Nine Practices for Best-in-Class BPO Performance

1 Based on the results of a survey of 263 BPO clients and on 57 interviews with executives leading 28 BPO relationships, we identified nine practices that contribute to best-in-class business process outsourcing (BPO) performance. The nine practices span a three-stage journey to best-in-class performance, which we call " Launch the Mission, " " Stay on Target " and " Explore New Frontiers. " The power of these nine practices is illustrated in the full article through the experiences of three BPO relationships, two of which are financial and accounting outsourcing deals and one a customer care/call center deal. These are examples of the most frequently outsourced business processes and also represent the range of BPO services from supporting back office processes to customer-facing sales. Practice 1: Assign a Great Pair of Leaders. An effective leadership pair—one from the client organization and a counterpart from the provider organization—is crucial for achieving best-in-class BPO performance. These leaders work collaboratively to implement the practices associated with best-in-class performance. They focus on where the outsourcing relationship should go, not where the relationship was in the past or is in the present. Each leader is open and honest about all operational issues with his/her counterpart and each acts swiftly to remove or work around obstructions stemming from people, processes or contracts. Each leader has high levels of credibility, clout and power within his/her own organization. Practice 2: Focus on Business and Strategic Benefits Beyond Cost Efficiencies. We found that best-in-class BPO relationships consider cost benefits to be table-stakes and the leaders focus the relationships on achieving more strategic benefits like getting products on store shelves faster, speeding product testing, increasing customer satisfaction or resolving customer issues better and faster. Clients include these business and strategic benefits in the business case for BPO, setting the tone for attracting the right provider. Practice 3: Acquire Strong Transition and Change Management Capabilities. Many BPO clients fail to invest in enough resources during the transition because they do not want to erode the financial business case. Yet, service excellence cannot happen without investing both in resources like onsite managers and in knowledge transfer (e.g., shadowing, mentoring and training). Strong transition and change management capabilities are needed to stabilize the relationship and set it on a path to best-in-class performance. Practice 4: Adopt a Partnering Approach to Governance. In best-in-class BPO relationships, a partnering approach to governance is much …