Recently a number of analyst reports have pointed to a shift within the BPO landscape. As our economy goes through tumultuous times, companies employ various strategies as it relates to workforce, automation / technology investment, and placing the high-yielding bets necessary to go from good to great. While most reduce spend and seek shelter from the storm, few others invest and prepare for the passing of these challenging times. Pragmatically speaking, leveraging BPO offers the opportunity to create a flexible load balanced model across various towers as a mitigation of risk. So think about your approach during the past years and the few who are peaking at these times of recovery.
It’s important to look at the cyclical nature and investment model to know when such strategy bets are placed. As we have seen the economy in the US improve, some are caught off guard by the requirements for new resources, improvements in productivity and the enabling technologies, which balance supply and demand. Companies that have BPO relationships have a partner that can balance these attributes while others kick in to either in-house or captive hiring or investment mode rather than pull the other levers to utilize what is already available through BPO engagements: infrastructure, talent, technology, and the global processes to generate transformation with lower risk during these cyclical times. So what is the DNA of a great BPO relationship, which delivers through both stable and turbulent times?
In our current landscape of outsourcing, it is critical to engage in business relationships that assure successful partnerships. The practice of outsourcing business processes is mature, and we are now able to better assess those factors that have led to successful or failed outsource relationships. High on the list of factors that result in successful BPO relationships is choosing the right partner to support an organization’s strategic vision, industry, and unique requirements for a target-operating model – specifically, a partner who values these qualities and consistently walks with you to push innovation through the endeavor. The ability to provide outcome-based solutions that encompass helping BPO buyers achieve innovation has quickly become a crucial differentiator.
Allow for maturity– Good outsourcing relationships, even among the most committed parties, require time to mature. Companies with more experience handle outsourcing better than companies with less experience. This may seem terribly obvious, but it points to the fairly common tendency for companies to second-guess their outsourcing decisions when experiencing early rough patches in the relationship. Amending a contract doesn’t mean that the decision was bad; it just means it’s time to reassess the initial thought processes that went into developing the relationship.
Back-loaded benefits – Having often been driven to consider outsourcing by demanding financial circumstances, clients often press their selected vendor to deliver attractive benefits right away. The vendor, being naturally anxious to please and keep the business, agrees to do so. This is a mistake all around. Practice makes perfect. Good outsourcing relationships are built on the expectation of steady improvement year over year, not on one quick hit followed by a flat line.
Broad outcomes – It’s fine to target cost reduction as one of your immediate outsourcing goals, but once the easy dollars have been saved, what will you offer shareholders as an encore? The biggest benefits in staffing outsourcing are not on the cost side; they’re on the income side – growth, cycle times, competitive advantage, revenues, and so forth. Those benefits start to accrue when you and your staff are freed up from manual processes, allowing the BPO provider to come in, transform, automate the processes and handle the transactions, etc.
Improvement is continuous – Continuous improvement over time requires investment, in new technology and training, for example. These investments, when made by the outsourcing partner, represent business risks. Experienced outsourcing managers have found that risk/reward incentives are good tools to use in driving performance. If you ask partners to invest, the rewards need to accrue to you both.
Active governance – Good partnerships are not hands-off, they’re especially hands-on. When problems arise, as they will constantly, they are best dealt with quickly, not at the next quarterly performance review. Best practice in outsourcing requires heavy, if not full-time, oversight by the best project managers available who report to engaged executives and managers on both sides.
Innovation: the driving force – With both BPO buyers and service providers collectively achieving measurable business outcomes as part of organized and collaborative long-term partnerships, innovation becomes the glue that holds it all together. More often than not, enterprise buyers of BPO services enter into a service provider relationship polarized on the initial cost take-out from the ‘lift and shift’. Future initiatives need to be considered as collectively you find additional value through better processes, talent and technology. Transform your business rather than seek low cost staffing models. This is the fabric of driving short, mid, and long-term value with retained end customer loyalties.