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How IT is Revitalizing BPO

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DQI Bureau
New Update

Business process outsourcing (BPO) can be a cutting-edge practice. Yes, really. This may well be a shocking statement to some, given that BPO has been a standard operating procedure at many companies for more than 2 decades, but for those CIOs prepared to take a fresh look at what they do, it is now possible to uncover significant additional value from the activity.

There was a time when BPO was simply about saving money. Today, while efficiency is still a driver of outsourcing deals, the most forward-looking companies also want to realize a number of other benefits-business insight, innovation and industry expertise-that will together deliver strategic business impact.

But, how to achieve the goal? A new study of best practices in BPO from Accenture, conducted in association with the Everest Group and the London School of Economics' Outsourcing Unit, considers exactly the same question. One important lesson to draw from those companies already getting the greatest benefits from BPO is that it's crucial to make better use of technological developments in service provision.

Infusing Technology

Some 40% of the companies identified as BPO high performers in the study consider that technology provided by their service providers is an important component of their relationship, compared to only 27% of companies whose performance is considered typical.

The key is to see technology not just as the mechanism through BPOwhich BPO is delivered, but rather as a source of innovation and competitive advantage in its own right. There are many examples of this:

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  • Analytics applications: These tools can be real drivers of value when built into a BPO provider's services. They provide real-time insights into a company's operational performance in a range of areas. One example might be customer retention, where analytics tools can help businesses segment clients into demographic or geographical groups, in order to identify particular areas on which to focus.
  • Forecasting tools: BPO services may incorporate applications that give companies a much clearer view of potential demand across their businesses-this can generate substantial improvements in supply chain management.
  • Technology innovation: BPO service providers have the scale and experience to develop new and valuable proprietary tools that businesses themselves would never come up with alone. These may be relatively minor application-a tool to identify invoices that have been paid twice, for example, but provide process improvements that could not be achieved by businesses operating without this support.
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  • Performance monitoring: BPO service providers are in the right position to identify and monitor the performance of their client companies on a wide range of metrics-tools that process and channel this data will add further value.
  • Automated disclosure: Some BPO services offer facilities to automatically disclose all relevant information to the client company's key stakeholders, improving transparency and building trust.

Underneath the Refresh

None of these facilities have traditionally been associated with cost-driven BPO, but each of them offers CIOs the possibility of genuine value creation alongside the efficiencies with which many organizations are much more familiar.

However businesses will have to make some adjustments in order to capture such potential. One is technological: in order to make the best use of BPO services, especially as they develop over time, a switch to cloud-based computing is likely a necessity.

More fundamentally, CIOs will need to begin thinking about their BPO service providers in a different way-as business partners rather than the suppliers of a commoditized technology solution. In practice, only those providers who have really detailed knowledge of their clients' needs and access to their most sensitive data will be able to offer a full range of BPO tools, particularly in areas such as analytics and performance measurement.

That will require high levels of trust on both sides and a much closer working relationship. Get it right, however, and the prize is a valuable one: BPO services that generate competitive advantage as well as cost savings.

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