Medellin is one of those cities that you never want to leave. Blessed with mountains on all sides,  a Mediterranean climate and some of the best beef dishes anywhere in Colombia (especially when over a barbeque), Medellin is shaking loose from the shackles of its past and putting a remarkable amount of focus on global services. We spent a few days there last week – and got to know how the Paisas people see Colombia’s second biggest city evolving as a hub for innovation and global engagement.

Red tape, scalability, labor analysis, financial incentives and investment risk are among the burning issues for a Nexus panel joining together Ann Harts, Kevin Parikh and Fabrizio Opertti

By: Michael Santamaria

There’s little doubt that Business Process Outsourcing is here to stay; the lure of “easy” cost savings is just too powerful for companies to resist. But the truth of the matter is that implementing a successful outsourcing project is hard work and realizing those “easy” savings is by no means a foregone conclusion. While data on outsourcing failure is hard to come by, the Aberdeen Group has reported that 21% of outsourcing projects fail to meet stakeholder expectations, and Gartner puts the outsourcing failure rate as high as 30%. Although neither study defines what constitutes a “failure,” the bottom line is a large percent of projects end with unhappy clients.

When an outsourcing project fails, it’s easy to blame the vendor. But having experienced the situation from both sides of the table, I would suggest that more often than not, the purchasing company lays the groundwork for the poor performance. The onus is on the purchasing company to do an adequate due diligence and to manage the project. Can you really blame the vendor when they were put in the position to fail from the beginning? Ultimately, no one wins the “blame game,” you are better off doing the project right the first time around.

To avoid being one of the Gartner statistics, there are four considerations that need to be part of your outsourcing initiative, 1) set an outsourcing strategy, 2) choose the vendor that best fits that strategy, 3) own the transition, and 4) create the structure to manage the relationship.

Strategize Wisely

Setting your outsourcing strategy is the all-important first step. To a certain degree, outsourcing strategies can be classified as either tactical or transformational. The tactical model is designed to take advantage of labor arbitrage and often employs what is referred to as a “lift and shift” approach. Work is lifted from your company and shifted to one in a lower cost area. Vendors of lift and shift models typically use existing processes and work in your existing systems, requiring little change on the part of your company. Essentially, the location of the worker changes, but the work itself does not.

On the other hand, a transformational model almost always involves a software implementation, which leverages optimized workflows. Under a transformational model, your company replaces existing processes and technology with the vendor’s processes and technology. As such, an IT project is embedded within the implementation. Clearly, implementing a transformational model is more involved than lift and shift, but it yields some notable advantages.

So, how do you decide which approach is best for your company? While there are no pat answers, I have found that companies often shy away from “yet another IT project” and end up following the tactical path, which is a mistake. My advice is to start assuming the transformation/software dependent solutions. Many of these solutions are very sophisticated, their processes and technologies successfully encapsulating industry best practices, and they have a large installed base so you can take comfort knowing that most of the bugs have been worked out. In addition, most solutions have a relatively streamlined and formalized client onboarding process, mitigating many concerns about implementing the solutions. In some cases, of course, there are no transformational options that fit your needs, forcing you to go the tactical route. This approach is workable, as each model has its benefits.

Figure 1 below breaks down the strengths and weaknesses of each.

Choosing the Right Vendor

The next step in implementing a successful outsourcing project is choosing the right vendor. If your company’s strategy employs the transformational approach, the process of choosing a vendor will be driven by the software solution, actually making selection easier. Comparison of tactical vendors is more difficult, because, for the most part, you will be comparing intangibles.

Regardless as to the approach, it is necessary to spend adequate time on due diligence checking all references, asking the hard questions, and arranging to visit reference sites in order to observe the process in action. Observing the process in person provides a better understanding of the processes, handoffs, potential issues related to team integration, and challenges communicating across distance. A vendor demonstration cannot compare to an onsite visit. A trip to one or two reference sites will prove to be money well spent.

Once vendor selection is complete, the planning stage begins in earnest. Generally, vendors will provide the overall implementation work plan. That said, since this is ultimately your project, you have the responsibility of owning it! Your company should remain integrally involved in the transition, which means dedicating the appropriate staff, assigning a sponsor, and holding senior leadership governance and gate reviews. It is also necessary to spend time developing a comprehensive risk mitigation plan. Your company needs contingency plans to address potential obstacles, including negative employee-client reaction to temporary performance dips, the PR response if contacted by the local press, transition plans for the local staff, and most importantly, plans to deal with unforeseen departures.

