Business processes have emerged as a key variable in the design of high-performance organisations.
The primary objective of the traditional outsourcing process was cost arbitrage. Service providers based out of low-cost locations could provide services at lesser costs. With time, the focus shifted from cost to quality of service, as customers with tighter budgets and more expectations realised that “process value creation” does not necessarily result in “business value creation”.
However, according to a recent HfS study of 189 outsourcing buyers, the paradox is that for so many outsourcing clients trying to achieve value beyond cost, however, the reality of today’s outsourcing business, is that most services buyers are only expecting their service providers to be agents of cost-reduction and efficiency.
Currently the industry is in the next phase of business transformation and the way they approach it is in a value-focused way that will differentiate the service offerings.
And as expectations change as processes become more efficient and governance skills develop, service providers bring new capabilities to the table, namely automation, business intelligence and analytics and process reinvention.
This gave rise to metrics-focused SLAs measuring performance of the service providers.
Although KPIs in the traditional outsourcing process were focused on accuracy, cycle time, and productivity; service providers started focusing on value delivery.
The next wave of value from BPO engagements
According to the same survey, outsourcing buyers, they expect to have evolved to a transformative BPO engagement where their processes are enabled by new technology tools and platforms, in barely a couple of years.
The BPO market and the HRO market in particular are currently undergoing a period of disruptive innovation.
In short, the rules of the game are shifting dramatically. And, as Michael G. Jacobides, Associate Professor of Strategic and International Management at the London Business School, notes:
when an entire “industry architecture” is transformed, it is not only “who does what” that changes, it is also “who takes what”.
The next wave of value for the post-labour arbitrage enterprise, is to reduce the reliance of manual labour and create value from SaaS-platforms analytics tools and other digital solutions.
However, in order to create this value, we need to reorient how our operational staff delivers services to be more aligned with the needs of the C-Suite.
In short, this implies enhanced capabilities for cross-contract planning with more strategic vision and prioritisation of scarce resources (e.g., technology skills, industry skills, data skills) to deliver the results.
This means if they do not reach this state soon, or have visibility of their future roadmap to get beyond a primarily labour-arbitrage driven model, many will look at alternative means to achieve it, such as evaluating alternative service providers, or even bringing services back in house.
We also know that the only long-term avenue towards continual improvement and value is by reaching out into the market to explore new provider partnerships.
The shift from “process value” to “business value”
With this shift from “process value” to “business value” service providers are accountable for business results t and must achieve KPIs linked to the customer’s strategic business objectives.
- Integrated approach with common goals
- Focus on end user satisfaction
- Domain expertise in clients’ business and industry
- Partnership approach with more flexibility
- Higher rewards and benefits
A shared understanding of your processes
Only an organisation that has a shared understanding of its processes can begin reflecting on better ways to design and operate them.
Service excellence: A focus on streamlined, productive operations linked to client’s key business goals
Adaptive and flexible to cost effectively accommodate increased demand smoothly and according to compliance standards
Focus on networking with and benefiting from the input of external partners and resources that enhance customers’ reputation or business ranking, creating a positive brand image
Ensure that the implemented solutions are sustainable and validate the rationale.