The Outsourcing Blog..."Horses for Sources"

Executive ADD: The disruptive scourge of social networks in the services industry

When you try and quantify the impact social media is having on industry, it's actually quite alarming how dangerous this medium can be on our lives and our careers. 

We discussed the impact of blog culture over a year ago, but the speed by which social media has crept into our daily activities, already dates many of the opinions expressed back then. The information world has altered radically, and this economic environment is accelerating the speed of change.

As an analyst in global services industries, my job is to get across insight and opinion to as wide an audience as possible.  A couple of years' ago, if I'd produced an article or report, I'd probably send it out to about 100 people... that was the extent of the audience with which you would typically deal, and you'd rely on your firm's marketing department to disseminate press releases and media advisories to drive more eyeballs to your craft. 

Phil Fersht on service provider rankings: make the experts accountable, not faceless brands

Vinnie Mirchandani has his latest take on the constant controversy of third-party researchers, consultants and associations compiling rankings of service providers.  This time the IAOP's Global Services 100 is being questioned. 

We've also had some banter about the Black Book of Outsourcing on this site, which made such a noise with its constant rankings of service providers, that Datamonitor decided to buy them to hop on this bandwagon.  And we've never even got to discussing the Global Services 100, or several other rankings that come out periodically.  Moreover, some "analyst" firms make a living ranking service providers, while barely bothering to talk to their customers, and selling white papers to the winners so they can flout their success (you all know who you are).

Personally, as an analyst and advisor, I find these lists useful - I sometimes find out about some provider I didn't know a lot about, and they draw attention to who's doing well at the

Datamonitor goes to Hollywood

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.

It speaks volumes for the Brown-Wilson group

The Black Book of Hollywood

Ladies and gentlemen, these guys need no introdution.  Each year we are treated to a new set of rankings that gets everyone talking.  Yes, it's the infamous Black Book of Outsourcing's top advisors and consultants guide!  Forget your sourcing advisors, forget research reports, forget client references - these guys will simply tell you how it is with their magical rankings. 

You have to hand it to them, they never fail to stir up emotions, excite some small outsourcing vendor, or boutique advisor... when it comes to the Black Book, anyone can get in on the game.  This year we're treated to several one-man bands, outsourcing vendors posing as "independent advisors", and some firms who don't even do what their category states... can you guess some of them?

Download 2009 Outsourcing Advisors Report

Alliance performs some spectacular Satyam ambulance-chasing

I was stupefied to observe Alliance Global Services, a privately-held IT services shop, join the Satyam ambulance-chasers by promoting it's "IT Partners Bill Of Rights".  Alliance is hoping to get 100,000 signatures supporting some version of its bill of rights and to have the document serve as a platform to establish a "global ethic consortium for IT services vendors":

1. The right to demand transparency throughout every step of an engagement -- from sales to contracting to delivery and termination
2. The right to fully understand the nature and character of an IT partner and the service that it provides to them
3. The right to fully understand the financial viability of an IT partner
4. The right to be made aware of any impending legal charges against an IT partner, should they arise, as soon as they occur
5. The right to arrive at a mutually agreed upon definition of the term "trusted partner"
6. The right to expect a clear contract that defines fees and expenses up front before any agreement is signed
7. The right to terminate a relationship with no financial penalty in the event of any admitted fraudulent activity
8. The right to demand the existence of a truly independent board of advisers
9. The right to expect the presence of an independent financial auditor accompanied by a set of checks and balances
10. The right to demand accountability for any actions taken within the scope of a technology project or as part of a firm's broader business practices

While I cannot argue with any client requesting any of the above from an IT vendor (or any client of any services supplier in any industry for that matter), this media-marketing is shamelessly exploiting the Satyam situation to market its own services and take advantage of media-hounds hungry to add fuel to this controversy.  One vendor cooks the books and suddenly the whole world of offshore outsourcing is crooked? Would this action really have prevented Ramalinga Raju doing what he did?  Puh-lease!

Planetary-sourcing

I received a terrific comment during our debate on scrapping the "O" word from Frank Feather, which I wanted to highlight:

"I agree that outsourcing should be scrapped, but for none of the reasons you cite.

Simply put, outsourcing is a futile term in a global economy. It would mean to send work outside this planet, to another planet.

On this planet, every economy is now interlinked, with one resource pool for human labor and all other inputs, from natural resources to capital."

...I wonder if we can outsource our economy?

