Music for CFO ears : Accounts Payable Offshore BPO

Chief Financial Officers of Fortune 1000 Companies are often compelled to "Walk the Talk" on cost competitiveness of Finance & Accounting operations. Today, pressure is increasing to "stretch the dollar budget " for operations, manufacturing, customer service, marketing etc. Therefore, shouldn't the Finance & Accounting Operations, directly supervised by the CFO follow the same mantra? Is there a benchmark which CFOs follow for cost competitiveness? CFOs typically try to keep the F&A operations budget within 0.5% of the overall revenues of the company.

Thankfully, most of the worlds leading companies have established the foundations for taking Finance and Accounting operations to the next level. These foundational steps are (a) Consolidation (b) Standardisation (c) Automation and (d) Internet enabled ERP. Let us explore each in detail.

(a) Consolidation. Agile businesses needed to provide autonomy to business units for achieving business success. As a result within a few years, each business unit had their own Finance & Accounting Operations. Consolidation refers to the physical consolidation of personnel who work the F&A operations of different business units. This lever of productivity improvement has already been leveraged by business organizations world wide.

(b) Standardisation. Once the consolidation of personnel was accomplished, the opportunity to adopt best practices and to cut on waste was self evident. New ways of working were defined and manually implemented at first. Productivity - no surprise here - went up.

(c) Automation. While the Y2K bug has got most of the credit for the worldwide implementation of ERP solutions, the secret sauce for successful ERP implementations were standardisation and implementation of best practices. Companies who implemented ERP as a business solution - taking the time to define the right process and then implement it using technology - improved productivity by leaps and bounds.

(e) Internet enabled ERP. With ERP implementation as the bed rock, Internet enabled ERP took the possibility of work getting done from any part of the world a reality.

Therefore, the foundational steps for F&A offshore BPO have now been implemented by leading business organizations world wide.

Where would the CFO begin offshoring? Would it be in mature processes like Accounts Payable, Travel and Expense etc or would it be in GAAP Accounting? For example, the GAAP Accounting work is currently being done by a CPA in the United States. Therefore, wouldn't it make sense to have a Chartered Accountant (CA) in Chennai, do GAAP accounting, resulting in more dollars of savings? The flip side of course, is the risk associated with such a decision.

9 out of 10 CFOs, typically vote in favour of Accounts Payable for their indirect purchases as the first process for offshoring. Reasons are easy to understand. AP as it is called within the Accounting world, is a part of Procurement Accounting and therefore deals with suppliers. Secondly, using Internet enabled ERP and Imaging/Workflow systems, operational control can be achieved from 10,000 miles away.

Why indirect purchases? Indirect purchases win over direct purchases in terms of priority for offshoring on account of the business sensitivity of information associated with direct purchases. If Hewlett Packard is buying 10 million hard disk drives from Seagate, would HP want an employee of a BPO firm working in Gurgaon, India to know the prices that HP gets from Seagate and the associated payment terms? Perhaps not.

What are the business benefits of offshoring of accounts payable work? While cost saving is the top priority there is more than what meets the eye. These are (a) Accuracy in Payment (b) Levraging the full benefit of credit period and (c) Remarkable turnaround times (d) Supplier satisfaction (f) Extraction of full volume discounts and benefits (g) Cost per transaction is lower. Let us examine each benefit in detail.

(a) Accuracy in payment. Six Sigma level accuracy is a reality with a few leading offshore BPO service providers.Therefore, duplicate payments become a distant memory.

(b) Leveraging the full benefit of the credit period. Suppliers are often paid late resulting in complications including delayed shipments of future supplies or losing the confidence of the supplier. Paying on time would mean better working capital utilization for the CFO and increasing the confidence of his supplier.

(c) Remarkable turnaround times. Offshore BPO service providers have an enviable record of tracking and measuring non payment reasons, reasons for blocked invoices etc calling them out to the client regularly, thereby bringing the root causes for non processing of invoices to the minimum.

