Analytics Outsourcing on the Rise Pg19
The Next Generation of Business Process Outsourcing Pg 22
No Room for Heroes in Outsourcing Relationships Pg 29
Contact Center Industry: Where Do You Go From Here? The new rules to play by: Growth in demand in new geographies Balanced shoring Domain-driven services Unified customer experience
A CYBERMEDIA Publication
An integrated media platform which connects the various constituents of the global technology and business processing services industry ecosystem.
Pradeep Gupta Chairman & Managing Director Cyber Media (India) Ltd.
Directory of Services
E. Abraham Mathew President
Ed Nair Editor email@example.com
A regular digest of key industry happenings. Digital Magazine
Satish Gupta Associate Vice President firstname.lastname@example.org
The fortnightly digital magazine features research reports, articles and expertsâ€™ views. Available on www.globalservicesmedia.com
Smriti Sharma email@example.com
Webinars Global Servicesâ€™ web-based seminars aim to impart useful information related to outsourcing industry in the form of presentations and discussions by industry specialists.
Sruthi Ramakrishnan firstname.lastname@example.org Niketa Chauhan email@example.com
Virendra Kumar firstname.lastname@example.org
We deliver indepth analysis and research reports on sourcing subjects.
Global Services Cyber Media (India) Ltd. CyberHouse, B- 35, Sector 32 Gurgaon-122001, India Tel: +911 24 4822222 Fax: +911 24 2380694
Microsites Online resource center designed to provide focused content on special subjects to the outsourcing community. Events From multi-day, high-level, resort conferences to intimate breakfast discussions we offer a number of opportunities that connects the outsourcing community.
Contact: email@example.com Disclaimer All rights reserved. No part of this publication may be reproduced by any means without prior written permission from the publisher.
CUSTOM PROGRAM Customized services rendered through different media platforms. OSOURCE BOOK A directory of global outsourcing service providers. www.osourcebook.com
Letters to the Editor Send letters to firstname.lastname@example.org, or to any of our writers. We reserve the right to edit all letters. Postings submitted to our blogs and letters to the editor may be published in our digital magazine or Website.
Contact Center Industry: Where Do You Go From Here? 10 by Sruthi Ramakrishnan The new rules to play by: Growth in demand in new geographies, balanced shoring, domain-driven services, and unified customer experience
“Expectations Around Customer Experience Are Changing” 17 Andrew Kokes, Vice President, Global Product Management at Sitel, shares some insights with Sruthi Ramakrishnan on changing consumer behavior and how providers can best adapt to it
Can this process get better? by Smriti Sharma If you are a Genpact client, there is yet another way of getting more out of business processes
xperts The Next Generation of
Business Process Outsourcing 22 By John Lutz, general manager, IBM Global Process Services
Rural BPOs in India: Are they overhyped? 24 by Kumar Parakala, KPMG
Analytics Outsourcing on the Rise Excerpted from Horses for Sources Research ‘Where offshore analytics is heading in 2011’ by Smriti Sharma The importance of business analytics has been on the rise. Now it has also become an eminent candidate for outsourcing. How is the analytics outsourcing industry evolving?
The emerging market for analytics 27 By Reetika Joshi, Senior Research Analyst, ValueNotes Sourcing Practice
No Room for Heroes in Outsourcing Relationships 29 By Nigel Hughes, Global Services Director, Compass Management Consulting
Global Services Digital Magazine
Next Issue: The New Rules in BPO
Learn about what will drive the BPO sector in this April special report.
Contact Centers and the Challenge of Social Media O Ed Nair Editor
The dynamic nature of social media and its speed of adoption presents itself as a moving target to be chased by the contact center industry.
ur cover story this month focuses on the new directions of growth for the contact center industry. In the traditional sense, the contact center industry predates the outsourcing industry. It is only in the last decade, with the unbundling of business processes and the growth in globalization driven offshoring, that the contact center industry got folded into what we now call as the BPO industry. Both then and now, this industry continues to be a dynamic segment within BPO, marked by numerous advances in technology— CTI, IVR, IP-based contact centers, hosted contact centers and the like. These technology changes improved the performance of contact centers that in turn led to improved customer management. The rise of social media presents a whole host of new challenges for the contact center industry. While the industry recognizes the importance of including social media as part of its customer engagement strategy, the wherewithal to do that with success is lacking. Meanwhile, the dynamic nature of social media and its speed of adoption presents itself as a moving target to be chased by the contact center industry. While it is a tad easier for enterprises to include social media as part of its customer management strategy, the contact center industry is grappling with the challenge of delivering it as a service. There is the classic gap between ‘knowing’ and ‘doing’ in this case. Many contact center companies profess to know it, but they fall woefully short when it comes to doing it. That’s the reason this topic is still the stuff of many whitepapers and conferences. Part of the answer lies in technology: an industry-standard platform that effectively integrates multiple social media conversations is needed. This would take care of the need to track social media conversations (‘listening’ as it is called) so that social media insights become measurable and amenable to analytics. Most of the other requirements like handling inbound social media traffic, handling outbound social media conversations, analytics and reporting become possible. The other part lies in how the contact center organization structures this activity, develops specialized skills, and proves business value. Global Services would like to know how the contact center industry is weathering the challenges in this area and the learning from it. Do write in to share the best practices that worked for you. . .GS
The Global Services 100 Survey - 2011
Recognizing & Celebrating Service Provider Excellence! Click Here To Participate Survey Deadline: April 10, 2011
Can this Process Get Better? If you are a Genpact client, there is yet another way of getting more out of business processe by Smriti Sharma
usiness processes are the source of value for an enterprise. Cost, efficiency, effectiveness, quality of output, and time are some of the elementary process parameters amenable to various forms of optimization. There’s much more that can be done to processes to uncover new sources of value, be it business process reengineering (the rage of the early nineties) or Six Sigma or lean or software-driven BPM. Genpact, the BPO provider, is reporting success in the process management area, based on its home-grown methodology called smart enterprise processes (SEP). Some examples of the company’s success include: A leading fortune 500 global financial security company uncovered opportunities to improve revenues by $6-8MM. A leading software security solutions provider improved cash flow and reduced Total Cost of Ownership (TCO) by $28- 40MM. A leading shipping, energy, logistics and retail conglomerate found opportunity to reduce IT Helpdesk cost and improve productivity by $9MM. An US trucking major transformed its Order-to Cash process and improved cash flow by $40MM. Genpact experimented, tested and analyzed data from more than 200 million transactions across more than 3,000 processes it manages for clients to determine the benchmarks that best-in-class companies achieve at each level in a process. The next step is to distinguish `the vital drivers of enhanced business results for each process, and develop best practices for addressing those drivers. Developing customized clientspecific- diagnosis and roadmap for achieving business results along with recommendations for the execution phase are the next steps. The end-step is to arrive at a commercial model that bases compensation on the results achieved. SEP in the making Sasha Sanyal, SEP and Business Development Head, articulates, “The way we originally managed our business was very
much about managing just the part of the process that we ran. Most of the process management happened onshore and what really happened offshore in our captive was people management. The Team Leaders would look at the SLAs that were around such as accuracy, efficiency and turnaround time. A lot of the time, while we would manage upstream and downstream processes, we would not look at the inter linkages between the process.” This did not work nearly as well with multiple clients. Most companies when they look at processes or functions they look at them in silos, so what happens is that each function, each silo optimizes that process so it manages it to perfection. But, between different functions, there was a lot of value leakage. “No one was looking at the process holistically. While you optimize your process at an individual level, who’s looking at the process holistically from end to end and seeing what value leakages happen across the way. This is the point of efficiency vs. effectiveness, which is each process is managed to efficiency, but the overall effectiveness of the entire process value chain is not something people look at. That was really the start of SEP as a concept,” adds Sasha. In a nutshell, SEP helps to test the effectiveness of client’s processes by measuring points of leakage at each level of a given end-to-end process and then to apply best-inclass benchmarks from within and across industries. The result is a client specific roadmap for maximizing process effectiveness. Cost arbitrage is still a factor Genpact is currently engaged in comparing Penske’s existing metrics to those in SEP methodology to: (a) identify additional metrics that should be tracked to provide deeper insight into processes which would drive effectiveness and efficiency improvements, and (b) to benchmark Penske’s performance against proprietary benchmark database.
