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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 focusing on business outcomes.
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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 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.
A review of 1,356 BPO and ITO findings from 254 academic research studies identified as robust.
Our client interviews and survey both found that a focus on business outcomes is one of the most important of those practices.
Excellence in service delivery is a characteristic of high-performance BPO, but partners in these relationships also look beyond that to innovations and better business performance. This translates into regularly re-examining service level agreements so that they help achieve business goals that the outsourced processes support. A key process advantage is the depth of the relationship with the provider.
For high performers, process excellence and integration are necessary building blocks for leveraging provider impact beyond a single functional area—for example, finance and accounting, human resources, procurement—into wider business and strategic impacts.
The research also refutes the belief that outsourcing cannot achieve innovation. Our several studies have found plenty of examples that demonstrate the link between high-performance BPO and innovation.The distinctive pattern in all these cases is that clients get such results by:
Inviting the provider into the strategic tent.
Adopting collaborative practices.
Leveraging the provider’s wider capabilities to achieving process innovations and strategic business outcomes.
In our companion study, we identified three key contracting practices across the 26 cases that supported collaborative innovation:
Contracts share risk and reward, and offset risks.
Contracts focus on a combination of business imperatives (the “what”), and allow for adaptiveness in how these are achieved (the “how”).
Contracts are designed to incent innovation, flexibility, collaboration and high performance to achieve common goals.
The present high-performance BPO study reinforces these findings. Clients in high-performance BPO relationships understand that they need to incentivize providers if they expect to achieve greater impact or transformative results. For a significant number of high-performance businesses, the answer is outcome-based pricing with performance incentives built in. More than half of high–performance organizations (54 percent) have such incentives in place, compared with only about one-fourth (24 percent) of typical performers.
November 7, 2012
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