By Martin Conboy, President – Australian BPO Association

As we are coming to the end of yet another eventful year, I thought that it might be a good idea to ponder upon what next year will bring.

I believe that we will still see even more concentration on lower operating costs as companies try to survive in an ultra competitive environment, and we will see more ‘Green’ initiatives in the way that good companies go about their business.

Will we or won’t we have a US double dip recession?

We hope not. However, economists in the US doubt consumers can keep spending like they did in the northern summer without actually earning more. Consumers are already struggling with higher prices for basics like food and petrol. For spending gains to be longer lasting, employers will need to hire more people and that’s not looking very promising. In recent months, US job growth has stagnated and employers have only added about 75% of the number of jobs needed just to keep up with population growth. I believe that it will be hard for the US to justify sending jobs offshore with nearly 20 million people on the unemployment list. We have heard of a number of BPO projects being repatriated and companies using that as a marketing edge. That will cause a slow down in BPO activity in this part of the world as most large projects come from America
This will in part be offset by the acceleration of Shared Services. Next year will be the year when Shared Services comes of age, especially in Australia. It has reached the tipping point and is just about there or there about. I believe that Shared Services will become a very important part of the BPO value chain and move offshore in an accelerated manner. The cost efficiencies will be too compelling for companies to ignore and will dictate the offshoring of non-core services.

We are going to hear a lot more about China next year. We believe that China will have little or no impact on BPO in the broader region, but it will all be about internal growth. There will be fantastic opportunities to sell consulting services into China as they gear up to service their own market. Just remember that over 60,000,000 people took an international holiday out of China last year and their middle class is growing very quickly.

The cloud finally seems to be getting traction and organisations are starting to get their heads around the cost savings, such as no infrastructure costs and the efficiencies of centralized and standardized databases. Converging technology and the further blurring of the lines between devices like smartphones, tablets and laptops and an emphasis by the cloud players to develop mobile computing applications so that people can access data anywhere, anytime anyhow will have a dramatic impact of its uptake.

Online shopping will offer cost savings to consumers of up to 50% and will drive competitive savvy companies to offer BPO customer support behind their shopping websites as a way of establishing competitive advantage.

We believe that with inflation set to stay around the target set by the Reserve Bank, Australian economic growth in line with the long-term trend and unemployment broadly steady, there will be no need to move interest rates upwards to put a break on the economy.

The Australian dollar will still stay at its record highs, which will only amplify the cost difference between Australia and less expensive BPO Asian destinations. The Australian call center outsourcing sector will really start to shake itself out next year, and we expect to see a lot more mergers and acquisition activity and maybe some players withdrawing from the market altogether.

By Natalie Williams

It is no secret that, historically, Australian businesses have been more apprehensive towards outsourcing and offshoring than their European and American cousins.

Having begun its life as an outpost of the now defunct British Empire and remaining, for the most part, contently insular and isolationist until the final decades of the 20th century, an attitude of ‘Australian-Made’ has been interwoven into almost every industry vertical.

Nevertheless, our proximity to the opportunities of Asia, burgeoning post-GFC economy, and a growing desire from Australian businesses to capitalise on their ability to now compete on the global stage has caused a shift in opinion when it comes to the BPO community. At SSO Week in Melbourne this year, we witnessed these changing attitudes first hand, with discussions becoming far more open about what Asia has to offer and far less taboo than the previous year.

Interestingly, just as the private sector is delving deeper into BPO back office provision and the benefits of relocating to APAC and beyond, so too is outsourcing creeping up the public sector agenda.

During my extensive research with all tiers of government agencies, it became apparent that in order to fully realise the benefits and cost savings of shared services, the public sector might need to look outside of their existing workforce and capabilities to really deliver a citizen-centric service.

There are, of course, still mighty mountains to climb in the form of political pressure and media frenzies around redundancies, redeployment and retaining jobs onshore, but make no mistake, outsourcing discussions are happening at a federal, state and local government level.

I am looking forward to delving deeper into this evolution of attitudes at SSON’s Public Sector Shared Services Transformation Forum in early October.