40-50 companies, and over 3,000 business processes, the SEPSM methodology replaces the trial and error approach with proven, scientific approaches.
predictable, replicable, or sustainable over time. A good example of this can be found in electronic procurement. Sourcing and procurement organizations frequently acquire e-procurement technology but fail to ensure that the technology is used, and used effectively.
Enterprise Application FIG. 3 - A HOLISTIC, GRANULAR FRAMEWORK FOR MANAGING BUSINESS PROCESSES
A Holistic, Granular Framework for Managing Business Process
6 5 4 3
2 1 Identifies the key business outcomes for the company
Maps every core business process at a granular level
Links business outcomes and benchmarks to key performance measures and key performance drivers
Identifies drivers of performance variability and roadmap for improvement by leveraging ‘insights’ and ‘best practices’
Offers solutions including process, analytics reengineering and focused IT
Solution implementation to deliver business outcomes through process efficiency, transformation projects, Point IT / analytics solutions
3 New SEPSM Methodology Delivers Enterprise-Level Effectiveness of the Source-To-Pay Process
A few examples of insights gained to date: • Penske compares favorably to benchmarks in Average Days Delinquent, a measure of collection effectiveness, and in Cash Application Accuracy. • Penske has the opportunity to improve performance in the Service Completion to Invoice Cycle Time, a measure of billing timeliness, and in further increasing the AutoCash Hit Rate
Frank Cocuzza, CFO, Penske Truck Leasing articulated, “Our partnership with Genpact has not only provided us cost-efficient business processes, but also the process rigor and metrics that enable us to achieve ever-higher levels of performance. We look forward to continuing our progress by leveraging Genpact’s Smart Enterprise Process Methodology.” GS
Genpact’s wide expertise in understanding the key drivers of the order –to-cash process across geographies and industries has enabled the company’s ability to provide insights into how specific focus points and improvement areas within operations can lead to a positive and significant impact to an organization’s revenues and bottomline figures. When Genpact embarked on the SEP way, the first thing they did was look at the existing processes they were running. Genpact did a diagnostic of Penske’s Order To Cash process. Existing process templates were measured along with their measurement systems, benchmark and best practices. Genpact identified gaps. Although, they were running this process for a long time, a different approach aided in identifying gaps. The entire process within order management, across order-to-cash life cycle was analyzed. What leakages were happening, what areas were not doing optimally and when were they not close to benchmarks.... all these points were studied. Within six months, it was identified that if there were about 45 metrics being measured, then there were about 38 that were best-in-class, and there were seven where there were gaps. These gaps were addressed using best practices. Five new opportunities were identified for this process through benchmarking. Next, these were then implemented into their process, which was then able to drive an additional outcome of almost 25 additional million dollars a year. 9 GlobalServices
Tools & Technologies
Tools & Technologies
Contact Center Industry:
Where Do You Go From Here? The new rules to play by: Growth in demand in new geographies Balanced shoring Domain-driven services Unified customer experience 11 GlobalServices
Contact Center Industry: Where Do You Go From Here? The global contact center industry is on the path to recovery. Growth in demand in new geos, balanced shoring, domain-driven services, and unified customer experience are the new rules to play by.
ith post- recession studies showing that the contact center industry is on a growth path again, the sunrise industry seems to be shining again. Selection Group’s November 2010 report on call center openings and contractions showed that new growth or expansions numbered most in the US, followed by Latin America, Canada, India and Philippines, creating over 10,000 new call center jobs. Here’s a lowdown on what is driving the recovery, and how it can be sustained. Growing domestic demand, MNC contracts driving recovery IBM sees heavy demand fueled by certain factors. “In the last 18 months, we have started seeing heavier demand coming out of Latin America, Africa and the Middle East. This is true especially in the banking, insurance and telecommunication sectors,” says John Lutz, general manager, IBM Global Process Services. Additionally, there is a drive for more on and near shore delivery that is fueling a re-balancing of centers/agents for many global companies.Because of this trend, we see clients looking for a much more ‘balanced shore ‘ strategy. Finally, companies that continued to use or adopted outsourcing during the recession for cost cutting objectives are now extending their requirements to areas that afford them an improved customer experience, such as the integration of advanced customer analytics within a contact center.” The focus is now on encompassing the entire customer experience rather than managing only singular aspects, say Rajiv Ahuja, President - ASEAN & ANZ, Aegis Limited. “This approach would range from customer acquisition to retention to enhancing the experience and leaving no stone in the customer’s bag unturned. Customer Interaction is a core aspect for Social Networking and the Services industry, which makes it important to manage the entire experience lifecycle. This is especially true since 12 GlobalServices
acquisition or retention have higher cost containments when activities performed individually as compared to revenue generation. Also, the channels for acquisition have diversified from the bricks to the clicks world. Hence a newer focus seems to throw more light on Customer Acquisition.” According to a Frost & Sullivan study, the Asia Pacific (APAC) region’s revenues from this industry will grow to $616.6M by 2016, from $287.5M in 2009. This will be supported by the presence of multinational firms signing up for outsourced services from service providers in countries like Malaysia, Vietnam and the Philippines, which had been growth markets during the recession period. While 2009 was primarily about customer retention, the first half (H1) of 2010 saw most markets in the Asia Pacific strive towards customer acquisition. “As the effect of the financial crisis erodes, enterprises are looking outwards and readying themselves to go full steam to acquire more customers aligned with their growth ambition in the region,” says Krishna Baidya, Industry Manager for Frost & Sullivan’s ICT team. “The APAC geography has evolved from a provider of cost-effective services to a balance sheet partner focusing on end-user experience and business transformation. Customer Acquisition will be the prime focus for every marketer due to the customer experience focused mindset of the buyer, the maturity of the end users, increase in consumption pattern, deep penetration of the verticals and the geographical spread of the region,” says Ahuja. The increasing domestic demand for customer service in developing markets such as India, China, Indonesia and Vietnam caused a surge in demand for small and medium business (SMB) contact centres with less than 50 to 100 seats. This segment is also expected to impel the move towards a hosted model or encourage businesses to
Contact Center Industry: Where Do You Go From Here?
