BPO (3rd Handout)

CLIENT-SERVICE PROVIDER RELATIONSHIP

 CLIENT-SERVICE PROVIDER RELATIONSHIP ATTRIBUTES

o Client Company is concerned with:
1. Efficient operation of business function that were once handled in-house
2. Quality transition of processes
o Service Provider Company is concerned with:
1. Benchmarks to ensure objectives standards in assessing work quality
2. Performance measures
3. Scope of service
 THE BPO CONTRACT – Formal agreement between a client and a service provider to take over a “pre-agreed
portion” of the client’s business operation.
o Pre-agreed portion- documented in the contract as the SCOPE OF WORK (SOW).
o MASTER SERVICES AGREEMENT (MSA)
 BPO contract with all its attachment, assumptions and documented agreements.
 Covering agreement that summarizes terms applicable to every job-order with the service
provider.
 Main Elements:

Operational Elements (Used day by day) Just in case Terms

Service to be provided Country Laws
Performance management, issues, change management

o SCOPE OF WORK – Describes specific work to be delivered, by when, at what cost

 Consideration:
a. Can be similar to a “job order”.
b. It is generally an attachment/addendum to a Master Agreement, points to covering terms.
c. May state that in case of terms inconsistency, the SOW or Master Agreement supersedes.
o CORE ELEMENTS
1. Costs to the client.
o Refers to the payment made by the client to the service provider for honoring
contractual agreements.
2. Performance standards expected from the service provider; Service Level Agreements (SLA)
and Key Performance Indicators (KPI).
o “Handle Time” and “Average Handle Time”
o Customer satisfaction rating
o Sales Attainment
3. Service to be rendered or provided as documented in the Scope of Work.
o Delivering food or flowers or mail
o In-bound inquiries or subscriptions
o Out-bound sales costs
4. Timeline of the contract; start date (“go live”) and duration.
o It is a detailed schedule of when the transition period starts and when the service
provider assumes control of the contracted processes.
o In terms of type per duration; most contracts are typically multi-year contracts, however
and when deemed most effective, on-demand contracts may also be put into effect.
 5. Other Specific Operational Requirements.
a) Legal provision (non-completion, confidentiality)
b) Location of operations
c) Outline of reporting procedures, decision-making and escalation of problems
d) Qualifications of personnel
e) Who will provide the service?

BPO (4rd Handout)

BPO OPERATIONS MANAGEMENT

 BPO: OPERATIONS MANAGEMENT OVERVIEW

o End to End Service Level - main strategy that the BPO sector applies.
o Contract with the client - theoretical and practical aspects of designing and implementing End-to-End
Service Level Management (SLM) in any BPO relationship.
o Service Level Agreement (SLA) – a formal agreement between the client and service provider for a
common understanding on aspects including service quality, responsibilities, performance metrics,
penalties and commitments.
o SLM – regular and systematic review of service provider performance against the agreements.

 BPO: OPERATION MANAGEMENT COMPONENTS

1. PERFORMANCE MANAGEMENT
o Systematic process by which an organization involves its employees, as individuals and members of a
group, in improving organizational effectiveness in the accomplishment of mission and goals.
o Employee performance management includes:
1. Continually monitoring performance
2. Developing the capacity to perform
3. Periodically rating performance in a summary fashion
4. Planning work and setting expectations
5. Rewarding good performance

2. METRICS AND REPORTING

o Operational Goals and Metrics
1. Meet Operational Budget
a. Cost per seat/hour/transaction
b. Target Average Handle Time
c. Transaction volume/forecast
2. Reduce Waiting Time
a. % of transactions handled at a specific time
b. Abandon Rate %
c. Average speed of answer
3. Reduce Repeat Transactions
a. First time resolution %
b. Resolution Rate
o Limitations of Service Level Agreement (SLA)
 Lack of emphasis on business objectives
 Lack of end customer focus
 Lack of sub-process metrics to ensure consistency
 Over emphasis on efficiency rather than on effectiveness
3. PROFESSIONAL DEVELOPMENT - Refers to skills and knowledge attained for both personal development and
career advancement.
o Value – lifelong learning, a sense of moral obligation, to maintain and improve professional
competence, enhance career progression, keep abreast of new technology and practice or to comply
with professional regulatory organizations.
o Approach to Personal Development:
 Case Study Method
 Coaching
 Communities of practice
 Consultation
 Lesson study
 Mentoring
 Reflective Supervision
 Technical Assistance

