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Software Outsourcing

Top 10 reasons for BPO - Care Analytics

Top 10 reasons for BPO

By | Software Outsourcing | No Comments

In this blog, I thought we would discuss the business benefits of Business Process Outsourcing (BPO). BPO has been around for a while now and it continues to grow. BPO provides some significant advantages to the businesses who choose to pursue, and sometimes to go through the growing pains of incorporating them. Here are the top 10 reasons for leveraging BPO at your company.

  1. Increase revenue and cycle times

Whether it is by calling clients, processing files, underwriting loans, or handling inbound transactions, you can leverage BPO activities to increase revenue generation activities. Most companies think about BPO in terms of cost reduction or access to talent, but the highest returns in BPO are usually in revenue generation processes. Sales and Marketing, loan processing, customer analytics, and inbound sales support are areas where cycle times can be reduced to improve revenue. These should be areas to consider for BPO.

  1. Improve business focus

In addition to improved cycle time, improved business focus can help drive company revenue by allowing key resources to focus on company growth. Outsourcing redundant tasks that provide little business value will allow your team to focus on higher value, revenue generating activities.

  1. Lower, and create more predictable, costs

Let’s face it, outsourcing your operations are usually about lowering costs. The cost per unit of production can be dramatically lowered, even taking rework into account. These cost savings can then be used to invest in strategic business activities. Another advantage in BPO is that you can create predictable costs through contractual arrangements. This helps the financial team project actual costs going forward. This is a real advantage to the CFO as they manage cash flow.

  1. Improve productivity and throughput

One of the big advantages of BPO is that you can improve the quantity of output you can produce in a set timeframe, without having costs increase dramatically. You can blend an onsite and offsite team to double production. You can have a “night shift” to process files to be ready to execute the next day. You can also set up a 24 hour a day processing center to maximize throughput in a day. All of these scenarios allow you to process more in a given period of time.

  1. Customer Service – Increase the speed of resolution

Clients want responses now. Unfortunately, to staff a full call center to be available now, can be very expensive. BPO can help alleviate this situation. A BPO center can catch overflow when lines are backed up. Or, if you do not want a call center where the BPO rep speaks directly with a client (mortgages come to mind); a BPO center can process files and get them ready and if questions come in, the reps can email responses or forward them to whomever you assign.

  1. Access to world class specialists

In many industries, there is a shortage of qualified resources. Companies need access to trained, professional specialist that understand the industry and the process. Setting BPO centers provides access to many resources that have prior experience processing functional and/or industry focused tasks. Gaining access to trained professionals is one the biggest use cases for leveraging BPO services.

  1. Meet fluctuation demands quickly without hiring additional staff

For many industries there are cyclical fluctuations in demand. This could be due to seasonal demand, or fluctuating supplies. In some cases, there are irregular spikes in demand. In both cases, companies look for solutions to cover excess demand without having to hire additional long term staff. They often outsource a percentage of the business to the BPO firm, then sign contracts that if demand spikes, the outsourcing center will reassign workers to cover the excess demand. This way they keep the same amount of work for their onsite workers.

  1. Improve quality in routine processing

While most people do not associate quality with BPO, it can be an effective strategy due to existing quality control procedures at most BPO operations. This is even more so the case when mundane, routine operations are involved. In the US, workers can get bored, and then quality control falls far behind the standards set in overseas operations. BPO operations are used to, and are prepared for, routine mundane tasks, so it is an effective way to increase quality in these situations.

  1. Ensure compliance and share risk

Many BPO operations are more compliance conscientious than their US operational counterparts. This is because they are heavily audited, internally and by their customers. So you can actually help compliance issues by outsourcing operations to companies that specialize in that specific task. In addition, you can contractually share the risk if compliance is violated. This will help mitigate the risk and lessen the impact if there is ever a violation.

  1. Streamline operations / Accelerate the benefits of Re-engineering (BPE)

One the lesser discussed advantages of BPO is the ability to streamline the companies process by leveraging the BPO firms best practices. Or team the process of outsourcing with a business process engineering (BPE) exercise. Do not just outsource an inefficient process. Instead, go through the process of streamlining the process first, then outsource it with the vendor. In most cases, the BPO vendor can provide advice and guidance in creating best practices. You will then gain efficiencies from improvement of the process, and from outsourcing. Your productivity should dramatically increase.

BPO can be an effective way to increase your productivity, reduce costs, and gain access to needed resources, but the highest return may come from revenue generation activities. Whether that is direct sales and marketing activities, or just providing quicker backend processing so the direct teams can make the sale faster or more cost effective. BPO can also help in creating best practices, compliance, and you can share the risk of non-compliance with the BPO vendor. This is the reason that the BPO industry continues to grow year over year.

So that is all for this week. Please contact me at tommy.simon@careanalytics.com if you have feedback, comments, or ideas. Until next time. I wish you health, happiness and prosperity.

Tommy Simon
President and COO of Care Analytics

Top 10 things to look for when selecting an outsourcing partner - Care Analytics

Top 10 things to look for when selecting an outsourcing partner

By | Software Outsourcing | No Comments

I was visiting several customers this week to discuss various software outsourcing opportunities and a topic that repeatedly came up was what makes a good outsourcing company. So I thought it would make a good subject for this blog. Since I have recently been in the habit of creating top 10 lists on several topics, I thought I would continue the trend and give you my top 10 things to look for in an outsourcing vendor.

