OFFSHORING CONSULTANTS: Do They Matter?

Just how has GE done it? Is it true that two of our three major competitors
have already gone to India? What are they doing there? What are the real cost
savings? How is the business environment there? Are they capable of
understanding all these complex processes, because I do not think they have
these products available in the Indian market? And why are so many people
running their own operations? How good are the Indian service providers? How
good is the Indian law to protect the confidentiality of my critical business
information? And then, all said and done, I hardly know anything about India-how
can we take such critical jobs there?

Fact 1: The opportunity is big. At least everyone seems to be saying
so.

Fact 2: Questions are just too many. Obviously, you cannot seek the answer
from your competitors.

Solution: Some 'independent' advisor who would answer all the
queries, give you a lot of numbers, some real-life examples, backed with some
more numbers; and would volunteer, if the need be, to do a part of the initial
work on your behalf.

Enter the end-to-end consulting providers. The dotcom opportunity had its
Scients and Viants; Proxicoms and Sapients. The offshoring opportunity has its
own-NeoIT, TPI, Everest, and DiamondCluster to name just a few.

But what value do they provide? Why do so many companies spend thousands-in
odd cases millions-of dollars on them? And why do so many others do not?

But,
first things first. Who are these consultants? If you are new to the outsourcing
arena, you may never have heard of them. Why cannot the McKinseys and BCGs do
that? Or, maybe more broad-based Accentures and KPMGs? And, why not the Gartners
or IDCs, if information is all it requires. Why these new names? What is so
great about them?

Focus, my dear Watson-say consultants. "Unlike the strategic
consultants, who have their hand in many pies, this is our bread and butter. We
try to deliver the best in one area rather than focus on many," says Atul
Khosla, country head, India, Everest Group a pure-play outsourcing consultant
firm and owner of the popular www.outsourcing-center.com website.

What Do Consultants Do?

In terms of level of difficulty, the question is arguably next only to Freud's
legendary doubt-what do women want? There has never been a simple answer to
this question about business consulting in general. And expecting a definitive
answer to this, involving a still-nascent phenomenon like offshoring, is asking
for too much.

But broadly speaking, most consultants agree that there are a few definite
steps involved in offshoring where they can bring some value to the table. NeoIT
calls it knowledge, plan, source, and manage. BackesCrocker calls it preparing,
optimizing, and maintaining. Everest Group describes this as determining whether
or not to outsource; developing a strategy; assessing the value creation because
of outsourcing; actual change management; and even adds renewing or ending such
relationships as a step.

To summarize, a consultant can help in one or more of the following ways.

• Serve the information needs of the clients to enable them to get the right
  perspective. This requires knowledge about the developments, offshoring
  destinations, and other broader issues like return on investment.
• Help in creating an offshoring strategy and recommend a model (like source
  or buy, or a mix). This requires familiarity with offshoring processes,
  understanding of micro issues, and the experience of early movers.
• Help in actual vendor selection. This requires skills to be able to map
  client requirement with skillsets of vendors and a deep local knowledge
  about the destination, especially India.
• Ensure that the program runs successfully after offshoring. This requires
  understanding of relationship issues, deep process knowledge, understanding
  of potential gap areas, and knowledge of a particular vertical/horizontal,
  as well as quality parameters.

All the steps, of course, require different skills. For the
consultants to be seen in a proper perspective, it would be apt for us to
classify the consultants in four categories.

• The strategy consultants like McKinsey, AT Kearney, BCG,
  and Accenture

• Pure-play outsourcing consultants like NeoIT, TPI, and
  Everest Group

• Research firms with consulting arms, like Gartner

• Individual consultants and networks of consultants who
  work much the same way as pure-play consultants

A category-skill map (there could be a few exceptions to it)
is presented in the category-capability matrix above, along with the influence
of consultants in these areas.

The Tribes and Their Influence

The consultants claim they are becoming an integral part of the business.
"From strategy, its execution, structuring the contract, to work transition
to ongoing governance. We are involved at every stage," says Avinash
Vasistha, founding partner, NeoIT.

“There is no need for outsourcing consultance as far as I am concerned”   “A consultant must evaluate a seller and not work for him” Sanjay Kumar, CEO, vCustomer Ravindra Datar, principal analyst, IT Services and BPO

Not everyone agrees though. A senior executive of a financial
services company, which has outsourced quite a lot to India, thinks consultants
are useful for companies who do not know India at all. Unlike them, his company,
which is doing business in India's domestic market, has little to gain from
consultants, he says. However, he agrees that the initial confidence building
about offshoring is no mean job and the consultants really do add a lot of value
there, for companies who are complete strangers to a location, say, India.

In other words, it is in the first stage of decision-making,
where a manager needs to get convinced as well as convince other influencers in
his company about offshoring and a destination, that the consultants add a lot
of value. No wonder then, that research companies like Gartner have got into
this area in a big way. Others like Everest, NeoIT, and BackesCrocker also boast
a lot about their research capabilities.

However, with more and more information being made available
by research companies and with awareness increasing, one does not always have to
rely on a full-fledged consulting company for this part of the offshoring
process, says Shekhar Mullatti-who till recently worked at GreenPoint
Mortgage, which has outsourced business processes to multiple outsourcing
vendors in India-while refusing to comment specifically on what approach
GreenPoint followed.

