Fourth Generation BPO Evolving

November 3, 2011: Business Process industry (BPO) since its acceptance among the various industries has undergone many changes. Innovations were brought into BPO as a part of process improvement.

Steve Rudderham from Capgemini has been in the BPO scene from its very start and is a witness to every change in the industry. Steve is the Vice President of Client Engagement at Capgemini and he says that the major driver behind companies going for outsourcing initially was to tap the talent across the globe.

Business process outsourcing later focused to tap the resource and sot saving potentials in Asia and South America. During the initial stages the growth was slow and the operations were just lift and shift operations.

  • First generation BPO was mainly offering data entry services
  • Second generation BPO concentrated on continuous improvement and included services in multiple languages.
  • Third generation BPO was focused on adding value to the outsourcing function, where more critical processes were outsourced, still mostly the non-core back end ones.
  • In the fourth generation BPO, focus is on making use of technology in transforming the services offered to the clients. It also concentrates on analytics.

Now with fourth generation BPO, the situations have changed. Clients are interested in outsourcing to industry specific outsourcing vendors or specialists. Earlier the BPO services were just transactional in nature, the services outsourced were mostly back end operations. But now companies have started to outsource essential functions which form the core of their business strategy.

According to Steve, the confidence in the industry has increased and large pool of talents from India has transformed the industry. While Steve was working with GE in India, his work force consisted of people with master’s degrees and was serving clients from US and Europe. He says that the talent pool in countries like India will be there and will continue to grow. But outsourcing vendors should concentrate on adding value to their processes. The service provides should make use of technology to add value to the service offered to the clients and should strike a balance between people, process and technology. 

In order to stay ahead of competition outsourcing service providers should develop their own global process models and exploit technology to add value to their services. This will help them to overcome issues such as rising labor cost. It is quite often easy to say that companies should make use of cutting edge technologies to add value to their services, but it is difficult to put to practice. So it will take time for the fourth generation BPO to mature and reach its full potential.

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