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Guy Kirkwood's BPO Backchat

30 jun 2004

Kelly Johnson was head of "Skunk Works" that developed the U2 spy plane, the blackbird and eventually the F-117 stealth fighter/bomber. What is the relevance to outsourcing? Johnson wrote 14 cardinal rules of project management. Having read through them and extrapolated to the outsourcing customer/vendor relationship, I believe they are relevant, timely and concise. See what you think.

  1. The (Skunk Works) program manager must be delegated practically complete control of his program in all aspects. He should have the authority to make quick decisions regarding technical, financial and operational matters.
  2. Strong but small project offices must be provided both by industry and the military.
  3. The number of people having any connection with the project must be restricted in an almost vicious manner. Use a small number of good people.
  4. A very simple drawing and drawing release system with great flexibility for making changes must be provided in order to make schedule recovery in the face of failures.
  5. There must be a minimum number of reports required but important work must be recorded thoroughly.
  6. There must be a monthly cost review covering not only what has been spent and committed but also projected costs to the conclusion of the program. Don't have the books ninety days late, don't surprise the customer with sudden over-runs.
  7. The contractor must be delegated and must assume more than normal responsibility to get good vendor bids for sub-contract on the project. Commercial bid procedures are often better than military ones.
  8. The inspection system as currently used by the Skunk Works, which has been approved by both the Air Force and the Navy, meets the intent of existing military requirements and should be used on new projects. Push basic inspection responsibility back to the sub-contractors and vendors. Don't duplicate so much inspection.
  9. The contractor must be delegated the authority to test his product in flight. He can and must test it in the initial phases.
  10. The specifications applying to the hardware must be agreed to in advance of contracting.
  11. Funding the program must be timely so that the contractor doesn't have to keep running to the bank to support government projects.
  12. There must be absolute trust between the military project organisation and the contractor with very close liaison on a day-to-day basis. This cuts down misunderstanding and correspondence to an absolute minimum.
  13. Access by outsiders to the project and its personnel must be strictly controlled.
  14. Because only a few people will be used in engineering and most other areas, ways must be provided to reward good performance by pay, not simply related to the number of personnel supervised.

28 jun 2004

I can see the headlines now... A BPO TOO FAR, or WHAT GOLD STANDARD? I can just smell this is going to be trouble. What?

Edexcel, one of Britain's main examination boards, (consistently in the news for "losing" exam papers which are then sold to well-heeled cheats before the exam), is sending thousands of answers to GCSE papers abroad for marking in Australia and the US.

Said Ted Wragg, Emeritus Professor of Education at Exeter University:

"This is just a dummy run. If the technology works, soon we will see marking centres in low wage economies like India and Africa, in a drive to cut costs."

23 jun 2004

I'm sure this has got to be a joke... but perhaps "blessed are the deal makers."

22 jun 2004

The market is expecting PA Consulting to announce it is selling itself to SAIC in the next few days. The synergies between these two firms are manifold but what makes sense to both parties the most - each firm is owned by its employees. I like the sound of this deal a lot.

21 jun 2004

In a truly classic display of "non-joined-up thinking", Siemens employees have demonstrated with mass-walkouts in a battle between efficiency and outsourcing.

How embarrassing is this for the firm's BPO and outsourcing arm, SBS?

18 jun 2004

In a research note published this morning, Dryden Financial mention that Northgate (who recently bought one of our clients, RebusHR) has healthy growth prospects in the UK and Spain in the near future due to the improved outsourcing business. There are also rumours about the likelihood of Northgate being acquired by GE in the near term, the analysts say. Dryden Financial believes that the current valuation of the company's stock is attractive.

17 jun 2004

Hewitt Associates has reached an agreement to acquire rival Exult for just under USD700m in stock. The move creates an HRO business that will turnover USD3bn this year.

Kevin Campbell Exult's CEO, is taking the number four job in Hewitt and will run all of the BPO elements of the business.

With both firms doing little of any consequence in continental Europe, I think that although the deal probably makes sense from a "critical mass" perspective, the firm should have a good look at the management in Europe.

14 jun 2004

I am a huge fan of Recruitmax, so it is good news to read that the premier provider of software to the recruitment market is branching-out into HRO.

13 jun 2004

Well folks, here it is... the new look Antiphon site. All pages have been updated with new content, the structure has, we think a more modern, professional feel. Of course you may disagree, either way drop us a line.

For those who are interested, the site is compliant with W3C's XHTML and CSS. It is also certified as AAA within Web Content Accessibility Guidelines 1.0 and is approved in the US Section 508 Guidelines.

For those who are not interested, we'll be back with more insight into the BPO market tomorrow.

