Outsourcing arrangements in many organisations are now more than 20 years old, and as such the relationships these companies share with their service provider goes much deeper than the vanilla phrase “strategic partner” would suggest.
In many cases external providers have essentially become parts of the client’s own office in all but name.
However as with all long term relationships, things can get stale and monotonous, particularly if it seems that fresh commitments and added value are not being offered from both sides.
From the strategic partner’s perspective, it wants to see more revenue as a minimum, whereas a client has a somewhat different view on how relationships should mature, and demands ever more efficiencies that go beyond the labour arbitrage that first attracted them.
Stock market pressures and technological advances are guiding the quantity and quality of fresh commitments and value additions in these partnerships, and automation is the topic on everyone’s lips regardless of whether you are provider or client.
Generally my observations show that service providers have three different approaches to pitching their automation and artificial intelligence offerings, depending on who they are talking to.
- For their existing clients
Service providers will typically demonstrate automation capabilities, but will look to restrict implementation to only the processes not yet outsourced to them.
- For clients which they have previously lost, or which are currently being served by their competitors
Here providers will aggressively showcase their automation offerings and offer free consulting for automation assessment, with the aim of picking up a bigger piece of the BPO pie at a later stage.
- New bids
This is where a provider becomes most truthful with the realities of modern capabilities in AI and automation, and will often come armed with aggressive pricing discounts.
Why we need to benchmark ?
These discriminated go to market strategies make it difficult to benchmark service provider on their automation and AI offerings as each market segment or client experiences different offers and services.
This ambiguity is exacerbated by marketing statements, which are made without any evidence.
This confuses buy side clients and CXOs at buy side client organisations (mostly incumbent clients) as they do not see any discount in price or increase in efficiency coming to their P&L account.
The issue was broached in an interesting article by The Australian Financial Review recently, which can be accessed by clicking here .
How we can benchmark ?
The maturity of any BPO service provider in RPA/AI should be benchmarked on the following parameters:
- What is the ratio of Implementation of RPA/AI by them at their incumbent clients compared to new ones?
- Who has initiated and implemented RPA/AI at their incumbent clients? Is it the client? A reaction to a competitor? Or the service provider themselves?
- How it is benefiting their clients in terms of reduction of pricing, when automation is done of the service provider’s own processes?
- How non-linear are the revenue projections of the particular service provider as given to the stock market?
- What is incentive structure for their Business Development, sales and client managers?
Service providers are, of course, running a businesses and are entitled to make a profit, but only the ones that are mature enough to pass a reasonable share of benefits to their clients will survive.