| As a truly remarkable year draws to a close, it's time | | | | improve the business cost base but caution in moving |
| once again to cast our thoughts back over the | | | | delivery away from the corporate control where the |
| previous twelve months and ask: "What the heck was | | | | benefits are not immediately obvious. There is also less |
| THAT all about...?" | | | | capital investment available to make it happen. |
| In accordance with an age-old (ok, year-old) tradition, | | | | It is likely this is a temporary hiatus as need surpasses |
| SSON reached out earlier this month to network | | | | caution. Certainly we have had a lot of interest in |
| members, asking for their thoughts on what | | | | visiting the Rolls-Royce HR Shared Service Centre |
| characterized 2009 in shared services and outsourcing. | | | | from private and public sector organisations alike. I think |
| The result? SSON's Year in Review special. Read on, | | | | the next two years will see an unprecedented level of |
| enjoy, and see how far you agree with what our | | | | activity in HR transformation projects. Much of this will |
| experts have to say about the last year... | | | | probably be in the public sector where the choice of |
| Phil King | | | | back office infrastructure is weighed up against the |
| Associate Partner | | | | ability to field front line staff. There is no real choice |
| Atos Consulting | | | | between the two and there are only so many options |
| 2009 was the year of challenge for shared services | | | | to reduce costs. Politically unpalatable collaborations |
| leaders, with short term pressures on cost control as | | | | between public sector entities could now be seen as |
| part of organization-wide freezes restricting | | | | very desirable. This may see the emergence of some |
| investments at the same time as demands from | | | | of the very largest HR transformations. |
| customers to do more for less. Large investments in | | | | This could be set to be a very exciting couple of |
| e.g ERP upgrades were put on hold so a large number | | | | years. |
| of small-scale initiatives have been carried out - such | | | | * |
| as shared services and process diagnostics, process | | | | Traoloch Collins |
| improvement driven by techniques such as Lean, | | | | CEO |
| starting off scope expansion projects, and the | | | | 2009 has been a tough year for most organizations |
| assessment, design and implementation of "niche" | | | | – characterised by a steep downturn but also great |
| solutions, particularly in areas such as automated AP | | | | uncertainty. Uncertainty in business is deeply |
| invoice processing, improved collections processing, | | | | unsettling. Uncertainty in sourcing relationships is no |
| automated reconciliations, automating HR processes - | | | | different. We saw a noticeable trend in the second |
| projects which can give a payback of less than a | | | | half of 2009 to a renewed focus on structured |
| year and add to the corporate bottom line as well as | | | | management of risk and performance in both |
| improve efficiency. The best leaders have delivered | | | | outsourcing and shared services. This approach was |
| significant bottom-line benefit by techniques such as | | | | driven by clients and service providers – both |
| dynamic discounting leveraging the consistent, | | | | recognising that effective risk and performance |
| standardized and stable processes that an optimized | | | | management keeps costs down and service |
| shared service can deliver. | | | | consistent. Management of performance has always |
| * | | | | been a key focus for organisations but as the |
| John Sheridan | | | | importance of cost control is reinforced this is |
| Senior Manager | | | | becoming more formal and rigorous. |
| Alsbridge | | | | * |
| Global recession is probably the lasting image of 2009 | | | | Deborah Kops |
| – with just about everyone looking like a rabbit that | | | | CMO |
| has just been caught in the headlights. The low | | | | WNS Global Services |
| seasonality of the Christmas period lasted for 3-4 | | | | 2009 has been the "year of the survivor.". Supporting |
| months into Easter with the market waiting see who | | | | this theme are a few notable trends: |
| would twitch first and which way they would go. | | | | - Companies now recognize that business process |
| Outsourcing initiatives that were in development (or | | | | outsourcing is an appropriate operating model for both |
| in-flight) were restructured and/or deferred; the drive | | | | good times and bad. Companies, both veteran and |
| for flexibility and innovation that was gaining | | | | new industry entrants, are now embracing outsourcing |
| momentum came to a crashing halt as cash became | | | | with more alacrity. This year we saw historical |
