Discuss, debate and exchange ideas on latest trends and opportunities in the Business Process Outsourcing (BPO) landscape. Deliberate on adding “business value” to clients, vendors, employees and various other stakeholders to enhance customer satisfaction and sustain long term partnerships.

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July 17, 2014

Current pressures on companies which require software to run their business

One of the answers to reduce the complexities of managing software assets would be to use Open Source Software.


Over the last few years, it has been observed that desktop and laptop sales have been slowing down in favor of tablets and mobiles. This shift in technology led to a lot of side effects, one of them being declining revenues and profits from the sale of software to the desktop and laptop segment. This in turn has led to commercial software vendors tightening their control over the licensing of their products to maintain a continuous growth of revenue and profits. These tightening of controls include random audits of their business customers to ensure that more licenses are not used than what has been bought.

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In case of a significant difference between the licenses bought and the number of software used, there is a loss to the customer (i.e.) if the licenses bought were too low, they would have to pay penalties to the vendor or if the licenses bought were too high, they have wasted money on them. To avoid these type of issues, the business using the licenses would have to adopt one more process known as SAM (Software Asset Management). The higher the licenses used, the higher the complexity of the process. This complexity is an add-on to the complexity of the purchasing process.

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These complexities seem to be unavoidable unless we start considering the root cause (i.e.) the need to buy a software which is essentially locked down to a monopolistic vendor for that particular software.

One of the answers to reduce these kind of complexities would be to use Open Source Software (OSS). Let me give a small and simple explanation on what is an Open Source Software. OSS is the software created by anybody who knows how to create a program and the source code (the code behind the program or executable) is "open" for anyone else to view, understand and improve it.

There are no restrictions on this software apart from those which prevent anyone else to restrict this software from others. There are multiple type of licenses which are used by OSS to keep it open such as "GNU General Public License". There are multiple OSS which are currently used by the public such as VLC, Mozilla Firefox, different versions of Linux, etc.

Note: Open source works are generally free to use though this need not always be the case.

Watch this space for my next post on the subject of OSS

July 10, 2014

HR future state operating model

I envisage the HR ecosystem changing significantly over the coming decade and see the need for a dynamic operating model for the HR function to stay in sync with this.
HRM today is a rapidly changing space. Hitherto dispersed employee data - performance, learning, social media etc. is now presented in a cohesive manner through Human Capital systems for the benefit of decision makers. I envisage the HR ecosystem changing significantly over the coming decade and see the need for a dynamic operating model for the HR function to stay in sync with this.

HR product companies have introduced several V2.0 products offering sophisticated features including integrated talent & performance management and analytics. Line managers now have more collaborative decision making opportunities creating the need to closely align HR with the business environment. Here are my thoughts on how we could harness this change of operating scenarios.

Let's look at HR models over the years - from a services only framework to lead organization effectiveness and strategy, they have been delivered through multiple sub groups. "One HR" policy was followed for process delivery across functions. HR was expected drive Engagement through a seamless end user experience; Service delivery through processing models; Biz adoption by realizing people value  through performance management. HR teams adhered to a pyramid structure ensuring transactions delivery and strategic support were balanced through tail to head FTE ratios. Subsequently, CMMs became an integrated part of the HR framework - each function rolled out silo operating models and tactical tools to breed healthy delivery.

Shared services came next with large and medium scale global organizations moving to a consolidated services model. The pyramid continued to co-exist with the bottom seeing increasing transaction volumes. The governance layer was simultaneously enhanced to ensure that the back bone of centralized services support continued. We observed a transformation of Services delivery through "Click", "Call" and "Face" and the HR industry progressed to distinct disciplines such as:

  1. HR Generalists only
  2. Generalists + Service delivery + Specialist functions
  3. Generalists + Service delivery + Specialists functions + Shared Services

The transformation continues even as the current technology-enabled generation "taps" through tablets, smart phones and cloud applications, replacing the "clicks" and "calls". This force needs more agile and flexible policies, influential data, connectedness at work, power to take informed decisions, faster job role changes and better compensation to live up to the social value. Of course it is part of the corporate ecosystem along with the older generations creating the need for an operating model that can engage all without a one size fits all approach.

