Getting A Piece Of Business Process Outsourcing

June 25th, 2015 by Rahul Jain No comments »

The intersection of technology and globalization has changed the way business is done and created new business opportunities in the international marketplace.Outsourcing22

Business process outsourcing (BPO) has evolved with time and the rampant innovation in technology. The BPO trend is accelerating. It is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider. Originally, outsourcing was associated with manufacturing firms, such as Coca-Cola, that outsourced large segments of its supply chain.

BPO is typically categorized into back office outsourcing, which includes internal business functions such as human resources or finance and accounting, and front office outsourcing, which includes customer-related services such as contact center services. In addition, other outsourcing segments within the global industry include business services, energy, technology, healthcare and pharmaceuticals, retail, travel and transport, and telecom and media.

The revenue of the global outsourced services industry rose steadily year over year from $45 billion in 2000 to just under $100 billion in 2012.

India is a clear leader in this area, offering a highly skilled, educated, cost effective, English-speaking labor pool. Still, many organizations are understandably apprehensive about having people on the other side of the world support critical business functions. However, some of the best outsourcing providers have mitigated the risk and addresses the concerns that clients may have about placing their work offshore through their innovative project management strategies.

WNS Holdings (WNS) operates in two segments: WNS Global BPO and WNS Auto Claims BPO. Its clients are primarily in the travel, banking, financial services, insurance, healthcare and utilities, retail and consumer product industries. WNS Global is a global business process management company headquartered in Mumbai, India. It has more than 29,000 employees working in 37 “delivery centers” across the world, including India, the U.S., United Kingdom, China, Costa Rica, Philippines, Poland, Romania, South Africa, and Sri Lanka.

Another company that has embraced the BPO model is Accenture (ACN). One of the top multinational management consulting, technology services, and outsourcing company, ACN reported revenues of over $30.0 billion with approximately over 330,000 employees, serving clients in more than 200 cities in 56 countries. In 2012 Accenture had about 80,000 employees in India, more than in any other country, about 40,000 in the US, and about 35,000 in the Philippines.

While there has been push back from U.S. consumers regarding poor service at certain international call centers, it is clear to me that the more a company is willing to think globally, they open themselves to greater profits. The BPO model should be expected to grow for years to come.


Eisai Signs Global IT Outsourcing Contract With Accenture

June 24th, 2015 by Rahul Jain No comments »

Accenture ACN, -0.34% today announced that it has signed a contract to provide information technology (IT) system maintenance and operations, as well as monitoring and operations of servers and networks for Eisai Co., Ltd. in the U.S. and Japan.Outsourcing21

Under this contract, Accenture will deliver services including operations, maintenance and monitoring of Eisai’s applications and infrastructures (excluding a portion of research and development) in the U.S., and a part of Eisai’s enterprise resource planning systems including accounting, production management and related systems, as well as its IT infrastructure, such as servers and networks in Japan. This contract runs for seven years in the U.S. from April 2015 until March 2022, and for nine years in Japan from April 2015 until March 2024.

The global pharmaceutical industry is undergoing significant standardization in areas of new drug development, medical practices, and regulations for new drug review and approval. This contract will enable Eisai to strengthen its global competitiveness by further reducing global IT costs and enhance its global IT solution delivery framework. This, in turn, will enable Eisai to build a global IT governance structure that is more efficient and effective.

“During Eisai’s recent growth, Accenture has been supporting Eisai in many initiatives, and it is our pleasure to have this opportunity to play an important role in this key project that is designed to ensure even greater growth for Eisai in the future,” said Atsushi Egawa, senior managing director, Products, at Accenture in Japan. “We will use our experience accumulated in the pharmaceutical industry, our IT operational processes that are standardized globally, and our deep expertise in continuous business improvements to support Eisai’s successful business.”

These contracted services will be delivered from the Accenture Delivery Center for Technology in Manila, Philippines, and a part of application services for the U.S. will be delivered from the Accenture Delivery Center for Technology in Pune, India. These are both part of Accenture’s Global Delivery Network, which is comprised of more than 50 locations around the world.


