Genpact Limited acquired Headstrong Corporation, a provider of comprehensive consulting and IT services with a specialized focus in capital markets and healthcare.
Tech Mahindra announced its plans to set up BPO operations in the Philippines. The company has a contact centre in Manila and has recruited over 600 associates. The company plans to cater to both the Philippines and the global market.
Firstsource Solutions announced a business process outsourcing (BPO) joint venture with Dialog Axiata, a subsidiary of Malaysia's Axiata, based in Sri Lanka. Firstsource Solutions and Dialog will hold 74% and 26% stake respectively in the JV.
EXL Service Holdings Inc is to Outsource Partners International for $91 million. OPI is a specialist in providing complex finance and accounting outsourcing services and has 3,700 employees. The company with about 80 clients, reported revenues worth $76 million in 2010.
Fairfax Media is to outsource subediting at its major newspapers, as part of its reorganization of newspapers and their websites. The company has indicated that this is just the start and there may be more outsourcing as the company moves ahead with its restructuring.
These five occurrences over the last few days have set the tone for the next few years. The aggressive approach to the adoption and expansion of the outsourcing industry is for all to see. As the industry moves beyond ‘whether to outsource’ to ‘how and what to outsource’, the various stakeholders are actively pursuing what is required of them.
Buyers identifying priorities
The Fairfax announcement has, as expected, met with many disgruntled voices and opinions, opposing the move to outsource some of its functions. The primary impact is that 60% of the subeditors’ work on The Sydney Morning Herald, The Sun-Herald, The Age and The Sunday Age will be outsourced by the end of the financial year. This also means that they will release some of their staff. The company has also indicated that the funds that they generate as a result of these cost savings will be used to focus on developing their journalistic capabilities.
While this is just an example, it does indicate that the buyers more than ever consider outsourcing to be a strategic move, and are open to restructuring and realigning their businesses and processes. The buyer confidence about outsourcing has increased and they also understand that they are equally responsible when it comes to maximizing the benefits from the outsourcing engagements.
What they expect from vendors is a complete solution, and ownership with regards to all outsourced tasks and processes. They are increasingly looking to expand their relationships with vendors in a way that impacts not just their bottom line, but also their top line.
Meeting buyer demands
The buyer readiness to hand over the entire processes means that vendors offers must include not just cost reductions, but also process improvements, reductions in turn around time, improvement in quality through training, automation and help the client improve performance. The examples stated above indicate that vendors are looking at actively meeting these demands. As part of efforts to increase the suit of offerings, expand their presence and enable services across verticals and horizontals, vendors are increasingly looking at partnerships and acquisitions and are extremely bullish. The stated examples clearly reflect the vendor approach as they try to meet buyer demands of end-to-end solutions, single vendor engagements and effective risk management.
The impact on mid to small size segment within the vendor community is slightly different. The domain expertise that they can offer is extremely valuable and large vendors are open to partnerships with them. They have the option of retaining their presence, or opt for merger with the larger vendor. Domain expertise has achieved great significance in the last few years and buyers are demanding that vendors meet this requirement, since this has a direct impact on the quality of the outcome. The change in vendor approach to cater to all buyer requirements is evident as they move to new geographies, add services, look at new verticals and enhance offerings with inclusion of technology.
Outsourcing aggressively
With Governments also pooling in to offer incentives to vendors, the sector is set for a rapid rise. With most of the buyer demands being met, outsourcing will be just another tool to improve profitability. The lean structure is in, and outsourcing and technology are playing a major role. The future will definitely be about one stop shops, global delivery and end-to-end solutions. While these may be termed as buzz words by skeptics, they also indicate the route that the industry will take. We can expect more competition, and larger deals will be back – deals that cut across geographies, verticals, and services. While survival for the smaller players will be tough, there will no dearth of opportunities for vendors, big and small, who can meet buyer demands.
- Deepali Sathe, Manager and
Sr Analyst, ValueNotes Sourcing Practice
