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
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.
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.
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....
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?
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