06 Apr 11 Platform BPO_the growth trajectory for the BPO industry
Business process outsourcing services have evolved from purely voice and back office support to multifunctional, multi-horizontal services. Delivery of these services has also gone beyond the hourly or FTE (full time equivalent) based engagements. Today, it’s not just about cost savings in the outsourcing engagement; it’s about the value and the business outcome that outsourcing brings to the table. The BPO industry is now on a growth trajectory rather than staggering survival. The introduction and inclusion of technology in service delivery has been the biggest game changer. This led to the introduction of platform based BPO solutions. Analysts believe this is also a natural progression for the IT service providers that ventured into BPO services in the last decade. Platform solutions gave them an opportunity to increase their footprint among clients of both services.
The diagram below depicts the growth and evolution of BPO services over the years. The trend has clearly been to include technology into service delivery and now, it seems like technology plays a major part.
Many service providers have had “platform” offerings across different service areas such as Finance & Accounting (F&A) or procurement or HR. For example, Caliber Point, the BPO arm of Hexaware launched Republic in 2010, a multi-tenant HR services delivery solution based on Oracle E-Business Suite Release 12. According to the company, Republic is hosted and maintained by Caliber Point and interfaces through a user-friendly and secure HR portal. Tata Consultancy Services (TCS) offers platform solutions in multiple service lines such as F&A, HR, analytics and procurement. Infosys ’ Source to Pay is a procurement platform solution and is based on Source-to-Pay cycle for indirect spend categories, according to the company.
Addressing the smaller clients
Platform BPO solutions took momentum with the recession a couple of years ago. Cost pressures on the clients and the need to engage on a long term basis with the clients have fuelled investments by some of the large service providers. Platform based solutions will probably be a boon to mid to small size clients, where they don’t have to invest in an ERP platform and then outsource some of the business processes as well. This works out for the service providers as well, who are looking to expand beyond the Fortune 500 companies.
Is Platform BPO for everyone?
Not all service providers have the capabilities to develop platform solutions. Currently, we see that the larger players have created platform offerings. This is because developing a platform based offering needs high investments in infrastructure as well. Moreover, since this model relies on transaction pricing, mature relationships with clients would be needed. For the mid-sized service providers, this may well be an opportunity to develop platform based solutions on a select area of expertise.
What is the future of platform BPO?
The evolution of platform BPO is actually a gradual shift from the earlier models of BPO. However, platform is in a way BPO on a cloud model and since this is the way of the future, it is also most likely to succeed. Another reason why platform BPO will succeed is the inherent benefit to the clients – in terms of low capital expenditure as well as transparency in pricing. Therefore, whether platform BPO is a win-win solution for all is yet to be seen but surely a model that will see exponential growth in the next few years.