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Analytics Outsourcing The Next Generation of Business No Room for Heroes in Outsourcing

on the Rise Pg19 Process Outsourcing Pg 22 Relationships Pg 29

globalservicesmedia.com

March 2011

Contact
Center
Industry:
Where Do
You Go
From Here?
The new rules to play by:
Growth in demand in new geographies
Balanced shoring
Domain-driven services
Unified customer experience
Global Services A CYBERMEDIA Publication
An integrated media platform which connects the
various constituents of the global technology and Pradeep Gupta
business processing services industry ecosystem. Chairman & Managing Director
Cyber Media (India) Ltd.

Directory of Services E. Abraham Mathew


President
Newsletter
Ed Nair
A regular digest of key industry happenings. Editor
ed@cybermedia.co.in
Digital Magazine
Satish Gupta
The fortnightly digital magazine features research
Associate Vice President
reports, articles and experts’ views. Available on
satishg@cybermedia.co.in
www.globalservicesmedia.com
Smriti Sharma
Webinars smritis@cybermedia.co.in
Global Services’ web-based seminars aim to impart Sruthi Ramakrishnan
useful information related to outsourcing indus- sruthir@cybermedia.co.in
try in the form of presentations and discussions
by industry specialists. Niketa Chauhan
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February 2011

features

10
Contact Center Industry: Where
Do You Go From Here? 10
by Sruthi Ramakrishnan
The new rules to play by: Growth in demand in new geographies,
balanced shoring, domain-driven services, and unified customer
experience

“Expectations Around Customer


Experience Are Changing” 17
Andrew Kokes, Vice President, Global Product Management at
Sitel, shares some insights with Sruthi Ramakrishnan on chang-
ing consumer behavior and how providers can best adapt to it

8 xperts The Next Generation of


Can this process get better?
Business Process Outsourcing 22
by Smriti Sharma
By John Lutz, general manager, IBM Global Process
If you are a Genpact client, there is yet another way of get-
ting more out of business processes Services

Rural BPOs in India: Are they over-


hyped? 24

19 by Kumar Parakala, KPMG

Analytics Outsourcing on the The emerging market for analytics 27


Rise Excerpted from Horses for Sources By Reetika Joshi, Senior Research Analyst, ValueNotes
Research ‘Where offshore analytics is heading in Sourcing Practice
2011’ by Smriti Sharma
The importance of business analytics has been on the rise. No Room for Heroes in Outsourcing
Now it has also become an eminent candidate for outsourc-
Relationships 29
ing. How is the analytics outsourcing industry evolving?
By Nigel Hughes, Global Services Director, Compass
Management Consulting

Global Services Digital Magazine


Next Issue:

The New Rules in BPO


Learn about what will drive the BPO sector in this
April special report.
Editor’s Note
Contact Centers and
the Challenge of
Social Media
O ur cover story this month focuses on the new directions of growth
for the contact center industry. In the traditional sense, the con-
tact center industry predates the outsourcing industry. It is only in the
last decade, with the unbundling of business processes and the growth
in globalization driven offshoring, that the contact center industry got
folded into what we now call as the BPO industry. Both then and now,
this industry continues to be a dynamic segment within BPO, marked by
numerous advances in technology— CTI, IVR, IP-based contact centers,
hosted contact centers and the like. These technology changes improved
Ed Nair the performance of contact centers that in turn led to improved customer
Editor management.
ed@cybermedia.co.in The rise of social media presents a whole host of new challenges for the
contact center industry. While the industry recognizes the importance of
including social media as part of its customer engagement strategy, the
wherewithal to do that with success is lacking. Meanwhile, the dynamic
The dynamic nature nature of social media and its speed of adoption presents itself as a mov-
of social media and ing target to be chased by the contact center industry.
its speed of adoption While it is a tad easier for enterprises to include social media as part
of its customer management strategy, the contact center industry is grap-
presents itself as a pling with the challenge of delivering it as a service. There is the classic
moving target to be gap between ‘knowing’ and ‘doing’ in this case. Many contact center
chased by the contact companies profess to know it, but they fall woefully short when it comes
to doing it. That’s the reason this topic is still the stuff of many whitepa-
center industry. pers and conferences.
Part of the answer lies in technology: an industry-standard platform
that effectively integrates multiple social media conversations is needed.
This would take care of the need to track social media conversations (‘lis-
tening’ as it is called) so that social media insights become measurable
and amenable to analytics. Most of the other requirements like handling
inbound social media traffic, handling outbound social media conversa-
tions, analytics and reporting become possible. The other part lies in how
the contact center organization structures this activity, develops special-
ized skills, and proves business value.
Global Services would like to know how the contact center industry is
weathering the challenges in this area and the learning from it. Do write
in to share the best practices that worked for you. . .GS
The Global Services 100 Survey - 2011

Recognizing
&
Celebrating
Service Provider
Excellence!
Click Here To Participate

Survey Deadline: April 10, 2011


Enterprise Application

Can this Process Get


Better?
If you are a Genpact client, there is yet another way of getting more
out of business processe
by Smriti Sharma

B
usiness processes are the source of value for an much about managing just the part of the process that we
enterprise. Cost, efficiency, effectiveness, quality ran. Most of the process management happened onshore
of output, and time are some of the elementary and what really happened offshore in our captive was people
process parameters amenable to various forms of management. The Team Leaders would look at the SLAs
optimization. There’s much more that can be done to proc- that were around such as accuracy, efficiency and turnaround
esses to uncover new sources of value, be it business process time. A lot of the time, while we would manage upstream and
reengineering (the rage of the early nineties) or Six Sigma or downstream processes, we would not look at the inter linkages
lean or software-driven BPM. Genpact, the BPO provider, is between the process.”
reporting success in the process management area, based on This did not work nearly as well with multiple clients.
its home-grown methodology called smart enterprise proc- Most companies when they look at processes or functions
esses (SEP). they look at them in silos, so what happens is that each
Some examples of the company’s success include: A lead- function, each silo optimizes that process so it manages it to
ing fortune 500 global financial security company uncovered perfection. But, between different functions, there was a lot of
opportunities to improve revenues by $6-8MM. A leading value leakage. “No one was looking at the process holistically.
software security solutions provider improved cash flow and While you optimize your process at an individual level, who’s
reduced Total Cost of Ownership (TCO) by $28- 40MM. looking at the process holistically from end to end and seeing
A leading shipping, energy, logistics and retail conglomerate what value leakages happen across the way. This is the point
found opportunity to reduce IT Helpdesk cost and improve of efficiency vs. effectiveness, which is each process is man-
productivity by $9MM. An US trucking major transformed aged to efficiency, but the overall effectiveness of the entire
its Order-to Cash process and improved cash flow by process value chain is not something people look at. That was
$40MM. really the start of SEP as a concept,” adds Sasha.
Genpact experimented, tested and analyzed data from In a nutshell, SEP helps to test the effectiveness of cli-
more than 200 million transactions across more than 3,000 ent’s processes by measuring points of leakage at each level
processes it manages for clients to determine the benchmarks of a given end-to-end process and then to apply best-in-
that best-in-class companies achieve at each level in a process. class benchmarks from within and across industries. The
The next step is to distinguish `the vital drivers of enhanced result is a client specific roadmap for maximizing process
business results for each process, and develop best practices effectiveness.
for addressing those drivers. Developing customized client-
specific- diagnosis and roadmap for achieving business results Cost arbitrage is still a factor
along with recommendations for the execution phase are the Genpact is currently engaged in comparing Penske’s existing
next steps. The end-step is to arrive at a commercial model metrics to those in SEP methodology to:
that bases compensation on the results achieved. (a) identify additional metrics that should be tracked to
provide deeper insight into processes which would drive
SEP in the making effectiveness and efficiency improvements, and
Sasha Sanyal, SEP and Business Development Head, articu- (b) to benchmark Penske’s performance against proprietary
lates, “The way we originally managed our business was very benchmark database.