| king once again as a primary tactical driver. | | | | outsourcing ‘laggards"—new industry entrants |
| | | | | such as CPG, retail, logistics and media and |
| As if the global recession wasn't bad enough, the year | | | | entertainment start on outsourcing journeys |
| had started on a downer almost immediately with the | | | | side-by-side with more experienced industries such as |
| Satyam scandal: the chairman of India's fourth largest | | | | financial services, who ramped up their initiatives in |
| outsourcing service provider, Ramalinga Raju, resigned | | | | response to the worst economic conditions in 60 |
| on 7 January 2009 after notifying board members and | | | | years. |
| the Securities & Exchange Board of India (SEBI) | | | | - The second trend is the increasing globalization of |
| that Satyam's accounts had been falsified (cash on its | | | | service providers in response to more global programs |
| books inflated by $1bn; $253m liability incurred on funds | | | | of the buyer sector. During 2009, the provider |
| personally arranged by Ramalinga Raju; quarterly | | | | community aggressively expanded their footprints to |
| revenues for the period ending 30 September 2008 | | | | serve the needs of their clients. |
| overstated by 28% and earnings overstated by | | | | - The third discernable trend is the pronounced waning |
| $125m). This sparked a huge crisis of confidence and | | | | of the era of captive centers. Many clients revisited |
| sent shockwaves around the outsourcing world placing | | | | their captive shared service center strategy with the |
| major question-marks against India's position as a | | | | recognition that third party providers can deliver the |
| premier destination for outsourcing IT services - plus | | | | same or better levels of service at lower cost with |
| the role of its auditors, PricewaterhouseCoopers, in the | | | | less administrative hassle. |
| whole saga. | | | | * |
| | | | | Vipin Suri |
| I think the year will also be remembered for its merger | | | | MD |
| and acquisition activity, following in the footsteps of | | | | Shared Services International Inc. |
| HP's purchase of EDS in 2008, a trend that I can see | | | | In 2009, several companies had their business cases |
| continuing into 2010. Deals included: | | | | prepared but deferred their decision to implement |
| - Oracle stepping bravely into the ‘open-source' | | | | shared services until next year. The primary reasons |
| systems market with its $7.4bn acquisition of Sun | | | | for this deferral were competing priorities e.g. other |
| Microsystems in April 2009 after Sun's discussions with | | | | mission critical initiatives during the challenging economic |
| IBM broke down. | | | | times, ERP system implementation and lack of |
| - Tech Mahindra picking up the ashes of Satyam by | | | | organizational capacity to handle incremental |
| taking a controlling interest in April 2009, initially | | | | changes. |
| operating them as an independent company under the | | | | Another major question which required most of the |
| name of Mahindra Satyam before bringing them under | | | | debate in 2009 was: Do we create Shared Services |
| the group umbrella. | | | | first and then outsource or should we just |
| - Dell's $3.9 billion acquisition of Perot Systems in | | | | outsource? Of course, there are two schools of |
| September 2009 giving them a stronger position in the | | | | thoughts - the outsourcers recommend one-step |
| IT services market and deep government / healthcare | | | | outsourcing because of quicker savings and single |
| experience. | | | | organizational disruption but the conventional wisdom |
| - Xerox launching into full blown BPO most recently | | | | suggests - two-step outsourcing i.e. get your house in |
| with their acquisition of ACS (October 2009) helping | | | | order first by creating shared services and then |
| them in their transformation from a document | | | | consider outsourcing. The objective is not to leave |
| company into higher value end-to-end business | | | | more money on the table for the outsourcers. The |
| processes. | | | | pendulum seems to be swinging in favor of one-step |
| … Oh yes … and then there was "Cloud" and | | | | outsourcing. |
| "everything" as a service … with BPO and ITO | | | | The reporting structures within the SSCs were also |
| becoming ever more intertwined. Watch this space … | | | | reviewed with a trend towards moving to functional |
| * | | | | reporting lines rather than continuing in a multi-function |
| Ravichandran Venkataraman | | | | environment. In this case, various functionally based |
| MD | | | | shared services are co-located in the same center |
| ANZ Operations & Technology Pvt. Ltd | | | | and common management practices e.g. customer |
