What is ‘The state of Outsourcing’ in 2022? 

What is going really well, post-pandemic, and where do the opportunities lie? To answer those questions, and a whole lot more, we invited Sameer Jalundhwala, a global Shared Services leader with expertise in building Global Business Services (GBS) operating models and transforming processes and systems, leveraging exponential technologies and new ways of working. He is SVP, GBS Operations & Outsourcing at NTT Ltd, where he’s responsible for building and managing Global Business Services operations across 40+ countries, covering back and mid-office processes, and delivered through two world-class outsource providers.

Sameer paints a picture of what it’s like to go from BPO to BPM and on to BPO again (but then with a twist!). 

But first, the basics!

Host of SSONext, Barbara Hodge, asked:

Is outsourcing still relevant for businesses ramping up a shared services infrastructure?

“It is definitely very relevant,” says Sameer. “Because if you are talking about outsourcing business process services, we're not talking about a call center, we're not talking about manufacturing widgets, we're talking about delivering services. Services such as finance and HR. These are end-to-end services. The inputs are very much within the business. And the outputs may come from the service providers, and they may become inputs for the next part of the process. 

This whole model works well in a services environment. But it relies on the ability to work in the spirit of partnership and teamwork.”

Dismantling the perception that outsourced talent may not be ‘close enough to the business’ to understand information of strategic importance  

In the case of higher value, more sensitive, service areas, Sameer says that the process at hand needs to be really well defined. 

“Sometimes, the process or service is not that well defined. It may be that the business is going through a lot of change. Perhaps mergers and acquisitions. A good model needs to consider incubating and transforming some processes first to get them fit for outsourcing. When things are pretty structured, and they're digitized and automated, then they work well in an outsourced environment. But if you have a lot of manual and fragmented scope, it might need some transformation before you get it outsourcing-ready or outsourcing-fit. 

Think about it as incubation centers. Some large GBS organizations are doing this.”

The difference between business process management (BPM) and business process outsourcing (BPO)

Business Process Outsourcing (BPO) is a subset of outsourcing that involves hiring a third-party service provider to handle non-core business operations for you. When contracted outside your own country, BPO becomes offshore outsourcing. It usually focuses on the back-office or front-office operations. When contacted, the BPO provider generally shares a set of sample profiles that the client can choose from.

Business Process Management (BPM) is a relatively new subset of outsourcing. It deals with hiring a service provider who handles highly skilled and expert work such as litigation support, or credit and collection services. BPM is similar to BPO in many aspects. However, a BPM service provider also trains replacements, motivates staff, and above all, manages the operation. This very fundamental difference in business model reveals other key differences between BPO and BPM.  

Sameer explains: “In the very early days, business process outsourcing was pretty much about offshoring. You move the process offshore, get that quick benefit, and then you implement productivity and some transformation. The biggest chunk of value was coming from offshoring and labor arbitrage.

However, labor arbitrage has shrunk over time and while it's still a big value driver, there are also big value drivers in automation, in eliminating processes, in simplifying processes, and of course in automating processes. 

Think about pulling a lever that involves going deeper into your processes – eliminating waste, simplifying processes, standardizing them, and then automating them. There's a lot of focus on process skills, and process expertise. And I think that the change in the acronym (from BPO to BPM) reflects the maturing outsourcing environment, with more focus on automation and transformation – and process management.

Hence, business process management.”

If you like the audio medium, and would like to hear a detailed interview that dives much further into business process management, listen to the SSONext podcast with Barbara Hodge and Sameer Jalundhwala on iTunes or Spotify.