Regardless of severance packages or retention bonuses, once job eliminations are made public, employees begin searching for new opportunities. Needless to say, their departures don’t always align with your company’s staffing needs. Recently, I had the opportunity to experience this issue first hand, when my client on a six-month outsourcing project announced to me that we needed to go live in one week, three months early, because they no longer had the staff in the department to process the work. It goes without saying that the next few weeks were not exactly smooth.

Manage the Vendor

The last factor to consider for your outsourcing project is post-implementation vendor management. Unfortunately, this step tends to go overlooked until problems arise. Communication is one of the most vital elements in making an outsourcing relationship work. I recommend you plan to over communicate at the beginning of the project. The communication plan should include daily supervisor calls, monthly management reviews, and a quarterly sponsor meeting. Over time, if this proves cumbersome, you can dial it back. At the beginning, though, plan to over-communicate.

The daily calls should occur at the supervisor level, last no more than 10 minutes, and address yesterday’s challenges and today’s expected volume. I try to keep the daily calls informal to help forge a relationship between the team’s supervisor groups. Monthly management meetings should focus on the service level agreement (SLA) and performance metrics. It is critical to agree on what will be measured, how it will be measured, and what performance levels are acceptable before going live. In my experience, failure to exercise rigor in this step is where many outsourcing initiatives go wrong. Finally, the sponsor meeting should be a review of monthly trends and discussion of performance issues.

For these meetings, it is important that sponsors treat the two teams as unified and hold them jointly accountable. When issues inevitably arise and a “blame game” begins, sponsors need to be able to cut through the noise and force the teams to work together towards a solution. After all, one team cannot be successful if the other fails.

Outsourcing is not easy. But if you start with a sound strategy, leverage the right vendor, and are prepared to manage the project and relationship you can achieve significant savings. Let’s face it, those savings are hard to ignore.

Michael Santamaria is a director at ScottMadden. His consulting experience spans a number of areas including business process outsourcing, process redesign, organization design, operations improvement, and project management. Prior to joining ScottMadden, Michael ran operations for a business process outsourcer, consulted for Clarkston Potomac Group and Emerson Consulting, and held several positions with General Electric. Michael received an M.B.A. from Case Western Reserve University, Weatherhead School of Management and his undergraduate degree from Washington and Jefferson College. He is a certified GE Six Sigma Master Black Belt.

By Dan Berthiaume

When selecting a location for BPO service delivery, there are some standard metrics most BPO buyers use to determine the best location. However, “standard” does not always mean “right.” Just as in so many other areas of business, sometimes the common wisdom in the BPO realm is outdated, distorted or just plain wrong. Following is a brief review – compiled from several different expert sources- of some popular myths:

1. Rankings are helpful to understand relative attractiveness of locations. 
Despite heavy reliance on various “official” rankings of BPO locations, it is prudent to digest these reports with a heavy grain of salt.  Factors such as an incrasingly large number of competing rankings, a lack of correlation between rankings and actual end outcomes, score differences that are not meaningful enough to denote relative attractiveness, and the inability of generic rankings to take company-specific considerations into account limit the usefulness of rankings.

Furthermore – as long-time followers of Nearshore Americas can recall – there are firms pretending to do analysis of markets, but when confronted to produce evidence of their findings, they are nowhere to be found. The classic example of this is the 2009 “Black Book” of Outsourcing’s unfair attack on Bogota, performed by the owners of “Black Book” which was later acquired by DataMonitor/ Ovum. The ‘authors’ never engaged with us when we requested they provide evidence of Bogota being the ‘riskiest place on earth’ to do outsourcing. (Ovum CEO’s actually wrote a letter to us about this topic – published here.)

2. Size = scalability.
While the “size of an overall talent pool is often assumed to indicate scalability,  in reality, scalability is driven by multiple factors including quality of talent, competition, and companies’ unique requirements. The size of what appears to be an available talent pool  can be significantly reduced by issues such as lack of quality of quality and propensity and competition, resulting in a much smaller net talent pool. In addition, Everest Group – among others – cautions that statistics on available talent pools of qualified college graduates can often be misleading, and that local college graduates are not always part of the available talent pool.

