Business Process Outsourcing refers to the contracting of non-essential business activities, such as data processing to a third-party provider. Businesses that apply this strategy to outsource their non-core processes often reap invaluable rewards in building resilience around a competitive market (StepWise, 2020).
Nevertheless, not until recently, the vast majority of BPO buyers were often indifferent to what really went into the core of a successful experience in business process outsourcing outcomes, namely technology. In part, this was because not only was it viewed as a consideration the provider was already paid to figure out but also since the non-core activities being outsourced therein were just that their supervised execution would not warrant the investment of resources, time and effort beyond what was already outsourced to the provider (Adams, 2017).
Often the results from such unfortunate oversights were massive, ranging from failure to achieve the intended outcomes to project cost overruns. This might sour the relationship between the buyer and seller of these BPO services with detrimental consequences to the entire industry in terms of bad reputation and loss of business. The buyer could also suffer loss in terms of resources and time expended (HR Exchange Network Editor, 2011).
Expected Business Process Outsourcing Relationship Outcomes:
What are some of the outcomes expected in a business process outsourcing relationship? In a nutshell, these include efficiency, quality, performance, and the availability of resources to be allocated in a business at any given time (StepWise, 2020). To get maximum return on their investment, BPO buyers usually incur certain substantial costs in exchange for the value proposition from BPO providers. The industry has come a long way ever since it first became prudent to apply the model of business process outsourcing to small and medium businesses that were witnessing rapid growth and/or expansion to keep up with their growing demands for additional resources (Sadar, 2015).
The Three Major Types of Sourcing:
Generally, there are three main different types of sourcing. These are:
Insourcing refers to the idea of reassigning roles from one department, function, project, or job role to another within a Company. Usually, this is because the Company’s HR department opts to recruit internally to fill the position as part of its recruitment strategy. Midsourcing refers to the practice of hiring a local contractor to provide management of outsourced labor for software, hardware, and IT engineering. It is a middle ground between outsourcing and insourcing for high-tech companies. Outsourcing refers to the practice of contracting non-core activities to a third-party professional services provider (Beers, 2020).
As you can see above, outsourcing is the most outstanding and fully optimized end-to-end business process form of support. As such, BPO buyers would do well to include it in their checklists of business optimization goals at the earliest point in their business growth and expansion journey. BPO providers likewise understand the importance of their business model to the success of numerous enterprises of all sizes and industries. For this reason, companies in this space are increasingly moving away from primarily investing in the non-core and back-office functions, as has been the norm to increase the breadth and depth of their services and innovation in cutting-edge technologies (Nag, 2004-05; Weerakkody & J. G. J. S, 2018).
The driving force behind this change of tactic has to do with the fact that BPO providers still have to cope with enormous pressures with sluggish growth rates, dwindling margins, volatile ROI, and legacy techniques to process discovery and mapping where most initial assessments still take 3 to 8 weeks (Celonis, 2019). This is in spite of the fact that analysts estimated the global BPO industry at USD 232.32 billion in 2020 and is expected to reach USD 245.91 billion in 2021 (GrandViewReseach, 2021).
Forces Shaping the BPO Industry:
Forces that are shaping the BPO industry today include-: a growing list of client needs and expectations, the rise of automation and AI, and the opportunities that these two trends present for innovation and diversification. Since BPOs revolve around the service provision process, and since most of these services involve processing client data, most BPO buyers increasingly demand to work in a data-driven fashion. They expect real-time data reporting and continuous improvements of the processes they entrust to BPO providers for execution (Celonis, 2019).
More than ever, the realization that the overall indifference among BPO buyers in the past toward the significant technological portion of their BPO investment resulted in costly blunders has made many such buyers reconsider their view of the impact of technology on realizing their full potential of BPO business outcomes. Hence, today, businesses are no longer just interested in cutting costs alone but they are also keen on BPOs helping them achieve set business outcomes as well (Adams, 2017).
To this end, cutting-edge technologies such as predictive analytics tools, risk management tools, data visualization tools, data annotation tools, semantic segmentation tools, process-mining tools, text-mining tools, content moderation tools, and online collaboration tools, among others, pushed through bundled cloud services are all helping clients guarantee their business outcomes more seamlessly through real-time data-driven support (Rana, 2021 ).
Likewise, today’s BPO providers are not only positioning themselves around these technologies as business enablers by directly investing in their development and implementations on-premise, in-cloud, through hybrid and on mobile, but also establishing strategic partnerships with platform providers for data processing-intensive and hi-tech client support opportunities. These technologies and platforms provide a means for BPO sellers to measure the impact of their input and throughput against both client expectations and the actual outcomes (Stokes, 2015).