consider domestic outsourcing options. “Key value proposition for hosted contact center model lies in its flexibility, scalability and total cost of ownership (TCO). Flexible pricing options allow smaller businesses to set up contact centers when the cost factor may have made an on-premise deployment prohibitive,” says Baidya. In developed economies like Australia, Japan and South Korea, migration toward IP-based systems (telephony, unified communications) helped the industry remain sustainable. This, combined with the above-average levels of Internet service (fast broadband and high broadband penetration rate), enabled an increase in the uptake of professional services like financial analysis. Australia’s contact center industry returned to growth in 2010, generating total revenues of $55B, representing an increase of 13 percent over the previous year. The number of contact center seats also grew by three percent to a total of 198,000, according to a benchmarking report by callcentres.net and sponsored by RightNow. Contact centers also reported an average increase of 15 percent in operating budgets last year. Participants in the Frost & Sullivan study expect the consolidation of contact centres to result in higher spending in the more than 200 seats contact center segment in China, Australia and Japan. On the whole, the industry is expected to grow at an annual rate of 11.5 percent through 2016. Onshore+ Offshore+ Nearshore= Rightshore The ‘balanced shore’ strategy mentioned by IBM’s Lutz finds resonance among other providers. “Rather than being a purely offshoring branded player, we have a concept called rightshoring, which is identifying right processes or projects for the right locations,” says Suresh Ramani, COO, Intelenet Global Services. “We have the onshore model, which is having facilities within the countries where the job is actually being worked out of, whether it is the US or the UK. We have the nearshore center- Guatemala (where Intelenet has opened its newest facility) could be considered a nearshore center- and then we have low cost centers like India and Philippines. This has been our game plan for the last 3- 4 years. We have presence in the three segments, i.e., nearshore, onshore and offshore.” But that does not mean that offshoring has lost its charm. Offshore deployments, alongside onshore resources is very much a viable business model, especially in EMEA countries like Poland and South Africa, where the agents can compete against their onshore counterparts in terms of sophistication, cultural compatibility and customer empathy. It is also favorable in terms of cost advantage, scalability and commercial sophistication. 13 GlobalServices
Industry, processes have matured “Contact centers cannot today be used in the same terminology as you would have used five years ago, because today the industry has matured,” says Ramani. “Prospects too have matured, looking at what vendors can provide– more than only people (or bodies) to handle the lowest end of the value chain, which is taking calls. So processes have matured, and they are looking at ‘how can I as a vendor create a strategic impact?’ So is there a product or service which can impact their topline or bottomline- that sort of a solution always has demand, that is not going to fade.” While voice processes still comprise the mainstay, the uptake in non- voice is on the rise. “We have seen a rise in non-voice channels that is being driven both by enterprise needs to reduce costs and consumer desires to be served anytime, anywhere. Agent voice remains the heaviest used channel, hence the most in demand,” says IBM’s Lutz. Vertical- specific is the way to go – The resumption of enhancements and expansions by domestic banks in the Asia Pacific led to significant contributions from the banking, financial services and insurance (BFSI) sectors in H1 2010, the Frost & Sullivan report says. “Which are the domains that you are offering, and what do you offer in those domains- that’s the differentiator today,” says Ramani. “If I create a product or service in the Healthcare segment, and that is the sweetspot people are witnessing today, people then come and quickly buy that. Otherwise, if you have to sell inbound or outbound, there are 20 people selling the same set of services.” Building domain knowledge and capabilities in the booming verticals is what providers are looking to do now. “Healthcare, Banking, and Travel, Transportation and Hospitality taken together are three segments which are seeing people wanting to buy services. IT spends have also increased from where they were in the last 2 years, meaning that businesses in the top line are supposed to grow. If we as a company can offer a product cum service entity in these domains, I think we will have a really good market to tap into,” he says. “Telecom and Retail sectors are expected to see steady growth, especially in the markets of India, Indonesia, China and Korea. Government spending on citizen services in the ASEAN markets, India and China is growing at a double digit rate. Other verticals that are growing sporadically across the (APAC) region are Travel & Hospitality, Retail & Utilities, entertainment and Manufacturing,” says Baidya.
Additional growth will be technology-led and noncapex led therefore there will be increased focus towards Travel & Hospitality, Healthcare, Hi-Tech, Govt. & Education and Utilities. At Aegis, we see our technology practice taking a centre stage in leading this growth story. Smarter technology, and rise of social media The Frost & Sullivan report says that mature markets like Australia, Singapore and Hong Kong are investing in applications such as analytics and social media integration, while the high-growth markets of India, China and Philippines are investing in workforce optimization and self-service applications. “The theme of customer acquisition is likely to drive technology investments from contact centers in the region (APAC) in the near to mid-term with priority in growth-aiding technologies or processes. This could lead to simply expanding contact center capacity, to investing in advanced outbound dialers, or in Analytics to help fine-tune sales strategies,” says Baidya. “In advanced markets significant investments are towards analytics, likely to propel contact centers as a Strategic part of the organization, not just a profit center or cost center.” “Several capabilities within a contact center require investment that can drive smarter interactions with customers,” says IBM’s Lutz. These capabilities are namely, 1. Analytics --- cloud or SaaS based customer analytics and the ability to embed findings into operations in a real time fashion; the use of predictive analytics to change the outcome of an interaction with a customer. 2. Knowledge Management --- The impact that a robust, current KM database can have on each and every customer interaction should not be underestimated. Lack of investment in this core asset can have a direct, negative impact on consistency across channel and your overall brand. 3. Unified Communications --- Customers want their interactions with an enterprise to be consistent, relevant, and timely. Linking channels together to understand what your customers are doing beyond the contact center allows for a more successful interaction. “Agent voice remains the heaviest used channel, hence the most in demand. However, enterprises at the forefront of the customer experience have successfully blended all channels seamlessly to meet customer driven interactions,” he says. In IBM’s case, it has been leveraging its software and consulting assets, 14 GlobalServices
for example Customer Experience 2.0 and the Global CRM Consulting Framework, to drive customer interactions. At the same time, companies should not lose focus on human resource. “Call centers should continue to invest most in their biggest assets: their talent. People are by far the most important part of any call center because they make the difference between good service and great service. Companies should be deploying firstclass recruitment, training and on-going support at all points of the employee lifecycle,” says Joe Doyle, Vice President, Global Marketing, Sitel. Alongside, he expects to see increased investments in emerging technologies that compliment traditional customer service approaches. This includes chat and intelligent chat, and social media CRM support. Social media is an area which is set to see a lot of action in the coming times, though companies are not very clear about the course of that action. “They know its where their customers are going, at least a section of them. But they are not quite sure how to engage with them,” he says. “There seems to be quite a big debate as to should they use existing portals around them, like YouTube, Twitter and other well- established online media, monitor those, and create their own page on one of them. There are quite a few high- profile examples where organizations have started to place commercials on YouTube. The other school of thought is that they would be better off controlling it a little more and creating still a forum where people could go online and ask and answer questions and interact with other customers, instead of doing it within the confines of the company’s message board or their website.” Entering an era of complexity One thing that service providers are clear about is the increasing complexity that the industry is witnessing. This can be both a challenge and opportunity. “The growing volume of data, number of channel options, and degree of variation across customer bases is creating a significantly more complex environment to navigate,” says Lutz. “The opportunity resides in making sense of the complexity and making each interaction ‘simple’. Leading enterprises in their respective industries have successfully used the ability to do this as a differentiator. This ties back to the importance of investment in analytics, knowledge management and unified communications. The notion of a single view of the customer will once again take precedence as enterprises recognize that channel profusion has to be managed and the opportunity exists to bind all customer activity together in one space.” GS
COUNTRY-IN-FOCUS Ensuring Global Visibility
A special feature for countries to showcase their uniqueness
There are numerous outsourcing destinations that exist as great alternatives to India and China.
Inviting Countries to showcase capabilities that accentuate their uniqueness.
