Guy Kirkwood's BPO Backchat
30 sep 2005
My favourite Indian company to watch, Gecis has changed its name to Genpact. The firm says its new name reflects both both its GE heritage and its look to the future. Genpact is confidently expected to pass the USD1bn revenue mark in 2007-08 and employ 30,000 people around the world.
29 sep 2005
I heard that Tom Butler had left Liberata last week and read today that Robert Gogel has taken over as CEO. I thought that General Atlantic Partners were looking to offload the business. Does this mean that it is more, or less likely? I'll find out more and report back.
23 sep 2005
September's BPO Notes has been published.
22 sep 2005
Unsurprisingly, I got an excellent note from Deepa Mani mentioned a couple of days ago:
I think its so important for business school research to be relevant to industry practitioners and the blog does prevent my research from operating in a vacuum. So far, my research has been predominantly focused on the US outsourcing market. That's largely because I find it very difficult to get firm-level data from the European companies for any of my research projects. The UK firms are definitely more responsive than the rest of the sample but these still do not allow for a large-scale research study. However, I do plan to strengthen the transatlantic connection soon since my next study includes the impact of country-specific differences on outsourcing performance.
...It's interesting how the response to the surge in outsourcing in Europe echoes the yesteryear American backlash. Perhaps, as the market matures and the benefits of outsourcing become evident to all, outsourcing will no longer be the dirty word it is.
20 sep 2005
Google has a new beta blog search engine and inevitably I tried "bpo". I came up with a blog from Deepa, a PhD student at the University of Texas, called BPO Journal. She naturally has a US-centric slant, but I was particularly taken with her analysis:
...not only are firms unprepared for the transformation that outsourcing brings, they also don't have a sound strategy to transfer failed outsourced operations back in-house. While much has been said on the former, recovering from a failed outsourcing deal is a topic that has received much lesser attention in the business press.
Take a look.
19 sep 2005
A weak Germany is bad for Europe. With no clear winner in yesterday's German election, Angela Merkel may well be the new (and Germany's first woman) Chancellor. But with only 36 per cent of the vote; and with Schröder's SPD on 33.5 per cent, the free market changes that Germany so desperately needs will not happen.
I believe that outsourcing firms and corporates looking to set up shared service operations (which are restricted by strong works councils) will find that their positions will be weakened in the ensuing political chaos.
The Euro zone will undoubtedly be damaged by a weak Germany and this will ultimately play into the hands of the US... and let's face it, that will please no-one on this side of the Atlantic.
18 sep 2005
LogicaCMG, astoundingly the third largest computer services provider in Europe, is looking to acquire Unilog of France for almost EUR1bn. Logica's business in France and Germany has been struggling and the division had posted a loss in the first half. Its British business is profitable.
On the surface then, this makes sense. Unilog has 80 per cent of its business in France. But, I'm just slightly wary of this deal. With French politics in a state of flux, if a UK company takes over a French services company, I can see political pressure brought to bear for current clients: EDF and GDF, Total, Vivendi, Societe Generale and AXA, to find an alternative home for their business from the likes of Atos or Capgemini.
As Han Solo said: "I've got a bad feeling about this".
17 sep 2005
In silicon.com's leader column last week, the team thought all was not "doom and gloom" for offshoring in and for the UK. I agreed in a follow-up comment.
14 sep 2005
The SBPOA F&A conference from which I'm just back was excellent as usual. The guest speakers from Reuters and Thomas Cook shared service operations particularly stood out. However, F&A is nowhere nearly well as established (in terms of new thought) as outsourcing and shared services in the human resources space. After all, finance generally and CFOs in particular have always been assumed to be more closely aligned to the business (how many "chief human resources officers" do you know).
I think this is strange and was discussing it with a senior member of IBM's BTO team. We came to the conclusion that the inherent conservatism of accountants mitigates against rapid and substantial change. Certainly they can see the benefits of creating a shared operation, thereby reducing FTEs and costs - and improving reporting, compliance and standards. But, making the leap in thought that has been occurring routinely in the HR space over at least the last five years, seems to be beyond them.
I am sure this situation will change, but until then, the SBPOA and other educative bodies must accept that whilst over 400 practitioners in HR will come to find out what's happening from the brightest and best in the market in November, their F&A brethren would struggle to reach 100.
p.s. In a wonderfully inappropriate start to the day, attention was truly distracted by the fact that the victorious England cricket team were staying in the same hotel... I not entirely surprised at the number of people who needed to take a "comfort break" so early in the morning.
