Updated
June 7, 2024
Written by
Alyssa Maano
The ever-evolving nature of business demands an increase in operational efficiency to stay ahead of today’s global competition. With the emergence of outsourcing, companies can enhance their strategies by extending their functionalities to external service providers.
So, why do companies choose to outsource work?
There are several reasons why business entities turn to business outsourcing solutions. While cost may be the primary driver for outsourcing, there are numerous advantages to contracting a third-party provider, from access to expertise to technological advancements.
If you’re considering availing business process outsourcing services, you must understand the weight of the following factors:
Traditionally, outsourcing was a cost-cutting method. During the 1980s, businesses in the manufacturing industry pioneered this low-cost strategy by outsourcing their supply chain processes to external companies.
Soon enough, large enterprises like Kodak began outsourcing their data center operations to IBM, one of the biggest tech giants. This significant period in the history of business process outsourcing (BPO) made way for other companies to hire providers in other countries with lower labor costs.
For instance, business outsourcing services offered by third-party companies based in India and the Philippines are significantly cheaper than those in countries where wages are higher. Thus, most businesses “offshore” their operations to overseas regions.
Overall, BPO offers financial benefits in terms of labor and operational costs. It eliminates the need to invest in infrastructure and technology as well as hiring and training an in-house team to perform non-core functions.
Outsourcing also allows companies to have access to a global talent pool. BPO companies hire skilled professionals who excel in their niche to perform specific tasks for their clients.
For example, call center companies employ agents with relevant experience in customer service and exceptional communication skills. They may be required to speak a certain language if the role requires multilingual support.
Aside from outsourcing call centers, companies also outsource experts in the following areas:
Companies that need staff for employee recruitment, onboarding, and payroll activities partner with HR BPO providers. They ensure that all HR personnel have administrative expertise and a strong understanding of employee relations.
Outsourcing IT solutions encompasses knowledge about network security, data centers, cloud services, software support, and other IT-related services.
Some of the top IT BPO companies in the world are Accenture, Concentrix, Cognizant, IBM, and Wipro. These companies have headquarters all over the world and are known to employ hundreds of thousands of IT experts.
One of the most commonly outsourced services is accounting. Accountants, bookkeepers, and financial managers are hired by companies to perform tax consultations, financial planning, and other finance-related processes. These professionals reduce the risk of critical errors that could incur losses to the company.
Businesses in the e-commerce industry also outsource their digital marketers. A team of marketing experts can conceptualize and run campaigns on various online channels, including websites, emails, and social media accounts. Search engine optimization (SEO) consultants typically manage blog writers and editors for search engine optimization (SEO) to boost search rankings.
With outsourced business services, companies can free up their time to focus on core business activities such as research, product enhancement, and other core strategies necessary for business growth.
For instance, if a company chooses to integrate a sales department into their company, they would have to dedicate time and effort to hiring and training each employee. Moreover, they need to allocate additional resources for office space, equipment, software, and other necessities.
By delegating sales tasks to external experts, internal staff won’t have to go through this tedious process since external parties are already equipped with the skills to successfully integrate into your operations.
Outsourcing companies offer both front-office and back-office functions. The former includes customer-facing tasks such as customer support and sales, while the latter involves administrative or technical activities like accounting, HR, IT, and marketing.
The business landscape is constantly changing. However, many businesses fail to keep up with fluctuating demands and customer needs. Outsourcing to BPO companies grants businesses greater flexibility by allowing them to scale up or down their operations whenever necessary.
For instance, when companies outsource outbound call center services, they can request more agents during peak season or ask for fewer reinforcements during the off-season. This flexibility removes the burden of hiring and laying off staff and avoids overhead costs.
Moreover, outsourcing can also be project-based. For example, a small start-up hires a web designer and developer to create an eye-catching and functioning website to promote their services. The reality is that small businesses simply don’t require a full-time web designer. The same goes for other smaller companies that only need a specific talent to execute a one-time task.
Companies face various risks in different aspects—changing management, labor relations, supply and demand, and even health and safety. Failure to mitigate these risks can result in grave consequences.
When businesses outsource work, they also outsource risk management solutions, such as financial responsibility and liability for a project. BPO providers help mitigate these risks by sharing these obligations and ensuring operational efficiency to meet consumer demands.
