The Outsourcing Blog: Horses for Sources

Sourcing advisors - your opinion is valuable

We've had some pretty spicy debating this year about the role and importance of third-party sourcing advisors.  In addition, we've had lively discussion on the boutique advisors which are proving to be an active low-cost channel for many buyers.  As part of my ongoing research into this market, I am very interested in what today's buyers and providers of outsourcing services are experiencing with the sourcing advisor medium.  Please take a few minutes to add your opinion here. And yes, you can remain anonymous if you prefer.

The Evolution of Captive and Outsourced delivery models for business processes: what is the right option for your company?

We are privileged to showcase the following incisive article from my good long-time friend Graham Russell, who leads Global Transaction Processing for pharma giant AstraZeneca.  Graham has been a long-established and respected authority on shared services and outsourcing for many years, and is one of a rare breed of executives who has had many years of experience managing both models.  I can't think of many other people in the industry more qualified than Graham to discuss the merits and shortcomings of both captive and outsourced delivery models.  Over to you Graham:

Birth of captives

Once upon a time, global and pan regional companies operated as a collection of single country businesses. Their back-office financial support was organized in the same way, with processes and systems being developed at a local level in each country. In the eighties, new global companies such as Microsoft entered the scene and were able to quickly organize their businesses and their back-office support services in a different manner since they were able to start with a clean sheet of paper, making them appear lean and nimble.

What's driving your outsourcing agenda?

Should this firm go for a straight "lift and shift", or move to an offshore model?

(Hat tip to Mark Stelzner for dredging up this little gem)

The emergence of the Indian suppliers in HRO: the answer to HRO's slowdown?

One of the most interesting discussion points I had on my recent visit to India was centered on the eagerness of some of the India providers to infiltrate the HRO market.  I recall the entry of the Indian top tier into HRO three years' ago, and have to admit I was skeptical.  Not many people believed you could take broadscale HR services offshore and run them successfully, while saving money for clients at the same time.  However, times have really changed since then, with the Indian top-tier now competing aggressively for hybrid IT-BPO contracts. What's more, the Indian providers are very good at working out how to take on back office work remotely.  It's their focus - and eagerness - to take on ground-up processes, such as payroll, data management, document fulfillment, which is driving a breath of fresh air into the flagging HRO business.

Why is it that...

Someone has always half-completed the crossword in American Way magazine  

A final word from India: moving beyond "old BPO"

As we discussed last week, BPO is rapidly evolving into "Global Services Provision". Most enterprises ventured into early BPO engagements to take advantage of the quick cost-savings on offer from employee remediation, using low-cost offshore labor on offer from outsourcing service providers. Many enterprises undertook BPO in times of financial distress, their priority centered on their year-end balance sheet and satisfying short-term shareholder demand, as opposed to long-term strategic thinking.

Musings from abroad: Futuristic BPO

No, it's not Disney.....can you name the place?

NASSCOM dispatch: "We're now past the era of BPO" (Pramod Bhasin)

Have just listened to the inaugural NASSCOM address delivered by Som Mittal (President, NASSCOM), Ganesh Natarajan (Chairman, NASSCOM), Shri Jainder Singh (Secretary for IT and Comms Department for the India Government) and Pramod Bhasin (CEO Genpact).  My main observation is the level of energy, passion and enthusiasm for the industry by the speakers - a far cry from some of the tired, jaded speeches I have been subjected to in the States and Europe recently. 

Musings from abroad... dispatch #3... Indian drivers

Welcome to a rather cool and cloudy Bangalore in June.  Indians have no concept of how to slowdown in traffic: cars, motorbikes, trucks and buses all focus on where they are headed, and, as opposed to their looking around to check the way is clear, they hoot their horns to tell others to get out of their way, with a fearless disregard of the risks and consequences. The same can be said of their rampant services industry, where their businesses have refused to slowdown, check their wing mirrors or pad their brakes, in fear that their revenues or profit margins will be seriously derailed.  Here's the evidence:

BPO: It's all about taking ownership to get results

Our last debate about about "Platform BPO" got me thinking more about how outsourcing PMOs can be more successful at delivering these engagments, and reaching a desirable operating state sooner.  While my good friend from SAP's BPO group, Gianni Giacomelli, makes an excellent point that service providers need to leverage economies of scale and process optimization ruthlessly to hit their targets, it also raises the question of how outsourcing PMOs within the buyer need to step up to the plate to take more owenership over their outsourced processes.  (Gianni wrote an excellent piece here last year entitled "Why a good BPO provider is not enough for a successful BPO service delivery" on this topic).

Many BPO engagements are currently a lot more complex than IT outsourcing engagements, where there are many additional challenges from the buyers' standpoint, namely training personnel, mapping new processes, transfering knowledge, establishing realistic service levels, developing workable reporting models and understanding which processes can be offshored successfully, and which of them should remain onshore - on inhouse - with the buyer. 

IBM/Bristol-Meyers: a shot in the arm for HRO

While several people have doubted the vailidity of HRO, IBM offers a strong ray of light for the sector by signing a $324m, 10year agreement with Bristol-Myers Squibb.  As we mentioned here just earlier this week, leading proviers have been working hard to find a workable model for delivering using their global resources:

"As the global providers become increasingly proficient at deploying offshore resources to support these processes, they will generate more cost-savings and compelling business cases for their customers"

As a result of this engagement, IBM is leveraging its employee contact centers in Manila and Budapest, in addition to local US-based delivery faclitiles, to implement and deliver SAP-based HR services. 

Platform BPO in the making?

Finance and Accounting BPO continues its growth path

As we picked up on here a few weeks ago, the F&A BPO market has had a red hot 2007, and this growth is continuing into this year.   The market saw a 30% growth in expenditure, a 20% growth in total contracts, and new contract expenditure totaling close to $4bn in contract value.  So a record year and a critical mass is being reached.  The barriers to entry in this market are getting harder and we're getting a clearer picture of how this could play out.  So, what's driving this, and who are the key players?  Read my aticle in the new issue of FAOToday magazine.

HRO Redux: 8/10 buyers don't look back, while the vendors look ahead

Following our recent discussions surrounding the successes and challenges of the HR Outsourcing (HRO) industry, I was sent a recent study from Erik Samdahl at the Institute for Corporate Productivity, which canvassed the opinions of 231 senior HR executives, mainly from large organizations, and has some telling stats on the future direction of HRO, which I wanted to share and interpret with you. There are two key observations from this study that standout in my mind: