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Disruptive Forces and Their Impact on BPO: Part 7 - High Velocity BPO - What the Client Always Wanted

This is the final in a series of short blogs that look at various disruptive forces and their impact on BPO. The impact of all these disruptive factors is that BPO is now changing into something that the client has always wanted namely “High Velocity BPO”.

In its early days, BPO was a linear and lengthy process with knowledge transfer followed by labor arbitrage, followed by process improvement and standardization, followed by application of tools and automation. This process typically took years, often the full lifetime of the initial contract. More recently, BPO has speeded up with standard global process models, supported by elements of automation, being implemented in conjunction with the initial transition and deployment of global delivery. This timescale for “time to value” is now being speeded up further to enable a full range of transformation to be applied in months rather than years. Overall, BPO is moving from a slow-moving mechanism for transformation to High Velocity BPO. Why take years when months will do?

Some of key characteristics of High Velocity BPO are shown in the chart below:

Attribute

Traditional BPO

High-Velocity BPO

 Objective

 Help the  purchaser fix  their processes

 Help the purchaser contribute to  wider business goals

 Measure of  success

 Process  excellence

 Business success, faster

 Importance of  cost reduction

 High

 Greater, faster

 Geographic  coverage

 Key countries

 Global, now

 Process  enablers &  technologies

 High  dependence on  third-parties

 Own software components  supercharged with RPA

 Process  roadmaps

 On paper

 Built into the components

 Compliance

 Reactive  compliance

 Predictive GRC management

 Analytics

 Reactive process  improvement

 Predictive & driving the  business

 Digital

 A front-office  “nice-to-have”

 Multi-channel and sensors  fundamental

 Governance

 Process-  dependent

 GBS, end-to-end KPIs

 

As a start point, High Velocity BPO no longer focuses on process excellence targeted at a narrow process scope. Its ambitions are much greater, namely to help the client achieve business success faster, and to help the purchaser contribute not just to their own department but to the wider business goals of the organization, driven by monitoring against end-to-end KPIs, increasingly within a GBS operating framework.

However, this doesn’t mean that the need for cost reduction has gone away. It hasn’t. In fact the need for cost reduction is now greater and faster than ever. And in terms of delivery frameworks, the mish-mash of third-party tools and enablers is increasingly likely to be replaced by an integrated combination of proprietary software components, probably built on Open Source software, with built in process roadmaps, real-time reporting and analytics, and supercharged with RPA.

Furthermore, the role of analytics will no longer be reactive process improvement but predictive and driving real business actions, while compliance will also become even more important.

But let’s get back to the disruptive forces impacting BPO. What forms will the resulting disruption take in both the short-term and the long-term?

 Disruption

 Short-term impact

 Long-term impact

 Robotics

 Gives buyers 35%  cost reduction fast
 Faster introduction  of non-FTE based  pricing

 No significant impact on  process models or technology

 Analytics

 Already drives  process  enhancement

 Becomes much more  instrumental in driving business  decisions

 Potentially makes BPO vendors  more strategic

 Labor  arbitrage on  labor  arbitrage

 Ongoing reductions  in service costs and  employee attrition


 Improved business  recovery

 “Domestic BPO markets”  within emerging economies  become major growth  opportunity

 Digital

 Improved service at  reduced cost

 Big opportunity to combine  voice, process, technology, &  analytics in a high-value end-  to-end service

 BPO  “platform  components”

 Improved process  coherence

 BPaaS service delivery without  the third-party SaaS

 The Internet  of Things

 Slow build into  areas like  maintenance

 Huge potential to expand the  BPO market in areas such as  healthcare

 GBS

 Help organizations  deploy GBS

 Improved end-to-end  management and increased  opportunity

Reduced friction of service transfer

 

Well robotics is here now and moving at speed and giving a short-term impact of around 35% cost reduction where applied. It is also fundamentally changing the underlying commercial models away from FTE-based pricing. However, robotics does not involve change in process models or underlying systems and technology and so is largely short-term in its impact and is a cost play.

Digital and analytics are much more strategic and longer lasting in their impact enabling vendors to become more strategic partners by delivering higher value services and driving next best actions and operational business decisions with very high levels of revenue impact.

BPO services around the Internet of Things will be a relatively slow burn in comparison but with the potential to multiply the market for industry-specific BPO services many times over and to enable BPO to move into critical services with real life or death implications.

So what is the overall impact of these disruptive forces on BPO? Well while two of the seven listed above have the potential to reduce BPO revenues in the short-term, the other five have the potential to make BPO more strategic in the eyes of buyers and significantly increase the size and scope of the global BPO market.

 

Part 1 The Robots are Coming - Is this the end of BPO?

Part 2 Analytics is becoming all-pervasive and increasingly predictive

Part 3 Labor arbitrage is dead - long live labor arbitrage

Part 4 Digital renews opportunities in customer management services

Part 5 Will Software Destroy the BPO Industry? Or Will BPO Abandon the Software Industry in Favor of Platform Components?

Part 6 The Internet of Things: Is this a New Beginning for Industry-Specific BPO?

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