Bringing Services Back In-house: Why Now is the Time

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Why now is the time to bring Services back

The fourth industrial revolution will impact the way many enterprises conduct business. Advents in technology, infrastructure, communication and social interaction require every company that values its customer base and operating costs to re-evaluate the business models that brought it success in the past. Access to skilled labor at competitive cost is crucial to every operation, and is the primary reason for the creation and growth in the offshore, third party Business Process Outsourcing (BPO) model.

This model was initially predicated on carving out labor intensive, non-core competencies to benefit from the economies of scale, labor arbitrage and process standardization that third party BPO providers offer. However, the digital revolution is now blurring the lines between core and non-core aspects of operations.

As a result, in efforts to avoid intellectual property and/or proprietary process exposure, or maintain regulatory and compliance requirements, operational flows can incur a degradation of process efficiencies and an increase in customer dissatisfaction.

In this second article in our series, we will take a look at some of the factors you should evaluate to determine your company’s strategy for success in the digital age.

BPO Model Maturity

Along with the growth and maturity of the BPO business model has come industry level standardization and adoption of the many processes, policies and procedures required to perform and manage key business functions. These operations are often provisioned from talent rich, cost effective economies around the world. Many tools governing these processes, policies and procedures are now available in a cloud model, allowing niche-focused, Small to Medium Enterprises (SMEs) to capitalize on the same tools and functionality as large corporations.

This evolution has created a vast pool of tenured staff who are often siloed inside large delivery centers, many of whom are now exploring avenues of professional and personal development.

At the same time, BPO providers have enhanced their models by offering outcomes-based delivery, and recently, increasing consultancy services. Their belief is that hybrid BPO/SSC support models will strengthen relationships beyond client/vendor into true partnership models, with operational processes co-existing within the same geographical areas and perhaps even sharing facilities.

The Evolving Infrastructure and Technology Landscape

The “everything” as a service (XaaS) business model is transforming capability availability. Similar to VCRs, personal digital assistants and answering machines, there are many antiquated solutions that required significant Capital Expenditure (CapEx) to design, build and maintain the hardware infrastructure required to enable an environment where the costly business support infrastructure would reside.

Today’s Cloud Computing model changes the paradigm and is commonly recognized in three layers of functionality:

  • SaaS (CRM, WFM, etc.): Software for day-to-day operations
  • PaaS (AppDev): Platforms that provides robust, controlled environments for application development
  • IaaS (VM, VDC): Hosted Infrastructure providing the actual hardware

All are available virtually, on an as-needed basis. This includes immediate scalability with maintenance and support handled by the provider(s).

The same model has expanded beyond the virtual world, with many suppliers now offering facilities, staffing, process design and management support in the as-a-service model as well. This evolution has significantly reduced or eliminated the CapEx requirement, moving it to a much more favorable Operational Expenditure (OpEx) model where up-front costs are significantly reduced and applied only when required to facilitate growth and development.

Operational Control and Regulatory Compliance in the Digital Age

Due to regulatory requirement considerations, some processes simply cannot be outsourced to third party providers. The benefits of access to required, experienced, skilled labor in a cost-effective environment can still be realized, however.

This occurs when performed under an internal governance structure as executed by a satellite operation, wholly owned and operated under the corporate umbrella. The need for this overall governance and control becomes even more critical when working to realize the full potential of emerging technologies like Artificial Intelligence (AI) and Robotic Process Automation (RPA) to achieve true Intelligent Automation (IA). The power of these technologies requires more than just replacing portions of a process with automated BOTs. True incorporation requires review of the entire end-to-end process that most likely will create entirely new process flows, requiring access to data, internal systems or IP.

It also requires highly trained and experienced staff that utilize the output providing an ultimate solution. It may not be prudent to develop, implement and expose this with outside third party vendors.

True Omnichannel (Multichannel on steroids) support requires extensive customer experience monitoring and interaction. If internal operational management resources are required to oversee this, the question must be asked, “Should these resources oversee internal or external third party staff?” This can often be hampered by communication challenges and hand-offs between disparate systems and databases. The very nature of the distributed ledger aspects of blockchain, for example, can expose sensitive information, which is best administered via internal resources.

Now is the time

The time for serious re-examination is prior to implementation, as these variables can significantly influence current operating policies, processes and procedures.

As little as 10 years ago, a viral tweet involved a sick bird of some sort, while today it can devastate a brand overnight. The fourth industrial revolution is re-imaging everything into a digital landscape and the possibilities are only limited by action, or more aptly, inaction.

Does your organization have plans to capitalize on and incorporate emerging technologies to improve operating models and customer interaction? Are these plans reliant on third party service providers owning key processes or should an internal solution be considered? Were prior CapEx requirements and expenditures a limiting factor? Does access to staff experienced in required operational disciplines cause concern?

The enterprise needs to determine what actions are required to thrive in the digital world.

Just be aware that past operational models most likely will not get you where you need to be in this rapidly evolving digital landscape.