8 GlobalServices www.globalservicesmedia.com March 2011


predictable, replicable, or sustainable over time. A good example of this 40-50 companies, and over 3,000 business processes, the
can be found in electronic procurement. Sourcing and procurement SEPSM methodology replaces the trial and error approach
organizations frequently acquire e-procurement technology but fail to with proven, scientific approaches.
ensure that the technology is used, and used effectively.
Enterprise Application

FIG. 3 - A HOLISTIC, GRANULAR FRAMEWORK FOR MANAGING BUSINESS PROCESSES

A Holistic, Granular Framework for 6


Managing Business Process 5
4 Solution
3 implementation
to deliver business
2 Identifies drivers Offers solutions outcomes
1 Links business of performance including through process
outcomes and variability and process, analytics efficiency,
Maps every core benchmarks to roadmap for reengineering transformation
Identifies the key key performance improvement by
business process at and focused IT projects, Point IT /
business outcomes measures and key leveraging ‘insights’
a granular level analytics solutions
for the company performance drivers and ‘best practices’

3 New SEPSM Methodology Delivers Enterprise-Level Effectiveness of the Source-To-Pay Process

A few examples of insights gained to date: Frank Cocuzza, CFO, Penske Truck Leasing articulat-
• Penske compares favorably to benchmarks in Average Days ed, “Our partnership with Genpact has not only provided
Delinquent, a measure of collection effectiveness, and in us cost-efficient business processes, but also the process
Cash Application Accuracy. rigor and metrics that enable us to achieve ever-higher
• Penske has the opportunity to improve performance in the levels of performance. We look forward to continuing our
Service Completion to Invoice Cycle Time, a measure progress by leveraging Genpact’s Smart Enterprise Process
of billing timeliness, and in further increasing the Auto- Methodology.” GS
Cash Hit Rate

Genpact’s wide expertise in understanding the key drivers


of the order –to-cash process across geographies and indus-
tries has enabled the company’s ability to provide insights
into how specific focus points and improvement areas within
operations can lead to a positive and significant impact to an
organization’s revenues and bottomline figures.
When Genpact embarked on the SEP way, the first
thing they did was look at the existing processes they were
running. Genpact did a diagnostic of Penske’s Order To
Cash process. Existing process templates were measured
along with their measurement systems, benchmark and
best practices. Genpact identified gaps. Although, they
were running this process for a long time, a different
approach aided in identifying gaps. The entire process
within order management, across order-to-cash life cycle
was analyzed. What leakages were happening, what areas
were not doing optimally and when were they not close to
benchmarks.... all these points were studied.
Within six months, it was identified that if there were
about 45 metrics being measured, then there were about
38 that were best-in-class, and there were seven where
there were gaps. These gaps were addressed using best
practices.
Five new opportunities were identified for this process
through benchmarking. Next, these were then imple-
mented into their process, which was then able to drive
an additional outcome of almost 25 additional million
dollars a year.

9 GlobalServices www.globalservicesmedia.com March 2011


Tools & Technologies

10 GlobalServices www.globalservicesmedia.com February 2011


Tools & Technologies

Contact Center Industry:


Where Do
You Go
From Here?
The new rules to play by:
Growth in demand in new geographies
Balanced shoring
Domain-driven services
Unified customer experience

11 GlobalServices www.globalservicesmedia.com February 2011


Special Report

Contact Center Industry:


Where Do You Go From Here?
The global contact center industry is on the path to recovery. Growth
in demand in new geos, balanced shoring, domain-driven services,
and unified customer experience are the new rules to play by.

W
ith post- recession studies showing that acquisition or retention have higher cost containments
the contact center industry is on a growth when activities performed individually as compared to
path again, the sunrise industry seems revenue generation. Also, the  channels for acquisition
to be shining again. Selection Group’s have diversified from the bricks to the clicks world.
November 2010 report on call center openings and Hence a newer focus seems to throw more light on
contractions showed that new growth or expansions Customer Acquisition.”
numbered most in the US, followed by Latin America, According to a Frost & Sullivan study, the Asia Pacific
Canada, India and Philippines, creating over 10,000 new (APAC) region’s revenues from this industry will grow to
call center jobs. Here’s a lowdown on what is driving the $616.6M by 2016, from $287.5M in 2009. This will be
recovery, and how it can be sustained. supported by the presence of multinational firms sign-
ing up for outsourced services from service providers in
Growing domestic demand, MNC countries like Malaysia, Vietnam and the Philippines,
contracts driving recovery which had been growth markets during the recession
IBM sees heavy demand fueled by certain factors. “In the period.
last 18 months, we have started seeing heavier demand While 2009 was primarily about customer retention,
coming out of Latin America, Africa and the Middle the first half (H1) of 2010 saw most markets in the Asia
East. This is true especially in the banking, insurance Pacific strive towards customer acquisition. “As the effect
and telecommunication sectors,” says John Lutz, gen- of the financial crisis erodes, enterprises are looking out-
eral manager, IBM Global Process Services. Additionally, wards and readying themselves to go full steam to acquire
there is a drive for more on and near shore delivery that more customers aligned with their growth ambition in
is fueling a re-balancing of centers/agents for many global the region,” says Krishna Baidya, Industry Manager for
companies.Because of this trend, we see clients look- Frost & Sullivan’s ICT team. “The APAC geography  has
ing for a much more ‘balanced shore ‘ strategy. Finally, evolved from a provider of cost-effective services to a bal-
companies that continued to use or adopted outsourcing ance sheet partner focusing on end-user experience and
during the recession for cost cutting objectives are now business transformation. Customer Acquisition will be
extending their requirements to areas that afford them an the prime focus for every marketer due to the customer
improved customer experience, such as the integration of experience focused mindset of the buyer, the maturity
advanced customer analytics within a contact center.” of the end users, increase in consumption pattern, deep
The focus is now on encompassing the entire customer penetration of the verticals and the geographical spread
experience rather than managing only singular aspects, say of the region,” says Ahuja.
Rajiv Ahuja, President - ASEAN & ANZ, Aegis Limited. The increasing domestic demand for customer service
“This approach would range from customer acquisition in developing markets such as India, China, Indonesia
to retention to enhancing the experience and leaving and Vietnam caused a surge in demand for small and
no stone in the customer’s bag unturned. Customer medium business (SMB) contact centres with less than
Interaction is a core aspect for Social Networking and the 50 to 100 seats.
Services industry, which makes it important to manage This segment is also expected to impel the move
the entire experience lifecycle. This is especially true since towards a hosted model or encourage businesses to

12 GlobalServices www.globalservicesmedia.com March 2011


Contact Center Industry: Where Do You Go From Here?

