Posted by Warwick Davies on Mon, Feb 08, 2010
by Nari Kannam, BPO Voice
Many of the top BPO players in India had added a BPO arm mostly through acquisitions. Infosys bought Progeon, Wipro bought Spectramind and so on.
Recently, we have seen weaknesses in the IT Services business of many of the Indian service providers but the BPO side of their business powers on. In fact, you may say that many of the public companies are lucky that the weaknesses on the IT Services side are offset by gains in the BPO business.
"Moving Up the Value Chain" is right within the grasp of many of these IT service providers if they leverage the BPO business in some strategic and clever ways. Many of the Indian BPO Service Providers have very highly qualified, highly skilled Master Six Sigma, Six Sigma Black, Yellow and Green belts. And they have extensive experience measuring, reporting and improving quality of delivery and process excellence.
All of this could be leveraged very effectively by the IT side of things by combining Business Process Management, Continuous Process Improvement, Measurement, Analysis and Reporting on the Business Process Management side with knowledge of, and consulting services from the area of Service Oriented Architectures, Business Process Orchestration Software and BPM tools.
Enterprises around the globe are becoming more and more integrated across organizations and within organizations across functions. Many of these processes that span multiple companies and functions are automated with islands of manual work within these processes. When these islands of manual work is outsourced, why not look at entire processes, offer IT services and BPO services as package deals that is higher valued, strategic and resulting in highly increased ROI.
IT services combined with BPO services is just like an unpolished diamond waiting for its brilliance to spill out! Many top IT companies around the globe are in this position, but especially top IT companies in India that also have extensive and mature BPO operations.
To read the article on the BPOVoice website go
here
Posted by Warwick Davies on Wed, Feb 03, 2010
By: Jamie Liddell, Contributing Editor, Shared Services & Outsourcing Network (SSON),
The reports recently released by TPI and PricewaterhouseCoopers looking at the ongoing growth in demand for outsourced services, and the shift in the geographical source of that demand, demonstrate yet again the invaluable role played by outsourcing in the development of the global business landscape. But they also demonstrate that as outsourcing continues its forward march, providers are faced with key decisions in terms of how, and where, to concentrate their expansionist efforts in the years ahead - decisions which will set the boundaries not merely for future competition among providers, but for the kind of terms available to organizations looking to procure services.
Effectively, providers looking for new sources of revenue have two primary options open to them: diversifying in order to increase the scope and scale of the work they already provide for existing clients; and attracting new clients. There are of course limitations to both these options - there is only so much work available from any given client organization; and only so many organizations to go round - but at any rate any provider with serious ambitions of becoming, or remaining, a global player must aim to compete on both fronts: the greater the quantity (quality being a given here) of services a provider can offer an existing client, at competitive cost, the less likely is that client to go elsewhere; while ignoring the opportunities posed by potential new business (and while there are indeed "only so many organizations to go round", in global terms that is a very great many) outside the company's current portfolio is hardly the best way to ensure a healthy balance sheet in a decade's time.
As a result, we've witnessed, as outsourcing has grown and flourished, the diversification of services offered by leading providers from what might initially have been core products such as IT or voice offerings to a truly dazzling array of capabilities. Any sell-side entity with the intention of being more than a mere niche or specialist provider (and while such a strategy is by no means without its benefits, we're talking here about those companies looking to play in the big leagues) must now aim to compete on a very wide battlefront with offerings that can tick numerous boxes for firms looking to outsource. Indeed, with so many outsourcers now able to provide high-quality low-cost services in the "basic" areas of BPO and ITO, differentiation of capability beyond these core areas is crucial; as industry commentator Phil Fersht wrote recently in his blog Horses for Sources , "quite simply, there are several vendors today pushing services within a similar price-band and sufficient track record of successful delivery. Furthermore, most large enterprises have already experienced offshoring and outsourcing varying degrees of their operations for several years' now, and are smart enough to realize outsourcing provides an opportunity to deliver more than simply cost-savings".