(d) Supplier satisfaction. Now that the work is getting done offshore, it is possible to provide the supplier the options of (i) receiving the cheque by snail mail (ii) arranging the cheque for a personal pick up by the suppliers manager (iii) email help desk which tracks and resolves supplier complaints on delayed payments etc - all within a lower budget.

(e) Extraction of full volume discounts and rebates. Through diligent tracking, many offshore BPO players ensure that the volume discounts and rebates that result out of year long purchases are tabulated, presented and included in the payouts of the client to their suppliers.

(f) Cost per transaction is lower. While cost per invoice processed is not a measure which accurately portrays the value of Accounts Payable Offshore BPO, it is certainly the most frequently measured metric in an ongoing offshore BPO relationship.

United Technology Corporation, the company that owns brands such as Pratt & Whitney, Otis, Carrier is one such beneficiary of Accounts Payable work done in India. The CFO of UTC must obviously be a happy man.

Cheers

Paul Simon Arakkal

2007 U.S Mortgage Market - Key Success Factor - Offshore BPO

The 2007 Outlook:

Standard & Poors believes that the 2007 mortgage market in the United States is likely to have lower mortgage originations than 2005/2006. To stay competitive in the lean market coming up ahead, leading mortgagers would need to increase consolidation and accelerate value chain integration, thereby lowering cost of origination and servicing.

Consolidation:

Consolidation is in full swing in the mortgage industry already. For example, a decade ago, the top 5 mortgage originators in the United States handled 17% of the total origination volume. In 2005, the top 5 mortgage originators handled 50% of the total origination volume.

Value Chain Integration:

The large mortgage players such as Countrywide, Wells Fargo, WAMU, JP Morgan Chase and Bank of America lead the market on account of their fully integrated capabilities across the businesses of (a) origination, (b) servicing and (c) funding. These large players leverage their considerable distribution muscle to influence the brokers, correspondent banks, realtors and property developers.

They are therefore ideally positioned to retain their leadership position during the lean days ahead on account of the proactive measures they have taken in consolidation and value chain integration.

How does Consolidation and Value Chain Integration impact Offshore BPO?

When two companies merge, the larger organization which emerges as a result of the consolidation needs to continue to work with disparate legacy systems for the origination and servicing side of the business while they migrate to the chosen long term technology platform. Offshore BPO helps by providing the bridge by having two teams trained on the two systems working till the day the switchover to the chosen platform happens. Citi Mortgage has leveraged this model with considerable success as they acquired mortgage servicers in early part of this decade.

Let us take a closer look at the impact of the 2007 market trends on mortgage originators and servicers on the offshore mortgage BPO opportunity. Please keep in mind that the large mortgage players mentioned above will be impacted on both origination and servicing fronts.

2007 Market Impact on Mortgage Originators:

In the U.S only 20% of mortgagees take their loan from their primary bank! This is likely to change on account of the lower originations and higher interest rates coming up ahead. Banks are likely to:

(a) Sell mortgage loans to their existing customers as they call customer service.
(b) Sell mortgage loans to their existing customer base through marketing campaigns.
(c) Acquire new customers through targeted marketing campaigns.
Mortgage origination leaders typically strive to keep the Cost of Origination within 2% of the Principal Originated. With the Interest Rates staying between 5 and 7% the margin for profits is not much. The past few years have been growth years for the origination business and therefore many mortgagers were able to live with inefficiencies and slower customer responsiveness. In the lean period coming up ahead, the mortgager would be forced to increase efficiencies, customer responsiveness and lower operational costs.

Currently many of them run on home built, disparate systems. They will need to invest in new, integrated, internet friendly technology platforms. For example, the mortgagers would need to invest in robust credit appraisals and under writing systems to ensure fast, effective and lower risk while providing loans.

Offshore BPO value in Mortgage Origination:

Offshore BPO Providers can:

(a) Cross sell mortgage loans to existing customers who call customer service.
(b) Cross sell mortgage loans through outbound telesales programs.
(c) Resolve customer requests quickly through turbo charged back office operations.
(d) Lower origination costs to 2% of the principal originated.
(c) Perform decision making services such as credit appraisals and underwriting.

