By Anneli Knight

Creel Price cofounded Blueprint & Custom Call outsourced call centres with Trevor Folsom and over the next ten years with the amazing commitment of their team (over 1,000 employees at it’s peak) they built one of the fastest growing BPO businesses in Australia; Editor

Whilst reputation and public relations (PR) rarely result in immediate leads they are essential for any business wanting to build long-term value and goodwill in their brand. Photo: istock

If your business is not green and growing then it’s ripe and rotting, says serial entrepreneur Creel Price.

Price is accomplished at the growth phase of business, having launched ten enterprises before he was 21 and then co-founding a start-up with $5000 capital and selling it ten years later for more than $100 million.

Striving for growth is something that should underlie all aspects of business, says Price, whose current business, Accelerate Global, trains entrepreneurs.

“It’s got to pervade the DNA of their company,” he says.

Sales become easier for a growing company as it secures a strong reputation, and a growing business is also more enjoyable, Price says.

“Business becomes a lot more fun when you start to get a bigger team all striving towards the one goal – when you start to see the business grow from more than just your efforts.”

Here are Creel Price’s 10 tips on how to grow your business:

• 1. Spend more time in sales – The first strategy is to ensure that the business owner or entrepreneur is spending as much time selling or managing the sales process as possible.
  This is particularly important at the early stages of business. No one can match you in terms of knowledge and passion for your business – and this is what sells.

  Write down a goal of how much time you should be spending in sales and compare it to how much time you are actually spending selling.

  If there is a big discrepancy implement strategies to free up your time and ensure you are focused on sales such as outsourcing everything but your core.

• 2. Be a niche player – Don’t try to be everything to everyone – select a niche market that plays to your strengths and build your products, processes and reputation around being the undisputed leader for this target market.

  Yet because this strategy takes time many entrepreneurs lose patience and have a tendency to launch brand new initiatives in new markets – a habit I call the entrepreneur’s curse. 
This distraction means you spread yourself too thin and don’t achieve anything except a myriad of unfinished ideas.

  Business success is about being an expert in one core field for one core target market before expanding products, locations and prospect types. This will help ensure you generate more leads, close more sales and can charge higher prices.

• 3. Launch a lead generation campaign – proactive marketing is one of the best ways to grow your business fast.

  Don’t wait for customers to contact you, go out and find them using one of numerous direct marketing campaigns open to you. These might include direct mail, e-marketing, telesales, seminars or person to person sales.

  Beware though that it is not all about closing the sale on the first contact – it often takes up to seven contacts before a customer is ready to buy so mix your communication up and ensure you are only selling to the right customers at the right time.

  For the rest you need to work out how to build their needs and have your company at the top of their list when they are ready to buy.

• 4. Revamp your unique selling proposition (USP’s) – Competition is increasing at an alarming yet exciting rate. If you don’t constantly revise the benefits for why your customers should choose your company you are in danger of being left behind.

  Think of the two or three things that you are great at and elevate these in your selling proposition and marketing material – they will revolve around some of these six attributes, namely your product or service is Faster, Cheaper, Superior, Easier, Scarcer or Greater (defined as bigger or more compact).

  By having clearly articulated USP’s you will sell to more customers more often.

• 5. Build your reputation – Whilst reputation and public relations (PR) rarely result in immediate leads they are essential for any business wanting to build long-term value and goodwill in their brand.

  A leading reputation is also essential if you want to convert more of your leads to sales. You can pro-actively work on your reputation by becoming a thought leader in your field, for example, write a book, get an article published or speak at a conference.

  You could ask your existing customers for written or video testimonials. Or you could have other peers, staff and clients endorse your services on LinkedIn or other social media.

• 6. Get connected – If business is about who you know, not what you know then you need to ensure you are connected. Social media such as LinkedIn, Facebook and Twitter offer a myriad of opportunities to build your network.

  However a word of warning: make sure you build connection with value not sales in mind. Ask the question “How can I add value or help my connections?” rather than “How I can sell them something?”.

  You will be surprised by how quickly that help and effort will turn into referrals back to you. If electronic networking is not your thing then make sure you are building your connections through networking at conferences and other events.

• 7. Build an alliance – Whether or not you have the right database of prospective clients to grow your business, someone else does.

  You need to identify these companies and work out how you can help them achieve their goals so that you can achieve yours.

  The internet has seen a proliferation of alliances so you will unlikely be breaking new ground. Ensure the company shares your values and is as equally committed to building a sustainable business as you or else you might be tainted with an image not of your choosing.

  You could seek alliance relationships with customers, suppliers, industry bodies, companies that sell non-competing products to your target market, or companies that have similar products in different geographic locations.

• 8. Increase your price – Increasing your price by ensuring you give more value to your customers can often be the quickest way to generate more revenue.

  Remember that every 10 per cent increase in price contributes more than the same 10 per cent increase in sales without all of the effort.

  For instance if your profit margin is say 20 per cent then every 10 per cent increase in your price is equal to a 5 times that increase in new sales.

  You might be surprised that your customers are either not as sensitive to price as you think or would appreciate the added value you could give them for only a small increase in price.

• 9. Be competitive – As a counter to increasing your price, ensure that you keep on top of the escalating increases in your cost base.

  Ensure that you renegotiate with your suppliers regularly and remove unproductive people, products or processes.

  The lower your cost base will either mean you make more profit that can be re-invested into growth strategies or be used to offer something more competitive to your target market. 
Start a competition with your team to see how much you can shave off your expenses.

