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Retail, CPG, & High-Tech Companies Shifting Sourcing in Favor of BPO to Restructure Service Delivery Models

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While organizations across retail, consumer goods and, in particular high-tech, continue to face cost pressure, their attention is increasingly moving to addressing their competitive positioning and innovation in product development, particularly to meet the needs of developing economies. Indeed there is strong pressure to enter new territories in both the high-tech and CPG sectors.

Nonetheless, the need for cost reduction within the retail, consumer goods, and high-tech sectors is often a strong surrogate for a need for wider process enhancement and changes in ways of working and there is often a strong correlation between the need to improve service quality and the need to reduce service cost. Across the high-tech, CG, and retail sectors globally, improving the level of service provided by existing shared service centers is highly important to 39% of companies, while reducing the cost base of existing shared service centers is important to 45% of these companies, As such the following cost reduction targets are strong indicators of process priorities within each sector:

 

 

 

While increasing levels of automation is playing an ever more important role in implementing new ways of working and process cost reduction, retail, CPG, and high-tech companies also exhibit a strong need to restructure their current service delivery, both organizationally to enhance their end-to-end process perspective and in terms of shoring to optimize service quality and efficiency.Consequently, moving to a Global Business Services environment is highly important to 55% of high-tech, CPG and retail companies and particularly so to high-tech companies, 

In particular:

  • Rebalancing activity between locations and moving to a GBS environment is particularly important to high-tech organizations
  • Improving the level of service provided by existing SSCs is of relatively high importance to both retail and CPG organizations
  • SSC cost reduction, and the migration of existing centers to lower cost locations, is of relatively high importance to CPG organizations.

SSC Initiative Intentions

Overall, 60% of companies express a high level of intent to increasingly move to a Global Business Services environment, accompanied by a significant level of rebalancing of activities between delivery locations. Organizations in the::

  • High-tech sector place a relatively high emphasis on implementing additional captive nearshore or offshore captives to take additional processes and on rebalancing activity between locations
  • Consumer goods sector place a relatively high emphasis on migrating work to existing offshore captives and on outsourcing or divesting existing SSCs.

The move to GBS environments supports a more hybrid and flexible approach to use of in-sourced and outsourced processes and organizations in the high-tech, CPG and retail sectors globally are in general undergoing shifts in their sourcing strategies in favor of BPO, with this shift most pronounced in the high-tech sector.

 

Nonetheless, organizations are becoming more demanding in their expectations from BPO service providers and seeking a much greater contribution from their service providers in both demonstrating a process vision for the future and making a more holistic contribution in the short-term. In terms of vision, it is important for BPO service providers to addrss the client's top-line revenue growth, and not just cost-to-serve, provide process consulting, and demonstrate an end-to-end process vision for the future. In terms of taking a more holistic approach, it is important for vendors to leverage automation and robotics and to support BPO services with complementary application management and (cloud) infrastructure management services.

 

To read the full NelsonHall report, go to "BPO Opportunities in Retail, CPG, and High-Tech"

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