Outsourcing key to rising security threats, staff shortages

June 24th, 2015 by Rahul Jain No comments »

It’s no secret that more organizations are turning to managed IT services.Outsourcing20

A recent report from Frost & Sullivan uncovers one reason why managed security services, specifically, are taking off like wildfire: a shortage of security professionals. According to the report, businesses are feeling the strain of that shortfall already.

Configuration mistakes and oversights, for example, were cited by 65 percent of survey respondents as a “top” or “high” concern. In addition, “remediation time following system or data compromises is steadily getting longer”, the report read.

“The net result is that information security professionals are increasingly cornered into a reactionary role of identifying compromises, recovering from mistakes and addressing security incidents as they occur rather than proactively mitigating the contributing factors.”

More than 60 percent of respondents to the survey – a joint effort by Frost & Sullivan, the International Information System Security Certification Consortium (ISC2), consultancy Booz Allen Hamilton and security professional placement firm Cyber 360 – said their companies have too few information security professionals, compared to 56 percent in the 2013 survey. Frost & Sullivan estimates that the shortfall in the global information security workforce will reach 1.5 million jobs by 2020.

The 2015 Global Information Security Workforce Study, conducted online from October 2014 to January 2015, polled almost 14,000 security professionals from small, midsize and large companies in a number of industries.

The security staff shortage, coupled with a growing number of security threats, is posing a tricky situation for organizations across the board. They plan to respond by increasing their investment in security technology, in-house personnel, and outsourced security services.

About 30 percent of survey respondents said they plan to increase spending on managed or outsourced security services in the next 12 months. Aimed mostly at augmenting security teams, rather than replacing them, outsourcing is an increasingly popular option for a number of reasons, including a “lack of in-house skills” (49 percent), a “temporary need for flex force capacity” (30 percent) and “recruiting limitations” (26 percent).

The rising cost of security operations is playing an important role as well. “It is less expensive” was cited as a reason to outsource by 30 percent. Twenty-three percent named outsourcing as a means of “alleviating the burden of tedious tasks”, and 18 percent cited “difficulty in retaining staff”.

Of course, outsourcing one’s security operations requires due diligence and caution. The service provider needs to be reliable, trustworthy and qualified.

Respondents to the Frost & Sullivan survey looked at a number of factors when sizing up security service providers. The number one criterion in selecting a provider, cited by 55 percent, was pricing. Next, they want a provider to stand behind its product with a service-level agreement (cited by 50 percent).

Forty-nine percent of respondents said they choose a provider based on the quality and number of security people, 33 percent use the number of years in business as a key criterion, 30 percent cited breadth of service, and 22 percent cited brand name.

And the security operations most outsourced by survey respondents? Threat intelligence, research, detection, forensics and remediation (40 percent). Number two, with 37 percent, was security asset management and monitoring (firewall and intrusion prevention systems, for example), and number three, with 28 percent, was risk and compliance management.

Here are the top three ways that survey respondents said they’re using professional security services:

– Implementation services (integration, installation, migration, lifecycle management) – 34 percent
– Technical services (audits, breach management) – 34 percent
– Security advisory services (strategy, governance/compliance, training) – 26 percent

Cloud-based security services, otherwise known as SECaaS, were placed in their own category in the Frost & Sullivan report, although they’re still considered part of the outsourced security services landscape.

There’s no question that more organizations perceive the cloud as a priority, but security concerns around cloud services persist.

Among survey respondents, 43 percent said using cloud services is currently a “top” or “high” priority, while 57 percent said it will be so over the next couple of years. Yet concerns are legion, with the most prominent being data breaches (76 percent), data loss (73 percent), account hijacking (61 percent), malicious insiders (59 percent) and insufficient due diligence (57 percent).

Ultimately, service providers hoping to win new contracts – and mindshare – will need to allay organizations’ concerns about using the cloud to manage security operations.

