BPO - What Next

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Business Process Outsourcing

– WHAT NEXT?

Mustafa Shehabi

[email protected]

January 2003

Disclaimer: This paper is a compilation of data from various sources together with the opinions of the author. This paper is not meant for any commercial use or transaction. This is for private

circulation only and not meant for publishing on any public domain.



Business Process Outsourcing – What next? Jan’ 2003

Mustafa Shehabi

[email protected] 1

INTRODUCTION ......................................................................................... 2

BPO DEFINED........... ............. .............. ............. ............. ............. ............. .... 3

BPO MARKET DRIVERS.......... .............. ............. ............. ............. ............. 3

CLASSIFICATION OF PROCESSES WITHIN AN ORGANIZATION.... 4

BPO GROWTH FACTORS...... .............. ............. ............. .............. ............. . 4

BPO GROWTH INHIBITORS ............ .............. ............. ............. .............. ... 4

BUSINESS FUNCTIONS ELIGIBLE FOR BPO............. ............. .............. . 5

BPO MARKET STATISTICS.............. ............. .............. ............. ............. .... 5

BPO COMPETITIVE LANDSCAPE................... ............. ............. .............. . 6

BPO MARKET TRENDS....................... ............. .............. ............. ............. .. 9

EMERGING SOURCING TRENDS........................ .............. ............. ........ 10

CRITICAL DIFFERENTIATOR 1......... ............. ............. .............. ............ 12

CRITICAL DIFFERENTIATOR 2......... ............. ............. .............. ............ 13

A NEW VIEW OF THE IT SERVICES MARKETPLACE...... .............. ... 15

THE MATURITY LIFE CYCLE.................. .............. ............. .............. ..... 17

BPO – WHAT NEXT?................ .............. ............. ............. .............. ........... 18

CONCLUSION............................................................................................19




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Introduction

As downsizing, competitive business pressure, macroeconomic and politicalfactors change the business landscape, organizations are searching for ways to

manage growth cost-effectively and efficiently with less infrastructure and fewer employees. For these organizations business process outsourcing is emerging asa viable and a strategic business solution.

Over a period of time, businesses have come to rely more strongly on externalservice providers who can leverage their domain, process expertise and costeffective delivery models to give an undeniable advantage in managing non-core

processes for businesses.

Business Process Outsourcing (BPO) as a service is usually considered as part of the IT services industry, as it is a form of IT enabled service. Thus, BPO too issubject to the dynamic changes sweeping across the IT services industry, whichis the least mature segment of the IT market. The recent economic conditions areforcing attention to some basic but redefining issues concerning buyer sourcingstrategies and service provider delivery models.

This paper makes an attempt to:

1. Analyze the global BPO market.

2. Classify different BPO vendor categories.

3. Analyze recent trends within the BPO market.

4. Understand the evolving model of buyer sourcing strategies.

5. Analyze what the current BPO model will evolve into.




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BPO Defined

The IT services industry in the recent years has desperately been searching for agrowth stimulant to keep up the double digit growth rates which it was used to -

in the not so recent past. Apparently, it seems that it has found this catalyst for invigorating growth in “BPO” also known as Business Process Outsourcing.

Various definitions of BPO exist. Simply put, it is a business strategy used by

enterprises to access best-in-class processes and cost predictability.

Alternatively, BPO is defined by Gartner as “the delegation of one or more IT-

intensive business processes to an external provider who, in turn, owns,

administrates and manages the selected process(es), based on a defined and

measurable performance metrics.”

BPO is not an IT service line but rather a contractual agreement to deliver acombination of business process transaction management services and ITmanagement services (refer paper: IT Services 2003 and Beyond. A Perspective:

Creating Recovery).

BPO Market Drivers

There are two primary drivers to BPO.

1. Increasing influence of Information Technology on business transactionsand processes.

2. Tough economic conditions forcing organizations to closely evaluatetheir core processes.

These two drivers are making it worthwhile for organizations to outsource their

non-core processes to external service providers for cost savings and/or moreefficient process management and delivery.

The need for optimizing internal as well as external business operations has ledorganizations to look for ways to reduce the cost of transaction processing innon-core areas. Also, the definition of what constitutes a “core” process isregularly being questioned by organizations and as the market gets tougher, thesphere of core processes which they are compelled to manage on their own isgetting smaller, leading to a bigger addressable market for BPO. This has led tothe forecast of BPO related services as the fastest growing IT segment in thecoming years.

