3forward » Alliances

Outsourcing Sales Leaders Brainstorm in the Big Apple

Matt Smith — Fri, 01 May 2009 09:44:06 +0000

Observations from The Outsourcing Institute’s Service Provider Summit, April 23, 2009, New York City

The Outsourcing Institute hosted an industry wide day of ideas and collaboration last week at the generous accommodations of the Law Offices of Kelley, Drye & Warren, Manhattan. The event attracted a well rounded consortium of outsourcing leaders; analysts and advisors; on-, near- and off-shore ITO, BPO and other providers; contract and negotiation experts; sales, marketing and branding specialists; relationship and governance leaders, and, of course, buy-side executives. Despite the lingering economic challenges which frankly everyone is tired of discussing, this was an energized, dynamic and optimistic group.

Current key buyer and market trends were presented by top researchers and analysts in the opening session, including the following. Sole source activities are up markedly year-to-date. Buyers are ‘trading’ scope increases with their incumbent providers in exchange for lower costs. It is becoming a great time to be a Tier Two provider as some of the largest outsourcers are having trouble shedding cost fast enough to meet buyer desires. This appears especially true for Tier Two’s who can exploit domain expertise in BPO solutions (an area it was suggested they can often out execute the larger players).

Hot industries for outsourcing include Government, Pharmaceuticals, Healthcare, and Consumer goods. High activity functional areas are application development and maintenance, finance and accounting (particularly accounts payable) and IT.

Breakout Session at OI's Service Provider Summit

A strong recommendation from the panel was for providers to concentrate on existing clients for revenue growth, especially where there are opportunities to provide client solutions that could create fast and measurable cost reductions. Deploying a proactive, consultative selling model when taking this approach was highly advised, rather than waiting for buyers to see the opportunities and ask for proposals!

There was encouraging news for emerging market providers as it was suggested buyers continue looking to these newer locales for solutions. (Providers, make sure you are sales ready with a compelling value proposition and clear differentiators.)

Speaking of Sales Ready, 3forward president Dan Hudson ran an afternoon breakout on Sales Best Practices that drew many Summit attendees. The topic, Old Rules, New Tools, generated some great dialogue with the many company and sales leaders on where they should focus their efforts. The presentation is available on 3forward’s home page and even more recommendation are covered in Dan’s recent blog post It’s Not Too Late to Start 2010 (Sales) Planning.

Of all the breakouts and topics of the day, the social networking panel that wrapped up the Summit seemed to be the hottest. Three leading practitioners in the 2.0 technology and marketing world, Jennifer Naylor, Vidar Brekke and Jeremy Epstein, provided simplified but powerful explanations of what social networking for the business-to-business world “Is and is not.” Each offered a number of examples of the tools and platforms and plenty of recommendations on where to start. Their session concluded with these closing points:

ONE, the wave of change started by social networking has just begun and will flatten many industries, companies and processes – and dramatically transform many others – as it unfolds;

TWO, while many social networking tools do sit on top of ‘low cost platforms’ the process of participation requires a measurable investment in strategy, time and resources for it to succeed;

THREE, It’s not a question of if your company should participate, it’s a matter of when, where and how you decide to get started.

The NY Service Provider Summit was a great combination of skill sets, backgrounds, experience and chemistry. It was very well choreographed and moderated by Frank Casale, CEO and Founder of The Outsourcing Institute (OI) and industry expert Jerry Durant of IIOM. OI by the way has a newly established Facebook page where many of the Summit presenters and participants are continuing to share ideas and discussions. Feel free to drop by to get connected with this group and many others in the outsourcing community. We also invite you to browse 3forward’s Facebook page and encourage you to join our conversations.

Michael Ryan (Kelley, Drye), Kathryn and Frank Casale

To all our fellow Service Provider Summit attendees, last week was a great reminder of how many excellent ideas are out there and whatever help, guidance or advice anyone needs is simply a click away. Don’t be shy!

Why US Companies Should Partner With Indian Outsourcers, Part 1

Matt Smith — Fri, 10 Oct 2008 12:03:59 +0000

Most technology and solution providers in the US are missing a tremendous opportunity to grow their sales through alliances with India’s IT outsourcing leaders. This is particularly true for firms offering on-site services, possessing vertical or domain specific solutions or operating in highly commoditized industries such as desktop support, product acquisition or transactional-based services.

To be fair, there are challenges to this strategy. India is a long way from the United States, ten or more time zones makes for conference calls at really odd-hours. Culturally the two regions are quite different – a reality that becomes evident for US travelers the moment the plane doors open on your first trip to Bangalore, Mumbai or Delhi. There is also a stigma in the US associated with Indian-delivered tech support and, to many Americans, India equals off-shoring and job losses.

So why consider it with so many obstacles to overcome?

The most fundamental reason is to look at it from the classic ‘shareholder perspective’. Sales alliances with Indian companies can be great for the bottom line. The largest of India’s outsourcer community, collectively referred to as SWITCH (Satyam, Wipro, Infosys, TCS, Cognizant and HCL) are big, fast growing companies. Their combined total revenues for the most recently completed fiscal year exceeded $19 billion (USD) according to annual reports, and the group averaged 37.5% in revenue growth last year. Most impressively, they generated more than $4.2 billion in net income during that same period. Compare that performance to EDS (prior to acquisition). Last year, the Texas based company that created IT outsourcing made just $716 million in net income on $22 billion in revenue.

The trend is likely to continue according to Gartner. In August 2008 the research firm reported “India’s top outsourcing companies will likely become the next generation of “mega-vendors” for IT services by 2011, competing for deals worth more than US$1 billion,”. The report went on to say the largest players will increasingly compete with other top players such IBM, Accenture and EDS for those large deals.

Do big, successful companies need partners? In research report published last year, Ravi Radjou, a Forester Vice President and Principal Analyst commented bluntly that, “Indian IT providers lack the outward-facing skills needed to orchestrate Innovation Networks — global ecosystems of internal and external R&D and go-to-market partners that collaboratively design and deliver business innovations that clients’ desire.” He further added, “In particular, Indian IT providers’ CEOs — many of them engineers by training — must dare to reorganize their sacrosanct CT office and R&D groups to act less as inventors, and more as brokers, of external innovation partnerships.”^{^[1]}

Evidence recommendations like these were taken seriously can be found in Everest Research Institute’s second quarter 2008 Market Vista report. They state that off-shore centric suppliers (India’s top tier), announced 19 new alliances in Q2 alone, a near 100% increase over the first quarter, when ten new alliances were formed. This figure counts ‘only’ those alliances formally announced on web-sites and press releases and excludes many more tactical associations that were likely formed during the same period.

Developing alliances with India’s outsourcer community is a pathway to growth both in the US and internationally. While many Indian companies still derive the majority of their revenues from US customers, they are very focused on growing other global regions to diversify from their US dependency. They need partners that can help them establish market presence in regions such as APAC, Europe and Latin America and also those which make them stronger or more competitive in mature markets like the US.

Coming in Part 2: How To Establish Sales Alliances With Indian Outsourcers

[1] Indian IT Providers Must Reinvent Their Innovation Strategies To Sustain Global Leadership, February 28, 2007, Navi Radjou, Forester Vice President and Principal Analyst February 28, 2007