Customers are now keen to understand the niche value propositions, the considerations that specialist organisations bring to certain parts of their business and the possibilities that such niche organisations with their focus could deliver significant value creation opportunities. This perhaps may not be true for some standard horizontal functions such as F&A outsourcing where the larger organisations often have an edge compared to the niche players (in terms of branding, transition risk, predictability and cost). But it is becoming increasingly relevant for areas like, say, loss adjustment or catastrophe modelling services in insurance or in customer analytics in retail. In these cases, the customers are keen to work more closely in not just defining outsourcing norms for cost reduction but actually using vendor organisations to render transformational services for innovative revenue augmentation opportunities.
Thus there is a clear delineation between domain-driven services and horizontal services for firms defining outsourcing and offshoring norms and partners.
However, it doesn't mean that the larger service providers cannot or are not seen as being able to provide similar levels of expertise as the niche providers. It is just that there is a greater need for them to be able to focus their offerings and create the necessary brand equity and perhaps, most importantly, be able to demonstrate that they can be as agile and responsive as the smaller niche providers.
Let's discuss the other two critical aspects in the next post -
Revenue augmentation versus processing cost
Discrete services versus integrated services
Raja Venkateswar holds advanced management program diplomas from Booth School of Business, Chicago & Instituto de Empresa (IE Business School), Madrid and an engineering degree from Institute of Technology, BHU, India (Engineering). He has spent the bulk of his 19-year career working in, consulting for and developing IT/BPO/KPO solutions for the financial services industry. He is now based in Australia and works with Xchanging (www.xchanging.com) a global business processor of choice to several blue-chip firms globally. He can be reached on email@example.com or firstname.lastname@example.org
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