consider domestic outsourcing options. “Key value Industry, processes have matured
proposition for hosted contact center model lies in its “Contact centers cannot today be used in the same
flexibility, scalability and total cost of ownership (TCO). terminology as you would have used five years ago,
Flexible pricing options allow smaller businesses to set up because today the industry has matured,” says Ramani.
contact centers when the cost factor may have made an “Prospects too have matured, looking at what vendors
on-premise deployment prohibitive,” says Baidya. can provide– more than only people (or bodies) to han-
In developed economies like Australia, Japan and South dle the lowest end of the value chain, which is taking
Korea, migration toward IP-based systems (telephony, calls. So processes have matured, and they are looking at
unified communications) helped the industry remain ‘how can I as a vendor create a strategic impact?’ So is
sustainable. This, combined with the above-average levels there a product or service which can impact their topline
of Internet service (fast broadband and high broadband or bottomline- that sort of a solution always has demand,
penetration rate), enabled an increase in the uptake of that is not going to fade.”
professional services like financial analysis. While voice processes still comprise the mainstay,
Australia’s contact center industry returned to growth the uptake in non- voice is on the rise. “We have seen a
in 2010, generating total revenues of $55B, represent- rise in non-voice channels that is being driven both by
ing an increase of 13 percent over the previous year. The enterprise needs to reduce costs and consumer desires
number of contact center seats also grew by three percent to be served anytime, anywhere.   Agent voice remains
to a total of 198,000, according to a benchmarking report the heaviest used channel, hence the most in demand,”
by callcentres.net and sponsored by RightNow. Contact says IBM’s Lutz.
centers also reported an average increase of 15 percent in
operating budgets last year. Participants in the Frost & Vertical- specific is the way to go –
Sullivan study expect the consolidation of contact centres The resumption of enhancements and expansions by
to result in higher spending in the more than 200 seats domestic banks in the Asia Pacific led to significant contri-
contact center segment in China, Australia and Japan. butions from the banking, financial services and insurance
On the whole, the industry is expected to grow at an (BFSI) sectors in H1 2010, the Frost & Sullivan report
annual rate of 11.5 percent through 2016. says.
“Which are the domains that you are offering, and
Onshore+ Offshore+ Nearshore= what do you offer in those domains- that’s the differ-
Rightshore entiator today,” says Ramani. “If I create a product or
The ‘balanced shore’ strategy mentioned by IBM’s Lutz service in the Healthcare segment, and that is the sweet-
finds resonance among other providers. “Rather than spot people are witnessing today, people then come and
being a purely offshoring branded player, we have a quickly buy that. Otherwise, if you have to sell inbound
concept called rightshoring, which is identifying right or outbound, there are 20 people selling the same set of
processes or projects for the right locations,” says Suresh services.”
Ramani, COO, Intelenet Global Services. “We have Building domain knowledge and capabilities in the
the onshore model, which is having facilities within the booming verticals is what providers are looking to do
countries where the job is actually being worked out of, now. “Healthcare, Banking, and Travel, Transportation
whether it is the US or the UK. We have the nearshore and Hospitality taken together are three segments which
center- Guatemala (where Intelenet has opened its newest are seeing people wanting to buy services. IT spends have
facility) could be considered a nearshore center- and then also increased from where they were in the last 2 years,
we have low cost centers like India and Philippines. meaning that businesses in the top line are supposed to
This has been our game plan for the last 3- 4 years. grow. If we as a company can offer a product cum service
We have presence in the three segments, i.e., nearshore, entity in these domains, I think we will have a really good
onshore and offshore.” market to tap into,” he says.
But that does not mean that offshoring has lost its “Telecom and Retail sectors are expected to see steady
charm. Offshore deployments, alongside onshore resources growth, especially in the markets of India, Indonesia,
is very much a viable business model, especially in EMEA China and Korea. Government spending on citizen
countries like Poland and South Africa, where the agents services in the ASEAN markets, India and China is
can compete against their onshore counterparts in terms growing at a double digit rate. Other verticals that are
of sophistication, cultural compatibility and customer growing sporadically across the (APAC) region are Travel
empathy. It is also favorable in terms of cost advantage, & Hospitality, Retail & Utilities, entertainment and
scalability and commercial sophistication. Manufacturing,” says Baidya.

13 GlobalServices www.globalservicesmedia.com March 2011


Special Report

Additional growth will be technology-led and non- for example Customer Experience 2.0 and the Global
capex led therefore there will be increased focus towards CRM Consulting Framework, to drive customer
Travel & Hospitality, Healthcare, Hi-Tech, Govt. & interactions.
Education and Utilities. At Aegis, we see our technol- At the same time, companies should not lose focus
ogy practice taking a centre stage in leading this growth on human resource. “Call centers should continue to
story. invest most in their biggest assets: their talent. People
are by far the most important part of any call center
Smarter technology, and rise of social because they make the difference between good service
media and great service. Companies should be deploying first-
The Frost & Sullivan report says that mature markets class recruitment, training and on-going support at all
like Australia, Singapore and Hong Kong are investing points of the employee lifecycle,” says Joe Doyle, Vice
in applications such as analytics and social media inte- President, Global Marketing, Sitel. Alongside, he expects
gration, while the high-growth markets of India, China to see increased investments in emerging technologies
and Philippines are investing in workforce optimization that compliment traditional customer service approaches.
and self-service applications. “The theme of customer This includes chat and intelligent chat, and social media
acquisition is likely to drive technology investments CRM support.
from contact centers in the region (APAC) in the near to Social media is an area which is set to see a lot of
mid-term with priority in growth-aiding technologies or action in the coming times, though companies are not
processes. This could lead to simply expanding contact very clear about the course of that action. “They know
center capacity, to investing in advanced outbound dial- its where their customers are going, at least a section of
ers, or in Analytics to help fine-tune sales strategies,” says them. But they are not quite sure how to engage with
Baidya. “In advanced markets significant investments are them,” he says.
towards analytics, likely to propel contact centers as a “There seems to be quite a big debate as to should they
Strategic part of the organization, not just a profit center use existing portals around them, like YouTube, Twitter
or cost center.” and other well- established online media, monitor those,
“Several capabilities within a contact center require and create their own page on one of them. There are quite
investment that can drive smarter interactions with cus- a few high- profile examples where organizations have
tomers,” says IBM’s Lutz. These capabilities are namely, started to place commercials on YouTube.
1. Analytics --- cloud or SaaS based customer analytics The other school of thought is that they would be
and the ability to embed findings into operations better off controlling it a little more and creating still a
in a real time fashion;  the use of predictive analyt- forum where people could go online and ask and answer
ics to change the outcome of an interaction with a questions and interact with other customers, instead of
customer. doing it within the confines of the company’s message
2. Knowledge Management --- The impact that a board or their website.”
robust, current KM database can have on each and
every customer interaction should not be underes- Entering an era of complexity
timated.   Lack of investment in this core asset can One thing that service providers are clear about is the
have a direct, negative impact on consistency across increasing complexity that the industry is witnessing. This
channel and your overall brand. can be both a challenge and opportunity. “The growing
3. Unified Communications --- Customers want their volume of data, number of channel options, and degree of
interactions with an enterprise to be consistent, variation across customer bases is creating a significantly
relevant, and timely.   Linking channels together to more complex environment to navigate,” says Lutz. “The
understand what your customers are doing beyond opportunity resides in making sense of the complexity
the contact center allows for a more successful and making each interaction ‘simple’.   Leading enter-
interaction. prises in their respective industries have successfully used
the ability to do this as a differentiator.   This ties back
“Agent voice remains the heaviest used channel, to the importance of investment in analytics, knowledge
hence the most in demand.   However, enterprises at management and unified communications.   The notion
the forefront of the customer experience have success- of a single view of the customer will once again take prec-
fully blended all channels seamlessly to meet customer edence as enterprises recognize that channel profusion
driven interactions,” he says. In IBM’s case, it has has to be managed and the opportunity exists to bind all
been leveraging its software and consulting assets, customer activity together in one space.” GS

14 GlobalServices www.globalservicesmedia.com March 2011


COUNTRY-IN-FOCUS
Ensuring Global Visibility
A special feature for countries to showcase their uniqueness
There are numerous outsourcing destinations that exist as
great alternatives to India and China.