Section 2: Future roles within HR
The end user experience, service delivery and biz adoption is now dependant on tools with Cloud and SaaS having the potential to make them even more attractive. I came across a recent study showing that ~50% of the large/medium sized organizations are inclined to invest in better HR systems with most HCM's looking at adopting better transaction processing modules, self-sufficient capabilities on performance management, talent planning and derived analytics. However, I feel legacy systems would exist until a new technology wave sets in and the next decade would be driven by a hybrid model as investments already made will demand ROI.

Here are the projected roles which I envisage would be addressed by certified in-house /vendor practitioners depending on the organization's budget and talent mix. 

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I believe, organizations could outsource HR services with vendors contributing with interfaces, middleware and other data management techniques across legacy and cloud systems. HR vendor management would be in-house or outsourced. Investments in software to achieve compatibility will reduce as these become plug and play modules. CIO and CHRO will have reduced dependencies if data migration techniques are aptly anchored and consumed bringing additional focus on Vendor Managers.

Generalists will focus on deriving business value and will be expected to contribute to organization change as line managers (more of the Gen X and Baby Boomers who continue to be 60% of employee base) see change in ways of working. Learning services and performance management will see consolidation.

Considering diverse systems across HR functions, technology enablers will run services of the technology back bone bringing in perspectives on transition, technology effectiveness and pricing.

Services delivery will govern the tactical side of business though vendors and captive shared services will continue to dominate this area via hybrid models.

Evangelists and policy keepers will continue to operate across verticals with the focus moving away from traditional models of advocacy to more participative rules - influence working level changes in policy making and adherence.

Section 3: Future Target Operating Model
Here is my HR operating model, considering the above.

As you notice, the model moves from being a pyramid to a more retained delivery through tools, reducing the transaction (tactical) agenda items - a model with less of transaction - bottom layer of the pyramid and significant middle and top layer, in the next 5 years.

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Tools will bring in more transaction processing ability and vendors will continue to invest in cloud based models. Product vendors will offer increased capabilities and services and cloud will contribute to deployment of changes. However, as mentioned earlier, a hybrid operating model is envisaged. Maintenance effort will be optimized and cost driven. I feel, an organization needs to identify impacting factors such as:

  • Budgets (move towards a structure that optimizes cost)
  • Organization structure: layers and span to bring in effectiveness
  • Distinct roles identification: to contribute to effectiveness agenda
  • Capability requirement against roles: a moving agenda as organizations transition into a dynamic environment
  • Products: sustainability of existing v/s future investment required
  • Talent demography: strategize and hire based on talent required
  • Learning organization agenda: Drive learning culture through talent planning

Conclusion
HR remains the focus of most new-generation and legacy organizations and transformation is inevitable. Innovation in HR will drive engagement, performance and productivity. Future employees will look forward to differentiating policies which offer flexibility. A workplace of tomorrow will need to delve deep and appropriately strategize alignment of HR function.

Download White Paper: Future State Human Resources Operating Model - Redefining HR operations to drive business value

July 9, 2014

How critical is it for organizations in India to have a mandatory CSR program?

Infosys is way ahead in the right direction. It has formed a committee of directors for CSR initiative and is driving it in association with the Infosys Foundation.


Globally, India is the first country to introduce Corporate Social Responsibility (CSR) through a statute.  All these years, CSR was a voluntary initiative from few institutions for their own branding. However, from April 2014, The Indian Companies Act 2013, made it mandatory for certain category of corporates to spend a portion of their profits to integrate social, economic and environmental objectives as CSR.

Who is required take up mandatory CSR activity?

As most of us are aware, any entity under the Act whose net worth is more than INR 5000m or turn over more than INR 10000m or net profit more than INR 50m in any year. The act says, at least 2% of average net profit for the past three years need to be spent on specified CSR initiatives.

