Mitigation Strategy

The transition from Business Process Outsourcing to Business Process Management and from the back end jobs to front end jobs is a tough one but the reason for success of Progeon is that the organization was not conceptualized or designed for BPO and in the coming days we may expect greater things from this company. The organizational chart reveals that the structure at Progeon is actually a mix of various structures and is predominantly a functional one at the top level where the organization is divided along lines of specialization and employees performing similar tasks such as Sales, Finance, HR and Product Development are assigned to separate departments.

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This structure fits the organization as the product delivered is largely a commodity currently. This structure enables Progeon to attain economies of scale within departments, promotes efficiency as employees are encouraged to develop specific skill set. However as Progeon grows, interdepartmental interaction might become cumbersome, develop bureaucratic features and resistant to changes. Many of these deficiencies might be overcome by having comprehensive information systems encompassing all facets of the working of Progeon, have temporary task forces and permanent teams which shall comprise members from various functional departments of Progeon.

On deeper analysis, the structure is found to have nested sub functional structures. These sub structures focus primarily on addressing the needs of various services and also to focus on various markets that Progeon participates in. For example, Product Management is divided into various product based divisions: Banking, F&A, Securities and Insurance. Similarly Operations is divided into Financial Services, Telecom, F&A, Insurance and Healthcare etc. It is interesting to note that Market based groupings are in place. For example, Operations consist of a Czech Center and Sales consists of US and Europe divisions. Similarly Transition has region wise divisions. These sub structures provides solid foundation to the functional structure at the top by achieving coordination between various departments for a particular product and while servicing various markets.

This sub structure also enables decentralized decision making and coordination will be easy when Progeon grows in size and diversifies its product portfolio and attends to more markets. The inherent weakness of this type of structure is redundancy of functional departments and weak coordination between product groups which is taken care by the predominantly functional structure at the top. Middle Managers belonging to various sub divisions should be given exposure to the other areas within the same functional specialization or if possible within various departments to ensure common goals to be dominant over functional goals.

This structure lies in between Functional Structure and a Divisional Structure resembling more the former. As Progeon matures, it shall have a large number of products offering and a number of markets to cater to. With the rapidly changing environment in the BPO sector, there shall be a pressing need for innovation driven by in depth specialization calling for high degree of coordination and information pressing across various Progeon units. This reflects in Progeon’s strategic intent that says “Our focus is on strategic segments and strategic customers.” This shall demand more than the current dominating functional expertise and both shall be of paramount importance for further growth.

Gradually the structure of Progeon should be to incorporate the desirable feature of both the structures should be implemented simultaneously where the Product Managers shall have an equal authority as the Functional Managers and the employees report to both of them. This shall bring into place a very strong form of integration mechanism within the company when it attains a large size. Also, integrating shall remove redundancies of workforce as well as infrastructure and enable Progeon to maintain price competitiveness that is one of the critical requirements of Business Process outsourcing Providers. Implementation is this structure shall work best if Progeon retains its informal work culture in order to enable dual reporting and informal problem resolving systems instead of decisions making powers being vested in hierarchical positions. Hence, Progeon should consider changing into a Matrix Structure when

1. As Progeon grows in size and products, pressure begins to build to share scant resources of executives and managers across various products from the portfolio of Progeon keeping in mind that having separate people and resources performing similar work for each of the product will be cost intensive. 2. Progeon operates in a knowledge intensive environment. This in depth technical know-how needs to be incorporated into various products. When the imbalance of power skews towards the technical side, by extrapolating the current scenario, Progeon should change its structure so that to maintain a balance of power between the functional and the product management groups.

3. The environment surrounding Progeon is very complex where Progeon has to deal with a number of elements i.e. Customer Preferences, Locations, Technology which are rapidly changing. When this starts calling for frequent changes and high interdependence between departments requiring a large amount of information processing in both vertical and horizontal directions, a matrix structure would be suitable.

The impact of various Factors on Progeon’s Structure Various factors, outside and inside Progeon as an organization, affect it and we shall discuss the aspects of the same to which Progeon must respond to in order to meet its goals and obligations. We shall define Progeon’s Organizational Environment (POE) as all the elements outside the boundary of Progeon that have the potential to affect all or some part of Progeon.

Progeon plays in a Task Environment which comprises of elements which have a direct impact on the organization’s ability to achieve its goals. This includes its parent company, Infosys, the BPO market, the other players in the BPO segment, the human resources market and technology. Progeon also has to deal with a General Environment which doesn’t have an impact on its daily operations nevertheless has an indirect impact on it. This includes Government Policies, Labor Laws, Culture of the workforce, General Economics Conditions. Financial Resources and Technological Innovations. Since Progeon works in the International arena, the Policies of the Foreign Countries,, its culture, and trade policies also affect Progeon indirectly.

