In recent years, business process outsourcing (BPO) has seen explosive growth across the globe. What has been behind this rapid expansion?
Businesses are adopting the BPO model because it is simply one of the most effective methods of streamlining a business. In other words, BPO offers efficiency, and an efficient business is a successful business.
There are many different varieties of BPO services available and many business owners may be unsure of what model would best serve their needs. This quick and easy guide explains what BPO is about for those who may still be unsure, and how it can add value to YOUR business.
1. The definition of BPO and history?
BPO stands for business process outsourcing, and it is the practice of contracting non-core business activities and functions to a third-party.
During the booming post-war economy, a new kind of management structure took hold in the United States. Corporations discovered that profitability could be increased by just focusing on the core strengths of the business.
During the 1980s, this philosophy developed into the beginnings of the outsourcing industry. By the early 21st century, businesses increasingly began to outsource to suppliers outside their own country. They did this to further reduce costs, increase profits and gain access to highly specialized personnel, particularly in technical professions.
What are the different kinds of BPO services?
There are quite a few different BPO services available, but we can break them down into two main categories: front-office services and back-office services.
1.1 What are front-office BPO services?
The front office represents the customer-facing function of a firm, for example, customer service, tech support, inbound & outbound call centers, and ticket handling.
Customer support is one of the most widely outsourced business processes, and the term ‘outsourcing’ has become practically synonymous with call centers over the years.
By handing this function over to a BPO vendor, you’re essentially allowing another firm to be the face of your company. Through a partnership with a reliable BPO partner, however, you can be assured that your customers get the quality customer service they deserve.
There are quite a few different BPO services available, but we can break them down into two main categories: front-office services and back-office services.
1.2 What are back-office BPO services?
The back office is the part of a company responsible for providing business functions related to administration and consists of support personnel who are not client-facing. Back-office functions include payroll services, accounting support, quality assurance, data entry, data management, and software development. More recently, social media management and content moderation have come to the fore.
An organization’s back office management can significantly impact its success and back-office outsourcing refers to the act of getting a third-party provider to build a support team on your behalf.
New developments in technology have meant that back-office BPO services no longer need to be handled internally. Software now helps automate and standardize business processes and management tools enable instant communication and remote supervision. Advancements in cloud computing have removed the need for servers or other expensive infrastructure.
Since back-office service providers are not required to handle clients or customers, offshoring your services can be just as effective as having an in-house team, but with lower costs. Business leaders should give further consideration to whether onshore, nearshore, or offshore outsourcing is the best option for them.
2. What’s the difference between onshore, nearshore, and offshore outsourcing?
2.1 Onshore outsourcing?
This means outsourcing your business processes to another company located in your home country.
The advantage of onshore outsourcing is convenience – you can work with skilled teams in your own country that share your language and culture and are usually in the same, or similar, time zone.
The drawback to onshore outsourcing is the high price when compared to nearshore or offshore options.
2.2 Nearshore outsourcing?
Nearshore outsourcing involves hiring firms in countries close to your own country with a similar culture and in the same or adjacent time zones.
For example, a company in the UK outsourcing their customer service to a call center in Poland.
Nearshore outsourcing offers some cost savings when compared to onshore and has the added benefit of proximity for frequent site visits.
2.3 Offshore outsourcing?
Offshore outsourcing means hiring a company in a foreign country, likely to have a different language and culture, in a different part of the world.
The benefits of offshore are higher cost savings while retaining access to a specialized labor pool.
Traditional offshore outsourcing destinations, such as India and China, are now seeing stronger competition from countries such as Vietnam, Sri Lanka, and the Philippines.
Offshoring is the more widely known option and tends to be what most people associate with the term outsourcing.
3. What are the advantages of BPO?
The number one deciding factor for business leaders when making a decision is how the outcome will affect the bottom line.
BPO can help accomplish this in a variety of ways.
● Overall cost reduction – Hiring full-time staff and providing them with office space and benefits can be expensive. Outsourcing to a highly-skilled professional from a BPO provider is far more affordable.
● Focus on what you do best – The best and brightest employees at a firm should be focussed on the activities that provide the greatest return. Remove unrelated or mundane tasks from their to-do list and allow them to concentrate on the areas in which they specialize.
● Access to experts – The ability to outsource a task to a BPO company with skilled expertise in that area is one of the primary reasons that companies outsource.
● Scalability – Flexibility during moments of uncertainty can be a huge advantage. An outsourcing partnership will allow you to scale resources up or down as needed during times of high or low demand.
● Speed of execution – No firm can afford to maintain idle resources for long, and hiring and training new staff for the implementation of a new project can be expensive and time-consuming. The speed of execution can often depend upon the complexity of the campaign but outsourcing firms have far greater flexibility with their resources in advance of a project.
● A competitive edge – The right outsourcing partner can give a small or medium-sized business the same advantages as a large multinational. By availing of the ‘best-of-breed’ services provided by a BPO partner, and through effective management of in-house resources, a business can gain a distinct advantage over its competitors.
The business process outsourcing industry can offer flexibility, reduced costs, access to high-quality talent and an opportunity to focus on core activities.
It may take some time to find the right BPO provider for your strategic needs, and one size does certainly not fit all.
But through careful planning and the establishment of clear communication channels, adopting the BPO model could be the necessary ingredient your business needs to compete at the next level.
Talk to Leap today about their variety of BPO services, offering flexibility and scalability to suit the bespoke needs of any business.
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Great overview! BPO really does provide essential flexibility and cost savings, making it a smart choice for businesses looking to improve efficiency and access specialized talent.