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What distinguishes high-performing business-process outsourcing (BPO) relationships from run-of-the-mill arrangements?
And what exactly does the journey to high performance look like?
Drawing on extensive case-study and quantitative research, the London School of Economic (LSE) has identified the “keys-to-the-kingdom” practices that contribute to high-performance in outsourcing relationships.
One of the best examples of a BPO arrangement exhibiting these key practices is the relationship between EMC and Accenture for finance and accounting (F&A) services, providing as it does a compelling illustration of a typical journey to high performance.
In 2008, EMC—a US-based multinational vendor of data-storage products and services—decided to create a global shared-services organization (Global Business Services), and sought a BPO partner to help with the enormous transformation involved. EMC didn’t just want to cut costs; it wanted to partner with a provider that would help it realize its global shared-services vision quickly and efficiently.
The initial contract between EMC and Accenture was signed in 2008 for seven years. The initial contract size, measured by full time equivalents (FTEs), was about 140 people.
Working closely with EMC, Accenture focused on 10 key practices that enabled high performance in their BPO relationship:
Since the original agreement was signed in 2008, Accenture has continued to evolve the arrangement, and the corresponding scope of services and locations, to align more closely with EMC’s shared-services vision and strategic imperatives.
Thus far, EMC has realized about 30 percent savings as a result of GBS and its BPO relationship with Accenture, with gains being driven by labor arbitrage and 5 percent yearly productivity increases. Accenture has also helped EMC meet its strategic outcomes, such as quickly integrating acquired firms by leveraging GBS offerings.
The relationship follows a typical path to high performance in BPO, with both parties learning to deploy best practices over time. The most advanced practices—like value-creation teams to drive analytics—came later, once initial objectives had been met and the service was well established.
Another key factor in the delivery of high performance is leadership. BPO is a people business and the best practices evident in the EMC-Accenture relationship only happened because of strong leadership from both the client and the provider organization.
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