Providers can achieve this differentiation either by building their own capabilities or through M&A activity - both of which options have of course been and will continue to be utilized by the major players throughout the history of outsourcing, but which require significant financial resources beyond the reach of most smaller firms now looking to get into an increasingly crowded marketplace. As a result, these smaller firms are increasingly looking to do battle not at the stratospheric levels of their behemoth , pan-capable competitors but in what remains relatively uncharted territory even for the biggest providers: among mid-market companies in developed economies for whom outsourcing is just beginning to become a headline proposition; and in developing economies which have until now remained off the radar for outsourcers busy fighting over business from marquee multinationals. Unfortunately for the smaller outsourcers, however, the eyes of the major players are also moving towards these uncharted territories, as they seek to complement the expansionary possibilities opened up by the diversification of offerings mentioned above with efforts to attract new business from companies and geographies which they might hitherto have ignored.
TPI's Momentum Report released last month shows how certain large emerging markets are rapidly moving up the agenda for outsourcing, with India, China and Brazil all moving northwards on the "league table". The great joy for providers - of any size - is that such markets contain within them a large number of businesses for whom "early stage" outsourcing - basic BPO and ITO offerings - remain relatively new propositions. Compared with the US, UK and Canada (the top three locations on the TPI table) these markets might not yet compete in terms of sheer size of outsourcing opportunities (although as noted by TPI, and as should be obvious to anyone with even a basic understanding of global economic issues, the developing economies are making gains at this level too) but they are comparatively untapped in areas in which the biggest developing economies have already been exploited to a great extent over the past couple of decades.
Crucially for smaller outsourcers, many rapidly growing firms in emerging markets might now be reaching the point at which, say, a relatively uncomplicated BPO deal might be both feasible and sellable to their boards, but at which a more radical business-transformation-type agreement might still be off the agenda. Of course, the major players retain their advantages of size and experience, but it is far easier for even a start-up outsourcing business to achieve a foothold amongst these emerging companies than in the super-competitive markets of the US and Western Europe.
While China and India in particular - thanks to an existing concentration of activity on the part of large players - are probably not logical targets for companies thinking along these lines, plenty of other emerging economies, headed by Brazil, fit the bill. Any open economy big enough to support a number of the kind of businesses for which outsourcing is an option presents an opportunity here - in other words, a significant swathe of the world's economies below G20 level, in which social and technological conditions are such that doing business is feasible. Providers with the determination and wherewithal to create the foundations - linguistic and cultural - for entry into one of these economies are able to focus on markets which might not be anywhere near as profitable in gross terms as the more traditional revenue sources, but which in terms of their ability to offer significant market share represent an infinitely more attractive proposal than the more saturated locations upon which outsourcers have traditionally focused - and in which it is still feasible to offer first-generation outsourcing services without also having to demonstrate more complex transformational capability.
The bottom line is that for many outsourcers the current environment is such that it might make more sense in the long term to aim to be number-one in BPO in, say, Uruguay or Angola than to attempt to fight the big boys on their own turf - even while they're increasingly focused on fighting each other. However, the aforementioned big boys are of course well aware of the potential gains to be had in new, smaller markets, and it's no surprise that the same firms who penetrated the likes of Poland and Romania several years ago are now sniffing around for opportunities in other emerging economies. So it's very much a now-or-never scenario for those lower-level providers thinking outside the box - for as the recent surveys show, the attention of the outsourcing world is increasingly focused on the "new world" of unexploited economies, and it won't be long before these unconquered territories too are brought into the broad embrace of the outsourcing industry. And, for shareholders, there'll be significant value in having already carved out a respectable niche in an emerging economy when the very biggest players start looking for ways to increase their footprint in that neck of the woods...
Posted by Warwick Davies on Sun, Jan 31, 2010
from Vikram of BPOVoice
"To encourage ... businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America."
What could have prompted Barack Obama to say these lines in his first State of the Union address. His falling popularity, string of losses in the elections for the democrats or the need to act on the projection that he is not any run of the mill president who wouldn't care to act on what he promised to garner votes. Whatever be the reason, the outsourcing service providers across the globe whose bulk of business comes from America will not be able to breathe easy tonight.
A decision has been taken and the details of execution are awaited.Though Obama himself admits that this alone would not compensate for the seven million jobs lost over last 2 years,he had to do this to score well at his home front as the pressure was building up and he had to act if not deliver as per the popular sentiment.
bloombergutv.com says "Analysts say US firms could see a 50% rise in the cost of outsourcing business processes to India if the new tax proposals are implemented. Indian IT majors like Infosys, Wipro and TCS have all started ramping up their US presence and are increasingly hiring locals but this will impact their margins as employee costs are significantly higher in the US even in tier-2 cities.
