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Accenture and the London School of Economics have uncovered the “keys to the kingdom”—those practices that contribute to high-performance business process outsourcing (BPO). In this paper, we examine the practice of collaborative BPO governance.
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As the BPO market matures, clients are expecting more than just cost reductions and fulfilled service level agreements. They want their back offices transformed, their business performance improved. They expect their service providers to adapt to changing business demands and deliver new sets of outcomes.
We call relationships that are achieving these exceptional results high-performance BPO.
Accenture and the London School of Economics undertook joint research to uncover the practices that distinguish high-performance BPO from its more typical counterparts. Our latest research from this partnership uncovered the “keys to the kingdom” practices that contribute to high performance. These practices emerged from analysis of four principal research streams: a comprehensive survey of 263 senior client BPO executives, in-depth interviews with client-provider executive pairs in 20 organizations, research into 26 organizations identified as high performers in collaborative innovation and a review of 1,356 BPO and ITO findings from 254 academic research studies identified as robust.
Collaborative BPO governance is one of the most important of those practices.
When most people think of collaborative BPO governance, they think of governance structures, such as joint operating, management and executive committees. While our research confirms that these governance structures are important, they are pervasive practices present in all substantially-sized BPO relationships. Governance structures are thus a “hygiene” factor, because the absence of such structures may result in poor performance, but the presence of collaborative governance structures does not in itself necessarily lead to high performance. In practice, if not designed correctly, they can inhibit, rather than enable, high performance.
In the high-performance BPO relationships that we studied, collaborative BPO governance is much more than a set of committees; it also comprises embedded partnership attitudes and behaviors. Collaborative BPO governance begins with an attitude we call the “partnership view” in which a client regards the provider as a strategic partner rather than as an opportunistic vendor. The partnership view manifests itself in partnership behaviors—such as resolving conflicts fairly and protecting both parties’ commercial interests—that result in high BPO performance from both client and provider perspectives. High performance, in turn, reinforces partnership attitudes and behaviors, preparing the ground for the next crucial interaction.
The combined evidence from all our BPO research streams enriches the survey findings. It points to three actions for stepping up to high performance:
Signal collaborative behavior and practices early, and always. In business relationships, the word “collaboration” signals close partnering behaviors developed over and for the long term, distinguished by the high trust, flexibility, reciprocity, risk-sharing and investment of time and resources essential if high performance on individual and shared goals are to be achieved.
Leadership is fundamental, starts in the boardroom, but must operate at every level in and across the collaborating organizations. Leadership must engage people to make progress not just on the technical but also on the adaptive problems they face.
High performance is built on cycles of trust and performance. Look to create a virtuous circle between trust-building, win-win incentives on strategic and operational criteria over the longer term, and the reinforcement effects of superior delivery.
October 28, 2012
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