From Business Process Outsourcing to Business Transformation

Valuesnotes (www.valuenotes.biz) in their latest newsletter (Valuenotes Weekly, Jan19, 2007 - I would have included a link to their website where they place newsletters also - Not yet up there!) talks about BPO service providers transitioning from "BPO Services" to "Business Transformation Services" in 2007 as one of the major trends.

Makes a lot of sense. Valuenotes identifies that margins are being squeezed. This is because rates for BPO services are held steady at a low rate because of competition, and escalating salaries and costs for Personnel in India are pushing the costs up.

Many business processes that are transitioned do not have proper documentation or the processes have evolved so much over the years that the existing documentation may be outdated. BPO service providers will not touch a business process unless it is properly documented (both for legal purposes as well as training their employees to perform them).

So, as long as you are analyzing and documenting a business process, why transition the business process as it is? Why not think about improving a business process or devise a better way of performing them while transitioning it?

With large corporations in the U.S and U.K, many business processes have been performed for well over 20+ years with legacy systems, mainly Mainframe and Minicomputer systems that were state-of-the-art in the mid eighties. Fast forward 20 years, and you have a surfeit of new technology - faster distributed computing, huge capacity storage devices that are inexpensive, document management systems, workflow systems and the biggest innovation of them all, the Internet and the Browser. Not to talk about letting the customer do all the work 24/7/365 like the Insurance companies are letting their auto insurance customers do!

Both BPO service providers and buyers can benefit a lot from not just getting hung up on cost savings but focusing on process improvement while taking the big trouble of transitioning the process anyway.

Hope it catches on! It can be mutually beneficial for both buyers and sellers of BPO services. Inefficient ways of doing things eventually die, no matter how inexpensive they are. We have seen this with agriculture and then with the industrial age. Why should the Information Age be exempt? Cost savings only last as long as the next inexpensive country. With countries in Asia growing at 8% and 9%, we will run out of inexpensive countries soon enough. It may be worthwhile for all to think about the best way of doing something, not the most inexpensive way. The inexpensive gets expensive very quickly as we have seen with Manufacturing - Taiwan, Singapore, Malaysia all became too expensive quickly. The other ones will also become so once their living standards and incomes rise.

The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew.

-- Abraham Lincoln