Respondents said they’d like to see providers acquire specialized cloud security skills. “Application of security controls to cloud environments” was named by 66 percent, “knowledge of risks, vulnerabilities and threats” wasn’t far behind, with 65 percent, and an “enhanced understanding of security guidelines” was cited by 62 percent.

The old adage positing that “knowledge is power” holds sway here, as it does elsewhere, and one of the best ways for MSPs to assuage fears will be to gain as much expertise as they possibly can.

The more confident businesses are in a service provider’s ability to keep their systems and data safe and secure, the more likely they’ll be to hand over the keys to their security operations.


Pharma outsourcing accounts for 75% of Indias healthcare BPO market: Study

June 24th, 2015 by Rahul Jain No comments »

At USD 2.5-3.1 billion (bn), pharmaceutical outsourcing market (excluding contract manufacturing services) accounts for about 75% of the India’s Outsourcing20medical process outsourcing (MPO) segment which is currently estimated at USD 3.3-4.2 billion, according to a just concluded Assocham-EY joint study.

”While the payer outsourcing market constitutes USD 700-900 million (mn) of India’s MPO market, the provider market accounts for the remaining share of about USD 100-200 million,” noted the study titled ‘Medical Process Outsourcing in India,’ jointly conducted by The Associated Chambers of Commerce and Industry of India (Assocham) and global professional services organisation EY.

The recent US regulation on Patient Protection and Affordable Care Act (PPACA) together with the proposed introduction of ICD-10 standards have given impetus to the Indian MPO market. Besides, domestic players are also gradually moving up the value chain in terms of service offerings while maintaining their cost competitiveness.

”All of these combined will give a boost to the MPO market, with payer BPO market likely to grow at about 10% year-on-year (Y-o-Y) in the next three to four years globally, provider outsourcing at more than 30% during 2011-2016, and the Contract Research Organisations (CROs) market at 18%-20% in the coming years,” highlighted the Assocham-EY study.

”We believe that there has been an ample push from healthcare payers, providers and pharmaceutical companies to move non-core processes to third-party service providers, and India has been one of the leading destinations for outsourcing in this space,” said D.S. Rawat, secretary general of Assocham.

”India has emerged as the second largest destination after the US in the healthcare outsourcing space. The growing ability of Indian players to analyse big data, discover hidden patterns and unknown correlations are driving new service offerings in this market,” said Milan Sheth, Partner and Technology industry leader, EY India.

Overall, Indian BPO industry stands to gain from the growing demand in healthcare outsourcing. An evolved medical education system and its established prowess as a hub for outsourcing give India an inherent advantage.

Factors like a mature pharmaceutical and medical education system, large English-speaking population, low cost base, large talent pool and diverse set of business process outsourcing (BPO) providers including local and multinational BPO companies are driving outsourcing in healthcare in India, noted the study.

Besides, rising demand for high-end healthcare facilities and multi-specialty hospitals, established medical and central lab infrastructure and training centers is contributing to the growth of healthcare and life sciences industry thereby fuelling the domestic demand for medical process outsourcing, it added.

In order to fuel growth in MPO sector, the Assocham-EY study has suggested the government to focus on implementing data privacy laws, introducing proper regulations around intellectual property and patent laws, and give a boost to education to help bridge the skill gap.

Although, Indian regulatory environment has been constantly evolving, the challenges around privacy laws, intellectual property laws and changing clinical trial laws continue to exist.

A favorable and stable regulatory environment coupled with increased transparency is critical for growth in this sector, according to the Assocham-EY study.


Sikka steers Infosys on bumpy road in first year

June 22nd, 2015 by Rahul Jain No comments »

As the first non-founder chief executive of India’s iconic IT behemoth, Vishal Sikka steered Infosys Ltd well on a bumpy road to turn around its fortunes in his first year at the helm.Outsourcing19

Though the 48-year-old former SAP AG executive took charge of the $8.7-billion global software major on August 1, 2014, he instilled hope in the 1.76-lakh techies that their troubled company was in safe hands and had a bright future.

