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Outsourcing Management arrangement. Local and federal government is the leading industry in AO-BPO and IO-BPO. It is also among the leading industries (either second or third) in AO-IO-BPO, bundled BPO and IO-AO. Banking is the leading industry in AO-IO-BPO and bundled BPO. Healthcare and process manufacturing are among the three top industries in IO-AO. 4. The average contract length is 76 months, with the varying averages for the bundling arrangements as follows: AO-BPO: 99 months, AO-IO-BPO: 97 months, bundled BPO: 77 months, IO- AO: 74 months, and IO-BPO: 90 months. 5. Competitive bid type is a far more common bidding practice than any other approach (e.g. incumbent or sole sourced) Our work has thrown up a range of insights that are useful to clients considering whether to bundle or not to bundle. . The maturity of the organisation to manage innovation and suppliers has a big influence on its ability to move into bundled services. This was the case with a major oil company and a telecom multinational, both mature and with their in-house capability sorted, and both willing to bundle services as they felt necessary going forward. Secure in their own ability to manage and implement sourcing strategy, they had a high propensity to buy bundled services if they could find the right supplier and right risk/reward deal. Other players that were relatively smart clients—for example a global mail company and a European telecoms firm—rated the relationship dimension as very high as an attraction into bundled services, but also saw innovation with a supplier as dependent on their own (client) shaping of the context, contract and relationship. Both still went down the multiple (relatively few) suppliers route but could see the point of bundling, especially as they were confident of their own in-house capability to manage that. This needs to be contrasted with another client who seemed to move into bundling because the supplier was incumbent for consultancy services, with whom they had a good relationship, and felt they did not really have the capability in-house to manage multiple suppliers. Also another client organisation moved into bundling because of poor governance and learning capability in-house. . We found that clients do not know how to evaluate getting value from bundled services. As a result they tend to evaluate based on function or silo. This is quite an important, if worrisome, finding. We would suggest that this inhibits their ability to identify the value of the bundled service proposition and pushes them into uncoupling services and leaves them open to multiple vendor solutions. Clients need some way to identify in detail the synergies from bundled services, and how to value those synergies. In interviewing one European and one Indian-based major supplier, we found that they also struggled to demonstrate the financial advantages accruing from both technical synergies (production costs) and from common management arrangements (transaction costs) though they could point to how such financial advantages might arise. Clients would then ask for "actual examples". . The follow-on insight from the above is that as a result, on bundled services, an organisation will tend to take an even more FALL 2011 | www.hroglobal.com [21] Insight 2 Insight 3 Insight 1

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