Future Gazers


	Talking with Michel Janssen

Brief profile

Michel Janssen created, and is President of the Supplier Solutions division at Everest Group. A consultancy specializing in strategic, management and transactional advice to buyers and providers of outsourcing services. During a career spanning almost two decades in outsourcing leadership positions, he has been a major contributor to the industry's development and has designed strategies for creating effective relationships between service organizations and their clients in a wide cross-section of industries and business processes. He was the principal architect of Total Value Equation (SM), Everest Group's methodology for identifying and capturing enterprise-wide value opportunities in outsourcing initiatives.

Prior to joining Everest Group, Mr. Janssen served as a senior member of Gartner's Strategic Sourcing Practice, where he was responsible for developing and implementing service offerings across the various Gartner business units. Mr. Janssen also held management positions at Electronic Data Systems (EDS) for 12 years. He performed costing, pricing, billing, competitive analysis, and new service/product development for all of EDS' large mainframe/midrange data centers around the world. He also was directly involved in the creation, analysis, and negotiation of long-term outsourcing relationships.

Do you believe that offshoring has become mainstream? Can you analyze this from different angles for eg. The size of contracts, kind of work being offshored, number of companies looking at offshore, the offshoring decision process etc.

Yes, I do believe that offshoring has become mainstream and is part of the strategy of most large outsourcing buyers. A few years ago, Indian IT companies were not in the radar screen when large deals were being discussed. In the last couple of years, however, companies such as Infosys, TCS and Wipro have moved each from an offshore labor supplier to a true global delivery model comprising onshore and offshore delivery capabilities. They have also invested in managing customer relationships better and have combined that with local hires to give a more robust industry context to their capabilities. Today, they have the scale to compete with local and multinational service providers, and are in the consideration set when large offshoring deals are discussed.

With offshoring becoming an integral part of a firm's outsourcing strategy, the involvement of the CEO and businesses have increased. With more at stake, the evaluation criteria have also changed as has the process.

While a few years ago, even large Indian firms were primarily working in a “projects” mode, today, they are transitioning to a “process ownership mode”.

The modus operandi has therefore changed from micro management of the effort by the client at the project level (doing as told mode) to program managing the engagement within the parameters of SLAs and goals that have been set. Given this scenario, corporate reputation, brand image, management depth, governance, risk management, change management and other such corporate level issues are becoming important parameters in evaluation. Think about it this way, you can date any girl/guy you want (few long term implications & obligations), but if you start thinking marriage, then there is a whole new set of criteria that comes into play.

As the size of the prize increase, so does the overall scrutiny…and that is where advisors like Everest become important.

How do you see the supply side playing out in the next 2-3 years? What kind of players will dominate?

It is rare to see the emergence of three players with global scale and cause a “discontinuity” in market dynamics. But that is exactly what has happened to the global outsourcing market with the emergence of TCS, Infosys and Wipro as players with $1B+ revenues. Also, as these players have focused on improving customer interfacing skills and business understanding, they have closed the gap with international players. At the same time, the Accentures and IBMs have begun establishing an offshore presence. So, in the next few years, we will see the home grown global players from India as well as traditional outsourcing service providers compete for all significant deals in the market place.

Do you believe that offering integrated IT – BPO services is a major value add to a buyer?

Yes, and in fact, in the long run, BPO will become more substantial and meaty than IT services, which would “support” the BPO offering. We are seeing BPO taking the lead in outsourcing situations because it is often one step closer to business results that buyers are ultimately trying to impact. In that context, I have wondered at the need for Indian players' dual branding of their IT and BPO services.

What is your view on the relative merits of the various offshoring destinations. In particular, could you compare India with China ?

What is different about India is there are at least a dozen home grown players with scale to effectively compete in a global market. Having said this, China, with its merits, will, and can emerge as an alternate offshore destination. While China may not grow in a similar manner (through home grown players), it is very likely that global players would set up a base in China to take advantage of the low cost talent pool.

India also has a huge advantage of a large English speaking labor pool, that no other low cost country can match.

Over time, though India's share in off shoring will decrease, it will continue as the destination of choice for offshore related services.

If you were to pick the one area that offshore players need strengthen, what would they be?

Branding is an area that needs to be considerably strengthened. As offshoring initiatives gain in prominence, the importance of being a known brand has increased. Being a recognized brand reduces the perceived risk of partnering with the company and hence enhances its chances of being selected.