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Abstract
Experts Point Out That Continued High
Growth In An Industry Can Be An Issue
Because It Strains Systems And
Governance Processes That Need Time To
Mature And To Be Institutionalized. Indian
BPO Industry Is Currently Facing The
Challenges Arising Out Of Its Stupendous
Growth. Can It Successfully Tackle These
Problems And Emerge A Winner?
The IT Enabled Services (ITES)[1] And
Business Process Outsourcing (BPO)[2]
Constitute The Fastest Growing Industry In
India. BPO Industry Is Considered To Be A
Part Of The ITES Industry. The Indian ITES
Sector Is Expected To Generate Nearly 2 Mn
Jobs In The Country In The Next Few Years.
The Revenues From This Industry, Which
Stood At $1.4 Bn In 2002 Are Expected To
Rise Sharply To $24 Bn By 2008 According
To A Nasscom-McKinsey Report.

It's Hot .....

Today, India Is The Hottest Destination For
Any Company Which Wants To Outsource
Its Business Processes. But What Can Be
The Reason For India Being So Popular With
The Companies Worldwide? The
Attractiveness Of India Can Be Contributed
To Three Basic Factors - Cost, People And
Environment. India Ranks First Among A
Host Of Desirable Nations In Terms Of Cost
(Which Includes Employee Cost,
Infrastructure Cost, Management Cost And
The Tax Structure). It Beats All Its
Competitors On The People Front As Well.
The People Factor Is Evaluated On The
Lines Of Size Of The Job Market, Workforce
Education Level, Language Barriers, Past
Outsourcing Experience And Employee
Retention. When It Comes To Environment
(Which Includes Country Risk,
Infrastructure, Cultural Compatibility,
Proximity Etc.) However, India Lags Behind
Countries Like Canada, Australia And

Ireland.
This Is Also Being Taken Care Of By
Government Initiatives Like The Corporate
Tax Exemption To All ITES Companies Till
2010. Apart From These, The Fact That India
Has 53 Of The 83 SEI CMM Level 5
Companies[3] And That Companies
Outsourcing To India Have Experienced
Cost Savings In The Range Of 30% In The
First Year Itself, Have Added To The
Attractiveness Of India As 'The' Destination
For Outsourcing. Given The Strengths Of
India, It Is No Wonder That It Is The First
Choice Of Nearly 82 % Companies In The US
For Outsourcing.
The Scenario However, Is Not As Rosy As It
Looks, For This Sector With Enormous
Potential. Like Any Other Industry During Its
Growth Phase, This Industry Is Also Going
Through Its Share Of Turbulence. The Fact
That The Growth Has Been Very Sharp Has
Added To Its Problems. However, All These

Ups And Downs Would Help The Industry In

Stabilizing And Maturing. At Least That's
What Experts And Past Experiences Say.
The Challenges Of Growth....
The Major Challenges Being Faced By The
ITES Or BPO Industry In India Can Be
Classified Into Internal And External
Challenges. The Internal Challenges Include
Shortage Of Competent Managers For The
Middle And Senior Management And The
High Attrition Rates. The External Challenge
Is In The Form Of Opposition From The US
Politicians And The UK Labor Unions
Against Shifting Of The BPO Operations By
Local Companies To India. The Threat Of
Real Competition From Other Players Like
Philippines Also Exists, But Doesn't Seem
To Need Our Immediate Attention. Let Us
Look At Some Of These Issues.
A Speaker At The ITES-BPO Track At
Nasscom 2003 Commented That It Is Not
ITES, But HRES. That Succinctly Explains

