Techmahindra - Business Process Outsourcing

19
8/6/2019 Techmahindra - Business Process Outsourcing http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 1/19   © Tech Mahindra Limited 2010  © Tech Mahindra Limited 2010 BUSINESS PROCESS OUTSOURCING: LEVERAGING THE CLOUD Pushkar B Gokhale  Abstract In the early to mid nineties, Business Process Outsourcing (BPO) along with IT Outsourcing (ITO) became the new mantras for driving down costs as well as improving quality and efficiency. BPO has fast become one of the primary means of cutting back on costs and has also resulted in becoming a ‘Job -cow’ for emerging economies like India, China and Philippines. Companies of all sizes, large to small, and everything in between, have been outsourcing part of their business to service partners. By doing so, companies have been able to leverage economies of scale and inexpensive labor to increase their own margins. With the growing convergence of IT and BPO, outsourcing has become more dynamic and it has created areas of opportunity for service  partners to provide better and innovative service offerings. Over the last two decades, different variations of outsourcing models have evolved, leading to various technological changes and upgrades. Cloud computing is seen to be the next big wave within outsourcing and has already seen major players like  Amazon, Microsoft and Google leading the way into the “Cloud.” With the current push towards cloud computing becoming stronger, traditional methods of outsourcing and providing service will need to change. This white paper looks at the possible convergence of BPO within the ‘Cloud’ and whether BPO can leverage cloud computing.

Transcript of Techmahindra - Business Process Outsourcing

Page 1: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 1/19

 

 © Tech Mahindra Limited 2010 © Tech Mahindra Limited 2010

BUSINESS PROCESS

OUTSOURCING:

LEVERAGING THE CLOUD

Pushkar B Gokhale

 Abstract : 

In the early to mid nineties, Business Process Outsourcing (BPO)

along with IT Outsourcing (ITO) became the new mantras for 

driving down costs as well as improving quality and efficiency.

BPO has fast become one of the primary means of cutting back on

costs and has also resulted in becoming a ‘Job-cow’ for emerging

economies like India, China and Philippines.

Companies of all sizes, large to small, and everything in between,have been outsourcing part of their business to service partners.

By doing so, companies have been able to leverage economies of 

scale and inexpensive labor to increase their own margins. With

the growing convergence of IT and BPO, outsourcing has become

more dynamic and it has created areas of opportunity for service

 partners to provide better and innovative service offerings.

Over the last two decades, different variations of outsourcing

models have evolved, leading to various technological changes

and upgrades. Cloud computing is seen to be the next big wave

within outsourcing and has already seen major players like

 Amazon, Microsoft and Google leading the way into the “Cloud.” 

With the current push towards cloud computing becoming

stronger, traditional methods of outsourcing and providing service

will need to change. This white paper looks at the possible

convergence of BPO within the ‘Cloud’ and whether BPO can

leverage cloud computing.

Page 2: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 2/19

 

1 © Tech Mahindra Limited 2010

Table of Contents

Business Process Outsourcing and its Drivers ................................. 2 

Current Drivers for Outsourcing................................................. 3

 Cloud Computing Defined ............................................................ 6 

Benefits of Cloud Computing ..................................................... 9 

Cloud Computing Concerns ..................................................... 10 

Why BPO in the Cloud is Important ............................................. 12 

How Cloud can help Service Partners ....................................... 14 

CAPEX to OPEX ................................................................... 14 

Cloud – Impact on Technology Costs ..................................... 15 

Being in the Cloud 24x7 ....................................................... 15 

Cloud – Replacing the Traditional Disaster Recovery Plan ........ 15 

Conclusion ............................................................................... 16 

References ............................................................................... 17 

About the Author ...................................................................... 18 

About Tech Mahindra ................................................................ 18 

Page 3: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 3/19

 

2 © Tech Mahindra Limited 2010

Business Process Outsourcing and its Drivers

Typically, Business Process Outsourcing (BPO) can be termed as the handing over of non-

critical work within a company to a third-party (Service Partners) who in turn takes

responsibility to run the process, as per the stipulations and agreements between the

parties.

Gartner defines BPO as "the delegation of one or more IT-intensive business processes to

an external provider that, in turn, owns, administrates and manages the selected processes

based on defined and measurable performance metrics."