2007 Market Impact on Mortgage Servicing:

The key to success in servicing is to operate in the most efficient and profitable way while servicing portfolios. Leaders within this segment attempt to keep the costs of servicing within 0.20 % to 0.30 % of Principal Serviced. Mortgagers primarily use customer service centers for mortgagee servicing.

Offshore BPO Value in Mortgage Servicing:

Mortgage Servicing Companies can leverage Offshore BPO operations for services such as:

(a) Loan File Set Up including Welcome Calls.
(b) Account Maintenance including Address and Beneficiary change updates.
(c) Payment Processing including assisting the customer with tax statements, processing of the principal, interest and insurance payments.
(d) Escrow management including escrow account set up, dispute management of escrow shortages and monthly payments.
(e) Foreclosure management including processing of request for statements, lien releases.
(f) Loss Mitigation including early and late stage collections.

In conclusion, Offshore Mortgage BPO could help in (a) Leveraging existing customer relationships and acquire new customers to lower cost of origination (b) Providing effective and efficient customer service to lower cost of servicing (c) Deliver the Brand Promise of Mortgagers.

In simple terms, Offshore BPO can be the key to efficiency and profitability of mortgage servicers in the tough times ahead.

Quite a few years back, when the U.S Real Estate Sector was going through the roof, a few mortgagers made investments in Offshore BPO and Offshore Captive centers. Approximately 8000 professionals work in this segment in India alone. These operations are now mature and ready - for the mortgager who is looking to leap frog the lean period ahead.

Cheers

Paul Simon Arakkal

Auto Finance Success Mantras & Offshore BPO Levers

In the United States the Auto Finance Industry is dominated by Captive Financiers who were focused on (a) reasonable return on funds (b) increasing the sales of the parent OEM automobiles through discounting and by their presence at the point of sale - the dealer store. The independent auto finance company does not have some of these advantages and they need to be extra conscious in providing market leading investor return.

Of late, things have changed for the captive financiers. The American automobile OEMs are losing market share to the German, Korean and the Japanese auto makers. To retain their market share, some of the captive auto financiers of the American OEM have changed their strategy. They have now started financing the purchase of the cars of the competitors of their parent OEM.

In simple terms all Auto Finance Companies have three parts to their business - Origination, Servicing and Funding. The Key Success Mantras (KSM) for Origination and Servicing are fairly obvious.

KSM for Origination : Getting the right customer is the key. This would mean segmenting the applicants based on their credit history and creating appropriate pricing models for them. Robust credit evaluation systems and verification would be keys to success. Mortgagors and Insurers have been leveraging offshore BPO for credit evaluation, claim adjudication and verification for quite a while. Auto Financiers can leverage on this available pool of talented knowledge workers offshore.

KSM for Servicing : Operating Efficiently and Collecting Effectively are the keys to success. Offshore BPO can provide 5 - 6 Sigma Level accuracy in transactions, overnight release of titles for customers who have paid their dues and improve the responsiveness of the auto finance enterprise by turbo charging the back office operations. This enables the auto financier and its key management staff to focus on customer retention and customer delight.

Collecting effectively impacts profitability. Employing Offshore BPO can help the auto financier lower the (a) Reserves for Credit Losses (b) Provisioning for Credit Losses and (c) Charge Offs releasing precious funds for investment. Offshoring of the Post Charge Off Collections Inventory would also help in increasing the recoveries. These measures positively impact the balance sheets and income statements of auto finance companies.

For the auto finance industry challenged by increasing competition, increased customer expectations and investor scrutiny, Offshore BPO could hold the key to sustained competitive advantage.

Cheers

Paul Simon Arakkal

Business Impact of Auto Finance Offshore BPO

In the United States it is estimated that 80+ percentage of people drive to work. The structure of the cities and suburbs, the highway system and the legendary American love affair with the automobile being the reasons. In 2005, total automobile sales in the United States amounted to 17 Million cars. The Cupid that enables the American love affair with the automobile is the Auto Finance Industry.

