As outsourcing becomes an indispensable part of corporate business strategy, especially during economic downturns, BPO (Business Process Outsourcing) has emerged as an important driver of IT Enabled Services. In very recent years, it has progressed from being considered for limited peripheral activities to encompassing very critical business activities that contribute to strategic advantage.
Though traditionally cost reduction has been the key driver for all outsourcing activities, other drivers such as speed of development, flexibility, expert skills and political maneuvering are equally important, if not more.
To succeed with Business Process Outsourcing (BPO), you must first research and determine if outsourcing should be pursued at all – an initial understanding of the expected size and nature of the deal is a must at this stage. This phase is known as the Assess phase as the involved parties try and establish senior stakeholder expectations at this stage. At the end of this phase, stakeholders should have clarity on the expected benefits, costs and risks of the potential engagement.
Next comes the Prepare phase which encompasses the vendor selection process. More often than not, organisations roll out RFPs (Request for Proposal) documents to find the right outsourcing partner. Fundamental elements of all other phases are defined and agreed upon in this Phase.
Evaluate phase is the third stage of the outsourcing lifecycle and it focuses on structured and thorough evaluation of the proposals received from vendors. At the end of this phase, you should be able to negotiate with selected vendors.
This phase paves the way for the Commit phase which is essentially the pre-contract stage. The Commit phase is by far the most resource intensive and commercially crucial phase as the deal design is finalized and the transition plan is developed in this phase.
Next comes phase 5 which is the Transition and Transform phase. In this phase, a robust transition plan is implemented. In addition, a reporting mechanism is also brought in place at this stage of the outsourcing lifecycle.
The Optimise phase, which comes next, focuses on managing the vendor relationship efficiently, tracking the vendor fees against the original proposal and monitoring contractual obligations. In principal, this phase is an ongoing one until the contract is renewed, renegotiated or exited.
When implemented properly, outsourcing contracts are likely to bestow immense benefits on organisations. No wonder that BPO is seen as a disruptive force that has huge impact on the cost-structure of nearly any industry and that is why it is not easy for organisations to ignore it. The hype around BPO may subside soon, but the business advantages that come with it are here to say as it enables many enterprises to succeed.