The strategizing phase is when clients need specific
information and some finer perspectives on others' experiences, to learn
0lessons from them if any, and specific inputs on whether to source or buy.
Both, this phase and the vendor selection phase, require that the consulting
company have a strong foothold in the terrain, as far as the offshoring
destination is concerned. India is the predominant destination. And, an India
presence is becoming imperative for the consultants.

“An extensive database and the buyer's requirements are used to shortlist the best suppliers”  “From strategy to work transition to ongoing governance. We are involved at every stage” Tom Weakland, MD, global outsourcing advisory practice, DiamondCluster Avinash Vasistha, founding partner, NeoIT

"In fact, this is where the consultants can add the most
value today," says Mullatti. "Everyone knows the top seven to eight
outsourcing vendors. But very often, even larger corporations need smaller
vendors, who are experts in their respective areas and who are often more
committed to even a smaller process. Identifying them early on will help a
company remain ahead of the curve. Without a strong local presence, it is very,
very difficult," adds Mullatti.

The trends confirm his opinion. Everest Group-which started
out much before offshoring became a buzzword-calling itself an outsourcing
consultant, has kept pace with the offshoring phenomenon. The company has set up
an India office at (where else?) Gurgaon recently.

NeoIT, of course, has been promoted by two Indians brothers-Atul
and Avinash Vashistha-and has a large team based out of Bangalore. It has now
gone to the next emerging location, the Philippines, with an office at Manila.

Even those who do not have a direct presence have established
relationships with India-based consultants. While TPI has a relationship with
NeoIT, there are many others who work with smaller networks of consultants and
individuals. ITESA, another such firm based in the US, works with Bangalore-based
consulting company Strategic Interventions India Private Limited (SIIPL),
promoted by Ranganath Iyengar, a veteran industry hand. RH Oetting &
Associates helped an IT company offshore to India with a Delhi-based firm India
Contact Center Advisory, promoted by Shiv Karan Singh, an ex investment banker.

However, smaller groups or individuals have their flip side
too. Says Ravindra Datar, principal analyst (IT Services & BPO), Gartner,
"They might have experience in the field and know the supplier side well
but this puts a question mark on the fairness and objectivity in the
recommendations they put forward. On the face of it, money occupies a primary
place for them and their decisions, heavily influenced by the supplier side,
often prove disastrous for the buyers, bringing bad name to the industry."

It is a tricky issue. While on the one hand a deep knowledge
regarding the suppliers is a must, there should be no involvement with the
vendor. "There should be no alignment with any vendor. There are various
parameters on which the suitability of a vendor is measured for the buyer. A
consultant must evaluate a seller and not work for him and based on the
evaluation should put forward his recommendations. Ideally, the work ends here.
If the client wants, only then the involvement goes beyond evaluation,"
adds Datar.

"There should be no financial relationship with the
seller. We, for example, depend on our experience and research to identify the
suppliers. Our extensive database and the factual data which we gather, and the
requirement of the buyer are used to shortlist the best-suited suppliers,"
says Tom Weakland, managing director, global outsourcing advisory practice,
DiamondCluster, a strategy consulting firm, which is not a pure play but has
considerable focus on this area.

That is why in the initial days when there were no pure-play
consultants-and to a great extent even today-the larger corporations, like
big financial services companies, used the services of traditional consulting
firms while offshoring. The pure-play firms are a recent phenomenon. And some of
them seem likely to build a mind share and credibility levels.

The individual consultants are also approached by vendors, to
act on their behalf. In fact, many smaller consulting companies have tie ups
with BPOs and outsourcing firms and act as their virtual sales team. That has
given a bad name to the entire tribe.

Large vendors have some other problems. They do not see
consultants as adding much value. They see them as more of gap creators between
client and vendor. Says Sanjay Kumar, CEO, vCustomer, "There is no need for
them as far as I am concerned." But if the client wants, he is open to
share information with good consultants who come to understand the company to
make the buyer more aware.

Most buyers, sellers, and others-with the exceptions of
consultants-opine that there is no role for consultants in the migration and
project management stage. Most consultants, however, claim that they have the
capability and there is a value that they can add.

Says a senior executive of a financial services company,
which has outsourced to India, "They may be doing handholding in the build
stage in a BOT model but once the migration starts there is no role for
them." His company, as well as many others', now have full-time vendor
managers based out of India. HP, Dell, Citibank, Amex, Microsoft, GreenPoint,
and most other bigger outsourcers are today opting for resident vendor managers
in India. This leaves hardly any scope for the consultants in that domain.

To summarize, the most common areas where consultancy is
sought by buyers are in building the awareness level, justifying the RoI, vendor
shortlisting, and some help in due diligence and selection. However, of late,
one crucial area where they are influencing a lot is in deciding the model for
outsourcing. This is because of the fact that the simple either-or model has now
definitively changed to mix-n-match. Many companies are opting for a hybrid
model and setting up captives, and at the same time outsourcing to Indian
vendors, that too, to a number of them. Also, the emergence of complex models
like BOT, where the relationship is a little tricky, has also created
opportunities for the consultants. One would not be surprised, following the
model of big accounting firms, even if some of these consultants get into the
build part of BOT themselves, rather than going with an existing outsourcing
vendor. The logic, which a few of them have, is that a company which knows that
it is just involved in your operations for a short while has no real reason to
be sincere towards a client, as that is not their business.

