Deborah Kops has some interesting insights into the current shape of the BPO market, with those providers leading the charge originally emanating from strong consulting backgrounds… over to you, Debs
Consultants in BPO – still lurking in the background, or gone forever?
You’re probably not aware of a very subtle, but tectonic shift going on in the business process outsourcing industry which has implications for all those things that we all tout as benefits of sourcing—innovation, deep domain experience, true client partnerships.
No, when I refer to consultants, I’m not talking about the likes of the sourcing advisors. They’ll continue to survive in one form or another. I am referring to the fact that the pioneers of the outsourcing industry, primarily BPO, came out of consultancy backgrounds. And as they leave the industry due to retirement or the pursuit of other interests, the sourcing community is much less well off.
Think back to the heady early days of BPO in the mid 1990s. Consultants from the Big-whatever-it-was, the then Andersen Consulting and even the likes of the white shoe strategic firms, got a bee in their bonnets that their intimacy with and knowledge of their clients could be harnessed to improve and deliver business processes. They formed business lines with skin in the game, exclusively focused on doing rather than just advising, tapping not only into their own expertise, but that of their partners and colleagues. At that time, moving work to India or even to Poland was a very hard sell to clients, so the value proposition came not from labor arbitrage, but the application of real business improvement tools and techniques in context.
Today, the makeup of provider teams has inextricably changed. Increasingly, those with deep consulting experience are rapidly moving out of the picture, while the leadership now comes from armies of managers whose base of experience is solely time in grade in the outsourcing industry. It’s unfortunately a detriment, not only to the creation of value for the buyer, but for the provider side of the equation. Experience in context–attaining knowledge by working side by side with a client, understanding how they work, and what makes their industry tick—is the greatest benefit of a consulting career.
This is not to say that providers’ rising leaders cannot deliver sourcing benefits beyond cost reduction and follow-the-sun operations; perhaps over time as they gain experience and wisdom, they can. But, in the main, they haven’t acquired the soft and problem-solving skills that come from having the training, intellectual freedom, proximity, and the ability to connect the dots that only consulting experience allows. Rather, their experience is limited to time in grade in delivery centers, or perhaps the five or six times a year when they have direct access to a client during the solution-development process. Their problem-solving skills have been shaped by process, not perception.
And the organizational paradigms in which they operate either can’t-or won’t—adjust due to competitive margin pressure, or perhaps even myopia. As a result, the sourcing landscape is in danger of increasingly becoming commoditized process shops with only a whiff of business value.
Not convinced? For just one proof point, look at HfS Research’s recently released finance and accounting sector analysis. It hasn’t escaped my notice that the majority of the top players come from a consulting pedigree. Are these players better innovators? Do they have a more consultative approach to client relationships? Do they deliver more value? The results beg the question.
Deborah Kops, Contributing Analyst, HfS Research
Call this post the mad musings of a former consultant. But I look around me and see a provider class which is fanatic about process delivery at the expense of those capabilities which create value. They forget that real sourcing benefit comes from the ability to solve a problem, the skills to develop a relationship with a client team at the highest level, and the knowledge of what drives value in an industry from the top down, not the arrogance of process mastery. Perhaps it’s time to change the provider paradigm, or entice a few of those consulting pioneers out of retirement…
Deborah Kops (pictured here) is a regular contributor to HfS Research and runs Sourcing Change, a specialist strategy boutique focusing on the dire need for change management in sourcing. You can read her full bio here.
Posted in : Business Process Outsourcing (BPO), Finance and Accounting, Sourcing Best Practises, sourcing-change
Deborah,
Interesting and insightful article on the extinction of the consulting breed. I agree that consultants with higher problem solving and greater understanding of client needs once were the prime hires for any BPO business. But then with the advent of technology and lower affordability, organizations try and find process centric solutions for client needs. The truth that we are facing in every industry is the aspect of human interface. Call it the pre-era of techno gurus. At least we know easy examples like facebook and google. Thank you once again for your valuable inputs.
Regards,
Manesh
Manesh, love the term pre techno gurus! But my current experience indicates that process alone is not “doing it” for clients, and the providers that want to gain the hearts and minds of the clients should sit up and take notice. i cannot tell you how many times very recently i hear something that goes like this–“the delivery is fine, but they don’t understand my business. i cannot have a problem-solving conversation.” Why do you think Cap, IBM and Accenture are three out of four of the top FAO providers? It’s not charm and it most likely is not about price. I’d say clients think they get more business value. And to close the loop, I’d suggest that a consultative heritage is the secret sauce.
