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8/6/2019 Techmahindra - Business Process Outsourcing
Below is the generic Service offering landscape showcasing different verticals & horizontal
services.
Figure 2: Generic BPO Service offering Landscape
Another key component of outsourcing is the ability to service end customers as well as
company clients from various locations. Initially, off-shoring (where work is taken out of
the country and is done from another country which is typically far away) was the
preferred option. Lately, there seems to be a greater push from companies to look atservice partners who can offer near-shore (neighboring country with similar language and
cultural background) and on-shore (outsourced within the same country) options as well.
While there are many reasons for the shift towards these options, one of the main reasons
is the current economic slowdown which has given rise to a more ‘politically sensitive’
business environment. Companies are making a conscious effort to be seen as preserving
jobs within the same country, thus, helping to reduce unemployment.
Like all business models, BPO continues to evolve and companies are now viewing it as
more of an ‘operational advantage’. Companies are looking at partnering with service
partners who can not only give them the cost benefits but also give them an edge over
their competitors. By creating the right partnerships, companies hope to build the correct
model to have a strategic impact on the way they operate and deliver service.
Current Drivers for Outsourcing
While cost continues to be the number one driver for outsourcing, there is increasingly a
shift towards driving more benefit out of the outsourcing model. Companies are looking at
more strategic factors like, globalizing businesses more effectively, re-engineering business
processes and accessing expertise etc.
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Figure 3: Customers are looking to drive change into their operations to become more effective globally
Source: Horses for Sources Research 2010
The above study highlights the top drivers behind companies looking to outsource.
Increased focus on efficiency and cost reduction
Increased emphasis on quality and customer needs
Increased importance on automation and optimization
Finding service partners with flexible pricing models
Global options – enabling a mix of near-shore, on-shore and off shore locations
Companies are looking at technology to increase their business benefits. As the world
slowly tries to grapple with the current slowdown in the economy, cost reductions andprocess transformations become a key market differentiator. One can see a significant shift
towards seeking service partners who can conceptualize and proactively introduce newer
systems and platforms.
Platform based BPO is a step in that direction whereas service partners like Tech Mahindra
are utilizing their synergy between BPO and IT to create customized platforms. This ability
to integrate technology with business process knowledge has given a new dimension to
BPO, and through that, service partners can now seek contracts at a much larger and more
strategic level.
Platform based BPO offers process standardization, improved quality through automation,
economy of scale and more importantly, bestows the complete responsibility of the
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platform on the service partner who will provide platform-maintenance, upgrades and give
the flexibility to modify and reengineer the platform according to the needs of the
company (client).
With the growing competition within the platform based BPO market, all service partners
will need to look at their innovation models and also start looking at complimenting theseplatforms with better and more innovative pricing strategies. They will need to start
looking inwards and put more business practices in place to improve their own cost
structure. Simultaneously, service partners will also need to start seeking new and
improved technologies to be able to continue providing better and more efficient service
offerings.
Cloud computing has surely given a new dimension to the complete outsourcing arena
(SaaS, PaaS and IaaS) and service partners may need to assess if the cloud can become an
integral part of their service offering. They will also need to assess whether BPO can
reinvent itself by becoming part of the cloud. Service providers with BPO capabilities willfind it imperative to embrace this change to ensure that they continue to operate on
better operating margins and continue to pass on the benefits while creating opportunities
for cost reduction within their own models.
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Gartner research, as shown in figure 4, in its most recent Top 10 Technology study
examined the maturity of technologies and offers IT Executives a perspective on the trends
and technologies that will have a significant impact in the coming year.
Figure 4: Gartner press release Oct 14, 2008 entitled “Gartner Identifies the Top 10 Strategic Technologies for 2009” and Gartner press
release Oct 20, 2009 entitled “Gartner Identifies the Top 10 Strategic Technologies for 2010”.
As seen in the figure above, cloud computing is expected to be the number one technology
which will be explored and leveraged for strategic advantage by various companies.
Cloud computing has been defined as: A model for enabling ubiquitous, convenient, on-
demand network access to a shared pool of configurable computing resources (e.g.,
networks, servers, storage, applications, and services) that can be rapidly provisioned andreleased with minimal management effort or service provider interaction. (This definition
is from the draft of the NIST Working Definition of Cloud Computing published by the U.S.