Preparing for '09: It IS time to dump the term "Outsourcing"

You may recall the discussion we had earlier this year regarding whether it is time to stop using the term "Outsourcing".  The general consensus among many of you (including myself) was that we are stuck with the phrase and we shouldn't go out our way to dress-up global sourcing with other, more relevant, terminology:

"However you want to spin it, your staff will view it as outsourcing, and the more you try and disguise the taboo term, the more suspicious your staff will be that you are simply trying to ship them out for lower-cost labor"

With the dramatic changes in our corporate climate and political attitudes in recent months, I believe it's now time to change our well-worn phrase.  The core issues being:

1) Poor comprehension of global sourcing. Too many people associate "outsourcing" with greedy corporate leaders only interested in slashing costs, with little regard for employee livelihood. They have pre-conceived notions that organizations have forgotten about their people, and only care about the bottom-line.  I can assure anyone that is not the case with the majority of companies with whom I speak with daily. 

WSJ confuses itself about outsourcing

I just read a piece in the Wall St Journal, which has me wondering whether many people actually think companies buy outsourcing like servers, or software licenses.  Companies outsource to reduce costs and access skills and technologies they need to be more competitive.  It's also a tough, long-term decision for many firms to take, and it's no wonder we're experiencing a slow quarter in deal activity as companies wait to see how the economy is going to shake out.  With IT budgets being reduced and pressure to take out more administrative costs, firms have little other choice than to explore outsourcing opportunities.  What the article fails to mention is the huge amount of evaluation activity we're seeing in the market right now.  How about asking TPI et al. how many consultants they have on the bench?  My sense is not many...

I cannot be serious

When I arrived on these Western shores a few years ago from the Old Country, I made it a personal mission to ensure (some) Yankees around me learned that special brand of humor termed as sarcasm. This habit of mine seems to have spilled over into my blogging... My recent post "The Calamity Clients Awards, 2008" enticed a couple of people to contact me - one person asking where she should submit her vote, the other kindly advising me to find a way to scrap the vote before I offended someone. 

For clarification, the purpose behind the Awful Outsourcing and Calamity Client awards was to

1) Make you laugh;

2) Have a subtle dig at some of the awards being banded around the outsourcing industry;

3) Raise some real issues concerning some struggling outsourcing engagements, and the fact it actually takes two-to-tango in this business (both vendors and clients).

Thanks for the many, many messages I did receive from those of you who did realize all three of the above points - very much appreciated, and makes me feel my original mission to induce sarcasm into the North American outsourcing industry is largely working :)

Anyway, I'll lurch back to more serious stuff next week... peace out

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Definitely not serious...

Why I put the kibosh on the survey of list-makers

Apologies to several of you who voted on a poll I ran on Sunday/Monday that was evaluating the credibility of the list-makers and award-givers in the outsourcing industry. Unfortunately, I received a very large number of suspicious survey responses from a host of "FORTUNE 500 buyers", whose IP addresses - for some reason - all seemed to emanate from the same couple of locations. I received a very large number of these survey submissions clustered within a short time-frame, and they had no names or email addresses attached. They also all had selected one particular list-maker as "highly credible", while simultaneously describing the same 2 others as having "poor credibility".

It saddens me that on-line surveys can seemingly be so easily manipulated by entities that seek to sabotage results, or skew them in favor of themselves. I have become a little more cynical (than usual) this week as a result. As an industry analyst, I try hard to be impartial and deliver information to clients to help them make informed, unbiased decisions. I run this blog to drive healthy discussion, promote ideas and share knowledge with others. It seems that not everyone shares my ideals.

There's my rant. Issue closed. Thanks for listening. I just hope that there are still many of us who want to drive out bias and impropriety from a challenging industry in these complex times.

Claims of death greatly exaggerated

Check it out... Forbes used our counterpunch... thanks for your contributions! 

I was going to write somethng dramatic about the "power of blogging"... but you can work that one out for yourselves.  And a major hat tip to the Forbes technology editor, Elizabeth Corcoran, for publishing this.

PF

The death of Indian outsourcing? Don't make me laugh...

Following hot on the heels of "34% Buyers Axe Their BPO Deals", I woke up to an even more breakfast-choking shocker this fine morning with Forbes.com's Sramana Mitra declaring "The Coming Death of Indian Outsourcing" . 

So I checked out the credentials of the author.  I couldn't find any other outsourcing literature, but plenty of Yahoo-Microsoft commentary, which was pretty informative.  However, I did find Sramana's blog where she comments that the "Indian BPO industry is very much at risk because of the SaaS trend, and if they do not start to get their act together and respond to the trend, they are going to get punished".  This is incorrect. SaaS applications actually enable delivery of BPO services for certain processes.  Where software can be delivered as a pure web application, and does not require onsite maintenance and development, what better for a global delivery model where services are delivered from remote locations?  True, SaaS threatens the traditional software model, but it actually compliments an outsourcing model.  And surely SaaS is much more threatening to software providers than services firms, which dominate India's outsourcing economy.