BPO can be divided into two main categories: Back office outsourcing and front office

outsourcing. Typically, back office work encompasses internal functions where there is

limited interaction with the end customer. Some examples would be finance or human

resource related work. More often than not, these services have a limited ‘voice’

component to them, which means that if there is some interaction needed between the

end customer and a back office representative, it is more often through written

correspondence.

In contrast to back office processing, front office outsourcing deals with functions which

are end customer facing. Examples can be billing support, customer service and technical

support. Here the responsibility of providing a high level of customer service overshadows

every other aspect of operational excellence.

Figure 1:  – Illustration of a few Back Office & Front Office Process types

In this ever increasing competitive environment, companies who are ready to outsource

are searching for service partners who can leverage technology to not only improve

existing systems but also to develop new ones. The need of software, hardware and

resource maintenance is increasing at an exponential rate and this, in turn, has created a

need for service partners to establish effective and efficient service offerings that

transcend the traditional support services and look to provide a complete service

landscape.

Page 4: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 4/19

 

3 © Tech Mahindra Limited 2010

Below is the generic Service offering landscape showcasing different verticals & horizontal

services.

Figure 2: Generic BPO Service offering Landscape

Another key component of outsourcing is the ability to service end customers as well as

company clients from various locations. Initially, off-shoring (where work is taken out of 

the country and is done from another country which is typically far away) was the

preferred option. Lately, there seems to be a greater push from companies to look atservice partners who can offer near-shore (neighboring country with similar language and

cultural background) and on-shore (outsourced within the same country) options as well.

While there are many reasons for the shift towards these options, one of the main reasons

is the current economic slowdown which has given rise to a more ‘politically sensitive’

business environment. Companies are making a conscious effort to be seen as preserving

 jobs within the same country, thus, helping to reduce unemployment.

Like all business models, BPO continues to evolve and companies are now viewing it as

more of an ‘operational advantage’. Companies are looking at partnering with service

partners who can not only give them the cost benefits but also give them an edge over

their competitors. By creating the right partnerships, companies hope to build the correct

model to have a strategic impact on the way they operate and deliver service.

Current Drivers for Outsourcing

While cost continues to be the number one driver for outsourcing, there is increasingly a

shift towards driving more benefit out of the outsourcing model. Companies are looking at

more strategic factors like, globalizing businesses more effectively, re-engineering business

processes and accessing expertise etc.

Page 5: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 5/19

 

4 © Tech Mahindra Limited 2010

Figure 3: Customers are looking to drive change into their operations to become more effective globally

Source: Horses for Sources Research 2010

The above study highlights the top drivers behind companies looking to outsource.

  Increased focus on efficiency and cost reduction

  Increased emphasis on quality and customer needs

  Increased importance on automation and optimization

  Finding service partners with flexible pricing models

  Global options – enabling a mix of near-shore, on-shore and off shore locations

Companies are looking at technology to increase their business benefits. As the world

slowly tries to grapple with the current slowdown in the economy, cost reductions andprocess transformations become a key market differentiator. One can see a significant shift

towards seeking service partners who can conceptualize and proactively introduce newer

systems and platforms.

Platform based BPO is a step in that direction whereas service partners like Tech Mahindra

are utilizing their synergy between BPO and IT to create customized platforms. This ability

to integrate technology with business process knowledge has given a new dimension to

BPO, and through that, service partners can now seek contracts at a much larger and more

strategic level.

Platform based BPO offers process standardization, improved quality through automation,

economy of scale and more importantly, bestows the complete responsibility of the

Page 6: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 6/19

 

5 © Tech Mahindra Limited 2010

platform on the service partner who will provide platform-maintenance, upgrades and give

the flexibility to modify and reengineer the platform according to the needs of the

company (client).

With the growing competition within the platform based BPO market, all service partners

will need to look at their innovation models and also start looking at complimenting theseplatforms with better and more innovative pricing strategies. They will need to start

looking inwards and put more business practices in place to improve their own cost

structure. Simultaneously, service partners will also need to start seeking new and

improved technologies to be able to continue providing better and more efficient service

offerings.

