Infosys shared with us that one of their larger accounts in the industrial area recently reached "a milestone of 250 sourcing and procurement FTEs globally" on the account. This is a relationship Spend Matters has been familiar with for some time and we're aware of how the "show-me" nature of many larger, often conservative procurement organizations can ultimately lead to these types of bigger, historically more prototypical, and often platform independent BPO engagements -- provided the early years of the relationship go smoothly.
Yet other companies are working with Infosys on a more targeted, sometimes highly specialized basis. For example, one global manufacturing company has engaged in a master data management program, inclusive of purchasing and supplier data. Spend Matters is aware of another BPO, an Infosys competitor, that is working the other side of the master data management coin, focusing on ensuring that data incorporated into an MDM environment is encompassing and accurate in the first place. In this other relationship, the BPO is essentially doing the heavy lifting for a supplier management program (inclusive of technology, but not technology the BPO owns or had any role in selecting) for on-boarding and maintaining registration, risk and performance details on a large subset of the company's suppliers.
It's our view that we will increasingly see BPOs begin to tackle both master data quality and maintenance for both spend management and supplier management. I asked Rajiv Gupta, who runs Infosys' for Sourcing and Procurement (S&P in their terminology) outsourcing practice for Americas about his view on this budding area and here's what he had to say: "Irrespective of size (big or small) we see companies struggling with issues of spend data -- which, when managed well (or not well enough) can make or break the promised ROI in any source to pay transformation program. Often the office of the CPO is successful in influencing increased levels of corporate spend visibility with the business by being able to measure, report and analyze spend data accurately. This requires a synchronous solution involving domain/category expertise and a tool set to aggregate, mine and benchmark master data ."
As spend and supplier management technologies and services continue to play a larger role in procurement BPO engagements where services and outcomes can't be separated from platforms, it's likely the market will reward both specialization and investment. Given this, I asked Rajiv where he thought the best returns for for customers would be in the next 36 months and where Infosys was gearing their technology and platforms investments, and here's what he shared:
"You're right, Jason. We see two segments of companies -- one under-invested in procurement best of breed technology -- so the business case is pretty obvious for a platform BPO solution. The other segment has invested in technology but struggles to increase adoption due to lack of specialized skill sets. This second set of companies often rely too much on IT and lack specific types of process expertise. Both segments are now looking for solutions from providers bringing a best-of-breed technology, closely coupled with process and domain expertise and in an engagement where the focus is on business outcomes. It is safe to assume that we see an opportunity to serve both segments of the market with a specialized set of procurement platform BPO solutions."
Over the next decade, Spend Matters believes we'll increasingly see procurement organizations take advantage of procurement BPO offerings without ever using the terms "outcomes" and "outsourcing" to describe what they're buying. It's our belief that the rise of MDM, supplier management and platform-centric BPO deals -- not to mention the continued need to help organizations get more from P2P implementations -- should provide enough underlying demand to materially accelerate the growth of providers . Perhaps even more important, BPOs like Infosys that continue to make substantial technology and platform investments and focus on the even more important BPO intangibles of developing relationships, proving and substantiating results and expanding relationships in a manner that even conservative procurement organizations can get comfortable with over time might help put a better face on a market that is still as well known for its failures as its success stories.