Outsourcing is Back in Fashion

Jeremy Payne looks at how the cloud and other enabling technologies have helped to bring outsourcing back from the brink.

The outsourcing market has undergone a revolution over recent years. At the start of the millennium, cost reduction was the primary driver for organisations outsourcing their business processes, and nowhere was this better illustrated than in the contact centre.

In the UK, there was a drive towards offshoring services to countries with lower labour and overhead costs. There were issues, though, with quality of service and often there was a disconnect between the business processes of the outsourcer and those of the end customer. The banking sector was one of the first to realise cost isn’t the only factor in the customer experience equation.

Over time, there was a backlash against this approach, coupled with a growing realisation that existing outsourced approaches were making the customer work harder to get what they wanted and even creating disaffection amongst them. Outsourcing fell out of favour.

Business agility rather than cost savings is making it more popular

Today, that’s all changed. Outsourcing is back in fashion – and thanks largely to the cloud and other disruptive but enabling technologies. It’s the fact that it can drive business agility and enhanced efficiency that is making it more popular rather than the cost savings it supports.

To take a typical start-up as an example. Traditionally, if you wanted to set up a business, you would have had to make a significant investment upfront in an office, staff and in IT infrastructure at the outset.

If you are looking to do the same thing today, you either don’t need an office at all, or you only need a much smaller one because many of the functions can now be virtualised. You can outsource the infrastructure and the staff and you can pay for the resources and services that you are consuming on a per interaction basis.

That means you can get a much tighter alignment between the investment decisions that you make and the revenue coming in and shorten the cycle from making the investment to getting a return on it. Effectively, you are only paying for what you are making money from.

It’s an attractive model for a growing number of companies and that’s why we are seeing the global IT outsourcing market flourishing today.

Flexible technological infrastructure is needed to build customer loyalty

The fact that organisations are increasingly attracted to the enhanced business efficiency and agility that outsourcing delivers is, of course, great news for business process outsourcers (BPOs).

But if they want to build customer loyalty and sustained success they need to ensure that they are using the kind of flexible technological infrastructure that supports agile customer service provision.

The foundation layer of their customer service provision is typically provided by infrastructure as a service (IaaS). There are a whole host of companies operating in this space, delivering peace of mind to their customers by managing their servers, managing uptime and delivering five 9s availability, for example.

BPOs can then look to build on this platform by providing a software as a service (SaaS) model. End customers benefit by only paying for what they consume and from transferring the responsibility for maintaining the server to the BPO.

Outsourcing is becoming a more attractive option for all sizes

Today, outsourcing is becoming a more attractive option for all sizes and types of organisation. Business process outsourcers are increasingly well placed to take advantage of this, thanks largely to new technologies like cloud and unified communications that drive enhanced flexibility.

It is in the area of customer service and customer interaction that the benefits of these technologies are being most keenly felt, as BPOs can use them to deliver improved efficiency and agility to their customers and in this way ensure that the outsourcing revival is maintained.

With thanks to Jeremy Payne at Enghouse Interactive