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The financial meltdown in the US has had an impact on many sectors. IT and BPO sectors have especially been going through a tough phase, with growth declining. As a result of the US recession, many BPOs are forced to streamline operations, cut costs and source cost effective measures.

To tackle this serious situation, the BPO industry is experimenting with a number of measures to increase operational efficiency and here, Business Process Management (BPM) is emerging as an important tool to reduce operational costs.

BPOs perform multiple functions for a large number of industries like loans and claims, transaction processing, billing, accounts payables, revenue accounting, SLA management, etc. This diverse portfolio of BPOs needs a tighter process control and monitoring, and BPM system is a preferred option.

BPOs are looking at BPM as an efficient approach to improve business processes and efficiencies. BPM attempts to continuously improve processes, in other words it is a process optimization.

According to research agency MindBranch, “Despite the relative immaturity of the BPO market, both providers and buyers are loudly tolling the transformation bell. At this juncture, most providers fall short of genuinely transforming financial services processes. Continous improvement and automation of enterprise processes that are repeatable and scalable require BPO providers to put robust BPM models and technologies at the core of their offerings. And this viewpoint explores the intrinsic role of BPM in BPO.”

Promoting Operational Excellence
Nasscom has pointed out that operational excellence is the next frontier in outsourcing and suggests that there is potential for BPOs to reduce costs by 20% to 30% through operational excellence. Low cost of operation results in offering quality services at lower prices.

Commenting on the trend Kaushal Mashruwala, MD, Savvion India says, “In order to achieve operational excellence, it is necessary to have complete visibility into outsourced processes. Complete and timely visibility can only be achieved by using BPM software to automate, monitor and measure outsourced processes. We have seen cost reduction of even more than 30% in some cases as a result of increased efficiency, better SLA management and reduced total cost of ownership of BPO solution.”

BPO and BPM together share a very good and vital combination. The combined effect and effort of BPO and BPM ensures that an organization's technology investments are effective in steady process improvement and reflective of enterprise business objectives.

“To achieve operational excellence, BPOs need to have tighter process control, demonstratable ability to manage and execute complex processes, real-time visibility of processses, consistent and high quality service, all of which result into greater customer satisfaction. These need to be managed while reducing cost and having better SLA management capabilities,” says Punit Jain, senior VP Sales & Marketing, Newgen Software in Nasscom's India ITeS-BPO Strategy Summit 2007.

Traditionally BPO contacts have been on man-month basis. Cutthroat competition requires BPO companies to be more innovative. One way for them is to offer transaction-based contacts to their end customers. This arrangement allows them to significantly increase their internal efficiency by implementing BPM-based solution and generate more revenue per headcount. Through effective monitoring and change management functionality provided by BPM software, BPO companies can increase their effectiveness on time, quality and resource dimensions.

SV Ramana, CTO, Genpact says, “Companies are looking at different ways to enhance their services portfolio and operations, and are therefore depending upon various innovative technologies to improve overall productivity. We are applying principles of re-engineering and IT platform automation tools for the same. We have invested heavily on videoconferencing to reduce the overall travel cost. It is imperative for each organization to evaluate its processes and find innovative solutions to increase operational efficiencies.”