ContributorsEnabling TechnologyMulti-process HRSourcing

A Lesson from America

While Europeans might laugh about certain American cultural practices, they also are students of how U.S. companies put technology to work in BPO transformation.

by Synco Jonkeren, Gianni Giacomelli

There is one thing America can teach the rest of the world. Guesses are welcomed. Use of air conditioning? Fuel efficiency? Vacation time? These days, there is enough for unending discussions; more if you include Canada in the mix. And in this column, written by a Dutchman and an Italian who are heavily influenced by American culture, we could go on for a while.

Still, there is something Americans arguably understand better than Europeans: the innovative use of information technology; maybe not systematically the development of such technology (the largest enterprise software vendor is headquartered right in the middle of Europe, and some Brits even claim that they invented the Internet) but rather the smart and thorough use of it. The average American businessman is more IT-savvy than his or her European peer and has historically learned more quickly how to use IT to get a business advantage. In particular, American senior management often beats Europeans hands-down in using IT as a strategic weapon.

BPO is no exception. While everybody knows that HRO gained traction in the U.S. first, and that Americans have had more time to experience its teething troubles, how they leverage related technology is not as well known. That is where an intriguing EquaTerra study fills in the blanks.

Data from interviews with more than 150 senior executives on both sides of the Atlantic show only small differences in how they use BPO and in-house shared services:

  • 78 percent of European respondents engage in BPO vs. 86 percent in the U.S.; and
  • 82 percent of European respondents have a shared services center for at least one business function vs. 92 percent in the U.S.

Clearly, Europe’s business people do not live in caves. However, when deciding about BPO, Europeans still seem very focused on purely commercial aspects of the relationship, including:

  • The “quality” of outsourcing contract and “service level agreements” (53 percent in Europe vs. 37 percent in the U.S.); and
  • Ongoing outsourcing management and governance (51 percent in Europe vs. 29 percent in the U.S.).

In contrast, U.S. respondents put more emphasis on the business foundations underlying the service delivery, such as:

  • Quality of the service provider (74 percent in the U.S. vs. 51 percent in Europe); and,
  • The providers’ IT landscape and capabilities (51
  • percent in the U.S. vs. 29 percent in Europe).

With more BPO experience, Americans realize that the contractual mechanics alone are not sufficient in BPO and that several key components are needed to ensure that BPO delivers sustainable value, including IT as a key enabler.

Another interesting result of the study is that European BPO buyers are more likely to turn to specialized outsourcing consultants for help on IT-related issues in BPO (51 percent Europe vs. 38 percent U.S.), but tend to rely less on their own IT department (44 percent Europe vs. 63 percent U.S.). This correlates to market maturity, and in addition shows the relative lack of experience that European organizations feel they have in using IT to make the most out of BPO.

Our opinion is that Europeans should consider the experience of their U.S. counterparts, better understand the impact that IT has on the cost, quality, and risk of their BPO engagements, and exploit it ruthlessly to obtain more sustainable results. Harnessing IT to increase the efficiency and effectiveness of BPO operations is a clear path to sustainability.

European companies should also consider including their IT departments early and thoroughly in their BPO projects to ensure that IT becomes an enabler and foundation for additional value in BPO, rather than risking turning it into a constraint later on.

All of the above is not to say that Europe does not know what information technology is. The point remains that while Europeans might keep on making jokes about certain habits of their transatlantic cousins, they had better look at how Americans use IT.

There is hope: Europeans have so far demonstrated mature attitudes toward HR standardization around best practices, both with words and money (the “poster children” of standardized HRO have a strong European component). Provider best-practice standards are a prerequisite for getting at those much-needed HRO economies of scale, and Europeans seem to have understood this. Becoming stronger in harnessing technology for their outsourcing strategy will just amplify the positive effect of those efforts.

Tags: Contributors, Enabling Technology, Multi-process HR, Sourcing

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