Government's National Institute of Standards and Technology)
In simple terms, cloud computing is the use of the Internet for the tasks performed on the
computer. The ‘Cloud’ represents the internet. Cloud computing is related to several
technologies and the convergence of various technologies has emerged to be called cloud
computing. The simplest thing that a computer does is to store and retrieve information.
We can store family photographs, favorite songs, or even save movies on it. This is also the
most basic service offered by cloud computing.
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Public Cloud: In simple terms, public cloud services are characterized as being available
to clients from a third party service provider via the Internet. The term “public” does
not always mean free, even though it can be free or fairly inexpensive to use. A public
cloud does not mean that a user’s data is publically visible; public cloud vendorstypically provide an access controlled mechanism for their users. Public clouds provide
an elastic and cost effective means to deploy solutions.
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Private Cloud: A private cloud offers many of the benefits of a public cloud computing
environment, such as being elastic and service based. The difference between a private
cloud and a public cloud is that in a private cloud-based service, data and processes are
managed within the organization without the restrictions of network bandwidth,
security exposures and legal requirements that using public cloud services might entail.
In addition, private cloud services offer the provider and the user greater control of thecloud infrastructure, improving security and resiliency because user access and the
networks used are restricted and designated.
Hybrid Cloud: A hybrid cloud is a combination of a public and private cloud that
interoperates. In this model users typically outsource non-business critical information
and processing to the public cloud, while keeping business-critical services and data in
their control.
Community Cloud: The cloud infrastructure is shared by several organizations and it
supports a specific community that has shared concerns (e.g., mission, security
requirements, policy, and compliance considerations). It may be managed by the
organizations or a third party and may exist on premise or off premise.
Benefits of Cloud Computing
The very basic benefit of the cloud is the fact that computing will be done online. Access to
information and applications will be via a browser. Applications and software will be
installed on a server accessed through the internet. This will enable greater reach and
access to information at any time.
Below are few of the benefits as described in Cindy Waxer’s article on
WebHostingunleashed.com titled ‘The Benefits of Cloud Computing’.
Scalability: IT departments that anticipate an enormous uptick in user load need not
scramble to secure additional hardware and software with cloud computing. Instead, an
organization can add and subtract capacity as its network load dictates. Better yet, because
cloud-computing follows a utility model in which service costs are based on consumption,
companies pay for only what they use.
Easy Implementation: Without the need to purchase hardware, software licenses or
implementation services, a company can get its cloud-computing arrangement off theground in record time — and for a fraction of the cost of an on-premise solution.
Skilled Practitioners: When a particular technology becomes popular, it’s not uncommon
for a whole slew of vendors to jump on the bandwagon. In the case of cloud computing,
however, vendors have typically been reputable enough to offer customers reliable service
and large enough to deliver huge datacenters with endless amounts of storage and
computing capacity. These vendors include industry stalwarts such as Microsoft, Google,
IBM, Yahoo! Inc. and Amazon.com Inc.
Freeing Up Internal Resources: By placing storage and server needs in the hands of anoutsourcer, a company essentially shifts the burden placed on its in-house IT team to a
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third-party provider. The result: In-house IT departments can focus on business-critical
tasks without having to incur additional costs in man power and training.
Quality of Service: Network outages can send an IT department scrambling for answers.
But in the case of cloud computing, it’s up to a company’s selected Service Partner to offer
24x7 customer support and an immediate response to emergency situations. That’s not to
suggest that outages don’t occur. In February 2008, Amazon.com had their S3 cloud -
computing service experience a brief outage that affected a number of companies.
Fortunately, service was restored within three hours.
Cloud Computing Concerns
One of the main concerns surrounding cloud computing is that of privacy and security
when dealing with transactions over the internet. Security concerns are highlighted with
the knowledge of having sensitive company information hosted on someone else’s data-centers. Other concerns are of more abstract nature such as ownership of data and if the
host can keep the information even after a contract ends? How good will the
interoperability of information be, post migration into the cloud? Can a multiple vendor
strategy still be used? A few tips to counter the privacy tips are given by Robert Gellman
and Pam Dixon in ‘Cloud Computing Privacy tips’ – Feb. 2009- World Privacy forum
Most of the above concerns are not new and exist even in the current outsourcing models.
