Serco: Value judgements - David Poole, United Kingdom

As companies continue to face the pinch, finding a cost-efficient way of running basic processes has become essential. The pressures of doing more with less have led many executives towards an increasingly attractive and competitive outsourcing market. Not only can BPO providers create a level of operational efficiency that saves money, they can also add genuine value to an enterprise by improving the performance of front, back and middle-office functions.

Those companies with existing outsourcing contracts also face interesting times. The economic climate has changed immeasurably since many companies first partnered with BPO vendors. Re-evaluating the terms of those relationships and seeking greater advantage is the key for industry experts like David Poole, UK and European CEO at Serco's BPO business.

"Given the reluctance to shift vendors, it's crucial to focus on doing things better with your BPO provider," he says. "Clients are asking for something new. They don't just want cost reduction; they want real value."

For Poole, adding that kind of value requires looking much more towards business outcomes than inputs. Making the customer more successful is key and can range from improving the way an organisation deals with administration issues right through to customer retention and employer performance.

"If organisations want to really maximise the value of their relationships, they should be working on how to improve things, that is, how to get the best outcome from the process," he says. "Clearly cost is a consideration, which is why Serco has a global network of centres to provide the most efficient way of delivering them. But the main thing we do is bring forward our ideas around processes with the investments we've made in order to make our client as successful as possible."

Among Serco's 700 clients, Poole is keen to share one example in particular. In this instance, the company focused on a very specific process and thought carefully about how the outcome could be improved.

"We had 550 staff working solely on loan cases and releasing credit for a large UK mortgage company," he reveals. "By doing that more efficiently and accurately we helped our client perform better in the marketplace and gain a great reputation among its customers. In the end, that mortgage provider felt like a real leader in the industry, doing things much more effectively than it had in the past."

Central to success

The range of business functions appropriate for BPO vendors has changed dramatically since the first tentative steps were made to outsource simple ancillary services. Companies such as Serco now run all kinds of central business tasks including customer service processes, finance functions and entire IT systems.

"I think there's a lot of capability in the BPO marketplace today," Poole says. "People are looking for a broad set of capabilities to achieve the best end-to-end processes. BPO vendors are so much more efficient at providing things like technology around procurement and HR.

"Organisations just don't need to have these kind of things in-house any more. There's a big opportunity to use the provider's processes and look towards the outcome they can deliver. They can focus on whatever their core business is and let us do what we do best - effectively deliver the outcomes you require."

While the scope of services offered in the BPO market has grown, the need for intimate sector knowledge remains absolutely imperative. In the past, generic service providers dominated the outsourcing market, but today, detailed industry knowledge is considered essential.

"Sector knowledge is driving the real added value," Poole says. "Senior management needs to have the confidence that we can understand their business and their market. Different processes apply to different industries and it's important those variations are appreciated."

Statement of intent

Serco, a FTSE 100 company with annual revenue of £4.5 billion and a heritage stretching back over five decades, has a stated mission to become the world's greatest service company. It delivers most of its work in the public sector at both national and local levels, but also has a number of private sector clients in the retail, automotive and banking industries. Serco's BPO business now employs 50,000 people, operating across ten countries in 98 locations.

"Serco is well known for delivering high-quality front-line services and for the detailed knowledge we have of our markets," Poole says. "As organisations have sought to respond to changes in the global economy, we have seen an increase in demand for our BPO capabilities as our public and private sector clients have started seeking efficiencies in back and middle-office support services. At the same time, they want to improve the services they are delivering to their customers. This approach comes naturally to Serco from our strong track record as a front-line service provider".

There are two particular areas where Serco's market knowledge and customer centric philosophy is proving a winning combination: retail and local government. Retailers are undergoing a deep shift in their traditional channels with the advent of online shopping and internet stores. And that means companies are having to rethink their entire customer service strategy. Local government is also having to respond to major socio-economic changes as well as cuts to central government funding, leading many authorities to consider fundamental changes to the way services are delivered.

"It’s crucial to focus on doing things better with your BPO provider. Clients are asking for something new. They don’t just want cost-reduction; they want real value."

"We want to be the best provider in those very specific areas that merge front, middle and back-office capabilities," Poole says. "These are very important to us because we have a real vision about how the sectors could work, how the channel shifts could be managed, and how the processes can be improved."

Strategic acquisitions

A series of new deals closed by Serco owe a lot to the wave of recent acquisitions that have positioned the company right at the front of the BPO market. In the past year Serco has acquired three BPO businesses: Intelenet, the Listening Company and Excelior. Intelenet is a market-leading pure-play outsourcing vendor with a focus on 'industrialised' service delivery. The company has a strong presence in a number of geographies including the US and India, and is best known for a variety of middle and back-office services including finance, healthcare and telecommunications.

The Listening Company is a successful UK onshore customer contact services business and Excelior is an Australian company with a decade of experience in customer care services for a variety of government and private sector areas.

"The acquisition of these three companies gives us an excellent place in the market," says Poole. "We have an industrialised business, two companies with fantastic customer intimacy, and then Serco, a great trusted brand that's been delivering front-line services around the world for years. We're already seeing the rationale of having a wider access to the market."

As outsourcing remains part of the strategic business conversation, Poole is engaging with clients at a far more senior level. And it's likely, as Serco looks to deliver its combination of low-cost services and high-end capabilities across a broader range of operations, that he'll be having many more discussions with CEOs in the months and years to come.

David Poole, UK and European CEO for Serco’s business process outsourcing (BPO) operation.