Stratoserve LLC

Outsourcing and innovation - Hackett Study and NESCON Workshop

Apparently there is a new study  by the  Hackett Group that finds that while Business Process Outsourcing (BPO) is on the rise because of cost savings , outsourcing executives are generally unhappy with the innovation by suppliers. I will address some of these challenges in an upcoming talk at NESCON.

Here is the summary of the upcoming talk on October 6, 2008 at Marlborough MA.

Your organization has crunched all the numbers and evaluated offers and signed the global outsourcing contract. You are rather pleased with your efforts including involving your internal users in the RFP, perhaps organizing a great global reverse auction and concluding some great win-win supplier negotiations. Your CFO and CEO are delighted with the projected savings that will come from executing the global outsourcing contract. In fact your CEO (followed by your HR) proudly mentioned that all displaced employees might be possibly absorbed in other parts of the US organization, avoiding layoffs.  This would be possible as global outsourcing will reduce costs and many more new product development and innovation projects might be speeded up –substantially. More and speedily developed new products for global markets would actually mean more jobs in the US organization! You knew that global supply chains were the way to go….

Two years down the line you find that the envisaged contract volumes have not emerged. The suppliers are complaining, your internal organization had changed with the outsourcing contract, and it’s difficult to find the people who knew what was going on in the first place.  The global innovation engine is moving much slower than expected.

Check out the program here. Should have some interesting feedback.

Outsourcing call centers - an ethics question?

I recently bought a Dell computer and during the buy process I needed to call and it was a US salesperson. In fact, the Dell website was very careful in guiding US customers in the early part of the buy process to US persons, or at least US numbers.

You guessed it ! The person who spoke with me was outstanding but did have a foreign accent and did not grow-up in the US.

So I found Bruce Weinstein's recent article on ethics, noble but out of touch with how things really work in this industry. Yes it is ethical and good business sense to give top customer service to customers so that they come back for more. But the assumption that a US worker will be more service oriented is wrong. The fact is that a decent US worker does not want to work these jobs even if the pay is higher because these are taxing jobs also called the "McDonald jobs" of the service sector. You can pay maybe 12 -20$ an hour compared to about $ 2 an hour in India but the motivation and attitude of the "dead end"  call center worker in the US is just appalling. Just go to an US call center and compare with an Indian one in the dead of night. Check my 2006 post here.

The point is that the Call Center industry is very highly developed and is geared to addressing customer issues depending on the phase of the sales or service process. For tech support Call Centers are paid differently for different levels of support ( Level 1 vs level 2).  The cultural training is also enormous as I have seen, although gaps do exist.

Thus the ethics question that Weinstein raises is really one of efficiency and industry is always trying to improve.  For example you are unlikely to find lead paint in Chinese toys in the future but Chinese toys will be back and US manufacturing will continue declining for purely cost reasons. But America and Americans are innovative and I think overall the world will be better off. I got this previous line's idea from Brink Lindsey's great book that I am currently reading called "The Age of Abundance." More on that later....

NECON 2007 my Knowledge Based Services - Low Cost Country Sourcing talk

The NECON Conference is a great event and will be will be inaugurated   by Massachusetts Attorney General Martha Coakley  with a whole lot of great speakers. NECON is a collaborative initiative of  the Boston and North Shore Chapter of APICS ,The Council of Supply Chain Management Professionals, the CSCMP New England Roundtable, the NE Supply Management Group  and The Purchasing Management Association,Boston.Richard G. Weissman's blog on Purchasing.com has started the buzz for the event that is between September 30 to October 2, 2007 in Marlborough, Massachusetts.

My own talk is on Tuesday afternoon and an abstract appears here. I am  working on delivering a really useful and enjoyable workshop!

John Seely Brown to join John Hagel at Deloitte Technology and Strategy Center

Just as things were slowing down for the summer I read the exciting news that John Seely Brown is joining John Hagel as Co-Chairman  at the Deloitte  and Touche Technology and Strategy Center.
Readers of this blog might remember John Hagel 's great book  Net Gain which talked about communities in 1997, a full decade before communities on the web really started taking off for various business purposes including customer community, word-of-mouth, new product ideas and co-development of new products. Not to forget that between Hagel's book and Web 2.0 we had the dot com meltdown and a phase where many seemed to doubt if the Internet was going to go anywhere.

But it is John Seely Brown to whom I owe an intellectual debt. It was during my PhD years in the late nineties that I was groping for theoretical work to ground my thesis on Global B2B innovation in what was a "round" vs today's "flat" world. It was by chance that I read a reference to some of Seely Brown's work with Paul Duguid which went on to give me a good foundation to develop my own ideas on collaborative learning and innovation. My own experience in high value packaging machine installations and servicing seemed to parallel the experiences of Julian Orr, an anthropologist at the Zerox center, then headed by Seely Brown. I  then went on to write several journal articles which presented my own extensions of collaborative "situated" learning popularized by John Seely Brown and his associates.

I am sure that John Seely Brown and John Hagel will do a great job at the new Center, particularly since they have been thinking of these issues decades ahead of the technology really becoming available. The question is : will Deloitte do a better job than Xerox in "absorbing"  and then "executing" these ideas ? I sincerely hope so.....

Technology, Jobs and Home-Depot

This MSN report from the Bureau of Labor Statistics offers one angle of jobs outlook for the US. It suggests that many jobs that can be simplified and done by technology will be done by technology. Simplification includes consolidation of farms to larger ones which will find the smaller farmer out of work. Stock clerks and order fillers in manufacturing and retail will also have their  work done by machines as will meter readers that will compete with optical scanning and voice recognition technologies.

The one common thread with most of these occupations is the ability to completely articulate the process or work into defined processes that can be then done by machines. Do jobs change after machines do much of the rote work ? Yes - if you go to Home Depot you see much of the check out is "self checkout" and the many former cashiers are in the aisles helping customers. Are they adding more value in the aisles than in the check-out? .. I think so.

How Babe Ruth felt

The article on "People Issues" reminded me of how Babe Ruth must have felt when he was "sold" to the Yankees by the Boston Red Sox. The "Curse of the Bambino" lasted 86 years and there is a blog entirely devoted to the curse. To avoid being cursed by IT star employees who are "sold" to the provider Martin Fustes of Computer World provides some valuable tips to the Outsourcer firm. Communication,communication,communication is the message I got from this article. This would minimize the angst of the outsourced employee but still would leave us with Gartner's estimates that half  of IT projects will be in-sourced by 2008 due to things not working out. So there is more to successful outsourcing that helps your business and minimizes employee angst...

HR Outsourcing and Transformation

A recent EquaTerra survey suggests that certain areas within HR are growing rapidly in the outsourcing domain. Apparently, tasks like payroll processing;benefits administration and HR-IT are the areas organizations find most useful to outsource.Blackenterprise.com reports a Hewitt Associates study that 94% of organizations outsource at least one HR function.

The Business Wire EquaTerra report also suggests  that outsourcers prefer providers who can help transform their organizations. This left me wondering about Jack Welch's incredulous comment in his recent Fairfield University interview.    Mr. Welch was wondering why most CEO's are always huddled with the CFO rather than the CHRO. The HR chief is the one who can help transform organizations particularly with a HR department freed up from mundane tasks and now able to facilitate better employee performance.