Back office outsourcing is entering a turbulent period. With the decline in labor arbitrage, customers are concerned about diversity, cost savings to process improvements and added functionality, and the accelerated development of Intelligent Automation (AI) technologies. These cumulative changes, especially those driven by AI technology, are shaping back office outsourcing future.
The result plays an important role throughout the industry and in the market for both customers and suppliers.
While the traditional outsourcing model is clearly in decline, the next-generation outsourcing model is emerging. Other measurement methods beyond the simple scale of transactions are needed to fully understand the nature of this growth. Here are the top trends that will drive changes across the field of back office outsourcing:
Social media adoption
Until 2000, the global customer service industry relied entirely on websites and interactive voice response (IVR) to route calls to the right representatives.
This trend has been completely broken. Now approximately 81% of the US population has at least one social media account. As browsing social media becomes the third most popular activity on the internet, consumer behavior has changed.
Businesses increasingly realize that social media is changing the consumer landscape. Brands use the huge amount of data generated by social media to identify potential trends, making them more flexible and responsive.
Seeing this trend, BPO service providers are investing in dedicated social media teams. Customer representatives and social media teams work together to resolve customer complaints and inquiries faster.
Virtual companies in professional industries
Outsourcing allows virtual companies to bring their business models to market without a prior investment of human and material resources. This competitive advantage facilitates more efficient pilot-scale expansion, product development, and rapid commercialization.
Historically, virtual companies have made the mistake of taking a partial outsourcing approach, using a one-time vendor strategy. Results are often time-consuming and frustrating.
Virtual companies are looking for professional external project management partners who can define, coordinate, and manage all aspects of the outsourcing process in a more reliable, fast, and successful way with fewer costs.
Improved background processing efficiency
Over the past decade, India has positioned itself as a “preferred destination” for BPO, which has doubled its revenue and number of employees in the industry. The Indian BPO industry has reached a turning point.
The back office outsourcing department faces collective obstacles in maximizing its market opportunities and establishing itself as a permanent value-added business partner. Outsourcing is not new. In different operating environments, it has been adopted in different industries in different ways. So successful that some terms can now be used interchangeably to describe the phenomenon of outsourcing.
From outsourcing low-risk functions in the past to more strategic functions in the future
A recent study of outsourcing from the London School of Economics shows that nine out of ten companies plan to increase or maintain their current dependence on outsourcing and general services over the next three years. The key is to identify the factors that influence these increasingly aggressive global sourcing strategies at the industry level.
The new shocks are forcing industry organizations to undergo fundamental changes in their economies to transcend their current organizational boundaries so that their business operations remain competitive.
Changes in the industry environment are forcing leaders. They already under pressure to continue to improve productivity and to behave more aggressively.
Changed industries are more focused on investments in shared services
These companies are culturally used to responding to market pressures rather than actively responding. Therefore, long-term fundamental change in the face of uncertainty does not fit your mindset.
Many of them have dramatically lowered operating costs and gained additional productivity gains by outsourcing a difficult proposition. Mistakes can be fatal to your low-margin business.
Outsourcing has always been considered an option, primarily to save costs more than for plant engineering. Its focus has always been on short-term cash flows, so a deep overhaul of its operating infrastructure is not a popular option.
Utilities is another industry that has earned a reputation for being conservative with outsourcing, primarily through the use of shared services. Although many large utilities were the first to implement shared services and hybrid outsourcing models, most utilities escaped the aftermath of the 2008 collapse and were not forced to conduct a thorough analysis of their operating models.
These organizations have adopted a conservative stance in their long-term plans. Many utilities are already companies that have implemented outsourcing services in large numbers and are expected to continue paying attention to current outsourcing plans and put more emphasis on improving and empowering internal shared services.
The rise of modularity
The organizational structure changes over a period of time. Before going back to the old point model, you generally convert from a full-service point model to a modular one depending on the technology.
Component manufacturing tends to be vertically integrated initially due to the small number of components and customization. Therefore, the cost of production is high. Brands looking to compete on price will try to standardize their components. Additionally, as companies compete to set industry standards, accelerating time to market is a strategic imperative. Modularity facilitates these strategies.
The functionality also encourages modularity and component separation to increase time to market. If the dominant design comes from standardized components, companies will opt for disintermediation as products become more modular.
If a company is outsourcing when its product architecture is critical, it can become dependent on vendors. By adopting a modular product architecture, you can mitigate this risk.
