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How and Why Vendor Management Can Improve BPO Performance

BPO buyer organizations talk the talk when it comes to governance and include it in their contracts, but many are not walking the walk. Thorough BPO vendor management is inconsistent at best, and this puts BPO engagements at risk as poor management of the relationship typically erodes value over time.

That said, there is typically plenty of opportunity for interaction and communication to improve, and buyer organizations should be looking for ways to stabilize and properly execute their vendor management practices as they can provide significant value to both parties in a BPO service delivery relationship.

The Three Layers of BPO Governance
A critical part of BPO vendor management is ensuring that once the structure and cadence of the vendor-buyer relationship has been established, governance then occurs at three layers: tactical, operational, and executive. The tactical layer involves topics and issues which are resolved in daily or weekly meetings and are directly related to executing project tasks and resolving specific concerns affecting daily services activities. The operational layer involves topics and issues which are resolved in weekly or monthly meetings, such as reviews of metrics, reports on service level agreements (SLAs), proposed contract changes, and higher-level productivity and process improvements.

Meanwhile, the executive layer involves topics and issues which are resolved in quarterly or seasonal meetings between high-level executives on the vendor and buyer sides. These include escalated issues that significantly affect performance, trend analysis, and strategic issues such as mergers and acquisitions and/or changes in IT infrastructure which may change the direction of a BPO program. Elements of the executive layer are often overlooked, but highly beneficial to both parties in the relationship, such as helping to align strategic objectives.

In addition, the vendor can showcase other services in its portfolio that may provide value to the buyer, and the buyer can identify specific needs not getting adequately addressed. Both parties can share meaningful feedback and insights that are not talked about on a day-to-day basis, but can provide significant value over time.

Ensuring Your Scorecard Meets Your Needs
A well-executed and developed vendor scorecard is critical to effective vendor management. But while most BPO buyers keep some kind of scorecard, it often contains the wrong information. A properly developed BPO vendor scorecard covers three categories of metrics: contract compliance, operational performance, and strategic planning.

• Contract compliance measures the vendor’s fulfillment of contract obligations such as invoicing, reporting, and change control.

• Operational performance, which involves meeting metrics such as SLAs and key performance indicators (KPIs), ideally should align with contract compliance and provide clarity to any performance issues and resulting service level credits.

• Strategic planning relates to high-level decisions that set the future course of the BPO relationship.

A challenge for many BPO buyers is that a “green” scorecard is not necessarily indicative of the overall health of the vendor-buyer relationship – buyers may still be unhappy with the services they are getting. For many buyers, this is because they defined metrics that do not necessarily conform with performance aspects that are truly meaningful to the enterprise.  For others, this is because metrics such as SLAs and KPIs typically measure quantitative results, such as how many customer calls are handled per agent per shift at a call center. They do not, however, measure qualitative results, such as risk and customer satisfaction.

In addition, too many BPO buyers use their scorecards to measure generic, “industry standard” results. While there is nothing inherently wrong with this, unless a scorecard also measures results specific to a buyer’s situation, it will offer an incomplete picture of what is going on. For example, a buyer organization may routinely pay early in order to receive early payment discounts, and the critical performance measurements should take this factor into consideration.

Communication is Key
To properly measure both quantitative and qualitative results and ensure a healthy vendor-buyer relationship, BPO buyers should actively communicate with their vendors as part of any vendor management program. Too often, organizations don’t actively invest in communicating with their BPO vendors, and see both satisfaction and performance degrade. At a certain point, perception of performance becomes more important than performance itself, and poor performance becomes a self-fulfilling prophecy. It can take a while to gather enough evidence to determine whether a vendor management program is working.

Ideally, the vendor-buyer relationship should grow stronger over time as communication practices improve and vendor performance enhances credibility and trust.  That is when you know you have an effective vendor management process in place – when the strength of the interaction increases as the relationship matures.

Source:http://bpooutcomes.com/vendor-mgmt-bpo-performance/

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BPO Competitive Advantage Relies on More than Cost

The competitive advantage offered by outsourcing, relative risks of global sourcing, and differences between process improvement and innovation were among the topics debated by panelists in the G6 Under Practitioner Review at the North American Shared Services & Outsourcing Week conference held last week in Orlando, FL. Discussion on all three issues demonstrated the variance of industry opinions about how these issues are affecting the delivery of outsourcing services, as well as differing thoughts on the relative merits and shortcomings of the captive team and outsourcing models.