The Auto Finance Process Value Chain can be broadly divided into (i) Auto Loan Origination (ii) Auto Loan Servicing and (iii) Loss Mitigation.

Auto Loan Origination would include (a) Application Capture (b) Credit Adjudication & Processing and (c) Funding.

The Auto Loan Origination Process is automated (to a large extent) with (a) scanning solutions available at the point of sale which scans the applications and the supporting documents (b) online access to customer credit history through http://www.myfico.com/ and (c) workflow solutions that enable the credit adjudication and processing steps. Competitive pressure to capture the impulsive car buyers have ensured that these steps are completed within one hour. Therefore, I believe the greatest value that Auto Financiers will get from Offshore BPO is in the Auto Loan Servicing and Loss Mitigation processes. Let us take a closer look.

Auto Loan Servicing would include (a) Loan Accounting (b) Customer Service and (c) Title Management. Auto Financiers are under pressure to (a) stretch each dollar to the maximum - maximize what they can achieve with their budgets (b) increase their competitive advantage by offering outstanding customer service (c) ensuring that payments received from customers are accounted for accurately and (d) claims from the collateral (the car) is minimized.

Let us get more specific. Offshore BPO can help in : (a) Lowering the cost of servicing by moving the operations offshore (b) Minimizing risk of outstandings through offshore operations activating direct pay accounts as against check payments (c) Increasing customer satisfaction by resolving address change requests in quick time (d) Lowering risk of claims by ensuring insurance cover is enabled continuously on all collateral (e) Ensuring the payments received are accounted for in the books and (f) Once payment is made in full, ensuring immediate release of title. The last in the list above has significant impact on the satisfaction of customer who have paid their dues. The average American owns a car for about 5 years. This means that one customer could buy eight cars during his working career! Auto Finance Companies would certainly want to keep these customers for life by providing outstanding customer service!

Loss Mitigation would include (a) Collection Management (b) Inventory Management and (c) Recoveries Management. Unlike a house a car is a depreciating asset and therefore speed is of essence in loss mitigation.

Offshore BPO providers can be engaged to (i) Initiate and Follow through on the re-posession of cars once a decision has been taken to re-posess (ii) Ensuring the movement of the cars to the nearest auction site (iii) Ensuring the quick inspection and valuation of the car in time before the car gets auctioned (iv) Ensuring inventories of reposessed cars are liquidated on time (v) Recovery is made on the residual amount (Total outstanding - Auction Value = Residual Value) and (vi) in the event of the customer filing for bankruptcy completion of the documentation to ensure the brightest chance of collecting the residual amount anytime in the future.

Loss Mitigation has Bottom Line Impact and was discussed in detail in my earlier posting: http://artofoffshoring.blogspot.com/2006/11/balance-sheet-impact-of-offshore-post.html

Thus far, we have discussed the processes that Auto Finance Companies can offshore for the benefit of their Investors, Employees (higher value added work possible) and Customers.

Estimated at $ 715 Billion by CNW Marketing Research, the auto finance industry is made up of (a) Captive Auto Financiers like Fort Motor Credit (b) Independent Auto Financiers like Americredit (c) Large Banks like Well Fargo and (c) Small Regional Banks.

As is well known, the captive auto financiers dominate the auto loan origination space on account of their (i) access to the buyers at the point of sale (ii) ability to increase the affordability and therefore the sales of the car of the respective OEM through financing and (iii) influence over the dealers through their funding of floor plans and capital financing requirements.

The Offshore BPO option is very attractive to the Independent Auto Financiers, Large Banks and Regional Banks since they can focus on origination and competing with the Captives to gain crucial market share. They can also focus on Customer Retention by offering world class turn around times for resolving customer requests and title releases. They can leverage on the economies of scale of the Offshore BPO player to lower their operational costs.

For Captives, the economies of scale exist - much more than other categories. The challenge for them is to be agile and nimble like their smaller competitors. Offshore BPO can provide them the opportunity to be agile and nimble and profitable.

Auto Finance BPO may not have received the attention that Mortgage BPO has. The opportunity for unlocking value for both Auto Finance Company and Offshore BPO Service Provider is no less.

