In fact, it’s probably the first time anyone’s peered seriously into the telecom’s operations services space. And who better to do the peering that my perceptive peer Pareekh Jain…
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Pareekh, how do you see this market evolving and what are the key drivers for telecom services?
We see telecom operations services evolving to the As-a-Service economy, where business processes of wireline and wireless operators across network, fulfillment, assurance, and billing are being delivered as BPaaS on specialized technology stack. Social, mobility, analytics, cloud, and automation (SMACA) solutions are driving this as-a-service transformation of telecom operations services across both wireline and wireless.
The telcos are facing four major challenges in their current operating environment. First, is the competition from the Over The Top (OTT) players such as Whatsapp, Skype, etc. which are denting the telcos’ revenue. Second, is new 4G/LTE rollouts for wireline operators and FTTx rollouts for wireline and broadband operators. Third, is high customer expectation of superior customer experience and support. Finally, is the rollout of new services.
SMACA solutions provided by telecom operations service providers can help telcos to mitigate these challenges by opex reduction, capex efficiency improvement, time to market improvement, churn reduction, omni-channel customer engagement and support, and helping telcos to offer predictable and agile services.
And how did the Blueprint analysis turn out?
Pareekh Jain is Principal Analyst, HfS (Click for Bio)
We focused our Blueprint analysis on the evaluation of SMACA solution capabilities of different telecom operations service providers.
This may sound clichéd, but we will call all seven service providers evaluated as winners. The reason is that we focused on evaluating SMACA capabilities and insisted on actual SMACA solution case studies in telecom operations services. We started with a long list of telecom operations service providers but realized that most of the service providers have not yet developed these offerings. Only seven service providers could withstand our scrutiny and evaluation. Ofcourse, there is relative positioning among these seven service providers.
There are three service providers in our Winner’s Circle – Accenture, TCS, and Tech Mahindra.
Four things are common across all three Winner’s circle service providers – telecom specific SMACA offerings, strong IT and BPO synergy validated by customer case studies, experience in delivering innovation or value beyond cost validated by customers, and strong and compelling digital vision exhibited by their initiatives, plans and PoCs.
The four High Performers in our study are Infosys, Wipro, HGS, and Firstsource. They are on the right path and will strengthen their telecom specific SMACA offerings and capabilities in coming months.
So what are your key takeaways from this study and what should we be watching for in the next few years?
We think there are three key takeaways from this study. First, the SMACA solutions are for real. Second, “design thinking” can be used as an innovation tool. Finally, the SMACA solutions can be leveraged in broadening client base and solution offerings.
Let us discuss each of them separately:
1. The SMACA solutions in Telecom operations services are for real. We are able to separate signals from noise by analyzing numerous case studies along with PoCs that convince us of the presence and applicability of SMACA in this market segment. The contract size for SMACA solutions is small today, but it has potential to become big in the future.
2. In telecom operations, HfS came across a number of examples of “design thinking,” where observation of frustration points amongst telcos’ external subscribers, and within a telco’s internal workforce led to the innovative solutions. As process improvement is running out of steam, “design thinking” can be source of value realization and emergence of new business and delivery models not only in telecom operations services but in whole “As-a-service” ecosystem.
3. There are about 700-800 telcos in the world, but only about 100 or so tier 1 telcos in selected countries have embraced outsourcing of operations services. Now there is an opportunity to provide services to tier 2 and tier 3 telcos too leveraging SMACA solutions. A few service providers have started to move up and expand their scope of services beyond IT and operations, offering network services and business advisory services leveraging SMACA. These were once the exclusive domain of telecom equipment providers and management consulting firms.
We will watching in coming months and years, how winners consolidate their positions and other service providers develop their SMACA offerings in telecom operations services. Also, as telecom operations services move towards “as-a-service,” we will be watching for “as-a-service” contracts, emergence of specialist service providers, and deployment of new business models.
Pareekh, thanks for taking the time to share your new research, another great effort from you! HfS readers can click here to view highlights of all our recent 19 HfS Blueprint reports.
HfS subscribers click here to access the new HfS Blueprint Report, “HfS Blueprint Report 2014: Telecom Operations Services“
The Analyst Firm of the Year 2014 Awards combines the opinions of 1,100 worldwide users of analyst firms who voted in the Analyst Value Survey, led by the worldwide acclaimed analyst of the analysts, Duncan Chapple. It is the only credible study today conducted on the analyst firms, that incorporates the views of a very large, statistically-significant community of research consumers:
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Duncan and his colleagues deserve a lot of credit for their hard work reaching out into the industry of end users and vendors to get the real, unvarnished view of this world and educating the masses on who is really influencing and performing.
I also wanted to praise the hard work of the HfS analyst team for working so hard to get our voice and brand above the deluge of noise in today’s industry and making such long term commitments with us to get us where we are today.