10 jun 2004

I'm working on a new look for the site... stay tuned.

9 jun 2004

What is the state of recruitment outsourcing (RO)? This will be a topic over the next few weeks. Following on from the last BPO Notes, I will be looking at whether it is possible, or necessary to "fix" the recruitment problem. For this, I would value your comments.

As a starter, these are my initial thoughts:

  • Recruitment doesn't work.
  • Human capital is critical to the success of a business.
  • Recruitment internally and externally has been decimated over past three years.
  • Recruitment as a percentage of total procurement spend is too high.

8 jun 2004

From June's bulletin from the SBPOA, Bob Gunn has concluded that HR BPO is here to stay. So far there have been 58 deals world wide representing USD12bn of contract value (according to Michael Janssen at The Everest Group) and the market is growing at more than 20% per year. Remarkably, we are just at the five-year mark since Exult and Xchanging pioneered the concept in 1999.

So where is the market headed now that we are past the proof of concept stage? Bob's top five predictions for the next five years are:

  1. Those agreements that stand the test of time will have been sponsored and managed by the Chief Human Resource officer... deals are bound to go off the paved roadway unless the CHRO is driving the car.
  2. Providers having primary focus on Human Resources will be the market leaders... look to Arinso, Convergys, Exult, Hewitt, or Mellon to collectively beat the combined market shares of ACS, Accenture, EDS, or IBM. No self respecting HR executive will mortgage their career to vendors whose principal clients are CIOs or CFOs.
  3. Only a handful of companies (less than five) will have outsourced HR on a global basis. Country-by-country scope expansion will be a far more prudent way for clients to extend outsourcing agreements.
  4. Relationships governed with a partnership mindset while managed with a vendor/client framework will outperform other agreements and set the gold standard for customer satisfaction, service quality, and HR transformation.
  5. The "one-to-many" solution based on proprietary technology and standardized service delivery model (e.g. ADP, Fidelity) will appeal to clients having less than 10 thousand employees – bigger companies not only require more flexibility due to their scale, but also operate business models that depend on it.

Hang on tight because Bob predicts this market may well have more than 150 agreements and USD30bn of contract value by 2009.

7 jun 2004

There is a new(ish) entrant to the HRO market.

FESCo is a newly created offshoot of Fidelity and provides benefits and human resources administration, workforce effectiveness, payroll solutions and stock plan services to over 17m employees in the US. Additionally, through its HR Access acquisition, the firm provides HR and payroll applications for about 12m employees in Europe.

D-Day plus 60 years

We went to the Normandy beaches yesterday. To meet such brave and modest men in the shape of the veterans is a truly humbling experience... nothing more to say actually.

4 jun 2004

Peter Cochrane is as usual, spot on about outsourcing, virtual organizations and MBAs:

" ...the company is completely overtaken by members of the legal, accounting and human recourses professions to the point where the bureaucracy of the company overrides all else. Everyone is there to support an administration that has assumed a life of its own - the tail is now definitely wagging the dog."

My response included:

"...the entrepreneurial and business savvy people leaving their declining corporate dinosaurs and setting up small, rapid and flexible firms that, in one case generated profits equitable to their competitors on costs that enabled them to undercut the market by a staggering 40%."

Peter's column is always worth reading. This one has the distinction of hitting on three of my hot-buttons - talk about value for money.

3 jun 2004

Although widely leaked, Xchanging's announcement of it's deal with Deutsche Bank is great news for the business. The CEO, David Andrews has been focused on continental Europe for at least two years and I firmly believe that BPO within "Europe", (ie those bits that are not UK for our US friends), will really start to accelerate in Q3/4 this year. With this deal, Xchanging are nicely placed to capitalise on this movement.

2 jun 2004

I found an interesting article from last August on silicon.com. Ian Watmore (then head of the MCA, now the UK government's newly appointed "CIO") said:

"Companies and government agencies have shed a great deal of cost through outsourcing their IT departments. Taking those savings to the bottom line is of course tactically attractive. But many also realise that there is a strategic value in reinvesting these savings to help them transform legacy IT."

Hopefully this will mean much more work for the busy boys and girls in the outsourcing suppliers. Let's see shall we.

1 jun 2004

All go at Antiphon Towers, the new BPO Notes is out. This month is not directly about BPO but about the problems of recruiting for the market. Anyone who has been on the receiving end of poor recruitment practices should read this and see if it makes sense. I would also value your opinions, send me an email.

As usual, last month's blogs are available and worth reading if you missed any, particularly as last month saw the value of BPO deals in Q1 overtake ITO for the first time... at last.