Expert - research findings and commentary

Current relationship models restrict BPO success

To add a further layer of insight to Open Outsourcing: Effective Engagement, Arvato commissioned independent industry research to understand how senior BPO clients across the public and private sectors view their current arrangement. Interestingly, while many are happy with the programme, there’s definite room for improvement when it comes to the relationship.

We also spoke to leading BPO analysts and experts on the subject and they confirmed the importance of effective engagement within outsourcing partnerships.

The BPO market is extremely competitive and providers have to work hard to resolve challenges. A general criticism is that providers are unable to tell clients early and often about bad news so that the clients could help fix the problem or mitigate the risk earlier. However, clients that treated their providers as partners (that is, as part of the team) had better experiences of BPO versus those that kept the service provider and its staff at arm’s length.

Cathy Tornbohm, Vice President Research, Gartner

Disconnect between objectives and measures

 

Cost-cutting now ranks as one of the least important drivers for outsourcing. The most important drivers are reliant on people, such as access to skills and expertise to facilitate growth and adapt to change. But, organisations still value more process-focused attributes – arguably a hygiene factor, above qualities such as agility and flexibility.

 

“Outsourcing is long term. All things are subject to change so flexibility is paramount. It is essential for both the customer and supplier to be aligned so that they each understand where the other is going, and how this helps them accommodate change, or even better, anticipate it.” Martyn Hart, Chairman, National Outsourcing Association

Trusted partner vs. contractor

 

Partnership is a well-used phrase in the outsourcing industry, but many BPO arrangements seem to be based on a vendor or contractor model without mutual trust and collaboration. Only just over half of respondents view their BPO provider as a trusted partner – a figure that should be much higher for BPO to achieve its full potential and deliver beyond just the contractual commitments.

 

“The most important element of any relationship is building trust and understanding each other’s objectives. Challenges which may arise centre around managing expectations regarding the service-based operations as well as the value-added activities.” Ilan Oshri, Professor of Technology and Globalisation, Director, Centre for Global Sourcing and Services, Loughborough School of Business and Economics

Contracts limiting flexibility and agility

 

A standardised model and sole focus on contractual obligations rather than doing the right thing for the partnership, is limiting the true potential of BPO.

 

“The problem with one-size-fits-all is that you can end up with one-size-fits-no-one. Ultimately partnership involves people working together to achieve success and people are all different, however no-one wants to risk reinventing the wheel, in case it doesn’t turn as well as the original. There is a middle ground here, where industry best practice is adapted and tweaked to fit the specifics of the relationship and the two organisations involved in it.” Eleanor Winn, Director, Source

Room for relationship improvement

While the majority of respondents are happy with the delivery of their BPO programme (80%), 87% feel there is something limiting the relationship.

 

“There really isn’t one relationship, but a series of relationships between individuals; the attitudes of key individuals make all the difference. People talk about ‘building trust’, but you only do that by taking real risks or going well beyond what you are obliged to do.” Marcus Alexander, Associate Adjunct Professor of Strategy and Entrepreneurship at London Business School (BPO specialism)

 

“Flexibility, transparency, and accountability are key. The agreement of a framework up front helps to define boundaries, but this must not be adhered to religiously. Contracts and relationships shift during the lifecycle of the engagement. Sufficient flex needs to be built in to accommodate these changes, with minimal detrimental impact on all stakeholders.” Jens Butler, Principle Analyst, IT Services, Ovum

 

“The only thing that is certain is change. The ability to give a little, showing flexibility and insight into the other party’s drivers, makes a huge difference – the law of reciprocity is such that when you need a little flexibility or understanding in return, you are much more likely to get it. The highest performing relationships are those where controlled flexibility is part of the day-to-day behaviours on both sides.“ Barry Matthews, Director, Source

The study was conducted by Coleman Parkes Research, based on interviews with 100 senior BPO clients in September and October 2012.