“They forget that real sourcing benefit comes from the ability to solve a problem, the skills to develop a relationship with a client team at the highest level, and the knowledge of what drives value in an industry from the top down, not the arrogance of process mastery.” I think this summarizes the current mindset on the subject. Here is a great article that talks about outsourcing for small business owners: http://ow.ly/4E6EF
I thought the wave of consultants that drove the early BPO industry just left a wake of broken and unprofitable BPO deals in their wake? Perhaps the value adds that you refer to aren’t really welcome in BPO? Sure it might be boring and process driven now…but at least its starting to work. And while BPO is taking small steps forward these days – we only thought it was going to grow in leaps and bounds because those consultants who sold the original big deals told us it would. Consultants have a very valuable role to play in any transformational and change management oriented deal. But lets be honest about what really drove the original spurt in BPO growth: Hype!
Thanks, Anonymous, for your comments. I’d firstly suggest that the initial activity in any service market is hype–remember the old saying “don’t confuse the selling with the doing?” Second, unprofitable or ill founded deals are not just the purview of consultants. One of the first big deals -BP-still exists over 10 years later. Lastly, perhaps you haven’t been on the other side of BPO players so steeped in process and so certain that there is a one-size-fits-all approach without any context or problem solving skill that it’s painful. I have as a buyer, and it’s fun.
This insightful piece makes me feel a little like a dinosaur. I was there as a consultant in 1995 and I am still here as a consultant today, trying to bring the sort of problem-solving and balanced sourcing decisions that indeed do make the difference in today’s F&A BPO world.
Yes, there was hype, sure mistakes were made, probably more than a few deals went into trouble zone, but overall an industry was created. And now at last, it seems that it is not merely about labour arbitrage and ‘same mess for less’ anymore. It is about the transformational value of BPO, in which good consultants are a critical success factor. This is the way I always thought it would have to be if it were to really work.
Jean-Paul, dinosaurs left very big footprints and millenia later, we’re still fascinated by them. I think this industry really does know that “consultancy” makes the difference, even if it does not want to admit it.
Let me slightly disagree with the way consultants have been projected and understood.
Over a period of time, the service providers have realized that the consultative selling and “consultative delivery” would make more sense as it talks about impacting the business metrics instead of focussing only on doing the processes and a little later doing those processes in a better (de-skilled) way.
The new breed of BPO service providers are acutely aware of this phenomenon and are re-orienting themselves so that they are revelant beyound labor arbitrage. The journey for real transformation has already begun and would benefit all the stakeholders.
Anil, I’d like to think you are right, and fully agree that it a more consultative sell is happening around the edges of our industry. but i don’t think it is happening fast enough, i don’t think offshore players broadly can move fast enough to fulfill their revenue goals, and i don’t think they will embrace the myriad of changes necessary–organizational, cultural, power shifts, trust–to develop a different paradigm and face to the customer. i’d love to be wrong here, but the lack of listening, and the aggressiveness (“what don’t you, Mr/Ms Client get about the fact that this is all about process) with which many of the players work with their clients)will take some time to change. And change comes from time and loss.
Hi Deborah, this really made me pine for the “old days”. I qualified as an accountant with PW and then worked in PwC BPO as a youngster – I migrated Castrol in for Europe when BP made that acquisition. Working with some of the brightest minds on outsourcing at the time, the training was invaluable. The network still seems to be very much alive – now dispersed between Capgemini, Accenture, Cognizant, IBM, HP, Tata, IAOP and more. I agree with you that the process sell now being pushed by the bulk providers seem very different from the consultative sell with value in transition I “grew up” with. The new big ones are missing a trick to create more value…
Madeleine, as a former PwC-er, I second your comments! When we had a range of tools in our kit, we could look at solving problems in different ways.
[…] Where have all the consultants gone? (April, 2011) Eradicating the Innovation Dearth in Business Process Outsourcing: Practical Advice on how to Achieve it (March, 2010) HfS Report: Desperately Seeking Innovation in Business Process Outsourcing: Enterprises Speak Out (July, 2010) Eradicating the Innovation Dearth in Business Process Outsourcing: Practical Advice on how to Achieve it (March, 2010) 0jQuery(document).ready(function($) { window.setTimeout('loadTwitter_8210()',1000); }); function loadTwitter_8210(){ jQuery(document).ready(function($) { $('.dd-twitter-8210').remove();$.getScript('http://platform.twitter.com/widgets.js'); }); } Bookmark the permalink | Leave a trackback: Trackback URL « It’s hard to be CSC […]