The Importance And Value Attached To The

'People' Aspect In This Service Industry. The
Fact That This Industry Is Still In Its Nascent
Stage In India Has Led To The Dearth Of
Experienced Middle Management Level
Team Leaders And Senior Managers.
Nasscom President Kiran Karnik Agrees
That Shortage Of Middle And Senior Level
Managers Is In Fact A Critical Issue. EntryLevel Recruitment And Employment Has Not
Been A Problem With So Many Fresh
Graduates With Good Language Skills,
Available Readily In The Job Market.
The Problem Is More Intense For The ThirdParty Outsourcing Companies Which Have
Just Ventured Into This Business. They
Cannot Even Invest In Training, Given Their
Financial And Other Constraints. Captive
BPOs Like GE And American Express,
Which Are Established Players In The
Business, Have No Such Problems. They In
Fact Invest Substantially In Training Their
Managers. However, They Have Been Facing
A Problem Of A Different Kind. Their Middle

And Senior Level Managers Are Being

Poached By The New Entrants To The
Industry. Reports Say That Large And
Established Players Face An Attrition Rate
Of 45% Against The Industry Average Of
35%. Everyone Agrees That Hiring From
Competition Is A Cyclical Process And Will
Not Help The Industry Grow, But With Very
Few Options Available, They Resort To The
Easiest Solution - Poaching.
That Brings Us To The Next Issue - High
Attrition Rates. Attrition Means Not Only
Loss Of Talent, But Also Includes The Cost
Of Training The New Recruits. The Attrition
Rate In The Industry Has Been Hovering
Around 35%, Which Is Quite High For Any
Industry. An Average Indian Call Center
Employee Works With A Company For 11
Months, Where As An Average UK Call
Center Employee Stays In A Company For 3
Years. It Is Expected That The Attrition Rates
Would Come Down Once The Growth
Stabilizes. Steep Growth Is One Of The
Reasons For The High Attrition Rates,

According To Many In The Industry.

According To A Survey By People-One
Consulting, An Employee's Leaving The
Organization Happens Typically In The First
Couple Of Weeks Of Joining. The Reasons
Are Many -- High Stress Levels, Monotonous
Nature Of The Job, Demand-Supply
Disparity And Lack Of Career Growth
Potential On The Professional Front; Loss
Of Identity, Mismatch With Normal Cycle,
Complete Change Of Life Style And Lack Of
Comfort On The Personal Front. Add To
This, The 'Poaching' Strategy Being
Adopted By The Players In The Industry.
What Else Can We Expect, But An Attrition
Rate Of 35%?
ANONYMOUS Tackling the attrition problem...
The industry players are trying out all the tricks
in the book to tie down their employees and
keep them locked in a safe.

They have been offering excellent infrastructure

facilities in the form of ergonomically designed
work stations and spacious, air-conditioned
offices. They have been offering industry
specific benefits like 24/7 cafeterias and home
pick-up and drop facilities apart from regular
benefits like retirals and loans at low interest
rates. They have been arranging special
weekend parties and offering incentives like
tickets to exclusive music shows and dance
parties. Some players are also sponsoring the
higher education of their employees. This is one
of the best ways of retaining a skilled employee
for 2-3 years with a company. All this really
goes well with a typical employee, who is in his
early twenties, fresh out of college and
unmarried.The industry has been quite
benevolent on the compensation front as well.
According to a Hewitt Associates survey
conducted last year, the highest salary increase
in the Asia Pacific region was in India.
Within the country, it was the ITES industry

which recorded the highest growth of 14%. The

variable pay component varied in the range of
15-70%, which is exhorbitant, to say the least.
All these measures are at the organizational
level. At the industry level, companies have
tried to get into informal agreements with
competitors to avoid poaching. Though these
agreements have no legal sanctity, they are
based on mutual faith of the companies. For
example, GE, HSBC, Nipuna, Microsoft, etc.
informally agreed that they would not recruit
someone who has worked for less than a year
with his employer or someone who has
switched 3 jobs in 2 years. Similarly, Tracmail,
Infowavz, Transworks, Epicenter and Global
Telesystems have all entered into an informal
understanding to arrest poaching.
In spite of all these measures, the attrition rates
have remained high. All these attempts by the
employers have resulted in only partial success.
What should companies do to curb this
unhealthy trend? Experts feel that appropriate
staffing strategies and managing employee

