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Feb 09, 2010

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Indeed, vendors have got much more organized with how they push more standard processes - case in point is Capgemini's GPM (Global Process Model) that aims to bring best-in-class, benchmarked processes with all the productivity gains that clients expect.

@Shankar: articulating anything to Wall Street beyond margins is tough, so you do have a great point!

Many of the current vendors are able to offset lower BPO margins by driving consistently strong ITO ones. Moreover, as deals become more blended with IT-BPO components, we won't see a "shock" effect with falling margins, more a gradual decrease, which is bound to happen in any case with increased wages, competition etc. I would hope even Wall St knows the spectacular consistency in 20%+ outsourcing profit margins is going to slow at some point...

PF

@Jerry: seeing some KPO uptick in the mid-tier, but it's mainly specific analytics for industry processes, as opposed to specific for F&A. As F&A gets more traction in the mid-tier, we'll start to see more customers add on KPO work. As I mentioned earlier, once in the BPO model, customers use it to scale when needed, as opposed to hiring internally

Phil - excellent analysis (as always). It's going to be tough for providers to maintain anything like the margins with these smaller F&A deals, compared to those of many large contracts. How do you think investors are going to react to this changing landscape?

Shankar

What is amazing in the F&A BPO segment is the lack of attentive opportunity seeking to evolve a F&a KPO analytic segment. With all of the chest pounding that is going on about economic recovery very little is being done in companies to strategically analyze market positioning. While I might consider it to be a case of not know how, I tend to think its because he models have change so dramatically. Hope to see some of my favorite KPOs start to make visible strides in this arena.

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