After the crash of the full-of-promise dotcoms, buyers have become leery of entrusting their vital but non-core business processes to a small player, observes Aaron Graham, senior director, BPO strategy for EDS, the global outsourcing supplier based in Plano, Texas. "They want someone who's going to be around tomorrow. Buyers wants process, technology and stability," he says.
The increasing complexity of BPO transactions also favors the bigger players. Companies are turning to BPO suppliers to integrate their front and back offices, always a daunting assignment.
In the last couple of years, corporations have had the visceral experience of an economy making 180 degree changes very quickly. That has underscored the need for corporations to sharpen their focus on activities critical to their core business and outsource the rest.
The pace of change in the digital era is also accelerating the decision to outsource non-core processes. Graham says these companies tell EDS, "We don't want to handle this process and we don't want to lose ground." So they decide to outsource knowing they will get both competency and currency. "Today, the winners in business are the ones who can take advantage of technological change," Graham notes. This is especially true in processes like human resources (HR), where the trend is to move many of the HR functions to the Web.
Moving To Outsource The Entire Process
Graham believes BPO outsourcing will enjoy continued growth in 2002. One of the pressure points will be change management by outsourcing multiple processes. Companies want a single BPO supplier to orchestrate this transformation. Buyers are so overwhelmed by the complexity of the transformation process they don't want to add another layer by having to manage multiple suppliers.
Buyers are now ready to outsource the whole enchilada instead of just key components. Graham says that in the past buyers preferred to purchase discrete segments of a process, like payroll or employee benefits in HR. Now, they are ready to hand over the entire area to a supplier. Graham says companies are also willing to operate on a shared technology platform, since multiple users on the same platform help keep costs in line. "Most customers are willing to share" when the processes are standardized like credit services, he explains.
"BPO is the space to watch. It's the future of outsourcing," he concludes.
Lessons from the Outsourcing Journal:
- Buyers now prefer suppliers who have staying power as well as technical expertise.
- The changing economy is forcing companies to focus on their core processes, making them more willing to outsource their non-core areas.
- Companies are now willing to outsource the entire process instead of just pieces of the process, which had been the norm.
- Buyers are eager to enjoy the newest technology and are willing to share platforms.