Webhelp’s Managing Director (Customer Solutions) Mark Guest looks at the growing need for commercial certainty as organisations consider the merits of outsourcing critical operations.
Despite the many difficulties of the pandemic, the Business Process Outsource (BPO) industry is arguably experiencing the most extensive adoption of outsourcing services in a generation, revealing common themes and new challenges to overcome.
Outsourcing buyers are keen to optimise their partnerships to maximise investments in people, data, technology, and transformation. Against this backdrop, organisations are looking for certainty related to performance, requiring commercial arrangements that boost confidence in their partners and offer more than the traditional—and frankly unsustainable—cost-to-serve model, which centres on billing for large numbers of transactions.
Outsourcers have an obligation to recognise this buyer shift, with our approach being the development of a model that has proven to be transformational in delivering clients the certainty they require in this incredibly uncertain time. The concept relies on strategic, outcome-based partnerships, where clients and outsourcers work together on shared commercial objectives. Most notably, this approach involves sharing the risks and rewards of outsourcing services, relieving the pressure from clients’ purchasing decisions.
This article will explore the fundamental tenets of this evolving commercial model, highlighting how innovation, flexibility, and agility can enhance an outsourcing strategy and lead to success for both sides of the partnership.
Outcome-focused commercial agreements
“The success of an outcome-based agreement depends heavily on access to technology, access to people, and access to data”
When organisations begin outsourcing, they’re hoping to achieve specific outcomes such as cost reduction, increased efficiency, improved customer satisfaction, revenue generation, or a combination of each. With an outcome-focused commercial model, these strategic objectives are directly tied to service delivery, meaning that elements of remuneration are only payable when outcomes are delivered. As such, the level of financial risk and reward linked to service delivery is highly dependent on each business’s risk appetite.
For example, if a client tasked us with transforming their customer experience, we would identify how to measure progress—perhaps through net promoter score, customer satisfaction (CSAT), or first-call resolution—and develop jointly agreed SMART performance targets to track the progress against these key outcomes.
The success of an outcome-based agreement depends heavily on access to technology, access to people, and access to data, all of which enable the outlining of fair costs and achievable goals based on the information given provided by clients. In our partnerships, if we find any inaccuracies or our client cannot fulfil its dependencies, there’s the flexibility to review the commercial commitment to ensure its suitability over the long term.
There is always a certain element of risk when partnering with outsourcers to achieve long-term goals, but by offering an outcome-based model, outsourcing providers are helping clients to better manage that risk, focusing on delivering results, not promises.
“In adopting a financially agile approach we can help clients remove, or at least minimise, cost-related barriers to outsourcing and digital transformation.”
Historically, Webhelp has always positioned itself as an entrepreneurial, creative brand in the commercial sense. Our willingness to adapt commercial structures to fit client needs has enabled the creation of partnership-centric contracts that provide significant value for both sides of the relationship.
Outsourcers with significant size and scale should be able to offer a level of financial flexibility that helps partners advance quickly towards their CX goals. For example, suppose an organisation is operating a 500-seat internal contact centre that is underperforming. In that case, there are several financial commitments and liabilities to deal with before switching to an outsourced model, such as facility costs, staffing, technology, and equipment. All these costs mount up and can delay a successful transformation, so it’s imperative to find a trusted outsourcing partner with the financial agility to support the organisation on its journey.
In adopting a financially agile approach we can help clients remove, or at least minimise, cost-related barriers to outsourcing and digital transformation. This type of flexibility gives organisations the agility to deliver a robust, accountable and achievable transformational programme without being held back by their existing liabilities.
While an outcome-focused model involves some level of certainty, by linking the commercial agreement to outcomes, commercial certainty is more about reducing financial risk for clients on the outsourcing provider’s behalf.
It’s not an approach that works for everyone, and considerable due diligence is essential. However, for outsourcing partnerships of significant scale or tenure it can be an approach worth exploring – our experience has shown that when planned and executed properly, the commercial certainty model can produce wins for both sides of the partnership.
The final tenet of an evolved commercial approach speaks for itself; commercial creativity exemplifies an ability to listen and work with partners to develop commercial models that meet their business needs whilst ensuring partnership creation and value for both parties.
As a global company, we’re thinking creatively on an international scale. The appetite for outsourcing constantly evolves in every region, defined by various domestic and global trends. In this ever-changing world, being commercially agile is essential to meet clients’ specific needs in every type of vertical market.
From a Webhelp perspective, if we can work creatively on commercial partnerships and give our clients comfort in the long-term value of outsourcing, we’ve done our job right.
“Our creative, agile, outcome-focused commercial agreements have helped us establish healthy foundations for building strategic, long-term partnerships based on trust”
The client/outsourcer relationship has to change. True partnerships, underpinned by innovative, flexible, and strategic commercial agreements, allow clients and outsourcers to focus on what matters most: creating game-changing customer experiences.
By taking an innovative and flexible approach to commercial constructs, we’ve found that senior customer and operational leaders within our clients’ organisations can confidently present outsourcing services as a solution to better manage costs and, ultimately, deliver an enhanced customer experience.
Our creative, agile, outcome-focused commercial agreements have helped us establish healthy foundations for building strategic, long-term partnerships based on trust, which—in a world of uncertainty—has been paramount to the success of our clients and their experience of the outsourcing industry.