Inviting Countries to showcase


capabilities that accentuate
their uniqueness.

Examples of Country-in-focus feature


Egypt Philippines Jordan

JORDAN

For more information write to satishg@cybermedia.co.in


Special Report

“Expectations Around
Customer Experience Are
Changing”
The Accenture 2010 Global Consumer Survey released last month
highlighted important aspects of consumer attitudes and behaviors.
The Survey, which had participation from more than 5,800 people in
17 countries (in both mature and emerging markets) across 10 indus-
tries, shows a decline in consumers switching providers due specifi-
cally to poor customer service. Despite this, customer service remains
a significant issue. Andrew Kokes, Vice President, Global Product
Management at Sitel, shared some insights with Sruthi Ramakrishnan
on changing consumer behavior and how providers can best adapt to
it. Excerpts from the interview:

GS: To what extent does customer service really affect experience for their customers; limiting the effort of the
consumers’ decision to switch service providers? customer, opening additional contact channels and making
AK: The customer experience is really the differentiating product support more widely an open platform.
factor in an otherwise capability-neutral product environ-
ment. There are constantly new products with new feature GS: How have consumer expectations changed? How
functionalities. The rate of change is so rapid that a cus- much of this change can be attributed to the popularity
tomer need only wait a matter of days sometimes for the of social media?
next great thing to come to their service provider. Bells AK: Today up to 81% of smartphone users start their
and whistles are a basic customer expectation with the dif- customer experience with the company online. This is
ferentiating factor being how a product makes them feel. indicative of the fact that the customer wants to be able
The brand image, the price point and the experience the to service themselves online, either through connecting
customer has have with a product is what’s in it for them. to other consumers via an online forum or through the
These are the reasons a customer would move from one company’s own website.
product or brand to another. Social media is one such evolving channel in a larger
The actual customer-company relationship remains online and mobile world. This means that there is a much
the unique element that can affect a consumer’s decision broader web customer experience that companies need
to stay or switch providers. Exceptional customer service to be able to understand and support. Sitel sees two key
is the face and voice of the brand experience, and is the opportunities of which service providers need to be aware
foundation that a company needs to successfully attract in this case:
and nurture their customer connections. n Web Conversion—When a customer goes online with
It is also important to note that the expectations around the intent of purchasing a product, a provider can
the customer experience are changing. Successful companies have a 20% increase in online incremental conversion
are ones that are constantly evolving and adapting to the by providing support at the moment the consumer is
changing demands and demographics to shape a personalize looking to buy. Simply by offering the consumer some

16 GlobalServices www.globalservicesmedia.com March 2011


“Expectations Around Customer Experience Are Changing”

level of live support in the web buying channel, the entire customer experience. As the customer experience
provider can increase the chances of sale. evolves across new communication channels, we are
n Web Retention—When customers begin their experi- offering technologies that allow you to build a complete
ence online, they expect to resolve their issue online. customer profile from their three big experiences - web,
The key for providers is to be there for the customer at call center and social, blending all of these elements into a
the point before a consumer clicks away from the Web multi-channel social CRM strategy.
site because they either can’t find what they are looking We are using data analytics and web engagement tech-
for or when the information is too complicated. nologies to offer proactive service and sales chat services.
Technologies are becoming much more intelligent in the
GS: How do you explain the disconnect between cus- way that they allow you to monitor customer behavior and
tomers’ expectations and the service given by the pro- predict buying signs or support opportunities at precise
viders? How can the two be better aligned? moments of truth to drive online sales conversion or web
AK: Company culture plays a crucial role in how a pro- retention.
vider is responding to customers’ needs and expectations. We are deploying artificial intelligence tools in the
Providers that have a real emphasis on the customer expe- voice environment, to do complex matching of customers
rience, customer relationships, and the overall customer to agents. We look at the demographics of the customer
engagement are certainly better connected with their cus- population and psychographic profile of the agent popula-
tomers and tuned in to their needs and behavior. tion and do intelligent pairing based on specific business
Studies of the largest consumer brands in the world objectives, like improving sales conversion, first call reso-
have shown that there is a very strong correlation between lution or customer satisfaction. The agent-caller matching
companies that are highly engaged across multiple chan- technology uses key variables to create a level of empathy
nels with their customers and the overall level of top line which potentially doesn’t exist when calls are routed solely
revenue and profitability, versus those companies that on agent skills or availability.
have a lower level of engagement in relationship with their
customers which have, over the past couple of years, seen GS: Is the contact center industry seeing a rebound
a decline in revenue and profitability. post-recession? If so, what is driving it?
Company culture that is focused on the engagement, AK: At a macro scale, companies are focused on getting back
commitment, and development of a positive relationship to growth. Thee call center industry is becoming focused on
with their customers rather than purely on cost-cutting customers and a dedication to growth and sales through new
is one that will cultivate loyal customers with greater channels. Many brands saw incredible shrinkage in overall
Lifetime Customer Value. top line, and there is now pressure on these companies to get
back to growth and overall profitability. As a result Sitel sees
GS: Price is no longer the differentiator for selecting a more intense focus on leveraging the customer experience to
service provider. What is the new differentiator? upsell and cross sell opportunities.
AK: Although price is still a big consideration when select-
ing a service provider, the bottom line is relationship and GS: Which are the services seeing more demand?
trust. To earn trust Sitel emphasizes Return on Customer AK: In terms of demand, customers are craving more
Investment (RoCI) as our key metric. RoCI is a measur- self-service and online or mobile communication options.
ing stick that we put against everything we do and every Sitel sees strong growth in multi-channel support pro-
investment we make. grams, with increasing emphasis on driving web retention
When a company commits their direct customer for customer support and web conversion where selling
interaction to a service provider, it requires a high degree opportunities exist.
of confidence. There are a lot of different factors that go The call center agent is evolving into more of a tier 2
into building and earning that trust. There is of course the or tier 3 type of support as opposed to basic triage.
expectation that the price will be in a competitive range, Customers are already answering basic questions through
but at the end of the day, I’m going to place my business Google, company websites, forums, and social networks,
with someone I trust will meet my service expectations and so agent are dealing with more complex questions. It’s
provide the best customer experience. not that there is less voice interactions, rather more cus-
tomer touch point opportunities. Sophisticated compa-
GS: How can technology be used to boost customer nies need to be able to communicate with social custom-
experience? ers and online networks because that’s how the customer
AK: Sitel technology is used to enable and optimize the is communicating. GS

