Guy Kirkwood's BPO Backchat

28 nov 2003

As announced this week, Capita has been awarded a 10-year, GBP110m contract for life & pensions administration services by the man (and woman) at the Pru. Capita is buying the Pru's Dublin-based SSC and TUPE'ing across 260 employees. This deal is good news for the UK BPO market generally, but more importantly, it demonstrates that the insurance industry is now looking to outsource open books. I expect a flood of L&P firms to follow suit in an increasingly competitive market.

26 nov 2003

There appears to be a movement by clients as the market picks up to reduce fee levels from what they were before the downturn in the technology markets from March 2000. Within six hours, we were given the go-ahead on three pieces of work by business managers and two were pulled by the procurement or HR functions. It appears that the power to control the recruitment process has moved. I do not know yet whether this is just within the tech-related markets or whether it is across-the-board, but I am going to do some research.

Why is this of any interest to the BPO market? Well, if procurement has more control over recruitment, it is indicative that it has more control over all aspects, including shared services and outsourcing, and this directly affects us all.

19 nov 2003

I attended the launch of the HRO Europe magazine yesterday in Brussels.

In an amzingly well-attended morning conference, I noted that the guest list was almost as impressive as the speakers. The vast majority of these events are attended by consultants, sales people and analysts, but here we had a mixture of C Level individuals of the major European HRO suppliers, along with the Chairmen of global and European Associations. - I really think HRO (which was invented in Europe) is coming of age.

For anyone who is involved with HRO, I heartily recommend taking a free subscription.

18 nov 03

An excellent contract briefing article appeared today by Karen Jones a solicitor at law firm Matthew Arnold & Baldwin. The article is long but well worth reading. It includes such gems as:

"Service level agreements are always the poor relation of support agreements as far as contracts are concerned and are often badly drafted but they play a critical role in nailing down the response obligations of the supplier – make sure these reflect your expectations and beware the difference between responding to a problem and fixing it."

17 nov 03

In a fascinating piece for The Boston Globe, Robert Weisman describes a potential new advance for outsourcing. Richard Parvelle of Invent Resources, the subject of Weisman's article, says:

"Companies are busy farming out manufacturing, call centers, even software programming. The next frontier for outsourcing may be idea generation."

I recommend you read the whole article - they could really be on to something.

12 nov 03

Accenture is now generating USD1.44bn in revenue from BPO according to the results for the year ending Aug 31, released today.

And while the company isn't looking to grow by combining forces with a tech giant, as PricewaterhouseCoopers did with IBM last year, Accenture is, "continuing to look at BPO [acquisition] opportunities where it makes sense to expand," said Chairman and CEO Joe Forehand. (This is as I predicted over two years ago).

11 nov 2003

While India and China have long been recognized as centres for US offshore outsourcing, other nations also are hustling to tap into this lucrative market, according to Ecommerce Times. Ghana, South Africa, Israel, Russia and several Eastern European countries all are vying for jobs and money in the sector.

As more back-office processes become commoditised, the ability of countries to provide BPO services will increase exponentially - this is just the start.

9 nov 2003

Wow, only seven years after I built the first true BPO team for a US company, the rest of the market catches up!

In a report by Doug Young of Reuters, and reported by USA Today, he says that the move toward a "fabless" business model, where semiconductor firms focus on chip design and marketing but leave capital-intensive production to others, is helping drive down costs for makers of chips that power gadgets from PCs to cell phones and DVD players.

This is what Joe Costello, the visionary CEO of Cadence Design Systems, chose to do in 1996. Under Kevan Howley, I built Europe's first true BPO team to focus on outsourcing the design of silicon.

7 nov 2003

Andy McCue at silicon.com reports on a LogicaCMG study into the risk analysis of outsourcing in the UK.

"IT outsourcing is still more common than other areas such as finance and payroll but the survey found that because of the perceived risks involved, organisations aim to cap their outsourcing activity to 18% of systems and processes.

Cost reduction also remains the main driver behind outsourcing according to 82% of respondents, ahead of factors such as improved business performance and service delivery."

Hmmm, it looks like we still have our work cut out to educate the market.

4 nov 2003

The Indian BPO firms are mostly run by IIT graduates. (For those that do not know, it is the premier business school in Asia). When Dilbert recognises this fact, one just knows that the market is bound to follow.

1 nov 2003

Last month's blogs have not suddenly gone out of date, if you missed any, they are worth reading. Also check the archive.

November 2003 and why can't people make up their minds. I think the whole of the executive search market is changing as recruitment comes under more control by the procurement team. This was evidenced at least four times this month - the only advice I have is the usual "adapt or die."

Archive