In most nascent marketplaces, the first provider of a service or product enjoys initial market supremacy — that period of time when product offering, terms of purchase, pricing and quality are dictated by the offer. Call it first-mover advantage, market maker or innovation premium — the market naturally takes some time to respond, embrace, accept and then put pressure on the offering to change or adapt to requirements.
This very same lifecycle is apparent in the global services industry, which is a fall-out of the evolution of the information-process outsourcing market. When the industry first took form, the buyer primarily bought what information technology providers offered (the “provider knows best” syndrome). Fast forward years later, corporations have become quite skilled at shaping strategy to meet specific business requirements using all the tools at hand — insourcing, offshoring, nearshoring, build-operate-transfer, managed-services agreements and so on. As a result, information-technology services delivery is a far cry from what it looked like at inception, with new players, strategies, alliances and internal management structures.
A parallel can be easily drawn with the delivery of business processes. With a market less than 10 years old by some accounts, first-in Business-process Outsourcing (BPO) providers have historically dictated the shape and form of process-services constructs. As a result, the marketplace is defined by a veritable alphabet soup — BTO, RPO, HRO, BTS — to name a few, all trying to lead the customer to services nirvana by serving up a brand and a point of view.
However, the industry is at an inflection point where clients are becoming more dominant in shaping the future of global service delivery — call it the end of buying off the peg, so to speak. Customers now require the marketplace to provide services in more flexible offerings and varied scopes, with higher expectations of service levels and an increasingly transparent trajectory to performance.
Available data. The industry, though somewhat unorganized and anecdotal — some might say akin to a “cottage industry”— is relatively easy to interpret. We all read the same reports and speak to the same experts. Base intelligence extolling the virtues of approaches and providers is freely available through the rising armies of intermediaries (advisors, lawyers and pundits), while providers are more than willing to invest time in education in their quest for clients, hopefully positioning themselves for an eventual sale in the dialog. Customers no longer need to be told about Bangalore or Manila as they have often taken the tour, and are entirely capable of calling Gartner or IDC to obtain vendor profiles themselves.
Lengthening track records. As a corollary to market intelligence, customers can speak with peers about the virtues of India delivery versus onshore, or commodity provision as opposed to a business transformation as they develop a services construct. And the importance of the internal track record should not be underestimated. Even companies that have not yet implemented major changes in their business-operating models have enough experience in managing commodity services such as payroll or desktop to understand what the role of the customer entails.
A longer corporate track record also brings a heightened awareness of the risks and challenges inherent in creating a wholesale change in the service-delivery model. Compliance focused internal departments — business-continuity management, insurance, internal audit, information-technology risk management — now have a point of view regarding the tracking and mitigation mechanisms appropriate to a such a degree of change.
