We recently released a report about cities in India that we believe will be the country’s next top outsourcing centers. Everyone talks about established places like Bangalore, Mumbai and Chennai, but India has other cities that are just as equipped with handling various outsourced functions. Paul McDougall, a columnist for InformationWeek blogs about our research here:
The press release on our findings is available here.
Controlling costs is a challenge for every company. If your competitor starts to outsource and gains a competitive advantage, then you really have an issue. Customers must ask themselves what functional areas they can outsource, who can help them and what are the advantages.
Here’s a recent podcast I did with Ken Rayment.
As I predicted in my trends release in December 2006, the opportunity exists for private equity to force change in the large, domestic outsourcing companies.
Now it’s starting to happen with the ACS announcement today.
We have been predicting that there would be two to three major events this year, driven by offshore cost pressures and consistently narrow margins of providers such as ACS.
Question remains will there be two or three more major moves in the outsourcing market this year?
CEO’s going through the decision process of adopting a new strategy do so often without clear, unbiased facts. Despite the decision to hire consultants and the sometimes compelling issues of today’s market, the decision to adopt change can be quite lonely.
Why are facts often so blurred and the decision difficult? The view from the team and employees is often no better as their own views are colored by human nature to optimize for their own view or agenda.
Here’s an example from my meetings this week. Company A knows it must reduce operating costs and continue to improve service. The friction of competing management agendas makes it hard for anyone to asses and build new and clear agendas for change. Frustrating for senior management, but most likely this problem has been around since the days of the spice trades thousands of years ago.
How do you burn through the fog? When do you collaborate to get buy in? When do you select a course and drive forward? Delicate points of decision for management and not as easy as it looks.
Dr John Boyd had some thoughts on this a few years back. Interesting reading.
I attended the EDS summit this past week in Plano, TX. Their Headquarters was as impressive as ever with the sense of structure and process that you would hope of a computer giant.
EDS appears to continue to develop a series of interesting capabilities and continues to expand their ITO and their BPO offerings with clarity of experience from their roots as an ITO provider. BPO is still a new and growing service for EDS that is dwarfed by their IT Outsourcng capabilities. Michael Boustridge had some interesting ideas on developing win-win relationships, which I found both refreshing and good for the overall sourcing industry let alone EDS. It is clear that providers have low margins and little room to innovate based on the relatively low gross margins. Win win and seeking to eliminate predatory pricing in contracts is one part of the answer moving forward. Will EDS be a part of solving the problems inherent in most contracts today? They have been an innovator in the past and appear to have the depth for the future. Time will tell.
Steve Hamm, a journalist who blogs at BusinessWeek Online recently discussed the tech services industry and its competitive nature. Mort Meyerson, Alsbridge Chairman is interviewed for this story and I think that you may find it an interesting read. You can read the blog here: BusinessWeek Online
I am off to speak at the Institute for Strategic Supply, San Diego event this week. The presentation, “ It’s Not Just Outsourcing: Innovative Relationship Structures,” will discuss creative and forward-thinking business structures such as joint ventures, alliances and partnerships and will offer best practices and case studies.
I am also looking forward to seeing J. Ross Docksey, a distinguished and well-known partner at the law firm of Sonnenschein Nath & Rosenthal LLP will co-present with me.
The .plan is to do a collaborative session on creative and non-standard contract and relationship structures that can be used to create real customer value. Or do a lot with in the real world situation we all face in business each day.
I love this subject. Going back to my time as a Marine Officer, when I was training a Squad for the Marines Combat Rifle Squad Competition (Super Squad). My Colonel observed that my I had a knack for turning a “Sows ear into a silk purse” when he observed some of the creative approaches we had developed to deal with lack of bullets and fuel as we tried to accomplish our mission.
No whining allowed, just accomplish the mission.
We did win that year and after 6 months of intensive training we won against squads from all around the world we won the gold and bronze medals in the top Marine Corps Combat Infantry Squad competition.
Those Marines were amazing.
Their picture still hangs on my home office wall and many went on to interesting and varied careers in both the Marines and Business.
How does that relate to sourcing?
Well we are seldom presented with a perfect situation and we must adapt and improvise to factual and relationship driven variables to improve a team or a business and our journey was over a long backbreaking 6 month program to hone the team to a fine edge.
It will seldom be perfect, it will rain on the wrong day and the helo might not show up late, but you persevere, adapt and improvise to make it work.
Another thought along the way we celebrated many small victories as a team to give confidence for the days when it may have not gone according to plan.Certainly if the Marines can do it with a bit more at stake than the annual bonus we should be able to also.
My question of the week is: Where does the U.S.-based outsourcing providers end up in five years? Are they executing a 1970s strategy with predictable, yet bland results, or are they going for the next “big thing” in sourcing?
Let me know your thoughts and comments.
Alsbridge is expanding. Recruiting and hiring at Alsbridge is part of our growth strategy for 2007 and beyond. I am pleased to see the volume of resumes we are getting especially in the area of client services in research. There is such a wealth of talent and the choices are hard, but it appears we are picking up some real stars.
We continued to move into our new U.S. headquarters this week. Our new facility has has expanded office space and a new conference facility for our client workshops. We’ve also allowed room for further expansion which is taking place in 2007. It is amazing to have so much space after what became cramped space in our old Addison office. (Addison is a suburb of Dallas).