Business Process Outsourcing is Neither Cheap, Nor Easy

As BPO outsourcing matures and more and more companies are getting into the fray, increasing numbers of companies are now also realizing that perhaps outsourcing hasn’t been such a good deal. The “lift and shift” mentality so commonly afflicting companies is coming back to haunt them in the final analysis – issues from poor training and productivity, management and technology do not go away, in spite of the work being done elsewhere.

Productivity, good productivity, is based upon good training. The train the trainer methodology so commonly used is not adequate if there are not sufficient ongoing training resources. Although companies should not pay for attrition training, development of a top notch training curriculum is crucial, particularly where there may be cultural differences to explain and overcome. Companies must then be willing to invest in ongoing training for not only internal associates, but for vendor associates as well. A well-trained agent will be more productive, less likely to be coached for performance issues and thus less likely to attrite. But, training costs money, and the expectation of many companies has been that training and productivity are the responsibility of the vendor alone. That is a costly mistake.

Low vendor productivity generally requires a company to hold onto more employees than anticipated, thus internal costs are higher. The inability to follow through on reduction in force plans equate to achieving less than optimal savings, the most common reason for outsourcing. Low vendor productivity often means that service levels are not met, since low productivity is often matched with poor quality. A strong training curriculum and program can make the difference.

Outsourcing of work does not diminish the need for good management. Ongoing vendor and program management is crucial to the success of any BPO work. Unfortunately, those skill sets can be difficult to come by, particularly when the intent of outsourcing is cost reduction. However, without close oversight, issues such as attrition, productivity and quality often aren’t addressed until the boiling point. Then, it is both expensive and painful to get back on track.

Technology is another key component in the unexpected costs of outsourcing. Unless work can be completely offloaded to a vendor’s systems, technology constraints do not go away with outsourcing. Outsourcing offshore for cheaper labor often provides for more users accessing systems. Licensing requirements, particularly offshore, may be prohibitive. Quite often, companies did not anticipate such costs prior to outsourcing.

In the final analysis, many companies are now determining that outsourcing is neither cheap nor easy. Of course, that is not entirely true. But the lessons learned along the way can be costly, and need to be learned from and acted upon by both company and vendor.


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