Metagrobolize

BPO Collaborations – There is a pressing need for them, but are they possible?

Rajesh Dhuddu — Thu, 28 Feb 2008 14:51:10 +0000

Dynamics of doing business in the BPO world are fast changing. Clients are increasingly seeking –
·         Global delivery with emphasis on near, mid and offshore locations comprising both established and new geographies,
·         Solution driven approach that requires a platform play in lieu of the classical lift & drop approach,
·         Combination of services covering different spectrums of BPO and KPO.
Given these requirements, it is impossible for several service providers to offer the same on their own, except for the few fortunate large service providers who possess Consulting, IT and Process Design & Delivery capabilities.
If this is the case
·         Should the new versions of BPO and opportunities there upon a prerogative of only the large and full service players?
·         Do the small and medium players invest substantial resources in time and money to develop these capabilities organically?
·         Or do these players invest capital on inorganic pursuits to fulfill the requirements.
No doubt the options mentioned above are valid. In addition to these, an important option could be BPO Collaboration. Some possible collaborations could be
1)       Niche IT companies with out BPO play collaborating with K/BPO providers. This will help IT companies introduce annuity revenue streams over the existing revenue streams that may be primarily project based and also help them deepen their client engagements. Collaboration with K/BPO service provider can also help IT companies pioneer services model (SaaS) which seems to be finding favor with the buyers of software services
2)       BPO service providers with delivery centers in a particular geography aligning with the BPO service providers in other geography to expand / create a global footprint on a win-win basis. This will also help BPO service providers to introduce new language capabilities in addition to the existing ones
I have listed just couple of possibilities above and there could be several others. Also, if we look at any IT company a small one though, they talk of partnerships either for system integration or software implementation etc. It is not uncommon too see a very large / marquee IT company collaborating with a small IT company for mutual benefit. This leaves me wondering why the same concept cannot be applied to the K/BPO companies.
Is the revenue potential a limiting opportunity or are there other compelling reasons? It will be interesting to obtain views from the readers of this post.

Leveraging 3rd Party Service Provider for Captive operations.

Rajesh Dhuddu — Thu, 21 Jun 2007 07:11:24 +0000

A number of global and regional companies have set up captive centers in remote locations to cater to their back office, product development functions. Does this mean,“There is no opportunity for firms to work with 3rd Party Service Providers and capitalize strengths of such providers for internal operations benefit”? Not really!!

Even a 100% captive operation has a fair and compelling need to work along with 3rd Party Service provider and reap benefits. The areas where this could be considered are

1) Rolling out pilot processes in newer areas for parent company that captive operation is not familiar with

2) Expanding service into newer geographies, where in size of operations makes a captive venture unviable and imbalances the effort and reward

3) Providing peak volume coverage through another operation / facility where in peaks are consistent but magnitude of such peaks is inconsistent and unpredictable

4) Requirement of a robust disaster recovery / business continuity sites for which green field investments are too expensive

5) Need for an internal performance challenger or requirement for external performance benchmarks to evaluate internal performance against

6) Infusion of new thoughts and incubation of new ideas

P&G is one such organization that balances captive operations with outsourced operations. They have termed the strategy as “Leveraging our best, with Their best” and has helped them to grow stronger, faster by tapping into the strengths of external partners. Also helped in smoother integration of newer processes that came into organization on account of new business acquisitions.

In a seminar I attended, a good number of strategic planners, decision makers, global shared service operations heads were looking for solutions in terms of how they can benchmark internal performance and infuse newer ideas apart from the ones that are generated internally. May be its time to identify an external, experienced BPO partner for a collaborative effort to accomplish internal objectives!

Smart Shoring by Indian Service Providers to drive India Offshoring

Rajesh Dhuddu — Thu, 14 Jun 2007 07:50:18 +0000

A recent report says that
Quote
“In the late 1990s, India’s software industry started booming. The threat of the so-called Y2K bug and an abundance of well trained, technically skilled and relatively cheap labour opened the country’s eyes to the potential of business outsourcing. The government soon realised that if it did not facilitate massive investments in telecommunications infrastructure, it would lose out on an enormous economic boost. Now, more than 300 000 fixed lines and more than 2 million cellphones are being added a month.
The National Association of Software and Service Companies (Nasscom) is saying that income from business process outsourcing (BPO) has increased tenfold over the past decade. The industry has set a revenue target of $60 billion (R435.5 billion) by 2010, up from an estimated $47.8 billion this year. Back in 1998, industry revenues were $4.8 billion. Nasscom estimates that as a proportion of national gross domestic product (GDP), the revenue aggregate of the Indian technology sector has grown from 1.2 percent in 1998 to an estimated 5.4 percent this year. Direct employment is more than 1.6 million people.

The US and the UK are the dominant markets, contributing to 67 percent and 15 percent of total exports respectively, but Indian firms are also exploring new markets. Banking, financial services and insurance are the main sectors, accounting for nearly 60 percent of the total, but manufacturing, retail, media, utilities, healthcare and transportation are growing rapidly.

India remains a choice destination for BPO and is key to any global BPO strategy, but Indian firms have started outsourcing to even cheaper destinations as they move higher up the value chain”.
Unquote
The reference to Indian firms outsourcing to even cheaper destinations is an interesting one. This is more to do with the BPO firms that are increasingly looking for “Smart Shore” options in countries such as China, Sri Lanka and others where in BPO is in early stages of adoption. Such an industry landscape allows the service providers to transfer work primarily at low end of the value chain and realize two fold gains -
1) Increase the process profitability by leveraging low cost resources in the Smart Shore locations who do not attrite faster &
2) Free up the existing trained resources in India to take on work at the higher end.
This seems to work well in case of non voice processes that are predominantly rules and decison based.