News / Business
CEO of Alsbridge Inc. Shares Top 3 Insights from NASSCOM Summit in New Delhi
Monsoon Season for BPO: An Updated Weather Report about Outsourcing's Near-Term Future
“I speak at world-class events all over the world including those hosted by Sourcing Interests Group (SIG) and IAOP. All three organizations are doing great work for their memberships, but the dynamics of NASSCOM are truly impressive,” said Alsbridge Founder and CEO, Ben Trowbridge. “The sights, smells and intensity of India never cease to amaze me and I came away from the event with three interesting observations.”
The full report details three insights that act as a guide to today and a predictions for tomorrow:
1. Focus on value and rapid growth – At the event, industry legend Vikram Talwar pointed out a number of issues the sourcing industry must contend with, including an exhortation to stop the price wars and focus on value.
“Alsbridge’s analysis is that Indian providers will have trouble doing this because they rely on their own experience-based price benchmarks that are flawed and will result in constant low-ball pricing ahead of market need,” Trowbridge said. “Buyers, however, will gain from their passion for costly 18% growth.”
Matching the current 16-18% growth rate in BPO was a huge topic for the attendees. Some providers with specialization by industry or function are optimistic that they can beat this year’s market prediction. Those without a specialization seem to be replacing the head of BPO and retrenching their strategies.
2. Benchmarking 2012 pricing changes - Through our ProBenchmark database, Alsbridge has seen FAO prices reduce by five-seven percent on a like-for-like basis over the last 12 months and forecasts this rate to slow to three-five percent over the next 12 months. However, the range of current prices for individual roles varies greatly, reflecting the lack of market standards for labor rates (see the recent ProBenchmark pricing trends webinar for more information).
“It was clear that Indian-based providers are struggling to control their constant price war mentality due to their reliance on internal price benchmarks. At this point, under pricing is their biggest challenge,” Trowbridge explained.
Some niche BPO providers are starting to gain scale in focused segments such as healthcare, analytics and knowledge management. Look for interesting value propositions in 2012 for segments of BPO not fully addressed in the past.
3. Prepare for the future - Western-based providers are facing a determined competitor intent on continuing that 18% growth. To compete, they will need a strategy that is focused and differentiated.
“India-based providers remain high quality and focused on winning contracts since their business development efforts will remain strong for the foreseeable future,” Trowbridge said. “If you engage properly, you can plug into a great wealth of talent at an effective cost point. Fail to engage right and you take unneeded risks.”
Access the full report,"Monsoon Season for BPO: An Updated Weather Report about Outsourcing's Near-Term Future."
About Alsbridge Inc.
Alsbridge provides world class sourcing advisory and benchmarking services for IT, finance and sourcing executives. With over 150 consultants located globally, we’ve helped hundreds of companies reduce costs and get more value from their vendors. Our experienced consultants leverage proprietary tools and information databases to identify and engage the optimal vendors for your situation, negotiate best practice terms at fair market prices, and improve the way you work with your vendors. Alsbridge clients utilize the most cost effective and value added sources globally for IT infrastructure services, hardware and maintenance, network services, software and maintenance, application support and development, business processes and cloud services. Alsbridge was ranked the #1 outsourcing advisor in the world by the International Association of Outsourcing Professionals (IAOP) based on the value delivered to clients. Our commitment to delivering value to our clients has made Alsbridge a distinguished member of the 2010 Inc. 500 fastest growing privately held companies in America.