17 GlobalServices www.globalservicesmedia.com March 2011


Industry- Specific Processcs

Analytics Outsourcing
on the Rise
The importance of business analytics has been on the rise. Now it has
also become an eminent candidate for outsourcing. How is the ana-
lytics outsourcing industry evolving?
Horses for Sources Research

A
nalytics does not fit perfectly into the traditional systems. Hence, most of these products are now available
outsourcing model; the level of data sensitiv- as services.
ity is extremely high and the nature of work is Increasing demand of analytics resulted in the emer-
complex. These pitfalls have made some clients gence of pure play analytics service provider. These pro-
set up or expand captive units instead of outsourcing. viders encapsulate domain knowledge and technological
However, in the past decade, third-party providers have and statistical expertise. As the process of developing and
armed themselves with commendable expertise in ana- deploying analytics solutions stabilized, work could be
lytics. Also, holistic solutions for business problems are broken distributed amongst multiple vendors and/or cap-
introduced via combing analytics and market research. tive units. The emergence of offshore locations boasting
Consultants are backing their recommendations with ana- of strong Information and Communication Technology
lytics. These factors have helped the entry of good players (ICT) infrastructure enabled offshoring of analytics serv-
in the last few years. ices to locations such as India.
There are two routes to analytics currently being
followed: Cost arbitrage is still a factor
Leveraging IT and BPO offshoring experience and eco- The cost of developing analytics solutions are very high
system: Companies that are already outsourcing are using and can be restrictive (especially for small and mid-sized
their current IT-BPO experience to source analytical solu- companies. Presently, Fortune 500 companies are the
tions, at times, giving preference to the same service pro- majority of analytics users. According to HFS research, for
vider. The third-party service provider in lieu of climbing a typical analytics project, talent cost is the 60 percent or
up the value chain developed analytics solution. In-house 70 percent of the total cost. The advantage of accessing tal-
analytics gives clients better SLAs and better time-to-mar- ent from locations such as India, Singapore or Hong Kong
ket results. Analytics is employed to drive improvements yield a saving. Also, other costs – infrastructure- being
in the effectiveness and efficiencies of offshored BPO-IT much lower than in onshore locations, cost arbitrage can
services and beyond. range up to 50 percent for offshore locations. However,
Availability of cross-functional, multi-skilled talent: high-level analytics strategies ensure that cost saving is
Initially, when the analytical industry evolved, companies overrun by other factors.
tried to develop and deploy analytics solutions. However, Credibility, accuracy and timeliness of business insights
as technical industry got more complex and the scale and from data analytics are critical to business. Offshore deliv-
scope of analytics expanded, it became difficult to hire, ery centers are attractive as they come with faster time to
maintain, and retain the specialized manpower internally. market and also provide accompanying support service on
This ensured companies started looking out for third-party a 24x7 basis.
service providers.
Meanwhile software companies developed complex, Recommendations for buyers
highly configurable, vertical-specific analytics and data 1. Acknowledge the imperative nature of analytics:
mining products. However, organizations found it dif- Buyers should evaluate their business function in order
ficult to support talent that would run and maintain these to identify areas that may benefit from analytics activity.

18 GlobalServices www.globalservicesmedia.com March 2011


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www.globalservicesmedia.com/E-Magazine
xperts By John Lutz, general manager, IBM Global Process Services

The Next Generation


of Business Process
Outsourcing
As BPO continues to evolve as a business strategy, it is clearer
than ever that senior decision makers are looking beyond
the tactical, cost-reducing benefits of yesterday’s BPO
engagements to higher order benefits

L
ike many other segments of
the services industry, busi-
ness process outsourcing
(BPO) has matured and
evolved, following a path over the
past decade from pure cost cutting,
to improved efficiency, to strategic
transformation and business model
change. As it has evolved it has
become more strategically significant
to businesses no matter the market
segment or area of focus.
As BPO continues to evolve as a
business strategy, it is clearer than ever
that senior decision makers are look-
ing beyond the tactical, cost-reducing
benefits of yesterday’s BPO engage-
ments to higher order benefits --- for
example, improving financial flex-
ibility, driving free cash flow, increas-
ing market penetration, expanding in
emerging markets and strengthening For example, a recent survey dis- competitive agility and enhanced
customer satisfaction, among them. closed that more than 60 percent of customer service.
This is not to say that the origi- the senior executives polled said that In our conversations with a range
nal benefits of BPO have lost their BPO plays a very important role of c-suite decision makers, we’ve
appeal. Cost-saving still matters. in supporting their business models identified three specific areas where
Improved efficiency is not going out and that they expect that figure will they hoped to gain operational
of style. But these now fall into the grow in the next three years. As advantages from BPO:
category of “table stakes”--- and the an indication of the kind of busi- n Strengthen their position with-

expectations that clients have of their ness model support these executives in their company’s ecosystem.
BPO providers are increasingly more found most valuable they pointed Provide innovation to differentiate
ambitious than ever. to higher productivity, improved them from their competitors and

21 GlobalServices www.globalservicesmedia.com February 2011


BPO Next gen

establish sustainable performance tailored to accommodate unique ele-


improvements.
n Develop forward-looking insight
“The road is going ments of their industry. An example
is a services engagement to speed
in order to anticipate and respond to get bumpier for claims processing via a cloud designed
to future events.
n Create operational flexibility so
pure-play BPO pro- especially for a major health insurer.
Meanwhile, business analytics ---
they can quickly make the most of viders whose capa- while already delivering clients the
rapidly emerging opportunities.
bilities in CRM, HR, capability to analyze past events and,
in some cases, near real-time data,
Given these findings, how should and other segments and moving steadily into delivery of
we look at the next generation of
BPO?
are merely “horizon- expanded predictive analytics --- will
grow more vertically specialized in
The primary areas of BPO have tal,” as opposed to the future. For example, real-time
been well-established in recent monitoring of customer interactions
years:
the deeper, industry- have helped a global airline improve
n Human Resources and Learning specific knowledge customer satisfaction 15 points and
n Supply Chain Management & increased revenue by $15 million in
Procurement that business model just the first year of implementation.
n Customer Relationship transformation In another example, a major auto
Management manufacturer put a tailored out-
n Finance & Administration
demands,” bound retention program into place
that helped convert roughly one out
While these areas are likely to of three engagements into a new
remain vital capabilities in the future, purchase through the use of a new
some dramatic shifts in the grow- BPO technology called “voice of the
ing demands for business expertise customer analytics.”
and the emerging technologies that In short, the next generation of
support BPO are keys to fulfilling BPO will be driven by client demand
the expectations that client decision for an evolving blend of historical
makers have for making BPO pay off cost efficiencies with business model
moving forward. transformations and predictive ana-
In terms of expertise, the road is lytics, all delivered with an increasing
going to get bumpier for pure-play industry-specific focus..  GS
BPO providers whose capabilities in
CRM, HR, and other segments are collaborate are increasingly tailored John M Lutz is general manager, IBM Glo-
merely “horizontal,” as opposed to to an industry and specific elements bal Process Services
the deeper, industry-specific knowl- of that industry.
edge that business model transfor- So why would BPO follow any
mation demands. This is a familiar different path?
evolutionary pattern that the IT and In fact, a closer look at two of
services industry has seen before, and the key technologies helping drive
it is reflected in the premium clients operational improvement, business
place on higher-value vertical indus- model transformation and market
try support vs. the increasingly com- expansion --- cloud computing and
moditized, price-sensitive state of business analytics --- make it clear
much of today’s hardware. Software, they have the potential to become
both applications and middleware, even more powerful assets when they
have become more industry-specific; offer industry-specific capabilities.
consulting delivers its greatest value While cloud enables a more effi-
to clients when it encompasses deep- cient, pervasive process delivery in
er industry knowledge. Even research general, clients will find greater value
projects in which vendors and clients if their private cloud model can be

