David Poole, Process Protagonist and Prognosticator
Many of you will remember one of the legends of BPO, Deputy David Poole, who’s spent much of his career fighting BPO crime on the streets of Chicago for Capgemini (where he actually rolled up with the job title “Deputy”).
He was also a founding member of PwC’s global BPO business prior to IBM acquiring their operations, having made a significant contribution to the development of the global BPO industry, crafting several major global engagements since the early ‘90s.
David’s thought to have skipped town, after a shootout at the Outcome-based Corral and is rumored to be trawling the streets of London seeking out errant processes in dire need of transformation. In the meantime, we managed to track him down somewhere in the ethernet to share some of his thoughts on where the BPO market is heading.
So without further ado, here’s Part I, where he discusses future of BPO having less to do with outsourcing and much more to do with venturing – a blurring of the lines between the client and the provider…
Venturing – Sharing of risks and rewards between clients and providers
Imagine a World where providers actually put their money where their mouths are. I don’t mean just putting their margins at risk (tied up with so much legal jargon there actually isn’t any risk). I mean really working out the added value they can provide and taking a share of that to create a true win – win. This will be a world where providers will do as much due diligence on their clients as clients do on them to analyse and dig out the true joint opportunity. Sound familiar? Well certainly not in the BPO World we know today, but much more like the venture capital world. In fact, perhaps Business Process Venturing has a nice ring to it?
So far, providers paid by results or so called business outcomes is little more than jargon, and frankly the evidence of this in practice is pretty slim, perhaps with the exception of more knowledge-based and directly financially measurable processes like in collections or procurement. The lucrative BPO market of the past few years has been extremely cosy and risk averse but this is all about to change.
I predict a new breed of deal and provider will emerge in the coming years, sending shivers through the current providers risk management processes but forcing the type of change and commitment to process excellence that the buyers always thought they were getting but in fact were not. I don’t think it’s a bad thing for the providers either because it creates the opportunity for the best ones to truly monetise the return from the investments they have made in processes, analytics, technology and facilities. This is because the overall influence providers will have over the delivery in this much more collaborative environment will be far greater and less bounded by the restrictive contracts we as an industry have over time developed to protect clients from the big bad providers.
Stay tuned for more of Poole’s patter, which pinpoints the potential of virtualized delivery, utility delivery models and the end of consulting as we know it (gasp)…
We’re gearing up for our HfS 50 Sourcing Blueprint Sessions, taking place April 24-25 in New York City for a two day spectacle of sourcing-savvy soliloquies:
One year on and the HfS 50 just got bigger and badder than ever
Over the last year, our elite peer group of sourcing buyers has doubled in size – making this our biggest, baddest and most discussion-rich meeting to date. And in response to the high-demand, we have managed to extend an extra ten invitations to the event – so if you are a client of BPO or IT services, a shared services or governance leader, or a senior service provider executive and would like to get involved with the HfS 50, please contact Tom Ivory for more information.
This exclusive event will include the development of a 2015 Blueprint for the sourcing industry, culminating in a tempestuous vendor/buyer face-off that will include leaders hand-picked from several of the top tier service providers.
Key discussions will include the following titillating topics:
What do we want – and what should we expect – from the vendor account manager?
Outsourcing higher value processes – what’s feasible and how options should be evaluated
Re-energizing the governance function
Blending shared services and outsourcing into a productive, manageable governance framework
Vendor management and performance management strategies
Forward-thinking and productive pricing strategies that can actually work
Globalization’s impact on today’s sourcing strategies
When it comes to nearshore, anyone in the know knows Kirk Laughlin and his nearshore news site Nearshore Americas… and we’re excited to let you know that HfS is being beamed up to lead the key session at Kirk’s annual nearshore sourcing shindig, aptly named Nearshore Nexus:
The conference will feature over 20 speakers, including top CIOs, sourcing advisors and also welcomes delegates from more than 15 countries in the region. Special features include:
Keynote presentation by Mr. Alvaro Uribe, Former President of the Republic of Colombia (2002-2010).
A “Buyers’ Super Session”, featuring deep analysis of costs, contracts and benchmarks, led by our own Esteban Herrera, COO at HfS Research.
Panel sessions on Vendor Management in a multi-provider, multi-geographic environments; selecting sites for new operations in Latin America and overall drivers and risk around doing business in Latin America.
Dedicated sessions on Sourcing to Mexico and Sourcing to Brazil.
