GLOBAL SERVICES A CYBERMEDIA PUBLICATION

An integrated media platform which connects the

various constituents of the global technology and Pradeep Gupta
business processing services industry ecosystem. Chairman & Managing Director
Cyber Media (India) Ltd.

DIRECTORY OF SERVICES E. Abraham Mathew

President
NEWSLETTER Ed Nair
Editor
A regular digest of key industry happenings. ed@cybermedia.co.in
DIGITAL MAGAZINE Satish Gupta
Associate Vice President
The fortnightly digital magazine features research satishg@cybermedia.co.in
reports, articles and experts’ views. Available on
Pratibha Verma
www.globalservicesmedia.com
pratibhav@cybermedia.co.in
WEBINARS Sruthi Ramakrishnan
Global Services’ web-based seminars aim to sruthir@cybermedia.co.in
impart useful information related to outsourcing Niketa Chauhan
industry in the form of presentations and dis- niketac@cybermedia.co.in
cussions by industry specialists. Virendra Kumar
virendrak@cybermedia.co.in
RESEARCH
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CUSTOM PROGRAM LETTERS TO THE EDITOR

Customized services rendered through different Send letters to ed@cybermedia.co.in, or to
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OSOURCE BOOK edit all letters. Postings submitted to our
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A directory of global outsourcing service lished in our digital magazine or Website.
providers.
www.osourcebook.com

3 GlobalServices www.globalservicesmedia.com November 2010

 N o v e m b e r 2 0 1 0 Vo l u m e 2 , I s s u e 2

Extended Global
FEATURES

Enterprise
10
ARE YOU
BEING SERVED?
by Ed Nair
The new watchwords for
services organizations:
consolidate, standardize,
balance and manage

8 21
GLOBAL BANKS TO INVEST IN THE IT OPPORTUNITY IN HEALTHCARE
CREATING FLEXIBLE PLATFORMS LEGISLATION
by Ed Nair by Sruthi Ramakrishnan
Even as the short-term business prospects are bleak, global banks IT reforms are an important and integral part of the reforms
will focus their technology services investments towards managing planned under the Patient Protection and Affordable Care Act
risk and compliance, creating platforms for growth, and improving
customer analytics.

17 23
THE SKY'S NOT PROCUREMENT
FALLING ON THE OUTSOURCING –
INDIAN IT INDUSTY CHINA'S MISSED
by Sruthi Ramakrishnan OPPORTUNITY
There is more to the increase in MAT and expiry of STPI benefits by Pratibha Verma
than meets the eye and a deeper study shows that the situation is PO, which is still not mature in China, is growing at a slow pace.
not as dire as is being made out to be Due to this its capabilities are untapped by many companies

19 25
ARE ON DEMAND CALL CENTERS IN STRONG CONTRACT
DEMAND? RESTRUCTURING LEADS WEAK Q3
by Vijay Venugopalan by Sruthi Ramakrishnan
More and more organizations are buying/exploring On-demand solu- Restructuring of contracts heavily influenced the last three quar-
tions, the economic situation has fuelled the desire to go on-demand ters, and will continue to influence Q4

4 GlobalServices www.globalservicesmedia.com November 2010

Releasing November 16th
To advertise or to participate
contact: Satish Gupta at satishg@cybermedia.co.in
EDITOR’S NOTE

Understanding the
Nature of Change
C hange is slow to be noticed. It is understood better, when things add
up over time or when a large shift happens.
This issue of the digital magazine is all about change; how micro-
trends will become waves of change or how systemic shocks like the reces-
sion can reset the economy and the market.
ED NAIR For instance, the story on how the OPD market is recovering from the
recession focuses on the impact of cloud computing on software product mod-
Editor els and the attractive mid-market opportunity. Mid-market software com-
ed@cybermedia.co.in panies are treating their OPD vendors as extended R&D organizations, while
enterprise software vendors will use OPD vendors to handle entire families
of products. Globalization of R&D is a far-reaching trend.
Microtrends will Similarly, the cover story on M&As spells out the need for companies to
buy their way into market share and the increasing willingness of small com-
become waves of panies with service niches to sell out. These trends will endure for a few years
change; systemic to come. Reason: buying market share is the fastest way to accelerate growth
shocks like the and to get into new geographic market for services (India, China, Brazil, oth-
ers).
recession can reset the Another interesting example of change is brought out by the story on RPO
economy and the in Europe. Very strict data laws mandate that RPO work not be offshored
market. outside the European Union. The laws are not aimed at curbing offshoring;
they are aimed at strengthening data privacy. This is in stark contrast to the
US trying to enact laws that penalize offshoring with increased taxes, dis-
criminating against Indian companies by hiking visa fees, or any other pro-
tectionist measures.
Finally, the story about Cognizant drives home the point on how a com-
pany can synthesize various signals that combine to form large forces of change
and make it a way of life both inside and outside the organization. The Cog-
nizant way is a fantastic example of thought leadership. GS

6 GlobalServices www.globalservicesmedia.com November 2010

 Releasing November 30th
Case Studies are invited from service providers. For more details
contact: Satish Gupta at satishg@cybermedia.co.in or visit:
www.globalservicesmedia.com/live
 Industry Outlook

Global Banksto Invest in

Creating Flexible Platforms
Even as the short-term business prospects are bleak, global banks will focus
their technology services investments towards managing risk and compliance,
creating platforms for growth, and improving customer analytics.

By Ed Nair

I
BM announced a deal with ABN AMRO (see Box) in
October. The deal has been hailed as a mega-deal in
terms of its value at nearly $1.8 B. At a time when
such megadeals are on the decline, this deal embodies
many of the trends in the large financial services industry
segment globally.
In terms of market environment, the short to medium
term outlook for the industry is difficult for banks in the US
and Western Europe. There is also quite a bit of social back-
lash because of the financial crisis; customers believe that the
banking industry created the financial crisis that led to the
recession.
In terms of market regulation, the combination of in-
country regulations like Frank Dodds bill in US, similar oth-
ers in UK and Germany, as well as international regulations
like Basel III, and also the expectation that the IMF is going
to put together a fund to prevent systemic failures, are putting
new pressures on financial services companies. Both of these
present a real challenge to profitability.
Though the regulations have been watered down (Basel III
is much less draconian than what is was expected to be) and
the industry has been given a long time to create the capital
required for Basel III, the return on equity which used to be
14 percent to 18 percent will fall below 10 percent in the next
couple of years. When you compare this to the cost of capital,
it looks very unattractive.
Profit squeeze is being exacerbated in banks where invest- ty is enormous. Even conservatively looking at the next five to
ment banking was really driving the profitability in the past. ten years, the global economy would grow at 5.8 percent to 6
Banks are being forced to shed hedge funds, proprietary trad- percent annual compounded. Says Likhit Wagle, Global
ing activity and such other engines of growth. Profitability is Industry Leader: Banking & Financial Markets, IBM Global
going to be considerably low in the coming few quarters. So Business Services, “That is significant amount of wealth being
the short-term picture is challenging. created and this has to be disintermediated by the banking
So, is it all gloom and doom? Hardly. In emerging markets industry.”
like China, India, Brazil, Middle East, the scale of opportuni- The emerging market opportunity is based on economic

