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Feb 15, 2010

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Phil

Indeed, providers who can bring in Industry domain expertise will emerge as significant players.

1. Industry specific services allow providers to reduce the customers Cost of Revenue (or COGS) rather than just impacting SG&A. Not only that but, a competent provider can help in new GTM strategies in existing markets and in Greenfield ventures. A great partner to have on all counts. This is an area where gain-share type of contracting is really relevant.

2. Providers who have delivered business consultancy services and/or developed products in these emerging domains or eminently more suited to meet the customer needs immediately. Further, having these diverse service offerings will allow these providers to paint a better career opportunity graph as they scale their potential employee base of bankers and doctors. Providers who have not offered these services, will not only be at disadvantage in terms of having a ready skill base but also will need to work on the career proposition for the talent they need.

3. Historically, Travel (airlines) is another sector where industry specific services such as Pricing/Fare filing or Yield Management or Load Management have seen demand though "revenue accounting" has got the most mind-share. From a future perspective, I believe apart from the verticals you have mentioned - Insurance is a sector which has been waiting for a good platform solution for a few years now. The historical players - especially in the UK market have not made most of the opportunity and this has seen the decline of one large player and acquisition of another.

4. Incidentally, Industry specific variations of Horizontals do continue to remain unaddressed though a few areas such as Revenue Accounting (Travel) or Revenue Assurance (Telecom) have been through the hype cycle.

Regards, Shyam

Phil,

Many of outsourcing engagements begin with IT outsourcing. The clients want to explore BPO offerings for their specific sector.
Having strong processes and clients in same domain helps win over these deals. One of the key challenges is also to demonstrate how "BPO+IT" is more than "BPO" deal alone, apart from financial benefits.

We have seen clients split their IT and BPO business between vendors where they found BPO depth of service lacking for their domain.
Also once they outsource BPO and are aware of how other clients are leveraging this they tend to consider options not previously marked for outsourcing. This is because some of the vendors have made significant progress and have built IP and strong delivery models around their BPO offerings

Phil,

I guess the way the market is heading towards is a clear split. There are vendors who are clearly trying to do everything for everyone, and are spread thin, however from doing low value - but high volume business they are able to manage the quarterly demands of the Street, but are unable to have the depth that most clients find desirable.

Other end of the spectrum is a Niche service provide, that understands client industry, needs, and specific requirements.

Simar

Phil,

This is a fine analysis of where the industry is heading from a vertical standpoint. I especially agree with the findings that it's both financial services and life sciences that are more focused on specific outsourcing areas - they have invested so heavily in offshore captives over the years that evolving into fully-outsourced environments is a natural extension for them.

Am also seeing more interest from firms looking at supply chain functions, such as management of environmental compliance, distribution management, sourcing etc.

Mark

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