Remember the old saying, "Nobody ever got fired for choosing IBM"? Truer words were never spoken, especially in the call center outsourcing industry where the age-old debate of big vs. small vendor is a mainstay conversation.
The topic of vendor size always sparks lively discourse and sharing of diverse perspectives. In some circles, there is a perception that the largest call center vendors or business process outsourcers (BPOs) are the most reliable options. There is also an assumption in the industry that sizeable BPOs are safer choices or better at scaling and handling complex workstreams than their smaller counterparts.
Our industry is crowded with vendors of all sizes competing for mindshare and market share. Size is relative, so how do you decide if outsourcers are too big, too small, or just right for your business needs? Let's delve into this.
Which camp are you in?
Vendor selection methods aren't uniform across our industry. With some brands, the process involves pre-ordained selection criteria targeting vendors only of a certain size. For others, cultural alignment and other preferences supersede size and scale.
Regardless of how selection processes differ, when it comes to exploring BPO options, brands seem to fall into one of several camps, including those who:
- Generally, prefer the largest and most visible, well-known BPOs.
- Automatically default to oversized BPOs even for smaller outsourcing needs.
- Have "been there" with big BPOs and are diversifying to mid-sized and smaller providers.
- Utilize a mix of large BPOs and smaller providers, thereby spreading risk.
- Always prefer mid-sized market leaders and rising stars.
- Are still unsure, open to ideas and exploring viable options.
Working with bigger BPOs
The largest outsourcers can range in size from 200,000 to 400,000+ employees globally and are well-known industry names. Bigger BPOs have the most expansive marketing reach and are often permanent fixtures on sourcing's RFP list.
The argument for going big is usually around large scale across multiple geos, combined with consolidated vendor management efforts. Many successful case studies confirm this strategy. For brands with very sizeable outsourcing needs, the decision to use bigger BPOs is necessary and pretty much automatic. And most big vendors are notable organizations that offer a large footprint, among other value adds.
With that said, since our inception, umpteen brands have worked with us to diversify from larger BPOs for very consistent reasons. Some are satisfied with bigger providers but wish to challenge them. In comparison, others have had lukewarm experiences and struggles with flexibility, speed, performance, staffing or onerous contract terms.
Many BPO giants are conglomerates, offering an expansive menu beyond traditional contact center services. That is fine for brands seeking managed services, IT outsourcing, manufacturing, software development, etc., but what if you're not? Brands that are only seeking best-in-class customer contact support ("BPO 101") report to us that they're often overwhelmed by larger BPOs "leading in" with a menu of extraneous services and constant upselling and cross-selling from other divisions of the BPO.
Working with mid-sized BPOs
Elite mid-sized BPOs offer scale, diversity, de-risking, expertise, flexibility, depth, stability, quick response times—not a bureaucratic maze. Notice I said "elite"—because the BPO should be meticulously vetted for demonstrable, impactful solutions. Picking a run-of-the-mill, modest-sized alternative won't get it done. Regardless of size, only a top-echelon BPO can move the needle on KPIs and service delivery.
The "argument" against mid-sized BPOs is that they're too small, incapable of scaling, lack a global footprint and have other limitations—much of this is misperception and sales vapor from vendors who fear competition. By design, most BPOs that aren't among the industry's largest have no aspirations to become a Goliath.
No BPO is perfect. However, most brands that selected our “right-size” BPOs tell us their response times are faster, there's greater agility and flexibility, the BPO is quick to fix problem areas, pricing is competitive, customer experience is solid, frontline depth is strong, change management is well handled, transparency is better and access to C-suite executives is a huge bonus. For example, one of our BPOs has 15,000 agents in 10 countries, supports 30+ languages and consistently wins Stevie Awards and other recognitions. This company has multiple clients that also utilize bigger BPOs.
All of this makes the brand feel like the company's most important and beloved client. Brands open to considering a BPO that isn't a big, obvious option can expect to achieve a similar level of client delight.
The default syndrome continues.
Too many brands with smaller outsourcing needs still default to the larger BPOs, thinking that big equals best—a common fallacy. The sales pitch is that "every" client receives the same attention regardless of size. Somewhat disingenuous? Brands have reported to us that with certain large-sized BPOs if the client requests something outside the letter of the contract, an inquest ensues. Or if the brand demands quick pivots, they're met with sluggishness and bureaucracy.
