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Business process outsourcing (BPO) is well established in business. In its third decade, it is now being called upon to offer greater value to clients seeking competitive differentiation in a brutally competitive global business environment.
A small group of organizations (about one in five) has succeeded in capturing significantly greater business value from their BPO engagements than most other companies.
In an effort to define this greater value and understand how it can be achieved, Accenture, together with the Everest Group and the Outsourcing Unit at The London School of Economics, has undertaken a comprehensive research initiative into high-performance BPO. The research identifies eight behaviors and practices in which BPO leaders excel.
Mike Salvino, group chief executive of Accenture’s Business Process Outsourcing growth platform says that this research study will make readers stand up and take notice, “Why do I say this report is so different? Because, I cannot recall another time when the disparity between the most successful companies studied—the practitioners of high-performance BPO—and the also-rans was so clear and compelling. Among the eight best practices that emerged as statistically relevant, time after time we see the gap between the best and the rest being not just a few percentage points but 30, 40 and 50 points.”
Business process outsourcing has become an accepted management practice across most companies and industries. At the same time, it is becoming a more complex endeavor, going deeper into the value chains of companies.
Until recently, companies were looking for something relatively straightforward from a BPO relationship: greater efficiency, streamlined operations and lower costs. Today, companies expect more, including:
The BPO industry is moving to a cost-plus-value proposition focused on delivering strategic business impact, not just operating cost reductions.
What exactly is the plus in that proposition? What separates the best-performing BPO relationships from the rest? Evidence to date has been primarily anecdotal.
Now, Accenture—in conjunction with the Everest Group and the Outsourcing Unit at The London School of Economics—has completed a comprehensive research initiative into the characteristics of high-performance BPO, or BPO that produces strategic business value for a company and enables it to exceed the performance of its industry peers in a way that can be sustained over time.
Some key findings:
Eighty-nine percent of high-performance businesses consider process excellence to be an important priority in a BPO relationship, as compared with only 63 percent of typical performers.
Nearly 85 percent of high-performance businesses consider their BPO provider to be a strategic partner; by contrast, only 41 percent of typical performers hold that view.
Eighty-eight percent of companies working within a high-performance BPO relationship regard change management as important compared with 62 percent of typical performers.
Two-thirds of high-performance businesses focus on the potential value of business benefits beyond cost alone when creating the business case, compared with only 26 percent of typical performers.
Sixty-two percent of high-performance businesses consider business-impact targets as an important component of the BPO service model, compared with 50 percent of typical performers.
Almost half (48 percent) of high-performance businesses consider their provider’s industry experience to be important, compared with only 31 percent of typical performers.
Half of high-performance businesses have engaged in modifications of their retained organization to optimize the BPO operating model, compared with only 29 percent of typical performers.
Forty percent of high-performance businesses consider technology provided by the service provider to be an important component of the BPO relationship, compared to only 27 percent of typical performers.
A relatively small number of BPO clients (20 percent of those participating in the research study) have succeeded in extracting greater business value from their BPO relationships than the majority. These are practitioners of high-performance BPO.
These high-performance businesses demonstrate best-in-class behaviors and practices in eight areas:
End-to-end approach: A holistic approach to managing the scope of the BPO relationship.
Collaborative BPO governance: Adopting a partnership attitude.
Change management: Managing the effects of change during transition and beyond.
Value beyond cost: Focusing on benefits beyond cost reduction.
Business outcomes: Targeting strategic outcomes, not just more efficient transactions.
Domain expertise and analytics: Contextualizing data for business insight.
Retained organization transformation: Enabling the retained organization to perform effectively in the new environment.
Technology as a business enabler: Driving operational improvements and business innovation.
One of the more promising findings of our research is that high-performance BPO is attainable for all organizations of any size. The research makes plain the fact that high-performance BPO is not dependent on organization size, industry, geography, tenure or business function involved. Rather, it results from taking a more strategic and thoughtful approach to the establishment and management of BPO engagements.
By adopting the behaviors and practices associated with high-performance BPO, clients can capture significantly greater business value and build new competitive strengths together with their differentiated BPO provider.
Accenture is helping many of the world’s leading companies use BPO to power high performance—contact us to find out how we can help you achieve the same benefits.
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