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Can pure play BPOs or ITOs stand alone in the long run?

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by Dinesh Goel May 24, 2010

It is a billion dollar question, at least, that is frequently debated in the strategic planning workshops of providers and the industry. In this post I will offer my view, for what it’s worth, and would love to hear your differing arguments.

My short answer is YES, pure play BPOs or ITOs can stand alone. A few reasons that underpin my answer include:

1.    BPO and IT services industries are both large segments with opportunities in their own right based on the global spend numbers.

2.    While related to a degree, they are quite different industries with their own nuances, requirements, and success factors.

3.    The overlaps between the two industries are minimal, though an effective bundling or combination of services can provide innovation or a transformation advantage; a benefit still elusive in its realization.

4.    While several analysts predicted the growth of large bundled transactions in the industry, the statistics bode well for the “best of breed” trend.

The crux of the matter is not in the ability of service providers to offer both ITO and BPO services as a full service “one stop shop”, but in being the best at what they offer. Hence the question is not so much about whether pure play BPO or ITO providers can stand alone, but whether they want to stand alone and be the best in the segment they elect to offer as their core services. That said, the ability to holistically offer both IT and BPO services to a customer does fundamentally assume the promise of a higher degree of efficiency, enablement, productivity, and so on. The truth of the matter is that customers aren’t willing to put all their eggs in one basket and providers are currently unable to bring to bear their full capabilities for results.

About the author

Dinesh is a highly experienced and well-respected advisor in the outsourcing industry with more than 23 years of experience in management consulting and outsourcing. He works with enterprises to craft sourcing strategies, structure and negotiate complex sourcing transactions and design and implement sourcing governance organizations. Prior to joining ISG, Dinesh worked with Infosys and Accenture, where he led large transition programs and consulted on IT strategy and implementations, business process-reengineering and operational improvement programs. He is a published thought leader and a regular speaker at industry conferences. Dinesh manages the ISG India Business.