(By Anthony Miller – Wednesday, 27th March 2009 9:45 pm). I’m guest of Capgemini at their sumptuous training Chateau (no, honestly) a couple of hours outside of Paris (actually an hour but the traffic today was le pits). The opening keynote was from Joe Heinrich, VP at Coca Cola Enterprises, the business which bottles the fizzy stuff across America and Europe.Heinrich gave a fascinating expose into the vendor selection process that CCE went through a year or so ago when it decided to outsource its finance operations, which was costing them some $200m a year to run. The shortlist came down to three players: their incumbent IT services supplier, IBM – initially the hot favourite; India-based Genpact; and Capgemini. IBM was subsequently eliminated so it was down to Genpact and Capgemini.
I won’t go into the detail here but as you may have already assumed, Capgemini won the deal, despite being 4% dearer than Genpact over the life of the 7-year, €100m contract. The key point that Heinrich made very clear was that the bulk of the cost savings (which should reach $25m p.a.) came simply from labour arbitrage. This was based on offshoring chunks of the finance operations to Chennai, Krakow and Guatemala. Technology played only a small role in the overall decision – indeed CCE appeared to shy away from a major ‘transformational’ approach which it saw as carrying too much risk.
It’s rare to get such an honest insight into IT/BPO decision-making and I think this proved a useful reality check on what the customer really wants - cost savings at least risk - vs some vendors' marketing hype around ‘transformational outsourcing’.
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