Global Services - Outlook 2012 issue

Outlook 2012 Expert Articles from
Survey Analysis p. 8 Sourcing Advisors p. 81

www.globalservicesmedia.com

O utloo k

Where do we go next?

The Way Ahead
Grim economic outlook, mounting
expectations, bigger challenges...
and few lessons to be learnt

p.20

Editor’s Note

Outsourcing in
2012: Surely,
Politics Will Not
Ed Nair, Editor
ed@cybermedia.co.in Matter

I
t being the election year, this is the time to pull out the political cards
against outsourcing. The anti-outsourcing machinery has already begun to
stir— the proposed Call Center Bill, restrictions on L1 visas, and what not.
Our survey indicates that politics will not have any impact on outsourcing.
Businesses have adopted outsourcing, or more specifically global sourcing
of services, as a strategic business practice. This is because organizations
One should expect
believe that not only does outsourcing help save costs, but also that out-
modest, guarded
sourcing frees up organizational bandwidth to pursue strategic growth
growth in out-
opportunities that matter more to the business.
sourcing this year.
One should expect modest, guarded growth in outsourcing this year.
Organizations will
Organizations will want to do it cheaper and better, but face minimal disrup-
want to do it cheap-
tive change. Therefore, cloud as an infrastructure service would see adoption.
er and better, but
But far-fetched experiments in cloud computing has been voted out of favor.
face minimal disrup-
Service providers can expect strong pressure on pricing because clients
tive change.
would force price renegotiations to get more ‘mileage’ from their trips with
service providers. Clients would also ‘maintain’ their vehicles, call it out-
sourcing relationships, using various management tools, to get the best
performance.
The good news is that leading service providers are geared to handle the
demands. Over the past decade, both buyers and service providers have
matured to this level. Our interviews with nearly 30 service providers during
the month clearly reveal this and more.
This issue is packed with insights and ideas about the outlook for the
coming year. Do let us know your opinions, comments, feedback, insights by
writing to me at ed@cybermedia.co.in.
Wish You a Very Happy New Year!

Contents
8
GLOBAL SERVICES OUTLOOK 2012 SURVEY

20
The Way Ahead
Lessons from the Past and Some More 22
Services Spends Will Happen Despite Budget Cuts 30
The Changing Landscape of the Global Services Industry 36
IT Outsourcing Slow, Deliberate March 43
FAO: Helping Really Handle the ‘Finance’ Function Better 49
Analytics Outsourcing 2012: What do the Cards Say? 53
Contact Centers Being Redefined 58
A Cautious Optimism Continues To Drive HRO 63
3 Pointers by Industry Leaders 68
What Service Providers Say? 76

Pradeep Gupta Smriti Sharma Global Services
Chairman Managing smritis@cybermedia.co.in Cyber Media (India) Ltd.
Director Smita Vasudevan CyberHouse, B- 35, Sector 32
Cyber Media (India) Ltd. smitav@cybermedia.co.in Gurgaon-122001, India
E. Abraham Mathew Sourabh Chandra Pushp Tel: +911 24 4822222
President sourabhc@cybermedia.co.in Fax: +911 24 2380694
Ed Nair Design
Editor, ed@cybermedia.co.in Suresh Kumar
Satish Gupta sureshk@cybermedia.co.in
AVP, satishg@cybermedia. Nitin Kumar Srivastava Contact:
co.in nitinks@cybermedia.co.in globalservices@cybermedia.co.in
Gary Bindra
gurdeepb@cybermedia.co.in Disclaimer: All rights reserved. No part of this
Niketa Chauhan publication may be reproduced by any means without
niketac@cybermedia.co.in prior written permission from the publisher.

81
EXPERTS
Global Services Trends: 2012 82
MARCH 15
Future of Outsourcing in 2012 89
NEW YORK 94
A Year of a Profound Change in Software Development CITY
Small Frames and Big Pictures: Keys to Success in 2012 100
Predictions on the Cloud Age: 2012 104
Knowledge Services Will be Most Important in 2012 Growth Strategies 107
IT Outsourcing in 2012 111

March 15, 2012 | New York City
|
www.globalservicesconference.com

8 G S S U R V E Y

GLOBAL SERVICES
OUTLOOK 2012 SURVEY

Tempered Expectations,
Moderate Outlook

GlobalServices www.globalservicesmedia.com January 2012

9

While the outlook for outsourcing is modest, the
direction is positive. Reducing operational costs
remains the prime driver, but organizations are
equally looking at outsourcing to create bandwidth
for pursuing strategic growth.

Ed Nair

G
lobal Services did an online survey in the second
week of December 2011 to gauge the sentiments
of how the services industry would fare in 2012.
The participants of the survey included all stakeholders in
the industry- services buyers, service providers, and sourc-
ing advisors- at a global level. We received 149 responses
that included services providers among the top 50 global
vendors, 30 buyer organizations with two-thirds being $1 B
plus organizations, and a near complete representation of
top advisors in the industry. Here are the top-line findings:


10 G S S U R V E Y

Overall Outlook is Modest

The overall outlook for the global services industry (answered in terms of change in the level
of outsourcing activity) is encouraging despite all talk of the adverse impact of the worsening
global economy on the industry.

Nearly half of the sample (46%) expects a moderate increase of outsourcing activity in 2012.
A quarter expects to maintain current levels of activity. Taken together, it means that over
two-thirds of the sample have voted for a positive year. Considering the fact that this includes
most organizations that currently have significant level of outsourcing activity, the overall out-
look is definitely encouraging.


12 G S S U R V E Y

Business Drivers for Outsourcing

‘Reducing operational costs’ remains the top driver for outsourcing services. In fact, this was
the only driver that was rated the highest amongst ‘highly important’ drivers. This is under-
standably so in a tough economy with organizations facing the threat of budget cuts. Also,
companies believe that there is a lot more scope to cut operational costs by increasing the
level of outsourcing activity.

The second closest dominant driver that emerged was ‘Create more bandwidth for strategic
growth’. Organizations appreciate that strategic growth has become all the more important
during the prolonged phase of economic downturn and that outsourcing can help release
management bandwidth to pursue strategic growth opportunities. Underlying this fact is that
organizations would want to do more with existing resources.

Interestingly, these two drivers taken together, suggests that the core value propositions of
outsourcing driven by globalization of services have remained unchanged.

An accompanying driver, the third most important one is ‘Gaining access to skills and resourc-
es not available’. This bears testimony to the value organizations find in pursuing globalization
of services. It also bears evidence to the continuing rise of new global destinations and scaling
up of existing ones.


14 G S S U R V E Y

Do Inhibitors to Outsourcing Remain the Same?

Indisputably, cloud computing has been hailed as the next shift in IT architecture and it has
been named as the game changing force in IT because of its disruptive nature. Precisely that’s
the reason cloud computing could become a temporary inhibitor to outsourcing.

More than half of the respondents cited ‘Need to rethink issues in light of adopting cloud-based
models’ as the top inhibitor. Amidst the hype about cloud and its implications on how IT and IT
services get delivered, there is increasing uncertainty on how to adopt these models. Organiza-
tions do not want to make the wrong investments. They would rather wait for the dust to settle
down so that both IT strategy and sourcing strategy work in sync in the longer term.

The next significant inhibitor is equally interesting. After having outsourced many activities,
‘internal organization is not convinced about the merits of more outsourcing’. Why would this
be? One reason is that vendors have been able to deliver cost benefits till now, but have not
been to specify definite plans for more cost reductions. The other two reasons, which also figure
as strong inhibitors, are: a) ‘Reduced budgets’—It is assumed that additional outsourcing en-
tails new upfront investments in managing outsourcing relationships. Under reduced budgets, it
is difficult to add new allocations. b) ‘Organization not ready for change’— Additional outsourc-
ing would mean more organizational changes to be embraced. Organizations are not in a mood
to take on the additional burden of change.

Organizations are willing to reach out for more outsourcing if ‘more can be done with less’; less
investment and less change. Else, it is an inhibitor.

Interestingly, the political and social factor about outsourcing, bears no credence.


15


16 G S S U R V E Y

Investment Areas in ITO and BPO

The responses resonate with the earlier finding of a moderate increase or maintenance of
outsourcing at current levels.

The top three areas in IT that are likely to see an increase in activity are:
1. Application development and maintenance (including packaged business applications)
2. Infrastructure management services
3. Staff augmentation services (closely tied in with Testing Services)

Responses for BPO were much more muted. The growth spots here are:
1. Industry-specific processes
2. Analytics outsourcing
3. Customer care


Hungary Belarus
Poland Russia
Sweden Ukraine
Switzerland Kazakhstan
Germany
UK

United States

Excellence in Software
Engineering
EPAM Systems a leading global IT services provider with delivery centers
throughout Central and Eastern Europe focused on complex software
product development services, software engineering and
www.epam.com vertically-oriented custom development solution.

Experience: since 1993 Services Industries
Talents: 7,000+ Product Development ISVs and Technology
Quality: CMMI Level 4, SAS
70 Type II, ISO 9001:2000, Application Development Banking Financial Services
ISO 27001:2005 Enterprise Application Platforms Business Information
Application Testing Media
Application Maintenance Support Travel and Hospitality
ASM Infrastructure Services Retail CPG
Emerging Vertical

Our Awards Sample client:

01 1
1

1 1
1 1
10 0 1 010 1 1 0 0 1 1 0 1 0 10 1 0 0 1 1 0

18 G S S U R V E Y

Trend-spotting in Global Sourcing

In the survey we checked out the strength of agreement to certain trend statements in the
market. This should help us in gauging the definiteness with which these trends would rule.

The three top-ranking and therefore definite trends are:
1. Pricing pressure and price negotiations will be common throughout 2012.
2. Companies will adopt vendor management tools, benchmarking and performance
management tools to manage their outsourcing relationships.
3. Cloud-based infrastructure services will move mainstream.

Opinions are mixed on trends such as:
a. Transformation through outsourcing
b. Platform-based BPO

Opinions are inconclusive on issues such as:
i) 2012 will see very little new scope being added, most outsourcing will be in the form
of project extensions.
ii) Convergence of IT and BPO will remain confined to niches.
iii) Investments in analytics do not measure up to the hype attached to it.


19

OUTLOOK 2012 SURVEY METHODOLOGY

Global Services conducted an online survey in early December. The survey was conduct-
ed within the Global Services reader community, two-thirds of which is based in the US.

Sample Profile

Total number of qualified responses= 149
Number of services buyers= 30
Number of service providers= 71 (representing 54 companies)*
Number of advisors/ analysts/ consultants= 48 (representing 28 organizations)*

* Multiple responses from companies were allowed..

MARCH 15
NEW YORK CITY

|

GlobalServices Welcome to the 7th Ann
www.globalservicesmedia.com January 2012

Outl oo k

t?
ex
n
e go
ow
ed

her
W

The Way Ahead
Grim economic outlook, mounting

22 O U T L O O K 2 0 1 2

Global Services 2012:
Lessons from the Past and Some More
The lessons from the recession economy led to permanent
changes in making outsourcing more effective. While these
will continue to hold, service providers will need to focus on
developing deep skills in business and industry domains,
leveraging opportunities in new geographies, and managing
risk to ensure scalable growth.

Smita Vasudevan

T
he year 2011 was tough indeed. The global
economic turmoil has had a knock-down
impact on most areas. The strains were
visible on the outsourcing industry too. The pace
of activities was rather slow and experts mark the
year as one with relatively sluggish growth.


24 O U T L O O K 2 0 1 2

Sweet Lessons from the Recessive Economy
Interestingly, even though the pace was slow, the transformations happening around
the industry like the quest for more business value (albeit in the form of cost savings and
more), increased accountability placed on service providers to deliver value and business
outcomes, heightened awareness for performance management and the recognition of the
need to manage and measure risks, were permanent. These are the sweet lessons from the
adversity of a recessive economy.
European and US enterprises will continue to battle rising costs and productivity issues.
The struggle has also resulted in a huge surge in what these companies expect out of their
outsourcing deals. Strategic outsourcing relationships, emerging verticals and new geo-
graphical areas were increasingly looked for by buyers, so that every possibility of efficiency
gain is made use of.
The economic outlook for 2012 does not augur the rapid recovery of the world economy.
Therefore, changes are here to stay and some trends may deepen.
The basics still remain the same as cost still continues to be one major driver. Just that
the focus has grown much beyond that and the aim is to build strategic partnerships that
help contain costs and at the same time attain long term objectives. The hunt is for service
providers that can add value and bring a mix of everything-low cost, innovation and overall
efficiency.

Not an Ugly Noun- 'Verticalization'
Efficiency improvement is something all enterprises are looking for, irrespective of
what industry or vertical they belong to. Demand is thus likely to come from most areas.
Healthcare is expected to consume a significant chunk of outsourcing services. Traditional
areas like banking and financial services will see growing demand for e-banking, online
authentication and automation services. Hospitality is another opportunity area; a grow-
ing number of hotels will use technology like GDS (Global Distribution Systems) and IDS
(Internet Distribution Systems) to increase online visibility and enable guests to book
online. “In addition, hotels are looking at outsourcing non-core technology functions like
managed services, internet marketing and loyalty
management” said Binu Mathews, President and
COO, IDS Next.
'Verticalization' will be an important trend to
watch out for. Service providers need to have
improved domain knowledge to be able to play in
different verticals. It goes beyond understanding
the technology requirements of different verticals to
developing deep-seated domain expertise to bring
about changes at the fundamental level of business
model.


26 O U T L O O K 2 0 1 2

“ Hospitality is a big opportunity area. Hotels are looking at
outsourcing non-core technology functions like managed
“
services, internet marketing and loyalty management.
—Binu Mathews, President and COO, IDS Next.

Hunt for New Geographies
When the going gets tough it is natural for enterprises to look for greener pastures. The
search for destinations was for a long time driven mainly by cost considerations. Offshore
locations like India and China have thus always been prominent spots on the global out-
sourcing map. Though these established locations still hold their value when it comes to
advanced service requirements, unexplored areas are increasingly being sought after for
their untapped potential. Tier II and Tier III locations in these countries are hence coming
out to be more attractive.
Multiple language capabilities have become more important as enterprises look for a
global presence. Cultural affinity, booming infrastructure, cheap workforce are few other
factors driving the hunt for new destinations. Certain regions in Europe and Middle East
are seeing high nearshore demand from United States and Western European businesses.
Latin America too is gaining prominence for its Spanish language capabilities. Amit Singh,
Partner, Avasant, says, Spanish is a major language requirement for the US. Some support is
coming from Philippines. But most of the Spanish language work is going to Latin America.”
Geographical proximity, similar times zones and cultural affinity make these locations
attractive.

“ Spanish is a major language requirement for the US. Some
“
support is coming from Philippines. But most of the Spanish
language work is going to Latin America.
—Amit Singh, Partner, Avasant.

While new and emerging locations offer certain unique capabilities and competitive
advantages, there are important factors to be considered. Europe, for say, is vast and
growth is scattered across different countries. It is thus important to analyze and look at
each country and region separately. Moreover, the current crisis has sapped the strength
of most European locations. The impact is also fairly visible on other regions like parts of
Middle East and Africa and Latin America. Economic stability thus becomes an important
factor be considered for expanding into these regions. GS


case study

A Fortune 500, Global Technology Company
Achieves Business Transformation through
its Partnership with HCL
The Client: Solution: at a glance
Headquartered in the U.S., the HCL Technology Infrastructure
Client
company is a Fortune 500 global Services Division, also known as A Fortune 500, Global
giant, a corporation of com- HCL ISD, offered end-to-end Technology Company
plementary business units that IT infrastructure services deliv-
design, manufacture, distribute ery. It undertook several trans- Service Provider
and service engines and related formational projects for backup HCL
technologies. The customer was
tape optimization, application
looking for a reliable outsourc- Service Provided
consolidation, database optimi-
ing partner to consolidate all its Consolidating all its internal
internal client services includ- zation, server virtualization and
client services including IT,
ing IT, HR, Accounting and more such. Besides, HCL ISD
HR, Accounting and
Professional Support into a sin- well-executed a major area of
Professional Support into
gle operation. concern for the customer i.e. data a single operation.
center consolidation. It handled
Situation Analysis: all data center operations tasks Industry
The customer wanted its internal without any external support; IT
IT organization to focus on areas successful migration of servers
that would create strategic dif- from Australia to Singapore data Solution
ferentiators for business and con- center being one. HCL ISD
tribute to the organization’s core
IT. The customer challenges were:
• Heterogeneous IT environ-
ment Success Metrics
• Wide scope of engagement HCL ISD introduced tools in the client environment and automated
that included end user com- processes that enabled client to improve IT services while taking out
puting, data center manage- costs.
ment, infrastructure applica- • Consolidation of helpdesk across geographies decreased support
tions, network and security, costs and reduced ticket resolution by 30%
and process consulting and • Focus on SLAs, process standardization across the globe, and
tools implementation resource optimization with zero impact on service improved CSAT
• Globally spread business oper- • Moreover, successful completion of Six Sigma projects saved client
ations on an average $ 50k to 100k annually per project.

For more information please visit
www.hcltech.com

28 O U T L O O K 2 0 1 2

Moving to New Areas
• Local knowledge and understanding of specific contexts of each region is
essential.
• Risk diversification is going to be important. There needs to be a right balance
between offshore, onshore and nearshore activities.
• the current scenario, economic stability in different regions is an important fac-
In
tor to be considered.
• Scalability is another factor that becomes important in the long run.

