Support Services: Outsourcing Selected Business Functions

Client Project

• PPI assisted Support Services leadership to identify opportunities to reduce operational costs and increase the utilization of the back-office processing unit located in India ("Offshore"). Analysis of a critical functional area (Eligibility Processes) was performed to determine how resources could be more effectively aligned to the actual skills (data manipulation or customer interaction) required by process activities to improve both process efficiency and customer experience.

• The eligibility process was not being managed as effectively and efficiently as management expected. Organization of the team as generalists, rather than specialists, resulted in a higher cost operating model.
  
  
• The generalist model meant that team members had to possess two different skill sets to perform eligibility process activities.
  
  
• The team's primary function is to map data from the customer's file so that the data can be loaded into the eligibility system. Approximately 65% of the eligibility team's work includes data and file mapping and testing - repeatable IT functions that require no direct customer interaction.
  
  
• The remaining 35% of activities require significant customer facing skills.
  
  
• Recent acquisitions and geographical expansion were beginning to tax departmental workloads.
  
  
• Corporate mandates to reduce costs were causing operational and management pressures.

• Because a significant portion of work the eligibility team performs is back-office in nature, a material opportunity existed for the Client to transfer selected processing tasks to the Outsource.
  
  
• PPI prepared operational analyses in evaluating the opportunity.
  
  
• The work included identifying key factors to be considered when transferring work outside the department. These included:
  
  
  • Repeatable process applicability.
  • Minimal to no voice component.
  • Complete end-to-end process with limited or no handoffs.
  • Client product expertise not significantly required.
  • Location not critical.
  • Function not a source of competitive advantage.
  • Critical competitive knowledge remains in house.
  • Ability of IT systems to communicate.
    
    
• Rather than having one team of generalists dividing their time between customer-facing activities and back-office processing, two teams of specialists were created: a customer-facing team and an IT back-office processing team (Outsource).
  
  
• This new operational model would leverage expertise, lower operational costs, and improve overall customer experience.
  
  
• Significant cost reductions were achieved by transferring 65% of eligibility tasks to the Outsource.
  
  
• Business simplification also led to further savings. The avenues to achieving this were by decreasing the degree of customer file customization, decreasing the number of files per customer, and increasing the level of detail and effectiveness of the documented file installation requirements supplied to the customer. This resulted in an additional decrease in the number of eligibility resources required.
  
  
• Other benefits included:
  
  
  • More effective, efficient operations (rigorous process management).
  • Higher, more responsive customer service.
  • Reduced cycle times.
  • Improved training practices.
  • Reduced customer response times.
  • Productivity related to shifting non-value added work to value-added activities.
  • Reduced cycle times.