Cheers

Paul Simon Arakkal

Balance Sheet Impact of Offshore Post Charge Off Collections

According to the Nilson Report, the 2010 Consumer Debt Obligations is projected to be $ 2.8 Trillion with a "T". This is up from $ 2.2 Trillion in 2002 (U.S Federal Reserve figures). What about the receivables charge off rate? Nilson Report predicts this at $ 87 Billion in 2010 - this number was at $ 51 Billion in 2002. Thus receivables charge off rate is likely to jump by 70% when the consumer debt is likely to increase by 27%.

Leading Consumer Finance Companies are aware of this growing risk and are taking action. Focus on Cost per Dollar Collected, Investment in Skip Tracing Tools, Focus on Business Metrics such as Total Delinquency Collected per month in addition to Contact Rate, Promise Rate and Kept Rate are some of the strategies that leading Consumer Finance Companies have been employing for a long time.

Offshoring of Charge Off Collections to 3rd party BPO service providers is among the latest strategies that these companies have employed. What are the concerns that these companies have when they contract with offshore BPO service providers? Customer Confidentiality is one of them - skip tracing tools for example provide access to consumers credit history. Operational Risk is another - would consumer finance companies want offshore service providers to call on behalf of the client (1st Party) or would they want offshore providers to call as themselves (3rd party)? Let us take a closer look at the strategies mentioned above and the concerns.

1. Focus on Delinquent Dollars Collected: Productivity Metrics such as $ collected per hour may look good on paper but may not impact the balance sheet. You could have a situation where the collection team working with the offshore BPO service provider is performing well on $ collected per hour without any impact on the overall delinquent pool. Therefore it would make sense to focus on the lowering of total delinquency (in the primary,secondary and tertiary buckets) - this would impact the bottom line positively.
2. Focus on Cost of $ Collected : Consumer finance companies typically sell the debt to "Outside Collection Agencies" once it becomes cost prohibitive. This means that the offshore BPO service provider must be well within 50 cents of cost to collect a dollar if the consumer finance client is to keep it offshore. This means quite a lot of challenges to the offshore BPO service providers - retaining the team is of paramount importance - this would mean more agents with vintage, persuasion and negotiation skills would be working for the client. Ensuring the osmosis of best practices across the collection team is also important - this would mean much more than stack ranking - the best agents need to be leveraged for best practice sharing across the team to move the bottom quartile agents up the conversion curve.
3. Investment in Skip Tracing Tools: Charge Off Collections is typically a "Voice Mail Avalanche", where you are speaking with the "Privacy Manager" of the defaulting customer more often than not. Many of the delinquents would have moved addresses, added telephone numbers, changed jobs. Therefore there is a huge need to trace them based on very recent economic activity. The offshore BPO service provider needs to have access to these state of art skip tracing tools.
4. Partnership with the offshore BPO service provider: Measurement, Monitoring and Motivation (3M) are the cornerstones of a charge off collection operation - even more so than customer service or technical support. Transparent measurement systems which call out up to date performance reports of agents, teams and delivery sites go a long way. Clients who involve themselves in all the "3M" programs will have much to benefit.
5. Ensuring Customer Confidentiality: Once a customer moves into the charge off category, it is fairly certain that he/she is no longer a customer of the client(e.g: Auto Finance Company). However, clients are very concerned about the security of customer information. The implementation of information security practices such as ISO 27001(BS 7799) and drug and criminal verification of all employees hired for the Consumer Finance client are some of the measures that offshore BPO service providers take to ensure the security of customer credit information.
6. 3rd party collection certification by offshore BPO service providers: This is the domain of Outside Collection Agencies in the U.S. However, the higher degree of operational freedom such a status provides to offshore BPO service providers would increase the effectiveness and efficiencies of the offshore player.
   
   Typically offshore BPO is not associated with balance sheet impact. Charge Off Collections is among the few processes that offshore BPO providers manage that has balance sheet impact. Fortunately, this is an offering that a few mature players have in the Offshore market place. For the Consumer Finance Companies in the U.S who are walking towards the $ 87 Billion receivables charge off rate in the year 2010, it is certainly a comforting thought.