Examples of Country-in-focus feature Egypt
For more information write to email@example.com
“Expectations Around Customer Experience Are Changing” The Accenture 2010 Global Consumer Survey released last month highlighted important aspects of consumer attitudes and behaviors. The Survey, which had participation from more than 5,800 people in 17 countries (in both mature and emerging markets) across 10 industries, shows a decline in consumers switching providers due specifically to poor customer service. Despite this, customer service remains a significant issue. Andrew Kokes, Vice President, Global Product Management at Sitel, shared some insights with Sruthi Ramakrishnan on changing consumer behavior and how providers can best adapt to it. Excerpts from the interview: GS: To what extent does customer service really affect consumers’ decision to switch service providers? AK: The customer experience is really the differentiating factor in an otherwise capability-neutral product environment. There are constantly new products with new feature functionalities. The rate of change is so rapid that a customer need only wait a matter of days sometimes for the next great thing to come to their service provider. Bells and whistles are a basic customer expectation with the differentiating factor being how a product makes them feel. The brand image, the price point and the experience the customer has have with a product is what’s in it for them. These are the reasons a customer would move from one product or brand to another. The actual customer-company relationship remains the unique element that can affect a consumer’s decision to stay or switch providers. Exceptional customer service is the face and voice of the brand experience, and is the foundation that a company needs to successfully attract and nurture their customer connections. It is also important to note that the expectations around the customer experience are changing. Successful companies are ones that are constantly evolving and adapting to the changing demands and demographics to shape a personalize 16 GlobalServices
experience for their customers; limiting the effort of the customer, opening additional contact channels and making product support more widely an open platform. GS: How have consumer expectations changed? How much of this change can be attributed to the popularity of social media? AK: Today up to 81% of smartphone users start their customer experience with the company online. This is indicative of the fact that the customer wants to be able to service themselves online, either through connecting to other consumers via an online forum or through the company’s own website. Social media is one such evolving channel in a larger online and mobile world. This means that there is a much broader web customer experience that companies need to be able to understand and support. Sitel sees two key opportunities of which service providers need to be aware in this case: n Web Conversion—When a customer goes online with the intent of purchasing a product, a provider can have a 20% increase in online incremental conversion by providing support at the moment the consumer is looking to buy. Simply by offering the consumer some
“Expectations Around Customer Experience Are Changing”
level of live support in the web buying channel, the provider can increase the chances of sale. n Web Retention—When customers begin their experience online, they expect to resolve their issue online. The key for providers is to be there for the customer at the point before a consumer clicks away from the Web site because they either can’t find what they are looking for or when the information is too complicated. GS: How do you explain the disconnect between customers’ expectations and the service given by the providers? How can the two be better aligned? AK: Company culture plays a crucial role in how a provider is responding to customers’ needs and expectations. Providers that have a real emphasis on the customer experience, customer relationships, and the overall customer engagement are certainly better connected with their customers and tuned in to their needs and behavior. Studies of the largest consumer brands in the world have shown that there is a very strong correlation between companies that are highly engaged across multiple channels with their customers and the overall level of top line revenue and profitability, versus those companies that have a lower level of engagement in relationship with their customers which have, over the past couple of years, seen a decline in revenue and profitability. Company culture that is focused on the engagement, commitment, and development of a positive relationship with their customers rather than purely on cost-cutting is one that will cultivate loyal customers with greater Lifetime Customer Value. GS: Price is no longer the differentiator for selecting a service provider. What is the new differentiator? AK: Although price is still a big consideration when selecting a service provider, the bottom line is relationship and trust. To earn trust Sitel emphasizes Return on Customer Investment (RoCI) as our key metric. RoCI is a measuring stick that we put against everything we do and every investment we make. When a company commits their direct customer interaction to a service provider, it requires a high degree of confidence. There are a lot of different factors that go into building and earning that trust. There is of course the expectation that the price will be in a competitive range, but at the end of the day, I’m going to place my business with someone I trust will meet my service expectations and provide the best customer experience. GS: How can technology be used to boost customer experience? AK: Sitel technology is used to enable and optimize the 17 GlobalServices
entire customer experience. As the customer experience evolves across new communication channels, we are offering technologies that allow you to build a complete customer profile from their three big experiences - web, call center and social, blending all of these elements into a multi-channel social CRM strategy. We are using data analytics and web engagement technologies to offer proactive service and sales chat services. Technologies are becoming much more intelligent in the way that they allow you to monitor customer behavior and predict buying signs or support opportunities at precise moments of truth to drive online sales conversion or web retention. We are deploying artificial intelligence tools in the voice environment, to do complex matching of customers to agents. We look at the demographics of the customer population and psychographic profile of the agent population and do intelligent pairing based on specific business objectives, like improving sales conversion, first call resolution or customer satisfaction. The agent-caller matching technology uses key variables to create a level of empathy which potentially doesn’t exist when calls are routed solely on agent skills or availability. GS: Is the contact center industry seeing a rebound post-recession? If so, what is driving it? AK: At a macro scale, companies are focused on getting back to growth. Thee call center industry is becoming focused on customers and a dedication to growth and sales through new channels. Many brands saw incredible shrinkage in overall top line, and there is now pressure on these companies to get back to growth and overall profitability. As a result Sitel sees more intense focus on leveraging the customer experience to upsell and cross sell opportunities. GS: Which are the services seeing more demand? AK: In terms of demand, customers are craving more self-service and online or mobile communication options. Sitel sees strong growth in multi-channel support programs, with increasing emphasis on driving web retention for customer support and web conversion where selling opportunities exist. The call center agent is evolving into more of a tier 2 or tier 3 type of support as opposed to basic triage. Customers are already answering basic questions through Google, company websites, forums, and social networks, so agent are dealing with more complex questions. It’s not that there is less voice interactions, rather more customer touch point opportunities. Sophisticated companies need to be able to communicate with social customers and online networks because that’s how the customer is communicating. GS
Industry- Specific Processcs
Analytics Outsourcing on the Rise The importance of business analytics has been on the rise. Now it has also become an eminent candidate for outsourcing. How is the analytics outsourcing industry evolving? Horses for Sources Research
nalytics does not fit perfectly into the traditional outsourcing model; the level of data sensitivity is extremely high and the nature of work is complex. These pitfalls have made some clients set up or expand captive units instead of outsourcing. However, in the past decade, third-party providers have armed themselves with commendable expertise in analytics. Also, holistic solutions for business problems are introduced via combing analytics and market research. Consultants are backing their recommendations with analytics. These factors have helped the entry of good players in the last few years. There are two routes to analytics currently being followed: Leveraging IT and BPO offshoring experience and ecosystem: Companies that are already outsourcing are using their current IT-BPO experience to source analytical solutions, at times, giving preference to the same service provider. The third-party service provider in lieu of climbing up the value chain developed analytics solution. In-house analytics gives clients better SLAs and better time-to-market results. Analytics is employed to drive improvements in the effectiveness and efficiencies of offshored BPO-IT services and beyond. Availability of cross-functional, multi-skilled talent: Initially, when the analytical industry evolved, companies tried to develop and deploy analytics solutions. However, as technical industry got more complex and the scale and scope of analytics expanded, it became difficult to hire, maintain, and retain the specialized manpower internally. This ensured companies started looking out for third-party service providers. Meanwhile software companies developed complex, highly configurable, vertical-specific analytics and data mining products. However, organizations found it difficult to support talent that would run and maintain these
systems. Hence, most of these products are now available as services. Increasing demand of analytics resulted in the emergence of pure play analytics service provider. These providers encapsulate domain knowledge and technological and statistical expertise. As the process of developing and deploying analytics solutions stabilized, work could be broken distributed amongst multiple vendors and/or captive units. The emergence of offshore locations boasting of strong Information and Communication Technology (ICT) infrastructure enabled offshoring of analytics services to locations such as India. Cost arbitrage is still a factor The cost of developing analytics solutions are very high and can be restrictive (especially for small and mid-sized companies. Presently, Fortune 500 companies are the majority of analytics users. According to HFS research, for a typical analytics project, talent cost is the 60 percent or 70 percent of the total cost. The advantage of accessing talent from locations such as India, Singapore or Hong Kong yield a saving. Also, other costs â€“ infrastructure- being much lower than in onshore locations, cost arbitrage can range up to 50 percent for offshore locations. However, high-level analytics strategies ensure that cost saving is overrun by other factors. Credibility, accuracy and timeliness of business insights from data analytics are critical to business. Offshore delivery centers are attractive as they come with faster time to market and also provide accompanying support service on a 24x7 basis. Recommendations for buyers 1. Acknowledge the imperative nature of analytics: Buyers should evaluate their business function in order to identify areas that may benefit from analytics activity.
