The taking on of a new complete, critical and complex service (CCC) by a new supplier for a BPO contract usually becomes the hardest and most expensive challenge the entering company faces during the whole duration of this kind of services contract.
This article discusses the lessons learned when transferring services negotiated as BPO contracts with the following characteristics:
- Complete, because the customer subcontracts the whole service, not participating directly in any processing it. That constitutes the externalization of a whole Business Area. It’s customarily understood that BPO means the exclusive subcontract of the services related to IT technologies. The typology of services this article refers to, also includes the development of software for the system that supports the service, that is, evolutionary and corrective maintenance, but also the top of the services pyramid, constituted by the team that, using the system, provides the service.
- Critical, that’s a subjective characteristic difficult to delimit, but that tries to identify those services that, when they fail to be available, generate big losses of every kind of nature: economic, health, ecology, etc.
- Complex, that one is also a subjective characteristic that refers to those services that require to achieve a high and difficult knowledge level.
During the assumption of a BPO, the supplier may face two types of starting situations that lead to completely different approachs.
- The service does not exist: the provider will have to execute a setup plan in order to start the service from scratch, with tasks like requirements specification, analysis, etc., to be executed with a lead time longer that when the service is already live. During this project the customer and the provider will define and will learn together the characteristics of the service. In this case the lead time will hardly constitute a critical factor.
- The service exists and it’s being provided by another supplier: in this case, and mainly when working with government agencies, the provider will face the necessity of assuming the service through a transfer process from the previous provider in much smaller setup time than when the service does not exist. In this case the setup time will surely constitute the most critical factor.
This article will focus in the second case, the transferring between providers of services that are already ongoing.
When talking about a CCC service, a provider will usually plan a life cycle composed by three big phases: assumption, execution and delivery of the service. In spite of considering a BPO, the assumption phase should be considered as an independent project that will cover the period since the award of the contract and through the taking on of the service until the stabilization of the service provided.
Below it’s been described the factors considered as key factors for success in this kind of projects:
They will be a key factor in order to form an outstanding team for the service, where main challenges will be:
- Retain the key human resources in outgoing team providing the service. Mainly in government agencies where, with typical 2-4 years cycles, public tenders are used to encourage provider change without detriment of service quality, with a transition period of just a few months (typically two months) it’s essential that the new company hires key human resources of the outgoing company with the objective of:
- Ensure the continuity of the service.
- Ensure the correct training of the team.
Achieving the identification and hiring of the key personnel of the outgoing company in order to ensure the successful cutover of a CCC service is the hardest challenge that the new company in charge of the contract will face.
- The basic training for the members of the incoming team in the new service. Though this recommendation seems obvious in the organizations, sometimes it’s not taken into account and can ruin a project/service of these characteristics.
- The learning rate of the team in a short period of time.
- The ability of the team for processing information in a short period of time.
- The ability of working under pressure during the phase of assumption of the service.
The organization of the team will be orientated from the start to achieve a clean transition of the service. For that, it will be necessary to assign transitorily some roles to resources much more qualified than the tasks to be executed. Since economically and professionally this initial assignment won’t be sustainable in time, once stabilized the service, and the knowledge absorbed in the incoming supplier assets, it will be necessary to plan the transfer of the service to personnel more adequate to the reality of each task, considering additional training, overlapping, etc, in a time period longer than the one initially available.
The assumption of the service requires a training figure where the number of incidences could surpass the required thresholds. When possible, it’s important to agree previously with Customer a period of stabilization of the services with less restrictive SLAs than the usual service performance.
Regarding the time element, the initial phase or assumption of the service will represent usually no more than the 16% of the revenue and typically a 10%. However, during this phase will happen the most relative and absolute costs of the project. In this phase there will be committed mainly two cost types:
- Costs of acquisition of infrastructure (IT or other), as it will have to be available for the time of the cutover.
- Costs of human resources, as it normally will be the phase of the project where there will be most people, most occupied and most qualified. This cost will include also those hiring costs of key personnel of the outing company.
The split of efforts that the project management will dedicate to the different knowledge areas that forms the project management is represented in the following figure:
The final conclusion of this article is that the success of this kind of projects, and therefore the effort and focus, will revolve around the human resources and the aspects related to their management, as it’s the selection, organization, training and commitment.
Salvador Sanz (Madrid, Spain), Program Manager with over 20 years experience in the IT leading projects in many different areas (Methodology, Consulting, SQA, Software Development, Web Portal, ERP / CRM, POS). He holds an Engineering Master Degree for IT; PMP (PMI); ITIL Foundation; CMMi Foundation and ISTQB Certified Tester. You can connect him at Linkedin and [email protected]