As a banker for many years, I dealt with ultimate commodity, money. We were trying to grow the investment banking arm of the then largest bank in the world, in India. Building a business meant winning more transactions, having a more robust pipeline and playing towards the top of the league tables to create scale and the ability to deliver more robust distribution and execution. We realized early that the way to win business was not to give fancy nomenclatures to our tools of the trade (earnings models, DCF, options valuations, capital asset allocation - and yes, we built these into the black boxes they are today), but to use them effectively to understand not just the customer but primarily, what our commodity could do for the customer’s financial statements. We were bankers, so we knew our financial models, but not of the pharmaceutical, retail, hospitality, food or manufacturing industry. We did, however, have friends and family in these other professions and where we didn’t; we used experts to understand their business, not from the perspective of replicating it, but from the perspective of understanding its value drivers and adjusting our cash flow and M&A models to accurately dimension the benefits of working with us. And we had friends and family in the technology and the BPO industry (largely call centers then) who taught us willingly, knowing we would take our learning and adapt it to their business for mutual benefit.
And in a time of great learning, hard work and tremendous fun, we did use our learning, adapt it to their business, gave sound advice and helped companies grow through acquisition, capital market access, private placements and risk diversification. The models were not theoretical, but created value for us as a bank and for our customers as intelligent users. I had fun, and would like to believe I was a good technology banker.
Then I changed industry and for some years, I’ve dealt with the penultimate commodity, talent. We took generic educated resources, provided them with good infrastructure and good transition and operations skills and set about creating scale in search of the virtuous cycle of scale in BPO. We gave our nomenclatures of ISO, 6-sigma, Lean, FMEA, CMM to the tools of the trade and we leverage our friends and family in other industries to generate business. Somewhere along the way, though, I believe this industry focused so much on hiring, infrastructure and generic “scale” that we’ve ignored the customization or the “skill” side of the equation. We continue to represent our business to customers in our generic nomenclature in all discussions. Take my two favorite examples – I’ve never known a bank to break its functions into voice, non-voice and KPO, but we do that for them constantly. And therefore out of the standard 178 page RFP response, 8 pages are dedicated to the customer and her industry, and 170 to generic quality, people, BCP and vague promises of 6-sigma.
It’s not that we don’t have friends and family in the banking (or other industry) sectors. It’s not that people have been not been willing to teach. I wonder then, why the development of industry specific models is not as common in the BPO business as it was in the banking world? The models work. We know what value our commodity adds in terms of the banks’ value drivers (visit us here for details). Could it be that everyone is having fun with the way things are? There has been celebration of the BPO industry’s initial success and growth. Sure, as BPO deals get more complex and harder to come by the BPO industries smiles at its early success are turning a little strained. After all that’s the price of being in the commodity business.
And fun for the financial institutions? By asking providers to bid for business through captive purchases, or feet to fire on unknown productivity gains or equating a mortgage processor to a fund accountant, they are using their commodity trading skills to trade the penultimate commodity and laugh their way to the …. um.. bank?
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