How is Outsourcing Facing Adulthood’s Challenges and Opportunities? – Part 1 | Article

Ritesh Idnani is the chief operating officer of Infosys BPO and one of the 15 members of the executive leadership team at the Infosys group of companies. He successfully helped scale Infosys’s BPO business from $43 million in FY 2005 to $427 million in FY 2011. Based in New York City, Idnani focuses on managing Infosys’ global sales and operations across all its businesses and is responsible for driving best practices, especially in end-to-end solutions. He talked with Outsourcing Center’s Senior Editor about the challenges in what he called “outsourcing adulthood.”

BER: Outsourcing has been around for a long time. Newbies typically struggle with issues of security, trust, transitions and SLAs, to name a few. What kind of challenges do mature buyers face?

RI: Once you get past the tactical – the lights on kinds of issues, mature buyers face challenges in four broad categories.

  1. Value realization. They already enjoy the benefits of labor arbitrage. They are used to continuous improvement. They want to know what’s next, what else and how soon? They want us to show them more sources of value realization.
  2. Governance. Governance is like a dating game. When we signed the contract, both of us had our best feet forward. Everyone wants to get everything right. But at this stage, the question is: Will this alliance end in divorce?

BER: How do you know the answer?
RI: By determining how strategic governance becomes. Notice who shows up to meetings at this stage. The representation changes. How do both parties think about the future of the relationship? What are the items that people discuss in the governance meetings?

BER: What is the third thing?
RI: Innovation.

BER: How is innovation different from value creation?
RI: People often confuse these terms. In the old days (1990s), innovation really meant a price discount. Now the definition of innovation can be a source of misalignment. To ensure there is no misalignment, the buyer and the supplier need to spend time discussing what innovation actually means to both of them.

BER: And the final issue is….
RI: Location/ emerging technologies/ trends. Mature buyers have to determine if it is wise to have all their eggs in one basket to protect their business continuity. Today, I think they have to ask if they have too much of an Indian or Philippines risk, as an example. Should they also send work to emerging destinations? What about the cloud? Mature buyers have to ensure they stay ahead of the curve when it comes to locations/ emerging technologies/ trends.

BER: What kind of innovative solutions can service providers come up with to address these maturity challenges?
RI: They need to work with their mature buyers and make specific investments to address their current needs. Service providers can invest in new capabilities, service offerings or countries.

For example, we work with a buyer who has locations in Europe, North America and Asia-Pac. Two years back they were looking to expand to Latin America. Infosys needed a footprint in Brazil to handle the Portuguese-speaking market. We had enough comfort and confidence in this relationship to set up a green field operation in Brazil along with this client

BER: What about innovation and value creation?
RI: Let me give you an example of this. We do the ITO and BPO for both a retailer and a consumer package goods company that sells to that retailer. We found ourselves at the center of their respective business ecosystems. We have visibility into their applications and process environments. We have been able to drive both innovation and value to both of these companies because of this knowledge.
Driving this kind of innovation is new. But it’s something a mature buyer expects and appreciates.

BER: Are there other untapped areas where mature buyers can benefit?
RI: I see five major areas. The first is opening up new markets. Many companies today want to step up their revenue in the BRIC (Brazil, Russia, India and China) and Eastern European markets. We can help them in that journey because we already have a large footprint in those markets. We can speed up their time-to-market.

Another business driver is mergers and acquisitions. One of the biggest challenges is figuring out how to realize the benefits of the acquisition sooner. We can help companies expedite the process of completing the merger or acquisition and get to Day 1 sooner.

A third driver is adoption of technology, specifically cloud, social media and mobility. We are investing extensively in these technologies and are building practices around them. We don’t want our clients to be the guinea pigs; we are at Infosys Labs. Infosys Labs is working on the impact of these technologies, for example, smart grid for utilities and mobile payments for financial services firms.

We believe the future is in the convergence of operations and technology. It’s not just about Lean or Six Sigma; these are now table stakes. Our incremental investments today are in our technology; we believe that’s how we can add value at regular intervals.

The fourth business driver is actionable outcomes. We have access to a lot of information through the processes we support. How do you monetize that information? How do you help a client get to be world class through effective benchmarking with their peer group, both within the industry and across? These are some of the things we work on with them.

Finally, there are the BPO adjacencies. A buyer may contract with us to only do one part of the value chain, say master data management. But we look beyond this for adjacencies, both upstream and downstream to solve operational efficiencies.

Editor’s note: Idnani talks about pricing strategies, new trends, cloud computing and the continuing changes in globalization in part 2.


1 Comment on "How is Outsourcing Facing Adulthood’s Challenges and Opportunities? – Part 1 | Article"

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  1. Janaya says:

    Posts like this birghetn up my day. Thanks for taking the time.

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