10 sep 2005
Poor old EDS. Like most of the IT outsourcing firms who rushed in and bought a strategy consultancy (Gemini Consulting, Index, Braxton Associates et. al.), when EDS acquired AT Kearney in a welter of publicity, the company had great plans.
Now, sadly, the firm cannot wait to get rid of it.
9 sep 2005
I found a nicely written article on tekrati.com describing the latest research from Everest.
In an analysis of new outsourcing contract signings and related market trends, Everest Research Institute found that as the market for outsourcing services continues to grow and mature, buyers are shifting away from large, broad-based, IT-oriented single-vendor contracts in favour of more specialized contracts, focused on discrete business functions such as human resources, finance & accounting and procurement, that are designed to deliver more tangible results and benefits.
It all means that the market is maturing and growing. I recommend that you read it.
8 sep 2005
Next Tuesday sees the latest in the SBPOA's series of meetings focused on finance and accounting outsourcing and finance shared services. The event takes place in London. If you would like to come, please take a look at the details and then email me. I have managed to get permission to invite two more practitioners (not vendors) free of charge.
On a different but related subject, I've been looking at networking organisations such as LinkedIn, openBC, executive-i, ecademy and Soflow. I'm not sure of the efficacy of these networks, but I'm giving them a try and will report back. Of course, if anyone has strong views on the subject, please do get in touch.
6 sep 2005
In an interview with India's Business Standard, Oscar Alban said:
Call centre agents don't desert the companies they work with; they simply leave the bad supervisors! The panacea to stem the exodus is the introduction of a 'home agent culture', permitting employees to work from their homes like they do in the United States. In the US, over 100,000 agents work from home. A majority of them are women and they have set their own working hours. This has helped in containing the attrition, as these agents are making use of the available free time to gain some extra money.
India should introduce the home agent culture and this would go a long way in containing attrition in the country's call centre and customer service outsourcing sectors.
With the attrition rate in these sectors is as high as 50 per cent, Alban has a point.
One of the main determinants of success in the increasingly aggressive BPO market is the cost of recruiting and training staff. This is particularly in evidence when Western companies are asking for, and getting, substantial labour arbitrage savings. Any way that Indian (or Malaysian, or Chinese) BPO providers can hold on to their main asset - their employees - the more successful the whole market will become. Employee churn hurts not only the provider but also their clients and that does no-one in the industry any good.
5 sep 2005
Far from agreeing with the MCA, Feaco has said that outsourcing, banking compliance work and big government projects has made the UK the biggest spender on consultants in Europe.
Accounting for 29.3 per cent of the market, the UK continues to be the biggest spender on consulting, growing by 7.2 per cent last year:
In particular, outsourcing has taken off as an acceptable strategy, in part because people have seen the first generation of outsourcing contracts delivering results... with a growth rate of 11.4 per cent, outsourcing was the fastest growing management consultancy practice.
The MCA and Feaco can't both be right. I believe that the MCA report and the MCA itself is biased against outsourcing. The argument I gave last week still stands.
2 sep 2005
Gecis, formerly GE Capital International Services has just signed a strategic partnership deal with Liberata in the UK; focused on offshoring life and pensions administration and is about to close an acquisition with Creditek, a provider of order-to-cash cycle outsourcing and enterprise receivables management services.
I met the Gecis boys at an SBPOA event earlier this year. From the tips of their ISO9002 heads to the ends of their six-sigma toes, these individuals were scarily good.
With more than 17,000 people delivering services from India, Hungary, Romania, Mexico and China, Gecis has largely been a provider for internal GE business services, including F&A, supply chain management, customer service support, software development and analytics. These alliances and acquisitions are an excellent demonstration that Gecis will go far in the BPO market. As far as I'm concerned, Gecis is the company to watch in 2005/6.
1 sep 2005
The UK's MCA yesterday reported on its members Q2 revenues.
What I found most interesting was the summation on outsourcing revenues in which there was a 15 per cent decline in outsourcing consultancy services from Q1 2005 to Q2 2005:
This may be continued evidence that the recent boom in outsourcing is showing signs of reaching its peak, as on a like-for-like basis, outsourcing fee income grew by 18 per cent in 2004, markedly down on the 46 per cent growth rate of 2003.
I conversely would argue that the majority of "consultants" have never understood sourcing in the first place, so as the more general consulting market picks up (i.e. the fat-boy financial services market) after a two year lull, of course they will all be scrambling back inside their comfort zones.
Sourcing, which includes both shared service operations and outsourcing is maturing but I do not believe that the MCA is helping its members with this slap-dash analysis.