You can read Duncan’s full post on the awards here.
In the murky world of outsourcing advisory, there are many mysteries… such as why did TPI change its name to ISG, such as what do advisors need to do to top the IAOP advisor rankings, such as why Gartner never got in on the game.. and such as why big management consulting firms dabble in it, but desperately try not to use the term “outsourcing”…
But, perhaps, the biggest mystery of all has been the curious existence of a UK-based Alsbridge firm, which has long been widely-rumored not to be actually owned by its much larger US namesake. However, all this mystery finally unravelled itself recently when the Alsbridge mothership announced it was building its own organic European empire, and the company formerly known as “Alsbridge Europe” was spinning off on its own direction – and attempting to move further up the alphabet – sporting the name “Aecus“.
Still clear as mud? Well fear no more, as we caught up with Alsbridge CEO Chip Wagner to explain more about what’s been going on with all these name changes, spin-offs, takeovers and investments…
Phil Fersht (CEO, HfS Research): Chip – firstly, it’s great to have you on HfS – I believe this is the first time since you were appointed CEO.
Chip Wagner (CEO, Alsbridge): It is, Phil, and thanks for the invitation. Glad to be on HfS!
Phil: Chip, can you give us a quick download on what’s been happening with the firm since the investment made by LLR?
Chip Wagner is Chief Executive Officer, Alsbridge (Click for bio)
Chip: We have thoroughly enjoyed the two years since LLR invested in Alsbridge; they have been a fantastic owner and advisor. Shortly after the LLR investment, Alsbridge’s founder, Ben Trowbridge, left his CEO position in July 2013 and then moved on from the Board in July 2014.
After assuming the CEO role and later a position on the Board, I’ve been working with the team to push a number of initiatives that include changing our corporate culture, restructuring the organization, establishing a delivery center in India, launching a new service line to deliver ongoing vendor management, opening new offices in Canada and Germany, and expanding our UK presence. We’ve been busy and so far we’ve had great success experiencing 32% organic revenue growth, increasing EBITDA margin and hiring a group of all-stars to carry us forward into 2015.
Phil: So what’s different about Alsbridge these days?
Chip: As part of a rebranding initiative, we have embraced a new Alsbridge tagline of “Challenge the Future” for both our external clients and internal operations. We believe that smart businesses challenge everything – especially conventional thought, existing behaviors and perceived best practices.
From an internal perspective, we have managed to unlock potential in our team, strengthen accountability, introduce a much more transparent culture, and empower the talented people we have working for us. From an external perspective, we are evolving our service offerings, methodologies, tools and capabilities to advise clients on business and technology transformations that were unheard of just a few years ago. For example, we just helped a Fortune 100 retailer with over 5,000 locations cut their network spend by over 25% – $10M in one-time savings and over $45M annually – while simultaneously enhancing their security and analytics capabilities by moving to a next-generation Internet Protocol network. This was a massive change fraught with risk, but if you have the data and expertise to select the right partner, the right solution and manage the change, the results one can achieve these days are astounding.
Phil: It’s been well known in the industry about the legacy relationship you’ve had with Alsbridge UK and it now appears that you’ve changed your focus and are making your own investments in UK staff and resources. What’s the grand plan for Europe, Chip, and what future investments can we expect?
Chip: Our arrangement with Alsbridge PLC, as some are aware, was a brand sharing one, begun in 2005, and there were no cross shareholdings. They have opted to proceed on their own now as Aecus, an 18 person firm focused exclusively on the outsourcing/shared services advisory business in the UK. Perhaps they will continue to operate in this way, or perhaps they will be acquired by another entity. The pseudo franchise model in the UK made sense for us in the past, but it constrained our growth in this important market. We look forward to the opportunity to invest directly and bring our full suite of services and the capabilities of our 250+ strong firm to UK enterprises. Our investments in the UK complement our opening of an office in Germany in late 2013 and represent a step forward in providing European enterprises with an alternative to their current set of advisors.
Phil: Why do you see Europe as a core center of our focus when you have such a successful operation in the US? Do you believe the Alsbridge brand and reputation in Europe has real growth potential?
Chip: While there are strong players in any one niche, we see Europe as an underserved market. There is no single advisor that can provide clients with a holistic solution and unbiased advice across the gamut of hardware, network, IT services, software and business processes. I believe Alsbridge has a solid brand and reputation in Europe for outsourcing and shared services advisory. But I also believe that European enterprises need something more from their advisors, and that our services can deliver value where there is currently a void. Our focus on and success in delivering value to our clients has served us well in the US market and I believe the same will hold true in Europe.
Phil: And finally, Chip, how do you view the advisory industry taking shape in the next couple of years? Which firms will succeed and which could fail?
