How to stand out from the crowd in the BPM Industry

The rapid growth of the Business Process Management (BPM) industry over the last few decades has been fueled by simple and, if we may say so, common business ambitions; of finding the best value. Its growth has been in-step with the transformation taking place in digital and communications technology at the same time, and the expansion of the internet to the deepest corners of the world. With low skill requirements, and the technology backbone becoming a commodity, there have been few barriers to a provider setting up shop, making the industry extremely competitive. Many don’t survive, unable to face the rigors of drumming up business from clients while ensuring a steady supply of resources who will do the work. Of course, many others do survive and thrive, from large companies with a wide variety of offerings, to small, niche players. Like oWorkers, a niche player operating in the space of data-based BPM services. It has made an outsized impact in its eight plus years of existence, being recognized as one of the top three providers in the world.

Historical driver – labor cost arbitrage

The industry has been driven by the desire to find the best prices for human resources, which is the major resource deployed by the industry. The industry handles business and transactions that need human intelligence to be performed. What could be automated has been automated, the rest is handled manually. No doubt, as technology develops and advances, it will take over more and more work that is currently done manually. With the expansion of the internet and the world being truly connected to the World Wide Web, along with greater bandwidth being available for the smooth flow of information across the networks, much of the work today can be done from anywhere in the world. Thus, the industry has kept expanding in search of the best labor costs, along with suitability in terms of education and skill sets. Other costs like real estate are also important, but, in general, they have also tended to be lower in geographies where labor rates are lower. oWorkers attracts a steady stream of walk-in applicants, as they are regarded as preferred employers in each of the geographies they operate in. Over and above the labor cost benefits provided by their delivery center locations, this stream of applicants saves advertising cost for attracting talent. Eventually, the savings get passed on to clients through the pricing model

Challenges with the model of labor-cost arbitrage

The labor-cost arbitrage driven model, though it has served the industry well, has limitations. It cannot go on endlessly. Most of the geographies with a supply of skilled resources in large numbers have been taken, whether it is India, or the Philippines, or Egypt or Nigeria. There is very little untapped real estate or population centers to go to now. Driving greater productivity from a human resource is not an endlessly achievable goal. At some stage it will be maxed out. The low cost is already baked into the calculations of clients. Providers can no longer say that they have halved the processing cost. That was done years back. The halved cost is now the baseline. Where can they take it from the half? Clients are always hungry for more. Over time, with work moving from higher to lower-cost resource pools, the relative cost advantages can be expected to reduce, even as prosperity rises. Thus, the industry can also be viewed as a channel for the promotion of financial equality around the world. oWorkers provides labor market benefits that few competitors can match. Clients swear by their ability to support unexpected and unplanned peaks in demand by providing up to a hundred additional resources within 48 hours.

Future drivers of the industry

As the industry evolves, how should participants prepare for a future that is at least as exciting and profitable as the present?

Go from BPO to BPM

BPO to BPM is a step forward. How? The usage of the term BPM over the more traditional reference of BPO (Business Process Outsourcing) is itself a reflection of the change taking place. The concept of BPO assumes that the provider is an ‘outsourcing’ partner who is able to perform activities that they have been asked to by the client, and only as well as the client can do themselves. It assumes a relationship where the provider had a somewhat subservient role to the client, even where the provider and client were two parts of the same company. BPM, where ‘management’ replaces ‘outsourcing,’ takes the relationship to a level of equality. It says that the engagement is a partnership where the provider is being engaged because they are better equipped to manage the transactions that need to be done, and in a more holistic manner that adds value to the client’s business. oWorkers has organically developed the capability of multi-lingual support and can, today, support clients in over 20 languages. This is another example of the ownership oWorkers demonstrates over the projects assigned by clients. They manage the work completely and do not merely turn around outsourced transactions.

Lead with technology

That technology will continue to be a significant factor in our lives and that it will continue to change and advance, are a given. Providers need to come out of the clients’ shadow. Instead of continuing to use their technologies for processing, they need to start implementing best-in-class technology solutions for an activity and soliciting business from a position of strength. They have the advantage of volumes. One client may not be able to justify investing in a technology, say for invoice processing, either because of lack of volumes or because it is not a revenue-generating activity. Providers, however, can tick both these boxes and invest in technologies that are advanced. With technologies like Artificial Intelligence (AI) and Robotic Process Automation (RPO) looming on the horizon, these could be exciting times for BPM providers with the appetite to invest in technology. oWorkers operates from super secure facilities & protocols for client data security requirements, with ISO certifications (27001:2013 & 9001:2015). They are also GDPR compliant. They have deep relationships with technology providers, enabling them to adopt state-of-the-art technologies for client projects.

