{"id":1739,"date":"2010-02-15T18:09:00","date_gmt":"2010-02-15T18:09:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/the-industry-speaks-part-vi-customers-increasingly-look-to-industry-specific-bpo-solutions-but-which-vendors-will-ultimately-invest-to-define-and-deliver-them\/"},"modified":"2010-02-15T18:09:00","modified_gmt":"2010-02-15T18:09:00","slug":"the-industry-speaks-part-vi-customers-increasingly-look-to-industry-specific-bpo-solutions-but-which-vendors-will-ultimately-invest-to-define-and-deliver-them","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/the-industry-speaks-part-vi-customers-increasingly-look-to-industry-specific-bpo-solutions-but-which-vendors-will-ultimately-invest-to-define-and-deliver-them\/","title":{"rendered":"The Industry Speaks, Part VI: Customers increasingly look to industry-specific BPO solutions, but which vendors will ultimately invest to define and deliver them?"},"content":{"rendered":"

\"Modern-industry\" <\/span><\/span><\/strong><\/a>As we\u00a0discussed\u00a0during the previous five\u00a0chapters<\/a>\u00a0of this encyclopedic journey to over-analyze our industry, customers are looking beyond the old simplicities of outsourcing to find new and creative ways to find new performance thresholds.<\/span>\u00a0<\/span><\/strong><\/p>\n

One of these areas is to exploit BPO opportunities within industry-specific domains, especially where there\u00a0is opportunity to\u00a0bundle both <\/em>BPO and IT services together under a single vendor’s provision\u00a0to\u00a0generate more efficient business outcomes.\u00a0<\/p>\n

To cut to the chase, the industry-specific (vertical) process domains\u00a0are where\u00a0some of the\u00a0newer vendor entrants are infiltrating, almost unnoticed, into the BPO industry.\u00a0 Most of the strong IT services vendors have been developing BPO niches in specific verticals where they have developed some strong process acumen and client credibility, and have the determination to invest in becoming best-in-class<\/em> within that industry.\u00a0<\/p>\n


\nWe’ve seen plenty of examples, for example, in both the financial services and life sciences industries, where\u00a0some of the\u00a0offshore IT services vendors have been seeking to expand their footprints, and layer-on BPO processes to their existing IT relationships.\u00a0 What’s more, some of the IT services shops have begun to realize that\u00a0BPO is a great lead-in to help themselves to future IT work within clients.\u00a0<\/p>\n

For example, if you’re already crunching data for clinical trials, why not also manage and develop the supporting applications and infrastructure?\u00a0 Bottom-line, customers see more opportunity within some domain-specific areas, and our recent “Seeking a New Normal in Outsourcing Delivery<\/em>” survey points to a continued upswing in BPO demand\u00a0within verticals:<\/p>\n

Figure 1:\u00a0 Financial Services and Life Sciences firms seeking to exploit domain-specific BPO<\/strong>\u00a0<\/strong><\/span><\/span><\/div>\n
\u00a0<\/strong><\/span><\/span><\/div>\n

<\/strong><\/span><\/span>\"\"<\/a><\/strong>\u00a0<\/p>\n

Industries undergoing major fundamental change are moving aggressively into domain-specific BPO opportunities.<\/strong>\u00a0\u00a0 <\/strong>One-in-ten financial services firms, and one-in-five from\u00a0life sciences,\u00a0are looking to move into some form of domain-specific BPO this year for the first time.\u00a0 These are typically areas where there is some immediate labor arbitrage opportunity, based on the availability of processing expertise offshore.\u00a0 For example, in\u00a0financial services,\u00a0we’re seeing a lot of trade settlement transactions and mortgage processing\u00a0move into BPO scenarios, and in life sciences, many of the data storage and management processes\u00a0that enable the drug-to-market cycle, are similarly evolving\u00a0towards this delivery model.\u00a0<\/p>\n

Why these industries specifically?\u00a0 Simply put, the financial services sector has gone through such a fundamental change in its very infrastructure, that moving into a BPO environment is no longer the strange, abhorrent procedure and experience it once was.\u00a0 Similarly, in life sciences, the major drugs companies know their blockbuster drugs models\u00a0aren’t going to last forever, and are facing toughcompetition from lower-cost\u00a0generic manufacturers.\u00a0\u00a0Hence, they are similarly\u00a0exploring new and radical means to improve\u00a0productivity, source new revenue opportunities\u00a0and drive-out cost.<\/p>\n

The success of existing domain-specific BPO engagements is driving broader scope-increase<\/strong>.\u00a0\u00a0Over half of all the financial services and life sciences firms surveyed, are looking\u00a0to\u00a0expand existing\u00a0BPO engagements this year, and very few are seeking to pull work back onshore.\u00a0 Firstly, it’s easier, and far cheaper,\u00a0for operational executives to add scope within a BPO engagement, than hire new staff onshore, when they need more work done.\u00a0 Secondly, in many cases, these engagements started small, often with only a handful of staff provided by the vendor, so it’s only a natural extension of the engagement to add more staff and additional process scope as the BPO environment develops.\u00a0\u00a0However,\u00a0this doesn’t necessarily\u00a0entail massive increased spending overnight, but more a gradual incremental increase in engagement scope.<\/p>\n

The Bottom-line:\u00a0 industry-specificity is clearly a major driver in outsourcing, but the financial pressures on vendors to maintain their profit margins may override its development.\u00a0 <\/strong>The capability to deliver\u00a0genuine domain-specific process acumen to clients is quickly becoming a major differentiator in the market.\u00a0 However, investing in the talent to\u00a0truly scale these\u00a0capabilities is expensive<\/a>, and the margins aren’t as appealing at those currently being\u00a0displayed by several vendors\u00a0delivering the easy, operational work.\u00a0 While some vendors are clearly content with a thin veneer of vertical capability<\/em>, others are stealthily picking verticals where\u00a0they feel they can\u00a0gain an edge over the competition.\u00a0 But it’s a gradual development, and you have to wonder whether every vendor has the patience and attitude to invest in the depth of\u00a0talent they need, when they’re more concerned with satisfying Wall Street’s short-term demands.<\/p>\n

While financial services and life sciences are both\u00a0becoming saturated, we’re already seeing many new BPO opportunities arise in industries also going through fundamental change, for example retail, manufacturing, healthcare and media.\u00a0 Moreover, the move to greater domain-specificity is intrinsically tied to the business utility model of the future, where we are starting to see\u00a0signs of the\u00a0convergence of SaaS, Cloud and BPO\/ITO models within an engagement structure<\/a>.\u00a0 The need\u00a0for clients and vendors to define,\u00a0develop and implement holistic end-to-end process solutions is slowly coming to the forefront… and industry-specific BPO is ultimately just one <\/em>piece in a larger jigsaw.<\/p>\n","protected":false},"excerpt":{"rendered":"

As we\u00a0discussed\u00a0during the previous five\u00a0chapters\u00a0of this encyclopedic journey to over-analyze our industry, customers are looking beyond the old simplicities of…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,51,61,64,849,81,838,91,832,837],"tags":[],"ppma_author":[19],"yoast_head":"\nThe Industry Speaks, Part VI: Customers increasingly look to industry-specific BPO solutions, but which vendors will ultimately invest to define and deliver them? - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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