How data, automation and AI are transforming Business Process Outsourcing into a competitive advantage

When IBM Consulting’s Neeraj Manik spoke recently with a large pharmaceutical client about how to streamline and improve its front-office and back-office financial processes, he pointed to a web of interconnected business challenges the organization was facing: “too many invoices, too many suppliers, too much money being paid to suppliers,” as Manik put it.

Manik, VP and senior partner for IBM Consulting, outlined a massive opportunity to strategically redesign the client’s finance operations and payment processing by leveraging AI, data analytics, metrics and automation. Ultimately, modernizing these processes could save hundreds of millions of dollars, improve the employee experience and make the company more agile and competitive, he says. Manik sees leveraging this technology as a fundamental change from years past, when a company might outsource business processes to save as little as 30% without considering how outsourcing might affect organizational efficiencies, job accuracy, and employee and client experience.

Technologies such as AI and automation have transformed the outsourcing market and BPO services, giving companies the ability to create efficiencies while also modernizing processes rather than relying on offshore outsourcing.

Labor arbitrage, or outsourcing labor to the lowest-cost workforce, has been the central strategy associated with business process outsourcing (BPO) for years. It often meant sourcing customer support, information technology and other office operations from countries with lower costs of labor. Today, though, technologies such as AI and automation have transformed the outsourcing market and BPO services, giving companies the ability to create efficiencies while also modernizing processes rather than relying on offshore outsourcing.

Technology-enabled business process operations, the new BPO, can significantly create new value, improve data quality, free precious employee resources, and deliver higher customer satisfaction, but it requires a holistic approach. Tapping into AI and automation helps businesses streamline and strengthen their operations, while providing rich information that helps enterprises quickly predict and respond to trends and threats alike.

Not only do companies that work with IBM Consulting get IBM’s experience in process design and business strategy; they also get the added bonus of IBM’s deep partnerships with companies like ServiceNow, Celonis and Salesforce. Ultimately, instead of being forced to focus on a single solution or technology, organizations can partner with IBM Consulting to invest in broad, transformational business initiatives and outcomes.

The new BPO is no longer just about cutting operational costs. When done right, it can make a business flexible, smarter and able to quickly scale to meet shifting market conditions. “Modern BPO is a creator of growth, differentiation and competitive advantage,” Manik says.

Spotting hidden opportunities

At a time of rising costs, talent constraints and economic uncertainty, technologically enabled BPO offers an opportunity for companies to build intelligent workflows and leaner processes across finance, human resources, procurement, supply chain and customer operations. According to organizational consulting firm Korn Ferry, more than 85 million jobs could go unfilled by 2030 because there aren’t enough skilled workers to take them. The new BPO enables companies to quickly access more expert, technical, functional and industry specific talent than they can assemble in-house, driving new levels of efficiency across their business functions.

When working with clients, Manik looks for business opportunities that might be hidden under the surface: How can an organization’s BPO capabilities and methods enable a larger business transformation?

“What we can see is sometimes just the tip of the iceberg. There’s so much underneath this that can be unlocked in terms of business value.” Neeraj Manik

“It is our role as IBM Consulting to say, ‘how do we help you connect the dots?’” Manik says. “‘What we can see is sometimes just the tip of the iceberg. There’s so much underneath this that can be unlocked in terms of business value, that can improve how you go to market, how efficiently you run your supply chains, and how you can raise your margin profile.’”

For IBM Consulting, it’s not only about producing a list of recommendations for action, Manik says, but about following through and helping companies implement process automation and manage change, ensure adoption and get results.

The results can be apparent quickly. In the case of insurance giant Generali, for example, IBM Consulting rolled out two new AI assistants in France—one that helped upskill employees and another that interfaced directly with customers. Generali also became one of the first insurance companies to use AI to tackle the complex task of escheatment, or returning unclaimed assets and property. The new tools augmented the work of thousands of insurance agents, saving $1million in the first year of deployment, and increasing productivity by 5%. The program’s success in France led Generali to scale AI solutions internationally.

Seeing the bigger picture

As companies plot their investments in various transformation projects, Manik has one central piece of advice: “Make sure every decision you make about technology starts with and has a clear and direct link to business outcomes,” he says. “It sounds obvious, but it’s something that many C-suite leaders tend to forget as they get excited about new technology or a specific upgrade,” Manik says. It’s his role to help leaders take a step back and look at the big picture: “Don’t focus solely on what to adopt next,” he says, “but ask yourself why you need it in your operating model.”

One car manufacturer, for example, opened up a conversation by asking about an upgrade to its data servers. Manik reframed the question. “Hang on — we recognize your need to modernize, but to what end?” he told them. “How will this technology decision deliver the business impact you need?”

That question sparked a conversation about the carmaker’s larger goals, including its push to produce more autonomous vehicles. “Once we really understood that they are trying to change how quickly they can produce cars and different types of vehicles, we realized they needed a different supply chain design,” Manik says. “We are now on a path with them around supply chain transformation.

“Many times the conversation starts with technology, but migrates somewhere else,” Manik says. “Ultimately, it’s not about adopting new technology for technology’s sake, it’s about rethinking business processes and core competencies to uncover new business opportunities and areas to optimize — sometimes in ways that customers aren’t expecting.”

Source: ibm.com