Cheers

Paul Simon Arakkal

Unlocking Offshore BPO Value

The phrase "Offshore BPO Operations" conjures up the image of a Low Cost Location where Smart People work for you, typically Indians or Philippinos. As the adage goes "you go for cost but you stay for quality". Is the Offshore BPO delivery model only about these two benefits - cost and quality?

Is there hidden value that Global Enterprises can unlock? Can Offshore BPO deliver (i) Business Results? (ii) Customer Insight? (iii) Brand Promise of Fortune 500 clientele? (iv) Innovation? Let us take a closer look.

(a) What do Clients have in mind when they talk about "Business Results"?

For Vonage, the VOIP service provider in U.S and Europe it means (a) Reduce Customer Acquisition Costs below $ 210 per customer (b) Reduce Customer Churn below 2% per month (c) Reduce SG&A below 12%. How can Offshore BPO help Vonage?

Through Offshore Telesales : By running telesales in collaboration with Vonage's marketing efforts and increasing the conversion rate. It means Consulatitive Selling over the Phone while keeping things very simple for the consumer. The BPO Service Provider who serves Vonage would need to sell the Vonage Value Proposition to a new breed of VOIP users - late technology adopters who have lot of choice of comparable offerings from Incumbent Landline, Mobile Service Providers and ISPs.

Offshore Customer Retention : A Proactive Customer Retention Program from offshore would certainly help. For example, if a Vonage Customer has not made any outbound call for 30 days it could mean that the customer is testing out a competitor's phone service. Retention rates would increase if the Offshore BPO Provider were to engage with this Zero Outbound Customer and find out whether he is satisfied with the Vonage service.

(b) What exactly is Customer Insight? Can this be delivered through Offshore BPO?

To my mind Customer Insight has got three dimensions:

(a) Analysis of Top Call Drivers and actions thereof focused on call avoidance.
(b) Analysis of Customer Experience - their emotions when they encounter certain processes and products and taking appropriate corrective action.
(c) Analysis of Customer Expectations - Analysis of Customer Verbatims to understand unmet customer needs. These unmet needs could result in new revenue and/or reduction in churn.

I have witnessed many examples of the (a) and (b) category mentioned above in the Indian BPO Industry and Prospective Clients can leverage the same now by working with certain Offshore BPO Players. If Clients were to allow Service Providers to access and analyse customer verbatims, many a revenue/customer retention opportunity would come to light.

Customer Insight could then be "lead indicators" to customer churn or needs for products/services. These of course can be delivered from Offshore Locations.

(c) What is Brand Promise? Can it be delivered through Offshore BPO?

Brand Promise for www.amazon.com is "Affordability, Convenience and Availability". Let us look at Convenience a little closer. A shopper who arrives on the Amazon site need three types of help (a) to find the product that he/she is searching for (b) once the product is found, to buy the same from the site and (c) once the product is bought, to get the product at his home in the quickest possible time. Amazon currently operates all three types of help mentioned above from India through Offshore BPO Players.

If Amazon, one of highest ever rated companies on the J.D Power Index can entrust their brand with the Indian CSP working for offshore BPO players, why would you hold back?

(d) Innovation? Isn't that a tad too much to expect from Offshore BPO?

There are innumerable examples of Accounts Payable operations of Clients getting streamlined once the offshoring decision is taken. This is since the paper invoices, goods receipt notes and purchase orders now needs to be digitized, indexed and transported over the wires to the offshore locations. Workflow systems get built to enable the management of workflow across mutliple continents. In the above example, automation is not what I am hinting at. I am pointing to the change of the business process where a new way of working is designed and then implmented using technology.

What are the benefits of the above Innovation example? (a) Ensure the Global Client gets the full benefit of the credit period agreed to with the vendor (b) Ensure prompt and accurate payment - no duplicate payment (c) Ensure Vendor Satisfaction (d) Ensure high employee productivity.

