Guy Kirkwood's BPO Backchat
31 aug 2005
Dr Eammon Butler, writing for the Adam Smith Institute, discusses an absurd situation inflicted on Nestlé by French law:
A French judge has ordered the Swiss food giant Nestle to re-open a loss-making factory outside Marseilles. It closed in June after nine years of problems, due largely to falling demand for the decaf coffee it produced, leaving it running at 30% of capacity.
Nestle offered all 427 workers other jobs within the group, or early retirement. But this was not enough for the French authorities, who say Nestle have breached their strict code on factory closures.
In the Fairyland of France, forcing investors to pay people to make stuff that people no longer want might look sensible. Elsewhere it looks plain daft. How will you keep up with today's needs if you lock workers into producing for yesterday's needs? And if future investors think you might force them to produce loss-making lines - well, there is a whole world they can take their money to instead.
The sooner Nicholas Sarkozy takes over, the better. The protectionist sympathies of this paragon of "old Europe" have to be swept aside, otherwise France will drag the whole of the Euro zone down with it.
30 aug 2005
The Financial Times has an excellent article introducing knowledge process outsourcing (KPO). (You will need to register with FT.com but I can email you the article if you drop me a line).
In this primer, Khozem Merchant discusses the similarities and differences between KPO and BPO:
Knowledge process outsourcing (KPO) looks like a cousin of business process outsourcing (BPO), but closer examination suggests they are more distant relatives.
BPO, the fastest-growing part of India’s USD17.2bn technology services industry, sits at the heart of a company’s information technology processes. It is high volume work with thin margins for customer-facing tasks such as settling card bills.
KPO is built around a demand for business expertise, such as legal services, the analysis that supports a merger, formulating patents, and writing equity, industry and product reports. It is project-based work performed remotely through extensive use of global data-bases and sources such as regulatory bodies. It works to the longer-term deadline and rarely has direct client contact that is the domain of the call-centre employee.
29 aug 2005
In an indication that India will continue its growth to become a global powerhouse, Nasscom is to collect personal details on all individuals working in call centre environments in a bid to obviate data theft. This is in reaction to criticism following the well-publicised selling of bank details to a British tabloid reporter.
I do not know any other industry in any other country that would react this quickly. We all know that organisations generally bury their heads in the sand and pretend that any problems are an "aberration" or perpetrated by "a couple of bad apples", when we all know that attempted fraud is endemic.
I therefore congratulate Nasscom on its honesty and speed of reaction - both admirable qualities that Western companies should emulate.
26 aug 2005
Today I want to talk about compliance, standards and validation. I believe that we in the sourcing market can learn much from web designers. Why? Because the road to achieve common standards has been tortuous and seemingly never-ending (and is still not completed). There are many indeed who think that standards will never become the norm.
The internecine wars between non-standard browsers vying for market domination is an old story, but I think we can learn from it. Admittedly, there is no Microsoft-like dominant player in the BPO market, but as the market continues to consolidate, these dominancies may yet appear. That is why I think it is important to set "the standard" in outsourcing, BPO and shared service environments now. The question of course is, to which body is this to fall.
I believe that a ISO9000 or PRINCE type accreditation is needed and frankly I do not mind if it is set up by the IAOP or the SBPOA or any other organisation. I just think we need it.
Incidentally, I got thinking about this after working yesterday evening on getting this site compliant. It took what a friend describes as "a good coat of looking at", but BPO Backchat's parent site Antiphon is now compliant for XHTML, CSS, RSS and for accessibility to Section 508 and the WCAG Priority 3 standards.
25 aug 2005
I read with interest news from silicon.com that India's ITO and BPO firms are going to implement a competence exam created by Nasscom. An initial three-month pilot will run in Bangalore, Delhi and Mumbai covering 36 key companies and 15,000 graduate recruits.
My concerns were published shortly after.
24 aug 2005
There has been a lot of heat over the British Airways/Gate Gourmet battle, but the Financial Times today looked at it from an outsourcing perspective:
Michael Mol, research fellow at London Business School, feels that too often companies focus on the benefits of outsourcing, ignoring the drawbacks of contracting out work as mere implementation issues. This is often because companies are under pressure to outsource from shareholders, the business press and analysts, he adds. "Over the past 15 years a lot of companies have outsourced at a faster pace than they can actually manage," Mr Mol says. "You cannot split out every single activity just because of the cost saving. Many of these activities are a lot more intertwined with core parts of the business than it appears at first sight."