The G6 panel consisted of Capgemini CEO Hubert Giraud, CSC President of Global Sales and Marketing Peter Allen, Alsbridge CEO Ben Trowbridge, Deloitte Principal Susan Hogan, Genpact President/CEO Tiger Tyagarajan, and KPMG Principal of Advisory Services Bob Cecil.

Cost as the Basis of Competitive Advantage
When presented with the statement “Outsourcing providers sell one competitive advantage: cost,” panelists agreed that cost forms the basis of the competitive advantage offered by outsourcing, but is not enough in and of itself to support the BPO industry.

“When I was a (captive services provider) for the first seven years of my career, that was our statement,” said Tyagarajan. “We said we aligned culture and business objectives. But cost is a starting point with other advantages layered on top. In today’s world, it must be there.”

Trowbridge said that shared services providers must offer their client benefits other than cost. “You must provide points of value based on the needs of shared services organizations,” he said. “(Shared services organizations) need to ramp quickly and quickly transition their assets and resources to a global shared services footprint. You can’t do that on your own. Cost is not the answer to all situations.”

Global Risks Require Management
Panelists also generally agreed that global BPO, shared services and captive team sourcing carries significant risks which must be properly managed. In response to the statement “A shrinking pipeline, new low-cost locations, data security, and economic/political uncertainty make global outsourcing risky,” Trowbridge said there is a “tremendous” risk associated with global sourcing.

“The reason a location is low-cost has a variety of drivers: dramatic differences in GDP, crime and communications,” said Trowbridge. “It’s easy to make a ‘me too’ decision based on where the nearest expat school is to the shared services delivery location, but you can wind up with a risky location. The labor pool can shrink, a new competitor can move in.”

However, Trowbridge said a properly set up captive shared services center can have its location based on a “pure” assessment of local risk. “With a captive center, you can tour the world with a blank slate,” he said.

Giraud spoke in favor of a widespread outsourcing footprint.“The world is changing at a pace nobody can predict,” said Giraud. “All barometers are continually moving. The capability of a big organization with a global strategy is a competitive advantage. Outsourcing spread across the world is less risky than a captive center.”

Source:http://bpooutcomes.com/sson-bpo-competitive-advantage/

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Modern BPO Requires Agile Delivery

One of the key elements of an effective BPO engagement is the capability to deliver a very flexible and adaptive organization. BPO clients are continually moving in a world that is also continually moving, with unpredictable challenges relating to labor availability, currency exchange, infrastructure capabilities, and security popping up at any given moment. Suffice it to say in the 21st century, no company operates on “quiet mode.” Thus agility has become one of the most important criteria by which BPO clients evaluate their providers.

Facilitating the Life of Your Client
The ability of a BPO provider to accommodate and facilitate the constantly changing life of their client, essentially its agility, is of the utmost importance. One of the best ways to ensure this agility is to have the ability to build a global and integrated services delivery network that is present in multiple countries, allowing resources to be shifted if necessary in response to changing client needs and circumstances. Let’s look a little more closely at how globalization serves as a critical piece of the BPO agility puzzle.

Walking the Global Walk
It’s one thing for a BPO provider to set up shop in multiple countries and call themselves “global,” but true global agility goes deeper than opening international locations. A provider must accommodate all main languages of its different global locations, effectively manage multiple currency zones and time zones, and truly link all different global locations in real time.

For example, in the past 10 years, all of Capgemini BPO’s major clients experienced growing needs which extended their engagements, and we included new locations to accommodate this evolution. We were able to seamlessly move work from one platform to another. In a multi-client environment, it’s not too difficult to move people around, and it’s important to be able to do that to accommodate the needs of clients.

Keeping Up With Best Practices and Innovation
Another crucial aspect of BPO agility is keeping up with the latest and most innovative developments in best practices and having the ability to quickly introduce and adapt them to clients. Introducing clients to wider scale best practices such as Six Sigma, as well as best practices more specifically targeted to industry vertical or specialization, can greatly improve their operational efficiency and also improve the ROI obtained from BPO. Specific best practices will vary by client according to factors such as business sector and countr(ies) of operation, and each client will have unique best practice needs and requests that must be met in a timely manner.