22 GlobalServices www.globalservicesmedia.com February 2011


xperts by Kumar Parakala, KPMG

Rural BPOs in India:


Are they over-hyped?
Rural BPOs are fraught with several challenges that need
to be addressed before they can really go to the next level

T
he rural BPO phenom- 70 – 100. For a similar resource within that area. Normally there is
enon in India started about the salary in urban BPO could be migration of educated youth to tier
five years ago. Since then around USD 150 – 220. I or tier II cities. Rural BPO pro-
outsourcing to rural BPOs n Low operating costs - Rural BPOs vides opportunities at arms length
or villages has been a catchy concept offer a 30 – 40 percent operating for the educated, especially for
with zesty entrepreneurs setting-up cost arbitrage over urban BPOs women who are normally restricted
rural BPOs, large Indian corporations n Virtually absent attrition levels - from moving out of their place of
starting their BPOs in villages as a Urban BPOs have attrition as high residence.
corporate social responsibility (CSR) as 50 percent, while rural BPOs Additionally, several state govern-
activity or tying-up with local NGOs have virtually no attrition ments have offered incentives to set-
to promote BPOs in rural villages. n Rural Transformation - Rural up rural BPOs within the country.
Recently, Infosys announced its BPOs are increasing employment Most of the rural BPOs set ambitious
plans to partner with rural BPOs opportunities that were hitherto targets looking at the initial success
across India to reduce cost and take unavailable for the educated rural they received. Few of the BPOs that
the advantage of vernacular language population, creating wealth for were set in past five years and their
support required to operate in the rural societies and supporting their proposed plans are shown in the fig-
domestic market. The company has growth and development. In this ure below. If we take a stock of their
already partnered with two rural process of transformation, these current status it is hard to believe
BPOs; RuralShores and DesiCrew BPOs help in retaining at least a per- that rural BPOs will see a growth rate
Solutions and set up centers in the centage of the educated workforce like their urban counterparts in this
villages of Andhra Pradesh. According decade.
to NASSCOM estimates, there are Rural BPOs have come up as an
around 50 odd rural BPOs in India “Rural BPOs have alternative for low-end, low-skilled
spread across the nation employing come up as an data entry work that proves to be
about 5,000 rural youth and these costly when worked out of a tier I or
numbers are growing. alternative for low- a tier II BPO. Typical services offered
Rural India offers a very cost-
effective solution to urban India’s
end, low-skilled by Rural BPOs include:
n Digitization services- data entry,

BPO challenges of increasing labor data entry work converting documents to ‘PDF’
costs, high attrition rates, employee
ambition and growth prospect issues,
that proves to be format, book digitization, typing,
scanning, conversion of hard copy
etc. Typical advantages that are often costly when worked into soft copy
touted about rural BPOs are:
n Low cost labor - Average employee
out of a tier I or a n Voice based services- inbound and

outbound calling (typically tele-


salary in rural BPO is around USD tier II BPO” sales, tele-marketing, and customer

23 GlobalServices www.globalservicesmedia.com February 2011


Rural BPO

Reality check on some of the Rural-BPOs


Rural BPO Location Proposed plans Current Status Services offered

DesiCrew Six delivery centers Planned to employ By August 2010, Digitization services such as data entry
Solutions across Tamil Nadu 1,000 people by end DesiCrew had and data conversion. Content creation
of 2010 and 5,000 around 170 and validation, GIS based mapping
employees in 50 employees in six services, transcription and localization
centers across India delivery centers
by 2015 across Tamil Nadu

Source for Bagar, Rajasthan Plans to hire 500 As of early 2010, the Data entry, web research and local
Change employees by operation had around language call services
the end of 2012 25 employees in
by following a Bagar
‘hub and spoke’
system comprising
centers with 30–50
employees each.

RuralShores Seven delivery Mission to establish Between 100-300 Data capture, documents processing,
centers throughout 500 centers and people in seven expense processing, Image indexing,
South, West and employment for delivery centers reports generation, trend analysis
East India. 100,000 rural youth
by around 2015

SourcePilani Pilani, Rajasthan Plans to grow to 150 By September 2010 Medical transcription, call center
employees by 2010 the company had 60 customer support
end and five centers employees
and a strength of 500
by 2015

eGramIT Three villages of No available About 500 rural Digitization, vendor payment
Andhra Pradesh information on youth in 3 villages of processing, translation services, desk
growth plans Andhra Pradesh by research, voice support
2010

Source: Company websites, Media articles, KPMG Research and Analysis

care for telecom companies requir- clients or operating as a sub-con- require extended hours of uninter-
ing local language capabilities) tractor to a foreign MNC client. rupted power. This often limits the
While quality issues can be As such this BPO works on a bare gamut of services that the BPO
taken care of through Service Level minimum infrastructure including could offer.
Agreements (SLAs), there are other a small office with a broadband n Access to funding - Most of the

issues that need to be addressed before or leased line to support connec- rural BPOs who have seen some
rural BPOs can really be relevant tivity. It is usually tough to get a success or have reached break-even
in the interest of the larger IT-BPO broadband connection in Indian by now are being nurtured by large
industry in the long run. villages so these BPOs have to Indian corporations or have man-
Rural BPOs are fraught with sever- manage with low-speed dial-in aged to receive funding through
al challenges that need to be addressed connections. Long and extended venture capitalists based on the
before they can really go to the next power cuts from a few hours on social impact that the business
level. the lower side to a few days on the could cause. In many cases the
n Infrastructure- An average rural extreme side are taken for granted investing party is being served by
BPO is a small set-up of 10 to in Indian villages. Hence, power the BPO, as far as corporations are
50 full-time equivalents (FTEs) back-up is an absolute essential to involved. A strong business case
employee capacity, providing low- keep the business running. Such a with scalability and growth pros-
end data entry work to domestic set-up is also riskier for services that pects remains unclear.

