Outsourcing: Ed Cross, Executive Director – Procurement & HRO at Xchanging (Part 4)

Sramana Mitra: It’s stuff like office supplies that you are outsourcing. It’s more of a cost consideration. Whereas, a more strategic procurement issue would be dealing with parts and technology, and that’s where it becomes more complicated.

Ed Cross: Let me be more direct. To outsource indirect stationery, for example, can be a fairly simple decision, but not to outsource direct materials. If you are an automotive manufacturer, to outsource the procurement activities associated with buying automotive parts that go into vehicles is a bigger decision.

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Outsourcing: Ed Cross, Executive Director – Procurement & HRO at Xchanging (Part 3)

Sramana Mitra: What do you think is driving that trend? Why is procurement outsourcing growing?

Ed Cross: A couple of things. One is that businesses need to save money. Though the global economy is starting to come out of recession, there was a level of retrenching that went on when economic conditions were difficult for businesses. Procurement is a relatively straightforward area to save money. For the CFO or the CEO, procurement outsourcing is starting to enter the mainstream and being seen as a viable approach to saving money, particularly if it’s outcome-based. We tend to charge our customers from the savings that we achieve. It’s a fairly straightforward decision for the CFO to engage somebody like ourselves.

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Outsourcing: Ed Cross, Executive Director – Procurement & HRO at Xchanging (Part 2)

Sramana Mitra: You said you have about 4,000 people in India. What’s the global distribution of the workforce?

Ed Cross: We have about 8,500 people around the world, of which about 4,000-4,500 are in India. About 2,000 are in the U.K., about 1,000 in Europe, several hundreds in North America, about 500 in Australia, and the rest are spread across 10-15 other territories which include Japan, Singapore, and Malaysia. We have smaller populations in each of those countries typically dedicated to the local customers that we have in those territories.

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Outsourcing: Ed Cross, Executive Director – Procurement & HRO at Xchanging (Part 1)

Having been awarded the Entrepreneur of the Year by The Economic Times back in 2010, Xchanging continues to provide leading solutions to a wide range of industries across the globe. Ed Cross, Xchanging’s Executive Director, takes us on a quick tour of the business outsourcing landscape discussing the trends, challenges, and opportunities facing the industry.

Sramana Mitra: So Ed, give us some background about yourself as well as Xchanging. What is your business? What do you do? What customer problems do you solve?

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Accenture’s Acquisitive Growth Continues

According to IBISWorld’s IT Consulting Market Research Report, the worldwide IT consulting market is estimated to have grown 2% annually from 2008 to 2013 to reach $337 billion. These projections are aggressive when compared with GIA’s report, which pegs the IT consulting market to be worth $255 billion by 2015. But while industry estimates vary, most consultants agree that after a few years of economic slowdown, the IT consulting market is gaining back lost ground.

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Trend Spotting: Indian Outsourcers Coming To Rescue American Youth

I recently had a very interesting conversation with Wipro’s Roop Singh that made me stop and observe the subtle irony of what’s happening in the Indian outsourcing industry.

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Accenture’s On-site Expansion

According to a recent report by technology research firm Information Services Group, the annual contract value of global outsourcing contracts fell 3% over the year last year to $21.2 billion. During the final quarter of 2012, commercial outsourcing contracts with annual contract values of more than $5 million fell 27% over the year to $4.8 billion. By scope of work, annual contract values of business process outsourcing (BPO) contracts grew 14% over the year to $7.9 billion. The increase was dampened by an 11% reduction in the contract values of IT outsourcing projects to $13.3 billion.

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Indian IT Outsourcers Continue to Grow, Way Past $100 Billion

According to the National Association of Software and Services Companies (NASSCOM), the Indian IT industry is expected to grow 11%-14% over the year during the current year after surpassing the $100 billion mark last year. Recent results announcement by leading IT players in India saw more mixed results. Players are looking at global expansion of operations and talent pool while focusing on product growth to capture the high-growth market.

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