Survival of the fittest: are BPOs ready to evolve?

October 24, 2018

The most successful businesses respond to market pressures much in the same way Darwin’s famous Galápagos finches responded to food scarcity: adapt or die.

The Darwinian analogy is more apt than you might think. Evolution and extinction are dominant forces in the world of business and customer service. How many companies have ceased to exist because they haven’t been able to adapt and innovate over the last decades?

And could Business Process Outsourcing (BPOs) be next on this list?


Disrupt or be disrupted

The business world has seen dramatic die-offs from time to time — Kodak and Blockbuster probably ring a bell. The two industry giants, once considered untouchable, missed several opportunities to keep pace with the digital revolution and ended up filing for bankruptcy.

Blockbuster could have acquired Netflix for $50 million US, in 2000, but their CEO thought it was a “very small niche business” and looked the other way. Today, Netflix has more than 100 million subscribers worldwide and a revenue of $11.69 billion US. Blockbuster, on the other hand, filed for bankruptcy in 2010.

As for Kodak, despite having created the digital camera, invested in the technology, and actually understood that photos would be shared online, they failed to realize that online photo sharing was the new business, and not just a way to expand their existing printing business.

However, what’s important to understand is that this happens across all industries and customer service is no exception.

Natural selection in customer service

Some say customer service used to be easier. Business hours placed natural limits on interacting with consumers, who were resigned to waiting a long time to speak with CS representatives over the phone. If a company failed to meet even these basic expectations, they might write a letter to the CEO.

Fast forward to 2018 and customers have taken control. They demand 24-hour access to customer service, via computer, tablet or smartphone. They expect to be able to self-serve if possible and, if not, get help using live chat, email, or telephone. They want an immediate response, and will scream it from the social media rooftops that you failed to meet their heightened service expectations.

This is why technology came to play such an important role. With the rise of artificial intelligence and big data, customer service has evolved into a field that’s all about efficiency, automation, and personalization. We’ve seen the emergence of new tools in self-service; live chat’s dominant performance in customer satisfaction; the widespread adoption of advanced analytics; and the automation of repetitive processes, which has allowed companies to cut down costs and keep their operations efficient.

So where does this leave those who have been the leaders of customer service in the last few decades? What will be the future of BPOs in this fast paced environment?

Are BPOs at risk?

As the VP of Global Alliances at Unbabel, I have been working closely with BPOs such as Concentrix and 5CA and have come to understand how they can improve the service they provide.

The problem is that clients are becoming more demanding and they expect BPOs to be using technology to increase their margins, lower the amount of human effort involved in customer service, increase efficiency, and — critically — pass those savings on to them.

But that has not been the case to the extent one would hope. BPOs have been behind the curve in terms of technology for a very long time. In other words, they’re not keeping up with their clients’ expectations. Just as CMOs are often better at standing on stage and talking about AI than actually making dramatic advances in their own companies, BPOs have talked about automation for a long time, yet efficiency increases are often small isolated innovation initiatives (also almost always in English) rather the wholesale change and progress.

So to put it simply, BPOs don’t have to go extinct: if they want to get ahead of the game, they’ll need to look beyond their successes and adapt to the trends in the industry. A technology first approach is beginning to dominate and dictate the M&A activity we have seen over recent months.

When you look at the numbers you realize how unstable things can get for a BPO company. The revenue of the global outsourced services industry has been unsteady over the last few years. In 2016, the industry market size dropped to $76.9 billion US, the lowest figure seen in a decade.

So if BPOs want to keep their business booming they need to not just look to the future, but be brave and bring about wholesale, technology-first change. Now.


Adapting to change and implementing state-of-the-art technology

BPOs have been talking about AI, big data, and the gig economy for ages. But very little has been done to actually take advantage of these opportunities.

We’re not talking just about buzzwords here; we’re talking about technology that BPOs should be delivering to their customers. It’s about taking innovation to their clients and cutting down costs (which, by the way, is the leading driver for outsourcing services, according to business executives).

But in order for that to happen, BPOs need to introduce new digital tools into their workflows without losing revenue.

Artificial intelligence is a great example. There are a lot of advantages to using AI in customer service. For example:

  1. AI can know everything your users are doing; your customer support team does not.
  2. AI can take away some of the repetitive workload from agents.
  3. AI provides customer service that is always on.
  4. AI is cost effective, fast and highly scalable.
  5. AI can help you deliver a hyper-personalized experience

But how can BPOs implement this type of technology without actually developing it themselves?

In my experience, the secret lies in finding the right partners. The trick is to look for other companies who are trying to improve customer experience by developing these technological solutions and partnering up with them.

In fact, that’s something we’re working on at the moment here at Unbabel. We’re partnering up with specific forward thinking BPOs and we are helping them build a whole new go to market message for themselves, while empowering them to introduce AI and lower their costs – and pass this through to their clients.

Building multilingual hubs in low-cost locations

BPOs have been working in low-cost locations for ages now and that has proven to be a very successful (and cost-effective) model. However, language has always been an obstacle. You can’t really move your customer service operations to another country if you don’t have enough native agents.

But now, for the first time ever, BPOs can create centers of excellence in low-cost locations.

Unbabel’s translation as a service allows BPOs to disrupt their own model by building a multilingual hub for clients across all non-voice channels in a low-cost location.

By partnering up with Unbabel, they get to tell their clients not just that they can take them to a low-cost location, but also enable them to do that in up to 28 languages, thanks to our AI-powered translation platform.

I believe the BPOs that survive will be the ones that pursue mergers and acquisitions to augment their technological capabilities, and that build deep, thoughtful long-term partnerships with a host of startups and scale ups. We are already seeing this approach pay off with quite extraordinary results.

In the end, it all comes down to disrupting yourself before getting disrupted. Successful businesses should never go extinct, and that goes for BPOs.

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