MARCH 15
NEW YORK CITY

|


case study

Lanit-TERCOM Creates iOS Application
for a Russian Bank
The Client: cedures are performed on the server, at a glance
A major Russian Bank which has so the application on the mobile
device acts as a client to display data Client
a network of branches and ATMs
throughout Russia and the CIS. received from the server. A major Russian Bank
The Bank is the leader in terms of The application allows a user to:
its own capital. It’s also the larg- Service Provider
• View banking services points on
est bank in terms of deposits and JSC Lanit-Tercom
the map or as a list, with an option
the main creditor of the Russian of obtaining detailed information
economy. The Bank has the largest Service Provided
on the selected object (address,
branch network across the country: Application Development and
hours of operation);
it includes 17 regional banks, about Server Management
• View the location of the service
20 000 retail outlets, a large number
provision point of interest in rela- Industry
of ATMs, and 241 000 employees.
tion to a user’s current location;
The Bank has representative offices Banking
in Germany, India and China. • Estimate the distance to the
selected object; Solution
Situation Analysis: • View detailed information about Client server solution for
The main task of the project is the services provided there; iOS platform
the full cycle development of an • View the rating of the selected
application for iOS (iPhone / iPad / service point and vote with user’s In the subsequent versions the func-
iPod), namely the mobile bank with rating tionality has been improved upon,
a geopositioning feature. • File complaints which are auto- and a mobile bank feature has been
matically routed to a client request added, which is easy to use and
Solution: processing center; enable users to:
The developed application allows • See the going currency exchange • Pay fares on public transportation;
to promptly obtain necessary infor- rates and the dynamics of their
mation regarding the provision of • Check the balance of a user’s
changes; account in the standby mode;
banking services and is intended to
help users find the nearest branch • View the current prices of pre- • Receive notifications of bank
or service point providing such cious metals; transfers;
banking services as money trans- • Convert one currency into another • Make micropayments.
fers and payments, opening deposit
accounts, cashier services, services
for credit card holders. Search results Success Metrics
include all points of service available • Over 40 thousands active users
nearby – branches, ATMs and cash • Over 30 thousands requests per day
machines. Due to large amounts of • Over 100 feedback messages to customer support service per day
data and with the view to facilitating • Over 3 thousands new active users per month
information updates, all search pro- • Over 40 feedback messages to application support service per month

For more information on Mobile Bank contact Vadim Sabashny
Vadim.Sabashny@lanit-tercom.com

30 O U T L O O K 2 0 1 2

Services Spends Will Happen
Despite Budget Cuts
There is no denying that the environment is fairly turbulent.
When there is uncertainty, capital investments get impacted.
Pricing pressure will thin out service providers’ margin. This
will in turn force service providers to come up with newer cus-
tomer-centric solutions and innovative engagement models.

Smriti Sharma
A
rvind Thakur CEO, NIIT Technologies Ltd. articulated,
“Both for the IT as well as the BPO industry, I do not
anticipate there to be budget cuts because we are
seeing renowned focus on outsourcing. The cuts really
would be on capital investments and not on operating
expense related activities.”
As per Thakur, three types of actions will hit the invest-
ment front. One would be just to keep the business run-
ning; this one would be budgeted for. Then, there may
be certain strategic initiatives -such as moving to a new
platform- that makes the business more competitive. This
one would be planned and also budgeted for. And then,
there would be activities that independent businesses
may feel appropriate to invest in. Here, the funding would
be sought for from the user itself.


31

IT Spending $2.7 Trillion in 2012
Gartner predicts that IT spend is projected to total $2.7 trillion in 2012. The slowdown in
US and Europe economic growth could suppress IT spends. According to Forrester Research,
IT spends are expected to decrease to 5.5 percent in 2012 for a total of $2.15 trillion, from
estimated growth of 11 percent this year.
Emerging economies such as India will account for $1.013 trillion. According to Gartner,
the telecommunications market is the largest IT segment in India with IT spending forecast
to reach $54.7B in 2012 followed by the IT services market with spending of $11.1B. The
computing hardware market in India is projected to reach $10.7B in 2012 while software
spending will total $3.2 billion.
Buyers are increasingly trying to consolidate their IT services as portfolio and thereby
arrive at cost savings.

“
I
nstead of having a multitude of contracts spread all over the
world, with a variety of service providers, buyers are increasingly
trying to consolidate their portfolio and implement global con- “
tracts with uniform standard SLA. This leads to a fair amount of cen-
tralization of spends and consequently cost savings for the client.
Chirajeet Sengupta
Research Director, Everest Group

Sengupta believes Infrastructure Outsourcing is one of the areas where we can expect to
see a change, as there is a steady increase in offshoring. Traditional onshore infrastructure
support services are going to go down. This entire wave of consolidation will evolve a fair
degree of system integration, process improvement and process optimization. These three
are some of the areas that are expected to go up.
In addition, enterprise mobility, cloud computing, managed services, machine-to-
machine communications, product engineering service are some of the areas that will wit-
ness growth.
Even though there have been major concerns around the macro economy over the past
year, it is still very difficult to envisage any significant budgetary cuts from the customer
standpoint going into 2012 and beyond.

“
A
t worst, budgets might remain flat as customers offset
the need for a technology refresh arising out of expo-
nential data growth, security and compliance concerns
by embracing fast emerging delivery models like virtualiza-
tion, cloud computing and unified communications. The tran-
sition towards an ‘As a Service’ IT economy has surely gained
“
momentum in the year gone by and is certainly the future of
IT services and solutions,
Brian J Manning
President and Managing Director, CSC India


32 O U T L O O K 2 0 1 2

Significant increase in IT spends in outsourcing are likely to come from emerging com-
panies and economies. These companies and economies have matured to a level where
they can significantly upgrade their IT infrastructure or want to get there soon enough by
leveraging best in class IT.
In Q1 2012, 350 companies are expected to invest more than $1B in IT. The main reason
behind this is they comprehend that IT impacts their business performance and that there
are many benefits to by spending on moving applications to the cloud.
Lalit Dhingra, president of NIIT Technologies expressed, “Hardware and technology
refresh is perceived to be optimized. With the spread of cloud computing, progressive
enterprises will use shared or dedicated computing power on cloud at a fraction of cost.
Traditional vendors who used to lease computing equipment and power in the old data
center hosting model will see a shift in consumer behavior.”
While innovation is the buzz word, RD spendings are expected to be scrutinized. Sanjay
Dhawan, president and CEO, Symphony Services Corp. opined, “Research and Development
spendings may come under pressure. Having said that, the pressure to innovate and intro-
duce new products has never been higher.” He expects customers to look for help from their
outsourcing partners in three ways:
1. Taking over mature products to drive down costs and add enhancements to extend the
lifespan, and using those savings to fund new products and initiatives,
2. Improving automation through new cloud-oriented processes and tools also unearths
product development life-cycle savings that can be used to fund new initiatives and
3. Delivering new product frameworks (software and hardware) to shorten time and cost
to market for new solutions.


33

In the end, as Everest Report titled 2012 Market Predictions pointed, “Larger buyers will
continue to drive the spending budgets in both infrastructure outsourcing and ADM, and
will focus on vendor consolidation, providing growth opportunities to larger players, both
offshore and MNC. This will lead to further growth disparity between large and small sup-
pliers IO deals will increase, driven by next generation models such as cloud computing
and RIMO.”

BPO: Win-Win Situation for Both the Customers and the Vendors
At the onset of the downturn, many organizations had put new projects on a pause; now
most of them are looking at a long-term outsourcing strategy.
Recently, HGS won a big public sector contract in the UK. The contracts are expanding
to include more service lines. Financial services institutions will move towards lesser and
more strategic relationships with service providers, resulting in longer contract terms and
larger contract sizes.

“
T
he focus is not as much on decreasing costs as
it is on increasing efficiency. This will translate
into a bigger average contract size in the coming
years. Driven by the imperatives of the austerity meas-
“
ures, there may be a significant increase in outsourcing
spends by government bodies in Europe.

Partha De Sarkar
CEO,Hinduja Global Solutions(HGS)

Unlike IT, BPO is more of an ongoing expense not a discretionary expense. Companies
will continue to look for ways to cut costs out of their operations.
Rajesh Ranjan, research director, Everest Group, enunciated, “Most of the organizations
are going to look for a balance set of outcome. Balance set of outcome means taking a deci-
sion that will help realize some of the short term objective, without compromising on long
term benefit. In fact, I am expecting organizations to take those decisions that while help-
ing them realize short-term objectives will create a foundation for the long term success.
This is also a mark of reflection of the maturity of BPO.”
Earlier buyers approach revolved primarily around cost cutting without due consid-
eration on the long term perspective. Or there were wholesome transformation approach
where it would take 2-3 years to start seeing some benefits. Ranjan thinks neither of these
has really provided the right set of value. Most of the organizations as we move forward are
going to look for balance set of outcome.
Neil Bentley, founder and managing director, Active Operations Management India(AOMi)
feels headcount is expected to come under pressure as a large part (over 70 percent) of con-
trollable cost in BPOs is associated with staffing. However, in cases where deals have already


34 O U T L O O K 2 0 1 2

been struck there may be zero incentives to reduce head count; in transaction-based deals
the scenario may be different.

“
C
ompanies seeking to make budgetary cuts may
well turn to BPO as an option - maybe even some
operations that have never previously considered
the option such as parts of the public sector. This may
lead to some growth in BPO but with it would come com-
petition and pressure on price and service delivery. The
successful BPOs would therefore be the ones that stand
“
out as being able to offer the most competitive package
- price plus assurance of delivery.

Neil Bentley
Founder and Managing Director, AOMi

Sitel is seeing a significant cost-savings opportunity for global call center BPO providers
to achieve optimal operational efficiency by transitioning from on-premise legacy systems
to cloud-based call center offerings that scale as a direct operating expense. This will also
open the door for companies to replace large, captive operations with faster and cheaper
outsourced operations, particularly in areas where customer experience can be enhanced
by specialists.

“
T
echnological, social and economic changes have made
at-home agents a viable business model, especially for
experienced outsourcing providers. With broadband
access now available in much of the US, end users can sup-
plement existing call center operations by drawing from
and connecting to a new and substantial labor pool. In
2012, Sitel believes the BPO industry will see a decrease in
traditional call center environments where agents work in
a typical office setting. Instead, work-at-home agents will
“
emerge as a customer-care solution that favors a more flex-
ible labor environment.

Andrew Kokes
Vice President, Global Product Management,Sitel

Investments will take place in building more robust analytics and integrated talent man-
agement offerings.


35

Highlights from Everest's Report titled 2012 Market Predictions
Restoring growth while improving profitability and reducing operational complexity
will be the primary imperatives for banks, leading to investments in legacy moderniza-
tion, application consolidation and ERP initiatives. In addition, adapting to changing cus-
tomer preferences will create demand in areas such as mobility, social media, and channel
integration.
Within banking BPO, increase pressure on margins and profitability, and the rising cost of
servicing each loan, is causing lenders to seek out solutions that can help them standard-
ize loan origination and convert fixed to variable costs; this will drive greater adoption of
technology-enabled BPO solutions within the leading segment.
Pricing pressure will squeeze providers' margins, especially offshore, forcing investment
in newer customer-centric solutions and innovative engagement models.
Captive investments will continue, and the majority of setups/expansions will be in Asia
Pacific and CEE.
The final word is BPO spends could increase as they have low impact on business and
help organizations save cost. Satya Gottumukkala, executive vice president, Anthelio
Business Technologies Pvt. Ltd. voiced, “I see more of shared services being outsourced – in
fact the vendors will look for newer opportunities to save costs of their customers. This will
be a “win-win” situation for both the customers and the vendors.” GS

MARCH 15
NEW YORK CITY

|


36 O U T L O O K 2 0 1 2

The Changing Landscape
of the Global Services Industry
Increasing attention to global sourcing management
consolidation initiatives.

Smriti Sharma

S
ervices buyers are looking for value beyond cost
arbitrage and efficiency gains. They will increas-
ingly look to vendors with deep domain expertise in
specific verticals. The year ahead will see more attention
being paid to global sourcing management and consoli-
dation initiatives.
Andrew Kokes, vice president, global product manage-
ment, Sitel articulated,“In 2012, Sitel believes outsourc-
ing will continue to see growth driven by cost pressure,
increasing complexity to deliver the latest technologies
and the need to align scalability to market demand. Call
center BPO’s with the right people, process and technol-
ogy will be in a great position to deliver solutions that
organization do not have the ability to invest in deliver-
ing, or would take years to develop their own operating
best practices.”


ePublishing - The New Success Paradigm
for the Media Sector
Author: Vasanth Kumar Mani
Online Publishing Media Solutions Expert,
Datamatics Global Services Limited.

O
ver the last decade wide availability falling costs of bandwidth with rapidly evolving
mobile computing devices have driven a paradigm shift in the way people organiza-
tions around the world create, access and distribute information. Rapid evolution of the
social media has further driven this growth in tendency to take everything online and expect
everything online. The internet is fast evolving into a powerful channel for marketing across
industries, more so for the publishing media sector.
Reader preferences are shifting towards electronic versions from the traditional print medi-
um. According to a recent industry report, e-books sale in the US market in the year 2010 was
$500 million; expected to cross $1000 million in 2011 and $2000 million in 2015.
Convenience of reading carrying, lower costs, novelty value, intelligent tagging and cross-
linking, multimedia, and ease of search are features driving demand for electronic versions of
print publications. Dropping prices and rapid evolution of eReaders tablets are further driv-
ing demand. Worldwide media tablet spending is projected to reach $29.4 billion in 2011, up
from $9.6 billion in 2010 by Gartner Inc. Global spending on media tablets is forecast to increase
at an annual average rate of 52 percent through 2015. By 2014, 6.7 billion devices will be con-
nected to the Internet.
Adapting to the ePublishing paradigm is not simply about creating digitized versions of
content in print. It requires a thorough rethink of the entire workflow from content acquisition
through editorial, creative representation and distribution processes. Relative ease of distribu-
tion, better margins on higher volumes and high level of flexibility makes it an attractive busi-
ness proposition for publishers too, to change lanes to the e-way.
There has been a mixed reaction from the publishing sector to this market trend towards
greater adoption of electronic versions of print media. Thought leaders in the sector were quick
adapt their organizations to maximize the potential of this opportunity while most other pub-
lishers are in a wait and watch mode. Datamatics joined hands with the thought leaders and
early adopters to help them venture into the field and has been an advisory partner for the
latter.
Datamatics is committed to delight publishers with intelligent technology leverage that helps
them enhance their user experience, expand reach and drive efficiency in their operations.
Datamatics online publishing and media experts are already working with some of the lead-
ing companies in the online publishing retail space, processing over 2 million pages a year.
Besides rapidly increasing volume, the depth and breadth of services in these areas has also
widened. Today, Datamatics is one among the few companies that is a preferred partner for
publishers and online companies for any new ventures into the technology space, be it produc-
tion or testing of new devices and e-book formats or even in Social Media marketing. .
For any further information on how Datamatics can help your organization in effectively
tapping the e-Publishing opportunity, please write to us at onlineprintmedia@datamatics.com.
Advertorial

38 O U T L O O K 2 0 1 2

The Dawn of the ‘As-a-Service’ Economy
Some of the dynamics have started to kick in with a definite shift towards ‘as-a-service’
economy.

“
T
his not only helps businesses put a cap on capex which
is at a premium, but also transition towards an opex
model. With businesses suffering two major hiccups
in the space of three years, there would be an incremental
demand for innovative service models aimed at mitigating
risk, possessing high domain knowledge as well as robust
security and compliance delivery models. Service providers
would also look towards innovative service delivery models
to sustain demand and major moves towards restructuring
“
internally as well as developing domain expertise and capa-
bilities can be expected.

Brian J Manning

The three key main forces in the marketplace are: a) price-performance ratios keep
improving, b) consumer expectations are changing dramatically, as they are exposed to
technology choices that empower them as never before and c) emerging technologies
are positioning IT to drive innovation and growth, rather than targeting cost-cutting and
efficiencies. These forces are driving the following trends - the rising importance of data,
analytics, cloud computing, services-centred architecture, IT security, data privacy, social
platforms, and user experiences.

The Role of the Service Integrator
Accenture believes that ‘transformational’ and ‘bundled’ outsourcing will become an
increasingly important strategy for companies in the current market. By outsourcing sev-
eral business processes and IT systems to one provider, companies can free up cost and
management resources while acquiring the strategic flexibility and capability for growth
and to embrace the trends to drive competitive differentiation.
In addition, significance of the role of the service integrator will continue to rise. The
cloud brings a set of third parties into the mix whose services cut across traditional lines.
It takes specialized skills in service integration as well as business processes and tools (aka
the service integration bus) that automate and monitor IT to ensure coordination and over-
sight between third party providers and in-house IT. The cloud has magnified the issues of
a multi-sourced environment and strategic sourcing has become not just an integral but a
critical part of IT and business strategy agendas. The key to being a service integrator is to
adopt a services mindset across all internal and external capabilities provided in IT. It is not
just cloud services; it is all services IT provides to enable the business.


39

Nearshoring and Consolidation
Another line on rise is a move
towards near-shoring of services. This
continuous pursuit of new locations is
driven by the demands of geographi-
cal proximity, similar time zones and
cultural affinity. Partha De Sarkar, CEO,
Hinduja Global Solutions (HGS), voiced,
“From the providers’ point of view the
focus is on geographical and verti-
cal diversification. The opportunities
are springing up in hitherto untapped
pockets and we need to be prepared
to capitalize on all of them. The indus-
try is also seeing consolidation, with
growing demand for new capabilities
and new geographies.”

Increased Competition
As the market has matured, it has
become much more competitive
also. Discussing the reasons behind
the competitive nature of the mar-
ket, Joy V Santosh, CEO and country
head, Active Operations Management
India(AOMi)expressed, “The market is
much more competitive for a number
of reasons. Hence, the landscape is
promising.” The market is competitive
because with quality and service being givens, the focus is once again on cost. Other rea-
sons include trends such as the consolidation of cheaper offshoring hubs; transitioning
of contracts from FTE-based to output/ outcome based; and the transition from standard
BPOs to more knowledge based platform services.

“
T
he big change that will take place over the next few
years is the shift in the center of gravity for plan-
ning and control from onshore to offshore, even for
resources still located onshore. This could cause raised
eyebrows in some quarters but the crucial factor is that
implementing a standard methodology that allows capacity
to be managed transparently in whatever manner suits the “
culture and objectives of the company (including spanning
across company boundaries into outsource providers).
Richard Jeffery


40 O U T L O O K 2 0 1 2

As it has been observed, in the last two years, enterprises prefer working with credible
outsourcers who focus on effectiveness than efficiencies. It is about partnering with ven-
dors who have demonstrated that they can create business value – e.g. increase the client’s
revenue by architecting new product and services and skin-in-the-game contracts.
Traditionally, call centers are limited by their geography to a job-recruiting radius of about
50 miles, and the hiring constraints that come with that geographical location. Talking
about home-based labor pool, Kokes shared, “In 2012, Sitel expects to see an increase in
the utilization of a flexible home-based labor pool to drive operating efficiency. The vir-
tual model will provide a wider hiring footprint with the hub-based environment focused
on hiring and training at a physical location to improve work/life balance for employees.
This concept will ultimately overcome the rigid scheduling challenges of call center-based
operations while complementing existing in-center customer care support, providing vari-
ous types of talent, shifts and scale for seasonality and call volume, regardless of location.”

