The evolution of a Business Process Outsourcer

By Colin Taylor
As many of our regular readers will know I have been in this business for more than a few years, having started by selling magazine subscriptions through outbound calling for a Toronto based Service Agency in 1976. The industry has changed significantly since this time. The essence of the services being delivered are virtually unchanged, but the technologies has changed immensely. Even the business model of those engaged in the outsourcing has evolved and today continues to do so.
Selecting an outsource call centre service provider can be a confusing. We have answering services; call centre service companies, fulfillment and mailing companies that offer call centre services and BPO (Business Process Outsourcing) organizations. Over the past twenty years or so the lines have blurred. It used to be the answering service organizations had no interest in calls longer than 30 seconds and didn‟t possess technology tools such as ACD‟s. But the mass acceptance and use of voice mail significantly reduced the traditional market for the answering service, so many shifted their focus to provide more traditional call centre services. A similar shift occurred beginning in the late eighties as direct marketing services companies who already offered services such as lettershop, list management, fulfillment services saw that call centres offered another opportunity to serve their customers. Against this backdrop were the „pure play‟ call centre outsource services providers, didn‟t need to shift into the market space, they were already there, but did feel it becoming increasingly crowded.
This crowding of the market put pressure on the „pure play‟ vendors to look at how they could expand their customer relationships and diversify their revenue streams. At the same time there was growing acceptance of outsourcing of a broad range of business services: transcription, data entry, account management, HR, finance, fulfillment, etc. The big challenge to these firms then is the same as any call centre service vendor today who wants to move towards becoming a BPO. In this article we will examine some of the challenges that you will face if you seek to embark on this journey.
BPO is typically categorized into back office outsourcing – which includes internal business functions such as human resources or finance and accounting, and front office outsourcing – which includes customer-related services such as contact center services. Having been down this path myself I know how difficult it can be, when you look to diversify your range of services. For example what services should you offer? Ideally these services should be ones that can be completed by your existing resources during low call volume periods or staff with similar skills (and similar base compensation). The services should, wherever possible allow you to increase „share of wallet‟ of existing customers by offering ancillary services that they purchase elsewhere. For a traditional call or contact center these services can include service such as data entry, transcription, forms processing, small volume fulfillment, white mail management etc. Of course for most organizations that have call centre roots these other offerings would follow the creation of separate service teams for Customer care, versus Technical Support, and interactive services groups. At Watts we diversified into a broad range of services which ultimately included: contact centre (customer care, tech support, interactive), pick and pack fulfillment, distribution services, lettershop, laser printing, database management, coupon redemption, and list management.

In the case of most large scale BPO operations they separate their services to reflect service offerings set out in the following chart. This chart illustrates the ease and/or challenges of outsourcing various function from the perspective of „closeness to the business‟ and the „internal knowledge intensity‟ requirements. It is interesting to note that the services rated „low/low‟ are increasingly commoditized in terms of pricing.

Of course it can be quite challenging for a traditional call or contact centre operator to diversify outside of their usual practice area and comfort zone. It is one thing for a call centre outsourcer to add data entry employing the same staff in off hours and quite another to decide that they should be offering outsourced HR services. In many cases effectively adding these other (unrelated) services require the addition of new core competencies within the organization. These competencies can be grown internally. Though this is a long and tedious process and more commonly are added through either the acquisition of a company providing these services; or the acquisition of an experienced Subject Matter Expert (SME), who possess detailed operational knowledge of this business and has a successful track record in building this competency to operational viability. In order to succeed in any meaningful manner creating, a new business unit requires significant funding of personnel and technology…this is not for the faint of heart.
You will need to manage the new business unit as a standalone business, that will likely lose money for a time, assume 12 months, before it turns a profit. This isn‟t always an option or an attractive option to the traditional call/contact center service provider. Service extensions more closely related to the core business are often more attractive and usually turns a profit more quickly
For a call or contact center operator service extensions can include adding outbound or technical support to your existing inbound customer service offering. Interactive services can be added directly leveraging existing technology or partnering with a service provider. These vertical extensions can be successful without a significant investment in additional personnel expertise or technology. Extending your services into other elements of clients processes could include data entry, fulfillment services, imaging, check processing etc.