Is Technology Making Outsourcing Easier?
Modern technology has revolutionized almost every aspect of our lives. Lightning-fast satellite internet, instant communication, automation. Technology has also impacted every professional field – and outsourcing is no different.
Businesses have been using Business Process Outsourcing (BPO) for years, as a means of cutting costs and improving efficiency. And technology has only increased this trend. Cloud computing, process automation, advanced business analytics software, and other such technologies are enabling BPO providers to become more effective, and even more cost-efficient.
The Role of Technology in Outsourcing Relationships
A recent study by Accenture has revealed that 40% of respondents who made use of BPO services rated the technology used by their provider to be an important aspect of their relationship. 56% also believe that gaining access to technology in a BPO relationship is important.
According to Anoop Sagoo, the products industry BPO lead at Accenture, “Effective technologies and architectures contribute to cost reductions and more efficient operations by streamlining the systems environment and reducing the number of systems involved, often standardizing the technology environment on a unified, centralized platform.”
A professor at Loughborough School of Business, Ilan Oshri also believes that IT and the platform you use to provide services are becoming an important part of BPO.
“Businesses have been considering more functions for BPO, mainly because of the current economic conditions and because the suppliers [can now] provide BPO services much better than 10 years ago. Buyers are also expecting vendors to deliver high value therefore expect the vendor to work closely with them on improvements.”
Like marriages, it’s important for both partners to “get something out of it” in an outsourcing relationship. With the addition of technology-based services, suppliers can change their business models by relying less on human resources. And, customers get more for their money. Oshri also adds that many vendors are now proposing end-to-end value propositions to their clients. They are capable of introducing many technological improvements.
The Rise of Outsourcing Automation
Another way technology is impacting the outsourcing sector is highlighted by Mark Lewis, head of outsourcing at Berwin Leighton Paisner – a law firm. He claims that we require greater levels of automation to match the scaling of the BPO market. BPO leaders should see these technological advances as a way of achieving non-linear growth.
He claims that those businesses that have traditionally made money by providing low-cost labor are now shifting to these business models. And while Indian BPO providers usually took a long time to catch up, they are now doing so quickly.
One such supplier is Cognizant, which operates out of India. According to Paul Roehrig, a senior BPO specialist at the firm, the convergence of business process work and technology has fundamentally impacted the value of business process services for clients.
“New business process services are emerging that integrate human process work with collaboration and automation via technology enablers and automation platforms. We’re also seeing next-generation technologies like cloud, social tools, and analytics much more effectively applied to deliver business process services,” says Roehrig.
He claims that, ten years ago, many companies tried to outsource non-core tasks in order to save money. They now want more, despite the fact that lower unit costs are still important. The mega-trends of continued globalization, new technologies such as emerging social/mobile collaboration, and a new mindset for problem-solving and dynamic process work are posing challenges and opportunities for businesses all over the world.
These themes are forming a new type of business process service, and evidence of a big market shift is growing as next-generation business process services and solutions offer ways to modernize operations that underpin complicated dynamic knowledge work.
Harnessing Big Data
According to Roehrig, businesses seek to modernize operations in response to the ongoing economic downturn. Virtualization and externalization of processes are actually revolutionizing how we currently do and will be doing business in the future years.
Another current business transformative trend is the importance of data, and the technology that allows companies to exploit the data they have. BPO can help us harness Big Data.
“In the past couple of years, we’ve seen BPO moving away from large scale transaction processing largely associated with operational cost take out and process efficiency, and moving towards being a driver of tangible business value. As such, BPO today is about mining the huge volume of transactional data that is being processed. BPO providers and their clients today are sitting on a gold mine of data and it’s all about using the provider’s industry expertise and insight, analytics, and innovation to help a client tap into that information in order to operate its business better and drive business outcomes.”
Sagoo backs up his thoughts. Clients today want BPO to be able to conduct transactional analytics, analyze the insights, and then discover opportunities to improve and add value to the client’s business. Clients can gain practical insight into their business operations by analyzing transactional data.
Times are Changing
Because of the cost of offshoring, there has been relatively little automation in BPO. But as the cost of offshore personnel rises, automation will rise as well. Though one will still need to use the two in conjunction.
O2 has implemented Blue Prism software to automate business processes in an effort to lower the cost of back-office operations and assist their offshore recruitment in dealing with workload spikes.
In order to enable new service offerings, the company’s back-office contains around 400 distinct small processes that function around larger processes. When Apple chose to modify the size of the SIMs in the latest iPhone, it became part of the business case for buying the Blue Prism licenses.
O2 had to have a business process in place to deal with changing customer SIMs with less than six weeks’ notice. Without the assistance of automation, their offshore team would have been in deep trouble.
There can be little doubt that technology is changing the face of outsourcing. Relationships are changing, and that’s a good thing.
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