Though the skills and responsibility for sourcing and ongoing management of third-party business service providers can be of vital importance to U.S. corporations, only two in five companies offer performance incentives to these specialists. So while quality is expected and desired, the means to measure and incentivize successful outcomes are often lacking.
That’s one of the key findings in a new study of 211 buyers of business-process services conducted by Global Services in conjunction with EquaTerra, an outsourcing and insourcing advisory-services firm. The interviews were conducted on the Web in March and early April in the North American market across all major industries. The study encompassed BPO areas such as human resources, procurement, finance and accounting, research/pharmaceutical, claims processing and medical/legal work.
The results suggest that business-process sourcing and outsourcing management is not yet widely regarded as a core expertise. Only 13% of respondents receive direct incentives for the way they source and manage service providers. Another 27% say they receive (unspecified) indirect incentives. Surprisingly, more experienced buyers of business services are only slightly more likely than their inexperienced counterparts to receive a bonus for these specialized skills.
While these managers often fail to receive a carrot in the form of a bonus from their organization — or even less formal recognition when the job is done well — they are also reluctant to use a stick to help achieve their organizational goals. A case in point: Three in five companies that outsource business processes receive annual performance gains from service providers despite the fact that only a minority of customers impose contract clauses that mandate it.
In some cases this form of outsourcing governance simply reflects the perceived business value of the activity. Too many organizations have established BPO engagements as caretaking operations and haven’t necessarily mandated — or received — improvements. Yet the study finds that most corporate buyers of Business Process Outsourcing (BPO) services are increasing their BPO investments and characterizing the portfolio as at least a moderate success.