Industry- Specific Processcs
( . R.E5/4/ '3 E5( 3'345/!/.7. .5,<3/1.5,<3/1 S3 <33 S3 .5,@5( ( . R.E5/4/E5( 3 45/!/.7. <33-*/3-3 .5,@5( /"4(/3).'4 3=) 13/=) ,4/343 .(.).'5( )3!/<4/.-3+ 544<(4 /"4(/3).'4 3=)34H/13/=)13/=) 34H/-343 13/=) ,4/ .(.).'5( )3!/<4/.-3+ 54 +./>, ' +./>, 13/ 44/<54/<3 34R 4S(= /1 . /1 .5 34).().5/474!@5( -<,7,).'<,3 ' 13/ 44/<54/<3 34R 4S(= . .5 34).().5/474!@5( -<, 45/').45/'). .53@).5/,/,-3+ 54H 3=) 54H 13/=) ,4/53@).'5/51/47-3+ 47- 54H<5 .53@).5/,/,-3+ 3=)343 13/=) 343 ,4/53@).'5/51//- 47-3+ 5/.475<55/.475<5 4, 445(.`g/!5( 5/5,3 = 5/5,3 .< 4H= (= 33)=(= 53/<'(41,)5/ /- 47-3+ 4, 445(.`g/!5( .< 4H 33)= 53/ ' /'31(@E4!/,,/>4G ' /'31(@E4!/,,/>4G
Analytics is easier to apply when a business process*%7.! is +&$!$!# #% *%7.! +&$!$!# #% carved out (eg. F&A). 2. Evaluate different options for outsourcing firsttimers and veterans: Companies with experience in undertaking analytics will be comfortable with niche analytics providers, reason being extremely specific nature of work and confidence in analytics solution. Companies that have existing outsourcing relationship should include analytics as an essential component or should discuss driving business value with vendors. 3. Develop partners out of specific providers: Companies with mature analytics outsourcing relationship may consider gain-sharing as a pricing model. !'#.$#-2011 !'#.$#-2011 4. Evaluate the feasibility of outsourcing alternatives: Certain companies are doubtful about outsourcing /35<. `[[/-1.) 45(5(= 45(5(= -44)= 53 1/4)5/3) 5( -/45)-1/35.5,) .5'3/<1 /35<. `[[/-1.) -44)= 5343 1/4)5/3) 43 5( -/45)-1/35.5,) .5 313)4 4!3/-= 3'//4RSE .5 analytics due to data security issues. To cater to them, 3..5 Collaborate innovate: Niche players and3'//4RSE .5 large BPOs , /->)5(() 313)4 37,44<(4!45N-/=).'/.4<4!3/-=to37,44<(4!45N-/=).'/.4<, / /"4(/3).'3 4)'.)#.5<@ 34!/3/"4(/3 .,@744 3=) 4H /"4(/3).'3 4)'.)#.5<@ 34!/3/"4(/3 .,@744 3=) 4Hmore several vendors offer onsite delivery teams. Creating joining hands on analytics projects and offering captive centers in offshore that specialize in analyticsÂť!is 4) Âťvalue to the /35<. end client is an GS 45( 4E4 3=)example. 13/=) ).3 343 4).',@53' 7.'-)N4)A ,) ! /35<. 4) 45(`[[/-1.) `[[/-1.) 4E4 3=)343 13/=) ).3 4).',@53' 7.'also a good option. /- .)(/4 3=) 13/=) ,4/,//+).'5/4 3= 5( 31),@'3/>).'/47.3 47 ') .)( 4 3=)343 13/=) 343 ,4/,//+).'5/4 3= 5( 31),@'3/>).'/-
N4. 43 53@).'5/3/44N4 ,,.,@744 3=) 45/5(3=) )3 45/5( ?)47.',) .54H( Âť! excerpted 3' N4. 43 53@).'5/3/44N4 ,,.,@744 )3 ?)47.', Recommendations for service providers Âť! 3'(Fully from Horses for Sources Research titled â€˜Where offshore /.3 7.'1),)7 4).()'(N=,< .,@744 3=) 44=,< N )" 3 .75/3!/3/3 /.3 7.'1),)7 4).()'(N=,< .,@744 3=) 44=,< N )" 3 .7 .,@A).' > 3!/3-. > 3!/3-. (3 4(/,4).,/,/<3).' analytics is heading in(3 2011â€™4(/,4).,/,/<3).' by Smriti Sharma. The recent report 1.Stay true: there is no one right.,@A).' answer: Providers should provides useful perspectives on understanding the emerging dynambuild on their strengths and escape from the â€œme-tooâ€? Âť! 4.4-,,4,4/. 5/3 5 5/3 41 ),)A 1),)7 4R H'HE 15(S5/4 1354 Âť! 4.4-,,4,4/. 5 41 ),)A 1),)7 4R H'HE 3=) 15(S5/4 .5<,,@5+ = outsourcing. 37,113/(5/'3/>5().5( )3(/4 ..)( )./3 35/-/= = = .5<,,@5+ = 37,113/(5/'3/>5().5( )3(/4 ..)( )./3 <15( 35/-/= of analytics Full report can be obtained from www. coping mechanism. A more focused approach than an = ics horsesforsources.com. ) â€˜everything under one roof â€™ will serve providers better. ,5(/<'(/5(,3' .-)N4)A #3-413 #3-413 4 .5/11/35<.)7 4!/3.,@7413/=) 34E5( , = 34E5 ,/ ,5(/<'(/5(,3' .-)N4)A 4 .5/11/35<.)7 4!/3.,@7413/=) 2.Lead with domain knowledge: Providers must embrace 5/5( 4 3=) )" 5/5(3H< )-15/!.,@74R H'HE $) .@').4E/454=).'4SE5( . 5/5( 4 3H< 3=) )" 5/5( )-15/!.,@74R H'HE $) .@').4E/454=).'4SE 4)'.)#.5!/3,3' 3,) .54).4/,<5 5 3-4H 5 3-4H a contextual understanding of clients business, they (&5/-2&1"#( (&5/-2&1"#( 4)'.)#.5!/3,3' 3,) .54).4/,<5 should align analysis to industry movements and to .,@74453, - .5E 3)7= 1/37.'E13 )7= -/ .5.<4). ,4 = ,/1- 44/.4<,7.'H( .5.<4). 44/.4<,7.'H( 13/ 44 ').4 .,@74453, 45-.' 45-.' - .5E 3 1/37.'E13 -/ ,4 = ,/113/ 44 ').4 clients unique issues and opportunities. By4 .7.'5( coupling/<51<5!/3 >)5(52<)4)7/.., .4).'E5-/ ,).'.#.,,@13 4 .7.'5( )4)/.-+).'H( /<51<5!/3 )4)/.-+).'H( (). >)5(52<)4)7/.., .4).'E5-/ ,).'.#.,,@13 .,@74=,< .,@74=,< (). business and analysis providers differenti).=/,= 45( sense 137)17/./!-<,71, 135= 3@,. =37.'5E44)45. ,5(5)4' . 37.'5E44)45. >)5(513 137/.. ).=/,= 45( 137)17/./!-<,71, 135- .545 = 3@, can =.545 ,5(5)4' >)5(513 137/.. ate themselves and the only way do this is through = .5<,,@<4).'5( 5).5( 3)'(5/.5 ?5H( 13/ 44-)'(5).=/,= 4 = 3,)5 37/.4 4)3() 3 4<,543 () = = .5<,,@<4).'5( 5).5( 3)'(5/.5 ?5H( 13/to44-)'(5).=/,= 4 = 3,)5 37/.4 !/3 5( 4)3 !/3 3 5( 4<,543 = !3/-..,@74-/ = ,/1. 1,/@.,@744/,<7/.4E=3) ?1 374 2<)3= 5 = 3@, = ,E3.').' domain ,/34/,<7/.H/ experience. ,/34/,<7/.H/ !3/-..,@74-/ = ,/1. 1,/@.,@744/,<7/.4E=3) ?1 374 )432<)3 5)43 = 3@, ,E3.').'
!3/-3 4 3( 5//,4.45747,4)'.E4/&>3 5//,4.45747,5(/45/-.' - .5=)4/3@1),)7 4H !3/-3 4 3( 4)'.E4/&>3 5(/45/-.' - .5=)4/3@1),)7 4H
*%8. +&$(' *%8. +&$('
! 4 3(H/ ! 4 3(H/-
V][\\E ! 4 3( 5H4 3( 5H V][\\E !