Cloud computing has surely given a new dimension to the complete outsourcing arena

(SaaS, PaaS and IaaS) and service partners may need to assess if the cloud can become an

integral part of their service offering. They will also need to assess whether BPO can

reinvent itself by becoming part of the cloud. Service providers with BPO capabilities willfind it imperative to embrace this change to ensure that they continue to operate on

better operating margins and continue to pass on the benefits while creating opportunities

for cost reduction within their own models.

Page 7: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 7/19

 

6 © Tech Mahindra Limited 2010

Cloud Computing Defined

Gartner research, as shown in figure 4, in its most recent Top 10 Technology study

examined the maturity of technologies and offers IT Executives a perspective on the trends

and technologies that will have a significant impact in the coming year.

Figure 4: Gartner press release Oct 14, 2008 entitled “Gartner Identifies the Top 10 Strategic Technologies for 2009” and Gartner press

release Oct 20, 2009 entitled “Gartner Identifies the Top 10 Strategic Technologies for 2010”. 

As seen in the figure above, cloud computing is expected to be the number one technology

which will be explored and leveraged for strategic advantage by various companies.

Cloud computing has been defined as: A model for enabling ubiquitous, convenient, on-

demand network access to a shared pool of configurable computing resources (e.g.,

networks, servers, storage, applications, and services) that can be rapidly provisioned andreleased with minimal management effort or service provider interaction. (This definition

is from the draft of the NIST Working Definition of Cloud Computing published by the U.S.

Government's National Institute of Standards and Technology)

In simple terms, cloud computing is the use of the Internet for the tasks performed on the

computer. The ‘Cloud’ represents the internet. Cloud computing is related to several

technologies and the convergence of various technologies has emerged to be called cloud

computing. The simplest thing that a computer does is to store and retrieve information.

We can store family photographs, favorite songs, or even save movies on it. This is also the

most basic service offered by cloud computing.

Page 8: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 8/19

 

7 © Tech Mahindra Limited 2010

The cloud computing services market will generate $45.5 billion in revenue by 2015, says a

report published by Telecom Trends International.

Figure 10: Cloud Computing Service revenue forecast – Telecom Trends Int, Inc

We have been exposed to cloud computing for a while now. Ever since the internet was

introduced into the mainstream economy, cloud computing was in existence and was

taking shape. Hotmail, Gmail or various other mail services are a perfect example of cloud

computing.

Delivery Models

Figure 5: Cloud Computing Ecosystem

The NIST definition of cloud computing also defines delivery models and deployment

models:

  Software as a Service (SaaS): The consumer uses an application, but does not control

the operating system, hardware or network infrastructure on which it's running.

  Platform as a Service (PaaS): The consumer uses a hosting environment for their

applications. The consumer controls the applications that run in the environment (and

SaaS

PaaS

IaaS

Page 9: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 9/19

 

8 © Tech Mahindra Limited 2010

possibly has some control over the hosting environment), but does not control the

operating system, hardware or network infrastructure on which they are running. The

platform is typically an application framework.

  Infrastructure as a Service (IaaS): The consumer uses "fundamental computing

resources" such as processing power, storage, networking components or middleware.

The consumer can control the operating system, storage, deployed applications and

possibly networking components such as firewalls and load balancers, but not the

cloud infrastructure beneath them.

While there is an implied hierarchy of delivery of services in the cloud as shown in the

Figure 5, it is not imperative that this model will be followed by all. A few Customers will

not seek IaaS but will look to utilize software in the cloud (Google docs).

Deployment models:

The below figure illustrates the different kinds of deployment models.

Figure 6: Cloud Deployment models – Source Frost & Sullivan

  Public Cloud: In simple terms, public cloud services are characterized as being available

to clients from a third party service provider via the Internet. The term “public” does

not always mean free, even though it can be free or fairly inexpensive to use. A public

cloud does not mean that a user’s data is publically visible; public cloud vendorstypically provide an access controlled mechanism for their users. Public clouds provide

an elastic and cost effective means to deploy solutions.

Page 10: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 10/19

 

9 © Tech Mahindra Limited 2010

  Private Cloud: A private cloud offers many of the benefits of a public cloud computing

environment, such as being elastic and service based. The difference between a private

cloud and a public cloud is that in a private cloud-based service, data and processes are

managed within the organization without the restrictions of network bandwidth,

security exposures and legal requirements that using public cloud services might entail.

