« Are you a BPO sales professional? | Main | TPI loses its talisman »

Jul 12, 2009


Feed You can follow this conversation by subscribing to the comment feed for this post.

Hi Phil,

Outsourcing will definitely transform itself in the next boom. Globally, organizations are faced with two major challenges - sustain themselves during the current tough times and the second - be ready to take competition head-on when the boom is back. Having both these together is tough business. And this is exactly where Business Process Outsourcing can step in and help organizations. In order to be successful one needs to partner with the right organizations and look for the right signs in the outsourcing partner.

Keeping this in mind Vijay Rangineni, CEO, Mahindra Satyam BPO has authored a white paper titled 'Benefiting from the recession through outsourcing’ where he discusses a number of points on how to go about outsourcing business processes during this recessionary time. He talks about how Process Outsourcing presents an excellent opportunity for organizations to not just cut costs in the immediate future, but create a lean organization that will be even more profitable once the economy recovers and deliver enhanced customer value. The white paper can be accessed at http://www.mahindrasatyam.net/about/documents/Benefiting_from_the_recession_through_outsourcing.pdf .

Andy - you are preaching to the choir here... see this piece from earlier this year:




No doubt that outsourcing will continue to flourish but the offshoring boom is over. Offshoring will become increasingly irrelevant; simply a better solution to yesterdays problems.

Phil - the HR BPO market is very different now from 2000/2001. Some of the pioneer HR BPO contracts did not deliver all expected benefits, for both parties. However the market is much more mature now. Some of the the differences include better mid-market provision, much better tools inc Smartforce, SaaS, realisation that more HR strategy requires HR transformation, a much more varied competitive vendor marketplace and better contract/vendor management in HR (with all the lessons learned since 2001). HR BPO 2.0 is very different to the first generation.
Andy Spence
HR Transformer Blog

Very well analyzed Phil.

Agree the offshore lever is the major driver 8 years' on. Those areas that relied on onshore labor need other areas of leverage, such as utility (i.e. IT infrastructure services) and technology platforms (i.e. payroll/benefits services).

The offshore components also need these leverage areas, but they at least provide the initial cost-impetus for clients to get started,


Offshore outsourcing more and more takes the shape of Business Process Outsourcing, where whole business processes (such as support and development) are outsourced.

Vikas -

To some degree, buyers will scale back the number of ITO providers where the larger service providers offer favorable terms for doing do. Clients use niche providers because they tend to provide quality people they have got to know and respect, and can fill valuable gaps in their skills requirements, particularly in niche and legacy areas. However, the common drive from senior management is often overriding this multi-vendor strategy in favor of more attractively-priced longer-term outsourcing models.

Hate to say it, but the driver here is more about cost than expertise and quality. I do see smaller providers (especially onshore ones) driving down their costs to remain in large clients - they have to apply tougher wage pressure on their own staff in this economy to remain competitive. Their challenge will be retaning their talent and avoiding it being re-badged by the larger providers. Survival of the biggest will likely prevail...


Mark -

Agree on the new thinking here with service delivery models. "Lift and shift" is clearly a fast-track route for the first-time outsourcer who wants to move quickly into an end-state. With new ADM models, it doesn't make a lot of sense, especially whre the requirements are for new technical skills being provided 90-100% from the service provider (i.e. ABAP development).

Lift and Shift is much more dominant for BPO deivery models, where process re-engineering is a long journey for clients, where there is no way they can transform everything quickly without the catalyst of an outsourcing transition,



Many large corporations work with multiple vendors - often multiple offshore vendors working in different pockets within the IT Organization. In last 6 - 10 months I have seen some consolidation but not a lot. Primarily, this to spread the risk and continue to leverage the existing relationships and the infra-cost already incurred by these big corporations. In coming months do you see a trend towards more aggressive consolidation to reduce multi-vendor overheads and perhaps negotiate better pricing with the providers to do more with them?

Phil -

I think another driver behind ITO app dev/maint growth will be smarter/more experienced/more realistic customers taking a broader view of their service delivery models. Many clients are honestly evaluating their first experiences with ITO ADM, improving their internal process maturities, and developing plans to use ITO ADM to optimize their IT delivery models -- as well as cutting unit costs. It's harder work than a straight "lift-&-shift", but should provide more satisfying results -- and ones with more staying power.

Mark Peacock
Archstone Consulting

The comments to this entry are closed.

Your email address:

Powered by FeedBlitz

Follow me on Twitter

    follow me on Twitter


    My Photo