morale are the key areas. Recruiting the right

kind of people not only at the entry level but
also for the middle management level can be a
big contributing factor. Any fresh graduate in
need of a job would say that working during odd
hours and adapting to a new life style is not a
problem, but when it actually comes to adapting
to a completely different way of life, they find it
difficult to reorient themselves. Adequate care
should be taken in choosing and employing
candidates in the entry level positions.
Companies should also be willing to invest in
training employees to take up higher
responsibilities as team leads and managers. A
strong middle and senior management helps in
arresting attrition at the lower levels and
consolidates the organizational culture and
character.
Another important area of concern is the limited
growth potential for an employee in this
industry. Organizations should concentrate on
individual career growth of employees and
succession planning in the organization.
Planning for growth both vertically and

horizontally can bring a little reprieve to the

employees. Horizontal growth can be in the
form of promoting the employee from simple to
more complex processes within the
organization. This will enhance the learning of
the employee and make him "feel-good".
The 'International' issue
The latest addition to the basket of woes of the
BPO players is the hue & cry on outsourcing to
India by the labor unions in the UK and the
politicians in the USA. In the UK, the call center
industry employs nearly 800,000 British workers
and is a vital part of their economy. Labor
unions are playing the card of 'patriotism' to
stop UK based companies from outsourcing
their back-office operations to India. The fact
that it is election time in the USA and perhaps in
the UK too, has added fuel to the fire. The
media, the unions and the politicians in these
countries have jumped on the 'backlash'
bandwagon and have been making strong
statements on outsourcing to India. However,
there have been some rational-thinking bigwigs

who have been opposing this backlash. The

issue is expected to cool down slowly, with the
elections getting over and better business
sense prevailing over the outsourcing
companies. The Indian BPO industry can also
launch a friendly and soft campaign against the
backlash, explaining the advantages of
outsourcing, especially to India.
The threat of competition
Many competitors like Philippines, Ireland and
even China are expected to catch up with India
in the future, but they have their own
constraints. China, which is being forecasted by
some as the biggest threat to the Indian BPO
industry, for example does not have Englishspeaking populace who can meet the
requirements of a primarily English clientele.
India outruns all its competitors when it comes
to availability of quality services at the lowest
possible rates. However, this does not mean
that the Indian BPO industry can sit back and
relax. It needs to gear up and prepare itself to
face the competition. The strategy of the Indian

industry should be to go up the value chain and

offer more specialized services that can create
a special position for it in the global outsourcing
industry. It should not completely bank on the
low-end services as they are cost-based and
can be transferred to any country that offers the
same services at a cheaper rate.
To conclude...
The Indian ITES industry should consolidate its
position in the business of outsourcing by
strengthening its domain knowledge and
becoming more specialized in terms of the
services offered. It should aim to go up the
value chain without restricting itself to lowskilled jobs. It has to continuously strive to
maintain its position of competitive advantage
over other countries in the fray, in terms of low
costs, quality people and conducive
environment. It should also realize that
unhealthy practices within the Indian industry
can affect its competitiveness in the global BPO
arena and therefore curb such practices. With
the international business world eyeing India as

a hot ITES destination and the Indian industry

gearing up to bring in a new revolution, India is
bound to become the BPO and ITES hub of the
world.
ANONYMOUS Amidst Other Challenges, Hewitt's HR BPO
Head Resigns
Hewitt announced it will "review" its thirdquarter guidance as it struggles for profits -- a
common problem in the emerging industry.
Pioneering in an emerging industry requires
"some pain," says one expert.
By Andrew R. McIlvaine
Hewitt Associates is the 800-pound gorilla of
the HR business-process outsourcing market.
The firm holds more than 37 percent of the HR
BPO market and has more big-name clients (30
or so large companies, including Sun
Microsystems and PepsiCo) than any other
vendor in the industry.

