Outsourcing lowers costs, increases profits and facilitates focus. IT has lead the way with the likes of Unisys, EDS and CSC building substantial businesses off the back of running other people's IT departments. The market then moved into more complex services like software development and support with a wave of major India specialist like Infosys being created. With the emergence of cheap bandwidth and better telephony, plus customer management systems, they then expanded to call centres for both sales and customer service.
The next big thing is Business Process Outsourcing, IBM entered the game through acquisition and Accenture has leveraged is existing infrastructure to create new offerings with significant investment in offshore resources. However, this is like an iceberg with very little of the true long term opportunity showing yet.
BPO specialist ICICI Onesource seems to have pretty good underwater vision. With deep pocketed backers and bags of experience they could present a challenge for the big guys. They look holistically and see customer interaction management as high cost, high opportunity for most B2C organisations. The Financial Services market got this years ago with the likes of GE Capital off-shoring various customer interaction functions. Great, another set of point based fixes.
So what does the future potentially look like in a Onesource world. Take a look at the re-engineering of IBM Finance in the 90’s and you see that 80% of the work in most instances can be handled by well trained and organised generalists. So potentially from the point where you acquire a customer you can outsource all the ongoing transactional management. This means that customer service, order fulfilment, billing, communication, cross and up selling, payment collect and credit control all go to the point of lowest cost. Add to this the standard business functions like payroll and accounting and you have a complete change of operational resourcing.
In a marketing and brand lead world the focus is on creating great products, taking them to market such that you acquire and retain the maximum number of customers. That’s where the likes of Onesource will potentially take over. Their purpose is to maximise the profitability of every one of those customers. They have to keep them happy, get them to spend more and then ensure they pay and all at a significantly lower cost than keeping it in-house.
A massive market opportunity for someone and with well targeted acquisitions like leading US collections company Account Solutions Group and 100% plus annual revenue growth Onesource could be one to watch. However, they have some big competitors who are promoting extension and gradual evolution from existing functional and point-solution outsourcing rather than a completely new service product.
