Satyam BPO Media Report

A showcase of Satyam BPO in media.

Third-Party BPOs On The Rise

Date: May 2008
Publication: SSO Network.com

Going one step beyond with Best BPO Provider Award-winning Satyam BPO's Venkatesh Roddam

Captives or third party? This is the current question haunting all potential outsourcers. As of now, inhouse decision-makers are experimenting with either a captive or third party or a combination of both depending on their appetite for risk. Though the short-term scenario will not change, in the long term we’ll see a hybrid of the present day situation. Specialists, be it captive or third party, will rewrite the rules of the game and quality and adherence to SLAs will be of prime importance.

Beyond cost

Outsourcing has moved beyond cost arbitrage. As organizations expand their global footprint, outsourcing is no longer a matter of choice but has become a part of strategy. Organizations are looking at spreading their risk across the globe in various forms; and one of them includes outsourcing. This is where third-party BPOs come into play.

By offshoring to a strategic third-party partner, clients enable the partner organization to unlock the hidden value of the process. But in order to do so, clients must ensure that they offshore to a partner who has proven capabilities as well as globally accepted “Process Outsourcing” certification, like eSCM. This will mean better adherence to SLAs and more benefits to be derived from outsourcing.

Beyond security

Third-party outsourcers ensure that their own security is robust and unbreakable. This is important since regarding an information leak crisis. Zero information breach is a great selling point for BPOs and they employ a large number of measures to ensure the same.

For clients it is best to go in for a partner who is certified by an international agency for their information security measures. This certification is nothing but a third-party endorsement about the importance given to information security by the would-be strategic partner and saves the client a lot of money, time and effort. These security measures will continue to become more important and, at certain points, non-negotiable.

Beyond processes

Due to the nature of being (in most cases) a service provider’s service provider, third-party BPOs stress quality and innovation. These two put together ensure lower operating costs for the BPO service provider. By innovating and putting in place stringent self-sustaining quality measures, lower operating costs and better return on investments result.

Beyond generalists

Gone are the days when BPOs were supposed to provide all services under the same roof. Today, BPOs specialize in certain fields like engineering services, BFSI, Healthcare, etc. This is reflected in their service offerings as well as target markets. This also ensures better management of processes and attrition control. Clients will look at outsourcing to multiple vendors who are specialists. This might seem like acquiring a lot of headaches, but allows the partner to provide more value add.

Beyond third party

Whenever outsourcing, clients have the inherent need to remain in control. This is truer for the clients operating in the BFSI space. In order to retain control over third-party outsourcers, clients will be willing to buy a specified stake in the outsourcing service provider. This puts the client in a more controlling position for security, service level agreements, privacy levels etc.

Another model that is emerging is the hybrid model. This will be more like a joint-venture between the outsourcing organization and the third-party vendor. The vendor will bring to the table expertise in terms of people handling skills, processes, quality, etc. while the outsourcer will maintain leadership and management control. This will help clients tide over IP issues and information security issues, while leaving the day-to-day management of business to the experts.

Beyond offshoring

Clients will use the hybrid model to establish their presence in a certain offshoring favored destination. Once set up, the client will look at introducing its own products into the market. Brand-building thus becomes an essential part of the plan for the client when venturing into such a territory.

Beyond size

Captives generally restrict their size to below 1,000 heads. They will operate in the form of wholly-owned subsidiaries. This enables the parent organization to exercise more control over them. Also, these captives provide core services to the parent organization which are critical from a security standpoint; outsourcing these to a third party becomes challenging. These captives will become specialists and would work exclusively for the parent organization.

Beyond value chain

In an attempt to shore up their service offerings, third-party BPOs will move up the value chain. This will enable them to take up more and more high-end work and get more billing. This not only drives profitability, but also better salaries and employee compensations.

Beyond the obvious

Though captives will never really go totally out of business, numbers are definitely dwindling. Organizations must have a strong case for supporting a captive business offshore unit and strong management backing. It is the hybrid model which will soon be pursued by the offshoring industry.

Click here to view article in SSN Network.com

Back