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Bpo Reviewer

The document discusses key concepts in business process outsourcing (BPO) contracts between a client and a service provider. It covers the main elements of these contracts including the services to be provided, costs, performance measures, and timelines. It also describes strategies for transitioning processes, such as lift and shift versus re-engineering, and factors for ensuring an effective transition.

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Jhaz Eusebio
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296 views4 pages

Bpo Reviewer

The document discusses key concepts in business process outsourcing (BPO) contracts between a client and a service provider. It covers the main elements of these contracts including the services to be provided, costs, performance measures, and timelines. It also describes strategies for transitioning processes, such as lift and shift versus re-engineering, and factors for ensuring an effective transition.

Uploaded by

Jhaz Eusebio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CLIENT COMPANY – concerned with quality transition of processes and efficient operation of

business functions that were once handled in-house.

SERVICE PROVIDER COMPANY – concerned with scope of service, performance measures,


and benchmarks to ensure objective standards in assessing work company.

BUSINESS PROCESS MANAGEMENT (IT-BPM) CONTRACT – a formal agreement between a


client and a service provider to take over a “pre-agreed portion” of the client’s business
operations.

MASTER SERVICES AGREEMENT – covering agreement that summarizes terms applicable to


every job-order with the service provider.
Main elements:
1. Service to be provided
2. Performance management, issues, change management
3. Country laws
*Elements 1&2 are “operational” elements, used day to day
*Element 3 are generally “just-in-case” terms

SCOPE OF WORK – describes specific work to be delivered, by when, at what cost.


Considerations:
1. Can be similar to a “job order”
2. Is generally an attachment/addendum to a master agreement, points to covering
terms
3. May state that in case of terms inconsistency, the SOW or Master Agreement
supersedes

IT-BPM CONTRACT CORE ELEMENTS


 Service to be rendered or provided
 Timeline of the contract (“go live”)
 Costs to the client
 Other Specific Operational Requirements
 Performance standards
 Service Level Agreements
 Key Performance Indicators

TIMELINE OF THE CONTRACT - a detailed schedule of when the transition period starts and
when the service provider assumes control of the contracted processes.

COSTS TO THE CLIENT – payment made by the client to the service provider

FIXED PRICE / FIXED PRICING – this pricing model is easy to plan and more predictable than
other pricing models.

TIME AND MATERIAL PRICING – the price for service is based on the time and material that
was used
CAPEX (Capital Expenditure) – business expense incurred to create future benefit.

OPEX (Operational Expenditure) – the money the business spends in order to turn inventory
into output. These are expenditures required for the day-to-day functioning of the business.

BOARD OF INVESTMENTS – Philippine agency created under the Department of Trade and
Industry; it strives to attract direct investments into the country to contribute to economic growth
and jobs creation in the Philippines.

DATA PRIVACY LAW – Republic Act No. 10173. An act protecting individual personal
information in information and communications systems in the government and the private
sector, creating for this purpose a national privacy commission, and for other purposes.

TRANSITION MANAGEMENT - is the set of activities that transpire after a BPO contract is
signed that implements or executes the detailed movement or transfer of processes from the
client to the service provider.

TRANSITION MANAGER - is responsible for migrating the function or the process from the
client location or organization to the service provider or outsourcing organization.
Skills of a transition manager:
1. an effective communicator
2. strong management skills
3. comfortable in working in a cross-cultural environment
4. thorough understanding of the existing business and legal processes and emerging
technologies

Common strategies in migrating function


1. Lift and shift
2. Re-engineer and migrate

LIFT AND SHIFT – physical relocation of hardware from one data center to another

Phases of Lift and Shift


1. Move the current process to the service provider without changes / improvements
2. Stabilize
3. Re-engineer the process to achieve efficiency gain – produce same output, less FTEs:
*Modify the process
*Add end user type or strategic automation
*Combine role with others
*Move process in a production line
*Negotiate elimination of unnecessary outputs

Items to consider:
1. Process changes will not affect process control points or an output can be done
independently by service provider independently
 Onshore approval of process changes is a good practice
 Onshore review if the change impacts regulatory control points
2. Major Effort:
 Transition phase can be easy especially if “people and processes” are moved as
it may take 3-4 months only.

 Onshore has the risk of losing political will to reengineer process after a while.

Advantages:
 Lift and shift is also known as “as is” migration process

1. Training new team is easier as process is well understood and documented.


2. Existing employees (at the donor location) are available to support the process in case
of disruptions or instability.
3. The new set of team look at the process from a fresh perspective, often resulting to
process improvements and enhance controls.

RE-ENGINEER AND MIGRATE – re-designing of the business process to achieve dramatic


improvements in critical measures of performance such as costs, service and speed.

Items to consider:
1. Useful when the process is broken and requires fixing or is due to undergo significant
change in the future.

*In such case, expertise of the existing team is needed to drive change before it is
handed down to the new team.

2. Company that outsource industry common processes from a leading market service
provider will generally follow the service provider’s processes.

3. Company changes its processes as part of transition to the service provider.

Transition pitfalls and risks


1. Inadequate investment and sponsorship
2. Unclear scope of work
3. Training shortcuts
4. Unclear roles and responsibilities
5. Not retaining the experts

Transition critical success factors


1. Technological readiness
2. Manpower readiness

Measures of transition effectiveness


1. FINANCIAL BENEFITS - quantify the real costs of the functionbefore offshoring (baseline
costs) and the costs of the offshore team on anongoing basis.
2. PERFORMANCE OF THE TEAM – done thru performance metrics; subject to a testing
phase to determine the reasonability of the service measures – also known as “baselining
period”
HAND-OFFS – transfers of the output to a different performer, an approver, for further action
prior to continuation.

Reasons for hand-offs


1. DATA ENRICHMENT – the data performer adds data to the transaction
2. QUALITY ASSURANCE – the second performer is a checker
3. CONTROL – approval for the materiality and substance is done by a separate person

WORK-SHADOWING – used for “learn by doing activity” by service provider personnel.

Phases of Work-shadowing:
1. Onshore personnel doing the activity
 Onshore personnel conducts the training, service provider personnel observes
how the client does the task.
 May be done in the onshore location with service provider staff travelling
 Service provider checks the document provided against actual activity of the
onshore personnel.
 Changes in documentation are done.
 Re-sizing of required staffing may be negotiated at this point

2. Guided service provider network


 Service provider performs the activity; onshore staff looks and provides
guidance.
 Activity can be done in the service provider or onshore staff location
 Generally 1 to 2 months of guided work.

3. Go-live
 Service provider performs the activity independently at the service provider site.
 Performance targets are in placed and required
 Changes in sizing or process now falls under change request process and
governance
 Need to closely monitor for a period of 3 months to ensure stable performance

Components of Readiness Assessment


1. Adequately documented
2. Correctly sized in generic resources
3. Resource sizing

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