Outsourcing can affect an existing business model in many ways, says Pankaj Vaish, Head, India BPO Lead, Accenture, in an interview with Sharadha Balasubramanian from India Syndicate

What are some of the key segments, which the Indian unit of Accenture is focusing on?

We launched our BPO operations in India in April 2003. Today we have built capabilities that enable us to deliver the following services -

• Accenture Finance Solutions - Accenture's finance and accounting outsourcing solutions free your finance function to focus on your core business.
• Accenture HR Services - From recruitment and employee selection through retirement and pension administration, Accenture HR Services can tailor the right people solution for your entire employee life cycle.
• Accenture Insurance Services - Helping insurers improve their financial performance, enhance customer service and concentrate on their core business activities.
• Accenture Learning - Accenture Learning enables organizations to achieve high performance through workforce performance improvements across the extended enterprise-including employees, customers and suppliers.
• Accenture Procurement Solutions - Partnering with an outsourcing services leader like Accenture Procurement Solutions can help you improve bottom-line performance by reducing the cost of doing business.

How critical are the Indian operations for Accenture's global strategy? What percentage of the overall BPO revenue does this constitute?

Accenture considers India one of its largest developing markets. Accenture's overall headcount in India as of November 30th 2004 was more than 11,000 employees.

The India delivery centers provide a wide variety of services, including applications development and maintenance, as well as various business process outsourcing capabilities, such as contact center, human resources, finance & accounting, procurement and insurance services.

Could you detail Accenture's Business Transformation Outsourcing (BTO) initiatives? How does this differ from traditional BPO?

Outsourcing is rapidly evolving beyond the simple relocation of support processes. For a number of CEOs, outsourcing partnerships are being used to achieve rapid, sustainable improvement in enterprise-level performance. The benefits of outsourcing have multiplied. Companies that take full advantage of outsourcing now report cost savings that average 50 percent, compared with an average of 20 percent savings reported in the mid-1990s. Beyond savings, these companies gain access to latest skills and technology, improve service levels and increase their ability to respond quickly to changing business needs. Many public-sector organizations have had similar experiences.

A few intrepid CEOs have taken the concept one step further. Nearly one-third of the companies we studied are partnering with outsourcers not just to reengineer support processes but also to dramatically improve the business capabilities that are critical to their companies' success.

These partnerships employ different mechanisms-some involve pure outsourcing, others rely on joint ventures, for example. But they share one unique characteristic: They are being used to transform entire enterprises. Whether the strategic agenda involves dramatic growth, market repositioning or rapid diversification, the early results of what we call business transformation outsourcing (BTO) are stunning.

BTO is distinctive in that it allows companies to achieve rapid results through five essential components:

• C-level leadership-BTO starts at the top and the CEO must stay active throughout.
• Bold strategic agenda-BTO means big changes fast and that starts with a radical agenda.
• Innovative deal structures-Both sides must have skin in the game.
• Collaborative outsourcing to transform critical processes-Bring in the specialists if necessary.
• Focus on enterprise outcomes-BTO outcomes will be measured by shareholders and competitors.

BTO is a high-stakes proposition. Execution and people will make all the difference.

Accenture is perfectly positioned to lead the way in this emerging area.

What according to you should companies do if they want to benefit from the long-term advantages of outsourcing, as opposed to the short-term gains of outsourcing for immediate cost savings?

Our hypothesis is that high performing enterprises, seemingly so different in external detail, actually share common underlying behaviors and characteristics that can be identified, measured and replicated. Specifically, they have an appetite for innovation and new technology-and are capable of forming alliances and industry collaborations. This provides them with structural flexibility and they incorporate outsourcing arrangements into their operating models.

The best operating models leverage the capabilities of suppliers and business partners to create a best-in-class capability where it does not make sense to invest internally to achieve that result. These are the situations where outsourcing helps to create competitive advantage for leading companies.