“BPO is the intersection o

imperatives & enablers, the must-do’s and can-do’s. The main

imperative is collaborate or die!”

“….. it is part of a portfolio oassets – the base to which a firm

builds sustainable capabilities &

competitive differentiation. The

more uncertain & volatile the

environment, the stronger the

case for BPO”

- Peter Keen

(Noted Author and Speaker)




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Classification of Processes within an organization

BPO Growth Factors

1. Budget constraints causing enterprises to increasingly look atoutsourcing their non-core business.

2. Increasing cost pressure and competition is putting pressure onenterprises to optimize their internal operations by reducing the cost of transaction processing in non-core areas.

3. Industry consolidation drives outsourcing of back office functions, asthey tend to get redundant after a merger or acquisition.

4. Globalization is driving multinational enterprises to outsource business processes to local service providers to gain local expertise, for e.g. infinance and human resource management local expertise helps a lot.

BPO Growth Inhibitors

1. Common misconception that outsourcing is a high cost alternative.

2. Enterprises doubt whether external service providers will improveservice levels.

3. Concern for loss of control of processes.

Market pressures reducing the scope of CORE processes

2

3

1. Core Processes:- Patient Care – doctor interaction

- Manufacturing Products- Representing Clients etc.

2. Non-Core, Business Critical- HR Admn.- Accounting

- Supply Chain Management etc.

3. Non-Core, Not business critical

- Cafeteria Services- Laundry

- Landscaping etc.

(Listed in increasing order of an

organization’s willingness to

outsource.)

ike is an example of an early

adopter of this view, its core

competency being brand

management, with all other

activities carried out by external

service providers.

“I am absolutely convinced that

the integration of people,

business processes &

technology, reengineered

through a BPO approach is the

way of the future….. I seeartnerships where they rely on

somebody else to invest in support & create ideas for

them. This new management

style is a company that knows

its strategic objectives & asks

what it needs to do to become

more competitive in the

market.”

- Charles Gibbons

PwC




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Vendors are increasingly using benchmarking as a means to compare processimprovements and convince customers regarding the qualitative benefits of BPO. Enterprises are also increasingly relying on independent benchmarkingdata to analyze efficiency and effectiveness of their internal operations, external

service providers can use this same data to validate the improvements their solutions offer in terms of reduced costs and access to best-in-class processes.For e.g. Six Sigma, ISO 9000 and TQM are some of the more popular ones.

Also, innovative contracts are increasingly being developed with sufficientchecks and balances to virtually “guarantee” significant cost reductions toenterprises. Enterprises are increasingly letting external service providers beresponsible for the “how to deliver”, while retaining responsibility for strategiesand policies. These developments reduce the fear within enterprises of losingcontrol of their processes.

Business Functions eligible for BPO

Various Business functions where business process outsourcing can be used areas follows:

1. Supply Chain Management- Warehouse / Inventory management- Direct Procurement- Transportation Administration

2. Sales Marketing and Customer care- Customer Selection- Customer Acquisition- Customer Retention- Customer Extension

3. Human Resources- Payroll- Benefits- Education and Training- Hiring and Recruiting- Personnel Administration

4. Business Administration- Other Administration: Claims administration,

document management, other vertical admin. processes

- Financials- Billing

- Indirect Procurement- Payment Services: Credit Card processing

and check processing.

BPO Market Statistics

Various sources have projected that the worldwide BPO market could reachapprox. $200 to 240 billion (by 2005) growing at a CAGR of approx. 10-15%. Itis a highly fragmented market with no vendor holding more that 5% of the

sset based

operations

Call-Center

based

operations

Back office

based

operations




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market share, this is typical of a relatively new and dynamic industry wherecustomers are also learning at the same pace as the vendors.Business Process Outsourcing was estimated to have a worldwide marketsize of $143 bn. for 2002.

Fig.2 Geographic BPO Market Break-up 2002

NorthAmerica

62%

Japan

4%Europe

26%

Asia Pac.

5%

Others

3%

(Source: Gartner Dataquest)

Fig.3 Worldwide BPO Services Market Size - 2002

Supply Chain

Mgmt.

20%

Sales Mktg. &

Cust. Care

11%

Business

Admn.

12%HR

29%

Finance

10%

Payment

Services

18%

(Source: Gartner Dataquest)

BPO Competitive Landscape

As enterprises seek to continually reduce and make more predictable their internal spending, many support activities, particularly those that arenonindustry-specific will represent a huge potential market for service providers.

