Four Critical BPO Transition Lessons

Business process outsourcing (BPO) engagements typically vary for a number of reasons. They can differ by client, in-scope activities, the selected supplier, and the delivery model employed. But there are a number of common lessons learned that apply to all BPO engagements.

Many of these lessons relate to the transition period. And whether transitioning from an internal model to an outsourced model, from a legacy provider to a new provider, or from an outsourced model to an insourced model, being aware of the painful experiences of those who came before will help ensure that any BPO transition is well positioned for success.

1. Retain Sufficient Talent and Know-How

A mistake many BPO buyers make is not having enough talent and pertinent know-how within the retained organization. Buyers can get so caught up in the flurry of activity that comes with planning for the transition that they fail to develop a sufficient retained organizational structure to manage the BPO supplier.

Examples might include identifying a need for “somebody” to manage the supplier — while neglecting to specify which resources to provide financial management, performance management, and other key oversight tasks.

Alternatively, BPO buyers may have a sufficient retained organization on paper, but they do not incentivize the right individuals to stay on as part of that retained organization. They lose too many existing staff members to the outsourcer or — worse — to attrition. A lack of workers who truly understand the legacy state, the transition plan, and the future state can severely impair the BPO buyer’s ability to secure the expected benefits and savings.

2. Establish a Solid Governance Framework

Buyers often spend big chunks of time — and money — developing the commercial and legal terms that will govern their relationship with the BPO provider. More often than not, however, these same buyers do not focus on crafting a governance framework that guarantees that the savings, innovation, and value expected from the BPO provider are achieved.

An appropriate framework, which should be adopted by both the BPO buyer and provider, accounts for the type of services provided and the key measurements of success. It also combines those with a customized cadence and timeframe for reporting, joint meetings, and escalation mechanisms. As noted, many outsourcing governance groups have specific sub teams focused on performance management and financial oversight. Some prioritize ongoing relationship development and maintenance. But buyers routinely fail to allocate enough resources for the governance function within their retained organization.

Governance should be thought of as an extension of the negotiation that took place to secure the contract — not as a paper-grading or checking-the-box exercise. This means that the skill sets required for governance professionals often better align with business-minded, collaborative, and operationally focused individuals rather than traditional “contract managers,” who may over-index towards contract compliance in objective terms rather than balancing these against business goals.

3. Don’t Try to Move Too Much at Once

The sourcing, selection, and negotiation process for BPO engagements can take a long time. In many cases this may drive buyers to rush because they want the provider to be fully operational as soon as possible to make up time. BPO buyers too often equate going live with reaching the goals outlined when the engagement was first considered.

The solution can be simple: Slow down. It is possible to try to move too much too fast. And this common — and very real — problem leads to significant issues for both the BPO buyer and provider because the effort to “save schedule” is often achieved by compressing the time allocated to provider knowledge acquisition.

There are options to combat the natural inclination to go, go, go. One is developing pilot or proof-of-concept approaches. Such approaches offer a trial period for the relationship with less at stake and an opportunity to learn.

Another useful strategy is to define specific, staged phases for a transition — and sticking to this time line. Phased, or incremental, shifts are generally preferable over a “big bang.” They help balance the need for speed with the risks associated with shortened transition periods.

4. Over-Plan and Over-Communicate

When it comes to transitions, there is no such thing as too much planning or too much communication. There are so many moving parts and dependencies that developing specific contingency plans is a good practice. It will lead to establishing alternatives and backups in case components of the transition fail to go as planned.

And above all else, always communicate. To all stakeholders and effected parties. Over and over. As you approach the transition, as the transition is happening, and once the transition is complete.

Newsletters, emails, webinars, conference calls, break-room board postings: These are all effective ways to make sure the message about the shift in the buyer organization — and whether it is in the planning stage, impending, in process or completed — are seen, heard, and digested throughout the buyer organization.