Avinash Vashista, managing director, Tholons, said: "There is still going to be a 15-20% difference between low-cost US and India. That is going to be significant margin impact, especially for BPOs.So, you will see margin impact in IT as well as BPO...."
In the next few weeks, the companies and the analysts are going to rush into frenetic analysis to figure out the probable impact and the other possible implications (hope the complete burden is not passed over to the service providers).
Without an iota of doubt, this will affect the margins; companies may also start looking for more non US Business however what wouldn't be affected is the idea/concept of outsourcing. The outsourcing as a business strategy is too critical for cost effectiveness to be ignored and is here to stay forever. Period.
Posted by Warwick Davies on Sun, Jan 24, 2010
By Nari Kannan, BPOVoice
When we talk about price competition to BPO companies in India coming from China, Vietnam and Cother countries, it is not always an either/or, black and white situation.
BPO processes vary significantly in skills needed. Some are subject to price competition severely and many are not.
The BPO business is a very fluid business. In India, the BPO business keeps changing all the time. What you see is the net gain after all the increases are adjusted for all the decreases. This is where paying attention to what business processes are vulnerable to price competition, pays in spades.
Doing Windows 7 support over the phone and chat is an incredibly skill and language intensive process. If you are not good technically, and not reasonable in your English and Cultural skills, you are not going to do well.
No country will approach India in doing these kinds of processes any time soon!
However there are hundreds of data entry processes or processes where a scanned document is on in one display, and a Financial application is accessed through Citrix in another. The job is just to read the name of the vendor and fill in the details for payment or enter orders from scanned order sheets.
Rest of the article is
here:
Posted by Warwick Davies on Thu, Jan 14, 2010
by BPO Voice
Avasant was named as "World's Best Outsourcing Advisor" in IAOP's 2009 List. Dr. Pradeep Mukherjee is the President and Managing Partner of Avasant's Asian operations. Prior to joining Avasant, Pradeep was heading the Offshore Advisory practice of neoIT. He has over 20 years of experience and expertise in Consultancy and Management of Technology Business.
BPOVoice talked to him to get the first hand analysis of the upcoming trends for 2010. Below are the excerpts :
What could be the top three trends for the outsourcing industry in 2010?
Global economies have begun to see some northward movement. This will boost firms to accelerate their outsourcing and offshoring initiatives:
Commoditized processes such as F&A, HR will be best candidates for firm's transformational initiatives. Service provider maturity and capabilities will provide client community (particularly mid sized firms) more confidence to offshore. IT budgets are expected to see slow cautious movement till mid 2010. Later part of 2010 will be critical for IT outsourcing
Supplier Rationalization: We expect greater rationalization in client portfolios as clients seek to work with fewer trusted suppliers. This would be a win-win for both clients and suppliers providing both parties with greater confidence in each other, and attain economies of scale.
Newer geographies will emerge and provide investors with compelling value propositions to expand delivery networks as well as provide regional services. Offshore and domestic service providers will also scout for attractive targets in the client markets to attain proximity to their clients.
How close is the "cloud computing factor" from making a serious impact on the outsourcing business?
A number of our clients are closely observing the progress in Cloud Computing area. Clients are increasingly interested in exploring and evaluating all potential solutions in their sourcing strategy. We believe cloud computing is here to stay and will offer significant benefits to companies on a case-to-case basis. There are obviously huge benefits for small and medium enterprises, and we anticipate greater adoption from clients in the coming year.
Could there be more pressure on the CEO etc. to deliver more in the post recession scenario?
CEO's role post recession would be more oriented towards regaining growth levels, increasing investor confidence and continue rationalizing costs. Outsourcing could be critical in implementing all of the above.
What can Indian companies do to stay competitive in view of increased competition from emerging locations?
From a business retention and client relationship perspective, further investments in key markets of US and UK would be imperative. These would be in terms on acquiring new client facing personnel, setting local near-shore delivery presence, and acquiring new skills such as business transformation capabilities.
