Russell Metcalf’s advisory experience includes both boutique and Big-4 positions, most recently with Pricewaterhouse Coopers (PwC) in the Shared Services and Outsourcing practice. BPOVoice interviewed him to know about his views and opinion on Dell’s recent proposal to acquire Perot System , advise for the companies for the post recession scenario and more importantly on how difficult is it for an average employee in any country to understand that his job which is being outsourced is good for the country/economy if not him? Below are the excerpts:
What are your thoughts on Dell’s proposal to buyout Perot System?
The recent acquisition is a great move for Dell, albeit a move that should have happened years ago. While HP was expanding their offerings through mergers and acquisitions on a large scale, Dell was content to expand their brand internally. The result was to keep the shareholder value flat while
their competitors flourished. This acquisition is a good move for both companies and should provide tremendous dividends as well as improve the competition in the space.
In your opinion how many clients are following the “Trimming of contract durations following Gartner’s advisory” and how much is it affecting the vendors?
This depends on when the clients began their foray into the outsourcing/services contracting space. Those that were early adopters learned that long term contracts quickly became burdens in many cases because of the way the relationship developed over time. Others who were later to the table learned from the media and advisors that a mid term contract of 3 years would better suit the needs. For anyone to accept Gartner’s premise wholeheartedly without careful consideration of the situation and needs of the business is obviously false. We try to analyze the situation to determine what best suits the goals of the organization–that may be a 1 year agreement or a 5 year agreement, depending on the variables. With long term agreements, doing an annual relationship health check and value analysis is critical to continued success.
From a vendor standpoint, it is a similar situation. Moving to a shorter term agreement may be good where the requirements are well established. But in uncertain situations, the long term agreement, allowing them to recapture the costs of initialization and learning curve is still a good idea. Again, the relationship with the client has to be the guiding factor.
Do you think Mahindra Satyam is back on the growth path? How much time would it require for a complete turnaround?
Have to limit my comments due to my previous relationship with PricewaterhouseCoopers. Yes, I think they are on the growth path. They will need 2-3 years however for the trust factor to come back to their relationships and end any “stigma” placed on them by the recent events. Bottom line is that they are a strong force in the Indian and Global Sourcing marketplace, with highly skilled staffing and processes. While there is some buyer beware aspect to contracting with them at present that will soon disappear as the need for their services increases.
How difficult is it for an average employee in any country to understand that his job which is being outsourced is good for the country, economy if not him… what are your suggestions on -How to counter the negative sentiment around outsourcing?
The average employee is concerned about his family and putting food on the table. When he hears that his job is being outsourced, he cannot see past that fact unless the company has provided him with a roadmap to the future. Many of the people that I worked with when I first became focused on outsourcing were convinced that they would be on the streets before the ink dried on the contract sending tech support jobs to Wipro or EXL in Delhi in 2000. Those same people are Directors or VPs at Dell, HP and other companies because the jobs that were sent freed them to expand their skill set and learn more about how they could impact their company. I am a firm believer in the premise that if Americans want to pay the lowest price for their goods and services, outsourcing entry and some midlevel jobs and manufacturing to other countries is the solution. Dell did it to lower the cost of service. Big pharmas did it to keep drug costs lower.
Countering the negative sentiment is not a case of providing information. You cannot counter an emotional issue with information and facts. My thought is that by showing the impact of these jobs on other countries around the world–the increased wealth in Asia, the improved services and infrastructure in India and the Philippines–people in the US will understand the good that is being done for the world as a community. We all have a vested interest in improving conditions around the world–by doing so, we will help countries to help themselves rather than having to support them with
US tax dollars. Eventually, I believe that this will become a neutral situation, but only when the US economy is strong and growing again. Until that time, the emotion of the situation will be the driving factor.
Any advice to the companies on how can they be better prepared for the post recession scenario?
Yes, start lining up staffing and resources now. Many companies do not plan for the recovery, they plan to weather the present, laying off staff, consolidating operations and reducing overhead. When the turnaround hits, the competition for staff and resources becomes a feeding frenzy, causing salaries to rise, the cost of raw materials to skyrocket and prices to follow. Look at how Accenture grew out of the last global downturn—while everyone was laying off, they kept hiring. When the economy recovered,
they were in a position to provide staffing and services to companies who could not staff up fast enough to meet the needs.
So plan for the recovery—find creative ways to retain staff, work on internal improvement projects, and look at how to modernize or retool. When the recovery hits, you will be in the forefront of the fast movers.
The International Association of Outsourcing Professionals has ranked PricewaterhouseCoopers first on its list of the “World’s Best Outsourcing Advisors”. What makes PwC stand out amongst the other audit firms?
PwC hires the best and the brightest Outsourcing professionals in my mind. They look at not just their advisory experience, but the hands on roles they have had. And they take a total lifecycle approach. Many firms want to help just with sourcing strategy; others are just interested in the “deal”. PwC and their professionals look at the sourcing life cycle, providing strategy, development, implementation and even operations improvement support to their clients. And as a full service firm, they can draw from the many disciplines within the PwC organization to support the project, be it Tax Planning, Accounting Processes, Supply Chain or other disciplines. And they have a consolidated team where some firms
have it spread across their many practices. Bottom line is that when you hire PwC, you get not just the Outsourcing Advisory group which is think is around 1300 people, you get the entire firm supporting the effort. It allows them to not only have a strong knowledge base, but it also helps them to perform in a more cost effective manner. I know this sound like a commercial, but I have worked for them and competed with them. In both instances, I found them to be formidable.
Do you think that the Satyam audit report dented PwC image to certain extent?
Yes, but because of my previous relationship, I cannot comment further. Suffice it to say that any audit issues can damage the reputation of a firm. In this case, it gives people pause for concern, but you have
to consider that this is one incident over a body of work that spans the globe. A drop in the bucket shall we say?
Tell us something about Metcalf Management?
Metcalf Management is a “boutique” consulting firm that focuses on advisory services for firms seeking to enter into or improve their outsourcing and shared services. Our principals have over 100 years combined experience in operations, service delivery and advisory with some of America’s premier companies including Dell, Sprint, Coca Cola, PwC, Ernst and Young, Deloitte and others. Our goal is to provide our clients with services that are on the same par as firms such as PwC, TPI and Equaterra without the big price tag and “faceless” service team. Our team is dedicated to making sure that we not only facilitate the project completion, but that we prepare the client team for the next project, training them and helping them to develop a better internal process. The result is a win win for all concerned.
About Russell Metcalf
With over 30 years in business operations and management, Russ’s expertise spans all aspects of Shared Services, Outsourcing and Strategy for some of the biggest global firms. With a career that started in Program Management for the USAF, he expanded into Proposal Consulting and Advisory. In 1994, he entered the world of Contact Center Management and grew rapidly into senior positions at Intuit and Dell. His advisory experience includes both boutique and Big-4 positions, most recently with PricewaterhouseCoopers in the Shared Services and Outsourcing practice. His clients have included mortgage, insurance, agricultural, retail, pharma and high tech. Russ has a stong background in Contact Center Strategy and Site Selection as well as F&A Shared Services. Russ has great global experience having supported clients and partners in their efforts to expand to India, Phillippines, Argentina, Canada and Central America. He has has authored whitepapers on Oursourcing and Shared Services as well as presented to industry groups in the US and Asia. He is a member of IAOP and SSON. Russ is based in Austin, TX. For more information, you can visit:http://metcalfmgmt.com