8 GlobalServices www.globalservicesmedia.com November 2010

 Industry Outlook

ABN AMRO extends Infrastructure Services

Agreement with IBM
ABN AMRO signed a contract to extend its services agreement with IBM. IBM will build and provide a new
computing environment while integrating the existing infrastructure of ABN AMRO and the former Fortis
Bank is an extension to the original contract. Next to that the infrastructure services for the former Fortis
Bank Nederland will come in. Both banks legally merged on July 1, 2010. Systems development will con-
tinue to be undertaken by a number of suppliers including Accenture, Infosys, and TCS.
On 1 September 2005 IBM announced that it signed a global contract with Dutch global bank ABN
AMRO to implement an on-demand IT infrastructure that will enable the bank to more rapidly roll out
additional services while significantly reducing IT costs. The contract, worth about EURO 1.5 billion over
5 years, supports ABN AMRO operations worldwide and represents the most extensive rollout of IBM's
data center automation technology, called Universal Management Infrastructure.
Further information from Nelson-Hall reveals:

■ Data center management, with IBM managing the IT infrastructure on ABN AMRO premises in
Amsterdam. The existing data center infrastructure will be moved to a private cloud environment
■ Desktop services. These services will retain a conventional desktop approach rather than moving to a
virtualized environment, with a major emphasis on improving collaboration through use of common
email infrastructure and community based collaboration utilizing web chat technology
■ Service integration, with IBM taking overall responsibility for the roll-out of new systems on-time and
on-budget. A single set of KPIs are being shared by IBM and the applications development suppliers.
Andy Efstathiou and John Wilmott, analysts from Nelson Hall opine, “ABN AMRO is seeking to simplify
its operating model to achieve a reduced cost:income ratio while also improving its ability to comply with
the regulatory environment and improve its time-to-market. The service integration role being undertaken
by IBM is key to achieving these goals. The contract is also an early example of a major bank moving to a
private cloud-based server infrastructure.”
IBM’s clients include Russia's largest bank, VTB, as well as Danske Bank in Denmark and Nordea in
Sweden – meanwhile a number of financial services companies in Europe are currently in negotiations with
IBM for Services contracts. Worldwide, IBM’s clients inlcude Citi, VietinBank, one of the largest banking
institutions in Vietnam, the Agricultural Bank of China, Discover Financial Services, and the National Bank
of Canada.

growth in these geos as well as the proportion of population is a good example.”

that is underserved— conservative estimates put it at 750 mil-
lion upwards and a third of which includes people with rising
incomes. This translates to growth rates of 25 percent or more
per year. So, the medium term view is very bullish.
The IT services spend in the global financial services sec-
tor is largely marked towards three areas: a)getting the orga-
nization ready in the area of risk and compliance b)creating
platforms that are standardized and flexible and c) getting
customer analytics in place. Many of these new services are
being provided using new technologies like cloud. Says
Wagle, “The approach is to avoid either doing a wholesale
rip-and-replace or a band-aid kind of quick fix. The objective
is to simplify the operating model and the ABN-AMRO deal
Organizations are sitting with expensive legacy systems
and want to take costs out, not incremental costs, but whole
areas of costs. This involves rationalizing systems, reengineer-
ing applications, and making the system more flexible. It
requires creating a platform that is standard and flexible. For
instance, in the ABN-AMRO deal, both ABN and Fortis will
migrate onto this platform that would in turn help them to
become more customer-centric.
From a strategic point of view, the traditional approach at
banks has been to free up more budget to run the bank as
opposed to changing the bank. However, the balance is now
changing when banks are investing in application develop-
ment, infrastructure refreshes, and process outsourcing. GS

9 GlobalServices www.globalservicesmedia.com November 2010

 Extended Global
Extended Global Enterprise Special Report

Enterprise

10 GlobalServices www.globalservicesmedia.com November 2010

Extended Global Enterprise Special Report

■ Are You Being Served? 12

■ Q&A with Cliff Justice, KPMG 12

11 GlobalServices www.globalservicesmedia.com November 2010

Extended Global Enterprise
The new rules for the services organization: consolidate and standard-
ize delivery; balance internal, external, and virtual capabilities; and
manage services like a portfolio.
By Ed Nair
I
f you are in global sourcing of ser-
vices, talking with Cliff Justice is
great investment in time, espe-
cially if the consultant’s clock is not
ticking. Cliff Justice is the National
Leader, Shared Services and
Outsourcing Advisory, KPMG. He
has been advising companies on glob-
alization, services delivery models,
outsourcing, global sourcing and
such for over 20 years. Cliff ’s work
with NeoIT, TPI, Equaterra- all
reputed sourcing advisory compa-
nies— where he either worked or
managed partnerships, puts him as a
leader in the sourcing advisory space.
His insights are thorough and amaz-
ing; his ideas are path-breaking and
impactful. Excerpts from a conversa-
tion with Cliff Justice on the new
rules and models of services delivery:
GS: We are just out of the recession.
What are your clients asking you to
do today? How’s it different from
yesterday?
12 GlobalServices
Special Report
Are You Being
Served?
CJ: In the last two years, clients have
been demanding more from their
sourcing advisors in the area of value
creation through optimization of sev-
eral functions or their own internal
services organization and seeking
more value out of managing SG&A
areas.
Whereas, ten years ago we were
brought in as advisors to help them
centralize shared services models or
advise them on the structuring of
outsourcing contracts and helping
make deals.
Today it is much more around
enterprise services, enterprise trans-
formation, and aligning that transfor-
mation to drive competitive advan-
tage to clients. More clients are ask-
ing— how do I get competitive Cliff Justice,
advantage through handling SG&A, National Leader, Shared
through partners, through the way I Services and Outsourcing
move services up the value chain, Advisory, KPMG
how do I access data and knowledge
in a better way, how do I leverage the
maturity of the services organization
www.globalservicesmedia.com November 2010
Extended Global Enterprise Special Report

