Sanjay Gupta, Chief Architect, Shared Services Forum
Choosing a partner need not be a nail-biting experience!
Globally, there are many models to capture, compare and classify the strengths of global BPO Players in verticals and functional processes. But, no such structured approach exists for understanding the Indian service providers. A pioneering approach to address this unfulfilled need is being initiated by Shared Services Forum – to develop the India market and adoption of BPM strategies
Choosing a matrimonial partner can be a nail-biting experience. Usually lack of information about the partner, risk of a failed coordination, and emotional incompatibility can make such decisions rather difficult to make – especially in the relatively early years of one’s life. A bad decision once made can have a rolling impact for life.
Frankly, the same can be said about choosing a business partner for services. In today’s world, handing over the reins of your business processes into the hands of another can be a big decision. It surely has several advantages of cost, capabilities, value and convenience. At the same time, it is a careful choice to make, since it can affect day-to-day operations, delivery or visibility to customer.
In terms of risk management, it acts as a risk ‘mitigant’ in many ways – flexibility in resourcing for peaks and troughs, variability in costs, and scalability for growth. However, in an extreme situation, it is fraught with risk too – risk of poor service delivery, risk of challenging relationships, risk of financial exposure or loss of reputation, if the information shared are not fully secured or protected. The successful adoption of Business Process Management (BPM) strategies depends upon tilting the balance in favour of advantages to client companies and improving the awareness and communication of such a proposition.
Questions such as what services are to be outsourced, and to whom can be rather difficult to answer. If a company’s business processes have been outsourced to a service provider, or the management is contemplating such a move, it is imperative that one should evaluate the potential supplier’s strategy and acumen – short and long term. Clearly, a company would like to outsource its processes only to the best there is in the industry.
Global Need Fulfilment
With India as the global hub for offshoring and outsourcing for overseas corporations, in the Indian context, there are a plethora of outsourcing and shared services organisations offering almost similar services. While these organisations have progressively grown and specialised into their defined spaces, they have largely remained off-shore oriented – a combination of Global In-house Captives (GICs) and Third Party Outsourcing (TPO). This space is, by now, a fairly well organised and cohesive one.
The question on how to define the “best for me” outsourcing partner is a complex one. Providers considered best in one particular field of specialisation may be completely lacking in other areas which could also be important to the potential customer. This need has been addressed a decade back for global operations by some of the leading consultants by creating a few ‘decision models’. It has also been made possible since the service providers around the globe are quite established by now, clearly enabling of the ‘letting go’ of the processes into the hands of another.
Organisations such as NASSCOM have assumed the nodal position and have effectively coordinated the efforts on behalf of its member companies. Several provider surveys take place on a regular basis and research papers published to understand the global provider landscape in India; however these publications have addressed more the global market serviced from India than the India Domestic Market. Overall generic as well as specific reports are available for a price, covering several different aspects of the top service providers in the industry.
Models for Global BPM
Gartner’s famed ‘Magic Quadrant’ plots all providers on a two-by-two scale of “Ability to Execute” and “Completeness of Vision”. This gives a wide-angle view of the relative positions of the market's competitors. By applying a graphical treatment and a uniform set of evaluation criteria, the quadrant quickly helps digest how well providers are executing against their stated vision. As the name itself suggests, the quadrant roughly sorts the entire landscape into four sections: Leaders, Visionaries, Niche Players, and Challengers.
Everest Group, on the other hand, has named their product very appropriately as PEAK (Performance/ Experience/ Ability/ Knowledge) Matrix. Customers stand to gain segment specific insights to identify and evaluate service providers based on assessment of “Delivery Capabilities” and “Success in the Market Place”. The matrix is supplemented with specific details to provide information and intelligence to enable assessment of relative strengths and key gaps of each provider. PEAK Matrix classifies service providers into Leaders, Major Contenders, and Emerging Players.
NelsonHall, a leading Outsourcing Research and Analysis firm has neatly coined its pictorial tool as “The NEAT” (NelsonHall Vendor Evaluation and Assessment Tool). This tool too consists of a two-axis model assessing vendors against their ability to “Deliver immediate benefit" and their ability to “Meet client future requirements". The latter is a pragmatic assessment of the vendor's ability to take clients on an innovation journey over the lifetime of their next contract. The firm categorises the providers into High Achievers, Leaders, Major Players, and Innovators.
Challenges for India BPM
Today, however, this can be daunting for the Indian business leaders, not just due to lack of understanding of the service outsourcing industry, but also due to lack of structured and reliable information about the Service Providers. While many of the above mentioned excellent reports along with several others are a great reference points for the overseas seeker of services, any equivalent report for the Indian domestic market is sadly nonexistent. There simply is no reliable source available to assess the provider market and its capabilities for Indian companies. With the emergence of the ‘Global India’, this is now a need both for servicing within India Domestic as well as for servicing their global operations.
Given the increasing adoption of BPM by Indian organisations, many have initiated their journey in shared services and outsourcing strategies during the last few years. However, by design, their operations are different from their overseas counterparts. The business case for Indian firms is different – with different requirements, practices and demands. The demand for outsourcing services in India is different but is steadily growing. More and more companies are turning to outsourcing both their core and non-core services to outsourcing firms which specialise in them.
