Key Challenges Faced By The Bpo Industry Management Essay

Key Challenges Faced By The Bpo Industry Management EssayPeter Drucker says diversity is a change that creates a new dimension of performance.In todays vexation world, competition has become fierce and sophisticated. Companies worldwide atomic number 18 striving hard to curb as efficiently as possible and pass on the savings to the end consumers, in a bid to stay ahead of the competition. In the process, umteen companies are forced to innovate to come up with slipway to reduce costs, increase efficiency and identify differentiators non only for their own brasss but overly for their customer organizations. In the midst of this dog eats dog global competition, customers are true beneficiaries by demanding additional value, process regeneration and business conversion from suppliers.In todays dynamic world, innovation is the hallmark of a competitive and leadership organization. With attrition rates and competition in the BPO and ITES sectors rampant, innovation is the logi cal solution to theme the rot of this exodus and surge ahead of competition. innovation, however, is not only about discoveries or new inventions it is a concerted initiative to implement new ideas and methods of doing business to increase the overall efficacy of results (read topline and bottomline).Innovation in BPO and ITES sectors is at once picking up after companies have woken up to the fact that innovation is indispens commensurate for selection and in addition in creating a competitive edge. Innovation occurs not randomly or accidentally but when there is a proper system/ grammatical construction in place to encourage it. Any business is the sum total of its capabilities, which may differ from person to person. Nourishing innovation involves understanding the various capabilities in an organization and harnessing them to the best of its ability. These capabilities includeDifferentiating capabilities an organizations primary assets that describes its special nature and t he real differentiating factorCore capabilities those that are critical to the organizations survival, but may not necessarily help in differentiationSupport capabilities those that support the organizations core capabilities and foster them.This paper aims to analyse innovation in the Indian ITES industry, success thereof and the focus on needed to excel in the space. In particular, the organozation I was peeing for was suffering from all the symptoms mentioned in the report.Key Challenges reflexiond by the BPO industry today and ways to fight itFlight to ScaleGalloping Manpower CostsIncreasing investments in InfrastructureCustomer RetentionCustomer AcquisitionPeople RetentionTo face these challenges, BPOs are forced to innovate and differentiate themselves in the market place.There are various types of innovation that a BPO can resort toBusiness work InnovationServices/Markets innovationOperations InnovationBusiness Model Innovation would mean changing the structure of doi ng business or even changing the billing model. From an hourly billing rate or transaction based billing organizations are now looking at outcome based monetary models and sharing the risk and reward with the customer.Services/Markets Innovation would mean targeting entirely new markets based on new or existing offerings. BPOs can too innovate by coming up with entirely a new range of serve ups. For example, many organizations are now talking about computer program chopine BPO is about providing Business Processing services using a domain rich vertical or horizontal finish (platform). Good examples for Horizontal application would be FA, CRM etc. There are innumerable vertical platforms. Some examples are Mortgage Processing, Collection Management, Insurance Benefits Administration, Policy Administration, Claims Processing and the list goes on. The occasion of the platform is to give credibility to the BPO suppliers capability.Operations Innovation aims at providing operatio nal excellence with new offerings. Organizations are increasingly investing in analytics to provide the invitee insights into the way business is conducted and identifying areas of improvement. In one sense, it is akin to consulting services.Other forms of innovation could be in the areas of employee practices and investments in new engineering science.This is a significant change, which is true also of what is happening in IT and has a remarkable parallel with the transformation and rise of Japan in the post-war period. The transformation outgrowth occurs in transiting from cost advantage (wage arbitrage) to quality. wherefore comes the stage where quality is taken for granted, like hygiene, and clients start demanding innovation as a matter of course. Indian BPO as also IT is here right now and the ability of Indian players to innovate, in which they are still beginners, will determine their future.A few examples of innovative players to help employee retentionIntelenet Global Services, one of the leading BPO companies in India and rated among top-10 by NASSCOM, offering BPO and technology consulting services to clients in various sectors across the globe, has capitalized on its capabilities through employee innovation practices. To eliminate the boredom of the employees and keep them prompt to give their best for continuous value-addition to their clients, it offers its employees three career paths in the form of vertical growth, horizontal growth, and shift to parent company. While 70% of promotions in the organization are internal, only 30% is external. After 2 years of service, if an employee doesnt want to be a team leader (vertical growth), but desires to get into HR or instruction or other areas, he is allowed to shift diagonally across functions. Moreover, if someone who has worked for 2 years wants to move from nightshift to dayshift, then he is given first preference, subject to a vacancy in the parent company. Intelenet has sponsored offshor e domain specialization training courses for its employees, besides certification