Transformational Outsourcing versus Business Process Outsourcing

Traditional BPO models are largely based on services from an outsourcing partner, ranging from low-end staff augmentation to replacement of the entire staff across a given business process. Though companies have benefited financially from this primarily labor arbitrage-driven arrangement, there is limited scope for unlocking value throughout the value chain through this model. Also, since the model is based on repeatability, outsourcing partners may not tailor solutions for specific clients. BPO is thus transaction-focused and operations-driven.

Transformational Outsourcing on the other hand, by focusing on the organization's core activities creates new business models that capture value from the global workforce and creates long-term competitive advantage. It does this by addressing the core operations of the organization with the objective of delivering economies of scale, company-wide cost competitiveness (as opposed to per-unit transaction costs), and redeployment of company personnel into key core operations rather than contextual activities. Transformational Outsourcing is thus driven by company-level strategic business issues such as profitability and shareholder value creation.

The figure below outlines the key differences:

Benefits from Transformational Outsourcing

• Lower total operating costs as a result of re-engineered business operations and processes.
• Improvements in operational competitiveness with a model that can scale up, down or into new areas in partnership with Trianz.
• Strategic benefits from refocusing company personnel into areas that are core to the business, which leads to improvements in core business and expansion into new areas of growth.

The Trianz Approach to Transformational Outsourcing

We start transformational initiatives by developing a 'shared management' view of the new operational model, with Trianz as the outsourcing partner.

We work with clients to establish short, medium and long-term objectives, and in examining operations to identify those areas requiring reinvention, usually through convergent technologies. The emphasis is on the redesign of operations for higher efficiencies and economies of scale, even before outsourcing with a partner. We then transition to an implementation phase where business processes, organization and technology enablers are redesigned as required.

The outsourcing relationship starts towards the final phases of implementation, with the goal of delivering to clients the following:

• Process-management effectiveness.
• Efficient, predictable and smoothly functioning operations with no unforeseen events.
• Ability to scale in non-repetitive situations
• Reorientation of the organization and operations based on changes in strategy or business focus.
• Total cost leadership Transformational Outsourcing initiatives pose complex challenges. As an execution-focused firm, Trianz understands the level of expertise and commitment required. Our Operations Consulting consultants guide the transition using detailed transformational approaches that encompass redesign of business operations, organizations, processes and implementation of the right enabling technologies. Once complete, we work with senior management in client organizations to develop the specific metrics and performance indicators that would guide the relationship to delivering its highest-level business objectives.

Trianz shares client's risks, and our rewards are linked to the success of our client's outsourced business operations even beyond the transition period.