BPO, Demands, Customer-Care

New demands for customer-care BPO

17 Aug 2004 | (Survey)

In the case of BPO outsourcing, escalation of the purchase decision up the chain of command is not just a cost measure. It also reflects the growing sense of importance that BPO plays in a corporate strategy.

One of the key findings gleaned from IDC's recent research tracking the changing dynamics in the customer-care BPO market is that customer-care BPO companies are expanding the definition of "service" and are offering an increasingly broad array of options. This is an essential move in what still is a competitive market, says Brian J. Bingham, IDC research manager and report author.

The second significant finding noted in IDC's "Worldwide Customer Care BPO: 2004 Competitive Landscape Leadership Report" has to do with way BPO firms are responding to new buying demands. Specifically, according to Bingham, there is a growing demand for innovative pricing structures and an increasing need to identify and escalate purchasing decisions to higher levels within the client organization. BPO firms, like their customer-service software counterparts, are responding in kind to win the deal.

Up the Chain of Command

Indeed, moving the purchasing decision up the chain of demand has been a trend seen in many I.T. segments -- not just a customer care BPO decision.

Over the last two to three years, companies looking to spend money on CRM have been completing an exhaustive business case before they spend even a relatively small amount, Bill Henry, vice president of marketing and strategy at PeopleSoft Global Services, told CRM Daily. That is a distinct change from the halcyon days of the late 1990s.

The CFO, CEO, CIO -- all are engaged at two levels lower than they were in the 1999 to 2000 CRM heyday," Henry said, adding that he has seen contracts worth as little as US$1 million go to the board for approval.

In the case of BPO outsourcing , though, Bingham says escalation of the purchase decision up the chain of command is not just a cost measure. It also reflects the growing sense of importance that BPO plays in a corporate strategy. "Buyers want to really make sure a purchase fits into the larger business strategy, so more business executives are getting involved in the decision. Final approval now must often go beyond the director of customer services."

Innovative Pricing

Buyers also are demanding and getting from their BPO buyers new pricing structures that do not focus on per-hour or per-minute costs.

"The latest trend is for BPO providers to assume some of the risk themselves to win significant contracts," Bingham says. "They may offer to help an enterprise transform the way they interact with customers -- and the provider then shares in the gains the customer realizes from both a cost-savings and revenue-growth perspective."

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