Per Transaction Pricing is not True Business Transformation

Many BPOs, when faced with the argument of not competing on price, turn to show their Per Transaction Pricing as the way they have "transformed" BPO for their clients.

This will eventually end up biting the Service Provider! Here's why:

Indian BPO Service Providers have traditionally thrown people at the problem rather than any considered, clever ways of doing things better or cutting waste in a process.

This worked before the advent of Domestic BPO or the recent Global Economic meltdown. In the past 5 years costs have escalated for the BPO service providers because the best people in the business, be it Mortgage Loan Processing or provoding excellent support over the phone or chat required certain kinds of talent and these people kept moving from one company to another, getting increases along the way!

Domestic Outsourcing pays a fraction of BPO revenues that a typical International Contract provides. The recent global economic meltdown has the BPO buyers twisting the arms of the service providers, as if they needed an excuse to renegotiate rates anyway!

Now on top of this, you add per transaction pricing, you are adding a triple whammy with your top line getting squeezed, you cannot throw additional people at the problem to meet your SLAs, and your costs are escalating!

Now if you think that just going to Per Transaction Pricing alone is going to add value to your clients, it certainly will! They will be extremely happy with the deal they are getting. You, as a service provider, unless you figure out a way of using your resources very efficiently and effectively, are going to face a profitability problem, unfortunately!

True Business Transformation is cutting waste from your process, human, time, unncessary movement of paper and information, unnecessary multiple contacts with the end consumer, etc. And there is a lot of that in processes, especially in companies that have been doing the same process the same way for the past decade or longer without ever thinking about it! That's what gets outsourced!

There is no escaping that and Per Transaction Pricing will not achieve this unfortunately, all but itself! But combined with true continuous process improvement, it can be a potent weapon that can keep competition at bay for a long time!