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The latest advertisement of Samsung 'Next is what?' is in a sense a statement that sums up the mood for most outsourcing entities that are facing challenging environment to fight out the odds and at a stage where newer frontiers are ready to be conquered. Ravi Chander, partner, North American Operations, head – Sourcing Strategy and Implementation, Anantara Solutions and authorized lead evaluator, trainer and consultant, eSCM speaks to Prasad Ramasubramanian of CyberMedia News about the role of eSCM (eSourcing Capability Model for Service Providers) adoption in the future.
What typically is the need for outsourcing entities to adopt the eSCM? The BPO industry in India, which is currently estimated at $ 11 billion, has the opportunity to grow five-fold to be over $50 billion by 2012 (Source: NASSCOM Everest Group study on Roadmap 2012). However, is this promising future secure, particularly for Indian BPO companies?
More importantly, is their present secure? Cost arbitrage is no longer the source of competitive advantage for Indian BPO companies that it once was. It is a level playing field, with global companies now offering the same value through out-located operations in India.
Further, competing destinations like the Philippines and China are poised to overtake India in terms of cost competitiveness. Customers are also now asking 'what next'?
Importantly, they are demanding a shift from cost arbitrage to improved business value from outsourcing service providers. This changed market scenario, coupled with the current crisis in the global economy, significantly threatens the ability of Indian BPO companies to survive and realize this enormous potential.
On the other hand, Indian industry (other than IT and BPO industry), which has achieved significant growth in business volume in the past few years, is faced with a different set of challenges. How to scale rapidly with optimal investment? How to effectively compete in the global market place?
Outsourcing of IT and business processes is emerging as the business strategy that can help Indian industry effectively address these challenges. Outsourcing is a strategy that global players have already successfully adopted and hence it is imperative that Indian industry follows suit to keep up with global competition.
More importantly, outsourcing presents an enormous opportunity to 'leap-frog' global competition since Indian companies do not carry a significant legacy in terms of IT investments and can therefore directly move towards outsourced on-demand IT and business processes.
This provides the context for the key drivers for adoption of the eSourcing Capability Models (eSCM), both eSCM SP for service providers and eSCM CL for client organizations, by outsourcing entities in India.
From the perspective of Indian outsourcing service providers, the key drivers for adoption of the eSCM SP are:
- Help sustain cost competitiveness through improved efficiencies
- Enable the shift to business value, which is now an imperative from customer
- Serve as a differentiator among global competition
- Help retain and expand current sourcing relationships
From the perspective of organizations in India which are looking to leverage the tremendous opportunity presented by outsourcing, the adoption of the eSCM CL will be driven by the need to:
- Learn from global experience in outsourcing to establish a best practices framework to plan and manage the outsourcing journey
- Derive greater business value from their outsourcing relationships Is there instance where sourcing entity faced a critical issue and the adoption of eSCM helped solve it?
Anantara's personnel have supported several global organizations to implement the best practices from the eSCM SP, across the entire journey from consulting through to evaluation for certification. Anantara Solutions is a Carnegie Mellon Authorized Organization for the eSourcing Capability Model (eSCM) for conducting eSCM evaluations and training.
Owing to confidentiality and non-disclosure requirements, Anantara is not in a position to share specific details regarding our customers.
However, in Anantara's experience, organizations have found significant value in the eSCM best practices as they directly relate to several of the critical issues particular to their business context. This includes issues relating to core service design, deployment and delivery activities, relationship initiation and management, and also in support functions like people and technology management. Could you please explain the benefits of eSCM-SP v2, which is the latest version of the model and its capabilities?
The eSCM SP has 84 best practices across 10 key capability areas that will matter in the future for IT-enabled services:
Knowledge management – effectively creates and manages engagement level and organization level knowledge assets
People management – across all aspects including competency planning, recruitment, training and retention
Performance management – both engagement and service level performance, to improving organizational performance through benchmarking and capability
Technology management – effectively managing the enabling technology infrastructure, including optimizing and ensuring high availability
Relationship management – managing relationships with clients, suppliers and partners
Threat management – mitigating risks from information security, business continuity as well as protection of intellectual property and ensuring statutory and regulatory compliance
Contracting – across all aspects of relationship initiation from requirements development through to contract establishment
Service design and deployment – including designing personnel structures, processes and technology, through to transitioning services from the client
Service delivery – ensuring effective service delivery, with minimal disruption to service availability, and ensuring adherence to service quality commitments
Service transfer – managing both inward transition from the client as well as outward 'reverse' transition back to the client
How different is eSourcing as a model whilst models usually focus solely on delivery capabilities?
The eSCM SP is designed to be complementary to and compatible with other quality models and frameworks. Hence organizations have successfully implemented the eSCM SP and integrated the same with other ongoing quality initiatives.
However, since it is a model designed specifically for organizations involved in IT-enabled sourcing, the eSCM SP addresses the entire sourcing life cycle, and also provides practices in capability areas that address the unique challenges faced by service providers. In this respect, the eSCM SP stands differentiated from other quality models or frameworks.
In terms of coverage across the sourcing life cycle, the eSCM SP has specific capability areas like Contracting and Service Design and Deployment that are designed to address the unique challenges in initiation of IT-enabled sourcing relationships.
Further, the eSCM SP uniquely addresses the aspects associated with not only transition of services from the client to the service provider, but also reverse transition back to the client or to another service provider.
Even in the capability areas addressed by the eSCM SP, it is unique in the sense that it integrates both core service delivery capabilities as well as enabling capabilities like Knowledge Management, People Management, Performance Management, Relationship Management and Technology Management.
It, therefore, can act as the 'umbrella' framework into which an organization can integrate several of their other quality initiatives that may be focused on improving service delivery capabilities.
Further, in terms of its capability levels, the eSCM SP Level 5 is a first in the sense that it is designed to reward an organization for sustaining its commitment to excellence.
While the eSCM SP Level 5 does not have any practices, an organization can attain Level 5 if it achieves Level 4 in two consecutive certification evaluations i.e. over a period of two years.
Therefore, Level 5 in the eSCM SP is challenging to attain, but at the same time ensures that only organizations with a sustained commitment to excellence are rewarded with the certification. In the coming quarters, what would the primary concern for quality models when it releases its latest versions? Quality models and frameworks have been used by organizations in India for over two decades to guide their process improvement initiatives and also as a means of differentiation. Beginning with ISO 9000 as the foundation, organizations have implemented several other frameworks including CMM / CMMI, ISO 20000, ISO 27001 and eSCM SP.
The focus of most organizations in implementing these frameworks has been on ensuring 'compliance' to the best practice standards.
This, while essential to ensure certification, has often times diluted focus on enabling true business value. This was because the best practices implemented were not tuned to address the specific business problems faced or the unique business context and change readiness of the organization.
Anantara believes that going forward organizations will be focusing more on enabling greater business value from their quality initiatives. This trend will also be driven to a large extent by pressure from clients to provide greater business value and to ensure continuous improvement in services and reduction in costs.
As a result, quality models will also need to evolve in terms of their content and also in terms of their associated evaluation or certification methods, to support this trend. The eSCM SP, both in terms of content and evaluation methods, is already focused towards enabling improved business value.
Further, quality models will also need to start following the path shown by the eSCM SP and ensure that they address the entire business and process life cycle of implementing organizations in their future versions.
