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V.Rishi Kumar

Morgan Chambers on how companies are going about growing.

Phil Morris

Morgan Chambers, an Independent sourcing and advisory services provider, guides corporations globally in their quest to tap into new markets, facilitating, the company says, sourcing decisions at the highest level.

The Chief Executive and Founder member of Morgan Chambers, Phil Morris, was in India recently to address the Nasscom Leadership Forum.

In an interaction with eWorld, he provides insights into how the European Union is expected to play a larger role and how `sub-layer companies' are making inroads by scaling up the value chain, pushing their bigger competitors to view things differently.

Excerpts from the chat:

The trends point towards increased merger and acquisition activity globally. How do you perceive this from an India and EU (European Union) point of view?

M&A is on the increase within the outsourcing industry players and amongst clients of IT and BPO solutions providers. For the outsourcing industry, this means the continuing rise of new players into the just sub-global layer behind the likes of IBM, EDS and CSC.

Many of these players are now extremely well positioned to take significant market share into the future.

The influence of economic globalisation is being driven hard by organic and inorganic growth by organisations from outside the North American and European areas; companies from these regions are working hard to catch up by acquiring in India, China and elsewhere.

For M&A in the client side, the implications for both clients and outsourcers is a fundamental need for flexibility.

Outsourcing can be both an unnecessary hurdle and a facilitator to smooth M&A transactions — industry will demand that it is increasingly a facilitator of whatever change corporate houses decide they need.

Some European players such as Cap Gemini are stepping up India investments through acquisition-led growth. Will this momentum continue?

The unfolding scene - A. Roy Chowdhury

The momentum for acquisition-led growth by European and US companies will absolutely continue for the foreseeable future whilst these organisations continue to compete with the Indian companies. The largest of the Indian players have built a significant lead and are now taking the services they offer to the next level of maturity, pushing the European players still further.

This questions the service delivery approach to more `global sourcing' and will continue to the point that it is not worth questioning the origin of service, just the quality and price.

Increasingly, larger deals are being worked out with Indian services providers. ABN Amro is one such example. Do you see this going up further?

The size of specific contracts and the volume of business generally will increase as the social and cultural barriers to contracting work overseas continue to break down.

The immediate future will see many more countries also making use of global sourcing, the greatest potential threat being that India starts to struggle with demand and starts to suffer quality issues, which will fuel wage inflation as the competition for talent increases.

Though Europe continues to grow with more cross border associations, it is still a smaller part of global outsourcing. Will this expand?

Absolutely. As competition grows within the European region, more and more work will be offshored or globally sourced to ensure cost- based improvements are exploited by all.

Will infrastructure outsourcing be the next big opportunity?

It is getting more complex and the accent is on integrated BPO. With organisations taking a `Process' view of services, this trend will be the next development in Offshore.

The discussion has already moved from labour cost to quality and innovation, with many clients surprised at the process improvements brought by offshoring.

This will accelerate and fundamentally change the image most have of the benefits of offshore sourcing

The level of offshore in the UK is beyond any other European country. However, it will increase everywhere.

Several European companies are looking at an India presence, particularly for manufacturing. How do you perceive this trend? And Indian companies seeking to expand footprint in EU?

Both trends are extremely positive but will add specific stresses and development requirements to these organisations. Plus this is not a new trend.

Much manufacturing has been done away from Europe for decades.

Indian companies have been looking at European acquisitions for some significant time as is the case with Wipro and TCS buying specific software capabilities in Europe.

The potential for growth in this area is phenomenal. It is no longer something that can be viewed as just interesting, nor can it be ignored or resisted by either corporates or governments.

Economic globalisation is here to stay and offshoring and global sourcing are fundamental elements behind its growth and increasing market maturity.

vrishi@thehindu.co.in

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