• 10. Align Outcomes – Your team, whether employees or not, give you the greatest leverage to grow your business.

  Share your goals and aspirations for your business and incentivise them on the outcomes. Incentives might include cash bonuses, responsibilities, promotions, equity, profit sharing or non-cash rewards.

Also don’t under estimate the power of incentives based on helping charities or other feel good pursuits.

* Creel Price’s book, The one thing to win at the game of business, was released this month by Wiley. www.accelerateglobal.com

Read more: http://www.smh.com.au/small-business/managing/10-ways-to-grow-your-business-by-10-or-20-or-50-in-12-months-20120524-1z687.html#ixzz1wDlb4NuZ

By Stephanie Overby (CIO (US))

Given the maturation of the IT outsourcing market and the introduction of more standardized offerings like cloud computing, you might assume that negotiating IT service deals is getting easier.

Not according to the lawyers hammering out the agreements.

KPMG reports that 41 percent of outsourcing attorneys surveyed for its 2012 Legal Pulse report indicated that complexity in contracting for outsourced services, as evidenced in things like service levels, contract structure, pricing models, use of global sourcing has actually been increasing. (The survey included outsourcing attorneys at 31 law firms.)

Sure, buyers and suppliers are more experienced and new out-of-the-box services are gaining traction. But that may be increasing complications in contracting. More sophisticated buyers are seeking higher-value benefits from outsourcing, globalization is increasing, and business leaders are sending more complex functional and process work out the door.

“As buyers gain more experience they continue to push the envelope in terms of scope, complexity of work outsourced, number and diversity of service providers utilized, geographical scope and mix of service delivery models. Complexity comes with the territory,” says Stan LePeak, KPMG’s director of research for advisory services. “So while the outsourcing market is maturing, it is not necessarily getting simpler, easier, or safer.”

Address IT Complexity Upfront

A complex contract, in and of itself, is not a bad thing. It can result in greater benefits for the outsourcing customer or may better address issues of pricing, performance and risk “Problems arise when complexity is not adequately addressed, recognized or accounted for upfront and in the ongoing management of the outsourcing efforts,” LePeak says.

The key is to make sure that the level of complexity in the legal documents is commensurate with the nature and goals of the outsourcing arrangement and not just the result of a once-burned buyer or overzealous counsel.
Typically, as services markets mature, best practices in contracting tend to cement themselves in the way of standardized pricing, performance assurance and particularly defined terms. However, 27 percent of the attorneys polled reported little or no standardization in defined terms, which LePeak says also points to the fact that while outsourcing is maturing, it’s also been expanding into uncharted territory in terms of scope, objectives, and geography.

The survey asked about the most contentious issue in outsourcing negotiations. The most challenging contractual terms to reach agreement on were limitation of liability, indemnities, step-in rights, pre-defined direct damages, and supplier financial risk all of which involve potential financial exposure to supplier or client. The most challenging commercial terms to come to consensus on were termination fees, termination rights, service levels, transformation and transition fees all of which involve service provider risk.

Arguments over terms related to transformation rated 17 percent higher than last year as more buyers are attempting to include transformation goals in their outsourcing engagements. “Transformation involves building into the contract terms, conditions, or measures for process transformation or for innovation or other nebulous but value-laden keywords,” says LePeak. “The challenge is translating a somewhat conceptual idea like transformation into contracted terms and conditions and factoring in all the events and conditions that could impact transformation being achieved or not.”

IBM, Accenture and HP Play Hardball

The toughest negotiators by far continue to be the traditional global outsourcers like IBM, Accenture and HP, according to the attorneys surveyed. Contracting with India-based service providers such Infosys, TCS and Wipro tended to be a less complex, contentious and lengthy process, according to the KPMG Research, while the easiest to deal with were regional or niche suppliers.

“Some of the legacy firms just have more and more aggressive lawyers, and there are also situational variances and exceptions across all classes,” says LePeak. “But as some respondents noted, legacy firms negotiate harder but remain professional and are less likely to come back later with requested changes and some Indian firms were easier to deal with but would come back later with requested changes or would not negotiate as solid a contract as is possible. So some of it is style and some of it is substance.”

And like complexity, a little back and forth during negotiations can actually be a good thing if it leads to a better or more equitable deal. “Were one side to roll over in negotiating, or if contentious points were ignored or not resolved before the deal is signed, it would be worse,” LePeak says.

“Ultimately you want the best deal and contract and one that has no holes, meets both sides’ needs and reflects the spirit of the effort, and sometime it’s harder and more contentious to get to that point,” LePeak says. “The key is that when all is said and done both sides are satisfied with the deal, and any contentiousness was not so bad that they can’t stand each other and can’t possibly work together going forward.”

Stephanie Overby is regular contributor to CIO.com’s IT Outsourcing section.
Read more about outsourcing in CIO’s Outsourcing Drilldown.

By David Wilson

With many smaller firms now being attracted to outsourcing or micro sourcing via sites like guru.com and freelancer.com this article serves as a timely warning that one must tread carefully and look to work with firms and individuals that that domain experience and a track record.
- Editor

Fiona Lewis was once fleeced in outsourcing and now puts potential contractors through interviews.

Love it or loathe it, outsourcing means risk. That accountant, typist or coder you hire may prove flaky or dishonest.

According to the security software developer Lieberman, 77 per cent of respondents believe their outsourcers have made up work to earn more money.

In one memorable blog post, entrepreneur Shane Snow complains about once getting billed for seven hours of work when just 20 minutes were spent on a project. Instead of saving you money, outsourcing can waste it.