!'#.$#-2011 !'#.$#-2011 57- 1 ,). 4=3@ 14/1 .).'/.5( 4/1 E1<31/4 ..5<3 3=) ? <5 H/.7.</<4M<., March 2011 .,@7413/* 57,). 4=3@ .).'/.5( E1<31/4 ..5<3 /!4 3=) ? /!4 <5 H/.7.</<4M<., 19.,@7413/* GlobalServices www.globalservicesmedia.com - .54R H'HE).3 4).'<45/3474!7/.E13/ 44/17-)A7/.S-@,45<1>3/!]@ 34E>( 3 4/. .'' - .54R .'' H'HE).3 4).'<45/3474!7/.E13/ 44/17-)A7/.S-@,45<1>3/!]@ 34E>( 3 4/. N/"-/ ,N N/"-/ ,N <),).'13/* 54-@,45 5> .^.\]> 543 /<54/<3 /-1, 5 ,@/3).13545//. /3-/3 5()3N135@ <),).'13/* 54-@,45 5> .^.\]> +4H3/* 543 +4H3/* /<54/<3 /-1, 5 ,@/3).13545//. /3-/3 5()3N135@
Digital Magazine Every Month
GLOBAL SERVICES DIGITAL MAGAZINE Frequency: Monthly Format: Digital Magazine & Downloadable PDF Number of Pages: 30-40 Distribution: 115, 000 Opt-in Global Subscribers + Distribution through various social media networks To advertise or for more information contact Niketa Chauhan at firstname.lastname@example.org www.globalservicesmedia.com/E-Magazine
By John Lutz, general manager, IBM Global Process Services
The Next Generation of Business Process Outsourcing As BPO continues to evolve as a business strategy, it is clearer than ever that senior decision makers are looking beyond the tactical, cost-reducing benefits of yesterday’s BPO engagements to higher order benefits
ike many other segments of the services industry, business process outsourcing (BPO) has matured and evolved, following a path over the past decade from pure cost cutting, to improved efficiency, to strategic transformation and business model change. As it has evolved it has become more strategically significant to businesses no matter the market segment or area of focus. As BPO continues to evolve as a business strategy, it is clearer than ever that senior decision makers are looking beyond the tactical, cost-reducing benefits of yesterday’s BPO engagements to higher order benefits --- for example, improving financial flexibility, driving free cash flow, increasing market penetration, expanding in emerging markets and strengthening customer satisfaction, among them. This is not to say that the original benefits of BPO have lost their appeal. Cost-saving still matters. Improved efficiency is not going out of style. But these now fall into the category of “table stakes”--- and the expectations that clients have of their BPO providers are increasingly more ambitious than ever. 21 GlobalServices
For example, a recent survey disclosed that more than 60 percent of the senior executives polled said that BPO plays a very important role in supporting their business models and that they expect that figure will grow in the next three years. As an indication of the kind of business model support these executives found most valuable they pointed to higher productivity, improved www.globalservicesmedia.com
competitive agility and enhanced customer service. In our conversations with a range of c-suite decision makers, we’ve identified three specific areas where they hoped to gain operational advantages from BPO: n Strengthen their position within their company’s ecosystem. Provide innovation to differentiate them from their competitors and February 2011
BPO Next gen
establish sustainable performance improvements. n Develop forward-looking insight in order to anticipate and respond to future events. n Create operational flexibility so they can quickly make the most of rapidly emerging opportunities. Given these findings, how should we look at the next generation of BPO? The primary areas of BPO have been well-established in recent years: n Human Resources and Learning n Supply Chain Management & Procurement n Customer Relationship Management n Finance & Administration While these areas are likely to remain vital capabilities in the future, some dramatic shifts in the growing demands for business expertise and the emerging technologies that support BPO are keys to fulfilling the expectations that client decision makers have for making BPO pay off moving forward. In terms of expertise, the road is going to get bumpier for pure-play BPO providers whose capabilities in CRM, HR, and other segments are merely “horizontal,” as opposed to the deeper, industry-specific knowledge that business model transformation demands. This is a familiar evolutionary pattern that the IT and services industry has seen before, and it is reflected in the premium clients place on higher-value vertical industry support vs. the increasingly commoditized, price-sensitive state of much of today’s hardware. Software, both applications and middleware, have become more industry-specific; consulting delivers its greatest value to clients when it encompasses deeper industry knowledge. Even research projects in which vendors and clients 22 GlobalServices
“The road is going to get bumpier for pure-play BPO providers whose capabilities in CRM, HR, and other segments are merely “horizontal,” as opposed to the deeper, industryspecific knowledge that business model transformation demands,”
collaborate are increasingly tailored to an industry and specific elements of that industry. So why would BPO follow any different path? In fact, a closer look at two of the key technologies helping drive operational improvement, business model transformation and market expansion --- cloud computing and business analytics --- make it clear they have the potential to become even more powerful assets when they offer industry-specific capabilities. While cloud enables a more efficient, pervasive process delivery in general, clients will find greater value if their private cloud model can be www.globalservicesmedia.com
tailored to accommodate unique elements of their industry. An example is a services engagement to speed claims processing via a cloud designed especially for a major health insurer. Meanwhile, business analytics --while already delivering clients the capability to analyze past events and, in some cases, near real-time data, and moving steadily into delivery of expanded predictive analytics --- will grow more vertically specialized in the future. For example, real-time monitoring of customer interactions have helped a global airline improve customer satisfaction 15 points and increased revenue by $15 million in just the first year of implementation. In another example, a major auto manufacturer put a tailored outbound retention program into place that helped convert roughly one out of three engagements into a new purchase through the use of a new BPO technology called “voice of the customer analytics.” In short, the next generation of BPO will be driven by client demand for an evolving blend of historical cost efficiencies with business model transformations and predictive analytics, all delivered with an increasing industry-specific focus.. GS John M Lutz is general manager, IBM Global Process Services
by Kumar Parakala, KPMG
Rural BPOs in India: Are they over-hyped? Rural BPOs are fraught with several challenges that need to be addressed before they can really go to the next level
he rural BPO phenomenon in India started about five years ago. Since then outsourcing to rural BPOs or villages has been a catchy concept with zesty entrepreneurs setting-up rural BPOs, large Indian corporations starting their BPOs in villages as a corporate social responsibility (CSR) activity or tying-up with local NGOs to promote BPOs in rural villages. Recently, Infosys announced its plans to partner with rural BPOs across India to reduce cost and take the advantage of vernacular language support required to operate in the domestic market. The company has already partnered with two rural BPOs; RuralShores and DesiCrew Solutions and set up centers in the villages of Andhra Pradesh. According to NASSCOM estimates, there are around 50 odd rural BPOs in India spread across the nation employing about 5,000 rural youth and these numbers are growing. Rural India offers a very costeffective solution to urban India’s BPO challenges of increasing labor costs, high attrition rates, employee ambition and growth prospect issues, etc. Typical advantages that are often touted about rural BPOs are: n Low cost labor - Average employee salary in rural BPO is around USD 23 GlobalServices
70 – 100. For a similar resource the salary in urban BPO could be around USD 150 – 220. n Low operating costs - Rural BPOs offer a 30 – 40 percent operating cost arbitrage over urban BPOs n Virtually absent attrition levels Urban BPOs have attrition as high as 50 percent, while rural BPOs have virtually no attrition n Rural Transformation - Rural BPOs are increasing employment opportunities that were hitherto unavailable for the educated rural population, creating wealth for rural societies and supporting their growth and development. In this process of transformation, these BPOs help in retaining at least a percentage of the educated workforce
“Rural BPOs have come up as an alternative for lowend, low-skilled data entry work that proves to be costly when worked out of a tier I or a tier II BPO” www.globalservicesmedia.com
within that area. Normally there is migration of educated youth to tier I or tier II cities. Rural BPO provides opportunities at arms length for the educated, especially for women who are normally restricted from moving out of their place of residence. Additionally, several state governments have offered incentives to setup rural BPOs within the country. Most of the rural BPOs set ambitious targets looking at the initial success they received. Few of the BPOs that were set in past five years and their proposed plans are shown in the figure below. If we take a stock of their current status it is hard to believe that rural BPOs will see a growth rate like their urban counterparts in this decade. Rural BPOs have come up as an alternative for low-end, low-skilled data entry work that proves to be costly when worked out of a tier I or a tier II BPO. Typical services offered by Rural BPOs include: n Digitization services- data entry, converting documents to ‘PDF’ format, book digitization, typing, scanning, conversion of hard copy into soft copy n Voice based services- inbound and outbound calling (typically telesales, tele-marketing, and customer February 2011
Reality check on some of the Rural-BPOs Rural BPO
Six delivery centers across Tamil Nadu
Planned to employ 1,000 people by end of 2010 and 5,000 employees in 50 centers across India by 2015
By August 2010, DesiCrew had around 170 employees in six delivery centers across Tamil Nadu
Digitization services such as data entry and data conversion. Content creation and validation, GIS based mapping services, transcription and localization
Source for Change
Plans to hire 500 employees by the end of 2012 by following a ‘hub and spoke’ system comprising centers with 30–50 employees each.
