Understanding BPO and how it can increase productivity and efficiency within your organization
Definition of Business Process Outsourcing (BPO)
What is Business Process Outsourcing (BPO)?
Business process outsourcing (BPO) is a business practice in which one organization hires another company to perform a task that the hiring organization requires for its own business processes. BPO can be categorized into two primary types: offshore outsourcing and onshore outsourcing.
For example, an interior design firm might hire a bookkeeping company to handle its customer billing and financial records. In this case, the interior design firm has contracted out the bookkeeping work to save money on personnel costs and other overhead expenses.
The outsourcing of specific business processes allows companies to focus on their core competencies and cut back on operating costs by reducing labor-intensive processes. This is particularly true if a company hires an outsourcing provider located in a country where the cost of labor is lower than in the company's home country.
Outsourcing has become more common in recent years as electronic communications have made it easier for companies in different parts of the world to collaborate on business tasks. The concept of BPO first gained traction in the 1990s when many corporations began relocating their back-end operations to countries like India, China, and Russia where there was a large pool of highly skilled technology workers willing to work for far less money than their American counterparts.
Today, BPO is employed in many different industries.
BPO And Its Impact On HR
The HR industry has seen many changes over the last few decades, with more and more companies turning to HR outsourcing for their needs. There are several reasons for this, but the most prominent one is that it allows HR managers to focus on what they do best - managing people - without having to worry about all the aspects of running a business.
This is especially true for smaller businesses, where there is not enough demand to justify recruiting in-house staff but people management is still an intrinsic part of their company. Smaller companies need to be able to save money where they can, and outsourcing allows them to focus their time and energy, as well as their money, on their core business services.
What are the different types of outsourcing?
There are four main types of outsourcing:
- On-site: Consultants will visit your offices and offer face-to-face support and advice. This is a good choice for more sensitive issues, such as dismissing an employee, but there may be extra costs involved as they are coming to you.
- Remote: Using remote outsourcing means that you don’t need to free up any office space to house the business process outsourcers. It also means that you can prioritize expertise over proximity, as the business process outsourcers can work from anywhere.
- One-off: One-off outsourcing will revolve around one project that can be taken over by your own employees, or will not need to be managed once completed, such as building a website or installing a piece of software that will be used by your employees.
- Ongoing: For ongoing projects, business process outsourcers may be a longer-term solution. For example, a company may opt for a BPO call center or CX team to handle their customer service needs, which is a crucial factor for so many companies.
When considering BPO for your company, consider what you need from a business process outsourcer and then you will have a better idea of what sort of type will work best for you.
What's a BPO (business process outsourcing) call center and what does it do?
The most common types of services provided by BPO call centers are customer service and sales. These are the two tasks that most businesses need help with in order to keep up with the demands of their customers. But there are many other services offered by BPO call centers as well - such as technical support, IT support, and even translation services.
As the customer-facing part of your company, and one of the main factors of customer buying decisions (68% of consumers say they are willing to pay more for products and services from a brand known to offer good customer service experiences. (HubSpot)) it is crucial that your CX team know what they are doing. Instead of spending time and money on setting up an operations team, outsourcing enables you to employ a ready-made team of experts.
What Are the Types of BPO Companies?
As a business model, Business process outsourcing has existed for some thirty years. It has evolved overtime to keep up with the changing demands of business.
Examples of BPO companies may include:
- IT Services
- Healthcare Services
- Cloud Solutions
- Finance Services
- Retail Services
What Are the Advantages of BPO?
In recent years, BPO has been gaining popularity as a means for companies to outsource their operational and administrative tasks. While there are many benefits to outsourcing, the key factor is a company's ability to focus on its core competencies while freeing up resources.
Other benefits include:
- Cost-effectiveness: Not only does outsourcing allow companies to avoid the costs of employing and training people, but they can also avoid the cost of office space and the financial cost of resources such as laptops and software needed. In many cases, it is simply cheaper to outsource rather than create a new department from scratch.
- Scalability and flexibility: Grow and decrease the size of your outsourcing team when need be. In retail, for example, you may need a larger CX team over the holidays, but an outsourced team can be taken on for a shorter contract ending when the holidays do.
- Reducing risks: When you hire the right people for the job, who have experience in the sector, you reduce the chance of mistakes being made, lowing risk.
- Improving efficiency: As if the reduction of risks, outsourcing enables companies to skip the training process, meaning you’re hiring an efficient team from the beginning.
Some Disadvantages of BPO (business process outsourcing)
One of the disadvantages of outsourcing your business process is that you lose control over it. For example, if you outsource your customer service then you will not be able to monitor what they are doing and how they are solving your customers' queries. This however is where employee monitoring can come in; getting hard data on agent performance and quality, and using a common standard of measurement. Perfect to support vendor negotiations.
BPO is a way for companies to reduce costs and increase efficiency by outsourcing certain business processes and by employing monitoring software, you avoid any issues.
Also read: process and task mining
How Fin can help with BPO? (business process outsourcing)
Fin’s Work Insights Platform is a turnkey solution that enables you to monitor the workflow of your outsourcers, allowing you to hold outsourcers accountable and on track. Because Fin works within your browser, it is easy to install and use, and covers your outsourcers workflow end-to-end, meaning nothing is missed. Fin relieves that feeling of being out of control of your outsourcers and means you can back up decisions you make about BPO with probable ROI.
If you would like to know more about how Fin can help with BPO cost management, get in touch with our experts or book a free demo today. Business process outsourcing is better with Fin.