In addition, private cloud services offer the provider and the user greater control of thecloud infrastructure, improving security and resiliency because user access and the

networks used are restricted and designated.

  Hybrid Cloud: A hybrid cloud is a combination of a public and private cloud that

interoperates. In this model users typically outsource non-business critical information

and processing to the public cloud, while keeping business-critical services and data in

their control.

  Community Cloud: The cloud infrastructure is shared by several organizations and it

supports a specific community that has shared concerns (e.g., mission, security

requirements, policy, and compliance considerations). It may be managed by the

organizations or a third party and may exist on premise or off premise.

Benefits of Cloud Computing

The very basic benefit of the cloud is the fact that computing will be done online. Access to

information and applications will be via a browser. Applications and software will be

installed on a server accessed through the internet. This will enable greater reach and

access to information at any time.

Below are few of the benefits as described in Cindy Waxer’s article on

WebHostingunleashed.com titled ‘The Benefits of Cloud Computing’. 

Scalability: IT departments that anticipate an enormous uptick in user load need not

scramble to secure additional hardware and software with cloud computing. Instead, an

organization can add and subtract capacity as its network load dictates. Better yet, because

cloud-computing follows a utility model in which service costs are based on consumption,

companies pay for only what they use.

Easy Implementation: Without the need to purchase hardware, software licenses or

implementation services, a company can get its cloud-computing arrangement off theground in record time — and for a fraction of the cost of an on-premise solution.

Skilled Practitioners: When a particular technology becomes popular, it’s not uncommon

for a whole slew of vendors to jump on the bandwagon. In the case of cloud computing,

however, vendors have typically been reputable enough to offer customers reliable service

and large enough to deliver huge datacenters with endless amounts of storage and

computing capacity. These vendors include industry stalwarts such as Microsoft, Google,

IBM, Yahoo! Inc. and Amazon.com Inc.

Freeing Up Internal Resources: By placing storage and server needs in the hands of anoutsourcer, a company essentially shifts the burden placed on its in-house IT team to a

Page 11: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 11/19

 

10 © Tech Mahindra Limited 2010

third-party provider. The result: In-house IT departments can focus on business-critical

tasks without having to incur additional costs in man power and training.

Quality of Service: Network outages can send an IT department scrambling for answers.

But in the case of cloud computing, it’s up to a company’s selected Service Partner to offer

24x7 customer support and an immediate response to emergency situations. That’s not to

suggest that outages don’t occur. In February 2008, Amazon.com had their S3 cloud -

computing service experience a brief outage that affected a number of companies.

Fortunately, service was restored within three hours.

Cloud Computing Concerns

One of the main concerns surrounding cloud computing is that of privacy and security

when dealing with transactions over the internet. Security concerns are highlighted with

the knowledge of having sensitive company information hosted on someone else’s data-centers. Other concerns are of more abstract nature such as ownership of data and if the

host can keep the information even after a contract ends? How good will the

interoperability of information be, post migration into the cloud? Can a multiple vendor

strategy still be used? A few tips to counter the privacy tips are given by Robert Gellman

and Pam Dixon in ‘Cloud Computing Privacy tips’ – Feb. 2009- World Privacy forum

Most of the above concerns are not new and exist even in the current outsourcing models.

With current outsourcing deals, there are no easy answers and all of them are going to

depend upon the organization and how it works today and where the vision is leading it. In

spite of the many concerns that cloud computing can raise, it is still a viable alternativerather than investing into a completely overhauled network.

So where does BPO fit into the cloud? And how does cloud help BPO providers deal with

the challenges that they face in the current economy. Forester research has just published

a new report entitled "The Evolution of Cloud Computing Markets". The research recaps

many of the cloud computing market observations from the last two years and categorizes

the business models in a consistent taxonomy. Some portion of the current BPO market

might transform into dynamic BPO services or even Business Process as a Service (BPaaS).

Page 12: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 12/19

 

11 © Tech Mahindra Limited 2010

Figure 7: “The Evolution of Cloud Computing Markets,” Forrester Research, Inc., July, 2010 

Page 13: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 13/19

 

12 © Tech Mahindra Limited 2010

Why BPO in the Cloud is Important

Various engagements are now moving towards a combination of both IT and BPO. Platform

BPO is a direct result of the synergy where both verticals have and will need to

continuously complement each other. Co-existing teams will need to be made up of business process expertise along with IT development and architecture.

