The
advantages of procurement BPO or contact center provider for an organization are mostly like saving costs, enhanced
efficiency in work processes and an increase in service quality. However, there
are certain risks associated with procurement BPO such as:
- Market Immaturity: The procurement BPO market is new and small and most analysts are not even sure about the actual size of the market and the growth rate is actually very slow and disappointing and seems difficult that it will survive in future.
- Huge Number of Providers: There are a large number of providers from big firms to niche providers and this does not work most of the time as the capabilities of the firm do not match with the requirements of an organization.
- Continuous Change in Providers: The providers are continuously changing in the market and new acquisitions are being made on and off. With so much change occurring, it becomes too difficult for an organization to sign long term agreements.
In such a
diverse environment, organizations are required to conduct a thorough research.
Moreover, here are some points which should be kept in mind by organizations
when evaluating a procurement BPO market:
- Vetting Providers: Excessive amount of providers in the market means that most of them are struggling and will eventually die out because of immense competition or somehow they will be acquired by a bigger firm. It has become difficult for organizations to search for providers because of privacy and limited access to information. On the other hand, large providers have a wide array of business lines and it becomes difficult to comprehend that what resources actually apply to their procurement capabilities.
- Reluctance of Provider. Providers may actually opt out for providing services when they notice that the client is considering too many options or not committed as well. At times, the organizations have to actually convince the providers to take part in selection process. If a provider, at any point feels that they have been asked to take part just to gather some market information, they will automatically withdraw from the process.
- Various Pricing Models. There are various pricing options there in the market. Mostly there is a fixed fee plus monthly service fee which is variable. This variable monthly fee is dependent on factors such as number of transactions, full time equivalents etc. Because many procurement BPO evaluations include unique elements therefore, it needs to have a solid evaluation strategy.
