Incorporating AI and automation in modern business strategies has paved the way for the employment of remote workers. Additionally, this has presented unique challenges like regulating workflow, overcoming management issues, and ensuring sustainable strategies.
This is where BPO becomes relevant— contracting specific business functions to overseas third-party providers and offering flexible solutions to evolve and adapt businesses.
They thrive on playing a role in supporting various industries encompassing IT, telecommunications, healthcare, finance and accounting, retail and e-commerce, travel and hospitality, education, HR, and much much more.
But why do companies choose to outsource work? Before we explore that, let’s take a moment to read up on the topic of BPO:
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Business Process Outsourcing: Facts and Figures
The BPO industry has been on the rise since its rich advent in the 1970s and is estimated to flourish at a compound annual growth rate (CAGR) of 9.6%. Check out the latest industry news related to business process outsourcing and its impact on the global economy:
Effects of COVID-19 on the BPO Industry
Although the pandemic was brutal on the entire globe, the necessity to keep businesses up and running made it possible for the BPO industry to provide back-office support and flourish. By 2023, the industry's worth peaked at $280.64 billion from the $92.50 billion market size.
*Source: CGS, Statista
The bilateral relationship between the US and China appears to be undergoing a complex change, with non-core business functions now being delegated to Mexico, an emerging competitor in the BPO industry.
Why?
Key factors contributing to this significant shift:
Allegations of software replication by Chinese developers and the stringent laws regarding intellectual property protection in Mexico have given Mexico the upper hand
Moreover, the linguistic expertise of Mexicans, where English is the 2nd most spoken language, has paved the way to gaining nearshore BPO service requests from its biggest trading partner, the U.S
Time zone synchronicity has facilitated immediate interactions between the two nations, fostering improved outsourcing partnerships
SaaS and IT Services: The Rising Demand of Outsourcing
The most common tasks outsourced to a BPO company include IT services and accounting, where 76% agreed to have outsourced IT functions in their businesses. These include but are not limited to software and web development, website maintenance, cloud computing, technical support, cybersecurity, etc.
According to the latest available data, IBM has reached the top of the ladder in IT outsourcing. Its rich leadership history and wide range of IaaS, PaaS, and SaaS services offered to its clientele have contributed to this notable achievement.
Why BPO: 7 Benefits of Business Process Outsourcing
“Should I choose to outsource work of my business?” is the most frequently asked question these days, mainly because of the underlying costs and resources related to hiring full-time employees and having to pay for an entire office setup.
This is especially a concern if you own a startup and need time to invest more and gradually scale up your business.
Keeping these scenarios in mind, we’ve compiled seven good reasons why you should focus on the core functions of the company and outsource the rest:
Access to Diverse Talents
Whether you’re in need of a data entry specialist or an expert like a designer, accountant, writer, programmer, marketer, or others, outsourcing one can give you the flexibility to recruit.
This means you get to choose a workforce from countries across the globe: better qualifications, improved skills, and optimal industry knowledge.
Retain Scalability
Operational and production demands vary from time to time, requiring the flexibility to scale the business up and down to handle the workloads efficiently.
These increased demands can be managed through proper strategic planning and adaptability, including investing in technology, developing standardized processes, focusing on customer retention, and monitoring financial metrics.
Nevertheless, as a business owner, you might encounter challenges to follow through efficient growth:
Lack of resources that lead to operational inefficiencies
Upfront investments in developing systems and infrastructure
Necessity to recruit new team members to balance increased workload
However, given cost constraints, it’s always wise to contact a BPO company for help with the upscaling management. Even when you need to downscale, you can do so without incurring revenue or resource loss.
For seamless scalability, look into the options available across the globe: Philippines, Bangladesh, Australia, India, and Europe. But before you do so, make sure to read up on “How to avoid underground BPO Scams” and steer clear of potential risks.
High Operations Output
Once you realize how easily routine tasks can drain out your high-performing employees, which can then turn your business visions blurry, it’s time to bring a change.
It’s well-advised to keep your competent employees unaffected by time-consuming administrative duties. Instead, allow them to focus on core tasks contributing to the business’s revenue generation and expansion.
As for the non-core ones, delegate them to a BPO service provider who can handle bookkeeping, answering emails and calls, data entry, and other such responsibilities.
