In a word – Yes. Although it is probably not possible to outsource an entire front office capability it is possible to outsource key elements so that the capability is (i) better supported, and (ii) more effective.
OUTSOURCING TEENAGE PREGNANCY
In a particular UK outsourcing company the account manager of a Local Government account in a in a poor area once asked the CEO of the Council if he felt that more IT would help him. The CEO snapped back that unless the account manager could solve teenage pregnancy with his IT then to stop bothering him! The question remained: could we help reduce teenage pregnancy through the use of our services? At the time no single process or set of processes existed which was particularly focused on the reduction of teenage pregnancy. Social workers merely had a bag of blunt tools which they applied on a case by case basis, usually after the fact (or in cases of extreme and obvious risk).
It would be ambitious. The area in question had the UK’s youngest grandmother. She was 28. Many young girls saw their only way out of the poverty cycle was by falling pregnant in order to get a council house and benefits. Regardless of the social problems this causes the sheer drain on the public purse is immense.
On an investigative trip to India where the outsourcing delivery partners were visited the Use Case was put to them. 3 areas were focussed on:
- Analytics. Analysing and correlating large volumes of data is key. This is not something that social services did nor could they do. Analysis would not only require the infrastructure but it would also need the personnel to input and interpret the output.
- Security. Data security and anonymity is critical. Employing local people was a key differentiator of the vendor and sending personal data offshore would be sensitive. Data would need to be cleaned, anonymised and then transmitted. Only when analyses were made and returned would results be matched with identifying indicators.
- Reporting. Reporting needs to be intelligent and intuitive. The analysis could not spit out typed reports but rather would need to target social workers directly and inform them of specific risks and link the risks to benefits, programs, policies and guidance in and around the entire area.
CONTRACTING FOR COMPLEXITY
Being part of such a complex capability would be very daunting for a business. Outsourcing vendors typically eschew complexity. Profit is based not only on an economy of scale but also on lower pay-band workers performing the tasks (typically in countries where labour is cheaper). Any increase in complexity adds the need for managerial oversight which adds the indirect (non-chargeable) costs of higher pay-band workers. Complexity is not good.
In order to avoid this in front-office outsourcing the vendor needs to get the customer to perform service orchestration. This is where the customer performs the oversight and configures the services as they wish. This does not mean that the vendor is just crunching numbers in the background. Rather, the vendor provides a level of human interpretation on the analysis as well as feeding them back into a vendor rep in the social services environment who can then ‘push’ the information. This last part is essential because the vendor is likely only to be financially incentivised on the basis of lower teenage pregnancy. Dealing with public service apathy and stagnant processes at a personal level is critical.
What if it goes wrong? Vendors are now part of vulnerable people’s lives. If something goes wrong who carries the liability? Should the vendor provide warranties for the services? Or simply guarantee results year by year? These areas are untested. However, it is likely that vendors will only warrant the technical aspects of the services which is not really front-office outsourcing. One way around this is to ‘own’ a number of key roles or at least the role specification. In this way they can realistically provide warranties for some of the outcomes.
In the end, front-office outsourcing is not only possible but it will be increasingly necessary in the future in order to provide vendors with the differentiators necessary to maintain profits. The most critical issues will be getting vendors to deal with complexity without paying too much for the additional risk and in a way which allows them to take on the overall liability as well. The front office is a prime source of differentiation but it can be ground captured by outsourcers so long as they are smart about both complexity and liability.