3. Wage increase directly leads to an increase in overall people costs.
Using the typical wages paid to ITO workers in India during the past few years as an example, Everest Group demonstrates that although wage inflation of 10-12% for senior programmers and 12-15% for junior programmers has often been reported, in actuality wages for these employees have actually risen 3-8%, with a net 4-6% impact on overall people costs. Everest Group attributes the disparity to lower levels of total inflation in salary bands than individual changes due to promotions and growth, as well as cost controls allowed by high rates of attrition among junior programmers.

Everest Group says high-cost locations can supplement a BPO portfolio by fulfilling unique needs, such as niche skills, customer proximity, and time zone overlap

4. Locations experiencing tight labor conditions are always unattractive.
Large cities in popular BPO locations often experience labor pool tightness due to competition for workers. However, Everest Group advises that BPO buyers can often supplement a “tight” labor pool in an urban BPO location with workers from adjoining areas, as well as the possible “additional” talent pool represented by employable high school graduates, part-time workers, and experienced professionals with similar skills from other industries. BPO buyers will need to implement the proper hiring and training models to implement and scale hiring of workers from the additional talent pool.

5. High-cost and low-cost locations are in competition with each other.
BPO buyers often assume they must select either a low-cost or a high-cost location, with an obvious bias toward the cheaper destination. In actuality, Everest Group says high-cost locations can supplement a BPO portfolio by fulfilling unique needs, such as niche skills, customer proximity, and time zone overlap. BPO buyers should also assess delivery risks, including stability and predictability and business continuity, as well as consider direct financial metrics such as labor arbitrage, operational costs and taxes and incentives.

(Editorial note: Much of our research for this report resulted from a webinar, the “5 Common Myths of Location Selection,” produced by Everest Group).

By Luke Bujarski

Distinguishing between domestic and export driven business is becoming increasingly important to vendors operating in LatAm. How are Brazilian banks outsourcing their back office? Why is Mexico’s manufacturing industry rebounding and what technology solutions are producers looking for? Is Colombia’s telecoms market the next big opportunity? Likewise, multinational enterprises will be looking for those service providers best suited to support their specific industry, as they invest in these oft complex markets.

The Latin America outsourcing model poses a new dynamic relative to India where exports still comprise 80 percent of total sales. Across LatAm exports are more to the tune of 30 percent. In a recent interview with our sister affiliate Global Delivery Report, TCS revealed that 70 percent of their Latin American presence (nine thousand heads) focuses purely on domestic consumption. As Brazil, Mexico, Colombia, and Peru blaze forward economically, we surmise that in-region deals will eat up an even bigger portion of that pie. Furthermore, while Mexican exports continue to grow rapidly, so too is its domestic outsourcing market.

Data Source: Mexico’s Ministry of the Economy

The Discussion Will Shift Toward In-Country Sourcing

As Latin American economies pick up steam and push labor markets to their limits, the Nearshore model will be put to the test. We already see this happening in Brazil and in Chile where increasing labor costs are making it less practical to export services. Multinational vendors are shifting certain BPO projects from location to location, transferring operations from high cost to low cost countries, from Chile to Guatemala, from Brazil to Argentina, from Mexico to Colombia.

As this game of ‘hot potato’ plays out, the global sourcing conversation will likely shift in different directions as it relates to domestic markets: How can we service Portuguese clients out of Colombia? Should Mexico’s public sector be a priority for us? How will the Colombia-US Free Trade Agreement impact local demand? Are we ‘vertical’ enough to break into Mexico’s manufacturing sector?

David Shpilberg of CPM Braxis touched on the ‘domestic’ issue, during an interview at Nearshore Nexus last week, when reflecting on the relevance of the US market to Brazil-based vendors – in light of the huge in-country workload. He responded by saying that “it has become difficult to distinguish between what is local and what is global.” Outsourcing mega deals involve numerous end-user and service provider locations across countries and continents. “To be a global player, you must show clients that you can manage nearshore contracts.” Keith Jones from advisory firm Pace Harmon also confirmed that “when entering into uncharted markets, multinationals [enterprises] want service providers that have experience working on projects in the United States.”

