Few industry segments can match the explosive growth rates of high-technology companies in America. “While companies with stellar growth curves might not seem like leading prospects for Business Process Outsourcing (BPO), their unique characteristics indeed make them very promising candidates,” says Jagdish Dalal, partner, PricewaterhouseCoopers’ Business Process Outsourcing for high technology
In fact, results of PwC’s Global BPO Top Decision-Marker Study, conducted by Yankelovich Partners among CEOs, Presidents, CFOs and CIOs of $1 billion companies worldwide, indicates that 65% of these decision-makers at high technology companies report that the importance of BPO at their companies has increased over the past three years and that 70% have outsourced one or more business processes to an external provider. And, remarkably, over nine of ten (94%) technology executives state they are satisfied with the BPO initiatives at their companies
BPO Creates Nimble Giants
Large high-technology organizations have the benefit of solid market capitalization, but far more nimble, narrowly-focused competitors are emerging every week with the latest technological twist on performance. Most large firms have established internal staffs to handle vertical functions and processes which have become tightly knitted into the corporate operations. This can present difficulties in changing course quickly. When facing an array of new challengers, quick reaction times can spell the difference between retaining and losing market share.
Dalal points to the impact created by Amazon.com on established bookseller giant Barnes and Noble. “Amazon.com came in with a business model that called for a boundary-free (some would call it a virtual corporation) approach with suppliers, partners, and vendors working together to deliver superior products to the marketplace,” notes Dalal. “Most of the high-tech companies are more tuned to that kind of business paradigm, in part because it’s embedded in their business plan.
Growth Pace Demands Expertise
Companies of all sizes can exploit what business process outsourcing has to offer. The critical need to focus on growth, profitability and shareholder value along with the complexities of managing that growth successfully make it an absolute requirement that companies have access to the best talent available. “This is exactly why outsourcing business processes to world-class providers such as PricewaterhouseCoopers makes sense,” says Dalal.
That’s why it’s so important to make sure that the processes to be outsourced – whether its finance/accounting, procurement, human resources, etc. – are the outsourcer’s core competencies, as these processes are at PricewaterhouseCoopers, where over 10,000 professionals focus on business process outsourcing services.
Helping Cash Flow
Another consideration is capital. Every start-up is starving for cash and looking for ways to sustain positive cash flow. BPO offers an excellent, meaningful way to help new and growing companies focus on their core business – whether its marketing, manufacturing, distribution or product development – by allowing companies to focus management expertise and time in those areas that will help build the company’s primary business, and not in areas and function that do not add value.
Finding BPO Experts
The dynamic nature of the technology industry makes it hard to keep on top of industry developments and particularly difficult for management to keep abreast of distinguishing and/or identifying core vs. non-core functions. When examining a specific area such as international tax issues, companies can hire a consultant or international tax expert but, according to Dalal, neither option is financially expedient. “What usually happens,” he says, “is they assign someone (usually a key resource) internally to the project and create a quasi-expert who makes a recommendation. But when you outsource this assignment to a world class provider with expertise in this area, they can access appropriate experts for the amount of time necessary to complete the project.”
Managing Growth in the Face of Uncertainty
While the technology industry seems to share many of the benefits of business process outsourcing that are common to other industries, it is unique in other ways, according to Dalal. BPO arrangements are often transaction-based with very specific performance standards and a degree of pricing uniformity. In the high-tech arena, operations tend to be more volatile. So how can a company arrive at clearly-defined performance standards, expectations, and work load predictions?
Many organizations don’t know the strengths and weaknesses of their infrastructures and what needs to be developed for the future of their business,” notes Dalal. He cites an agreement for real estate management where the work load cannot be determined in advance, and the client charges PricewaterhouseCoopers with the responsibility to provide appropriate resourcing. This is where company employees have an opportunity to benefit from outsourcing. Outsourced employees have the chance to work in a new environment, in which they truly can advance their career goals. As part of a world-wide firm like PricewaterhouseCoopers, employees become part of the outsourcer’s core competency and strategic mission. They are no longer just a member of the “back-office” in a company for which most back-office functions are not a core competency.
Lessons from the Business Process Outsourcing Primer:
- Growth, rapid changes, and capital requirements in the high-technology industry make a strong case for BPO.
- BPO offers break-out capabilities to high-tech clients, by enabling faster rates of change.
- BPO agreements for high-tech clients will be far less specific because of industry dynamics and rapidly changing requirements.
- Clients will rely more on past performance, expertise and trust in selecting BPO partners
- Caring for people is critical, clients look for a provider who will care for an empower their employees.