The India Plus Era

Slowly but surely, other offshoring destinations are emerging, if not as
competition to India, but as supplement to the country. This means, offshore
consulting will no more be synonymous with the India connection. As a joke goes,
every third person in the US today with an Indian surname and some experience in
either BFSI or technology industry is an offshoring consultant. That would
definitely change.

Just as India-centric BPO companies are trying to develop a
global delivery capability, the offshoring consultants will have to develop more
consulting skills and not just hope to be in the business of selling their India
familiarity.

Anurag Prasad

WHO'S WHO IN OFFSHORING CONSULTING

Backes Crocker

Involved in the design, implementation and management of offshore
outsourcing models for US companies

Key Persons: Neil Backes/Ben Crocker (Partners)

www.backescrocker.com

Diamond Cluster

Management consulting firm that helps organizations develop and implement
growth strategies, improve operations, and capitalize on technology including
outsourcing.

Key Person(s): Tom Weakland, Managing Director, Global Outsourcing
Practices

www.diamondcluster.com

EquaTerra

Outsourcing Consulting firm specializing in globalizing service delivery

Key Person (s): Mark P Toon (Founder CEO), Cliff Justice, Multishore
Practice Leader

www.equaterra.com

Everest Group

Provides strategic advisory services that help companies worldwide to
outsource. In-depth research-backed consulting firm, has set up an office in
India.

Key Person (s): Peter Bendor-Samuel, Founder & CEO

www.everestgrp.com

Global Reach Consultancy

Advisory company promising US firms cost effective offshore outsourcing to
India.

Key Person(s): Kumkum Dalal, President and Founder

www.grc-consulting.com

ITESA

Helps clients outsource, build or market their operations onshore, near
shore or offshore

Key Person(s): Keith W Fiveson (Founder, Managing Consultant)

www.itesa.com

Janeeva

A newly formed BPO assurance firm delivering and managing cost-effective BPO
management programs

Key Person(s): Vinay Gupta, CEO; Ashok Varma, COO

www.janeeva.com

JDalal Associates

Guides clients in exploring the benefits of outsourcing and off shore
alternatives.

Key Person(s): Jagdish Dalal, Principal

The Kinaara Group

Consulting and education firm specializing in outsourcing and offshoring

Key Person(s): Murty Chamarty

www.kinaara.com

Launch Offshore

UK-based firm helping clients to manage risk while offshoring

Key Person(s): Tim Bond, Founder

www.launchoffshore.com

Metagyre

Delivers assessment, advisory and management services to the buyer of
offshore outsourcing.

Key Person(s): Paul Thompson, Offshoring Expert

www.metagyre.com

Michael F. Corbett & Associates

A management education and research firm dedicated to advancing outsourcing
as a powerful management discipline

Key Person(s): Michael F Corbett (Founder)

www.corbettassociates.com

NeoIT

Major offshore consulting firm with significant presence in India.

Key Person(s): Atul Vashistha (CEO), Avinash Vashistha, founding partner

www.neoIT.com

New Horizons Consulting

A domain knowledge firm specializing in migrating business processes to
India in healthcare space

Key Person(s): Ravi Shah (Principal Consultant)

www.newhorizonsonline.com

Orbys

European specialist outsourcing advisory company

Key Person(s): Bob Aylott, outsourcing prac-tice leader; Alex Blues,
outsourcing in BFSI

www.orbys.com

The Paaras Group

Offshore consulting firm for CRM and call centers

Key Person(s): Dr Suresh Gupta

www.tpgglobal.net

Philippine IT Offshore Network (PITON)

Philippine-based offshore consulting firm

Key Person(s): Antonio O Cojuangco (Chairman)

PK2 InfoTech

Outsourcing management and consulting firm

Key Person(s): NA

www.pk2tech.com

Smallwood Consulting

The offshoring consulting firm of consultant and author Mark
Kobayashi-Hillary

Key Person: Mark Kobayashi-Hillary, MD

www.markhillary.com

TPI

A pioneering consulting firm in this space. Offers insight into all aspects
of sourcing relationships delivered on-shore, near-shore and offshore.

Key Person: Dennis McGuire(president & CEO)

www.tpi.net

Versatile CI

Pune-based firm providing offshore outsourcing transition management solutions
to the buyers

www.versatileci.com

RESEARCH-CENTRIC FIRMS

Gartner

Provides market information and outsourcing consultancy.

www.gartner.com

Nelson Hall

A research and consultancy firm specializing in the analysis of Business
Process Outsourcing.

www.nelson-hall.com

Ovum

A research and consultancy firm offering a consultative approach to deliver
market insight for client's strategy requirements.

Key Person: Katy Ring, practice director

www.ovum.com/outsourcing/

Compilation: bpOrbit