which wants to enter a new market segment can partner with some leading engineering service providers, that can not only deliver complete new product design but that can even collaborate with manufacturing partners for additional benefits. Some engineering service providers are also collaborating on high-end R&D projects with the world’s leading research institutions and filing patents both on behalf of their customers and the service provider.
We have observed six key demand-side drivers transforming the engineering services outsourcing market. First, product life cycles are getting shorter which means more product design work and faster time-to-market requirements for enterprises. Second, enterprises are looking to adjacent markets for growth but rather than do it all themselves they are partnering with engineering service providers. Third, enterprises are entering emerging markets and leveraging engineering service providers to do value engineering and to develop frugal versions of the enterprises’ products that can compete at the different price points in these markets. Fourth, the long tail of products created when technology companies merge (and they wish to maintain all existing revenue streams) is increasing the demand for the external help to manage the lifecycle management requirements of legacy or low growth products. Fifth, demand for smart products with the combination of software and hardware is driving enterprises to leverage engineering service providers which have developed expertise over the years across software, hardware and embedded solutions. Sixth, availability of composites and lightweight material is enabling enterprises to rethink the design of their products with the help of engineering service providers.
What was the scope of this Blueprint?
This Blueprint is focused on the product engineering segment of engineering services. The other two segments of engineering services i.e. software engineering and product lifecycle management (PLM) package implementation were excluded, and we will look to cover them in future Blueprints.
How did the Blueprint turn out?
Engineering services is a diverse market spanning across many different verticals and industries. While the value chain element of product development is common across this diversity the skills for designing a car are very different than the skills for designing medical equipment. We analyzed key engineering services outsourcing market dynamics and evaluated the capabilities of 14 service providers at the organizational level, the vertical level, and the service level. We evaluated both specialist service providers as well as broad-based service providers which also offer engineering services. All 14 service providers are leaders in at least one of the verticals.
Our analysis shows four clusters. The first cluster includes leading broad-based IT service providers which also have scale in engineering services. The second cluster consists of leading specialist service providers with strong expertise in few verticals. The third cluster includes broad-based IT services firms that are relatively late entrants in engineering services and building their scale and capabilities. The final cluster consists of specialist firms which have strong expertise in one or two verticals.
There are four service providers in our Winner’s Circle – HCL, Infosys, TCS and Tech Mahindra that have four things in common: scale, scope, investment in future capabilities and strong customer references.
The eight High Performers in our study are Capgemini, Cognizant, Cyient, Genpact, IGATE, L&T Technology Services, QuEST Global, and Tata Technologies. They are on the right path and building their capabilities.
In this Blueprint, we also focused on benchmarking and operations improvement. This is first of its kind of engineering services study where we tried to collect important operating data from engineering service providers and arrived at the aggregate or the average engineering services industry metrics. This should help each engineering service provider and captive to benchmark their operations and identify their strengths as well as areas or levers of improvement.
Pareekh Jain is Research Director, HfS (Click for Bio)
So what are your key takeaways from this study and what should we be watching for in the next few years?
There are three key takeaways.
First, engineering services is a huge untapped market. Currently, it is dominated by captives but we believe that is rapidly changing as outsourcing to service providers becomes more significant.
Second, scale is becoming very important in this market as it enables service providers to make investments in labs, capability development, additional services and market access which are critical to developing this market further. Finally, the scope and complexity of work being outsourced is continuously expanding.
This year the revenues from engineering services for Indian services providers has grown faster than the IT services according to NASSCOM data, and it is fast becoming a growth driver for the global outsourcing market.
We will be watching three key trends in coming month and years.
First, we believe engineering service providers will witness high growth and eventually service provider outsourcing will overtake the captive outsourcing. Second, we will be watching for mergers and acquisitions among engineering service providers. Finally, we will keep track of how service providers augment their capabilities and service offerings. We believe IoT/M2M and engineering analytics will become mature service offerings in next few years.
HfS readers can click here to view highlights of all our 21 HfS Blueprint reports.
HfS subscribers click here to access the new HfS Blueprint Report, “HfS Blueprint Report: Engineering Services Outsourcing 2015“
Most of the outsourcing industry is still trying to figure out what’s possible beyond doing labor arbitrage really well – because that’s what we do. Sorry, but there I said it – we officially have an identity crisis.