In terms of new growth opportunities, penetration of Indian companies in client markets such as Europe, Japan and Africa will be critical. Few of these markets are still nascent to outsourcing with locations such as Japan constituting less than two per cent of the IT services exports from India. Markets such as China, India, Africa, and South America would provide significant growth options in local markets. Establishment of presence in such markets for domestic outsourcing and nearshoring will facilitate Indian companies to remain competitive and compete with the global and regional majors such as IBM, Accenture etc. It will also be imperative for these firms to show critical mass and also be culturally aligned in these markets. This would require firms to adopt a partnership approach to enter and service these markets.
How much time could China take before it starts posing a serious threat to the Indian BPO industry?
We have seen very few contracts (<5% of total contracts) in the market requesting for offshore BPO services from China. Excepting for services catering to the Japanese market, China has not posted a threat to Indian BPO industry. As Japanese and Korean markets open up, China will have a bigger role to play with language capabilities and support.
China continues to make significant investments in improving the talent pool and providing the right infrastructure along with government support. A number of regional provinces are stepping up to increase competitiveness and attract global players. The English language capabilities continue to be a challenge with our findings showing that only about 2 out of 10 can speak some English, although not of quality to cater to the US/UK markets.
Now that Obama has been here for a year, do you still see the possibility of "reverse sourcing" in the coming years?
Domestic sourcing by clients in US would be done on a selective basis. This would primarily be driven by local employment generation, by leveraging lower cost locations locally and using government incentives. We however anticipate this to be minimal and restricted to certain low-end processes and functions.
Majority of large corporations are heavily committed to their globalization strategies and have leveraged their global delivery and transformation partners to remain cost competitive and stay relevant in these tough times. In the long term, as the growth trajectory improves, these firms will further increase their commitment to global markets and talent.
You have recently opened a new office in Ghana, is there any strategic reason for this sudden focus on Africa?
Avasant has been working on its Africa strategy for over last 12 months, and we are highly confident of Africa's prospects and emerging role in the global outsourcing area. Africa
offers significant potential to investors along with a large multi-lingual talent pool along with very supportive government. As a leader in the globalization space, we are actively working with various government bodies and development agencies to create awareness and foster public-private partnerships to attract investments in the region. A number of countries including Ghana, South Africa, Kenya, Uganda and Egypt are realizing the benefits of BPO and are actively working to develop and execute strategies towards promoting BPO industry.
Avasant has made rapid strides in Africa over last few months and we are already executing engagements in multiple countries in Africa. We are committed to Africa would it would continue to play an integral role in our strategy.
Posted by Warwick Davies on Thu, Jan 07, 2010
Posted by Francois Zielemans, BPO Voice
Usually sustainability is thought of as cutting down CO2 emissions and planting more trees. But sustainability is more than just acquiring a green image. It is another way to look at your own company, the external environment and thus also your sourcing strategy. Organizations can actually profit from better financial results by a smart application of the modern aspects of this theme. An example:
A large oil and gas company outsourced a part of its BPO activities to Asian supplier. This supplier had contracted another co-supplier for data-entry activities who used illegal under aged employees. A non-governmental organization found this out by accident which resulted in a lot of negative press for the oil and gas company. In order to outperform the competition they outsourced several activities, but this backfired due to severe damage to the corporate brand.
In this example the oil and gas company miscalculated the risks related to sustainability, which caused damage to their brand as well as to the ROI of the BPO contract. More and more organization are watched by governmental and consumer organizations on their social responsibilities. The fear of reputation damage is therefor often the starting point for the sustainability clauses in the contract. Sustainability is thus often approached as a risk and cost driver. For a smart BPO supplier this may also present an opportunity to prove the client wrong.
Being able to demonstrate as a BPO supplier to potential clients how it can add value in the area's of social responsibility, human rights, ethics and environment without additional cost, it obtains an edge over other suppliers.
Senior business managers are already demanding action from internal departments in the area of sustainability and it is not more than logical that a broader set of sustainability requirements will be included in future BPO contracts.
Sustainability may thus be a theme where client and BPO supplier can work closely together to make a difference in the marketplace.
