The full business value available from business process outsourcing (BPO) today is being realized on a relatively limited scale due to deficient management behaviors and practices, a new report from Accenture shows.
The BPO Research study is based on a survey 1 of 263 buyers of a range of BPO services such as finance & accounting, procurement, human resources and supply chain. The report shows a relatively small number of BPO buyers – 20-percent of those participating in the study – have succeeded in extracting greater business value from their BPO relationships than the majority and can be classified as “high performers.” The report also validates eight best-in-class practices that are strongly correlated with high performing engagements. By adopting these practices, buyers can realize greater business value than “typical” BPO engagements deliver.
The study shows that high performers in BPO exhibit eight core management behaviors and practices including:
- Taking a holistic approach to managing the scope of the BPO relationship. High performers consider the entire, end-to-end business process to be in scope, including elements managed within the client’s enterprise, those run by third parties as well as related processes that may impact overall performance.
- Adopting a collaborative approach to governance. Collaborative BPO governance is much more than a set of committees or a schedule of meetings; it also comprises the attitudes toward the relationship and the behaviors that strengthen it.
- Making change management a priority. High performers execute carefully planned change programs to manage the effects of change during transition and beyond.
- Focusing on benefits beyond cost reduction. Both client and provider look for value beyond cost – cost reduction is important but is not the prime motivation.
- Targeting strategic business outcomes. High performers aim for specific strategic outcomes -- not just more efficient transactions – that can be measured, such as helping clients increase revenues.
- Leveraging domain expertise and analytics. Clients look to their providers’ deep industry knowledge and ability to analyze data to more predictably drive business outcomes.
- Aligning the retained organization with the outsourced processes. High performers place as much importance on the client’s internal transformation as they place on transforming the outsourced processes.
- Using technology as an enabler. In high-performance BPO relationships, technology is a source of innovation and advantage, not just the infrastructure of delivery.
“This study clearly shows that the industry mindset needs to change for organizations to capture the full business value of BPO, where engagements are measured by business outcomes and improving clients’ business performance rather than just cost reduction,” said Mike Salvino, group chief executive, BPO, at Accenture. “The results indicate that BPO arrangements deliver greater business value when the client and provider engage in deeper relationships and leverage practices that drive high-performance BPO. Those who are able to bring these elements to their relationships will be well-placed to succeed – and those that continue to view BPO purely in terms of transactional processing and cost will be competitively challenged.”The research also found there are statistically significant differences in the performance and behavior of high performing and typical BPO relationships. Some of the widest statistical differences were in areas focusing on mindsets and attitudes, or on the execution of “soft” programs such as organizational alignment and collaboration or change management.