Unfortunately, companies looking for such outsourcing firms neither have the same level of information as their global counterparts in terms of published surveys/ reports on providers’ credentials nor have any researched information on focus and capabilities on India market. Hence, they face challenges, doubts and questions on the Provider landscape, which may be at variance with the ones posed by the overseas outsourcers.
Servicing Market in India
The service outsourcing market in India, especially the structured market, was started by serving overseas customers to begin with. Some of the big majors in this space have steadily established and expanded their footprint into the domestic market as well, and some have acquired companies servicing the India domestic market. At the same time, there has evolved a fairly large contingent of firms aimed at serving the domestic customers only.
By some estimates, they are at least a 1000 such providers in India at the last count. This includes all hues of service providers – large or small, metro based or rural based, generic or specialists, voice or data, unilingual, bilingual or multilingual. This number however does not include specialist services which are carried out by private individuals or small firms run by individual Chartered Accountants, Cost Accountants, Company Secretaries, Lawyers, HR consultants and such.
FoCapTM – The evolving Model for India
The India Domestic landscape, with several global majors and Indian companies, needs an independent assessment, first on a holistic basis for outsourcing services in the Indian market, and gradually, expand to look at domain specific assessments quite like the global market.
RvaluE, the leading BPM Advisory and Operational consulting services in the BPM niche of India, and Shared Service Forum have jointly developed a methodology called Focus & Capability Matrix (FoCapTM Matrix) specifically designed to fill this gap and address the need for the Indian Market. As the name suggests, this matrix is designed to cover the suppliers’ proficiency across two dimensions – Focus and Capability.
Focus is defined as the strategic emphasis and tactical attention that the Service Providers and their leadership invest, on an ongoing basis, to the market/ business development and sustenance of its service offerings to India client companies (current and prospects). It covers areas such as extent and quality of direction provided by the senior leaders, India market and business development efforts, financial and sales commitment, India industry support and finally, clarity of purpose.
Capability is defined as the ‘capacity and ability’ of the organisation to showcase its commitment to deliver best-in-context India operations and the skill/ knowledge required to be thought leaders in India Outsourcing operations. It will cover all aspects of actual delivery such as tenure, dedicated leadership time, global and India scope, scale and trend, delivery footprint, use of technology, and finally the ultimate experience of the customer.
The matrix organises the players in the industry into three broad categories: Possibles, Probables, and Preferred, each indicating the inclination of the client towards selecting the said partner.
Research & Insight
Enough research time has been invested to develop the parameters and the approach to collect, collate and analyze information has reached advanced stages to progress towards the India Service Providers study. As would be rather evident, ‘Focus’ is the softer side of the organisation. It denotes the seriousness of the firm to be in this business. Large firms with a large spectrum of services can easily run the risk of losing out on focus in the domestic market, especially when the margins could be wafer thin. It also denotes the management’s or the leaders’ determination and belief in the industry. ‘Capability’, on the other hand is the execution part of the firm’s storyline. A rich parade of industry professionals on rolls, a specialist IT application or tool, infrastructure to foster speed to transfer, and a couple of demonstrated successes are great examples of capability. To a large extent, capability can be brought in. It is, however, a lot tougher to buy focus or even to accurately assess it.
It is for this reason alone that the FoCapTM matrix promises to provide professional insights to the leaders and practitioners in this BPM space. While it will be virtually impossible to cover the wide range of 1000+ BPOs, the intent, of course, is to reach as many BPOs as possible with a reasonably significant sample to compile the results.
Often, the global models are immensely supported by the available public information as well as research information to supplement their survey based findings. The biggest challenge for India will be the very low level of information available in the market. Practically very minimal public information is available even with established associations, consulting companies and research bodies.
Surely, the study information will be combined with primary research and market information available with RvaluE over the last 2 years, now well supported by the Shared Services Forum members.
This would become a landmark document for the proposed buyer of services and will be used as a key input in their decision making of partner selection. This document will also be used as reference document by the provider community as a self assessment and improvement tool. Inclusion of the providers’ names on the report can ensure that they have a better-than-fair chance of establishing credibility from an independent source with the discerning buyer.
Shape of things to come
The shape of things yet to come in this field is rather clear. The customers, as in every other sphere, are likely to become more demanding. Professional outsourcing is likely to turn into aggregation of services. Use of technology will force the need for super speciality services. Outsourcing firms will polarise towards their chosen field of specialisation, to the exclusion of the others. Evaluation of the drive and potential of service provider too will be more towards deep domain specialisation. Global evaluation tools such as Magic Q, PEAK, or NEAT are already sectionalised towards industry specialisation. Soon FoCapTM too will follow, albeit, principally directed towards the Indian provider offering landscape.
Another emerging trend in real-time reporting is interactive reporting, which brings in the conspicuously absent ‘outside-in’ approach. While advisers form a view of the happenings at a provider firm and make recommendations to the buyer, they are applying their own judgement generally across their own parameters. The newer approach is to provide to the potential buyer of services a suite of options and weightings to various assessment parameters so as to allow the tool to make adjustments to the result. This means that two similar users of the tool with similar requirement may end up with different results depending on which of the parameters hold greater value over the other. This approach clearly brings in the parameter of individual preferences of the buyer, giving them the choice to play around with options.
If done judiciously, the choice of selecting a partner need not be nail-biting. Plenty of research on the background, looking for the right parameters, assessing the long term value, evaluating ethics, and matching of mindsets can be useful in making the decision. Hopefully tools such as FOCAPTM could soon well be used even to make matrimonial decisions!