  • Consistent delivery

This goes without saying really, but there is nothing more valuable than a partner that can, and does, do what they say they can do. The best way to validate the company’s ability to deliver is by giving them several short four to eight week engagements and see how they handle them. Do they do what they claim? Does it go smoothly? Look for how consistent the delivery is over a few projects. If they are consistent, then they probably have quality and delivery embedded in their cultural DNA.

  • Finding the Right Size Organization

One of the important factors in selecting an outsourcing partner is finding the “right sized” IT vendor. This means finding the right size company for the size of your project. If you are looking for a $100M outsourcing deal, there are only a dozen or so companies that can really handle that. You do not want to select a smaller firm for such a large project.

On the other hand, you do not want to be a small fish in a big pond. If you have a $2M outsourcing deal, you do not want to go with a big firm. Why? You will get the large vendor’s ‘C’ level talent (maybe worse). It is important for you to select a vendor where you are a big fish, but not too big. You do not want the risk of being their biggest client, but you do want to have influence.

Typically, being in the top 3-10 billing clients is a strong position to be in without too much risk. This will help ensure that you will get ‘A’ level talent, attention at the executive level, as well as other favorable perks, and terms and conditions that you will not get as a smaller client. Of course, you should do your due diligence to make sure that the ‘right sized’ IT vendor has the experience and technical capabilities to meet your needs. But getting the right sized vendor is critical to the overall success of the outsourcing engagement.

  • Business Continuity

Look for a company that has been doing offshore for a long period of time. Having worked for a company that was new to offshoring and one now that has been doing offshore for 18 years, I can tell you it takes a while to work out the kinks. It takes at least a few years to really mature. If I was looking for a company, I would want at least 4 to 5 years of experience before I would work with them. The longer the company has been doing offshoring, the more likely they are to have matured delivery processes and perfected working with clients to achieve the overall goals of the project.

  • Communication Plan

This may need to be much higher on the list of priorities, particularly if you are not familiar with offshoring. Communication plans should be based on a complete team approach. Daily meetings with the PMs and developers. Weekly status meetings with the business. A minimum of monthly meetings with the executive team. There should be clearly defined escalation processes, as well as regularly scheduled meetings with the business champions to demonstrate results and get feedback. When evaluating potential offshore partners, thoroughly investigate the communication plan and determine if there is transparency and open, ongoing dialogue. But that is not enough.

Having a plan is step one; executing the plan is even more important. Talk with client references and ask about the communication process. Find out if the vendors are consistent in following their plan. Find out if the business is involved, or is it just at a PM level. Can the developers, analysts, or workers be reached when needed? How long does it take to get feedback? Due diligence around communication will be key. And the only way to get real feedback about communication, is communicating with other clients of the vendor.

  • Company Culture

The company culture matters because it effects both employee longevity (as discussed below) and the culture of quality and customer service. Is quality and customer service engrained across the organization? Is it consistent? How is it taught, encouraged, and reinforced? It is hard to evaluate culture, so make sure to do your due diligence. One way to evaluate culture is to selectively pick a few consultants to talk with. If you can, do a random selection.

When you interview the consultants, it should become evident if the company culture is prevalent, if it is consistent across the teams, and if there is emphasis placed on it. Finding a partner with a quality focused culture can make the difference between success and failure.

  • Average Duration of the Team

Turnover can be a real issue in offshoring. Get stats on how much turnover the company has in a year and find out what the average duration is for their consultant base. Talk to several of the offshore consultants. Ask them about their tenure with the company.

  • Technical Certifications

Companies with employees with long tenure can experience another problem, complacency. The longer they stay with the company, the more comfortable they get. The more comfortable they get, the less they strive to stay on the cutting edge. That is not to say that all employees do this, but it happens enough that you should check. It is very important that when talking with the consultants you investigate what certificates they have, how old the certificates are, and what the company does to keep the consultants current with the latest tools and techniques, etc.

  • Innovation and Thought Leadership

Very closely associated with technical certificates is how involved and current the consultants are within the technical community. Do they publish articles, complete research projects, speak at events, train or mentors others, and/or participate in critical discussions. The more they participate with these type of activities, the more likely the consultants are to speak up, offer suggestions, provide insight, and provide critical thinking.

  • Sales Process

I know this sounds like it has nothing to do with delivery, but the truth is that the sales process will foretell a lot about a company’s delivery process. If the sales executive asks tough questions, if they manage the details, if they interview you during the process; it is generally a good sign that the company has mature processes and that they will manage the details of delivery too. If on the other hand, the sales process is loose and is being “winged”; you can bet that the delivery process will probably be handled the same way. Often times the sales process will predict what is to come with delivery, so pay attention to how they pay attention.

  • Point Solutions

If all of the other things mentioned above are present, than the more specific the expertise of the partner the better. My experience has been that the quality of the vast offshore companies that do everything are not as good as the niche companies that focus on what they do. A Microsoft based company, with experience in SharePoint for hospitals or healthcare will tend to deliver better results in this area, than a larger broader based company with lots of practices. But be careful, because these types of companies may not have all of the things mentioned above. When they do, the niche player is usually better at delivering the highest value.

Thank you for reading. I hope it helps. As always if you have questions, please do not hesitate to reach out to me at tommy.simon@careanalytics.com. I would also love to hear any feedback or suggestions on topics or ways to improve the blog. Until next time, I wish health, happiness, and prosperity.

Tommy Simon

President and COO of Care Analytics