For outsourcing to continue to grow contracts need to move beyond simply removing cost and in addition add true value to the client. In HfS’s PoV, Defining the Seismic Shift from Legacy BPO to BPaaS we uncovered what BPaaS really entails. In this study, we identified that BPaaS is not simply platform-enabled BPO as some would have you believe. BPaaS contracts are fundamentally defined to deliver business outcomes such as revenue growth, with KPIs and SLAs like average handling time being more about tracking and reporting on progress as opposed to being the only reason for payment. This approach requires a significant level of trust between the service buyer and the service provider – trust that is based on experience, credibility, or the combination.
The focus and purpose of BPaaS are not on how results are achieved, but the fact of achieving them (or not). In some cases, the service provider is paid based on the outcome, such as incremental revenue that is recovered in a collections operation. In other cases, while there is a specific business outcome in the contract, such as increasing medical adherence, the payment is based on a transaction, such as number of patients managed, or number of payrolls processed. For example, Webhelp’s contact center contract with UK retailer ShopDirect, whereby Webhelp is paid through a combination of FTE pricing and an outcome based model that varies according to service line, examples of outcomes include revenue gained, first call resolution rates etc.
With the amount of control placed in the service provider’s hands, trust is the key building block in BPaaS contracts.
BPaaS contracts are very seldom undertaken by first generation outsourcers. The level of trust involved in handing over complete control of processes is not something buyers are willing to undertake lightly. More often than not these BPaaS contracts evolve from well-established and successful BPO deals.
Another aspect to consider and something I have recently witnessed firsthand as I’ve visited a few South African BPO service providers (jealous much?), is the location of account management teams. Almost without exception, traditional BPO contracts I have witnessed have a top-down directive account management team based onshore with the client. This creates a further barrier to communication between service delivery and service destination, which can potentially hinder the development of trust needed to move to a BPaaS contract. Conversely, all BPaaS contracts I’ve covered during my time here have a dual account management function with one onsite at the delivery location and the other onshore near the client’s head office.
Is this dual account management function a symptom of a BPaaS or is it a key enabler of making these BPaaS contracts happen? The answer, more than likely, lies somewhere in the middle. This dual account management function creates a more fluid communication channel between the delivery center and the client. This communication helps to dispel the fear of complete loss of control from the client side and lead to a greater degree of trust.
Bottom Line: The key takeaway, however, is that this dual account management function could be a key factor in facilitating the transition from traditional BPO contracts to BPaaS partnerships by increasing communication, trust, and onsite presence.