The Cannes Festival of outsourcing

Michael Alan Hamlin

Posted on November 21, 2007

Mark your calendars: Feb 11-12

Avinash Vashistha, global managing partner of Tholons, recently announced that his firm has been approached by the Department of Trade & Industry (DTI) “to help them take their eServices Philippines (ESP Conference to the next level.” Tholons is an investments, advisory, and management consultancy specializing in outsourcing. ESP is an annual outsourcing conference organized by DTI’s Center for International Trade Expositions & Missions (CITEM) agency (Full Disclosure: CITEM is a client of my firm.).

Over its eight-year history, Vashistha told readers of his monthly electronic newsletter, “ESP has been largely Philippines-centric. They [DTI] recognized that if they stayed this way, then they would be capping the potential of the conference. They wanted it to be more global, more relevant and more valuable. We saw this as the perfect opportunity to take advantage of the trends we are seeing [in outsourcing] and help participants answer the same questions we’re constantly being asked.”

There are four trends Vashistha and his colleagues are seeing. First, he says that firms are adopting a “Cities of Excellence” model in which they outsource services from locations with specific domain and process expertise. For example, India for non-voice customer relationship management (CRM) services, and the Philippines for voice CRM. At least that’s the version many of us in the Philippines hear from our perch.

Vashistha noted that the “Philippines is second only to India in terms of Global Sourcing.” The second trend Vashistha identifies is the incidence of firms “multi-sourcing mega-deals” from a mix of Tier I and “best of breed” Tier II service providers, apparently referring to size rather than domain or process expertise. And three, he sees Tier II and Tier II providers are growing, and expanding their “global footprint.”

Perhaps as a result, where many in the industry have noted consolidation of suppliers in early mover sectors like contact centers, Vashistha observes SMEs funded by Private Equity investors “becoming significant participants in Services Globalization,” his fourth trend. Those SMEs may be future leaders in emerging business process outsourcing (BPO) sectors like financial advisory services, legal research, and even management consulting.

Vashistha intends to make ESP 2008 “The Cannes Film Festival of Outsourcing” (Film?) to elaborate on these trends, and “bring together the ‘Global Centers of Excellence’ to a single platform.” Sure enough, Vashistha notes that “Metro Manila is an example of a Center of Excellence for Customer Service BPO. We have received a lot of feedback from different suppliers that their Metro Manila center regularly outperforms their other centers in other parts of the world for customer service.”

But before we get too excited, there are a couple of things wrong with Vashistha’s perspective. First, by relegating Metro Manila to the status of Center of Excellence for Customer Service BPO, he implies that Metro Manila won’t evolve into a higher value-added Center of Excellence. But the reality is that Metro Manila is already doing exactly that. Headstrong (Full Disclosure: Headstrong is a client of my firm.), Accenture, and the fast-growing American Data Exchange are excellent examples.

Second, “a lot of feedback” is useful and interesting, but not the basis of an informed decision that an observable, bonafide trend is emerging in global outsourcing. Since I hear frequently that shared services software developers in the Philippines such as those operated by Canon, NEC, and Fujitsu are preferred by their captive customers around the globe over other destinations, I could conclude – based on this anecdotal evidence – that the Philippines is a Center for Excellence for software services (which it is in many respects) that rivals India (which it obviously doesn’t).

Despite the apparent infirmity, at least in my view, of some of Vashistha’s arguments, there are good reasons for DTI and CITEM to leverage Tholons’ global reach to support eServices and enhance its global relevance. First, Tholons is well integrated into global outsourcing networks, and that familiarity can help increase awareness of eServices among key influential industry executives.

Because of its relationship to those executives, Tholons can also be effective in convincing many of them to attend the conference as delegates, or to agree to speak in one of the conference sessions. A broad and respected line up of international speakers is an important component of the value proposition for any international meeting. Third, Tholons, as I’ve obliquely observed, can also serve as a lightning rod for debate within the conference itself, enhancing dialogue and its impact.

eServices 2008 will take place February 11-12 at the new SMX exhibition and conference facility next to the Mall of Asia. Some major speakers have already been confirmed, such as Kevin Campbell, group chief executive for outsourcing at Accenture ; TK Kurien, CEO of India’s highly respected Wipro ; and, Edward Caso, managing partner at Wachovia Capital Markets. It’s early, but mark your calendars now.

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