Click here to close now.




















Welcome!

Microsoft Cloud Authors: Greg O'Connor, Liz McMillan, Aleksei Gavrilenko, Elizabeth White, Pat Romanski

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
Growth hacking is common for startups to make unheard-of progress in building their business. Career Hacks can help Geek Girls and those who support them (yes, that's you too, Dad!) to excel in this typically male-dominated world. Get ready to learn the facts: Is there a bias against women in the tech / developer communities? Why are women 50% of the workforce, but hold only 24% of the STEM or IT positions? Some beginnings of what to do about it! In her Opening Keynote at 16th Cloud Expo, Sandy Carter, IBM General Manager Cloud Ecosystem and Developers, and a Social Business Evangelist, d...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at @ThingsExpo, James Kirkland, Red Hat's Chief Architect for the Internet of Things and Intelligent Systems, described how to revolutionize your archit...
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists addressed this very serious issue of profound change in the industry.
Discussions about cloud computing are evolving into discussions about enterprise IT in general. As enterprises increasingly migrate toward their own unique clouds, new issues such as the use of containers and microservices emerge to keep things interesting. In this Power Panel at 16th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists addressed the state of cloud computing today, and what enterprise IT professionals need to know about how the latest topics and trends affect their organization.
For IoT to grow as quickly as analyst firms’ project, a lot is going to fall on developers to quickly bring applications to market. But the lack of a standard development platform threatens to slow growth and make application development more time consuming and costly, much like we’ve seen in the mobile space. In his session at @ThingsExpo, Mike Weiner, Product Manager of the Omega DevCloud with KORE Telematics Inc., discussed the evolving requirements for developers as IoT matures and conducted a live demonstration of how quickly application development can happen when the need to comply wit...
The Internet of Everything (IoE) brings together people, process, data and things to make networked connections more relevant and valuable than ever before – transforming information into knowledge and knowledge into wisdom. IoE creates new capabilities, richer experiences, and unprecedented opportunities to improve business and government operations, decision making and mission support capabilities.
There will be 150 billion connected devices by 2020. New digital businesses have already disrupted value chains across every industry. APIs are at the center of the digital business. You need to understand what assets you have that can be exposed digitally, what their digital value chain is, and how to create an effective business model around that value chain to compete in this economy. No enterprise can be complacent and not engage in the digital economy. Learn how to be the disruptor and not the disruptee.
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Akana has released Envision, an enhanced API analytics platform that helps enterprises mine critical insights across their digital eco-systems, understand their customers and partners and offer value-added personalized services. “In today’s digital economy, data-driven insights are proving to be a key differentiator for businesses. Understanding the data that is being tunneled through their APIs and how it can be used to optimize their business and operations is of paramount importance,” said Alistair Farquharson, CTO of Akana.
Business as usual for IT is evolving into a "Make or Buy" decision on a service-by-service conversation with input from the LOBs. How does your organization move forward with cloud? In his general session at 16th Cloud Expo, Paul Maravei, Regional Sales Manager, Hybrid Cloud and Managed Services at Cisco, discusses how Cisco and its partners offer a market-leading portfolio and ecosystem of cloud infrastructure and application services that allow you to uniquely and securely combine cloud business applications and services across multiple cloud delivery models.
The enterprise market will drive IoT device adoption over the next five years. In his session at @ThingsExpo, John Greenough, an analyst at BI Intelligence, division of Business Insider, analyzed how companies will adopt IoT products and the associated cost of adopting those products. John Greenough is the lead analyst covering the Internet of Things for BI Intelligence- Business Insider’s paid research service. Numerous IoT companies have cited his analysis of the IoT. Prior to joining BI Intelligence, he worked analyzing bank technology for Corporate Insight and The Clearing House Payment...
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society-changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his session at @ThingsExpo, Jason Mondanaro, Director, Product Management at Metanga, discussed how you can plan to cooperate, partner, and form lasting all-star teams to change the world and it starts with business models and monetization strategies.
Converging digital disruptions is creating a major sea change - Cisco calls this the Internet of Everything (IoE). IoE is the network connection of People, Process, Data and Things, fueled by Cloud, Mobile, Social, Analytics and Security, and it represents a $19Trillion value-at-stake over the next 10 years. In her keynote at @ThingsExpo, Manjula Talreja, VP of Cisco Consulting Services, discussed IoE and the enormous opportunities it provides to public and private firms alike. She will share what businesses must do to thrive in the IoE economy, citing examples from several industry sectors.
In his keynote at 16th Cloud Expo, Rodney Rogers, CEO of Virtustream, discussed the evolution of the company from inception to its recent acquisition by EMC – including personal insights, lessons learned (and some WTF moments) along the way. Learn how Virtustream’s unique approach of combining the economics and elasticity of the consumer cloud model with proper performance, application automation and security into a platform became a breakout success with enterprise customers and a natural fit for the EMC Federation.
"Optimal Design is a technology integration and product development firm that specializes in connecting devices to the cloud," stated Joe Wascow, Co-Founder & CMO of Optimal Design, in this SYS-CON.tv interview at @ThingsExpo, held June 9-11, 2015, at the Javits Center in New York City.
SYS-CON Events announced today that CommVault has been named “Bronze Sponsor” of SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. A singular vision – a belief in a better way to address current and future data management needs – guides CommVault in the development of Singular Information Management® solutions for high-performance data protection, universal availability and simplified management of data on complex storage networks. CommVault's exclusive single-platform architecture gives companies unp...
Electric Cloud and Arynga have announced a product integration partnership that will bring Continuous Delivery solutions to the automotive Internet-of-Things (IoT) market. The joint solution will help automotive manufacturers, OEMs and system integrators adopt DevOps automation and Continuous Delivery practices that reduce software build and release cycle times within the complex and specific parameters of embedded and IoT software systems.
"ciqada is a combined platform of hardware modules and server products that lets people take their existing devices or new devices and lets them be accessible over the Internet for their users," noted Geoff Engelstein of ciqada, a division of Mars International, in this SYS-CON.tv interview at @ThingsExpo, held June 9-11, 2015, at the Javits Center in New York City.
Internet of Things is moving from being a hype to a reality. Experts estimate that internet connected cars will grow to 152 million, while over 100 million internet connected wireless light bulbs and lamps will be operational by 2020. These and many other intriguing statistics highlight the importance of Internet powered devices and how market penetration is going to multiply many times over in the next few years.
SYS-CON Events announced today that Dyn, the worldwide leader in Internet Performance, will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Dyn is a cloud-based Internet Performance company. Dyn helps companies monitor, control, and optimize online infrastructure for an exceptional end-user experience. Through a world-class network and unrivaled, objective intelligence into Internet conditions, Dyn ensures traffic gets delivered faster, safer, and more reliably than ever.