Companies have long used business process outsourcing (BPO) to gain the benefits of scalability and cost savings, offloading non-core tasks to a qualified service provider. Until now, these services were aligned horizontally, by specific function. A call center was a call center; data entry was data entry. The whole "sell" centered on labor arbitrage, centralization and economies of scale.
While this front office and back office BPO is still beneficial, progressive outsourcers are now investing time, training and resources into what is believed to be the next big industry trend: Vertical BPO. There is a huge opportunity to help clients with more complex, industry-specific work that goes beyond the traditional front- or back-office engagement. The opportunities are near endless, if the service provider is willing to make the investment in specialization.
While there are several industries that can benefit from the vertical specialization, let me explore one in greater detail – the financial services industry.
Ask any banker what's keeping him or her up at night and you'll get the same answer: regulations. The industry has been hit by a huge wave of regulations, as governments world over try to prevent another global meltdown. For banks that are already operating lean and using legacy core systems, regulatory compliance has the potential to bring them to the breaking point.
Vertical BPO can play a significant role in helping institutions deal with these new compliance needs. With industry-specific, integrated systems in place, the vertical BPO can seamlessly extract the needed data and create the appropriate compliance reports at a fraction of the bank's costs.
For investment banks, the vertical BPO can create an industry utility in the trade settlements and clearing processes that will encapsulate best-of-breed processes on a state-of-the-art multi-tenancy platform that will serve to reduce total cost of operations while improving accuracy and turn-around times.
The concept of Vertical BPO is an innovation, not a response to an existing demand. But, as companies worldwide face increasing economic challenges, it is the future of outsourcing.
Entering this specialized market takes commitment, in terms of time, training and FINANCIAL INVESTMENT. It requires specialized IT systems/platforms, certified personnel and subject matter experts with deep expertise in the specific industries served. This is not a strategy that can be bootstrapped. One needs to have a proactive mindset and demonstrate thought leadership to make inroads into the vertical BPO space.
Read more in the article, 'The Next Big Trend in BPO: Vertical Specialization.'