By Mark Atterby – Senior Staff Writer
The deployment of BPO solutions to address vertical functions unique to particular industries is having a significant impact in the growth of the industry and the range of services it offers. Recent research from the Everest Group highlights how growth in traditional horizontal functions is still substantial, but as the industry continues to mature, the focus on vertical solutions will increase.
The continued success of BPO service providers is closely tied to their ability to present a value proposition that provides cost savings while enhancing the client’s need to focus on its core business and competencies. BPO service providers need to have service capabilities that balance vertical industry expertise with sound and proven BPO management skills and methodologies. Key industry domains, according to Gartner, include healthcare, financial services, manufacturing and retail.
The diminishing importance of voice based transactions via a contact centre, traditionally a major area for BPO services, has encouraged providers to move up the food chain into providing more vertical and strategic solutions to their clients. For example, global BPO provider and IT outsourcer, HCL Technologies, has reduced the share of voice in its BPO business from 60% to 40% in three years.
As part of the key evolution of the BPO industry, where clients expect greater strategic value from their service provider.Clients are increasingly open to outsourcing sector specific mid- to front-end functions that require deeper domain knowledge, BPOs are enhancing their expertise in such functions. These include areas like mortgage processing, core banking, supply chain and healthcare insurance. For clients, this helps to contain costs and focus on their core business and extract further strategic value from the outsourcing relationship.
A recent survey by the Everest Group and SSON (Shared Services & Outsourcing Network), highlighted, while most growth is still in the traditional horizontal functions such as IT and HR, differences across industries are emerging plus vertical functions unique to an industry are increasingly playing an important role.
Saurabh Gupta, Vice President, Everest Group, recently stated, “BPO is fast morphing from being a horizontal service to a more industry-specific offering. Even in traditional BPO services, more and more industry-flavors are being included – be it around revenue cycle management for healthcare providers or meter-to-cash for utilities.”
The financial services industry has generally been the biggest and most innovative adopter of outsourcing solutions and methodologies. More and more clients in this industry, according Gartner research director T J Singh, are now looking to outsource more vertical-specific mid- to front-end operations that need profound domain knowledge. These comprise domains, such as core banking, mortgage processing, and insurance.