With current outsourcing deals, there are no easy answers and all of them are going to
depend upon the organization and how it works today and where the vision is leading it. In
spite of the many concerns that cloud computing can raise, it is still a viable alternativerather than investing into a completely overhauled network.
So where does BPO fit into the cloud? And how does cloud help BPO providers deal with
the challenges that they face in the current economy. Forester research has just published
a new report entitled "The Evolution of Cloud Computing Markets". The research recaps
many of the cloud computing market observations from the last two years and categorizes
the business models in a consistent taxonomy. Some portion of the current BPO market
might transform into dynamic BPO services or even Business Process as a Service (BPaaS).
Various engagements are now moving towards a combination of both IT and BPO. Platform
BPO is a direct result of the synergy where both verticals have and will need to
continuously complement each other. Co-existing teams will need to be made up of business process expertise along with IT development and architecture.
One of the main focuses of various service partners has been to try and create an
extension of their existing business engagements with companies to further enhance the
relationship through prescribing to an end to end service model which includes BPO
services.
Cloud computing presents a unique opportunity whereby end to end services can be
provided within horizontals as well as verticals across all lines of service over the internet.
Business process services can be categorized across all three cloud delivery models thusenabling cloud services to be more standardized and process centric. Inexpensive labor
required for the BPO services within the cloud will only add to the advantages of cloud
computing.
Companies looking to take advantage of cloud computing in its current form will need to
address important questions like, whether the applications and platforms in the cloud
constitute the vertical knowledge needed by the company and if the process centric
approach is enabled within the cloud? Companies will need service partners who possess
the business knowledge and can contribute through process led services which are an
integral part of every company’s operational strategy.
While taking a closer look at the current cloud environment, it is clear that most of the
cloud providers may not possibly know about the internal processes of a particular
organization or a particular vertical. While business process within an organization is
implemented based on primary tasks related to the particular company, what varies is the
task-specific business information which addresses not only the industry regulation
requirements but also company specific strategies and end customer centric processes.
Service partners with BPO capabilities will have to play a crucial role in the development
and success of cloud computing. Cloud in its current form generalizes business functions
instead of basing it on process centric information and steps. Simply putting business
knowledge on top of scalable infrastructure is not the answer to high quality needs. For
example, a telecom organization can utilize Cloud providers for billing processing but not
align billing based on their own offers and discounts that can only be done through process
centric platform management. This is especially true in markets where quad play (TV,
internet, wireless and wire line) strategies are extremely fluid and where different
marketing tools are extensively being used to increase the customer base. What is required
is to integrate the business process knowledge with services needed to support those
applications.
So what do companies looking to outsource want? They essentially are still looking atservice partners who can provide them high quality work at a cost effective rate. To add to
the advantages of less expensive labor, an end to end service model will provide
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companies the ability to tap into SaaS solutions which provide the one-to-many process
templates that reinforce BPO.
Figure 8: Majority of enterprises are considering blended IT-BPO engagements | Source: Horses for Sources Research, 2010
As seen in the earlier figure, two-thirds of companies now evaluate ITO/BPO solutions as a
bundled option. This clearly shows that there is a need for BPO to be integrated within the
cloud. Since business process-oriented cloud is a sub-set of company polices and business
process models, cloud has to preserve and mirror these and be able to tap into the rules
based business functionalities which would affect the end customer.
The combination of applications, infrastructure and business process creates a compelling
and often envious solution base. The fact that most of the deals today are still based on
vertical knowledge only highlights the need for BPO to be included and integrated into a
‘cloud sourcing’ model. Solutions catered to verticals like telecom, healthcare etc. need
solutions which not only provide the advantages that cloud can offer but also leverage on
the required understanding of the business processes which BPO along with Business
Process Management (BPM) specialize in .
With the economic slowdown, finding the right service partner is often the key to a
successful delivery. There is a constant need to take the service to the next level and Cloudas a Service (CaaS) will not be fully utilized if companies look at only leveraging
infrastructure from providers/ partners like Amazon, Google or Microsoft. Companies need
to look at service partners who can support, consult and provide business process
advantages across all three delivery models especially in terms of support services or by an
introduction of a platform to compliment the support services. For example, order fallout
management which continues to be a main focus within telecom industry- companies are
looking at service partner who can bring smart process led applications which can give
them a real competitive advantage- reduce the cycle time, reduce touch points, target high
fallout areas while combining self-service etc.