However, the recent resignation of Bryan J.

Doyle, president of Hewitt's HR outsourcing
business -- along with the simultaneous
retirement announcement of chairman and
CEO Dale L. Gifford and Hewitt's statement that
it plans to "review" its third quarter profit
guidance -- has brought new attention to the
company's operations.
It also has underlined the difficulties Hewitt is
having as it struggles to earn a profit in what is
still a controversial new industry, one in which
most of the major vendors have yet to turn a
profit.
"Their earnings calls have been dominated by
their HR BPO business, which has been
bleeding money," says Yankee Group analyst
Jason Corsello.
"Hewitt has continued to win new business
since it acquired [HR BPO vendor] Exult in
2004; it doesn't have a sales problem," Corsello
says. "However, implementing and managing a

BPO contract is very complex and Hewitt has

really struggled with it. Many of the HR BPO
contracts it inherited [from its 2004 acquisition
of Exult] have not borne fruit in terms of
scalability or operating efficiencies."
Though it's possible Gifford's retirement could
be linked to problems with Hewitt's HR BPO
unit, says Corsello, he says he's "not reading
too much into it."
However, consultant Naomi Bloom, of Bloom &
Wallace in Fort Myers, Fla., says she believes
Gifford was "forced out" because of problems
with Hewitt's BPO business. "He wasn't
delivering," she says. "HR BPO is a business
that could be successful, but Hewitt hasn't had
the right leadership in place. They inherited an
outstanding sales team when they acquired
Exult, but those people have all left."
Hewitt expects its HR BPO business to lose
$128 million this year, says Hewitt investorrelations spokeswoman Genny Pennise. The
Lincolnshire, Ill.-based company, which also

provides benefits consulting and administration

services to clients, had total revenues of $2.8
billion for fiscal 2005 and net income of $135
million.
Phil Fersht of Everest Group says Hewitt's
problems are the result of "trying to solve too
many operational difficulties at the same time"
and the outcome is that "many HR BPO
vendors are shifting more of their resources
from marketing to operations."
Julie Gordon, Hewitt's chief business
excellence officer, will serve as temporary head
of the company's HR BPO business while it
searches for a permanent replacement. The
company denies Gifford's retirement is linked in
any way to the HR BPO unit's performance.
"Dale Gifford has been thinking about
retirement for some time and he recently told
the board of directors that now would be a good
time to retire," says Hewitt spokeswoman Kelly
Zitlow. "As for Bryan, he's resigned to pursue
other opportunities, and I'm not going to

speculate beyond that."

Hewitt is not alone in finding the road to
profitability difficult.
Few if any HR BPO vendors are making money
at this point, says Corsello, adding that
Cincinnati-based Convergys is also losing
money, while IBM, Accenture, EDS and other
companies that provide HR BPO services have
not released numbers around their services.
Hewitt's difficulties are compounded by the fact
that the HR BPO industry (in which companies
outsource four or more of their HR functions to
a single vendor) is still relatively new and most
of the large contracts have yet to mature, he
says.
"I'd say profitability is pretty uncommon among
the firms providing HR BPO services today,"
says Stan Lepeak, managing director of
EquaTerra, an outsourcing advisory firm in New
York. "There's a camp of equity analysts who
wonder if HR BPO can ever be profitable. If

