Infosys’s BPO Colloquium late last week, in Boca Raton, Florida, was a good event and a nice chance to catch-up with old friends. A couple of day’s worth of sessions covering a wide range of forward-looking topics yielded several standouts for me. They are not necessarily new trends but, rather, greater progress on key themes that used to seem further away.
First, the overall level of conversation is so much more advanced than even three years ago. The state of the art for global services has clearly advanced, and almost everyone is now focusing on how to take things to a new level. Questions and strategies are more multi-layered, with less of an underlying hope or expectation that there is a single, simple, optimal-for-all answer. True services strategies with enterprise-wide thinking are no longer the rare exception – the “sign a deal and save some money quick” mentality has matured into a more thoughtful and strategic mindset.
Second, the march of technology into BPO is both unavoidable and a force that will create significant variation and differentiation among BPO solutions and service providers – and not just three to five variations but hundreds. While labor arbitrage continues to be an anchor of business cases, technology is what provides the opportunity to change the equation and better respond to business needs. And technology is going to take many, many forms – tools with which to suck value from data or plug gaps in existing functionality, service integration platforms, small-scale platforms (five-30 users), large scale platforms (SaaS), industry-specific platforms, mobility capabilities, etc.
Quite simply, many of today’s technology plays require more meaningful investment (not to mention new skills and management disciplines) than has been true in legacy BPO. And service providers – none of which can be, if they ever really were, everything to everyone – will have to pick and choose where they invest, which in turn will guide the areas in which they become distinctive and higher value-add. So what started more than a decade ago as a fairly universal proposition around cheap, skilled, and abundant labor is being quickly redefined by technology, leading to much greater variation in competencies than we have seen to date.
Finally, it is good to see Infosys putting more definition and precision around its Infosys 3.0 vision. This has advanced a fair bit in the last three to four months and will continue to do so as it works through the implications of increasing its focus on platform-type business models and more closely linking its consulting and systems integration businesses. From my perspective, the key thing to watch with Infosys (and every other service provider) is what significant investments it makes, in which areas, and how those are intended to advance the business model – industry focus, client segmentation, role of technologies, end-to-end process approach, pricing and service structures, etc.
The next level of investments is becoming far more differentiating than the ramp-up investments of several years ago, which focused on setting up centers in the right places to support FTE volume growth. Most of the emerging investments will naturally benefit some clients (those to whom the solution applies), while providing little, if any, value to other clients (e.g., does a retailer care if a new banking platform is receiving investment?).Overall, a lot to look forward to as BPO settles into the next phase of maturity. The rapid growth of BPO was led by the fairly universal pursuit of labor arbitrage, but the real innovation is just now getting started (not to mention the need to continue changing!).
Overall, a lot to look forward to as BPO settles into the next phase of maturity. The rapid growth of BPO was led by the fairly universal pursuit of labor arbitrage but the real innovation is just now getting started (not to mention the need to continue changing!)