01 November 2007

BPO - it's OK really

I've been sceptical about finance function outsourcing (actually, BPO in general) since a FTSE 100 FD told me he'd love to bring his dull, process-driven teams back in house and re-locate that "feeling" about the business, its suppliers and customers he got from having on-floor feedback from the "drones". But I had breakfast this morning with a BPO expert who assured me that many of the biggest issues - contracts, service level agreements and pricing plans - are being addressed by great minds in the BPO and consulting arenas.

Hmm. Still sceptical. But one thing she said did ring true: the biggest BPO problem is clients. I agree 100% - if the client doesn't know what they want, how they want it to happen and where the trip-wires are, who can blame the BPO provider for locking them into an expensive screw-up? Which is why I always think that unless you've done two BPO deals before - and seen how they go wrong - you shouldn't try it (at least not for a company you love). Catch 22? Well, pick a couple of companies you don't like and do it there first...

1 comment:

E Rana said...

You make a fair point. Having one bad experience with BPO doesn’t necessarily mean you should never consider it again. But why should FDs have to learn from their own experience? Why are FDs who have had “failed” BPO experiences so reluctant to share the lessons they learned with their peers? I, like you, write for the business sector and for some time now, I have been trying to persuade FDs to talk publicly about why and how they brought outsourced business processes back in-house. Although I have approached tens of companies across the world, I have yet to find one FD willing to go on the record. It may be that there is a stigma attached to any u-turn a company makes on an outsourcing decision.
That said, a large BPO provider recently told me that u-turns—usually on parts of a larger contract—are a common occurrence in the industry and are just part of the “ebb and flow” of the outsourcing experience. A recent IDC study on early contract terminations in the IT outsourcing sector found that u-turns often occur for external reasons—such as a change in business strategy, which means the outsourcing arrangement is no longer appropriate. In those circumstances, bringing outsourced processes back in-house becomes one of a number of options—including renegotiating the contract or going to a different provider—rather than an admission of failure.
Hopefully, once FDs start to talk publicly about u-turns, others will be able to learn from their experiences and not repeat the same mistakes.