BPO = Business People Outsourcing

Ian BarkinBlog

Business People Outsourcing

The last two decades have seen a world become flat thanks to high-speed networks, system virtualization, and an appetite to reduce costs by tapping into a massive supply of low cost labor.  The Business Process Outsourcing (BPO) industry benefitted from all of these trends, becoming, by some accounts, an over $400B a year industry.

In the life of BPO, several themes have risen and reigned for periods of time.  Arbitrage was the name of the game in the beginning.  Then, when simply ‘cheap’ wasn’t good enough, BPO firms realized they might be able to contribute other benefits back to client organizations.  These came in the form of best practices around Continuous Improvement, Analytics, Insight, Transformation, and Innovation (usually in that order).  All of these trends sound valuable and value-adding.  Why then, are so many BPO clients unhappy with this array of benefits they are supposedly getting?

The reason for the dissatisfaction is that the promise did not materialize.  Service providers over committed.  Buyers over expected.  And, at the end of the day, Business Process Outsourcing is about one thing – Business PEOPLE Outsourcing.  Mind you, this is not a slight.  The effort and gumption exercised every day in thousands of delivery centers around the world is exhausting just thinking about.  But, the problem is, it’s also really antiquated thinking.

Have you ever been on a site visit to a BPO delivery center?  Except for a few small distinctions, they are often the same.  A group of client personnel, being led from one floor to the next, having their attention carefully drawn to physical layouts, wall art (visual tracking systems), and, various bells and whistles used to ensure delivery excellence (six sigma projects apparently in progress, command centers, etc.). My most distinct memories of these tours, of which I have participated in many, are when a large group of people stand behind a (most certainly nervous) young agent rapidly copy/pasting data into a Word Pad so that they may then copy/paste it into a client’s SAP system (which is invariably down during the walking tour).

I don’t mean to suggest that any of such a tour is bad.  No.  This is exactly what the client is paying for.  Low cost, fast, focused, and compliant with the myriad SLAs, KPIs, and other such metrics in place to manage a principal/agent relationship laden with misunderstanding and distrust.  The problem is, these days, this is an analog reality in a digital world.  Clients bought Business People Outsourcing because it was easy to procure, negotiate, and normalize in the bid phase.  And they bought because it was so cheap, it didn’t matter that they were knowingly moving their problems offshore and out of sight, rather than transforming their problems away.

It’s time everyone turned on, logged in, and began to explore the digital reality that will fundamentally alter Business People Outsourcing. That digital reality is that the work most often outsourced fits a particular mold – it is routine, transactional, rules-based, and voluminous. This mold is the same one we now use to rapidly identify what is automatable.  This much has been pointed out countless times, and is well accepted.  As is so often quoted from the Second Machine Age, “outsourcing is a waystation on the road to automation.”  I tweeted this the first time I heard it – it resonated that much with me.

So now we are at a cross-roads, with three options.  Buyers may continue to buy Business People Outsourcing.  They may try to work with their BPO providers to introduce automation.  OR, they may begin to automate for themselves.  And my thoughts are thus:

  • Same old, same old (continuing to buy traditional BPO services) – this ‘do nothing’ approach will not hurt in the short term, but will make these operations the dinosaurs amongst their peers in any given industry.  This strategy will die in the next ten years.
  • Eat the cow (asking BPO providers to cannibalize their cash cow) – this is painful, disruptive, and at direct odds with stated (and expected) revenue growth targets.  Only the most visionary BPOs will do this for their clients – and there aren’t many of these.  This strategy will frustrate clients, result in sub-par pseudo automation (ie. desktop scripts), and ultimately spell the death of certain BPOs.  Noise, confusion, and disruption all around.  And, even if BPO’s do start to deploy RPA in off-shore delivery locations, it will eventually occur to people that it is just plain bizarre (and wasteful) to have work software (RPA) accessing a remote user interface over distrust software (Citrix) rather than just putting Digital Labor to work where the systems reside.
  • Take the ball and go home (repatriating work, with the help of new and insightful Service Delivery Automation partners) – this option will dawn on more and more enterprises.  It will start small, gain momentum, and help Enterprise rejuvenate transformation efforts.  It will also serve to catalyze a blossoming of big data analytics initiatives and breakthroughs.  I fundamentally believe that, for work that can be automated…”onsite = insight”.  Put another way, work processed closer to decision makers will inform more decisions.

So, in conclusion, Enterprise has a choice.  It’s no one-size-fits-all, but I believe we’ll see the empowerment of Digital Business Services and Enterprise Global Services teams inside of organizations.  Their toolkit has gotten quite potent, and exciting case studies are beginning to mount.

As for Business People Outsourcing firms, they too have a choice.  They either compete against a faster, leaner, more powerful horse (adopt automation), or they get off the race track and look for another sport (where human abilities have yet to be mimicked).  It’s ‘horses for courses’ and the course is changing.

P.S.  If you’re still in the market for Business People Outsourcing, there are much better options in the form of Impact and Crowd sourcing…

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