We’re trying to forge a new identity for ourselves and re-imagine what our careers, our services and our platforms could be like if we only figured out how we can define, prioritize and realize business outcomes that are valuable, as opposed to merely keeping the same old factory ticking over at the lowest possible cost.
Sexy robotics software, analytics tools, BPaaS platforms and artificial intelligence can only be effective and impactful once enterprises have re-designed their processes in a way that drives them towards their desired business outcomes. This has always been the case with (now legacy) ERP implementations, where thousands of clients have blown billions of dollars on enterprise software they simply never could mold effectively to their businesses. They weren’t finding problems to solve, they were creating new ones they didn’t need in the first place.
It’s the same with the next wave of As-a-Service solutions – they will fail without the right approach to designing processes that produce the desired results. Without Design Thinking, enterprises are really just retrofitting expensive solutions into legacy processes and likely wasting a whole load of time, resources and money. It all starts with Design Thinking.
New HfS research into the Ideals of As-a-Service, which canvassed the viewpoints of 178 major enterprise operations executives, points to the rise of Design Thinking and the cultivation of creative ideas, as critical to more than four-out-of- ten enterprises today, in terms of having immediate impact in their quest to reach an As-a-Service end-state, second only the investments in analytics tools and skills:
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HfS’ Design Thinking Outcomes Continuum aligns traditional concepts with the realities of today’s services industry
In today’s whirl of constant information and social media, it is much easier to visualize how effective enterprises will be running their operations in another five-to-ten years. However, developing a realistic strategy to get there is an immense challenge – and threat – for most enterprises mired in decades of legacy processes and systems.
We all know we need to get smarter with digitizing and automating legacy processes in order to access meaningful data to grow the business and be less reliant on inefficient labor. Plus, an increasing majority of us know we need to explore the possibilities capabilities of self-learning and artificial intelligence, to augment our existing knowledge labor. Today’s challenge isn’t only identifying what the future of operations should look like, it’s developing and adhering to a collaborative and entirely new way of re-imagining processes in order to explore what’s possible and execute against that.
Being successful in the As-a-Service Economy requires ambitious service providers to make fundamental changes to their whole approach to service design and delivery. At the heart of this evolution is a shift to service solutions being designed with real business context, as opposed to simply “looking at a process”. This involves a genuine focus on approaching and interpreting a client’s challenges, identifying and experimenting with opportunities, and ultimately evolving these approaches into the service delivery.
HfS believes that traditional capabilities, such as Six Sigma-based process design and execution, while essential to delivering the efficiency benefits of the traditional sourcing, are today standard, commodity-based capabilities embedded into any standard service model move to an As-a-Service delivery environment.
We believe that a new methodology must be front and center that imbues the full spectrum of human-centric design ethos. This methodology, commonly dubbed “Design Thinking” by several industry stakeholders, is based upon a more responsive relationship between the service buyer and the provider, one that is open, empathetic, experimental and yet efficient. We have seen Design Thinking come to organizational prominence in recent months at IBM, Infosys and Wipro, to name a few service providers, and at the offering or project level in many others. This makes sense to us, because without this more open and innovative approach, it will be difficult to build solutions to meet the challenges and opportunities of the “As-a-Service Economy” such as increasing consumerization of technology and a more virtualized workforce.
As our new survey data illustrates above, we firmly believe 2015 to be the year in which Design Thinking comes to the forefront of the sourcing and services market. It will be the time during which service provider leadership teams are sent to design camps, and a whole new set of conferences and workshops feature Design Thinking as their theme of the moment. Some of that may be hype or even unnecessary, but at the root of it, the arrival of Design Thinking into the mainstream of IT and BPO services makes sense to us as a way to re-imagine more effective process-based solutions for this increasingly digitized As-a-Service world.
There is no one best way to apply Design Thinking, but there are useful starting points, and we believe the HfS Design Thinking for Outcomes Continuum to be a valuable and meaningful way to think about how to solve problems in designing services for the As-a-Service Economy.
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The Bottom-line: Design Thinking for outcomes is a real methodology that enterprises can understand and embrace today, not in five years’ time
While we believe Design Thinking will take root in IT and business services in 2015 as a methodology to enable further innovation, at the end of the day it is still just another tool. What you make of it depends on the intent and practices of its users, whether individuals or organizations.