Posted by Warwick Davies on Wed, Jan 06, 2010
Addressing some failings of BPO: customer service interaction skills, prioritisation, mixed messages, and robotic service
By: Gerald Sackey-Addo, Finance Business Partner at a Leading HealthCare Company,
Phil Searle, Advisory Board Member for the Shared Services and Outsourcing Network, asks Gerald Sackey-Addo, Finance Business Partner at a Leading HealthCare Company, about his experiences with business process outsourcing and what Gerald sees as the main issues that need to be addressed to ensure long term success.
Phil Searle: Gerald, thank you for taking the time out to talk with me about your experiences on the Òfront lineÓ of business process outsourcing, in your role as a Business Partner at a leading HealthCare Company. As background, what processes were outsourced at your company, and when? And how were you personally involved in this?
Gerald Sackey-Addo: In my role as a Finance Business Partner, I am involved in supporting Product Brand Teams and the Corporate Affairs department, which also incorporates our NHS Operations. I have regularly been the focal point for queries from both my internal customers and also from the BPO (Business Process Outsourcing) team. The processes that were outsourced were Accounts Payables (AP), Accounts Receivables (AR), 3rd Party and Intercompany expense processing and some General Ledger (GL) activities. My involvement with the BPO team has mainly been with the AP and GL processes. For instance, I am responsible for ensuring that approved promotional expenditures and honoraria to key customers are paid promptly and to the correct cost centres. This assists with better budget management within the Community Care Pharma and Corporate Affairs Business units.
PS: Having been actively involved in offshoring processes to a third party provider at your company, what do you see as the main issues with Business Process Outsourcing (BPO) that have had to be managed?
GSA: It is true that BPO can deliver excellent cost savings, but there are also risks that need to be understood, managed and controlled. These include:
* Customer service interaction skills
* Prioritisation issues
* Mixed messages
* Acting like robots
By 'customer service interaction skills,' I mean how the BPO team interacts with both internal and external customers. For example, we have definitely had problems with language skills (including English) at the BPO provider. Indeed, this has sometimes made customers quite angry, resulting in calls to our head-office to have their queries dealt with.
PS: It is interesting that you also point to English language skills being an issue. Can you expand on this a bit more?
GSA: I believe that the BPO team could do better at this given that most of the teams I liaise with seem to be able to write excellent English, but seem less able to communicate verbally in English. This is perhaps understandable but, in my view, more and better oral, language and perhaps cultural training (in English and other languages) could help overcome this challenge longer term.
PS: Do you believe that some of the issues might relate to the attitude of internal customers as well as the BPO provider?
GSA: Yes, definitely. It is fair to say that some internal customers, given the "bad PR" resulting from certain BPO stories, possess an attitude when calling which often leads to their queries not being resolved effectively. They are expecting a problem before they call. Indeed, this view has often been shared with us by some of the BPO team members I liaise with. I believe that some internal training of users as well as the BPO team would benefit the relationship here.
PS: In relation to 'prioritisation issues' can you explain what you mean here?
GSA: By 'prioritisation issues,' I mean what the BPO team perceives to be a priority. For example, what might be internally viewed as an ÒurgentÓ task might not be viewed in the same way by the BPO team. This can be very frustrating, as it will often have an impact on other activities. As a result of my interactions with the BPO teams, I have come to realise that the culture within the BPO provider includes following very strict hierarchical decision-making processes that do not allow much flexibility or thought outside of defined processes and actions. Therefore, although a BPO team member could action a quick fix to an issue, they are sometimes reluctant to do so until they have spoken to a team leader. This approach leads to a lot of unnecessary e-mails.
PS: Turning now to mixed messages can you expand on this as well please?
GSA: This is where one BPO team member gives a customer an answer only for another team member to tell the same customer something totally different. As a Finance Business Partner, I also oversee the financial management of our sales force who often liaise with certain Key Opinion Leaders within the business who are vital to a particular therapy area that we pay honorariums too, which makes an issue of this nature quite embarrassing.
PS: Finally, you refer to what I assume would be the BPO team 'acting like robots?' Am I correct in thinking that this means acting in a rigid fashion without room for flexibility?
GSA: Yes, 'acting like robots' is my term to describe where the BPO provider follows a predefined set of rules/instructions but is not able to apply enough rationale or flexibility to their work.