Two Australian entrepreneurs with outsourcing horror stories now know how best to avoid getting gouged.
Sydney-based tech entrepreneur Fiona Lewis runs several businesses including the internet marketing consultancy, Internet Marketing Profit Centre.

But in “the early days” of late 2008, Lewis made her worst outsourcing blunder when she contracted to have a website designed for a key client.

Production lagged and eventually cost $2500 – double the quoted price, for nothing.

“The coding was so bad that I couldn’t possibly deliver it to the client,” Lewis says.

Worse, the designer proved not to be a one-man-band, as she thought, but a slippery firm that refused to provide a refund.

The outsourcing agency stonewalled, claiming Lewis had not cancelled the project during production. But she contests she could not tell that the site did not work because she only had access to screenshots.

Eventually, she paid another developer $1000 to build the site from scratch.

The ordeal made her feel “very stressed” and “appalled” at the lack of support for entrepreneurs stung by dodgy providers.

Now, after fine-tuning her hiring process, she has some advice.

First, get referrals. “I find that, once you’ve got somebody who’s good, they tend to know somebody else who’s got good work ethic and skill.”

If you cannot get referrals, Lewis says, try an agency you have found trustworthy. She uses vWorker.com, seeking talent on a regional basis.

Eastern Europeans are hot on the technical side and industrious, she says, adding that Filipinos excel at administration and online marketing.

Lewis interviews possible hires rigorously, asking them to answer technical questions she sends via Google Docs. She also conducts a Skype interview, which obliges the applicant to think on his or her feet. If an applicant gets past that stage, the final filter is a quick, paid trial assignment.

Lewis says regardless of who you hire, never let a web developer host a site on their server. By doing so, you lose control. Businesses might find that the site is never even transferred, as has also happened to Lewis.

Whitsundays-based virtual assistant Emma Wilson offers a cloud-based service to clients across Australia. Wilson’s work involves hiring cloud-based subcontractors, which has given her a file full of ordeals over deadlines, dud quality, inexperience and poor value.

In late 2009, she had a stack of audio files that needed transcribing.

Thinking she was being business-savvy, she looked overseas and found an online admin business that seemed efficient, judging by the email conversations she had with her contact. Certainly, the fee was attractive.

“Needless to say,” she says, “the quality of transcription I received back, due to the English not being their first language, was horrific.”

Each of the files, which she sent together, came back with mistakes throughout.

She had told her client she would deliver “come hell or high water”. So she had to redo the transcripts.

“Many sleepless nights followed,” she says.

Wilson says she felt cheated because, after negotiating a discount, she still had to pay half the fee for the useless work. The cock-up cost her $2000.

“But most of all it cost me hours and hours,” she says, adding that other work wound up “on the backburner”.

After the fiasco, she raised her game and devised a list of tips.

Emma Wilson’s top outsourcing tips for small business:

1. Spend time on the service firm’s website to gauge if it is legitimate.
2. Seek client testimonials and examples of previous work.
3. If outsourcing overseas, remember that English may not be the firm’s first language, so if you want accuracy, forget it.
4. Remember that Australia has a strong virtual assistant presence – reputable people running their own businesses offering services ranging from copy writing to graphic design.
5. Stick with trusted providers – ask your friends/ colleagues’ advice on who they have used.

Read more: http://www.smh.com.au/small-business/growing/i-got-gouged-the-horrors-of-outsourcing-20120409-1wk4o.html#ixzz1soO3N3I3

By David Kruzner, senior vice president, iGATE Patni (Network World)





This vendor-written tech primer has been edited by Network World to eliminate product promotion, but readers should note it will likely favor the submitter’s approach.

With the nation’s focus on the need to create jobs, the habit of outsourcers to cite the traditional value of cheap labor will no longer be of adequate value for an increasingly sophisticated clientele.

This is forcing outsourcers into a new age of value-based solutions and accountability. Accountability involves more stringent control of services delivered based on an overall business outcome (value-based) — not according to time and materials. Relationships are structured as long-term consultations and management, not short-term labor arbitrage projects. The workforce is more skilled, as domain or vertical experts and located across the globe, including increasingly in the U.S.

These pressures create a tremendous opportunity for the IT industry. Here are a few things your organization should know about how to take your vendor relationship to the next level.

* Think about creating value, not lowering cost: In a traditional outsourcing engagement, IT examines a particularly manual or cumbersome process and then evaluates the options for conducting it more efficiently and frugally. But, chances are, your business has already taken that step — you probably took it years ago. The next step is about technology-driven engineering and productivity. This productivity is measured on one key tem — business value.

In a value-driven engagement, vendors are evaluated based on the business outcome they create, not the time and materials they consume. It’s about the final output from the client’s success, which is a mutually beneficial relationship for both parties. The risk is shared among both parties — and when risk is involved, it’s not just about pricing and cost. The key currency in a vendor relationship is value, which can be a welcome change for any company that’s seen an outside party run up the bill based on number of FTEs.

* Align the vendor with your business: In order for an outside vendor to deliver business value, the vendor needs to have a clear idea of both the business’ and IT’s overall business goals and strategy. In these visibility-driven engagements, they’re handled as long-term consultations, not short-term cost-cutting projects.

Outsourcers embed themselves in the IT department, using their technology expertise to suggest ways the business could be run more efficiently. In many cases, this uncovers problems or opportunities a client did not know existed. It’s an additional level of sophistication, evaluated not by the needs of the outsourcing client, but by the needs of the client’s client. When overall business goals are met, this creates a relationship of optimum value to the customer.