that has been in place to really drive chain helping quantify value cre- Sourcing advisory has to include peo-
better business value. In the last two ation. ple and change; process transforma-
years, these were the dominant con- This requires going back to the tion in all functional areas like
versations. business and is a lot more challeng- finance, HR, IT, supply chain; and
The other important conversation ing; it requires lot more insight into enterprise risk management.
centered on managing risk. Back in the business— more than just doing Transactions services are fine; you
the day of pure outsourcing con- a base case analysis and measuring have to have those best-in-class. But
tracts, the risk question was a side savings of a transactional service. if clients really want the leverage, they
question. Now it is incorporated as They are table stakes that have to be have to think about service delivery
part of the value preservation discus- done. more organizationally, integrate with
sion. business partners, and drive value
GS: This is like more business con- back to businesses.
GS: Sourcing advisory as a business sulting work.
has been in turmoil. What is threat- CJ: We have always been doing that. GS: You mentioned about SG&A. Is
ening a change there? How has it There’s always a component of busi- it time to rewrite Porter’s value
evolved? chain? Are support functions
CJ: In the very early days, say getting to the core?
from 1997 to 2003, it was “The economy has caused CJ: What we are seeing is that
really about identifying the slowdown in major transfor- traditional support-oriented
right outsourcing vendors, functions contain lot of data
scoping out the outsourcing mation investment, but that’s and knowledge. There’s lot of
contract, structuring the deal, changing. Companies are look- cost and expense to those
putting in the governance functions and there’s lot of
mechanisms, and managing ing at creating sustainable value that comes out of those
the deal. From 2003 to 2007,
it was all about optimizing
services organization as functions. Organizations that
can think in terms of virtual-
those relationships. From opposed to chasing labor ization, in terms of harnessing
2008 onwards, we started hit-
ting the rocky shores, it was
arbitrage,” the capabilities that reside
within the company and har-
about how do we really opti- ness those well, as well as har-
mize and create value and nessing outsourcers and virtu-
competitive advantage out of
Cliff Justice al platforms, SaaS, and cloud
the investments that we made National Leader, Shared platforms, can create a much
into shared services and out- more dynamic model that can
sourcing partnerships.
Services and Outsourcing address new questions to the
Some industries are Advisory, KPMG business, changes to the busi-
approaching this for the first ness faster than before. It is all
time and wondering how to support, but it is the new
leapfrog. For example, the value that support can con-
pharma industry was late into the ness strategy that has to be aligned to tribute.
game, but they are now incorporating sourcing strategy. It was being done The core is still the core, it is real-
things like pharmacovigilance into a even ten years ago, but it is more vis- ly about how your SG&A functions
centralized shared services model, ible now. There were larger dollars are treated and addressed that they
some enabled by external parties, attached to sourcing deals and a lot of can become a competitive advan-
some not. The line between them is perceived external and internal value tage.
getting blurrier. We are structuring in traditional sourcing advisory. These are not necessarily revenue
them in a very similar way whether it We have a developed a platform generators; some industries may hive
is provisioned internally or externally, that is comprehensive and holistic. It them out and create a profit center. It
we are seeing lot more hybrids than helps a client look at a long-term is probably still not their core busi-
what we ever had, and more mature roadmap, not just a tower or two, on ness, but it enables their core business
companies are moving up the value how you provision the function. to become more competitive.

13 GlobalServices www.globalservicesmedia.com November 2010


GS: So what rules are you rewriting?
CJ: The rewriting of the rule is—
whether you can take these and man-
age them to the lowest cost and oper-
ate them purely on efficiency; or do
you put enterprise-wise strategic ini-
tiatives in place to drive innovations
into those services. That’s what we are
talking about.
Drive the innovation, add a rea-
sonable cost, create a flexible model.
The cloud discussion is bigger than
tech; it is really a way of thinking
about flexibility in business.
Create an extended global enter-
prise with internal, external and vir-
tual capabilities, many of which can
be provisioned quickly, as and when
new businesses are introduced into
the environment.
One of the key things that we
talked about in the framework is how
companies can take high value add
services that may be best in class
within a business unit and create a
services organization that serves more
business units. These are centers of
15 GlobalServices
excellence for that service. For exam-
ple, research centers combine massive
knowledge and data or take shipping
companies that carry lot of data on
trends.
GS: Going back, you mentioned
proper balance between internal and
external capabilities. How does that
work?
CJ: The desire for control over the
services, the ability to control risk,
the specificity of the function, under-
standing whether the service is some-
thing that third party providers have
the maturity in providing— these are
the questions to be asked. It is not
about the price you are going to pay;
lot of things can be moved out for a
lower price, but productivity could
get impacted. Hence, we are saying
that companies should look at opti-
mizing internal balance and external
balance by managing services as a
portfolio. Looking at internal provi-
sioning and comparing and bench-
marking against the external market
www.globalservicesmedia.com
Tools & Technologies
is important. That’s what leading
companies do. More importantly,
what we see is that services portfolio
organization across the enterprise
should have a broad view across the
organization, cross the enterprise,
helps the company realize the services
strategy. Drive and quantify the syn-
ergies that are sometimes not obvious
when you go to an end-to-end
process. That’s for a lot of companies
seeing true value. It is true for an end-
to-end process like say procure-to-
pay.
This is hard to do because you are
breaking the traditional functional
structure; it requires a lot of change
in management. But there are some
good examples of companies out
there doing this.
GS: For many, shared services have
become unwieldy. Why make when
you can buy? Are shared services on
the decline?
CJ: No. Not at all. It’s just the oppo-
site. More companies are looking at
November 2010
Extended Global Enterprise Special Report

4 Principles of Extended Global Enterprise Model

■ It’s blind to the organizational structure and therefore immune to any limitation that such a struc-
ture might impose. Driven by customer need and not organizational structure:
■ One-size-fits-all service offerings have been replaced with a balanced portfolio of retained, out-
sourced and centralized service offerings with tiered, tailored and bundled services across func-
tions.
■ The “set and forget” approach or simple vendor management has been replaced by a more sophis-
ticated Services Portfolio Management organization.
■ Business transformation is all about business simplification. It’s really a reduction in complexity
–consolidating and standardizing services delivery and then simplifying those service delivery stan-
dards. Instead of a siloed and redundant approach with fragmented planning – one services deliv-
ery strategy for IT, another for HR, and so on – you’ll have a single, common strategy within a com-
mon services delivery framework to achieve a common goal.

