is bpo ready for disruption
DESCRIPTION
Keynote Presentation by John Willmott, CEO NelsonHall at the BPO Innovations Conference held recently in New York and hosted by the Outsourcing InstituteTRANSCRIPT
© 2014 by [email protected]
John Willmott, NelsonHallOutsourcing Institute BPO Innovations Conference, New YorkOctober 30, 2014
State of the Industry: Is BPO Ready for Disruption?
© 2014 by [email protected]
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Topics
1. How have BPO Client Needs Evolved?
2. Disruptive Forces Impacting BPO
3. High Velocity BPO
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BPO Buyers Get More Demandingas They Mature
Important in 1st Generation BPO Important in 2nd/3rd Generation BPO
Attaining, or improving position within, top-quartile operations cost
Integration into Global Business Services organization
Ongoing ability to deliver innovation within operations Increasing automation of operations
Supporting full geo coverage of organization, incl. supporting entry into new countries and markets
Improving controls, compliance, and standardization of operations
Ability to support the client in their business vision
Client expectations of BPO vendors generally much higher generally than they used to be, e.g., of their:• Process knowledge and process
analytics (increasingly seen as a hygiene factor)
• Knowledge of the client’s business, combined with the ability to support them on a journey
• Ability to deliver transformation and contribute to C-level vision
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It’s No Longer About Cost Reduction. Is it?
Most Important Objectives in Next BPO (Top Four: Prompted)
High Importance in Supplier Selection
(%)
High Importance in Differentiating
Between Suppliers (%)
Commitment to deliver ongoing year-on-year cost reduction in operations 93 97
Commitment to delivering business outcomes 86 97
Ability to amortize initial transition costs as ongoing service charges 79 76
Willingness to flex cost down as well as up in agreed timescale 45 83
Cost-Related BPO Vendor Differentiators
Challenges for buyers & vendors• Operating end-to-end across
operational silos• Who drives change?• How do I still make a profit?
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The Robots are Coming: Is this the End of BPO?Where is RPA Currently Being Deployed
Implications for vendors:• Getting to client first• Rapidity of change - short
cycle-time for implementation
• Maintaining revenues and margin
• Maintaining deep understanding of standard operating procedures
• Make or buy?
BPO Activity Proportion of RPA Activity (%)
Data extraction & enrichment 50
Performance analysis & reporting
25
Self-help query resolution 15
Multiscreen integration for users <10
Compliance <10
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Analytics Becomes All-Pervasive…and increasingly predictive
Analytics used to be an add-on to identify process issues as part of a LEAN Six Sigma project but now increasingly embedded in process and predictive
Implications for vendors:
• Real-time drill down dashboards need to be built into all services
• Performance against benchmark & goals
• Increasingly focused on business actions and not just process improvement
BPO Activity Areas where analytics being applied
Contact center Speech and text analyticsNext best action/propensity enginesSocial media monitoring & lead generation
Marketing operations Price & promotion analyticsCampaign and media mix analysisStore performance
Financial services Model validationKYC/compliance
Procurement Spend analytics
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Labor Arbitrage is dead – long live laborarbitrageReports of my death were greatly exaggerated
Implications for vendors:
• Serving emerging domestic markets requires greater fragmentation of delivery centers as does moving up the value chain
• Agent diversity continues to increase
• The contact center refuses to die
In spite of automation, mature “International BPO” services now being transferred to tier-n cities• Labor arbitrage is good• Reduced attrition is even better• Rural centers in mature markets Growth in domestic markets:• Small now but opportunities in emerging economies are
growing especially in areas like customer management services
• Bangalore and Cape Town are great for “International BPO”
• Jamshedpur and Port Elizabeth more appropriate for domestic markets
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Digital Renews Opportunities inCustomer Management Services
The need to combine people skills and digital skillsgets ever more pronounced
Implications for vendors:• Need single-view of the customer & linked multi-
channel delivery• Need to be able to analyze and optimize customer
journeys• Need to recommend next best action both to
agents & through digital channels• Differing channels need differing skills• Agent recruiting & training & motivation more
important than ever• The web site is becoming a critical part of customer
service
Channel Proportion 2014 (%)
Equivalent 2017 (%)
Voice 56 41Non-voice 44 67
Customer requirements• Combined CSAT improvement and reduced cost to
serve» Reduced customer churn» Increased first call resolution rates• Reduced levels of shopping cart abandonment • To enable voice agents to focus on complex or high
value interactions• To be taken seriously as an online business
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Will Software Destroy the BPO Industry? orWill BPO Abandon the Software Industry?