“
W
e see a significant acceleration across various
governments – federal, state and local gov-
ernment. Government is going to increase as
a significant component of the outsourcing industry.
There were certain type of healthcare services that
buyers were reluctant to outsource. However, there is
a lot more desire and willingness to outsource them
today. Banking and financial services has always been
“
a leading edge exponent of outsourcing industry and
it continues to be in the same space.
Deepak J Patel
CEO, Aditya Birla Minacs

There is another phenomena, that is happening especially in North America -inhouse
unionized operations of the customers.
Over the last few months, significant amount of business is coming out from unionized
shops into the outsourcing environment and we will see an acceleration of that as well.

“
I
n 2012, Sitel believes outsourcing will continue to see
growth driven by cost pressure, increasing complexity to
deliver the latest technologies and the need to align scal-
ability to market demand. Call center BPO’s with the right
people, process and technology will be in a great position
to deliver solutions that organization do not have the ability
“
to invest in delivering, or would take years to develop their
own operating best practices.

Andrew Kokes
Vice President, Global Product Management, Sitel


41

The Hitch with Outcome-based Pricing
In the recent past, market has observed large, more complex deals where buyers demand
complex SLAs and consequently more complex pricing models as opposed to FTE-based
models.
In the year 2012, outcome based pricing will gain prominence. However, it will not
become the norm.

“ O
n papers, outcome pricing looks pretty inter-
esting and appears to be aligned with the
objectives of both buyers and providers. But,
in reality making it work is difficult. Simply because
unless the service provision is directly associated
“
with the service provider of the outcome it becomes
very difficult to connect.

Rajesh Ranjan
Research Director, Everest Group

For example, in procurement outsourcing, the service provider is actually managing the
budget on behalf of buyer. Here the provider can actually influence that spend and get it
down by identifying the right set of vendors and negotiating the contracts. Hence there is
a direct connect between what the service provider is doing and the actual dollar impact.
The degree of separation is very minimal.
Contrary to procurement, in the case of HR outsourcing, the degree of separation increas-
es. One of the objectives of HR outsourcing, providers wish to realize is to increase employ-
ee productivity, that will eventually result in revenue growth. However, in this case there is
separation as there are lot of other factors that play into employee productivity - such as
motivational factors, hiring factors - that are not directly in the control of service provider.
As the degree of separation increases anything to link it to outcome becomes challenging.

“ I
t is a given in now that most BPO deals (especially the recent
ones) have been bagged basis a transaction on outcome
based pricing model. Another theme might be supply chain
integration. A likely theme to follow on from Lean operations
is to take the concept one step further and look at the end to
end process. Just as the likes of Toyota spread their production
control method all along their supply chain, we might antici-
pate a similar move towards standardisation as companies seek
“
to strengthen their BPO and more importantly outsourcing/
Offshoring partnerships.
Neil Bentley


42 O U T L O O K 2 0 1 2

2012 will witness more of output based pricing; we'll also see traction of outcome based
pricing. However, output based pricing will become more dominant trend compared to
outcome based pricing.
Speaking about the buyers expectations, Abhinav Sharma, founder and director, Aceicon
pointed, “As an IT service provider we have learnt that customers are becoming more
demanding and are having high expectations from the company’s products and services
and you have to continuously deliver on those expectations.They expect not just any soft-
ware solution. What they desire is a complete package that comprise of the product, train-
ing, support services and after sales maintenance. The customer is interested in the value
being delivered by that product.”

In addition, the balancing act between captives and third-party models will continue. GS

MARCH 15
NEW YORK CITY

|


43

IT Outsourcing
Slow, Deliberate March
Smaller deals, more standardization of services, mix of
sourcing models, and cloud adoption are the key trends
in IT outsourcing for 2012.

Sourabh Chandra Pushp

“
T
he year 2012, will be marked by the inking of smaller
IT services deals, many of them by first-time buyers
who sat on the sidelines in 2010-11. Contract activity
“
will creep back throughout 2011, as the recover stutters and
buyers pull the trigger on sourcing activity.

Phil Fersht
Founder-Outsourcing Analyst Firm-HfS Research.


44 O U T L O O K 2 0 1 2

Rigor and Standardization
Clients will be increasingly open to changing their internal processes and accepting stand-
ard services in 2012, predicts Bob Mathers, principal consultant for Compass Management
Consulting. Service providers will put renewed emphasis on internal initiatives to standardize
their own offerings to leverage economies of scale and stabilize profit margins. It's the stuff of
benchmarking dreams, but economic conditions may turn it into a reality. Stan Lepeak, man-
aging director of global research for outsourcing consultancy EquaTerra KPMG, also predicts
more process, technology, and location standardization including platform-based solutions.

“
I
n 2012, there would be an incremental demand for inno-
vative service models aimed at mitigating risk, possessing
high domain knowledge as well as robust security and
compliance delivery models. IT outsourcing service provid-
ers would also look towards innovative service delivery mod-
els to sustain demand and major moves towards restructur-
“
ing internally as well as developing domain expertise and
capabilities can be expected.

Brain J. Manning

Sluggish Demand and Pricing Pressure
“The demand environment for service providers will remain tentative in 2012 given the
watchful approach of global buyers, and optimization
will be a strong focus for organizations looking to
extract more value from their sourcing models,” said Eric
Simonson, managing partner-Everest Research.
For year 2012, sluggish activity is expected due to
macroeconomic and political uncertainty, with greater
confidence likelier later in the year; but more attention
will be paid to global sourcing management and consoli-
dation initiatives.
Buyers’ IT budgets may be suppressed by fears of a sec-
ond economic slowdown due to the debt environment
in Europe and the macro environment in the U.S.
Pricing pressures will squeeze providers’ margins,
especially offshore, forcing investment in newer custom-
er-centric solutions and innovative engagement models.
Domain/micro-vertical expertise will be emphasized as
buyers focus on business innovation.
Overall, margin pressures will continue to be a chal- Eric Simonson
lenge for service providers. There will likely be continu- Managing Partner, Everest
ing strategic convergence between offshore and MNC Research
service providers.


Smart Technology to Manage Power Consumption

Author: Sanjeet Banerji
Head, Engineering Services Embedded
Software Business Unit
Datamatics Global Services Limited

M
ost economies across the world are struggling to address the challenge of managing
power consumption. Individuals and enterprises are also actively looking for ways
to conserve power consumption. Intermittent peaks in demand also pose a challenge
for power generation, transmission and distribution companies, which they try to address with
variable tariff slabs and other such means.
The first step towards managing anything effectively is to first be able to measure it. Same
applies to energy consumption. The next step would be then to analyse the processes/entities
that consume the most energy, the third being how to save and the fourth being able to predict
the energy demands and its use in the most effective way
Automated Meter Reading (AMR) is the first step towards near-real-time measurement of
energy as it is being consumed. The next step is the AMI (Automated Meter Infrastructure) for
managing the data so obtained in analysing the current usage patterns. The next step of energy
planning is to arrive at a re-sequencing of processes to obtain a sensible and economically viable
allocation of resources for production and consumption of energy. From the customer perspec-
tive it means better control of managing energy consumption, and for the utility provider it
means better control of production and distribution of energy in the most effective manner.
AMI is not only a means to reduce time and cost of meter readings, it also contributes towards
efficient energy management through load profiling and supply automation, enabling dynamic
pricing for suppliers and consumers to balance demand and supply, balance loads, tamper
notification, revenue assurance through timely and accurate billing, outage management and
lot more in terms of being able to supply and consume energy in a smart manner.
A typical system may vary from a simple deployment to a very complex system where
energy could be dynamically priced, leading to possibilities of innovative service offerings as
well as ability to schedule energy consumption by the consumers in the most effective way. One
such application is local monitoring of energy consumption in an enterprise to gain insight into
its energy needs and consumption patterns. Our experience has shown that such systems have
brought good value in terms of managing its peak demands, power factor, and wastage. The
discounts availed on a disciplined usage of power not only contributes to a lower power bill
but also contributes to a greener earth. The system also acts as an indicator and allows audit of
energy usage in real time, giving an early indication of power bills.
Datamatics provides end-to-end services from design and development of smart meter soft-
ware, remote management of meters, connectivity via MUCs, to systems that acquire meter
data, to management systems that remotely manage and monitor supply, and finally create
bills to be presented electronically to consumers. The whole comprehensive solution includes
a set of data modelling and smart analytical tools to predict and manage energy distribution
consumption.
To know more please write to business@datamatics.com .
Advertorial

46 O U T L O O K 2 0 1 2

Vendor Landscape
Larger buyers will continue to drive the spending budgets in both infrastructure out-
sourcing (IO) and ADM, and will focus on vendor consolidation, providing growth oppor-
tunities to larger players, both offshore and MNC. This will lead to further growth disparity
between large and small suppliers. Regional service providers will increasingly emerge glo-
bally and significant MA will continue, with Tier-2 suppliers the prime targets.

“
E
ven though the IT industry will follow along
the same transformational path as it did in
2011, the events, the choices, and the stakes
will be very different in 2012. The urgency to act
and to make the right decisions will dramatically
increase. By the end of 2012, we should be able
to see much more clearly which players have suc-
cessfully positioned themselves in the 'lead pack'
of the marathon-like race for industry leadership in
the decade ahead. In 2012, ITO deals will increase,
“
driven by next generation (NGIT) models such as
cloud computing and RIMO.

Frank Gens
Senior Vice President, Chief Analyst-IDC

Cloud Adoption
In the past, technical and perception issues have caused cloud adoption challenges.
But continued capital investments will result in new and sophisticated solutions that will
lead to new hybrid models and new integration approaches, making cloud adoption more
mainstream.
The rapidly accelerating use of enterprise mobility, social networking and cloud services
in workplaces will increasingly require integration into mainstream corporate networks,
driving more corporate spend in this area.

Smaller Deals
In 2012, macroeconomic factors could force reduced IT spend, with buyers doing smaller
number of deals with simpler pricing models, amid strategic convergence between offshore,
MNC service providers. Global sourcing stakeholders will continue to pursue new locations
due to talent, cost arbitrage and risk diversification-related considerations.


Achieving Non-Linear Growth Using Smart
Technology and Smart Outsourcing
Author: Punit Jain
Head – Smart Document Processing Practice
Datamatics Global Services Limited.

W
ith economic turmoil and increasing competition in the global markets, process
owners and operations managers are facing increasing pressure to build dynamic
scalability, cut costs and improve speed of processing. The biggest challenge for any
organization is not just attaining growth but to do so in a non-linear way.
Industry research indicates that an average office worker annually uses 10,000 sheets of copy
paper whilst most business decision makers spend over 40% of their time searching for infor-
mation. Documents, in paper or electronic form, constitute the lifeline of any organization as
they are vital for every operational success. With growing business velocity, increasing com-
plexity of business operations, ever stricter regulatory compliance requirements pressure to
cut operational costs, optimizing document-intensive business processes has become a business
imperative.
The world is moving towards smart technology to enhance the productivity of document-
intensive processes with break-through cost, quality, and scalability speed benefits through
intelligent automation. An intelligent platform can help automate the entire end-to-end process
workflow and significantly reduce manual effort of document processing.
Use of smart technology helps in reducing Value/Productivity Leakage which impacts both
revenue and cost, specifically in operational areas. Organizations are speedily moving towards
tools which emphasize on;
• Leveraging smart technology for process automation
• Reducing operational cost and continuous quality improvements through deployment
of workflow tools, and processes which adopt Industry Best-Practices
• Increased ROI by moving from manual to automated document management workflow
system
• Using artificial intelligence in capture of information from documents, both physical
and electronic
The evolution of an organization in the direction of process automation for document cap-
ture and process workflow, significantly reduces manual data entry, improves data accuracy,
frees valuable resources and dramatically speeds up processing time.
Are your business processes document driven? If yes, move to smart technologies consist-
ing of imaging, workflow and intelligent capture tools, and derive the stated benefits. Explore
outsourcing options which leverage these smart technologies. Smart outsourcing based on
smart technology can provide real, measurable value in terms of cost reduction, productivity
improvement, customer satisfaction and turn around time. Arguably, your documents can be
perceived as a valuable asset which you can leverage towards gaining competitive advantage.
To know more about how Datamatics can help you achieve break-through business benefits
with intelligent automation, please write to business@datamatics.com

Advertorial

48 O U T L O O K 2 0 1 2

Hybrid and Captive Sourcing Models
Companies will continue adoption of hybrid captive/third-party sourcing models in
2012, and efforts will be made to improve captive value by focusing on high-value proc-
esses. Captive investments will continue with the majority of setups and expansions occur-
ring in the Asia Pacific and CEE geographies in the year to come.
For example, in the year 2011, IT service providers opened 32 new outsourcing deliv-
ery centers in the third quarter compared to 17 the previous quarter. HP led the way by
announcing ten new locations, followed by Dell, which announced four. Convergys, IBM
and Tech Mahindra each announced three new centers. GS

MARCH 15
NEW YORK CITY

|


49

FAO: Helping Really Handle the
‘Finance’ Function Better
FAO clients expect their providers to undertake analytics
on transactions, gather functional insights, and then
identify opportunities to improve and add value. The focus
is on improving the performance of the finance function.

Smriti Sharma

A
ccording to a report by Everest Group, the FAO
market will continue to attract strong activity,
resulting in a year-on-year growth of 15 percent in
2012, with the total number of active multi-process FAO
contracts expected to reach 700. In terms of total contract
value, renewals worth $2.5B and annualized contract
value of $4.5B-$5B are expected. Strong tractions will be
visible in healthcare, financial services, energy utility
industry segments and mid-market. There will be contin-
ued upward growth in India-to-India domestic BPO and
the Middle East and APAC regions.
Accenture, IBM, Genpact, Capgemini, Infosys BPO and
HP dominate the FAO space. The reason being, recent
years, have witnessed these players bag multiple engage-
ments in the $50M+ range.
Tony Chambliss, global offering lead for FA BPO serv-
ices at Accenture articulated, “The ability to undertake


50 O U T L O O K 2 0 1 2

analytics on transactions, understand the insights and then identify opportu-
nities to improve and add value is what our clients expect from
BPO. For FA BPO clients we process their invoices, collate
the spend, map that back to their strategic sourc-
ing agreements and identify rogue
spending outside that agreement
– that is money sifting through
their hands. We’re focused on
finding it and 'giving it back' to
help drive savings. We’re also seeing more
emphasis on deep industry expertise.
More and more, clients are looking for
providers that have a deep understanding
of the industry environment in which they operate.”
Second tier vendors are eying the mid-market and are distinguishing themselves by cre-
ating differentiated offerings. Their focus areas will be innovative value propositions such
as industry-specific solutions, end-to-end processes solutions, specialized process offerings
etc, strategic alliances between pure-play FAO service providers and technology providers
to offer platform/SaaS-based offerings and increasing presence and foray into emerging
destinations such as Africa, Latin America.

Shifting Gears
1. Buyers’ expectations revolve around transforming the processes towards best-in-class
performance, although cost continues to be the key driver.
2. FAO value propositions will be shaped by verticalization of FAO services and industry-
specific FAO offerings, moving away from the traditional assumption that FAO is a horizon-
tal function. Many service providers are coming up with industry-specific FAO solutions
(e.g., focused offering in travel, telecom, utility etc.). Service providers are also aligning their
sales and delivery team along key verticals to make a targeted market approach.
3. Expanding role of technology will focus on augmentation/and add-on tools. As per the
Everest report, “The next year will observe a stronger push on platform and BPaaS-based
offerings (primarily catering to small and mid-market buyers) as service providers attempt
to integrate them in their FAO value proposition.
Sachdev Ramakrishna, director marketing, Steria India added, “Historically, FA out-
sourcing has not been a technology intensive service. The focus has been more on adher-
ing to processes, backed by a strong manual work component. This is starting to change
and for the first time, a growing number of FA suppliers are offering standardized IT
platforms with their FA services. While there are challenges to overcome regarding data
security, ERP architecture integration, these options will continue to evolve, particularly
in the near term for mid-market buyers who typically are more inclined to buy in standard
solutions.”
Saurabh Gupta, vice president Everest Group, stated technology strategies that are being
deployed across all FAO:
• Tie-and-run: Limited role of technology where service provider plugs into the
buyer’s existing systems to deliver pure-play BPO services


51

• Technology augmentation: Service provider implements tools that serve as “add-
ons” around the periphery of the existing buyer systems to address specific gaps
• Core FA technology replacement/ implementation: IT infrastructure and/or
core FA application implementation bundled with FAO services. Technology own-
ership resides with buyer
• Platform-based FAO: Pre-integrated applications and pre-built processes, owned
by service provider, with pricing built into the FAO contract
4. The demand for analytics and other specialized FA services such as regulatory com-
pliance, internal audit will continue to increase.
5. Pricing models namely outcome-based and transaction-based pricing will find
increased mention in FAO contracts. Chambliss spoke about how many companies are
moving from just a transactional basis of BPO toward outsourcing higher value added func-
tions in their decision making and FPM areas. He opined, “Access to better information to
communicate to their line of business owners seem to be driving more value add for the
FA organizations and making the opportunities to grow analytics and improvements in
the bottom line for companies. Value propositions are centered around improvements to
cash performance.”
WNS has adopted several mod-
els of implementations such as-
lift and shift, shift and fix, and a
combination of fix whilst lifting
and shifting. Tasneem Lakdawalla,
business unit leader, Finance and
Accounting shared, “WNS delivers
a full range of FAO processes to
support all functions in the CFO’s
office. We perform over 650 proc-
esses ranging from simple transac-
tions to complex analytical proc-
esses including industry-specific
processes such as royalty and
passenger revenue accounting.
Specifically, we deliver end-to-end
services across the full spectrum of
finance and accounting functions,
including procure-to-pay, order-to-cash and record-to-report.”
6. Demand in the emerging markets- whether it is India or Asia Pacific or Latin America-
for FAO services is expected to increase this year.
Shantanu Ghosh, senior vice president and global head of practices, solutions and transi-
tions, Genpact opined, “The reason being a lot of multinationals - which are US and continen-
tal Europe based- have done their first wave of FAO, where they obviously focused on high
impact geographies like US or UK or continental Europe are now focusing on their second or
third wave outsourcing through the new market. These economies are creating companies
that are growing from small to medium to big and they are expanding outside their home
territories. They are also looking not only from the prospects of labor arbitrage but also from


52 O U T L O O K 2 0 1 2

the prospect of creating growth platforms along with delivering process excellence through
use of process management expertise.”
7. FAO will continue to increase in the developed markets. Demand will continue to come
from late adopters. These are the people who have not jumped on the FAO bandwagon
earlier, but now have seen the model get proven and have got enough confidence that this
works and they are therefore now coming in the market.
8. An end-to-end process-driven approach to FAO is also emerging as opposed to a tra-
ditional functional and piecemeal approach.

