The business process outsourcing (BPO) industry has reached a critical inflection point in terms of what clients expect from outsourcing engagements and what providers can deliver, according to an Accenture sponsored study from HfS Research.
The report, entitled “BPO on the Brink of a New Generation: Technology Transformation,” found that in order to address the huge shift in buyer expectations and achieve sustainable value beyond cost reduction, both clients and outsourcing providers must embrace comprehensive technology capabilities including automation, analytics, and cloud computing.
According to the report, which featured a survey of 773 BPO industry stakeholders including enterprise buyers, service providers and advisors, two-thirds of the industry remains trapped in engagements focused on cost reduction alone with existing processes simply “lifted and shifted” from the client to low cost delivery centers.
Yet, half (49%) of today’s clients expect to undertake a wide-scale transformation of their business processes within the next two years to capture new and more sustainable business outcomes that are enabled by technology.
Despite this dramatic change in buyer expectations, six out of ten clients feel their providers are failing to deliver the technology skills and capabilities needed to drive this transformation. This represents a huge chasm that must be crossed in a short time frame in order to move into the next generation of the market, which is characterized by greater use of technology and higher level skills.
Mike Salvino, group chief executive, Business Process Outsourcing at Accenture, said: “The HfS report validates that technology-enabled BPO engagements — those we would consider to be high performing — are achieving significantly higher value business outcomes than those focused merely on cost reduction and labor arbitrage. It reinforces Accenture’s recently published Technology Vision, which demonstrates that today every business is a digital business, and companies face a choice to either disrupt their markets or be disrupted by more innovative and agile competitors. The HfS research report is an important call to action for those that want to realize the full potential of outsourcing and move into the next generation of the market.”
Clients who have taken the leap to the next generation with technology-enabled BPO are reaping much better results than those stuck in earlier phases, with 80% viewing their operational performance as “quite” or “highly effective”, compared to only 65% of those who have not technology-enabled their BPO.
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