Basically, BPO providers must move to continuously adapt, improve and innovate. Capgemini encourages people in our delivery centers to innovate ideas, for example one engagement generated more than 300 innovative ideas from across five delivery centers. These ideas, which originate close to the customer, help adapt and transform the way Capgemini provides BPO solutions to continuously drive value for our clients’ business.

And of course, innovation must occur on both sides of the BPO relationship. There needs to be a good understanding and fit on both the service provider and end user teams to analyze potential best practices and innovations, agree on which ones best fit the specific business needs of the client, and then jointly enact them.

Agility – the Modern Way of Conducting BPO
Agility represents the modern way of conducting BPO. The real major change in what BPO providers are doing is that instead of telling clients how they should conduct their business, providers are now listening to and analyzing clients on an ongoing basis to help them conduct their business in whatever manner best suits their needs at that moment.

Ultimately, in today’s business environment, if you’re not moving, you’re dead. That applies to both sides of the BPO equation.

source:

http://bpooutcomes.com/cg-giraud-agility/

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BPO Insights from the MIT Sloan CIO Symposium

Last week, I attended the MIT Sloan CIO Symposium held at historic Kresge Auditorium in Cambridge, MA. While BPO was not the central topic of discussion, I was surprised by how many of the sessions and panels I attended featured insights, forecasts and theories that directly related to BPO. As I sort through my notes from the event one final time, I thought I would briefly review some of the most important takeaways for senior executives involved in or considering becoming involved in BPO.

Outsourcing Is Becoming the Norm
Distinguished panelists including Professor Erik Brynjolfsson, Schussel Family Professor of Management at MIT Sloan, Professor Anant Agarwal, director of MIT CSAIL, and MIT Media Lab Director Joichi Ito agreed that the traditional model of work being performed by full-time employees with job security is quickly becoming obsolete. “A few people can scale their talents and creativity to make billions of dollars,” Brynjolfsson said. “And those who are slightly less creative may be left with no job whatsoever. This reorganization of the economy will happen whether we want it to or not.”

As a result, all three experts said we are headed for a “superstar economy” where a few creative geniuses hold most of the wealth and job security, and everyone else exists in a state of permanent competition. The panelists recommended project managers help make this new economic model work by creating “scaffolding” for innovation based on open source APIs accessible to anyone in the world.

Essentially, this “superstar economy” translates to most work being performed through global BPO, although individual freelancers would play a much larger role than they do currently.

If It Isn’t Core, Outsource It
A panel on IT outsourcing offered some basic advice on how to pick what systems to outsource that can easily be extrapolated to the broader world of BPO. ““If technology becomes a commodity, outsource it or share it internally,” said Time Warner SVP/CIO Bill Krivoshik. “Ask yourself, am I delivering a product or service in a competitive way with the market, or can someone else do it better, especially based on scale?” added Tom Sanzone, SVP of Booz Allen Hamilton.

While outsourcing non-core systems and processes may seem like a no-brainer, panelists were encouraging outsourcing buyers to assess internal resources as part of a competitive marketplace that includes external resources. The underlying strategy actually ties back rather nicely to the idea of the “superstar economy,” where everyone and everything is in competition and there are no guarantees against getting replaced if an outsourcer can provide equivalent or better performance at a lower price.

The Challenge of Culture
A panel on how businesses can advance to the 3.0 level with their enterprise mobility strategies may not immediately seem like a discussion with much relevance for BPO buyers, but a conversation that developed about the challenges business culture can pose to developing a state-of-the-art mobile program contained insights that can be applied to developing a state-of-the-art BPO program. “Companies do a crappy job explaining to people how to use their new mobile apps,” said Eric Scace, CSO of WWPass. “Just because someone can IM me 24 hours a day doesn’t mean it’s appropriate.”

Similarly, many companies do a poor job explaining how BPO or shared services actually work to employees who are affected by the change, resulting in unnecessary adjustment problems and even friction between in-house and outsourced personnel. And Todd Schofield, head of enterprise mobility at Standard Chartered Bank, said too many companies suffer from a “device-driven mindset” that focuses on mobile hardware rather than software. As a result, when devices inevitably become obsolete and need to be upgraded, there is a “major upheaval,” compared to the relatively smoother process of upgrading software.

In the world of BPO, companies often focus on supporting infrastructure to the point of limiting flexibility and agility in the actual process being outsourced. Ultimately, the MIT CIO Symposium urged attendees to be open, flexible, agile, and not biased in favor of in-house resources or any particular piece of infrastructure. These attributes are also highly helpful to practitioners of BPO, or any other business discipline, when you think about it.

