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Transforming BPO

Transforming BPO
James Riley - Global Head - Innovation | March 29, 2013
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Me Too

I didn’t really know what I wanted to do when I left university with a management degree. My heart said get a teaching qualification and a year later become a sports teacher. My bank balance said get a paying job sooner rather than later. More by luck than by judgment, the first job I applied for was a graduate position in a small IT Consultancy specializing in a relatively new German ERP application called SAP. I had always had some interest in IT, in fact I had taken courses in it as part of my degree, and my sense was that it was rapidly becoming a key ingredient for successful companies.

I remember my interview day very well. In the first of a number of one:one interviews, I was asked why I was so keen to work in the IT industry. The answer I gave that day is pretty consistent with how I feel today. I am concerned that companies are spending money on IT because their competitors are, rather than because of what it can do for their business. They are not focused upon the business outcome.

Pre and Post Y2K

As things turned out, the market for SAP implementation services in Europe over the next 3 or so years was more than healthy without needing to worry about business outcomes. Good for me, good for the consultancy I worked for.  I then joined Axon in 1998 and with Y2K rapidly approaching, things only got better as IT spending was brought forward to fend of the impending doom expected when the clock struck midnight on December 31st 1999.

The world didn’t descend into chaos in the early hours of the year 2000 as many had predicted. But the market for IT services had changed significantly. CIO’s, having seen their budgets increased pre-Y2K, all of a sudden were being asked to guarantee business outcomes for future project expenditures. For Axon, this was an opportunity. It was an opportunity, as a more nimble player in the SAP services market, for us to differentiate ourselves, and we embraced it. We called it ‘Benefits Realization’ and we offered clients to link a portion of our fees to the delivery of business outcomes. Something we still do as part of HCL today, and it still differentiates us.

The challenge, then and now, is the level to which we can control rather than enable business benefits for our clients. If large portions of those benefits are tied to IT ‘Run the Business’ savings, whether in Applications Management or Infrastructure and we are providing those services post implementation for a client, then it can be straightforward. However, if large portions of those benefits of outsourcing are tied to a more efficient call center, a more effective channel strategy for customer interactions, and faster and more effective management of a meter-to-cash process for a utility company, then unless we are running the call center or the revenue management function, at best we can enable but not fully control benefits delivery.

Your Mess for Less

According to SOURCINGmag.com, ‘your mess for less’ describes the attitude taken by organizations that view outsourcing as a way to hand over a muddled business process that needs cleaning up, along with the expectation that it should cost less to do when performed by a service provider. For such organizations, this labor arbitrage, the migration of jobs to nations where labor and the cost of doing business is inexpensive, has been critical to success.

So. What if large parts of the BPO market really is ‘Your Mess for Less’? Back to university days and a comment the professor made in a marketing lecture that I will never forget: competing on cost, without a sustainable cost advantage, means there is only one way to go…and that’s down. Labor arbitrage is not a sustainable cost advantage; almost all of the largest BPO providers have access to nations that provide inexpensive labor.

According to Gartner, process enhancement technology and services (PETS) can further enhance the technology elements in a BPO engagement, improve services, and reduce operating costs.  PETS have the potential to create and maintain more sustainable cost advantages for BPO providers, improving the services they provide, and creating differentiation in an increasingly commoditized market.

Truly Accountable, Truly Profitable

But wait a minute…perhaps there’s more!

By bundling systems implementation with BPO, HCL is able to not only enable benefits, but also control their delivery. In other words, clients can hold HCL truly accountable because those benefits are baked into the bundled price for those services. As such, the ball is truly in HCL’s court at little or no risk to the customer. PETS are key to this process. Let’s go back to the utility example where the benefits sought from outsourcing for a utility company , include a more efficient call center, a more effective channel strategy for customer interactions, and faster and more effective management of a meter-to-cash process.

Based upon extensive experience in the utilities industry, HCL has developed CEM, a comprehensive and unique  Customer Experience Management framework to enhance process in a multi-channel contact center environment.  More specifically this framework contains a number of process enhancing innovations that could be applied to improve services and reduce the operating costs associated with running a utility contact center and revenue management function, including:

  • Real-Time Interaction Management – predict and proactively manage cross-channel customer interactions, with a focus on the call center, to improve customer services and reduce average handle times for common interaction types.
  • Proactive Customer Communications – provide proactive and valuable communications through the customer’s channel(s) of choice, improving customer service and deflecting costly calls away from the call center.
  • Real-Time Channel Optimization – prioritize and route customers across channels, based upon customer value and interaction type, in combination with available inbound call center capacity.
  • Exception Management – capture, prioritize, and resolve exceptions in the meter-to-cash process from smart meter all the way through to bill payment, thereby reducing debt, working capital and operating cost as well as improving customer service.

Combining these innovations with the services to run the call center and revenue management functions is not just BPO; it is Transformational BPO.

Customer Experience Management Framework

It’s All About the Outcome

Clients are increasingly focused upon the delivery of business outcomes.  They also want to work with service providers who can genuinely be held accountable for the delivery of such outcomes.  At a time when the markets for implementation and BPO services are increasingly commoditized, and no sustainable cost advantages exist, transformational BPO offers HCL the opportunity to be both differentiated and accountable for the delivery of business outcomes for our clients.


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