Some months ago, I was talking to a sales VP at a high-tech consulting firm. He mentioned that, at present, his company’s revenue comes from existing accounts and partner referrals, about a 50-50 split. Then, he mentioned that he wanted to develop a sales model where his revenue was coming from existing accounts, partner referrals and new accounts, about a 33-33-33 split.
As we kept talking, I could literally see the huge chasm between strategy & execution in his organization. This divide is especially wide in the sales domain where most personnel are heads-down-focused on making the next month’s numbers. Strategy just goes out the window.
Now, what makes up a sound sales strategy? Some key elements include:
Ask any sales executive and s/he will mention that tuning any one of the above elements will take years of focused effort. How then is a sales organization to adjust its sales strategy while being focused on its current numbers? At the risk of this post looking like a thinly veiled sales attempt, I think that adjustments to sales strategies can best be done by independent, outside consultants that aren’t exclusively focused on near-term results.
The above example of the sales domain is particularly poignant and illustrates the deep divide between strategy and execution. However, this issue is also at the root of constant tussles in the board room where scarce resources have to be allocated to either tackling today’s competitors or being in a better position tomorrow. There are no easy answers. And I think, the Management Consulting industry has a sound future …
Cheers,
Sampath
Several of my friends have told me that my blog has a doomsday-ish ring to it. If you think I sound like an alarmist, you should read a book called The Elephant and the Dragon by Robyn Meredith. Robyn is a foreign correspondent for Forbes magazine and reports on China and India. And I must say that she has done a fantastic job of recapping the development of China and India as the next economic superpowers. And the fact that she is reporting from the field, based on first-hand observations, does add credence to her estimates and projections.
Robyn has a couple of very innovative concepts she pushes through in her book. First, she calls the development of China (as the factory of the world) and India (as the back-office of the world) as the Third Industrial Revolution, at par with the developments in Britain in the 1800s and the assembly line invented by Henry Ford in the early 1900s. Second, she introduces the concept of the Disassembly Line. With recent developments in supply chain management, technology and network connectivity, one of the drivers behind the growth of China and India is the ability to disaggregate the manufacturing and back-office processes into more and more granular levels.
Just to highlight a few quantitative and qualitative observations that Robyn makes in her book:
There are significant downsides to this growth spurt as well.
What does all this mean for the US? I mentioned in an earlier post that the only way for the US to stay competitive is to keep innovating. Robyn articulates this point much better by emphasizing that:
All in all, Robyn has done a phenomenal job of paraphrasing such complex issues as the emergence of China & India, projections for the next few decades and the implications for US companies & employees. Highly recommended reading.
Sampath
Every professional plays the role of a consultant at some point in his or her career. Some more than others. Large companies these days are training their employees on consulting skills because even within organizations, there are “customers” who need to be “sold” on ideas and solutions.
Having been a Management Consultant over the last decade or so, I have heard customers, both external and internal, ask me two questions over and over:
• What can you tell me that I don’t know?
• Why should I trust you?
This leads to my hypothesis that for a Management Consultant to be effective, s/he needs to be competent and independent. Competent enough to walk into the meeting with the customer well aware of the customer’s issues, pain-points, industry trends and articulate potential solutions. Independent enough to think primarily about what is best for the customer and not just offer solutions that are thinly-veiled attempts at cross or up-selling.
And over the last decade, I have seen blatant violations of both the above codes of conduct. I have seen consulting practices that have over-emphasized buzz-words, management fads and nebulous solutions that will never see the light of day. I have also seen consultants recommend solutions that they themselves are in a prime position to implement. But, I have also seen up-standing consultants who know what they are talking about and put the customer’s interests ahead of theirs. And needless to say, these are the types of consultants who are well regarded by their customers.
So, if you are in the business of dispensing advise, figure out how to score high in the competence and independence scales and the rest will follow.
Sampath
The Management Consulting industry has changed quite a bit over the past decade or so. And the off-shoring phenomenon has added a new element to the mix. Thought I would put together a back-of-the-envelope model for how I see Management Consulting continuing to evolve over the next 10 years.
If you mentioned Management Consulting in the 1990s, the key firms that came to mind were McKinsey, BCG, Bain and then, the Big 6 (Anderson, C&L, PW, KPMG, E&Y and Deloitte). The first 3 firms were focused exclusively on strategy consulting. The Management Consulting units of the Big 6, however, had more expansive offerings that included BPR and IT Design & Delivery. That is, the Big 6 not only advised on solutions to their customers' business problems. They also delivered these solutions. One of the things I distinctly remember about the 1990s is how Management Consulting firms would shy away from “low-value”, long-term, outsourcing relationships. These types of deals, typically focused on IT outsourcing, were pursued by EDS, IBM and maybe towards the end of the decade, by Accenture as well.
