KPO - building on BPO as a foundation?

Clients actually have this continuous complaint that their vendors are mere 'vendors' and not 'partners' - reason being that sourcing vendors provide good answers to the questions client ask them, but they do not ask questions! Gone are the days when cost arbitrage was something that excited people. Couple of things have changed fundamentally - cost arbitrage is given and client expect vendors to influence their business on an ongoing basis; secondly, they want vendors to influence their top line and not just concentrate on the cost. How can vendors start asking 'questions' or in other words provide insights to the client into their own business thereby providing ongoing value.

Standard BPO processes provide a good platform for sourcing companies to start providing these Business Insights. BPO vendors by virtue of providing standard services to organizations have access to a wealth of information which is, more often that not, ignored or should I say, not exploited to the maximum. Just by looking at the information that the teams process on a daily basis, you can come up with trends, root causes, early warnings etc and in the process positively impact the end customer experience. Some of the questions might serve as an input for the client to fix the larger process internally, and thereby impact revenue/cost positively.

Not to mention that by providing these insights, you automatically create Exit Barriers for the client organizations which would be much harder to overcome. The reason being that you start moving from a Vendor relationship to a Partner Relationship.

Crisis 2008 - How would it affect the Sourcing Industry

The current financial crisis is posing an interesting question to the Sourcing Industry - is this good or bad for the industry. I was reading an article by an advisory group saying that FS companies would outsource much more than they had before. The reason being that these companies are under tremendous cost pressures and therefore, would use outsourcing as a strategic tool to cut costs. I think otherwise. If we look at the Financial Services companies, I would tend to believe that most of these companies are running lean operations - operations already made lean by outsourcing. This is also not surprising considering the fact that the FS industry are the champions of outsourcing and contribute 40-50% of the outsourcing business. Secondly, the current crisis is also bring in a sense of insecurity in the economy at large, important indices like unemployment %s being looked at and monitored critically now. I would believe that markets in UK and Continental Europe, where the labour laws are anyways stricter, would get more difficult in the current times. It would not be easy for companies to let go of large number of people from their rolls easily. Therefore, though outsourcing might increase in the medium to long term, certainly looks quite difficult in the immediate term. Spending by cos would become even more prudent and every penny spent would have to be justified. Also, spending would be extremely cost sensitive. Winning business and running it profitably is going to be challenging.

Vendor companies would have to evaluate their cost bases with the magnifying lens and constantly innovate their operating models. In order to win business specially in KPO viz research, analytics, they would have to prove the value to the client organizations upfront before making them to commit to large scale spending. They would have to make investments in doing proof of concepts to mitigate any risks and make the clients feel comfortable. With the crisis also affecting the sourcing vendors, the challenge that these organizations would have is to be rightly selective about where to make investments and where not to.

The current time is not that most of us have witnessed and is different to the times of 30-40% growth we have all seen. These times are surely interesting for all of our organizations.