Welcome!

Microsoft Cloud Authors: Yeshim Deniz, Janakiram MSV, Andreas Grabner, Stackify Blog, Liz McMillan

News Feed Item

“BPO on the Brink” Research Finds Technology is Critical for Achieving Value Beyond Cost Reduction in Outsourcing Engagements

The business process outsourcing (BPO) industry has reached a critical inflection point in terms of what clients expect from outsourcing engagements and what providers can deliver, according to an Accenture (NYSE:ACN) sponsored study from HfS Research. The report, entitled “BPO on the Brink of a New Generation: Technology Transformation,” found that in order to address the huge shift in buyer expectations and achieve sustainable value beyond cost reduction, both clients and outsourcing providers must embrace comprehensive technology capabilities including automation, analytics, and cloud computing.

According to the report, which featured a survey of 773 BPO industry stakeholders including enterprise buyers, service providers and advisors, two-thirds of the industry remains trapped in engagements focused on cost reduction alone with existing processes simply “lifted and shifted” from the client to low cost delivery centers. Yet, half (49 percent) of today’s clients expect to undertake a wide-scale transformation of their business processes within the next two years to capture new and more sustainable business outcomes that are enabled by technology.

Despite this dramatic change in buyer expectations, six out of ten clients feel their providers are failing to deliver the technology skills and capabilities needed to drive this transformation. This represents a huge chasm that must be crossed in a short time frame in order to move into the next generation of the market, which is characterized by greater use of technology and higher level skills.

“The HfS report validates that technology-enabled BPO engagements – those we would consider to be high performing – are achieving significantly higher value business outcomes than those focused merely on cost reduction and labor arbitrage,” said Mike Salvino, group chief executive, Business Process Outsourcing at Accenture. “It reinforces Accenture’s recently published Technology Vision, which demonstrates that today every business is a digital business, and companies face a choice to either disrupt their markets or be disrupted by more innovative and agile competitors. The HfS research report is an important call to action for those that want to realize the full potential of outsourcing and move into the next generation of the market.”

Advantages of Technology-Enabled BPO

Clients who have taken the leap to the next generation with technology-enabled BPO are reaping much better results than those stuck in earlier phases, with 80 percent viewing their operational performance as “quite” or “highly effective”, compared to only 65 percent of those who have not technology-enabled their BPO. This demonstrates the impact technology enablement can have in creating a modern service infrastructure, optimized for analytics, offering more standardized processes and workflows, and enabling greater visibility and control for clients. The research found that technology-enabled BPO provides the following benefits:

  • Facilitates the move away from the “lift and shift” model -- Fifty-two percent of buyers with technology-enabled BPO are seeing real progress towards shifting away from the “lift and shift” BPO model where the only value metric is based on cost per employee. This is twice the proportion of those clients which haven’t undergone technology-enablement of their BPO processes.
  • Drives common standards and workflows -- Over half (52 percent) of the buyers who have undergone a technology transformation can boast much greater effectiveness of process delivery in the cloud, with significantly improved cost, quality, and organizational agility.
  • Provides analytical insight and innovative capabilities -- Most technology-enabled BPO buyers are achieving real effectiveness in higher value areas, namely new ideas/initiatives (50 percent), analytical insight (45 percent) and even gain sharing with their providers (42 percent). While clearly there is room for improvement in these areas, it is notable how clients that have invested in technology to enable their BPO are able to focus on higher value outcomes.

Key Recommendations

The research study shows that clear and concerted action is needed by both enterprise clients and service providers. Key recommendations include:

  • Break away from the labor arbitrage model with automation -- BPO clients will eventually see their efficiency gains wither away if they cannot break out of the labor arbitrage model. Automation will provide the bridge between the labor arbitrage past and the state of technology enabled transformation.
  • Embrace the move to digital – Clients and providers alike should re-think existing processes and remove or replace all "analog" steps which may currently be eased by technology but which aren't fundamentally digital in nature. Clients also need to invest in improved governance skills to cover these new capabilities, while many service providers need to invest in the higher caliber talent, analytics capabilities and technology platforms required to create this value.
  • Invest in technology-centric personnel -- Service providers should re-organize around product management and development teams driven by software engineers and supported by business analysts rather than capability teams defined by the geography or broad pools of generalist talent. The CTO of a BPO service provider needs to have a voice at the leadership table.

"Most business function leaders do not have the luxury of ten year programs in today's environment, especially with initiatives like BPO, where expectations for reaching new thresholds of business value are moving a lot faster,” said Phil Fersht, CEO and founder, HfS Research, and author of the report. “Their leadership expects to see tangible results in much shorter timeframes and this study clearly shows that expectations for transforming BPO delivery models are at an all-time high. What started with the reduction of costs of companies' existing processes is now evolving to a wide-scale technology-enabled transformation of business operations, driven by the skill and acumen of operations talent on both the buyer and provider teams. New generation BPO is about transforming processes, developing talent and embracing technology capability for ambitious organizations.”