So as enterprises move in, Nearshore contracts can play as the ‘hook’ that catches more work on Brazil’s domestic front.

Mexican Manufacturing Will Drive more IT/BPO Deals

Vertical expertise could also be a game-changer for LatAm domestic markets. Jimit Arora of Everest Group sees the “verticalization” of IT application development and maintenance (ADM) as a major paradigm shift in today’s global services marketplace. “Clients are reassured when vendors can speak their language whether it’s financial services, hospitality, manufacturing, or health care.”

Mexico is the largest trading partner with the United States second only to China. 2010 was a record year for goods exports totaling $230 billion US dollars 

Accenture is credited as the pioneer of the ‘vertical’ approach, but most outsourcers now market their offerings based on specific vertical expertise. Nearshore Americas surveyed the top IT services vendors operating in Mexico and identified the following verticals to keep a close eye on:

Data Source: Nearshore Americas supplier survey

Manufacturing in Mexico is a good example of how vertical know-how could help IT/BPO outsourcers grow their domestic business. According to the Offshore Group, rising costs in China are a boon to Mexican manufacturing. The sector suffered in the late 1980s as producers packed up and began moving production overseas, but the last five years have seen a rebirth of even more advanced manufacturing, particularly in aerospace. In 2004 aerospace companies operating in Mexico exported a total of $146 million US dollars worth of products; that number rose to $3.5 billion US dollars by 2010. Of particular interest to the big outsourcers might be the multinational packaged goods and automotive clients (see chart).

 Data Source: Instituto Nacional de Estatistica y Geografia

Mexico is the largest trading partner with the United States second only to China. 2010 was a record year for goods exports totaling $230 billion US dollars (US Census Data). Indian product exports to the US barely scratched $30 billion US dollars in 2011. Nissan’s recent decision to locate a $2 billion US dollar facility in Aguascalientes gave the industry an additional boost as well as a recent survey by the IMF, showing that Mexico’s rapid economic recovery (as the US rebounds) shows strong fundamentals particularly in manufacturing.

Verticals and Co-Location – The Way Forward?

As multinationals bring manufacturing back to Mexico, vertical expertise will be a ‘hook’ for both IT and BPO contracts. Homegrown technology services providers like Neoris – Latin America’s only SAP Global Partner – will likely see a bright future in that vertical. These homegrown players are expanding their sales force in the United States undoubtedly pitching global goods manufacturers – among others. BPO providers with proven expertise in manufacturing could also see a bright future. “Co-location is always beneficial because it removes another layer of complexity,” explained Keith Jones of Pace Harmon. “If you’re manufacturing in Mexico, does it make sense to send your back office to India?”

Patrick Cogny of Genpact explains the reason global pharmaceutical are grasping for global outsourcing partners.

Ahluwalia was among 25 experts speakers at yesterday's Nexus conference.

By Patrick Haller

When it comes to making sourcing decisions, buyers have many things to consider. They need to look beyond the surface cost benefits and truly evaluate if there will be synergy between their organization and the outsourcing provider that will lead to mutual successes not only in the short-term, but well into the future. Vishal Ahluwalia, Executive Director-Head Outsourcing/Off-shoring WMA Ops at UBS Wealth Management, a recognized global sourcing evangelist, has been effectively implementing and managing outsourced vendor relationships for close to twenty years.

His extensive experience as a buyer of services from North America, Latin America, Europe and Asia Pacific has given Ahluwalia a unique perspective and understanding of what is involved with finding and keeping the right provider, and what it takes to effectively transition to a new one.

NSAM: What are the primary factors that play into your sourcing decisions?

Ahluwalia: Thank you giving me the opportunity to share my personal views.

Risk, domain capability, setting the right Service Level Agreement (SLA) and creating a pool of resources which can meet the changing demands of the market.  Trust, transparency and commitment on both sides. Plan for governance, including teams working along with the vendor organizations, and possibly sitting in the vendors’ office to address the mutual issues. Tracking and reporting, push vendors to invest in the additional governance needs. Establish a proper escalation process that involves business entities as well in the client organization. Establish benchmarks and challenge the vendors to innovate and improve on the goals. Establish penalties and incentives to motivate the vendors and force them to compete with each other.

