Shift From BPO To BPM

Mar 04, 2014

This thought leadership piece was written by Keshav Murugesh and first appeared on Professional Outsourcing. 

By Keshav Murugesh, Chairman of NASSCOM BPO Council and Group CEO of WNS Global Services, following the NASSCOM India Leadership Forum

In the early part of this millennium, organisations around the world started looking at outsourcing business processes to cut costs and compete better. The Business Process Outsourcing (BPO) industry was founded on the primary goal of providing organisations low-cost options for business process delivery.

India was among the first choices for global organisations because of its capabilities in information and communication technologies, a vast pool of English-speaking graduates and the availability of low-cost of labour.

Over the years, BPO service providers have developed a strong understanding of their clients’ businesses and have steadily moved up the value chain in terms of the services offered. From being a provider of low-cost back-end services, these companies have now become strategic partners for their clients.  The term Business Process Management (BPM) conveys increased maturity of the industry that manages complex processes that directly impact the client’s profitability and survival. BPM also conveys the shift in the industry’s business model from being input-based to outcome-driven, thereby taking responsibility for business results.

This new era of BPM brings a combination of deep domain expertise and commitment to business excellence. In a sense, the transformation from BPO to BPM reflects the journey of the industry from the back-office to the client’s boardroom.

  • The reasons for replacing ‘O’ with ‘M’:
  • To reflect the kind of work delivered as an industry at a global scale
  • To convey the value additions created by the industry
  • To provide the right impetus in making the industry ‘attractive’ for job aspirants and other stakeholders like parents and academia

The industry has always been about doing things differently and eliminating activities that do not add value. The goal of BPM today is to enable transformational activities through process re-structuring and sharing best practices while achieving sustained savings and adding value by eliminating non-value-added work.

 

Onshore outsourcing in the UK and nearshoring in Eastern Europe

The way to look at locations is to ensure that the outcome is to the client’s advantage. If it is possible to deliver better outcomes at the right price from a location, then so be it! Choose it as the right location for that engagement, for instance, when a customer asks for delivery from geographically diverse locations, commitment can be shown by opening new centers to do so.  Eastern Europe as such is a great hub for the rest of Europe owing to its talent and work ethic. So we will always look at it while considering location options.

Vertical approach

Vertical approach means the ability to provide solutions that are industry-specific. In common parlance, a vertical is an industry. Organisations have adopted the vertical approach to service delivery to be closer to the client (in terms of what it needs).

 

At the core of the vertical approach is the provider’s level of domain expertise.

Expertise can be demonstrated through experience and the right knowledge. Talent plays a major role in this and can be acquired from the market to meet clients’ requirements or employees can be developed in-house. It is important to try and have a combination of both, which can be done through an in-house domain university  to help create specialist paths, or though industry certification programs for employees.

The vertical approach should essentially be:

An organisational structure with Business Units (BU) built around industry verticals that deliver solutions tailored to our clients’ industry needs and Centers of Excellence (CoE) built around a domain expertise or specialisation

The CoE, in collaboration with the respective BU, designs and deploys end-to-end solutions

Increasing importance of non-FTE-based charging models

For enterprises looking at outsourcing as a means of transforming their business processes, achieving cost efficiencies is of top-most priority. However, intelligent organisations are now focusing on going beyond cost-saving mechanisms and looking at achieving greater flexibility to scale and support their global operations.

Clients want business outcomes from their BPM providers and business models should be adapted to that. Organisations should offer outcome-based solutions rather than the earlier FTE- or input-based solution.

This can be done through being confident enough in the expertise in technology, analytics and process solutions that you can lend to a client’s enterprise. It is important to focus on outcomes, and hence, believe a lot in innovative pricing models where you are happy to put your expertise as table-stake.

Future Trends

High-end analytics. New channels like Smart Meters will disrupt the way we price and deliver any product or solution.

Radically evolving technology. Nothing changes more than technology. Things become obsolete in minutes. Aligning businesses with new infrastructure and helping them stay ahead of the curve will be really challenging. Google glasses, automated driver-less cars… augmented reality… it’s going to be a new world.

New era of regulations. Risk and compliance frameworks will become more binding in their approach and implementation. Providers like us will have to work with companies in managing new governance mechanisms and also helping businesses understand the different kinds of risk (along with mitigating them).

Social media biting at every organization’s heels. Everyone will talk to anyone and everyone. So look at what that can mean to business. For instance, imaging you are just getting your boarding pass printed at your office desk and you receive a ping through a social or rather neural network that says “don’t fly the airline you are just about to travel in” because it was delayed for three hours that very morning… imagine what you would do. Brand loyalty will cease to exist in the new era… every company will have to be awake (and that too brightly) all 24 hours to ensure that it’s brand is not being compromised.

Essentially, when working across industries, look at all these future trends and then partner on the right technology and processes to deliver. It’s not about bringing aboard one particular process. It’s about making a difference to our client’s top and bottom line!

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