Lean Six Sigma in services · Guide for operations and CI leads
Lean Six Sigma in BPO and shared services: project examples, metrics and case studies
How BPO providers and shared services centres use Lean Six Sigma, the projects that suit transactional work, the metrics to track, how DMAIC runs in a service centre, and what published case studies show.
Lean Six Sigma in BPO and shared services means using Lean to remove waiting, handoffs and rework from transactional processes, and Six Sigma’s DMAIC method to cut errors and variation, so that a service centre meets its SLAs at a lower cost per transaction. Typical projects target invoice exceptions, payroll errors, ticket resolution time, first contact resolution and month-end close. The work suits BPO and shared services well because the processes are high volume, repeatable and already measured.
Why Lean Six Sigma fits BPO and shared services
Business process outsourcing (BPO) providers and shared services centres (SSCs) run the same kinds of work: finance and accounting, HR and payroll, IT service desk, procurement, customer contact and back-office processing. That work has three features that make Lean Six Sigma a natural fit:
- High volume and repetition. The same invoice, ticket or claim passes through the same steps thousands of times a month, so a small fix pays back many times.
- Data is already there. Workflow tools, ticketing systems and ERP logs record every transaction with time stamps, so Measure does not start from zero.
- Clear customer requirements. SLAs and KPIs spell out what the client or business unit expects, which gives every project a ready-made critical-to-quality (CTQ) measure.
Lean and Six Sigma attack different problems. Lean targets flow: queues, handoffs, approvals, waiting for missing information and rework loops. Six Sigma targets defects and variation: wrong postings, mismatched invoices, tickets reopened, payroll errors. Most service-centre problems have both, which is why the combined method is used.
BPO vs shared services: what is the difference?
The two models do similar work, but the relationship with the customer is different, and that changes how improvement is run and who gains from it.
| Aspect | BPO | Shared services centre |
|---|---|---|
| Who runs it | An external provider under contract | The organisation itself, as an internal unit |
| Customer | A client company | Internal business units and countries |
| Service terms | Contractual SLAs, often with penalties | Internal service agreements and chargebacks |
| Who keeps the savings | Depends on the pricing model; under FTE-based pricing, savings can reduce the provider’s revenue unless gains are shared | The organisation, as lower cost per transaction |
| Typical improvement driver | SLA attainment, margin, contract renewal | Cost, standardisation across units, control |
Many organisations use both: they keep finance or HR in an internal shared services centre and outsource customer contact or IT support to a BPO provider. Lean Six Sigma works the same way in each; the difference is in how projects are chosen and how benefits are agreed.
The Malaysian context
Malaysia is a significant location for this work. In 2021 MDEC reported 579 global business services (GBS) companies within MSC Malaysia, 57% of them foreign direct investments. Although they were about 20% of active MSC Malaysia companies, they accounted for 50% of investments, 66% of exports and 61% of jobs created.
Published research includes a Malaysian case: Wong and colleagues (2021) applied DMAIC with root-cause analysis at an IT outsourcing provider whose break-fix service was missing its SLAs, and reported improved SLA achievement once the factors behind penalties were identified and addressed.
Six Sigma project examples in BPO and shared services
Good projects have a clear defect, a measurable CTQ and data you can pull. These are typical project scopes in service centres; the problem statements are generic examples, not results from a particular client.
| Process | Typical problem | CTQ measure | Useful tools |
|---|---|---|---|
| Accounts payable | Invoices fall out of automatic matching and wait for manual checks | First-pass match rate; invoice cycle time | Pareto of exception reasons, mistake-proofing at supplier onboarding |
| Record to report | Month-end close takes too many days | Days to close; late journals | Value stream map of the close, standard work, task board |
| Payroll | Errors and off-cycle payments | Payroll accuracy; off-cycle runs per month | Fishbone, input checklists, cut-off control |
| IT service desk | Tickets breach SLA or are reopened | SLA attainment; reopen rate; first contact resolution | Ticket data analysis, knowledge articles, routing rules |
| Customer contact | Repeat calls about the same issue | First contact resolution; repeat contact rate | Call reason coding, root-cause analysis, scripting |
| Order to cash | Billing disputes delay payment | Dispute rate; days sales outstanding | Dispute reason Pareto, billing data checks |
| Onboarding and KYC | Applications bounce back for missing documents | Right-first-time rate; end-to-end cycle time | SIPOC, checklist at intake, queue analysis |
Pick projects where the defect is frequent and costly, the process owner wants it fixed, and the scope fits in three to six months. A Green Belt project on one process in one team is a better start than a centre-wide programme.
Metrics to track
Service centres already report many KPIs. For an improvement project, choose one primary measure tied to the client’s requirement, plus one or two balancing measures so that a gain in one place does not cause a loss elsewhere.
- SLA attainment: the share of transactions completed within the agreed time or quality level.
- First-pass yield (right first time): the share of transactions completed with no rework, correction or return.
