Keshav R Murugesh, Group CEO of global outsourcing provider WNS Global Services and chairman of NASSCOM’s BPM council looks at how the Business Process Outsourcing industry is reinventing itself as the Business Process Management industry

In the early part of this millennium, organisations around the world started looking at outsourcing their business processes to cut costs and become more competitive. This is how the Business Process Outsourcing (BPO) industry was founded, primarily to provide low-cost options for business process delivery.

Over the years, BPO service providers have developed a strong understanding of their clients’ businesses and have steadily moved up the value chain in terms of the services offered. Far from just being providers of low-cost back-end services, these companies have now become strategic partners for their clients and directly impact client profitability on a global level. Offerings such as end-to-end actuarial services support for the insurance industry; predictive analytics models for managing demands and forecasts in the retail / CPG industry; or managing multi-channel customer interactions as well as revenue generation at the contact center for the travel industry, are examples of the transformation shift from BPO to Business Process Management (BPM).

This shift signifies increased maturity of an industry that manages complex processes and truly understands the client’s industry, client needs for regulatory compliance, risk mitigation and the impact and demands of globalisation.
BPM also reflects the move from a business model focused on being input-based to outcome-driven, where the BPM provider takes responsibility for the client’s business results. In a sense, the transformation from BPO to BPM reflects the journey of the industry from the back-office to the client’s boardroom.

Taking a vertical approach

This new era of BPM brings a combination of deep domain expertise and commitment to business excellence. Vertical approach means the ability to provide solutions that are industry-specific. For instance, two regulation and financial reporting directives that will soon change the face of the insurance industry in the EU is Solvency II and IFRS 4 Phase II. BPM partners can play a crucial role to support insurers in this compliance challenge by providing actuarial systems and Solvency II support, plus financial reporting and measurement.

Domain expertise can be sharpened through experience or through knowledge of a particular industry. At WNS, it is the interplay of both experience and knowledge that enables us to understand client requirements and present customised solutions that help clients ‘outperform’ in their respective businesses. In insurance, our long-standing partnership with some of the world’s leading insurers has made us leaders. For most other industries such as BFS, retail, CPG, Shipping & Logistics, Utilities & Energy, our focus remains on building a pool of resources that can serve client needs and requirements.

From cost-saving to business transformation

For enterprises looking at outsourcing as a means of transforming their business processes, achieving cost efficiencies is of top-most priority. However, intelligent organisations are now focusing on going beyond cost-saving mechanisms and looking at achieving greater flexibility to scale and support their global operations.

Clients want business outcomes from their BPM providers and business models are adapting to that, offering outcome-based solutions rather than older full-time equivalent (FTE) or input-based solutions. For example, close to 40 per cent of WNS’s revenue now comes from non-FTE or outcome-based solutions; stemming from the confidence we have in our expertise in technology, analytics and process solutions. With a focus on outcomes, innovative pricing models can arise where expertise is offered as a part of the value proposition.

Is the future cloudy?

The BPM market offers an array of options to clients – whether platform based or non-platform where a ‘lift-and-shift’ model is used. More recently, Business Process as a Service (BPaaS) has emerged as a solution that offers a Cloud-based model to provide flexible services and cost reduction options. BPaaS tools focus on business outputs or outcomes such as improved working capital and higher customer loyalty, not inputs such as labour and physical assets. One example of a Business Platform that leverages an outcome-based pricing model is WNS’s proprietary engine Verifare - a highly automated revenue recovery solution for airline clients. More commonly, most providers are still focussed on domain-based services but extending those to new areas, such as analytics and social media.

• High-end analytics.
New channels like Smart Meters for the Utilities and Gas industry will disrupt the way we price and deliver any product or solution

• Radically evolving technology.
Nothing changes more than technology. For the BPM-client partnership, three forms of technology will be important: Enabling technologies such as social media monitoring tools; Bolt-on technologies such as applications and services for F&A ERP enhancement; Transformation technologies such as BPaaS solutions

• New era of regulations.
Risk and compliance frameworks will become more binding in their approach and implementation. Companies will have to work with providers like WNS in managing new governance mechanisms and to understand the different kinds of risk (along with mitigating them).

• Social media biting at every organisation’s heels.
Everyone will talk to anyone and everyone on multiple platforms. Brand loyalty will cease to exist in the new era… every company will have to be awake 24/7 to ensure that its brand is not compromised.

The BPM providers that will succeed will be those that stay abreast of future trends and partner with the right technology and develop processes to deliver the right solution. This is about branching out of the back-office and stepping up to the board room to make a difference to our clients top and bottom line – not just costs.