These facets of the environment bring in an inherent complexity in the structure of Progeon which shall be managed to be effective. There is an inherent difficulty in decision making due to lack of information about the lot many sectors affecting it and due to the rapidly changing nature of these forces. We shall discuss some of these factors under various categories.

External Environment 1. Complexity of the Environment: Progeon has a complex environment to deal with, as compared to simple environment faced by pure voice handling services. It has to incorporate a large number of technology to perform competitively and due to the large workforce, which is rapidly increasing, and its international operation, has to deal with many kind of cultures.

2. Stability of the Environment: Elements with which Progeon deal with are dynamic in nature that tend to shift abruptly. That is the case with most of the technology driven organizations, more accentuated for Progeon as it is a relatively new organization, the only cases of stable environment being Government Monopolies. The demand of the customers for Progeon is difficult to predict, the technology changes rapidly and there is the inherent instability associated with international operations. The cut throat competition in the BPO arena, esp. with the emergence of South East Asia and China as lucrative alternative destination. Progeon performs in a very dynamic arena.

These factors have a marked impact on the structure of Progeon. Progeon operates in a high uncertainty area. This calls for an Organic Structure that is loose, free flowing and adaptive to changes with less rules and regulations as compared to a Manufacturing firm which generally operates in a complex but stable domain. This uncertainty calls for teamwork and lesser hierarchy as compared to industry. Communication in Progeon should be horizontal and control of tasks should be spread across the organization to deal with rapid changes. The large number of external factors calls for many departments which in turn increases the complexity in Progeon.

Also this calls for Progeon to have defined and effective boundary spanning roles wherein changes in the BPO industry is communicated to the decision makers and also to broadcast information about Progeon to the environment which portrays Progeon in favorable light to external agencies. In addition to these, Progeon has to make sure that it minimizes its resource dependence on the environment to the extent possible, esp. for the vital resources such as Technology and Human Resources. This shall enable Progeon to be an autonomous organization.

Interorganizational Relationship Progeon is an entity that interacts with many organizations that include its parent company – Infosys, the society, the Government, Other BPO companies and so forth. Each of the organizations with which Progeon interacts with thrives on autonomy and competes for supremacy over each other. This situation can be compared with an Eco System with a large number of living organisms struggling for survival and largely dependant on each other for survival. This in turn causes resource dependence which shall be dealt with effectively in order to thrive. Progeon has to compete with a large number of companies in the BPO sector

. These companies are involved in a similar set of activities as Progeon and Progeon should differentiate itself in order to attract the resources of the environment such as finances and human capital. Progeon, being a new company, shall bring in variation in the kind of work it does, its work culture and its strategy to differentiate itself from other players in the area. This shall make the society view Progeon favorably and hence it will keep on attracting best talent and financial resources.

This shall help Progeon gain societal legitimacy, a critical ingredient for success and gradually Progeon shall become an integral part of the society and shall be an autonomous, self sustainable unit. However this shall cause certain changes in the structure of Progeon. It shall have to incorporate some of the societal rules and regulation and start appearing like other BPO outfits which it could not afford to do during the initial stages. One reason for this is that as Progeon grows, it shall incorporate new managers from various other BPO outfits that shall bring in their different cultures and the structure of Progeon shall tend to a common melting pot culture with ingredients from various professional organizations. This is a common phenomenon in all companies which grow large.

Effect of Technology on the Structure

The deliverable of Progeon is Service as contrasted with a tangible product, such as an automobile. This is abstract and often consists of the transfer of knowledge in performing the services as required by the client. The interaction with the customer is sustained and lasts through a period of time till Progeon has a contract with the Outsourcing firm. The quality of the services provided by Progeon is perceived by the customer and is difficult to measure in absolute terms, such as mileage for automobiles. This also calls for a rapid response to the needs of the customers. These factors effect the organizational structure of Progeon.

The importance of an interface with the customer cannot be overstated. Progeon has well developed boundary roles to interact with the customer. This also calls for Progeon to be divided into small firms in abstraction handling different products and separate customer groups. For further analysis Progeon’s departments have been aggregated into two categories, variety and analyzability. Variety refers to frequency of unexpected events occurring during day to day functioning of the particular department. Analyzability refers to the mechanical steps taken in order to perform a task. Refer Exhibit.