What Goes Wrong With BPO?

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Phil Searle, Advisory Board Member for the Shared Services and Outsourcing Network, asks Gerald Sackey-Addo, Finance Business Partner at a Leading HealthCare Company, about his experiences with business process outsourcing and what Gerald sees as the main issues that need to be addressed to ensure long term success.

Phil Searle: Gerald, thank you for taking the time out to talk with me about your experiences on the Òfront lineÓ of business process outsourcing, in your role as a Business Partner at a leading HealthCare Company. As background, what processes were outsourced at your company, and when? And how were you personally involved in this?

Gerald Sackey-Addo: In my role as a Finance Business Partner, I am involved in supporting Product Brand Teams and the Corporate Affairs department, which also incorporates our NHS Operations. I have regularly been the focal point for queries from both my internal customers and also from the BPO (Business Process Outsourcing) team. The processes that were outsourced were Accounts Payables (AP), Accounts Receivables (AR), 3rd Party and Intercompany expense processing and some General Ledger (GL) activities. My involvement with the BPO team has mainly been with the AP and GL processes. For instance, I am responsible for ensuring that approved promotional expenditures and honoraria to key customers are paid promptly and to the correct cost centres. This assists with better budget management within the Community Care Pharma and Corporate Affairs Business units.

PS: Having been actively involved in offshoring processes to a third party provider at your company, what do you see as the main issues with Business Process Outsourcing (BPO) that have had to be managed?

GSA: It is true that BPO can deliver excellent cost savings, but there are also risks that need to be understood, managed and controlled. These include:

  • Customer service interaction skills
  • Prioritisation issues
  • Mixed messages
  • Acting like robots

By 'customer service interaction skills,' I mean how the BPO team interacts with both internal and external customers. For example, we have definitely had problems with language skills (including English) at the BPO provider. Indeed, this has sometimes made customers quite angry, resulting in calls to our head-office to have their queries dealt with.

PS: It is interesting that you also point to English language skills being an issue. Can you expand on this a bit more?

GSA: I believe that the BPO team could do better at this given that most of the teams I liaise with seem to be able to write excellent English, but seem less able to communicate verbally in English. This is perhaps understandable but, in my view, more and better oral, language and perhaps cultural training (in English and other languages) could help overcome this challenge longer term.

PS: Do you believe that some of the issues might relate to the attitude of internal customers as well as the BPO provider?

GSA: Yes, definitely. It is fair to say that some internal customers, given the "bad PR" resulting from certain BPO stories, possess an attitude when calling which often leads to their queries not being resolved effectively. They are expecting a problem before they call. Indeed, this view has often been shared with us by some of the BPO team members I liaise with. I believe that some internal training of users as well as the BPO team would benefit the relationship here.
PS: In relation to 'prioritisation issues' can you explain what you mean here?

GSA: By 'prioritisation issues,' I mean what the BPO team perceives to be a priority. For example, what might be internally viewed as an ÒurgentÓ task might not be viewed in the same way by the BPO team. This can be very frustrating, as it will often have an impact on other activities. As a result of my interactions with the BPO teams, I have come to realise that the culture within the BPO provider includes following very strict hierarchical decision-making processes that do not allow much flexibility or thought outside of defined processes and actions. Therefore, although a BPO team member could action a quick fix to an issue, they are sometimes reluctant to do so until they have spoken to a team leader. This approach leads to a lot of unnecessary e-mails.
PS: Turning now to mixed messages can you expand on this as well please?
This is where one BPO team member gives a customer an answer only for another team member to tell the same customer something totally different. As a Finance Business Partner, I also oversee the financial management of our sales force who often liaise with certain Key Opinion Leaders within the business who are vital to a particular therapy area that we pay honorariums too, which makes an issue of this nature quite embarrassing.

PS: Finally, you refer to what I assume would be the BPO team 'acting like robots?' Am I correct in thinking that this means acting in a rigid fashion without room for flexibility?
Yes, 'acting like robots' is my term to describe where the BPO provider follows a predefined set of rules/instructions but is not able to apply enough rationale or flexibility to their work.

More specifically, this is where the BPO teams, despite having the knowledge and information available to action a task, will still contact the client finance team in the home country to ask what must be done even though this might be a basic task they should be able to perform themselves. This reflects a lack of Òflexibility.Ó Indeed, if one of the merits of BPO was to enable the client business to focus on core business activities, local client finance teams in a home country should not need to stay so involved with processing duties after the transfer of responsibilities to a BPO provider. This is not to say finance teams in home countries should not ever be asked questions, but there is a real danger that the internal client has to retain internal resources to provide unexpected support to, and management of, the BPO provider and perhaps even translate some things to make them of value to internal users. This makes the outcome less efficient and therefore more costly and can cause delays in processing activities.

As a result, the design and definition of services and responsibilities as to who does what, and when is critical to the success of the BPO arrangement, but so is allowing some flexibility within this.

A very important example of this is where an organisation must be careful when outsourcing a customer call centre. The role of the outsourcer and the work performed must meet with customer expectations (i.e. full resolution of query) and not just be a robotic response.

PS: Thanks very much Gerald. Would I be correct in summarising your thoughts by saying that although BPO can lead to lower costs and the release of certain non-core activities, one must never forget and underestimate that there is a service still needing to be performed. Whilst an organisation can outsource an activity it cannot outsource ultimate responsibility to the business for the provision of effective and efficient service. Back office processes may be regarded as 'non- core' but they are still 'mission-critical'! If they are not delivered effectively and efficiently the business will suffer.

GSA: Definitely. In a recent interview with David Wyss , Chief Economist at Standard & Poor's (SSON, 2009), when asked about his stance on the significant move in off-shoring to "lower cost" countries over recent years, David stated this is a natural part of globalisation. I completely agree with his view. But, at the same time, I strongly believe that there needs to be a better understanding of what outsourcing means and the potential issues that must be addressed. There need to be stronger standards demanded of and then delivered by BPO providers and the business needs to help the BPO provider with this process. Metrics can be introduced but a damaged reputation in an ever-competitive and challenging world can be very difficult to repair, once things go wrong.

Gerald Sackey-Addo
Finance Business Partner
Leading Healthcare Company
Email: g.sackey-addo@live.co.uk
Tel: +44 (0)7710 123126

Phil Searle
Founder and Managing Director
Chazey Partners
Email: philsearle@chazeypartners.com
Tel: +1 408 460 0785