Nearshore Americas

Get Ready for BPO 2.0: A Revolution that will Lead to Lower Outsourcing Costs says Forrester

The outsourcing vendors make another run at the BPO market by adding a standard software “platform” underpinning the BPO offering. By adding such software platform to their people and process expertise will cut costs for clients by an additional 20 to 30 percent on top of the 15 percent to 20 percent savings of a traditional BPO solution, said Forrester.

The report, ‘Platform BPO: Process Outsourcers Take A New Approach To Traditional BPO’ by Forrester VP and Principal Analyst, John McCarthy, states that over the next 24 to 36 months, the emergence of a range of platform BPO offerings gives BPO clients a more compelling savings and innovation option in the space. McCarthy, a veteran outsourcing-offshoring analyst who first predicted that 3.3 million white-collar American jobs would shift offshore to countries such as India by 2015, terms it as the BPO 2.0 arrival.

“Over the past two years, the seeds have been sown for a new generation of business process outsourcing (BPO) offering. Service providers have been rethinking their BPO approach and the level of savings for clients. Traditionally, they built the BPO value proposition on labor arbitrage out of countries like India and the Philippines, but that is changing. Today, instead of taking on the clients’ grab bag of legacy systems, providers are now offering the entire stack with a common software platform that gives them a more scalable solution, and the ability to continuously reduce costs as well as improve process performance for clients,” said McCarthy.

Forrester expects the platform BPO space to mature in two phases over the next 24 to 36 months in terms of client demand and breadth of offerings. Currently, almost every platform BPO offering from providers focuses on either the HR or procurement/F&A space, which is a legacy of the focus of the traditional BPO market. And year 2011 on, providers will reorient their platform BPO approach to target industry-specific processes. This reorientation will enable providers to turn their platform development into a more IP/expertise-led approach. And instead of a pure cost-reduction story, this vertical model will enable firms to showcase the process improvements that they have built into the platform and that far exceed clients’ old internal or manual systems.

With the platform BPO maturity approaching, McCarthy’s advise to BPO clients is clear – ‘if you are going to tender for BPO, add a section to the RFP that evaluates potential suppliers’ platform BPO capabilities, including factors such as who developed the underlying platform, how they are handling multi-tenancy, and the technology road map.’

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

Add comment