Last week I questioned recent survey results which stated that outsourcing in mid-market is moving slowly. My experience has been the opposite. Outsourcing contracts are shrinking for two reasons. One is that clients are getting more experienced in buying BPO and favor multi-sourcing arrangements, the other is the fact that BPO business is expanding to mid-market.
When larger companies are on their second round of outsourcing contracts, most of mid-market is on their first round. Hence, mid-sized companies are in the box sheet in learning from the mistakes by the first-rounders.
Provider evaluation criteria typically emphasizes six key dimensions. Price. Speed. Innovation. Capability. Quality. Culture.
According to the consulting and outsourcing firm Kinetic, buyers make three main mistakes when evaluating potential BPO providers. Firstly, the buyer is too focused on the brand of the BPO provider rather than the actual people delivering the service. Secondly, the buyer is focused on the lowest price provided. Thirdly, the buyer accepts the provider selected by their procurement and not by business stakeholders.
There are other ways to challenge and test the provider. Is the provider curious, committed and have courage to challenge and change you? Some of my thoughts to follow.
Keen on getting to know you. Companies are unique in the way they work. Your service provider isn’t an expert in your culture, nor your business. You are. And it’s your job to teach him.
Just as you are evaluating your service provider’s references and case studies, evaluate their curiosity and responsiveness. Ask to meet the people who will face your people in the run services. Do they ask the right questions? If yes, they are more likely to care to understand your business too.
Challenge the provider to flesh out the principles for your collaboration. What is the practice for collecting qualitative feedback? Is it frequent and regular? How is the feedback turned into action?
Likewise, assess the provider’s motivation to engage and devote. Will you get a customer dedicated team? How will it be educated and updated about your priorities and critical business events?
I hear you saying this is all apparent. I agree, but don’t make the mistake to treat it as apparent.
Value partner. It is not only the captive SSC or in-house finance functions that are privileged to carry a “business partner”-title. As outsourcing providers are moving up the F&A value chain and offering advanced business support, your relationship becomes more business-partnership-like. Modern outsourcing providers know how to turn the tremendous data flows they deal with, into intelligence. There are a few models for that. Some deliver delimitated analytics packages, others offer analytics solutions. Talented providers will make suggestions, advise you and challenge you.
Innovation is word worn through. Yet, it isn’t when you need to select an outsourcing partner. Obviously I am biased, being an employee at a provider. But some years ago, employed as an advisor I evidenced that innovation weighed a lot in my clients’ evaluation criteria. Providers responded to it claiming “proven track of innovation” and suggesting gain-share models. They were not wrong, the potential is there. But still, there is too little discussion around the concrete “innovation process”. With that I mean build, prototype and test. Quickly, continuously and together with the client. Innovation shouldn’t mean that smart people sit in a room and come up with products tailor-made for you. Instead, challenge your provider to give you an entrance ticket to his innovation lab. It’s a game of two. Called co-creation.
Being bold is risky, and we in finance are famous for our risk-adverseness. Yet, change will not happen without being a little adventurous. If you need to improve, go for a bold provider. A bold provider will dare to test and experiment.
Take RPA as an example. Only a half-decade ago no one knew how hugely RPA would disrupt the existing BPO service delivery models. Some feared it would eliminate the whole BPO-business.
Today, BPO-providers have adopted RPA in their business models and are helping their clients do the same.
In outsourcing, it isn’t trendy to live in monogamy. Look at a blend of providers and identify the area that they master. I will guarantee you no one masters everything. Pick the best from the best, and let your partner orchestrate the mix of services. The service will then appear seamless for you.
Make sure you’re a VIC (Very important client). While selecting a service provider, make a quick test on how important you are for them. The risk with selecting a smaller specialist provider is their capability of managing big clients. Then again, the down-side of going with a big player is that you will become “one of many”. The best way to test this is struggle. An agile provider will react quickly and put all efforts on fixing whatever is wrong. Ensure you’re this important. You may want to partnership with a provider to whom you are a game changer and a strategic up-scale. You will certainly enjoy the provider’s commitment and you can impact the course of development.
Tuotepäällikkö, BPO palvelut