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Service partners will have to be careful about their cloud strategies. Integrated providers
who are willing to create a niche for themselves may want a flexible model in which they
can offer –
Cloud hosting services (hosting information on its own cloud deployment network and
giving companies the option of choosing from them - private, public or hybrid) to smallto medium business that are looking to offload their CAPEX and are in no state to invest
in infrastructure.
Giving BPO led support services within clouds owned by other players like Microsoft,
Google and Amazon.
Providing migration, maintenance and business support services to companies who are
building its own private cloud.
The above model can be interlaced depending on the type of services needed by the client
(company), its geographic location, size and business strategies.
How Cloud can help Service Partners
With the constant pressure from the companies for higher quality at inexpensive rates,
service partners with integrated IT-BPO service capabilities will need to continuously push
the levels of innovation and cost elimination within their own processes and models.
Providing standardized business processes along with an IT framework in the cloud
provides service partners a unique opportunity to utilize cloud advantages to create a
more flexible, innovative and cost efficient model.
With the immergence of BPOS (Microsoft) and Google docs (SaaS), utilizing a well known
model of pay per use will need to be utilized by service partners quite significantly.
CAPEX to OPEX
Cloud gives the opportunity for service partners now to move from a CAPEX model to OPEX
model for their BPO services as well. With the immergence of BPOS (Microsoft) and Google
docs (SaaS), utilizing pay per demand, service partners can reduce the upfront costs of
buying licenses which can later be rendered unusable in times of down turns. Instead,
cloud enables them to have on-demand pricing which reduces investments. If capital is
considered as a cost, cloud improves revenues and the capital can be utilized in a moreefficient manner, enabling improved margins or giving benefits back to the customer.
Such a model enables service partners with BPO capabilities to take more risks. Initiating or
inducting new technologies or platforms to win new business will be more accessible,
seamless and more importantly, it will reduce the risk of investing in them even if the
business is not won. Cloud is going to change the way financial capital is put behind new
initiatives and the reduction of capital expense will result in –
Faster Return On Investment – return on investments which would normally take up to
one or two years will be much faster as most of the expenses now will move as anoperational expense
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In conclusion, service partners who manage to fully integrate their cloud offerings with in-
depth business vertical knowledge (business processes layer) and give the end to end
solution will surely have a significant advantage over providers with BPO or IT onlyservices. Service providers will need to utilize cloud computing advantages to their own
business models to redefine themselves and remain competitive in the coming decade.
Integration of BPO within cloud computing will surely become the norm as adoption of
cloud computing increases. Integration of business and service oriented technology
platforms will need to have the flexibility of supporting the end customer through business
process services and will be invaluable.
Like any new technology, cloud has its own risks but being ready to convert a risk into an
opportunity will need Integrated (IT+BPO) service partners to be within the cloud. It is onlywhen one buys a lottery ticket, does one have an opportunity to win something. BPO in the
cloud will not only bring process centric knowledge and flexibility but also a wide variety of
support services which are needed and continue to impact the end customer.
8/6/2019 Techmahindra - Business Process Outsourcing
Pushkar Gokhale is a member of the Business Solutions group, specializing in BPO solutions
for Tech Mahindra Americas. Prior to this, he was heading the Management Information
System group for the BPO vertical within Tech Mahindra and has been instrumental invarious automation led initiatives within the company. Pushkar has a Bachelors of
Computer Science degree from University of Pune and a Masters in Information Systems-
specializing in Mobile Transactions, from La Trobe University, Australia.
About Tech Mahindra
Tech Mahindra is part of the US $7.1 billion Mahindra Group, in partnership with British
Telecommunications plc (BT), the world’s leading communications service provider.
Focused primarily on the telecommunications industry, Tech Mahindra is a leading global
systems integrator, Business Process Outsourcing provider as well as Businesstransformation consulting organization. Tech Mahindra has recently expanded its IT
portfolio by acquiring the leading global business and information technology services
company, Mahindra Satyam (earlier known as Satyam Computer Services).