Sunday, June 16, 2024

Driving BPM Towards Digital Future: Four Critical Success Factors Influencing Digital Outsourcing

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CX management and outsourcing of businesses are becoming more digital, and technologies are taking a central role in managing business processes and operations. Typically, businesses outsourced processes in the past as a part of their cost-saving strategies. However, organizations are now more inclined to capitalize on more sophisticated provider offerings, including custom industry solutions and advanced digital technologies to manage business processes. It began with simple automation for targeted processes and the right-shoring with BPO services provider. However, it quickly evolved into achieving fully digitized operations with business process management, creating significant bottom-line value.

So, digital outsourcing is taking the front seat with other high-value and expert functions outsourced with BPM services. As a result, more and more digital products and services are bundled with traditional outsourcing services. Along with expertise and knowledge, automation capabilities are also being seriously considered in outsourcing strategies and decisions. Read this blog to understand the success factors driving the new outsourcing paradigm and how to utilize them to obtain the best outcome for your business.

Critical Success Factors Driving Digital Outsourcing Outcomes

Several factors drive outsourcing decisions and deals. Industry and business need varies, and options available in the market are countless for business process management providers or traditional BPO services. However, a few critical aspects emerged as crucial factors shaping the outsourcing landscape.

 Utilizing digital solutions to transform operations

Generally, outsourcing in the past was straightforward transactions to generate marginal efficiencies. Organizations used to hand over a well-defined set of activities or tasks to the outsourcing providers. These vendors are paid based on the rate for time and material invested. However, a new model is gaining traction where outsourcing is radically changed. Here, operations are transformed with digitization with advanced technologies and their expertise. Providers take on more complex processes and are paid based on the outcome they can deliver and the technological solutions they deploy, such as robotic process automation, natural language processing, and AI applications.

Focus on shared incentives derived from innovation.

Technologies and applications in the BPM service domain are still evolving. Therefore, the potential value they can offer is also changeable. So, businesses are structuring the deals to incentivize innovation. These BPM service providers and vendors are getting into full contract terms with gain sharing; for example, if a service provider suggests a business a process change that can reduce days-sales outstanding figures by a few days or decrease working-capital requirements that provider can negotiate to share the value gained by the business in future. Typically, the innovation agenda must align with the overall priorities and goals of the business. Moreover, it should be able to contribute to all dimensions, including organizational efficiency, effectiveness, and the CX management sphere.

Redesigning entire digital journeys.

Organizations can no longer simply outsource a single, segmented slice of a process and expect significant improvement since processes are constantly reinvented to capitalize on digitalization. Instead, the provider often has to control and alter the entire end-to-end process through optimization, digitalization, and automation. Moreover, they must eliminate manual procedures and tasks to have the most impact and enhance business outcomes and CX management. For instance, a provider responsible for automated invoice processing may encounter early problems due to nonstandard formats.

So, they may need to recommend upstream format modifications to the supplier invoice submission process. As the business and technology environments change, this broadened viewpoint contributes to the development of a more comprehensive continuous improvement attitude. Moreover, it acts as an enabler for the BPO or BPM partner and their client businesses to work together to create more value.

Shared accountability for adoption and transformation of digital technology.

Digital outsourcing necessitates a shared governance structure as opposed to the hands-off contracts of the past. An organization and provider now need to collaborate at arm’s length frequently. A complete set of KPIs, including customer experience or CX, is developed and tracked by dedicated team members from both firms. Measurable impacts and improvements in CX management show the success of the endeavor. In areas like access to the technological stack or alleviating fears about data loss, providers need to be given the freedom to make some decisions on their own. Also, they need to work more closely with customers as partners.


Though opportunities are abundant, and possibilities are limitless in this new outsourcing domain, it is not without its challenges. Adopting digital sourcing is a journey full of potential and challenges. Gaining the approval of senior executives is one of the biggest hurdles since this transformation requires their active involvement, leadership, and ongoing oversight. Even when the need for digital transformation is clear, the following factors might impede the move:


  • inertia of long-standing organizational practices,
  • strong supplier ties and
  • a natural tendency toward stability


Additionally, some teams could contend they are already overextended from dealing with other current changes. Also, they believe they cannot devote resources to a program for digital transformation and may not be willing to accept the chaFurthermore, internal sourcing methods require a digital makeover to replace the manual processes that are still common in many firms. Although developing these skills takes time and effort, the potential benefits are great regarding CX management and actual profitability. According to research, including digital and automation in contract renewals for outsourced projects may increase the experience for internal stakeholders while producing a financial benefit that is three times greater than traditional outsourcing.


Finally, while these obstacles are great, they can be overcome with the help of strong leadership, a change in corporate culture, and financial support for the growth of digital capabilities. The result is a more flexible, creative, economical, well-positioned organization utilizing outsourcing services for success in a more digital world.


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