The Business Process outsourcing market includes a huge diversity of serviceofferings that span business processes from logistics, to virtually any enterpriseinternal support function to customer care and service. Some BPO offerings,such as payroll processing, payment processing and claims administration are




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very mature, almost to the extent of being commoditized (incidentally, ADP wasno.1 in terms of revenue within the BPO space in 2001).

On the other hand, since this market is relatively new as compared to traditional

IT services – suppliers are still creating and offering solutions ahead of time,making a classic case of a supplier driven market. For the more mature offeringswe see new entrants into the space, driven by the fact that there is a significantamount of enterprise spending linked to these activities.

The BPO space is thus fast becoming a complex marketplace of suppliers, eachwith their own value propositions. Broadly, they can be classified as under:

Pure Play

This type of a provider was

formed solely as a BPOfirm, offering servicesaround a specific process.

Typically most of their revenues come from BPOservices. In many cases they

have been formed as jointventures, with deal basedequity from prospective

clients. Success of pure play players will go a long way inimpacting the growth of the

BPO market.

E.g.: Exult, e-peopleServe,Xchanging, SourceNet etc.

IT Outsourcers

IT Outsourcers were players

who got into this game viathe IT services and thetransaction based processing

areas like credit card processing / claims processing. Almost all of

them tend to have a formalBPO division.

E.g.: ACS, EDS, CSC etc.

Consultants

This group has got into the

market based on their strongfinancial and accounting

backgrounds, and with the

early adoption of BPOwithin Finance, Accountingand HR, these firms are

leveraging on a strongcompetitive advantage. Their

primary strengths are

process expertise and business consulting.

E.g.: Accenture, IBM/PwC,CGE&Y, KPMG etc.

DP’s recent move to acquire ProBusiness stems from the

ollowing facts:

1. Its core business (payroll)

faced increased competitionand reduced margins due to

the commoditization of the

payroll services market.

2. Difficulty in upselling non-

payroll services like HR and

benefits services3. Difficulty in client retention

ProBusiness has strong

capabilities in managed payroll services with the average size o

clients much bigger than that o

DP.




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Process Specialists

These providers wereformed because they had

offerings focusing on aspecific or a single business

process (payroll, benefits

admn. etc.). Their in-depth process expertise has been akey factor in the gradual but

increasing adoption of their service offering. As themarket matures to the level

of multi-process outsourcingthese players will expandtheir service offerings to

meet those needs.

E.g.: Payroll/Benefits/HR:

ADP, BrassRing, Intuit,

Convergys, Fidelity etc. Finance & Accounting:

Creditek, Equitant etc. Logistics: Ryder, UPS etc. E-billing: Metavante etc.

Offshore Providers

The need for increase in ROI

of the IT investments had

already forced the traditionalIT services players to

leverage the Offshoredelivery model. The sameholds true for BPO services,

so much so that we findstrong well-positionedoffshore players being able

to deliver very competitiveofferings, which directlycompete with onsite

providers.

E.g.: Progeon (Infosys),

Spectramind (Wipro), Ma Foi, Daksh etc.

Software Providers

As the name suggests, these

providers are leveraging

their software productexpertise to gain access to

the BPO service pie.Software products wouldinclude CRM interface

products like: computer telephony interface (CTI),contact center products.

Finance and accountingsoftware and others.

E.g.: Genesys, Flexi

International, ORCOM etc.

Business Service Providers

This group of providers hasemerged as a mix betweenthe ASP model and the pure

play BPO model. The ASPmodel offers a one-to-manyapplication centric solution,

whereas the BPO pure playoffers a relatively complex

process centric solution.

This particular method of providing BPO services isclosely been watched as the

lead runner within the mass-market space when the BPOmarket matures.

E.g.: HR: Employease, Administaff etc.

Fin. & Accounting:itAccounts etc.CRM: SalesForce.com




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BPO market trends

Business process outsourcing increasingly is being considered as a businessstrategy by enterprises that want access to best-in-class processes and cost

predictability. In 2002 four market trends clearly emphasized thistransformation.

1. Shift from transactional BPO to Strategic BPO

BPO engagements are characterized by varying levels of process ownership,from mere administration to full process management (e.g., payroll processingv/s payroll process management). The difference between the two is the degreeof the service provider’s ownership, responsibility and liability for the process.The depth of BPO engagement is a function of the customer’s size, budget andits willingness to let go of its business processes and make a BPO provider responsible.