Hewitt -- one of the most respected companies

in the HR business -- can't make money at this,
the thinking goes, then who can?"
Bloom says the answer to the question of
whether HR BPO can ever be profitable is a
"resounding yes," adding that she believes
several vendors have (or soon will) achieved
"fragile profitability."
"It's hard work, not to mention expensive, to be
a pioneer in an emerging industry, and that's
what HR BPO is," she says. "There've been a
whole host of issues the industry has had to
address, ranging from massive investments that
had to be made to services that weren't priced
correctly, software that had to be created and
the question of what role customers should
play. Look at Amazon.com -- it's an established
player now but they had to suffer through years
and years of losses. You don't get to an upside
without some pain."
Lepeak says he anticipates Hewitt will most
likely restate the number of HR BPO clients it

expects to sign this year, adding that the

company had initially predicted it would sign
eight to 10 new clients in 2006. Hewitt has not
publicly announced any new HR BPO clients so
far this year.
Hewitt's challenges include the fact that it
aggressively courts large clients, which, in turn,
necessitates long and complex transitions from
the clients' systems and processes to Hewitt's,
says Lepeak.
"It's usually a couple of years into such a
contract before the client and the vendor finally
start to achieve the results they'd anticipated,"
he says. "This is complicated by the fact that
customers tend to have higher expectations of
Hewitt in terms of service delivery, which tends
to lead to higher costs."
Hewitt still has plenty of opportunities to make
its HR BPO business profitable, he says.
"Hewitt is putting processes into place to make
sure new HR BPO deals are economically

sound, although the results won't be obvious

until two or three years down the line," says
Lepeak. "Deals are being more carefully vetted
by top managers, whereas before, like many
other vendors, they had their field teams
structuring deals, which was good for the clients
but not so good for the providers."
Bloom is skeptical about Hewitt's prospects,
however.
"One hopes that their board either has a big
plan for either creating an A-plus leadership
team or else selling off the BPO business
before it loses even more value."
ANONYMOUS What afflicts BPOs in India ?
Top 6 things which are greater challenges for
the ITeS segment are :
1. US economy slowing down - particularly the
Banking and Insurance segments

2. Lack of Incentives from the Government sunset cluase for STPI units
3. Failure to attract and retain top talent at all
levels - Executive, Middle and Senior
Management
4. Bad media publicity - always showing the ill
affects of working
5. Failure by the Companies to project 'careers'
instead of 'jobs'
6. Poor perception by the job seekers.
With so many adverse conditions will the BPO
industry in India can survive ? Only time will tell
what the future holds for this segment.
Here is a good write up on the challenges that
are affecting the Indian BPOs and what the
Government must be doing to shore up the
environment for doing business in ITeS. Share
your valuable thoughts on this subject.
Happy Weekend
Raghav
Founder HRinIndia

ANONYMOUS BPO industry in India new challenges

A+ AThe fact that the Business Process Outsourcing
industry in India is growing faster than ever was
demonstrated by the standing room only sell
out response to NASSCOMs annual BPO
summit in Bangalore in August. An industry
which was created to a large extent by the early
moves of GE under the leadership of Jack
Welch now sees globally listed firms like
GENPACT, WNS and EXL clocking a few billion
dollars in value and leading a pack of small
medium and large firms whose employment
may well overtake that of the much older IT
services industry in the not so distant future.
The views of the research industry leader,
Gartner at the conference point the way to the
future of this dynamic segment of the Indian
knowledge industry. Single process outsourcing
successes have morphed into for

comprehensive end to end services with more

and more process optimization resulting in
higher value addition. Platform BPO solutions
have also begun to substantially improve the
quality and speed of new process migration
offshore and multi-function BPO as well as
comprehensive Human Resource Outsourcing
have moved to the very apex of the hype
cycle
There are quite a few challenges emerging as
well. The abrupt rise of the rupee against the
dollar and pound have left many young BPO
firms gasping for breath and the inherently
lower profitability of this segment compared to
the industry majors in IT services puts most
players at risk with the dollar likely to seek
lower and lower levels against the rupee in the
next eighteen months or so. Business
transformation consulting which seemed to be
the logical next wave as more and more KPO
(Knowledge Process Outsourcing) wannabe
firms emerged has dipped into the trough of
disillusionment that follows the peak of inflated
expectations in the Gartner hype cycle and if