More specifically, this is where the BPO teams, despite having the knowledge and information available to action a task, will still contact the client finance team in the home country to ask what must be done even though this might be a basic task they should be able to perform themselves. This reflects a lack of Òflexibility.Ó Indeed, if one of the merits of BPO was to enable the client business to focus on core business activities, local client finance teams in a home country should not need to stay so involved with processing duties after the transfer of responsibilities to a BPO provider. This is not to say finance teams in home countries should not ever be asked questions, but there is a real danger that the internal client has to retain internal resources to provide unexpected support to, and management of, the BPO provider and perhaps even translate some things to make them of value to internal users. This makes the outcome less efficient and therefore more costly and can cause delays in processing activities.
As a result, the design and definition of services and responsibilities as to who does what, and when is critical to the success of the BPO arrangement, but so is allowing some flexibility within this.
A very important example of this is where an organisation must be careful when outsourcing a customer call centre. The role of the outsourcer and the work performed must meet with customer expectations (i.e. full resolution of query) and not just be a robotic response.
PS: Thanks very much Gerald. Would I be correct in summarising your thoughts by saying that although BPO can lead to lower costs and the release of certain non-core activities, one must never forget and underestimate that there is a service still needing to be performed. Whilst an organisation can outsource an activity it cannot outsource ultimate responsibility to the business for the provision of effective and efficient service. Back office processes may be regarded as 'non- core' but they are still 'mission-critical'! If they are not delivered effectively and efficiently the business will suffer.
GSA: Definitely. In a recent interview with David Wyss , Chief Economist at Standard & Poor's (SSON, 2009), when asked about his stance on the significant move in off-shoring to "lower cost" countries over recent years, David stated this is a natural part of globalisation. I completely agree with his view. But, at the same time, I strongly believe that there needs to be a better understanding of what outsourcing means and the potential issues that must be addressed. There need to be stronger standards demanded of and then delivered by BPO providers and the business needs to help the BPO provider with this process. Metrics can be introduced but a damaged reputation in an ever-competitive and challenging world can be very difficult to repair, once things go wrong.
Gerald Sackey-Addo
Finance Business Partner
Leading Healthcare Company
Email: g.sackey-addo@live.co.uk
Tel: +44 (0)7710 123126
Phil Searle
Founder and Managing Director
Chazey Partners
www.chazeypartners.com
Email: philsearle@chazeypartners.com
Tel: +1 408 460 0785
Posted by Warwick Davies on Wed, Dec 30, 2009
BPO Voice had this great opportunity to interview one of the authority writer and speaker on globalisation, outsourcing, and corporate change - Mark Kobayashi-Hillary. Here are the excerpts:
BPO Voice: From Outsourcing to India (Your first book) till who moved my job (the latest one), how much have these factors changed - Market, Perception of the masses and the corporate Outlook?
Mark: The market has changed and obviously has grown. Outsourcing has moved from a strategy that needs to be explained to something that is accepted as a part of the management toolkit - the question now is just how to use it and where is it appropriate to use. The EU has become a larger market than the USA leading to a lot more interest in what European companies are planning. People on the street still don't like outsourcing for a couple of reasons. Either it involves off shoring, so they see jobs being created far from home, or it leads to a decrease in customer service standards. And the people are generally right. If companies make their service to customers worse because they outsource tasks then they deserve to be criticized.
BPO Voice: Tell us more about your new book. What inspired you to write this book and whom are you trying to address?
Mark: I've written several books about outsourcing and globalization. In 2007 I wrote a book called 'Global Services' for the British Computer Society. Take a look at it - I know I am biased, but I think it's the best exploration of how the entire IT industry is changing and moving to a new paradigm. I was writing about the cloud and globalization of services in that book, yet hardly anyone bought it. Maybe they were scared off by the British Computer Society label, but I can assure you that it's a fairly easy read!
I wrote Who Moved My Job as a response to that experience. It's a bit like entrepreneurs and their elevator pitch - if you can't explain your business plan in a few seconds then it won't work. I just applied this to a book about globalization, outsourcing, and jobs. I wanted to write something short, punchy, and as a story. So people could read it, understand, and then pass on the book to a friend.