“It has been a year of great transition for us though the full-year performance was average,” Sikka candidly admitted in his maiden letter to the company’s investors ahead of its 34th annual general meeting (AGM) here on Monday.

Admitting that the company faced internal issues leading to lagging growth, Sikka said high attrition rates and exit of many key executives during the fiscal 2014-15 had put tremendous pressure on its business and performance.

A whopping 37,604 techies left Infosys in 2014-15 as against 36,268 in 2013-14, resulting in net addition of 15,782 in FY 2015 as against 3,717 in FY 2014.
“There were hard-fought battles in a difficult climate in which clients’ expectations were changing, new emerging technologies were coming to market and where the landscape of (IT) services firms became more competitive,” Sikka told the 4.5-lakh investors.

A 1:1 bonus issue in October 2014 swelled the number of shareholders by 24 percent to 448,000 in December from 362,000 in September, while the company’s board recommended another 1:1 bonus on April 24.

Signalling a departure from the era of its illustrious co-founders who built the company with their hard-earned savings over the last three decades, Sikka said the management and the employees were learning to work in a new environment and in new ways through a difficult phase.

“As I look over the last year (fiscal 2015), which has been a difficult one, I see many promising signs for the future as with learning comes the promising of renewing ourselves and pursuing new horizons,” Sikka said in the letter.

In a bid to check the rising attrition level, which shot up to a whopping 23.4 percent in first quarter (April-June) before Sikka took over the reigns, the company wooed its techies with a higher compensation and additional hikes in third quarter (September-December) and promotions to 25,000 to retain as many of them.

“By investing more in our employees and giving them opportunities to move up the value chain, we brought down annualised attrition to 13.4 percent in the fourth quarter (January-April) from 23.4 percent in first quarter (April-June) and the number of employees leaving the company reduced by more than half from May 2014 to March 2015,” Sikka said.

Assuring investors of higher growth, operating margins and profitability, the chief executive said the company’s revenue would grow 10-12 percent in constant currency for this fiscal (2015-16) as against 7.1 percent in last fiscal.

“I believe we have a promising year ahead of us in the near term. Looking beyond this year (FY 2016), our mission is to prepare the company to achieve an aspirational goal of $20 billion in revenue by calendar year 2020, with 30 percent operation margin, with specific targets of increasing revenue per employee to $80,000 per year,” Sikka said.

Growing at 5.6 percent in dollar terms, the outsourcing firm’s consolidated revenue increased to $8.71 billion in the fiscal under review (2014-15) from $8.25 billion in previous fiscal (2013-14) and operating margins to 25.9 percent in FY 2015 from 24 percent in FY 2014.

“Our strategy to achieve large-scale growth is the right one, as evident from several measures we took to improve competitiveness in winning large deals in areas such as application maintenance, software testing, infrastructure management and business process outsourcing,” Sikka pointed out.

A doctorate in computer science from Stanford University, the Silicon Valley-based Sikka infused fresh blood at executive levels by inducting at least a dozen of his former colleagues at SAP and investing substantially in the automation platform to run the software more on artificial intelligence than human ability.

“Going beyond automation, we are bringing artificial intelligence to more cognitive tasks that were not solvable by software systems, specifically, complex business problems such as airplane engine balancing through artificial neural networks,” Sikka added.


Wipro wins best outsourcing thought leadership award for 2015

June 15th, 2015 by Rahul Jain No comments »

Wipro, the IT bellwether, won the best outsourcing thought leadership award for 2015 from a US-based leading institute, the global software major said on Tuesday.Outsourcing17

“The Outsourcing Institute, the largest neutral professional association dedicated to outsourcing, selected us for our thought leadership article showcasing a real world use case encompassing innovation, creativity and results,” the city-based company said in a statement here.

The institute’s eight-member sourcing executives from Fortune 1,000 enterprises were the judging panel.

“The business process leadership awards the Wall Street technology innovation showcases the most innovative work from providers’ across the outsourcing industry,” the statement noted.

