What is Business Process Outsourcing: Our Complete Guide
Experts say that the two most important factors in building a business are time and money. This is because of the idea that the faster you produce, the more work you finish and the more money you will earn as a result. The relationship between these two – functioning as the left and the right “hand” of the business – is said to be the core of revenue success. Without the existence of the other, the business will be crippled. The practice of maximizing time and money without compromising the quality of work is clearly exhibited by small to mid-sized businesses. Knowing the importance of both, SME’s sought the assistance of third-party providers to expand their operations without the costly expense of hiring more people. This particular practice soon evolved into what is now more widely known as Business Process Outsourcing. This article will discuss the essential factors of Business Process Outsourcing and how it helps in long-term business development and progress.
What is Business Process Outsourcing?
Business Process Outsourcing (BPO) is a division of outsourcing wherein company operations such as customer support, marketing, and other tasks are contracted by another company. Here, hiring another organization to perform these tasks to operate with the company in need of outsourcing is done to maximize the manpower needed in lesser time possible. Most businesses employ BPO for two main purposes:
Back office functions – The division of a company that does not directly involve with the customers or the public such as purchasing, accounting, IT services, human resource, quality assurance, and payment processes. Front office functions – A component of business operations directly involved with the customer. It includes customer support, marketing, and sales.
The Different Types of BPO
Business Process Outsourcing is not only limited to one specific location. It is a worldwide service that deals with different businesses across the globe. To provide more inclusive BPO services to any location, it is divided into three main categories:
Offshore Outsourcing – This type of outsourcing is done when a company hires or contracts a BPO company abroad.
Onshore Outsourcing – Onshore outsourcing is done domestically. A company hires or contracts a BPO company in their own country.
Nearshore Outsourcing – It takes place when a company hires or contracts with neighbouring countries. One example is America outsourcing in Mexico.
What Services Benefit The Most From Business Process Outsourcing?
Business Process Outsourcing has since taken a huge role in the development of most businesses. A word about BPO’s potential and advantages spread throughout various services and industries, effectively expanding the range of services it can assist. The following are the services aforementioned:
Contact Center Services (inbound and outbound call centers, telemarketing, email support and technical support services)
E-commerce Websites – (online ordering and refund processing)
Educational Institutions – (course information and fees processing)
Health Care Services (teleradiology, medical transcription, healthcare claims adjucation)
Information Technology (IT)/ Information Technology Enabled Services (ITES) – (software development, helpdesk services, and infrastructure management services)
Manufacturing – (component information, ordering and help services)
Retail Services – (ordering and status checking)
Telecom sector – (services information and complaint processing)
Travel Industry – (bookings and cancellations)
Advantages of Using Business Process Outsourcing
Businesses around the world are quick to choose outsourcing for obvious and simple reasons: convenience and sustainability of work done in the shortest possible time. However, there are way more advantages that outsourcing can bring. These include:
Financial Advantage – Using BPO service is a cost-effective way to reach financial goals in businesses. This is because the overhead expenses of other countries (mostly in Asia like China, India, Indonesia, and the Philippines) are much lower compared to first world country businesses.
Experienced Professional Advantage – Recruiting, hiring, and training new employees can be much of a hassle for growing companies. With BPO, companies can hire experienced professionals to do the tasks instead. Again, this reduces the expenses needed because of the aforementioned benefits above.
Global Expansion – Due to the diversity of cultures, existing roadblocks like language barrier and difference in marketing approaches can be a problem for most businesses. Business Process Outsourcing can be an advantage because a company can simply find local partners with native workers to bridge cultural and language gaps between two companies from different countries.
Building Strong Partnership – When it comes to business, there are unforeseen and inevitable circumstances that may affect the business’ overall operations and success. Building trusted and quality partners can be the key to resolve this.
With the right partner, the stronghold will serve as support to be fully equipped when facing challenges and factors that could possibly cripple the entire business. This external relation allows one company to grow and at the same time develop a reliable support system to work within the case such troubles take place.
Competitive Advantage – Due to the expansion to a global and local market, businesses employing BPO services are becoming more competitive. This is because the BPO provider performs the processes with greater accuracy, efficiency, and speed. All tasks are done at the highest level.
More Employment Opportunities – Due to the outgrowing success of the BPO industry, it became one of the largest known providers of jobs in Asia. The rise of BPO companies created a wide range of employment for countless of skilled and qualified applicants.
Access to Updated and Latest Technologies – Businesses know for a fact that buying the latest software, applications, tools, and equipment is very costly. Small to mid-sized businesses simply cannot take that risk. As such, teaming up with a BPO company that has access to or possesses topnotch technology and software relevant to the services offered by the business, instantly enhances efficiency and user-friendliness.
Focus on Core Functions and Improvements – The best part of using outsourcing is its ability to let businesses focus on their core functions and improvements. This is because the outsourcing company is the one handling and performing some of the core tasks of its partnering business, thereby allowing more time to concentrate on devising strategies for brand expansion and growth.
Access to Global Talents – Established businesses must have employees that have expertise in certain fields. With BPO, not only do businesses gain access to the latest technologies but also to reputable professional and global experts in different fields all at a low-cost budget.
Excellent Source of Customer Feedback – Business process outsourcing has been enabling employees to have direct communication with customers. Direct communication allows the collection of first-hand feedback that the company needs to know what to improve for business growth.