In the meantime, there is an interesting white paper available here about how the BPO community is responding to the growth of the Australian outsourcing industry and what tailored offerings we can expect to see in the future…. Watch this space.

Natalie Williams
SSON Australia

Source: Shared Services Network

Insourcing vs. Outsourcing vs. Hybrid Models – What’s best for you?

By Mark Atterby Senior Staff Writer

As the outsourcing and shared services industries continue to grow and evolve, more hybrid arrangements for outsourcing are emerging, where organisations and their providers can adopt and adapt a variety of models to best address their business needs. The Sauce speaks to Ray Slayford, National Lead Partner of Procurement and Shared Services KPMG – at the 14th Australasian Annual Shared Services & Outsourcing Week in Melbourne, about the evolution of the shared services and outsourcing industries.

In the past, outsourcing and shared services were viewed as two very distinct business practices, where numerous debates existed concerning the merits of one versus the other. KPMG’s Ray Slayford comments, “I think the existence and understanding of shared services (in-sourcing) and the various forms of outsourcing (on-shoring, near-shoring and off-shoring) are becoming far more common. We will see greater emergence of hybrid models which will connect insourcing, outsourcing, offshoring and on-shoring with different providers including the cloud and overseas providers.”

The emergence of various hybrid forms of outsourcing and managed services has been identified in various studies. Recent research by the SSON, published in March 2011, identified three types of hybrid models that exist in the market today:

   1. Geographic Hybrid: Involves models where a particular geography may have been outsourced and another intentionally keeps its services within a captive shared service centre (i.e. the Melbourne office of a corporation may have fully outsourced a process while Sydney retains control through the managed service centre. This enables a clear comparison for many processes between what is provided by the captive shared service centre and the outsourcing provider. 
   2. Scope Hybrid: Hybrid models that are separated by scope with non-core, repeatable, measurable, and predictable activities migrating to an outsourcing provider, and activities that are core to the business or cannot be migrated due to data restrictions or culture remaining in a captive shared service centre.
   3. Intermediary Hybrid: Fluid hybrid models where the shared service centre is the intermediary step for processes prior to full outsourcing to the external provider. This allows the internal change management required in pulling activities away from the divisions, departments and subsidiaries to be completed; the activities and procedures stabilised; and the processes understood prior to transferring to the outsourcing provider.

Traditionally, Shared services (In-sourcing as opposed to outsourcing) refered to the provision of a service by one part of an organisation or group where that service had previously been found, to more than one part of the organisation or group. Thus the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider. The key is the idea of ‘sharing’ within an organisation or group i.e. two government departments may share the same HR, Payroll and finance services and infrastructure.

In the past outsourcing and shared services were seen as being diametrically opposed. But the two have become blurred, particularly as commercial enterprises engaged in shared services. The internal department could evolve into being its own commercial entity (profit centre), where the services it provided could be offered to other businesses and organisations, hence becoming an outsourcing provider.

Though the provision of shared services and outsourcing are very different models, where there are constant debates about the merits of both, there is an increasing view that they can harmoniously co-exist. The development of hybrid models, that combines the benefits of insourcing and outsourcing, allows organisations to maintain control and migrate from one service to the next.

The Australian shared services market is quite mature, where, over the last twenty years, a lot of private organisations as well as the public sector have explored or developed shared services with different degrees of success. Slayford believes that where Australia is lacking maturity to some extent is in the outsourcing phase and the transitioning from shared services to outsourcing within a hybrid model, he states, “What’s less mature compared to Europe and North America is the outsourcing phase, which is growing at a rapid rate with the emergence of China and Asia as outsourcing destinations.”

“Asia has a lot to offer in terms of talent and resources. They have highly skilled workforces. They have highly educated workforces as well as high English speaking populations. They can provide services that are in high demand where we are experiencing shortages in Australia.” Asia is close and offers Australian organisations, with providers in places like China, Vietnam, the Philippines, as well as India; a number of opportunities in developing cost effective solutions based on hybrid managed services and outsourcing models.

The mainstream view is that outsourcing and shared services should not be viewed as being diametrically opposed to each other. Hybrid models are being developed to leverage the benefits inherent in each, offering organisations greater flexibility and options when it comes to more efficiently managing their business processes.

