Ask the Pro: Emerging business process outsourcing (BPO) trends
Peter Lowes, Principal, Deloitte Consulting LLP
We recently renegotiated a large outsourcing contract. While we’re satisfied with the outcome, we might have done even better if we’d considered how changes in the BPO marketplace over the past five years might affect our outsourcing needs and options. To prepare for future negotiations, what emerging BPO trends should we watch?
Two underlying phenomena will likely shape BPO over the next few years. The first is the development of more flexible, cost-efficient computing platforms that, among other things, can more effectively support cloud-based service delivery. The second is the adoption of advanced analytics to help monitor performance, forecast demand, and quantify other aspects of the outsourcing relationship that have historically been less rigorously measured.
These developments will likely have several practical consequences. For one thing, the dominant BPO pricing model may shift from input-based (i.e. cost-based) approaches to output- and outcome-based arrangements. While the latter are rare today due to the information gap between providers and clients, advanced analytics applied to more and different types of data may help providers bridge the gap, reduce their risk, and offer clients a more compelling value proposition.
Additionally, many providers may introduce cloud-based service delivery options, with some moving to a cloud-based model entirely. As the technology matures, customers are likely to find cloud-based services’ scalability and small initial investment needs increasingly attractive.
Regarding preparation, you may want to consider ways you would prefer to structure an output- or outcome-based pricing arrangement in case those options become available. What information would you need to collect and analyze to support such an approach? You might also participate in whatever dialogue your company may have about its use of cloud computing. Security and privacy concerns can make many companies nervous about cloud computing, but it’s important to consider the potential benefits as well as the risks. Reminder
As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.