As of early 2010, the operation had around 25 employees in Bagar
Data entry, web research and local language call services
Seven delivery centers throughout South, West and East India.
Mission to establish 500 centers and employment for 100,000 rural youth by around 2015
Between 100-300 people in seven delivery centers
Data capture, documents processing, expense processing, Image indexing, reports generation, trend analysis
Plans to grow to 150 employees by 2010 end and five centers and a strength of 500 by 2015
By September 2010 the company had 60 employees
Medical transcription, call center customer support
Three villages of Andhra Pradesh
No available information on growth plans
About 500 rural youth in 3 villages of Andhra Pradesh by 2010
Digitization, vendor payment processing, translation services, desk research, voice support
Source: Company websites, Media articles, KPMG Research and Analysis
care for telecom companies requiring local language capabilities) While quality issues can be taken care of through Service Level Agreements (SLAs), there are other issues that need to be addressed before rural BPOs can really be relevant in the interest of the larger IT-BPO industry in the long run. Rural BPOs are fraught with several challenges that need to be addressed before they can really go to the next level. n Infrastructure- An average rural BPO is a small set-up of 10 to 50 full-time equivalents (FTEs) employee capacity, providing lowend data entry work to domestic
clients or operating as a sub-contractor to a foreign MNC client. As such this BPO works on a bare minimum infrastructure including a small office with a broadband or leased line to support connectivity. It is usually tough to get a broadband connection in Indian villages so these BPOs have to manage with low-speed dial-in connections. Long and extended power cuts from a few hours on the lower side to a few days on the extreme side are taken for granted in Indian villages. Hence, power back-up is an absolute essential to keep the business running. Such a set-up is also riskier for services that
require extended hours of uninterrupted power. This often limits the gamut of services that the BPO could offer. n Access to funding - Most of the rural BPOs who have seen some success or have reached break-even by now are being nurtured by large Indian corporations or have managed to receive funding through venture capitalists based on the social impact that the business could cause. In many cases the investing party is being served by the BPO, as far as corporations are involved. A strong business case with scalability and growth prospects remains unclear. February 2011
Talent Management- Most of the workforce in rural BPOs is either college drop-out or having elementary education. The organization structure is quite flat with probably just two to three layers till the management. At the team leaders role these BPOs try to recruit talent who are city educated but having roots in villages so that they are open to such openings and are sensitized to the village culture. They typically take up a rural BPO job because the cost of living in the city does not leave them with enough savings at the same time staying away from their families. Additionally, getting trained manpower for IT infrastructure maintenance and management requires skills that are not available in the villages. In such cases rural BPOs have to get the support from the most optimum resources in near-by cities. n Business and service scalabilityAn average rural BPO offers low end digitization services. With the limited resources that the BPO has, it is very difficult to scale-up this business assuming there is growth in number of similar clients or growth is work volume or both. Attracting qualified talent in numbers is a task in itself. Itâ€™s only the larger rural BPOs that can afford to train and sustain fresh recruits and keep hiring. According to NASSCOM, the 2015 projections being put out by the leading rural BPOs are about 1,000 centers and 150,000 employees. Although this figure is achievable statistically, given the number of rural youth having basic understanding in computers and English language required for low-end BPO work, such an enormous growth (CAGR of 100 percent from 2010 to 2015) will call for more investments and more business flowing in. Unless there is significant back-up of funding from n
investing parties, be it public or private and parallel marketing initiatives to begin with, sustaining rural BPOs and transforming rural economy at a national scale remains a distant reality. With the limited talent willing to actually work in a rural set-up, these BPOs cannot work beyond the low-end services in the coming years. Training employees to deliver more high-end services will not prove to be cost-effective and good business sense. The whole idea of cost-effectiveness for low-end work delivered through a rural BPO will be under question. Given these limitations, rural BPOs might not scale-up to offer a range of services across different verticals like their urban counterpart. Moving forward Rural BPOs are expected to grow organically up to a limit for remaining manageable with the resources available and making business sense. In order to achieve its ultimate goal of being a social venture transforming rural communities and operating as a business enterprise it is advisable for such BPOs to operate in a hub and spoke model. This is similar to the analogy of milk co-operatives that materially transformed rural communities in Gujarat, India. Rural BPOs could develop a panIndia set-up through a decentralized hub and spoke model. In such a model, each unit or center in the network of the BPO will provide the actual services that will be delivered to a regional center or hub which will further assimilate the content and deliver it to a central location that delivers the final output to the client. Every center is in this way could be an entrepreneurial initiative and responsible for its own profitability and management. From a business development perspective, it makes more sense for rural BPOs to support local government www.globalservicesmedia.com
initiatives including online data entry of affidavits during elections, assisting banks in financial inclusion initiatives by providing voice and non-voice support for micro-finance activities including periodic calling, application filling, repayment collection, feedback collection, etc. Additionally, local NGOs can partner with these BPOs to present their case to large domestic BPOs and other large corporations who are willing to sub-contract their BPO work as a part of their corporate social responsibility initiative. With the challenges that urban BPOs are facing in terms of growing global competition, escalating costs and high attrition levels, companies can have a serious look at what rural BPOs have to offer. High end work still can continue with the tier I cities, and high volume, low-end work can be certainly offshored to rural BPOs centers to continue to take advantage of India as an offshoring destination. Conclusion The rural BPO wave in India has just begun and is quite difficult to predict which direction the market forces will take these BPOs. Rural India is becoming more and more a growth area for businesses like telecom, FMCG and other goods who want to penetrate deeper in these geographies. Additionally, with NASSCOM estimates for domestic BPO market in FY11 to be around USD 2.8 billion, there is a large opportunity for rural BPO to tap and remain relevant.Â GS Kumar Parakala is Head of IT Advisory KPMG in India and EMA,COO Advisory, KPMG in India Global Head for Sourcing Advisory
By Reetika Joshi, Senior Research Analyst, ValueNotes Sourcing Practice
The Emerging Market for Analytics As investments in IT soar further, there is an increasing need to convert organizational data into knowledge, by using analytics on a more sustained basis
he rural BPO phenomenon in India started about five years ago. Since then outsourcing to rural BPOs or villages has been a catchy concept with zesty entrepreneurs setting-up rural BPOs, large Indian corporations starting their BPOs in villages as a corporate social responsibility (CSR) activity or tying-up with local NGOs to promote BPOs in rural villages. Organizations typically focus on the meticulous capture and measurement of transactional data, for benchmarking performance. The data aggregated is used as input for management information systems, data warehouses, etc. - again aimed at measuring performance. Companies have made heavy investments in technology infrastructure to collect this data. However, very little attention is paid to transforming it to knowledge/ business insights, to achieve specific business results, beyond process optimization. Today, as the investments in IT soar further, there is an increasing need to convert organizational data into knowledge, by using analytics on a more sustained basis. Analytics refers to the gathering and interpreting/analyzing of historical data to facilitate business decisionmaking and planning. The process of transformation of historical data
into meaningful business insights and knowledge is difficult, and calls for a new approach in design and deployment. In defining a problem, businesses need clear and closed-ended definitions, compared to the broad based scope of business problem definitions in management consulting/ strategy formulation. Solution delivery too, calls for deriving data from multiple sources, and aligning analysis with business needs. Establishing an analytics process in an organization can be thus broadly classified into three broad steps:
The outsourcing angle The lack of technical skills, statistics related capabilities, the broader organization culture and the absence of a proactive problem-solving team hold back organizations from applying analytics to specific business problems. Furthermore, to use analytics on a continued basis, companies need both a framework and an operational model to overcome the organizational barriers. Organizations are addressing this problem either by developing analytics teams and culture in-house and\ or outsourcing their analytics related
Establishing analytics for an organization
requirements to a third party service provider. Technology has enabled the breaking of the analytics process into discrete components of work, which can be outsourced/offshored. Services offshored in analytics can range across various areas across the value chain or involve end to end delivery of the project. From the offshoring perspective, the activities in an analytics project can be categorized into four broad groups, based on their genesis.