Shared Services and Outsourcing community assembles in Melbourne

By Martin Conboy – President, Australian BPO Association

Last week I was a guest at the 14th Annual Shared Services and Outsourcing conference and exhibition in Melbourne. Over 470 industry professionals gathered for one of the year’s largest outsourcing exhibitions and conferences; speakers included Donal Graham of Deloittes and Martin Fahy of The Hackett Group. Everybody that was anybody in shared services in Australia was there and the energy was palatable.

The concept of outsourcing and offshoring was very mainstream at this conference and the discussions had moved well beyond labour arbitrage and centered on available workforces and access to skills. It was not a case of if people were outsourcing – it was a case of when. This was a sophisticated group who were very hungry for information and knowledge.

Charles Reis – General Manager of Shared Business Services at MMG Minerals & Metals Group: “This is THE annual meeting place of just about everyone in the Australian shared services profession.”

Emma Beaumont, Global Head of Events, SSON: “Over the last 14 years, the shared services and sourcing industry has been undergoing an exciting phase of growth in the Australasian region. This year, our 14th Annual Australasian Shared Services & Outsourcing Week saw over 470 industry professionals come together in Melbourne to mark the cross over in our region from industry gathering, to a bonafide shared services community.”

In case you were wondering shared services refers to the provision of a service by one part of an organisation or group where that service had previously been found, to more than one part of the organisation or group. Thus the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider. The key is the idea of ‘sharing’ within an organisation or group. Significant parts of the shared services are outsourced or offshored. Shared service is usually the domain of IT, Finance and HR.

During the conference I met all sorts of players on different parts of the outsourcing journey, some who were starting out and looking for information and others who were well advanced and happy to share their experiences.

One of the delegates was Dr. David Platt of the Municipal Association of Victoria. He is responsible for $5 Billion of costs across the State of Victoria and is looking for ways to squeeze more value from his assets. “The biggest hurdle to this is in fact diversity, every council is different, we have different systems, we configured them differently and as result of that we work on different business processes, we do things differently in each council.

I caught up with Ray Slayford, an advisory partner with KPMG and one of the events sponsors reflecting on the place of shared services in the business landscape. “The existence and understanding of shared services and hybrids of outsourcing, onshore, offshore, in source and outsource is much more common place.”

“A lot of organisations will look at the differences on these models and the emergence in the hybrid model is the connection of both in source, outsource, onshore, offshore models with different providers including cloud or overseas providers is much more commonplace.”
He touched on the offshoring debate. “Asia has a lot to offer in terms of talent and reach as they have highly skilled workforces who are highly educated and English speaking. They can provide services that are in demand or in shortage in places like Australia. This talent can be onshore, could be offshore, could be a hybrid or even attracting the right talent to Australia through immigration.”

A sign of a good conference is that by and large most of the delegates were still there on day three, which is testament to quality of the speakers and the interesting formats that the organisers used to get the learning and information across.

Of concern like the Frost and Sullivan event of the previous week, is that there is limited understanding with in this community of the impact of Social Media, The Cloud and utilising mobile marketing as a tool. I guess that will come and I look forward to next year.

By Mark Atterby – Senior Staff Writer

Dr. David Platt was a delegate at the SSON conference and exhibition last week in Melbourne. We caught up with him during his visit.

Victorian local governments are looking to expand on their use of outsourcing and managed services, so in turn they can offer greater services to their citizens and constituents. Dr.. David Platt, of the Municipal Association of Victoria commented, “Fundamentally, it’s about improving services to our citizens and the communities for which local government serves. It also means giving them better and more flexible access to those services.”

Access is not just via the internet or the contact centre anymore. Plant observes, “Increasingly, people are accessing a vast range of services from their mobile phone and other devices. We want to offer the Victorian citizen a great deal of flexibility in how they access the services.”

Regardless of how they decide to interact with their local council, the citizen will receive a consistent level of service via a one-stop-shop for local government type of environment.
All councils, regardless of their size, have limited resources when it comes to investing in new systems and applications. They need to work together and collaborate to realise the potential benefits, Platt says, “We have very limited resources with which we can do things, so the way we are looking at doing our shared services is that it has to fund itself. One process and project at a time. Once the benefits have been realised in one area we can than move onto another.”

