Idle ramblings of a wandering mind...

Business Process Outsourcing (BPO) has been on a center of a lot of debate and controversy. However, the fact remains that it is here to stay, it will continue to grow and it benefits both sides. Important thing to note through is that the nature of BPO and hence the potential benefits of BPO as well as the capabilities needed to successfully compete in the BPO marketplace have evolved significantly in past few years. This evolving nature of BPO and associated issues have been part of my recent research focus. Here is one picture that explains my view of the evolution of BPO:



The figure above says many things - so needs a little explanation. The left axis represents the main driver of BPO in a particular BPO evolution stage. The right axis represents the ideal role that a vendor should play (or a client should establish) for a BPO evolution stage. The x axis represents the three stages of evolution of BPO. The main body of the graph depicts the core activity or work that is outsourced for a BPO evolution stage. This framework was presented by Prof M S Krishnan (my doctoral advisor and dissertation chair) at the Global BPO Forum organized by the CGRL:India in New York. Prof Krishnan and I both attended the forum.

This framework is helpful in understanding the future direction of BPO. We will increasingly be moving towards the third generation BPO - BPO 3.0 - high value added, knowledge intensive BPO work. This will require vendors to change their focus from cost (predominant focus right now) and quality (emerging focus among top players) to innovation. Clients, on their side, would need to make sure that they do not use the old and outdated mechanisms (efficiency oriented SLAs, restricted collaboration...) to engage with their vendors. They will have to enter into strategic partnership with their BPO vendors to co-create value for both sides of the transaction. This is of course easier said than done - but there are many leading indicators to suggest that this is happening and growing. We (as in researchers at Ross, Michigan) have documented instances of BPO 3.0 in our case studies, analyzed them in our ongoing research and I plan to investigate this phenomenon further in my dissertation.

From a research point of view, the most interesting question to be asked is: on a broad level, what are the antecedents of a successful BPO 3.0 engagement? What kind of contracting, engagement structuring, engagement monitoring, HR policies, process selection etc needs to be done to leverage the "innovation" aspect of BPO 3.0. BPO vendors and clients have more of less perfected the art of an "efficient" BPO engagement with main focus on cost reduction. Many have acquired sufficient mastery over running an "effective" BPO operation with main focus on quality improvement. However, based on my interactions, most companies are still looking for directions on how to successfully leverage an "innovation" oriented BPO engagement where an efficiency or effective oriented policies might not only be ineffective, they may even be critically detrimental to the success of the engagement. I hope to throw more light on the subject through my ongoing dissertation research.

To end, an image I have found quite effective in breaking the ice when teaching any BPO related topic:

Labels: BPO, CGRL:India, India, Research, Teaching