TPL is back from Boston; the IRCE was an invaluable opportunity to meet with our clients, make new connections and of course, catch a Red Sox game at Fenway Park. (We were lucky enough to see the Sox win 6-1 against the Marlins, in their 500th straight sellout game at Fenway!)
At the IRCE, we encountered a wide spectrum of vendors, from companies who were still considering outsourcing their business processes, to more experienced companies who were exploring additional outsourcing opportunities.
Some of our biggest clients use additional outsourcing providers along with TPL; it’s a strategic approach, akin to diversifying your portfolio or avoiding putting all your eggs in one basket. PC World recently published an article on outsourcing to multiple providers at once, citing U.S.-based Hanover Insurance as an example.
As companies grow savvier about outsourcing, they’re choosing to parcel out their work based on the specialties of different providers. Hanover Insurance outsources to no less than 3 countries: India for mainframe work, Canada for research and development, and China for both application interface design and its ability to quickly scale the number of workers for a given project.
Companies are now transitioning from evaluating what areas they can outsource to looking at which outsourcing providers would best suit their needs. This trend indicates a shift from viewing outsourcing providers as mere cost-cutting measures. Now, outsourcing providers are being considered for their potential as long-term partners with specific areas of expertise. We find this interesting because TPL has made “focusing on what you do best” a core part of its business philosophy from day one. By choosing to concentrate on data entry services, TPL can confidently offer our clients world-class expertise and service (but don’t take our word for it; our clients have plenty to say.)
Filed under: Other Outsourcing Destinations, Outsourcing in the News, Uncategorized
Global management consulting firm A.T. Kearney just released their Global Services Location Index (GSLI), which ranks the most attractive destinations for offshoring. Vietnam cracked the top 10 for the first time, leaping ahead 9 spots from 2007 to land alongside perennial powerhouses India, China, and Malaysia. Though the top three players haven’t changed, the report notes that there’s been a significant trend away from Eastern Europe towards the Middle East and Africa.
You can read A.T. Kearney’s article here or download the full report, “The Shifting Geography of Offshoring”, here.
KPMG, an international accounting and professional services firm (they’re part of the ”Big 4″ auditing firms alongside Ernst & Young, PriceWaterhouseCoopers, and Deloitte) has just published a report titled “Exploring Global Frontiers”, on emerging BPO destinations. Ho Chi Minh City was listed among cities like Brisbane, Australia and Boise, Idaho as promising alternatives to more traditional locations in India or China.
According to the report, reasons to look to cities in the Asia Pacific region include “[...] younger populations, plenty of government incentives and the lessons learned from the numerous outsourcing centers which already dot the region.”
Check out the article in our News section or click here to download “Exploring Global Frontiers” as a pdf.
Filed under: Outsourcing in the News
Here’s a great promotion for those of you interested in learning more about outsourcing. Farrar, Straus and Giroux is offering a free audio edition of Thomas Friedman’s The World is Flat. If you haven’t read it already, Friedman begins by taking readers into Infosys, the Indian outsourcing juggernaut, and then traces the history and reasons behind the global outsourcing movement.
The promotion is available through August 4th. You can sign up for the free audio book by following this link: http://www.thomaslfriedman.com/giveaway.
Filed under: Outsourcing in the News
We subscribe to the Knowledge@Wharton e-newsletter – and in the most recent issue we received, we got this message:
Wipro Technologies and Knowledge@Wharton are conducting a survey on how companies prefer to source business processes from outside providers and how they ensure the quality of those services. This is the first survey in a two-part series. Please take a few minutes to respond to our questionnaire via the link below. All responses will be kept confidential, and the results will appear in a report to be published by Wipro and Knowledge@Wharton. Many thanks for your participation.
We’re pretty interested in hearing the results of this survey, so if you source your business processes and are inclined to participate, here’s the link:
http://www.surveymonkey.com/s.aspx?sm=sQHAwZ6ArZ_2fW2lYPmM3HSA_3d_3d
Filed under: Advantages/Disadvantages of Outsourcing/BPO, Other Outsourcing Destinations, Outsourcing in the News
There’s been a slew of outsourcing articles in the past week, resulting from Brown-Wilson Group’s annual Black Book of Outsourcing, which identifies the 50 best-managed global outsourcing vendors.
Here are a few that we found interesting:
Critics Challenge Outsourcing Rankings, BusinessWeek:
“Brown & Wilson Group’s principals defend their way of doing business. Scott Wilson and Doug Brown say their survey, which results in multiple rankings, is the world’s most independent and objective rating of outsourcers.”
Report: India losing grip on outsourcing ecosystem, ZDnet:
“Despite their slide on the list, Indian players remain a major force in the outsourcing industry, and outsourcers in China are still nowhere close to replacing them.”
Philippines tries to edge out India for U.S. outsourcing jobs, Christian Science Monitor:
“The BPO market [in the Philippines] has grown by nearly 50 percent a year in the past three years alone, generating nearly $5 billion in revenue last year. That’s still only a fraction of the business that India – the global market leader – captures.”