Size doesn't guarantee anything.
It's a myth that bigger vendors offer an outsourcing safe haven. Here is a real-world example—a client of ours selected one of the top 10 largest vendors thinking their business would be in good hands. The outsourcer promised the moon but didn't quite deliver, and, in fact, a data breach occurred. This vendor made multiple acquisitions of other vendors, and systems remained disparate and leaky. Credit card numbers and other private customer data were stolen by the vendor's own staff, leading to identity theft activities. Imagine the reputation damage and cost of clean-up the client endured.
By Nick Jiwa
Founder & President at CustomerServ
To be fair, such issues can happen at BPOs of any size. The moral of this story is that the size of the vendor does not guarantee that they are a higher quality or safer operation.
Overconcentration can hurt.
Proponents of outsourcing to fewer, larger vendors argue that it makes no sense to use multiple vendors when you can consolidate to a single-sourced big one or couple of big ones. This is logical for some, not all, brands, especially if price concessions are involved, but they usually come with a guaranteed multi-year locked-in contract, handcuffing the brand from leaving the BPO.
And what about de-risking? Suppose you outsource so much of your business to a single vendor or several large vendors, and, one day, the tail wags the dog. Then what? De-risking or even fully exiting from an untenable vendor relationship is a huge time-suck and resource drain. This predicament not only applies to expense outlay but also production, performance and reputation because when a company must stop to "figure things out," it typically creates chaos.
Diversification is key.
Remember the Avis car rental commercials? Smaller in stature than the big behemoth Hertz, Avis would say, "We try harder." ˆYou can make the same argument for the "Davids" competing against the "Goliaths" in the BPO world. There's ample expertise and horsepower outside the largest BPOs, and perhaps even more hunger and desire to win, grow and retain your business partnership. The goal is to create balance in your partner lineup so that no vendor controls so much of your business.
Too much consolidation can be risky, while diversification gives you the ability to spread your outsourced headcount to several key strategic vendors. That gives you the luxury of shifting your business to your best performers, keeping all vendors in your sourcing channel on their toes. This way, you call the shots; you're in control and never find yourself with too many eggs in one basket.
Big vendors make big moves.
Profit margins are under tremendous scrutiny, especially in today's challenging economy. And if private equity owns the BPO, the pressure is always on. However, with larger vendors, margins always seem to be front and center. The "bottom line" can dictate seismic moves, like wholesale shredding of lower profit clients and firing or de-prioritizing smaller accounts by allocating resources to larger clients. Or by selling off divisions of the company in whole or in part, with ineffective transition strategies that ultimately lead to client attrition.
A message for mid-sized and smaller vendors.
"We are better because we're smaller" is NOT a selling point. If you're a mid-sized call center vendor competing against the larger players, you must be at the top of your game. I've seen far too many mid-sized BPOs get walloped because they didn't work hard enough for the client. Or they promised the client lower attrition and scalability and ended up with high attrition, higher costs, rampant staffing issues and mediocre performance.
If you win over a client that is used to working with larger vendors, you must prove to the client daily why they made the right choice by picking your company. That means your services must match your sales pitch. The customer intimacy you promised, and the shorter turnaround times better be a reality. Most importantly, if you de-prioritize a client because of size, you're guilty of the very same thing you accuse bigger vendors of.
In the end…
"Vendor selection" is one thing; choosing the most compatible and best-aligned partner is another. Vendor selection is all about the right fit, the right offer and the right time. The vendor landscape shifts daily, requiring you to keep up with developments that will ultimately impact your selection process and options.
Brands are seeking outsourcing relationships with the right balance of scalability, expertise and flexibility. But the issue for many leaders is the time and resource investment required to uncover those extraordinary vendor relationships you want to hang on to long term. It's easy to select an obvious, visible, big BPO, but it's much harder to locate that extraordinary partner who can move the performance needle better and faster.
Your business should always be attractive, desirable, and valued by any outsourcer you choose. So, don't end up as just another logo on the vendor's masthead. Instead, pick the right-sized collaborative partners who will be inventive and nimble and prioritize your business—not just today but every day. Make sure that the CEO and other senior executives value your partnership and keep their promises because you deserve a top-down commitment.
Think about what your business means to the outsourcer because, in the end, size matters! #VendorPerformanceManagement#OutsourcingStrategy#BusinessStrategy