Emergence of IT+BPO players in BPO
Of late, there has been a significant increase in the IT+BPO deals in the F&A space with customers increasingly preferring vendors who can offer both IT and BPO in an integrated way. The increased focus on IT+BPO contracts stems from organizations' growing need for relevance and need to transform their businesses to counter the challenges arising from the dynamic business environment that they operate within.
When an organization decides to outsource its business services to a service provider, the organization inevitably has to go through change management. So, when an organization is looking to outsource their IT support like ERP roll out, application maintenance, etc. they choose to bundle it with the BPO services to effectively manage change. This also gives the organization the opportunity to have both process experts and IT experts work together to define a "Target Operating Model" that helps meet the organizational objectives.
Some of the benefits arising from an IT+BPO are discussed below:
Combining process know-how with Technology know-how: Partnering with an IT+BPO service provider enables an organization to have access to industry aligned services that weave together consulting, enabling technologies, process best practices, automation, business analytics capabilities that drive meaningful business outcomes. This is specifically handy in cases when there is a new regulation and processes/applications have to be created anew to cater to the new regulatory requirement.
Business Process as a Service (BPaaS): With the advent of BPaaS, (Platform based BPO offerings) organizations can now have access to best in class technology without need for capital investments while reducing the overall operational expenses. BPaaS delivers business process services on applications hosted on the cloud to help reduce the overall cost of ownership (achieve economies of scale, reduce spend on technology infrastructure, reduce capital costs, minimizing license costs etc.). BPaaS, also gives organizations access to Mobility that empowers stakeholders to review and approve requests even on the move.
Access to New technology advancements: An IT+BPO service provider has access to the process best practices and technological advancements that have come up in the specific industry or in the market. This can be easily extended to the client organizations. E.g. Robotics has been gaining momentum to eliminate repetitive transactional activities that can be automated.
Automation and other improvement projects: Automations, technology improvements, customizations are some of the potential benefits arising from an IT+BPO deal. With a technology service line, companies are equipped to cater better to the organizations' changing needs through development of customized tools/solutions to address the client organization's challenges.
Single vendor performing F&A services along with ERP system support: The potential benefits arising from a single vendor performing F&A services along with ERP system support services are:
- Better understanding of client processes, requirements, nuances resulting in accurate and quicker resolutions
- Complete ownership of end to end SLAs.
- Single and simpler governance model
- Currently, clients pay IT vendors on number of tickets getting generated for support and typically pay BPO vendors for number of FTEs. However, with single ownership for both ERP and F&A, a client can contract for an outcome - e.g. vendors paid on time, or books closed on time, rather than focusing on tickets and FTE
- A focus on ERP functionalities/automation to eliminate process inefficiencies. This might not get the required priority if there is a separate vendor performing the SAP system support. In our experience, most times ERP systems get implemented and there are deviations from desired outcomes. Once ERP is implemented, it is usually status quo with support applying patchwork to changes that ERP brought in. However, with IT and BPO being with one provider, the service provider can focus on eliminating some of the implementation defects that might arise during ERP implementation rather than instituting manual fixes to the ERP at a later stage, by leveraging business analysts who are well versed with the respective ERP and finance processes.
Based on the organization objectives and long term goals, companies decide to go with an IT+BPO service provider v/s a pure play BPO service provider.