To remain competitive and to win in the offshore BPO market, providers must maintain a strict focus on operating effectiveness, innovation and quality. They must understand customer requirements, be aware of current and emerging market conditions and provide both perceived and real value for each dollar of revenue collected. Leaders in this area should also specialize in seamless implementations, painless change-management and innovative solution management.
To most of us, offshore BPO has been viewed as a dynamic approach to reducing costs and leveraging knowledge based expertise while allowing internal management to focus more time and effort on core activities. Organizations that see a clear link between the resolution of major business or process issues and the decision to outsource have a significant advantage. Often the BPO vendor will have particular expertise, the ability to recruit and train large numbers of individuals with particular or unique skills, better technology or the geographic diversity required to resolve the particular business need. Before a company willingly moves an important segment of its important internal functions to a third party and particularly to an offshore BPO vendor, trust must be established. This trust is the basis for the strategic partnership that results in a healthy outsourcing relationship.
The basic reasons companies outsource are:
- Lower cost market for services
- Gain access to world class capabilities
- Free-up internal resources to focus on other duties and activities
- Accelerate gains in efficiency and operational effectiveness
- Improve company focus
- Address challenge of price compression (reduced fees at contract renewal)
As companies begin to recognize the quality and service gains provided by offshore vendors in particular, they also recognize the potential gaps in their own operations and other in-house resources. Companies also recognize that economies of scale allow offshore BPO’s to specialize in particular products and services and invest in domain expertise or technologies that differentiate them and provide some areas for competitive advantage. These advantages represent opportunities for outsourcing customers to share in the savings and technology gains.
Successful offshore BPO vendors have established a keen balance between fiscal responsibility and high quality service. The best excel at recruiting, training, managing attrition and maintaining a stable operating environment. A shortage of skilled personnel within certain verticals makes the off shoring proposition even more compelling – so a firm with solid recruiting capabilities has a decided market advantage. The right arrangement could in fact move the responsibility for specific activities and areas of specialized expertise from the company to the offshore vendor.
The major barriers to offshore BPO are focused around the areas of security risk, business controls and business knowledge management. Security risk has been addressed via very stringent local security practices including the use of fingerprint and biometric scanning in addition to the disabling of USB ports and print capabilities for non-management staff. Control issues can be significant with respect to responsiveness, privacy concerns, service level agreements and the metrics used to determine that critical tasks have been performed as required. Top tier BPO’s have addressed this with the deployment of account managers, reporting analysts and Six-Sigma based process management teams who translate business outputs into tactical plans for solution management. Many offshore BPO providers have also added internal controls functions to closely monitor and mitigate against new requirements and to manage the ever changing regulatory environment. Knowledge management has been more of a challenge since many off-shorable tasks are performed by individuals who have succeeded in wrapping many indistinct functions together – effectively providing an unbreakable link of the resource to the function. Smart BPO’s have established process mapping and other Six Sigma methodologies to isolate and measure the capability of processes irrespective of the number of hands touched in the “as is” version of the process. Quite often, the recommendations resulting from the analysis will improve the process whether the decision to offshore is made or not.
In short, companies looking to maximize their participation in an offshore BPO relationship should expect the following:
- higher service quality
- efficiency and productivity gains following a short ramp-up period
- innovation via reengineering and solution management
- significant cost reduction
- better specialized metrics, tools and scorecards
- rigor and predictability around service level performance and expectations
Service providers who can consistently deliver these results will have the Lion's share of the burgeoning offshore BPO market.
Ellory Conic
The author is Vice President, Six Sigma and Operations Analysis at Motif, Inc.,
a specialized BPO (Business Process Outsourcing) company providing rules based and decision intensive back office transaction processing services, customized email response services
and internet research, analytics & database generation to global clients.
(www.motifinc.com)
