The outsourcing of business processes has gone well beyond the labour and cost arbitrage and is not discussed as key drivers any more. The current phase in outsourcing is about getting the right partners to transform your business. Service providers are intricately linking their performance to that of their clients. Discussions are now around transformation and outcomes, not just about cost savings. Services also evolved accordingly - from purely voice and back office support to multifunctional, multi-horizontal. Delivery of these services has moved beyond the hourly or FTE (full time equivalent) based engagements. The BPO industry is now on a growth trajectory rather than merely survival.
Marrying technology to the services
The introduction and inclusion of technology in service delivery has been the biggest game changer. The outsourcing industry has been all about technology and it was only a matter of time before the delivery of business services would be so integrally linked to it. This was the beginning of platform based BPO solutions. Analysts believe this is also a natural progression for the IT service providers that ventured into BPO services in the last decade. Platform solutions gave them an opportunity to increase their footprint among clients of both services.
Today, the platform BPO services straddle both horizontal services (F&A, HR etc.) as well as verticalised industry offerings, such as procurement. Infosys, which is aggressively developing its offerings, is concentrating on the horizontal as well as the vertical offerings in HR and procurement. Infosys’ Source to Pay is a procurement platform solution and one such example. Caliber Point, the BPO arm of Hexaware launched Republic in 2010, a multi-tenant HR services delivery solution based on Oracle E-Business Suite Release 12. According to the company, Republic is hosted and maintained by Caliber Point and interfaces through a user-friendly and secure HR portal. Tata Consultancy Services (TCS) offers platform solutions in multiple service lines such as F&A, HR, analytics and procurement. EXL, with its recent acquisition of OPI, is likely to benefit from OPI’s platform based solutions in the F&A space.
Addressing the smaller clients
Platform BPO solutions took momentum with the recession a couple of years ago. Cost pressures on the clients and the need to engage on a long term basis with the clients have fuelled investments by some of the large service providers. Platform based solutions will probably be a boon to mid to small size clients, where they don’t have to invest in an ERP platform and then outsource some of the business processes as well. This works out for the service providers as well, who are looking to expand beyond the Fortune 500 companies.
This does not mean that larger clients or existing clients will not benefit. Platform solutions will offer easier and cheaper ways to explore newer avenues of business. It presents service providers the opportunity to help their clients deliver their business efficiently and perhaps even cheaper.
Is Platform BPO everyone’s cup of tea?
Not all service providers have the capabilities to develop platform solutions. Currently, we see that the larger players have created platform offerings. This is because developing a platform based offering needs high investments in infrastructure as well. Moreover, since this model relies on transaction pricing, mature relationships with clients would be needed. For the mid-sized service providers, this may well be an opportunity to develop platform based solutions on a select area of expertise.
What is the future of platform BPO?
The evolution of platform BPO is actually a gradual shift from the earlier models of BPO. However, platform is in a way BPO on a cloud model and since this is the way of the future, it is also most likely to succeed. Another reason why platform BPO will succeed is the inherent benefit to the clients – in terms of low capital expenditure as well as transparency in pricing. Therefore, whether platform BPO is a win-win solution for all is yet to be seen but surely a model that will see exponential growth in the next few years.
By Jui Narendran, Head - ValueNotes Sourcing PracticeBy Jui Narendran, Head - ValueNotes Sourcing Practice