24 GlobalServices www.globalservicesmedia.com February 2011


Rural BPO

n Talent Management- Most of the investing parties, be it public or pri- initiatives including online data entry
workforce in rural BPOs is either vate and parallel marketing initiatives of affidavits during elections, assisting
college drop-out or having elemen- to begin with, sustaining rural BPOs banks in financial inclusion initiatives
tary education. The organization and transforming rural economy at by providing voice and non-voice
structure is quite flat with prob- a national scale remains a distant support for micro-finance activities
ably just two to three layers till the reality. including periodic calling, application
management. At the team lead- With the limited talent willing filling, repayment collection, feedback
ers role these BPOs try to recruit to actually work in a rural set-up, collection, etc. Additionally, local
talent who are city educated but these BPOs cannot work beyond the NGOs can partner with these BPOs
having roots in villages so that they low-end services in the coming years. to present their case to large domestic
are open to such openings and are Training employees to deliver more BPOs and other large corporations
sensitized to the village culture. high-end services will not prove to be who are willing to sub-contract their
They typically take up a rural BPO cost-effective and good business sense. BPO work as a part of their corporate
job because the cost of living in The whole idea of cost-effectiveness social responsibility initiative.
the city does not leave them with for low-end work delivered through With the challenges that urban
enough savings at the same time a rural BPO will be under question. BPOs are facing in terms of growing
staying away from their families. Given these limitations, rural BPOs global competition, escalating costs
Additionally, getting trained man- might not scale-up to offer a range of and high attrition levels, companies
power for IT infrastructure main- services across different verticals like can have a serious look at what rural
tenance and management requires their urban counterpart. BPOs have to offer. High end work
skills that are not available in the still can continue with the tier I cities,
villages. In such cases rural BPOs Moving forward and high volume, low-end work can
have to get the support from the Rural BPOs are expected to grow be certainly offshored to rural BPOs
most optimum resources in near-by organically up to a limit for remain- centers to continue to take advantage
cities. ing manageable with the resources of India as an offshoring destination.
n Business and service scalability- available and making business sense.
An average rural BPO offers low In order to achieve its ultimate goal Conclusion
end digitization services. With the of being a social venture transforming The rural BPO wave in India has just
limited resources that the BPO has, rural communities and operating as a begun and is quite difficult to predict
it is very difficult to scale-up this business enterprise it is advisable for which direction the market forces will
business assuming there is growth such BPOs to operate in a hub and take these BPOs. Rural India is
in number of similar clients or spoke model. This is similar to the becoming more and more a growth
growth is work volume or both. analogy of milk co-operatives that area for businesses like telecom,
Attracting qualified talent in num- materially transformed rural commu- FMCG and other goods who want to
bers is a task in itself. It’s only the nities in Gujarat, India. penetrate deeper in these geographies.
larger rural BPOs that can afford to Rural BPOs could develop a pan- Additionally, with NASSCOM esti-
train and sustain fresh recruits and India set-up through a decentralized mates for domestic BPO market in
keep hiring. hub and spoke model. In such a FY11 to be around USD 2.8 billion,
According to NASSCOM, the model, each unit or center in the there is a large opportunity for rural
2015 projections being put out by network of the BPO will provide the BPO to tap and remain relevant. GS
the leading rural BPOs are about actual services that will be delivered
1,000 centers and 150,000 employ- to a regional center or hub which will Kumar Parakala is Head of IT Advisory
ees. Although this figure is achievable further assimilate the content and KPMG in India and EMA,COO Advisory,
statistically, given the number of rural deliver it to a central location that KPMG in India Global Head for Sourcing
youth having basic understanding delivers the final output to the cli- Advisory
in computers and English language ent. Every center is in this way could
required for low-end BPO work, such be an entrepreneurial initiative and
an enormous growth (CAGR of 100 responsible for its own profitability
percent from 2010 to 2015) will and management.
call for more investments and more From a business development per-
business flowing in. Unless there is spective, it makes more sense for rural
significant back-up of funding from BPOs to support local government

25 GlobalServices www.globalservicesmedia.com February 2011


xperts By Reetika Joshi, Senior Research Analyst, ValueNotes Sourcing Practice

The Emerging
Market for Analytics
As investments in IT soar further, there is an increasing need
to convert organizational data into knowledge, by using
analytics on a more sustained basis

T
he rural BPO phenome- into meaningful business insights and The outsourcing angle
non in India started about knowledge is difficult, and calls for a The lack of technical skills, statis-
five years ago. Since then new approach in design and deploy- tics related capabilities, the broader
outsourcing to rural BPOs ment. In defining a problem, busi- organization culture and the absence
or villages has been a catchy concept nesses need clear and closed-ended of a proactive problem-solving team
with zesty entrepreneurs setting-up definitions, compared to the broad hold back organizations from apply-
rural BPOs, large Indian corporations based scope of business problem defi- ing analytics to specific business prob-
starting their BPOs in villages as a nitions in management consulting/ lems. Furthermore, to use analytics
corporate social responsibility (CSR) strategy formulation. Solution deliv- on a continued basis, companies need
activity or tying-up with local NGOs ery too, calls for deriving data from both a framework and an operational
to promote BPOs in rural villages. multiple sources, and aligning analysis model to overcome the organizational
Organizations typically focus on with business needs. barriers. Organizations are addressing
the meticulous capture and meas- Establishing an analytics process in this problem either by developing ana-
urement of transactional data, for an organization can be thus broadly lytics teams and culture in-house and\
benchmarking performance. The data classified into three broad steps: or outsourcing their analytics related
aggregated is used as input for man-
Establishing analytics for an organization
agement information systems, data
warehouses, etc. - again aimed at
measuring performance. Companies
have made heavy investments in tech-
nology infrastructure to collect this
data. However, very little attention is
paid to transforming it to knowledge/
business insights, to achieve specific
business results, beyond process opti-
mization. Today, as the investments in
IT soar further, there is an increasing
need to convert organizational data
into knowledge, by using analytics on
a more sustained basis.
Analytics refers to the gathering
and interpreting/analyzing of histori-
cal data to facilitate business decision-
making and planning. The process
of transformation of historical data

26 GlobalServices www.globalservicesmedia.com February 2011


Emerging Market

requirements to a third party service Within these broad categories,


provider. Technology has enabled the there are a variety of specific activi- “The process of
breaking of the analytics process into ties that can be outsourced/offshored.
discrete components of work, which There is also a variance in the offsho-
transformation of
can be outsourced/offshored. rability of these services, elaborated historical data into
Services offshored in analytics can below.
range across various areas across the The execution of complete projects meaningful business
value chain or involve end to end often require an onshore presence, insights and knowl-
delivery of the project. From the off- as the offshorability of knowledge
shoring perspective, the activities in intensive and core analytics activities edge is difficult,
an analytics project can be categorized is relatively low. Although activities and calls for a new
into four broad groups, based on their that are highly customized or dis-
genesis. crete can be largely standardized and approach in design
and deployment”
Establishing analytics for an organization
Type of activity Genesis of activity Typical activities automated, the requirement varies
Knowledge intensive Based on reasoning, - Research design significantly between projects. This in
judgment and - Data collection and validation turn lowers the offshorability of these
interpretative abilities - Intuitive analytics activities.
Discrete processes Can be broken down and - Data tabulation
disintegrated into multiple - Data preparation Is outsourcing going to grow?
locations - Cleaning of data As the use of analytics in prob-
- Warehousing lem solving becomes more widespread
Highly customized – Specific to the project - Study methodology and ‘industry standard’, organizations
specific to project - Developing statistical model will have to evolve in terms of their
Core activities to High levels of IP involved - Verbal presentation frameworks and operational models
analytics – drive results - Customized dashboards to in deploying analytics related work.
view results This will help them see significant
- Management consulting
- Analytics products
value from data in the form of knowl-
Source: ValueNotes Research
edge and insights.
Offshoring analytics is complex, as
the intermediate steps involved need
Offshorability and level of offshoring in analytics
coordination on a continuous basis.
Over the past few years however,
the outsourcing and offshoring of
analytics by the corporate segment
has grown. Amongst the companies
that do not outsource, the trend to
outsource at least some tasks in the
analytics value chain (such as data
cleaning) is on the rise.
Over the next few years, as
the outsourcing/offshoring model
and the service provider landscape
evolve, we will see greater confidence
among client organizations, driving
the transition of ‘high value’ analytics
offshore.  GS