Chip: I wish I had a crystal ball to be able to predict who might win and who might struggle in the coming years. Some of our boutique competitors seem to be stagnant offering the same services at a lower cost rather than enhancing their value proposition, while others shift their focus to selling services to the vendor community or country development agencies. The Big 4 and even some of the traditional management consulting firms are investing in their sourcing advisory practices, but the depth of expertise varies widely among them and historically their interest in and commitment to the space has fluctuated. Growth rates, scale, diversity of offerings, and willingness to adapt the model may be indicators of who can thrive in the rapidly changing advisory landscape. An understanding of emerging technologies, tools for providing data-driven recommendations and the ability to help the client manage organizational change are more important than ever. We have actively worked to add breadth to our service offerings so as to be able to assist our CXO client base from many vantage points and in many ways.
Cloud is now ubiquitous with a whole set of new providers; traditional single enterprise data centers will likely be very scarce in less than ten years. Robotic process automation/autonomics is an oncoming, game changing force that will bring a step function change to enterprises and providers. Cognitive networks and the “Internet of Things” offer tantalizing promise and the specter of risk. In the advisory space, if you cannot fluently address this changing landscape for your clients, you will be marginalized, absorbed or otherwise cease to exist. For Alsbridge, it is all about helping our clients Challenge the Future!!
Phil: Thanks for clearing up the great mystery of Alsbridge Europe and giving us some insight into what you guys are up to, Chip. We’ll have to have you back on here soon =)
And back to the reality of a freezing cold buyers’ discussion in Chicago last month…
Many enterprise service buyers have made it clear they’re happy they outsourced and admit they should give up more high value work to their providers. So what is holding them back? Why don’t they trust them enough? Is it because they are simply too insecure to let go, or more because they worry their provider just spins them any old line to get more revenue out of them? Let’s take a closer look at what annoys them the most about their service provider…
Yes indeed, folks, clients are fed up with being treated like ATMs. Many (39%) are clearly caught in relationships where the only conversation they can get from their provider is centered on how they can pony up more dough. Whats more, a similar number (35%) still rankle at not receiving the delights they were promised during the courtship phase. Simply put, far too many service buyers feel they have been sold down the river and are getting increasingly frustrated with the lack of focus from their service provider on delivering value and quality.
This is why so many service buyers are holding back from taking their outsourcing relationships to a more intimate level with their service providers – they simply do not trust the intentions of their account manager to do anything but drill them for more revenue. It’s not that they don’t like their account managers, it’s simply that they always feel like they are being sold to.
The Bottom-line: Service Providers need to become agents of value, not devils of low-value margins
We’re seeing this happening in many situations, where too many service buyers are feeling burned and want a different type of relationship. Service providers simply have to start taking a very different approach to growing their current relationships – it’s just becoming increasingly unsustainable to keep finding more onshore bodies to be displaced into offshore centers at high margins – those days are fading, especially with mature enterprises which have now outsourced pretty much all the low-hanging-fruit transactional stuff.
Service providers need to sell their clients by showing how they can save them money on a process/function, that doesn’t only involve more labor arbitrage, in order to be given more processes to take on. Yes, it may be cannibalistic for a provider to automate their client’s accounts payable processes and take a hit on the margins on the labor supply, but if they can prove they can deliver a transformative model in one area, surely their client will give them more areas with which to run similar efforts? Service providers need to approach their clients with new ways of doing things, which may not be immediately lucrative for them, but is the way to win their trust – to show them they are agents of value, not simply devils of extracting low-value margins.
And why should smart service providers take a risk by cannibalizing their own labor model? Because if they don’t, eventually one of their competitors will. Because the way outsourcing is being priced and delivered is changing – and many clients are wising up to the shift. There’s already a host of stagnating legacy ITO providers grimly limping along on life-support today because they failed to get with the program – and this population of walking-dead providers is only going to increase as more of them fail to evolve the model.
Some will (and a few are) already adapting to a model of shared risk/shared rewards, but I stress this is a minority today. This really is a time for the ambitious providers, who want to adapt to the As-a-Service Economy, to make initial margin sacrifices to get ahead of the curve, and some are walking away from business they know adds limited value. We are in a time of transition in the world of outsourcing, where the brave will get ahead of the curve and prosper, the conservative will get suckered into stagnant growth and eventual decline. The leaders in this market, in a few short years, will unlikely be most of today’s faltering candidates – they will be technology-led providers with value-based services weaved-in, whose models are based on driving sustained cost-reduction and business value into their clients. Many may nor even be formed yet…
When it comes managing and enhancing a customer’s touchpoints with an organization, the impact of digital technologies is having a profound impact – not only on the customer experience, but also with the effectiveness of marketing to them.