Moreover, Sramana claims "Yet, India, for all its glory, is still the world’s back office. India's tech industry is a "services" industry. The Indians don’t do the thinking. The customers do. India executes".  Er... isn't that the point?  However, what she plainly fails to discuss is the fact that the better the Indian services become, the greater the number of services that require the "thinking". It is no coincidence that IBM, Accenture and HP have employed 10% plus of their workforces in India today to perform tasks that go beyond pure execution work.  When you look at the scale and type of services being delivered from India today, as opposed to 5 years' ago, the move up the value-chain of services being delivered from India is impressive.  Services such as remote infrastructure management, financial reporting, insurance claims adjudication and industry-specific application development were a far-flung fantasy back then, but today are high-growth outsourced services being delivered for enterprises today.

Sramana picks on on ADP's global sourcing model, which only has 2,500 staff in India.  However, what she doesn't comment on is that fact that very few firms outsource payroll to India, largely as this industry was established long before India came to prominence, but also because of the regulatory and privacy concerns tied to sending payroll data offshore. 

I empathize with her concerns over wage inflation, staff attrition and rupee appreciation.  These are the challenges the Indian industry is dealing with, which we discussed here last year, and it will slow down the breathtaking growth in the long-term, however, to proclaim the "coming death" of Indian Outsourcing is absurd. 

Panic selling

I nearly choked on my breakfast this morning with the stunning news that "34% Buyers Axe Their BPO Deals", according to a study conducted by Diamond Management & Technology Consultants and headlined in Global Services Media.  I have observed over 400 publicly-announced and private BPO engagements over the last decade, and barely 6 of these were discontinued, normally as a result of the enterprise downsizing to the point where the BPO engagement was no longer viable for both parties.  I am not arguing that the other 394 engagements are all going extremely well, but when enterprises move beyond a BPO contract transaction, the short answer is they rarely go back to the way they were.

For starters, the article states "One of three customers of Business Process Outsourcing (BPO) services ended their offshoring deals prematurely". There is a marked difference between "BPO" and "offshoring".  Offshoring is the process of moving work offshore, and - in most cases - involves a firm moving more work into its own offshore "captive" center.  So are we actually talking about Business Process Outsourcing or offshoring?  This is a major difference, as many firms who try to "offshore" work themselves experience far more problems than they anticipated, usually because they do not have the skills or experience internally to manage offshore transition successfully.  That is why many firms decide to outsource their business processes, rather than try to offshore them.  That is also why many of the large BPO deals signed today are companies selling off their captive operations to an outsourcing provider.

I respect consulting firms that invest in quality research for their clients, to generate eminence in the marketplace, create discussion points with their clients, and use it to support their consulting engagements. However, "research" can be a dangerous tool when firms use it to panic people for the sole purposes of creating attention.  I can understand why Global Services Media picked up on the story, as it is a major attention-grabber, but there are no details regarding how the study was conducted, what sample of firms was used and how exactly is "BPO" defined for the purposes of this research. 

The Baffling Book Baffles on...

EDS has wasted no time in reveling in its meteoric rise from number 36 to number 1 over the last 12 months...

Upon hearing the news earlier....

The Baffling Book of Outsourcing

I have been inundated in recent weeks with press releases, quotes, and data references to the The Black Book of Outsourcing.  "Great", I thought, "Now I can access a complete encyclopedia of outsourcing....".  So I decided to look up an area where I have some knowledge:

TOP 10 ACCOUNTS PAYABLE OUTSOURCING APO VENDORS

2006 RANK	COMPANY
1	Mellon SourceNet
2	Capgemini
3	Accenture
4	IQ Back Office
5	Outsource Partners International
6	XIGN
7	IBM
8	CorePay
9	API Outsourcing/ Wells Fargo
10	Harbor Payments/ADP

OK - all these guys do Accounts Payable to some extent, but wait... Genpact didn't even make the list - and neither did ACS, InfosysBPO (Progeon), WNS, VWA, CGI etc etc.  And then I looked at sourcing advisors...ITO vendors...HRO vendors etc.  I realized if you don't know much about an area, these lists can appear credible, but if you actually have some domain knowledge you quickly see that these rankings and selections of vendors make little sense.  What I'd like to know is who is reading these lists, and are business decisions being made on them?  Isn't there some sort or body that regulates this "stuff" floating around the industry?  Can anyone shed some light on this?