India Is Still Very Competitive On Price And Many End Users Will Look To India First As A Cheap Destination To Outsource” Martyn Hart – Chairman , National Outsourcing Association (NOA)

There are leaders and then there are leaders who are heads and shoulders above the rest. Martyn Hart is one of those business leaders who has been constantly guiding the outsourcing industry through his skillful assessment and thoughtful analysis. BPOVoice got this great opportunity to interview him courtesy “ Buffalo Communications (UK) ” and have him share his thoughts on many important questions. Below are the excerpts.

There have been many reports on the “Beyond BRIC scenarios”. Taking India as a case study, what works for and against it as an ideal outsourcing destination?

India’s strengths lie in its capacity, in terms of workforce and price. There are very few destinations, if any, that can match India in its scalability, it still has a well skilled labour pool that is eager to work. India is still very competitive on price and many end users will look to India first as a cheap destination to outsource to.

However, India is not without its problems. It has a poor infrastructure outside the main cities. The key outsourcing hubs such as Mumbai, are becoming increasingly expensive for suppliers to work in, hence they are looking to move elsewhere. However, the quality of graduate pools and modern technology tend to decline the further afield you go from the country’s main outsourcing hubs.

India is also coming under stiff competition from destinations that are located closer to the UK and USA. Some organisations are cautious about sending processes to far afield, destinations such as Eastern Europe (for UK), the Philippines (for US) and Africa (for both) are seen as attractive destinations for the more cautious end user.

India has had a few high profile incidents of recent months. The Satyam saga and Mumbai terrorist attacks may have knocked confidence amongst some potential outsourcers. India needs to ensure business reliability and political stability if it is to continue being an offshore powerhouse.

What’s your take on the effect of recession on outsourcing? Do you think that the European governments might turn to protectionism, something on the lines of what Obama is proposing in US?

Obama is yet to actually ‘do’ anything to curb offshoring and I imagine that the EU won’t do much either. Companies need to take a long hard look at their overall business strategy and avoid knee jerk reactions. Although bringing offshored operations back home may feel good and look good, whether this is economically right entirely depends upon each situation. Companies still need to take their time and consider all their sourcing options before acting, otherwise they may end up with increased costs, poor processes and ultimately a worse situation.

What are your views on “suppliers should be treated as business partners and not just mere cost cutting entities …”

Whoever the supplier is and whatever service they offer, from cleaning to marketing, there are a number of considerations. Company culture is first. If a supplier understands and matches your working methods and expectations then the relationship will be stronger and the service will be of a better standard. If two companies don’t gel then there is little likelihood the partnership will last. Similar working ethics, visions and expectation will ensure that the outsourcing relationship runs far more smoothly and ultimately the provider will be easier to manage. Other features to look for include sector specific experience, a good track record, a realistic cost proposal and a reliable infrastructure.

Depending on the scale of the outsourcing contract, suppliers generally should be treated as part of the overall business. If an organization has outsourced a great deal to a supplier, or a key process, then it would be wise for the end user to treat that supplier as a partner.

What is your opinion on the ongoing debate between (service level agreements) SLA vs. BOM (Business Orientated Metrics)

BOMs are much harder to understand and set, a bit like Inputs, Outputs and Outcomes. For a supplier, especially a new one, it is often hard to really understand an organization until they are working for them. Suppliers in this situation will be reluctant to commit to BOMs, and will initially push for SLAs which are easier to measure and set. However, in the long term BOMs will grow in popularity and may become more common. BPO contracts will likely be the pace setter here.

Do you think Clients will increase geographical diversity to de-risk the delivery model?

Yes. End users will probably look to cultural affinity groups and also areas with common language.

Your views on outsourcing 2.0?

By 2.0, do you mean collaboration, like web 2.0? To outsource successfully you need to be good at collaboration and set up the processes and empowerments to allow great collaboration. So in the outsourcing industry we are already one step ahead!

What are NOA’s current priorities?

The NOA is always looking to increase its members and ensure good networking between end users, suppliers, industry experts and thought leaders.

One of the key priorities the NOA has is to make sure that its members are kept up to speed with the latest industry trends, best practice guides and market development. We do this through a series of publications, research papers, events and roundtables.

The NOA is looking to not only educate and inform its members but also the wider business community. Hence it has set up its own training programme and university accredited qualifications to help ensure that anyone involved in outsourcing is trained and educated on best practice.

What are the various initiatives NOA has taken?

We are increasing membership contact, through initiatives such as the NOA’s own publication- sourcingfocus, steering committees, networking events and quarterly research announcements.

The NOA is also looking to restructure to give more people access to its benefits, both within the UK and globally through the European Outsourcing Association (EOA).

About Martyn Hart

Martyn Hart is the Chairman of the UK’s National Outsourcing Association (NOA), which he instigated back in 1987. It has become the UK’s official industry body for business outsourcing.

Martyn has been involved in information and communications technology for over 30 years. Martyn is currently with Gartner the world’s leading information technology research and advisory company. He has held senior posts in the criminal justice and security services sector and had stints in finance, retail, telecoms and transportation. He has had
positions with Mantix (now W S Atkins), Steria, DTI, PWC, BT, BR and the UK’s Home Office where he delivered Europe’s first outsourced Criminal Justice ICT system in the early 1990’s.

Although originally a technologist (he is a European Chartered Engineer) since obtaining his MBA at Imperial College’s Management School he has focused on outsourcing, shared services and insourcing in the public and private sectors.

His position as a leading authority on the subject of outsourcing has meant that he has participated in many client negotiations and on an international scale with the ITU and the G8 group. Martyn is a prolific writer on outsourcing and communications management and a regular speaker and chairman at business management & information technology conferences.