Consider the Source

Catching Up or Staying Ahead?

Today's blog on the HP/EDS deal comes from Peter Allen, Partner and Managing Director, TPI.

The marriage of EDS and HP is not about catching IBM, as has been commonly reported, but about staying ahead of Google, Amazon and Dell, while emphasizing services over effort.

Look at the bigger picture: there are only two clear leaders covering the broadest spectrum of outsourcing services.  IBM and Accenture cover the gamut of IT and business process services, including many industry-specific processes for airlines, retail, pharmaceuticals, and banking. The nearest pursuers are in India: Infosys, TCS and Wipro.

The combination of EDS and HP is one step short of having the sort of coverage enjoyed by IBM and Accenture, but three steps ahead of everyone else.

European Roulette

Today's blog on European outsourcing comes from Duncan Aitchison, Partner and President of TPI’s operations in EMEA.

You would think that a shift in global outsourcing demand away from the U.S. would be accompanied by an increase in outsourcing activity in Europe. Surprisingly, this has not been the case.

If one looks at the Total Contract Value (TCV) of private sector outsourcing transactions conducted in Europe each year since 2003, the amount has been consistently around the $40 billion level.

What is more interesting, however, is the pattern of outsourcing activity at the country level within Europe.

Europe remains a challenging market for any business. It doesn’t behave as a definable, targetable concentration of homogeneous demand.  It is a collection of diverse countries and regional markets with different cultural and linguistic characteristics, as well as a variety of legal and industrial structures. Together, these factors influence what is bought, where, and how it needs to be sold.

Listening to the Buy-Side

Today's blog on TPI's Americas Sourcing Leadership Exchange (SLE) comes from Peter Allen, Partner and Managing Director, TPI.

Falling quickly on the heels of our Americas Sourcing Industry Conference (SIC) held for service providers, we conducted our latest Americas Sourcing Leadership Exchange (SLE) for buy-side participants last week in Chicago.

What can one learn from spending a couple of days with almost 200 executives who are actively involved in the outsourcing business proposition and battling the recessionary markets of 2008?  Plenty.

Despite some of the popular conjecture about a slowdown in the adoption of outsourcing, this was our largest SLE ever, and the attendees generally expressed a desire to become ever MORE active in using outsourcing to achieve greater variability in their corporate cost profiles.

Many of the attendees, whether in the planning stages or actively managing existing arrangements, were keen on achieving even greater flexibility in their costs.  The discussions around captive operations, shared services and internal optimization received considerable air time when considered in contrast to outsourcing.

Think Outside the Indian Sourcing Box

Today's guest blog on outsourcing in Latin America comes from Melany Williams, Partner & Managing Director, TPI Innovation Center.

With a wave of buyers of outsourcing services looking to Latin America, the habit of moving your business 7,000 miles away needs evaluation.

The appreciation of the Indian rupee by more than 11 percent against the U.S. dollar this year and the rise of the Canadian dollar is causing many companies to consider diversifying their offshore portfolios. India is facing constraints such as wage inflation, talent attrition and infrastructure strains, and Latin America is increasingly becoming the alternative “go-to” location.

A number of factors support setting up a Latin America operation: most countries in the region have stable social and economic environments, the necessary infrastructure, intellectual property rights, and free trade agreements including NAFTA that make sharing data in core business applications across borders possible. These regions are more appealing now than a few years ago and successfully migrating IT and business service support functions requires a balanced view of risks and opportunities.

Tipping Forward

Today's blog on TPI's Sourcing Industry Conference comes from Peter Allen, Partner and Managing Director, TPI.

Have 120 executives from over 50 service provider firms discuss the “tipping point” in sourcing, and the word you’ll hear repeatedly is innovation. It’s no surprise the topic earned the most buzz at TPI’s Sourcing Industry Conference (SIC) in Chicago on April 22.

How to put the topic of “innovation” more prominently on the table for outsourcing relationships has been led by my colleague Harvey Gluckman. His work with several service providers and law firms is addressing the ways that innovation is declared as an expectation, its evaluation techniques, funding models, and the overall governance constructs. It’s truly market-changing work.

Is Change Management Just a Growing Pain?

Today's guest blog on change management comes from Shawn McCray, Partner, TPI. 

Things don’t eventually come around.

Problems that occur during implementation of outsourcing are primarily caused by poor change management and lack of governance, and they’re not just natural growing pains. We’ve seen situations where initial implementation went so poorly the entire business case was degraded such that recovery was almost impossible.

But when change management and governance are proactively deployed both parties achieve expected results. A miracle of miracles!

So why doesn’t this happen every time?

Buckle Up for 2008

Today's blog on the state of the outsourcing industry comes from Peter Allen, Partner and Managing Director, TPI.

With the risk of sounding too dramatic, I think that 2008 is going to be a defining year for the outsourcing industry.

Whether the U.S. economy has entered a recession or not is still up for debate. What’s certain is that companies in consumer-oriented industries are behaving as if protection of profits and cash flow are much more important than driving growth.

How does this relate to outsourcing?

Identifying the 3C Provider

Today's blog on the future of outsourcing comes from Peter Allen, Partner and Managing Director, TPI.

A new breed of service providers will emerge to service outsourcing demands in the coming years. Called the “3C sourcing framework,” we expect a relative equilibrium with emphasis on cost, capacity and capability.

We see the characteristics of the 3C framework applied with equal emphasis to internal service delivery organizations as well as the selection of external providers. In fact, the criteria may be the ultimate determinant of service delivery strategy for a broad range of technology-enabled business functions. Here are some of the characteristics clients look for in their prospective service providers:

The 3C Sourcing Framework

Today's blog on the future of outsourcing comes from Peter Allen, Partner and Managing Director, TPI.

One risk of offering projections about the future is that astute observers will keep score. Alas, so be it.

The demise of the labor arbitrage era as it relates to sourcing is rapidly approaching. The labor turnip has been squeezed and a new era dawns.

When future historians look back on the timeline of services outsourcing, their archeological record will show a period when productivity mattered less than the ability to throw cheap labor at transactional work.  The ash layer of effort-based contracting will be strikingly thin, and it will serve as a distinct demarcation between industry eras.

Is "Outsourcing” Passé?

Today's post on the declining use of the term "outsourcing" comes from Peter Allen, Partner & Managing Director, TPI.

After spending a day with a leading India-heritage service provider, an epiphany occurred to me: could it be that the term “outsourcing” is passé?

The purists among us will recall that outsourcing was borne in an era when companies were transitioning employees and certain operational assets such as systems and applications. The preface of “out” versus “in” conveys movement from internally-aligned to externally-provisioned services.

But we are seeing less and less transitioning of employees and assets from the balance sheets of clients to balance sheets of service providers.  Why?