Introduction and challenges
The outsourcing of services (BPO: business process outsourcing) begun in the early 2000s. Today, the BPO market is global, competitive, mature and provides a competitive offering (pricing and service quality).
The BPO market includes many tier-one providers, who offer broad functional coverage and value-added services, as well as processing capacity. Some BPO providers have built global networks of onshore, nearshore and offshore centers that they use to support their customers. Additionally, there are many tier two providers with a more specific scope (geographic/functional) designed for smaller clients.
The main question is not whether to choose a BPO-supported organization or a shared services organization (captive centers), rather, it is finding the right shared services model that leverages BPO in a pragmatic way (hybrid model). In fact, most companies that have implemented BPO have integrated it into their shared services model.
However, outsourcing is not an objective, it is a tool. Even if the BPO market is mature, an outsourcing project remains risky; as shown by a few unfortunate examples where a BPO service provider caused huge losses on a contract or when a customer regretted his initial decision and internalized support services.
The challenge is therefore to use BPO in a calculated way, checking its relevance for the company and making sure all conditions for success are met.
How we can help
Argon & Co’s experts have both internal and external experience of BPO, in addition to shared services. We have supported global companies in the definition and implementation of effective hybrid models. We provide the necessary perspective and methodology to support managers in structuring choices and execution. For example:
- Does the company have the right level of maturity to consider BPO?
- What should be the BPO scope (functional, geographical, BU)?
- What should be the BPO target model (number and location of BPO centers, governance)?
- What impacts, especially the HR impacts, should be expected and how can you manage them?
- How can you reorganize the retained work, i.e. the part of the function that is not outsourced?
- What is the business case and what is the roadmap for BPO?
- How do you manage the BPO bidding process and choose the right service provider?
- How do you structure the contract?
Argon & Co can help upstream in the definition of the BPO strategy, during the tender process and downstream, particularly in the organization of the retained work.