shared services, but the blend in pro-
visioning is changing.
In the past, shared services and out-
sourcing were two distinct service
delivery models. That distinction is
going away; they are becoming highly
blended. A company provisions its ser-
vices in a very centralized way and
enables more or less through third
party. Some companies don’t even call
it outsourcing. That is, provisioning of
services through partners within shared
services unit is certainly on the rise.
You can see this growth at the ser-
vice provider’s end. Even in a down
market, they are growing, their
pipelines are full.
The economy has caused slow-
down in major transformation invest-
ment, but that’s changing.
Companies are looking at creating
sustainable services organization as
opposed to chasing labor arbitrage.
GS:What’s this Extended Global
Enterprise model all about? Sounds
like yet another consulting method-
ology.
CJ: Extended Global Enterprise is
KPMG’s philosophy, framework,
methodology, point of view or what-
ever you call it; it’s a holistic view on
service delivery of enterprise ser-
vices. It addresses companies that are
both very new to services as well as
those that are extremely mature in
services. It is a comprehensive set of
principles that we as a firm use to
enable our partners, advisors,
employees, to work with clients that
leverage the practices that we believe
will drive value into their services
organization. It is a roadmap to cre-
ating a long-term services strategy
and the framework helps clients
design and implement a comprehen-
sive services model that continues to
evolve over time. It is agnostic to
both outsourcing and shared services
in that it doesn’t recommend one
over the other.
GS: How do you compare this with
the other frameworks?
CJ: I am not aware of any that is sim-
ilar. There are frameworks on how to
build a shared services organization,
how to build an outsourcing deal,
how to manage shared services, how
to manage outsourcing contracts, and
many others. EGE helps companies
approach their services in the way
they want. It gives them the enter-
prise capability that goes across func-
tions and creates a common way to
access services. There are different
degrees to this like different levels in
a maturity model. At the top is a
completely integrated end-to-end ser-
vices organization with complete ser-
vice portfolio management (SPM).
The SPM is a very simple interface to
request and manage services. The
goal is to create an organizational
capability that can interface between
a complex multi-tower service deliv-
ery organization and the business and
its customers. SPM helps the adop-
tion of services without worrying
about different contracts, different
pricing, different SLAs— the SPM
handles all that and it constantly
evolves and aligns all of the services to
the services strategy. GS

16 GlobalServices www.globalservicesmedia.com November 2010


The Sky’s Not Falling on
the Indian IT Industry
There is more to the increase in MAT and expiry of STPI benefits
than meets the eye and a deeper study shows that the situation is
not as dire as is being made out to be
By Sruthi Ramakrishnan
T
wo things which have been making news
recently and are projected to have grave
implications for the Indian IT industry are
the proposed extension of MAT to the hith-
erto tax- free Special Economic Zones
(SEZs), and the expiry of the Software Technology Parks of
India (STPI) scheme in March 2011.
The concern about both is that they will increase the tax
burden on the IT companies across the board, irrespective of
size, location or turnover. The truth is that there is more to
these measures than meets the eye and a deeper study shows
that the situation is not as dire as is being made out to be.
Lets take the MAT increase under the DTC (Direct Tax
17 GlobalServices www.globalservicesmedia.com
IT Market Dynamics
Code) regime first. It is not the increase in the tax itself,
which actually comes to less than a percentage point,
which is worrying. Most IT companies, including those
operating in Software Technology Parks, already pay this
tax. The real cause of worry is that firstly, it it is planned
to be extended to the SEZs, and secondly, tax benefits will
change from being profit-linked to investment-linked.
"For SEZ, the tax benefit is for a period of 15 years,"
says Raju Bhatnagar, VP, Government Relations and BPO,
NASSCOM. "this is structured as a 100% tax benefit
available only for the first five years, 50% tax benefit for
the next five years, and the last five years has a tax benefit
of 50%, provided the profits are invested in certain pre-
November 2010

determined avenues. So after the tax holiday is there from
lets say 2006-10, you get 50% tax holiday, on the remain-
ing 50% you have to pay full tax.
For an organisation that is halfway in the SEZ benefits,
they are paying normal tax. So the normal tax paid versus
the computed MAT, whichever is higher is what would be
applied." Thus the MAT increase may not impact too
much after the first 5 years of tax benefit is availed.
So the real challenge seems to be the change from prof-
it-linked to investment-linked approach to tax benefits, as
the latter approach would benefit sectors with large capital
investments. "If there is a tax benefit that is being allowed,
let us say for the SEZ, and MAT is levied, upto two-thirds
of the tax benefit gets nullified," says Bhatnagar.
But this may not impact the big players like Infosys and
TCS significantly, who have multiple units in various stages
of operation in SEZs, besides subsidiaries operating outside
India. "There are several non-financial charges that they are
able to take credit of which are
allowed as per the Income Tax
law," he says. "Besides, they Believing that the Indian IT
have subsidiaries operating in
foreign countries. So they pay
industry's USP is solely the tax
tax in those countries for sops and incentives offered by
which they are eligible to
claim credit in India. So when
the government is wrong
you talk of the effective rate of
tax for a company which is a
conglomerate, it is not simple, there are multiple aspects
that come into play."
Where does that leave smaller companies? "So far as
those companies which are not in SEZs are concerned,
they will have to in any case pay under normal income tax,
and not get incentive deduction. So they will not be affect-
ed by MAT," says Sunil Shah, a partner at Deloitte Haskins
& Sells.
Thus the proposed extension of MAT to SEZs doesn't
imply an uniform increase in taxes at one go, but a phased
increase according to the age of each unit of a company.
Regarding the other major concern about the expiry of
the STPI exemptions in March 2011, firstly, it is the ben-
efit provided by Section 10A of the income-tax law (100
per cent deduction for 10 years of export profits derived by
units set up in any STPI, which is in accordance with the
scheme notified by the Central Government) alone that is
coming to an end. "Under the STPI scheme there are mul-
tiple benefits that are available, like the income tax benefit,
bonded delivery center, duty free imports from within
India, etc. Of these benefits, one which is the income tax
benefit will expire. The rest remain open-ended, they don't
have a sunset date," says Bhatnagar.
Besides, its end does not come as a surprise for the
18 GlobalServices www.globalservicesmedia.com
IT Market Dynamics
industry. It was known from the inception of this scheme
that this particular benefit has a ten-year horizon, which
was later extended to 12.
Calling for extension of benefits is not wrong. But
believing that the Indian IT industry's USP is solely the
tax sops and incentives offered by the government is.“Our
tax liability will go up to 25% next fiscal from around 21%
in the present fiscal on account of this,” V Balakrishnan,
CFO, Infosys told Financial Express regarding the end of
the STPI tax benefit. But a company of Infosys' size and
spread- across services, industry verticals and geographies-
can surely absorb the increase in tax outflow. After all, it
was none other than Infosys' Founder-Chairman Narayan
Murthy who said that “Asking for tax exemption for 10s
of years in my opinion is not the smartest thing” and
believes that IT and software sector should and are capable
of paying taxes just like other industry sectors.
Alternatively, they can shift operations to their delivery
centers outside India. That is
one advantage the services sec-
tor enjoys. "In services you
can, pretty much at the drop
of a hat, pick up your service
delivery center and shift it,"
says Bhatnagar.
Admittedly, this can work
both ways, and drive away for-
eign companies with Indian
subsidiaries to countries offering more tax benefits. But
what needs to be kept in mind is that the Indian IT indus-
try took the world by storm on the basis of its strong skill
sets, talent pool and innovativeness and not solely low
costs. The former, combined with India's rising status as an
IT market, continue to propel India's IT story.
With the partial loss of their protective cocoon, com-
panies will have to increase efficiency and become more
competitive to retain customers. Smaller companies today
already understand that going niche is the way forward.
Companies which are good at what they are doing, espe-
cially if its specialized services, will always be in demand
even if they chose to marginally increase their prices.
In short, the industry need not hassle itself over mea-
sures which will, at best, cause a marginal increase in
their tax outflow. While they will, in the short term, hit
the "Infosys' and TCSs of the future which are still in the
process of growing", as Bhatnagar puts it, expecting
extension of exemptions endlessly is unrealistic. In an
industry where low cost is fast ceasing to be the deal
clincher, all providers will eventually have to depend on
the efficiency and quality of their work to survive. The
sooner the Indian industry admits and adapts to this, the
better. GS
November 2010
 BPO Market Dynamics

