Historically dismissed by consumers as a way for companies to slash costs while ignoring the impact on customer service, outsourcing and shared services have long suffered from an image problem. But the tide is turning as the focus shifts from cost to value, says David Turner, CEO of management consultant Webhelp UK. “Performance was driven by tough productivity targets that focused on the efficiency of the process rather than the quality of service,” he says. “Suppliers routinely – and not surprisingly – compromised quality to avoid the financial penalties they would incur if these productivity targets weren’t met.”

This new focus on value is reflected in IT services company Dimension Data’s 2015 Global Contact Centre Benchmarking Report, which reveals that nearly three-quarters of organisations recognise the importance of their contact centre as a differentiator and gauge its performance predominantly on the impact it has on customer experience.


“This trend has also driven the need to rationalise outsourcing partners across the globe and to deliver a consistent customer experience regardless of geography,” says Mr Turner. “Increasingly, organisations are looking for one, or a small number of, strategic outsourcing partners that can cover multiple geographies and languages, using a combination of in-country, near and offshore sites. This delivers the consistency of customer experience required but also leverages the economies of scale and investment that global procurement affords.”  


Tom Velema, Europe, Middle East, India and Africa (EMEIA) IT advisory leader at EY, and Christian Mertin, global business services leader and EMEIA finance leader at EY, say that many companies have moved beyond the traditional single-function shared-service centre (SSC) by setting up global business services (GBS) organisations. These encompass multiple business functions and provide their services across multiple regions. “In the near future we foresee GBS becoming the engine for a technology and value-based transformation – of processes first, and then of the entire global organisation,” they say.

Technological developments are helping the sector move towards service. According to Dimension Data, digital contact in the form of email, web chat, social media and self-service channels is continuing its explosive growth as a popular method of engagement. 

“The Internet of Things can impact service at every level of the customer experience, such as monitoring product performance, facilitating customer-brand communications, identifying malfunctioning issues or downtime prevention, and recognising sales and additional service opportunities,” says Mr Turner. “BPO is transforming and, as we step into tomorrow, we will be defined by how we use data from connected devices to add value.”

Avinash Vashistha, CEO of business adviser Tholons, says automation is behind new trends in the sector. “For example, in finance, 500 people could be doing tasks for a client, but a significant part of this is being automated,” he says. “In the past 12 months, such projects had automated about 30% of that work. And they will probably do the same or more each year, so that’s an area that will be completely automated in a few years.”

Rise of the machines

Mr Vashistha believes contact centres will also be automated. “There are robot agents that could be as good as humans in a year or two. When that happens, customer service business will become increasingly automated. Artificial intelligence is also going into this automation, so a lot of processes that are medium-end will also get automated in three to five years. Then you have cognitive computing, which could be on the cards in five years plus,” he says.

This technological transition has the potential to have an impact on the BPO/shared service industry. “Automation requires fewer people,” says Mr Vashistha. “It requires skills in automation, artificial intelligence and cognitive computing. And because this is so technically intensive, it makes sense to do it in the US, India, Europe – wherever you can get people with technical skills – and it doesn’t require a lot of people with these skills.” 

Mr Vashistha believes India will remain a key location because of its tech-savvy workforce. However, countries such as the Philippines are less well equipped to deal with this shift. “It will become less important whether a business relocates some of its functions to Mauritius or the Caribbean – or any other location. It will be more a question of where can the right skills for artificial intelligence be found,” he says. “Companies wanting to do financial services may look at London, New York or Hong Kong because they won’t need hundreds of people to do the work; it will be the kind and quality of talent that is most important. 

“Developments with digital technology are a significant opportunity for small countries, because it’s about quality, not quantity. Small countries aren’t switched onto this development yet, and it’s a glaring gap. My advice to them is to focus on two or three sectors and come up with solutions for them.”

Risk factors

Mr Velema and Mr Mertin believe SSC location selection should be tailored to a company’s profile and its strategy. “More and more companies are considering new location and cross-border investment strategies to adapt their business model to current global changes,” they say. “Today, more than ever, companies are balancing a variety of costs, quality and risk factors when selecting their strategic business locations. Factors that influence the location decision are availability and cost of talent, market and business environment, and existing company presence in a location.”

Firms certainly need to assess locational risks, as Mr Turner points out. “In 2008, Egypt was heralded as Outsourcing Destination of the Year by the UK’s Outsourcing Association and yet, in the aftermath of the Arab Spring, few businesses would be brave enough to consider placing a contact centre operation there today,” he says. “The change in Egypt’s fortunes has been dramatic and, we hope, will be short lived. But it illustrates a point. Choosing the appropriate locations in which to make long-term investments is fraught with risk and often for much more prosaic reasons. When a new offshore location opens up, companies tend to pile in, the labour pool becomes stressed, prices rise, and all of a sudden a low-cost location is starting to look expensive and agent attrition is on the rise as companies compete for talent.”