Introduction
Business Process Outsourcing refers to a scenario where an organization outsources certain business functions to a third-party vendor, hence a company can move processes such as customer support, accounting, IT and many others to their external service providers.
Some of these activities that will be multi-originated enable the companies to cut processes on overhead costs and in turn help them gain modern equipment and resource personnel.
Cost savings is not the only reason for outsourcing, it is a professional manner of managing companies which enables them to remain competitive in their respective industries by outsourcing only irrelevant functions to third party business process outsourcing services.
What is Business Process Outsourcing (BPO)?
Business Process Outsourcing services therefore involve the delegation of specific business functions by companies to external service providers. Companies can thus delegate their customer support, accounting, IT services, and much more to experts outside the company organizations.
These out-sourced activities help the companies save overheads while having access to the latest technology and quality experts.
Outsourcing, other than being a cost-cutting measure, is a strategic approach to ensure that businesses remain competitive by focusing attention only on the essential activities and letting unimportant things be handled by outsourcing services of BPO.
What Are the Types of BPO?
BPO services can be categorized in a large number of ways, both according to location-based and nature-based business process outsourcing. By categorizing BPO services, businesses can select the most appropriate outsourcing strategy that will best meet their needs in solving a particular problem.
1. Onshore BPO
Onshore BPO means that a business process outsourcing to a provider happens within the same country. Companies are apt to opt for onshore BPO options because they require more control over their outsourced business processes. They also tend to be wary of potential issues such as language constraints and time zone differences.
An onshore BPO platform offers an environment with reduced language barriers, quicker turnaround times, and easier management of the legal and regulatory matters: the provider is situated in the same country as the client company.
For example, a company domiciled in the U.S. could decide to outsource its payroll processing operations to a BPO company based in the U.S. respectively. Due to their proximity and cultural similarities, they would be able to work together with fewer comprehension or operational breakdown risks.
2. Offshore BPO
Offshore BPO is a form of outsourcing where business processes are outsourced to a service provider who is from another country, often on another continent. This form of BPO tends to be based on a strong desire for making tremendous savings. Countries like India, the Philippines, and Malaysia attract offshore BPO outsourcing services because of the lower cost of labor and also because they have huge pools of skilled professionals in various industries, including IT, customer servicing, and finance.
Of course, offshore outsourcing can help achieve significant cost savings. However, it also raises a problem on the language side and potentially in terms of time zones as well as the need for more robust communication management to avoid misalignments.
Nevertheless, many view the upside as outweighing the down side, especially when cashing in on the special expertise and round-the-clock support offered by offshore providers.
For instance, an American-based organization may decide to outsource technical services to a team that is located in India, where labor is relatively inexpensive but well trained in the relevant skills. It then becomes possible to have support 24/7, which is expected to heighten customer satisfaction and operational efficiency.
3. Front Office BPO
Front Office BPO pertains to customer-facing service where the provider being outsourced actually interfaces directly with the customers or clients of the company. Such services generally include call center services providers, help desk support, telemarketing, customer service, and technical support.
Business firms can outsource such processes to streamline customer interactions, improve service availability, and enhance levels of satisfaction without hiring an in-house team. Example: most e-commerce business firms outsource their customer support services to a call center services provider. This ensures round-the-clock support, which is especially valuable when dealing with international customers.
4. Back Office BPO
The Back Office BPO outsources the firm’s internal business functions that don’t necessarily require direct employee-client interaction. Its services concern the operations of the firm and may include data entry, management of human resources, payroll processing, accounting, and IT services, among others.
What Are Common BPO Services?
BPO outsourcing services encompass a wide range of offerings that cater to different business needs. Some of the most common services include:
- Call Center Services: This is one of the most widely outsourced processes. Call center services providers handle customer interactions, from sales inquiries to technical support, ensuring smooth communication and a seamless customer experience.
- Human Resources (HR) Outsourcing: BPO can manage tasks like recruitment, payroll processing, employee benefits administration, and training.
- Finance and Accounting Services: Outsourcing tasks such as bookkeeping, accounts payable, tax preparation, and auditing allows companies to access specialized financial expertise.
- IT Outsourcing: IT services, including help desk support, software development, network management, and cybersecurity, are frequently outsourced to BPO outsourcing services providers.
- Data Processing Services: From data entry to data analytics, businesses can outsource data management tasks to improve accuracy and efficiency.
What Are BPO Subgroups?
BPO outsourcing services comprise an extensive package of offerings that allow addressing the most diversified business needs.