Source:

http://bpooutcomes.com/insights-mit-cio/

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São Paulo’s Property Bubble: How Will an Overheated Market Impact Tech and BPO?

 

iStock 000012464357XSmall 2 300x199 São Paulo’s Property Bubble: How Will an Overheated Market Impact Tech and BPO?

Last week O Globo reported that 10 out of the 22 Brazilian builder firms suffered an aggregate loss of 3.2 billion reals in the first trimester, due to stalled projects and rising costs.  Analysts tracking the market also concede that a significant correction is likely to hit in 2012.  However, the degree to which a major depreciation will impact Brazil’s economic growth (and subsequent demand for outsourced enterprise solutions) may not be as extreme as some fear.

In fact, a property crash could deter some foreign capital in-flows; there is skepticism over the country’s macro fundamentals as reflected in last week’s issue of the Economist.  Despite that, the Brazilian consumer will certainly welcome cheaper rents and mortgage payments, as the lack of affordable housing and office space further stunts economic expansion.

A Top-Earner Bubble

According to London-based research firm Capital Economics, “the current pace of credit growth [in Brazil] is unsustainable.  Household balance sheets look stretched and there are signs that the rapid expansion of credit is stoking bubbles. We think the housing market may be overvalued by 30-50%.”Data from the FIPE ZAP property index also show home prices in Rio and Sao Paulo increasing by 22 percent over the last 12 months and 135 percent over the last three years.

So far the number of people that actually own homes in urban centers and that can afford to buy at current prices is actually quite small. According to Brazil-based low-income property investor Ruban Selvanayagam, “in the larger metropolitan areas of Brazil the ratio between income levels and property prices is completely disproportionate. One of the major mistakes that investors in developed countries made was to ignore affordability as an indicator of true market value.”

And while rising incomes, expanding credit, exploding foreign direct investment (FDI) and speculator exuberance have all contributed to the growing demand for real estate, Brazil actually suffers from a serious shortage of housing. Various estimates point to a deficit of 8 to 10 million homes, the majority of which are in the low-income category.  “Outsiders tend to forget that Brazil is still a developing economy and that most people live in favelas and very inadequate housing,” explained Ruban.  Inflated property prices have also undermined government programs like “Minha Casa, Minha Vida,” established to help low-income families buy homes.  Lending caps for the programs are set at levels much lower than what current market conditions make favorable to investors.

Economic Impacts Could Be a Net Gain

Investors are rightly cautious of what’s happening in Brazil, considering the havoc that subprime lending caused to the U.S. and global economy. But while the market distortions that led to the U.S. housing crash were utterly crippling for most involved, the Brazil bubble could actually create more winners than losers. The situation here differs because Brazil’s housing market is still small relative to developed countries.  Real estate credit as a percentage of GDP is only five percent, while in countries like the United States and the UK the number is more like 70 percent. This suggests that most homeowners live relatively debt free – probably in legacy homes passed down within families – meaning that a market correction would only hit certain submarkets and not to the degree witnessed in the U.S.

The minority that will get hit the hardest by a market correction will be the large investors buying in bulk and recent homebuyers.  Undoubtedly, a market drop would be welcomed by aspiring homeowners and inner-city renters, as rental prices have also skyrocketed in line with sale prices. So while large investors and construction firms might record losses in the short-run, prices more in-line with income levels could free up consumer purchasing power, as well as the debt financing markets.

Brazil’s major lending institutions are in good financial health and mortgage delinquencies are low.  “Banks continue to have very tight lending criteria that adhere to international standards,” stated Ruban.  Furthermore, according to data from the World Bank (complements of Jones Lang LaSalle), real estate credit as a percentage of GDP made a big three percent jump since 2009 after laying flat for over six years.  This is yet another classic signal that a rapid and sudden hike in demand for housing is outstripping supply.

And while country GDP growth has slowed, the unemployment rate holds at a record low of 5.6%, rising nominal incomes (9.2% CAGR) underscore the critical role of the rising consumer class as Brazil’s economic engine.

“You can negotiate hard particularly if you have cash in hand and are aggressive.”

