PublicationDate:August9,2002ResearchBriefBusinessProcessOutsourcing:WhatPwCCBringstoIBMAbstract:TheacquisitionofPwCConsultingwillboostIBM’sambitionsinBPO.ByRobertBrownandRebeccaSchollRecommendationsIIBMmustleveragethebrandequitythatPwChasbuiltintheBPOmarketwhileselectingthecontractsandcapabilitiesthatwillnotaffectitsbottomlineintheinterim.IOtherBPOprovidersshouldbeonthelookoutforcontractsandresourcesthatIBMwillleavebehindtogainprocessexpertiseanddeliverycapabilities.IPwC’sBPOclientsmustchecktheircontracttermsanddiscussatransitionstrategysothedeliveryofBPOservicesremainscost-competitiveandseamless.2BusinessProcessOutsourcing:WhatPwCCBringstoIBM©2002Gartner,Inc.August9,2002AddingProcessExpertisetoITUtilityBusinessprocessoutsourcing(BPO)wasnottheprimaryreasonforIBMGlobalServices'acquisitionofPricewaterhouseCoopers(PwC)Consulting,butitwillturnouttobeoneofthemostimportantaspectsthatthecombinedentitycanaddress,ifIBMandPwCConsultingaretobesuccessfulincombiningITutilityandbusinessprocessexpertiseintheirserviceofferings.BPOisthefastest-growingcomponentofanotherwiseslow-growthITservicesmarket.TheannualizedbacklogofrevenuefromBPOdealsplayswelltotheIToutsourcingbusinessthatIBMhassuccessfullybuiltduringthepastdecade.InlightofthepotentialrevenuestreamPwC'sBPOunitcouldoffer,itremainstobeseenhowmuchoftheBPO"dowry"willcometoIBM.Since1989,PwChadbuiltasolidreputationforitsBPOcapabilitieswithagoodvarietyofcustomersandprocesses.BecauseoftheseparationissuesinmanyformerBigFiveaccountancies,theorganizationalstructureofPwC'sBPOunitisanimportantconsideration.Asaparentcompanythatincludedtaxandauditaswellasconsultingservices,PwChadalineofserviceknownasBPO.Inmanyrespects,PwCwasamongtheearlyevangelistsforBPOwithglobalclients.WhenPwCConsultingplanneditsIPO,mostofPwC’sBPOlineofservicecamealong.Eightto10BPOcontracts—thenamesofwhichhavenotbeendisclosedpublicly—willtransitiontoIBM.Whileitisearlytoguesswhichclientcontractsmightbeincluded,GartnerDataquestbelievesthatsomearecurrentlyunprofitable.IBM'sforayintoBPOhasbeenopportunisticatbest,anditsearlyeffortstopromoteacross-industryBPOofferingin1996havenotyieldedmanyresults.Inthepastyear,IBMhasstatedastrongdesiretobecomeamajorplayerintheBPOspace,particularlyinEurope,butappearedtobelateinthegame.IBMandPwC'sBPOCoverage:KeyFactsandFiguresThefollowingarePwC'sBPOlineofservicecoreofferings:IFinanceandaccountingIProcurementIHumanresourcesIRealestatemanagementThefollowingarekeyfactsandfiguresregardingPwCBPOglobally:IThirtyclients,including14inEurope(forexample,BPAmoco,NortelNetworks,Safeway,ANZBank,GrupoAlgar)IAboutUS$600millioninBPOrevenueIAbout5,000BPOemployees(including1,800inEurope)ITwenty-nineservicedeliverycenters3©2002Gartner,Inc.August9,2002IBM'scapabilitiesinBPOincludedthefollowing:ICustomerrelationshipmanagementIProcurementIHumanresourcesThesecapabilitieswereformalizedunderBusinessProcessManagementuntil2000andthenreallocatedtoIBM'sverticalandsolutionpractices.GartnerDataquestPerspectiveBPAmocoisthe"anchortenant"andfeatherinthecapofPwC'sBPOclienteleandrepresentsPwC'sprimaryfinanceandaccountingplatform,whichisofstronginteresttoIBMbecauseofitslackofpresenceinthisprocessarea.ItisGartnerDataquest'sopinionthatpartsofPwC'sBPAmococontractsindifferentgeographiesshouldcometoIBMbecauseofthePwCConsultingacquisition.PwC'scenterofexcellenceinKrakow,Poland,isanexce...
