Gun Shy on BPO

I find it hard to believe that 30% of companies would go to the effort of conducting a BPO evaluation without awarding a contract on the back-end (note this statistic is for the general BPO sector, not procurement BPO specifically). These findings come courtesy of Supply and Demand Chain Executive. According to the article, "In a report on its research into factors inhibiting the adoption of BPO in North America, NelsonHall said that vendors need to improve offshore location mix and delivery capability ... [the] research has identified that no action is taken in one-quarter of sourcing evaluations where BPO and use of captive centers are evaluated, and BPO contracts are not awarded in 30 percent of instances where BPO is evaluated." What is holding back companies from pulling the trigger on evaluations? NelsonHall cites "improved process operations knowledge, proven cost reduction capability, improved offshore location mix and delivery capability" as the primary reasons why companies are holding off on embracing BPO, awarding a greater percentage of contracts after provider evaluation and negotiation.

I also found it interesting that, according to the piece, "it is difficult to find locations with high all-round skills. While India scores highly with U.S. sourcing managers in terms of process transfer and take-on skills, it lags behind Latin American countries such as Brazil and Mexico in terms of cultural compatibility. However, these Latin American countries, like China, are perceived by U.S. sourcing managers to lag behind India in the development of industry-specific process knowledge." The irony of this last statement is my BPO expert friends often criticize India for a lack of process depth and knowledge (which makes me wonder if the other countries are truly incapable of delivering any degree of process depth or whether the research itself is flawed). Regardless, I'm looking forward to digging into the Indian procurement BPO scene in the coming weeks and months as I talk to more and more offshore providers.

Jason Busch

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