Josh: Hello and welcome to the WNS business insights podcast series. This podcast series brings you the latest trends in the field of outsourcing so that you can make your outsourcing programs even more successful. My name is Josh Passman and I’ll be your host for your podcast with Deborah Kops, Chief Marketing Officer at WNS, a leading global business process outsourcing company. Deborah has the unique perspective on the outsourcing industry having served in executive positions as a buyer, as a provider and adviser prior to her current role as CMO of WNS. In today’s podcast, we’ll talk with Deborah, about why she believes that companies need to leverage business process outsourcing to survive the current economic turmoil more so now than ever before. Hi Deborah and welcome to the WNS business insights podcast series.
Deborah: Thank You Josh
Josh: So Deborah, to set the stage; let’s first just talk about the economy in general. Can you give us a snapshot of how the environment looks like right now?
Deborah: Well, I think Josh (that) all companies are finding themselves in a life raft hoping for a very safe harbor. Today’s global economic crisis is creating unknown challenges for in businesses in every industry, in every geography whether they are large or whether they are small. The survival of once very very solid companies quite frankly is in question and there are very few tools and techniques available to quickly equip the organization to whether what may be a short storm or very very long storm, Josh.
Josh: Deborah with survival the name of the game now for companies in this current economic environment, why should companies look at BPO now?
Deborah: Well, the first reaction of most organizations is to shed some of their most important but in some cases seen as their most fungible assets which are people. It’s relatively easy and quick to cut through the layers of staff sometimes cutting through muscle unfortunately and shed staff through quick headcount reductions. However, the challenge with shedding staff in this environment is that – 1) The work still needs to be done by someone and 2) those who are left behind are affected quite substantially by the implications of morale. Business Process Outsourcing as a tool does affect the workforce but it also positions the company for growth going forward and if it’s structured properly, if it’s targeted to the right processes, if the scope is defined appropriately, it can actually help companies to not only weather the storm, but position themselves for growth when the economy does turn.
Josh: Deborah, you talked about how BPO can help companies navigate the difficult economic environment. Can you talk a little bit more about how BPO can also help companies position themselves nicely for after the storm?
Deborah: Well first of all, those who are responsible for change in the organization and we know from experience that successful implementation of BPO always starts from the top of the house when the CFO or the CEO is seen as a sponsor. The potential for success quite frankly is much greater. But to get maximum impact to reduce cost at speed which is a key purpose of implementing BPO change managers and organizations must be able to answer ‘yes’ to a majority of the questions that I am about to pose to you.
First and foremost, management must ask, ‘will the implementation of BPO significantly and rapidly decrease the cost structure?’ If it doesn’t lead to a significant reduction in cost for a specific process, let’s say 25 per cent or more and that’s within two to three quarters cost reduction, it most likely does not make sense in this environment. Second, it’s important to focus on the all important customer. In the environment such as the economic challenges that we are experiencing right now, sometimes customers get lost in the fray, so, CXOs need to ask, ‘Will BPO at least maintain or enhance the customer experience? Will service levels stay consistent or improve through the implementation of BPO?’
Another question CXOs must answer before they embark on the BPO journey is will BPO change the cost base. Will it make fixed cost variable? One of the key determinants of using BPO at this juncture in this economy is to move some component of fixed cost very quickly to a unit transaction pricing structure, any other variable cost structure which will adapt to business volume. Another question CXOs should ask is, ‘Will I know more about my business? Will the implementation of BPO give me more knowledge about the performance of my business providing me more information about revenues, customers and operations? One of the values of BPOs whether it’s in good times or more challenging times such as we’re experiencing today is that BPO commercializes and makes more transparent the performance of a business process and then last but not least, it’s not just about costs; It’s about measurable business impact. BPOs can be used to collect receivables far more quickly or if customers can find easier access to products and services, the business impact can be more than just a reduction in the cost base.
Josh: Deborah, we talked about how companies can jumpstart their outsourcing journey, what are some tips that you could provide on how companies can get started relatively quickly with this?
Deborah: I think first and foremost like I mentioned earlier, BPO has to be a top of the house priority. Only the CEO can deliver the message that there are very few other options for survival otherwise the imperative for outsourcing is not taken very seriously and management sees implementation the change that BPO is optional. So first and foremost, it must come from the top of the house and it must be a CEO priority. I think second, companies who are looking to implement BPOs in these uncertain times need to approach outsourcing with open mind. If companies merely think about call centre work or growth based transactions, it really limits the extent to which business process outsourcing can be used as a survive and thrive tool.