Not just lower cost

Instead of operating from the shadows, with clients unwilling to openly acknowledge and recognize the relationship as sometimes happens, BPMs need to move to an open, public relationship with their clients. This is important because the channels of engagement with customers are rapidly expanding., Customers are no longer coming through only the Call Center. They are coming through every nook and corner they can squeeze through. Even back-office transactions handled by vendors eventually impact customers. Even without running Call Centers, BPM will be the one who will either impact a customer’s experience through their transaction processing capabilities, or be the first to know customer feedback and reaction. BPMs will need to demonstrate their willingness and capability to operate as extensions of the client who can add to their top line, instead of being a cost center that has to be managed to lower its cost. Clients testify to savings up to 80% when outsourcing to oWorkers, especially for clients from Western Europe and North America. However, clients keep coming back because oWorkers operates like a partner, not a vendor.

Pricing model

For the longest time, the full-time equivalent (FTE) based pricing has been the default model in the industry, which is also known as the input-price based model, which defines the resources that are contracted to be deployed for the job. Output and outcome-based models have been experimented with but have found, at best, limited success. With the FTE-based model as the standard, vendors have traditionally had little incentive in delivering processing efficiencies. And understandably so, as delivering efficiencies would mean a reduction in headcount and consequent reduction in revenue. The only time vendors do make an attempt to deliver efficiencies is when they are pitching for new business; in other words, when they really have no clue what the business is about. What is the solution? Though outcome-based models have not caught on widely, they seem to be the way to go. Getting a reasonable set of performance parameters to base it is tricky, but worth striving for. Vendors have to evolve to gainshare-based models in pricing; a model where the vendor is incentivized to deliver efficiencies by getting a share of what is gained by the client. These are arrangements a mature industry will expect. oWorkers has pioneered pricing models, including their much admired one of offering a choice to clients between an input and output-based pricing model. They initiate gain-share model discussion at an early stage in client negotiations and solidify the model if the client is willing.

Specialization

BPM vendors are well placed to develop specialization in certain types of transactions and processes as a result of handling them for a bouquet of clients. A client, on their own, will only know about the work in that area they do for themselves, never for others. A BPM provider, on the other hand, by virtue of handling transactions for different clients, is in a position to understand the best way of processing and also implement learnings from one client into the processing of another client. Higher aggregated volumes also provide them the leverage and ROI to invest in both technology and process improvement that, once again, individual clients on their own may not be able to. Process and vertical specific knowledge and capability could be the key to unlocking value for clients as well as for providers. Providers are well placed to leverage the sweet spot created by the intersection of their knowledge of the client industry, emerging relevant technologies and customer needs as, in many cases, they are the closest to all three. oWorkers has led from the front in specializing in services that are of more recent provenance and have gained expertise in them. Community content moderation, data annotation and invoice processing are a few of these services in which they lead delivery.

Outcome based commitments

A B2B decision is never an easy decision, as it involves a significant shift. There are likely to be doubts in the mind of the client whether such a move will create or destroy value, especially for clients attempting it for the first time. At the time the matchmaking is being attempted, vendors make an effort to present a rosy picture of the outsourced future that could look ‘too rosy’ to be realistic, creating further doubts. Outcome based pricing has been discussed elsewhere in this piece. Experienced vendors could make a bold statement about their capability and seriousness by making efficiency commitments, and demanding pricing or value sharing in return. This will lead to driving the doubts and uncertainty out of the minds of decision-makers and expedite closures and faster adoption of such arrangements. With an employed workforce, as opposed to the freelancer and contractor workforce preferred by some competitors, oWorkers is well placed to commit outcomes to clients as they have an understanding of the competence of their staff. Not any staff but staff who regularly rate oWorkers at 4.6 and above on external platforms like Glassdoor, leading to easing client worries regarding the outsourcing engagement.

Conclusion

“What Got You Here Won’t Get You There,” the Marshall Goldsmith book that talks about people and behavior, could be a relevant read for industry professionals. The industry has matured. Vendors need to evolve and be on the lookout for opportunities of creating value for clients by differentiating themselves. The differentiation could be through technology, it could be through pricing, or through specialization or through other means. Being the partner likely to be the more experienced in the ways of the industry, they need to show the path to potential clients and create confidence for them to make the transition quick and smooth. With a leadership team that has over 20 years of hands-on industry experience, oWorkers is well placed to be a leader in the evolving BPM industry.

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