BPO and operations these days is becoming a lot more focused around the consumer-led needs from enterprises, than merely managing back office processes effectively, which is why we’ve tasked HfS’ Reetika Joshi with spending time in a Blueprint laboratory for consumer-led operational services, in order to come up with an HfS Blueprint Report XVIII, entitled “Marketing Operations and Digital Customer Experience Management“:
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Reetika, How do you see this market evolving and what are the key drivers for marketing operations and digital customer experience management services?
In the emerging As-A-Service Economy, HfS Research sees an increased convergence of the consumer-oriented business functions of marketing, sales and customer care to serve the end customer. Organizations will do this through enabling technologies and innovative service frameworks that create new opportunities for collaboration and redefine the omni-channel customer experience – from brand awareness and campaign personalization, lead nurturing and customer acquisition, service support through to long term engagement and retention.
All of these areas of activity are focused on the customer experience, and in the digital world, instead of the marketing, sales, and customer care departments / functions dictating the experience for them to receive, the customers are increasingly participating as leaders, either consciously or unconsciously by their actions. It’s compelling these departments to use data, analytics, and technology to work together in a new way and include and treat the end consumer more consistently across all the functions as well as channels.
This trend is creating an exciting new consumer-focused services market. Currently, the solutions to these needs are being procured and sold disjointedly and opportunistically. Stakeholders are not aligned within client organizations. While the convergence is starting to take place particularly in the digital context, HfS still sees a siloed approach in services and technology procurement within and across these business functions – heads of customer service, heads of online sales, heads of analytics, CIOs, CMOs, etc. Clients have common pain points that service providers are trying to solve for in different ways – approaching from traditional strengths in ecommerce support and web development, data analytics, marketing campaign execution, or customer care. Providing services in overlapping or even adjacent areas is still very much a new concept, with few use cases today.
And how did the Blueprint analysis turn out?
Our Blueprint mapping illustrates highly innovative approaches but a long way to go in executing consistently. Our research found great examples of marketing and digital CEM innovation that service providers have been able to implement with willing clients already. However, we observed a marked absence of consistency in service providers bringing thought leadership and capabilities across their client bases. Creating more readily implementable use cases within the intersections of industry-specific context and the relevant enabling technology and services frameworks will drive the next few years of growth for this market. This also depends on buyers being willing to share best practices in order to also receive more value.
The leading service providers in our study have been proactive about developing practices for this emerging opportunity and have all charted a broad vision for the customer experience:
Accenture, a progressive service provider with a vision for bringing together multi-disciplinary digital marketing capabilities
Cognizant,bringing a depth in technology combined with a strong industry-oriented approach to providing marketing services
Wipro,a technology based service provider with an ambitious digital offshoot stitching together end-to-end digital capabilities
Infosys, a technology leader bringing a suite of platform-based BPO solutions for digital marketing & CEM
The High Performers in this study – HCL, Genpact, Sutherland, Concentrix and Xerox – have diverse approaches to servicing this market. In the next few years, we expect their efforts to continue to expand the scope of the market: HCL with ecommerce integration, Xerox and Genpact with campaign execution strengths, and Sutherland and Concentrix continuing to push the envelope on technology enablement and the integration of digital into customer relationship management.
Achieving greater scale through a more consistent approach to execution will help service providers in this market hit the top-right of our Blueprint matrix in subsequent studies. We expect to see this happen over the next year as the services mature.
So what are your key takeaways from this study and what should we be watching for in the next few years?
HfS Research believes that the marketing operations and digital CEM market will converge in a focus on helping client organizations respond to the new consumer truths that ‘digital’ is spearheading. These truths include the way consumers learn about, experience and discuss brands, respond to promotions and make purchase decisions, and interact and engage with them over their life times.
Ultimately, this market will come together – and is already starting to with the anchor of ‘Digital’. Service providers are delivering the majority of services in the spectrum of marketing-sales-CEM in an isolated manner today, with practices that are for the most part distinct. However, we see market leading service providers beginning to tie these capabilities together and starting conversations with buyers using the ‘digital’ context, with some setting up Digital practices. Today these have more digital strategy consulting and technology infrastructure implications, but in the future will feature more rounded out services support functions (analytics-driven marketing, digital sales and CEM operations). The overlap between marketing, customer care, sales and ecommerce is not new but providing comprehensive services to the overlapping pieces and acting on the synergies is where the opportunity lies.
Buyers value flexibility in marketing operations delivery. Many buyers that worked with service providers on campaign management and marketing content management highlighted the importance of being flexible in day to day operations. This is an especially relevant attribute considering the complex nature of an organization’s marketing ecosystem, working across marketing departments, multiple ad agencies and creative production houses, distribution channel partners and technology partners, all across geographies and markets. Service providers that can institutionalize operational flexibility instead of rigid, standardized performance expectations from their staff will find greater success in maneuvering their clients’ challenging marketing environments.
