State Of The BPO Industry: An Interview With DATAMARK President Bill Randag

Outsourcing Insights recently sat down with DATAMARK President Bill Randag to get his thoughts on the state of the BPO industry and his recommendations for selecting an outsourcing provider in 2011.

A Look Back at 2010

Randag: Contrary to the predictions that 2010 would be the strongest year ever for business process outsourcing (BPO) firms, we found the year continued to be “slow” following the trend started with the 2008 recession. Many companies continued to operate under a “watch and wait” mentality and postponed outsourcing initiatives. However, things have started to turn around. During the 4^th quarter of 2010, we saw a sudden surge of interest. This surge was much larger than what we have seen in the last few years.

The BPO Market in 2011

Randag: While several areas of BPO work are decreasing due to automation, I expect the overall market to grow in three ways:

1. New BPO deals will increase as the economy returns to its pre-recessionary state and business activity starts to grow. Outsourcing becomes an attractive business model during sporadically growing business conditions because it allows organizations to flexibly operate under a variable cost structure.
2. While BPO providers will continue to produce value through labor arbitrage (using lower cost labor), smart outsourcers will be looking for more consultative engagements. Though BPO firms have traditionally been sought to reduce costs, their real value is in their ability to deliver overall process improvements.
3. As the BPO market matures and more companies become familiar with the outsourcing of back-office processes, we’ll start to see more complex functions being outsourced.

Bill’s Recommendations for Selecting an Outsourcing Provider in 2011

Randag: Companies considering outsourcing business processes should take the following recommendations into consideration.

1. Reevaluate internal business processes that you previously considered to be core competencies to determine if they still fit that description.
2. Determine whether you require an on-shore or off-shore solution, or a provider that offers both.
3. Determine whether your outsourcing engagement will be a long-term partnership or a short-term project, limited in scope.
4. Evaluate potential providers through a pilot program or trial engagement in which you transition a small portion of the work to determine if the provider can deliver as promised and to ensure that there is a cultural fit.
5. Do not underestimate the importance of a Cultural fit with your chosen partner. Everything is beautiful at the wedding, but when the honeymoon is over cultural compatibility becomes supremely important. Select a provider that not only meets your business requirements, but whose corporate culture fits with that of your company.