The BPO industry has gone way beyond call centre work and transaction based processing in to support for securities trade and to claims management and also into marketing analytics. And often CEOs who just get on a plane and touch and feel what BPOs can provide them by taking a tour, going to the Philippines, or to India or to Romania, they get a much better sense of what BPO can do for them. Also, keep it simple. This is not the time to try to reorganize or reengineer the whole organization. It’s much better to take it one process or one sub process at a time rather than try to implement new technology under the guise of survival. Just keep it very simple and focus on getting the cost out very very fast. I think next I would advise the CEOs who are going down the BPO path to advance at all speeds; Move fast; there is no change without urgency.
Companies who mandate aggressive timelines across the board even if those timelines are met by a week or two have much more ability to use BPOs successfully as those who look at it as a process that would evolve and will be implemented in the future. So sometimes telling the business lines that they will get X costs out of the business by Y date is a great incentive to move on. Also, companies should empower an internal outsourcing Tsar or leader and put the very best talent in the organization on the case. Survival programs are always led from the top and from the centre and committing the company’s best and the brightest to manage the process is the right way to go.
I think it’s also important to develop a very realistic deployment plan when outsourcing is being implemented for costs, measured, a tightly sequenced and rational program that meets milestones and has as a little disruption as possible to the business has a much greater success than a ‘all hands’ on sprint to the finish program. If the companies don’t measure their deployment, don’t measure their implementation and do it rationally, when the first failure occurs because processes can’t be documented properly or there wasn’t enough time to shadow the knowledge in the existing team, everybody starts pointing fingers and says, ‘I told you so!’
I think next is important is to insist on alignment, finding an outsourcer who understands who is the client and how important the client’s ways of working are very very important. Outsourcing can be a tug of war between the client and provider. You have two cultures that trying to work together and finding an outsourcer whose values and ways of working are very similar to the company is critical. And last but not least, little trick I learnt some time ago is that if companies really want to implement outsourcing, debit the budgets in advance and not only deal with the seven tips that I just mentioned, but also build the effects of the BPO into the current year’s budgets so the operating units or the functional units really have a straight line of sight to the goal.
Josh: Deborah, you talked about one of the advantages of using BPO as a life raft in this economic environment – is that it creates an opportunity for the companies to position itself for long term growth when the economy turns around. Can you talk a little bit about how that is?
Deborah: Well, simply reducing the work force by the numbers yields a short term benefit Josh. When it’s time to position for growth, the talent that’s necessary to get back into the game quickly quite frankly is not going to be there. BPO is not just about cost reduction. What it also allows the company to do is to change the architecture of the way it works. It globalizes the workforce. It can make fixed costs variable. It can put in performance management processes that didn’t exist before and most importantly, it ascribes a cost and a value to processess and services. It’s important to understand that when the economy does turn around, companies that have made sustainable, not short term cut out the flab in the organization changes in the organization will be in a much better position to shift gears and by using BPO for example, as not only a survival tool but as live tool, companies have support for rapid market entry. One of the major differences between this economic climate and past recessions is that the extent to which our economies and our geographies are all globally linked.
Survivor companies are going to have to act quickly to enter new markets and BPO is a flexible tool to allow that. BPO also implements a commercialized approach to operations. Most companies can’t put a price on paying a bill or collecting a receivable or talking to that all important customer. The BPO contract in itself helps restructure the organization to be more commercial.
BPO also standardizes business processes. Companies often work for years using standard reengineering tools to reengineer the way they work and try to adopt standardized processes globally. The act of BPO by consolidating offshore helps companies move very quickly to standardize processes and last but not least I think it’s important to know that what BPO does because it’s being implemented in a challenging economic time, because it is so important to survive, moving to a shared operation offshore helps overcome the misconceptions and fears about service levels or delivery accuracy which quite frankly companies during good times didn’t wonder about and rather than test and try, they just say no. So BPO in some respect is a getting to ‘yes’ opportunity.
Josh: Well, thank you Deborah for this very insightful and topical conversation. I’m sure we’ll be hearing a lot more about companies and their use of BPOs as a life raft to help them to stay afloat during this difficult economic environment that we are all facing. Thank you very much; it was a pleasure.
Deborah: Thank you Josh.
Josh: For more information on how companies can leverage outsourcing and other business insights on how you can improve your business performance, visit us at www.wns.com/financeandaccounting