OSP core Business Processes

An outsourcing service provider (or OSP for short) has certain critical processes that define his business model. Understanding these business processes should lend some insight into the underlying business model. How the OSP3processes are implemented and how their execution impacts the different layers of the OSP organisation structure will provide further insight into its approach to its business goals, and thereby its long-term game plan. The ability to change business direction in mid-flight is also dependent on the flexibility built into the process implementation and the OSP organisational structure. For example, one-dimensional thinking in defining the organisational structure will be an obstacle to change.

An understanding simply of the business model alone is not enough to gauze competitive opportunities; these are dependent on many other economic factors. These are the important processes for an OSP,

  • Recruitment

For a small to medium sized OSP without benching, recruitment is a critical process, also in view of the promises made to clients regarding turn around time, increases the importance of this business process. The size of the OSP, and the need to quickly react to the client resource requirement is served best by establishing a partner network of recruiters and recruiting organisations. The smaller the OSP the more important the partner networks, and not having one will impede growth.

Recruitment consumes a lot of effort, particularly since hiring is costly, and a mistake can sour the client relationship for the OSP. For a small to medium OSP reputation and relationship are important for new client acquisitions and repeat business. A good partner network can help by providing the right candidate resource, and can also help in the selection process thus freeing this major hurdle from the OSP.

It must be emphasised here that the recruitment process for all its effort and cost is a simple rule based process, and is a prime candidate for automation; it cab be easily implemented as a case managed process. It goes without saying that any such automation must also include the partner network; otherwise it will be half an implementation with only half the benefits. But, usually a lack of maturity in the OSP recruitment division makes the automation exercise a failure. In fact all of the critical business processes of an OSP, regardless of size, are rule-based processes and thus are amenable to automation. A lack of justification in the early stages to divert funds, and in the later stages a shortage of vision leads to only a few automation exercises of critical business processes amongst OSPs.

The smaller the OSP the more difficult it will be to automate the recruitment process via an in-house application. In all likelihood it will be a manual process, acting as a lag to growth and the response to the clients. There are a few cloud based business process systems that may provide a readymade solution or an opportunity to define ones required process. But, very few implement a pure case management process; in most cases it is a hybrid implementation. It is rare to find an implementation of an ad-hoc sub-process. If all the hurdles are overcome then it may still not provide all that the OSP requires to execute his recruitment process. So many compromises may be needed or just go back to a manual process until the OSP can bear the cost of an in-house build.

Although, the recruitment involves many parties in the process, it is inherently simple, that is, it’s a rule-based process. This does not mean that there is a pre-ordained flow, but that the knowledge worker on a case-to-case basis dictates the flow. A central repository is at the core of any case management system providing a single sourced view of the cases. There should ever be only one copy of any document in the system. Process monitoring will provide the information for improvement, such as, adding/removing tasks, and modifying the rules embedded in the process.

  • Invoicing

This process usually has a large chunk of conflict management due to monetary disagreements. One of the major reasons for this is because time management is treated as a separate process, but in an OSP organisation time management of a resource is an intrinsic part of the invoicing process. This has nothing to do with the type of costing model agreed upon with the client. It is the provision of transparency or the lack of it that leads to conflict management. Repeated errors in this process can be serious and lead to reputation risk in the market.

Unlike the recruitment process, there are many cloud-implemented systems for invoicing and time management. But, rarely are they an integrated offering, which once again will require some form of integration to be performed via an in-house build. This should be possible, as all cloud systems should provide an API, and if they don’t provide it look for one that does. Dependent on the APIs and the integration required this could be quite difficult, not to be ventured into by the small OSP.

  • Expense management

The major expense is the provision of hardware, software and associated licenses. The management of licenses is of particular importance to avoid penalties in the future. The management of expenses must also incorporate the management of vendor network, quotations, purchase order, and payment histories. The hardware and software allocated to users within the organisation must be traceable. Although, this process is straightforward, it can differ from OSP to OSP, there can be a multitude of authorisation steps involved, and many players from the OSP organisational structure may play a significant part in the completion of an instance of this case.

Unlike the other two business processes, there are surprisingly many cloud (and other) systems that provide a ready-made solution. Some of these tools vendors also provide built-in analytics. But, for a few exceptions these solutions would suit most OSPs, these exception will normally hinge on the authorisation flow in the OSP.


The size of the OSP will impose a different degree of importance on these processes. For a small to medium sized OSP without benching, recruitment is a critical process; also the promises made to clients heighten the profile of this business process. These three processes impact the OSPs bottom line, and hence proper handling of these processes by OSP organisational design is imperative. There may be other processes, but their influence on the growth of the OSP pales in significance when compared to the three mentioned in the document.

About KM Mukku

Kick-start, build and manage teams in product development (particularly in the financial domain), and enjoy all in adaptive case management, business process design and business process improvement. Currently holding the position of CTO at coMakeIT.
This entry was posted in BPM, outsourcing, process management and tagged , , . Bookmark the permalink.

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