the industry has to continue to maintain a

profitability level north of twenty percent, a
study by Mckinsey suggests that many critical
parameters of operational excellence shift
utilization, productivity, support costs , span of
control and the ever present Damocles sword of
attrition have to be put under the microscope.
Another interesting nugget from Mckinsey was
that industry leaders who are setting best
practices in human resource management and
retention actually pay less than the laggards
and are leveraging effective people
management practices rather than higher
compensation to keep their teams intact. And
finally, a reaffirmation of a feeling that most
industry watchers have had captive BPO units
average a cost level which is thirty seven
percent more than third party processors even
though the best in class turn in cost data which
is less than the figures of the best third parties.
There is an old Chinese curse May you live in
interesting times and these are definitely that.
The paradox is that a segment of the industry

which benefited in its initial days through its

umbilical cord connection with the IT sector is
now concerned that the withdrawal of tax
benefits may result in making the Indian BPO
sector less competitive than competitors like
China and Eastern Europe which are nipping at
our heels. Maybe better sense will prevail and
the sunrise industries will get continued support
from the powers that be lets wait and see!
Dr. Ganesh Natarajan is Vice Chairman of
NASSCOM and Deputy Chairman and MD of
Zensar Technologies Ltd.
ANONYMOUS Source: DQ-IDC BPO E-Sat Survey 2007
Busting the common myth that BPO employees
join/change jobs based primarily on salary
hikes, the survey finds that a good work
environment and high growth opportunity are
better attractions. This is in contrast to salary
and compensation for IT employees
Individually, within the parameters of employee
satisfaction, large firms do comparatively better

in work culture and image; expectedly, niche

companies do better in salary and job content,
and there is a mix when it comes to appraisal.
When you go to the sub parameters, the large
firms do better on corporate governance, and
honesty and integrity, while small companies do
better in the day-to-day working culture related
parameters.
The Industry Fares Better
Rankings apart, what comes as good news for
the entire industry, is that at the industry level,
the overall employee satisfaction score has
gone up to 8.0 (on a scale of ten) from last
years 7.8. This is in contrast to 2006, when the
score had actually gone down.
This is heartening, in the midst of controversies
and criticism. In fact, the satisfaction levels
have gone up in five broad parametersjob
content (8.1 versus 7.8 in last year), work
culture (8.4 versus 8.1 last year), training (8.4
versus 8.1 last year), appraisal (7.2 versus 6.9),
and people (8.4 versus 8.2). It has gone down
in twocompany image (7.7 versus 8.2) and

salary (6.7 as compared to 6.8). Salary also

happens to be the factor about which
employees are least satisfied.
Attrition Blues
Ask any BPO companys CEO or HR manager
about his or her biggest challenge, and attrition
is what theyll say. The industrys biggest demon
is rampant attrition, with scores of BPO
companies looking for talent, BPO
professionals are in hot demand; and often
these fresh out of college graduates hop from
one job to another, till they can hop no more.
With each jump, the package goes up by as
much as 20%.
ANONYMOUS Choosing the Right BPO Partner
In the age of outsourcing, it is critical to engage
in business relationships that assure successful
partnerships. The practice of outsourcing
business processes is maturing and we are
now able to better assess those factors that

have led to successful or failed outsource

relationships. High on the list of factors that
result in successful BPO relationships is
choosing the right partner to support an
organizations business needs.
Generally speaking, companies know their
business needs and challenges. However,
successful BPO relationships defined by the
vendors positive impact on their customers
ability to meet their goals, is somewhat allusive
in todays evolving BPO service industry. Given
that a failed relationship can result in millions of
lost revenue, market share, and eroded
customer base, it is critical to have clear criteria
on which to base the decisions.
In terms of meeting clients needs in such an
arranged relationship, it is incumbent on
vendors to understand those core corporate
characteristics that businesses must consider
when selecting a BPO partner, as well.
Towards this end, a BPO relationship should be
viewed as a highly strategic business

