Pam Peters, Advisor and Project Director, EquaTerra Human Resources (HR) Practice

A “Top 10” label, when applied to business process outsourcing (BPO), assumes a heightened expectation around the level of quality, expertise and technology. The issue is that most of these listings tend to be one dimensional when it comes to the basis of the rankings.  How were the “Top 10” ranked—by revenue, profitability, market share, number of clients, number of employees served, and/or number of processes or services?

When it comes to determining the top BPO providers, buyers should instead be asking, “What is the multi-dimensional criteria that equates to ‘top’?” Or, more importantly, “What is the best fit?” How is the criteria valued, and whom is it valuable?  If you’re a mid-size buyer, the top-ranked large market providers may not be relevant.  Do you want to be the smallest fish in the pond, a medium fish or (if you are a large client) do you want to be the biggest fish in the pond of a provider that primarily serves the mid-market but was listed in the “Top 10” based upon its profitability?

The provider market is beginning to blur as more large market providers have started moving downstream with mid-market solutions. In the BPO market EquaTerra suggests that, rather than looking at “Top 10”, you evaluate whether “Tier 1” or “Tier 2” is the best fit.  “Tiers” are multi-dimensional categories that compare and contrast various aspects of a provider.  “Tier 1” providers are known for comprehensive, quality solutions with deep knowledge within their bench, thought leadership and world-class integrated technology.  “Tier 2” providers may cover much of the same scope or choose to specialize in point solutions around specific process and business areas, and technology integration may be thinner.

For buyers, the required criteria (beyond scope, services and technology) tend to focus around the provider’s financial stability, future investment plans, innovation and how its vision aligns with the buyer’s business strategy. While “Top 10” rankings can serve as important recognitions for the industry, buyers are best served by developing their own, more relevant multi-dimensional criteria and evaluating providers against them.

Interested in more insights ? Read my latest article, “Benefits Sourcing: What’s Next in Healthcare? Creative Cost Containment”.

Filed under: Outsourcing by EquaTerra