- June 23, 2008
- Posted by: admin
- Category: Blog
No body can deny the increasing rationale and importance of the ITO/BPO bundled approach. With the business environment getting more competitive and unpredictible every passing day, you would ideally want to have your IT and Operations to be working very closely hand-in-hand. Not to mention the time and thus cost savings you’ll experience as a result of the enterprise agility you’ll gain. So yes… from this angle HP/EDS and similar other deals make definite sense for customers to get everything under one roof.
However, the downside of this for the customer is of having to put all the eggs in one or atleast limited baskets. Innovation in business is driven either from Technology OR from Operations… and ultimately by the competition. The challenge for the customers here is to instill in the vendor the same intensity about their business challenges as they themselves have.
For an enterprise in order to respond to any major market change (given that its IT and Operations both are largely outsourced) would involve crossing an extra barrier of negotiating and changing the SLAs each time. The large one-shop vendors would have their own business model to take care of as a primary factor – and as these merged companies become behemoths themselves with many customers and contracts, they’ll have even greater need to focus on their own business priorities than to really give the priority to one particular customer’s business challenge that it deserves.
So my argument is with these large consolidations is that (although they have some really positive connotations) they can convert them into oligopolies for the top-tier market where IBMs, Accentures and HPs of the world will ultimately drive the top-tier market leaving no worthwhile space for the mid-market providers to grow themselves in to the top-tier. Another downside would be that this will attract all the top-tier talent to few large companies. Overall market’s innvoation and entreprenuerial attitude may suffer as a result.
I myself have been selling the idea of bundled ITO/BPO offering for many years now, its encouraging to see that it will finally become a de-facto. My argument above was not on whether ITO/BPO should be bundled together (they definitely should be) BUT with the far-reaching impacts on the market competition and customer satisfaction of these large mergers which are poised to take place.