programs such as Train the Trainer. It has direct its employees to participate in seminars and conferences of top management institutes and also got them Customer Operations Performance Centre (COPC) certified. Similarly, prudential Process Management Services (PPMS), the wholly-owned BPO subsidiary of Prudential UK, also offers vertical and lateral growth for its employees, thus enhancing value for its clients as well as employees through employee innovation.eFunds International, a US-based company providing technology solutions in financial risk management and electronic payments, and consultancy services, is creating continuous value for its clients through employee innovation. Whenever an employee joins the organization, he is given a Magic Score Card, which serves as a training passport. eFunds provides its employees training expertise in domain areas and also focuses on leadership skills. Becau se of its innovation initiatives, eFunds net revenues increased 11% from $532 million in 2003 to $552 million in 2004.Infowavz, another(prenominal) BPO company, offers a 1-year Management Development Program for fresh employees who join the company after completing their MBAs. It also offers an Accelerated Career Development programme for highly motivated and self-driven employees who look for continuous challenges and opportunities to maximize their potential. It has designed a unique Team Innovation programme for top performers who are associated with new projects at the polisher stage or proof-of-concept stage. Infowavz lucidly communicates its career path to employees at the recruitment stage, defining the Key Result Areas, and conducts an exhaustive Training Needs Analysis programme to identify the deficiencies and build employee competencies.There are quite a few BPOs investing on platform technologies to differentiate themselves from competition and also to improve margins. Wipros stick in the outsourcing industry has led to the development of Base, a technology platform that integrates outsourced services with the customers internal business processes and fulfils the following requirementsFlexibility and continuous improvement curtail and transparencyComplainceFaster time to benefitAccuracy and QualityWhat it takes to be an innovatorA Partnering Attitude. Whats key here is a strong, long-term relationship amid the two organizations. Both organizations must discourage adversarial, us-versus-them attitudes. If the provider fails, the client failsand vice versa. This is not about warm, fuzzy feelings it is about clarifying synergies between the two organizations during the RFP wheel and ensuring alignment of interest just like in joint ventures.The Right Technology Platform. IT should support innovation. The technology platform provider must be able to make new technologies available quickly through the provider. This requires close collaboration betw een the BPO provider and the technology vendornot just marketing agreements. Also, buyers should select technology vendors with a demonstrated track record in bringing innovations to market over extended periods of time. BPO is long term it is an innovation marathon, not a sprint.The Appropriate judicature Mechanisms. Buyers must ingrain innovation in their governance. That includes creation of an innovation and technology council with members from both buyer and supplier who meet regularly to review progress, ensure the technology evolves, and check the benchmarks at regular intervals to identify where performance falls behind. And technology evolution must push innovation efficiently, meaning integration is easy because the platform conforms to standards. Buyers can insure their tech platform does this using proactive oversight and agreed-upon standards.Standardized Process Redesign and Related Technology. Buyers need to limit their customization demands whenever they can. If buy ers want innovation, the service deli really economics must work for the supplier. Suppliers that make money can afford to bring in innovation. This often becomes tricky because both buyer and supplier have to clearly understand the cost structure of the service delivery. A provider forced to accept a service delivery model that does not harness economies of scale, process optimization, or access to labour arbitrage is never going to be able to innovate, and customers forcing BPO providers to tweak their offerings may inadvertently kill the very root of the economic advantage suppliers are supposed to bring to the table. Better discussions about standardization pains and gains must happen between the client and the provider organization.Absolute top management commitment. No innovation can happen without top management commitment for both human and capital resources. This is very serious because when investing in innovation sometimes results are not immediate. The senior management must have the vision and patience to reap the benefits.ConclusionInnovation in the BPO space continues to be a challenge for the following reasonsBPOs are normally under margin pressures and resource commitments for innovation are difficult to make.The SLAs are very stringent and time bound. Moreover daily performance could affect the commercials in a big way. This is because organizations see this as a window to pretend out to their customers and a slip here would directly affect their customer satisfaction. Hence contracts are very tight and normally followed to the dot. This leaves very little mode for innovation. Running the operations everyday is a struggle in itselfPeople related issues are much higher when compared to the sister industry Information technology. The work hours are odd and the compensation less. This means a good amount of time being spent of motivational issues and coaching and training.Due to all these reasons, innovation in the BPO space continues to be a challenge. But in future as competition stiffens and the line between IT and ITES fades, there is a good discover that the scene gets better, including the organization I was working for.