* Focus on management: In a particularly uneasy and pressure-packed time in the economy, your biggest ally in a vendor relationship is organized and strict management practices. These aren’t traditional benchmarks; they’re best practices that align directly to a business outcome. If a vendor is held to a particularly high standard in a business context, that vendor will utilize its full array of expertise and resources to ensure client success.

But effective measurement does not come without visibility and clarity in the beginning. One shortfall from the “gainsharing” days in the 1990s was that these types of projects failed because of their lack of structure and true visibility. The outside party tied its work to client success, but the projects were structured in a way that never articulated what success was and the attributes of the success were not visible. If success is tied to solid, measurable business outcomes, then the vendor and client can march toward the same goal as true partners, with shared risk and investment.

We are at a crux point in the IT services industry. The traditional days of labor arbitrage are over, leading to a more sophisticated level of vendor-client relationship. With change comes opportunity, and savvy clients can use these pressures to create a more productive and long-term engagement.

An accountable outsourcer is not just a marketing term; it represents the next step in a 35-year-old business idea. With additional accountability, we see a future where both vendor and client is set up well for success.
Kruzner is a senior vice president, iTOPS Solutions and consulting at iGATE, an outcomes-driven outsourcing provider and systems integrator based in Fremont, Calif.
http://www.techworld.com.au/article/421627/next_stop_outsourcing_accountability/?fp=16&fpid=1

The Global Sourcing Council, a non-profit organization that fosters dialog on critical issues in global sourcing and supply chain management release a joint report, with Pandiva called The State of Global Trade in 2012, which highlights key concerns, challenges and opportunities facing those engaged in global trade. Based on a survey of buyers and suppliers worldwide, the report found that half of global trade professionals are optimistic about the global economy in 2012 and nearly three quarters plan to spend at or above 2011 levels.

But as the U.S. economy appears to be rebounding in the beginning of 2012, larger organizations may still have doubts about a full recovery. In fact, respondents at companies with over $100 million in revenue were two times more pessimistic than those at companies with less than $100 million in revenue (30 percent vs. 14 percent). Regardless of company size, the three top concerns about the economy were a slump in global demand, volatility in commodity prices and rising labor costs (31 percent, 23 percent and 18 percent, respectively).

Other key findings from the report include:

Buyers and suppliers both see opportunity in U.S. – Almost a quarter (24 percent) of buyers named the U.S. as a sourcing alternative to China. Further, 63 percent of overseas suppliers pointed to the U.S. as a region they will target for new business; suppliers were less interested in seeking to supply goods to Europe (56 percent) or China (41 percent)

Suppliers and buyers vary when it comes to rising labor costs concerns – only 7 percent of suppliers cited rising wages in manufacturing hotspots as a biggest economic concern for 2012, compared to 26 percent of buyers.

Buyers are shifting sourcing outside of China – Although 73 percent of buyer respondents currently source from China, 68 percent of them cited sourcing outside of China as “much more important” or “more important” in 2012 as compared to 2011. In fact, 34 percent of all buyers cited sourcing in new geographies as their top way of managing costs in the year ahead.

Other Asian nations remain the top sourcing alternative to China – More than half (53 percent) of respondents pointed to other countries in Asia as where they plan to source goods beyond China.

According to David Kinnear, founder and chairman of The Global Sourcing Council and managing partner of BK Advisory Group, “We see a growing maturity in the global outlook and perspective of buyers, suppliers and consumers alike – resulting in a more balanced view of sourcing methods and locations. There is a greater depth of view and a palate of perspective beyond simply price. Of recent, we also see a new wave of understanding and action on the issues related to labor and workplace conditions with some high profile headlines driving public debate. Balancing geo-economic and socio-economic considerations in the goods and services supply chain is a critical decision for present day senior management teams – especially in the current political and economic climate. The right balance is one that we feel will greatly benefit companies and their customers alike in the short and longer term.”

The State of Global Trade in 2012 report is currently available for free download on Panjiva’s website, http://panjiva.com/blog/whats-new/the-state-of-global-trade-in-2012. The report is based on a survey of over 250 professionals engaged in global trade conducted in February 2012. The respondents represent buyers, suppliers and others engaged in global trade from companies of all sizes from around the world.

By Mark Atterby – Senior Staff Writer

How well one manages stakeholder expectations may make or break a BPO or outsourcing venture. Who are the stakeholders in a BPO relationship? How does one develop a sound understanding of these expectations? What’s at stake if you get it wrong?

Narayanan Sampath from Infosys, believes that successful outsourcing ventures have governance models and practices in place that balance the expectations of stakeholders (from both the retained and the outsourced organisation). Superior governance requires regular interaction, information exchange and meaningful action — ultimately resulting in better solutions that more effectively meet stakeholder needs.

Prior to commencing a BPO relationship, according to Sampath, a detailed analysis of stakeholders and their need for information needs to be carried out. Stakeholder groups may include senior executives, IT personnel in both the retained and outsourced groups, the service provider and the “users” of the services (employees, customers, suppliers and others). This analysis should take into account impact, influence, urgency, legitimacy and interest of stakeholders. In other words what are their expectations and how are these expectations going to be met.

Once the list is reasonably complete it is then possible to assign priorities in some way and identify the ‘highest priority’ stakeholders. While it may be impossible to please all stakeholders at the same time, the governance procedures put in place should strive to balance each group’s needs over the term of the agreement. An effective communication plan needs to be devised to ensure all stakeholders are notified when they need to be and in the most appropriate format.