Are ‘On-Demand’ Contact

Centers in Demand?
More and more organizations are buying/exploring On-demand solutions,
the economic situation has fuelled the desire to go on-demand

By Vijay Venugopalan, CRM Capability Lead, APAC, BT Global Services

O
n 4th Sep 1882, the world’s first power sta-
tion started its operation in New York
City. 85 customers in lower Manhattan
received enough power to light up 5000
lamps and they paid US 5$ per Kilowatt-
hour in today’s dollar terms. Until then, people relied on
expensive battery powered ‘lighting bulb’. Power on-
demand took over battery based power rapidly in its devel-
opment cycle.
That’s the history of electricity. Let’s look at computing;
Growth of computers was slow until IBM released
Mainframe systems in the mid-80s. Due to the size, com-
plexity & cost of Mainframes, the ‘Digital Computing’ era
actually started as a hosted model - one centralized main-
frame with ‘dumb’ terminals deployed across the enter-
prise. Had we continued in this path, perhaps all of us
would be paying monthly PC usage bills like our power
bills – well, I wouldn’t have had the opportunity to write
this article!
The point is many of what we use today such as tele-
phone, power (even cars and real estate!) have changed
Vijay Venugopalan,
from ‘buy’ to ‘share’. CRM Capability Lead, APAC,
The ‘Microprocessor’ generation which made BT Global Services
PCs/servers possible, fundamentally changed the trajecto-
ry of ‘Digital Computing’. Long story short - mainstream of the single largest expenses and it makes their businesses
IT solutions moved to outright purchase as it made perfect less agile to change. What causes the shift in mindset?
business sense from a Cost/Benefit perspective. Unpredictable and escalating costs of IT operations, tech-
Organizations invested on technology infrastructure to nology obsolescence and changing customer demands!
empower their businesses. IT assets were depreciated over In the ‘credit crunched’ economy, a corporate executive
3 – 5 years. Happy days! wants to improve efficiency, productivity and to make
In my opinion this history sets the context for the their business agile to ‘change’. Hence executives tend to
future of IT services. invest the scarce resource ‘dollars’ on core business func-
In the last 10 years, many global organizations have tions such as R & D, product enhancements, emerging
realized that their IT assets are cumbersome and expensive markets.
to manage. Some CFOs even claim that technology is one On the other hand, consumers want to have personal-

19 GlobalServices www.globalservicesmedia.com November 2010


ized, timely service anytime anywhere via multi-channel.
This trend has led to interesting survey results:
“80 per cent of businesses think they deliver a superior
experience, yet only eight percent of customers agree”
[Source: Frost and Sullivan]
This ‘paradigm shift’ in expectations has paved the way
for ‘On-demand’ services.
An on-demand contact centre meets these criteria,
combining hosted IP telephony and automated, voice-acti-
vated software-as-a-service to deliver a package that is
deeply scalable and can be purchased in new and flexible
ways, such as per concurrent agent and by the hour. This
new level of cost granularity will allow chief operating offi-
cers and heads of customer service to measure the efficien-
cy and cost of operation, unlock service improvements and
additional cost savings in the
future and its needless to say
these fully managed services Organizations adapting to on-
will remove worries about risk
of technology obsolescence. demand models should be pre-
Some of the early net- pared for an internal transfor-
worked IT services providers
[SPs] like BT Global Services mation – to make changes to
have invested quality time and their operating model, process,
effort (and dollars!) on market
research, designed mar- governance and people
ket/industry relevant packaged
on-demand applications and created business models &
return-on-investment tools around it and have acquired
customers.
The first agent logged into BT’s contact center On-
demand platform back in 1999.
Many global MNCs have changed their operating mod-
els to adapt to on-demand contact centers and have seen
benefits. More and more organizations are buy-
ing/exploring On-demand solutions, the economic situa-
tion has fuelled the desire to go on-demand.
Comments I hear in Asia are ‘Are these on-demand con-
tact centers fit for purpose?’ or ‘On-demand contact cen-
ters are only fit for short term deployments’. To get some
clarity around this, let’s analyze the future of On-demand
in 2 parts –Short & Long term.
Short term
In Asia, we are in the transition stage from outright pur-
chase to On-demand services. While many organizations
see the benefits of On-demand contact centers, they have
concerns around security, data privacy and some say – ‘In
the long run hosted or cloud based contact center services
are expensive’
Global networked IT service providers like BT have
20 GlobalServices www.globalservicesmedia.com
BPO Market Dynamics
been providing network based on-demand services for over
a decade and have addressed these concerns already.
Optimized on-demand contact center services are available
at a global scale – these services have the unique ability to
collect the contact (not just calls!) from anywhere in the
world and deliver it to an agent with the right skills work-
ing anywhere in the world – with secure platforms and
data privacy [It is mandatory for SPs who are registered
data controllers under the data protection act]
Wondering how? The contact center services are hosted
on a very large voice and data network that spans across
170+ countries.
Just deciding a best on-demand platform alone is not
adequate. Organizations adapting to on-demand models
should be prepared for an internal transformation – to
make changes to their operat-
ing model, process, gover-
nance and people. Such
changes will determine the
success factor of the on-
demand deployment. If an
organization gets its internal
transformation right, on-
demand platform will fit in
like a charm.
In 2010, finding the right
technology partner to move
contact centres into the cloud, and the right commercial
model to buy those services, will be vital.
Long term
If we take the long term view of the On-demand contact
centers, say 5- 10 years from now, many organizations
would have procured contact center applications as a
shared service. We are talking about hundreds of thou-
sands of agents using on-demand service which will invari-
ably bring down the cost per agent.
Business models will evolve to provide the service for
free as auxiliary revenue streams like network will make up
for it. After all, free is better than cheap if it results in a
win-win deal for customers and partners.
What's more, on-demand call centers will also be a
means to gain points on ‘Corporate Social Responsibility’
as arguably, On-demand services will reduce carbon emis-
sion compared to on-premise rivals. Hence, organizations
will evaluate which SP to choose rather than which tech-
nology to choose and buy.
On a long term perspective, it’s obvious that on-
demand contact center solutions are the way to go and it
will be very difficult to justify an outright purchase busi-
ness case! GS
November 2010
 IT Market Dynamics