| The year that went by had some real challenges...: | | | | surveys, SLAs, pricing strategy etc. are being |
| - specific industries like travel were really hit and | | | | leveraged by creating a Service Management Office |
| anyone doing back office work for this had to look at | | | | (SMO). |
| other options; | | | | In addition, executives spent considerable amount of |
| - as predicted at the beginning of the year, we saw a | | | | time discussing Lean Six Sigma, Value Stream |
| drop in profits making PE investors force companies to | | | | Mapping & Business Process Improvement |
| offshore/outsource more; | | | | * |
| - the volatality of the dollar was so high and across | | | | Jon Hansen |
| different currencies, that it got a lot of companies off | | | | When I was recently contacted by SSON's Jamie |
| guard. Of course, many banks made money; | | | | Liddell to provide my thoughts on "The Year in Review |
| - many companies moved hard on productivity, salary | | | | " for 2009, as well as "The Year Ahead" in 2010, |
| cuts, no raises, lower bonuses, no promotions to higher | | | | relating to shared services and outsourcing I must |
| level jobs, etc. | | | | admit that there was no shortage of ideas and |
| * | | | | reference material. |
| Phil Searle | | | | Over the past 12 months I have had the opportunity |
| Founder & MD | | | | and privilege of interviewing some of the industry's top |
| Chazey Partners | | | | thought leaders on the subject of shared services and |
| This time last year we were in economic | | | | outsourcing including Sources for Horses and former |
| Armageddon! Countries, governments, financial | | | | AMR Research analyst Phil Fersht and IACCM's CEO |
| markets and enterprises were often in near panic | | | | Tim Cummins. |
| mode. There was little visibility or confidence, all | | | | The Fersht interview, which originally aired on June |
| "discretionary" spend (however that was being | | | | 24th, was interesting on many levels, not the least of |
| defined) was stopped, and we didn't know how deep | | | | which was the fact that according to industry studies |
| and how desperate this recession was going to | | | | two-thirds of all outsourcing programs fail to achieve |
| be. This time this year many economies have | | | | the expected results. While there were a number of |
| returned to growth for the first time in 18 months (with | | | | reasons that had been cited and discussed for this |
| one notable exception being the UK), in large part due | | | | dismal track record during the 45-minute interview, one |
| to significant government stimulus packages. | | | | of the most telling revelations came from the fact that |
| Economists are now debating whether this is a | | | | even though organizations were looking to increase |
| "V"-shaped or a "W"-shaped recovery and whether | | | | their activity in this area, few companies were actually |
| we are really over the worst or might yet suffer a | | | | going beyond the "rob Peter to pay Paul" mindset that |
| double dip. Then there is the very critical longer term | | | | led to the failures in the first place. Specifically, |
| question of how to deal with the huge deficits that | | | | becoming disenchanted with outsourcing services |
| public finances have got into as many governments | | | | through domestic providers, organizations repatriated |
| have borrowed to fund their economic stimulus | | | | development internally through the engagement of |
| packages. | | | | overseas providers from countries such as India. |
| So what does this all mean for governments and | | | | The problem of course is that the change in |
| businesses and, specifically, shared services and | | | | geography did little to address the origins of the |
| BPO? Some of the world's most respected business | | | | problems with domestically driven initiatives, which is |
| leaders rightly tell us that a time of recession is a great | | | | the client's abdication of responsibility for managing the |
| opportunity to take stock, make important structural | | | | process. In other words, success with outsourcing will |
| and strategic decisions and ready the business to | | | | continue to be elusive if companies insist upon |
| come out stronger than ever. Shared services and | | | | assuming a spectator role in their own business |
| BPO can and has been a part of this. Many | | | | process improvement programs. |
| organizations have looked to shared services and | | | | Recognizing these challenges and their overall |
| BPO to help drive out inefficiencies and cost, get | | | | contribution to the poor results, companies are now |
| control of operations, generate cash and closely | | | | starting to turn toward solution providers that can |