High Price for Commercial & Industrial

According to Sao Paulo based Shay Coker of the Tenant Representation Group at Jones Lang LaSalle, “commercial developers are doing extremely well because they have a product that continues to be in very high demand.”  Land for office, retail and industrial is in short supply and doesn’t really compete with residential properties. “Rents in Rio are higher than in Sao Paulo and have increased 140 percent in the last 10 years, but we don’t expect a major drop in the market.” Some potentially good news for contact center operators is that rent hikes for Sao Paulo offices are beginning to slow.

Nevertheless, it is very unlikely that we would see the type of massive correction that analysts forecast in the residential market to hit commercial properties.  According to Coker, “rents for offices will likely slow and remain around their current rates.” For this reason many vendors entering the Brazil market are looking outside of Rio and Sao Paulo to second-tier markets like Curitiba or within the SP suburbs like Campinas.

Could be Time to Buy

Selvanayagam asserts that while Brazil is a complex and difficult market to break into, there are still real opportunities for investors that have done their due diligence and get to know the market.  Ruban also surmised that the current environment is in a way a buyers’ market, given the uncertainty over the direction things are heading. “You can negotiate hard particularly if you have cash in hand and are aggressive.” Furthermore, part of this uncertainty stems from the fact that property market valuation is still underdeveloped in Brazil.

In short, real estate prices are poorly tracked making it difficult to gauge real market value.  Hasty deals based on limited experience and information will inevitably impact careless investors.   In the long-run, the sooner market adjustments bring investor expectations back down to earth, the better conditions will likely become for more sustainable economic growth.

Source:

http://nearshoreamericas.com/brazil-property-bubble/

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BPOs are coming out of the coder shadow

Is the business process outsourcing (BPO) servicessegment finally emerging from the shadow of information technology (IT) services?

It sure seems to be trying. In fact, last quarter, most BPO subsidiaries and firms grew at a faster clip than their IT counterparts.

Tien-tsin Huang and Puneet Jain, analysts with JP Morgan, said BPO major WNS’ robust revenue growth of 2% sequentially and 7% year-on-year last quarter underlines buoyancy for this year.

“WNS is seeing benefits from restructuring… and healthy demand environment for BPO services. The company is also seeing a nice build-up of large contracts in its pipeline. WNS needs to win a couple each year to drive next year’s revenue growth,” they said in a note last week.

Back home, even HCL saw its margins salvaged by a turnaround in the BPO numbers.

“While… results (of HCL) are ahead of expectations with positive surprise on margins, a large part of the beat was driven by turnaround in the BPO segment,” Religare analysts Manoj Singla, Rumit Dugar and Udit Garg said in a note on Wednesday.

Ankita Somani of Angel Broking said the demand environment for BPOs was improving as clients looked at globalisation of delivery capabilities, which was driving transformation and enterprise-wide cost efficiency.

“HCL is continuously investing in building platforms for non voice-based businesses in this segment. Demand is seen in areas of cloud, mobility, social media and multi-tower end-to-end process data,” she wrote in her report.

Even Sid Pai, managing director and partner, TPI, the third-party outsourcing advisory, said one reason BPO revenues were climbing was it was no longer a back-office support kind of work but more higher-end such as business-oriented core functions that customers were seeking.

According to Samiron Ghoshal, partner and national leader, IT advisory & global talent, Ernst & Young, there were two main factors driving the recent BPO growth.

“First, peer BPO deals (contact centre) are not happening so much anymore, and there are more KPO-linked deals. Secondly, a lot of deals which took place in the last 5-10 years are coming up for renewal in the next 12-18 months. The new renewals are also seeing some change in strategy, where processes are being divided between players, instead of giving out bundled contracts for all BPO services to a single player as was the case earlier,” said Ghoshal.

This, he said, worked in favour of companies like HCL, who have more value to add than pure voice BPOs.

“However, this sudden rise in BPO gains can be looked at as a sporadic change and not a complete lifting of the BPO segment since it impacts Opex (operational expenditure) spends and not Capex (capital expenditure) spends,” said Ghoshal.

Ritesh Idnani, chief operating officer of Infosys BPO, said in a recent interview to DNA that he expected the BPO market in India to grow faster than the IT market this fiscal.

Keshav Murugesh, CEO, WNS, said what had turned the tide in favour of BPO was the segment’s focus on non-linear services as well as more consulting and technology-based offerings. He said most firms were slowly moving away from traditional BPO offerings.