The IT Opportunity in
Healthcare Legislation
IT reforms are an important and integral part of the reforms planned
under the Patient Protection and Affordable Care Act
By Sruthi Ramakrishnan

T
he US healthcare reform bill, even before solutions on insurance exchange because we believe there
being passed into law (the Patient Protection is a huge opportunity in trying to create an insurance
and Affordable Care Act) in March 2010, exchange. It constitutes essentially six buckets- product
was touted to bring a huge boom for 3rd configuration; quoting engine; payment gateway; applica-
party service providers. But while the BPO tion processing; reporting certain tools which will inter-
opportunity is quite visible- in the form of increased cus- face with individuals and their families, employers, agents,
tomer service, claims processing, etc- the IT aspect of it is payers, which will extend towards data migration; and
less obvious. Nevertheless, it is an even more important and automated enrollment processes. That can be extended to,
integral part of the planned reforms. from an infrastructure perspective, to solutions in cloud
"There is going to be a need to invest more in IT sys- computing."
tems to not only support a The federal plan to launch
larger user base for goods and a healthcare information
services, but also to support superhighway, the
the administrative side of
The federal plan to launch the Nationwide Health
delivering these services adher- Nationwide Health Information Information Network
ing to the additional regula- (NHIN) also requires expand-
tions coming on board. It is Network (NHIN) requires expand- ing and uphauling the existing
going to require more systems, ing and overhauling the existing IT infrastructure. Mark Boxer,
greater automation and inte- Senior Vice President and
gration of the existing systems IT infrastructure Group President of ACS
in order to be able to support Government Healthcare
these services on a practical Solutions, now part of ACS
basis, and also to achieve greater efficiency and effective- Xerox, says," For the EMR (Electrnic Medical Record) to
ness," Stan Lepeak, Managing Director of Research, be meaningful, it has to be aggregated and it has to be
EquaTerra had said in a March 2010 podcast (What Effect shared. We have got the data assets, the aggregation engine
Will Healthcare Legislation Have on IT Services and to aggregate EMRs into EHRs (Electronic Health records).
Outsourcing?) organised by EquaTerra. EHR cuts across hospital systems, And then EHRs can be
Service providers in the IT space are well aware of the shared on a Health Information Exchange, which would be
opportunities that the legislation has brought. "From an filled by states.
application development perspective, we believe that the In addition to all the stuff that build the infrastructure,
opportunity that lies for us is the requirement for new we also have critical rules engines that sit on top of the
claims administration application," says Pradeep Nair, Vice health exchanges that prospectively identify patients that
President & Head – Global Life. Sciences Practice, HCL. are at risk of getting diabetes, heart disease, etc. So this can
"From infrastructure, there is an increased storage require- help physicians take action before it becomes a critical issue.
ment." That is the promise of the healthcare reform."
He sees insurance as another segment with huge So there is a lot of potential for growth for the service
potential for IT expansion. "There is the framework of providers. For healthcare providers and payers, there is a

21 GlobalServices www.globalservicesmedia.com November 2010

 IT Market Dynamics

Key Vendors in US IT Hospital Market

Top Enterprise Healthcare IT Vendors Top Consulting Firms for Hospitals

Cerner Corporation
CPSI
Eclipsys Corporation
Epic Systems Corporation
GE Healthcare
Healthcare Management
Systems
Niche Vendors
Vendor
ADP
Kronos
Lawson Software
Mediware
Oracle Corp./PeopleSoft
Philips Healthcare
Picis/MSM
SCC Soft Computer
Sunquest Information Systems
Surgical Information Systems
3M Health Information
Systems
Unibased Systems Architecture
Healthland Accenture
Keane Healthcare Services ACS (acquired by Xerox)
McKesson Provider Technologies Beacon Partners
Medical Information Technology BearingPoint
QuadraMed Corporation Cerner Corporation
Siemens Healthcare Courtyard Group
CSC
Deloitte
Encore Health Resources
Specialty Environment Hayes Management
payroll services IBM
time and attendance systems McKesson Provider Technologies
enterprise resource planning Perot Systems Corporation (acquired by Dell)
pharmacy, blood bank Siemens Healthcare
enterprise resource planning
intensive care systems, cardiology information
Top Firms Providing Outsourcing
systems, PACS systems for both radiology and Services to Hospitals
cardiology, and obstetrical systems ACS
operating room management, emergency CareTech Solutions, Inc.
department, and intensive care unit (ICU)
Cerner Corporation
applications
CSC
laboratory, radiology, pharmacy
Eclipsys Corporation
laboratory and radiology
IBM
operating room management
McKesson Provider Technologies
encoding, dictation, transcription, and HIM
management applications Perot Systems Corporation (acquired by Dell)
enterprise scheduling Siemens Medical Solutions

