I’ve mentioned before that innovation ranks high on list of requirements when companies consider their business process outsourcing (BPO) aspirations. And now a new study released from long-time outsourcing blogging outfit and market analysis firm Horses for Sources is driving home that point.
Actually, Horses for Sources has been saying more and more executives are seeking innovation as a key aspect of their BPO contracts for some time. Sure, cutting costs are well-received, but once those cuts even out, what executives want—and expect—are increased productivity levels and greater opportunity to generate revenue, the research firm says.
The new report, “Desperately Seeking Innovation in Business Process Outsourcing: Enterprises Speak Out,” has some pretty interesting stats. For example, 43 percent of buy-side decision makers now view innovation as a critical element of BPO. Just over half, or 51 percent, view innovation as quite important, and only a tiny portion, 6 percent, think innovation is a “nice-to-have.”
I think these execs are right on target. Companies can cut costs and cut costs, but eventually there’s nothing more to cut. If any IT or business initiative isn’t improving operations and thus boosting productivity and ultimately revenue, something needs to be done. Unfortunately, the Horses for Sources report reveals some not-so-good news about innovation and BPO.
For example, half of today’s enterprise buyers are disappointed with their current state of innovation. Customer care, recruitment, payroll and management reporting are noticeably failing to meet clients’ innovation expectations, the study found. Only half of the BPO engagements today have adequate talent and technology provisioned, from both the client and service provider sides, to help drive innovation. And finally, the study reveals, less than 10 percent are surpassing expectations of innovation achievement.
Horses for Sources queried 588 shared services and outsourcing executives. The report isn’t solely bad news, however. The research firm does offer some good advice. In fact, the firm recommends that for innovation to occur, BPO buyers and their service providers need to work together to achieve measurable business outcomes as part of organized and collaborative long-term partnerships. Also, the firm says, “buyers need to put the innovation track-record of service providers high up the decision-making tree when they select make selection decisions.”
I’d like to hear more suggestions. Readers, how can companies advance innovation in their BPO arrangements?