Off-shoring in the late 1990s and specifically in the early part of the current decade created new markets. The SWITCH companies (Satyam, Wipro, InfoSys, TCS, Cognizant and HCL) all have significant traction in IT markets (Engineering, R&D, Custom IT, ERP / CRM). The business process outsourcing market took a long circuitous route to maturity and now compares favorably with the IT market in India. As I mentioned in a previous article on BPO, the SWITCH companies have established sizeable BPO lines of business as well, either through acquisitions or organic growth.
The most interesting development I find in this context is the development of the KPO market. I view this as the natural evolution of strategy consulting. I remember the days in the 1990s, when a handful of well-dressed management consultants would engage with a customer for a couple of months. And after a series of interviews and mid-night sessions, we would deliver a well-crafted presentation on the strategic solutions to the customer’s imminent business problems. In the industry, we used to call our deliverables “credenza-ware”, because most of our presentations would gather dust on the CxOs’ credenzas. What the last few years have revealed is that with India’s large, latent pool of well qualified research analysts, strategic advise can be delivered at such a granular level that it is immediately actionable. This is what we have been doing at SalesQB. We do not just deliver PowerPoint presentations to Sales VPs on how they could execute their sales strategy. We provide personalized sales support to individual sales reps on specific deals & accounts that they are chasing. This is what I call Operational Analytics.
Fast-forward to the 2010s. I think Management Consulting firms will have to evolve and demonstrate strong Advise & Analytics capabilities that are tightly coupled with their current BPR, BPO and IT capabilities. And I think Accenture is already on the right track with its emphasis on Consulting, Outsourcing & Technology. It will be interesting to see how the SWITCH companies morph their identities from IT service vendors to business service providers to leading Management Consulting firms …
Sampath
John Chambers, CEO of Cisco, once said that “there is no substitute for being in the right industry at the right time.” By that account, the BPO industry in India is where one should be today. Several of my readers have asked me to put together a primer on BPO. So here goes. We will look at what BPO is, the key numbers, the industry structure & its evolution, key trends and some potential roadblocks.
Outsourcing is a well understood, tried & tested management process that global companies have been using to move to a “boundary-less” organizational model. From its initial focus on cost-cutting, outsourcing is now increasingly viewed as an enabler for long-term competitive advantage, process efficiencies and co-innovation. Most of the media noise over the last decade has focused on IT outsourcing (ITO) – Think helpdesk support, data center operations, application delivery & support. Business process outsourcing is the process equivalent of ITO – Think payroll processing, financials & accounting and customer support. And then, there is the off-shoring dimension. Countries such as India, China and South Africa have been vying for a share of the global outsourcing market. In this post, I will treat outsourcing & off-shoring differently to the extent I can, so that the big picture is a little clearer.
The Numbers
OK, let’s dive right into it:
These numbers aren’t as outrageous as FaceBook’s reported $15B valuation by Microsoft, but are staggering nonetheless. The IT, BPO and KPO sectors in India are looking at a CAGR of 20-40% over the next 5 years. Remember John Chambers’ pearls of wisdom?
The Services
Let’s come back to the topic of our blog – BPO. What is it? PwC suggests that the BPO market could be broadly broken down into three functional areas:
More specifically, the key BPO services that have been offered by Indian vendors over the past 5 years are:
There is a fair bit of grey area between BPO and KPO services. I think of BPO services as those that resemble the proverbial assembly line, with maybe a little bit of data reconciliation and research involved. Processes that require deep domain or industry knowledge, research & analysis, taking a step back & looking at the larger picture, are what I would consider to be in the realm of KPO services. Having said this, BPO services now include a number of sub-categories such as:
The Industry Structure & Evolution
According to a recent PwC report, BPO in India evolved in four distinct waves:
Sanjeev Kumar, a PhD candidate at UMich’s Ross School of Business, and his advisor, Prof. M.S. Krishnan, have come up with the following model to describe how BPO is evolving. I think this model is very descriptive, though I would argue that what they call BPO 3.0 is being referred to as KPO in the trade rags. For Sanjeev’s complete article, click here.
The Key Trends
The Key Roadblocks
The Key Takeaway
I understand that most of us in Corporate America who wear IT or business operations hats are wary about BPO & off-shoring. We can continue to debate what these trends & numbers mean for the American economy and employee. My key goal in this post is to establish that BPO & off-shoring are real, big, growing and here to stay. Make sure you think about this when launching your start-up or planning your next career move.
Sampath
:: Next Page >>