Leveraging the Sourcing Edge

World BPO/ITO Forum Raises the Bar and addresses Key Industry issues

 The third edition of the annual World BPO/ITO Forum held on the Hudson proved to be yet another successful confluence of industry experts, stakeholders and firms looking at outsourcing as a strategic and transformational lever. The recently concluded conference provided an ideal platform for decision makers at various levels to discuss and deliberate upon the future of outsourcing in light of the changed economic situation, emergence of new technology driven models and the broadening of the outsourcing spectrum beyond the usual solutions and destinations. Apart from bringing together top industry leaders, the forum also provided great peer to peer networking opportunities to over 300 participants. The event was attended by over 75 C-level executives and representatives from six of the top ten global ITO/BPO companies.

 

Over the two days, industry luminaries provided insights into the future of the Global Sourcing industry with discussions ranging from the Impact of the Cloud, Convergence of BPO and ITO and Rise of Nearshoring. Keynotes by leading experts such as Glen Salow, EVP/CIO, Ameriprise Financial and James Harris, Managing Director, Cloud Services, Accenture provided valuable insights on where the industry is going and provided real world perspective on how companies can adopt strategic sourcing models.

 

Some of the sessions that stood out included ‘Going up the BPO Value Chain’ moderated by Mykolas Rambus, Former CIO, Forbes and ‘The Changing Face of Outsourcing: From SaaS to Cloud Computing’ led by Liz Herbert, Senior Analyst, Forrester Research. A power-packed CIO Roundtable discussed the topic of “Managing Offshoring to Thrive in the New Normal”. Christopher Horace, Director, IT Sourcing, The Coca-Cola Company in his panel discussion deliberated upon the vital subject of ‘Integrating ITO & BPO’. The other keenly attended discussion was on the social aspects of outsourcing and its impact on globalization with Carl Lavin, Managing Editor, Forbes and PK Agarwal, CEO, TiE Global; Former CTO, State of California. With American jobs going overseas becoming an emotive subject there was widespread accord that US skills could be leveraged to spearhead innovation while cheaper offshore destinations could provide US firms the edge to stay competitive and grow their market share.

 

One of the highlights of the conference was the customer case study jointly presented by VK Raman, Head – BPO Services, TCS and Anu Gupta, VP Profit and Process Improvement at Michaels Stores. Dealing with the concept of driving Business Excellence through Delivery Certainty, this session showed how collaborative partnerships could deliver on results far beyond contracts or SLAs. The keynote by Raj Patil, President, Mphasis BPO illustrated how BPO service providers are redefining their offerings to go above cost savings and raising the bar from Transactional engagements to more Transformational relationships.

 

The conference also had its fair share of representation from various established and emerging destinations such as India, the Philippines, Brazil, Hungary and Uruguay, reaffirming the growing reach of outsourcing as a social and economic enabler. The level of speakers, delegates and sponsors at this year’s World BPO/ITO Forum has validated that Global Sourcing is thriving and this forum will continue to provide an important knowledge sharing platform for thought leaders and executives in this industry.

 

Posted by Anupam Govil, CEO, Global Equations; Conference Co-Chair Global Sourcing Forum; Program Chair, World BPO/ITO Forum

Indian IT- BPO s gearing up for capacity addition in FY11

from ValueNotes

There is much talk about IT and BPO industry growth, fuelled by the recovering global economy. Expected offshore business that was stalled 2009 onwards, is now on the cards again, as management focus and financial situations are more conducive. Studies have shown that organizations of all sizes are planning to outsource more in the next two years, to countries such as Mexico, China, India and Philippines. What this signals for Indian providers is that business is about to boom in the next financial year. Several analysts have forecast an industry uptick. But while the signs all point towards growth, there have been no significant new deals to corroborate this sentiment. In anticipation of the growth in business, this much has become clear for Indian IT-BPO firms: the level of scale offered will be paramount to exploiting this expected growth period. Employers have in fact realized this, and the ‘demand environment’ is already affecting the industry’s human capital.