Nexus “After Dark” featuring live entertainment at the conclusion of the conference.
Kirk Laughlin is beaming up the nearshore superstars in New York on April 19th… click to register
The Venue:
April 19, 2012 at the Crowne Plaza, Times Square, New York City
Outsourcing clients and decision makers can obtain an all-access conference pass at no charge! In order to register, click here to go to this web page and type in code: MDUX10
Thank God services providers don’t like buying each other very much. There are scores of IT services and Business Services providers today competing for every help desk, invoice processing, app dev, clinical data management (etc.) deal.
For smart services buyers, they are spoiled for choice to keep their providers on their toes to get as much attention, talent, technology and inspiration that they can squeeze out of them. And if they only care about low-cost, there are plenty of providers who’ll kill themselves to do their work as cheaply as is humanly possible.
When I watch Oracle and SAP rapidly clean up whatever application is left on the market worth buying, my heart sinks for the future of the enterprise software business. For Oracle and SAP, it’s all about maintaining the status quo and growing their considerable license revenue streams. They know they have to be seen to embrace the Cloud, but all they really care about is protecting their customer bases and preventing upstart vendors sneaking in to disrupt their revenue model. And can you really blame them? It’s economics 101…
Microsoft won the office apps game well over a decade ago and today largely focuses on milking its massive customer base. I mean, have you seen anything radically different with Word, Excel and PowerPoint over said period? No competition means limited innovation, and that is my fear for the enterprise software business, which is rapidly running out of worthy independent applications that can help business managers run their functions better, have access to more relevant data to help them make decisions, and be provided on a more affordable pricing model that allows them to pay for what they need, when they need it.
Companies buy software because they want standard process that can be automated with as little human intervention as possible. For process flows such as recruitment, if Taleo can provide you with the steps you need to automate an end-to-end recruitment process effectively, then the only way to find more value (or dare I say “innovation”) from recruitment is in those areas that cannot be automated – such as assessing the cultural fit of a candidate, or making a judgement call that the candidate has potential which his or her former employers had previously failed to unleash.
Unless Oracle and SAP decide to enter the services game, they are not going to provide enterprises with that kind of innovation – they are merely pedlers of automation. Once they own all the apps on the market, they will own all the automation, and my huge concern is whether there is really any more room for innovation spurred by this automation. Essentially, have these enterprise apps pretty much reached the peaks of their capabilities now they are owned by the 1600-pound ERP gorillas? I mean, seriously, how much further can you improve a companies’ recruiting processes by making some tweaks to the software code? Yes, I hear all the techie purists voice their fury because all software products can have their architectures improved, but at the end of the day, most of these software apps support pretty standard business processes today.
We’ve arrived at a juncture where the next wave of value that enterprises can derive from their business processes isn’t going to be purely from upgrading to whatever software platform is next available on the market. It’s actually going to be having real help in improving the quality of those process elements that cannot be automated, require real context and judgement, and real analytics. These are requirements you can’t download via an email from your SAP rep – they are where you need real consultative support from experts who’ve gotten to understand your business.
The Bottom-line: Packaged software alone is no longer providing innovation for buyers
SAP and Oracle don’t need to try to hard to differentiate from each other these days – there are only two of them and they pretty much own the enterprise packaged software markets between them. The consolidation of the software apps business is firmly placing the onus of innovation and process improvement in the hands of today’s service providers. Those business services outsourcing providers that can coach their clients on an ongoing basis as part of a managed services relationship, will be able to differentiate themselves in the market. We are already starting to observe service providers handpick industries where they really think they have an edge and are eager to demonstrate it at every opportunity. Our new research on Business Platforms already shows that today’s leading service providers have already leveraged over 15o packaged and custom-built applications to underpin their services. The apps provide a process framework that can help improve an enterprise’s current state, but the actual innovation will only come from the introduction of new and creative methods that can’t be embedded in a piece of code.
The Phoenicians were the greatest entrepreneurs of their time, dominating the trade of the ancient world and founding colonies throughout the Mediterranean. We will never see the likes of them in the modern business world, where a nation of business hungry folk could possibly develop their own real estate within today’s Global 2000 organizations through savvy barter of their own wares. Or will we? Deborah Kops investigates…
India’s Sourcing Leaders — the New Phoenicians
"Maximo innovation at unbeatable prices… hurry while stocks last"
At a sourcing conference cocktail party in Singapore, I was chatting pleasantly to a gentleman who– Indian by nationality, Kenyan by upbringing—was leading a global sourcing strategy team in Dubai for one of the largest of multinationals. As he politely tried not to blow smoke in my face, I had one of those eureka moments— I was speaking to a Phoenician!
