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To BPO, or not to BPO

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Editor Coda
Sep 11, 2017

A sharespace member recently posted a question in socialspace asking about the pros and cons of using a Business Process Outsourcer (BPO) when it comes to new technology solutions. I thought this was an interesting topic. 

Here are some considerations to examine when looking at choosing a BPO or building an in-house solution. 

For many shared services organizations, the role of the BPO is significant in helping them achieve their objectives – which is why companies like WPP, Reckitt Benckiser, AB InBev (ex SAB Miller), Astra Zeneca and Mondelez partner with BPOs for finance transformation and delivery. 

Working with a BPO on technology delivery can supply a number of benefits:

•    It’s less work for you.

Having an outsourced approach to technology requirements means that the business can be less ‘hands-on’. This allows employees, and the business, to have more focus on other value-adding tasks. 

•    Attractive business cases. 

BPOs have scale and bulk. This means they secure great deals when working with their technology partners (the more you buy, the better the deal). As a BPO client, you get to benefit from these economies of scale, which might be wholly unachievable for you if left to your own devices.
•    Best practice could be more likely.

Because BPOs work with many clients, they are more in tune with what ‘best practice’ looks like. BPOs might not always offer this insight, so the client needs to ensure this is part of the offering. Similarly, BPOs have a higher use of technologies than most companies, because of the volume. So their product awareness and expertise is likely stronger. Make sure you tap into this expertise, rather than sit back and wait for the BPO to reveal the best practices.

What about the disadvantages? Let’s take a look at these:

•    Longer-term costs.

Cost will always be a strong factor in any business decision, whether we like it or not. When arbitrage was cheap, using a BPO was an easy and obvious choice. However, labor arbitrage is not as compelling as it used to be, as salaries in popular BPO countries like India climb. Make sure that the BPO is offering you a very compelling long-term business case. 

•    Who’s the boss? 

In any type of relationship, the subject of ownership and authority tends to crop up. Although you may have initially agreed the contract on your terms, the reality can become somewhat different. Reporting lines, ownership, and control can become issues, and that means certain objectives can be forgotten and, in some cases, not met. If there is ambiguity concerning responsibilities, accountability, and ownership, you should lead the way in correcting this, as BPOs may not always make it a priority.

•    There’s too much choice. 

The past ten years have seen a significant rise in technology solution providers offering solutions to e-invoicing, RPA, supplier portals, and more. This means that competition is high, and therefore technology solutions that are available today are arguably more cost-effective than what your BPO is offering.  Providers want your business. They won’t take just any deal, but if they can use your name, and you promise to be a ‘good’ customer (run a great project, dedicate the right resource, speak at events about the program), then you can likely negotiate a favorable deal.

If you are already working with a BPO, a decision to implement new technology may not be an easy one. One of the major considerations, if you are looking to steer away from your BPO, is the financial implications of breaking the contract. You need to ascertain whether your business can justify these costs.

Having touched on some of the pros and cons, I am hoping that you have begun to find some more clarity as to whether you work with a BPO on technology decisions or not. If you would like more advice and expertise, take some time to listen to a podcast authored by Suzanne Ryder from Reckitt Benckiser who has extensive experience working with BPOs. 

If you have any thoughts or experience on this, please join the discussion and get involved! 

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