Service Providers' Competences in Business Process Outsourcing for Delivering Successful Outcome: An Exploratory Study

Abstract

Business Process Outsourcing (BPO) has become a very competitive industry with many players in the market. The challenge all the BPO companies are facing is how to build and sustain business with the clients in such a competitive industry. The service providers can hardly compete on cost arbitration. On the one hand, they have to respond to their existing clients, who have tasted and achieved labour cost arbitration benefits and have started looking beyond this. On the other hand, they have to win new customers by providing value more than simply cost arbitration. With this business environment in mind, we have undertaken a study of service providers operating in India to explore what competences they have developed for successfully delivering the outcome. This research explores two competences of service providers: business process management competence relationship management competence. These two competences have the theoretical grounding in resource-based view and relationship theories. The study also identifies the fundamental competences required to strengthen the above two competences as human resource management competence, information technology management competence, and outsourcing management competence. It further explores whether the service provider can, with the help of these competences, deliver the intended business process outsourcing outcome. In order to understand the successful business process outsourcing outcome, classification of business processes as viewed by both the client and the service provider is considered desirable. From the clients' perspective, processes are classified as traditional, peripheral, critical, and strategic; as core, critical, and non-core non-critical; and as critical, key, and support. Similarly, from the service providers� perspective, the business processes are classified on complexity and criticality dimensions. This classification further helps in defining the successful BPO outcome as intended by the client. For example, when a non-core non-critical process is outsourced, the successful BPO outcome would be process efficiency in terms of cost reduction and improvement in the quality, and at the most process transformation through some innovation. Thus the study concludes that the business process management competence and relationship management competence will definitely help the service providers to deliver the BPO outcome. As an expansion of BPO literature, this research makes two significant contributions: It puts forth a conceptual model that focuses on the competences of the service provider required to deliver successful BPO outcome It identifies the critical competences and the foundation competences for doing the same.