Quality is of paramount importance to the Total Cost of Ownership of outsourced business processes. Hence, relocating a process to a low-cost country is much less important per se than achieving the highest level of quality possible. Under this paradigm, workers across the world would be able to compete equally for their slice of the Business Process market based on their ability to provide the highest quality, not just the lowest labor costs. If employees meet their employers’ financial goals through quality improvements, there may be no incentive for outsourcing. Focusing on the TCO of the process makes most sense for shareholder value creation, as well as serves the interests of existing employees who fear being replaced by lower cost outsourced workers. For the company this can be a win-win proposition: either it meets its financial goals without undertaking risky outsourcing, or the internal quality initiative fails to achieve its goals but significantly improves the business process, in the end making outsourcing less risky. For the employees this is not a win-win, but competing on quality rather than labor costs is a far fairer challenge that leaves them far less negative toward their management and its ultimate decisions.

Moreover, BPO relationships must be managed based on the Total Cost of Ownership, not just tactical measures such as unit cost, uptime, etc. Gartner provided some excellent recommendations in a May 2003 Gartner Market Analysis titled “BPO: Climbing the Learning Curve” that can be easily applied in the context of TCO oriented vendor management. “Contracts must be built on the realization of the business goals, with SLAs that measure the entire business process. Process is at the core of BPO offerings. Unlike IT outsourcing (ITO) offerings, where metrics often involve items such as systems availability, or response time within a specific application, the metrics that truly measure the effectiveness of a BPO offering measure the effectiveness — in terms of cost, quality and timeliness — of the entire business process.”