Congratulations to our friends at the Black Book of Outsourcing, who have been rewarded for their years of entertaining us with a nice little buy-out by British research firm Datamonitor, which also owns boutique outsourcing advisor Orbys.
With all the recent fuss in the media and the global sourcing industry about protectionism derailing new engagements, I wanted to set the record straight with some brand new survey data and some views into President Obama's current position, that protectionism is not proving to be as big an impediment behind companies' making outsourcing decisions in the near future as many people have stated.
To this end, I wanted to share some preliminary data from our current survey on global sourcing dynamics that tackles the issues preventing companies from making outsourcing decisions this year:
When he's not tinkering with his fast-cars and rock music, Ritesh Idnani has emerged one of the key guys behind Infosys' prominent rise as a leading BPO provider. But's it's not been an easy ride...when you get up close, you can start to see some grey hairs creeping in to defy those baby-face looks. I've known Ritesh for a number of years and thought it ample time for him to share his views on the development of the BPO industry and what holds for the future in these crazy times...
PF: We've been through a tremendous development in the world of BPO over the last decade. What, in your opinion, has worked, and what hasn't?
RI: The emergence of outsourcing is not a new phenomenon. It has been practiced by corporates from the 60’s, but it is only in the last decade or so that corporations have recognized the phenomenon and actively engaging in outsourcing as a lever to reduce the effect of non-core activities contributing to the wrong side of P&L .
If you can make it to Eastern Europe, it would be great to have you part of the show and take part in the debate. And if you can't make it in person, log-on and blog your questions live to the panel. You also get to hang out with the famous Emma Beaumont...
Kevin O'Marah, AMR Research's Chief Strategy Officer, blogs a thought-provoking piece that highlights how so many retailers and manufacturers have failed to embrace collaborative supply chain models through fear of "giving more than they'll get". Kevin argues that consolidation amongst suppliers will accelerate in this environment as major industrials drive cost out of their supply chains by reducing their supplier bases. He adds,"what we have since seen is that cooperation takes a lot more than just setting up EDI, reverse auctions, or visualization. It takes trust, which apparently is still in short supply."
I wanted to share a few early snippets from our forthcoming market landscape on Supplier Management BPO services, which is due to hit the shelves next month. The market surpassed a billion dollars in expenditure for the first time last year with a 30% hike in expenditure on new multi-scope BPO contracts. Find out more over at Think Global...
One of the nicest guys in the BPO industry is Oracle'sRoger Turnham. He's been Oracle's brains-behind-the-scenes since BPO was a mere twinkle in Larry's eye four years' ago. Many of you have been dazzled by Roger's Texan charm as the software giant develops its BPO partner program for service providers. He also has some very interesting views on innovation strategies that can add significant value to a BPO engagement. I am going to hone in on the "I" topic over the coming weeks, and asked Roger to kick off the discussions... over you you Mr T:
Innovation: What’s in a Name?
Over the past four years I’ve sat through BPO panel discussions on innovation, I’ve listened to some of the world’s largest BPO customers complain that they can’t get it, while BPO providers claim great success in delivering it. Either somebody’s lying or the word is like evolution: It’s so broad a word that it can mean anything you want it to. To extend the analogy: Evolution is a word that means everything from change over time to the origin of matter, to a cosmic explosion that created everything, to why some of us are big and others blond and – my personal favorite – how goo turned into you. If “innovation” is like evolution, it can mean anything, or everything, or nothing.
Many of you whom I've been interacting with lately know I'm concerned by the degree of protectionism from some politicians and a handful of organizations; namely the TARP-funded financial services firms and a few from the healthcare sector. We recently discussed many of these issues here.
Professor Bob Kennedy, who heads up the William Davidson Institute, a non-profit research and educational institute that focuses on business and policy issues in emerging market economies, has been keeping very close tabs on these issues and I asked him to contribute his recent experiences and views with us. Bob also has a new blog up and running entitled "Services Shift", and has recently released his new book, adorning the same name. Over to you Bob...
Why No Regulation of Offshoring: Untangling the Gap Between Rhetoric and Action
Picking up on Phil’s April Fool’s day post, I wanted to share a few thoughts on why we see lots of anti-offshoring rhetoric from politicians, but (thankfully) very little actual policy.
You can spend hours analyzing how the global sourcing industry got to where it is today, but in today's climate it's more important than ever to reach out to the industry at large to get the real deal on what's going to happen next. Your voice is crucual, so please spend a few minutes filling out my online survey and I'll share a summary of the findings with you in return.
This is a forum for leading outsourcing executives to share their experiences, views, opinions, best practices and lessons learned in the world of business process outsourcing and offshoring. You will also get a chance to participate in our forthcoming "State of the BPO Industry" online survey next month.
