No thrill in outsourcing: US firms

BANGALORE Majority of US corporates believe that outsourcing improves business processes. Yet many of those corporates are only moderately satisfied with their service providers, according to a survey.
The BPO study, conducted by Managing Offshore, InformationWeek magazine, and EquaTerra, an outsourcing advisory firm, reported that 73 per cent of 200 US corporates across all industries agree that BPO is improving their business but rated their experience a 'moderately satisfied' 6.7, on a scale of 1 to 10, where 10 is 'extremely satisfied'.
In this high-growth, high-potential industry where customer satisfaction is the key driver for success, this could come as a dampener. But the positive side to it is that more experience the company gains in outsourcing, the higher the customer satisfaction levels.
Companies with more than two years of experience in outsourcing were much more satisfied than those with less than two years' experience.
"This just goes to show that BPO is complicated and difficult to master and that the transition to the outsourced environment is often a painful process that can hurt satisfaction levels in the short term," says Rusty Weston, founder, Managing Offshore.
Another contributing factor to satisfaction levels is the number of service providers engaged. Nearly 80 per cent of companies that use more than one BPO service provider come out as more satisfied, as compared to 60 per cent of respondents who have taken a sole-source approach.
Says Vikram Talwar, CEO, Exl Services, "That is true. Some organisations feel that it's easier to manage one provider. But when you work with multiple BPO providers, there is more competition and you get to share best practices, leading to higher satisfaction levels."
Higher satisfaction is also seen to come from implementing penalties and performance metrics in service level agreements (SLAs).
While three out of four respondents believe that SLAs with penalties are valuable tools, only 50 per cent have SLAs that include metrics. Without metrics, it's difficult to invoke a penalty clause.
"Companies that have used outsourcing providers earlier have benchmarks to follow. But, when you do it for the first time and don't have baseline data for your efficiencies, problems occur," says Eric Selvadurai, head (global operations), WNS.
But if you place too much importance on SLAs and penalties, you also tend to lose out on building a long-term relationship, he added.