There are other examples of Innovation within the India BPO Landscape which one would like to cover later. The fact is :Innovation is very much prevalent in Offshore BPO.

The unsung hero in Unlocking of Offshore BPO Value is the Far Sighted Client - An organization which understands and invests in Offshore Strategies for Competetive Edge, not merely Cost and Quality. Therefore should the more relevant question be "When do you want to unlock the value of your offshore BPO operations"?

Cheers

Paul

Can an Indian CSP be the Brand Ambassador for Global Clients?

Customers of Global 1000 companies in the United States and United Kingdom are increasingly speaking with an Indian Customer Service Professional (CSP) when they call in on Toll Free numbers designated for Customer Service. Are the reputations of these Global Giants at risk during these moments of truth - when they speak with an Indian CSP?

In an increasingly competitive world where corporations are stretching every sinew to retain customers - for example in the U.K, the citizen to telephone connection ratio is about 1:1.3. This means that every U.K citizen has a telephone connection already. In such a market it would make sense for every telecom major to retain its customer base, wouldn't it?. Now, the existing customers call into the toll free lines of these telecom majors, don't they? Are the reputations of these telecom majors (British Telecom, Orange et al) at risk when customers call into these numbers and speak with an Indian CSP? Let us get a little deeper into this challenge.

The reputations of these Global Giants and consequently their brands are at risk when the customer comes in contact with any employee of these great companies. For sure, the reputations of these companies will either fall or stand tall based on these "moments of truth" interactions with any employee of these corporations and this would include the outsourced employee working for an India based Service Provider. In short, the answer is Yes.

Is this a fair comparison of CSP ability? The Insourced CSP working for Orange in the U.K has a much better chance of understanding the Orange Culture, its Vision, Mission and Values than the outsourced CSP in India, isn't it? Now how can this be bridged? How can we increase the competence of the Indian Outsourced CSP so that he/she can deliver on the Brand Promise of the clients that he/she is working for through their employer?

The following are the critical steps:

1) Hire for Delivering the Brand Promise : Hiring needs to be based on the Behavioral, Foundational and Functional Competencies required to deliver the Brand Promise. Pick any typical job description and you will find a jumble of skills, experience and qualifications all rolled into one paragraph. This practice of haphazard hiring will not deliver the results that Global Clientele are looking for.

2) Training for Delivering the Brand Promise : The newly hired CSP needs to be taken through the realization that they are Brand Ambassadors for their clients. This "realization" creates the necessary environment for what follows - namely the understanding of the Client's business and CRM strategy. Any U.K based employee of Orange would know that Orange provides mobile telecommunication services to businesses and consumers in the U.K and that they are part of the France Telecom group. They would also know that Orange has services in the Prepaid and Postpaid range. They would also know the profile of the typical Orange customer and their expectations of Orange. The Indian CSP needs to understand these dimensions. The Indian CSP also needs to understand the methods and tools that are used by the U.K based insourced CSP and how to use these tools to deliver the Brand Promise.This would create a level playing field.

3) Managing for Delivering the Brand Promise : Through Operational Best Practices, Technology Implementations and Performance Management measures (Monitoring, Measuring and Motivating) On Brand behaviour needs to be enforced and encouraged. For example, the CSP who exemplifies On Brand Behavior for a month consecutively needs to be publicly and dramatically rewarded (paid $) and recognized (certificates).

From my experience, I can confirm that the Indian CSP is more than willing to focus and commit to being the Brand Ambassadors for the Clients that they work for. They are in fact thrilled to represent these Brands. The Service Provider that employs them needs to prepare them for the Brand Ambassador Job. The Indian CSP needs to believe in the behaviour that is expected of him and its importance - it has to come from his/her heart.This means that we will need to follow the "rules of the farm" - hard work, natural fertilizers, plenty of water and sunshine. Short cuts won't get you there.

The Indian BPO Service Provider who cracks this code will have truck loads of jobs coming their way - it would be simply too juicy for the Global Clientele. Too good to resist!

Cheers

Paul Simon Arakkal