One of the main focuses of various service partners has been to try and create an

extension of their existing business engagements with companies to further enhance the

relationship through prescribing to an end to end service model which includes BPO

services.

Cloud computing presents a unique opportunity whereby end to end services can be

provided within horizontals as well as verticals across all lines of service over the internet.

Business process services can be categorized across all three cloud delivery models thusenabling cloud services to be more standardized and process centric. Inexpensive labor

required for the BPO services within the cloud will only add to the advantages of cloud

computing.

Companies looking to take advantage of cloud computing in its current form will need to

address important questions like, whether the applications and platforms in the cloud

constitute the vertical knowledge needed by the company and if the process centric

approach is enabled within the cloud? Companies will need service partners who possess

the business knowledge and can contribute through process led services which are an

integral part of every company’s operational strategy.

While taking a closer look at the current cloud environment, it is clear that most of the

cloud providers may not possibly know about the internal processes of a particular

organization or a particular vertical. While business process within an organization is

implemented based on primary tasks related to the particular company, what varies is the

task-specific business information which addresses not only the industry regulation

requirements but also company specific strategies and end customer centric processes.

Service partners with BPO capabilities will have to play a crucial role in the development

and success of cloud computing. Cloud in its current form generalizes business functions

instead of basing it on process centric information and steps. Simply putting business

knowledge on top of scalable infrastructure is not the answer to high quality needs. For

example, a telecom organization can utilize Cloud providers for billing processing but not

align billing based on their own offers and discounts that can only be done through process

centric platform management. This is especially true in markets where quad play (TV,

internet, wireless and wire line) strategies are extremely fluid and where different

marketing tools are extensively being used to increase the customer base. What is required

is to integrate the business process knowledge with services needed to support those

applications.

So what do companies looking to outsource want? They essentially are still looking atservice partners who can provide them high quality work at a cost effective rate. To add to

the advantages of less expensive labor, an end to end service model will provide

Page 14: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 14/19

 

13 © Tech Mahindra Limited 2010

companies the ability to tap into SaaS solutions which provide the one-to-many process

templates that reinforce BPO.

Figure 8: Majority of enterprises are considering blended IT-BPO engagements | Source: Horses for Sources Research, 2010

As seen in the earlier figure, two-thirds of companies now evaluate ITO/BPO solutions as a

bundled option. This clearly shows that there is a need for BPO to be integrated within the

cloud. Since business process-oriented cloud is a sub-set of company polices and business

process models, cloud has to preserve and mirror these and be able to tap into the rules

based business functionalities which would affect the end customer.

The combination of applications, infrastructure and business process creates a compelling

and often envious solution base. The fact that most of the deals today are still based on

vertical knowledge only highlights the need for BPO to be included and integrated into a

‘cloud sourcing’ model. Solutions catered to verticals like telecom, healthcare etc. need

solutions which not only provide the advantages that cloud can offer but also leverage on

the required understanding of the business processes which BPO along with Business

Process Management (BPM) specialize in .

With the economic slowdown, finding the right service partner is often the key to a

successful delivery. There is a constant need to take the service to the next level and Cloudas a Service (CaaS) will not be fully utilized if companies look at only leveraging

infrastructure from providers/ partners like Amazon, Google or Microsoft. Companies need

to look at service partners who can support, consult and provide business process

advantages across all three delivery models especially in terms of support services or by an

introduction of a platform to compliment the support services. For example, order fallout

management which continues to be a main focus within telecom industry- companies are

looking at service partner who can bring smart process led applications which can give

them a real competitive advantage- reduce the cycle time, reduce touch points, target high

fallout areas while combining self-service etc.

Page 15: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 15/19

 

14 © Tech Mahindra Limited 2010

Service partners will have to be careful about their cloud strategies. Integrated providers

who are willing to create a niche for themselves may want a flexible model in which they

can offer – 

  Cloud hosting services (hosting information on its own cloud deployment network and

giving companies the option of choosing from them - private, public or hybrid) to smallto medium business that are looking to offload their CAPEX and are in no state to invest

in infrastructure.

