The Top Ten Reports on Outsourcing

A Chillibreeze report

Business Process Outsourcing (BPO) and, more recently, Knowledge Process Outsourcing (KPO) have been the subjects of intense debates and discussions in view of the exploding outsourcing industry (McKinsey values it at $10 billion) and its double digit growth rates. Sifting through the massive data on the outsourcing industry, we have culled 10 relevant reports by McKinsey & Company and the Forrester Group. Of these, the 4 Forrester Group reports are paid reports, which one has to purchase to view the entire contents. The McKinsey reports are available on the firm’s website.

1. Benchmarking India’s business process outsourcers (McKinsey & Company – July 2006): In late 2005, McKinsey and NASSCOM launched a benchmarking survey to research the performance of the BPO providers, covering 50 operational processes across 12 delivery centres in India. Three findings emerged –

Clients want more than just labor cost savings
There exists a significant difference in performance of the leading BPOs and the rest
Streamlining operational practices led to better process performance.

2. Ensuring India’s offshoring future (McKinsey & Company – 2005 Special Edition): By 2007, India’s IT services and BPO industry will account for 7% of India’s GDP and employ 1.5 million people. To sustain the lead and competitive advantage, India has to fend off challenges from other low-wage countries in addition to surmounting domestic constraints in talent, policies and infrastructure.

3. Moving IT infrastructure labor offshore (McKinsey & Company – June 2006): Organizations have been reluctant to outsource IT infrastructure because of telecom constraints, limited availability of key skills and labor at end-user sites in developing countries. The burgeoning number of offshore vendors in the last 2 years has prompted firms to remote-manage their infrastructure. This report sheds light on how to offshore
it effectively.

4. Exploding the myths of offshoring (McKinsey & Company – July 2004): The realities of American jobs moving to low-wage nations such as India have provoked fierce debates in the media and even prompted policy makers to restrain outsourcing. This report argues how offshoring creates wealth for both the US and India. Cost savings and improved productivity enable companies to direct resources to next-generation technologies and innovative business ideas.

5. Getting more from call-centres (McKinsey & Company – April 2005): Call centres have become ubiquitous but most companies fail to gain maximum value from them. The key to reap the benefits is to develop a customer service strategy that balances costs, revenues and quality. To build on the strategy, companies must invest in infrastructure and ensure the best possible execution by its agents.

6. Running a customer service center in India – Interview with Operations Head, Dell India (McKinsey & Company – May 2006): Setting up its first customer service centre in India 5 years ago, Dell recently announced its plans to double its staff to 20,000 by 2009. India represents a growing consumer market for its PCs, and a huge talent pool for transaction processing, R&D and IT operations. The interview highlights the problems Dell faced in recruitment and retention and how it overcame them.

7. Offshore Indian BPO Leaders emerge (Forrester Research – March 2006): The Indian BPO industry is changing its emphasis to transaction-based and knowledge-based services. Having a cost advantage alone will no longer be viable. Only some will succeed in redefining themselves to pursue higher-value services with global reach. (Price: US$249)

8. HRO BPO accelerates (Forrester Research – October 2005): HR Outsourcing is moving from single-function deals towards broader scope transactions covering multiple HR processes. These multifunction deals will expand the supplier market to include IT outsourcers in addition to the traditional providers. (Price: US$ 775)

9. Outsourcing trends to watch in 2006-09-11(Forrester Research – January 2006): New buyers of outsourcing services look set to emerge. Providers will differentiate themselves with their deal governance and implementation skills. Indian companies will continue to expand aggressively. (Price: US$249)

10. Best Practices – Selecting a BPO Service provider (Forrester Research – January 2006): Companies choosing a BPO strategy come up against an array of traditional IT services firms, hybrid domestic and offshore players. Selecting the right provider involves formulating an overall strategy and defining the project scope against the firm’s internal capabilities. (Price: US$349)

Article published in December 2006.

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