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Lessons learnt from pan Asian outsourcing vendors The IT sector that led the charge with outsourcing and off shoring has learned some valuable lessons that can be picked up by the Call Center and back office processing sectors.
The background is that we are now starting to see anecdotal evidence of vendors in the Asian pacific region collaborating with each other on major contracts and playing to their strengths. Multi-vendor selection is gaining traction within the industry, and vendor selection it is moving away from a country specific to a more global, talent based destination mix. This selection process could be either a single vendor with operations in multiple countries or from different vendors in different countries with the former offering less complex management from the client point of view. Single, multi-country vendors are arising as a natural part of the maturing outsourcing sector however formal and informal partnerships between different players in the industry offering complimentary capabilities is also emerging as a viable option for client consideration.
As an example, voice work is going to one destination and back office processes from the same contract are going to a completely different country. Of course from the client end the issue is, what is the ideal way of dealing with geographically diverse services suppliers to make sure that one can make sense out of trying to manage what looks like from a distance a herd of scatty cats. Breaking down the issues, they revolve around who is responsible and who has accountability for what process? Will dealing with multi vendors mean increased levels of overhead as more management is employed to manage the projects, thus negating the reasons for outsourcing in the first place? This was certainly the case when the Australian Government outsourced its IT requirements and not only ended up with a massive headache, but a massive bill as well.
neoIT one of the world’s leading consultancies on business process outsourcing recently published an excellent article about maximizing the value and avoiding pitfalls of a multi vendor globalization strategy.
As everybody knows the key drivers are about reducing costs and increasing operational efficiency, however one of the real roadblocks to outsourcing is the issue of risk mitigation and who in the equation actually accepts the bulk of the risk. This of course leads us down the path one of the fundamental pillars of our economies, ‘The risk reward scenario”.
We are often amazed when we hear stories about companies expecting outsourcing vendors to pick up the bulk of the risk on a particular project and not be allowed to build in a premium for risk. In many cases the management of the enterprise is not fully across the inherent risks of an outsourcing project. For outsourcing to continue to be successful and navigate through any major hurdles, risk management must be addressed. In the end, even if a company expects a vendor to bear the risk, it is the company that will bear the full risk to its shareholders and customers.
The learning from the IT sector, the frontrunners of outsourcing, is that the appropriate processes and governance structures to manage multiple external vendors that contribute to common enterprise objectives need to be well thought through. Of course this is not always the case as the overwhelming majority of enterprises using multiple vendors repeatedly experience a collision between the interests of various silos within the company doing the outsourcing. One section of the company may wish to take advantage of technical expertise or vendor specialization of a particular supplier, whereas another department may simply want to drive costs down. These quite often-unresolved conflicts diminish the value of the initiatives they provide to the enterprise. What is the right formula for using different vendors without adding costs or undermining their existing outsourcing relationships?
The first question that the company faces is ‘How can we ensure that we do not increase overheads by mismanaging different departments non-aligned strategic goals.’
The next question is ‘ Can different vendor companies work together and collaborate on a specific project?’
This is all very well for large companies with big management bandwidth. However once one leaves the rarefied and heady air of large multi national companies that can afford to put together a project team to investigate and manage an outsourcing project, it’s a different story. In a smaller organization who can afford to invest the necessary amounts of time and effort to conduct due diligence and resource planning? Furthermore one is faced with the problem of who in the organization can one take away from the day-to-day operation to focus on the project. Its not as if there are spare bodies sitting around waiting to be kick started.
One of the answers is of course to use the resources of the outsourcing companies. By selecting best-of-breed vendors one can tap into their entrepreneurial savvy. Many BPO suppliers have excellent working relationships with other players and can easily straddle multi faceted projects by the division of labor. One company becomes the main contractor and sub contracts the part of the work that it does not have the expertise in to a trusted sub contractor often in a different country.
From the enterprises’ perspective there is only one relationship, with the prime contractor, and they will manage down on the subcontractor.
As this trend starts to become more apparent, there is a need to get the Industry players from across the Asia pacific together in one location and thrash out the best way forward.
Now that the industry is maturing we would like to see a symposium to identify and discuss how to solve the major issues and challenges faced by the industry today and create a road map for future directions.
Areas for discussion should include, legal, project transition, go to market strategies, pan Asian service delivery models, sales, marketing and promotion in foreign markets, interoperability of unpinning technology, telecommunication strategies, quality monitoring and reporting and of course Disaster Recovery Planning (DRP).
This activity will not only strengthen and improve the industry itself but will help it better serve is clients, companies looking to outsource processes. By providing more comprehensive, lower risk, lower complexity multi-vendor and multi-country offerings to large, and medium size companies, businesses that outsource and the vendors that serve them will be better off for the effort.
-- Martin Conboy
(Martin Conboy is the Co-founder and CEO of FooBooOnLine.com. He has extensive knowledge of Asia Pacific market trends and he is one of the most quoted commentators in the call center and outsourcing space in the in the Asia Pacific.)
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