“The benefits that we achieve from moving into an area of shared services have to fund the change and the transformation that we have to go through. And when we start getting into some bigger programmes such as asset management, we want to see the benefits we get through collaboration actually Dr.iving a lot of cash benefits.”

The biggest hurdle local government is facing in instigating these new services involves the various legacy systems and different processes, Platt states, “Every council is different, we have different systems that are configured differently. We work on different business processes. Essentially we do things very differently in each council.”

To overcome these legacy systems, the local councils of Victoria are investigating their cloud options and the feasibility of moving to a single platform.

At present there is no political imperative from the state government for councils to undertake these initiatives. They are taking a ‘let’s experiment and see’ approach. But according to Dr. Platt, once the business case is signed off, things should start to materialise within 9 – 12 months. “Within two to three years we expect to see significant cashable benefits flowing back into councils. It is a long journey, but things in government take time.”

Shared Services & Outsourcing Week Australasia 2011 Announces G6 Visionaries

The Shared Services & Outsourcing Network (SSON), the largest and most established community of shared services and outsourcing professionals, announced the results of its community’s selection of the “G6”. This group of industry thought leaders will be featured at SSON’s upcoming 14th Annual Australasian Shared Services & Outsourcing Week conference, which will be held at the Palladium at Crown in Melbourne, Australia from April 11 – 14, 2011.

The panel, moderated by Dr. Martin Fahy, Practice Leader APAC, The Hackett Group, will feature the viewpoints of several of the industry’s top sell-side authorities:

•   Asheesh Mehra, Head of BPO, Infosys BPO
•   Donal Graham, Partner, Deloitte
•   Arno Franz, Partner and President, TPI
•   Ray Slayford, National Lead Partner of Procurement and Shared Services,
KPMG
•   Peter Barta, Principal – Consulting, Deloitte
•   Raja Venkateswar, Head – Sales, Marketing & M&A, Xchanging

“The G6 panel is a substantive platform to challenge conventional thinking through the kind of hard hitting, no hold barred conversations we need to have as an industry. No sugar coating, no half truths – just facts, insights and perspectives on issues and challenges that define our business,” stated Asheesh Mehra, Head of BPO for Infosys BPO.

“The G6 debate is poised to move from ‘shared services vs. outsourcing’ to ‘shared services’ value capture through strategic sourcing’. Recent advances in technology and operating disciplines have enabled the convergence of a number of value-capture options for shared services operations,” remarked Peter Barta, Principal – Consulting for Deloitte. “
Technology evolutions such as open systems, interoperability and cloud; standardised processes and quality disciplines for business processes; and greater commercial and operational control of outsourcing models are all forces that combine to create a new wave of innovation and improvement options. These choices will allow Shared Services leaders in Australia to optimise quality, cost and risks in order to create significant competitive value for their user organisations.”

Sarah Clayton, Head of Strategy at SSON, stated, “With the Australasian market gaining a deeper understanding for the true value of shared services and refined business processes, we look forward to hosting an event that provides significant educational and networking opportunities to all attendees.”

The premier shared services and outsourcing event will take place at the Palladium at Crown in Melbourne, Australia from April 11 – 14, 2011. Over the course of four days, the event will engage more than 450 shared services and outsourcing professionals with more than 35 presentations by industry experts.

The 2011 Australasian Shared Services & Outsourcing Week is set to emphasise one-on-one networking and personal development, as well as featuring the 2011 SSON Excellence Awards – which includes “The People’s Choice” for Personal Contribution to the Industry Award. The Awards Ceremony will be take place on April 12.

More information about the Shared Services & Outsourcing Network (SSON) can be found at www.ssonetwork.com. Stay up to date with SSON’s latest twitter posts at twitter.com/ssonetwork, connect with global practitioners, providers and advisors on the Shared Services & Outsourcing Network (SSON) LinkedIn group and Sign up to receive SSON’s weekly updates today