BPO: It's all about taking ownership to get results

Our last debate about about "Platform BPO" got me thinking more about how outsourcing PMOs can be more successful at delivering these engagments, and reaching a desirable operating state sooner.  While my good friend from SAP's BPO group, Gianni Giacomelli, makes an excellent point that service providers need to leverage economies of scale and process optimization ruthlessly to hit their targets, it also raises the question of how outsourcing PMOs within the buyer need to step up to the plate to take more owenership over their outsourced processes.  (Gianni wrote an excellent piece here last year entitled "Why a good BPO provider is not enough for a successful BPO service delivery" on this topic).

Many BPO engagements are currently a lot more complex than IT outsourcing engagements, where there are many additional challenges from the buyers' standpoint, namely training personnel, mapping new processes, transfering knowledge, establishing realistic service levels, developing workable reporting models and understanding which processes can be offshored successfully, and which of them should remain onshore - on inhouse - with the buyer. 

From the provider's standpoint, it needs to work out how to help its customers reach their desired outsourced endstates, while meeting the pricing schedules and maintaining their own profit margins.  In order for this to be successful for both sides, surely both parties need to take equal ownership of the solution development in order to meet their desired outcomes?  I can't tell you how many BPO buyers tell me the same story:  that they didn't start to find a successful operating balance until they stop being reactive with their provider and waiting for it to magically start sorting out their entire transition by themselves - they had to proactively grasp the bull by the horns, take control over the relationship, sit their operations people down with their service providers' staff, and jointly work on knowledge transfer procedures, develop process flows that made sense for their existing staff and technology, and generally start working as a TEAM.  When you go to your doctor, don't you have to be specific about your symptoms, be open and honest about your lifestyle, then actually work to improve your health over a specific period, before you can start to feel the long-term benefits from your relationship and start judgeing her performance?  You basically need to take ownership of the situation to get the best results.

Where some early BPO deals struggled, blame was commonly heaped on the service providers' "operational defficiencies". However, as outsourcing PMOs get more experienced, they realize that success lies in their own hands, and many of them are improving at working with their providers to drive more efficiencies into their relationships. You hear many buyers say today "we need to develop a strategic sourcing strategy" - they are realizing the world has changed and they need to change with it. Outsourcing is just one vehicle for change, and the onus is on them to drive it correctly.

What BPO buyers can learn from many of their ITO peers, who have been managing outsourced environments for several years, is the fact that experienced buyers today take far more ownership over their delivery that they used to. They realize their vendor can provide skills, resources, processes and technology, but arbitrage only works when the buyer takes on equal responsibility for delivery. You rarely hear and experienced ITO PMO complain bitterly about her provider - they talk about how they manage their retained organization and their provider's staff as part of the same outfit.  They view key project managers in theor service providers as critical to their success as if those people were employees of their own organization.

Comments

[Akki]

Hi All,

I am pleasantly surprised and delighted at the fact that these discussions are taking place.

I am sorry for being too detailed, I would attribute it my Operations Background and Experiences in Service Delivery Roles across all the phases of Project Implementation and Execution

My experience has been that these relationships pangs or service delivery ownership issues can be attributed to a few common situations –

- Organization that is created at the Client end to support the outsourcing Initiative

o If it is fractured, with no central command or set of rules it giver rise to a situation which is typically describes as – “Everybody’s Responsibility is Everybody’s Responsibility”
o Multiple Department Based Outsourcing relations at the onset without any Strong Project Management Interface – (Strong means with a Strong Mandate from Senior Management and Higher Degree of Understanding of Outsourcing Methodology)

- Lack of Technology or Processes that are in Place to Identify the Standardized/Volume Driven work for Tangible Gains in Efficiencies

o So often I have seen that the Processes that are Migrated or Off shored are Not standardized – Have A Huge range of variation – Associated Difficulties in Training and Assessing Performance

- Outsourcer’s representatives not being realistic and asking the Question – “How did/would I manage it under these circumstances?” Especially related to situations of huge Seasonal Differences in Work task Volumes and activities/task which require a Huge Learning curve. (From Time to Hire – to - Quality and Capacity Expectations being met)

Regards/Akks

[Archit Batra]

Phil,

Being assertive will not guarantee an improved performance, infact it might go the other way where the ops team becomes less and less satisfied and tied and finally bail out leaving the entire business at risk. I'm in no way saying that the customer needs to give a free hand to the BPO folks but there have to be a balance. When an organization decides to outsource then the BPO and the customer have to co-operate and make this decision a success. Pushing the work across the wall will not help the org to achieve the objective for which they decided to go for outsourcing at the first place. As someone rightly pointed out that the Due diligence is a critical step for both the BPO service provider and the organization to evaluate each other and synchronize. All the assumptions that have been taken during the solution development should be clarified and cleared as we go along before go live, there should be no surprises ( Vol, HC, Peak levels, Knowledge and Skill requirements). Good amount of time should be devoted to decide and freeze on the metrics, just having a green metrics does not always ensure customer satisfaction. The Knowledge Transition phase is critical to ensure that the receiving team is well equipped with the process knowledge and the giving ops team should provide a guided support to them.

BPO ops team should be treated as a partner in the success of the entire strategic objective. The customer should keep a close watch on the progress and a review should not be just some annual event.

Archit Batra

[David Johnson]

I believe there is a fine line between being assertive and being a bully. Some clients may take the phrase "the customer is always right" too far to the point of being abusive or taking advantage.

I recommend that with any new BPO relationship, set clear expectations about what deliverables are expected and what results are required to be considered a successful relationship that would allow growth and longevity. At the same time, by clearly outlining what good performance is, you also determine what average and bad performance are. No one will be surprised in this case. The BPO provider knows exactly what they need to do to keep the business and grow it and the client will know that they are getting the results they want. As much as possible, quantitative metrics are best. For example, if it's an inbound campaign average speed of answer for a period (day, month, etc.) can be a good indicator. Each BPO campaign will be different in terms of the metrics that make sense, but as a general rule, productivity and quality indicators are possible.

In addition, regular communication is key. The relationship will be best when it's viewed as a partnership, not so much as a vendor/client relationship that can be ended by either party with notice. Yes you will have out clauses on both sides because it's prudent to have them, but the time, money, and other resources spent on both sides to do find the deal, generate proposals, negotiate, win the business, train, and kick off new BPO relationships is an investment and should be viewed that way.

[Prem Kumar Kondaparthi]

Hi Phil,

Wonderful analysis and great root cause analysis. As always, the Blame Game and finger-pointing will lead to only ruptured relations - not symphony. Both the sides should try to empathise with each other and try to look things from others "shoes" but not one sided perspective. But a due diligence before and involving experienced, when I say experienced, relevant experienced resources to manage and forcast the risks and threat will surely deliver a great sucess. I compelety agree with you that BPOs are much more complicated "shows" to run than Software.

But at times, we all have to realise, Business means both Profit and Loss, just not loss. But all we need is patience to learn and try to over come risks and threats and try to avoid mistakes with lessons learnt!

Thanks again

Best regards
Prem.

[Stephen Cohen]

Phil,

Well put. I couldn't agree more - far too many companies sit back and moan about their supplier, when they should be grasping control over the engagement to drive results. Will come in time, just takes a while for buyers to learn it's their responsibility too,

Stephen