  Giving BPO led support services within clouds owned by other players like Microsoft,

Google and Amazon.

  Providing migration, maintenance and business support services to companies who are

building its own private cloud.

The above model can be interlaced depending on the type of services needed by the client

(company), its geographic location, size and business strategies.

How Cloud can help Service Partners

With the constant pressure from the companies for higher quality at inexpensive rates,

service partners with integrated IT-BPO service capabilities will need to continuously push

the levels of innovation and cost elimination within their own processes and models.

Providing standardized business processes along with an IT framework in the cloud

provides service partners a unique opportunity to utilize cloud advantages to create a

more flexible, innovative and cost efficient model.

With the immergence of BPOS (Microsoft) and Google docs (SaaS), utilizing a well known

model of pay per use will need to be utilized by service partners quite significantly.

CAPEX to OPEX

Cloud gives the opportunity for service partners now to move from a CAPEX model to OPEX

model for their BPO services as well. With the immergence of BPOS (Microsoft) and Google

docs (SaaS), utilizing pay per demand, service partners can reduce the upfront costs of 

buying licenses which can later be rendered unusable in times of down turns. Instead,

cloud enables them to have on-demand pricing which reduces investments. If capital is

considered as a cost, cloud improves revenues and the capital can be utilized in a moreefficient manner, enabling improved margins or giving benefits back to the customer.

Such a model enables service partners with BPO capabilities to take more risks. Initiating or

inducting new technologies or platforms to win new business will be more accessible,

seamless and more importantly, it will reduce the risk of investing in them even if the

business is not won. Cloud is going to change the way financial capital is put behind new

initiatives and the reduction of capital expense will result in – 

  Faster Return On Investment – return on investments which would normally take up to

one or two years will be much faster as most of the expenses now will move as anoperational expense

Page 16: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 16/19

 

15 © Tech Mahindra Limited 2010

  Reduction of Risk – making investments and the failure of risk will no longer be road

block for Service Partners.

  Shift from CAPEX to OPEX gives service partners an opportunity to try and reduce

operations costs by innovation and better operations management there by resulting

in improved margins.

Cloud – Impact on Technology Costs

With the advent of cloud computing, access to information and platforms, as well as

applications, will only need a secured internet connection. This eliminates large amount of 

technology setup costs (up- front cost) for building call centers or back office centers. Here

the initial CAPEX as well as the OPEX will see a significant reduction thus enabling further

cost saving for both service partners and their clients (companies). 

Being in the Cloud 24x7

Outsourcing itself will mirror a pure play call centre environment where real time usage of 

applications and software become more relevant.

Taking the call centre environment a step further, service partners can utilize the web

service model ’cloud’- to deliver service from any location at any time, hence enabling

physical relocation and expansion to be a seamless experience. With the push towards ‘on-

shore’ operations taking more significance, the cloud will enable service partners to take

advantage of ‘work from home’ concept thus reducing infrastructure cost of set up,

expansion and maintenance.

Utilizing applications and software on pay per use (on demand) enables the concept of 

using application utilization up to 3 times (ideal scenario - 3 shifts of 8 hrs each). Workforce

and capacity management in fact will become more OPEX conscious there by giving service

partners another avenue of cost realization and reduction.

Cloud – Replacing the Traditional Disaster Recovery Plan

BPO comes with a few risks and one of them has always been- what happens if there is a

disaster at the service partners’ site? Customers have insisted on a disaster recovery plan

which further burdens service partners with infrastructure, connectivity and human

resource costs. Physical bodies need to be present in multiple locations (sites) to be able to

handle significant load in an event of a disaster at the primary site. Accessibility to data,

applications and information from any place at any time, one of the key advantages of 

cloud can quite literally render such disaster recovery plans insignificant and further help

reduce costs (OPEX and CAPEX) thus enabling service partners to give further value. Cloud

itself having a contingency plan as a measure of disaster recovery is a perquisite for cloud

computing to succeed and hence it is assumed that cloud / internet connectivity is a

constant.

