The concept of micro BPO is not new, but it has not achieved its potential. In the world where BPO services are measured in high volume, micro-sourcing provides a source for Small to Mid-Market Businesses (SMBs) to take advantage of global sourcing models to reduce their operational and back-office costs. It also changes the dynamics of the supply chain. It provides an opportunity for smaller service providers to connect with SMBs.
The challenges with micro sourcing from a SMB perspective are three-fold:
1. Management issues – SMBs are not adept at managing global sourcing leading to gaps between expectations and delivery.
2. The sheer number of SMBs with a large pool of smaller BPO players makes the job of connecting the “right” BPO vendor with the SMBs extremely challenging.
3. Even though the BPO projects are small, the procurement logistics are still time-consuming and complex.
Having a single consolidator that manages the smaller BPO vendors provides an efficient mechanism to implement micro-sourcing. Good consolidators perform due-diligence on the service provider network, match project needs to providers, and provide a dashboard to review the service levels. The benefits of having a single consolidator include improving the procurement efficiency by providing a set of reliable, credentialed service providers, a one-stop procurement channel, competition between service providers and complete transparency in sourcing. SMBs benefit by getting Tier-2/Tier-3 pricing together with a single point of control and total visibility on the engagements.
While there are challenges the cost savings can be enormous, in fact substantially higher than IT outsourcing. Just in the U.S., there are over a quarter million companies who have between 100 and 500 employees. A back of the envelope estimate suggests that the savings can be in billions of dollars even if a small percentage of these firms take advantage of Micro-BPO in their business.