Outsourcing: Evalueserve Interview (Part 2)

By guest author Tony Scott

Knowledge Process Outsourcing: Labor Arbitrage or Value-Added Knowledge?

Tony: So you are defining the market space as anything that’s a knowledge-based process?

Alok: Yes, whatever is a knowledge process where you need domain expertise. Legal, consulting, and accounting and CFO-type solutions all require a lot of domain expertise. Investment banking data analytics is another area. And doing data analytics for health care is different from doing data analytics for telecom and technology guys – each requires specific domain expertise. So that’s what we do; we provide these knowledge-based processes that are built on top of the domain expertise we create over time.

Tony: A lot of what you’re doing is providing specific knowledge, but at the same time you are basically providing labor rate arbitrage, right?

Alok: Right.

Tony: So what part of your business driven by labor rate arbitrage piece versus the fact that you are the most knowledgeable experts on something?

Alok: I think it started as labor rate arbitrage, no doubt about it. As time has gone by, people have realized that they can use our services in ways that increase their revenues. For example, if an investment analyst is working for Citigroup and we can free up 50% of the analyst’s time by doing all the front-end work such as creating models, doing investment breakdowns, and even writing portions of a report, then that analyst has 50% more time free to sell to his or her clients. It allows the analyst to focus on higher value activities and therefore become more productive.

Tony: Which means more revenues per analyst.

Alok: So it is no longer just a cost play, but it becomes a revenue-enhancing play. Not surprisingly, a lot of our clients are beginning to take advantage of this. They keep the same number of people in the United States or the United Kingdom as equity research people. They are not firing people: They have the same number of people directly on their staffs, but they are able to increase the number of companies they cover.

Tony: So in this case one analyst can handle more companies and more clients.

Alok: That’s right. I think this is one of the most interesting differences in what we do compared to a typical call center or a BPO company that is playing purely on labor cost arbitrage.

Tony: Do you think that’s actually driving your clients to outsource to you – the ability to have a specialized process and specialized knowledge from you, which allows them to use their own human capital more efficiently?

Alok: Precisely.

This segment is part 2 in the series : Outsourcing: Evalueserve Interview
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