The emphasis on business value and outcome, is driving some BPO customerstowards a more strategic outsourcing relationship, thus BPO is evolving over time for some enterprises from pure transaction processing to full processmanagement.

For a higher level of delegation to a provider, a strategic involvement of theservice provider is required in the design and management of the business

process. This is also known as “Strategic BPO” or “transformational”outsourcing. These types of megadeals in a relatively new market are currently

being initiated by bigger enterprises (typically the Global 500), and the successor failure of which will significantly affect the growth of the “strategic” BPOmarket post 2002.

2. Single process to multi-process outsourcing

The integration of complimentary applications and web-based technologies intoBPO offerings has made multi-process outsourcing a logical move towardsusing synergies, which are generated from delegating several processes to one

provider (payroll and benefits outsourcing to one provider rather than multiple providers). This allows seamless integration of data generated from multiple process interactions.

Having said that, the BPO market is still relatively immature and only a few

market-setting enterprises are willing to give up control over several processesat once. In most cases the evolution towards multiprocess outsourcing takes

place in a phased approach, through several contract extensions rather than theone big outsourcing engagement.

The emergence of providers that are delivering BPO services across a range of processes, or acting as general contractors for multiple BPO providers, confirmsthis trend.




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3. Emergence of offshore BPO

Over a period of time since the “need for Y2K bug fixers” created awareness for

the offshore model, enterprises are increasingly relying on external service providers with offshore capabilities for more complex, sophisticated serviceneeds. In the past, enterprises had already used the offshore model of delivery inareas such as accounting transactions management, payment processing, medicaltranscription and contact center services, all of which are labor-intensive

business processes.

Service providers are beginning to position themselves to offer offshore BPOservices by making investments in delivery centers in countries with a strong

pool of skilled labor, labor cost advantage and relatively sophisticatedtelecommunication and network infrastructures. Thus, countries such as India,Philippines, Mexico, Canada, Ireland, Poland etc. are a proving to be gooddestinations for offshore outsourcing of even BPO services. Enterprises havetaken advantage of this model, as evident by internal operations established byGE Capital, American Express, British Airways and HSBC in India.

4. Shift from BPO to BSP

In a large scale BPO engagement, enterprises select a holistic solution thatincludes multiple IT services such as, upfront consulting engagement, followed

by business process re-engineering, IT consulting, application development,systems integration, IT outsourcing, change management and processmanagement. Also, the primary buyers of BPO services are business buyers,typically the CEO or the CFO, rather than the IT department. Thus it could takeanywhere from six months upwards to many years to negotiate a deal and then

transition the business processes.

BPO providers are realizing the benefits of the application service provider model (ASP) for speed, reliability, predictability and reuse. Various schools of thought are now predicting a convergence of the traditional BPO model withthat of the ASP model, giving rise to a new Business Service Provider (BSP)model, which would enable a faster time to market and rapid deployment.

Thus, although transactional BPO still accounts for the majority of the BPOdeals, emerging trends reflect a move towards more strategic, muliprocess, dealsthat will take advantage of global sourcing advantages as well as new servicedelivery models such as BSP.

Emerging Sourcing trends

To look at what the IT services and the BPO market will evolve into, lets look atwhat the emerging sourcing trends are.

Today, the IT outsourcing opportunity extends far beyond the classical view based on categories such as:




Mustafa Shehabi


- Hardware and Software Maintenance and Support

- Business and IT Consulting

- Development and Integration

- Education and Training

- IT Management Services

- Business Management Services and

- Transaction Processing

This approach is good for measuring how an IT service provider’s revenue addsup, but does not give us a lot of insight as to how and why an enterprise sourcesinto these categories in the first place. Hence, the overall evolution of the ITservices industry and more specifically that of Business Process Outsourcingcannot be predicted by tracking these classical segments. We will have to look

beyond that for emerging critical differentiators. Differentiators which areexhaustive enough to encompass long term changes in buyer sourcing strategiesand vendor delivery models and capabilities, thereby help us in predicting thefuture course of the IT services market.

Let us begin by looking at why there exists a need for outsourcing cutting edgetechnology and applications within enterprises. There are 2 basic reasons:

1. Enterprises unable to meet their IT service requirement internally.

2. Continuing need for enterprises to evolve as a part of a connectedeconomy.

The above two reasons make IT outsourcing a necessity which enterprises arelearning to manage.