Page 17: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 17/19

 

16 © Tech Mahindra Limited 2010

Conclusion

In conclusion, service partners who manage to fully integrate their cloud offerings with in-

depth business vertical knowledge (business processes layer) and give the end to end

solution will surely have a significant advantage over providers with BPO or IT onlyservices. Service providers will need to utilize cloud computing advantages to their own

business models to redefine themselves and remain competitive in the coming decade.

Integration of BPO within cloud computing will surely become the norm as adoption of 

cloud computing increases. Integration of business and service oriented technology

platforms will need to have the flexibility of supporting the end customer through business

process services and will be invaluable.

Like any new technology, cloud has its own risks but being ready to convert a risk into an

opportunity will need Integrated (IT+BPO) service partners to be within the cloud. It is onlywhen one buys a lottery ticket, does one have an opportunity to win something. BPO in the

cloud will not only bring process centric knowledge and flexibility but also a wide variety of 

support services which are needed and continue to impact the end customer.

Page 18: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 18/19

 

17 © Tech Mahindra Limited 2010

References

  Figure 2: Generic BPO Service offering Landscape

  Figure 3: Customers are looking to drive change into their operations to become more

effective globally | Source: Horses for Sources Research 2010

  Figure 4: Gartner press release Oct 14, 2008 entitled “Gartner Identifies the Top 10

Strategic Technologies for 2009” and Gartner press release Oct 20, 2009 entitled

“Gartner Identifies the Top 10 Strategic Technologies for 2010”. 

  Figure 6: Cloud Deployment models – Source Frost & Sullivan

  Figure 7:The Evolution Of Cloud Computing Markets,” Forrester Research, Inc., July,

2010

  Figure 8: Majority of enterprises are considering blended IT-BPO engagements |

Source: Horses for Sources Research, 2010

  NIST Working Definition of Cloud Computing published by the U.S. Government'sNational Institute of Standards and Technology

  Gartner Research – Gartner's fifth annual publication of "Gartner on Outsourcing"

2008-2009

  The Benefits of Cloud Computing - Cindy Waxer

(http://www.webhostingunleashed.com/features/Cloud-computing-benefits/) 

  Business Ecology Initiative and Service-Oriented Solution - Why Business Process

Disappears within the Cloud?- Michael Poulin June 13, 2009

  Telegensys - BPO 2.0 – Refining the Very Basics of Business Process Outsourcing

  An Essential Guide to Possibilities and Risks of Cloud Computing – Maria S pinola – June 2009

  Avanade – Global Survey of Cloud Computing, 2009

  Cloud Computing Nariman Mirzaei ([email protected]) Fall 2008

  Cloud Computing Privacy Tips- World Privacy Forum- Robert Gellman and Pam Dixon-

Feb. 2009

  Telecom Trends market survey published on Cloud Computing, 2010

  USE OF CLOUD COMPUTING APPLICATIONS AND SERVICES - Associate Director John B.

Horrigan (202-419-4500) September 2008

  Telecom Companies Profit as Cloud Providers - Keith Hanna – 2010 – Team Quest

  Cloud Computing - Andy Bechtolsheim - Chairman and Co-founder, Arista Networks

November 12th, 2008

Page 19: Techmahindra - Business Process Outsourcing

8/6/2019 Techmahindra - Business Process Outsourcing

http://slidepdf.com/reader/full/techmahindra-business-process-outsourcing 19/19

 

About the Author

Pushkar Gokhale is a member of the Business Solutions group, specializing in BPO solutions

for Tech Mahindra Americas. Prior to this, he was heading the Management Information

System group for the BPO vertical within Tech Mahindra and has been instrumental invarious automation led initiatives within the company. Pushkar has a Bachelors of 

Computer Science degree from University of Pune and a Masters in Information Systems-

specializing in Mobile Transactions, from La Trobe University, Australia.

About Tech Mahindra

Tech Mahindra is part of the US $7.1 billion Mahindra Group, in partnership with British

Telecommunications plc (BT), the world’s leading communications service provider.

Focused primarily on the telecommunications industry, Tech Mahindra is a leading global

systems integrator, Business Process Outsourcing provider as well as Businesstransformation consulting organization. Tech Mahindra has recently expanded its IT

portfolio by acquiring the leading global business and information technology services

company, Mahindra Satyam (earlier known as Satyam Computer Services).