(Be patient with me, readers…I’m drawing an analogy in order to make a point. Perhaps a little history lesson might be a diversion from treatises on governance or the consolidation of the outsourcing industry. I’ll try not to be too much of a bluestocking.)
For those of you who are not familiar with Phoenicians, it’s not a dirty word. Phoenicians —the “red people”—that dominated the regions proximate to the Mediterranean from the ninth to the six centuries BC, were a significant cultural and political force. They grew rich trading the commodities of the time—olive oil, wine, timber and precious metals, and were unmatched city builders, developers and stonemasons, hydraulic engineers and superb mariners.
But their greatest contribution was as globalizers of the only region that mattered in the ancient world. As developers of the modern alphabet (yes, without Phoenicians who knows how you’d be reading this), and acting as cultural middlemen, the Phoenicians disseminated ideas, myths, and knowledge. As a result, the Mediterranean arguably became the first example of a world economy.
So much for togas, olive oil and wooden ships. When I talk to the likes of an Anirvan Sen of GE, a Jay Desai of Northern Trust, a Vinoo Mehra of Colt, or any number of executives from the likes of Genpact, Accenture, Infosys or EXL, I am chatting with the progenitors of those ancient globalizers. Born in India, perhaps degreed in the US or Europe, climbing the career ladder in a range of industries, holding a breathtaking number of increasingly challenging positions in multi-national corporations, these folks are the true evangelizers of process globalization, whether they are on the buy or sell side, or even advising and warning as consultants. Builders of outsourcing companies and shared services platforms, masters of process excellence, spokespersons for global delivery—they do it all. And today they are found in Indian-legacy outsourcers, global outsourcers, consultancies and a myriad of corporations.
The Bottom-line: our Indian industry colleagues play the role of globalizer so well
—Common ways of working. Although often castigated as being too “Indian” in approach, their shared, monolithic code of conduct actually supports implementation of globalization. Whether located in Manhattan, Manchester or Mumbai, our Indian colleagues know the handshakes and the rules when they work together, and have the ability to cut through the chase to get things done. In effect, the sourcing industry benefits from a common way of working.
Take this a step further, dear reader. Contrast the results when an American, a Brit, a German or a Swede (or all of the above) work with an Indian to source processes. First, they have to study Culture 101, spending sufficient time to understand that when a German says no, he means that the case for change has not been made, or that to a Brit, a meeting is not where decisions are taken. Overlay an Indian on the other side of the table, and you get a cultural stew of nuance, decision-making style, sense of timing, and hierarchy. But with a number of savvy Indian leaders in the room, with shared experiences, it is generally possible to develop a commonality of understanding, bridge the cultural divide and keep moving on.
–-World citizenship. As a group, the Indian members of our industry have substantially more experience working globally than our country compatriots. Perhaps they left at 18 to study in the US, the UK or Switzerland, quickly absorbing local ways of working and living, knowing that Yankees and Red Sox are the ultimate in sports rivalries, that May is the time to eat spargel in Germany, or that passing out red envelopes to children is the done thing at the Chinese New Year. Cultural understanding and experience are underrated attribute in the sourcing world; the ability to straddle and translate two or more cultures is golden to the implementation and operation of a global operating model.
–Strong networks. Global operating networks are even more successful when they are underpinned by effective professional networks. Our Indian colleagues went to college and university together, and have many shared experiences; their ability to collapse the proverbial game of “seven degrees of separation” into two or three is awesome. Seemingly, everyone knows who has what expertise, who is looking for new talent, where the latest innovations are occurring, and who is developing leading-edge applications. Now you might think that this is a bit of an over-the-top characterization, but in an increasingly more complex world, networks matter; often, they are the best way to get things done quickly and efficiently.
Deborah Kops, Research Fellow, Sourcing Change Management, HfS Research (click for bio)
–Understanding how destination economies really work. Despite many trips to places such as India and The Philippines, most of us never develop a deep understanding of their inner workings—specifically cultural values, acceptable mores, and how to get things done. Because they do not evaluate a situation through a wholly western lens, our Indian colleagues are able to bring a level of local understanding which is so critical to global sourcing success.
