The Beginner’s Essential Guide to Business Process Outsourcing
Coming up with novel, innovative process management strategies can turn any business from good to great. Business process outsourcing is the new trend in the corporate world where big and small firms alike are outsourcing, that is, contracting out their work to other parties that hold expertise in particular areas.
With technology developing at breakneck speed, it has been getting significantly feasible and has proven to be quite beneficial to communicate and work with teams across the other end of the world. Business Process Outsourcing (BPO) can create a positive, impactful change to your business if you apply it in a careful way and with a quality vendor.
In this blog post we will be tackling everything you need to know about Business Process Outsourcing: what it is, what types of factions exist, the functions BPO vendors support, and how to choose a vendor that’s right for your company. Let’s start!
What is Business Process Outsourcing?
Business Process Outsourcing (BPO) is the process where companies hire a third party to look after a faction of business related operations. In general terms, this can include many processes such as accounting, data management, social media marketing, game development, and customer support.
The processes outsourced, however, are rarely the core ones. You are more likely to benefit from outsourcing support roles or secondary tasks, such as customer relations. This way, your in-house can give more focus on your core functions rather than spending time trying to learn new skills.
Instead of having to start a customer support team from scratch, you are giving the job to a company that specializes in it, and you will end up spending less as well.
The BPO industry is divided into three separate factions that is depending on the location of the vendor:
Offshore outsourcing is outsourcing in a distant country. Think Australia to the Philippines. This usually means very significant cost-cutting, since the salaries in developing countries can be cheaper than that in Australia.
Nearshore outsourcing can be beneficial for your company as your neighboring states you decide to outsource from are in close physical proximity and usually have a better idea of your cultures than a far situated country.
This means outsourcing within the same country but from a different city or state. The main value here is still cutting costs, while maintaining the added benefit of your employees being native, doing away with any chance for miscommunication.
You can choose a company that is not just aware of your culture but one that completely understands the dynamics of it.
Why Do Business Process Outsourcing?
There are many other reasons why businesses engage in outsourcing, and these reasons include the following:
Probably the biggest benefit of BPO providers is a reduced cost for in-house labor and for the required facility space to house local employees. When these providers are physically located in developing countries, they leverage lower cost in relation labor.
Expand Global Presence
Outsourcing companies can serve customers in multiple countries speaking multiple languages, 24 hours a day, 7 days a week, and not put that task on the local company.
It can be tough to find employees in your local market that speak all of the languages required to support all your company’s product or service. Outsourcing companies can leverage your presence in multiple countries, expanding your global presence.
When you decide to outsource your non-critical functions, you can more quickly and easily ramp the business up or downsize it. This way, your company is also managing the risks more efficiently that are usually be associated with introducing new products or services.
Melting Pot for New Knowledge
With the advancements in technology and the world becoming more of a global village, the transfer and sharing of information have become an easy process and has shrunk the modes of communication to bring the world a little closer. It’s the sharing of any and such knowledge that has educated people even in remote areas and has regarded them to be good employees at much lower salaries.
What Can Be Outsourced?
- Data Management
- Research and Analysis
- Technological Services
- Financial Services
- Game Development
- Engineering Design
- Customer Contact Centers
How to Choose a BPO Vendor
Choosing a vendor to support your outsourcing needs is no easy feat. There are many things to review prior to settling on one company and getting an appropriate agreement in place.
Many experts highly recommend a formal, extensive process in order to have the best outsourcing experience and find the best possible provider that can meet your company’s unique goals.
You can start off by identifying who your key stakeholders are and make it a point to engage them in the process from the very beginning. Set all and every key stakeholder expectation early. The next step is for your company to also figure out what your key objectives, risks, and scope are for BPO.
A potential outsourcing company should be able to help you decide which parts of your business you need to keep in-house. If a company tries to take out core processes from you without you telling them, chances are they are not the right fit.
The key takeaway in this is that you should choose your BPO vendor should be performed carefully and fervently. The relationship between you should be defined formally and managed considered regularly.
What to Remember
Depending on what process you want to outsource, your control should vary depending on the weight of the process being outsourced. For example, customer support may simply require you oversight to be minimal, communicating through reports on a monthly basis. If you are outsourcing software development, though, you would need to actively keep an eye on the whole process.
Ensuring the efficiency and quality of your BPO can be quite daunting, but with a consistent way to manage your vendors, using the right tools and processes, you can reduce associated risks, improve communication, and increase accountability between your business and your BPO vendor.
At this point, you can ask yourself if it would be better for your company to turn over non-core functions to a business process outsourcing company. Word of advice, the answer to this is usually yes.