Industry news

Business Process Outsourcing (BPO) has traditionally been used to outsource the processes peripheral to the key business strategy, in order to use time, money and resources more effectively. Some of the most common outsourcing activities include human resource management, financial services and accounting, information technology and legal process management.

An austere economic climate has seen the BPO contract count climb to an all-time high, as organisations look to cut costs in an effort to survive. This feature will be looking at three growing trends in BPO – HRO in SMEs, integrated BPO / ITO packages and the use of BPO in financial services.

HRO and SMEs

The rise in outsourcing contracts bought by SMEs has recently been dramatic. Particularly fragile to economic downturn, SMEs have looked to use their resources more effectively in an effort to survive. Human resources and payroll tasks can be arduous and time consuming, often requiring dedicated departments and infrastructure. Outsourcing HR has proved to be an effective way for SMEs to save time and money.

EISER was formerly wholly-owned by Fortis Investments which was a subsidiary of BNP Paribas Investment Partners Group. The Partners in EISER completed a management buy-out to become a single, independent entity. Prior to this, all of EISER’s back office services, including HR, were supplied by Fortis. The challenge was to transfer all their employees out of Fortis and become fully self-sufficient in HR with no drop in service quality.

plusHR’s dedicated HR Administrator handles all day-to-day HR tasks, including issuing employment contracts and employees and maintaining HR data. Employees are able to book holidays online via self-service, and managers can view employee reports for their teams. Payroll is entirely outsourced, freeing up internal finance to concentrate on value added tasks. With plusHR, EISER now have a dedicated, full-service HR and payroll function at a fraction of the cost of hiring their own in-house team.

Integrated ITO services

For larger businesses that operate internationally, ITO integration services can provide clarity and ease of use across all platforms. Avis Europe plc is a leading car rental company in Europe, Africa, the Middle East and Asia operating the globally recognised Avis and Budget brands.

Avis Europe identified a need to provide greater clarity and improved efficiency in order to maintain its reputation as a customer-focused business. With locations across Europe generating some 15 million documents per year, it was becoming increasingly difficult and time consuming for staff to store, retrieve and process customer documentation. Although the company had separate online imaging systems within each country, these were not integrated and did not allow for cross-border working.

After a competitive tender process, Avis Europe selected EDM to provide high volume processing and storage services. As part of its consultancy service, EDM set up EDM Online, a secure information management system. This system allows Avis’ shared service centre to access essential customer information from any branch – all at the click of a button.

Around seven million documents a year, out of a total of 15 million, are now shipped to EDM’s Manchester mailroom in the UK for capture and storage on EDM Online. The remaining documents are added to the system through dedicated on-site scan stations, which are located at individual Avis Europe locations and securely connected to EDM Online via the web.

BPO in Financial Services

Within financial services, bureaucratic and administrative workloads can often become excessive. Nationwide’s merger with Portman generated an increase in the volume and variety of customer records, which highlighted the need for a centralised, audited and efficient document management service for the business and its customers. The solution needed to bring together information in multiple formats and locations, including a microfiche/film archive in excess of 40 million frames, 68,000 boxes of customer records and 25 million scanned images.

EDM designed and implemented a purpose-built document archive and retrieval solution through its secure Scan-on-Demand service. EDM’s transition team catalogued all customer records and managed their secure transfer to a dedicated facility purpose-built for Nationwide. Now, as records are requested, EDM scans and uploads documents to its hosted web service, EDM Online, to give Nationwide staff secure and instant access to archived customer data from any networked PC across the organisation. The complete service assures seamless document security.

Summary

It is apparent that emerging technologies and economic activity continue to change the face of BPO. Business process outsourcing manages to drive a range of efficiencies in a number of different types of organisations. A wide variety of organisations will continue to benefit from BPO in these austere times which can also support a collaborative approach to contract negotiations.

As the business process outsourcing (BPO) market matures, buyers are expecting outcomes from BPO beyond just cost reduction. Next generation BPO buyers are demanding services providers bring industry expertise and insight, analytics and innovation to their engagements; adjust nimbly to shifting business directions; and drive better business outcomes. Accenture considers relationships that are achieving these exceptional results to be high performing.

So what distinguishes high performing BPO relationships from “typical” BPO relationships? Accenture set out to explore this question in a new study, conducted with the Everest Group and The Outsourcing Unit at The London School of Economics. The study uncovered eight best-in-class behaviours that separate the high performers from the rest:

1. End-to-end approach: Holistically managing the scope of the BPO relationship

For those that are most successful, the entire, end-to-end business process is within scope of the BPO arrangement, including elements managed within the client’s enterprise, those run by third parties as well as related processes that may impact overall performance.

2. Collaborative BPO governance: Adopting a partnership attitude

The disparity between high performing and typical BPO engagements is particularly evident in this practice. Nearly 85 percent of high performers consider their BPO provider to be a strategic partner versus just 41 percent of typical engagements.

3. Change management: Managing the effects of change during transition and beyond

The gap between high performers and typical performers is large in terms of attitudes toward change management, but especially when it comes to executing a robust change management program. Eighty-eight percent of companies working within a high-performance BPO relationship regard change management as important and execute carefully planned change programs.

4. Value beyond cost: Focusing on benefits beyond cost reduction

In high-performance BPO, both client and provider acknowledge the importance of cost reduction, but do not see that as the prime motivation. This mindset manifests itself in several ways, including how the business case for the BPO program is constructed.

