Business Process Outsourcing Driving Agility
What is Business Process Outsourcing?
Business Process Outsourcing is the practice of contracting specific work processes to third-party vendors. The services can include social media marketing, payroll, telemarketing, accounting, data recording, customer support, and more.
The demand for BPO services is witnessing an increase from fledging startups to Fortune 500 companies outsourcing processes to experience the innovative services and advanced technologies to stay ahead of the business competition.
Cost reduction and business growth are the striking features that prompt businesses to adopt business process outsourcing.
BPO services are often divided into two types: front office and back office.
The front office deals with sales, customer-related services like tech support, marketing, etc. In contrast, the back office deals with internal company processes- accounting, purchase, human resources, IT services, quality assurance, and so on.
Based on the location of the vendor, outsourcing can be divided into three different types:
Offshore- Outsourcing in a distant country. For example, a U.S. company may use an offshore vendor in China. This is cost-effective since the salaries in developing countries are much cheaper than in the U.S.
Nearshore- Countries that are located close to the vendor’s company. For example, the U.S. to Mexico.
Onshore- When outsourcing is done within the same country but maybe in a different location or city. Cutting out chances for miscommunication is one of the significant benefits here.
Benefits of Business Process Outsourcing
1) Cost efficiency
The most significant benefit of bpo services is significantly lower expenses. Outsourced vendors can complete business processes at a lower cost because of low-cost countries, economies of scale, specialized techniques, and so on, without compromising quality. When outsourcing, businesses can save real estate costs as the space needed to accommodate employees is decreased.
Firms that outsource their business processes can opt for a fee for service plans rather than fixed-cost models.
Also, American organizations can accrue tax savings as part of outsourcing.
2) Better productivity
BPO companies ensure that they work with the best technology to provide better results for the outsourced company.
They took measures on their employees’ productivity to deliver the best to the outsourced firm without any fall.
3) Focus on core functions
Business Process Outsourcing can help businesses focus on their core competencies- the core processes that make the company stand out. Additionally, outsourcing can avoid expensive investments in equipment for supporting business; thus, these investments can be used for other business purposes.
4) Global expansion
Some business outsourcing companies provide services globally, offering multiple language support around the clock. This is a great relaxation for the companies; this will help firms leverage a more extensive global presence without many risks.
Multiple language support systems can enhance customer satisfaction and customer experience.
5) Reassign resources
The right BPO industry helps you reduce costs on tasks, reallocate resources, and use warehouse space for additional improvements.
6) Access to technology resources
Outsourcing business processes ensure that your company is in the right hands, uses advanced and the latest technology and innovative skills. Moreover, the employees will be skilled to use best practices to make your business a success.
7) Speed and efficiency
Business process outsourcing, BPO companies always choose specialized hands to be part of their team to handle their client’s business processes. The benefit of having technical hands will result in time-saving, improved accuracy, error-free, etc.
Business Process Outsourcing Risks
BPO services can also lead to risks if not handled properly. Let us read more on that:
1) Data breaches
Often companies have to share sensitive data and information with a third party; chances are more to create a security breach. Security is difficult to maintain if your service providers are not in the same country, as different countries may have additional security requirements. Security systems may be less in developing countries, so be careful about what data and system privileges you give to a third party.
2) Communication issues
Language barriers are a common issue while outsourcing businesses to bpo companies. It can lead to delay and curbs on feedback from various departments; thus, communication gaps will magnify the entire process. So before choosing a bpo service partner from another country, see to it that things can be handled properly.
3) Overdependence on service providers
Once you designate a vendor for specific processes, the other company becomes an integral part of your business, and it becomes harder to cut ties. This means, if they are underperforming, there would not be a lot that you could do. Chances are there for vendors to replace experienced hands with less experienced hands to reduce cost, affecting the work quality. If you fire them, you must reinvest to switch companies.
4) Hidden expenses and time waste
It is challenging to choose the right vendor. It will take a lot of time to pick a trustworthy vendor; the whole process may take up to a year to get the initiative started. It may also include an entire chunk of other miscellaneous expenses, including legalities, outside BPO consultant, vendor-search, etc.
How to pick the right BPO services ?
From the thousands of BPO companies available, it is crucial to pick the right one. If you mess up in this, it is expensive and time-consuming to find the right one. Read these tips on how to do it right.
1) Define your requirements
Initially, you need to have a proper understanding of the areas you need to outsource. Have a specific plan regarding the objectives, benefits, and risks of your BPO goals
2) Evaluate proposals & choose the vendor
Go through all the proposals and select the one that is fitting for your requirements. Don’t just go for the lowest partner, for they may lack quality in their work, which will end up in more expense for you.
3) Draw up the contract
You can negotiate the contract by listing out all the minor details regarding the project at this stage. Cost of the project, expected completion time, cost details if ending the contract mid-way, privacy policies, etc., should be mentioned in the contract, and both parties should agree to all contract terms.
4) Monitor performance
Quality of work and performance should be monitored at every step. Make sure the quality doesn’t degrade over time.
Business process outsourcing has mainly become favored by companies irrespective of their size; these modern business techniques have the capability of bringing your company from good to great.
BPO industry can help to flourish your firm if enacted in a careful, conscientious manner with the best business process outsourcing partner.