What are the future risks in global BPO and how can they be tackled now?
In recent years, we have seen how the BPO landscape has widened to become a fully global one. Yet this new environment can carry with it significant risks for companies to navigate, as well as opportunities.
In a business world peppered with new regulations, where the speed of outsourcing requirements and information flow has accelerated dramatically, the risks involved in managing a series of global service providers can be urgent, ubiquitous and multi-faceted. A seemingly innocuous event in a remote corner of the world can quickly cascade throughout an enterprise and deeply integrated teams of multi-tiered providers are increasingly vulnerable to breakdowns at any point in the delivery chain.
For instance, as organisations continue to source BPO operations to India, a country-wide disaster – whatever the cause – can pose the risk of significant disruptions to business operations. As a result, contingency plans must go beyond IT disaster recovery considerations and encompass broader issues related to overall business continuity.
More specifically, the increasing specialisation of service providers has led to geographic concentrations of suppliers in certain functional areas. In locations such as the Philippines and Costa Rica, for example, customer call centres proliferate. While this allows businesses to leverage the language skills and specialised expertise of workers in those countries, centralising critical services in one geographic area increases exposure to risk.
Further risk points – such as the increased speed of BPO requirements, the rise of cyber-attacks, fraud and a constantly evolving regulatory landscape, with different rules on data and intellectual property across different borders – mean that organisations now require new approaches to designing and implementing risk mitigation strategies amongst their BPO suppliers.
The first requirement in ensuring operational business continuity is in the deployment of an integrated supplier management strategy. This is controlled through a service integration approach, where the organisation and its agents operate in a holistic manner. This integrated approach is essential as companies continue to outsource critical internal and customer-facing processes to third-party providers. These are then further supported and underpinned by stringent and frequent audits of those suppliers.
Businesses also need to view the BPO service provider and delivery management as an on-going process – not a one-and-done exercise. Typically, enterprises focus on this effort early in the process of contracting with suppliers. However, with today’s three-year contracts with one-year options, all the data collected at the outset of a relationship has a limited shelf life, and within three to six months, those early days assessments are outdated – and of little use when a potential crisis arises.
A “dashboard” approach to assessing the global BPO landscape will arguably be a key component for businesses going forward. Organisations will need tools to keep a bird’s eye view on the global landscape of their providers, and keep track of multiple risk areas – be they related to terrorist threats, weather events or crime trends. The dashboards will need to be integrated to processes that escalate responses and readiness to heightened risks in any particular area.
While organisations can’t guarantee that a crisis of some sort will not occur amongst their global BPO service providers, a well-managed service integration and management strategy and a sound risk mitigation strategy can help a business prepare and limit the damage and take corrective action when a risk event occurs.
About the Author
John Keppel is Partner and President, ISG North Europe