Bain & Company
Next-Generation BPO: Are You Ready?
BPO today: Generations 4 and 5 | Leveraging analytics and on-demand service platforms
As valuable as early-generation BPO benefits were, many executives today believe that outsourcing can add even more value to their businesses, particularly in business insights from the immense stores of transactional data they’ve amassed during long-term client engagements. And they’re using those insights to generate decidedly new kinds of business outcomes not commonly associated with BPO. These outcomes range from accelerated speed to market, enhanced innovativeness and stronger customer loyalty to savvier talent management, and top-line growth. Consider these 4th generation examples that represent a variety of cross-industry and industry-specific BPO clients: • A leading global oil and gas producer identified $20 million in working capital improvements by using F&A BPO analytics to dive deeply into spending data and applied the insights to move vendors across the globe to standard discounting terms
• A medical device manufacturer turned to a BPO team to analyze warranty and defectiveness data, which identified key opportunities for product improvements. • A leading aircraft engine design and manufacturing company worked with a Supply Chain BPO team to reduce the business’s working capital requirements by using supply/demand variation analytics. The result was millions of dollars in value from improved material planning and reduced stocked inventories.
Effective use of analytics in BPO environments (through sophisticated tools and techniques for statistical surveying, root-cause analysis and process optimization), paired with deep industry expertise, exert a major impact on organizations’ performance today. Providers should use both descriptive and predictive analytics to help C-level executives understand what’s happening now in their businesses as well as what could happen in the future. The next step is to craft the right strategies, incorporating the vast volumes of transactional data a provider accumulates by virtue of its management of a client’s business processes and the performance of those processes over the long haul. In addition to analytics, technologies such as software-as-a-service and mobility are catalyzing further evolution of BPO. With these technologies, we see BPO moving into its fifth generation—characterized by on-demand services applied across multiple clients through flexible software platforms and commercial contract structures paired with standardized processes. Fifth-generation BPO is emerging process by process—and will continue to do so—as these technologies mature and as more clients embrace standardized processes as a source of further value creation.
BPO tomorrow: Generation 6 | Building learning communities through social media technologies
We believe that online social networking technologies will help BPO to evolve into yet another generation in the future. Today, business people are increasingly using such technologies to build communities where members share best and worst practices, discuss how they’re surmounting their toughest business challenges and learn from one another. We envision using social networking as an extension to the fifth generation platforms which will build these social learning communities centered on BPO-provided processes. The platforms created in the fifth generation would be supplemented by integrated online communities linking client users and BPO provider staff. Through participation in the community, clients could exchange and benefit from each other’s insights about how BPO can help them achieve new business outcomes as well as shape the ongoing evolution of the on-demand platform and standardized processes as their own needs and requirements change over time