Service Providers Landscape
Experts from the Everest Report titled 2012 Market Predictions:
Driving non-linear growth through investments in technology-led solutions (platform
and BPaaS-based offerings) and process-led solutions (process maturity models and
frameworks).
Creating differentiated offerings through industry-specific and go-to-market strategies,
specialized process offerings and bundled FAO-PO offerings to leverage synergies across
the FA and procurement functions.
Service providers will push to increase penetration in the small and mid-market buyer
segments and also in emerging buyer geographies such as India, the Middle East, and
APAC. They will also continue and South America, the Middle East Africa, and Tier -2/3
locations in India etc.
The MA activity witnessed in 2011 will continue to an extent in 2012 with acquisition of
niche players by established suppliers trying to augment their capabilities to enter newer
MARCH 15
geographies. Private equity investors looking to either invest in mid-market FAO suppliers
or exit their positions held with large suppliers. GS NEW YORK CITY

|


53

Analytics Outsourcing 2012:
What do the Cards Say?
Analytics outsourcing will continue to grow as businesses
would turn to analytics to understand customer
behavior and optimize various business measures.

Smriti Sharma

I
nitially, analytics did not perfectly plug into the con-
ventional outsourcing model, as the level of data sensi-
tivity is exceptionally high. These vulnerabilities made
some of the clients set up or expand captive units instead
of outsourcing their secure data. However, in the past
decade, third-party providers have armed themselves
with commendable expertise in analytics. Thus, the ana-
lytics space that was once dominated by captives of large
companies is now embracing large vendors offering end-
to-end specialized solutions to specific verticals.
For those companies, whose data security concerns are
still making them hesitant about AO, vendors are offering
onsite delivery teams – at clients’ premises, client country-
so data is not required to reach offshore.


54 O U T L O O K 2 0 1 2

AO-Evolution
AO started with financial and marketing functions. MNC’s when they had set up their
captives in India, were one of the first companies to benefit from it. At the start, heavy
lifting in terms of data analysis was being outsourced and then entered the higher end
statistical modeling. Nowadays, high end business consulting (based on the data) is being
outsourced. Next phase will observe companies start services where they will own data and
provide consulting/analytics based on the owned data as well as customer data.
Anoop Sagoo, BPO cross operating group lead, Accenture, expressed, “BPO today is
about mining the huge volume of transactional data that is being processed – and using
industry expertise, analytics and innovation to help a client operate its business better and
drive business outcomes. The ability to undertake analytics on transactions, understand the
insights and then identify opportunities to improve and add value to the client’s business is
what our clients expect from BPO.”

Over the next five years, the top strategic technology investment at outperforming mid-
size operations is business analytics, according to an IBM report in CIOs. Thus, this space is
expected to grow in the coming year and also there is expected to be an increase in the
percentage of service providers offering analytics services from offshore destinations.

Gaining Importance
Analytics has become a critical component without which tactical and strategic decisions
cannot be drawn. Today, companies can choose from a host of platforms and services based
tools that can be deployed to make intelligent use of information enabling business deci-
sions that impact both top line and bottom line.
Arun Kharbanda, business unit head, Research Analytics, WNS Global Services stated
that analytics will continue to grow because it helps their clients to grow the topline by
understanding customer behavior better. He added, “This in turn helps optimize various
business measures like cost reduction/ optimization of price, inventory and shipment to


Smart Analytics – The Strategic Edge
For Your Business
Author: Rakesh Tiwari
Head – Smart Analytics Practice
Datamatics Global Services Limited

E
nterprises across the world generate terabytes of data from transactions that happen
internally and externally. This data carries a wealth of information, which if extracted
properly can equip the enterprise with strategic business insights. Here is a example from
the many we like to refer to at Datamatics:
A large bank was able to maximize ATM utilization by tracking ATM transactions data
across locations. Analysis of transaction data over a defined time interval provided insights for
ensuring ATMs were available easily where their customers would need them the most, were
stocked with the right currency denominations in the right quantities. This ensured greater cus-
tomer satisfaction scores, significant reduction in ATM maintenance management costs and
a noticeable increase in market share in the pilot areas where the project was run. Needless to
say, the bank then ran the initiative world-wide and is reaping business benefits.
Most companies are unaware of the wealth of potential strategic insights they are sitting on
with the transaction data generated every minute. Those that do set on this path typically have
to go through a 5-step ‘Datamatics Information Management Maturity ModelTM’ given below:
Assessment: Get visibility into sources and consumers of the information, needed to pro-
vide 3600 view of the business, prepare for the activities at data layer and assess infrastructure
needed to support business decision making process
Data Management: Prepare data layer related infrastructure to generate business data
glossary data dictionary, build business data governance structure relevant infrastructure,
logical and physical data repository and validate data repository. Provides integrated business
view needed by decision makers and planners
Reporting: Map business needs to the reporting requirements, create reporting infrastructure
to support business reporting needs starting at the dashboards for executive level to canned
reports for transaction analysis. This architecture should be further supported by OLAP struc-
tures to facilitate for detailed analysis by power users.
Predictive: Data mining and pattern recognition to detect trends in the business data and
support business leaders to make suggestions for addressing emerging business scenarios.
Prescriptive: Suggest changes to the current
business processes to handle the emerging
business trends detected by predictive busi-
ness models.
Right information at the right time to the
right person in the right format empowers
decision makers for well-informed decisions
and the enterprise with a competitive edge.
To know more about how your enterprise
can benefit from smart analytics, please write
to business@datamatics.com

Advertorial

56 O U T L O O K 2 0 1 2

reduce demand-supply mismatches, improving sourcing to reduce cost of procurement,
quantifying probability of adverse outcomes to reduce risk, improving compliance adher-
ence and provide strategies to minimize risk; improving predictability of and minimize
variations in planning.”

AO-Outlook 2012
Analytics service providers include BPOs, KPOs, BPO/KPO arm or department of large
IT-BPO Company, specialist market research (MR) firms, and other boutique Research and
Analytics (RA) firms.
The coming year will not see much change in the major markets that are being served
by analytics service providers. That is US, UK and to some degree, the rest of Europe will
continue to demand this space as they move up the value chain. Some providers will be
focusing on Australia and Japan.
The delivery locations are also expected to
remain the same. India, China and Eastern Europe
are the most prominent destinations on the ana-
lytics outsourcing map. Others include nearshore
countries to the US such as Mexico and Costa
Rica, and offshore destinations such as Singapore
and Sri Lanka.
On the buyers’ front, Fortune 500 companies
are the big-league clients for this knowledge
service. Pankaj Kulshreshtha, senior vice presi-
dent, Genpact's analytics and research depart-
ment articulated, “Genpact has a large concen-
tration in America and a large portion of their
current revenue comes from this region. It has
footprints in Europe, China, India and Australia. In
the coming years, it is expecting to grow signifi-
cantly in Europe and Asia-Pacific Region.”
In 2012, WNS – whose clients are based in
the US and European Union region – would also
expand its client base in the Asia-Pacific region.
The next 10 years of the analytics landscape
will be drastically different from the last one.
“With structural shifts in demographics, that will reflect more prominently in the interna-
tional trade and economics, where outsourcing will no longer be a choice. The KPO industry
in India has gone through a “concept selling” phase in the last few years for a majority of
clients who have so far utilized BPO services. At the same time, some clients have been able
to create a competitive advantage for themselves through establishing Analytics Centers of
Excellence programs that have resulted in improved decision making across multiple busi-
ness groups, markets and geographies,” opined Kharbanda.
Industry verticals such as shipping and logistics, manufacturing and supply chain were
initially not very active in this space, but they now offer good opportunities. From an offer-
ing standpoint, web and web related services are very much in demand from the market,
as are packaged solutions that combine consulting services with delivery.


57

“As a business partner, clients will expect a far greater expertise in vertical industry
knowledge from their providers as well as the latest combined BPO and IT outsourcing
capabilities. Providers will need to possess industry, technical and functional knowledge.
They will need the proven ability to deliver end-to-end processes and deploy analytics in
order to identify opportunities to improve and add value to a client’s business. And they
need a strong transformational capability by making change management a priority,” said
Sagoo.
Viral Thakker, executive director, performance and technology services KPMG pointed
out some of the emerging/growth areas in analytics:

• Customer analytics for the energy and utilities sector
• Fraud analytics in retail banking
• Cyber-analytics to detect cyber crime and terrorism
• Learning analytics to assess academic performance

Other trends that could emerge are:

• Cloud-based BI tools could see proliferation
• Social network data mining for customer analytics
• ‘Big data analytics’— Big data refers to the tools, processes and procedures allowing
an organization to create, manipulate, and manage very large data sets and storage
facilities. GS

MARCH 15
NEW YORK CITY

|


58 O U T L O O K 2 0 1 2

Contact Centers Being Redefined
Multiple channel interactions, technology innovations
and increasing preference for self service is bringing
about massive changes in the way contact centers work.

Smita Vasudevan

T
he contact center outsourcing industry continues
to witness some major transformations. A turbulent
economy, rising customer expectations and chang-
ing modes of customer interactions are swiftly redefining
contact center activities. Customer service is being increas-
ingly seen as one of the major competitive differentiators for
enterprises, as there is not much scope in other areas.


60 O U T L O O K 2 0 1 2

Interactions have grown beyond the traditional phone calls. Customers are interacting
in different ways and through different channels like email, chat and social media sites, like
never before.
Cost reduction remains one of the primary objectives as a result of budgetary pressures.
Enterprises are attempting numerous ways to reduce their cost of servicing, at the same
time not compromising on the quality. A higher percentage of technology automation is
thus being enabled with the objective of cost savings and improved customer service.
How far will automation go? Though automated technologies will continue to find their
way, where ever possible, this will depend on the complexity of transactions involved and is
not expected to replace human interactions completely. Experts and service providers have
similar views on this. Sitel foresees humanization of technology to be an important change.
The idea behind the approach is to discover ways to reduce expenses through technology
without sacrificing the human touch.

Multiple Channel Interactions and Self Service
Today customers are interacting through multiple channels and are smart enough to
decide where, how and when do they want to interact. In case of a problem, they are more
likely to look for solutions on their own before they make a call. This poses a big challenge
for enterprises to be there where all the customer is and interact in a way the customer
is interacting. Service providers that can enable their clients to interact and engage with
customers on multiple channels will clearly have an edge. Significant investments are thus
being made into channels like email, chat and Web-based interactions.
Self service is being encouraged more through technology enablement. The benefit here
lies in being able to lower call volumes and be able to take up more customer service. It can
significantly cut down the amount of time that customers need to spend waiting in queues
finding answer to their queries.
Web engagement is going to be a major part of customer care strategies. Engaging cus-
tomers once they are on the web either through self service or through assisted service will
be very important. Web retention and web conversion are two major opportunity areas.

“ Multiple channel communication will be a major trend. Players
who can bring technology to combine all mediums of communi-
“
cation to offer an optimum communication medium strategy will
stand out.
— Manish Dugar,
Senior VP Global Head, Wipro BPO

The Power of Social Media
Social media interactions are happening in a big way. More companies are thus waking
up to the benefits that a social media strategy can bring about and the impact it can have
on the overall customer service. Customers are increasingly turning to social media sites
and other online forums to find answers to their queries and even to vent out their anger
when things go wrong. It is important for enterprises to be a part of these interactions


61

to understand and control what is being said about them and use it to their advantage.
Andrew Kokes, Vice President, Global Product Management,, Sitel, commented in a previ-
ous interaction, “Here is the reality all companies must face, social media interactions are
going to happen with or without you.
Social media strategies in contact centers is still in the early stages of adoption. United
States has been an early adopter and other areas are also gradually gaining momentum.

“ What we get out of our social media activities is an addi-
tional layer of value add capability that enables us to build
better relationships with people. The major challenge here
“
is lack of awareness. But we do see increased adoption in
the coming years.
— Andrew Kokes, Vice President, Global Product
Management, Sitel

Increased Technology Automation and Cloud Adoption
More enterprises will move to the cloud and adoption rates are likely to go up signifi-
cantly. Vijay Narsapur, Strategic Business Practice
Head, Customer Service, Infosys BPO, reveals in
another interaction on automation. “Lot of contact
centers will be moving to the cloud-both hardware
and software. CRM software is already going to the
cloud” he says.
Experts have a unanimous view on this.
Technology automation is leading to major transfor-
mations and will continue to do so in the coming
years. Enterprises will take the road to technology
automation in order to cut down costs and and
be able to offer better customer service. Significant
amount of technology investments are being made
across different channels of communications.
During an interaction on technology automa-
tion in contact centers, Subramanium C, Chief
Technology Officer, Hinduja Global Services,
reveals, “Lot of new technologies are being enabled. The IVR is slowly being replaced by
ASR. TTS is another area that is seeing more adoption. These are technologies that are being
enabled to see that volumes are lowered so that automation kicks in for end clients to take
more service.”


62 O U T L O O K 2 0 1 2

“ New revenue streams like Cloud will gain popularity.
Business driven projects towards customer experience,
business intelligence, etc are examples of customers
“
spending to adopt technology evolution to keep up
competitive differentiation at services level.
— Deepankar Khiwani, Vice President,
Continental Europe Application Services,
Capgemini India

Analytics-How You Make Use of Data
How you manage data is going to have a very crucial role to play in understanding cus-
tomer behavior and making right decisions at the right point of time. Customer interactions
across different mediums offer a huge pool of useful information. Integrating the scattered
pieces of information and using it in the right way through analytic solutions can help
enterprises in improving overall performance and cutting down costs. This is thus an area
that is going to gain more prominence in the coming year.
A recent example is Avaya that has added speech analytics capabilities with the acquisi-
tion of Aurix, a global provider of speech analytics and audio data mining technology. Brett
Shockley, Senior Vice President, Corporate Development, Strategy and Innovation, Avaya,
commented in one of its press releases, “The value of document search engines is widely
MARCH 15
understood. There is another dimension of data that is largely untapped,and that is the
information exchanged through spoken interactions.”
NEW YORK CITY
What Lies Ahead?
Multiple channel interactions and technology innovations will continue to influence
contact centers in 2012. According to Amit Singh, Avasant, “Technology disruptions will be
the biggest trend to watch out for in the coming year.” Enterprises that are able to make
customer interactions simple, serve on multiple channels, imbibe new technologies and
bring out flexible offerings will clearly stand out. GS

|


63

A Cautious Optimism Continues
To Drive HRO
Withstanding the turbulent economy will be high on
enterprises' agenda next year. Non-core functions like
HRO will be outsourced more with the objective of short-
term cost savings and long-term strategic objectives.

Smita Vasudevan

R
ecession fears are around the corner and cost savings
is a priority for every enterprise. This coupled with
the growing complexities in handling HR processes
and meeting the fast changing technology advancements
is likely to drive human resource outsourcing in the year to
come. Rohail Khan, Group President, HR Outsourcing and
Solutions, ACS, says, “Focus on cost management is going to
drive HRO. The “double dip” economy in the United States is


64 O U T L O O K 2 0 1 2

forcing companies to focus on core, revenue generating areas and outsource more of the other
non-core functions, like back office processing.”

Keep it Short and Small
This year we saw more preference for small, short term deals as enterprises became more
cautious about their outsourcing decisions. Even the multi-process HRO deals had reduced
in size with the inclusion of fewer processes. Experts believe that this trend is going to
continue as enterprises are still treading a safe path and are cautiously optimistic about
outsourcing their HRO processes.
Rajesh Ranjan, Research Director, Everest Group, says, companies will continue to be
cautious and start with outsourcing a few HRO processes to a single service provider. He
adds “A multi vendor approach is likely to increase as a single vendor may not be able to
offer everything end-to-end.” The success of such contracts will depend on how enterprises
make use of such relationships to achieve the desired outcomes.

“
“
“
A multi vendor approach is likely to increase as a single
vendor may not be able to offer everything end-to-end.
— Rajesh Ranjan
Research Director, Everest Group,

Manish Dugar, Senior VP Global Head, Wipro BPO, holds a slightly contrary view on this.
He believes that instead of the trend of outsourcing different processes to different service
providers, the industry will see the emergence of multi-process transactions” he says. ACS
too holds a similar view.“Clients are driving the need for much more service integration
across HR domains, as client HR teams are downsizing and can’t effectively manage the host
of vendors they have had historically” says Khan.

Global Footprint is the Need of the Hour
Enterprises want to partner with service providers that have outsourcing capabilities
in not just one but multiple locations. Expanding their capabilities and gaining a global
footprint will be high on service providers' agenda. This they may be doing on their own or
inorganic growth strategies like mergers and acquisitions. More consolidation is thus likely
to be seen. Service providers will have to be prepared to handle this kind of complexity to
play in the HRO market. Dugar adds, “You need to have the capability of understanding the
law of land and managing the requirement of different geographies, if you want to play in
the HRO field. You can either do this on your own or partner with someone.”

Growth Areas
Payroll and Benefits have traditionally been the most outsourced HR functions. This trend
continues as enterprises will preferably start outsourcing these transaction intensive func-
tions and then move to other areas like learning and recruitment. Benefits administration


65

is expected to gain more outsourcing interest in the coming year. “Health care reforms
happening in the US is driving outsourcing in health and benefits administration.
Changes in health care reform bill may have an impact on this area. But as of now Benefits
Administration looks attractive,” says, Ranjan.
RPO is another segment that has been capturing good amount of attention. Western
economies are struggling with their unemployment rates but at the same time have also
cut down significantly on their recruitment staff. This creates the need for an option that is
scalable and flexible, and RPO fits the bill.
The mid market is another area that presents a huge opportunity. A large chunk of busi-
ness is coming from these enterprises and service providers are also developing specialized
packages to tap the vast potential of this segment. In an interaction earlier this year, Ann
Vezina, Executive vice president and chief operating officer Enterprise BPO, ACS, com-
mented, “Services need to be scalable for any size employer with the ability to grow as mid-
market organizations grow and their needs expand. We are prepared to meet their needs in
all service lines and grow with them as the economy recovers.”

