Quality as a value driver foroutsourcingWith increasing complexity in the type of businessprocesses being outsourced to third-party providers,the demand for quality as a practice is steadilyexpanding—directly impacting your employees,customers, vendors, and business partners.

While business process outsourcing (BPO) leverages aservice provider’s people, process, and technologyexpertise to streamline your non-critical businessoperations around finance and accounting (F&A),how can you be sure of getting the level of qualityyou demand?

Traditionally, quality in the BPO context has beenrestricted to defining, measuring, and reporting thestatus of service-level agreement (SLA) metrics.However, sophisticated clients are increasinglydemanding value beyond service-level compliance,requiring proactive identification of processimprovement opportunities and compliancemechanisms.

If you have outsourced or are planning to outsourcesome of your business operations, you too maybe concerned about some of the key challengesrelating to quality:

• Maintaining quality initiatives: How do you makesure quality initiatives continue to drive improvementseven after outsourcing?

• Improving performance standards: How can you usequality to drive performance improvements withoutsignificant incremental costs?

• Driving adherence to quality: How can you useoutsourcing as an opportunity to drive adherence tostandard policies and processes across globaloperations?

Overview• Increase operational efficiency of outsourced processes through quality• Improve compliance with internal policies and external requirements• Enhance productivity and establish ongoing process improvements

HP’s approach to quality managementunder business process outsourcingDriving operational excellence beyond service-level requirements

Robust, innovative quality management systems andmethodologies hold the key to meeting thesechallenges. But do you have the time and resourcesneeded to implement and manage these systems?With HP’s unique approach to quality management,we put to work for you our experience and longtradition of quality practices within our own business.

Typical benefits from effective deployment of qualitysystems include:

• Reduction in defects—Experience fewer processingerrors and re-work, leading to more reliable data, byidentifying quality issues earlier and before theyescalate to clients or business partners.

• Improved productivity—Streamline workflows forimproved productivity through quality initiativesand tools.

• Reduced costs—Reduce operating costs with processimprovements, increased capacity utilization, andbetter production planning.

• Improved compliance—Equip your F&A processeswith better preparedness and adherence to variousregulatory requirements.

• End-to-end process improvement—Streamlineoperations through a comprehensive assessment ofupstream and downstream processes.

Core elements of qualitymanagementWith over 15 years of experience in the field of BPO,HP has adopted a powerful combination of qualitymethodologies that help you achieve the level ofquality you demand in all your business processes.

Our approach to quality management is based onkey concepts such as ISO 9001:2000 (adoptingstandard definitions for business processes to achieveuniformity), Six Sigma (disciplined, data-drivenmethodology to eliminate defects by identifying rootcauses), and Kaizen (participative approach to small,continuous improvements that have a major impact oncosts, accuracy, and speed).

ISO standards help stabilize processes in the initialphase, after which Six Sigma and the Kaizenapproach help in taking the process to the next levelby driving periodic improvements.

2

Industry recognition

”Six Sigma Quality Improvement Project of the Year”from the Indian Statistical Institute and QualityCouncil of India (December 2005)

The initiative helped reduce headcount and led tocost savings associated with customer contract datamigration across platforms. This was managed byapplying manufacturing concepts like Lean, SixSigma, and Work Cell in a services context.

Business context: The client observed that a delay in payments led toa loss of vendor discounts and incurred penalties for key expendituressuch as rentals and utilities. Outsourcing the accounts payable activityto HP represented an opportunity to bring about discipline in theprocess related to vendor information consistency, improved matchingbetween invoices and goods receipts, and reduced delays inpayables processing.Solution overview: Using the Six Sigma cycle of Define-Measure-Analyze-Improve-Control (DMAIC), HP’s team worked with the clientbusiness managers and finance teams to:• Educate the business on use of existing discrepancy management

workflow

• Set up a process to communicate any changes in the client’s internalfinancial systems to HP’s BPO team

• Define a phased escalation process for discrepancy resolutionClient benefits: On-time payments led to an annualized benefit ofmore than U.S. $750,000. The client business also managed toaddress late-payment penalties and experienced reduced escalationsfrom vendors.