4. QUALITY MONITORING AND ANALYZING

o Quality Specifications:
1. Total Quality Management (TQM)
 Management system or approach to long-terms success though customer satisfaction.
 All members if an organization participate in improving processes, products, services
and the culture in which they work through the use of; strategy, data and effective
communications to integrate the quality discipline into the culture and activities of the
organization.
2. Total Quality Circles (TQC)
 Having organized Kaizen activities, involving everyone in a company – managers and
workers – in a totally systematic and integrated effort toward improving performance at
every level.
 Lead to increased customer satisfaction through satisfying such corporate cross-
functional goals as quality, cost, scheduling, manpower development and new product
development.
3. ISO 9001
 Very flexible quality standard that is readily applicable to many industries as well as to
all sectors of IT-BPM industry, hence its popularity in the Philippines even with small-
scale business.
 Part of a series of International Standards for Quality System, it is primarily focused on
quality systems as models for quality assurance in design/development, production,
installation and servicing.
4. Six Sigma
 Set of qualitative and quantitative (statistical) techniques to systematically improve
processes by eliminating defects and process variation.
 It is by product of decades of quality improvement methodologies such as Statistical
Process Control (SPC), Total Quality Management (TQM), and Zero Defects.

5. PRODUCTIVITY MONITORING AND CONTROL

o Employee Productivity – amount of outputs which can be produced by employee per period of time,
utilizing the given resources. The more stable and elaborated the process of production, the smoother
level of productivity is expected from employees operating it.
o Guidelines for monitoring employee productivity
 Comparison
 Feedback
 Identification
 Measuring
 6. CONTINUOUS IMPROVEMENT INITIATIVES
o 5S Process “5S” – structured program to systematically achieve total organization, cleanliness and
standardization in the workplace.
o Was invented in Japan and represents 5 Japanese words:
1. Seiri – Tidiness – Throw away all rubbish and unrelated materials.
2. Seiton – Orderliness – Set everything in its proper places for quick retrieval and storage.
3. Seiso – Cleanliness – Clean the workplace; everyone should be a janitor.
4. Seiketsu – Standardize – Standardize the way of maintaining cleanliness.
5. Shitsuke – Discipline – practice “five s” daily, make it a way of life; this also means commitment.
o Benefits:
 Decrease down time
 Develop control through visibility
 Identify problems more quickly
 Improve safety
 Raise employee morale
o Kaizen
 Japanese management concept for incremental (gradual, continuous) change (improvement).
 It is a way of life – a philosophy, assuming that every aspect of our life deserves to be constantly
improved.
 “Kai” means Change and “Zen” means good
o Key Quality of Kaizen
 Communication
 Effort
 Involvement of employees
 Quality
 Willingness to change
o Lean
 Process management framework and methodology derived mostly from the Toyota Production
System (TPS). It aims to optimize the flow or speed of producing goods and services by removing
the traditional “8 deadly wastes”.
 Lean implementation leverages tools for assessing process flow and delay at every step in a
process. The focus is on separating value-added from non-value-added activities and eliminating
the root causes and cost of non-valued activities. Lean methods are used to quantify and
eliminate the cost of complexity.

 PROCESS MAPPING AND NOTATION: BASIC SHAPES

o Flow – represents; sequence flow. Connects the tasks, shows/indicates the flow direction.
 Ex: Check for duplicate invoice is followed by generate accounts payable entry.
o Group of Tasks - represents; a group of tasks. It is literally a visual indicator that the included tasks are
within a logical group.
 Ex: Pay supplier group can include:
 Generate balance sheet entries
 Get official receipt
 Issues check-payment request
 Pay supplier