BPO 3.0: Veering towards value-extraction
Date: Thursday , May 31, 2007
When off-shore outsourcing began, the outsourcer’s biggest focus was cost-saving.So businesses outsourced their non-core activities and sat back to watch their processes being taken care of in off-shore destinations, while they saved phenomenal costs. This characterized BPO 1.0 or the “lift and shift” generation, which was all about identifying low-cost locations and shifting the non-core processes. When the cost-saving demand was fulfilled, buyers started benchmarking different centers on the basis of operational metrics and operational performance across specific business processes. Customer expectations moved towards quality and productivity improvement, heralding the reality that we know today as BPO 2.0.
Today, the industry is still strongly focused on performance and quality and its importance can never be underestimated or de-valued. However, though service providers have demonstrated proven capability in BPO 2.0, customer expectations will go up once again. The customer has seen India centers deliver to specifics, experienced the quality and is off-shoring most complicated tasks. The question that service providers will need to ask themselves is “what next?”
Given the volume of transactions processed and the insights gained in running the operations through all these years, service providers will be expected to proactively add value to their business process, whether it is CLM, HR, F&A or Procurement. Simply offering services at lowered costs and delivering these services with efficiency will no longer be enough. It can best be termed as a “job well done”, which is no doubt an important factor, but not good enough. What will be needed is continuous Value Extraction or Derivation from every transaction through innovation and global source leverage.
End customer behavior, demands and buying patterns are undergoing transformation at a rapid pace. In this complex and ever-evolving scenario, delivering real value to customers would mean demonstrating a significant improvement in profitability or enhancement in service or effectiveness by leveraging an actionable view of customer intelligence. This becomes possible through the development and application of innovative methodologies for the constant derivation of value at every stage of the CEM. When done well, through the use of scientific and high-end analytics and mathematical models, the results will show clear, significant ,and measurable Return on Transaction or Engagement.
Next Generation CEM is possible only when a service provider demonstrates proven expertise and understanding in 3 critical areas - end customer intelligence, technology, and business insight. It is this right mix that gives a service provider the unparalleled edge in knowing what application or technology to apply where, on what parameters, and eventually to know what insights to derive. We also believe that Next Generation CEM will be driven with innovations on the Web and through the Web. Research organizations and analysts have shown us that Net consumers will grow multi-fold in the next few years.
The obvious reasons are broadband penetration, flat growth in household populations and correspondingly increasing “Do Not Call” lists in the U.S. & U.K. markets. As the online penetration continues to grow fiercely in these markets, businesses and service providers will have to find more and more innovative ways of winning and retaining customer loyalty. And this will be the key driver for the Next Generation of CEM, which will be all about Innovation through Insights for on-going Value Extraction.
The author is the Co-founder and CEO of 24/7 Customer. He can be reached at firstname.lastname@example.org