- Cycle time and ageing: how long a transaction takes end to end, and how many are older than the target. In Lean terms this end-to-end measure is lead time; our guide to takt time, cycle time and lead time explains the difference.
- First contact resolution: the share of contacts or tickets resolved at the first touch.
- Defects per million opportunities (DPMO): the Six Sigma measure of error rate, useful when a transaction has several fields or steps that can go wrong.
- Cost per transaction: the measure finance and clients usually care about most; use it as the business case, not as the only project measure.
Watch for averages hiding the problem. An average handling time can look fine while one client, one shift or one transaction type misses the SLA every week. Six Sigma’s focus on variation is what finds those pockets.
How DMAIC runs in a service centre
Define
Which process, which client requirement, which defect?
Write a charter with the problem, scope, target and team. Map the process at a high level with a SIPOC (suppliers, inputs, process, outputs, customers) and agree the CTQ with the client or business unit.
Measure
How often does the defect happen, and how long does the work take?
Pull transaction data from the workflow or ticketing system. Check that the data means what you think it means (for example, when the clock starts and stops), then set the baseline for the CTQ.
Analyse
What causes most of the defects and delay?
Use a Pareto chart to rank defect types, then look for causes by client, input source, shift, team or transaction type. In transactional work, poor input quality and handoffs between teams are frequent causes.
Improve
What change removes the cause, and does it work?
Remove waiting and rework, mistake-proof inputs at the point of entry, simplify approvals and write standard work. Pilot with one team, measure again, then roll out.
Control
How do we hold the gain after the project closes?
Hand the process owner a control plan: the measure, a control chart, the response when it goes out of limits, and a regular review, often linked to a PDCA cycle.
Lean tools for transactional work
Lean tools translate well to offices and service centres once the waste is described in office terms: transactions waiting in queues, information re-keyed between systems, approvals that add no value, and work done on incomplete inputs that later has to be redone.
- Value stream mapping shows the end-to-end flow and how much of the elapsed time is waiting rather than work.
- Standard work makes the best-known method the normal method, which reduces variation between staff and shifts.
- Visual management and pull, such as a team board or kanban with work-in-progress limits, keeps queues visible and stops work piling up.
- Digital 5S applies sort, set in order and standardise to shared drives, templates and mailboxes.
A survey of shared services centres in Poland found respondents using Lean management (52%) or Lean Six Sigma (44%), most often with value stream mapping, KPIs and end-to-end process analysis, and focusing on repeatable, transactional processes (Zaporowska and Szczepański, 2022). The sample was small (23 centres), so treat it as an indication rather than a benchmark.
What the case studies show
Published research on Lean Six Sigma in BPO and SSCs is mostly case studies. The findings are consistent, though each study covers only a few organisations.
- Cycle time in a BPO operation. Ray and John (2011) applied Lean Six Sigma to reduce cycle time in a BPO process and found it worked well for reducing cycle time through process changes, using Lean concepts to speed up the Six Sigma project.
- SLA performance at a Malaysian IT outsourcer. Wong and colleagues (2021) used DMAIC and root-cause analysis to address SLA violations in a break-fix service and reported improved SLA achievement.
- Sustaining gains in KPO and BPO firms. A study of five Indian KPO and BPO organisations identified business alignment, leadership commitment, tailoring of knowledge and post-implementation actions as the critical factors for lasting impact (Motiani and Kulkarni, 2019).
- Leadership style. A follow-up study of two KPO and BPO organisations found that leaders who coached and empowered staff, rather than directing them, helped Lean Six Sigma succeed (Motiani and Kulkarni, 2021).
- A mature shared services centre. Sum and colleagues (2020) built twelve indicators across the 6M categories to study stability and capacity during a Lean implementation, and found that even a process in a mature SSC had several improvement opportunities.
- Customer satisfaction. A survey of 304 service companies found that continuous improvement has a direct, positive effect on customer satisfaction, strengthened by management commitment and by rewarding employees for taking part (Koval and colleagues, 2018).
What makes Lean Six Sigma stick in a service centre
- Leadership that coaches. The research above points to visible senior commitment and leaders who coach teams through problems.
- Projects tied to client requirements. Choose projects from SLA misses, client complaints and cost drivers, not from a list of tools to try.
- Agreed treatment of savings. In a BPO, agree up front with the client how productivity gains are shared, so that improvement is not seen as cutting the provider’s own revenue.
- Trained people at each level. Yellow Belts in the teams, Green Belts leading projects in their own area, and a Black Belt coaching and handling cross-functional problems.
- Control after the project. A control plan owned by the process owner, reviewed in normal team meetings.
A project charter for an accounts payable team in a shared services centre. The figures are invented to show the format, not results from a real centre.
| Problem | Too many supplier invoices fail automatic matching and wait for manual handling, delaying payment |
|---|---|
| CTQ | First-pass match rate; invoices paid within terms |
| Baseline | First-pass match rate of 70% over the last three months |
| Target | 85% within six months, with no rise in payment errors (balancing measure) |
| Scope | Purchase-order invoices for one country; excludes non-PO spend |
| Team | Green Belt project lead, two AP processors, a procurement buyer and a systems analyst |
Common mistakes
- Starting with the tools.A centre that trains everyone and then looks for projects ends up with small, scattered wins. Start from the SLA misses and cost drivers.
