In our most recent BPO benchmark study, we found that while improving margins on existing clients was important, doing so fell to the third priority for Business Process Outsourcers behind growing revenue through new customer acquisition and expansion of service offerings. That focus could have serious effects on business.
Modernizing Existing Client Operations
A recent Horses for Sources blog identifies that failure for service providers to modernize their existing client operations carries with it significant risk of losing their business. The blog goes on to state that, according to research of 381 enterprise operations leaders only 30% of existing contracts will continue to operate as traditional “lift and shift” models with the remainder being transitioned to models that focus on more transactional, on-demand, cloud-based delivery models.
Client Needs and Expectations
Some potential disconnects could be caused by focusing on preserving existing operations and/or margins instead of looking at client needs and expectations. So while clients expect their service providers to provide ever-adaptive delivery models and capabilities, service providers, aiming to be good stewards of existing agreement terms, seek to protect the status quo. No one gets fired for meeting SLAs.
Brute Force Manual Labor
However, in a world of buzzwords like “digital transformation” and “machine learning,” contracts that are delivered through the brute force of manual labor are increasingly at-risk as more novel automated approaches prove more successful in delivering results.
Whatever the reasons are for not re-thinking existing operations, from organizational risk to technical and project risk, the ultimate effect is that traditional service providers are in a version of Clayton Christensen’s “Innovator’s Dilemma” where the incumbents are outmaneuvered by upstarts that use technology as a strategy to offer services that are simultaneously lower cost and higher quality.
You have to seek to disrupt your own business before someone else does it for you.
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