Buyers of business process outsourcing have historically prioritized efficiencies and effectiveness as key outcomes of these services. The drivers for internal shared-service centers, or captives, were similar —deliver on business metrics, improve processes, and deliver on cost savings. While these goals continue to be key drivers in the industry, “experience” as a key factor, has catapulted into the expectation set.
The Pivot to ‘Experience’
Three key factors are primarily responsible for the focus on experience:
Consumerization of experience: One key factor has been the influence individuals have seen as consumers – the enterprise customer is also a consumer. As a consumer, the advent of mobile apps, digitization, and AI, have radically changed experiences across the cycle, from propensity to buy, to purchase and post-purchase. Transactional simplicity, speed of use and responsiveness have dramatically changed over the last few years. Further, the advent of social media has changed how brands drive communication to consumers. This consumerization of experience begs one question – why is my experience as a consumer not the same as an enterprise customer?
The disruptive influence of new-age companies: Traditional industries are being upstaged in every area by companies born in the Internet era. Brick and mortar banks have steadily lost home mortgage originations to non-banking lenders that tend to be online-only and asset-light companies. From 37% of originations in 2015 to 68% in 2021, the switch has been dramatic. What draws customers is the experience — skipping physical paperwork with agile digital processes, faster turnaround times, and therefore, faster closure.
The long-tenured companies have noticed the risk digitization brings to their fundamental businesses and have started to respond with their versions of digital twins. In parallel, they’ve begun to look for digitization opportunities within their organizations. Their technology leaders are transforming one key bottleneck — enterprise systems. The journey to the cloud to drive agility, higher standardization in processes, and the rapid growth of hyperscalers provides the most compelling evidence of this shift.
The pandemic factor: While the digitization journey was underway, the pandemic brought it into sharp focus. In a contactless world, companies that were prepared for virtual interactions with customers did much better than those that weren’t. Equally importantly, managing a digital business requires enabling employees to work remotely and meet customer needs. The pandemic also brought to light questions on productivity in remote working environments, which in turn necessitated process simplification and simpler employee experience with corporate applications. The pandemic has accelerated the paradigm shift, as evidenced by the marked shift in spending towards digital businesses.
How do you define “experience”? The prompt answer is customer experience (CX), or employee experience (EX), and to a lesser extent supplier experience from a functional standpoint, or more generically, as user experience (UX).
Let’s take customer experience to delve in a bit deeper. Historically, companies have invested in customer experience, but more so as part of a product, or a services sales cycle. These are then monitored using post-sales surveys. But this approach does little justice to the end-to-end process the customer has gone through and may result in point-of-time feedback coupled with the potential for recency bias.
To tackle this loophole, companies have adopted a more end-to-end approach by keeping customer journeys and touchpoints as key milestones. There are “moments that matter,” and to identify these moments requires skills beyond process domain, lean/six sigma, and other technology training.
Anthropologists have long used ethnographic studies to understand behaviors and cultures. Leading providers will leverage some of these newer, cross-disciplinary skills to drive a deeper understanding of customers. Design Thinking, for instance, enables the conversion of data-based observations and insights into customer needs to create human-centered solutions.
The concept of experience, therefore, has shifted to a broader approach to include the human experience (HX). HX combines technology, empathy, design thinking, and customer proximity, to deliver business results. And while individually we will still track discrete areas like employee experience, HX provides a broader framework and delivers better results even in conventional metrics like CSAT scores or NPS, typically used to measure experience.
Experience as a Competitive Advantage
It is important to call out how experience specifically enhances the digital advantage. Organizations that embrace digital solutions clearly have a competitive advantage in three key areas:
Agility/faster time to market: Insights from market and customer data are leveraged to make decisions faster. The ability to test new products/services with rapid A/B testing and make changes in near real-time is a key advantage.
Efficiency: Digital technologies streamline operations and automate manual processes, resulting in greater speed, less waste, and more focus on core activities.
Productivity: Remote work setup and leveraging collaboration technology and tools have maximized workforce productivity.
In each of these areas, experience has a multiplier effect. Consider an efficient process with a self-service portal. The adoption of self-service has a stronger correlation to the experience the customer, supplier, or employee undergoes, and a better experience can drive higher efficiencies.
In conclusion, the competitive advantage that companies can get by focusing on the human experience is hard to negate. The advent of cheap compute and storage capabilities has enabled AI/ML to be effectively leveraged to drive predictive views on customer behavior and scores in areas like customer retention, advocacy, and loyalty.
Organizations though must lay the building blocks for effective customer interactions, by putting forward the right talent. Here too, technology advances have empowered companies. Service providers have already moved beyond their silos of technology providers or business process providers to bring in the vital aspect of human-centered design to their clients. This focus on upfront design ensures the gap between user expectations and the final service or product is minimized. Further, with agile techniques, the tweaks necessary are iteratively done, thereby ensuring speed-to-market for such services. Witness how the State of Rhode Island managed to build a Covid-specific tracker in record time, combining the latest design principles, mobility, location-based services, while ensuring security and privacy.
Finally, customer proximity is becoming critical as transactional operations are automated and becoming increasingly complex to be delivered at speed. The growth in nearshore centers will continue and governments will recognize the multiplier effects on jobs that technology and BPM service providers bring to their economies.