“The
traditional cost centers such as HR, finance and accounting and some low-value,
high-volume customer-facing functions have been the most frequently outsourced
activities. In such services, reducing cost has been the objective, though the
means of achieving that have evolved over time.”
Many companies have already outsourced cross-functional
support processes. In addition, the cost
of global labor is eroding margins for BPO firms. So how are BPO providers
responding?
One method has been moving the focus to core business
process outsourcing. This will deepen
the customer relationship and divert discussions from “savings” to “value”. Value can be anything: Market agility, scalability, global delivery
capability, etc.
I often hear the words: “We want to go deep and wide.” Yet there is little tolerance for taking on
anything but the highest margin work. In
my experience with IBM going “wide” requires investment on both sides. Customers will want the BPO provider to take
over processes that THEY HAVE THE MOST TROUBLE WITH, high margin or not. If it was easy and cheap for them to manage
why would they outsource it?
Is it a matter of BPO firm contract profitability measurement? Is it a myopic view of relationships? My experience is customer portfolio
measurement provides better outcomes for service companies. It measures the profitability of the
relationship, not individual contracts.
It allows for taking on a broader selection of processes from customers,
with different margins, to lock in customer trust and relationships. It shows the commitment of the BPO vendor to
the benefit of the customer.
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