With the emergence of automation, many were led to speculate that BPO will soon fade into oblivion. However, savvy service providers have found a way to work around this disruptive technology as clients demand for ongoing cost savings.
In its latest research, "BPO on the Brink of a New Generation: Technology Transformation", HFS Research analysed the performance of 180 outsourcing clients. While 49 per cent still use the lift and shift model, 28 per cent have invested in wide-scale tech-enabled BPO processes.
Clients benefit from transformational processes through tech-enabled BPO
Tech-enabled BPO processes provide better results from standard services. Eighty per cent of respondents view their engagements as highly effective. In one finance and BPO initiative, the service provider implemented workflow tools that automated an accounts payable process for a major media enterprise.
As a result, the finance executive in charge of overseeing the engagement said, "we’ve been able to reduce the amount of sub-tasks from 36 to 23, our payments cycle has sped up considerably, and we have much faster access to cash flow data and overall visibility over our processes."
Fifty-two per cent of tech-enabled BPO clients are shifting away from lift and shift model where the value is based on cost per employee. According to the same finance executive at the media firm, "since we renewed the contract, we now are paying for our accounts payable service purely by cost per invoice processed, we have greater visibility and predictability into our costs now."
Better Insight and Real Innovation
Tech-enabled BPO clients are able to collaborate with their service providers to produce standardised processes. In turn, this enables them to focus on higher value outcomes - ideas and initiatives (50 per cent), analytical insight (45 per cent), and gain-sharing with providers (42 per cent).
According to one finance controller, "We embarked on a major initiative with our provider to roll out a unified financial system after we had undergone the initial BPO transition. Now we’re fully operational, our finance staff is able to focus on planning and analysis activities and providing much more relevant data to our leadership team than previously. In the earlier phases of our BPO they were consumed with just getting through the day with our basic operations - now things are running better than ever and our finance team is performing at a level we have never seen before."
The trend has made significant strides for some clients and service providers, but majority still think in terms of FTEs (full-time equivalent) instead of outcomes. Eventually, they'll have no choice but to adopt digital process platforms. However, HFS CEO Phil Hersht believes "it won’t happen in the near term."
"The BPO industry’s ability to change is still slower than what buyers claim they want and expect, and what service providers claim they can actually deliver," he said.