The BPO market can be confusing when it comes to
pricing. As BPO providers mature into
core business processes it is becoming even more complex. It’s starting to look like “anything goes”,
but there is some reason to the madness.
There are three basic models for BPO pricing:
1.
INPUT
/ OUTPUT: Traditional services
based pricing. Pay for units of input
and maximize output (i.e. hours, FTE’s).
2.
ACTIVITY
/ VOLUME: Pay per unit of activity within a volume range (i.e. transactions,
documents, scans, calls).
3.
VALUE
/ BUSINESS OUTCOMES: Pay based on the value a service provides. Often a hybrid of the activity / volume model
and performance measures (i.e. claims processed within 3 hrs, issues resolved in
single contact). It could also be based
on a percentage of savings or growth (i.e. increased sales, reduced cost per
transaction, reduced aggregate procurement spend).
An entire book can be written on the variations of these
models in practice. That being said, the
slate is usually wide open. BPO vendors often
entertain any model they feel comfortable with in terms of risk, quality
performance and reasonable profitability.
Here is a simple process to follow when talking to your BPO
vendor:
1.
Decide what processes make the most sense to
outsource. These usually bubble up
easily based on organizational strategy, pain, cost and capabilities.
2.
Define your strategic goals for the
process. Are you looking for growth,
quality improvement, scalability, reduction in cost, innovation or consistency
in cost per transaction?
3.
Define who you feel should take ownership and
risk for that process. Not just execution
quality but process innovation, design, performance, outcomes, etc. The more risk you want the BPO vendor to take,
the more value you want them to add, the more control they will want over the
process.
4.
Now define a proposed pricing model based on the
above attributes.
The outcome will best represent your expectations and significantly
simplify BPO vendor discussions.
Consider these links:
No comments:
Post a Comment