Case study: a global foods company

Quality at every stage in the processlifecycleIn our approach to quality management, the lifecycleof any process is broken down into three phases.Quality plays a critical role throughout the entirelifecycle, from the initial stage of defining servicemetrics to the final stage of performance management.

Stage 1: Foundation

Objective—Understand your requirements from aperformance standpoint and set SLA metrics

Benefit—The success of any process is largelydependent on the diligence and accuracy achieved inthe initial phase of the project. Your needs arethoroughly captured to avoid any kind of re-work.

Stage 2: Production monitoring

Objective—Stabilize performance and achieveplanned service levels

Benefit—All activities here are aimed at increasing theperformance predictability of processes. This avoidsfluctuations in performance metrics and increasescontrol.

Stage 3: Production management

Objective—Drive ongoing improvements to go beyondservice levels, using quality frameworks and tools

Benefit—Process improvement projects impact yourbusiness’s overall performance by:

• Saving time and human resources, thereby drivingdown costs

• Reducing customer complaints and improving overallsatisfaction

• Eliminating re-work and waste, allowing for moretime spent on value-add activities and real innovation

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Applying quality tools across stages in the process lifecycle

0 to 3rd month 3rd to 6th month 7th to 18th monthTimeline

Outcome

Phase 1: Foundation Phase 2: Production monitoring Phase 3: Production management

• Assessment of client requirements

• Identifying key performanceindicators (KPIs) using“Critical-to-Quality” assessment

• Process design using “Supplier-Input-Process-Output-Customer”(SIPOC) maps

• Process documentation withinterfaces, checklists, and workinstructions

• Risk assessment through“Failure Mode Effect Analysis”

• Project scope

• Risk assessment

• SLA definition

• Client experience and feedback

• Ongoing improvements

• Stable performance as perservice levels

• Monitor KPIs set up

• Define standard processes as perISO norms

• Institute corrective action based on“Cause-Effect” and “Pareto”analyses

• File for ISO certification

• Set up data collection mechanismsfor reporting and analyses

• Define visual dashboards like“Green Star” for ongoingmonitoring

• Set up regular customer feedbackchannels including “Voice ofCustomer” surveys

• Define “Six Sigma” projects forongoing improvement

• Drive culture of employeeparticipation under “Kaizen”

To learn more, visit www.hp.com/go/bpo

© Copyright 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject tochange without notice. The only warranties for HP products and services are set forth in the express warrantystatements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

4AA0-0183ENW Rev.1, December 2006

Delivering operational excellencewith proven quality methodologiesAcross its ten global delivery centers, HP has over70 dedicated quality professionals and more than4,000 Six Sigma trained (Green belt, Black belt)processing staff with experience in finance supportacross industries. The teams can be scaled rapidly,depending on the process lifecycle and requirementsof specific quality projects. These professionals conductregular knowledge-sharing sessions to drive bestpractices and training across the delivery centers.

We have systems in place to drive compliance withkey quality requirements in a BPO setup:

• ISO 27001—Information Security Management

• ISO 9001:2000—Quality Management Systems

• SOX—Sarbanes-Oxley

• SAS 70—Auditing

We have adopted processes for ongoing improvementbased on Six Sigma methodologies and promote aculture of employee participation through Kaizenconcepts.

Benefits for your businessWhen you outsource to HP, we make sure that everyprocess meets its primary need of standardization,stabilization, and continuous improvement. Bybreaking down the lifecycle of any process intophases, we drive quality in managed increments,facilitating predictable performance.

Our approach to quality management is designed withflexibility in mind. We create quality solutions forclients, like you, on the basis of your specific F&Aprocesses and specific business requirements. Wework closely with your teams to evaluate individualquality needs that fit with your overall corporatequality strategy.

To learn moreTo learn more about how HP can help you achieveoutsourcing success with improved quality systems,please contact us at BPO_Info@hp.com or visitwww.hp.com/go/bpo