Some say that we’re entering the age where it’s very cool to be a non-Indian in the outsourcing industry, or in the words of one of my sourcing industry headhunter friends, “ American companies want Americans. Indian companies want Americans. Everybody wants Americans.” And to my mind that’s a good thing; after all, successful globalization involves leaders from all cultures and geographies, not to mention that every decision can’t be made by dialing +91. But I’ll place my bets that our Indian friends cum/Phoenicians will continue to play an outsized leadership role the sourcing world.
We’re very excited to announce that we’ve partnered with ACCA (the Association of Chartered Certified Accountants) to conduct the largest-ever global study of finance professionals to understand adoption trends, experiences and dynamics of shared services and outsourcing for the finance function.
Are you achieving sourcing success for your finance function? Click to take part in our survey
Members of the ACCA global membership and HfS Research’s own network of finance and sourcing professionals are being surveyed over the next couple of weeks across organizations of all sizes, industries and regions.
We will gain an unprecendented global picture of finance and accounting sourcing from well over 1000 organizations:
What CFOs and senior finance executives really think about shared services and outsourcing;
How organizations’ adoption patterns of finance and accounting sourcing are differing across industry sectors and countries;
What are the experiences of finance professionals to date and how they rate their sourcing performance in terms of both cost control and productivity improvements;
Whether today’s finance functions are realizing finance transformation improvements with the right level of finance talent and technology they need;
Whether finance leadership’s business objectives are being met by a shared service or outsourced finance delivery model – and have these business objectives changed since they started on their transformation journey;
How finance leaders are measuring sourcing success.
Does your organisation use finance shared services or outsourcing? If so, we would like to hear from you.
Your feedback will be aggregated with that of others and will be a key input into our series of research and insights looking at finance transformation by both ACCA and HfS. At the end of this survey we welcome you to register for a copy of the report findings from this survey and enter a free prize draw for an iPad 2 as a thank you for time and feedback.
As per usual, election year brings up the age-old argument about how to combat the “threat” of outsourcing. However, let’s not forget this is nothing new..I recall in 2004 when an HR Outsourcing conference was subjected to a vociferous demonstration by anti-outsourcing protesters (I mean – seriously – HRO? Most of it is onshore in any case).
Today’s angry hoards of protesters are (and quite rightly so) expressing anger at the obscene wealth generated by Wall St, and barely even notice the fact that real “American” companies, such as Apple, employs 500,000 people in Chinese factories and that lovely “American” Hanes underwear brand employs thousands of people in Vietnamese sweatshops.
Yes, the argument is boring, flawed and jaded, and while politicians need to be seen to be against it, they do little to prevent it. However, one major stride of progress that Obama emphasized during his recent State of the Union speech has been how the US automotive industry has been brought back from the brink:
“This blueprint begins with American manufacturing. On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen. In exchange for help, we demanded responsibility. We got workers and automakers to settle their differences. We got the industry to retool and restructure. Today, General Motors is back on top as the world’s number one automaker. Chrysler has grown faster in the U.S. than any major car company. Ford is investing billions in U.S. plants and factories. And together, the entire industry added nearly 160,000 jobs.
“We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back.
“What’s happening in Detroit can happen in other industries. It can happen in Cleveland and Pittsburgh and Raleigh. We can’t bring back every job that’s left our shores. But right now, it’s getting more expensive to do business in places like China. Meanwhile, America is more productive.”
Why is the experience of the resurgent US automotive industry significant to resurrecting its flagging IT industry?
Let’s not beat around the bush here. The US onshore IT industry has ceded much of its dominance to India in recent years. While three-quarters of ERP development work was performed onshore in 2008, the proportion has today decreased to 65%:
I’m not going to get into the tedium of this latest wave of toothless “protection” acts aimed at creating tax incentives / disincentives, and other various penalties and inconveniences for US organizations which dare to employ foreign labor outside of the country to service their business operations and manufacture their wares. Simply put, there are already US IT services firms, such as Systems in Motion, pushing services at US enterprises with wage rates comparable, and often even cheaper, than those of Bangalore – especially those which leverage resources in low-cost onshore locations such as Michigan. And while some niche onshore providers are finding pockets of business and growth for themselves, you can’t ignore the bigger picture that the US onshore IT industry is on the decline. At HfS, we’ve even seen enterprises actually declining to use onshore US IT services firms which underbid their Indian competition, because many of these buyers of services are so invested in the Indian IT brand. Today, many senior IT executives within US organizations actually prefer to invest in their Indian IT relationships than their US ones!