Reetika Joshi is HfS Research Director, Consumer-centric Operations and Analytics Strategies (click for bio)
Talent plays a critical role in driving marketing success for clients. HfS noticed the emphasis on getting the right talent for marketing operations and analytics support among buyers across the board. Several clients attributed engagement to having the right talent in place, and the steps taken by their service providers towards hiring, developing and retaining. Buyers are increasingly looking for talent that come with marketing experience within their specific industries that can work alongside their marketing teams without missing a beat on, for example, campaign execution. Similarly, analytics talent that can pull together learning across industries to bring new ideas are highly valued, particularly for omni-channel customer analytics. Some service providers will thus have to rethink their typical hiring strategies to seek specialized talent that are seemingly making or breaking these marketing engagements.
Customer experience management is still very much an emerging area in the digital context. HfS sees CEM as a recasting of the old CRM BPO and enabling technologies, creating new market opportunities. Buyers are acutely aware of the challenges they face ahead of them in formulating and executing on their digital strategies. They expect service providers to particularly help them contend with the pace of change in the ways that end customers are creating and experiencing brands in an omni-channel environment today. Opportunities in this space include addressing changing customer channel preferences, digital marketing optimization, ecommerce and brick-and-mortar integration, particularly in CPG, retail, travel and hospitality, consumer electronics, retail banking and pharma.
Reetika, thanks for taking the time to share your new research. We look forward to more of your continued coverage of consumer-led operations services in the coming months. HfS readers can click here to view highlights of all our recent 18 HfS Blueprint reports.
HfS subscribers click here to access the new HfS Blueprint Report, “Marketing Operations and Digital Customer Experience Management”
While we were all getting carried away with the As-a-Service Economy, where life and work will be completely digitized, robotized, on-demand, one-to-many, outcome-based – and all available on your mobile device – our Chicago Blueprint Sessions helped us dial back a bit to reality, where one core element is needed for enterprises to get through the next 12 months, let along the next 12 years: Trust.
When we asked the service buyers to describe their service provider relationship, it immediately became clear that half of them are still “master/slave” in nature:
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So Barbra McGann decided to put pen to paper after the vigorous Chicago debates to encapsulate the key tenets both service buyers and providers need to think harder about, if they are all going to end up joining the elite 27% in the promised land of jointly-strategized and executed service behavior:
Here are three phrases that are today’s big no-nos:
1) Labor Costs. These things are just the worst thing ever and have to be eliminated. Who wants people anymore, when systems can talk to other systems, processes mimicked in drag-and-drop software apps and cognitive analytics can replicate those antiquated human brains. People cost money and need to be gone.
2) Transactional. Oh my – all you do are transactional activities? Can you please replace yourself right away with someone either lot cheaper or, even better, a piece of software? How can you dare exist when you add no “value”?
3) Legacy. Probably the worst insult anyone can use on any person, process or technology. You’re done. Dated. Over. Yesterday’s news. Time to crawl away and cower somewhere on government handouts.
There is good news – and challenging news – for outsourcing buyers, service providers and advisors: most enterprises are pleased they moved into an outsourcing model, but have recognized they need to make significant changes to the way they manage their service provider relationships, if they are to realize real value in the future.
Some service providers are going to become legacy, some will step up to meet the demands of the As-a-Service Economy, and there will be new arrivals in the future to disrupt the market, which may not even have been formed yet.
What is clear, is that two things are going to happen with most outsourcing relationships in the short-medium term: many existing service providers will be switched out, and contractual terms will need to change to reflect the evolving needs of the maturing enterprise buyer.
During the recent Chicago HfS Blueprint sessions, we asked the enterprise buyers to express how they viewed outsourcing service providers and the nature of their relationships. As we revealed last week, a good number of buyers (43%) admit they should give up more high value work and responsibility to their providers, but are struggling to let go because of the change and trust issues at play. However, when probed further, over four-fifths of service buyers would choose not to reverse their outsourcing decisions, and, instead, would make changes to their current contractual terms (44%) or simply look to change provider (33%):
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What this signifies, is that outsourcing is the start of a new way of working for enterprises, but does not provide all the answers in the early days – it sets the agenda for how they intend to operate in the future, where third-parties provide lower operational costs, increased scale and – hopefully – added capability. However, what is clear, in the initial phases of outsourcing, is that achieving lower cost and added scalability of resources are the real outcomes three quarters of service buyers actually expect:
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The Bottom-Line: It’s time to dial-back the rhetoric as most services buyers are still getting to grips with cost
We can bemoan for days the struggles so many outsourcing clients are going through trying to achieve value beyond cost, however, the happy reality of today’s outsourcing business, is that most services buyers are only expecting their service providers to be agents of cost-reduction and efficiency.