NSAM: As a buyer of outsourcing services, how do you effectively manage vendor relationships?

Ahluwalia: Buyers must establish a strong evaluation criteria. Evaluate vendors on common parameters.  Utilize flexible, yet robust processes to rationalize the organizational portfolio and plan for vendors based on the portfolio (either by business lines, technology, functional organizations, regions, language, proximity to business, etc.). Involve the associated business entities in the planning process and socialize the process early in the cycle to avoid possible conflicts. Create a strong and transparent governance structure.

NSAM: When do you start renegotiating contracts with your service providers (immediately, mid-term, near the end of the term)?

Ahluwalia: Mid-term as this gives both sides time to level set futuristic expectations.

NSAM: How should buyers transition to a new service provider?

Ahluwalia: Make the selection process visible, transparent, involve associated functions in the organization. Make sure to evaluate the processes, competencies, delivery and quality credentials, vendor portfolio, culture, past experience working with the vendors, etc. And use a scoring model to compare the vendors on the same parameters that are of importance for the organization.

NSAM: Where are the strengths and weaknesses of Latin American countries when it comes to BPO and IT services?

Ahluwalia: Strengths are near shore locations, hunger to drive and meet customer demands, a lot of support from local country associations, and languages which can support the client’s needs. Weakness include creating a mass and the fact that buyers have yet to get the confidence that providers can meet multi-million dollar annuity deals cutting across IT, BPO and Infrastructure.  There are too many associations rather than being a collective; it’s become a race against time. Latin American countries should look at mature offshore markets as a role model and not a threat.

NSAM: What should buyers look for when considering Latin American countries for their outsourcing needs?

Ahluwalia: They should look at Latin America as a destination where they can get sourcing done to meet company goals and objectives and to regard this region for its strengths and not as an alternative or comparison.

NSAM: Competition is heating-up between Asia and Latin America for outsourcing market share. Which countries do you think will emerge “victorious” at the end of 2012?

Ahluwalia: Again as I said, these decisions are not made just because someone likes a country. They are made based on a lot of factors and futuristic goals, so my thoughts are neutral and I as a buyer look at players and regions which can meet demands and expectations.

NSAM: Some experts believe that labor arbitrage is dead – what is your opinion?

Ahluwalia: I disagree as the fact is we all have matured in understanding the concepts of off shoring and continuous improvement has led us to achieve savings and gains in other areas too.

NSAM: What are the top five “right sourcing” strategies?

Ahluwalia: Pick a vendor /Location, Effective Transition, Governance, Stakeholder Mapping and Continuous Improvement.

NSAM: There has been a lot of focus on Shared Services recently. What are some of the elements for a successful Shared Services operation, and are Latin American countries viable sourcing destinations for this type of operation?

Ahluwalia: Yes, there is lot of focus on Shared Services, and this is one low hanging fruit and risk that can be evaluated before complex processes are set for transition. Success is established on maturity of vendor, the buyer side and how well the transition can be done.

Yes, Latin America is a viable location, and organizations like yours is bringing lot of thought process and making buyers and providers share ideas. Thank you.

Uribe highlighted positive social, political and business developments in the Latin American/Caribbean region

Kirk Laughlin, CEO of Nearshore Americas, kicked off today’s Nearshore Nexus Conference at the Crowne Plaza in New York City by stating nearshore outsourcing has gone from “novel to mainstream.” Laughlin promised that conference speakers would illustrate how outsourcing destinations in Latin America and the Caribbean are “no longer in the shadow of India or China,” but have instead become vibrant providers of sophisticated IT and business outsourcing services in their own right. The first speaker, former President of the Republic of Colombia Mr. Alvaro Uribe, delivered on that promise.

Uribe Highlights Positive Developments in Latin America

Rather than focus exclusively on Colombia (although he did touch on how Colombia has transformed itself into a stable, secure democracy which attracts foreign investors), Uribe highlighted positive social, political and business developments in the Latin American/Caribbean region as a whole. The region has about 600 million people with an average age of 28. While 170 million people are in poverty, another 40 million have left poverty in recent years and Uribe classified 64% of the region’s population as members of a “progressive middle class.”

