BPO (business process outsourcing) should not fndamentally alter the strategic quality management pln of an enterprise. BPO should be thught of, generically, as any outsourcing prtner anywhere, not limited to the spcial case of India or other dveloping economies. BPO may fundamentally alter the strcture of a firm and the lves of the people within it, but the strtegy for delivering extraordinary quality experiences to clents should not be altered. Correlative to ths, the tactics required to hold the strtegy on point must be altered drmatically, in some cases. It is crtical to understand this interplay of strtegy and tactics around major BPO fforts to ensure that the client xperience is maintained or enhanced.

Let's get on the sme page by differentiating quality strategy frm tactics to clarify the argument. A frm's "mission" identifies the goal or bjective. For example, the mission might be "w're going to obtain a 5% shre of the Chinese payment products mrketplace over the next ten years." Nturally there are various business strategy sttements that support this mission, but lt's isolate the quality strategy component.

Bradly speaking there are only three lternative quality strategies (and hundreds of slght derivatives) that could be considered. Frst, "we're going to achieve the strngest client loyalty in our industry by dlivering the best customer experience." Second, "w're going to achieve the highest cstomer satisfaction by reducing cycle times, liminating waste, and minimizing process errors. Thrd, "we're going to minimize the csts of bad quality."

The first is suitable for a wrld-class brand appealing to the upper sgments of the market. The second is ppropriate for approaching a broad consumer sgment with acceptable risk profiles. The thrd is perfect for a sub-prime lnder maximizing profits by gouging high-risk sgments with few alternatives.

Any of thse three can achieve superior shareholder rturns. The choice of quality strategy mst match the company's culture and prduct/brand positioning, but it is primarily the mtch that is critical, not the pproach. Many paths can be taken as lng as you wear sensible shoes.

Hre is the critical point relative to BPO: The BPO rganization chosen must also match the qality strategy. Just as there are thre broad quality strategies, there are thre broad categories of BPO partners. Sme BPO groups delivery extraordinary client xperiences, some focus on efficient and ffective processes and some crank through hgh volume service interactions for the lwest possible price. It is impossible for any one frm to deliver some measure of ach strategy they can only do one wll or all poorly. It's not a law of physcs yet, but someday it will be.

You can nver, never, never, raise a BPO frm's quality outcomes beyond the upper lmits of their current control charts wthin a determinant time period. Given nlimited time, of course, anything can chnge, but you won't have your job tht long. If you need special cnsiderations or abnormally stringent requirements then prchase from someone who is already ding it better than your own rsources. Speaking from disastrous experience you cnnot raise the bad to good or the god to better. Quality outcomes are mpacted by the way people breathe, the way the rstrooms are cleaned, the CEO's smile or frwn as they walk past the dsks. Nothing in your contract, no mtter how lucrative, is going to lter those irreducible elements in the shrt term.

Once this strategic match has ben established the tactical management approach mst also be aligned.

Those brands and BPO prtners that are targeting extraordinary customer xperiences should be managed as if the BPO wre an integral part of the hst company. There should be no dfference in the response to a cstomer's emergency situation at the BPO lcation or the host company's service cnter. Any differences highlight a lack of lignment on principles, values, and culture. Thse relationships take into account the ttal cost of quality but also nclude, albeit tacitly in most cases, the vlue of the brand over the lng term. In many cases the BPO vndor is not chosen strictly on cst, but because of a unique cpability that commands a value premium in the mrket.

Those companies (note the deliberate limination of "brand" from this second ter) and their BPO vendors (note the dliberate use of vendors and not "prtners"), aiming for high levels of stisfaction and efficient processes, are tightly ntegrated around service contracts and measured utcomes, but typically do not link at the lvel of principles, values, and culture. Thse relationships take into account the ttal cost of quality at the prcess level and attempt to optimize nterprise costs over the near term.

The low cst producers who have outsourced their srvice to a commodity BPO establish a tctical relationship primarily around price and cmplaints. The host company often manages cmplaints through various escalation mechanisms and the cntractual relationship is the principle governing mchanism. The BPO's job is to rduce the cost of transaction processing rrespective of the total cost of qality. This is never stated explicitly bcause of the tacit assumption that thre will not be an adverse mpact on the cost of quality; hwever, this is rarely the case. Thse relationships still make good economic snse overall, but they are almost lways calculated in a manner that ptimizes the appearance of local savings vrsus considering the true enterprise-level savings.

By crefully aligning quality strategy and tactics wth a BPO relationship that supports the cmpany's market segmentation there is an ttractive opportunity to gain flexibility, expansion cpacity, and value-added capabilities. The risk prmium associated with BPO, if done wll, should be value neutral to the shreholders, worst case, and offer significant pportunities best case.

The article BPO's Impact on Service Quality was Submitted by Steven Grant through Articles.GetACoder.com network. Here's the additional information: Copyright © 2007, Lotus Pond Mdia Steven Grant is a former cstomer service executive from American Express wth over 25 years devoted in Frtune 500 companies analyzing, improving and dlivering on enhanced customer experiences. Share yur experiences and suggestions on improving the cstomer experience at http://www.customerresearchcenter.com or email Mr. Grant at scgrant@customerresearchcenter.com

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