BPO is here to stay – at least according to our group of BPO Executives. In short they told us they were all going to be increasing their outsourcing activities, but this time with a focus on “doing them better”. So where did they go wrong in the past? Mis-aligned expectations, over-promising and under- delivering, “junk-shifting”, lacking valid measurements, “toe-dipping” and governance.
With all these areas for improvement, why are these companies pursuing more? Because after the pain of the transition, their outsourcing is actually working! The roundtable executives said they will be expanding their scope in the classic BPO areas (e.g. Finance) as well as looking at some of the emerging areas (e.g. Knowledge Process Outsourcing and Strategic Sourcing Outsourcing). And they will be doing this with an eye towards a new type of governance (COE), a focus on risk management, and avoiding “lift and shifts.” The BPO world is going to continue to evolve.
Outsourcing is working
Understand the true cost of “lift and shifts” – try to avoid junk shifting if possible. Try to fix your processes prior to shifting to the Service provider.
Listen when the service provider and/or external advisors provide realistic advice
Own and manage all expectations, get the business owners on-board and accountable
Vendor Management is not BPO governance. Develop sophisticated BPO Governance Centers of Excellence (COEs) that can perform end to end BPO governance including operations monitoring, Service Provider Procurement and complete supplier management
Don’t overlook Risk Management. The world continues to change and with outsourcing comes new levels of risk around loss of the clients talent pool, market knowledge, etc.
EY’s Complex Transactions Advisory Services are designed to help clients identify and execute on opportunities to drive savings, reduce costs and increase strategic focus in select functions. To achieve Best in Class Operating models, firms tell us that they will consider BPO solutions for select business processes. While some of these activities are mature, emerging technological solutions such as cloud computing as well as the need for even greater cost savings and more strategic focus has increased the number of functional areas that are currently outsourced.