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Benefits of Business Process Standards in BPO

July 5, 2008

In this article we’ll explore the benefits of business process standards and how it helps companies in their BPO initiatives. Companies that use standard business processes and tools will reduce cost and risks associated with their BPO projects. They’ll also improve the quality of the BPO operations and management.

Cost
One of the main reason for companies go for BPO is cost arbitrage, though the operational cost will reduce in BPO engagements, still companies need to incur other costs like BPO contract maintenance, transition, etc. The business process standards will reduce the cost of BPO projects significantly.

BPO Contract Maintenance
Business process standards gives companies to check the SLA on regular basis and if need arise they can choose a different BPO vendor in a cost-effective way without being locked with a under performing BPO vendor. Since the BPO vendor will use the standard tools and technologies it is relatively easy for companies to switch from one BPO vendor to other.


BPO Transition
One of the major problems working with BPO vendors specifically from India is high attrition rate of BPO employees. Business process standards make it easy for both the BPO vendor and the company to curtail the unexpected transition cost. Here again standard tools, technologies, and interfaces that are used by the BPO vendor helps to train their new employees easily and quickly.

Total cost of Management (TCM)
In any BPO operation major cost is associated with manual intervention in automated workflow of various processes. If companies follow business process standards then tools and technologies that support the business processes can eliminate unnecessary cost by providing a standard mechanism for BPO vendors to intervene the business process workflow.

Risk
As soon as the business process leaves the physical boundary of company and move to outsource provider’s location, companies face huge risks in their BPO operations and management.

BPO Initial setup
Companies spend significant amount of time in initial setup, organizational changes, and employee acceptance during the transfer of operations to the BPO vendor. If companies use standard business processes then it will be less cumbersome to transfer the control to the BPO vendor.

Business process changes
Incorporating business process changes in BPO operations is a time consuming and costly process, business process standards helps companies to accommodate changes in the business processes without inuring huge risk to the organization.

BPO Transition
Any time if a company decided to move the BPO operations either to in-house or to a new BPO vendor there are several risks associated with the transition like process operational knowledge, custom developed tools and technologies that manages and monitors the business processes etc. Using standard business processes, tools, and technologies companies can significantly reduce the BPO transition risks.

BPO Operation
In any BPO engagement inconsistencies and accuracy of process output are major problems caused by human performance, lack of business process standards and procedures. Companies that have standard business processes can reduce the daily operational risks.

BPO Cost
Standard business processes and technology that support it makes companies to predict the cost structure associated with the overall BPO operations. For example if companies want to add a new business unit into the BPO operation, company management can predict the cost increases in their BPO operations. This eliminates unexpected financial risks associated with organizational and management changes.

BPO Quality
BPO will definitively improve the quality of the business process operations and managements. But the outsourcing the business processes to a BPO vendor brings in several quality issues to companies. When a new business processes are added or existing business processes are removed or changed overall business process value chain must be changed. In a typical BPO projects some of the processes are owned by the outsource vendor(s) and some will be maintained within the company. Any time if a business process is changed, companies need to make sure the overall business process value chain works without any issues. If the business processes are not standardized then it will become very difficult to manage the quality of the changes and smooth functioning of all the business processes. Standard business processes, tools, and technologies helps companies and BPO providers to reduce the quality issues when changes happen in the business process value chain.

Big ERP companies like Oracle and SAP are responding to the importance of business process standards and offering their ERP suite to target BPO projects. Once the companies install their ERP suite then they can bring in any BPO vendor from any part of the world to mange one or more business processes in a standardized way using standard tools and technologies.

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Written by Mani Malarvannan · Filed Under Articles 

Comments

4 Responses to “Benefits of Business Process Standards in BPO”

  1. Top Three Hurdles of Offshore Outsourcing | Outsource Portfolio on September 5th, 2008 8:23 pm

    [...] vendor, how do you know the offshore vendor is doing better than your own employee? Without business process standardization it is difficult to measure [...]

  2. Managing the Life Cycle of a Vendor Partnership | Outsource Portfolio on August 5th, 2009 10:29 am

    [...] intervals. In a creative field like application development, lack of control can be catastrophic. Standardize processes to your specific business needs. In fact, map your processes end-to-end rather than wall-to-wall. [...]

  3. mahadev.m.s on February 5th, 2010 9:34 am

    Good info. Standards like 6 sigma, CMM, etc will help the outsource vendors and their customers

  4. Jazzy on April 30th, 2010 12:53 am

    The motivating strength behind the outsourcing of business processes is cost efficiency. The ease of use of easily accessible, technically trained English speaking labor in India is what attracts most companies to outsource their businveess processes. During the last couple of years telecom and other infrastructure has also been made better In India to compete with the global standards. The quality of services provided is also meeting global standards. Another main motive for outsourcing is the income tax rule followed by the government and also the ability of the BPO’s to provide 24/7 services.

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