Business process outsourcing with a difference


24 February 2004

I have seen the future of business process outsourcing (BPO) to India and other large, low-cost areas, and it is very different from what the current promoters would like you to believe. The future is not to get a consultancy to run your business for you, in your country or abroad, but to get a business like yours to run some of your operations from a lower cost base in a partnership model that also give you access to the foreign markets. The ICICI Prudential partnership in India is an example of how to do this.

ICICI Bank is India’s second largest bank with some 450 branches. Through their subsidiary ICICI OneSource they offer business process outsourcing, primarily to clients in the United States and United Kingdom where they have local on-shore presence.

There are several advantages to this approach. First, there is the well-known cost advantage of moving your operations to India. Second, for financial institutions there is the opportunity to partner with an organization who not only knows your business but is in your business. With this approach, there is a real opportunity to continuously develop and enhance your processes, and the quality of the work should be much higher than the traditional “dumb” outsourcing model where you only buy bodies.

But the real killer is the opportunity to use this partnership to enter the Indian market and target its 1 billion consumers. That is exactly what ICICI did with Prudential, a large international financial services group headquartered in the United Kingdom. Not only did Prudential outsource parts of its business operations to ICICI but they also established ICICI Prudential as a joint venture to market and sell Prudential’s products in India.

This is a compelling story and business case.

I have always been skeptical of offshore BPO through one of the large consultancies who dominate this market. Nothing wrong with consultancies, but they shouldn’t run your business. Their outsourcing model will give you cost savings, but to realize the full benefits you need to partner with a business in your business. This is by far the stronger business case and is surely the future of BPO.

Expect to see more of this type of deals in the future.