Looking at On-Demand BPO
Posted on June 11, 2009 by Atul
It’s been over a decade since corporations started
leveraging outsourcing to better manage capacity, costs, quality, risk and
speed to market. From offshoring
to managed services, there has been a dramatic evolution in corporations’
thinking about outsourcing.
Corporations are challenging existing business models as they seek ways
to speed innovation, focus on their core competencies, and scale to capitalize
on opportunities and outpace competitors. Today, many corporations are looking
beyond back-office, labor-intensive tasks to outsource more complex business
processes – from investment and pricing analytics to inventory management to
aircraft engine maintenance forecasting.
It is no longer a debate as to whether to outsource but rather what
functions can be outsourced. As a
business consultant, I hear often about companies’ abilities to achieve cost
and/or capacity advantages, and yet, many are still not satisfied. For some, it
has not given them much advantage from a competitive standpoint and for others
it is just moving the “cost” around.
I hear often from businesses, when will I see significant value?
It is not hard to understand why the question of
value is still raised when you consider that today’s outsourcing models have
some inherent limitations that reduce the overall gains companies can achieve: low
worker retention, lack of control and visibility for clients, and long,
inflexible agreements to cover execution and investment risks for both parties.
These issues are more pronounced due to recent trends in internet and social
networking capabilities that have us rethinking outsourcing from a geography
game (i.e. “cheap labor force”) to a game of skill and expertise (i.e. recruiting
a team of all-star experts). Few
business “futurist” or industry pundits would argue that the popularity of
social networking, collaboration tools and the pervasiveness of Web-based
applications from email to CRM have given corporations greater visibility,
control, and speed than ever before.
We have become accustom to “always on” services and give little thought
to the backend processes that deliver those applications to our laptop – it
just happens. It is what many
people today refer to as “cloud computing.” I believe there is a lot of value in an outsourcing
model that borrows a page from cloud computing – on-demand, pay-as-you-go,
unbound by geographic constraints, and where tasks are assigned to a team of
distributed workers. Seriously,
what’s not to like? I call
this next phase in outsourcing, “cloudsourcing.”
Cloudsourcing combines on-demand business process
outsourcing (BPO) with crowdsourcing technologies to enable companies to
purchase quality BPO services on-demand through a pay-per-use model. Cloudsourcing allows corporations to
launch new business process work types, scale and innovate in Internet time and
maintain real-time visibility and control to minimize risk. Further, it enables
corporations to have immediate access to the right worker, with the right
skill, at the appropriate price point, regardless of location.
For those in the
consulting world, there is no doubt that the world is truly flat as Thomas
Friedman presented so vividly in his book. With cloudsourcing, “The Flat World” becomes more visible
and the creation of on-demand workforce can be realized. Imagine being able to hire what skills
you want, when you want and for how long you want! This not only converts your fixed costs to a variable
structure but also enables you to launch new programs in internet speed — broadband,
of course! Cloudsourcing also
enables BPOs and individuals who have particular skills or expertise new
avenues to offer their services on-demand.
So when will cloudsourcing be a reality? Interestingly, there are examples of
work being deployed in this model today.
Take for instance, LiveOps, a Silicon Valley technology company run by
Maynard Webb, the former Chief Operating Officer of eBay. It has been cloudsourcing through a
virtual workforce of more than 20,000 independent contractors, and recently
launched a new work marketplace, LiveWork, as a platform for on-demand business
process outsourcing. While the
company provides on-demand contact center services to a wide range of businesses,
the impact of cloudsourcing is best illustrated with the services they provide
with natural disaster emergency relief efforts where fast response to the “unpredictable”
is the norm:
When Hurricane Katrina hit the Gulf Coast of
the U.S. in 2005, a toll-free communications center was urgently needed to put
victims in touch with their families. Every other outsourcer that was
approached to provide communications services declined to take on the project,
because they couldn’t mobilize agents fast enough. Within three hours, LiveOps
launched a call center with over 300 independent, home-based agents ready to
help reunite victims of Hurricane Katrina with their family members. The
virtual call center, with no fixed investment in buildings or technology infrastructure,
was established with skill workers in hours and then subsequently wound down
when work was done.
Consider
what all of this may mean for your business or industry – a retailer during its
high season being able to scale to meet call volumes, a technology company needing
to rapidly staff up its email customer support team in response to a new
product release, , or a gaming
company needing an on-demand workforce to augment their existing team to help
moderate their online chatrooms. I
believe the possibilities are huge and will lead to more work types being
outsourced.
In the summer of 2007, I wrote an article titled “Futurized
Corporation,” describing a company that shines in its ability to seamlessly
stitch together component-based, composable services from different providers
and its own operations to re-create self-standing business functions – i.e. a
virtualized supply chain. This
vision is cloudsourcing at its best. I believe with this new trend, companies now may be able to
achieve significant gains by taking advantage of on-demand BPO model that
increases velocity and agility and thus creates sustainable competitive
advantage.
Atul Vashistha is
Chairman & Founder of neoIT, a leading global services and sourcing
management consultancy. He is also Chairman & Founder of NeoGroup, an
outsourcing firm focused on vendor management, and program management of
governance, regulatory and compliance initiatives. Atul Vashistha also founded Best Outsourcing Jobs in May 2009.
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