The Bottom-line: It’s time for government to help re-brand US IT services
While the US IT services industry is nowhere near the state of distress that the US auto industry found itself during the last Recession, isn’t it now clear that the only way for the government to stimulate the success of its onshore industries is to invest in them, to aggressively help them, to encourage them to hire locally with real investment? By investing so heavily in their automotive industry, they also re-branded the entire American automotive business. Nothing’s worse than a business in financial decline, and by giving automotive a helping hand, they also improved the perception and credibility of the entire US automotive industry.
The Chinese and Indian governments, as examples, constantly invest in their local business to help them grow and be successful – so why can’t the US government do the same for its flagging IT industry, that it did for automotive?
I, for one, would be happy to see my tax dollars being re-invested in stimulating local industries and job creation in growth industries like IT services and Cloud computing, BPO, social media and medical research, so why not follow the example of how the US automotive industry was salvaged and do the same for IT? Invest in some local companies… hire train and their local workforces to support our organizations’ IT systems. Small measures never work, waste everyone’s time and allow our more aggressive foreign counterparts to advance further ahead in industries such as global IT services. Isn’t now the time, in an election year, to stop the rhetoric and actually make commitments to growing local industries that have a direct impact?
Any BPO veteran will recall Affiliated Computer Services (ACS) as one of the early darlings of BPO, which existed right at the top of the competitive tree in the early 2000’s, whenever a large Finance & Accounting, HR or call center deal was up for grabs. They were also a pretty handy domestic IT services shop before the Indian offshore pureplays arrived on the scene. It would always give Accenture and IBM a run for their money in BPO pursuits, and had a compelling client-focused culture and engagement methodology for many of the old world BPO engagements (i.e. a lot of lift and shift and staff re-badging).
Two years into its $6.4 billion acquisition by Xerox, management has finally decided to phase out this famous old brand… HfS Research’s Tony Filippone and Phil Fersht take a closer look into why Xerox brass has now decided to do this, what it means to this heritage business, and where it needs to focus in the future to strengthen its market position.
ACS finally gets its re-brand as Xerox zeros in on integrating the businesses and cultures
Corporate-naming consultants must have pitched ACS a dozen better names, but none better than the one it interred today. The fact is, straight-talking ACS has never spent the billions its competitors have on branding. In fact, even their unremarkable logo remained nearly identical for the company’s 24-year history. All this makes us believe that today’s announcement that ACS will now market itself as Xerox, rather than “ACS, a Xerox company” is a sign of opportunity and synergy.
As its branding has reflected and its customers know, ACS’ success is not because it is smarter than everyone else. Rather, ACS simply outhustles its competitors. Its Midwest American values make the company the likeable, down-to-earth service provider that gobbles up government deals one after the other. Moreover, it is focused on technology-based outsourcing solutions, not headcount. Its vertical experience is a marvel, with strong positions in government, healthcare and financial services.
The acquisition announcement had analysts everywhere wondering exactly what the offspring of a toner cartridge mother and a call center father would be like. Mixing this capability with Xerox’s traditional business has clearly not been easy. Our discussions with buyers suggest that Xerox’s aggressiveness has put off clients who don’t want to hear sales pitches, while Xerox’s recent acquisition of the Breakaway Group indicates that Xerox is supporting ACS’s industry-focused approach. However, we’ve also heard that Xerox’s rigid financial management process at times conflicts with clients’ needs for flexibility.
When the acquisition was announced, it was obvious that Xerox saw Dell’s Perot acquisition and HP’s EDS acquisition as examples of technology manufacturers entering the services business. “With ACS, we take another step forward, expanding our leadership to include business process outsourcing that helps simplify document-driven work,” claimed Xerox CEO Ursula Burns at the completion of the acquisition.
Well, a lot has happened over the last few years that shows just how difficult corporate transformations can truly be: IBM’s transformation from a manufacturing company to a services organization continues to much ballyhooed success, HP’s public leadership brouhaha has held the firm back, and Dell Services (formerly Perot) continues to grow, but it’s clear that Dell remains a technology product organization.