Uribe stressed that with a few exceptions, Latin American countries now abide by the “rule of law” rather than dictatorships. “Public indebtedness, defaults and hyperinflation are the province of the past,” he stated. Uribe also highlighted Latin America’s extensive natural resources, including 30% of the world’s oil resources, 26% of the world’s beef, and a potable water supply expected to account for half the global total in 2030.

Moving to human and political resources, Uribe stressed that with a couple of exceptions such as Venezuela and Ecuador, Latin American countries are following the example of Colombia in creating a “triangle of cohesion” based on security, free investment, and social cohesion. Uribe’s prepared remarks led directly to a Q&A session with CNN Senior Latin Affairs Editor Rafael Romo, who began with a question about the message Argentina’s recent decision to nationalize its leading oil company YPF.

“Maybe Argentina has made mistakes,” said Uribe. He said Argentina is privatizing key elements of its oil industry because of concerns there is not enough exploration, but would have been better served by discussing the matter with private industry. “In Colombia and Brazil there is a middle ground,” he said. “The government has an important role in oil production, not a monopoly.”

During his conversation with Romo, Uribe also discussed some of the specific ways Colombia has bolstered its BPO industry. “We consulted with private industry and identified five or six sectors where Colombia would become world class (including BPO),” he explained. “We had 2,000 BPO jobs and now have close to 100,000.” As part of its efforts to boost Colombia’s BPO industry, Uribe said the government eliminated the value added tax (VAT) on business services and is working on advancing education to provide workers with skills BPO and ITO buyers require, including by offering free university education to poor citizens.

Uribe also said he thinks Latin America should approach education on a regional, cooperative basis. “Twenty-five years ago, economists recommended countries in Latin America needed to change from commodity-based to knowledge-based economies,” he said. “They need to do the same today to add value to commodities.”

Eliminating the Software Factory

In the morning keynote, Leonardo Matiazzi, VP of International Business for Ci&T, said it is time to eliminate the “factory approach” to software development. “IT is the one industry that can change the world,” he said. “The mental model organizations use to develop software is optimized for mediocre results. It won’t be a total failure, but will be mediocre.”

Matiazzi compared developing software to writing a book. “Can you write a book by copying the first page 250 times?” he asked. “Try and come up with a book writing factory. You can’t. Writing software is the same as writing stories. You’ll end up with a dull book nobody cares about, just like you end up with dull software nobody uses.”

Matiazzi acknowledged moving away from the “software factory” model will be difficult, but necessary. “It’s not easy to throw away,” he said. “The concept has been part of the IT culture for so long.”

By Robert L. Scheier

A recent study out of Duke University shows that American companies still prefer India, China and the Philippines to the Latin American Nearshore for IT infrastructure and application development and maintenance (ADM). The percentage of finance and accounting work done in Latin America rose from 10 percent in 2009 to 16 percent in 2011, with application development and maintenance (ADM) work rising from seven to 12 percent in the same period, according to the International Offshoring Research Network Project at Duke’s Fuqua School of Business.

And yet, the researchers found, the percent of ADM work done in Asia rose from 66 percent in 2009 to 70 percent in 2011. Among the reason for the preference for Asia (especially India), they say, are customer familiarity, the maturity of the IT and BPO industry. And China, which some predict may outpace India as the largest outsourcing provider in the world by 2020, already has 10 percent of America’s outsourcing business, the study found.

Another factor, as reported on Alsbridge’s Outsourcing Center, is that relocating to the nearshore or even back to the US is not free of cost or complications. It requires planning, management effort, possible disruption to operations (and other) transition costs, says Arie Lewin, a professor of strategy and director of Duke’s Center for International Business Education and Research.

Lewin also points out that the decision to outsource, and where to outsource, is being driven over time more by strategic concerns such as the need for innovation, or to move into a fast-growing developing market, than by cost savings alone. While it’s little surprise that India continues to be the home of choice for mature, well-understood disciplines such as application development and maintenance, Latin America can carve out specialties for itself in newer areas such as the development of mobile or social applications.

There’s no doubt, as we recently saw at the Sourcing Interest Group’s spring summit, that growth and innovation are key customer concerns as the global economy recovers. For customers looking to “transform” their organizations, the greatest concerns might not be where to outsource, but what specific skills and expertise a partner (wherever they are located) can provide.

