Commentary by Dan Berthiaume
To most people involved in either the buy or sell side of BPO or tasked with analyzing it, BPO is probably seen as a set of well-defined practices designed to lower costs and increase efficiencies. However, as the business landscape rapidly evolves due to disruptive changes in technology and the economy, BPO is evolving as well. You could argue that BPO today is less a concrete strategic approach and more a state of mind.
Don’t worry, I’m not wearing a tie-dye T-shirt and chanting mantras as I write this. Let me explain in a little more detail exactly what I mean.
Bringing It All Back Home
First, the emergence of “onshoring,” “reshoring,” “insourcing” or any other term that encompasses the outsourcing of work to domestic providers is a radical shift in the traditional BPO strategy. While BPO has never inherently required moving processes and/or personnel offshore, the fact remains that the overwhelming majority of outsourcing has and still does involve shifting work to lower-priced locations outside the US.
But as wages and other costs of doing business rise outside the US and fall at least in certain regions inside the US, performing BPO within America’s borders becomes a more realistic and attractive option.
Concurrently, shared services have been growing more popular in recent years. While implementing a shared services program can involve setting up a dedicated center in a remote offshore location, it can also involve realigning internal personnel around function, rather than department, to obtain maximum operational efficiencies.
Thus BPO becomes less about place and more about simply doing things in a way that reduces costs and improves efficiencies – or a mindset of working in the most efficient manner possible, which can and does still include traditional offshoring.
The Technical Viewpoint
Second, it is hard to understate the massive impact leading edge technologies such as mobile, social and cloud are having on BPO, as they are on everything else in business. Reducing or eliminating infrastructure costs has always been a primary goal of BPO initiatives. However, companies can now use mobile devices, social networks and cloud platforms to reduce and even eliminate infrastructure without eliminating or moving jobs. There is much less need for dedicated office space, and the BYOD (bring your own device) trend is reducing the need to invest in employee computing devices while cloud-based services are replacing physical IT infrastructure.
Thus work can now be “outsourced” to employees who work from their homes, and social crowdsourcing lets companies bid out projects to individuals who may be located anywhere in the world for far lower costs (with far less oversight and fewer guarantees) than traditional BPO providers.
Collaborate to Innovate
Finally, the basic BPO model is evolving to the point where providers essentially become an extension of the buyers, actively collaborating with them to produce lasting innovations rather than simply taking on rote tasks at a cheaper rate than they can performed in-house. This model also essentially represents a mindset of “all for one, one for all” instead of the near-adversarial relationship produced by traditional BPO agreements.
A BPO state of mind. Billy Joel fans may prefer a New York state of mind and many West Coast residents will tell you California is a state of mind all to itself, but any state of mind that produces cost savings, business efficiencies, collaboration and innovation is one worth investigating.