“My Biggest Client is Dumping Me!”: A BPO Nightmare

Mar 18, 2015

Customer Care outsourcers offer a multitude of benefits to their client base. This includes eliminating capital expenses, flexibility to address new markets, access to qualified call center agents, reduced costs, advanced management techniques and the opportunity to gain access to state of the art technology without massive financial outlays. Service provider solutions help clients acquire, retain and increase the lifetime value of their customer relationships.

Outsourcers provide their clients with customized, high quality customer care services and solutions to market leaders in the communications, retail, healthcare, consumer goods, government, travel & entertainment and financial services industries. Activities include customer service, sales, acquisitions, collections, technical support and help desk.

Rampant Vendor Consolidation

Frost & Sullivan has noted in our interviews with leading market participants so far this year, a trend toward reducing the number of provider partners. This movement has been particularly acute over the last 3 years. Companies no longer want to manage a large number of customer care outsourcing relationships as it becomes really difficult to do well with limited company resources. The interface between the vendor and the client organization is usually multi-faceted as it involves various departments: IT leaders, business leaders, Human Resources, Procurement, Accounts Payable, and perhaps a Vendor Management Office. Frost & Sullivan has identified a number of forces that are driving this type of vendor consolidation.

Operational Performance

Companies routinely review its relationship with outsourcing vendors, keeping vendor scorecards, and using contractual means to govern the relationship. Every time the contract expiration date nears, the vendor is subject to a renegotiation and re-bidding process. They must, if effect, 're-win' the business. The most obvious driver for consolidation is lackluster vendor performance over a wide variety of KPI's. Two to three year contract periods are very common.

This exercise can be especially problematic and complex if this type of examination involves multiple sites, multiple programs and industry segments- often spread over the entire globe.

Lack of Innovation

While operational excellence is critical, it is vitally important that outsourcing vendors be seen as a true partner; a business colleague that innovates and provides a significant value- add to the business and the brand. This involves a proactive approach with clients; finding new creative ways to leverage people, processes and technology to increase sales, conversion rates, and customer satisfaction. Those that fall short in this area do not make the new 'short list' of providers.

Cultural Misalignment

The nature of the relationship between customer and provider is vital to the long-term success of any outsourcing arrangement. It becomes even more important today because consumer expectations for excellent service delivery are extremely high, regardless of the vertical segment. Premium brands, in particular, want to be able to sculpt and shape the customer experience. This requires a shared vision and a good cultural fit between vendor and client. It engenders a high level of trust, a synergistic relationship and a great deal of transparency. Poorly defined requirements, scope creep and lack of understanding between business cultures can produce service delivery gaps that are irreparable.

The Bottom Line

The majority of outsourcers, large and small derive a significant portion of their revenues from a few clients. Thus, the loss of a key client by way of vendor compression can have a huge impact on revenues, profits and business results. It can be a slippery slope since contracts often contain penalty provisions for failure to meet minimum service levels and can be cancelled by the client at any time or on short-term notice. It is therefore imperative that outsourcing providers offer clients demonstrable added-value in the form of relevant and innovative services.

Our research shows that clients are, more than any other time perhaps, looking for true partnerships with their outsourcing providers. They want to build a relationship with a provider that accelerates the growth of their companies and the strength of their brand. However many companies have pursued multi-sourcing without the requisite investment in their in-house vendor management capabilities. As part of any project execution methodology, there is a need to continually govern, re-assess and reconfirm priorities periodically.

The 'win-win' is the ability to deepen and expand existing relationships so that clients end up purchasing multiple services from outsourcing partners. They will only do so when they see improvements in productivity, reduced costs, improved customer relationships and enhanced revenue opportunities. Be on the watch for reevaluation and restructuring of many of these relationships next year.


Michael DeSalles

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DeSalles has 25 years of contact center operational experience. He combines this with 10 years of research and analytical expertise in: Emerging trends, convergence, collapse and disruptive technologies in the contact center industry; Insight into site management, supervision and agent development; Customer care outsourcing; Skills based routing; BPO Near shore deployment; Home based agents


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