Steps in Planning a BPO Strategy

Preparing and implementing a BPO strategy can take as long as six months, depending on the scope of the project. No two deals are exactly alike. However the basic steps are the same.

Here's a step-by-step guide for each stage of the planning, request-for-proposals, and negotiation process.

First Phase: BPO-strategy analysis and education

• How much can your organization really save by outsourcing? Analyze direct and indirect costs and processes, including sub-processes and projected investments.
• Educate yourself on governance and relationship-management requirements, retained processes and organization, internal improvement opportunities, and the request for information (RFI) process.
• As part of your sourcing strategy, consider single versus multiple providers, sole source versus competitive bids, and gather intelligence about prospective providers.

Second Step: RFP development and pricing

• State the work requirements-for example, key processes, finance, HR, or IT.
• Define current and targeted service levels.
• Perform a financial analysis of economic and productivity factors.
• Develop the business case, including costs savings and tangible and intangible process improvements.
• Figure out whether you preferable to have one strategic provider or to work with multiple best-of-breed vendors.
• Choose a pricing model-for example, fixed versus variable or output-based pricing.
• Determine governance, service level agreement and relationship-management plans.

Third Step: Bid evaluation and negotiation

• Distribute RFP to qualified BPO providers based on the business strategy.
• Visit with providers and rank them. Based on your analysis determine a short list of choices.
• Begin preliminary negotiations.
• Check references and conduct three to five detailed customer-site visits.
• Negotiate contract, service levels and legal framework.
• Create a governance and BPO program management office

Once these three steps are done, it is time to begin transition planning.