| manage working capital. Improving service levels to | | | | facilitate without intimidating the management process, |
| the business have remained important but the "burning | | | | which was reflected in the PI Window on Business |
| platform" has for many businesses been cost and | | | | "Emerging Giants: Future Titans of the SaaS World |
| cash. The challenge has been how to "invest" at a | | | | series." |
| time of restrictions on "discretionary" spend and | | | | In particular, the August 20th segment in which I |
| availability of cash. Time will tell whether short-term | | | | interviewed Blueprint's Senior VP and CMO Matt |
| actions will reap longer-term pain or gain. Any | | | | Morgan. Morgan discussed at length the emergence |
| effective and sustainable move to leverage shared | | | | of "visual requirement definition" as well as the myriad |
| services and/or BPO across in-scope processes such | | | | of other tools that are now available to organizations |
| as Finance, HR, IT and Procurement requires a robust | | | | who want to gain access to needed resources |
| approach with investment in people, processes, | | | | without losing control of the development process. |
| technology and a new service delivery framework. | | | | While organizations assuming greater responsibility and |
| Short-term moves to cut heads and costs through | | | | control for their outsourcing projects in 2010 will |
| something called "shared services", offshoring or | | | | continue to be the trend, the question as to level of |
| outsourcing will likely fail – and quickly – if these | | | | outsourcing activities beyond the domestic landscape |
| are done as a "quick fix" or simply "slash and burn" | | | | remains to be seen. |
| type activities. | | | | On September 30th I welcomed both Canada's Trade |
| On the flip side, organizations that may not have | | | | Minister Stockwell Day and an international guest panel |
| previously thought much about or really leveraged | | | | of experts that included IACCM's Tim Cummins to |
| existing shared services operations or BPO | | | | discuss the impact of the Buy American policy on both |
| relationships have turned to them and reaped the | | | | the domestic and international economic landscape. |
| benefits. Sometimes, there is nothing quite like a | | | | During the 90-minute special, Tim made the prediction |
| "burning platform" to get things done! But long-term | | | | that outsourcing activities would begin to shift away |
| sustainable success will not be achieved in just 12 to 18 | | | | from India to South Africa where, as he put it, there is |
| months. | | | | a nascent outsourcing sector that will make it the new |
| Offshoring has been an interesting and often quite | | | | preferred destination for companies looking to |
| political and indeed emotional topic in 2009. While | | | | outsourcing for improved process performance and |
| offshoring can bring business benefits (often linked | | | | bottom line savings. |
| directly to cost) it also potentially means moving jobs | | | | Whether this transformation will shift into high gear in |
| overseas. What has definitely happened is that there | | | | 2010 or the year after is yet to be determined. |
| have been far fewer expats being sent overseas to | | | | However it is safe to say that 2009 was the starting |
| help establish and operate offshore captive or | | | | point, and that 2010 will be the year of transition. |
| outsources centres. | | | | This latter point of course demonstrates how |
| * | | | | outsourcing activity extends beyond the sector itself to |
| Zachary Misko | | | | encompass and impact global economies. |
| Global Director | | | | As I had discussed on the PI Window on Business |
| KellyOCG - RPO | | | | Show, and both the Procurement Insights and PI |
| Obviously over the past 12 months, the economic | | | | Window on Business Blogs, the Clark and Fourastie |
| situation has changed dramatically. Last year, in our | | | | "three-sector hypothesis of industry" (which is now |
| global RPO survey report, which is conducted annually, | | | | four with the advent of high tech and R&D |
| over 70% of respondents cited recruitment difficulties. | | | | industries) as it relates to the development of a |
| This year, the global figure has dropped to just 54%. | | | | wealthy nation's economy, demonstrates outsourcing's |
| Interestingly, however, at the time of the survey, that | | | | economic impact . (Note: the now "four industry |
| figure remained at 67% for European respondents. | | | | sectors" of the hypothesis through which a wealthy |
| When this recession passes, as it will, HR departments | | | | nation must progress to maintain its economic position |
| around the world will have downsized significantly. HR | | | | includes the extraction of raw materials (Primary), |
