Two BPO Vendors Who Are Doing Things Right
Much that LeapSource did wrong, its colleague at Exult did right, says Marc Pramuk, senior industry analyst for IDC in Framingham, Massachusetts.
First, Exult concentrated its sales efforts on the nation's largest companies. "Exult doesn't consider a company as a potential client unless it is large enough to offer economies of scale from the start," reports Pramuk.
Also, Exult hasn't relied upon building new and expensive assets when existing ones are available more cost effectively. When it signed an outsourcing agreement with Tenneco, it acquired Tenneco's shared services center. The operational facility was running below capacity. "Tenneco got rid of an underutilized asset and Exult got an asset cheaply," explains the analyst. Exult used this acquisition to achieve scale by placing its new clients like Unisys there. This strategy allowed Exult to build the necessary transaction volume quickly. Then, its Bank of America contract yielded a second shared services center in Charlotte, North Carolina.
"Exult understood its sales pipeline and timed its purchase of new assets with new clients," Pramuk points out. "It matched its revenue stream to its expenses."
The IDC analyst also cites PricewaterhouseCoopers (PwC)'s Business Processing Outsourcing group as a BPO provider with staying power. Even though the BPO group is relatively new, Pramuk says it is a strong contender because it has the economic wherewithal to make the capital investment required and then wait until its dance card is full. "PwC can afford to invest money in the short term because other areas of the business can fund it," says Pramuk.
In addition, the BPO group can tap into other divisions of the accounting firm and utilize their excess capacity, tamping down costs. PwC hires new staff once it has clients. "PwC stays lean by using existing resources that already exist rather than hiring people," he explains.