Pros and Cons of COTS Software vs. BPO “Components”
Questions for vendors:• How do I maximize my IP?• Will “make” be more cost-
effective than “buy”?• Can I get a much more coherent
combination of processes, dashboards, and analytics this way?
• Where do key tools not exist?• Can I maintain the focus on
services and not be tempted by software sales?
COTS Software BPO “Components”
High brand acceptance No brand value
Tool-up quickly A relatively slow build
Licenses are expensive as is SaaS BPO companies always built key tools like workflow to reduce cost
IP is shared/handed to software company
IP retained in-house
Difficult to integrate with process models and dashboards
Process models and dashboards can be built-in – less “Heath Robinson”
Hard to sell BPO as an add-on to software
Easier to sell BPO service with embedded enablersFacilitates move to BPaaS
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The Internet of Things: Is this a NewBeginning for Industry-Specific BPO?
Where is the Internet of Things Currently Being Deployed
Implications for vendors:
• Often not the traditional BPO buyer
• A high element of 24/7 services
• Strong analytics capability likely to be a pre-requisite
• Potentially takes the meaning of risk/reward to a whole new level
Sector ExamplesTelemedicine Monitoring heart operation patients post-op
Insurance Monitoring driver behavior for policy charging
Energy & utilities Identifying pipeline leakages
Telecoms Home monitoring/management - the next “big thing” for the telecoms sector
Plant & equipment Predictive maintenance
Manufacturing Everything-as-a-service
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Accelerated Timescales of Transformation in F&A
Standardizing processes on
transitionLabor Arbitrage
Process Improvement & standardizat’n
Tools &Automation& Robotics
Business & Process Analytics
14
Months
Years
Greater automation; Analytics embedded in specific processes
Previously
YesterdayToday
Business insight
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The Future: High Velocity BPOWhy take years when months will do it?
Attribute Traditional BPO High-Velocity BPO
Objective Help the purchaser fix their processes Help the purchaser contribute to wider business goals
Measure of success Process excellence Business success, faster
Importance of cost reduction High Greater, faster
Geographic coverage Key countries Global, now
Process enablers & technologies
High dependence on third-parties Own software components supercharged with RPA
Process roadmaps On paper Built into the components
Compliance Reactive compliance Predictive GRC management
Analytics Reactive process improvement Predictive & driving the business
Digital A front-office “nice-to-have” Multi-channel and sensors fundamental
Governance Process-dependent GBS, end-to-end KPIs
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Impact of Disruptive Forces on BPOMore opportunity than threat
Disruption Short-term impact Long-term impact
Robotics Gives buyers 35% cost reduction fastFaster introduction of transaction pricing
No significant impact on business models or technology
Analytics Already drives process enhancement Becomes much more instrumental in driving business decisionsPotentially makes BPO vendors more strategic
Labor arbitrage on labor arbitrage
Ongoing reductions in service costs and employee attritionImproved business recovery
“Domestic BPO markets” within emerging economies become major growth opportunity
Digital Improved service at reduced cost Big opportunity to combine voice, process, technology, & analytics in a high-value end-to-end service
BPO “software components”
Improved process coherence BPaaS service delivery without the third-party SaaS
The Internet of Things Slow build into areas like maintenance Huge potential to expand the BPO market in areas such as healthcare
GBS Help organizations deploy GBS Improved end-to-end management and increased opportunity
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Q&A
@John_NH
John Willmott, NelsonHallOutsourcing Institute BPO Innovations Conference, New YorkOctober 30, 2014
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