This approach will not be easy for some legacy service providers who cannot yet see how the world is changing. For those service providers and their enterprise clients who can see that thriving in the As-a-Service Economy requires new approaches and capabilities, we see a real potential to use Design Thinking in the move from the present into the future.
Getting new digital processes and services right from the perspective of their end users is critical. Design Thinking, which is about context and empathy for the user, can facilitate this focus. It will be an integral part of the emerging As-a-Service provider offerings, many of whom are already rapidly emerging to redefine the market.
You can read the full POV on HfS’ approach to Design Thinking by Phil Fersht, Hema Santosh and Charles Sutherland by clicking here.
When we look back at this current era of IT services, we’re going to remember this as the time when many of the leading providers launched their platforms to help orchestrate, analyze, automate and artificially intellectualize the delivery of technology to enterprises.
We’ve already had IBM’s Watson™ and Wipro’s sidekick Holmes™, in addition to the several specialist IT autonomics platforms such as IPSoft’s IPCenter™ and Arago’s Autopilot™, so surely, it’s just a matter of time until we get the full gamut of branded autonomics-driven IT management platforms from all the major service providers. The most recent launch comes from TCS, which has been putting a significant amount of investment and attention into its new IT autonomics “neural” platform ignio™.
So we recently got some time with ignio’s mastermind, Dr. Harrick M. Vin, who’s the Chief Scientist and Global Head of Innovation and Transformation, and IT Infrastructure Services at TCS. Maybe he should just call himself the Platform Professor…
Phil Fersht (CEO, HfS): Good afternoon Professor Harrick Vin! It’s great having you on the blog. Maybe you can start by giving us some color into your background, and earlier career–and how you ended up working for a major service provider like TCS.
TCS’ Dr. Harrick Vin launches ignio this June in New York City (click for bio)
Dr. Harrick Vin: First of all it’s a pleasure to be here, and I appreciate the opportunity to talk to you, Phil. Let me first introduce myself. My name is Harrick Vin and I’m vice president for R&D and Chief Scientist at the Tata Consultancy Services (TCS). I look after our largest R&D center in Pune, India. For the past several years, I have also been driving the overall strategy and innovation for the infrastructure services business unit of TCS. Most recently, my team and I have been involved in developing a product called ignio, which we are launching in the market. I have been with TCS for about 10 years. Prior to joining TCS I was a Professor of Computer Science at the University of Texas at Austin for almost 15 years. At TCS, I have had an opportunity to closely work with and analyze some of the most complex systems, ranging from human systems, technological systems, to large engineering systems. We have used a lot of the learnings about how to manage complex systems, to design ignio.
Phil: So talk to us a bit, Harrick, about why automation is suddenly the flavor of the month in the industry. Why is it suddenly such a talked about topic as we look at the future of services and where things are going?
Harrick: Automation is not at all new, Phil. In fact, the whole IT industry is about automation, because that’s what IT does to the business. In fact, in my mind, the words IT and automation are synonymous. But what is interesting is that while IT has been used to automate business, the way we have been running IT and operations behind the scenes involves a significant amount of manual work. We are still very dependent on a lot of tacit knowledge, experience and intuition that people gather over a period of time while running these systems. Most organizations have exercised several people and process optimization levers to reduce cost, make technology and operations more efficient and consistent. And this has served us well to date.
However, I think the next decade is really going to be all about speed or agility. While the digital revolution has created many opportunities for businesses to transform themselves, it has also created some very tough challenges for the enterprise technology and operations teams. For instance, in most enterprises, technology complexity is on the rise; on one hand, most enterprises are struggling to reduce legacy, while on the other hand, new technology, new applications, new businesses processes are being introduced at an unprecedented rate. Data volumes are on the rise, and decisions are becoming difficult to make. Rising complexity is also leading to increased operational risks resulting from failures, technology misconfigurations and human errors.