Rise in attrition in Q1

Attrition is rising once again, across IT and BPO segments. The first quarter saw attrition rates of over 15% for many software exporters. Infosys’ Q1FY11 attrition rates, at 16%, were its highest in the last four quarters. Even TCS faced an escalation, with 13.1% LTM attrition, compared to 11.5 in Q1FY10. Attrition in the company’s BPO wing was significantly higher (at 20%), compared to IT services (at 12.3%). As the economy recovers, industry opportunities are opening up again, and attrition has naturally been higher in the first quarter. In fact, most IT-BPOs have formulated their hiring strategies in anticipation of higher attrition rates this year. Voice processes in BPOs have particularly high attrition (anywhere between 50-70%). Some of the ways in which BPOs are trying to lower attrition is by looking at Tier III cities and rural locations for setting up centers, and diverting voice processes into multi-channel contact processes (involving non-voice, email/chat/web based support). 

NASSCOM has predicted a drop in attrition rates by September 2010, nearing campus recruitment time for many employers. To counter this temporary churn, retention of critical resources, coupled with aggressive capacity addition will be key for industry growth this year.

Revised hiring targets

Companies are revising their annual and quarterly hiring targets upwards. To illustrate, TCS is now targeting 40,000 new recruits, in lieu of the previously estimated 30,000. Infosys is also looking at hiring 36,000 from the 30,000 outlined in April. The majority of these will be campus recruits, and of the 14,000 to be added in Q2, the Infosys BPO itself will absorb 9,000 employees.

The capacity addition for these companies is mainly in new centers, and new markets. The reasons attributed for both upward revisions are strong deal momentum and consistent ramp-ups for both companies. While companies such as Wipro and WNS are yet to declare their Q1 results, it can be expected that aggressive human capital development will be a crucial element in their strategies as well.

Aggressive retention plans

NASSCOM believes that remuneration is extremely important in motivating an employee to continue with his company in the long run. In line with this, most large outsourcers are pre-empting the exits, and offering salary hikes as a retention strategy. Current BPO wage inflation of 10-15% is definitely increasing costs for employers. But as it is expected to lower attrition rates in the next few quarters, the costs associated with new hires will reduce significantly. Retention is being termed as a ‘major priority area’ for the industry and remuneration is one of the most important ways it may be addressed. TCS, Infosys and Wipro have introduced salary hikes of 10-20% (on average) in this year to ensure that their workforces are not motivated towards global rivals such as HP, Accenture and IBM.

To further enhance retention, IT-BPOs will have to evolve a stronger employee value proposition, with greater scope for learning and career development opportunities. These factors will be the strongest source of differentiation for employers, once the dust from the attrition settles down.

So even in anticipation of strong growth, IT-BPO companies are striving to match pace with global demand, in terms of human resources. Companies are in a bid to extend service capabilities for the expected international business, and aggressive human capital development seems to be the ace up their sleeves this year.

Talking IT Outsourcing

Confidence has returned, outsourcing is back on the agenda - IT is no exception. Mark Kobayashi-Hillary discusses trends we are likely to see in the coming year.

By: Mark Kobayashi-Hillary, IT Editor, Shared Services & Outsourcing Network (SSON),

I'm focused on the trends and changes in the industry and what you should be looking out for in the months ahead - particularly in ITO.

The biggest change we have all observed in the past year has been the change in sentiment from customers, because of the chaos caused by the global economic slowdown. I know from my own business that I spent 2009 talking to potential clients, who were all getting slowly more confident about the economy and as we passed into 2010 a tidal wave of contracts were commissioned.

So that sounds good, but just take a look at BusinessWeek magazine from a year ago - what a different story. One year ago, the business press was talking about a ‘perfect storm' centred over India because clients were scrapping discretionary IT project spending. I remember being surprised to find large investment banks with travel bans at that time - even though they were running huge IT development centres out in India. Project management had to work by phone - or just fail.