This report is an important extension of Accenture’s High Performance in BPO research, which identifies the specific business outcomes and the collaborative behaviors and practices that enable clients to capture the greatest potential value from BPO. The full report is available here: www.accenture.com/BPOonthebrink.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with approximately 281,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page is www.accenture.com.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
"We provide IoT solutions. We provide the most compatible solutions for many applications. Our solutions are industry agnostic and also protocol agnostic," explained Richard Han, Head of Sales and Marketing and Engineering at Systena America, in this SYS-CON.tv interview at @ThingsExpo, held June 6-8, 2017, at the Javits Center in New York City, NY.
SYS-CON Events announced today that Calligo, an innovative cloud service provider offering mid-sized companies the highest levels of data privacy and security, has been named "Bronze Sponsor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Calligo offers unparalleled application performance guarantees, commercial flexibility and a personalised support service from its globally located cloud plat...
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
"The Striim platform is a full end-to-end streaming integration and analytics platform that is middleware that covers a lot of different use cases," explained Steve Wilkes, Founder and CTO at Striim, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We are focused on SAP running in the clouds, to make this super easy because we believe in the tremendous value of those powerful worlds - SAP and the cloud," explained Frank Stienhans, CTO of Ocean9, Inc., in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
DX World EXPO, LLC., a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
SYS-CON Events announced today that DXWorldExpo has been named “Global Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Digital Transformation is the key issue driving the global enterprise IT business. Digital Transformation is most prominent among Global 2000 enterprises and government institutions.
SYS-CON Events announced today that Datera, that offers a radically new data management architecture, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Datera is transforming the traditional datacenter model through modern cloud simplicity. The technology industry is at another major inflection point. The rise of mobile, the Internet of Things, data storage and Big...
"MobiDev is a Ukraine-based software development company. We do mobile development, and we're specialists in that. But we do full stack software development for entrepreneurs, for emerging companies, and for enterprise ventures," explained Alan Winters, U.S. Head of Business Development at MobiDev, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We've been engaging with a lot of customers including Panasonic, we've been involved with Cisco and now we're working with the U.S. government - the Department of Homeland Security," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held June 6-8, 2017, at the Javits Center in New York City, NY.
While the focus and objectives of IoT initiatives are many and diverse, they all share a few common attributes, and one of those is the network. Commonly, that network includes the Internet, over which there isn't any real control for performance and availability. Or is there? The current state of the art for Big Data analytics, as applied to network telemetry, offers new opportunities for improving and assuring operational integrity. In his session at @ThingsExpo, Jim Frey, Vice President of S...
SYS-CON Events announced today that DXWorldExpo has been named “Global Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Digital Transformation is the key issue driving the global enterprise IT business. Digital Transformation is most prominent among Global 2000 enterprises and government institutions.
In his opening keynote at 20th Cloud Expo, Michael Maximilien, Research Scientist, Architect, and Engineer at IBM, discussed the full potential of the cloud and social data requires artificial intelligence. By mixing Cloud Foundry and the rich set of Watson services, IBM's Bluemix is the best cloud operating system for enterprises today, providing rapid development and deployment of applications that can take advantage of the rich catalog of Watson services to help drive insights from the vast t...
SYS-CON Events announced today that EnterpriseTech has been named “Media Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. EnterpriseTech is a professional resource for news and intelligence covering the migration of high-end technologies into the enterprise and business-IT industry, with a special focus on high-tech solutions in new product development, workload management, increased effic...
SYS-CON Events announced today that Massive Networks, that helps your business operate seamlessly with fast, reliable, and secure internet and network solutions, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. As a premier telecommunications provider, Massive Networks is headquartered out of Louisville, Colorado. With years of experience under their belt, their team of...
SYS-CON Events announced today that Cloud Academy named "Bronze Sponsor" of 21st International Cloud Expo which will take place October 31 - November 2, 2017 at the Santa Clara Convention Center in Santa Clara, CA. Cloud Academy is the industry’s most innovative, vendor-neutral cloud technology training platform. Cloud Academy provides continuous learning solutions for individuals and enterprise teams for Amazon Web Services, Microsoft Azure, Google Cloud Platform, and the most popular cloud com...
SYS-CON Events announced today that Cloudistics, an on-premises cloud computing company, has been named “Bronze Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Cloudistics delivers a complete public cloud experience with composable on-premises infrastructures to medium and large enterprises. Its software-defined technology natively converges network, storage, compute, virtualization, and ...
SYS-CON Events announced today that CHEETAH Training & Innovation will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct. 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CHEETAH Training & Innovation is a cloud consulting and IT training firm specializing in improving clients cloud strategies and infrastructures for medium to large companies.
SYS-CON Events announced today that Datanami has been named “Media Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Datanami is a communication channel dedicated to providing insight, analysis and up-to-the-minute information about emerging trends and solutions in Big Data. The publication sheds light on all cutting-edge technologies including networking, storage and applications, and thei...
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...