How are BPOs evolving to address the AI challenge?

I recently had the opportunity to moderate a panel discussion with leading global BPO (Business Process Outsourcing) players – Wipro, HCL Technologies, and Cognizant at the Verint APAC Engage 2024 event in Phuket, Thailand, on 28th February 2024. Together, we explored BPOs current approach to delivering CX value & differentiation, AI’s impact and how BPOs can evolve for the future.

Intense competition in the BPO sector compels constant innovation, critical to acquiring and renewing client contracts. The traditional BPO advantage of cost arbitrage has given way to more value-based drivers, with client conversations shifting towards CX transformation in recent years.  

But how does a BPO deliver CX transformation?  

A major portion of CX today initiates on a digital channel (mobile app, website, chatbot, or WhatsApp). Traditionally, BPOs have taken over only parts of a service process, i.e., voice & email support or voice, chat, and email for credit cards only. Hence, BPOs must convince clients to give them a more complete CX workflow encompassing;

  • multiple channels, including digital,  
  • and the ability to attain more customer data to leverage AI & analytics.  

AI brings huge promise in CX with the potential to automate responses and analytics, enable agents with better guidance & insights, and personalize the interaction in real-time. At the event, Verint showcased its AI Bot approach to help clients adopt AI incrementally to address specific CX challenges and extract clear and measurable value from AI.  

Given this backdrop, we discussed 3 important questions on the impact of AI on BPOs:

1. Will AI deliver new revenue streams for BPOs?  

While additional revenue options are available through analytics services, not all AI applications may be “chargeable”. As AI & Gen AI tools mature and deployments begin, these tools will become the norm and hence will be priced in instead of becoming a separate revenue stream. Clients are expecting more value from their BPO providers and demanding to know the AI roadmap and AI tech capabilities (but are not necessarily looking to pay for additional AI tools). Hence, to deliver this value, BPOs must swiftly leverage AI to drive internal operational efficiency or a higher quality of service.  

2. Is AI a threat to BPOs?  

AI presents a double-edged sword for BPOs. On one hand, AI offers automation and efficiency gains, empowering fewer agents to handle more customer interactions. Conversely, the automation and productivity benefits of AI will reduce agent count and threaten traditional BPO businesses that still run a seat-based or time-effort pricing model. To thrive, BPOs need to transform themselves to become experts in data strategy, building and implementing AI models & tools and managing client IT & security requirements. At the same time, they need to continue to excel at handling their calls & digital transactions and training their agents to have empathy. BPOs of the future need to be more tech-enabled and tech-capable to support their clients and deliver a differentiated CX experience.  

3. What are some AI use cases that client organizations are asking their BPO service providers?  

As BPO players get into renewal conversations with their clients, the expectations from client organizations to deliver additional value and leverage AI are clear. Client organizations are looking at AI to:

  • Help them better understand customer sentiment  
  • Attain real-time insights on how a customer transaction is being handled (to allow for interventions, consistent delivery, and service recovery)
  • Deliver operational efficiency with automation
  • Provide support for agents  

The AI use cases for call summarization and agent-assist tools are opportunities for client organizations and BPOs to deliver more with less and make the support process easier for their agents.

The first step to building a good data strategy and leveraging AI’s full potential should aim to answer these 6 pivotal questions.

  1. What data is required?
  2. How can we best capture it?
  3. Which data can be used for analytics?  
  4. Where should we store this data and who has access to it?  
  5. How and where can it be processed?  
  6. Who gets access to the insights?

Client organizations need to build the data foundations, and BPOs need to be able to guide, advise, and help their clients with this data transformation so that they can help with the overall CX transformation by leveraging AI.  

BPOs such as Wipro, HCL Technologies, and Cognizant are positioned well with their approach towards CX transformation. They are building their capabilities around data & AI, as well as leveraging analytics and AI tools from providers like Verint to be able to add CX differentiation and provide additional value to their customers.  

The hype around AI in 2023 will translate into implementation projects in 2024 with specific use cases that may focus on efficiency gains. BPOs face the challenge of where to show and bring additional value when renewing client contracts, and this is where AI can give them a boost and create differentiation. However, this would also require BPOs to change their client engagement approach, pricing models, and internal capabilities to capitalize on this opportunity.