LinkedIn has just expanded the group's capacity to 8,000, so we can start letting more of you in... whether you want to find out the cost of a mainframe developer in Buenos Aires, chit-chat with other services-nerds, or just can't wait to find that dream job (ahem). You also get a free subscription to the Horses Digest. And it's FREE FREE FREE. Am I the most charitable person you know?
So there was a bit of Phil-bashing going on this week - from SaaS lovers - after my post that discussed some of the potential issues with SaaS delivery versus outsourcing. I also got several messages of "thanks for nailing this one for us" from services folks. To clarify my point, I would like to emphasize I am a huge fan of SaaS delivery and strongly believe that SaaS services will enmesh with some areas of BPO to create the genuine business utility models for the future. BPO provides that level of business-customization for those business processes that are enabled by the SaaS app. I believe the issues are more about IT folks understanding the basics of business service delivery - and vice-versa.
My concerns with SaaS delivery are how companies govern their business processes that are supported by SaaS application delivery. It is a serious step
The hottest area for new BPO growth is over in Europe, and you can get a taste of the action at the forthcoming FAO Summit Europe in London on May 18-19. This is ideal for executives considering how to improve F&A’s impact on the total enterprise, including those actively engaged in F&A outsourcing and/or shared services.
There's also a compeling line-up of speakers, including a keynote address from Andrew Tinney, Deutsche Bank's CFO. I will also be at the show and would welcome to chance to meet while am over visiting my homeland.
TPI's Bill Huber was busy on the blog all last week at the Sourcing Interests Group show and has good summaries of some of the key sessions. For any of you who missed the show, I suggest you follow the progress of the group under the excellent stewardship of Dawn Evans. To pack a place as well as she did - in this market - is a phenomenal achievement. The fact the event was organized in Baltimore was a master-stroke... people don't feel guilty going to events in Baltimore :)
SaaS is effectively the same as outsourcing - you're handing control over business processes to a third-party service provider. However, while SaaS delivery shares many similarities with outsourcing as a delivery model, there are serious caveats buyers need to consider. Read more over at Think Global.
I had the pleasure today of having lunch with former Speaker of the House Newt Gingrich, who is also widely rumored to be a possible Presidential candidate in 2012.
While I do not share many of his political views, Newt does have some nailed-on perspectives on globalization, outsourcing, and some measures the US needs to take to get its act together to remain the world’s economic superpower. Plus, he’s very funny.
Here are some soundbites from his keynote speech at the excellent Sourcing Interests Groupconference in Baltimore from earlier today:
"We’re spending trillions to cover up really stupid policies, violating every fundamental principal of economics. These congressional leaders are people who know nothing – our Founding Fathers deeply mistrusted politicians. Bush was wrong for all of 2008. Paulson the worst ever Treasury Secretary, even though Geithner is now rivaling him."
I'm still getting emails / tweets and calls from all sorts of people wanting to talk about the "sensational news" yesterday, on what was a record traffic day on the Horses. And if I haven't already made it plain enough, it was an April Fools joke. And while it was kinda funny, what hit home was how believable the story was.
Yes, protectionism already is the number one impediment to outsourcing growth over the next few months, but we're never going down anything like the crazy lines outlined in the post. What's nervy, however, in this era of rapid change, is the fact that so many people fell hook, line and sinker for that little prank. It made me realize how prepared so many people are for sensational changes to their way of life. And if you feel I went too far I do apologize, but everyone seems to have taken this in a good spirit. I really feel we need a sense of humor and a few laughs to help out out of this tough time...
The soon-to-be-appointed head of the outsourcing disciplinary committee
Folks - I can exclusively reveal - and you heard it here first - that President Obama will shortly be announcing a blanket ban on the offshoring of US jobs. My government insider tells me that he will take the following measures:
Any employer seeking to replace US staff with an overseas employee will have to prove it was unable to source a US employee for the role for a period of 90 days, where the position was widely advertised on national media;
A task-force of leading US-headquartered outsourcing service providers, including IBM, ACS, CSC and HP, will be tasked with assisting US firms with their backsourcing initiatives, their fees being footed by a proposed budget ammendment that is likely to total as much as $50 billion;
Leading outsourcing service providers which are not US-headquartered, and have more than 50% of their employees based outside of the US, will have their US trading licenses revoked and will have 30 days to wind down their US operations;
All jobs that have moved offshore within the last 8 years, that are currently being performed for any US-domiciled organization, are to be replicated back to a US location within the next six months. The US government will reimburse 20% of the reinstated onshore employee's salary to their employer upon completion of their first year of employment;
CEOs who fail comply with the ruling will face a disciplinary panel headed by Lou Dobbs.
So the battle is on between the USA's onshore locations. Who will win out? Albuquerque, Detroit, Nashville, Jacksonville, El Pazo? Love to hear your thoughts...