I think this is a very good point. How many deals have gone south because the client doesn't understand what it's losing in outsourcing some "non-core" but vital bit of the business?
23 aug 2005
Following news earlier this month that Convergys has acquired Deloitte's F&A business in the US, I was looking at the business from a European perspective.
For a company that is known and respected for its HR services business, Convergys' decision to move into F&A is a smart one indeed. As a recent event organised by the SBPOA in Copenhagen demonstrated, the appetite for BPO is increasing to such a stage that a client today described himself and his business as being "stupidly busy".
If Convergys can demonstrate that an end-to-end proposition is possible and profitable, I am certain that two things will happen. Firstly Convergys will immediately become a target for a take over and second, all the other HRO companies operating in Europe will want a piece of the action too... cue more consolidation and M&A activity.
22 aug 2005
Professional blogging is becoming the norm, why not outsource it? This seems to be the role of a new Chinese operation called blogoriented.
As you can imagine, amateur bloggers have been up in arms about the commercialisation of their "art", but I think this is a natural extension to the BPO mindset.
20 aug 2005
In an editorial for the Adam Smith Institute, Dr Madsen Pirie discussed the reduction in social mobility caused by non-selective education. No longer are bright children from deprived backgrounds encouraged through selective "grammar" schools, but put through a "comprehensive" system that is anything but.
With increasing discrimination of privately educated students applying through UCAS, (as a result of UK government targets), it is now preferable to look for well-educated people from continental Europe. They are generally fluent in at least three languages, have a broad education and still be able to (probably at an advantage) apply to university in the UK. One has to remember that French, German, Dutch and Swiss education is also not selective. I do not believe that the system in the UK is broken, I believe that in most cases the teaching is broken.
19 aug 2005
Scores of European trading companies are facing bankruptcy or severe financial losses. Many jobs are likely to be lost. Trying to stop imports and outsourcing amounts to economic suicide.
Who wrote this? I was surprised to learn that it was four ministers from the European Union.
I've been banging on how protectionism doesn't work for some time. It is nice to hear that the EU is getting the message.
17 aug 2005
Business Week is publishing a series of articles on the powerful combination of India and China in a look at the future of global business.
To globalization's skeptics, however, what's good for Corporate America translates into layoffs and lower pay for workers. Little wonder the West is suffering from future shock. Each new Chinese corporate takeover bid or revelation of a major Indian outsourcing deal elicits howls of protest by U.S. politicians. Washington think tanks are publishing thick white papers charting China's rapid progress in microelectronics, nanotech, and aerospace -- and painting dark scenarios about what it means for America's global leadership.
I recommend that you read them all.
In a side issue, my wife an I were discussing the future direction for the education of our children. Our son is easy he has always wanted to be an equine vet. Our daughter has a flair for languages and we concluded that if you want to get on in the world for the next 30 to 50 years, there are three languages you absolutely need: English, Spanish and Chinese (Mandarin and Cantonese). The articles in Business Week seem to support this.
16 aug 2005
What is this (full size image)? This is probably the most accurate indication as to the state of the BPO market. There is a direct correlation between mentions of BPO in dejanews.com and the perceived state of the BPO market. It also accurately reflects the famous Gartner technology hype curve.
What does it mean? It means that we're now moving into the plateau of profitability when leading (surviving) companies in any given market have been accepted and will mature in a profitable way.
Interestingly, this is the same for any market, product, company or even person. Check out you own choice using the fantastic Meme Miner from Broward Horne.
2 aug 2005
Following on from yesterday's blog, Business Week ran a similar piece. I started to think about how outsourcing could affect compliance issues and replied to the article thus:
I predict that third party providers will come to the fore in supplying SOX compliance business process outsourcing (BPO). I'm sure that we'll see in the next three years SOX compliance not as a burden for honest and efficient corporations, but as a positive differentiator.
1 aug 2005
Sarbanes-Oxley: not all bad then? Not according to the lastest research from Approva.
Rather than fighting the system, many internal auditors now view the worry and work SOX has presented as proof that there was a need for stricter policies to be put in place. The ultimate goal for SOX is to have better-run corporations, with more accurate and reliable reporting. That's starting to happen to the benefit of all.
In an article I wrote in March of 2003, I decried the lack of senior management control that led to Enron and Parmalat. What we see after three years of SOX maybe the beginning of the end of unethical and criminal behaviour... at least until the next time.