Additionally, outsourcing partners can help with legal compliance to reduce regulatory risks by conducting regular audits, quality assurance, and training to validate their processes and correct any issues encountered.
For example, call centers that handle sensitive customer data must comply with local laws and regulations surrounding data privacy to protect the client’s reputation and avoid legal fines.
Another reason why companies choose to work with BPO companies is due to their use of advanced technologies. Cutting-edge technology is the backbone of effective BPO services. These technologies include:
In modern BPO operations, having an omnichannel communication tool is essential in handling different types of customer interactions, whether through email, call, social media, or live chat. Through an omnichannel solution, customers can conveniently engage with a company across multiple channels.
The benefits of AI are also evident in the BPO industry. With human and AI outsourcing solutions, automating repetitive processes became possible. It allows sales representatives and customer support agents to analyze customer data and feedback and schedule emails and follow-up calls.
Moreover, AI-powered analytics are also used to predict future trends, customer behavior, and other marketing opportunities, allowing clients to make data-driven decisions and form better strategies.
Another must-have software for BPO vendors is a CRM system. This allows employees to organize customer profiles and other related information for easier retrieval. With a centralized database, they can craft tailored solutions and offer personalized experiences for enhanced customer satisfaction.
BPO is a game-changer for business operations due to its ability to optimize workflow by implementing standard procedures and best practices. With their resources and infrastructure, they can manage operations with accuracy and efficiency.
BPO staff have the tools and systems to achieve maximum productivity, deliver high-quality output, and gain faster turnaround rates. They also undergo constant training to stay updated with industry trends and increase their work proficiency.
Furthermore, BPOs track and measure agent performance and overall efficiency through several key metrics:
By measuring call center agent performance, BPOs can assess their employees’ productivity and how they help the entire organization become more efficient.
Some of these metrics include:
AHT is the average amount of time elapsed when handling customer calls, including hold times and after-call tasks. The goal is to balance the AHT score to ensure that issues are resolved efficiently.
This metric refers to the percentage of logged-in time an agent spends actively handling customer calls within their shift. Ideally, representatives should spend most of their time on calls rather than secondary activities.
The occupancy rate measures the percentage of time spent by an agent actively handling customer issues versus the time spent idle. By monitoring this metric, agent schedules and staffing can be adjusted to accommodate call volumes.
Improving call center performance metrics enables BPOs to deliver optimal performance for clients. These metrics include:
It identifies peak and low seasons by measuring the total number of inbound and outbound calls handled by the call center.
This is the measurement of calls that are dropped or abandoned by customers before being answered by available agents.
This measures the BPO’s ability to answer inbound calls within a given time. Typically, the target is to have 80% of the calls answered within 20 seconds or even less.
Collaborating with a BPO service provider promises enhanced customer experience and satisfaction. When a company’s customer service function is outsourced to an external party, it taps into a pool of highly skilled experts who are proficient in dealing with customer interactions.
Here are the different ways how BPO shapes better customer experiences:
Today’s businesses demand round-the-clock customer service to ensure that assistance is given despite varying time zones and locations. Thus BPO offers 24/7 accessibility to guarantee clients can address customer concerns as they emerge.
Customer service teams are trained to resolve issues promptly. Their efficiency in issue resolutions boosts customer experience and retention. Moreover, their use of advanced tools helps them personalize interactions for better satisfaction.
To evaluate the level of customer satisfaction from the received service and identify opportunities to improve customer journey, BPO measures the following:
This metric gauges customer loyalty by asking them how likely they are to recommend the company’s products or services. The higher the NPS, the more loyal your customers are to the brand.
CSAT is a direct method of knowing how customers assess the service or support they receive from the company. It is measured through a customer satisfaction survey which asks the individual to rate their overall satisfaction delivered to meet their needs.
Outsourcing offers companies a strategic advantage by providing cost efficiency, access to specialized expertise, and the ability to focus on core business activities. By partnering with external service providers, businesses can scale operations and manage risks effectively.
Furthermore, outsourcing grants access to advanced technologies and significantly improves operational efficiency and customer experience. These long-term benefits assist companies in staying competitive in the global market, innovating continually, and achieving sustained growth.
Embracing business process outsourcing service through NMS not only optimizes resource allocation but also drives business success.
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