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Why Should You Choose Mid-tier Vendors For Your Outsourcing Partnership?

By Author: Mrunmayee Pandhare
Total Articles: 10

In the last few years, we have heard of hundreds of organizations that have opted for specialized & niche vendors to manage several aspects of their business operations. Larger companies have been the first ones off the block in working with several different specialized vendors and have been reaping significant benefits from these outsourcing initiatives.

The mid-sized, community and regional players have been contemplating the right way to leverage outsourcing and benefit as well. However, what has worked for the large players may not necessarily work for the mid-sized ones. Mid-sized organizations are looking to ‘test the waters’ before a full commitment, have fewer resources to manage the outsourcing relationship and do not want to invest a lot of money and resources upfront.

Our feeling, therefore, is that mid-sized firms can benefit most by working with mid-tier business process outsourcing (BPO) organizations. (BPOs are alternatively referred to as Business Process Management (BPM) or business process service organizations).

There are several reasons to choose mid-tier BPOs and these include:

1. The need for flexibility

Amidst the market volatility, it makes sense to work with a vendor who can start small (or big) as needed, and also be flexible in scaling the relationship up or down based on your business requirements. Mid-tier BPOs, based on their agility and desire to engage closely with mid-sized organizations, are able to offer higher engagement flexibility. Larger BPOs require larger scale because of higher overheads, and may not be as flexible.

2. The need for Variable Cost structures

Managing fixed costs, especially in cyclical businesses, is very important and drives the overall profitability of the organization. Mid-tier BPOs, if you have chosen the correct partner, are able to offer variable cost structures (also called pay-as-you-go or transactional pricing). This not only reduces your fixed costs, but also allows you to scale up quickly as your business grows (and scale down if needed) and transfers the risk to the service provider. We have found that mid-tier BPOs are far more likely to offer variable pricing than larger providers.

3. Handholding the process

As you move to outsourced operations, it is important that your partner ensures that the transition of your operations to them is seamless and does not disrupt operations. This requires not just close engagement of the two parties, but also a deep commitment and senior management engagement of the service provider. Mid-tier BPOs tend to be more flexible in their approach, put more senior resources to nurture the engagement, and offer a lot more handholding to ensure that your transitions are a success.

These factors play an important role in ensuring success and to drive ROI and business benefits from your outsourcing decision. Large size vendors tend to focus more on engaging using their standard structure and model, and offer a less customized approach unlike mid-tier BPOs. Mid-tier BPOs go a step further in building a great relationship with the client and customizing solutions to ensure mutual success.

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