Outsourcing in the 21st century

During a recent business trip to India on a consulting engagement, I came across a news item in the local newspaper in Pune, India that is worth a mention for the benefit of my readers. In the September 26, 2011 issue of the Times of India (Pune edition), Kenneth Coleman, member of a special advisory group on US-India trade policy and a key figure in US President Barrack Obama's IT think tank was quoted “If Indian players can solve critical problems in the processes of their customers there is no question of 'lower cost' logic coming into play, because it is value that will drive businesses in the next 20 years."

Coleman added that markets such as China, the Philippines, Poland and Russia are coming ahead fast and will challenge India's cost advantage.

Coleman went on to say that many US companies have significant cash reserves and are looking at opportunities to pick up businesses that can help them grow. "Average to weak companies which thus far thrived on venture capital will no longer be relevant and only those with a strong growth promise will attract international strategic investors," Coleman underlined.

Outsourcing service providers should take a cue from Coleman’s remarks. Solving their customer’s business problems throwing human capital will no longer be acceptable. Solving critical problems in the processes is the value-add that customers are seeking and I may say willing to pay. BPO service providers should help transform their customer's processes and position their customers for the growth that will inevitably come. Outsourcing companies need to move their focus from transaction processing to process improvement to process transformation.

You may also read my earlier blog on a related subject “Predictions for 2011 in Shared Services & Outsourcing”.