Guy Kirkwood's BPO Backchat

27 oct 2005

EquaTerra has announced a joint deal with the Hackett Group for sourcing advisory.

I think this is a great move for both parties as is rapidly creates critical mass, enables the continued expansion of Europe and provides both firms' clients with an expanded portfolio of services.

In a discussion last week with a senior member of the EDS' management team, we were talking about the future direction of BPO and we came to the conclusion that the next big push after knowledge process outsourcing is legal outsourcing.

It comes as no surprise that the Indian's have beaten us to it.

21 oct 2005

Is the US getting cold feet? According to the latest news from TPI, Q3 results indicate an expected decrease of 10 to 15 percent in total dollar value for outsourcing contracts awarded in 2005, to USD65bn from an average of USD72bn awarded in recent years. To date, the year's total contract value (TCV) is USD43.8bn for transactions signed in the Americas (USD21.3bn), Europe (USD20.3bn) and Asia (USD2.2bn), compared to a global total of USD52bn this time a year ago.

I think this is total rubbish and has much more to do with Europe rapidly overtaking the US in terms of shared services and outsourcing and the move away from IT mega deals (which incidentally are the bread and butter of TPI's business) to smaller more strategic (and more important) BPO deals.

20 oct 2005

October's BPO Notes is published entitled Knowledge process outsourcing (KPO), the future of research

18 oct 2005

Silicon.com seems to be convinced that outsourcing is more complex than any other business service. Firstly on its CIO Jury strand, there was a discussion on the difficulty of negotiating outsourcing deals which I think misses the point. And secondly a couple of UK universities are thinking about setting up an MBA course in outsourcing. I'm not convinced about this either.

16 oct 2005

Asia's booming economies poses an interesting question for US corporates: with increasing salaries, will the region become less attractive for offshore outsourcing?

I believe labour arbitrage is something that is the responsibility of the outsourcing/offshoring supplier. ABC corporation in the UK, Germany and the US really doesn't care whether XYZ supplier provides their service from India, China or Indonesia, provided that the service level agreements are in place and work, and that the price is right. It is only natural that Indian suppliers are now sub-contracting to China.

The original question and my response are on Cnet.

15 oct 2005

I wasn't sure whether to laugh or cry... watch Big Box Mart and find out the future created by offshoring in the US retail market.

14 oct 2005

I've maintained over about the last year that the convergence and M&A activity in the BPO market will end up with only two big winners. Those companies will be IBM and Accenture.

With IBM's strategic outsourcing business (but, interestingly not BTO) due for substantial growth in the next couple of quarters, today's news from Accenture is not surprising.

Accenture has just reported financial results for the fourth-quarter and full fiscal year ended 31 August, with record annual revenues, operating income and earnings per share. Net revenues were USD15.55bn, compared with USD13.67bn for 2004, an increase of 14 percent. Diluted EPS were USD1.56, compared with USD1.22 for fiscal 2004, an increase of 28 percent and ahead of the company's expected range of USD1.52 to USD1.55.

It also looks like the firm will start the 2006 year exceedingly well in Europe too... more about that shortly.

12 oct 2005

IAOP is building a list of the top 100 outsourcing firms globally. If you would like to enter your company, please fill out the application form. Oh yes, you will need to pay a USD350 non-refundable fee just to enter.

My previous reservations about this organisation have just been vindicated. What a joke.

10 oct 2005

Some business people just do not "get it". In my industry, companies and individuals are inherently selfish. Firms are set up on the premise that "my" candidate and "my" client are sacrosanct. But I believe that this is wrong. Wrong for clients because you do not get the best people working on your behalf (just the account manager who doesn't want to dilute their fee) and you get second rate candidates that are chosen because they "belong" to the recruiter. It is also wrong for the candidate because it limits where they can be presented.

I actively and happily recommend candidates talk to my competitors. They get a broader view of the market, get access to a larger potential employment pool and get to see the best head hunters in their industry.

As a result, two things happen: firstly the candidate comes back to me, not necessarily to the person who placed them; and secondly, I've demonstrated that I'm different from the rest of the market - always a good thing in my opinion.

You may be interested to know that I've done this for over seven years and it has never been reciprocated.

6 oct 2005

In a recent look at outsourcing in Silicon Valley, Dawn Kawamoto said that over half of companies are outsourcing with India still leading the way as the preferred offshore location. She then questioned how long this situation would last.

Dawn makes a good point. When you consider that India has one million unemployed graduates (yes, that is correct, *one million*), is it any wonder that US and western European companies continue to tap into this resource. I believe that China will take over but it will probably not be for at least five years.

One other industry has a history of extensive outsourcing and that's the pharmaceutical market. These firms have outsourced, research, clinical trials, sales and marketing in addition to the more usual IT, finance and HR.

I predict that the age of the virtual organisation is really now upon us - it has been talked about for decades, but I'm sure will see increasing numbers of real companies achieving this over the next five years. And of course, for the company itself, and its clients and customers, it really doesn't matter where the outsourced functions are being transacted.

5 oct 2005

I've been in meetings for the past two days with our major client and business for them in the advisory space is extremely strong in Europe (almost to the surprise of the US headquarters). I've also got it on good authority that the supplier market is taking this firm to their hearts... even when the supplier loses the outsourcing or shared service bid. Now that is high praise indeed.

I've just set up BPO Backchat on Google Groups as a forum and potential talking shop. Please take a look and introduce yourself. I'll try it for a month, if no one posts, I'll kill it.

1 oct 2005

Is online networking dying? Are we going to see the death of Ecademy, LinkedIn and openBC? Judging by some research I did yesterday, online networking is certainly not very well.

I think the lesson is clear; live networking events can and do produce results. (What prompted this was a thank you call I received yesterday from an individual working on a shared service assignment in Bratislava that came as a direct result of an SBPOA Club event held a month ago). But, the broad nature of online networking builds communities of passionate people, but not much business. And without tangible results, the shelf life of these networks is finite.