“For long, too much attention has been focused only on the IT functions of a BPO process whereas there is a great difference between an IT and BPO buyer on the strategic side. In the current recessionary climate, they are now outsourcing more of their non-core functions to BPOs like WNS, which can provide them with new ideas to improve their top-line and bottom-line,” he said.

IDC has predicted a compounded annual growth rate of 19% for the offshore BPO market in the next five years, the bulk of which is expected to come from India. Recently released TPI index shows that while outsourcing contracts were down 37% sequentially and 20% annually, BPO contracts were up 30% and 27%, respectively for the same periods.

TPI’s Pai, however, does not see BPO revenues overtaking IT services revenues in the near future mainly because of the way its contracts are structured.

“I don’t see it (BPO segment) becoming larger than IT services because of the way it is bought. I believe IT companies would continue to go after IT services contracts,” he said.

Source:

http://www.dnaindia.com/money/report_bpos-are-coming-out-of-the-coder-shadow_1679374

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BPO employment opportunities still robust

Ninety-eight percent of applicants registered in the country’s online job matching system, the Phil-JobNet, prefer local jobs even as employment opportunities in the business process outsourcing (BPO) sector continue to remain robust.

Labor and Employment Secretary Rosalinda Baldoz said opportunities in the BPO sector, particularly for call center service workers, rose consistently from the first to the third quarters of 2011, sustaining their number one position among all other Phil-JobNet vacancies and affirming the Philippines’ status as the BPO hub of the world.

The Bureau of Local Employment (BLE) report showed that BPO job vacancies reached 11,237 in the first quarter; 13,454 in the second quarter; and 15,130 in the third quarter of 2011.

“BPO companies continue to expand their business operations in the Philippines. On the demand side, from the year 2010 to the past three quarters of 2011, call center service workers hold the number one position in the vacancy list,” said Criselda Sy, BLE director.

To further boost employment in the BPO sector, Sec. Baldoz noted that the Technical Education and Skills Development Authority (TESDA) is expanding to key cities of the country the further development of skilled workers capable of filling the in-demand opportunities in the BPO sector.

Source: http://www.mb.com.ph/articles/346473/bpo-employment-opportunities-still-robust

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Infosys BPO to acquire Australian firm Portland for AUD 37 million ‎

Infosys BPO, the back office subsidiary of Infosys, has acquired Australia-based sourcing and category management services firm Portland Group. The A$37-million all-cash deal is expected to be completed by early January 2012.

According to Infosys, which has often been criticised by analysts and industry watchers for not being aggressive on acquisitions despite sitting on almost $4 billion of cash, the deal will help it establish presence in the Australian market with more offerings in the value-added segment.

"The deal will essentially enable us to have a reach into the Australian market. It will enhance our sourcing and procurement capabilities. Infosys’ focus has always been on value-added services and this will add to it," Swamithan D, CEO and MD of Infosys BPO, told ET.

Portland Group has over 100 employees with a reported revenue of approximately A$31.3 million for the fiscal year ended June 30, 2011. "Portland Group has over 100 procurement specialists with domain expertise and some 40-odd clients. None of them is our clients as of now. The deal will certainly help us intensify our service offerings and take sourcing and procurement functions to a higher level," he added.

Source: http://economictimes.indiatimes.com/tech/ites/infosys-bpo-buys-australia-based-portland-group-for-aud-37-mn/articleshow/11187711.cms

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2011: Promising start, but a cautious outlook for IT-BPO industry – Part 2

 

The start-up ecosystem in India is also at an exciting juncture with more than 1000-plus start-ups focused on building innovative applications and services around the cloud, mobile, internet and SMB customer. This ecosystem needs nurturing and the product vision can become a reality much faster. Growth does bring with it an associated set of challenges and the war for talent was again visible with high attrition rates and salary increases.

Anti-outsourcing rhetoric reached a crescendo in the lead-up to the 2010 US mid-term elections. With economic growth weak and unemployment high, politicians with little economic progress to talk about resorted to protectionist hyperbole and blamed outsourcing, among other practices, for job losses. However, the visit of President Obama to India did help allay concerns on this issue. There was recognition that the expanded economic ties between our two countries are a two-way street that benefits both. Growth in India’s outsourcing industry should not be seen as a threat by Americans but as an opportunity to make enterprises more efficient and productive.

