Cognizant Technologies: BPO to BPaaS | In Practise

Cognizant Technologies: BPO to BPaaS

Former VP, North America at Cognizant Technology Solutions

Learning outcomes

  • How the BPO service industry was born from ERP implementation
  • Challenges and opportunities for BPO providers in a cloud world
  • How the larger Indian BPO companies disrupted Western players
  • Why reputation matters more than price
  • How Accenture and Cognizant are the best positioned
  • Economics of BPaaS vs traditional BPO
  • Outlook on visa and regulatory risks for BPO providers

Executive profile

Eric Storey

Former VP, North America at Cognizant Technology Solutions

Eric has over 23 years of experience in the BPO industry and is the Former VP of North America at Cognizant where he ran 12 delivery centres globally to generate over $700m revenue for the group. In 1998, he started his career at Accenture implementing large ERP systems for Fortune 100 companies. He had a short spell at Deloitte and Booz Allen Hamilton where he was consulting clients choosing large BPO providers before being hired to run Affiliated Computer Services, the $6bn BPO acquisition by Xerox, which is now called Conduent. Eric was also previously the Former Chief Revenue Officer at Solix, a specialised healthcare BPO provider in the US. Read more

Could you introduce your background and role within the BPO industry?

I started in BPO in 1998 with Accenture, when they were still Andersen Consulting. It was not called BPO back then. At the time, big system integrators such as Deloitte, Ernst and Young, KPMG and Accenture were all doing big ERP implementations and wanted to replace that revenue stream. They got into application development and maintenance of those ERPs and other tangential systems they put in. They thought, while we are doing this, why not take over the running of that system and processes on it? I was at Accenture for six years, in financial services primarily – then chemical energy and natural resources – doing BPO for them.

I moved to Deloitte and did a short stint at Booz Allen Hamilton where I was strategy and ops consulting on the sourcing of BPO and some ITO. I was on top of what was going on in the industry. After Deloitte, I joined Xerox which had acquired Affiliated Computer Services, ACS, a large BPO provider with $6 billion in business in 2010. Today they are called Conduent, which is strictly a BPO provider. I was at Xerox for six years, leading BPO in the financial services industry, healthcare and some HR. Following that, I was recruited by Cognizant to run all of the delivery operations for BPO in North America at first.

My furthest Northern delivery center was Toronto and I had six more inside the US. They expanded my portfolio to all of the Americas, where I ran all delivery operations from Toronto to Buenos Aires, totaling 12 delivery centers including Brazil, Costa Rica, Guatemala, El Salvador and North America. I have seen the gamut of everything from selling BPO to how to drive better deals. At Deloitte and Booz Allen, we were at the table bringing the two parties together for the best deals that would benefit both sides.

Can we take a step back and look at the evolution, over the years, of services within BPO, from the original ERP system implementations, and how services beyond that were spun out of maintaining or developing applications?

We had big ERP implementations and, at that time, there were still companies doing ITO, IT outsourcing. The IT space needs many different skills by any company, from different applications and development tool sets to running your network, mainframe and mid-range servers and today the cloud, where many services are required. Any company which runs IT and applications that run business processes, needs a diverse mix of skill sets and few of those individuals with a single skill set work 20 hours a week, let alone 40.

This is how the genesis of BPO occurred. At the time there were separate supply chain and HR systems, but now they are wrapped into single ERPs. As the systems integrator put the ERP in, after receiving $100 million contracts for implementation, how would they replace that revenue stream once it was fully implemented? The answer was to take on the application development and maintenance for additional tool sets. That alone would not reach $100 million. At the time, most of these were implemented on the client's mainframe or in their mid-range server set somewhere. They took on the processes and trained people to do insurance claims and general ledger reconciliation, all across the board.

That is where it was born in the early 2000s. Today, it has moved from mainframe and mid-range servers to everything being in the cloud. I no longer need to own any infrastructure and, as a company buying services, I do not need to own applications. Instead of spending millions of dollars implementing something on my servers, I can now buy anything I need as a service. We say, buy the drink or buy it by the drink. For a transaction, I pay for the person to do it, the application to run it, and all the computing resources and have a single charge; a few pennies to a few dollars, depending what the transaction is. There is evolution across the board. For example, in healthcare, the full set of services for both the insurance payer and provider, in financial services and insurance, in particular. An insurance policy requires high maintenance with beneficiary changes, paying and reviewing claims and managing agent applications.

How has that fundamentally changed the relationship between the BPO provider and client in the cloud world of today?

I think it is huge; the companies that are buying these services rely heavily on providers who are delivering their infrastructure, digital services and running their BPO. Most consumer companies want to reduce the number of vendors in their space so they can manage it better, with tighter security over a few vendors, rather than everybody having access to their systems.

It has changed the relationship for those providers who deliver quality end-to-end services, from running network infrastructure, to managing applications and delivering BPO services, including both people and agents. The digital aspects of delivering those services are becoming more prevalent. Reducing the number of people doing basic tasks and replacing them with chat bots, automated robots, artificial intelligence and machine learning, thereby saving people for more complicated higher-level tasks and involved processes.

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Cognizant Technologies: BPO to BPaaS

September 8, 2020

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