Risks and Disadvantages of BPO
Despite all the benefits discussed for Business Process Outsourcing, there are still a few drawbacks that must be taken into consideration:
Foreign Country Dependent – One possible threat of BPO is the difficulty in cutting ties with partners from foreign companies or countries. Unlike in a non-outsourced setting, a single, underperforming can be terminated with more ease on the part of the employer.
But, in a collaboration brought by business process outsourcing, there are a lot of considerable troubles one company will face if they want to replace their current BPO partner with another company. The company must have a lot of investments for switching, and they must re-orient the affected operations and departments once again.
Hidden Expenses – There are a lot of required expenses that are necessary for one company to start using BPO. Finding the right vendor may take some time and it may also risk the possibility of encountering scammers or companies that charge beyond the company’s intended budget.
Other than that, there are also a lot of miscellaneous expenses included, such as vendor-search, legalities, and outside BPO consultants, to name a few.
Vulnerable Security Risks – Security risks is one common problem encountered in BPO’s, Distributed work means you have to share valuable information with other companies. What’s scary is when crucial company information is leaked and used to destroy the reputation of the other company.
Language/Communication Barrier – It is quite inevitable to encounter the problem with communication. Since outsourcing is a global expansion of business, factors like miscommunication particularly between two different languages may occur. The diversity of culture and the difference in marketing strategy can affect the BPO process and the business partnership.
Choosing The Right Partner
The success of outsourcing business processes relies on the right choice of partners. There are available options, considerations, and deciding factors before one company can successfully choose the potential partner with whom they can depend and rely on their business. Below is a simple guideline in choosing the right outsourcing partner:
Set the standards – In choosing the right outsourcing partner, there must be a list of qualifications that need to be met before a company can be considered as a potential collaborator. It is crucial that they understand the nature of the business, how it works, and the desired end-goal for choosing to employ outsourcing with them.
Among the qualifications to consider include:
Credibility – The basic requirement in choosing a potential BPO partner is its credibility. They must have a good reputation in their services and positive feedback from other companies. There is a higher chance of success with a company that already has experience in providing quality and assured services.
Service Offers – Regardless of the objective for using BPO, there is always a need to bank on companies capable of delivering a multitude of services. As the company expands, surely there will be a growing need to keep up with the competitive market and continuously enhance the services offered.
For example, a business hires a company specializing in web development to create a website for the brand. Once the website is completed, it is also important to employ SEO and content services to promote the website. Flexible services will help businesses achieve their core goals for future development.
Tech-savvy – Providing a higher quality of outsourcing service may also mean having the capacity to offer and keep track of the latest trends in technology. Make it a point to check the systems and software used by a potential BPO partner to effectively and efficiently complete outsourced tasks.
Number of Staff and Relevant Training – Another thing to consider is the number of staff that will work on the outsourced tasks. A good BPO partner must be more than enough to complete the required projects. Having undergone the necessary training for the job is also a must.
Pricing – The number one purpose of hiring BPO is because of its low-cost advantage. A company with excellent service, a good track record and one that is open to negotiating in terms of competitive price, is the practical way of choosing an efficient associate for outsourcing.
There are more characteristics and factors that can be included in this list of BPO qualifications, such as: Flexibility, Scalability, Awards and Certifications, Brand Awareness, and Communication Skills, for better options.
Request for Proposal – Once the qualifications are established, the next step is to draft the Request for Proposal. It contains all the requirements and conditions of the company for the partnership. After that, start sending this RFP to multiple potential companies.
Evaluation & Selection of Partners – After sending the RFP, all proposals that will be received from aspiring business partners must be carefully evaluated. Although it is more practical to choose the cheapest, it does not always promise the best performance.
Check and see which company will meet all the qualifications. After selecting the best potential partner, start discussing the needed projects.
Contract Negotiation – Aside from the major factors, don’t forget to discuss the minor details of the contract as well. Ask about the means of communication, the commitment, the time frame of the contract, expectations and what is expected of them.
From the cost of their services, the arrangement and cost of cutting ties with them, how to negotiate disagreements with them, and so on, the contract must be crystal clear for both parties.
Launching of Project – After the contract negotiations comes to the project launching. This means every plan must be brought to action now. Allow time and patience to observe the progress of the partnership. It is necessary to always be a few steps ahead of the developmental progress, no matter how fast or slow the company’s road to success is.
Monitoring – Launching the company’s project is not enough to say that success is already right around the corner. There may be a time where parts of the plan may not go as expected. Closely monitoring the progress of the project is essential.
This way, it will serve as a constant reminder and reassurance that there is an existing aid to help recover through the roadblocks and continue achieving the business’ goals.
Why Choose New Media Services for Business Process Outsourcing?
In the phase of growing businesses, there’s always a way to stay competitive, stable, and outgrowing. Our Business Process Outsourcing services at New Media Services provide flexible solutions that help you upgrade your business and achieve greater heights.
We ensure the best experience for our clients and partner companies. Through our updated and latest technologies, experienced and professional staff, and cost-effective services, we guarantee that the success of your business is on the right hands and on the right path! So, if you are searching for the best BPO partner to assist you with your business, what are you waiting for? Send us a message and experience our best assistance that’ll help your company achieve your goal.
Get in Touch
480 Collins Street, Melbourne. 3000. Victoria, Australia