The business process outsourcing market worldwide could be worth as much as $120bn (£74bn) by next year, according to the New York-based Outsourcing Institute.
One of the reasons why BPO has become so fashionable is because not only does it promise to deliver a cheaper service, but it also promises a better service. And that better service comes with the same staff often working in the same building.
Hugh Morris, managing partner in Business Process Management Capability with Andersen Consulting, says: ‘There is magic to outsourcing. People previously buried somewhere are suddenly on the front line. It changes the way people think about themselves.’
Bob Aylott, a management consultant with KPMG and an ‘advocate of considered BPO’, sums up the shift. ‘On outsourcing, the employees are transferred to the supplier and they have to develop a whole new outlook on what is important,’ he says.
Aylott’s firm has recently conducted research into outsourcing best practice.
‘The trick of outsourcing companies is that they concentrate a lot of effort on “boarding” people. They know that is a key process. They enthuse them with a new vision,’ says Aylott.
The new vision usually consists of telling people that they are now in the front line of the business rather than the back office. And, in this brave, new, commercial world in which they live, what they do makes a difference.
Kurt Meisenbach is director of business process outsourcing for PricewaterhouseCoopers, which is based in the London office. Part of his job is to make sure the outsourcing trick works. In the mid 1990s, when the BBC was setting up an outsourced finance function, it admitted that one of the areas where it under performed was communication with staff. And communication is one of the key themes that Meisenbach concentrates on, from the initial announcement to the staff to be transferred, to the ongoing work when the outsourcing contract is in full swing.
‘Before you start talking about culture change, you talk about the importance of straightforward, consistent, reliable communications. It is a continuum which begins with the initial contact you have with the employees,’ he says.
Once the new client and the outsourcing company have resolved the main contractual issues, then an information process swings into action.
Meisenbach says: ‘We usually make a joint announcement, explaining some of the things that are happening. It is very important that you identify concerns, answer questions and get back to the employees very quickly – ideally you answer all their questions there and then.’
PwC cites the Elf contract, which it won last year, as an example of good planning, where all the questions were anticipated and answered.
However, the communication doesn’t end there. If BPO is going to be a success, the staff have to come to trust the outsourcing company; their new employers. It is crucial that if they are told something is going to happen, then it must happen.
If that goes well, then BPO has an advantage over shared service centres, where multinationals try to bring functions, such as accounting, from around the organisation under one roof in order to save money and improve service.
But while BPO can be seen to be creating a new culture, staff joining an SSC can bring along baggage. Aylott sees this as one area where BPO scores over SSCs: ‘A lot of people, when they try to do SSCs, hit enormous political barriers. People belong to the organisation from which they were drawn, and certainly during the transition process they would have strong allegiances to the old business, and that slows the process down. They tend to focus on idiosyncratic differences.’
In contrast, according to Meisenbach, BPO is a time both to redefine processes and change the culture by involving the employees in that redefinition.
He calls this ‘the phase that really makes a difference’. Workshops are held which involve the employees and the end users of the information – the client – defining ‘the service deliverables’; what is needed in terms of reports, or databases, or information transferred over the phone.
Meisenbach says: ‘The employees define what they are doing, take ownership of that definition and look for opportunities for doing it better. We establish a very clear ownership of the work so it becomes an employee-empowering organisation.’
And that is often different from how the employees have been treated in the past. Meisenbach says: ‘Although that sounds normal and logical, we find it very different from the environment which we encounter. Employees are “stove piped”; they don’t know what’s happening outside their area and they haven’t been given the latitude to make the service-type decisions which we would want them to make.
‘We want them to know through this process the value of what they do; why it is important to the client and to others within the team who are also providing service support to the client. We create strong ownership in the workplace.’
While the outsourcing company works hard on the boarding process, the employees are often willing to join in. Andersens’ Morris says that individuals start the cultural change and the firm encourages them by clear statements of its values, opportunities and backup such as training.
While the way in which newly transferred employees work is changed, so too is the environment in which they work. If the staff are transferring to a different site – into a BPO factory – changes in their working culture will be obvious.
But cultural changes are made even when the staff remain on-site. For instance, with the Elf contract, PwC put new technology on the desktops, gave its employees access to Lotus Notes and made changes to the office in terms of decoration. Such changes can seem immaterial, but they enable employees to have a say.
While all this sounds great in theory, Aylott says that finance directors thinking of a BPO deal should go and find out how it has worked in practice for others. He says that a key indication is the retention rate of skilled people: ‘It is inevitable in a re-engineered process that there will be some shake-outs, and those will normally occur at the lower end. But if the retention is good, it is usually because there is a consensus that they have better career opportunities.’
Morris agrees: ‘When people work deep within an activity, they are bonded by the opportunities in that group.’
He cites as an example the London Stock Exchange. When Andersen took over the running of stock exchange systems in 1992, it inherited 220 people. The firm now has 20 senior managers, who although originally from the Stock Exchange, now know the Andersen culture and know what is expected.
Such BPO deals aren’t just for the big boys, though. Consultants reckon that in terms of transferring staff, there is a threshold of around 50, although they do admit it is the giants who will make the greatest cost savings. But everyone can benefit from the cultural pay-back.
Meisenbach says that when staff transferring to another employer under a BPO deal are asked ‘what kind of company do you want to work for?’, the same values come through across the world. They want to be in control of their career; they want their work to make a difference; they want to work with a team that delivers quality service; and they want to be in an environment where team and individual performance is recognised. BPO providers argue they can provide that for staff equally as well, if not better, than a traditional employer.
OUTSOURCING VIA THE CALL CENTRE
As Bob Aylott of KPMG puts it, outsourcing is about defining core from chore. If it’s core, you keep it in-house; if it’s chore, you look at ways for someone else to do it.
One of the latest trends in outsourcing is the call centre, or the helpdesk, for internal and external services. With modern technology, call centres can work well – especially where there is a need to dispense a high volume of repetitive information. If the same call comes in 200 times a week, that information can either be handled by a human being on a scripted dialogue, or through a recording.
In the US, Andersen Consulting already runs a number of call centres for clients such as Ford. If you buy a new Ford in the US and want to find out where the nearest service centre is, for instance, you will talk to an Andersens employee. Extending the Andersens deal to Europe is under consideration.
Hugh Morris says that by outsourcing the after-sales service, Ford has reduced costs by 30% and its service has improved – so customers’ problems are sorted and not lost in the system.
Here in the UK, BPO firms are seeing outsourced call centres as a way of helping clients – particularly in areas such as financial services – and improve their customer relationship management. Morris sees the call centre as part of an evolution in BPO from single-function outsourcing, like accounting, to process outsourcing.
In the case of Ford, this means looking after the totality of the CRM.
Aylott says that call centres can handle detailed technical enquiries, and that the crucial element for the customer is to define the outputs.
If that is not done well, the call centre won’t function well. ‘I don’t blame the call centre; I blame the client who specified the requirement. In a narrow, limited way, the call centres were doing the job they were asked to do,’ he argues.
The key element is to define speed of response – how soon do you want the phone picked up – and the level of information that should be imparted.
The onus is on both the supplier and the client to look at the excepted call profile and the sort of queries that will be received.
If those issues are dealt with, call centres that use technology to the full can grow even more sophisticated in the level of customer service they offer. Aylott has seen a call centre in Ireland where the person answering the phone will be from either Northern Ireland or Southern Ireland, depending where the inbound call was from. Peter Williams is a freelance journalist
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