Buying BPO Successfully

By Brendan B. Read, Senior Contributing Editor  |  December 01, 2010

This article originally appeared in the December 2010 issue of Customer Inter@ction Solutions.

Deciding whether or not to contract out (e.g., outsource acquiring, qualifying, selling, surveying, serving, supporting and/or collecting from your customers) and, if so, to which firm(s), is one of the most critical decisions you can make. That is because the contractor, which is becoming popularly known as a business process outsourcer or BPO, will be representing you, on your behalf.

The BPOs’ teams: agents, supervisors, IT (including business continuity/disaster recovery and security), hiring and training personnel – as well as their account and site managers that relay concerns and issues – can together make or break your customer relationships. Where BPOs can locate your program can make a big difference in cost, implementation and management, and in customer satisfaction and retention. Therefore you need to be sure on your choice to outsource – why, where, to whom – and be ready to work with the BPO firm to make outsourcing a success.

To find out how to make BPO arrangements a success, Customer Interaction Solutions recently interviewed Christine Timmins Barry, senior vice president, customer management, Convergys and Michael Clarkin, vice president, marketing, Sykes (News - Alert) – two of best known global BPO firms.

CIS:    What contact center functions and programs are best suited for outsourcing? Which ones should remain in-house?

CTB: When it comes to considering what functions and programs a company could outsource, a good way to think about outsourcing is 1 + 1 = 3. The sum of two partners, the company and outsourcer, far outweighs the parts. Companies who partner with top BPOs not only gain access to the functions and programs, but also these three key areas, often looked at in reverse order during the decision-making process:

1.         Intellectual property

Many companies overlook this asset, but it’s important to tap into the knowledge of the executives and management of the outsourcing partner who have deep industry and operational knowledge. These resources are available and can be utilized at any stage of the process.   

2.         Market entry

A partner who has already navigated a new market and established the right labor and technology can quickly accommodate a company’s request to enter new markets.

3.         Human capital

This is the place most companies start, but should be the logical conclusion to any outsourcing consideration. Access to a solid labor market with a balance of onshore, offshore and home agents provides quick and ready access to the right labor force now and in the future. 

When looking specifically at functions that are candidates to remain in-house or partially outsourced, a few include:

·         Functions that must be physically located within an internal site, and where an on-site outsourced solution is not feasible for security or other reasons;

·         Segments of work where contractual obligations preclude outsourcing to a third party;

·         Blended solutions where the outsourcer has a portion of the work while retaining a portion in-house, giving a company the ability to gain expertise, technology, benchmarking and cost savings from the outsource partner, while staying engaged in the operation and close to key customers.

Leveraging the expertise of a strong BPO from concept to deployment is the best approach for any business. It puts the company in a position to focus on its core strengths while leveraging the outsourcers’ best practices, experience, technology and manpower to help build customer satisfaction and loyalty, drive sales and, ultimately, build brand awareness and market share for the company.

The most important thing a company should do is take advantage of 1 + 1 = 3! Once the decision has been made to look for a BPO, allow the outsource provider to bring some innovation and input to the RFP process. One of the primary reasons to outsource is to gain access to expertise from a provider whose sole focus is taking care of customers. An RFP that is too prescriptive will limit the ability of the BPO to offer a big picture look at the pain points of the business and bring innovative approaches, new technology and solutions to the process. 

When looking for a BPO, does the outsourcer have a reliable and redundant network with a consistent operating model from site-to-site and geography-to-geography? This is important in ensuring a consistent level of service and the ability to shift work in the event of an unforeseen operational/business issue or natural disaster.

Once a decision has been made and a partnership has been established, build agreements that naturally drive both parties toward the same goals and objectives. Set forth strategic objectives and target goals, allowing the outsourcer the flexibility to build innovative thoughts and creative solution alternatives into the day-to-day operation. Establish a communication plan and regular meeting schedule between the two teams and contingency plans to handle unexpected situations, like volume spikes and business interruptions. Develop goals and metrics that truly measure what’s important and what is key to success.