Technology-enabled BPO companies through their technology vendors such as Celonis, etc. for example, also now offer specific services such as process mining, to measure the impact of back-end process friction against front-end user experience in order to raise the bar on meeting client expectations. Further extending the service of process mining is also text mining service, which allows companies to capture desktop data so they can analyze how their people are getting the work done, and understand how they can improve it even further (Celonis, 2019).
You can think of process mining as dealing mainly with business data, which is a set of data that lies buried deep within a company’s transactional systems, as time-stamped event logs whereas desktop data is that set of data that captures what your employees do to get the business data going. These include anything they do in between the steps to process business data. As such, these two technology-enabled services work in tandem with each other to empower companies to gain a fuller picture of how their business truly works in terms of not just their process-wise but also people-wise analytics. A good example of business data can be an invoice, whereas desktop data can be filling in that invoice (Celonis, 2019).
Another trend that is shaping the modern BPO industry is the increasing uptake of sophisticated tools by companies including robotic process automation, or RPAs, such as chatbots, and other AI-powered services, which automate the manual processes at about 25% or less the cost of hiring a full-time outsourced employee. Therefore, this trend presents a growing threat to traditional BPOs, which rely heavily on human-powered manual processes unless they quickly learn and adapt to the trend (Teleperformance, 2016).
Having said that, however, many opportunities and fewer threats actually abound in the increasingly technological landscape within which a heavily service-oriented industry like BPO inevitably finds itself in. BPOs and Technology industries, by virtue of their shared nature of service-centric orientation, closely intertwine with each other so that neither can do without the other. As technology becomes more and more sophisticated so does the demand for IT-enabled business services increase. Since no single company can satisfy all of its needs internally alone, eventually they have to make tradeoffs between several competing interests (Flinders, 2012).
This calls for a necessity for innovation and diversification of services offered in the market from a BPO industry perspective. Companies that push themselves front and center over these combined forces of the growing client demand for business outcomes guarantee, as well as the rise of automation and artificial intelligence, will see the need to innovate and then diversify their business process outsourcing model offerings (GenPact Research Institute, 2014). The trick is in conducting a SWOT analysis of your business from time to time to see how to turn your current weaknesses and threats into opportunities while still maximizing your current strengths and opportunities (Celonis, 2019).
How StepWise Measures Up:
Realizing this potential at StepWise, we have consistently continued to carry out our own SWOT analyses to figure out new ways on how to satisfy our growing list of client demands and rise up to the challenge of the impact of rising automation & AI. To this end, we have collaborated with some of the leading global technology platform providers to meet these client expectations and SLAs. We are also investing in new industry service lines such as trainings and certifications that help fill gaps in the market, all of which gear toward outcome-based models defined by SLAs and KPIs in order to guarantee quality and compliance, especially in a hybrid model such as ours that combine cutting-edge technology platforms with traditional outsourcing (Li & Meissner, 2008).
At StepWise, we are not just combining cutting-edge innovation through strategic partnerships & investments as well as traditional outsourcing but also making an impact in the process, through using technology in business as a force for good to empower our underserved employees from marginalized groups. This approach ensures that we remain true to our B-Corp-certified mantra of being equally passionate about both profits and purpose even as we work hard each day to not only meet but also strive to surpass our diverse clientele expectations.
Brief Summary of Key Points:
As we have all clearly seen by now, technology plays a critical role in ensuring that BPOs consistently strive to meet and surpass the increasing demand of business outcomes guarantee that goes beyond just cutting costs and achieving efficiency from customers’ perspective. We have also seen that the retail uptake of technology among most companies, both IT and non-IT based, made easier through cloud computing, i.e. offering the technology as a service, and the rise of automation and artificial intelligence, are putting BPOs offering only traditional outsourcing, i.e. human-centered manual processes, under a growing risk. Finally, we have seen that despite these two forces shaping the BPO landscape into being pushed to the wall or so it would seem, there is actually light at the end of the tunnel for BPO companies, resellers, and providers that continuously push themselves to maximize their strengths and minimize their weaknesses through spotting opportunities, under this type of environment.
Therefore, prudent BPO buyers want to make sure that they focus their full attention on the significant technological portion of the BPO investment they are making to guarantee not only their business outcomes but that they also do so in the most cost-effective way possible. Understanding the impact of technology on the cost outcome of any BPO project will help businesses navigate through the labyrinth of vendors to accelerate the process of finding the right fit with their business needs beyond just the usual traditional outsourcing outcomes, as we knew them.
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