But a year is a long time in business and though this recession was deeper and more severe than anything any of us will have witnessed before, there is positivity in the press. In the Philippines they are seeing their own BPO industry expand by fifty per cent.

And the latest survey by Gartner on IT spending in India shows a healthy 14 per cent increase predicted for 2010. That's great news for the IT suppliers in India, though it's tempered somewhat by an observation from the analysts Ovum that we are heading for the same old issues of increasing pay demands from techies and attrition as they all start quitting their jobs with the renewed confidence that better salaries are out there.

Wipro is already observing attrition amongst staff of 17.1 per cent, and they are handing out fresh pay rises in order to keep the people loyal, but as the market in general gains confidence, so do the IT experts, becoming more footloose and in search of a better deal for their expertise.

In a sense, what we observed during the recession was a natural and predictable slowdown in outsourcing. As the storm commenced in 2008, there were offshore suppliers rushing around and talking of the savings to be had by going offshore quickly - as if a hurried deal to an offshore supplier in the midst of a recession could help anyone.

That predicted offshoring trend never developed. Though it can certainly be cheaper to run IT from offshore, everyone in the industry knows there are upfront costs associated with the transition to a new business state. Training, travel, knowledge transfer - all those processes cost money up front in order to reduce the ongoing run rate later. And what's the first thing to go in a recession? Discretionary project spend, so most IT outsourcing projects bit the dust.

In 2008, any CEO worth his or her salary was focused on reviewing strategy, revising budgets, and reducing unnecessary headcount - not outsourcing the technology department to the other side of the world.

But now confidence has returned, outsourcing is back on the agenda again, but in a slightly different way. There is a trend to reduce the number of suppliers being used, to make life less complex. There is an even greater expectation on offshoring to reduce cost - far more than before the recession, and there is a complete review of any existing contracts with the emphasis on driving down agreed rates.

For the IT suppliers it almost feels like business as usual, but it's not quite. The new breed of ITO customer wants more for less and is not quite so forgiving anymore. As our friends in France say, plus ça change...

 

 

 

Global Sourcing Forum Registration Now Open

Focused Content, Valuable Networking, New Location!

Global Sourcing Forum (GSF)'s primary focus is on showcasing latest strategies, trends and best practices in the industry through an interactive forum that encourages discussions and peer to peer learning. In addition, GSF offers a Global Showcase for exploration of established and emerging global destinations for outsourcing solutions and partnerships.

Executive Forum: Participate in two days of insightful and educational sessions provide a unique perspective on the most current issues impacting this sector as well as solutions that will stay the test of time and rigor. 

Pre-Conference Workshop: Before the main Forum, take part in an in-depth, comprehensive review of the most pressing and timely topics to help successfully source, manage and deliver global services.

Global Showcase: Meet top service providers, and discuss your BPO/ITO needs with established and emerging outsourcing destinations. 

Valuable Networking: Take advantage of the valuable networking opportunities available throughout the day and into the evening to interact with peers and make connections. 

New York City has it all!  Utilize your attendance at Global Sourcing Forum as an opportunity to experience NYC in July.  Enhance your trip with outstanding restaurants, shopping, museums, Broadway shows, sightseeing and many other attractions and activities.

Join Us!  Registration is Now Open at http://www.globalsourcingforum.com

The Transition Magic(ITO/BPO)

Right now the BPO/ ITO industry is witnessing a paradigm growth across the world. So building a matured transition management capability is crucial - but how do you add that certain magic?

By: Anurag Kulshrestha, Managing Principal, McTranz Global,

We all might have seen or experienced Business Process Outsourcing (BPO)/ IT Outsourcing (ITO) transactions implemented at the receive location with or without seasoned transition management expertise. You may have experienced something - let's call it the "Transition magic" - with varied possibilities - good tricks, bad tricks or maybe no tricks et al. It's really a factor of: "Did the ‘magician' transition manager do a great job of creating something special or something different?"