It's time to Move to the Cloud
SaaS and cloud-based models are increasingly becoming
a part of HRO deals. At this time when cost pressures are
paramount, platform-based models are likely to see more
interest coming in. This is because it does not require buyers
to make upfront technology investments. The technology
part is brought in by the service providers. This eases off a
lot of burden and is thus becoming more attractive in the
current scenario.
Northgate Arinso has recently partnered with Workday
to bring multi-country payroll to the cloud. Brad Everett,
VP Strategy, Marketing and Portfolio Management at NGA,
commented in its press release, Multi-country payroll is a
challenge that ranks very high on HR leaders' agenda today,
and for which NGA has developed a unique platform. By
partnering, we can now support Workday customers in their
search for global HR and payroll excellence.

The Challenge
Buyers will look out for partners who can offer global expertize, integrated HR services
and technology innovations. The focus will be on balanced outcome, that is short-term cost
savings without compromising on long-term considerations. Khan says, “The first genera-
tion of HR services contracts are coming up for renewal and the providers need to show
innovative thinking and additional efficiencies to win the renewal. Incumbents are still pre-
vailing, but in some cases firms are breaking up the deals if the providers are not innovat-
ing.” The message is thus loud and clear.


66 O U T L O O K 2 0 1 2

“ The first generation of HR services contracts are coming up
“
for renewal and the providers need to show innovative think-
ing and additional efficiencies to win the renewal.
— Rohail Khan
Group President, HR Outsourcing and Solutions, ACS

Major Trends for 2012
• Preference for small and short term deals will continue
• Enterprises will look for service providers with global footprint
• Multi-process HRO deals will be seen but with fewer processes
• Platform-based HRO models will gain more popularity
• ‘’Best of Breed’’ approach likely to be seen more GS

MARCH 15
NEW YORK CITY

|


DIGITAL MAGAZINE
Monthly
Outlook 2012
p. 00
Expert articles from
p. 00
FLASHBACK 2011 DECEMBER 2011

1
survey analysis sourcing advisors analysts

Outlook 2012 Building

O utl OOk VOICE OF THE EXPERT
Sustaining
Excellence in
What Are Business Platforms And Why Do They
Represent The Future of Outsourcing?
Service Center Excellence: Getting Things Done
Dispelling the Ten Myths that Impede Excellence
Global Services
Where do we go next? in Business Service Delivery
Getting Multisourcing Right!

The Way Ahead
Grim economy, mounting

p.10

INAUGURAL ISSUE  NovEmbER 2011

Infrastructure Top 100 Cities
Management Regional
Services Dynamics
Infrastructure
Management Services
Experts Speak
RIM Comes of Age Benchmarks Go Strategic
Ben Trowbridge Kathy Rudy
Alsbridge Compass Management Consulting

Emerging Models in IMS Achieving Innovation in IMS

01 Amit Singh
Avasant

Global Sourcing of Services
Cliff Justice
KPMG

Stan Lepeak
KPMG

“WFM Has Changed to a Know-
ledge-based Function”

Pg 8
Robert McNeill
Horses for Sources

Pricing the Cloud
Scott Feuless
Compass Management Consulting

Stanton Jones
TPI

Why Governments Are
Treading Slow Pg 10

The gateway to the global sourcing of IT and BPO services

Hot and
ADM
Testing
Services
New:
Android Accelerates Mobile
Application Development Pg 22

September 2011

Hot and New:
ADM
Testing
Services

2011
Global
Services
Compendium
Special Report
Small, Shorter Term
Deals in HRO

Pg 20
Human Resources
Transformation


HRO

Landscape

So Old,
Yet So New

The Offshore Analytics
Pg 10
Pg 28

Making Sense of Data to Make
Money


The
Promise
of
IaaS
Pg 19
Sourcing Strategies, Trends,
and Observations Pg 32

July 2011

Cloud IaaS: How secure is
the user? Pg 24

May 2011
HRO
So Old,
Yet So New

The Promise
of IaaS

Everest Report Forecasts 20% All Eyes Are on Latin New Face of The BPO Analytics Outsourcing The Next Generation of Business No Room for Heroes in Outsourcing
Growth in FAO Pg 8 America Pg 20 Sector Pg 27 on the Rise Pg18 Process Outsourcing Pg 21 Relationships Pg 28

BPO 3 Rules to Contact Center
www.globalservicesmedia.com globalservicesmedia.com

March 2011

Live By Industry: Where
April 2011


bpo 3 Rules Contact
to Live by Center Do You Go From
Industry:
Where Do Here?
You Go
From Here?
The new rules to play by:
Growth in demand in new geographies
Balanced shoring
Domain-driven services
Unified customer experience

From the NASSCOM India The 21st Century Employee Global Services LIVE!
Leadership Forum 2011 Pg22 Incentive Program Pg24 Case studies Pg26

Next Best Utility
globalservicesmedia.com

Practices
February 2011

Computing:
NEXT BEST in Global The Reality
PRACTICES IN Sourcing
GLOBAL SOURCING
Thought-leading Practitioners’ Viewpoint
Check
The State of the Outsourcing Industry .............. Pg 8
Key Imperatives in Global Sourcing ................. Pg 11
Collaborative Sourcing................................. Pg 13
Supply Risk Monitoring ................................ Pg 16
Cloud and its Implications on Service Delivery ... Pg 18
Business Process Integration In The Cloud......... Pg 18
Accelerating Transformation through BPO.......... Pg 19

www.globalservicesmedia.com/E-Magazine
For queries write to niketac@cybermedia.co.in

68 O U T L O O K 2 0 1 2

Pointers by
Industry Leaders
Smriti Sharma, Sourabh Chandra Pushp Smita Vasudevan
CEOs' verdict
For Providers:
• Move towards op-ex model (from cap-ex).
•Diversify to increase reach and expand portfolio.
•Look at long-term engagements.

For Buyers:
• H
ave a streamlined internal process to define the outsourcing
needs and vet a prospective provider.
• Use outsourcing not to just reduce costs, but to increase value.
•Look at long-term engagements

For Both:
• W
hat is needed is an integrated relationship between the client
and the provider whereby each has a stake in the other. The two
parties must act as one in a business association that goes beyond
Partha De Sarkar a cost reduction exercise to function as a true partnership.
CEO, HGS

• Tap into newer verticals – heathcare, retail, energy public sector.
• here is global economic activity shifting to east. I would say
T
increase activity in Asia region.
• raditionally, the industry has focused on large accounts but with
T
the advent of cloud there is the big opportunity in the long tail
which is to reach out to the SMB segment.

Arvind Thakur
CEO, NIIT Technologies Ltd


69

• Generic providers’ will be commoditized. So, there is
need for a lot of specialization. Specialization can be on
industry capabilities, on technical capabilities, on the
tools and technology that you bring to the table etc. But
it is going to be a more specialized game. People who
are very generalist will approach commoditization and
then it is just a pricing game.
• D
emonstrated capability is going to be another big
factor; in truly being able to harness the opportunity.
When you are trying to outsource the core pieces of
your business, it implies higher amount of risk in the
customers mind because now you are relying on some
third party to do what you use to call core yesterdayIn
order to win that one needs very specialized and dem-
onstrated capability to be able to harness it.
• Y
ou cannot wait for such businesses and for the cus-
tomer to tell you. You will have to have the innovation
engine that you will lead to create idea and thought Deepak J Patel
leadership to make sure that the processes that you CEO, Aditya Birla Minacs
are running for your customers are operating at best in
class level.

• Mobility being new and agile companies who have cre-
ated skills on this will be wanted. Mobility outsourcing
will be played on a level field where niche companies
can compete and win against the big guns.
• C
ompanies will come looking for than fixed bid, low
value projects. Companies are looking for their out-
sourcing vendor to create more value for them and be
associated for the long term.
• D
esign will matter. Smartphones provide great user
experience. Work delivered by outsourcing compa-
nies need to maintain and if not enhance the user
experience.
Prakash Sreewastav
CEO, WINIT


70 O U T L O O K 2 0 1 2

• Cost will never lose its spot as a key driver, but it sure is in a crowd
of other value-based drivers. The provider's proven expertise in
industry solutions, sophistication of services offered, emotional
drivers like 'cultural alignment and fit' and the ability to impact
the customer's business in the long-term become equally impor-
tant criteria.
•Commoditization is on its downward spiral, while 'verticalization'
of offerings will take reigns. From a WNS perspective, being the
early adopters of a verticalized structure, our offerings have reso-
nated better in industries such as banking and financial services,
insurance, utilities and travel.
•We foresee that BPO deals will move from the FTE-based model to
outcome- and value-based. Non-linearity will be the way forward.
Going ahead, focus will be more on delivery models, a mix of off-
Keshav R. Murugesh shore, nearshore and onshore.
CEO, WNS


71

executives' viewpoint

• ncreased adaptability of cloud services: The global mar-
I
ket for cloud services is predicted to surge to US$148.8B in
2014 from US $68.3 billion in 2010. This shows that there
will be a huge transformation in the business model of
any organization. The cloud service providers should work
aggressively on finding out the solutions to cloud security
as its one of the biggest issues when we talk about cloud.
• Enterprises Mobility Market will grow dramatically:
Mobility market is predicted to grow to $7670.4M by 2016.
We are experiencing an increased demand in testing serv-
ices for mobility apps especially during 2011. We expect
this to increase further in 2012. With rise in the numbers of
private application stores, mobility services are acting as
fuel in promoting information communication technology
globally. Thus, new applications that are developed by any
organization must leverage rich browser and mobile devices
to support end-user demands for a movement from PCs to
mobile devices.
• Adoption of as a service offerings: Most of services
offered by software vendors today will soon be offered Brian J Manning
as “as-a-Service” because it gives cost efficiency which is President Managing
acceptable to most of the customers. As such, enterprises Director CSC India
will eventually be forced to standardize their processes
(for competitive-parity business functions), to embrace the
lowest-cost solutions in order to ensure that underlying cost
structures meet industry averages. As a result, clients will
need to clearly identify business processes providing com-
petitive parity, along with their underlying IT services, for
analyzing as a service potential.


72 O U T L O O K 2 0 1 2

• In both ITO and BPO, high performing businesses will
continue to extract significantly more value out of their
investments if they approach outsourcing as a partner-
ship with their service providers. Buyers are looking
at outsourcing as a driver of business value -- to help
operate their businesses better and to deliver measur-
able business outcomes – and that is best achieved with
a true business partner. To that end, we expect clients
to be much more discerning about their outsourcing
providers.
• A
s a business partner, clients will expect a far greater
expertise in vertical industry knowledge from their
providers as well as the latest combined BPO and IT
outsourcing capabilities. Providers will need to possess
industry, technical and functional knowledge. They will
need the proven ability to deliver end-to-end processes
and deploy analytics in order to identify opportunities
to improve and add value to a client’s business. And
they need a strong transformational capability by mak-
Anoop Sagoo
ing change management a priority.
BPO Cross Operating Group Lead
Accenture • T
hose providers with the ability to bring these elements
to their clients will be well-placed to succeed in 2012 –
and those that continue to view the market as one in
which it's all about “lift and shift”, transactional process-
ing and cost alone will be challenged.

• he focus will be on improved Return on Investments.
T
These are being enabled through improved poductivi-
ties with the same spend, alternate geographies new
technologies.
• Fundamental shifts in engagement model from TM
based to outcome oriented model is becoming the
norm. Certain services which are at the bottom of the
value chain are becoming increasingly commoditized
putting margin pressures on traditional large outsourc-
ing services companies.
• With the current economy trends customers are defi-
nitely looking for more at lower budgets. The focus
is more on optimizing existing IT infrastructure and
resources. Hence more focus would be on consolida-
tion and Virtualization. Investments in new technolo-
Ramesh Ajjampur gies like Cloud will continue with caution
SVP, Global Delivery
Mindteck


73

• s cloud, SaaS, mobility and other trends fundamentally re-
A
shape software development, there is a large, growing market
for specialized product development specialists. 2012 is just
the beginning of some of these massive movements. There are
a bewildering range of technologies on the market today.
• Service partners will become a key conduit for new tools and
technology. Cloud, SaaS and mobility have spawned lots of
investments and new companies producing new technology
and tools. Many organizations want to leverage these tools
but donít have the domain visibility to select the best ones
or the integration experience. Small and medium-sized enter-
prises (SMEs) are starting to invest heavily in cloud, SaaS and
enterprise mobility technology. However, few of these busi-
nesses have the technical expertise to develop this technology
in-house.
• 2012 will be the year in which cloud sourcing supplants tradi-
tional outsourcing. Thereís no question that cloud computing
Keith Higgins
has transformed the way companies do business. Organisations
Chief Marketing Officer
are now sourcing complete business solutions through the pub-
Symphony Services
lic cloud using a combination of cloud applications, platforms
and infrastructure. We expect that outsourcing companies will
become more specialised in 2012 and will include some cloud-
based tools in their offerings.

• iversify overall enterprise support to include at least 10-20%
D
home-based agent labor.
• eview collections strategy to identify opportunities to prevent
R
good payors from becoming routinely past due.
• igrate technology investments to hosted models that scale
M
web engagement and customer experience solutions as needed.

Andrew Kokes
Vice President, Global
Product Management
Sitel


74 O U T L O O K 2 0 1 2

• see more spends on BPO as they have low impact on
I
business but will help organizations save costs. I see
more of shared services being outsourced infact the
vendors will look for newer opportunities to save costs
of their customers. This will be a win-win situation for
both the customers and the vendors..
• Customers are now very clear on what they want. They
are asking vendors to show value beyond ìpure vanilla
services. Value-add is going to be the name of the game.
The expectation of the customers is to see reduction of
costs as vendors maintain their systems for long. There
will be pressure on vendors to become more efficient.
• Specialize / verticalize, implement better processes to
reduce costs and look for new opportunities in BPO that
would help customers with cost containment. It is get-
ting very clear that customers are now looking at spe-
cialized offerings. They want vendors to solve business
Satya Gottumukkala
problems and also help them with cost containment.
Executive Vice President
New focused solutions that address specific business
Anthelio Business Technologies
problem will be in demand.
Pvt. Ltd.

• irst, the classical syndrome is playing out : for many corporates
F
that didn't streamline their cost base enough in previous years,
the need for caution is leading to cost takeouts in application
and infrastructure management.
•Second, it is not just cost: let's take the telecom customers as
case in example wherein the apprehension of increased churn
is leading to operators focusing on how to secure competi-
tive advantage. So the implication for outsourcing is that IT is
moving away from setting up and running systems to the avail-
ability and performance of services. Overall this is creating new
transformation opportunities in outsourcing as well, but with a
focus on not just cost.
Deepankar Khiwani •Third, because many corporates - especially the more global
VP, Continental Europe companies - are less cash-crunched, we see investment in
Application Services project work - post MA consolidation, or new systems that
Capgemini India help in differentiation, which are accelerating because of
increased need for speed of development.


75

• The industry is going to be more specialized. As demand for
services comes up from different verticals, service providers
will need to have strong domain expertise to capitalize on
the opportunity.
• C
onsolidation will be a big trend to watch out for in 2012,
especially in low margin businesses. Service providers will
take up inorganic routes to expand their service offerings
and global reach.
• T
echnology disruption is another big trend that will have a
great influence. Innovation and technology-related transfor-
mations are likely to offer a competitive advantage to buyers
in this grim economic scenario. Service providers should be
able to offer this to survive and succeed. GS Amit Singh
Partner
Avasant

MARCH 15
NEW YORK CITY

|


76 O U T L O O K 2 0 1 2

What Service Providers Say?
Service providers put across their viewpoint on 2012.

Smriti Sharma Sourabh Chandra Pushp
Clients are looking for more industry-specific BPO offerings

In the past couple of years, weíve seen BPO mov-
ing away from transaction processing and moving
towards a driver of business value.Clients want BPO
to help operate their businesses better and to
deliver measurable business outcomes. They also are
looking for more industry- specific BPO offerings,
and services are moving from the back office to the
mid- and front office. BPO today is about mining
the huge volume of transactional data that is being
processed ñ and using industry expertise, analytics
and innovation to help a client operate its busi-
ness better and drive business outcomes ñ which
Accenture calls fourth Anoop Sagoo, Generation BPO.
The ability to undertake BPO Cross Operating Group Lead analytics on trans-
actions, understand the Accenture insights and then iden-
tify opportunities to improve and add value to the
clientís business is what our clients expect from BPO.In BPO, our clients are looking to lever-
age scale, industry expertise, analytics and technology for expanded industry-specific BPO
services. As a result, we have seen a surge of interest for industry-specific BPO offerings
such as care management, health administration, mortgage, insurance, communication
network, life sciences, consumer goods and utilities services.


77

Significant IP Assets around Business with Comprehensive
End-to-End Managed Services Model

Customers today are definitely looking at service
provider partners who have demonstrable and well
documented domain expertise around their busi-
ness. Increasingly stringent and complex security and
compliance guidelines being rolled out all across the
globe, accompanied by stiff penalties resulting out
of non-adherence is a major reason for this. Customers
also expect their service providers today to possess
significant IP assets around their business. A compre-
hensive end to end managed Brian J Manning services model with well-
defined SLAs and compelling President Managing Director value propositions has
always been well sought after CSC India and will continue to be so.

Transformation of the Outsourcing Market as we Know it Today

The shift to cloud, the emergence of enterprise
mobility and other trends have spawned a wide range
of innovative technology, platforms and services. But
the primary issue here is that many customers lack the
expertise to deploy the new solutions, and many of the
companies building the solutions donít have professional
services arms. The answer to this would be partnerships
between services companies and a range of companies
that results in best in class solutions for customers. We
are reaching the tipping point of complexity with a
huge variety of connected devices, significant security
concerns, app development challenges, and expense
management concerns. Sanjay Dhawan All these are driving forces
for most enterprises to buy President CEO Enterprise Mobility as a man-
aged service. Symphony Services Corp.