Because of these, conventional methods for running technology and operations in most enterprises are starting to fall a bit short. In fact, to deal with complexity, most enterprises IT teams have organized themselves into lots of layers and silos, and deployed many workflows. This essentially ensures that everybody who needs to know or who needs to have a voice gives an approval before something gets done. Unfortunately, this slows things down. Work essentially flows and doesn’t get done very quickly. The lack of an end-to-end view resulting from layers and silos also increases operational risks from human errors.
Thus, the combination of rising complexity, lack of agility or sluggishness caused by complex workflows, and significant increase in operational risks are some of the key drivers that are really making automation of technology and operations essential for the future.
Phil: As you look at the value that a service provider can bring in this space, obviously it’s bringing a lot of capabilities around system integration, bringing together platforms and processes. What do you see new evolving from a technology perspective, that is really changing the game here? Is it that new things are coming on to the market that are creating better types of platforms that are more effective, or do you think it’s just increased skill sets on the services side?
Dr. Harrick Vin talks to us about neural automation…
Harrick: Most enterprises have failed to use conventional automation products or practices to create scalable or sustainable automation. We have seen automation applied in pockets, leading to islands of automation. However, we have not seen most enterprises being able to scale the benefits of automation. This can be attributed to two primary reasons.
First, today’s best practices and tools often require enterprises to embrace a standardize-first model: standardize technology and processes first before you spend the time and effort to automate and thereby derive efficiency and other values. This has often failed because standardize-first requires a fairly large lead-time and there is also no clarity on what is the necessary diversify that one has to actually support. So when you say standardize-first, the question is standardize to what? This is difficult to answer for most enterprises.
Second, perhaps, what has really resulted in lack of scalability and sustainability of automation, is the very fact that most of the current tools or products for automating operations, implement run-book automation, in which a standard operating procedure for doing something manually is converted into a workflow, a script, a program, or a set of rules. This run-book automation model has its roots in manufacturing, where once you configure an environment for automation, the environment doesn’t change much. For example, if you consider a BMW factory that produces a 3 Series car, it produces exactly the same car design for the next several years. But in the case of enterprise IT, everything changes all the time: the workload keeps changing, the underlying technology and their versions keep changing, application functionality keeps changing, new applications keep getting introduced, among others. And all of these changes make automation obsolete, and often leads to automation maintenance nightmare. In fact, because of the challenges in accommodating changes, many enterprises automate only things that are not changing very frequently or things that are at lower layers of technology stack. The higher up you move in the technology stack, the greater the rate of change hence the greater rate of obsolescence.
Thus, to be effective, we need new technologies and products that will enable enterprises to build automation that is inherently designed to accommodate change, designed to accommodate diversity and designed for high degree of reuse, such that automation benefits can be obtained quickly. So, in effect, we need highly intelligent automation with the head-on, rather than dumb automation.
Phil: So let’s look at the next generation solutions to help clients. We talked just recently about an exciting offering that TCS is coming out with called “ignio.” What is different about what you are bringing to market with ignio?
Harrick: Phil, ignio is the world’s first Neural Automation System for the digital enterprise. Let me explain what neural automation means to us. To us, neural automation means four things.
First, it means connected. Ignio has ability to collect data and assimilate data from a large number of enterprise data sources, to create context awareness about what the enterprise environment looks like. In a typical enterprise today, there is no one data source that gives you everything you want. There are hundreds of thousands of data sources that actually contain relevant information. ignio taps into all of these data sources to build context awareness.
Second it is adaptive, in the sense that it does not require an enterprise to make changes to its tools or systems; it does not require standardize-first. It simply connects to what an enterprise has and adapts to the enterprise environment.
Third, it is intelligent in that just like how our brain works, it breaks any complex activity into a large number of smaller simpler tasks, performs each of these tasks and then composes these tasks together on the fly in order to carry out a complex activity. Because it has the ability to create the context awareness, it also has the ability to predict an emergent condition and take proactive actions. So that’s why it is intelligent.
Last but not the least, it is resilient. It is able to accommodate changes or failure gracefully, and reconfigure itself to accommodate change. Which as I said a little while ago, is a fundamental requirement for automation to be scalable and sustainable.
So, in a nutshell, it’s connected, adaptive, intelligent and resilient. These are exactly the characteristics that you would actually associate with a human brain, and how our neural system works. This is exactly what ignio does.
Phil: Why “ignio”? What was the thinking behind the brand?