partnership requiring a deep union between

businesses. As such, in deciding upon the
appropriate partner, the corporate personality
becomes a very real and tangible aspect of the
relationship to consider. In essence, the right
match is likely to result in a long term
relationship characterized by contract renewals,
increased revenue for all and positive corporate
images within their respective industries. A poor
match will likely end up with large sums of lost
revenue, damaged corporate images and
possibly litigation.
The purpose of this article is to describe those
corporate personality traits that characterize the
Right Partner for corporate clients. Again,
these traits may sound like the list a marriage
counselor would provide a newly wed couple,
but, the fact is that corporations are
organizations of people who need to be able to
maintain a high-level of communication,
teamwork and, be capable and willing to
negotiated differences.
Lets take a look at the list.

Integrity
A company should espouse Integrity as one of
their core values. This is an indication to
prospective clients that this vendor will do what
they can to meet a companys business needs
in the most ethical and legal manner. When our
times are characterized by corporate
accounting and management scandals, vendor
companies must set themselves above the
others by clearly defining how they will maintain
their integrity in providing services to clients.
Mission statements are a nice place to start,
but, the crux of corporate relationships must be
established between key corporate leaders. In
establishing a partnership of trust, commitments
must be made by those executives who can
assure the delivery on promises. Having face to
face communication and regular executive
involvement helps to establish the tone of the
relationship that is to be formed.
Open discussion of the issues and challenges

on both sides of the relationship is required.

Clients dont want to be sold to, they want
somebody who understands their situation and
has a solution. Honest assessments of what is
required to meet a clients needs will drive
customer confidence and establish a vendor as
having integrity.
Commitment
The best vendors offering BPO service
understand that outsourcing is not a market that
can be entered into without full commitment to
the BPO relationship. In cases where solution
providers are uncommitted, performance
slumps, revenue drops, frustration develops
and the relationship suffers.
The vendors who are able to exemplify the core
values of the company they support and deliver
the services for which they have committed are
able to generate customer satisfaction,
increased productivity and revenue.
Furthermore, this level of commitment enables
BPO partners to build a degree of trust that

serves as support when times are rough.

Willingness to Listen
When engaging clients in BPO activity, it is
critical t to understand the business
circumstances and drivers that has them
seeking this relationship. To do this, vendors
must allow clients to describe their perception
of their issues and challenges in detail. It is
tempting to jump in early with solutions that
may meet a clients needs. However, often,
requirements change with the introduction of
additional stakeholders input, changes in
budgets, market fluctuations, organizational
restructures, IT architecture redesigns, etc.
A good vendor partner will take the time to
gather the inclusive data that will accurately
represent the corporations business needs and
requirements. Furthermore, much consideration
should be given to issues not raised. The best
of breed vendors use their industry experience
to bring forward additional considerations that
should be made by their customers. Successful

BPO vendors provide reliable services by

designing their solutions around client
requirements and industry best practices while
setting clear expectations.
Responsiveness
Corporations need vendor companies to be
agile. The ability to respond to client requests
and needs in expeditiously. Additionally, Vendor
companies must demonstrate the ability to
predict potential issues will prevent a lot of
relationship conflicts, however, when issues do
arise, good BPO vendors know the importance
understanding the impact of an issue for their
client and taking swift action by communicating
this fact to their client. Again, having processes
and contingency plans in place to resolve
issues demonstrates a vendors ability to react
to unforeseen problems in a controlled manner.
This provides customers confidence in a
vendors ability to maintain a reliable service.
A big differentiator between BPO vendors is
those who identify potential opportunities and