Formal governance boards and steering committees are essential, but informal stakeholder involvement is the way successful relationships are built and maintained over time. Stakeholder involvement results from an effective combination of information exchange and action. For example, a governance group can set up ad hoc advisory teams, actively pursue the opinions and participation of key business leaders, and offer informal educational presentations such as “lunch and learn” seminars that stimulate the exchange of information.

The channel and nature of the communication should be determined by the needs of the stakeholder community. Stakeholder involvement results from an effective combination of information exchange and action.

Companies that successfully outsource continuously “take the pulse” of all stakeholder groups to balance their needs over time. Communication is an imprecise science, and misinterpretation increases when people attempt to bridge the language and experience gaps across functions and cultures. By taking special care to develop a deep understanding of stakeholders’ motivations and expectations, governance group members can negotiate more creative and mutually beneficial solutions.

By Maddy Miller

In today’s economy, being efficient and operating at a low cost is no longer considered a competitive advantage; it’s a requirement to survive. While Business Process Outsourcing (BPO) is widely used across all industries as a revenue enabler, many companies who don’t implement their BPO strategy properly end up backing themselves into a corner…or a bad contract with the wrong partner.

Source One has teamed with noted BPO expert, George Brooke, and has released a new whitepaper providing a high-level outline of the processes necessary to ensure a successful BPO implementation. This whitepaper outlines seven steps, starting with internal evaluation and ending with negotiation and implementation. “Seven Steps to BPO Success” details the questions companies need to ask themselves when they are looking to outsource a business process and helps them to recognize when doing so would be advantageous to their business.

“BPO providers that also propose to host and license the enabling applications on which the in-scope transactions are performed may be of great convenience and benefit, but require a much more comprehensive, two-phased evaluation. We strongly recommend an evaluation of the application “fit” first and then a separate evaluation of the competitiveness of the BPO capabilities.”

Seven Steps to BPO Success, Step #5: Selection of “Best Fit” Provider
To request your free copy of “Seven Steps to BPO Success,” visit Contact Us page, complete the form at the bottom, and select BPO Whitepaper from the drop-down menu

By Mark Atterby – Senior Staff Writer

Managing one outsourcing relationship can be a challenge. One of the main reasons for the lackluster performance of a BPO relationship, results from the client allocating insufficient resources in managing that relationship. So, why would you want anymore than you already have? Are you doubling your headaches? What are the benefits and disadvantages of managing a portfolio of service providers?

Over the years, as highlighted from Everest Group research, the increased growth and adoption of ITO and BPO has created more outsourcing relationships. As a result most large companies are now engaged in multiple outsourcing initiatives. For some companies outsourcing is a standard practice or at least a preferred model for handling non-core functions and activities. These days outsourcing is a standard business practice, and organisations are expecting more from outsourcing as they tackle the challenges of managing increasingly complex global operations and the technology environments needed to enable them.

An organisation needs to reach a certain level of experience and maturity in utilising outsourcing services, before it can successfully consider adopting a multi-vendor approach. With multiple providers, you can allocate regions to those best equipped for that geography or allocate processes to the best BPO specialist. Multiple BPO providers help avoid the risk of putting all your eggs in one basket. When a BPO provider exits the business, goes out of business, (it does happen) becomes difficult to deal with, doesn’t perform as contracted, or gets acquired, the buyer can more easily switch out that provider for a suitable replacement.

Depending on the organisation and if they have the resources to manage it, developing a portfolio of providers will offer a number benefits over bundling a range of functions to one provider, domain experience aside.

In a multi-vendor environment, governance is more costly, and inherently more complex, to manage than with a single vendor. As well as governing specific/individual outsourcing relationships, client organisations need to adopt some form of enterprise governance model that stretches across multiple outsourcing relationships[1]. Building and sustaining such models across a large enterprise can be extremely difficult, but are necessary if outsourcing is to deliver true strategic and operational value to the organisation.

Setting up multiple outsourcing agreements, according to Allan Hopwood from KPMG, especially simultaneously, requires significant attention to interdependencies. The client maybe caught in the middle between service providers if there are hand-off issues[2]. As a company’s use of outsourcing increases the entanglements of an increasing number of suppliers becomes more pronounced.

Ensure sufficient time and analysis is spent in evaluating potential providers. Suppliers with broad offerings and capabilities may be used as anchor providers, who can expand the scope of your outsourcing initiatives[3]. Combine these with providers who have strengths or domain experience in particular areas or functions. A multi-provider strategy gives the buyer more leverage and can increase the probability of healthy, competitive tension on their account over time. This works particularly well when the buyer is a well-recognised, global brand.

Unfortunately, selecting which model is best for your organisation is not a straightforward exercise. A multiple BPO provider solution is certainly a viable alternative to a one-stop shop approach, but you need to plan carefully and ensure your organisation has the resources to manage it effectively. Developing a strong profitable relationship with one vendor is difficult enough, each one you add to the mix adds significantly to the challenge.

It is prudent to seek outside consulting advice.

1. http://www.accenture.com/SiteCollectionDocuments/PDF/MultipleOutsourcingRelationshipsFinal.pdf.
2. http://www.equaterra.com/_filelib/FileCabinet/Research/6080EU_EquaTerra-KPMG_Position_Bundling-Outsourcing_Multiple_Business_Functions_Dec2011.pdf.
3. http://www.accenture.com/SiteCollectionDocuments/PDF/MultipleOutsourcingRelationshipsFinal.pdf.

