The current global economic downturn is forcing retailers to scrutinise IT budgets more closely than ever. The resulting belt-tightening is benefiting IT service providers such as TCS that can offer cost savings through business process outsourcing (BPO) and ROI through business intelligence (BI) solutions. However, in the near term, TCS needs to build its services around price optimisation solutions. In the long term, TCS must brace itself for slowing demand from retailers that are putting IT projects in other lines on hold.
TCSs retail revenues continue to grow despite the slowdown in the global economy in general and the retail industry in particular. The bulk of this near-term growth comes from TCSs BPO offering and services around analytic solutions.
ERP adoption is creating BPO opportunities for TCS
The retail BPO market is growing thanks to the selective outsourcing of finance & accounting (F&A) and HR functions. This in turn can be attributed to the implementation by retailers of enterprise resource planning (ERP) solutions. The rise of BPO in retail is linked to the adoption of ERP within the industry. Historically, retailers lacked confidence in BPO vendors, believing that outsourcers couldnt be trusted to run mission-critical processes or to manage data from complex business processes in the timeframes required. But the growing use by retailers of ERP solutions from suppliers such as SAP and Oracle is changing that. The use of ERP solutions increases confidence that mission-critical processes are being run as retailers require. ERP solutions also simplify a retailers complex processes, making it possible for BPO vendors to select suitable processes for outsourcing. Inefficient, labour-intensive and routine F&A and HR functions are now more easily outsourced, and TCS has been among the leaders in jumping into this space. The F&A functions where TCS has seen the greatest opportunities are accounts payables and receivables, ledgers, financial reporting, purchase order payment and invoice matching; and in HR: payroll, policy administration, training and recruitment functions where TCS has been able to draw on its experience and assets in other verticals.
TCS needs to forge a stronger partnership with Oracle
Analytics is the other line where TCS is seeing growth in retail. Analytics for SKU-level data analysis such as assortment by store and item management in the supply chain and for consumer-level data such as buying patterns, loyalty and demographics offer rapid ROI. So even when IT budgets are feeling the pinch, as they are in the current economic climate, the business case for services around analytics is not a difficult one for CIOs to make.
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