Harrick: Interesting question. Let me explain. ignio converts every service into a piece of software. By doing so, it is essentially allowing us to create a technology-first service model, whereby ignio has the right of first refusal to do any work, and ask for help when it does not know how to perform the work. So, ignio in our mind is this invisible, evolving intelligence that will ignite and drive change for a large enterprise. That’s what led us to the name ignio.
Phil: So last question, Harrick. When you look at the world today, if you were crowned the emperor of IT services for one week, what’s the one thing you would do to change this industry?
Harrick: That’s an interesting question; let me think a little bit, Phil!
To answer this question, let me draw an analogy between IT services and manufacturing. In manufacturing, because of the industrial revolution, we’ve gone from manual engineering or craft, to mechanized, to now precision engineering. That happened because of the sophistication of automation. If you look at IT services today, we are still very much a manual engineering type of industry. We rely very heavily upon intuition, experience and tacit knowledge to perform different types of complex operational tasks. I believe that the IT services industry is ripe for undertaking this industrialization journey, and this is what I would try to promote and drive.
I also think that converting services to software, like what ignio is designed to do, to enable a technology-first service model for enterprise technology and operations is a critical step towards realizing this industrialization vision. If you look at the last decade or two, we have witnessed disruptions in many other industries, whether it is retail, whether it is taxi rental, whether it is video rental, and so on, where a people-centric model of service has been converted to a technology-first model of service.
Phil: That was very well answered! It’s been a pleasure having you talk to our readership today, Harrick; we look forward to sharing your views with everybody. And good luck with ignio!
Dr. Harrick M. Vin (see bio), is Vice President and Chief Scientist, Global Head of Innovation and Transformation, and IT Infrastructure Services at TCS. He holds a PhD in Computer Science and Engineering, University of California, San Diego, an MS in Computer Science from Colorado State University, and a BTech in Computer Science and Engineering from the Indian Institute of Technology.
We’ve been talking about the great divide between consulting and outsourcing models for decades, but – finally – it’s time for the two to get much closer together as the forces of the As-a-Service Economy combine to weld the two models into a new services mongrel which combines simplicity, efficiency and capability for enterprises finally attempting to drag themselves away from their perpetual treadmill of obsolete technologies and valueless process flows.
The whole premise behind As-a-Service is one of a fundamental cultural change with how enterprises approach their operations and partner more collaboratively with capable service providers to re-imagine their processes, based on defined business outcomes. Simply put, it’s a huge, huge challenge for most current services relationships to morph into anything closely resembling an As-a-Service model, with the current mindsets of most buyside and sellside delivery staff. Buyers need deep expertise to help them reorient their skills and capabilities – and their service providers need to make serious investments and sacrifices to help them, which give their accountants and shareholders hives.
Coupled with the troubles facing buyers and their service providers, is the abject failure of most of today’s sourcing consultants to do anything difference to reform their old way of doing things. Yes, it’s a Catch-22 of many service industry stakeholders not wanting to change their ways, but being forced to address these issues to remain relevant and – let’s face it, employed. In short, the pace at which the services economy is evolving will render many people unemployable in a few short years who fail to get ahead of this.
Just remember how foreign the concept of cloud computing was just five years’ ago… you think it’s going to take that long again for RPA to take hold, and significant advancements in artificial intelligence to reshape how enterprises run their operations? Think again, people; things simply have to change – and these market forces will make sure there will be winners, survivors and losers who will fizzle away into insignificance.
But the answers are staring us in the face – the future of services is a combination of the ability to create business value based on processes that are run efficiently, simplistically, and to common standards we find acceptable.
Consultants make a living demonstrating value in order to create demand to sell their capabilities. This is where too many service providers will terminally struggle
Clever consultants find problems, not just solve them. The only way to get buyers to do anything different is to convince them that hiring you will inspire them to make these changes. This is what able consultants do – they want to be billing themselves out 2,000 hours a year to their clients, so they are constantly looking to find problems, not merely make incremental improvements to existing processes that add minimal value.
BPOs need consulting skills – at scale – to succeed. I hate to say this, but you can’t achieve real success with the next wave of labor-lite solutions with a couple of smart visionary guys living on planes with their PPT mosaics. That may have worked for BPO rounds one and two, but this is round three and there needs to be lots more feet on the ground to be effective. Most of today’s BPOs are operating with very thin layers of consultants to front their client relationships. Simply put, they do not have enough to genuinely scale this beyond a few discreet engagements.