78 O U T L O O K 2 0 1 2

Five key areas of strategic focus in 2012

1. Work@Home Solutions home-based
agent program where the customer service
agent works remotely. This allows for more
satisfied agents, better customer experience,
and a more efficient operating environ-
ment. Over the next year, Sitel will continue to
evolve its Sitel Work@ Home Solutionsô with
the industry-leading Sitel Work at Home Center
of Excellence. The Sitel Work at Home Center
of Excellence is a centralized management
hub designed to raise the standard for virtual
workforce performance, security and scalability
to align virtual customer service quality levels
comparable to or better Andrew Kokes than any call center.
2. Global Language- VP, Global Product Management Based SolutionsóSitel
will be focusing on Sitel matching the language
needs of our clients with the expertise of our
global agents. Sitel combines the right agent skill set for the right global location(s) at the
right time, all of which falls within the varying operating budgets of the client.
3. Collectionsó Sitel provides domestic and international receivables management/col-
lections programs for companies across the globe. Our dedicated team offers comprehen-
sive experience in loss mitigation and provides a consultative approach, sharing industry-
served best practices to create customized strategies. In the New Year, Sitel expects to see
more focus placed on the Companyís early stage debt prevention offerings to ensure client
customer retention while reducing losses and delinquency rates.
4. Customer Experience ManagementóAs Sitel continues to invest in new call center
technologies based on client needs, a strategic focus will be placed upon on-demand
hosted solutions that improve the view of a clientís customer data, access to knowledge
and consistency of communication across multiple channels.
5. Voice and Data Analyticsóto extract greater real-time knowledge that empowers busi-
ness decisions that drive behavior and returns closer to the actual transactions.


79

Shift in Center of Gravity for Planning and Control

The big change which will take place over the next
few years is the shift of the planning and control cen-
tre of gravity to offshore even for resources still located
onshore. This could cause raised eyebrows in some quar-
ters but the crucial factor is that implementing a stand-
ard methodology that allows capacity to be managed
transparently in whatever manner suits the culture and
objectives of the company (including spanning across
company boundaries into outsource providers).
In most global companies transaction processing/
back office operations are shifting to offshore locations.
This may be just the simple transaction processing or
the majority of back office functions and in some cases
essentially the whole of the delivery function. Both
the transition of capacity and the ongoing optimisa-
Richard Jeffery
tion of the use of that capacity can only realistically
Founder Managing Director
be achieved with a combination of transparency of
AOMi
plans and monitoring and reporting of actual perform-
ance and this in turn requires a standard approach to and culture of managing operations.
In our view, the implementation and partnering framework offered by AOM provides a
unique solution to an increasingly universal set of challenges.

Strong Focus on Specific Verticals

Buyers are looking to work with companies that
have a strong focus on their specific vertical. Firm
that make significant investments in the vertical,
high-touch account management, credible his-
tory of creating value for clients with a strong bal-
ance sheet.

Lalit Dhingra
President, NIIT Technologies, Inc.;
Director, NIIT Media Technologies
Managing Director, NIIT Healthcare
Technologies


80 O U T L O O K 2 0 1 2

Value-Add Is the Name of the Game

Customers are now very clear on what they want. They are
asking vendors to show value beyond pure vanilla services. Value-
add is going to be the name of the game. The expectation of the
customers is to see reduction of costs as vendors maintain their sys-
tems for long. There will be pressure on vendors to become more
efficient. GS

Satya Gottumukkala
EVP
Anthelio Business
Technologies Pvt. Ltd.

MARCH 15
NEW YORK CITY

|


EXPERTS SPEAK

Leading Industry Experts throw
light on what 2012 has in store

82 E X P E R T S

Global Services Trends: 2012
Out with the old and in with the new. Well, almost!

Atul Vashistha is the Chairman
CEO of Neo Group Inc., a glo-
bal firm. Atul is a recognized
leader in the global services
industry with numerous indus-
try recognitions, such as ‘Top 25
Most Influential Consultants’,
‘Nearshore Power 50’, ‘HRO
Superstar’, ‘FAO Superstar and
Atul Vashistha Global Sourcing Leader’.
Chairman CEO, Neo Group Inc.

1. Demand Outlook
Demand will weaken initially, but then should improve
by mid-year. The inhibiting factors will be:
• Continued tight budgets.
• Minimal discretionary spending, with approvals
requiring rigorous ROI explanations. The majority
of investments will need positive ROI within the
fiscal year and as a result, lead times and planning
cycles will be short.
• Most IT budgets will be approved on rolling month
or quarterly basis


Ex-
Introd ucing The World's Foremost
pert On Outsourcing

Vox Artis, a Latin phrase that literally means voice of the ex-
pert, is a resource of cutting-edge insights by xperts in global
e
sourcing of bussiness and technology, the esource is intended
r
to be a knowledge repository and is oriented to help practi-
tioners make actionable decisions. The voice of experts is de-
livered on various subjects and in multiple formats such as e-
book, pdf, microsite, webinars, webcasts, expert round tables
and more.

An initiative by

For queries, write to us at globalservices@cybermedia.co.in

84 E X P E R T S

• Systems integration, led by standardization and
migration to common global processes, will lead
growth. Simplify remains the buzzword for CIOs
• Cloud computing offerings will stimulate greater
demand for infrastructure outsourcing. Outsourcing
vendors, therefore, will revamp the architecture of
their product offerings to fit the modular needs of
a cloud environment. Buyers moving to the cloud
will thus will create a big demand for redesigning
software architecture, and also for QA and testing
services. 2012 is clearly about cloud and mobile,
said Sam Rasul, VP, ABB Inc.

The ROI of Business Process Outsourcing will continue

“ The return is no longer
generated from the reduced
to be challenged. As we support clients in this sourcing
area, we see lack of domain skills on supplier teams stym-
cost of a transaction but ing deals. “While I agree a return on investment in Business
rather from staffing quality Process Outsourcing can be challenging in some functional
and flexibility, tools, proc- areas, the return is no longer generated from the reduced
ess improvement and inno- cost of a transaction but rather from staffing quality and
vation that remains inherent flexibility, tools, process improvement and innovation that
“
in the culture of third party remains inherent in the culture of third party global service
global service providers. providers. I also would forecast significant growth in the
Amanda Sweeney, Director, KPO area; for retail, specifically focused on business analyt-
Petco Animal Supplies. ics. I believe retailers are beginning to see the true benefits
of a global delivery model and are moving in the direction
of working from the ground up to establish the right inter-
nal/external model versus starting with a full in-house staff,
said Amanda Sweeney, Director, Petco Animal Supplies.
Outsourcing by mid-market companies will be on the rise
with much attention on platform- based bundled outsourc-
ing, and transaction- based pricing. The most common
example is services such as payroll and hosting services.
“We have witnessed a 20% rise in real estate outsourcing
services to middle market firms over the past three years.
These firms are outsourcing at a faster pace as a means


85

to create operational nimbleness and gain strategic com-
petitive advantage. They also want the services available to
larger companies to help their competitive position.”, said Bill
Concannon, President of CBRE’s Global Corporate Services
business.

2. Operating models going retro
A mix of factors will affect the market. At the same time,
continued hiring and attrition challenges at global busi-
nesses, and overall governance requirements, will accelerate
buyers’ move to managed services models.

3. Professionalization of Outsourcing
Supplier management and governance challenges
will also help clients recognize the need for profession-
ally trained managers on their staff. Programs such as
Certified Outsourcing Professional (COP) from International
Association of International Professionals (IAOP), and work-
shops will be leveraged more.
Additionally, customers will increasingly see clear differ-
ences in sourcing and managing in the services sector vs.
product categories. This will lead them to place a higher
importance on sourcing leads and high-quality vendor
managers.

4. MA to continue, but yield little benefits
Small acquisitions, focused on specific domain knowledge,
will continue among suppliers. The gap between high-end
Tier 1, and smaller Tier 2 providers is wide now. At the same
time, there is an interesting mix of billion-dollar firms that
have yet to stake a lead claim in their category; they need
clearer differentiation.
Some niche, or Tier 2 players, will continue to prosper,
but focus is key to their success. Therefore, clear differen-
tiation branding is needed for them as well. There are no
clear leaders in this category yet. CIOs need to make sure


86 E X P E R T S

that detailed due diligence happens when selecting a Tier
2 partner. Assess if the fit is right with your future plans and
their investments.

5. Pricing is expected to be flat in spite of many upward
pressures
Pressure on suppliers will continue, meaning that pricing
will be flat – but not down --compared to 2010/11 levels.
Moreover, weak exchange rates and weakness of the U.S.
dollar, will put increased pressure on suppliers. This could
be a good time for businesses to get good deals on contract
terms. Increasingly, outsourcing will move away from staff
“ There will be greater
attention on the diversity
augmentation/time and materials toward output-based
pricing and managed services.
of one’s geographic port-
folio as well as on moni- 6. Hiring and Utilization will strengthen
toring of risk and compli- Expect to see growth in new graduate hiring by suppliers
ance related to disruption as a result of market growth and the need to reduce costs.
“
at supply locations and the The better firms will continue to operate with staff utiliza-
supplier base. tion in the high 70s to low 80s. In addition, hiring in newer
geographies-- such as Brazil, Mexico, China, Poland and
Colombia-- takes some attention away from India.

7. Wages will rise creating increased pressure on
margins
Higher inflation is causing wages to rise 10% -15% in
India and many other Asia/ Pacific locations, while U.S.
and Western Europe will see much smaller raises. Latin
American wages will rise more than 8 percent.

8. Proactive Risk Management
Proactive Risk Management is important to the contin-
ued growth of the outsourcing industry.
There will be greater attention on the diversity of one’s
geographic portfolio as well as on monitoring of risk and


SAVE
the
DATE
03.15.2012

Organizers

88 E X P E R T S

compliance related to disruption at supply locations and
the supplier base.

9. Rising Geographies will take market share away
from traditional locations, but the overall pie is
growing
Eastern Europe and Central and South America are surg-
ing and buyers will increasingly utilize existing supplier's
Global Delivery Models to provide time-zone coverage and
realize true 24x7x365 support. Offshore players will also
continue to expand and/or setup operations in new geog-
raphies, such as Brazil, Poland, China, Mexico and Colombia.
In conclusion, expect something new, something old and
something borrowed in global services and outsourcing as
we head into 2012. But most importantly, expect frequent
change and so don’t go long on risk. GS


89

Future of Outsourcing in 2012
Greater emphasis within bpo in maximizing value
from existing customer bases.

John is the founder of NelsonHall
and has been CEO since its incep-
tion in 1998. John has over 20
years' experience in the services
sector, principally in roles with
strategic marketing responsibili-
ty. John previously held senior
positions with suppliers and
research agencies in both Europe
John Willmott and the U.S.
CEO, NelsonHall

A
s we build-up to 2012, Q4 2011 has a very similar feel
economically to Q4 2008, which will potentially have
major implications for outsourcing next year with
similar business pressures being experienced in 2012 to
those felt in 2009.

So what are the parallels and differences between 2009
and 2012 and what implications does this have for the
outsourcing industry in 2012?
Well firstly, the economic pressure in Q4 2011 is com-
ing from a different geography, this time the Euro zone,
rather than the U.S. However, in both cases, the result is a
slowdown in economic growth globally, with the mature
economies such as the U.S. and Europe hovering around


90 E X P E R T S

the point of recession, and a slowdown, though still high
single-figure GDP growth, in the emerging economies.
This has implications both for the geographic emphasis
of the outsourcing vendors and for the approaches taken to
outsourcing in the various geographies.
Clearly the nature of this demand is different from that in
the mature geographies and is about bringing best practice

“
processes, people and technology to support high transac-
Clients are also seek-
ing contractual flexibility tion growth. The emphasis is less about labour arbitrage with
that enables them to scale service delivery typically in country or region, though this
up in those parts of their trend is encouraging the development of delivery capabil-
business where growth
is occurring and to scale ity outside the established centers. This acceleration in use
back the number of FTEs of BPO and outsourcing in “growth markets” will continue
in areas where levels of apace in 2012 as vendors seek to inject growth beyond that
“
business and transactions
available within the depressed mature economies.
are declining.
In the mature economies, the focus is returning even
more strongly to cost reduction and to aligning cost struc-
tures with business volumes while minimizing client invest-
ment. This leads to contracts that are more about quick
wins with a 12-month or lower payback time, than massive
end-to-end process transformations. Clients are also seek-
ing contractual flexibility that enables them to scale up in
those parts of their business where growth is occurring and
to scale back the number of FTEs in areas where levels of
business and transactions are declining.
However, while an economic slowdown places a greater
need on organizations for process excellence and reduced
process costs, and organizations typically recognize this, it
also enhances all the main inhibitors to BPO and outsourc-
ing i.e. uncertainty regarding the shape of their future
business and levels of demand together with increased
difficulty in providing the executive time and investment
needed to carry out the deal and undergo transition.
There is also the added pressure not to impact service
quality, as often happens immediately post transition, at
a time when the business may be in a state of fragility. So,


91

contrary to expectation, business process outsourcing in
order to flourish needs some level of short-term stability,
if only to free up the management bandwidth necessary
for adoption.
In addition, if organizations are seeking immediate
impact i.e. with the next 6-months, then levers such as
office closures and redundancies have much more rapid
effect than BPO. Organizations in these circumstances
typically recognize that they have a requirement for BPO
to assist them in moving to more standardized processes
and to process excellence but BPO remains essentially a
medium-term, rather than a short-term, cost lever, which
reduces its adoption in times of significant economic
stress.
In addition, the continuing emphasis on cost reduction
from key markets such as the U.S. combined with wage
inflation and staff attrition in India and China will lead ven-
dors to enter new lower cost locations moving to parts of
India for example which have yet to experience BPO and
may deliver both lower cost and greater employee loyalty.
At the same time, political pressure in the U.S. will
lead vendors to offer a greater range of onshore options,
again using new lower cost locations where possible, with
HCL’s introduction of “socially-responsible” outsourcing an
example of this trend.
In addition to the economic forces at work, there are
also technology forces impacting the level and manner of
outsourcing adoption. Chief among these are cloud and
social media.
Surprisingly enough, both of these factors are having
a positive impact on the level of demand for BPO while
within IT outsourcing cloud is having a positive impact
on niche application adoption through SaaS but on the
whole a negative impact on the adoption of large-scale IT
infrastructure management services.


92 E X P E R T S

As discussed above, the economic environment in the
mature economies is generating a need for quick wins,
leading in many cases to smaller, shorter BPO contracts.
Here cloud and social media technologies come into their
own, with organizations able to use BPaaS services in con-
junction with their core processes and core technologies
for example to enhance their ability to apply more sophis-
ticated collections strategies and improve their DSO or use
specialist P2P technology to reduce the numbers of screens
used by agents in a given transaction and improve the take-
up of early payment discounts. In practice, there are many
sub-process areas where BPaaS can be use both to augment
existing core systems and processes and to implement new

“ Typically organiza-
tions are still not ready
“edge” processes where there has been little formal process
and technology in the past.
to adopt out-and-out Similarly, social media services also offer a means of
public cloud for produc- achieving a “double benefit” by simultaneously offering
tion applications, with customer service cost deflection and improved customer
the preferred approach satisfaction. In particular, social media can be used to both
being a gradual move proactively identify issues as they arise and to resolve these
towards hybrid cloud through multi-channel outbound notification. It can even
with public cloud being be used as a partial means of crowd-sourcing, involving an
adopted in support of organization’s customers in its sales and customer service
storage in areas like efforts.
e-commerce and cus- Accordingly, NelsonHall expects to see a significant
tomer relationship man- rise in the use of BPaaS to tackle sub-process optimiza-
agement which are both tion both within core processes and to support new
customer-facing and emerging requirements, and in social media in sales
“
have volatile levels of customer service process optimization. Overall there will
resource usage. be a greater emphasis within BPO in 2012 in maximizing
value from existing customer bases, with the emphasis on
cross-selling and up-selling continuing to increase within
BPO contracts.
So what impact is cloud having on IT outsourcing? In
2012, it will continue to inhibit the adoption of large-scale IT
infrastructure management contracts, since organizations


93

are still typically working out what cloud means to them.
Typically organizations are still not ready to adopt out-
and-out public cloud for production applications, with the
preferred approach being a gradual move towards hybrid
cloud with public cloud being adopted in support of stor-
age in areas like e-commerce and customer relationship
management which are both customer-facing and have
volatile levels of resource usage. But as in BPaaS, cloud will
encourage use of SaaS for niche applications.
So overall what does NelsonHall expect to see in out-
sourcing in 2012:
• Single digit growth in the mature economies with
an emphasis on quick sub-process wins rather than major
transformation, with double-digit growth in the emerging
and growth economies
• Increased acceleration to new lower-cost delivery
locations both onshore, to meet branding and political
pressures, and offshore to re-establish high levels of labor
arbitrage
• Increased adoption of BPaaS, both embedded
within existing end-to-end services and also increasingly
in standalone form, and SaaS in ITO
• Continuing emphasis on certainty of outcome in
short timescales within the mature economies with proc-
ess benchmarking and roadmaps key factors in establish-
ing certainty of outcome. GS


94 E X P E R T S

A Year of a Profound Change in
Software Development
2012 is the beginning of some of these massive
movements.

Keith brings more than 20 years of
technology, product and outsourc-
ing services experience to Symphony
Services. Prior to joining Symphony
Services, Keith was senior vice presi-
dent of marketing at Aricent. Keith
was vice president of worldwide
marketing for Copper Mountain
Networks. Keith has also held senior
marketing and sales positions at
Keith Higgins StrataComa, Cisco Systems, and
CMO, Symphony Services Sprint.

T
he Outsourced Product Development (OPD) mar-
ket is going through a period of massive change.
As enterprise software enters a great renaissance
period driven by mobility, cloud computing and Software
as a Service (SaaS), software manufacturers are increasingly
turning to experts in product development to help them
deliver innovation to market faster, and at a lower cost. By
2015, technology analyst Forrester expects the market for
product development services to approach $19B USD.
During 2012 the market for product development
services will become increasingly fragmented and


95

specialized. Demand for general outsourcing services
will decline. Instead, we expect organisations to turn
to specialist service providers for support with very
specific initiatives related to technology such as mobil-
ity, cloud and SaaS, their industry, business and vertical
segments.
Six key trends will influence the product development
services market in 2012:

1) ISVs will swap or expand their
service partners for better results
Many Independent Software Vendors (ISVs) have long
standing agreements with their software engineering
2012 will be the year partners. These are now beginning to unravel. Most
in which cloud sourc-
agreements were drafted before the advent of cloud
ing supplants traditional
outsourcing. Thereís no computing, enterprise mobility and SaaS and are no
question that cloud com- longer relevant.
puting has transformed According to the global consultancy Zinnov, 70% of
the way companies do
business. We expect ISVs look at industry benchmarks every year to re-nego-
that outsourcing compa- tiate contracts with their services partner. Increasingly in
nies will become more 2012 ISVs will be looking to add rigorous Service Level
specialised in 2012 and
Agreements (SLAs) and other outcome-based conditions
will include some cloud-
based tools in their to the commercial engagement model with their services
offerings. partners.
As a result, we expect to see savvy ISVs using these
measures to add and replace a high volume of services
partners during 2012.
We predict this will create a significant opportunity for
specialist service providers, as more ISVs will move to a
multi-source model involving a spectrum of trusted part-
ners. ISVs will actively seek out specialist help to address
specific pain points in their businesses, speed innovation
and reduce costs. They will not hesitate to call on the best
talent available. Incumbency is no longer the advantage
it once was.


