{"id":4596,"date":"2008-05-24T10:20:00","date_gmt":"2008-05-24T10:20:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/bpo-partnerships-are-opportunistic-rarely-strategic\/"},"modified":"2008-05-24T10:20:00","modified_gmt":"2008-05-24T10:20:00","slug":"bpo-partnerships-are-opportunistic-rarely-strategic","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/bpo-partnerships-are-opportunistic-rarely-strategic\/","title":{"rendered":"BPO partnerships are opportunistic, rarely strategic"},"content":{"rendered":"

<\/a>\"Icgc-gpact\"<\/a> Having worked closely with both <\/strong>ICG Commerce<\/strong><\/a> and <\/strong>Genpact<\/strong><\/a> for the last few years, it was a positive step forward for the firms to <\/strong>announce a partnership<\/strong><\/a>, but I believe the companies should go a step further and merge.  Partnerships like this are normally opportunistic; they help the firms team up for broader finance\/procurement customer bids, as they can be vulnerable when competing with Accenture and IBM, which have broadscale finance & accounting (F&A) and Procurement BPO solutions.<\/strong>  <\/p>\n<\/p>\n


\nBPO solutions that cut across finance\/procurement and payroll functions, normally require process knowledge that can be shared across delivery staff and technology.  How easy is it to transfer these processes to two separate suppliers, whose staff work in separate locations, work for different organizations with different cultures and may not be overly familiar with each others’ technology platforms?  Your BPO services are only going to be as good as the people delivering them, so you need to know your provider is investing heavily in ongoing quality improvements, enhancing the technology on an ongoing basis, and constantly developing its personnel.  I like partnerships where two parties set aside budget to co-invest in developing a platform, or jointly establishing a delivery center, as opposed to opportunistic arrangements set up for competitive purposes to win deals.<\/P>
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Both Genpact and ICGC are great masters of their areas, and, in-fact, resemble each other quite closely:  Genpact was the rogue little guy that came along and upset the F&A BPO apple-cart and won multiple contracts away from the big boys, through a unique combination of low-cost labour underpinned by the GE culture and process methodology.  The firm is now the third-largest F&A BPO provider and has recently gone public. ICGC has had to operate in a similar fashion, competing against much larger competition, but has enjoyed some notable blue-chip client successes, winining procurement engagements with companies such as Kimberly-Clark, Hertz and Nordstrom.  F&A BPO is a much larger and more lucrative market, based on the major labor arbitrage advantages of moving transactional processes offshore, whereas procurement BPO has been a tougher sell to companies, with the challenges of moving work into low-cost locations and transitioning unique expertise sets in distinct category areas over to third-parties providers.  <\/P>
\n

The business case for procurement BPO is based on future savings from managed spend, not on immediate<\/em> savings from the bottom-line through moving hundreds of positions offshore.  Moreover, procurement is one of those functions which has, in many firms, been cut to the bone, and the only means to find new avenues of optimization is through having better technology and access to skilled staff, who normally reside in the regions where the procurement transactions take place.  Most companies moving into procurement BPO today are often motivated by the fact they have already outsourced transactional finance work, have become experienced with outsourcing, and want to take a longer-term and more strategic view of managing their global sourcing mix.  Hence, ICGC needs to be close to the F&A BPO action to get into the procurement BPO discussions.  Being joined at the hip with Genpact is a very smart strategy – and Genpact – at the same time – needs to have that procurement story.<\/P>
\n

However, when we look back at BPO partnerships, it’s difficult to find examples of ones which have genuinely worked.  ARINSO<\/A>, the Belgian-headquartered HR services firm, which was acquired by Northgate in May 2007, secured a famous reputation for becoming the “outsourcer to the HROs”.  The firm was simply one of the best feet-on-the-street SAP payroll integrators in Europe and knew how to knit together complex pan-European payroll solutions.  Firms such as ACS and Accenture subcontracted their European payroll work to them as part of several major HR BPO deals.  They didn’t want to be European payroll providers, and ARINSO did, so this made sense for individual deals.  These firms didn’t partner, they signed contracts to work together when their clients required it.<\/P>
\n

In Genpact’s case, the need for the major BPO providers to broaden their solutions across business processes tied to core ERP is intensifying.  Many current BPO discussions are being dominated by the broadscale ITO\/BPO suppliers pushing harder for bundled IT and business process options.  HP now has EDS and should become a major force in broader BPO offerings, while Capgemini, Infosys, TCS and Wipro are all focusing on going after these broader engagements.  They realize the risk of Accenture and IBM running away with the high-end market if they can’t scale up and bundle their offerings more effectively.  <\/P>
\n

Let’s cut to the chase – we’re in a very competitive market right now, and the battle is on to take control over the top clients.  Long-term BPO contracts are the way in – they give outsourcing providers the runway to build credibility and broaden their solutions in developing areas such as procurement BPO.  BPO is not ITO, which is far more mature and clients have options to multi-source areas such as application development and IT infrastructure.  BPO is not as cut and dried – processes blend across functions and it’s really more about people than simply machines and programmers, which is why we don’t see a lot of companies sharing out functions such as HR, finance and procurement to multiple suppliers and try and manage them all.  We’ve seen some do this, laregely big brands with big resources – and to some extent this has worked, but it will take years for the majority of buyers to develop the internal governance skills to manage multi-sourced BPO environments successfully.  We’re moving to a state where companies will select one major BPO supplier, and they will subcontract to niche specialists where necessary, but they will own the overall client relationship.  <\/p>\n

<\/P><\/p>\n","protected":false},"excerpt":{"rendered":"

Having worked closely with both ICG Commerce and Genpact for the last few years, it was a positive step forward for…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,835,79,81,836],"tags":[],"organization":[],"ppma_author":[19],"class_list":["post-4596","post","type-post","status-publish","format-standard","hentry","category-business-process-outsourcing-bpo","category-f-a","category-hr-outsourcing","category-it-outsourcing-it-services","category-procurement-engineering-supply-chain-outsourcing"],"yoast_head":"\nBPO partnerships are opportunistic, rarely strategic - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/bpo-partnerships-are-opportunistic-rarely-strategic\/\" 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