Hence, if IT outsourcing is going to be critical for cutting edge technology, itwould not be unusual for enterprises to strategically restructure their IT sourcingstrategies and that’s exactly what they are doing.

Enterprises are more than ever focusing on the IT Services Value Chain toderive a sourcing strategy.








Mustafa Shehabi


1. Capabilities selling requires an organization that integrates thosecapabilities and delivers a solution or service to the client organization(originally the role of the internal IS department).

2. IT Service capabilities selling does not work for strongly business oriented buyers or for small and medium businesses, who do not really pay for capabilities, they simply want a solution to their problem.

3. The service provider organization (capability unit) contains, manages anddevelops capabilities on economies of knowledge and scale, and the salesfront end must then find clients that need those capabilities and sell them.Recent experiences show that this is a very expensive model to sustain.(The ideal model for such a sale is the one adopted by the big consultingorganizations with the organization model focused at making a high endconsulting sale into the client.)

All of the above, bundled with the fact that the internal IS organization is nolonger the sole IT provider for an enterprise is leading to less differentiated ITservices, setting the ground for the emergence of a shared enterpriseenvironment. A shared environment, which will be a function of the match

between the provider’s capability and the customer’s business advantage,derived from this shared environment. Needless to say, enterprises will not seek a shared enterprise environment if not supported by proven business advantages.

The industry cannot forge ahead in building a single-case architecture for everything and everyone. Provider driven standardization and servicecommoditization will lead to a high volume and low margin marketplace, and atthe same time value added relationships will evolve, based on the need for differentiation on a case to case basis. This second very different area will havelow volumes and high margins.

And thus, we see the emergence of a second critical differentiator:

Enterprise Environment Shared Environment.

Gartner uses these two differentiators to define a new view of the market that isrepresented as a continuum of four sub-markets. These four sub-marketsrepresent the whole IT services market and are formed by the 2 criticaldifferentiators mentioned above. The VALUE differentiator and theDELIVERY differentiator.

2




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A new view of the IT services marketplace

Future of the IT Services marketplace: Two Critical Differentiators at work.

(Source: Gartner Research)

The two critical differentiators are used as the two axes:

1. VALUE axis: determines the client objective when buying IT services, thetwo extremes being IT efficiency and business outcome.

2. DELIVERY axis: determines the delivery models for these services, the two

extremes are enterprise environment and shared services.

The four market quadrants based on client needs:

a. Management: manage and maximize return on assets. b. Optimization: optimize internal resources (knowledge and human capital) to

deliver business value. Focus on core competitiveness.c. Access: Do not want to own technology/assets. Hence, the need to have

“access” to functionality and technical expertise.d. Creation: Wealth creation, Return on Equity. Need to create business value

beyond “access”.

In the “management” and “optimization” quadrants, capabilities selling will stillexist, while in the other two quadrants capabilities selling will just not work.This is primarily due to the fact that IT services aimed either at IT efficiency or

business value can be delivered faster within a shared environment. This speedof delivery and the ability of the clients to adapt to such solutions will over-ridethe capabilities selling cycle in the “access” and “creation” quadrants.

Each provider will need to select the market(s) in which it will be best positioned to provide IT services. Each market segment is unique and this willdefine the right capabilities, relationships, financials and offer models which the

provider will have to bring to the table for succeeding.

Business Outcome

IT Efficiency

Shared

Environment

Enterprise

Environment

Optimization Creation

Management Access




Mustafa Shehabi


The client’s spectrum of options for sourcing IT services, will thus be acombination of the above four segments and the option of using in-house ITcapabilities.

The IT services market today is primarily evolving out of the Optimization andManagement quadrants. It is predicted that in the coming seven to ten years itwill be more evenly spread in the four segments. Thus giving high growth ratesto Creation and Access quadrants. (About 90% of the global IT services market,currently falls in the two quadrants: management and optimization).