It is worthwhile to note that the CSR initiatives are to be taken near the location of corporates where it operates. Thus, the effect of environment, social and economic imbalance contributed due to corporatization in the local area is addressed.

Infosys is way ahead in the right direction. It has formed a committee of directors for CSR initiative and is driving it in association with the Infosys Foundation which has been very active in these areas. Other companies have also started the same in their individual capacity in the area of health, education and the planet. In my opinion, Infosys can look at education sector as a part of CSR where in required talent can be identified, groomed for ready deployment within the organization as a strategy for Infosys to get skilled employees and also to fulfill the CSR obligation.

What are the Accounting or Taxation Requirements of CSR Initiatives?

Accounting:
Going by the spirit of the statute, it is preferable to operate a separate account under COA for CSR activities to retain and prove the CSR obligation.

Taxation:
The Indian Income tax authorities are yet to come out with specific provision for tax treatment of CSR expenses. One school of thought is of the opinion that it is an appropriation of profit and hence CSR expenses are not allowed as expenditure for computing Income tax profit. However, individually almost all the expenses listed above is allowed as expenditure provided it is related to business as per sec 35 of Indian Income Tax Act.

Conclusion

Over all it's an appreciable move by the Indian Government to introduce CSR for a good cause and we need to wait and see the benefits in the coming months as millions of rupees will be at the disposal of profitable corporates for a great cause.

July 8, 2014

Low Cost Country Sourcing (LCCS) - Are International Purchasing Offices the next paradigm?

I strongly believe LCCS could be the next paradigm - a more strategic kind of service when compared with a pure play BPO or BPM led service. 


With business environments getting competitive, organizations increasingly look to 'Source' functions to low cost geographies, an activity commonly referred to as Low Cost Country Sourcing (LCCS) or Best Cost Country Sourcing (BCCS). This effort has resulted in the emergence of BPOs or BPM enabled offerings over the years, a model that's served for a good period of time. However, organisations need to look beyond and achieve more value by taking a fresh, integrated approach also considering the human resource angle - how do we excite the current breed of procurement professionals!

As a professional with years of experience in this domain, I strongly believe LCCS could be the next paradigm - a more strategic kind of service when compared with a pure play BPO or BPM led service.  LCCS or BCCS is treated as a stand-alone offering for Source to Pay (S2P) enabled offerings while I feel it could very much be part of the same gamut of S2P services as well. In fact you will agree with me that looking at LCCS holistically, any transformational or BPM service is in fact a by-product of this very exercise of LCCS itself.

Challenges & Benefits

As you are aware, identifying/developing the right supplier(s) base is the most critical part of any LCCS model and we need to consider various challenges associated with global supplier development - knowledge of local laws, monitoring, market realities, cultural issues, exchange rates and many more. Effectively implemented however, the benefits would be too significant to ignore - cost deflation, global sourcing techniques, creation of alternate supply bases, establishment of robust engagement models and more... I envisage that these issues could be approached by packaging LCCS as a proven concept taking along its benefits effectively implementable only by an executioner - the role I foresee the International Purchasing Office (IPO). 

In the paradigm I propose the typical IPO model works on sourcing/ supplier development and supplier management - an end-to-end approach where, by the time a sourcing/ supply base gets developed the entire process gathers relevant information which forms a solid foundation for the BPM offerings. This eventually paves way for a robust BPM which is our typical BPO model. In terms of business engagement, I feel the IPO model and the associated activity could be offered standalone or as a package. I believe the value differentiator would be the fact that it is modularized to an extent and has the ability to form a niche offering to the overall S2P value.

Going forward, I envision that businesses can distinctly benefit by defining an integration and scale-up plan for the IPO with LCCS as a foundation, a move that will enhance the overall S2P/ BPO/ BPM value chain while also offer a unique proposition that could be modular.

LCCS (IPO model) should be more seen as an extensive category management exercise for selective categories which lays foundation for BPM or (BPO) processes in a more systematized and structured manner.

To read more on Low Cost Country Sourcing, download the whitepaper now.

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