Business process outsourcing now accounts for 30 percent of Affiliated Computer Service’s (ACS) more than $1.1 billion consolidated revenues. Jeff Rich, president and chief operating officer, said that figure is just one indication of a healthy industry.
“Outsourcing is still a growing and vibrant marketplace,” he said. “Certainly all the vendors have had fairly healthy growth during the past year, and I think that will continue. We continue to see an expansion of business process outsourcing opportunities.”
Although customers place a high priority on having the contract include the right procedures and processes to give them some degree of control, the move toward business process outsourcing gives vendors more flexibility, according to Rich. “We’re getting paid to manage a process, not to use a particular set of technology tools,” he said. “The technology tools are independent of the relationship with the customer. We are free to change those in and out, however we desire.”
An Imbalance of Power
These new relationships are fraught with new challenges, including the “people” element. Rich echoed the concern of most vendors about attracting and retaining skilled people. With only 35,000 new computer science graduates entering the workplace each year and forecasts calling for the U.S. economy to create one million technology jobs between now and the year 2000, Rich said the current imbalance is only going to get worse.
That demand also is putting power in the hands of the skilled personnel.
“In this day and age, if you’re a technically skilled person, you are in very high demand,” he said. “In the early 1990s, we would outsource a data center, shut it down and offer the people jobs to move to wherever the data center was located. In some cases, the people would move. Now people are not willing to uproot their families. They prefer to find a job in the local market.”
To meet that challenge, ACS has adopted a new approach. The computers are still run at the ACS data center, but many of the programmers and technical support staff work from the city where the previous data center was located. “If you have a systems programmer, it doesn’t really matter where he lives,” said Rich. “He can work on clients all around the country. We just have to manage a little differently.”
Reshaping an Industry
That type of accommodation appears to be essential in an industry that is redefining itself through previously uncharted opportunities. ACS presents a microcosm of the industry’s changing landscape.
“ACS started out as a mainframe processor, and that’s less than 20 percent of our revenues today,” said Rich. “We see tremendous growth in BPO and in network and desktop outsourcing. We’re now handling a little over 50,000 desktops. We’ve also seen growth in server outsourcing opportunities.”
The stresses of dealing with the problems of year 2000 are adding to the growth of outsourcing, according to Rich. “That’s causing a lot of stress,” he said. “Companies are all too happy to off-load some of that work, so they can focus on the critical issues that they have.”
Among those critical issues are exploring the benefits of the internet and intranet networking. Rich said that the intranet market will be driven by the potential to reduce paper flow within a corporation. ACS has been active in that arena.
“We’re doing a lot of work helping clients design and build intranets,” said Rich. “Most of that is around the administrative processes within a corporation — customer service, HR forms, accounts payable, things like that.”
Communicate, Communicate, Communicate…
The successful relationships between ACS and its customers all come back to another “people” issue, communication. That, said Rich, is the single most important issue in building smoothly functioning relationships.
“Communicate, communicate, communicate,” he said. “Involve your outsourcer in your planning strategy. Treat them as part of your technology team. Have a clear, open line of communication, and you won’t get surprised.”
Rich said ACS builds meeting schedules into contracts. With some large clients, ACS personnel participate in the customer’s weekly staff meetings.
“When customers take that kind of approach, they will find that their views toward the outsourcer change,” he said. “All of a sudden, they’re not just a vendor, they’re a partner, a member of the team. Customers who go through that kind of process embrace it.”