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Integrated IT-BPO Services A Whitepaper
InterGlobe Technologies:
A global leader in travel technology and business processes
1. Introduction :
Outsourcing has evolved to become a key component of strategy for global companies. The world has started viewing outsourcing more as a way to increase the value of their businesses, rather than just cost reductions and are seeking tangible results from both IT investments and improved business processes. Cost savings can be the main driver of an outsourcing project. Each outsourcing initiative within any company has a mix of other drivers, prioritized differently in each case. Beyond cost savings, a second major theme is access to capabilities whether human talent, process excellence, or sheer physical resources. Apple designs the iPod in its Cupertino, California offices, but it outsources the manufacturing to select Chinese firms not just because they can build it cheaply, but also because of their unique intellectual property in materials science and packaging technology. A third major theme is strategic benefit freeing up ones own resources, improving flexibility, gaining access to capital, access to new markets, or changing the rules of competition in an industry. In 2003, Bharti Airtel, lacked the capital to respond to a massive growth opportunity in its domestic market. It cut an end to end IT outsourcing deal with IBM. Much of IBMs compensation in this deal depended on Airtels market growth. Airtel made other shared risk/reward deals with equipment suppliers Ericsson, Nokia and Siemens. Today Airtel has some 40 million customers and is its countrys market leader. Each company must achieve an optimal balance of top-down management and collaborative partnering in dealings with suppliers, channel marketers, companies selling complementary services and customers. Each definitely illustrates that a uniquely integrated IT and BPO service business model makes possible the squaring of many circles: cost savings with growth, speed as well as quality, and organizational cohesion plus knowledge and innovation.
Key Drivers for Outsourcing

2009
Reducing Costs Gaining Competitive Advantage Lack of In-house Resources Leveraging technology expertise Availability of cheaper manpower Flexibility Consolidating assets/resources
2010
40%
50%
6%
18% 8%
15%
0%
3% 3% 3%
6%
8% 8% 8%
Copyright 2010 InterGlobe Technologies
2. Multi-outsourcing Relationship A shift in approach

The outsourcing of discrete functions of a business has been a way of life for many years. Diversity of non-core business processes allows the organization to focus on more important matters, make better use of skills, mitigate risk and, in certain cases, reduce costs. Information Technology outsourcing has gained in popularity, with huge international contracts worth billions of dollars signed annually.
Manufacturing 7%
Human Resource 9%
Marketing & Sales 6%
Information Technology 20%
Distribution & Logistics 10%
Customer Service Finance 7% 7% Management 4%
Transportation 5%
Real Estate 10%
Administartion 15%
However, recent years have seen significant changes in the way organizations approach outsourcing. Whereas a decade ago, the typical organization either fully outsourced their IT function to a single vendor, or provided IT in-house through the IT department, today the option of relying on a single provider is less attractive for many reasons: The expected reductions in IT spend are not being realized, there is no alignment to business objectives and more often than not, the relationship contributes little in terms of innovation and thought leadership. Today, organizations are demanding more from their outsourced service providers and are seeking more of a partnership where common goals and aspirations are targeted. These factors have resulted in organizations opting for Integrated Outsourcing or Multisourcing models, where certain functions are outsourced and selected functions are retained in-house. By employing a variety of best-of-breed service providers, organizations are seeking to enjoy greater agility and reap competitive advantage.
High
Operational Effectiveness
Revenue Generation
Enhanced Products & Services
Cutting Costs
Leveraging Location
Enhanced Customer Reach
Supporting Decision Making
Partnership & Transparency
Business Effectiveness
Business Growth
Reducing Costs
Low
2. Multisourcing Relationship An integration between IT & BPO Services

Companies adopting outsourcing as a significant part of their sourcing strategy face increasing complexity from managing multiple outsourcing efforts and multiple suppliers. To cope with this growing complexity, integration of IT and BPO services come into play. Specific skills are required to effectively manage the volume and complexity of relationships between the various parties involved.
2.1 Adopting a Partnership Approach

In traditional client / supplier relationships, the primary focus is generally on cost or price. Moreover, organisations often view the service provider with suspicion and a lack of trust exists between the two parties, which can jeopardize the success of the overall engagement. When adopting a multisourcing model, the development of a partnership relationship between client and supplier, based on trust and focused on mutual business outcomes, is key to the success of the contract. This model requires organisations to adopt a new attitude toward service providers as strategic partners not just as vendors from whom goods and services are procured, but as business partners with experience, skills and assets that can be harnessed to create competitive advantage. Service providers, in turn, must be prepared to work to better align their services and contracts to their clients unique needs.
2.2 The Right Measurement Tools

Effective measurement techniques are critical to establishing a trusted partner relationship between clients and service providers. A common problem in traditional sourcing relationships is that often Service Level Agreements (SLAs) just measure incidental items that have no bearing on business outcomes. The result is that the organisation cannot ascertain whether it is getting value for money and is unable to prove to management that it has made a good decision to outsource. Adopting a multisourcing model therefore requires a new discipline to measure and monitor the performance of sourcing relationships. Key to this process is commitment on the part of both the client and supplier to being fully transparent. For service providers, this means being willing to share true cost and delivery effort information with the client.
2.3 Supplier Management Skills

One of the hardest parts of moving to a best-of-breed outsourcing approach is managing the process. With this model, one sourcing relationship is not autonomous of another and numerous service providers depend on each other and on internal services to reach goals. Managing multiple suppliers is much more complicated and demands a new set of skills and management techniques. To effectively cope with these new challenges, organisations need to develop a coherent plan for the ongoing management of their supplier relationships and the services that are provided. This includes re-evaluating the roles and responsibilities of in-house IT personnel, building up internal skills to track the performance of the outsourcing contract and developing techniques to assess whether value is being delivered. Copyright 2010 InterGlobe Technologies
3. The Value Proposition

Integrated Services Model
Lead Source
Niche Suppliers
Lead Supplier Model
A E
Master Partners
B C D
Management of multiple relationships with third party vendors and customer Coordination and collaboration with other suppliers Clear overarching responsibility for delivery with lead supplier Ensuring robust requirements definition Managing and supporting end to end integration Use of effective methodologies and tools
Clear roles, responsibilities and territories Competitive tension Co-operation between partners Sharing knowledge Communication Coordination and collaboration of all vendors Any central lead supplier role is subject to competition Collaboration and Partnering Honest intentions and best interests of customer
4. Case Study

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Integrated IT-BPO Services A Whitepaper

Key Drivers for Outsourcing

Copyright 2010 InterGlobe Technologies

2. Multi-outsourcing Relationship A shift in approach

Marketing & Sales 6%

Information Technology 20%

Distribution & Logistics 10%

Customer Service Finance 7% 7% Management 4%

Real Estate 10%

Enhanced Customer Reach

Supporting Decision Making

Partnership & Transparency

2. Multisourcing Relationship An integration between IT & BPO Services

2.1 Adopting a Partnership Approach

2.2 The Right Measurement Tools

2.3 Supplier Management Skills

3. The Value Proposition

Lead Supplier Model

Copyright 2010 InterGlobe Technologies

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