These expectations change as processes become more efficient and governance skills develop, which is when service providers will be held to task to bring new capabilities to the table, namely automation, analytical prowess and process reinvention, which we will reveal shortly. However, for now the industry is – by and large – a reasonably happy place to be. It’s the next phase of business transformation with will separate the wheat from the chaff… a phase we have already entered, even though many have not yet realized it.
Gianni Giacomelli is SVP, Product Innovation and CMO for Genpact (Click for Bio)
Did you hear the one about the Italian process wonk who gave up his E-Class Benz, his job-for-life at SAP and his Frankfurt home to uproot his family to spend a year in Delhi devising strategy for an India-heritage BPO provider which, at the time, was barely out of its start-up phase? Yes, that actually happened.
I have known Gianni Giacomelli well for 10 years now, and have always described him as a misplaced analyst foraging a career on the sell-side – always one of the smartest guys to talk strategy, and great fun to bring to our HfS summits to face the fury of the buyers. Gianni today has found himself as product innovation and marketing lead for the largest business process services pureplay of all, Genpact, and moved his family from Delhi to the confines of Westchester County, New York.
So without further ado, let’s find out what’s going to happen in the world of business process operations..
Phil Fersht, CEO, HfS Research: Good afternoon, Gianni – it’s great to get some time with you today. I think we last featured you on HFS (see post) about maybe seven or eight years ago right at the beginning of the blog. So it’s nice to circle back after all this time and hear from you again. You have had a pretty colorful career in the services and software industries, so maybe you could just take us through some of the highlights.. and how you ended up doing what you’re doing today.
Gianni Giacomelli, SVP & Chief Marketing Officer, Genpact: Yeah, thanks Phil, and it’s especially good to see how you guys have evolved as well. I mean seven years ago, certainly a bunch of talented people – you never have thought that you would end up disrupting the analyst model so it’s good to have seen you growing like that.
I would actually like to make a parallel. I mean, you guys have grown and I think it takes perseverance and a lot of work but then it also takes innovation and agility – this stuff takes you, careers take you to an unexpected place. Frankly, I never would have expected starting 25 years ago working in consumer products marketing and analytics then in consulting for BCG and so forth and ending up in SAP, product innovation in a business services companies. I guess it’s a little bit of a hallmark of our times, right? You don’t quite know where you are going to end up being. I think all that matters is the diversity and what you call colorfully diverse. Because when you have diversity, you actually see things from different perspectives and you end up in places that you wouldn’t know but there is a logic, there is portability and I do think that is the crux of what I’ve tried to do. Technology that can be applied to services and services that can be applied to technology.
I do think that is the way many industries are converging these days, frankly, services and technology and consulting are colliding. There is a space that is called software as a service. Ten years ago it was software and then services. And there is another space that is called consulting and then there is advisory that is very close to ongoing relationships with clients that are very similar in some cases to operations support that we do. I think having the ability to look at those things from a different perspective and obviously I have worked as a consultant and advisor. I have worked in technology and worked in services, I came to see why it is that this stuff is converging because the root isn’t all that different.
Phil: Gianni, I think the biggest contrast in your career was spending several years working for enterprise software giant SAP and then moving to a high-growth Indian-centric (at the time) BPO firm (Genpact). How did you find that transition. What was the big difference between a big software firm and a big services firm… just from your experience?
Gianni: Yeah, so it’s interesting because, you know, first of all, Genpact, yes a very big India root but a company that was growing out of India really fast, it was exhilarating. I mean, the Board was, if you look at the composition of the company, a lot more diverse and a lot more global and especially now, many top people including CEO and CFO and a number of P&L leaders in New York, and certainly very strong roots, operations, and strength of that in offshore locations. So the company already promoted the idea at the time, Pramod Bhasin who was my boss back then did so vehemently, we needed to be absolutely global and already the India based folks where very global in that respect.
So that wasn’t actually too much of a shock to be honest. I also moved to India. I moved there for a year. The reality is that obviously I was in Germany before and moving to India isn’t quite the same thing but the type of work that you do is global. I mean, you can do it from the moon and at the end of the day, it’s very similar. You end up talking to Germans and Indians and instead of sitting in German you’re sitting in India, and conference calls, groups’ compositions are roughly the same, you just have to sit somewhere else. So that wasn’t really all that much of a shock, daily life and whatnot is different but that’s life anyway. I think the big difference though, and it’s interesting, is software versus services. I think it’s a difference that will fade away to some extent over time. Think about SAP, and how it has changed. SAP has always been long-term planning, you know, do three to five years planning, organic, don’t buy too many companies because you’ll corrupt your DNA. That was back then.