Outsourcing can affect an existing business model in many ways: by reducing cost or adding competency, by improving or extending the model, or by radically transforming it. For example, in the logistics industry, the need for internal cost transparency and the pressure on profit margins have combined to provide a solid, organic foundation for outsourcing.

In a global economy, companies that grow through mergers and acquisitions also can use outsourcing to align disparate back-office processes and systems into one global or regional solution. This not only reduces costs, but also provides greater flexibility and market access, and refocuses in-house resources on core business capabilities.

High-performance businesses revisit and adapt their operating models as required to sustain competitive advantages over time. Outsourcing can allow companies to build new business capabilities rapidly, expand into new geographic markets and change internal systems and processes to support new business models. It reduces the risk associated with implementing transformational change. Through outsourcing, organizations can reduce their costs and maximize efficiencies by using innovative contracting approaches that can help make outsourcing a lower-risk solution with compelling and real business benefits for those companies seeking high performance.

Among other things, Accenture also helps its clients to "identify and enter new markets." Does this imply that Accenture is closely tied to the strategic aspects of its client companies? In other words, do your clients also outsource their strategic expansion plans to Accenture?

As a global management consulting, technology services and outsourcing company, Accenture helps clients become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills, and technologies to help clients improve their performance.

Specifically, we help our clients:

• Identify and enter new markets.
• Increase revenues in existing markets.
• Improve operational performance.
• Deliver their products and services more effectively and efficiently.

Our business is structured around five operating groups, which together comprise 18 industry groups serving clients in every major industry. Our industry focus gives us an understanding of industry evolution, business issues and applicable technologies, enabling us to deliver innovative solutions tailored to each client or, as appropriate, more-standardized capabilities that we offer to multiple clients.

Accenture spends around $250 million every year on research and development. Could you highlight what areas are targeted?

Accenture Technology Labs, the dedicated technology research and development (R&D) organization within Accenture, has been turning technology innovation into business results for almost 20 years. The Labs are located in Chicago, Illinois; Palo Alto, California; and Sophia Antipolis, France.

The Labs focus on creating original research and authoritative insights on strategic business issues and technology advances that are shaping the future. We have a dedicated technology research and development team that enables Accenture and our clients to stay at the forefront of technology by providing innovative, patent-protected technology solutions and prototypes. We don't seek to invent technologies. Instead, we focus on applying technologies to real client challenges and develop prototypes to demonstrate a technology's potential.
Listed below are some of the latest innovations and prototypes developed at Accenture Technology Labs, which can help companies and agencies achieve high performance in a variety of industries.

1. Airline - During both turbulent and smooth times, successful airline companies continuously invest in safety, security and customer service enhancements. Accenture Technology Labs devises first class solutions that encompass every facet of the airline industry.

2. Automotive - Accenture Technology Labs is developing prototypes, which enable two-way communications with vehicles, enhance customer service, accelerate product research and drive overall efficiencies.

3. Consumer Goods & Services - Accenture Technology Labs is developing prototypes to help consumer products companies gain competitive advantage by staying tuned into customers' buying patterns and feedback, and by improving supply chain functions.

4. Communications & High Tech - Whether you are looking to launch a new technology product within an established client base or seeking an entry point in a competitive market, the Accenture Market Adoption Accelerator can help.

5. Electronics & High Tech - Efficiency is key in any industry, but for electronics & high tech enterprises especially competition is fierce, innovation is king and product lifecycles are short. So short, in fact, those manufacturers often stake their profit margins on early adopters who buy the newest gadgets at a premium price. Mobile Decision Support can help companies address these challenges.

6. Energy - For any commodity trader, being on top of the game means pulling current data from a variety of sources, analyzing the data and making a decision quickly before circumstances change again. With Live Information Models, a prototype from Accenture Technology Labs, finding and analyzing "live" data becomes a quick and seamless process.

7. Financial Services - Introducing clients to digital pen and paper technology can help financial service providers realize millions of dollars in savings by streamlining their processes and might even enable a competitive advantage.