Experts at Horizon Business Solutions are recommending that companies look at outsourcing payroll functions in order to free up staff time and allow more focus on core competencies.

Experts Advise Outsourcing Payroll Allows Focus on Business 
Experts are advising the outsourcing of business processing to increase employee focus and flexibility. According to business management expert Dan Robins with Horizon Business Solutions, “The advantages of outsourcing far outweigh any potential problems.”

Business process outsourcing (BPO) began in the manufacturing business with corporations such as Coca Cola outsourcing segments of supply chain management. As small and medium-sized companies began to see the advantages of outsourcing BPO grew. Today BPO involves contracting with third party service providers to management all kinds of operations, processes and functions. Outsourcing payroll has proved to be a major resource and capital saver for companies and organizations. 
The outsourcing of payroll is known as the outsourcing of a back office function and often includes the outsourcing of all accounting and finance processes. When a U.S. company outsources payroll to another country this is called offshore outsourcing. This practice has been the cause of some hot political and economic debates. The cure for this, obviously, is conducting business with a U.S. business management firm, such as Horizon Business Solutions.

“Companies need to focus energy and staff time on their core competencies,” says Dan Robins. “Key employees are freed from the burden of administrative processes and they can focus on doing what they do best, not tied up with payroll.” 
Robins says BPO allows companies to increase their flexibility. Because most BPO vendors offer products on a fee-for-service basis companies can transform fixed costs into variable ones. A variable cost structure helps a company respond well to changes in capacity. Companies also don’t have to invest in assets. This creates more flexibility, says Robins.

Robins goes on to say, “You can reduce your response time to change.” The business management firm specializes in the business services that they are contracted to provide. They stay up-to-date on technology, news and trends in their business and keep their customers’ processes current and efficient.

But potentially most important, says Robins, is a company’s opportunity to focus on their own core competencies without being weighed down by the burden of bureaucratic restraints. Key staff members are free from completing non-core process. They invest more time and energy into their core business processes. A focus on core competencies can give a company the competitive edge that they need to win in today’s tough market place.

BPO also increases the speed of business processes like payroll. The effective use of partners in business increases speed. With experts focused on processes that they specialize in, speed and accuracy increase.

Maintaining entrepreneurial agility is key to a company maintaining its place in the market. Outsources payroll allows a firm to retain their flexibility and focus on creating new business. It helps companies avoid a more bureaucratic mode of operation. Staff can focus on creativity and using expertise. This could actually allow a company to grow faster, as it will be less constrained. Dan Robins says, “Just the equipment savings is huge. Equipment can take years to amortize and may be out-of-date quickly.”

While outsourcing is a major capital saver, Robins acknowledges that no business enterprise is completely without risks. That’s why he says companies should be careful in selecting the outsourcing firm that they use. Robins says, “Horizon Business Solutions offers transparency. There are no unforeseen or hidden charges. Companies should be wary of vendors that don’t offer a clear menu of services that is complete with pricing.” Robins also says outsourcing companies must be able to demonstrate that they can meet services levels and change as the customer’s needs change.

According to the experts at Horizon Business Solutions the few risks of outsourcing payroll are far fewer than the benefits. Freeing staff time to focus on growing business leads and using expert knowledge can and has provided the edge that businesses need to become a leader in their field.

Source: Virtual Strategy

By Facilitating Technology Enablement and Global End-to-End Process Ownership, A GBS Operating Model Helps Companies Drive to World-Class Performance

Companies can generate millions in annual savings and improve both efficiency and effectiveness by achieving world-class performance in finance, IT, HR, and procurement, and a key strategy is the implementation of an integrated Global Business Services (GBS) operating model, according to new Book of Numbers™ research from The Hackett Group, Inc. (NASDAQ: HCKT).

The Hackett Group’s new research found that companies with GBS operations, which integrate and consolidate multiple business functions, can drive real cost reduction, and are a key to achieving world-class performance, in part by facilitating both greater technology enablement and global end-to-end process ownership. The Hackett Group’s research found that companies that achieve world-class performance across business operations achieve cost reductions of 29 percent. For a typical Global 1000 company with $28.8 billion in revenue, these reductions amount to $314 million in annual savings. At the same time, top-performing GBS organizations deliver dramatically improved effectiveness, including a nearly 30 percent improvement in quality of service, nearly 6x the improvement seen at typical companies.

The days of significant transaction processing across most of the back office are quickly coming to a close. For example, The Hackett Group’s research shows that over 70 percent of all corporate finance transactions are already handled by a GBS. Most companies are now taking an integrated approach, and the trend away from stand-alone shared services operations and towards multi-function GBS operations is accelerating rapidly. According to The Hackett Group’s research nearly 75 percent of GBS organizations now integrate processes from across more than one business function, an increase of nearly 50 percent over the past two years. Finance continues to be the dominant anchor function of GBS organizations, followed by IT, HR, customer services, and procurement.

The Hackett Group’s research also includes an analysis of the best shared services center locations across the globe that companies can turn to for low-cost labor as part of their GBS optimization and business process outsourcing efforts. While India and China remain the leading countries to turn to for high-volume transactional work, the research recommends looking at other countries for skill leverage, and also for work where cultural and language skills may take precedence. The research identified several countries as promising next-generation sourcing locations, including Chile, Columbia, South Africa, Indonesia, Sri Lanka, and Bulgaria.