Low Operations Cost
Variable strategic models are implemented through and through to keep a business running despite the ups and downs. However, this can result in fluctuations in net expenditures due to spending on additional employees, resources, and bills.
The best way to cut costs in this scenario is to opt for outsourcing services from low-income countries with optimal technological advancement. Since the workforce in these regions is well-educated and has a commendable grasp of English but charges less hourly, your business will end up saving heaps each month. This can later be utilized in further investment and growing your company.
Low Operational Risk
Having to constantly focus on core and non-core business tasks while also planning on expansion can create unwanted situations. Financial losses, especially due to ineffective plans and policies, inadequacy in executing procedures, etc., can hamper a business and even force it to shut down forever.
In fact, facing operational risks is typically caused by four distinct reasons:
People
Processes
Systems
External events
However, once you decide to outsource routine tasks, obstructions in business operations can be significantly reduced.
Fulfill Compliance and Regulatory Measures
Owning and operating a business isn’t only about managing the workflow and earning from it. Ensuring that the latest regulatory changes are readily incorporated into the company policies and adhered to all through is necessary to mitigate potential risks. These risks may include security and data breaches that will bring questions to the company’s reputation and lost customers.
Moreover, it can lead to penalties against the brand, such as license revocations, financial penalties, and losses.
However, passing on this regulatory compliance duty to a third-party company, i.e., a BPO service provider, can relieve you of the burden of following these.
Increase Brand Visibility and Loyalty
For any business to survive in the market, it’s mandatory to make sure that your company is consistently connecting to existing clients while reaching out to new potential leads. This will gradually help build business credibility among the clientele.
Strategies such as, utilizing SEO, offering reward and referral programs, producing audio and video content, etc. can simply be carried out by partnering with an outsourcing company that will do the work for you. The results? Your company gains recognition through client engagement and you’ll have higher chances of returning customers almost loyal to a fault.
Things to Look Out for in a BPO Company
Simply putting a bet on outsourcing your administrative tasks should always be avoided. Instead, clear your mind and make a sound decision when relying on a third-party company:
Experience and Technology
While many BPO companies offer a wide range of services, from customer care services to social media management (SMM) and legal management, the focal judgments should be based on the expertise of its employees and the advanced technology equipped to handle those.
In fact, high-touch services, where personalized customer support and strategies are provided to individual clients, should be #1 on the business’s priority list. This way, you can bring in high-value recurring revenue customers from real estate, legal, healthcare, wealth management, etc., and gradually grow your organization.
In-House Training
When choosing an outsourcing provider overseas, we suggest you pick one that offers in-house training facilities to the recruits.
Although we agree that newly onboarded employees are already skilled professionals, ready to showcase their capabilities, training and guiding them to adapt to their new employer and company policies is much commendable.
This is precisely where a BPO organization comes in handy, where they train the team before you can assign projects to the new hires. As a result, they’ll be ready to take on challenges straight away and ensure high ROI for the company.
Data Security
Enhanced data security can be readily guaranteed when collaborating with an outsourcing partner; otherwise, it is cost-prohibitive for individual companies or start-ups.
BPO service providers can implement robust security measures to protect confidential user data and credentials, corporate financial information, data in transit and at rest, etc., on your behalf and at reduced costs.
Here are a few tips for business owners when picking an outsourcing partner:
Perform comprehensive research and assessment of their data security practices, like security certifications, data encryption, data management policies, risk response management, and others.
Refrain from compromising on signing precise contracts that mention the data ownership, results of security breaches, confidentiality agreements, etc.
Emphasis should be given to evaluating your BPO service provider at regular intervals so as to audit and monitor the agreed-upon service standards.
Ascertain that your newly recruited remote team is well-trained and aware of following the data security best practices to prevent information breaches by individuals.
Hidden Costs
Often, a lack of transparency or miscommunication leads to increased time, effort, and additional resources spent on project delays, consequently generating steep invoices. Besides, agreements may include extra billing rates on account of setup fees, maintenance charges, systems integrations, training workforce, additional staffing etc.
This brings our attention to overseeing these significant contributors to increased expenditures when taking services from outsourcing companies.
Concluding Remarks
Having mentioned why companies choose to outsource work and the determinants of choosing one, don’t forget to skim “Tips to overcome the disadvantages of outsourcing.” Be well prepared to face it all!