8. Freight & Logistics - Companies that go the distance in the freight and logistics industries are those who use innovative means to utilize assets to their fullest, achieve operational efficiencies, provide enhanced customer service and safety, and reduce costs.

9. Government - Imagine how many hours could be saved in government offices across the world if people didn't need to manually re-enter the data collected on customs declarations, traffic tickets, case reports and other forms. The Labs think the digital pen and paper technology could help.

10. Government - From improved airport security to better weather forecasting, Sensor Telemetry offers huge opportunities to government.

11. Health & Life Sciences - Like most industries, health services needs to adapt to ongoing change. The labs look at how the latest technology innovations in-patient monitoring could be designed to help aid transformation, improve human performance and provide better healthcare.

12. Industrial Equipment - Accenture Technology Labs is devising new ways to harness emerging technologies to innovate at affordable levels and help industrial equipment manufacturers come out on top.

13. Insurance - When a major European insurance provider wanted to gauge reaction to some negative news coverage about its services, it turned to the Internet. With the help of Sentiment Monitoring Services the company learned that, while people were not upset about the news story, they were in fact agitated about a separate event within the company.

14. Media & Entertainment - Sports fans are among the most loyal customers on the planet. Now, media and entertainment companies can gain a share of that loyalty and offer fans a whole new experience by being a part of a new unique, innovative entertainment opportunity.

15. Rail - While US and European railways must address vastly different issues, their tracks converge when it comes to trying to improve customer services, maximizing asset usage, and providing more reliable services.

16. Resources - While the resources sector has already been using sensors for some time now, a new generation of sensors has the potential to improve performance and transform the way the sector does business.

17. Retail - An Accenture study revealed that success is achieved through a combination of clear brand strategy, operational excellence and strong customer service. Retailers in the vanguard harness technology to catapult into high performance value creators.

As per info on your website, Governments accounts for 15% of your net revenues for the year ended 31st August 2004. Could you please highlight what this specific area concerns?

Our Government group is dedicated to helping the world's leading government and education organizations achieve high performance to meet the challenges of a rapidly changing public sector environment. We serve clients by seeing the world as it is, and bringing innovation to carry out their vision of how it could be.

For example, with Accenture's help, the City of New York has applied principles of customer relationship management to transform the way it delivers services to its citizens. Today, New York City residents can dial 311 anytime, day or night, to speak with a citizen service representative who can assist them with a wide range of service requests and information in 170 languages. The integrated system provides callers with more personalized service, faster problem resolution and easier access to knowledgeable help.

What are some of the other key trends that you see happening in the BPO space in the near future?

BPO is an industry that is growing in leaps and bounds. A prominent feature that is evolving fast is the fact that different parts of work are being outsourced to different locations either because of time zones or language. Work is being distributed to multiple locations to avoid putting the money / eggs in the same basket. Another interesting trend is the bundling of IT and BPO services - for example accounting on a SAP application: we not only manage the SAP implementation but also bundle it with our BPO services. Thus from an outsourcing point of view we are well positioned to manage the entire chain from requisition to payment and associated accounting process on a standard platform we have industrialized across our network -- which provides the best value to the client.

Some of the key advantages that Accenture brings to the table:

A Global Network: more than 40 integrated delivery centers in over 30 countries that provide a seamless set of offerings and capabilities to meet each client's unique priorities 24 hours a day, 365 days a year.

• Experience Working with Global Clients: Accenture serves 84 of the Fortune Global 100, two-thirds of the Fortune Global 500 and government agencies in 26 countries. Of our top 100 clients in fiscal 2004, 93 have been clients for at least five years and 73 have been clients for at least 10 years.
• The Accenture Delivery Suite: common methods, tools, architectures and processes, for consulting, technology and outsourcing types of work.
• A Multidisciplinary Workforce: a highly tuned technology and outsourcing workforce, both client-site based and delivery center-based which is sourced globally.
• Commitment to Employee Training: in fiscal 2004, we spent more than US$400 million on training globally. The latest available peer comparison study told us that Accenture employees spend 50 percent more time in training than the industry average.