The maturity of the IT service market is increasing. Though some servicesegments like the “Management” Services have taken decades to mature out of infancy, we should expect the newer services especially the two quadrants whichare within the “shared services” spectrum, to mature faster. The main reasonswould be the following:

a. Past experience of the IT service industry in the enterprise environmentwould make it easier to develop mass-customized infrastructure services inthe “access” and “creation” segments.

b. Shared delivery offerings are more standardized than custom-orientedservices, making the move to maturation quicker.

c. Increased mergers and acquisitions arising from market conditions, reducethe scope for a large number of IT offerings, thereby reducing the pace of intense innovation and creativity seen not so much in the recent past.

d. The highly fragmented nature of IT services provider market will promptnew players to be more vertical and process specific, creating niche playersthat will be able to deliver reliable services. These new players will be“best” positioned to deliver this focused expertise via a shared environment.

e. Willingness of customers to forego IT ownership in favor of IT “access.”

f. The transition from an intra-enterprise view of IT to an inter-enterprise viewand extra-enterprise connectivity.

g. The increasing attractiveness of the Small and Medium Business segmentand its compatibility with the shared services model.

IBM Global services announced

in Feb’03 that it will provide

on-demand BPO services. An

approach IBM has been

championing because it claims

that its generally more flexiblethan traditional outsourcing

engagements, where the serviceterms & fees are more rigid &

thus more difficult to modify asthe needs of clients change.

This reinforces their strategy

announced in Nov’02 that it

will offer the first e-business

on-demand applications for

mid-sized businesses for a

usage based charge.




Mustafa Shehabi


The Maturity Life cycle

Each IT service line has its own maturity life cycle. Where each of these fall inthe four segments of the new IT services model is a function of their maturity.

Infancy Adolescence Mid-life Maturity

High RISK Low

Hence as IT services mature, commoditization increases and thereby reducing

risk in terms of cost and delivery failure. Thus, as IT services within the“optimization” and “management” quadrants mature we should expect theseservices to move to a shared environment of delivery as shown below.

- Initial phase of offering

- Single-client experience

- Strong onmarketing to

drive value

- Lack of

understanding of

service

- New offering tested on friendlycustomers

- Heavycustomization

- More providers start addressing

the service line

- Slight increase

in competition &rice pressure

- Earlymethodologies

are defined

- Offering is for the first time –

defined

- Providers canleverage on

economies of

scale / knowledge

- Service isrepeatable and

scaleable

- Differentiation

between

roviders in

terms of methodologies,

technologies

- Early signs of

consolidation

may occur

- World of best ractices and

commoditization

- Serious price

competition

- Additional

rovider consolidation

- Highly stable

and standardized service offerings

- Masscustomization

manages the

needs of different clients




Mustafa Shehabi


There are different predictions as to the rate of growth of the four quadrants,Gartner Research’s predictions are shown below to give an indication of thetrends expected in the industry:

2000 2010

Management 51% 25%

Optimization 38% 35%Access 8% 30%

Creation 3% 10%(Source: Gartner Research)

BPO – what next?

Needless to say the same is expected of BPO, which resides today in theOptimization quadrant. It has increasingly been predicted that the maturing of BPO services and the need for the stagnant ASP model to evolve will actually

promote a new class of provider, viz. BSP – Business Service Provider or alsoknown as Business Utility Provider. This class of providers will merge offeringsfrom both the ASP as well as the BPO models to deliver business value on a

shared environment.

IT services in all the four quadrants will appeal to different segments of customers with varied needs. BSP will address a unique set of clients and so willBPO and ASP. One thing is for sure, the move to a shared environment willdefinitely open the doors to the SMB (Small and Medium Business) market. For e.g. Primarily, bigger clients due to the larger engagement commitmentsrequired are currently pursuing BPO. Also, the time involved for a BPOengagement to materialize and deliver results is long, making it unattractive tothe SMB segment

Business Outcome

IT Efficiency

Shared

Environment

Enterprise

Environment

Optimization Creation

Management

Access

BPOTODAY

ASPTODAY

BSPFUTURE




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Conclusion

After going through 3 years of stagnant (at best) growth rates, providers are

realizing that tweaking their business models to deliver growth will not help. Inan industry where by the time a trend is recognized, it has already passed, when

buyers have changed, new types of competitors have arrived and technology ismore reliable and simple, many providers are sending their entire company back for re-design and reinvention.

Providers willing to do business in the new IT service marketplace, have to usenew solution delivery models, which address the customers new sourcing needs.Providers who can innovate their business models to effectively position their services as part of the “IT services value chain” will be able to deliver their “capabilities” as solutions and leapfrog over their competitors. Others willstruggle increasingly in a declining growth market.

-

“To exist is to change, to change is to mature, to mature is to go on

creating endlessly.”

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BPO - What Next