Know the Risk: Digital Transformation's Impact on Your Business-Critical Applications REGISTER >
With its promised cost savings, it's easy to get support for BPO from upper management. But the frontline employees, the people who will actually be affected by the outsourcing contract, are of equal importance to a successful deal. They will either be working for the outsourcer, managing the relationship, or without a job after the deal takes hold. Many employees already view outsourcing as a threat and are less than eager to see it succeed. "It's a political struggle," says the Yankee Group's analyst Phil Fersht. "People don't want to give up control of their processes, and IT leaders don't want someone else tinkering around with their systems."
Vendors agree that BPO deals often fail because companies plan BPO projects without the involvement of the employees they will affect. When it comes to outsourcing, honesty is crucial. "Companies have to lay out a strategy for making their people clear about the game plan, rather than waiting until the last minute," says Sunil Gujral, vice president of technology for Wipro BPO, one of the largest offshore BPO vendors in the market. "If employees hold back, it could lead to a potential failure."
Filippo Passerini, CIO and global services officer at $51 billion global consumer goods giant Procter & Gamble, says company executives began to consider BPO about four years ago. To make the transition as smooth as possible, Passerini says, P&G took a straightforward approach with its employees, holding frequent meetings and offering updates about the progress of the initiative, placing a particular emphasis on how employees would be affected. "We wanted to do what was right for our business in the long run, and also for our shareholders and employees," he says.
P&G hired three firms to handle its BPO initiativesHewlett-Packard Co. for IT infrastructure and transactional accounts payable, IBM Corp. for human resources and Jones Lang LaSalle for facilities management. Each firm not only took over a series of P&G processes, it also took on a number of P&G employeesroughly 3,500 workers in total (99 percent of all affected P&G employees were rehired by the BPO partner), who were offered similar positions at the BPO firms with the same salary and benefits as their former positions at P&G. Transferring the people along with the processes helped the BPO providers get up to speed much more quickly, he says.
Regardless of whether you transfer people along with your processes, assign a dedicated company liaison to the BPO vendor. "Relationship management is a big component to making BPO work," says Robert H. Brown, an analyst at Gartner. Initiate routine status meetings with both the BPO partner and the internal group to track progress and smooth out any cultural wrinkles.
Business process outsourcing, particularly to an offshore vendor, is a strategy that was born to get messy. But the problems that plague these deals can often be mitigated by a thorough analysis of the cost, management and people issues prior to signing the deal. Even if you don't end up outsourcing anything, you'll at least learn something about your company. And that's always a good business decision.