96 E X P E R T S

2) Enterprise mobility will reach a
tipping point
Today’s workers are not static. They are constantly on
the move and need to have instant access to information
anywhere, anytime. According to a recent Gartner survey,
30% of large organisations cited enterprise mobility as
their top business priority for 2012.
In the past, the enterprise tended to be a closed and
homogenous place. Employees would typically use one
type of device – like a Blackberry – to communicate
amongst themselves. Enterprises now have to grapple
with a dizzying array of business and connected mobile
devices, all of which need to communicate seamlessly and
securely with one another.
Organisations will address this challenge in 2012 by out-
sourcing their enterprise software mobility development.
Complexity will drive this trend. There are massive hurdles
for companies to overcome if they want to develop their
own enterprise mobility services. Challenges involving
security, application development, expense management
and system integration have to be comprehensively dealt
with. Only a finite number of companies around the world
have the skills and resources to do this.
We’re convinced that the enterprise mobility market has
reached a tipping point. Expect to see more companies
buying enterprise mobility as a managed service in 2012.

3) The market for personal health
management systems will explode
2012 will see a rapid growth in the adoption of personal
health management systems. There are already applica-
tions on the market that help patients compare the qual-
ity and performance of different hospitals. Other systems
– such as Intel’s Health Guide – allow patients with chronic
illnesses to keep doctors informed of their conditions.


97

Applications have also been developed to encourage
patients to take their medication. US-based HealthPrize
has developed an innovative platform that gathers daily
compliance data from patients, verifies their prescription
refills and rewards them for sticking to their medication.
Other healthcare systems collect non-clinical data to help
users improve their general quality of life. One example is
the Nike+iPod Sports kit, which measures the distance and
pace of a run and records the amount of calories burned.
The speed of growth in the industry is set to quick-
“ During 2012 the mar-
ket for product devel-
en. By 2015, as many as 500 million smartphones will
have a health-related application on them. The Veterans
opment services will Administration in the US is planning to rollout 100,000
become increasingly iPAD tablets across 152 hospitals. Next year, we expect to
fragmented and special- see a host of new vendors enter the market with innova-
ized. Demand for gener- tive connected healthcare solutions.
al outsourcing services
will decline. Instead, we 4) Cloud sourcing will outpace outsourcing
expect organisations to 2012 will be the year in which cloud sourcing supplants
turn to specialist service traditional outsourcing. There’s no question that cloud
providers for support computing has transformed the way companies do busi-
with very specific ini- ness. There are now two million users of Salesforce.com
tiatives related to tech- around the world and 25 million users of Google Apps.
nology such as mobil- The way in which companies utilise cloud technology
ity, cloud and SaaS, their is changing too. Organisations are now sourcing com-
“
industry, business and plete business solutions through the public cloud using
vertical segments. a combination of cloud applications, platforms and infra-
structure. There are good reasons why this happening.
Public cloud services give companies much more granular
control over their IT environments. They also offer a much
cheaper alternative to traditional outsourcing – some
businesses can cut their costs by as much as 85% by going
down the cloud sourcing route.
We expect that outsourcing companies will become
more specialised in 2012 and will include some cloud-
based tools in their offerings. An example is our partnership


98 E X P E R T S

with Electric Cloud. The company’s products help soft-
ware developers to create private development clouds.
Software developers can then use these clouds to build,
test, and deploy software quickly and cost-effectively.
Gartner predicts that 75% of all computing will be in
public clouds by the year 2020. We predict that cloud
sourcing will reach critical mass in 2012.

5) Service partners will become a key
conduit for new tools and technology
Cloud, SaaS and mobility have spawned lots of invest-
ments and new companies producing new technology
and tools. Many organizations want to leverage these tools
but don’t have the domain visibility to select the best ones
or the integration experience. And the new companies
themselves don’t have professional services arms so serv-
ice companies will fill this critical gap. Small and medium-
sized enterprises (SMEs) are starting to invest heavily in
cloud, SaaS and enterprise mobility technology. However,
few of these businesses have the technical expertise to
develop this technology in-house. Nor do they have profes-
sional services arms capable of doing the work for them.
We expect these companies will turn to outsourcing
partners to get the specialist help they need in 2012.
Service companies will effectively become conduits for
emerging platforms, tools and technologies. Over the next
12 months, service firms will put a lot of energy into
locating new best-in-class technologies for their clients.
They will then deliver these innovative technologies to
their customers as a trusted partner.

6) Open Source will come of age
We predict that companies globally will adopt open
source at an accelerating rate throughout 2012 in a wide
variety of ways. More companies are waking up to the
significant cost savings they can gain from using this


99

technology. For example, more than half of the respond-
ents surveyed in a recent Gartner report have adopted
Open Source Software (OSS) as part of their IT strategy.
Enterprises are increasingly using Open Source code to
speed up the deployment of mobile, cloud and virtualisa-
tion technologies.
Companies are also choosing OSS because it is vendor-
neutral and flexible. More than 90% of respondents to the
Future of Open Source Survey, published in May 2011, said
they had adopted OSS to avoid vendor lock-in.
These trends lead us to believe that Open Source use
will escalate throughout 2012. Service companies will be
amongst the most avid users of the technology. By incor-
porating OSS into their offerings, outsourcing companies
will be able to help clients get rapid speed to market for
new products and services.

Conclusion
As cloud, SaaS, mobility and other trends fundamentally
re-shape software development, there is a large, growing
market for specialized product development specialists.
2012 is just the beginning of some of these massive move-
ments. There are a bewildering range of technologies on
the market today. The good news is that the service indus-
try is becoming more and more specialised. Companies
that want to take advantage of the hottest initiatives
today – be they Saas, cloud or enterprise mobility – can
get all the assistance they need. The right software devel-
opment service providers will have in-depth knowledge of
all these platforms and the competency to deploy them
quickly and at a competitive price. They will also offer
outcome-based engagement models that fit each client’s
needs. If you want to stay ahead of the technological
curve, take the time to talk to a specialized service pro-
vider like Symphony in 2012. GS


100 E X P E R T S

Small Frames and Big Pictures:
Keys to Success in 2012
Effective sourcing strategies are increasingly
characterized by a granular attention to detail coupled
with a high-level view of operational strategy.

Nigel Hughes is Markets and Services
Strategy Director for Compass, an ISG,
Inc. company. He has 20 years experi-
ence in Service Development, Change
Management and Performance
Management, and is responsible for
aligning and expanding Compass
services with market opportunities.
Industry expertise includes financial
Nigel Hughes services, manufacturing, public sector,
Director, Global Services,
Development Compass Management and utilities.
Consulting

A
s client organizations and service providers assess
the sourcing landscape and define their priori-
ties for 2012, a clear theme emerges. Executives
are focusing on performance at a granular level to ensure
optimal efficiency, while at the same time maintaining
a high-level perspective on long-term operational strat-
egy. In other words, putting out fires is not enough; rather,
today’s competitive imperative is to address emerging
challenges with urgency, while charting a path toward a


101

fully integrated global enterprise that takes full advantage
of standard services, utility computing, and cloud delivery
models.
Consider CIOs, who are increasingly haunted by the
specter of the “Bring Your Own Device” phenomenon; spe-
cifically, the thorny issues involved in managing the iPads,
Blackberries, iPhones, and other devices that employees
purchase and use for work-related purposes.
One set of considerations involves what policies to define
and enforce: who can use what kind of device for what kind
of activity? Who will be allowed access to what level cor-
porate network? What criteria will be applied to determine
accessibility? What if an approved user wants to collabo-

“ For both client organ-
izations and service
rate with a colleague who doesn’t pass security clearance
muster? It becomes very confusing, very quickly.
providers,sourcing suc- Another challenge surrounds application and infrastruc-
cess in 2012 will require ture support for myriad mobile devices. Will character-
a combination of effi- based legacy applications hamper mobile functionality? Put
ciency and effectiveness differently, who wants to tell the EVP he can’t access sales
doing things right on a figures on his iPhone? For infrastructure, BYOD impacts
daily basis to optimize network strategy in terms of managing perimeter security,
performance, and at the IP, and client data, and other issues.
same time doing the While BYOD raises a number of thorny and immediate
right things in terms of issues, it needs to be viewed in a broader context of the
defining and implement- big-picture tasks of IT operational strategy – including
ing a long-term enter- platform enablement, management of legacy applications,
“
prise strategy to support and rationalization of application portfolios. My colleague,
the business. Compass Consulting Director John Lytle, says that while
CIOs are fretting about BYOD, they are also increasingly con-
cerned about developing a long-term ‘operational defense
plan,’ based on a solid understanding of spending and utili-
zation, and guided by optimized shared services and sourc-
ing. As such, he says, “The imperative to effectively support
mobile devices can become part of the strategic plan to
transition the enterprise from where is now to where you
know it needs to be.”


102 E X P E R T S

In the BPO space, there’s a similar correlation between
granularity and overarching strategy. My TPI colleague,
Managing Partner Bill Huber, says service providers are
eschewing price-based differentiation and focusing instead
on vertical- and process-based specialization. Rather than
relying on labor arbitrage, vendors are applying innovation
and automation to specific business issues to deliver value
and generate profits.
At the same time, client organizations are pursuing
broader agendas in response to growing C-level interest
in re-structuring broad swaths of the organization. This
approach contrasts to earlier efforts, which focused on
discrete functional areas. “Cost savings remains a goal,
but executives are becoming more ambitious about using
BPO to free up capacity and make better use of limited
internal resources and capture business knowledge,” says
Huber. “The goal is to tend the garden more intelligently,
to leverage standardization and address unique growth
challenges.”
Huber anticipates increased BPO activity in 2012, as busi-
nesses recover from their “deer in the headlights” reaction
to the 2008 recession. “Businesses have been too nerv-
ous to do anything because of uncertainty on regulations
and the economy. Today, while the economic risks remain,
there’s a realization that you can’t simply wait and so they
are moving forward.”
The banking sector, meanwhile, faces continued pres-
sure to “do more with less” and improve cost structure. Terry
Kuester, global leader of the Business Advisory Services unit
of TPI, says banks are addressing this challenge by focusing
on granularity. “The meat axe stuff has been done; now it’s
time for the scalpel.” Specifically, he says, managers accus-
tomed to assessing a unit’s performance at a high level
must now take a more detailed view and manage from the
bottom up. “If you look at the PL of a bank’s auto-lending
unit, you can see a trend and assume one thing or another.


103

That’s no longer enough. You need to manage dealer rela-
tionships and understand which ones are profitable and
which ones aren’t.”
Kuester sees a significant opportunity emerging in the
small- and medium-business (SMB) lending operations of
major banks. While improvement initiatives traditionally
have focused on retail and commercial loan operations, the
SMB space is “neither fish nor fowl” and has been somewhat
neglected. “Banks have struggled with SMB operations,”
says Kuester. “They don’t understand the processes and the
cost structures, and there aren’t clearly defined benchmark
“ While improvement
initiatives traditionally
standards or best practices.” With the emerging imperative
to leave no stone unturned in identifying and addressing
have focused on retail
and commercial loan performance gaps, executives in charge of SMB operations
operations, the SMB are eager for insights into how to drive improvement.
space is ìneither fish
nor fowl and has been
“ For both client organizations and service providers,
somewhat neglected. sourcing success in 2012 will require a combination of
efficiency and effectiveness – doing things right on a daily
basis to optimize performance, and at the same time doing
the right things in terms of defining and implementing a
long-term enterprise strategy to support the business.


104 E X P E R T S

Predictions on the Cloud Age:
2012
The current landscape of the outsourcing industry will
shift in 2012. Most notably, we’ll see a strong transition
to cloud computing.

Fred Côté is the president of
Kunnect, an industry leader in
cloud-based call center
telephony solutions. He has
over 10 years of sales and
operation management
experience and has spoken at
conferences worldwide.
Fred Côté
President, Kunnect

T
he year 2012 might be associated with the Mayan end
of the world prophecy, but it also signals the start of a
new era for the outsourcing industry – the cloud age.
The current landscape of the outsourcing industry will
shift in 2012. Most notably, we’ll see a strong transition to
cloud computing. Cloud-based technologies have made
a notable impact on the business community in the past
five years. However, it has been in the last two years that
we have seen cloud providers increase ten-fold.


105

2011 was the beginning of an amazing era, which will
prompt change, especially to cloud-based technologies
and the call center industry.
Here’s what we can expect to see in the year ahead:
1. “100,000 new jobs will be created in the call center
and BPO field. Two new proposed laws will prompt this
job growth – the U.S. Call Center and Consumer Protection

“ 50 percent of all tradi-
tional BPO workers will
act, which seeks to restore outsourced call center jobs,
and the Veterans Job Bill, which will provide employers
be doing some form of with tax credits for hiring veterans.”
multi-channel work. This 2. “The US call center and telemarketing industry
implies that agents are will see $23 billion in revenue in 2012 - roughly $5 billion
doing more than just one more than 2011 due to significant job growth. In 2011,
form of client interaction there were 336,000 telemarketing employees. New ini-
“
like email, telemarketing tiatives like those set forth by Jobs4America are already
or chat. creating new jobs.”
3. “75 percent of companies will choose cloud sub-
scriptions lasting more than one year. The adoption
rate for cloud-based services is increasing dramatically.
Consumer-based familiarization with the iPhone 4s’ iCloud
will further support the cause for cloud-based solutions.
Organizations are also witnessing ROI in the cloud, as evi-
dent in a CSC study showing that 82 percent of businesses
adopting cloud services save money.”
4. “The ‘at home’ remote agent call center workforce
will see 30 percent growth.This will be due to the para-
digm shift in employer perception in the productivity of
this employment segment. In an economically critical
time, companies will do whatever they can to increase
productivity, grow revenues and control expenses.”
5. “50 percent of all traditional BPO workers will be
doing some form of multi-channel work. This implies
that agents are doing more than just one form of client
interaction like email, telemarketing or chat. This will
be substantiated by the continued growth in companies
adopting multi-channel CRM solutions and it will translate


106 E X P E R T S

into companies buying new state-of-the-art hosted multi-
channel solutions.”
6. “There will be 2.5 billion global internet users by the
end of 2012. As the availability of broadband and smartphone
connectivity increases globally, this number will continue to
grow at a rate of more than 20 percent annually. We crossed
the 2 billion internet user platform in January 2011, as report-
ed by ITU.”

The Future of BPO/Contact Center Outsourcing in the
U.S.: How to Prepare
Despite seeing a steady stream of interest from offshore
BPOs for cloud-based telephony solutions, there has been an
impressive increase in demand from U.S. based firms. This is
a sign of an improving business environment in the U.S., one
that will rely heavily on optimization, cost reductions and
increased efficiency - all deliverables of cloud-based solutions.
According to research from Datamonitor, contact cent-
er outsourcers saw significant cost saving benefits from
home based agents compared to contact center facilities.
Based upon estimates from brick-and-mortar providers,
cost savings estimates can vary between 20% to 30%.
With cloud-based solutions gaining momentum, U.S. com-
panies have a responsibility to “know the facts” and make
informed decisions, while offshore outsourcers need to firm
up their value proposition if they want to remain competitive
on more than just price. GS


107

Knowledge Services Will be
Most Important in 2012 Growth
Strategies
The key will be the ability to understand and stay ahead
of buyer demands.

Deepali manages projects in
the ValueNotes Sourcing
Practice. She has undertaken
projects across verticals such
as e-learning, legal outsourc-
ing etc. Her experience
includes projects on compet-
itive intelligence, partner
selection, destination analy-
sis, etc.
Deepali Sathe
Project Manager,
ValueNotes Sourcing Practice

• Genpact announced its plans to acquire US based
EmPower Research, which offers social and tradi-
tional media monitoring and measurement, event
impact research, brand tracking and data man-
agement. Its clientele spans across PR agencies,
technology firms, pharmaceutical and consumer
packaged goods (CPG) companies. This is likely to
help them cross sell services and will add expertise
to their Smart Decision Services business.


108 E X P E R T S

• EXLService Holdings, post its acquisition of Trumbull
Services – a specialized service provider to the
insurance industry, is now looking at enhancing
the existing capabilities of Trumbull’s SubroSource
platform by investing in data analytics.
As Information Technology (IT) and business proc-
ess outsourcing (BPO) companies realign their growth
strategies to meet changing buyer demands, many have
realized the importance of expanding their product and
service lines to include knowledge services (or knowledge
process outsourcing – KPO). The examples above are
indicative of a growing trend among the IT and BPO com-
“ 2011 has been the start
of a dramatic shift in the
panies to focus on exploring lateral growth even as they
build on existing capabilities and strengths. This reflects
structure of the industry
and clear winners and los- a shift where providers need to build knowledge based
ers will emerge in the next capabilities as opposed to process capabilities.
five years. The key will be
their ability to understand
“
and stay ahead of buyer The synergies and benefits are too strong to ignore
demands. Now that cost savings due to offshoring and simple
process optimization are done, buyers are seeking more
value. Their expectations from service providers have
moved beyond traditional processes, e.g., call analytics
along with call center services to improve hit rates. They
want service providers to contribute in ways that will
impact their business.
To cater to this evolution in buyer demand, service
providers are making efforts to leverage existing client
relationships and expand in service areas where they
are already present. When Accenture agreed to acquire
Zenta, a provider of residential and commercial mortgage
processing services in the United States in August 2011,
Terry Moore, global managing director of Accenture Credit
Services said in the press release, “In the residential mort-
gage business, low customer satisfaction, rising fulfillment
costs, and falling pull-through rates -- coupled with slower
refinancing and purchase activity -- are undercutting


109

profitability. On the servicing side, regulatory changes are
forcing operational transformation… This acquisition will
help our clients address these challenges by combining
Zenta’s resources and expertise in mortgage processing
with Accenture’s long track record helping financial insti-
tutions design and execute complex, large-scale business
transformations. Zenta’s white-glove approach to mort-
gage processing will serve our clients well.”
The other obvious benefits are higher billing rates and
the potential move up the value chain. Many suppliers
achieve this by acquiring capabilities in areas where they
predict a definite demand growth. As Genpact stated in its
press release post its acquisition of Symphony Marketing
Solutions (SMS), “Genpact was one of the first companies
to offer high-end analytics services from delivery centers
in India and today is one of the largest global providers of
the full spectrum of analytics services. The acquisition of
SMS expands Genpact’s scale and depth in the retail, phar-
maceutical and consumer packaged goods industries and
reinforces Genpact’s leadership position in the knowledge
process outsourcing industry.”
Many other instances of this phenomenon already gain-
ing significant traction were visible in 2011. Infosys BPO,
FirstSource, TCS BPO, are just some examples among a
growing breed of companies looking to strengthen their
presence in various knowledge services such as legal
process outsourcing, publishing outsourcing, analytics
etc.