The Hackett Group’s Book of Numbers volume, entitled “Global Business Services: The Revolution Continues,” provides a detailed analysis of the challenges companies face as they shift from separate functional departments to an integrated multi-functional GBS organization, and critical insights on how to overcome these challenges. The shift requires dramatic changes in the service delivery model and mindset and culture of companies. In addition, the volume describes in detail the best practices used by companies that achieve peak GBS performance. The new Book of Numbers volume contains more than 60 pages of insights and over 30 charts and tables detailing metrics of both typical GBS organizations and top performers.

“Our research clearly shows that operating models with stand-alone functions for IT, finance, and other areas are giving way to an integrated service-oriented approach,” said The Hackett Group’s GBS Global Practice Leader Honorio J. Padrón. “Even before the recession drove a ‘whatever it takes’ attitude to cost-cutting, savvy companies were beginning to use Global Business Services to transform the delivery of business services based on processes and services rather than functions. Now the trend toward GBS is accelerating, and the benefits are becoming even more clear.

“The opportunity for companies to reduce costs and also improve effectiveness and business alignment by shifting to a GBS approach are impossible to ignore,” said Mr. Padrón. “Instead of taking an inward-focused cost center mentality, top GBS organizations are operated as a ‘business within a business.’ They act and think like an outward-looking customer-centered service provider. The result is that they drive greater value and play a more strategic role within their companies.”

According to The Hackett Group’s Chief Research Officer Michel Janssen, “What we’re seeing with GBS is a dramatic transformation of the corporate back office. But the change requires a real cultural shift, which can be quite challenging. The Hackett Group’s research shows that companies need to truly standardize and consolidate activities across multiple functions in order to achieve the necessary economies of scale. Decision-making authority has to shift, to enable cross-functional process design and a standard services catalogue across a company. World-class companies have shown that training is required to help staff build strong skill sets in areas like business relationship management and demand management.”

Additionally Mr. Janssen says, “Research also demonstrates that companies must maintain a focus on continuous service and process improvement, as well as give consideration to how best to globalize the service delivery model to leverage offshore resources and optimize costs and skills.”

By Pradeep Khanna

In a flatter world, cost of services in Australia could potentially be impacted by how organisation culture is blending with Indian and Philippines national cultures

In Europe, Greece’s parliament approved an austerity package. One wonders though whether financial instability will be replaced by financial and social instability.

The European crisis continues to directly and indirectly impact the Australian economy through slowing global growth and funding pressures for the banks. Significant interest rate differential between Australia and other countries is encouraging carry trade (borrowing at low rates in other countries and investing in relative higher rates in Australia) thereby keeping the A$: US$ exchange rate high. The net impact of all this is a structural change in the Australian economy where cost focus is the dominant theme in practically all sectors of the economy except the resources sector.

However, the major growth engine of the Australian economy (resources sector) employs only around 2% of the country’s workforce. Like most developed countries, Australia’s service sector is has more than 75% of the country’s workforce. Services share of the workforce is even higher if we consider embedded services.

The structural changes in the Australian economy are resulting in onshore job losses, jobs moving offshore or both. The challenge for Australian corporates is now how best to balance benefits of globalised service delivery against additional complexity and associated higher risk. If managed properly, services globalisation can work very well for an organisation. On the other hand, if not managed properly, it can also become a nightmare.

Working well with different cultures is now emerging as critical success factor for globalisation of services. In this context, it is often presumed we are referring to working well with different national cultures. However, in reality, it is a blend of national and organisational cultures – one that can vary significantly from one services provider to another.

A lot of research has been done on culture – both national and organisational culture. By appreciating there is no right or wrong culture and groups of people behave differently (for a variety of reasons) helps in a better understanding of and working with different cultures.

Let’s look at how this combination of organisational and national culture impacts a service provider of globalised service delivery.

Professor Nancy Adler (In her book International Dimensions of Organizational Behaviour), cites researcher André Laurent’s finding – cultural differences were “significantly greater among managers working within the same multinational corporation than they were among managers working for companies in their own native country. When working for multinational companies, Germans seemingly became more German, Americans more American, Swedes more Swedish, and so on.”

Likewise is the culture of Indian service providers like TCS, Infosys, Wipro, HCL, Tech Mahindra more dominantly Indian or an appropriate blend of their national and organisational culture?

Let’s have a look at two leading service providers – Accenture and TCS. I have chosen these two as TCS’s global headcount is now around 90% of Accenture’s and in times to come, it may well equal or be higher than Accenture. A similar analogy will equally well apply to other organisations as well.

Table 1 below gives some comparative information of Accenture and TCS

Table 1 : Accenture and TCS – Global Presence, Comparative Global Headcount * , Annual Revenues **, and People from India & Philippines as % of Global Headcount

* Global headcount above is comparative headcount with Accenture as a base of 100
** Accenture’s revenue is for FY ended 31 Aug 2011 and TCS revenue is for FY ended 31 March 2011
Source – Accenture and TCS websites

Looking at Table 1 – columns (2) & (3) ONLY, it could be inferred that both Accenture and TCS are geographical well-diversified global organisations with TCS being relatively smaller of the two. As presumably none of them appears to have a dominant nationality (when looking at column (2) and (3) only), it could possibly be inferred that both have a dominating organisation culture which appropriately takes cognizance of differing national cultures in the countries these two organisations operate.
However, Looking at Table 1 – column (4), Accenture’s revenues are almost three times TCS’s revenues. It could therefore be inferred that Accenture is more into high end consulting with higher charge out rates. So Accenture’s culture is probably more innovative as required by a successful consulting company.