Source: Executive summary of HIMSS Anaytics Report ‘Essentials of the U.S. Hospital IT Market’ 5th edition.

major incentive to increase outsourcing to them- cost ben-
efit. "For firms, particularly the smaller to mid-size organi-
zations, the equation has changed as to what is the fully
loaded cost of an employee, and that's going to change the
equation of whether it makes sense to add that next person
or to invest in technology to automate that activity or rely
on third parties," says Stan Lepeak.
Besides IT systems, another resource which will be
equally in demand are the IT personnel skilled to man
and maintain the systems, for whom there is already a
glaring shortage. According to a College of Healthcare
Information Management Executives survey of 182
healthcare CIOs, there is already a 71 percent shortage of
clinical support implementation and support personnel.
There are 44 percent vacancies for infrastructure vacan-
cies, and 43 percent vacancies for business software
implementation and support personnel. These figures are
only set to grow as the country begins implementing the
Health IT Workforce Development Program, leading
more agencies to look at outsourcing as a way out.
"While in some cases firms may make the investments
themselves and deploy management systems, in many
cases they are going to look outside to the IT experts, so
that they can concentrate on their piece of healthcare and
let third parties manage the back office IT systems," says
Lepeak.
Thus for the country's healthcare system to meet the
huge targets set by the Federal govt in the next few years, IT
will have a big role to play, and in that third party providers
will have a dominant say. GS

22 GlobalServices www.globalservicesmedia.com November 2010


Procurement
Outsourcing-
China's Missed
Opportunity
PO, which is still not mature in China, is growing at a slow pace. Due to
this its capabilities are untapped by many companies
By Pratibha Verma
D
espite being strongest in the manufacturing sector,
China, which is also known for its outsourcing capa-
bilities, has failed to attract a considerable amount of
foreign direct investment in procurement outsourcing sector.
The European Union has recently turned up the interna-
tional pressure on China to give foreign companies access to
its national procurement deals.
EU Trade Commissioner Karel De Gucht said, “China
needs to improve investment opportunities for foreign com-
panies, as European businesses are raising "serious questions"
about China's procurement policies.
Many companies have expressed concern
that recently drafted policies will discrimi-
nate against foreign companies in favour
of domestic suppliers with "indigenous
innovation," according to The Wall Street
Journal.
De Gucht also expressed concern on
behalf of EU companies that are becoming
increasingly agitated about the lack of pro-
tection for intellectual property in China.
"There's so much discussion about
China's indigenous innovation policy,
because it forces European companies to
register as a Chinese company to get access
to private procurement markets”, he says.
Because of the huge manufacturing
23 GlobalServices www.globalservicesmedia.com
Procurement Outsourcing
base, China can be strong in direct spend but most of it is
done in-house.
Michael Rehkopf, Analyst TPI, says, “In procurement out-
sourcing, direct activities like buying raw material, are huge
and often it's done by and large in-house. When we look
around, we see a few number of firms doing one or two key
grand deals but nobody would do 20 or 50 in numbers.
Procurement outsourcing revenue in China is sort of going
slowly because spend control is slowly being shifted to
China.”
As organizations become more com-
fortable to see where they want to locate
their control for their spend, they move to
the region where they have got the manu-
facturing facilities.
Rehkopf says, “We have witnessed two
trends. The first one is the movement of
that activity from Europe and North
America to the region where things are
being procured and the second one is to
decide whether they should be done in-
house or need to be outsourced. We are
seeing both the things happening simulta-
neously.”
One of the biggest differentiators in
China is language. China is being per-
ceived as a very good destination only for
November 2010
 Procurement Outsourcing

people who deal in Chinese, Japanese or Korean. world class goods unlike India whose philosophy is to provide
In the past, MNCs in China were focusing on their best services at low cost. The mindset is different. You get a lot
topline growth and their spend was relatively small. There has of benefit if you open a shop in India but you don't get them
been a rapid change in that area. For suppliers, PO base is in China. Lack of governement support and language also
slowly becoming strong. Organizations are starting to shift deter companies from investing in PO.”
their focus not only to increasing their spend but also to do When it comes Procure-to-Pay process, which is transac-
PO work more efficiently and effectively. tional in nature, China is not an attractive destination to do
Rehkopf says, “Local companies in China believe that they that. The value proposition comes in only when you deal with
can do everything themselves and at a cheaper rate. But what the country for low cost country sourcing. Apart from that, it
we see in the coming years is that they would no longer have is difficult to set up a center in China. People want to set up a
sufficient data and robust quality processes. Then they might shop in China and buy from local Chinese manufacturers but
start depending on outsourcing not only for cost benefits but only some top service providers have delivery centers in China.
also for overall benefits.” Over a period of time these western MNCs like
Some suppliers have set up their centers in China and are Accenture, IBM, Infosys, TCS, Wirpo, have gained confi-
dealing with a number of clients but none of them have huge dence in running their businesses in China. Companies like
clients. They are all getting themselves positioned for an Accenture have their centers in China.
upcoming wave of procurement Accenture started its pro-
outsourcing. curement delivery hub to serve
“A lot of MNCs have been “Local companies in China multi-national clients in 2002
controling their spends from in Dalian and established itself
other parts of the world. I antic- believe that they can do every- as a strong procurement service
ipate that there is significant thing themselves and at a cheap- provider over a period of 8
uptaking in this kind of out- years.
soursing in the next four-five er rate. But what we see in the David Conte, Senior
years. People have now started coming years is that they would Executive, Accenture
thinking that outsourcing Procurement BPO Solutions,
makes sense.” no longer have sufficient data says, “China not only provides
China is a complex place for
foreign businesses. Regulations
and robust quality processes.” access to a large, highly skilled
talent base of procurement pro-
are sometimes unclear, and Michael Rehkopf, Analyst TPI fessionals but, just as important-
often not helpful. Contract ly, it provides access to local sup-
enforcement can be tricky. Its pliers and low cost services.”
business culture differs from that of India. And most impor- He opines that China's cost competitiveness will remain a
tantly, language forms a critical barrier. key differentiator for multi-national clients.
Nearly 10 to 15% of all PO deals signed in the last 3 years Conte also says that with other markets, there will be new
have China as a delivery location. The key locations in China opportunities for growth in China as the supply base contin-
from a PO perspective are Dalian, Guangzhou, Shenzen, and ues to mature and expand into new segments. Additionally,
Shanghai. China will continue to be an important location for helping
Everest classifies 20+ PO suppliers into emerging suppli- clients manage and balance supplier risk. More generally, we
ers, leaders and major contenders based on a comprehensive also expect to see continued demand from clients to help
assessment of capabilities and market success. Nearly a third them add value and analytical insight from their BPO engage-
of all these PO suppliers have presence in China. However, it ments back into their business.
is interesting to note that while all PO leaders have a China- PO, which is still not mature in China, is growing at a
based presence, only 25% major contenders have delivery slow pace. Due to this its capabilities are untapped by many
capabilities in China and none of the emerging players is pre- companies.
sent in China. So it is pretty evident that China is an impor- Gupta says, “PO is growing in China but I haven't seen
tant cog in the overall delivery strategy for established PO too many suppliers from Chinese origin coming into play.
suppliers and is emerging as a differentiator. They are all global suppliers. There is this value proposition
Surabh Gupta, Analyst, Everest, says, “The biggest issue that a country operates on low cost country model. That is
with China is that there is a lack of service culture. Chinese distinctive and unique about China and no other geography
Government philosophy is based on producing cheapest and can support this.” GS