Clients will pay when they see the value in front of their faces. BPO grew up on the sale of immediate cost reduction – a unique value sale that created the industry we are in today. However, as the labor savings run out of room, the sale has to shift to one of future ROI and value – something, let’s face it, which is very challenging for our legacy service providers and advisors to succeed at and manage. However, clients frequently pay for skillful consultants who can come in and make a difference, who will find problems and sell their capabilities to solve them to their clients. The As-a-Service value proposition is really a combo of this consultative prowess and the efficiency and simplicity of effective BPO. So, the two need to be better conjoined to grant clients what they really need. (I stress the term need, as opposed to want, as many enterprises do not know what they need, so there isn’t too much to want until they have it spelled out in front of them…)
BPO delivery staff are simply not very “right-brained”. It’s just how the industry has evolved – lots of people who have a transactional mindset. They do what they are told, they follow a process… that’s nigh-on impossible to change. However, put BPO staff under the management of skilled consultants and this impossible mindset may just start to be molded.
Consultants will struggle without an As-a-Service delivery model behind them. While BPOs clearly need consultants, the same applies vice versa. Clients increasingly do not want to spend millions on custom engagements – the cash just isn’t there, like it used to be, to reconfigure their operations. However, they will buy managed services that are predictable and have a sustainable value proposition. I have used the term Expertise-as-a-Service for a while now, and it’s making increasing sense as the realities of the As-a-Service Economy continue to unravel.
There is no written curriculum for this industry to follow. Yup – we can rewrite the rule book, folks. We’re really venturing into unchartered waters, so what’s preventing this marriage of business models?
New market entities can chase after As-a-Service projects without the risk of self-cannibalization. This is significant. Let’s just assume, for example, Deloitte purchases an F&A BPO business and launches a spin-off As-a-Service provider business that doesn’t conflict with its audit business. This new entity can bid for brand new As-a-Service deals that incorporate the benefits of RPA, AI etc without any legacy revenue that will get eroded – it can pick off re-bids from legacy deals that have become stagnant, in addition to bidding for “virgin” As-a-Service deals from clients venturing into the model for the first time. Bottom-line – all new business is gravy.
As-a-Service demands the whole gamut of people-process-technology change. The pilgrimage to As-a-Service is all about simplification – people willing to offload the transactional work to focus on higher value talks; IT willing to write-off legacy applications and systems that may have absorbed millions of dollars to keep them functioning over the years; and processes that have become obsolete and need re-imagining to align with providing genuine value.
Clients need to trust providers to give up more… consultants are successful because they build trust. This is what consultants do – they invest in clients to trust them, as trust is all they really have. Service providers struggle to build trust because it’s all about the deal to them – once they have a contract, it’s about meeting the obligations, as opposed to really building that trust. It’s just the nature of the relationship.
The Bottom-line: Change is coming with the advent of As-a-Service, and it might not be quite what you expect
You only need to have a few conversations with key industry stakeholders to realize something isn’t quite right with the industry these days. Many buyers are in denial that they need to do anything different, despite all the disruptive technology emerging; most service providers recognize the disruption, but are more concerned with sounding impressive than actually delivering. Can we really progress in this era of denial and bullshit? Of course not…. we will see a few bold moves to get ahead of this market, and some may well come from this potential marriage of big consulting and big BPO.
The d.school said this is like many times the total number of students that have taken the course at Stanford. I don’t know what the exact number, but 36,000 is just insane.
If I have to read another article about Uber’s disruptive business model, I think I am going to defect to a Trappist monastery and brew very strong beer for the rest of my life…
Right on cue, after we 
Like many of you out there, I was floored last night to see Presidential candidate Hillary Clinton 
We’ve been talking about the great divide between consulting and outsourcing models for decades, but – finally – it’s time for the two to get much closer together as the forces of the As-a-Service Economy combine to weld the two models into a new services mongrel which combines simplicity, efficiency and capability for enterprises finally attempting to drag themselves away from their perpetual treadmill of obsolete technologies and valueless process flows.