Within these broad categories, there are a variety of specific activities that can be outsourced/offshored. There is also a variance in the offshorability of these services, elaborated below. The execution of complete projects often require an onshore presence, as the offshorability of knowledge intensive and core analytics activities is relatively low. Although activities that are highly customized or discrete can be largely standardized and
“The process of transformation of historical data into meaningful business insights and knowledge is difficult, and calls for a new approach in design and deployment”
Establishing analytics for an organization Type of activity
Genesis of activity
Based on reasoning, judgment and interpretative abilities
- Research design - Data collection and validation - Intuitive analytics
Can be broken down and disintegrated into multiple locations
- Data tabulation - Data preparation - Cleaning of data - Warehousing
Highly customized – specific to project
Specific to the project
- Study methodology - Developing statistical model
Core activities to analytics
High levels of IP involved – drive results
- Verbal presentation - Customized dashboards to view results - Management consulting - Analytics products
Source: ValueNotes Research
Offshorability and level of offshoring in analytics
Is outsourcing going to grow? As the use of analytics in problem solving becomes more widespread and ‘industry standard’, organizations will have to evolve in terms of their frameworks and operational models in deploying analytics related work. This will help them see significant value from data in the form of knowledge and insights. Offshoring analytics is complex, as the intermediate steps involved need coordination on a continuous basis. Over the past few years however, the outsourcing and offshoring of analytics by the corporate segment has grown. Amongst the companies that do not outsource, the trend to outsource at least some tasks in the analytics value chain (such as data cleaning) is on the rise. Over the next few years, as the outsourcing/offshoring model and the service provider landscape evolve, we will see greater confidence among client organizations, driving the transition of ‘high value’ analytics offshore. GS Reetika Joshi is Senior Research Analyst at ValueNotes Sourcing Practice
Source: ValueNotes Research
automated, the requirement varies significantly between projects. This in turn lowers the offshorability of these activities.
By Nigel Hughes, Global Services Director, Compass Management Consulting
No Room for Heroes in Outsourcing Relationships Outsourcing relationships dominated by the individualistic, “hero” dynamic are at risk, and both parties need to be aware of how to address them
he rural BPO phenomenon in India started about five years ago. Since then outsourcing to rural BPOs or villages has been a catchy concept with zesty entrepreneurs setting-up rural BPOs, large Indian corporations starting their BPOs in villages as a corporate social responsibility (CSR) activity or tying-up with local NGOs to promote BPOs in rural villages. A recent performance analysis of an offshore managed service operation conducted by sourcing consultancy TPI concluded that a high degree of cooperation existed between the client and service provider teams. Both the client – a U.S.-based Fortune 500 firm – and the vendor – a major Indiabased service provider – were found to be team players, mutually committed to the partnership and proactively seeking ways to optimize and integrate their application development and maintenance (ADM) operations. What’s more, TPI’s analysis showed, customer satisfaction among business users was at acceptable levels. Digging deeper, however, TPI found that senior staff members on the client side were consistently
supplementing the service provider team, unintentionally circumventing process with the intent of satisfying business user requests. This lack of discipline and failure to adhere to standardization resulted in lower than expected productivity, ambiguity in roles between client and service provider, and ultimately an inability to achieve contractual obligations – all originating from the core objective of driving business satisfaction. While cooperation and mutual commitment to shared goals are certainly laudable and clearly recognized as essential to an effective sourcing relationship, this example illustrates that a positive culture is no substitute for the process discipline and operational rigor that managed services delivery models require. Indeed, as TPI found, a seemingly positive culture can conceal serious underlying issues that may contribute to inefficiency. I recently spoke with Todd Dreger, a Partner at TPI in its Operational Strategy Practice, about some of the key challenges and opportunities businesses face in managing global sourcing operations. www.globalservicesmedia.com
NH: What do you mean by a “hero” culture and what problems can it cause in service delivery? TD: When you look at the IT organizations of many Fortune 500 companies, the places that are consistently ranked as some of the best places to work, the culture is all about people, customer satisfaction and personalized service. It’s about teamwork and collaboration. When a problem occurs, people swarm to fix it, they stay up all night if they have to. They strive to become heroes. The trouble with this approach is that it’s very reactive. By its very nature, stress becomes a critical success measure. Companies that foster this culture often reward the heroes and further reinforce this behavior. As you might imagine, individuals seeking to become heroes tend to lose sight of the value of a disciplined process. An IT organization can’t predict performance and the execution of tasks when everyone is reacting to the moment and earning a reward. It’s extremely inefficient. In this particular case, the client had high-level, senior people doing menial tasks, duplicating the efforts of the service February 2011
Global Services Hero
provider. As a result, opportunities to increase stability and focus on business innovation were thwarted. Service providers, meanwhile, must be very process-oriented in managed services models. Ultimately, the purpose is to measure and manage service and performance against service level metrics. ADM Service Providers need the process discipline, and CMMi maturity, in order to effectively delivery services according to their business model. They need consistency, repeatability, and predictability in their operations. This requires commoditization of knowledge, and the leverage of a shrinking percentage of highly skilled service provider resources. NH: What happens when these cultures collide? TD: At TPI, what we’ve seen typically is that the client’s hero culture prevails. For one thing, there’s a natural tendency for the service provider to want to please the customer, and to adapt to the customer’s way of doing things. In addition, within the client organizations, the hero culture is championed by the most talented and dynamic people – by the leaders. Meanwhile, on the service provider side, and particularly in the case of many of the offshore providers, they’ve experienced tremendous growth over the last five years or so. As a result, many of the mid-level people on the operational front line lack the experience to push back on the client and promote process discipline. Instead, they accommodate to the client’s approach. NH: One of the dilemmas we’ve observed at Compass is that, in order to change the hero culture, you need the support of the individual heroes to make that change happen. Yet, the nature of that change – repeatable processes, consistency, commoditization – can make the heroes feel marginalized or threatened, because 29 GlobalServices
and put process discipline in place? TD: At TPI, we’ve seen that after a transition to a new outsourcing partner, there’s typically some movement toward process institution, but it tends to plateau prior to maturation. After a while, it makes sense for an outsourcing advisor to come in and assess the operation and its effectiveness to ascertain what’s going on. Why aren’t we achieving our objectives as defined in the business case? Why aren’t we getting repeatability and predictability in service delivery? Why are SLAs not being met? You need to ask these questions in a thorough manner and focus on the executive perspective to develop a plan to reinvigorate the transition to a more process-centric operating model. A key element is that the client must allow the service provider to institute process discipline, and this requires the IT organization to manage the expectations of the business customer. When you go through this process and capture all the challenges and opportunities, you get the elements of a “get well plan,” and you can begin to define actions for both the client and the service provider to take to drive improvement.
“We found that seniorlevel client staff were frequently stepping in to solve problems that service provider staff couldn’t handle....not only was that inefficient and not cost-effective, the result was that knowledge and skill gaps weren’t being addressed” Todd Dreger Partner, Operational Strategy Practice, TPI their individual talent is less visible and potentially less valued. So the challenge is to create incentives that give the heroes a stake in the implementation of process discipline, so that they’re recognized and rewarded. TD: Absolutely. Another issue is that, in an outsourced environment, the hero culture is often characterized by a high degree of collaboration between the client and vendor teams. This can foster a sense of satisfaction with the overall relationship, while glossing over performance issues. In the analysis TPI recently conducted, we found that senior-level client staff were frequently stepping in to solve problems that service provider staff couldn’t handle. So, not only was that inefficient and not cost-effective, the result was that – in the spirit of teamwork – knowledge and skill gaps weren’t being addressed. NH: So what’s the solution? How do you address this hero problem www.globalservicesmedia.com
NH: And from Compass’ perspective, periodic benchmarking against the business case systematically drives re-assessment and re-commitment to change. You need to quantify the initial opportunity and, subsequently, quantify progress toward the targeted end state to ensure that the savings and benefits defined in the business case are not eroded through value leakage. GS For a forthcoming webinar on this topic, look up: www.tpi.net Nigel is Global Services Director for Compass Management Consulting February 2011
The new rules to play by: Growth in demand in new geographies Balanced shoring Domain-driven services Unified customer experience