2011 will begin on a promising start. However, given inter-dependencies with global economies, there will be a cautious outlook and an expectation to measure industry contribution beyond a growth rate. It will also be the beginning of a new decade, which will require the industry to focus more on innovation and new models of growth. 2011 hopefully would also see the government in the centre and state focus on enhancing economic growth and long-term policy implementation.

2011 hopefully would also see the government in the centre and state focus on enhancing economic growth and long-term policy implementation. We continue to be optimistic on the potential of this industry to transform global businesses and transform India.

There was recognition that the expanded economic ties between our two countries are a two-way street that benefits both. Growth in India’s outsourcing in-dustry should not be seen as a threat by Americans but as an opportunity to make enterprises more efficient and productive.

2011 will begin on a promising start, however given inter-dependencies with global economies; there will be a cautious out-look and an expectation to measure the industry contribution beyond a growth rate. It will also be the beginning of a new decade, wherein opportunities will be different from the past and will require the industry to focus more on innovation and new models of growth. 2011 hopefully would also see the government in the centre and state focus on enhancing economic growth and long-term policy implementation. We continue to be optimistic on the potential of this industry to transform global businesses and transform India.

Perhaps US Commerce Secretary Gary Locke put it best: "There are some people who are very concerned (about the out-sourcing of jobs to India). We have to look at the total picture in terms of jobs. Indian companies have invested in the US, and U.S. companies are selling their products to India, creating jobs back home."

Source: http://economictimes.indiatimes.com/infotech/ites/2011-promising-start-but-a-cautious-outlook-for-it-bpo-industry/articleshow/7147941.cms?curpg=2

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2011: Promising start, but a cautious outlook for IT-BPO industry – Part 1

 

‘Don’t waste a crisis’ is a popular paraphrase and the industry performance in 2010 demonstrates how the IT-BPO industry was able to use the crisis as an opportunity. Growth, Transformation, Diversification, Hiring… these were the headlines of 2010.

In many ways, I believe that 2010 was the inflection point for the industry – the maturity of the domestic market, product ecosystem of start-ups, growth in core markets and a recognition that global sourcing is not only about cost savings, but fundamentally transforming customer business. These are trends that will reshape the industry in the decade ahead.

However, the year did have its share of challenges in India and globally. The rhetoric on protectionism created an environ-ment of uncertainty and laid open a debate on the perceived benefits of globalisation. Issues of corruption dominated attention in India leading to a negligible focus on policy issues.

The year started on a subdued note in the backdrop of the recession and the industry clocked 5% growth by March, 2010. However, with rebound in global tech budgets, the industry is expected to exceed the initial estimates and total revenues of more than $72-75 billion in FY2011. The amazing part of this growth is the ability of large Indian IT companies to defy all traditional economics and grow faster than the industry, aggregating growth rates of 18-22%.

Growth in the year was broad-based with IT services taking the lead, BPO being relatively slow and the ER&D market wit-nessing maturity. Each of these segments have different sets of growth drivers. However, a common theme during the year was customers demanding more of transformational outsourcing. India-leveraged providers have the lead here and rapidly demonstrated their capability to offer solutions to meet this need. Adaptive business models that included fixed-price projects and managed services, provided customers the ability to do more with less. In addition, a focus on platforms, analytics, IP-led innovation and process re-engineering enabled global customers to transform their businesses.

An interesting conversation with the head of a Fortune 500 company in New York well summarised this trend: “We are ex-panding in India, not for the cost arbitrage, but our need to get more efficient, become lean and get products to market faster. We don’t need a vendor, we need a strategic partner”.

In fact, if the last-quarter results are any indication, the industry had the highest net client addition in the last two years and there was stabilisation in the onsite effort and billing rates. Focus on non-linearity resulted in revenue per employee increasing by 4% and fixed-price projects accounting for 40% of the total project pipeline. Expanding its global presence, the industry set up delivery centres across global locations and more importantly – onshore at the customer country. The mantra is clearly globalisation – global footprint, global workforce and global customers.

Growth and maturity of the domestic market saw many large and mid-tier companies building an India practice and compete for large government and corporate contracts. The highlight of the year was the rollout of the ambitious UID project and the exciting opportunity that it provides for applications to be built for financial inclusion and healthcare.

Source: http://economictimes.indiatimes.com/tech/ites/2011-promising-start-but-a-cautious-outlook-for-it-bpo-industry/articleshow/7147941.cms

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