Business Process Outsourcing, or BPO, is set of services that a company that provides to other organizations in an externally sourced manner.
These services could include customer service and support, payroll, logistics, data entry or any task that is required to keep an organization functioning.
The goals of BPO are typically to reduce costs and streamline processes.
Cost Savings: With BPO, businesses can reduce their operating costs, employee-related expenses and capital investments.
By outsourcing certain tasks, businesses can cut down on labor costs and improve their profitability.
Increased Efficiency: BPO services are designed to help businesses increase their focus on core operations.
By outsourcing mundane or repetitive tasks, businesses can increase their efficiency and focus on customer service.
Access to Expertise: By partnering with a BPO provider, businesses can access experienced professionals who have expertise in their field.
This makes it easier for businesses to access the resources they need to increase their efficiency and improve their customer service.
Enhanced Efficiency: Since many BPO providers are available 24/7/365, businesses can improve their responsiveness and ensure that customer inquiries are addressed in a timely manner.
Improved Quality Control: By outsourcing their tasks to BPO providers, businesses can benefit from improved quality control.
BPO providers use their expertise to ensure that their services are accurate and compliant with applicable regulations.
This helps to protect businesses from potential litigation.
Risk Reduction: By outsourcing certain tasks to BPO providers, businesses can reduce the risks associated with certain activities.
Many BPO providers are specialists in certain areas and are equipped to handle the most complex tasks with ease.
Any business can benefit from outshoring services. But choosing the right provider needs a few points to consider –
Reputation and experience: Research the background and history of the provider and ensure they have a proven track record in delivering successful BPO services.
Cost: Understand the pricing structure of a BPO provider and ensure they offer good value for money and cost savings in the long run.
Security and data protection: Make sure the BPO provider has measures in place to protect your data and important documents.
Extensibility and scalability: Determine whether the provider can help you adapt and scale quickly if your business needs change.
Process optimisation: Evaluate how the provider can help you streamline processes and improve efficiency.
Program management: Ensure the provider has a dedicated program manager and team to oversee the project.
Utilisation of technology: Choose a provider who stays on top of industry trends and uses the latest technology.
Though a BPO provider can offer all types of outsourcing services, typically most providers focus on a few niches.
Contact Center/Help Desk BPO: Provides customer service, internal and external technical support, customer engagement, and customer relationship management (CRM).
Transaction Processing BPO: Manages Back Office operations, accounting and finance services, human resources, distribution and logistics.
Analytics BPO: Analyses customer behaviour and performance, along with other data-driven tasks related to a business’s core objectives.
Knowledge Process Outsourcing (KPO): Provides high-value services such as predictive analytics, research and analysis, and healthcare informatics.
Legal Process Outsourcing (LPO): Provides speciality services such as legal research, document review, document drafting, and legal transcription.
Content Writing Services BPO: Develops compelling content for websites, blogs, press releases, case studies, annual reports, whitepapers, and other corporate documents.
Recruitment Process Outsourcing (RPO): Manages recruitment and staffing processes such as sourcing, screening, and on-boarding.
Process Automation BPO: Automates customer service and manual processes, such as data entry and document processing.
Depending on the location of the providers, BPO vendors can be divided into onshore, offshore and nearshore providers.
Onshore BPO provider is situated in the country where the client company is based.
Thus, onshore providers are geographically accessible and close in proximity to their clients.
With onshore providers, companies don’t have to worry about cultural, language and communication barriers.
Other advantages of onshore providers include subject knowledge, higher quality of services, ability to customize, and better control and monitoring of operations.
The main drawback of onshore providers is the higher cost associated with them, which could be a factor for cost-sensitive companies.
A nearshore provider, on the other hand, is located in a neighboring country of the client company.
Using a nearshore provider increases the range of time zones and office hours, with fewer language and cultural barriers as compared to offshore providers.
Nearshore BPO providers also boast reasonable costs due to the close proximity to their clients.
The main drawback of nearshore providers is that they tend to have a limited pool of resources and lack of experienced personnel and subject matter experts.
Finally, offshore BPO provider is located in another country, thousands of miles away from the client company.
Their services are generally cheaper than the onshore and nearshore providers, and the employees are often well-educated.
Offshore BPO providers are also able to provide more cost-effective operations by taking advantage of the different time zones.
However, the main drawback of offshore BPO providers is that communication and cultural differences might present a problem in terms of understanding and delivering the desired services.
Additionally, the quality of services can vary considerably and there is a greater risk of data security and privacy.
Examples (for US clients) –
Onshore Business Process Outsourcing (BPO) providers:
Nearshore Business Process Outsourcing (BPO) providers:
Offshore Business Process Outsourcing (BPO) providers:
BPO services comes with challenges associated that a business needs to keep in mind.
Loss of Control: When any business decides to outsource a particular service or process, or even parts of the business, it runs the risk of handing over management of that service or process to a third party.
This could lead to a perceived lack of control as the original business may not have as much input anymore.
Language and Cultural Barriers: Communication is a major hurdle when it comes to international outsourcing.
External providers from other countries may not be fluent in the same language, making it difficult to communicate details.
There may also be differences in cultural norms that complicate the process.
Risk of Confidentiality Breach: Any business dealing with sensitive information is at risk of their data getting leaked if their outsourcing provider is not trustworthy.
This could lead to a major reputational damage as well as health and safety risks.
Quality Compromise: One of the major challenges associated with outsourcing is quality.
If the outsourcing company doesn’t have the same quality standards as the original business, this could result in substandard performance.
Cost Overruns: Another common challenge in outsourcing is an unforeseen cost increase.
This could be the result of added fees, unexpected expenses or longer timelines.
If not managed properly, an outsourcing project could end up costing more than expected.
Although anything that cut down costs without compromising company security can be outsourced, here are some processes that are usually sourced out –
The pricing models adopted by BPO vendors varies depending on what is on offer.
So it is difficult to say that vendors offer a specific type of pricing.
Neverthless, there are some common pricing models seen to be adopted by various BPO agencies.
Fixed-price Model: This model includes a fixed rate for the whole project, regardless of the outcome. This type of pricing works well for projects with clearly defined scope and requirements.
Time and Materials Model: This model is based on hourly rates or cost per unit plus a contingency for potential additional costs.
It is suitable for projects with extensive requirements that may change during the course of the project.
Outcome-based Model: With this model, the payment is made solely based on the success of the project.
This pricing structure is suitable for projects that require creativity or innovation and have a large potential upside.
Risk/Reward Model: This model works by sharing the risk between the vendor and customer by offering a discount if the project is completed on time and without any flaws.
Subscription-based Model: In this pricing model, the customer pays for a specific period for the BPO services provided by the vendor.
This type of pricing works best for customers with a steady and repetitive workflow instead of one-time projects.
The BPO industry has evolved significantly over the years.
In the beginning, businesses outsourced only basic administrative tasks such as payroll and billing.
However, in recent years, BPO services have expanded to include more complex services such as data entry, customer support, software development and web design.
Companies are also leveraging global talent and access to cutting-edge technology to provide more sophisticated BPO services.
Additionally, the introduction of cloud computing and distributed infrastructure has enabled BPO providers to become more agile and efficient in their operations.
Through the expansion of BPO services, companies are now able to gain more value in outsourcing their operations than ever before.
Copyright FasBeez 2022 ©