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Shared Services & Outsourcing Neork (sson) Q&a: Tom Weakland SSON: Briefly Cordarrelle Patterson Jersey , can you outline the future of sourcing as you see it Where’s it going over the next couple of years Tom Weakland: Briefly, wow: that’ll be tough! Over the next few years we’ll see more and more smaller deals; we’re going to see a lot more renegotiations; we’re going to see prices tied to various economic indicators, whether it’s currencies, whether it’s inflation rates; we’ll see this notion of “green outsourcing” with people starting to talk of their outsourcers having a carbon-neutral footprint, or needing to have one; and I think we’re going to see a lot more consolidation, and a lot more not being able to distingui beeen the big players at all &nda; they’re all going to look extly the sa Adrian Peterson Jersey , they’ll have the sa geographic footprint for offering services, and they’ll recruit from the sa ples. I think you’ll see a lot of those things in the next couple of years. SSON: Is that what you’ve described previously as the ergence of “global firms” Because you’ve predicted increased M&A tivities over the next few years; how far can that process be taken Presumably we’re not likely to see a monopoly, or a duopoly TW: No, I don’t think it’ll go so far as a duopoly &nda; but I think when it es to the big firms there’ll be sowhere beeen five and 10 giant firms who’ll do everything from system integration to pure outsourcing. And then I think there’ll be a whole bunch of second and third tier firms who bee more specialized and offer more niche services. It will be just like it was in the US for a long ti. When it ca to system integration there were 8 big firms that just about everyone turned to. I think we will see sothing similar with outsourcing. There’ll be 3 or 4 Indian firms, and 2 or 3 US firms, and maybe a Chinese firm Jerick McKinnon Jersey , and maybe a European firm &nda; there’s going to be a small number. SSON: At a conference a couple of weeks ago you said “India remains unsurpassed &nda; for now” yet you’ve just said you expect there to be just as many US firms involved in future. Can you explain a bit about what you think India’s role is in this ongoing developnt TW: OK, let clarify. Even the big US firms that are going to be peting with the Wipros and the TCSs, they’re going to have huge Indian footprints. So the majority of their outsourcing will still be done in India for the next few years. India has kind of driven the outsourcing boom, and I think they’re still driving a lot of what I would call the innovation in establiing new locations; a lot of big firms are going into China now to take advantage of the wages and the economy and the education levels, so I think they’re seeing that they can’t stay focused on India forever. SSON: You’ve repeatedly highlighted what you see as a lk of innovation in sourcing. Can you explain a bit about the institutional obstles in the way of innovation &nda; and is there any way we can overe them TW: Companies are being innovative in the way they deliver their core outsourcing services; they’re not necessarily being innovative in the business transformation domain. There’re a couple of reasons I think why outsourcing has not led to business innovation. First, the buyers &nda; the people who tually do the outsourcing &nda; can never figure out how to manage it effectively enough to be able to get past the moditization mindset where they can start thinking about innovation in outsourcing. That’s part one. Part o is the outsourcing firms themselves are not necessarily incented to think about innovation Harrison Smith Jersey , to think about doing less with more, to think about business transformation because they make their money on scale. And innovation typically runs counter to scale. Innovation helps you to reduce that scale. So they’re not really incented to be innovative. SSON: Do you think that’s an institutional part of the way we do business now and do you think future developnts will force things to change there TW: I think sourcing is not going to drive business innovation. I think the poor economy that it feels like we’re in and heading into is going to drive a lot of innovation. Sourcing will be a part of that but sourcing won’t drive it. SSON: You’ve spoken about green outsourcing and how that’s going to be a driver. Tell us why you think this is going to be important. TW: It’s not that important today, but I think it’s going to bee more and more visible. There’s a trend at least here in the US about green organization: conserving paper, conserving electricity, thinking about how far we mute and travel and just being more green, being more environntal. And as organizations bee more green Anthony Barr Jersey , and start thinking about being carbon-neutral, they’re going to pu that thinking into their key relationips and partnerips and start asking the sa of them; they already are for example building things into contrts about “How can I be more carbon-neutral How do I minimize the amount of paper that I use How do I ensure that I’m recycling” Things like that. SSON: And you say this process is already happening in terms of the structure of contrts now TW: It’s just starting, yes. SSON: OK, finally; you produced a paper recently on healthcare and the US election re, so let’s talk politics for a second. What do you think has been the impt on sourcing of the election campaigns so far, if any Teddy Bridgewater Jersey , and what will be the consequences of a victory by any of the remaining candidates TW: That’s a really good question, and to answer it I have to go bk four years to the Bu-Kerry election. Senator Kerry ca out with a very strong, negative stance on outsourcing &nda; offoring<
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