Xerox’s 2011 Q4 earnings release held a mixed bag as it relates to services revenues. While its BPO earnings increased 8 percent, its ITO earnings dropped 6 percent. When compared to its competitors in the BPO arena, Xerox has slipped further from the top tier into the middle of the bunch since the Xerox buy-out. Accenture and Infosys’ recent quarters featured increases of at least 20 percent in outsourcing revenues, while IBM showed a 3 percent improvement and HP stayed flat.
The easy story this tells is simple: printers and ink relationships aren’t going to win you an outsourcing engagement given the aggressive ADM marketplace and sophisticated sales approaches of their competitors.
The harder story to decipher is the development of the marketplace for document management outsourcing. While companies clearly don’t want to print more, they certainly want to redesign processes in a manner that eliminates the need for documents to manage. Based on numerous discussions with buyers, we’re confident that buyers want to redesign their processes to reduce the source of costs, instead of simply managing them more cost efficiently. The question is how Xerox will cope with the more complex projects this shift generates.
The Bottom Line: The hard work starts now for Xerox
Having two names confused the marketplace and hid any synergies from view. Having one name suggests that there aren’t two different teams providing services to buyers (buyers hate multi-party deals and the politics they cause). The elimination of the ACS brand will clarify Xerox’s account management strategy and should encourage groups to continue to work together. Xerox also needs to complete the naming soon and eliminate the decision to keep the ACS brand in Asia Pacific. This sort of decision confuses the marketplace of global buyers.
Xerox needs to pursue the vertical focus that its competitors, such as Cognizant, have mastered. Xerox has long maintained a geographic focus, but they need to refocus on global industry leadership as ACS does (did). The elimination of ACS’s brand is one step down this path, but it would be a mistake to stop here. Xerox should organize its services team by vertical and focus its effort on strengthening vertical expertise through acquisition and internal development (Xerox is well-known for its R&D capability).
Document management isn’t a growth horizontal, it’s a cash cow. If Xerox wants to demonstrate leadership, it will need to develop strong consultative skills to help clients alleviate their reliance on documents as part of solutions. Positioning ACS’s industry leaders and improving their internal thought leadership is a critical step. Hard work is important, but this effort takes the type of intelligence the Indians love to exhibit – and Xerox will compete against them heavily. ACS needs to focus on thought leadership to battle the brainy Indians and smart consultant-wielding Accenture and IBM. They need to hire more consultative resources, invest more in their services leadership team, and be bold in their R&D efforts.
Build on ACS’ strengths in healthcare, government and financial services. Xerox needs to bring more consultative skills and technology to the table, beyond what it inherited from ACS. While its competitors are hurriedly investing in developing business platforms that combine their business process and technology (Cloud) capabilities, we are yet to see Xerox put a stake in the ground to develop solutions beyond document management that can set the industry alight.
Revitalize ACS’ horizontal BPO businesses. While ACS’ position in F&A BPO has slipped in recent years, it has a great chance to leverage the Xerox brand and significant customer base in document management to open up more client conversations and opportunities. Adding more consultative capability in finance transformation would help elevate Xerox’s differentiation from much of the competition- solely relying on brand isn’t going to fly for many customers. Xerox has also inherited a stellar HR outsourcing capability, with the respected Buck consulting division helping cement its position in the market in recent years, while also developing a strong business line in benefits administration services. Like F&A, Xerox needs to give its HR business plenty of investment in terms of sales acumen and market awareness, but is well positioned to challenge for market leadership with many of the leading HRO providers struggling to grow their businesses in today’s environment. Procurement BPO is also a market where Xerox has a belated opportunity to make a push, with such strong internal manufacturing competency, but needs to make some specific investments in platform development, category expertise sales and marketing to make up for lost ground against the likes of IBM and Accenture.
Its ITO business needs a serious overhaul. Losing revenues in a growing market indicates a real weakness. While ACS still had a strong ITO business two years ago, today’s ITO environment is too commoditized to be a “me, too” player. Xerox needs to differentiate its ITO offerings through development of business platforms, build on its strong US domestic capabilities, get aggressive in search of strong acquisitions (such as Genpact’s acquisition of Headstrong), or exit the business. ITO cannot be built on the back of toner cartridges and multifunction devices, while other service providers show aggressive tenacity to win marketshare.
Xerox has a market awareness problem when it comes to services. When you talk to Xerox, what are you talking to them about? What is the company focused on today – are they selling a machine or a business platform? Xerox needs to develop some real thought leadership in the markets it chooses to go after.