Outsourcing Looks Closer to Home, Wall Street Journal:
“As the world becomes smaller, companies are no longer considering moving offshore as the most cost-effective and efficient way to outsource, but instead are asking: what does the business demand? This transformation means outsourcing is seen as less of a crutch for the technically deficient or work-force challenged company, and more of a strategic tool. ‘It is becoming a matter of looking at the world as a marketplace of skills and products and deciding what gets done where the best.’”
How Offshoring Affects Customer Satisfaction, Wall Street Journal:
“If a company can save more by sending customer service overseas, it will have more opportunity to devote at least some of that money to upgrading its business.
In addition to considering whether or not to offshore customer service, companies should consider whether back-office functions such as information technology may be suitable for offshoring. Our study found that back-office offshoring had no effect on overall customer satisfaction. So the savings a company garners this way aren’t offset by dissatisfaction among customers.”
We’re always interested to hear which cities are moving up or down the list of top outsourcing destinations. It’s no suprise that Indian cities still rank highest, as reported today in BusinessWeek: India Still Top Choice for Offshoring. What’s interesting to note is that China is catching up. For a host of reasons, including the appreciating rupee, infrastructure improvements in anticipation of the upcoming Olympics, and government support, some expect China to become the top outsourcing destination as soon as 2011.
Today, the San Francisco Chronicle published this interview with Infosys CEO, S. Gopalakrishnan: Pioneer in the field of global outsourcing. Infosys is one of the world’s largest outsoucing companies, with more than 91,000 employees, 40 offices worldwide, and $4 billion dollars in revenue.
As a relatively young business process outsourcing (BPO) provider, we found this interview particularly interesting. In it, S. Gopalakrishnan traces the growth of Infosys from its early years:
I think of ‘81 through ‘91 as the surviving ascent company, surviving to establish a viable business. This is the period when the Indian economy was almost closed and it was a very different era. So we struggled a lot. We didn’t have much to show for all that struggle. We hardly grew. I think in 1991 we would probably have had about a million dollars in revenue, something like that.
In ‘91, the economy opened up. We did an initial public offering in ‘93 and invested that money into the business. That was the period of building the foundation of the company, of a stable organization – working systems, processes, lots of things we did to create a strong foundation for growth.
And then in ‘99 – helped by the Y2K boom, the telecom boom and the Internet boom – we began growing more than 100 percent year over year. That’s been our period of accelerated growth. It took us 23 years to get to the first billion, 23 months for the second billion, 12 months for the third billion and so on.
Looking forward, S. Gopalakrishnan notes continued opportunities for growth:
The reason why we continue to grow is that our market share is very, very low. We have only about 500 clients. There are a lot of companies that we don’t work with. So there is still opportunity for growth.
The outsourcing ”pie” is projected to offer growing oppportunities for offshore IT/BPO providers in other countries as well. You can imagine how exciting this prospect is for an emerging BPO such as ourselves. Infosys is a model of success that we certainly hope to emulate in the coming years.
An article today in BusinessWeek, Indian BPOs Don’t Fear US Recession, reports:
A study conducted this year by Nasscom and research firm Everest estimates “conservatively” that between 2008 and 2012, the industry will see a compounded annual growth rate (CAGR) of 28-30%. But it believes this could go up to as high as 45-50 % if supply constraints are eased.
Nasscom is the trade body and chamber of commerce of the IT-BPO industry in India, so the statistics above report specifically on Indian providers. Howevever, these growth rates suggest strong opportunities for other offshore destinations as well, for instance, China, the Phillipines, Eastern Europe, Central America, and of course, Vietnam (where we’re based), who may be able to capitalize on the appreciating Rupee and wage inflation.
Of further interest to us in the article:
Within India, the focus is moving to smaller towns. Nasscom would like to create a new layer in the educational sector to help BPOs. “We can’t keep doing training in-house. We need independent schools to teach the kind of things BPOs need,” says [Nasscom President Som] Mittal.
Anticipating aggressive growth in the coming year, we’re starting to explore similar proposals in Vietnam with peer companies and nearby universities. We’ll report on this possible endeavor as information becomes available.
Filed under: Advantages/Disadvantages of Outsourcing/BPO, Outsourcing in the News
This week, InformationWeek published a 30-page report on the results of a reader poll focused on business process outsourcing. Author Ivan Schneider, writes:
“Saving money is still the No. 1 goal of business process outsourcing, though a notable minority sees it as a tool for strategic change.”
At TPL, we tell prospective clients that cost savings are an important advantage of BPO, however, it’s not the only reason. Companies should also look to BPO in order to increase efficiencies and reduce resource/management burden.
Companies who view BPO as a “tool for strategic change” are the companies we like to target. Any new BPO partnership requires a sizable initial investment of time and resources, for the client and the provider. So to be sustainable, it’s got to be a long-term win-win for both parties.
Aside from cutting costs (cited by 83%), other reasons companies consider BPO are:
- Improving efficiency (73%)
- Shifting internal focus to innovation and new projects (55%)
- Improving time-to-market (42%)
- Tapping lower-cost offshore labor (53%)
- Concentrating on core capabilities (54%)
- Expanding into new business (20%)
More key drivers for BPO are available in the report. You can download and read the rest of it here. Happy reading!