MC: Rather than focus initially on specific functions and programs, it’s wise to take an honest and objective look at the company as a whole. Is it prepared from an operational and cultural perspective to set up an external operation as an extension of its own in-house team? Once these hurdles have been overcome, it’s safe to begin identifying functions and programs to be outsourced.

Business functions that can be successfully outsourced share three common characteristics:                                          

  1.         A well defined processes or workflow

Without this, a successful transference of a business process to a provider with a lower cost structure stands little chance of succeeding. If the processes are well defined and the skills well understood, then hiring, training and operating is very transferable to another provider, even if the work is sophisticated.

 2.         Any work that is not “core competence”

Core competence is about skill, not strategic importance. Even if a particular function or program is highly strategic, if the company doesn’t possess the depth of expertise and experience at it, finding an expert outsourcing partner is a good strategy. 

3.         Any task that has proven to be difficult in terms of hiring and retaining staff

For example, in technology companies, customer tech support is often an entry-level engineering job, and most engineers would rather get promoted to something more strategic, such as a QA or designer job. However, for an outsourcer, those tech support jobs can be very high-end – a position that to which reps aspire and are likely to maintain for a long time. If the external provider can hire and retain better than you can for a given role, that role is a good candidate to be outsourced.

CIS: What BPO programs are best handled onshore, by formal contact centers or home-based agents, and which ones are ideally suited for offshore?


CTB: There is no pat answer to this question. More times than not, however, companies find that a customized balanced approach is what they need to determine where to put work, incorporating onshore, offshore and home agent sites as part of a comprehensive BPO solution with a built-in business continuity and disaster preparedness plan.

The best place to start is to analyze and understand the current customer base/customer profile and determine if the call types require regional knowledge to be effective and look at sourcing to the appropriate skill set. Next, specific program requirements must be evaluated to determine if an offshore solution is viable.

·         Does the program require certification/licensing that can only be obtained onshore?

·         Is there an extreme political sensitivity to migrate the work offshore? An example here may be a regulated utility with close ties to the local community.

·         Does the operation have a government component that precludes work from being performed outside of the country (e.g., a healthcare payer supporting Medicare programs)?

While most contact center functions can be handled in any setting, certain geographies and agent populations may be better suited for specific types of customer interactions. For example:

·         India has a large labor force of engineering and technical graduates making it a prime spot for technical support programs.

·         The Philippines has a strong Western culture and can easily relate to U.S. customers, making it a good location for most customer service programs and companies looking to boost satisfaction and build loyalty and brand.

·         Latin America has a strong affinity for U.S.-based customers, similar to the Philippines, with the added component of providing bilingual (Spanish/English) support to customer service operations.

·         Home agent-based programs are a flexible option for most blended solutions allowing quicker access to agents for very specific skills requirements (e.g., medical, technical), faster ramp time to accommodate seasonal call volumes and increased schedule flexibility for programs with fluctuating call volumes

Some of the more general areas that drive offshore versus onshore decisions are based on decisions made around operations with extensive seasonal components where large increases in agent support and incoming call volume are required for short periods of time. This type of work is best suited in a geography that has ample labor supply to accommodate rapid hiring and skills required to handle a higher level of customer service. 

Certainly, the focus is a balanced footprint, but size of operation is also a consideration in making an offshore decision. A company must determine if potential cost savings generated by placing work offshore are large enough to outweigh the travel expense and support required to establish an offshore operation. 

MC: You can look at processes and programs and use them to determine the appropriateness of outsourcing, but making a decision regarding on/offshore depends largely on the readiness and preparedness of the company to embrace the idea that an external party is part of the company as opposed to a competitor.  The criteria for deciding whether to choose onshore or offshore can have several factors to consider:

Does the company have a global “cosmopolitan” view that allows it to embrace the distance and cultural differences between the company and the offshore center?