The company’s seminal piece was recognised for its innovative work titled “Semantics and Ontology – The Future of Data Aggregation”.

“Financial institutions are giving more attention to improving quality of data and turning it into a strategic advantage, owing to competitive, regulatory and business pressures,” Wipro’s global head for securities & capital markets Roop Singh said on the occasion.


Time to end outsourcing and rebuild the public service

June 15th, 2015 by Rahul Jain No comments »

In the early 1980s there was a joke doing the rounds about the NSW Department of Main Roads, with its gold-plated standards and its ageing road-building workforce.Outsourcing16

The DMR, the joke went, builds roads like the Romans: to about the same quality, and at about the same speed.

If you asked anyone then about the biggest problem with the federal and state public sectors, the answer was their isolation from the development of modern business practices.

The answer was to bring business and its practices into the public sector: by contracting out jobs, from road construction to the provision of highly skilled advice and other services; by opening departments to modern management practices and accountability; and by “corporatising” or, better still, privatising government businesses.

And so the pendulum swung with gathering speed, but not always for the better.

Malcolm Turnbull, the Abbott government’s Communications Minister whose job it is to clean up the mess of Labor’s national broadband network, lamented last week the brain drain from the federal bureaucracy as governments have turned increasingly to private consultants.

“There has been a practice for government to outsource what should be the legitimate work of the public service to consultants,” Turnbull told The Australian Financial Review’s National Infrastructure Summit in Sydney.

“So the public service departments just become, you know, mail boxes for sending out tenders and then receiving the reports and paying for them.”

He is not the first to complain about this trend.


Gary Banks, the former head of the Productivity Commission and now dean of the Australia New Zealand School of Government, warned the Rudd government that the bureaucracy no longer had the expertise to provide the evidence-based policy advice the prime minister was demanding.

Banks bemoaned the decline in the number of public servants with the necessary quantitative and analytical skills. He also warned about the varied quality and motives of the consultants involved in developing policy.

While there were highly professional consultancies, he said, there were also consultants who cut corners, provided superficial reports and second-guessed what ministers wanted to hear. Consultants had different motives to professional public servants, for obvious reasons.

If prime ministers wanted evidence-based advice, Banks said, they would have to invest in its production. That’s a tall order for a prime minister who is as short of money as Tony Abbott.

So, how might the process of rebuilding proceed?

Probably out of necessity, and with a politician who enjoys wrestling with interesting problems and who would rather hear bad news than blarney.

Turnbull concluded quickly that one problem he had to wrestle with was the quality of advice coming from his department and the NBN.


He says he started by making his managers and public servants “absolutely accountable”.

No doubt you would prefer that I let him tell his story, so here is an edited slice of Turnbull’s off-the cuff remarks to the summit:

“I’ve got nothing against consultants – nothing at all. But there has been a practice for government in particular to outsource what should be the legitimate work of the public service to consultants.

“What we have to do in government in my view is stop panning public servants and do more to ensure that they do their job better. And one of the ways to do that is to make sure they do the work that is their core responsibility, as opposed to outsourcing everything.

“Of course, that will show up people who aren’t any good too: clearly it’s a lot easier just to send out a brief to McKinsey than it is to actually do the work yourself.

“There’s no single answer to this but managing a talented workforce is very, very hard. You’re in the talent business.

“The talent is the real asset of the Australian Public Service, so we have got to have a focus on the APS, a respect for the quality and seek to promote and improve the quality of that workforce all the time.


“Most people work for the public service as much for the psychic wage as they do for the financial wage. Most of the very smart people in the APS could earn a lot more money somewhere else. One of the things we’ve got to do is respect the public service – respect it, expect more from it, and make sure that it has more challenging and interesting work to do.”

Of course, it won’t be easy to wean ministers off consultants who tell them what they want to hear. So, here is a suggestion from Gary Banks: require that consultants’ work be subjected to peer review.

That would take some of the pleasure out of cabinet submissions, I would imagine.


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