If you look back five years ago, most people would think of the value of outsourcing simply in economic terms as a way of reducing costs and restructuring the balance sheet. I think the focus now is far more on “is there a better way to leverage technology† in a very competitive environment where we have pressure to move quickly.” We are therefore constantly reengineering our business processes and IT systems, and we just don’t have access to all of the schools that we need to do that quickly and be active in the marketplace. So we are looking for a different type of sourcing that enables us to respond to that market pressure. That is the big driver of the outsourcing market nowadays.
On Where Outsourcing Is Heading
I continue to see growth opportunity. We have always thought that the market would be at close to 100 billion dollars by 1998. Companies are looking for outsourcers to take more accountability for business outcome, as opposed to business input. If you do a whole business process, the business outcome is the availability of the goods and services.
On Relationships Changing
Most companies realize now that this is a relationship that has to work seamlessly in an organization, and it has to last a long time. It is a long-term commitment that can’t be unraveled quickly if something is not working well. Therefore, you have to work very closely to make it work. I see a very strong level of support for an alliance where it is very difficult to determine who works for whom because both client and outsourcer are working as one team to achieve the client’s goal. A key focus of ours is to have compensation directly tied to the success of the client. As you move to a selective business process outsourcing, clearly the relationship is moving toward a shared risk environment. That is not to say that in traditional IT outsourcing you don’t take risks. You do, but now your risks are tied to the success of the business. Where we believe we have the expertise, we are prepared to take business risks. So, it is very important for any outsourcer to make sure that they truly have expertise in that business process, otherwise they can’t assist in the cost of performing.
On Growth Areas
Let’s not write off the data center. The whole market continues to grow including the traditional parts that started it off. There is no sign of people not wanting to look at their data center or application maintenance, or their application development. We have not taken resources from there† we have grown our resources into new areas.
On New Areas
A lot of people don’t understand that the small and medium enterprises spend 44% of the money spent on technology in the world. There is less usage of outsourcing by those folks than there is by larger enterprises. No one has sat down to think how to get to these people, how to deliver officially, and what you do for a larger engagement in terms of marketing and delivery is going to be different than doing the same thing for multiple smaller enterprises.
On the Internet/Intranet
I think most people understand the classic stages of development and uses of the network. They want to understand what it is and how to manage it; start interacting with theircustomers, suppliers, and between their employees; and then start doing key business. There is a huge interest in how to move through these phases, how to manage the application environment on the network, and how to integrate that back into all the other core systems that run the business.