Beneath the Surface
Labour arbitrage, risk mitigation, cost reduction, skill hunt, new revenue generation, increased capital productivity: all derivatives that resonate with outsourcing. Yet the real challenge lies in ensuring that these benefits are actually realised. Assessing and selecting the right provider is never merely a mundane or a routine task to a buyer who knows exactly what they expect in a potential partner. Due diligence has never been more important.
From the position of an outsourcer that has been a leader in the BPO/contact centre offshore arena, the experience of acquiring clients from different business cultures offers the following conclusion: the amount of work spent on the due diligence exercise during the selection process, regardless of its thoroughness, does not usually predict the expected performance of the provider in an accurate way. For the most part that is not due to any specific inefficiency during the actual site visit but rather due to the tunnels of details that those questionnaires typically drive the buyer teams to delve into, with one adamant objective: to get all the questions answered. That also applies to due diligence exercises that are carried out by almost all renowned companies.
We believe that most of the vendor “acceptance basics criteria” should be examined at an earlier stage during the RFP qualification process. We have also found that the most common due-diligence endeavours typically serve as material proof that the very basic capabilities addressed previously during the RFP and claimed by the vendor, are actually true. A few examples of the due diligence that we have been through as providers – and highly scored at – did not in fact deliver as expected during the deployment of the actual program.
These are what we see as key factors at successful vendors that would require some digging beneath the surface of a traditional due diligence exercise: the cultural affinity of the partner to be; standing clear on the detailed profile and skill set needed for the job; and last but not least, the ability to innovate and add value.
Very often clients are unable to gain and apply a thorough insight when outsourcing certain functions to offshore service providers. This sort of challenge is usually experienced with offshore vendors where cultural differences play a catalytic role during the very first phase of the due diligence. It is within this phase that most buyers get “slammed” by an initial impression that would likely last until the end of the evaluation stage if not longer. The two strong pieces of evidence within the culture topic that any outsourcer should examine before committing to an outsourcing tenure are: cultural affinity and any claimed multilingual capabilities. That in itself establishes the base for a high-quality service experience, not just only a “local sound” or higher Csat scores but rather a much deeper understanding of the client, customers and the program. Many vendors in different destinations will throw claims of availability of languages while the scalability of those languages would drastically fail in sustaining an outsourcing contract of a decent magnitude. So mastering the language or claiming availability is not enough for an assessment pass-score. Delving into credible reports for actual attrition rates, inflation trend, and industry labour market figures is highly advisable. Also, correlating between the trending of those factors is certainly of value for future prediction.
Again the key to a sustainable outsourcing partnership starts with the vendor’s assessment phase. Clients need to establish a skin-deep due diligence checklist that works at a layer above the service delivery metrics. Typically, if a client needs to have a contact centre they must verify employee attributes, analyse how the outsourcer will hunt for and maintain these attributes, and eventually validate the outsourcer’s operational factors needed to achieve desired targets.
In most cases, buyers and providers discuss standard service delivery aspects during due diligence. Although outsourcing is often viewed as synonymous with cost-cutting, SOWs and contracts tend to overlook critical project sustainability and key success drivers making the project more susceptible to project creeps and escalated costs. Scrutinising prospective clients and questioning requirements such as the profile required for the job is highly recommended. We have witnessed the case where clients have mis-estimated required skill sets, and their outsourced programs have suffered from excessive experimental and corrective spending until the right skill set joined the workforce. Only then performance picked up. A good example of collaboration during that assessment phase is to discuss thoroughly how the profile and skill set is perceived by the vendor and if there are any additional skills it may be deemed necessary to add. Having buyers conduct actual interviews with potential candidates as a probe is of a great value.
The pace of development is still escalating in the BPO industry whereby customers soar into new levels of requirements. Vendors that deploy a mirror reflection of the client’s resources and processes are deemed to be inefficient. This marks the need for innovation and sets the stage for a new phase of BPO development. A 2007 study by Frost & Sullivan identifies innovation as one of the key factors to consider in due diligence when selecting an offshore outsourcing provider. An IDC survey among BPO clients in the US reinforces also the importance of innovation, reporting that 35 percent of the respondents look for BPO providers to drive innovation. An intrinsic part of any due diligence should be asking vendors to present actual cases of innovation and realised added value that led to savings for real clients. Moreover, understanding the existing mechanism to sustain the birth and incubation of innovative ideas within the vendor’s organisation is also crucial to guarantee that it is more of a culture rather than a sporadic, random activity.
Identifying and agreeing with clients’ specific service delivery strategies and standardising them around industry best practices guarantees sustainable success and realises benefits for both parties. Furthermore, looking beyond the surface of infrastructure must–haves, metrics and pricing should guarantee a more successful partnership.