Obviously, they’ve now been buying companies left and right especially in software as a service and it is funny because in those days when I was there in 2004, we actually tried to start a software as a service business in many respects by trying to embed technology into the outsourcing service providers as well as obviously using similar software into shared services. It just met with a lot of internal resistance. That strategy turned into a defensive play instead of an offensive play and low and behold ten years later, the pendulum is swinging a lot. They have abandoned a lot of reticence against inorganic growth and creating all this HANA based stuff that is a lot more malleable and adopting software as a service pervasively. So the company was already changing quite a lot back then in 2010. That is also the reason why the jump wasn’t all that big.
But yes in terms of software you have long cycles of building an assets whereas in services you typically try to get into a client situation and build stuff out from there and I think that was the biggest difference. It creates differences in terms of which people you staff solution design and delivery functions with, how you give investments, tollgates and all that kind of stuff. But even software companies are increasingly doing co-innovation with clients, doing agile development, and software as a service means that you don’t allow product management in Germany to tell you what products and operational functionality because it is needed for those clients in North Carolina – you do a lot more of a try, test, does it work, remove and then move on. I think services companies are coming in from the other side. I for example think of co-innovation with clients but also creating assets, creating the foundation, creating, in our case, system of engagement technology that allows you to build IT underpinnings more quickly. And yes, it is agile development with a lot of testing with our operations people.
Phil: There is so much talk right now about disruption, Gianni, with the emergence and availability of new technologies, automation and analytical tools and capabilities – and there is a lot of out-of-the box thinking going on. Are things really that different when you look at your clients and what they’re buying from Genpact today? Do you think there is a genuine shift happening in the industry, in terms of the types of services clients are buying and the way they are going to be priced?
Gianni: This is interesting because five years ago I would have said, Phil, in many respects I can go into hibernation for five years and I come back and we’re still talking about the same stuff when it comes to innovation. In 2005, we talked about outcome based pricing and we used to talk about governance. In 2010, we’re still talking about the same stuff. The reality is that I do think the last four years have changed things substantially. A couple of things that I think have happened. First of all, let me just clarify one thing that hasn’t happened. Here you are dealing with operations so follow me and forget about shared services, outsourcing and whatever those are just incarnations of operations. You’re dealing with operations and the ability to do controlled experiments in operations is always relatively limited. That is the reason why you can’t often do abrupt innovation changes. This industry is not like I buy an iPhone, I like it, I don’t, tomorrow I buy a Samsung.
In operations, there is legacy and refresh cycles are longer that is the reason why many of these things get delayed. Obviously, service oriented would have helped already back in 2007 but they didn’t until a couple of things happened. But a few things happened. First of all, APIs are a lot more pervasive right now. You have a lot of systems of records out there that you don’t need to use the inner architectures of. Very often people just take stuff out through API. The master data is still a mess but the solutions are more intelligible than it used to be in the past – from both a technology and process standpoint. So when you have those two, you can actually start pulling process stuff out and do change bit by bit which is actually what enables innovation and most people don’t think about that, but the reality is that if you try to change things wholesale, the COOs of any operation they won’t do it unless you allow them to do it bit by bit.
The other thing that has happened is obviously all the practices related to shared services and outsourcing has matured. I mean, they used to be an exuberance period in 2005 and 2007 in which everybody was running offshore for all sorts of things and I think there were a bunch of deals especially in the HR space but also in others where some providers took too much stuff to be honest and they actually ended up tarnishing a little bit of the reputation of an industry because of few but disproportionally publicized. So a lot of that has matured and that also gives everybody a bit of a level-set, and people are less reluctant to try new stuff now. And the third aspect is within the last two or three years, we have had a bunch of stuff that has become really mature in terms of technology. You should look at Mobility, you can look at Cloud, you can look at analytical tools, all that kind of stuff. It has been about three years, all of them have come together and they are mature now.
Three years ago the performance of those things was crappy and it was unpredictable if you would finish something in time or not but now the mobile applications work, much big data technology is not bleeding edge anymore and it allows you to do a proper job with distributed analytical powers. The Cloud stuff isn’t – a lot more people understand a lot more how you can use Cloud. Think of our systems of engagement, they couldn’t have been there at this scale and cost three years ago. So I do think that those three things all together are a big shift and they come together and now is the perfect storm on top of obviously the fact that in 2008 the world changed and it has created a burning platform for a bunch of people. So I do think that things have changed.
Phil: The platform is definitely burning! There is a desire to change… so when you look at Genpact, you have built a great business through managed operations, BPM, so where does it go from here? Does you become more of a consulting type business? Do you just broaden your operational services business? How does Genpact get to that next phase of growth in your evolution? What does that kind of game plan look like?