The onus is thus on Nearshore governments to provide the appropriate training to their populations and to keep providing hopefully smart incentives to foreign as well as local start-ups. Just as important, Nearshore based service providers must keep moving up the value chain and differentiating themselves from their hungry Asian competitors. The current differentiators of location, language and cultural affinity will only go so far before the Nearshore must distinguish itself with value-added skills in area such as agile development, software testing or multimedia.

This article originally appeared on our sister site Global Delivery Report

By Steve Rudderham 

Most outsourcing arrangements are literally “out” sourced in that services are delivered from a remote location. Whether that location is within a few miles of your corporate headquarters or on the other side of the globe, you need to ensure the services are delivered in the appropriate manner without physically being there to oversee the operation. The provider often promises an “extension of your operations,” but this task often winds up being one of the biggest challenges of BPO, but fortunately there are a few basic steps BPO buyers can take to manageably ensure quality service delivery from remote locations.

Communicate to Effectively Run Your Virtual Team

When BPO services are delivered from a remote location, the buyer becomes the head of a virtual team whose members may be scattered across different countries and continents. The most important factor in effectively running this type of virtual team is communication. There needs to be a regular rhythm to your virtual BPO team communication, with team meetings happening on a monthly or even weekly basis. With the continuing advances in communication technologies such as videoconferencing, getting remote employees “together” for regular meetings should be less of an issue than it was in the past.

Remember it’s important for team members to see faces. Also remember that when you are communicating your goals and expectations to your virtual BPO team, the substance of your communications should go beyond “Here’s my agenda.” Let team members know why your agenda is relevant, so they don’t say “so what” upon hearing it.

Select the Right Team Members

Of course, even the most effective communications have little impact if they fall upon the ears of those who don’t understand or care what you are trying to accomplish. Members of the virtual team should be collaborative people who are open to other ideas, work cross-culturally and are effective communicators themselves. 80% of being a good communicator is being a good listener. These people will then help translate your goals and expectations to the broader local culture of your BPO provider. Ultimately it will be about communicating your shared vision to the teams.

Metrics, Metrics, Metrics 

Ensuring quality remote BPO service delivery also requires transparency and control of the operation. The best way to achieve transparency and control is through the use of metrics which are regularly updated and drive the entire operation.

It shouldn’t matter where in the world your BPO services are originating from, because you should have one common global standard, which everyone understands, and is easily communicated. This means you need to have a good measurement system. For example, Capgemini has a BPO command center which drives consistency through metrics. The basis of your standard should be a well-documented operation manual with regular orbits against it, with the measuring system sitting on top.

And remember, part of being a good overall leader is communicating, so the leader in charge of it all needs to communicate what you’re trying to do but also live and breathe what you’re trying to do. Create a culture based on metrics which people can listen to and translate.

Obtaining Quality Service Delivery from Emerging Economies

Many popular BPO service destinations are located in emerging economies which pose their own special set of delivery challenges. When dealing with a provider located in an emerging part of the world, remember that your corporate headquarters must embrace the local culture – one shape does not fit all! Sometimes the local operation will have a “that won’t work here” attitude. To avoid this, make sure you get collaboration and provide clear guidelines so you can share consistency.

You don’t want the local operation interpreting anything, so you must provide them with strict guidelines while still respecting local customs and established ways of doing things. And the best way of all to ensure you obtain top quality services from providers in emerging economies is to simply get on a plane.

Despite advanced communication technologies, there is still no substitution for going out and seeing the operation and having the operation see you. Directly share what you expect and why you expect it. One strong initiative of Capgemini BPO is that we educate associates in different countries so they can answer the all-important question of “Why do I matter?”

Shake Things Up

My final, brief piece of advice is within the BPO operations and to look to shake things up to make sure lines of communication are open and best practices spread organically. Mix up your leadership. Send the leader of your Guatemalan BPO center to Poland and the leader of your Polish BPO center to Brazil, all while rotating executives in and out of your Indian BPO center. This allows you to share best practices from different delivery centers. Remember that best practices are not only about conforming to ideas from the top, but about adopting new ideas from every corner of the business.

Steve Rudderham is VP, Global Transition and Delivery Excellence of Capgemini.

This article appeared originally on our sister publication BPO Outcomes