LONDON--()--A lack of effective engagement is preventing business process outsourcing (BPO) relationships achieving their full potential in today’s changing economic climate, according to industry research commissioned by arvato UK & Ireland1.
“Every situation is different, but in short a vendor or supplier will deliver what’s in the contract, whereas a partner will deliver what’s ultimately right for the organisation. The type of relationship you choose depends a number of factors – company culture, drivers and type of service outsourced”
The independent research, which questioned 100 senior BPO clients across public and private sectors, found that while 80% of respondents claimed their outsourcing programme was successful (good or very good), 87% of respondents felt there was something limiting the outsourcing relationship.
Indeed only 2% of respondents believe that their BPO provider is ‘very engaged’ and despite ‘partnership’ being a widely used term across the outsourcing industry, only 56% view their supplier as a trusted partner.
Performance, processes and contractual commitments are being delivered, and should remain an important part of any BPO programme. However, the research suggests organisations are not always getting the most from their outsourcing partnerships because the softer, more people-focused elements are being overlooked.
Indeed it appears that what clients are looking for from a BPO provider has not kept pace with what they ultimately want to achieve. Today just 10% of organisations describe cost-cutting as the primary role that their BPO provider plays, with the key drivers now being access to specialist skills and expertise (72%), growth and expansion potential (66%) and coping with changing market conditions (58%). These drivers are all more about the strength of ‘people’ than just simply ‘process’ based in nature and they are focused on enabling success as a ultimate goal, rather than immediate savings.
However, almost three quarters (74%) reference ‘adhering to strict KPIs’ or ‘well-defined processes’ (69%) as the most important attributes - arguably hygiene factors in empowered outsourcing partnerships that deliver and add real value.
Today’s outsourcing contracts and how they are used can restrict the ability of a partnership to do the right thing. The research calls for a more flexible and agile approach to the structure of outsourcing relationships to enable success beyond the contract. Over half (54%) of organisations have a standard partnership model in place, but 76% of all respondents would prefer to work within a more customised partnership model created for their specific needs.
While 71% cite the ability to adapt to changing industry and relationship dynamics as a key expectation of their BPO provider, currently 67% of suppliers have to submit a change request for even the smallest changes to processes. This conservative approach is reflective of tight budgets and a fear of spiralling costs in today’s economic climate, but also highlights a trust issue.
The outsourcing industry is already contributing £207bn (8%) of the total UK economic output2, but arvato believes that facilitating better, deeper and more effective engagement would help the industry reach its full potential and deliver more value to clients and their customers.
“Every situation is different, but in short a vendor or supplier will deliver what’s in the contract, whereas a partner will deliver what’s ultimately right for the organisation. The type of relationship you choose depends a number of factors – company culture, drivers and type of service outsourced,” explains Matthias Mierisch, CEO and Chairman, arvato UK & Ireland. “Just because BPO includes the word process, trusted partnerships shouldn’t stop there. If a client’s goal is to achieve fundamental improvements or real growth, it requires people and partnership too!”
The full research findings underpin the launch of arvato’s Open Outsourcing report series, which aims to get to the heart of real-life outsourcing relationships. The first issue focuses on effective engagement and the elements that ensure business outsourcing is delivering the very best results for both parties. It examines how brands such as Microsoft, Universal Music and Bosch, as well as pioneering public sector organisations have constructed successful outsourcing relationships, and includes further data from the research as well as industry expert commentary.
To view or download a copy of Open Outsourcing: Effective Engagement go to: www.arvato.co.uk/openoutsourcing
About the research
The industry research was executed by Coleman Parkes Research, an independent B2B research company. The study consisted of 100 quantitative, computer-aided telephone interviews with large companies headquartered in the UK undertaken in September and October 2012. 70 interviews were conducted with private sector companies (within retail, finance, technology, healthcare and energy sectors) and 30 with large public sector organisations (including central and local government). Interviewees either have been involved with, or will be involved in the management of business process outsourcing contracts.
About arvato UK & Ireland
arvato is a trusted global business outsourcing partner to the private and public sectors in the UK. With more than 50 years of experience in outsourcing, arvato combines expertise in business process outsourcing (BPO), finance services, contact centres, loyalty and customer retention, supply chain solutions, and public sector and citizen services to deliver innovative, individual solutions. arvato has long-term partnerships with some of the most respected companies in the UK and globally, as well as innovative public sector clients. It is a subsidiary of arvato AG, an internationally networked outsourcing provider with over 60,000 people employed in over 270 subsidiaries across 35 countries worldwide. arvato has annual revenues of approximately €5.4bn contributing over a third of the Bertelsmann group annual revenues of over €15.3bn. For more information, visit www.arvato.co.uk.
1 Coleman Parkes Research – research conducted with 100 senior BPO clients, on behalf of arvato, in September/October 2012
2 OxfordEconomics - May 2011