24 GlobalServices www.globalservicesmedia.com November 2010

 Market analysis

Strong Contract Restructuring

Leads Weak Q3
Restructuring of contracts heavily influenced the last three quarters,
and will continue to influence Q4
By Sruthi Ramakrishnan

T
he TPI Q3 analysis shows that a pause in the market they initially took at the start of the recession. Projects involv-
recovery has dampened year-to-date momentum (see ing new scope and budget approval are once again being
Fig.1), but data and service provider feedback suggest delayed. Restructuring which bring quicker and potentially
that a more active 4Q10 is underway. easier returns to bottom lines tend to move forward unim-
Restructuring of contracts has heavily influenced how the peded,” said Keppel.
last quarter, and in fact the annual TCV (Total Contract In numbers, restructuring constituted 20% of the market
Value), have shaped up. “In the 1st quarter of this year there for both ITO and BPO and about 1/3rd of TCV. The relative
was an unprecedented 42% of global TCV which were strengthening of BPO contract restructuring shows the
restructuring related. At that maturing of the BPO market
time we anticipated more as some of the larger oppor-
renewals were on the way. In tunities awarded in the mid-
Q3 they make 48% of global “Some of the 7- 10 year dle of the decade come up for
TCV,” said John Keppel, contracts rewarded in the early renewal.
Partner & Managing On the other hand, new
Director, TPI Research, part of the decade are up for scope activities were down,
Analytics and Intelligence at renewal. At the same time, some not just in terms of global
The TPI Index webinar. market share but also by
“Restructuring TCV repre- of the recent 3-5 year contracts. absolute TCV numbers. New
sents about 34% of the global
market, compared to the 20%
As a result, there were more scope TCV was down signifi-
cantly, by about 50% QoQ
we’ve typically seen over the contracts being restructured and YoY. Clearly, new trans-
past 3 years.” actions are not entering the
The past quarter saw some
simultaneously,” market as quickly as they
large restructurings- General John Keppel, Partner & Managing used to in previous years.
Motors, Bank of Ireland, This is being attributed at
ABN Amro, etc. In fact, six of
Director, TPI Research least partly to the recession
this year’s nine mega-deals and delay in new projects.
were restructurings.
One of the reasons for this extent of restructuring activity Industry- wise
is the change in the timing of renewals. “Some of the 7- 10 For ITO, which has seen consistent performance since 2006,
year contracts rewarded in the early part of the decade are up a huge Q1 followed by two weaker quarters has resulted in a
for renewal. At the same time, some of the recent 3-5 year flat year. Most of the ITO mega-deals awarded have bundled
contracts. As a result, there were more contracts being restruc- Infrastructure and ADM together. Much of the activity in this
tured simultaneously,” said Keppel. space was restructuring related.
Another reason is that larger economic difficulties still While BPO TCV is typically comprised mostly of new
cover outsourcing adoption. “In North America especially, scope, an increasing amount is restructurings. The traditional
CIOs and CFOs are returning to a restraining posture that BPO strengths- contact centers, FSO, HRO, F&A generally

25 GlobalServices www.globalservicesmedia.com November 2010

 Market analysis

3Q10 and YTD Headlines

Restructurings include renegotiations, renewals, extensions

Source: The TPI Index: An Informed View of the State of the Global Commercial Outsourcing Market
Third Quarter 2010

trended downwards and have been lower that their 2006 lev-
els, while there was some pickup in HRO and FSO. More
than half the activity in multi-process BPO was restructuring
related. The emerging R&D KPO activity is picking up in
volume and contracts.
Region-wise
The Americas experienced a decline in both the number and
TCV of contracts in the past quarter. This is important espe-
cially since the Americas, and the US IT market in particular
have been leading the market recovery which began in 3Q last
year. Despite this, TCV for this year is high because of
extremely strong first half performance and this makes the
Americas the largest buyer of outsourcing services so far this
year. “The US, which is traditionally the dominant force in
the Americas region, has improved its share of the global mar-
ket from 36% to 44& YoY to date. The Americas is expected
to end this year on the upside,” said Duncan Aitchison,
Partner & President, TPI EMEA.
More contracts were granted in EMEA than Americas
this quarter, but this region is still lagging behind Americas
in both metrics. Within EMEA, there seems to be a lot of
activity in less mature markets. The Nordic region, the sec-
ond largest outsourcing market in the world in 2010, and
the Dutch market provided strength in Europe. The results
in both geographies have been heavily influenced by large
restructurings signed during the first nine months of this
year.
Geographically, APAC has shown the most fluctuation, at
49%, due to a few large deals.
Industry Segment- wise
The Financial Services sector has grown the most this year,
supported by large mega-deal restructurings. Driven mainly
by EMEA region, the growth in this sector has been support-
ed by megadeal restructurings in the region, like that of ABN
Amro. Manufacturing has not improved on the same lines,
though the Americas saw activity in this space.
Retail, travel and transport, and hospitality sectors have
adopted outsourcing at an increasing pace over the last year.
Retailers, still experiencing top line pressure, are looking at
outsourcing to help reduce costs. Hospitality, travel and trans-
port have nearly doubled their contract values.
Looking at the number of deals coming up for renewal,
2011 again looks like it will be very active on the restructur-
ing front, though not as much as 2010. GS

26 GlobalServices www.globalservicesmedia.com November 2010