Reetika Joshi is Senior Research Analyst at


Source: ValueNotes Research ValueNotes Sourcing Practice

27 GlobalServices www.globalservicesmedia.com February 2011


xperts By Nigel Hughes, Global Services Director, Compass Management Consulting

No Room for Heroes


in Outsourcing
Relationships
Outsourcing relationships dominated by the individualistic,
“hero” dynamic are at risk, and both parties need to be
aware of how to address them

T
he rural BPO phenome- supplementing the service provider NH: What do you mean by a “hero”
non in India started about team, unintentionally circumventing culture and what problems can it
five years ago. Since then process with the intent of satisfying cause in service delivery?
outsourcing to rural BPOs business user requests. This lack of TD: When you look at the IT organi-
or villages has been a catchy concept discipline and failure to adhere to zations of many Fortune 500 compa-
with zesty entrepreneurs setting-up standardization resulted in lower than nies, the places that are consistently
rural BPOs, large Indian corporations expected productivity, ambiguity in ranked as some of the best places to
starting their BPOs in villages as a roles between client and service pro- work, the culture is all about people,
corporate social responsibility (CSR) vider, and ultimately an inability to customer satisfaction and personalized
activity or tying-up with local NGOs achieve contractual obligations – all service. It’s about teamwork and col-
to promote BPOs in rural villages. originating from the core objective of laboration. When a problem occurs,
A recent performance analysis of driving business satisfaction. people swarm to fix it, they stay up
an offshore managed service operation While cooperation and mutual all night if they have to. They strive to
conducted by sourcing consultancy commitment to shared goals are cer- become heroes.
TPI concluded that a high degree of tainly laudable and clearly recognized The trouble with this approach
cooperation existed between the cli- as essential to an effective sourcing is that it’s very reactive. By its very
ent and service provider teams. Both relationship, this example illustrates nature, stress becomes a critical suc-
the client – a U.S.-based Fortune 500 that a positive culture is no substi- cess measure. Companies that foster
firm – and the vendor – a major India- tute for the process discipline and this culture often reward the heroes
based service provider – were found to operational rigor that managed serv- and further reinforce this behavior.
be team players, mutually committed ices delivery models require. Indeed, As you might imagine, individuals
to the partnership and proactively as TPI found, a seemingly positive seeking to become heroes tend to
seeking ways to optimize and inte- culture can conceal serious underly- lose sight of the value of a disciplined
grate their application development ing issues that may contribute to process. An IT organization can’t pre-
and maintenance (ADM) operations. inefficiency. dict performance and the execution
What’s more, TPI’s analysis showed, I recently spoke with Todd Dreger, of tasks when everyone is reacting to
customer satisfaction among business a Partner at TPI in its Operational the moment and earning a reward.
users was at acceptable levels. Strategy Practice, about some of the It’s extremely inefficient. In this par-
Digging deeper, however, TPI key challenges and opportunities ticular case, the client had high-level,
found that senior staff members businesses face in managing global senior people doing menial tasks,
on the client side were consistently sourcing operations. duplicating the efforts of the service

28 GlobalServices www.globalservicesmedia.com February 2011


Global Services Hero

provider. As a result, opportunities and put process discipline in


to increase stability and focus on “We found that senior- place?
business innovation were thwarted. TD: At TPI, we’ve seen that
Service providers, mean- level client staff were after a transition to a new out-
while, must be very process-ori- frequently stepping in sourcing partner, there’s typically
ented in managed services models. some movement toward process
Ultimately, the purpose is to measure to solve problems that institution, but it tends to plateau
and manage service and performance service provider staff prior to maturation. After a while,
against service level metrics. ADM it makes sense for an outsourc-
Service Providers need the process couldn’t handle....not ing advisor to come in and assess
discipline, and CMMi maturity, in only was that inefficient the operation and its effectiveness
order to effectively delivery services to ascertain what’s going on. Why
according to their business model. and not cost-effective, aren’t we achieving our objectives as
They need consistency, repeatability, the result was that defined in the business case? Why
and predictability in their opera- aren’t we getting repeatability and
tions. This requires commoditiza- knowledge and skill gaps predictability in service delivery?
tion of knowledge, and the leverage weren’t being addressed” Why are SLAs not being met? You
of a shrinking percentage of highly need to ask these questions in a
skilled service provider resources. thorough manner and focus on the
Todd Dreger executive perspective to develop a
NH: What happens when these plan to reinvigorate the transition
cultures collide? Partner, Operational to a more process-centric operating
TD: At TPI, what we’ve seen typi- Strategy Practice, TPI model. A key element is that the
cally is that the client’s hero culture client must allow the service pro-
prevails. For one thing, there’s a vider to institute process discipline,
natural tendency for the service pro- and this requires the IT organiza-
vider to want to please the customer, their individual talent is less vis- tion to manage the expectations of
and to adapt to the customer’s way of ible and potentially less valued. So the business customer. When you go
doing things. In addition, within the the challenge is to create incentives through this process and capture all
client organizations, the hero culture that give the heroes a stake in the the challenges and opportunities, you
is championed by the most talented implementation of process disci- get the elements of a “get well plan,”
and dynamic people – by the leaders. pline, so that they’re recognized and and you can begin to define actions for
Meanwhile, on the service provider side, rewarded. both the client and the service provider
and particularly in the case of many of TD: Absolutely. Another issue is that, to take to drive improvement.
the offshore providers, they’ve experi- in an outsourced environment, the
enced tremendous growth over the last hero culture is often characterized by NH: And from Compass’ perspec-
five years or so. As a result, many of a high degree of collaboration between tive, periodic benchmarking against
the mid-level people on the operational the client and vendor teams. This can the business case systematically
front line lack the experience to push foster a sense of satisfaction with the drives re-assessment and re-com-
back on the client and promote process overall relationship, while glossing over mitment to change. You need to
discipline. Instead, they accommodate performance issues. In the analysis quantify the initial opportunity
to the client’s approach. TPI recently conducted, we found that and, subsequently, quantify progress
senior-level client staff were frequently toward the targeted end state to
NH: One of the dilemmas we’ve stepping in to solve problems that ensure that the savings and benefits
observed at Compass is that, in order service provider staff couldn’t handle. defined in the business case are not
to change the hero culture, you need So, not only was that inefficient and eroded through value leakage. GS
the support of the individual heroes not cost-effective, the result was that –
to make that change happen. Yet, in the spirit of teamwork – knowledge For a forthcoming webinar on this topic,
the nature of that change – repeata- and skill gaps weren’t being addressed. look up: www.tpi.net
ble processes, consistency, commodi-
tization – can make the heroes feel NH: So what’s the solution? How Nigel is Global Services Director for Compass
marginalized or threatened, because do you address this hero problem Management Consulting

29 GlobalServices www.globalservicesmedia.com February 2011