Outsourcing report canes Infosys
By Pulkhit Sharma

US-based Brown and Wilson Group offer themselves as experts in the outsourcing business.  Every year, Brown and Wilson release a Black Book which gives readers an up to date snapshot of the outsourcing world. As a marketing exercise to add buzz, there is a top 50 list of winners. On the face of it Brown and Wilson offers two services which could lead to some possibility of conflict of interest. 

One service is advisory to help American and European companies outsource.  The second service is to research the outsourcing industry and prepare a neutral, independent report.  General, their reports are credible and give a good indication of the trends in outsourcing.  The ‘Wall Street Journal’ and ‘Businessweek’ report extensively on Brown and Wilson research.

The ground realities are that the Indian outsourcing industry continues to boom.  But the report says that Indian companies only have 10 of the top 50 positions this year, while in previous years India had 50 percent of the top spots.  In the same breath, the report says that the Indian outsourcing industry will grow by as much as 30 percent.  As all of us know that statistics never tell the full story.

Last week, the Brown Wilson Group released the 2008 Black Book State of The Outsourcing Industry Report.  According to the press release the report: “showcases the results of five years of outsourcing research and up to date insight from twenty-four thousand outsourcing customer survey respondents from 40 countries”

The report continues:  “Over 3000 vendors and 200 advisory consultant firms qualified to be ranked by customer recommendations. Twelve of the Top 20 outsourcing supplier positions were awarded to US firms: (1) Hewlett Packard, (2) Perot Systems (3) CSC (4) Unisys (5) EDS (9) ADP (10) CIBER (11) Accenture (13) Fidelity Employer Services (16) Oracle (17) ICG Commerce and (19) Computer Associates, a major shift from 2004 when only two American firms were ranked by customer satisfaction ballots.

Five Indian firms, (6) Wipro (7) Satyam, (8) Genpact (14) Cognizant (15) Tata Consultancy Services closed out the Top 20. Notably all five are boosting their American-based client service operations.

Indian firms, which dominated more than half of the coveted positions in past years, accounted for just ten of the Top 50 in 2008 - the same number as ranked outsourcing firms based in Europe.

Nineteen firms have appeared on the Top 50 Black Book list for the five consecutive years of the survey, a distinct honor from over five thousand global outsourcing vendors. One interesting change was the scorecard plummets of offshore suppliers that have not responded adequately to the demand of American and European clients who want their front office operations nearby or onshore with their back office savings from less expensive offshore locations including India. The industry evolution termed "reverse outsourcing" is currently compelling clients to discharge inflexible offshore vendors. Conspicuously, previous Black Book Top 50 customer service winners Infosys, ICICI Firstsource, Hexaware Caliber Point, EXL Service and Convergys, all fell off the high client approval ranks.

Opportunities arose for many European outsourcing firms to enter the ranks with customer satisfaction advances including (12) Capgemini (18) Logica (20) Steria Xansa (29) BT Global (35) Orange Business Services (38) Xchanging (42) Siemens (43) TietoEnator (46) SAP and (50) KPN Getronics.

For a second consecutive year the intensely-watched Chinese outsourcing firms did not earn any of the coveted Black Book positions. However, Latin America emerging client favorites (24) CPM Braxis and (26) Neoris pushed far ahead on the list.

Destination preferences also shifted in 2008 as South Africa, once thought to be the next big hot spot for offshoring, receiving very low satisfaction and forward-looking investment interest. Growing offshore attention now brightly shines on Brazil, Chile, and Eastern Europe. The majority of clients who indicated outsourcing service expansions to China in 2008 report cautious hesitance, putting advancement plans on hold as infrastructure and training issues are addressed.

The fastest growth is predicted in the areas of outsourced Finance & Accounting, Procurement, and Technology Infrastructure and Applications, especially Bundled ITO/BPO, while business intelligence and analytics were ranked as the outsourced technology capabilities having the greatest impact for clients in the next year. Government clients were the most content overall with highest praise for (2) Perot Systems (3) CSC (4) Unisys (5) EDS (10) CIBER (11) Accenture (23) Northop Grumann (27) CACI (31) ACS and (48) IBM”.

Techgoss note:  What is interesting is how the report canes Infosys which is one of the most respected, successful company in India.  Infosys was No. 10 last year, but this year has dropped down to No. 59. The report states: “Indian outsourcers dominated the Top 50 rankings in 2004. As the years have passed, suppliers from around the globe have chipped away at the Indian stronghold. Over the past five years, several vendors have fallen from the top list of honorees, but none as surprising as Infosys in 2008. Indian giant Infosys prominently fell from the Black Book Top 50 with rising accounts of client discontent. Over a dozen major customers cited the fact that Infosys has not melded their consulting and service delivery well.   US clients cite a lack of American front office support with an imbalance of too much delivered from offshore.   Frayed at the edges, clients participating in the survey noted an Infosys arrogance which does not prioritize an intensity to make their clients successful above all else.

Client experience is driving the current question, ‘Can the customer move to the next generation of business transformation (via outsourcing) with a partner who doesn't put their interests in high regard?’

Clients also discount Infosys' opportunistic growth machine as losing its competitive edge with practically no inorganic growth and a disregard for vertical expertise. One former Infosys client went as far as stating on their survey instrument, it’s a lesson for other India vendors on how not to succeed tomorrow. “