BPO Voice: Your thoughts on Cost cutting vs. Cost Optimization.
Mark: When off shoring really came on the scene in a big way, companies were blinded by the potential for savings by shifting work around the world. Fundamentally though, you can optimize what you do in your supply chain and increase efficiency, but if you only ever go for management measures that cut costs then will you win the long game?
BPO Voice: In your view what are the foremost challenges for the companies, those who look to outsource and for those who offer their services?
Mark: The biggest challenge is to reach a state of true partnership. The biggest problems in outsourcing come from this client/supplier mentality. The client is all-powerful and can screw the supplier down for lower prices, more service, better free theatre tickets... yet we sometimes forget that all companies sit in their own supply chain. If a major international bank is commissioning IT from a supplier in India then don't forget that the IT supplier is probably a multi-billion dollar outfit buying services all over the world in just the same way the bank has to keep their own customers happy. If more managers remembered this and made the outsourcing process less adversarial then it could be a lot more successful - and fun.
BPO Voice: What is your view on the present market scenario i.e. recession and its effect on outsourcing industry world wide. Do you think this recession would bring more outsourcing destinations and thus would affect the Indian outsourcing business significantly?
Mark: More destinations will happen anyway. I've been invited to Iran and North Korea and if those guys are exploring the possibilities then everyone knows the story!
The Indian companies will shoot themselves anyway if they continue to try selling the low cost story to foreign customers. India has built up a reputation for being an IT leader - now you need to deliver on that reputation, not sell on price alone. In general the recession should not hurt the big guys too much. Yes, they might halt recruitment for a time, but they have big ongoing contracts that should ride them through a rough patch. It's the small and medium sized companies that will really suffer.
BPO Voice: In your opinion which country/region offer the best outsourcing destination for the future and why?
Mark: It's hard to just pick a country as different places have different attractions in terms of the infrastructure or people, but in general I'm most excited about how east and south Africa is developing. Lots of great people there with excellent qualifications and the infrastructure is now improving. Nothing is going to stop them.
BPO Voice: How much would the "Obama" factor work against the outsourcing industry, if it will.
Mark: Obama needed to recapitalize a large chunk of American industry. It was natural that the bailout money would come with strings attached, particularly regarding sourcing from the USA only. However, I don't see this as much of an issue going forward - unless you think that American industry is going to be perpetually bailed out by the government. Let's assume that America is going to recover and reclaim much of its former economic glory - even if China and India are likely to surpass it this century.
BPO Voice: You are one of the most influential authorities on outsourcing, what are your views on the downfall of Satyam? What are the probable lessons to be learnt?
Mark: I don't think it had anything to do with the outsourcing or IT industry in particular - it was a crooked boss cooking the books. If anything can be learned though then I'd suggest more professional company boards, particularly with more diverse non-exec directors who can kick up a fuss if they see any funny business taking place. So in short, don't stuff your board full of family members and friends. Diversity is the key.
BPO Voice: Do you think there might be more Satyam(s) around in India or elsewhere?
Mark: Of course something like this will happen again at some point and in some country - maybe not India and maybe not in the IT business. But to assume that the regulatory authorities will be able to spot every crooked CEO is possibly hoping for too much. However, if a more professional board structure can be introduced then many issues can be averted. This doesn't just apply to India though, just look at a country like France. Major companies have boards stuffed full of friends all sitting on the board of each other's company - more like country clubs than executive management.
BPO Voice: On the lighter side, as you wrote in one of your blogs- Did you receive any call from Tech Mahindra about taking over the sponsorship of Satyam for the next FIFA world cup?
Mark: The England football team is performing well this year, just like our cricket team. I was looking forward to seeing some of my friends down in South Africa and hopefully getting there thanks to FIFA or Satyam offering to host me while I take a look at their technology, but alas, it looks like I'm going to have to start cycling from London soon if I want to be in South Africa in time for the first kickoff!
About Mark Kobayashi-Hillary: Mark Kobayashi-Hillary is a British writer with a long history of commenting on globalisation, outsourcing, and corporate change. He has written several books, the most recent being 'Who Moved My Job?' and he is a regular contributor to Computing magazine in the UK. His new book 'Talking Outsourcing' will be published in July 2009. www.markhillary.com