Business Consultancy and Transformation Outsourcing (BTO)
WHAT IS BTO?
Business transformation outsourcing (BTO) is the next logical step for the big outsourcing
vendors. In BTO a company’s entire business process is outsourced to the BTO vendor. The BTO
vendors not just manage the business processes, instead they work closely with the company
to transform and improve the business process to add strategic value to the shareholders of
the company. BTO goes beyond the traditional outsourcing in which the external service
provider will constantly transform and optimize the business process based on the changes in
the marketplace and competition.
Outsourcing is a common accepted strategy in order to optimize companies costs and resources.
Compass Business Consulting has developed a service line oriented to add value to
organizations by outsource their collection of conciliation payment processes. Our most
differentiation factor is the ability to confirm transactions online.
BPO vs. BTO
In business process outsourcing (BPO) often a discrete function within an overall business
process is outsourced, the BPO vendor maintains the discrete business function for their
client company, there is little or no value added by the BPO vendor. On the other hand the
BTO vendor will own the entire business process of their client’s company and adds strategic
value by bringing process and business efficiency to the entire company. For example in the
accounting business process BPO vendors will mange accounting functions like bookkeeping,
Accounts Payable, and Accounts Receivable. On the other hand the BTO vendors will manage and
transform the entire accounting and financial processes of their client’s company.
Often time BPO vendors have generic skills in managing the entire business processes or some
functions within the overall business process. BTO vendors will have deep vertical business
expertise in particular businesses like Accounting, Legal, and HR. Even within Accounting
they will have strong expertise in particular industry like retail, manufacturing, and
hospitality. By working with several vertical industries BTO vendors will bring in industry
best practices and procedures to their client organizations. BTO vendors have the vision for
changing business landscape and work closely with their clients to change the entire
business process according the events like competition, government policy changes and
BPO contract between the client and vendor is simple, have a specific contract written for
the BPO tasks and BPO vendor gets a flat fee for their work.
In some cases BPO vendors will be paid based on their performance. The BPO contracts are
simple and easy to manage and monitor. On the other hand the BTO contracts are fundamentally
different and it is complex in nature.
Both BTO vendor and the client must have a mutual trust between each other and often they
need to engage in partnerships to share the risks and rewards.
Cost saving is the main reason companies opt for BPO relationships and most of the time
senior managers or Vice presidents can directly engage with the BPO vendors to form the
relationship. If the BPO vendor doesn’t provide the necessary cost savings, clients can
cancel the contract. BTO relationships are long-term and often formed to increase
shareholder values by creating new business ventures and partnerships. The BTO relationship
is established with strong commitment with the C-level executives from the client company
with the BTO vendor.
In any BTO engagements there are significant risks associated for both the client and the BTO
vendor. The BTO vendor needs to get full control of the business process so they can adjust
and change it as needed. For client it may not be easy to give full ownership of the
business process to the BTO vendor because of internal structure of the company. The IT
systems and technologies of a company have to be properly aligned with their business
The client has to give control to their IT systems and the corresponding business processes
to the BTO vendor to succeed in their efforts. As the part of their business transformation
strategy BTO vendors may change the client’s IT systems and this will be a significant risk
to the client employees in managing their regular day today operations.
There are other challenges in BTO adoption, the policies and pricing models are complex and
in most part it is untested. Managing BTO deals are complex and client companies must have
proper tools and systems to adequately manage and measure the relationship.
For the client companies one of the greatest risks of BTO is the intellectual capital of
their business processes that distinguishes it with their competitors. For example if a BTO
vendor provides business process transformation services to an electronic retailer say Best
Buy and to generic retailer say Target, how the BTO vendor will maintain the intellectual
capital for the two clients? It is a known fact that both Target and Best Buy compete for
customers and each has it’s own business strategies in attracting the customers. In this
case how the BTO vendors will mange the relationship without compromising the trade secrets
of Target and Best Buy?
The key advantage of BTO is it enables to transform Client Company’s business with industry
best practices so it can compete efficiently in the global marketplace. BTO also helps
companies to quickly adopt to change in market conditions and this will be the key for
companies to survive and thrive in an era of volatile market and shifting customer demands
Rapid technology changes only add more challenges and risks to the companies in adopting and
integrating them with their own IT systems and to their business partner’s IT services. To a
certain extent BTO reduces the challenges and risks associated with the new technologies.
For example BTO vendors like IBM and HP can manage entire IT infrastructure with business
processes associated with them, in this BTO engagements companies can make the BTO vendors
accountable to all the technology and business changes.
In the highly competitive global marketplace, BTO helps companies to focus on their core
competency and outsource rest of the functions to the BTO vendors. By focusing on their
primary core competency, companies can make the BTO vendor accountable for all the auxiliary
but critical business processes required for the core business processes.
FUTURE OF BTO
Unlike Business Process Outsourcing (BPO), Business Transformation Outsourcing (BTO) does not
have a standard structure yet; each deal is unique in nature and there are significant risks
associated with the BTO. But this does not stop companies in signing BTO contracts with
major consulting firms like IBM, Accenture, EDS and BearingPoint. The big three Indian
offshore consulting companies TCS, Infosys, and Wipro are also started offering BTO
solutions, this will be a topic for a future blog.
What Rajput Jain & Associates Offers
We offer services in the areas of Business Transformation outsourcing (BTO), We redefine
processes to achieve high performance and results. We offering in business transformation
seek to manage the landscape of creating customer branded experience via an end-to-end
approach. Our Business Transformation Outsourcing (BTO) model helps companies build brands,
reduce costs, and improve existing operations, and more importantly drive customer
satisfaction and loyalty.
Organisations have historically seen outsourcing as a cost reduction exercise, and often seen
a less than positive impact on quality or the customer experience. We offering in business
transformation seek to manage the landscape of creating customer branded experience via an
During transformation process we study the existing scenario, business and resources of the
company and devise transformation modules wherein progress report is discussed on monthly
/quarterly/yearly basis. Complete business transformation take two to three years. During
transformation Process our strategy will be to benefit the organization in all functional
areas of production, technology, Finance and administration, HR ,marketing set ups.
Throughout the transformation process our endeavour is growth and development in all
divisions of organization. We help client achieve success threshold, seeds to IPO through a
suite of services designed for each stage of developments.
Our Broad Coverage during transformation process.
- Marketing set up and strategy
- Human Resources
- Product Quality
- Costing and Pricing strategy
- Finance, Legal & Administration
International: Assists MNC,s in expansion , brings speed ,high performance in system
- International business management consulting
- Restructuring of global business management
- International resources management services
- International human resource management consulting
We undertake business transformation of organization in all above areas on turnkey bases,
However we take up transformation of selected areas also, but it is advisable to go for all
as productivity of one department is linked with others.
Organisations have historically seen outsourcing as a cost reduction exercise, and often seen
a less than positive impact on quality or the customer experience
Now, organisations are looking at service providers who can assist to transform their
business operations through delivering higher levels of service and quality, and learn to
adapt to the changing demands of their customers.