Global IT company transformed its business model after a 64% positive correlation increase between effort and output

BPO Transforms to More Profitable SLA-based Model

Our client, a very large and successful IT outsourcing provider, has operations in over 40 countries, with nearly 8,000 employees—but despite high company growth, employee productivity was shrinking. Facing customer demands for stiffer SLAs and increased pressure on billing rates in a highly competitive market, our client needed a vendor management software solution that could improve productivity from their teams, while continuing to provide the highest quality service.

30

productivity improvement within 9 months.

35

minutes gained in work effort from each employee.
 

64

positive correlation between effort and output.

Challenge

Our client, a UK-based business process outsourcing (BPO) company, has nearly 8,000 employees, operations in over 40 countries, and offshore centers in India, Singapore, and Malaysia. The company had enjoyed great success and significant growth since first opening its doors, but in recent years, the market had shifted. Clients had begun to reject the traditional Time and Materials (T&M) pricing model, and were requesting new service level agreements (SLAs) that would allow them to pay for results rather than resources.

However, before our client could transition to the new model, they would have to find a way to raise employee productivity in the workplace. Based on results, it was clear that productivity was too low— but with no real-time visibility into actual effort data, management was unsure how to address the problem. The BPO’s timesheet system relied on manual data entry by employees, who often entered incorrect data. To meet changing business needs, they needed a radical change in workplace transparency, accountability, and productivity.

Analysis

The BPO’s management realized that the only way to ensure contracts with customers were renewed, was to switch from a T&M pricing model to an SLA-based model. However, they were not sure if they could sustain profitability after moving to output-based pricing. To test the waters, the client deployed Sapience vendor management software across a team of over 100 users. Sapience collected and analyzed data, which revealed:

The daily average “work time” (total on-PC time spent on work-related activities) per employee was less than 5 hours.
Work distribution across the company was uneven. The top 20% of employees were working 2 more hours per day than the next 60% of employees.
Client pressures to increase productivity were creating high stress levels among team members and client managers.

Solution

After implementing Sapience, the client had a better idea of their teams’ baseline employee productivity, and began to understand daily work patterns. They used this information to set goals and measure progress, helping employees and the team increase productivity in the workplace. Leaders also communicated with team members about working mindfully, and adjusted workload managment to ease the burden on the top 20% of employees, preventing burnout.

Results

Sapience data showed that improved effort had a direct impact on output:

Each employees’ on-PC time increased by 35+ minutes a day, in just 3 months.
Mindful work and better workload distribution resulted in improved effort, which led to higher output.

A positive correlation between Case Volume and Effort was made, over a 3-month period.
The BPO’s management team was pleased with the results the Sapience implementation, and wanted to take advantage of the opportunity to extend this 30% productivity improvement to new projects. Their positive results generated the confidence to pitch a 3-year, year-on-year business model to their customer, based on year-on-year SLA improvement, at the same price they had previously provided their services. This excellent business process optimization example shows how Sapience for vendor management can transform results.

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