| departments which have been downsized in the lean | | | | manufacturing (Secondary), services (Tertiary) and |
| times will be overwhelmed with the complexities of | | | | later knowledge-based (Quaternary). Outsourcing |
| identifying and onboarding the quality and quantity of | | | | encompasses elements from both the third and fourth |
| talent they need to fuel their company's renewed | | | | sectors.) |
| growth. Many companies are using their employees | | | | Referring once again to India, the advent of that |
| within HR and recruitment in the midst of hiring freezes | | | | country's rise to prominence as a preferred |
| and layoffs, to engage in more social networking and | | | | outsourcing destination for American firms, each of |
| passive recruitment. Unlike the economic trials after | | | | which have committed to investing $1 billion into its |
| 2001 when companies had no interest in Recruitment | | | | economy, has significantly impacted its standard of |
| Process Outsourcing (RPO) or developing recruitment | | | | living. In fact studies show that India has seen |
| skills, this time they want to retain and expand their | | | | double-digit wage growth for much of the 2000s. |
| knowledge of the current job marketplace during the | | | | The critical points to consider regarding the India case |
| slowdown. As well, today they want a more flexible | | | | reference is that outsourcing is a key cornerstone of |
| cost structure, so they are looking for RPO providers | | | | the Tertiary and Quaternary sectors that are essential |
| who can become their long-term partners. Companies | | | | to a nation's economic viability and ongoing |
| are transitioning knowledge now so the RPO provider | | | | strength. How this plays out during 2010 and the |
| will be prepared when the economy turns around and | | | | ensuing years will likely have a significant influence on |
| they are ready to hire. This provides much needed | | | | the global economy as a whole, especially if |
| flexibility and scalability to companies. | | | | predictions such as the one by IACCM's Cummins |
| Respondents to our 2009 global RPO survey cite a | | | | forecasted shift from India to South Africa materialize. |
| variety of challenges that are slowing the hiring | | | | Given the above, it is safe to say that as we move |
| process. Fifty four percent said the most common | | | | further beyond 2009, we will one day come to see it |
| challenge was quality of hires. Following that, challenges | | | | as a pivotal year of change that like 2010 will represent |
| include time to hire (37 percent), cost to hire (28 | | | | the bridge between past failures and future success |
| percent), hiring manager satisfaction (27 percent), | | | | on multiple levels of what is a complex industry. |
| performance monitoring (21 percent), and quality of | | | | _ |
| recruiters (18 percent). | | | | This article was first published on the Shared Services |
| * | | | | & Outsourcing Network (SSON) - Read it here: |
| Mark Judd | | | | About The Shared Services & Outsourcing |
| HR SSO Director | | | | Network (SSON) |
| HR Shared Services | | | | SSON is the largest and most established community |
| Rolls-Royce plc | | | | of shared services and outsourcing professionals, with |
| If the management of an HR shared service | | | | over 25,000 members. |
| organization has ever been considered a challenge in | | | | SSON provides the roof under which key industry |
| the past, the last twelve months have reset the bar. In | | | | experts and organizations share their experience, |
| both the public and private sector the concept of a | | | | knowledge and tools, and practitioner peers connect |
| cost-saving business case is no longer enough to | | | | with other all over the world, both face to face and |
| justify investment and commitment to transformation. | | | | online. |
| The need to work within the boundaries of | | | | SSON focuses on developing its members through |
| affordability, in an environment where cash is scarce | | | | providing training, tools, and networking opportunities. |
| and closely protected, has meant that we have to | | | | SSON staff works from international offices in New |
| make more careful choices on how we progress our | | | | York, London, Singapore, Sydney, Berlin and Dubai to |
| service offerings. This impacts on the design of our | | | | research current trends and developments in shared |
| solutions and the pace at which they can be | | | | services. |
| implemented. | | | | More information visit the Shared Services & |
| It has also created a paradox in that there is an | | | | Outsourcing Network (SSON) website. Stay up to |
| urgency to deliver much more to preserve and | | | | date with SSON's latest twitter posts at twitter. |