Combining Innovation with Business Process Outsourcing

July 19, 2014

8:00 pm

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The business process outsourcing industry is a dynamic domain which meets the challenges of a very swiftly changing technology world along with business environment. There are a few things that have changed in the last two decades though. In the early 1980s outsourcing, and more precisely offshore outsourcing, was incorporated by a few brave organizations. As they put their toes in the water with some anxiety, they naturally tried to preserve the maximum control, and the kind of work being outsourced was non-strategic. In the next stage, the software development procedures integrated outsourced services that have proved their worth. A larger span of responsibilities was assigned and the vendor was now expected to suggest enhancements to processes and systems & profitability

But we are not seeing a new exhilarating phase of software outsourcing procedure where vendors are developing to become partners in the quest for that Holy Grail: innovation. We only see the first few pioneers to this trend, organizations that leverage the technology proficiency that the outsourcing vendor has gained over their relationship, and working together with the vendor to locate the next big idea.


In the technology landscape, the customer and vendor have two diverse world views. The vendors are obviously closely aligned to the end user and market trends, which are the reason that original specs of products and solutions are defined. But the other element for coming up with the next killer product is a great mastery over technology, and some outsourcing vendors can contribute here. So we now see situations where vendors are utilizing their study of technology and trends to provide pointers to the future.

In recent years, the numbers of companies that outsource crucial business processes to outside suppliers have expanded exponentially. The business process outsourcing (BPO) has been projected to encompass activities comprising of finance and accounting, human resource management, procurement and legal services, and the overall volume is assessed to be growing at a rate of around 25 percent annually.

A lot of organizations introduced BPO as a part of an operational effort but it has changed into much more. Senior managers today expect more from BPO service providers than short-term cost savings and meeting minimum contractual requisites, but they are more cynical of big-bang enhancements. Companies want service providers to modernize constantly. In relationships that companies categorize as high performing, the service providers perform a series of innovation projects that deliver considerable long-term enhancements to the client’s operating competence, business-process efficiency and strategic performance.

Consider the Following Examples

  • A BPO assisted health care company to enhance the claims adjudication process by utilizing analytics to envisage claims likely to result in rework. The prognostic tool now interrupts more than 50 percent of claims that would have been reworked, saving the client $25 to $50 in administrative costs per overpaid claim and $6 to $12 per underpaid claim.
  • An aerospace manufacturer operated with its BPO provider to integrate new key performance indicators and processes to achieve third-party vendors. This allowed the client to enhance customer-order fill rates for new parts from 60% to 85% and turnaround times for delivering parts to grounded vehicles from 21 hours to 17 hours.
  • A supermarket chain worked together effectively with its BPO , to implement new forecasting tools, methods, and approaches that enhanced the client’s stock fill rate from 80% to 95%, reduced inventory by 27% and abridged error rates by 50%.

The cost saving criteria is now “a given” aspect and the emphasis is now gradually moving towards new priority areas including transforming businesses and strategic alignments.

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Ritesh Sanghani is a Director at Hi-Tech BPO and a passionate writer with experience of 10+ years of in Business Process Outsourcing, managing strength of 450+ professionals.

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