BPO 2.0 is arriving, according to the latest Forrester report, as
the outsourcing vendors are making another run at the BPO market by
adding a standard software ‘platform’ underpinning the
BPO offering. And addition of such software platform to their
people and process expertise, says Forrester, will cut costs for
clients by an additional 20 percent to 30 percent on top of the 15
percent to 20 percent savings of a traditional BPO solution.
The report, ‘
Platform BPO: Process Outsourcers Take A New
Approach To Traditional BPO’ by Forrester VP and
Principal Analyst, John McCarthy, states that over the next 24 to
36 months, the emergence of a range of platform BPO offerings will
give BPO clients a more compelling savings and innovation option in
the space. McCarthy, a veteran outsourcing-offshoring analyst who
first predicted that 3.3 million white-collar American jobs would
shift offshore to countries such as India by 2015, terms it as the
BPO 2.0 arrival.
The report cites the examples of players such as Infosys and TCS
who are extending the functionality of the base software package to
handle the entire process. For example, Infosys has created a
specialized workflow around the core SAP platform to streamline the
procurement process, as well as developing specialized analytics to
optimize invoice payment.
Some players are also building specialized software from scratch
for new processes. A case in point is TCS which has developed its
own payment reconciliation and insurance claims processing
platforms.
Says McCarthy, “Over the past two years, the seeds have been
sown for a new generation of business process outsourcing (BPO)
offering. Service providers have been rethinking their BPO approach
and the level of savings for clients. Traditionally, they built the
BPO value proposition on labor arbitrage out of countries like
India and the Philippines, but that is changing. Today, instead of
taking on the clients' grab bag of legacy systems, providers are
now offering the entire stack with a common software platform that
gives them a more scalable solution, and the ability to
continuously reduce costs as well as improve process performance
for clients.”
Forrester expects the platform BPO space to mature in two phases
over the next 24 to 36 months in terms of client demand and breadth
of offerings. Currently, almost every platform BPO offering from
providers focuses on either the HR or procurement / F&A space,
which is a legacy of the focus of the traditional BPO market. And
year 2011 on, providers will reorient their platform BPO approach
to target industry-specific processes. This reorientation will
enable providers to turn their platform development into a more
IP/expertise-led approach. And instead of a pure cost-reduction
story, this vertical model will enable firms to showcase the
process improvements that they have built into the platform and
that far exceed clients' old internal or manual systems.
With the platform BPO maturity approaching, McCarthy’s advise
to BPO clients is clear – ‘if you are going to tender
for BPO, add a section to the RFP that evaluates potential
suppliers' platform BPO capabilities, including factors such as who
developed the underlying platform, how they are handling
multi-tenancy, and the technology road map.’
Outsourcers like Accenture, Genpact, Infosys, and Tata Consultancy
Services (TCS) are making another run at the BPO market. This new
line of attack is based on a standard software
“platform” underpinning the BPO offering. No longer
will these and other suppliers take over the hodge-podge of client
systems in order to run the process. They now offer a full
“integrated platform” that includes a standard software
offering, not just the people and the process expertise.