risks for client companies. As the business

environment changes, so must rules, processes
and models. Vendor companies must
proactively help clients take advantage of
changes in the business environment with an
eye on long-term gains. Vendors who respond
to contractual relationships by simply reacting
to client needs, do to their clients a large
disservice. Vendors who provide clients with
regular industry insights, updates on changing
technology, market insight, and business
strategy drive client BPO relationships to more
successful positions.
Innovation
Once of the main reasons that companies join
into BPO relationships is that they understand
the business function they are relinquishing is
not a core competency for their organization. As
such, it should be the vendors core
competency and as a result should be able to
produce increased efficiency through increased
innovation and process improvement. Vendors
who simply replace resources and maintain

existing processes are not adding enough value

to the customers organization to justify the
increased complexity of BPO.
Innovative vendors must evaluate and
challenge existing modes of work to establish
the best possible work processes for the
organization they service. Given the protective
nature clients may have of these processes, it
is important to clearly understand these
processes and present service improvement
recommendation in a manner sensitive to the
corporate culture in which the vendor finds
themselves.
Corporations expect and desire technology
innovations from BPO vendors however; these
innovations should be approached in a
responsible manner. Vendors who recommend
unproven technical solutions must recognize
the risks that they bring to their clients
business. Therefore, it is absolutely critical that
vendors invite clients to open evaluation when
recommend technology solutions that address
business needs, are financially responsible and

have a well established performance/support

records. It is not uncommon for clients to
request solutions that do not meet a vendors
standards, and in these cases, the best vendors
will communicate this to their clients to help
them understand the issues involved and
appropriately set expectations for the solution
implementation. In this way, good vendors
illustrate their willingness to innovate in a
manner that best supports their clients
business goals.
Financial Responsibility
Good vendor partners are able to establish that
they will be able to maintain the relationship
being entered. Most long term BPO
relationships are assumed to be maintained
with the same vendor. Vendor facing financial
instability bring an increase risk to the client in
the case of being acquired, business
downsizing, or worst case, going out of
business. Vendors who are financially unstable
are less likely to invest in innovation, resource
training and client relationship building

activities.
Financial responsibility also extends to
business activities that vendors take on their
clients behalf. Good vendor partners strive to
keep costs of business low and demonstrate
appropriate accounting procedures for the
business they support. Financial responsibility
shows respect for the client company and
further illustrates the vendors desire to support
clients business goals.
Proficiency
World class BPO vendors maintain resource
pools who can address their customer business
requirements on a daily basis. This requires
vendors to continually acquire talent and train
staff to meet the challenges of their clients
businesses. Having workers who are certified or
degreed in specific areas of expertise will
provide a standard of knowledge that will
benefit the client.

Good vendor partners will work with their clients

to identify and train those skills that make
workers competent for the roles they are to
perform. Demonstrating interest in the clients
business further strengthens the client-vendor
relationship.
As corporate organizations become more
complex, providing more products and services,
in diverse vertical markets, vendors are forced
to provide resources in many areas of
expertise. Good vendor partners may establish
relationships with other quality BPO
organizations to enable them to provide the
services their clients require. In so doing, good
vendor partners establish and maintain
relationships that assure the highest level of
quality for their customers. The same principles
of integrity, commitment, responsiveness, good
listening, innovation and financially
responsibility discussed above apply and may
be contractually agreed.
Proficiency drives performance and
competitiveness in the marketplace. The result

of proficiency is that corporations are more

successful in their marketplace and more
profitable. Typical among the highest
performing companies is that they have
enterprise learning strategies designed to
support their corporate goals. Similarly, the best
of breed vendors recognize this and have
proven strategies for helping clients build
alignment and measure the impact on clients
goals.
In Summary, vendors need to be able to
demonstrate that they are the Right Partner by
demonstrating certain corporate traits
consistent with your own. BPO relationships are
strategic partnerships, it is critical to understand
corporate cultures and establish relationships
that are founded on principles that support
business goals. With a foundation built on these
traits, BPO relationships have a greater chance
in establishing long term business relationships
provide measurable value in terms of increase
competitiveness, efficiency, and profit, in
todays challenging and diverse marketplace