New outsourcing dynamics to impact the industry
The other important aspect of this trend is its three-way
impact on the industry. Benefits to the buyers are set to
increase with more providers to choose from. It will how-
ever require in-depth due diligence to ensure that they
work with the best in the industry.


110 E X P E R T S

The provider map that has many niche knowledge proc-
ess outsourcing (KPO) providers and IT/BPO companies will
witness a huge impact. A small to mid-sized niche KPO can
expect tremendous increase in competition. The competi-
tion may not necessarily be characterized by experience,
but will be from companies that excel in processes and
scale, and boast strong customer relationships in IT or BPO.
Undifferentiated KPOs may find survival difficult and may
look for exit opportunities. For those that want to maintain
their existence, the one way to do it would be to move up
the value chain, and undertake highly specialized work.

“ It is not going to be all
that easy for the IT/BPO
Discerning buyers are likely to recognize them for their capa-
bilities and pay higher rates for services.
service providers, despite
However it is not going to be all that easy for the IT/
the obvious scale and
brand advantages. Buyers BPO service providers, despite the obvious scale and brand
of many knowledge serv- advantages. Buyers of many knowledge services tend to be
ices tend to be small and small and specialized (e.g., law firms, market research com-
specialized (e.g., law
firms, market research panies) and may not be willing to work with gigantic pro-
companies) and may not
“ viders. Many highly qualified professionals such as lawyers,
be willing to work with Chartered accountants may also have inhibitions about
gigantic providers.
working in BPOs.
The future definitely looks interesting. Small undifferen-
tiated KPOs as well as BPOs who rush in blindly are both
going to be in trouble. 2011 has been the start of a dra-
matic shift in the structure of the industry and clear win-
ners and losers will emerge in the next five years. The key
will be their ability to understand and stay ahead of buyer
demands. GS


IT Outsourcing in 2012
IT infrastructure outsourcing will see geographic
expansion, consolidation, adoption of cloud, and
offshore service providers continuing to work with
US-based data center companies. IT applications
outsourcing will be marked by increased thrust on
business analytics driven by consumer computing and
social media.

Amit is a Partner with Avasant LLC,
one of the globally top ranked sourc-
ing advisory and management con-
sulting firms. He is one of the key lead-
ers of the firm in strategy consulting,
MA and global shared services opti-
mization practices. He possesses sig-
nificant international management
consulting experience and has a deep
understanding of the outsourcing
Amit Singh
Partner, Avasant industry.

IT Infrastructure
1.Global Service Delivery: IT infrastructure outsourc-
ing has been one of the mainstays of IT outsourcing
industry. Over the years, it’s composition has changed
significantly. IT infrastructure outsourcing was tradition-
ally limited to domestic outsourcing companies that had
the financial and operational capabilities to build and


112 E X P E R T S

manage data centers, network operation centers (NOCs),
help desks and support end-users on the ground. In last
couple of years, that model has undergone a massive
change. With increased server virtualization technologies
and availability of sufficient bandwidth, remote server
management has become the de facto standard in data
centers. This has led to offshore companies coming to the
table with multiple services models and competing with
traditional IT infrastructure outsourcing firms. This trend
will become stronger in 2012, with offshore providers
building on successes of 2011 and competing strongly

“ Remote data center
management, NOCs,
in new IT infrastructure deals. I believe offshore provid-
ers have turned a new page in capacity development and
remote end-user support
service delivery maturity, with India emerging as a key hub
and severity 2/3 help
desks will see increased of activity and achieving a critical mass of IT skills required
“
competitiveness from off- for IT infrastructure management. Specifically, remote data
shore service providers. center management, NOCs, remote end-user support and
severity 2/3 help desks will see increased competitiveness
from offshore service providers. I do not believe physical
data centers will move away from United States. Offshore
service providers will continue to work with US based data
center companies to provide IT infrastructure solutions.
2.Geographical Dispersion: Another key area for IT
Infrastructure outsourcing will be developing new cent-
ers for service delivery in diverse geographical regions. I
believe Latin America and Eastern Europe will continue
to emerge as secondary delivery centers. In fact, service
delivery management tools that facilitate seamless move-
ment of operational tasks across geographies are already
mainstream. I regularly see service provider service deliv-
ery toolsets and proposals espousing a true global deliv-
ery management structure, following client’s flow of IT
operations across multiple geographies. This geographical
dispersion is expected to continue into 2012, because of
an ease of use/similar time-zone support requirements as
well as geo-political considerations.


113

3.Consolidation: Another key trend for 2012 is consoli-
dation of IT infrastructure. Ongoing pressure on profit mar-
gins, technology growth and streamlined internal report-
ing requirements are continuing a world-wide push in IT
organizations to consolidate their IT infrastructure and per-
sonnel into a more centralized architecture that supports IT
requirements in a highly virtual, modular way. With the con-
tinuously lower hardware costs, premium is being placed
in IT organizations on an ability to reduce IT management
costs, with a centralized structure seen as a preferred con-
cept. We have witnessed multiple initiatives where global
organizations are consolidating IT infrastructure in just a
few global hubs to provide service delivery across geogra-
phies and companies.
4.Cloud Computing: Cloud computing will have a big
impact on IT infrastructure service delivery as well as IT appli-
cation management in 2012. The advent of cloud is rooted
in the concept of shared availability, immediate scalability
and usage based payment. Cloud providers such as Amazon,
Google, Rackspace, ATT have created large server farms that
allow for scaling IT infrastructure almost effortlessly. Cloud
enablers are working with clients to identify services that are
best delivered on cloud and I believe 2012 will see increasing
traction for multiple cloud based service categories, most
notably Products as a Service (PaaS) Infrastructure as a
Service (IaaS) domains. There still are a lot of questions that
will need to be answered before organizations will consider
cloud as a viable option for most critical systems but we will
see an increasing push for adopting variants of cloud based
services in IT service delivery across the spectrum. For now,
they will likely include non-core business applications and
services and provisioning of non-critical IT infrastructure.

IT Applications
1.Consumer Focus: 2011 was a banner year for Business
to Consumer (B2C) applications, not in the least due to the


114 E X P E R T S

tsunami of mobile devices that resulted in a terrific spurt
in new application development, porting or upgrading of
existing applications. The key categories included media
(video content), retail and healthcare. 2011 saw a big jump
in the share of ecommerce, including mobile commerce as
compared to retail store purchases. 2012 will be no differ-
ent. I believe this year should mark a fundamental shift in
the consumer purchasing behavior, with more and more
consumers making significant portion of total discretion-
ary purchases electronically. This trend is also catching on
in developing countries and 2012 will see a strengthening
trend.
“ This year should mark
a fundamental shift in the
2.Business Analytics: Across industries, the amount
of data being captured is growing exponentially. As such,
consumer purchasing
behavior, with more and 2012 will present significant opportunities for compa-
more consumers making nies providing business analytics solutions. There has
significant portion of total
“ been an explosion of data availability in the consumer
discretionary purchases
electronically. space. Organizations will look to technology and man-
aged outsourcing services in order to mine this data and
leverage it to position products and services better. The
retail, healthcare, banking and media industries will mark
the highpoint of data analytics requirements. In United
States, healthcare is one of the growth industries for 2012
and new EHR (Electronic Health Record) requirements are
expected to be a key driver for data management, port-
ability and analytics domains.
3.Social Media Online Gaming: I believe that social
media, social commerce and online gaming are among 3
top growth application areas for 2012. With LinkedIn,
Facebook, Google Plus, Twitter and other private/public
networking sites, a supporting ecosystem of applications,
games and technology tools will continue to develop in
the coming year. As traditional IT Application develop-
ment areas mature, IT service companies will have an
increased focus on these technology organizations. GS


Welcome to the 7th Annual

BUILDING AND SUSTAINING

THEME UNIQUE
BUILDING AND SUSTAINING
EXCELLENCE IN GLOBAL SERVICES
DIFFERENTIATORS

Welcome to the next generation of the services economy — where FOCUS ON GLOBAL SOURCING
we have technology and business processes enmeshing with each GSC has always maintained a sharp focus on the
other on a global scale — to unlock business value. Global sourcing of strategy and practice of global sourcing covering
these services have gone beyond the paradigms of large scale both ITO and BPO
outsourcing, offshoring, distributed global delivery, managed
services, and such other mechanisms. Various models, old and new, FOCUSED ON OUTSOURCING PARTNERSHIPS
will coexist to make this a reality; the scope is inherently global and
The primary focus is on nurturing outsourcing
the returns are implicitly valuable.
partnerships between buyers and service providers and
creating win-win relationships between them
Beginning with in-sourcing and often shared services, organizations
went on to outsourcing, co-sourcing, and finally co-creating
competencies with service providers. The new rules for the services HIGHLY INTERACTIVE DISCUSSION BASED
organization are to consolidate and standardize delivery; to balance Sessions are not canned presentations; they are highly
internal, external, and virtual capabilities; and to manage services interactive with the audience. The audience RoI is
like a portfolio. These are the essential steps to building and enriched through these peer-level discussions of live
sustaining excellence in services. situations

Global Services Conference 2012 will focus on how to build and
sustain excellence in services. This strategy is the key to enterprise
PRACTITIONER-DRIVEN CONTENT
services, enterprise transformation, and aligning that transformation All of GSC content is conceived by sourcing practitioners
to drive competitive advantage to companies. Companies are looking to be delivered to a peer-level audience
to access data and knowledge in a better way and to leverage the
maturity of the services organization that has been in place to drive
better business value.


AUDIENCE @ GSC
The audience at GSC is unique and represents the best mix of qualified
buyers, providers and influencers.

Over 150 Over 25 Over 2,000
DELEGATES SPEAKERS ONLINE VIEWERS

Over 75 Over 25 Over 30
BUYERS/USERS INFLUENCERS GLOBAL PROVIDERS

2011 BY TITLE 2011 BY INDUSTRY
23%
13%
22%
6%
41%
11%
17%
25%

28% CEO/CIO/CTO/CFO/CSO More than $5 B
President/SVP/EVP/VP/AVP 16% $1 B - $5 B
Director - Sourcing/IT/LoB/Corp. $500 M - $1 B
GM/Manager - Sourcing/IT/LoB/Corp. $100 M - $500 M
Others Allied Less than $100 M

2011 BY REVENUE 2011 BY BUDGET
9% 13%
6%
23%
35% 12%
3%
BFS/Fin. S $100 M and above
9% Business Services 13% 6% $25 M - $100 M
Insurance $10 M - $ 25 M
2% Life-sciences 6%
$5 M - $10M
14% 9% Hi-Tech/IT/Software/ISV's $1 M - $5M
7% 2% Telecom/Comm. Related 23% 6%
$500K - $1 M
Govt./Education $250K - $500K
Manufacturing/CPG/Retail $100K - $250K
Travel Transportation Not Disclosed


ROLE OF GSC AUDIENCE
● Create Strategy Set Goals
● Authorize Service Provider Partnerships/Signs Contracts
● Evaluate, Specify Service Providers/Create Shortlist
● Select or Manage Outsourced Enabling Technologies
● Selecting/Negotiating with Vendors/Partners/Providers
● Manage Contracts/SLAa/Relationships
● Determine Needs (Own Business Process)
● Establish or Manage Budget
● Consultant/Advisor

COMPANIES AT GSC
ACE Group Citibank J.P. Morgan Pitney Bowes Inc.
ACE Insurance Citigroup JJ PR Newswire Association LLC
Aetna City of New York Johnson Johnson Group Prudential
AIG City of Santa Clara JP Morgan Chase Publicis
Allianz Life City University of NY KeyBank Purdue Pharma
Ameriprise Comverse KeyCorp RPO (Citi Group)
Applied Materials Credit Suisse KPMG International SAP
ARTstor Deutsche Bank Life Masters Schering-Plough
Assurant DOW JONES M. Fried Store Fixtures State University of New York
Astra Zeneca Duetsche Bank Marsh Inc Stevens Institute of Technology
ATT Edifice Mass Mutual Financial Group Stratos
AXA Equitable Elance Merck Synapse Group Inc
Axis Group Fairmont Capital MetLife TD Canada Trust
Bancolombia Group Farmers Insurance MGI The Hartford
Bank of America Fidelity Microsoft Corporation The Hartford

BNY Mellon Flushing Manors Moelis Capital Partners The McGraw-Hill Companies

Bank of Tokyo-Mitsubishi Footstar Morgan Stanley The World Bank
Biomet Forrester Research MSP Co Thunderbird
BlackRock FTV Capital MTA -NYC Transit Time Inc.
BNY Mellon GE Energy Novartis UBS
Bristol-Myers Squibb GE Money Novartis Biomedical Research UBS Investment Bank
Burberry General Atlantic LLC NYC Dept of Correction UPS
CA GFI Group NYC Dept of Health Visa
CDTV.net Gloria Jeans NYSE Wachovia
CheckFree Gomez Enterprises Pace University WACHOVIA BANK
CIGNA Guy Carpenter PepsiCo Wells Fargo
Citi Venture Capital HSBC Pfizer Inc. Wolters Kluwer


CONFERENCE PROGRAM
COLOR CODE SESSION TYPE MINUTES PERCENTAGE

Conference Sessions 575 Minutes 62%

Networking Breaks 220 Minutes 24%

Featured Sessions 125 Minutes 14%
SCHEDULE PLENARY SESSIONS (AM)
07:30 – 08:00 AM Breakfast Registration
08:00 – 08:10 Welcome Note
08:15 – 09:00 Keynote: Building Sustaining Excellence in Global Organization
09:00 – 09:50 C-Panel: Building Sustaining Excellence in Global Sourcing
09:55 – 10:15 Featured Session – Platinum Sponsor
10:15 – 10:30 Coffee Networking Break
TRACK I BUILDING EXCELLENCE
This track deals with best-in-class ideas that are fundamental to building excellence in the services model
10:30 – 11:15 Mastering The Art Science of Global Sourcing
11:15 – 11:30 Featured Session – Gold Sponsor
11:30 – 12:15 Monitoring Managing Supplier Risk
12:15 – 12:30 PM Featured Session – Gold Sponsor
12:30 – 01:30 LUNCHEON
01:30 – 02:15 Seeking Value Through New Service Delivery Locations
02:30 – 03:15 Excellence In Shared Services
03:30 – 04:15 Setting-up A High Performance PMO/Governance
TRACK II SUSTAINING EXCELLENCE
Next practices in global sourcing of services that differentiate and sustain excellence in services
10:30 – 11:15 Understanding Next Generation Sourcing Models
11:30 – 12:15 Developing and Retaining Topnotch Talent
12:15 – 12:30 PM Featured Session – Gold Sponsor
12:30 – 01:30 LUNCHEON
01:30 – 02:15 Managing The Global Locations Portfolio
02:30 – 03:15 Sourcing Platform-Based Services
03:30 – 04:15 Beyond SLAs – Benchmarking Customer Satisfaction

SCHEDULE PLENARY SESSIONS (PM)
04:15 – 05:15 PM Closing Keynote Address
05:15 – 05:30 Closing Remarks
05:30 – 07:30 Cocktail Reception


SPONSORSHIP OPPORTINITIES
There are various sponsorship options designed to meet marketers objectives that include - Thought
Leadership, Branding Awareness, Influential Marketing and Lead/Interest generation:

Sponsorship packages designed for: Global Services Providers, Regional Service Providers,
Countries, Country Associations, Trade Investment Promotions Agencies, Solution Providers and
others allied to the outsourcing field.

A few standard options are:

Platinum Gold Silver Associate

Lunch Reception Breakfast Coffee Breaks Delegate Kit/Bag

Lanyard/Badge GSC Webinars Conference Guide Conference e-Book

Other Standard and Custom Options

SPONSORSHIP BENEFITS
There are variety of benefits associated with Global Services Conference 2012. A few sponsorship
benefits are listed below (Not Limited):

● Allows you to meet face-to-face and address your potential customers currently/considering
sourcing
● Builds a platform to position thought leadership
● Creates avenues for branding and awareness - prior to the event, on-site and post-event
● Generates qualified leads through complete registration attendee list with analysis
● Instills confidence in your clients and contacts by maintaining a strong presence
● GSC is unique as it attracts highly engaged sourcing professional who are subscribers and
readers of Global Service Magazine, website and various media vehicles that keeps them
connected round the year
● Global Services is the first and only leading outsourcing media house with the largest opt-in
subscriber base of over 115,000 - Stand to benefit from the widest outreach program
deployed for GSC2012.

CONTACT INFORMATION

SATISH GUPTA GARY BINDRA
HEAD OF SALES MARKETING MANAGER – INTERNATIONAL SALES

E-mail: satishg@cybermedia.co.in E-mail: gurdeepb@cybermedia.co.in
Mobile: +91 987 199 7785 Mobile: +91 991 040 1911


REGISTRATION

Outsourcing Services Buyer Outsourcing Service Provider/Other
REGULAR FEE: $695.00 REGULAR FEE: $1495.00

For Special Offers Visit www.globalservicesconference.com

Registration Includes:
• Full day of conference sessions, track sessions and keynote lectures
• On-site and vaulted conference materials
• Breakfast, Lunch, Refreshment, Networking breaks Cocktail Reception

For Registration queries please call: 1.516.277.1108 or write to:

Dawn Walton Niketa Chauhan
dawnwalton@optonline.net niketac@cybermedia.co.in


Thank You
Outloo k

O
sp
! PANTONE 2915 C
CMYK 59/7/0/0
RGB 18/188/235
PANTONE 299 C
CMYK 85/19/0/0
RGB 0/157/220
PANTONE 2935 C
CMYK 100/46/0/0
RGB 0/118/192
PANTONE 1795 C
CMYK 0/94/100/0
RGB 238/52/36
nsors

Global Services - Outlook 2012 issue

More Related Content

What's hot

Viewers also liked

Similar to Global Services - Outlook 2012 issue

Recently uploaded

Global Services - Outlook 2012 issue