Transition managers or Program managers, who play the role of magicians during an outsourcing deal, need to put together a great show to create magic for their business. Here are some ordinary illusions and some remarkable magic tricks, for executing a good offshoring and outsourcing transaction.

Illusion 1
Transition management is usually considered a generalist low-end skill. While few large organizations do invest, only some mid-size or small-size outsourcing providers invest in building this capability and use it as a selling tool to win their deals.

Magic
Transition management needs to be recognized as a specialized skill and it's high time for business leaders to realize and recognize that a transaction can be rarely successful by industry standards, if the transition is not done well. Just like large organizations focus on building core-migration expertise, it is even more critical for small outsourcing providers to invest in migration capability

Illusion 2
A great misconception in the industry is that only great solution and great service delivery are an integral part of any outsourcing deal. Transition management, on the contrary, is not as crucial to the well being of an overall transaction.

Magic
I often compare the sciences and marvels of transitions with the "Golden Gate Bridge" in my migration training sessions. Similar to the architectural marvel that connects San Francisco City to San Francisco peninsula, we need a bridge of a robust transition project management to reach a good sustainable service delivery.

Illusion 3
Industry management consider timelines, costs and "Voice of Customer" as the sole measures/metrics of successful transition.

Magic
This, more often than often is an incorrect and misleading perception. The above-mentioned factors are surely important, but a successful migration is also directly affected by the quality of solution. Deep and adequate understanding of customer as processes at due diligence or solution stage is necessary.

I have made best efforts to proliferate and support building this competency in various ways during my engagements with multiple Global BPO organizations. Let's partner and contribute towards this area, if we see some value here.

Global Sourcing Forum (GSF) 2010: Call For Speakers

Global Sourcing Forum (GSF) is the premier conference and thought-leadership forum covering various facets of outsourcing and globalization.

WHEN:
October 13-14, 2010
Pre-Conference Workshops: October 12

WHERE:
Marriott Marquis Times Square (new location!)
New York, NY USA

Theme: Managing Growth & Change in the New Relentless Economy

This premier event caters to the needs of senior business and soucing executives charged with leading their organizations through change during an economic period that has undergone significant structural shifts. Over the last decade, Global Sourcing Fourm has become the leading conference in the industry that goes beyond the common issues to provide insights and advice on improving competitiveness and increasing profit margins through strategic outsourcing.

Global Sourcing Forum presents a unique opportunity for decision-makers and management to evaluate strategic options, leverage global sourcing models and gain best practices knowledge from experience practitioners and thought leaders.

Click here for Conference Overview

Call for Speakers

Global Sourcing Forum invites business executives and industry leaders to submit a speaking proposal for consideration by our event Advisory Board. 

Submission Deadline is May 23, 2010

Three Conference Tracks:

1. Strategic Sourcing: Enabling the Agile Enterprise
2. Mastering Sourcing: Achieving Business Transformation through Collaborative Relationships
3. Best Practices: Maximizing ROI while Minimizing Risk

Pre-Conference Workshops:

• Achieving Sourcing Excellence: From Sourcing to Governance (For Enterprise Buyers)
• Selling to the CIO (For Service Providers)

Find Track descriptions, Session topics and Submission form here.

Who Will Attend?

• Senior Business Executives/CEOs/Owners
• Senior Sourcing Executives/Practitioners
• COOs/Operations Executives
• Business-unit Heads/General Managers
• CFOs, Financial/Asset Directors/Managers
• Purchasing/Procurement Directors/Managers
• CIOs/CTOs
• IT Operations Directors/Managers
• IT Services/Sourcing Directors/Managers
• IT Security Directors/Managers
• Corporate counsel/Attorneys/Regulatory
• Sourcing Compliance/Governance Managers

 For more information, visit http://www.globalsourcingforum.com