Reader Forum: Managing headcount with outsourced services

Editor’s Note: Welcome to our weekly Reader Forum section. In an attempt to broaden our interaction with our readers we have created this forum for those with something meaningful to say to the wireless industry. We want to keep this as open as possible, but maintain some editorial control so as to keep it free of commercials or attacks. Please send along submissions for this section to our editors at:dmeyer@rcrwireless.com or tford@rcrwireless.com.
Wireless carriers continue to trim headcount, per a recent Bureau of Labor Statistics report that showed 2,000 fewer jobs at wireless carriers than a year ago. Despite the need to reduce headcount to maintain profit margins, however, wireless carriers must maintain their operations with the same level of excellence in the face of growing subscriber counts and increasingly complex networks. Business process outsourcing is emerging as a primary way to help carriers manage network performance and the bottom line.
Outsourcing is not off-shoring
The word “outsourcing” often brings to mind overseas telephone banks where companies relocate entire departments such as customer service or IT, but BPO is a different type of outsourcing. BPO involves assigning a specific network function to an outside organization with processes billed by the transaction, rather than by the hour, in any geography. For example, wireless carriers adding new services or managing integration may need special attention to their asset database. With BPO, database updates are billed transactionally for each function or set of functions by the transaction performed, rather than by time and expenses. Wireless carriers using BPO must have employees with specific skill sets required to perform this work. But the carrier is not responsible for the cost of training, on-boarding, facilities, tools, or other costs associated with acquiring specific talent.
Contracting, or staff augmentation, is another method of supplementing the workforce. In this case, however, the contractor typically works at the carrier’s facility and is paid by the hour.
Different situations will lead a business to use either a BPO or a staff augmentation solution. Short-term needs are usually solved with a staff augmentation arrangement where a contractor is brought in, while ongoing work processes are usually best covered with a BPO solution.
Reasons for outsourced services
At nearly every telecom company, there is more work to be done than can be handled by internal staff, yet the work of building and maintaining networks and services continues unabated. Additionally, there may be a need to adjust staffing levels based on varying workloads, but this can be expensive due to recruiting, training and other associated costs. Outsourced services can alleviate both of these issues in several ways and fill in the holes in staffing levels for several reasons.
Optimizing skilled staff assignments: In some cases, the carrier wants to devote its internal resources to the newest networks or service offerings, but may be bogged down by the need to maintain older services and technologies. In this case, the carrier may bring in outsourced services to handle the older services and technologies.
Offloading mundane work: Carriers may also use a BPO model to handle more mundane tasks. With BPO, the carrier can offload a highly skilled workforce of chores like AutoCAD updates, database maintenance, materials tracking, project management, and order writing. In one situation, a carrier used BPO to take on cabling jobs it had originally done in-house. The BPO vendor was able to reduce the completion time on a given job from 21 days to five days, and to reduce the cost per job by 66%.
Using the capex budget: Transactions can be tied directly to a projects budget, so BPO services can often be charged to capital expense budgets rather than operating budgets to help hold down operating costs.
Providing support in a geographical area: Companies may also outsource because they need work functions performed in a specific geographical area and the skills or bandwidth required to perform those functions are not available from staff in the area.
Making costs predictable: Staff or contract employees can vary in the amount of time they take to do work (and hence the cost of the work), and workloads vary from time to time, making it difficult to predict the ultimate cost of handling a particular set of tasks. However, BPO is billed by the transaction, so the cost of getting the work done becomes predictable and easier to budget.
Eliminating ancillary costs: With contractors, carriers must deal with the cost of on-boarding, off-boarding, training, facilities, and so on. With BPO, the work is performed offsite with the vendor’s equipment. In a BPO engagement, the outsourcing company is the one that has to deal with ups and downs in workload – the customer doesn’t worry about this anymore.
Improving efficiency: BPO organizations are motivated to work as efficiently as possible because they are paid by the transaction. In addition, a BPO engagement can bring an external perspective to company business processes, often revealing solutions that internal employees may not see because they are too close to the problem. One wireless carrier used BPO to outsource database maintenance. The BPO firm brought in its own optimized process for transactions, and was able to complete eight times as many transactions per worker in a given day.
As we can see, BPO brings a lot of advantages to companies seeking to optimize their internal workforces and reconcile their workload demands. There are, however, risks associated with the practice.
For example, carriers are concerned about ceding control over a specific business process to an outside vendor, only to have the vendor not meet the criteria for the statement of work. It takes a leap of faith to stop having one’s own employees handle tasks and to give them to an outside firm. In other situations, the BPO vendor may change the process being performed and then for one reason or another discontinues the engagement, leaving the carrier to re-hire and re-train internal workers to do the job.
Many of these concerns can be addressed with a careful structuring of the BPO engagement.
Requirements for success
For companies considering BPO engagements, there are several requirements for success, including a detailed scope of work, clear communications and flexibility.
A SoW document details precisely what work is to be done and what constitutes a transaction. In many cases, the customer needs help from an external subject matter expert to detail a process and identify the transactions that must be accomplished as part of the process. If the SoW isn’t accurate, the customer won’t get the work they want done, things fall through the cracks, and the customer is disappointed.
It is crucial to have ongoing communication between the customer and the BPO vendor throughout the engagement to discuss how the work is progressing, billings, quality of work, and any other concerns. In order to best promote ongoing communications, it is optimal to identify a single point of contact at the BPO vendor who is responsible for the work. When the engagement begins, it’s very important to have open communication so the vendor and customer both verify what work is covered by the transactions being charged and adjust the scope of work or the transactions, as needed. Some BPO vendors have online portals where the customer can log in and see specific charges at the transaction level.
Additionally, the customer must communicate properly with its own employees about the need for the BPO engagements. Employees can get nervous when workloads are shifted to a BPO vendor, so the customer needs to communicate that the BPO engagement is being done to help full-time employees extend their own bandwidth and do the jobs that they are best at doing.
The customer and the
BPO vendor must be creative and flexible when de
fining the engagement. Sometimes it’s outside their comfort zone – perhaps a type of work they might not have thought about breaking out for BPO, or something that seems impossible to break out for BPO. For example, suppose a fundamental planner completes a certain number of transactions per year. All of the planning takes place the first six months of the year, but the planner has to support those plans for the last half of the year. In this case, the vendor and customer must build the support for the plan into the transaction price. These are the details that the BPO vendor’s subject matter experts can help by mapping out the customers process at a high level and helping the customer see the areas where outsourcing can benefit them the most.
Often, it is best to think small with the first BPO engagement, taking small, discrete processes such as order writing and outsourcing those before considering replacing an entire project management function, for example. Starting small gives the carrier greater confidence that a specific task can be handled by the BPO firm, and allows the two organizations to build a relationship before moving onto complex tasks.
Finally, the BPO vendor must have proper access to the necessary customer systems for its employees. Since the work being performed per the BPO agreement is typically done away from the customer site, the vendor’s employees need the necessary passwords and permissions to perform database updates or other functions remotely.
BPO engagements are an important tool for managing carrier workloads. With the right planning and preparation, they can enable carriers to manage ongoing work efficiently and cost-effectively, whether they are challenged by lower headcounts, are looking for efficiencies, or navigating through a business or technology change.