The most important factor to consider is how much communication, management, and new processes need to be put in place to be able to treat an offshore location like you would one that is closer in distance, time and culture. For a business process that is new, evolving, being developed or reengineered, sometimes having that team down the hall or across town is valuable, so that you can have your staff there if needed.

Be careful of the assumption that onshore gives a better customer experience than offshore.

The data comparing on- and offshore contact centers’ comparable customer satisfaction scores usually come out equal, or offshore better. Call/contact center jobs are more appealing to candidates in most offshore locations than they are domestically, which means a higher education level and available, interested talent. For those locations, these are jobs where an employee can exercise both education and language skills, get global job experience, and work in a field with more prestige than it might have in small-town USA.

Home-based agents work great for a couple of different applications.

For processes that require a unique skill or profession, but the candidates for those positions might not be so interested in the call center work environment, at-home widens the candidate pool. Think about licensed insurance agents, certified nurses, CPAs or lawyers. It is also great as part of blended solution, so if there is consistent base of customer demand or calls, but peaks due to seasons, events or other external factors, at-home agents are an easy-to-train, flexible workforce, since so many of them work part-time and don’t have the burden of having to drive to work

CISIf an organization is considering sharing the same functions it handles in-house with a BPO firm (i.e., spreading the load, after-hours, or seasonal), what are the best means of ensuring that the BPO performs at least as well as the in-house center?

CTB: Developing a strong partnership and plan with the selected BPO with frequent communication, knowledge-sharing and best practices that feed process improvements back into the operation is important to the success of any outsourcing arrangement. Key components of any shared operation include:

·         Establishment of clear and reasonable expectations by first benchmarking current in-house levels of performance, then combining the view of the two operations and setting new vendor levels accordingly. If a benchmark cannot be established, set levels after the first 90 days of operation.

·         Well documented training, methods and procedures that incorporate the in-house center’s key learnings and tribal knowledge of tenured employees and the BPO’s best operational procedures and practices ensures consistency between the two groups.

·         Development of a robust knowledgebase tool that is used by internal and outsourced operations to ensure currency, consistency and accuracy of information.

·         Strong knowledge transfer process that fosters easy on boarding of managers, supervisors, trainers, and quality evaluators, who will be supporting the ongoing program operation.

·         Development of a clear volume allocation strategy and corresponding operational plan.

·         Include channel integration in both operations to ensure customers receive the same information, regardless of whether they are served by a live agent, IVR, Web, e-mail or any other contact method.

Continued and frequent communication and calibration between the two teams is critical to the success of any BPO partnership.  

MC: Is the company prepared to invest in developing a third party’s capability to behave like an internal organization? This includes both training staff and delegating a level of trust by creating a layer of management infrastructure that’s different from the in-house operation.

Successfully transferring operations to an outsourcer requires well documented processes that lend themselves to smooth adoption by your external team. Any vendor who provides good value will help you do so. The two key factors that ensure comparable performance are: 

1.          Invest in training and certification of staff

Outsourced operations often underperform because the in-house skill was retained in tribal knowledge doesn’t transfer well. Make sure all of the tribal information gets into formal training, and then verify that the outsourced team has practiced and truly learned how to perform each and every task – not just the common tasks, but also the exceptions. 

2.         Delegate the same authority and permission

If the in-house staff have the latitude to waive a fee, grant a reprieve on payment, or simply handle a complaint without escalating, the same authority must be part of the outsourced process. Customers are very sensitive to those differences, and will complain quickly if a rep isn’t empowered to solve. They will assume that the rep isn’t trusted enough to handle, and the rep will assume the same and behave less an advocate of the customer, and more a victim of the policy or process. The ability to analyze, redesign and improve processes for how your customers are treated is a differentiator among outsourcing providers. Lots of companies can mimic your processes, but are they helping to improve them and behaving as a true strategic partner to your business?  

Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.

Edited by Stefania Viscusi