Among the most common services are:
- Call Center Services- Generally considered one of the most outsourced processes, call center services providers address all kinds of customer communications, including inquiries regarding sales or technical support, to ensure smooth communication and provide a seamless customer experience.
- Human Resource Outsourcing- BPO can outsource activities like recruitment, salary processing, employee benefits administration, and training.
- Financial and Accounting Services– Company capabilities to outsource tasks like bookkeeping, accounts payable, tax preparation, and auditing will provide direct access to specialty financial expertise.
- IT Outsourcing-Tasks like help desk support, software development, network management, and cybersecurity are very common with the outsourcing services providers from BPO.
- Data processing service- All the way from data entry to data analytics, data management functions can be outsourced to organizations to enhance precision and effectiveness.
BPO Services: What Can Be Outsourced?
The scope of outsourcing can vary widely depending on the requirements of the specific company or industry. Among the most common outsourced services are:
- Customer Service: Most businesses outsource their customer service functions to a call center services provider. In this manner, customers are attended to efficiently at all times, without overburdening internal teams.
- Technical Support: Highly complex product and service organizations outsource technical support to experts so that their customers are handed over their technical issues with specific knowledge.
- Telemarketing: Companies outsource sales and telemarketing campaigns to decrease the costs and access trained sales professionals.
- Order Processing: E-commerce organizations outsource order processing in order to ensure an efficient handling of orders, shipping, and returns.
- Content Writing: Companies have outsourced writing and content development from blog posts to a marketing piece, ensuring that it is quality and saving time.
- HR and Payroll Outsourcing: Each HR activity, including payroll, benefits administration, and compliance, has been outsourced to concentrate more on human capital and the company culture.
- Finance and Accounting: Bookkeeping, accounts payable and accounts receivable, financial reporting, and tax preparation represent common forms of outsourcing to BPO outsourcing service providers.
When Should You Outsource?
Choosing the right time to outsource can have a tremendous bearing upon the growth of one’s business. Outsourcing should be considered when:
- Focus on Core Activity: As a means of dealing with non-core tasks, each business organization must now concentrate on the innovation of the products or its marketing promotion.
- In-House Knowledge Absence: A business firm that lacks in-house capabilities can acquire knowledge form outsourcing services through industry experts in such domains, securing a high-quality service.
- Cost Cutting Requires: When considering offshore options, considerable cost savings can be realized through outsourcing.
- Need for Scalability: An excellent benefit of outsourcing is that it gives the business flexibility to scale operations up or down according to business requirements. For contact centres, such scaling involves, for example, making sure their staffing is able to ensure service availability even when customer service demand fluctuates.
- Tasks Need More Time: Outsourcing time-consuming tasks such as data processing and telemarketing will leave more time for the internal team to be engaged in value-added, strategic initiatives.
- Require 24/7 Operations: Outsourcing service providers have always been quite popular with companies that require round-the-clock services, especially with companies providing customer service and IT support whose working hours spread across a number of different time zones.
How To Outsource Successfully
Outsourcing is a very strong tool for businesses, but the right execution is crucial for successful outsourcing.
Here are some steps that can ensure smooth outsourcing:
- Identify the Right Processes to Outsource: This refers to the careful evaluation of which processes are best suited for outsourcing. Instead of focusing on non-core activities that consume so much time but that don’t provide direct contributions towards business growth, focus more on non-core activities.
- Research Potential BPO Providers: All business process outsourcing providers are not equal. Businesses research and compare different business process outsourcing services providers and find one that specializes in their industry, has a good reputation, and can give them scalable solutions.
- Consider Compatibility in Communication and Culture: Communications are one of the success factors of outsourcing. Companies need to opt for providers who are compatible in their work culture and ensure the provider will communicate well with them in the same language.
- Clearly define the scope of work, deliverables, and timelines before entering any outsourcing partnership. This avoids misunderstandings and ensures that both parties are on the same page.
- Track performance periodically: Even after business process outsourcing, a business needs to track the performance of the BPO outsourcing services provider constantly. A regular monitoring of service quality, turnaround time, and customer satisfaction through KPI helps ensure the provider is at par with expectations.
The Bottom Line
Outsourcing business processes allows companies to unlock tremendous value through the reduction of operational costs, improvements in efficiency, or through access to specialized expertise. Whether you are a startup or an existing large company, outsourcing can help your business grow and scale without compromising quality. Best practices, combined with the right business process outsourcing services provider such as NexGen Agency, will result in enhanced productivity, increased client satisfaction, and so much more to help businesses outrun their competitors in today’s fast-paced marketplace.