Dell Testimonial

Written by

Christine Crandell

Topics

February 25, 2020

BPO: An unexpected Innovation Partner

BPO is a great innovation partner

Every organization, large and small, is under pressure to be more competitive, innovative, and efficient. 

It’s no longer about offering the most product features, best design, user-interface, or lowest price. For organizations to survive in today’s interconnected global economy, they must be able to spot new trends, agilely pivot to capitalize on them, and do it more efficiently and cost-effectively than their competitors. That’s a tall order.

CGS’ annual report “A Look Ahead: Business Process Outsourcing Trends in 2020” discovered nine business challenges companies face today:

  • Customer data security/fraud prevention (46.8%)
  • Business continuity and disaster recovery (37.1%)
  • Infrastructure stability (37.1%)
  • Changing regulations and policies (37.1%)
  • SaaS/Cloud platforms to replace on-premise solutions (34.4%)
  • Geopolitical, economic and/or social challenges (30.1%)
  • Cost of labor (28.5%)
  • Vendor consolidation (24.2%)
  • Integrating Robotic Process Automation (22.6%)

Add to this list, consistently delivering on your customers’ ever-evolving expectations while constantly innovating your business – it can become overwhelming. One could argue that this list directly contributes to why the lifespan of companies today is estimated to be less than twenty years. Compare that to a company’s life span in the 1960s when it was between thirty-five and sixty years.

Addressing these challenges in today’s economic volatility and velocity requires innovation as a core business strategy. Not just in products but business models, routes to market, and organizational design. There are many ways to operationalize innovation in strategy; open innovation is one that is gaining adoption.  

Open innovation is when cross-disciplinary organizations partner to solve a problem or challenge and create something new. It is the secret sauce of how today’s leaders stay on top while continually disrupting themselves.  

Companies looking to reap the advantages of open innovation need look no further than their business process outsourcing provider. Outsourcers bring an array of technical skills in new technologies and valuable cross-industry expertise that is instrumental in creating new value.

The study found that respondents turn to their outsource partners to creatively address business challenges while innovating how they meet customer expectations. Companies with 1,000 to 5,000 employees looked to their BPO partners to improve cybersecurity and privacy compliance. Those with over 10,000 employees ranked cost reduction and predictability as well as getting a better handle on transaction demand variability as top goals.  

In analyzing study responses, company size influenced which business challenges were the most important. The largest of firms grappled with problems stemming from geopolitical and social issues, as well as data security and cloud adoption. Organizations with employees ranging from 1,000 to 50,000 said their focus was on data security, regulatory compliance, cloud adoption/infrastructure stability, and disaster recovery.  

The good news is that almost seventy percent of respondents were very or moderately satisfied with their outsourcing results in terms of improved business outcomes, customer/employee satisfaction, access to emerging technologies and achieving consistent service delivery. However, that level of satisfaction is not uniform across the board. There is room for improvement. Nevertheless, across all sectors, BPO vendors are considered key to mitigate risks associated with business challenges.

One of the most interesting findings from the study is a definite shift that is underway in the relationship between businesses and their outsourcing service providers. BPO vendors are seen as partners beyond just a mechanism to reduce costs. And that spells opportunity. As the adage goes, “the whole is greater than the sum of the part.”

This year’s study showed a marked increase in companies looking to their BPO partners for new services. Whether it was technology transformation advisory services or completely new capabilities, this new perspective focused on innovation redefines the traditional ‘cost reduction / operational efficiency’ relationship. For example, the study found a fourteen percent increase in businesses asking BPO partners for customer journey mapping, customer experience and customer transformation advisory services.

BPO providers can be valuable open innovation partners, but it takes dedicated work by both parties. Culture fit between the companies is paramount.

A collaborative culture coupled with tight alignment on vision and strategy is a baseline requirement as is clear articulation of goals and outcomes. Without these realizing target results from synergies will be problematic. One key to a successful innovation partnership with your outsourcing service provider is to rethink incentives and how gains will be shared.  Open innovation requires a very different business model to maximize the results from melding different competencies to create a new form of value.

The best place to start in exploring open innovation with your BPO partner is with a clearly defined small project. It could be to create a new selling channel based on augmented/virtual reality or customize a solution from one industry to solve an unmet need in a different sector. You get the idea. Start small, be specific, keep communication on expectations open, brainstorm, and co-create – see what comes of it.

As you look for new ways to transform and drive growth from emerging trends, a potential open innovation partner is your BPO vendor. Their knowledge of your business, capabilities, culture and organization is a distinct advantage - that can lead to greater things down the road.

Dell Testimonial

Written by

Christine Crandell

Topics

BPO Guide

BPO Guide