Big guns, Accenture and IBM to face stiff competition from service provider alliances

By Our Corporate Bureau | 03 Sep 2004

1
New York: New research from independent market analyst Datamonitor (DTM.L), finds competition is heating up as outsourcers try to take a bigger slice of the $600 billion global IT services market. The report highlights how the big guns such as Accenture and IBM Global Services face stiff competition from alliances of service providers.

Outsource providers face up to changes in their business
Some call centre companies have started to move away from being commodity 'bums on seats' businesses by offering a more complex mix of services in an attempt to take a slice of the overall IT services market globally, valued by Datamonitor's ComputerWire at $600 billion.

Margins amongst service providers are being squeezed hard. This is a result in part of the loss of call centres to nearshore countries like Eastern Europe and North Africa, and cheap labour destinations like India. Add to this the fact that firms are increasingly implementing web and phone-based self-service solutions. This is changing the types of calls reaching call centre agents and has the potential to lower call volumes.

Transformational outsourcing is a new weapon
Enterprises are increasingly outsourcing to providers who can transform the actual processes as well as run them, as part of an overall outsourcing deal, rather than merely outsourcing part of an existing business function.

Accenture and IBM Global Services are typical of a new breed of full service providers (FSPs) that offer a one-stop shop for everything from strategy consultancy, through systems integration to call centre and business process outsourcing solutions.

"One for all, and all for one"
"When BT and HP announced in May 2004 that they would develop shared go-to-market services, including a call centre proposition, they started a trend," says Ryan Powell, call centre technology analyst with Datamonitor and author of the study.

In recent weeks a number of further alliances / partnerships have been announced between various players in the IT services and outsourcing space, including: CSC with AON and EDS with Siebel. These alliances aim to bring together various elements of the IT services and outsourcing puzzle to address customers' increasingly complex demands.

However, a number of elements of the services that outsource providers, both front office (call centre) and back-office (business process outsourcing) offer, do not differ dramatically from one firm to the next. "It will be crucial therefore for outsource providers to ensure they differentiate their services in innovative ways in order to win new business," concludes Powell.

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