5. Business outcomes: Targeting strategic outcomes, not just more efficient transactions

High performers aim for specific strategic outcomes from a BPO arrangement that can be measured and that can help achieve competitive advantage. Beyond that, they also forge deals that incentivize both parties to achieve those outcomes. .

6. Domain expertise and analytics: Contextualising data to create business value

As BPO evolves and matures—and as it enables richer and more complex business outcomes—the field of providers is beginning to separate out in terms of their ability to provide new levels of value. Part of that value is in the ability to use deep domain and industry knowledge—and the ability to analyse data about the functions and processes being outsourced—to more predictably drive business outcomes.

7. Retained organisation transformation: Enabling the retained organisation to perform effectively in the new environment

High performers place as much importance on internal transformation as they place on transforming the outsourced processes. Companies with high performing aspirations also need to re-align the retained organisation around the outsourced delivery model in terms of roles, responsibilities and requisite skills.

8. Technology as a business enabler: Driving operational improvements and business innovation

Technology should be a source of innovation and advantage, not just the infrastructure of delivery. For example, 40 percent of high performers consider technology provided by the service provider to be an important component of the BPO relationship, compared to only 27 percent of typical performers.

Overall, the research found that only 20 percent of those surveyed are classified as high performers. It’s clear there’s a significant opportunity for organisations to capture greater business value from BPO, adopting the behaviours and practices associated with high performance to build new competitive strengths. Those that continue to view BPO purely in terms of transactional processing and cost will be competitively challenged.

Research from the International Securities Association for Institutional Trade Communication (ISITC), shows that over the next two years, almost three quarters of global financial services firms are expected to increase spending on IT.

The research gathered from polls of leading financial services members including executives, managers and brokers pointed to increased financial spending on IT services, however the research also revealed that the future of the industry was uncertain as to how the market would appear by 2020.

Jan Snitzer, chair of ISITC, said: "What is clear is that although progress has been made in improving our industry's infrastructure and processes, there is still much room for us to improve."

Amazon looks to continue to reduce the price of its cloud-computing service after a 37 percent reduction in price at the beginning of March.

Amazon’s move to reduce Cloud services costs has put pressure on Microsoft to do the same with their competing Azure Cloud services, as the two companies compete over the market share of Cloud service users.

Both Microsoft and Amazon have suffered from reduced profit margins, with Amazon stock falling nearly 25 percent from October, while Microsoft is under scrutiny from investors over its high cost position in the markets.

Collin Gillis, an analyst from BGG, said: “It’s a commodity business-these are ubiquitous services where you win with massive scale, and the way that you achieve massive scale is to lower the price.”

PayPal, the U.S online payment Ebay subsidiary plans to enter into overseas payment markets in China and India. PayPal is expected to meet strong competition from established online payment companies in China according to analysts.

The company is already used to facilitate cross border transactions but is now looking to make its services available domestically, with the Chinese market representing 193 million e-commerce users.

Dickson Seow, PayPal spokesman, said today: "We are currently applying for a domestic payment license in China and are intending to do the same in India in the future."

Wednesdays Budget is expected to see the scrapping of the 50p tax for top earners, and the introduction of measures for low and middle income families.

The Budget is also predicted to see the introduction of plans to reduce the salaries of public sector workers in poorer parts of the country. The proposed ‘tycoon tax’ introduced by the Liberal Democrat is expected to be discounted.

George Osborne said on the Andrew Marr Show: "The bulk of the measures in the budget are going to be targeted at working people on low and middle incomes. That is our priority."

Investcorp Corp, a Bahraini investment manager company, which is looking to spend over $400 million on stakes, has said today that it has acquired education firm GL Education Group.

The Bahraini investment company, who had previously floated such luxury brands as Tiffany & Co Gucci, paid an undisclosed amount to debt capital and private equity firm Veronis Suhler Stevenson, for the education group.

GL Education Group, previously named as Granada Learning Group, specialises in providing educational tools and programs to children.

BT has announced a contract with NATO’s Consultation, Command and Control Agency (NC3A), which is responsible for delivering technology in support of NATO’s global operations. The contract provides NATO with a communications network, connecting more than 70 locations, spread across the NATO nations and the Balkans. The five-year agreement is valued at €47 million.

Ethernet Connect will lay the foundation for a highly-secure wide area network (WAN) in support of NATO’s missions and decision-makers around the world. BT will also supply the NC3A-organisation with the hardware to accomplish this.

Georges D’hollander, General Manager at NC3A, said: “Information - and the ability to share it rapidly across a coalition - plays a paramount role in 21st century operations, as well as political decision-making. To underpin this we need a flexible, future-proof network. BT has, over the years, developed an in-depth understanding of the specific challenges we face. Their BT Connect portfolio is particularly well designed to support our communications needs.”

Cisco has announced its intent to acquire NDS Group Ltd., a leading provider of video software and content security solutions that enable service providers, and media companies to securely deliver and monetise new video entertainment experiences.

The acquisition of NDS will expand Cisco's ability to transform how service providers and media companies worldwide deliver next-generation video experiences to subscribers.

NDS uses the combination of a software platform and services to create differentiated video offerings for service providers that enable subscribers to intuitively view, search and navigate digital content anytime, anywhere and on any device.

Hampshire and Oxfordshire county councils are planning an ICT partnership that would see them supporting each other in the use of different systems.

A memorandum of understanding is already in place and the move will go ahead if it wins approval at Oxfordshire's cabinet meeting on 20 December.

The first step is expected to be Hampshire providing supporting the other council's SAP system when its current service contract with Serco ends in late 2012. This is predicted to save the council £1m over three years.