Gianni: Yeah, I think the way we look at it and certainly the way I look at it is twofold. First of all, let’s straight on understand what your clients want from you, which is getting them to run more effectively and efficiently. And secondly, let’s try to understand what you can do because of the genome of what you have. If you wanted me to be a singer, that would be great but I wouldn’t have the genome to do that so you wouldn’t want me the do that. So the same applies here. I mean, many of our clients for which we have been running operations believe we have been a really good operator and really good transformer of day-in and day-outs processes and so forth for almost 20 years for some of them. They ask “can you help us design and transform the next wave?” I think that is legitimate. Yes we’re not a management consulting firm per se. I mean, we’re not and will never be a traditional management consulting firm. But what does that mean?
We certainly have a sense of what we call the “operations feedback loops” which basically means whenever you change things, you know, small things, big things, we run that stuff and we actually figure out if those things actually materially impact from a business outcome standpoint what you’re doing. That clearly gives us an advantage over folks who just design or implement the stuff – because we design it, then we test it, we have thousands of people working on that stuff hands on keyboards and eyes on screen and a bunch of clients we can observe and you end up understanding what works and doesn’t, both on our side and on our clients’ side. So that’s our angle. Our angle is we typically tends to be fairly accurate in terms of understanding what works and what doesn’t, what will work and what will not work. Now, are we going to be your strategy consultants for every company function? Are we going to do the complete blue sky and candles kind of stuff? Should we be that? I mean, what we do is about how you run companies better, it is operations. At the end of the day, you want to invent the future but you want to invent a future that our clients can run on within the next two years. There is no appetite anymore for long jumps, because of the volatility and uncertain market conditions. I mean, you can do a little longer but it isn’t like in the old times when you implemented ERPs with a 5 years ROI in mind and it ended up being 10 and you survived it.
So I think we are becoming a little bit of that. Managed services company who can design, transform, and help you run and continuously innovate on your operations and frankly, the crux of the operation is how do we them make it intelligent, how do you re-imagine them so they predict, sense, react and learn from the impact to get better next time. Part of it that we run, part of it you run. How do we use tools? How do you use metrics? How do you use the process acumen to optimize both of them? Certainly, yes, we have come a long way from just operating one part of the business. I do think that in this respect, the GE heritage has helped a lot because we have always been kind of an extension of a client company. We have been a service provider but the next door was the rest of the company so you can actually understand how you can work across boundaries and whatnot. Does that clarify a bit?
Phil: Well thought out, Gianni. So that brings me to my final question… You are crowned the emperor of BPO for one week and you are allowed to do one thing to change the industry, what would that be?
Gianni: Our is an industry that needs some vision as well as execution. Maybe I will go way back to your initial point which I think you bumped into it and maybe accidentally but I think it is a very profound one. This isn’t about BPO or shared services or system integration or consulting or big data. This is trying to solve enterprises way of running at scale, every day, operations, a bunch of different processes. I think I would do one thing which is take everybody who is involved on the BPO side and the shared services side, on the consulting side, the analytics folks, in banking, in health care, in consumer products, and a bunch of other places, across processes. Put them into a blender, mixed them up and kind of pull them out and put them into different positions from where they were.
So in other words, just push diversity. People get siloed and incremental because they have always looked at their little patch of land and they think oh, you know, domain expertise is all there is, and obviously you need to have that, but that’s not all. We ran an interesting piece of analysis recently. We took a sample of 500 operations leaders, and most of those folks have only worked in one industry. I think that is dangerous. And by the way, you are in the one industry where you have more a mixed genome is the software industry, where people from all kind of places. Spot the correlation with innovation.
But the reason why that is, if you look at, take health care, they want to get straight processing through processing of a bunch of stuff that they do but, you know what? Banks have been doing straight through processing for probably 20 years. Well, I want you to get people from banking into health care to look at some of that stuff. And you look at the contact centers in pharma companies and their model of needing to listen more to clients directly and perhaps even provide services, and again, there is CPG contact centers have been doing social media analytics for that and have been doing a lot of combing and listening to clients in very portable ways.
It’s just that the moment that you start siloing people and siloing careers. and, by the way, the same can be said for services and technology, people think of them as categorically different but there is more overlap than you would think. You get to stifle stuff a bit, right? So what I would do is just get people to, for a week or a month or a year, do – what was that movie, Sliding Doors, I mean, you have got to swap people up for a period of time, right, and then see if you still can do things and if you can innovate. I think that probably would be a good thing for the industry.
Phil: Well said! It’s been a great interview Gianni – really some strong stuff in here. I look forward to sharing with the HfS network.
Gianni Giacomelli is SVP, Product Innovation and CMO for Genpact. He can be reached on twitter at @ggiacomelli
And back to the reality of a freezing cold buyers’ discussion in Chicago last month…
While we were all getting carried away with the 
There is good news – and challenging news – for outsourcing buyers, service providers and advisors: most enterprises are pleased they moved into an outsourcing model, but have recognized they need to make significant changes to the way they manage their service provider relationships, if they are to realize real value in the future.