Now, Look at additional information in column (5) in Table 1 – People from India and Philippines as % of global headcount – this does indeed provide more insights.

In Accenture’s case, people from India and Philippines now account for 40% of their global workforce – with India headcount being almost three times Philippines headcount. These two countries are a major part of Accenture’s Global Delivery Network (GDN). Accenture GDN’s rapid growth has come almost entirely in the last 8 years and more so in the recent years. GDN accounted for 13% of Accenture’s global headcount in 2003 and this has now grown to almost 60% in 2011.

These numbers become important as market feedback indicates global organisations are now including global delivery in almost all deals wherever possible.

So, we come back to the key question we asked earlier in this article – i.e. – in case of global organisations like Accenture, IBM, HP, CapGemini etc., do Indian employees become more Indian and Filipino employees more Filipino when dealing with their counterparts and their customers in other countries ? Or is global service provider’s organisational culture so strong that it becomes the dominating culture in spite of large number of one or two country nationals in their global workforce. While I could answer these questions, for the time being I will leave them with you as some points to consider and to ask global services provider.

In TCS’s case, people from India and Philippines account for almost 93% of TCS’s workforce. However, it comes as no surprise that its workforce consists predominantly of Indians. People from Philippines are less than 0.5%.

So, do Indian organisations like TCS, Infosys, Wipro, HCL, Tech Mahindra have a dominant national (Indian) culture which possibly blends with its organisational culture. Some points to consider and to ask these organisations when you have them as a service provider. And presumably an understanding of and an ability of working with Indian culture would be helpful when they are the service provider. Again, some points to consider and ask your Indian services provider.

Note: There are other aspects of culture that are equally important and these will be discussed in subsequent articles later this year. Also, working well with different cultures is just one of the critical success factors in managing a successful globalised service delivery

This services globalisation insight has been brought to you by GLOBAL MINDSET.

By Kevin Scarpati

10.) Flexibility
With uncertainty surrounding today’s global economy, companies need the ability to expand or downsize quickly. Unfortunately, that’s not always possible with today’s labor laws, as employee lawsuits are at an all-time high. By outsourcing, companies take that risk away, allowing businesses to adapt more quickly to rising or slowing demand.

9.) Efficiency
Odds are, your company isn’t an expert in IT management, HR services or accounting functions. Companies can spend weeks, sometimes months, just finding people for a particular in-house department. From there, you’re forced to train people and really adjust on the fly. At the end of the day, businesses can be left with a hefty bill with little to show for their money. By simply outsourcing basic business services, companies are able to jump right to the finish line when building a department.

8.) Peace of Mind
While the uncertainty surrounding outsourcing contract negotiations can be unsettling, companies often feel a sense of relief once people start signing on the dotted line. Contractual agreements offer protection for both parties, and remove any nasty human interactions that can take place when in-house workers are dismissed. Outsourcing companies can also be held responsible for negligence and poor performance in legally binding contracts, further aiding the outsourcing drive.

7.) Freeing Up Internal Resources
Why waste people in areas that don’t focus on core business functions? Capital and people are becoming higher commodities in a difficult financial environment, and companies need as many good people as possible to focus on what really matters with a business. By outsourcing non-core processes, companies free up time and capital to move their business forward.

6.) Risk Management
Going along with No. 10 on this list, risk management is another top reason why companies choose to outsource. If a business is launching a new product or offering something new, having employees in developed nations offers little in terms of risk management should the product not do well on the open market. With offshore workers, operations can quickly be fine-tuned to meet a skyrocketing demand or a demand that never comes into fruition.

5.) Improved Service
Believe it or not, outsourcing can actually help improve service. Why waste time and valuable resources training an in-house customer service team when there are professionals to be hired that can usually do the same task for less money? IT performance, HR functions and financial services are some of the most commonly outsourced jobs, and companies all over the world have been working in those specific fields for years. Having an offshore company handle non-core business activities usually lead to better service.

4.) Tax Breaks
Check out our piece on the Top 5 Tax Efficient Outsourcing Locations, and you’ll get a clearer picture on why companies choose to outsource some of their operations. By handling business overseas, businesses are able to take advantage of lower corporate tax rates. Countries like Ireland, Hong Kong, Singapore and Taiwan have very low corporate tax rates, which can have a dramatic impact on a company’s bottom line should they outsource certain services there.

3.) Lower Regulatory Costs
Not only can companies pay offshore workers less, but significantly lowering regulatory costs also drive down the outsourcing price tag. Programs like Social Security, Medicare and unemployment insurance don’t exist in many developing countries, which drive down outsourcing costs further. Even if an outsourced worker makes the same as his/her American or European counterpart, lower regulatory costs mean that it’s usually much cheaper for the business to go with the overseas employee.

2.) Focusing on Core Business
The second biggest reason companies choose to outsource is to free up time to focus on core business processes. Without having to run an accounting department or an IT operation, companies are able to direct their scope to work on what really matters inside their business, increasing work flow and allowing managers to finish projects faster.

1.) Lower Wages
As the old saying goes, it’s all about the money. The fact of the matter is that most companies wouldn’t be sending jobs overseas if they weren’t saving money. According to a 2010 study, India’s per capita income is $1,371, good for 133rd in the world. By comparison, the United States placed tenth, with a per capita income of $46,860. Lower wages are a huge factor when outsourcing, and the top reason companies choose to send parts of their operation overseas.

Source: Supply Chain Digital