The Pitfalls of Throwing People at a Problem

When BPO contracts specify stringent SLAs on performance when they outsource to a low wage country, the vendor is in the cat bird seat to begin with.

Where you need 100 people to man the phones in a call center, you put 200 people to work. After all, the margins are pretty good and every SLA can be at 99.999% compliance. This is where the trouble starts. Once the process is on its way and people gain experience, salaries start escalating. You find people absconding without notice, only to show up at another BPO for a 10% raise!

Pretty soon your overstaffing becomes a serious financial issue!

Whether it is developing software or delivering business process outsourcing services, throwing people at the problem never works and hurts in the long run! In developing software, throwing more people at the problem guarantees failure! At least in business processes, you have a buffer of people that makes the SLAs somewhat immune to personnel turnover.

The thinking in many business processes, especially in companies that are competing with huge established players is somewhat interesting; they have dispensed with KPIs and SLAs altogether!

Here's an interesting story about how Zappos does customer service - How Zappos Does Customer Service and Company Culture

Zappos completely dispensed with measuring handle time of their Customer Service Representatives! The CSR stays with the customer till their problem is solved, and they are happy! The longest call was supposed to have been 4 hours!

This will not work for every company, but for a company liek Zappos that was trying to get a foothold in a crowded market, exceptional customer service was part of the product, not a cost center!

When we talk about BPO companies moving up the value chain, this kind of service can be a niche offering!

In fact, in many companies that have already done a lot of BPO, first call resolution is becoming very important. Exceptional service can have its own price and it will certainly take a lot of BPO service providers out of the competing-on-price game!

Something to think about!