IBM BPO shifts focus to verticals

Written by Diksha Dutta | Diksha Dutta | Kirtika Suneja | New Delhi | Updated: Aug 30 2011, 08:54am hrs
As the business process outsourcing (BPO) industry matures and aims to win clients from different industry sectors, IBM Global Process Services, the BPO arm of global IT giant IBM is now moving its focus from horizontals to three specific verticals. Verticalisation seems to be the mantra for the BPO for its go-to-market strategy.

We started with horizontals, but now we are becoming verticalised in our go-to-market strategy. The three verticals that we will focus on in India and globally are financial services, telecom and healthcare, said John Lutz, global head, IBM Global Process Services. Lutz explained that IBM as a company has a dominant approach to customers via industries, and the same approach will be adopted to its BPO operations.

The company is divided into three parts global technology services, global business processes and global process services or BPO- BPO being the newest to the company, post its acquisition of Daksh in 2004. The horizontal line in our company is slanting downwards and the vertical line is going upwards. Even our acquisitions in the recent past have been to add our industry (vertical) expertise, he added. For instance, acquisition of analytics firm Red Pill in 2009 helped the BPO in identifying different industries and customised analytics to clients from different sectors, especially telecommunication and financial services. In every BPO offering to our customers, analytics will be an added layer by us, noted Lutz.

Apart from these specific verticals, the horizontals that the company is present in, range from finance and accounting, human resource outsourcing or customer services.

Eric Simonson, managing principal (research) at research firm Everest Group concluded, Verticals have always existed in BPOs. But now the vendors are realising that they need to be more specific in their offerings to different sectors like retail , telecom , healthcare etc. They have separate teams to cater to customers in different industries. BPOs are acquiring small consulting firms which help them in adding value to verticalisation.

In the Indian market, IBM has clients like PepsiCo and ICICI. Even other BPOs like WNS Global Services have moved their focus to verticals from horizontals, as a result of customer demand in the outsourcing market.

Keshav Murugesh, chief executive of the company says, Eighteen months back, one of the key decisions we took as a team was to go to the market vertically aligned. We chose to go to the market with different specified sector verticals as opposed to just horizontals like finance and accounting (F&A), customer service or research and analytics which were seen as verticals earlier.