Performance turnaround at a leading provider of global outsourcing services

Background

Facing an increasingly competitive environment, a leading provider of outsourced services to the Financial Services industry called in PIP to help deliver a rapid and sustainable improvement in operating performance.

Working closely with management, PIP delivered $75M in validated, run rate EBIT improvement over the first year and $100m in 15 months (on an improvement pipeline of approximately $200m).

In particular, the company’s BPO operations were facing increased price pressure from “best shore” solutions. PIP therefore focused on three main levers of the organisation’s business:

1. Efficiency and service levels in the call centre operations
2. Productivity in the “Mortgage Factory”
3. Efficiency and effectiveness of shared service functions
   1. Procurement
   2. Human resources
   3. Real estate
      

1. Call centre operations

BPO situation

• Rising unit costs increased pressure on clients to migrate to Low Cost Countries (“LCCs”)
  • Gradual increase in labour costs – and a marked premium relative to India
  • Low utilisation, particularly at off-peak periods
  • Stagnant productivity – with technology investment not delivering expected improvements
• Service levels on par with LCCs
  • Poor forecasting and high absenteeism led to shortfall in staffing at peaks
  • “Catch and dispatch” approach during peak periods (to meet Service Level Agreements) reduced resolution rate

What we did

PIP prioritised and implemented a range of key initiatives with management, reducing unit costs by (i) improving utilisation and (ii) reducing average call times. In addition, these initiatives significantly increased resolution rates – improving customer service levels and radically reducing the cost of Level 2 support. Specific areas of focus included:

• Trained front line (“Level 1”) staff for improved real-time resolution
• Automated low value interactions
• Cross skilled for work on multiple issue categories
• Systematically worked through root cause of downtime
• Reconfigured staffing to eliminate ring-fence of non time-critical activities
• Modified scheduling parameters to ensure greater forecasting accuracy
• Shifted staff mix to part-time employees to improve matching of staffing to demand
• Improved short interval control and review processes to manage individual performance

Impact of cost initiatives can be felt in relatively short time frames through clear accountability for targets

The teams achieved a marked and sustained increase in 1st level resolution – greatly increasing customer satisfaction

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2. Mortgage Factory productivity

What we did

• Simplified KPIs to improve productivity tracking and increase focus
• Trained supervisors in the use of PIP’s SPIN methodology to rapidly improve productivity of underperformers at the front line level. Identified opportunities at supervisor level to develop front line management skills to help deliver performance improvements.
• Identified root causes of systematic re-work, developed KPIs to target issues and tracked these measures to drive performance (e.g. increasing compliance of frontline staff to form input criteria through implementing simple KPIs on completeness of the form at time of first client contact and then improving feedback process).
• Incrementally improved end-to-end workflow of high repetition tasks to remove inefficiencies enabling higher targets.

The PIP team was able to reduce direct labour cost per unit by 22% in one area of a mortgage processing facility

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3. Shared services

(a) Procurement

PIP worked closely with the client team to examine all procurement opportunities and achieved savings through price renegotiation, changes to specification, supplier rationalisation, compliance management and the elimination of usage.

What we did:

• Switched suppliers and negotiated cost reductions in hardware.
• Reduced contractor spend by (i) implementing contractor approval process to manage down usage and (ii) consolidating suppliers to improve terms.
• Rationalised software packages (and distribution) to reduce costs.
• Reviewed terms from preferred suppliers based on increased concentration of spend.
• Reduced travel usage and enforced policy compliance.
• Increased scrutiny of non-standard expenses to eliminate discretionary spend and ensure people buying on catalogue.
• Enforced existing usage policies for telecom services and centralised telecom service suppliers.

Results: Procurement spend was reduced by over $13M

(b) Human resources

By adopting a “Total Value of Ownership” approach to the HR function, the team was able to identify significant HR related opportunities both within and beyond their own cost base. The annual value of the improvement initiatives was 80% of the total HR cost base.

What we did:

• Reduced unplanned absenteeism through standardisation of reporting and absenteeism management processes
• Converted contractors to permanent staff (at better rate)
• Brought selected recruitment screening processes in house
• Re-designed the ex-pat package structure to reduce overall cost to the business

Example of the TCO approach: HR has a number of ways to tackle the cost (and value) to the entire business of recruitment process

(C) Real estate

Lease constraints and a permanently shifting baseline are obstacles to the effective optimisation of real estate costs. By taking a systematic and strategic look at the technical limits on capacity, PIP helped the client identify the hidden opportunities and to develop a plan to monetise them well in advance.

What we did: