The BPaaS model is fast becoming a cornerstone of customer enquiries and addresses an inflection point in the BPO industry. While the IT+BPO story was earlier about automation, it's now about offering the entire service - tech, people and process as a service.
With a population made up of a mix of immigrants from across the world who still retain their language and cultural specifics, it's a dream labour pool for a prospective BPO center.
To be able to outdistance other market players, service providers have to reach to an idea used in production environments - the Research and Development units.
Cloud has caught the imagination of everyone i.e. companies (buy-side and sell-side), analyst, BPO vendors, IT vendors etc. and is seen as the next big thing. Is it really a revolutionary business model or old wine in a new bottle? I think it is high time we analyze and understand how the ecosystem will evolve to leverage the full potential of upcoming technologies to provide real value add to businesses.
Internal process utilities in staff functions like Finance, Procurement and HR have been successfully implemented in many financial services firms. We also see internal utilities gaining traction in areas like reconciliation, reference data and reporting where implementing a common platform and process is helping drive efficiencies. These line functions are a good fit because they can be standardized on a common industry-leading platform, and are usually performed across different asset classes/business lines that will benefit from consolidation.
On the operational front, creating internal shared services utilities have made it easier for firms to run them on a global delivery model from places like India, Poland and Brazil -- whether through their own organizations or through outsourced arrangements. And as we know outsourced arrangements today could be a combination of people, underlying technology platform, and also hosting arrangements.
Interestingly we are also seeing discussions in the area of Fraud operations that today are being executed by a host of different systems, and are decentralized across the bank's branches in retail banking. They are also run in separate organizations for the other parts of the bank's portfolio. A utility model - while challenging to implement in Fraud operations - would provide significant benefits in reducing the fraud losses incurred by banks, while at the same time enhancing compliance.
External utilities are used by many financial services firms, like say custodians and securities processing firms who have a platform + services outsourcing model. While this model has been prevalent in Human Resource Outsourcing (HRO), we also see its adoption in areas like Sourcing & Procurement and it would be interesting to see a discussion on this Community which is focused on the challenges and opportunities in implementing external utilities.
After reading a recent Colloquium Point of View on Delivering Transformation by Creating the Right Internal Utilities, I got really curious about which business processes are most likely to move to a process utilities model. There are a lot of potential candidates -- Deposit Processing, Fraud, Account Opening, Clearing, Payments, Credit, Loan Processing, Collections, Research, Reporting, Billing, Risk, Reconciliation, Sourcing & Procurement, Compliance. Which of these, or any other, makes sense to you as a utility and why? I look forward to your views.