- Trusting the data without checking it.Ticket and workflow data often has gaps, such as clocks that pause or statuses used differently by teams. Validate it in Measure.
- Automating a broken process.Robotic process automation on a process full of exceptions moves the rework to a different queue. Simplify and stabilise first.
- Ignoring the client side.Many defects start with the inputs the client or business unit sends. Bring them into the project.
- No control plan.Without an owner and a regular review, results drift back once the project team moves on.
FAQ
What is Lean Six Sigma in BPO?
It is the use of Lean to remove waiting, handoffs and rework, and Six Sigma’s DMAIC method to reduce errors and variation, in outsourced business processes such as finance, HR, IT support and customer contact, so that SLAs are met at a lower cost per transaction.
What are examples of Six Sigma projects in BPO?
Common projects include raising the first-pass match rate of supplier invoices, reducing payroll errors, cutting ticket reopen rates and SLA breaches at an IT service desk, improving first contact resolution in customer contact, and shortening month-end close.
What is the difference between BPO and shared services?
BPO is work done by an external provider under a contract with SLAs. A shared services centre is an internal unit that provides the same kind of services to the organisation’s own business units. Many organisations use both.
Which Lean Six Sigma belt do BPO and shared services staff need?
Team members benefit from Yellow Belt awareness, team leads and analysts who run projects in their own area usually train as Green Belts, and continuous improvement leads who coach projects and handle cross-functional problems train as Black Belts.
Does Lean Six Sigma work in a mature shared services centre?
Yes. Research in a mature shared services centre found that even its established processes had several improvement opportunities, and a survey of 304 service companies linked continuous improvement directly to customer satisfaction.
Key takeaway
BPO providers and shared services centres have what Lean Six Sigma needs: high-volume, repeatable work, data on every transaction and clear client requirements. Choose projects from SLA misses and cost drivers, run them with DMAIC, use Lean to remove waiting and rework, and hand every gain to an owner with a control plan.
Lean Six Sigma training in Malaysia
Build the people who run these projects
Green Belt training prepares team leads and analysts to run DMAIC projects in their own area. Black Belt training prepares continuous improvement leads to coach projects and take on cross-functional problems.
Training a whole service centre or team? See in-house training.
Related reading
Sources
- Malay Mail (6 September 2021). MDEC: Major global tech firms say Malaysia remains an attractive digital investment hub.
- Ray, S., and John, B. (2011). Lean Six-Sigma application in business process outsourced organization. International Journal of Lean Six Sigma, 2(4), 371 to 380.
- Wong, W. Y., and colleagues (2021). Towards integrating Six Sigma approach: service level agreement measurement and monitoring (a Malaysian IT outsourcing case study). Turkish Journal of Computer and Mathematics Education, 12(3), 2191 to 2198.
- Motiani, N., and Kulkarni, A. (2019). Sustainability and impact of Lean Six Sigma practices: learnings from some KPO/BPO organizations. International Journal of Innovative Technology and Exploring Engineering, 8(11S), 442 to 452.
- Motiani, N. N., and Kulkarni, A. (2021). Leadership role in implementing Lean Six Sigma: a cross case analysis of KPO/BPO service organizations. International Journal of Innovation Science, 13(3), 249 to 267.
- Sum, F. F., de Paula, I. C., Tortorella, G. L., Pontes, A. T., and Facó, R. T. (2020). Analysis of the implementation of a lean service in a shared service center: a study of stability and capacity. IEEE Transactions on Engineering Management, 67(2), 334 to 346.
- Zaporowska, Z., and Szczepański, M. (2022). Exploration of lean management methods used in shared services centers, drivers and barriers to process selection for improvements in the light of risk management and ESG reporting. Sustainability, 14(8), 4695.
- Koval, O., Nabareseh, S., Chromjakova, F., and Marciniak, R. (2018). Can continuous improvement lead to satisfied customers? Evidence from the services industry. The TQM Journal, 30(6), 679 to 700.
Start today
Learn Lean Six Sigma at your own pace
Each belt is a self-paced online course with quizzes and a certification exam. 12 months' access, start any day.
Self-paced onlineLean Six Sigma Yellow BeltA first grounding in Lean, Six Sigma and DMAICStart any day · 12 months’ access · Certification exam includedRM2,088 
Self-paced onlinePopularLean Six Sigma Green BeltRun improvement projects with the core DMAIC toolsStart any day · 12 months’ access · Certification exam includedRM3,788 
Self-paced onlineBest sellerLean Six Sigma Black BeltLead larger projects with the full DMAIC toolkitStart any day · 12 months’ access · Certification exam includedRM5,088 Compare the three online courses · Self-paced courses are not HRD Corp claimable. For a claimable option, see live virtual courses.
3 Comments