BPO For Long-Term Planning

Business Process Outsourcing (BPO), sometimes called Managed Services, was a $200B market in 2018. Market research indicates it will grow to $350B in the next five years. This growth suggests that companies expect to find value and cost savings by outsourcing non-core tasks. What this also suggests is that the BPO industry at large is going to gain from economies of scale and will emerge smarter and perhaps more able to deliver cost savings. The truth is that most companies would find financial benefits by working with outsourcing firms, and yet many companies in the oil and gas sector are not aware of the industry-specific, outsourced services available to them. This blog presents the most commonly outsourced services in the oil and gas services and what to look for in a BPO firm.

LONG TERM STRATEGY

For oil and gas, this is a good time to make long-term strategic commitments and rethink business processes and workflows as part of driving digital or operational transformation. In the oil and gas sector, a majority of BPO activities center around the following:

1. Production Accounting
2. Revenue Accounting
3. Operations Cost Accounting
4. Joint Interest Billing
5. General Accounting and General Ledger Processing
6. Treasury
7. Property Administration, including 1099 Processing and Division Order Administration
8. Land Management
9. Regulatory Reporting

As companies rethink workflows as part of their broader, long-term strategy, they should think about which of the above categories most impacts existing cost structures. With cost and reliability as the two main value drivers, companies should then explore BPO options available.

Here are some things to look out for as you are evaluating outsourcing firms for one or more of the services listed above:

• Most of the outsourced services require software and many of the oil-and-gas specific BPO firms have software and system limitations. Make sure that your systems and software can be supported, or you are able to migrate to a new system or software to drive efficiencies and lower costs.
• Who owns your data? Some BPO providers keep your data on their version of the software. Which means they control it. This can lead to a variety of problems.
• Some BPO services are using extensive RPA (robotic-process-automation) as a means to increase reliability and drive down costs. Make sure that RPA-based tasks are optimized for your needs or consider standardizing your tasks to fit the BPO organization’s structures that drive down costs.
• Some BPO firms use offshore teams or a combination of onshore and offshore capabilities. Make sure that you know how the BPO offshore and onshore teams operate and clearly define how you engage.

As companies make BPO decisions, they should make sure that getting better results for non-core functions is the driving force. Many organizations have successfully made their processes more efficient and cost-effective by turning to outsourcing firms. In the oil and gas sector specifically, taking some of the rules-based, transactional work and handing it over to BPO experts can make a lot of sense and drive savings.

Rakhee Das, Innovation & Technology Practice Leader – Sirius Solutions, L.L.L.P.

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