Business process outsourcing (BPO) can work wonders for your business. Imagine being able to increase the overall efficiency of your business and take workloads off your internal teams while being able to reduce overall costs. These are just some of the many business processes outsourcing benefits. In fact, many businesses have already taken advantage of the benefits of business process outsourcing. Recent data shows that the share of businesses currently using the business process outsourcing industry for their information technology needs stands at 74%. Today we will take a closer look at BPO and all of the advantages it offers so you can start enjoying these benefits inside your own business. Let’s start by getting an overview of what exactly is business process outsourcing.
What Is Business Process Outsourcing (BPO) and How Does It Work?
BPO is a type of outsourcing in which the execution and responsibility for a specific business function (business process) are transferred to the supplier. BPO is the deepest form of outsourcing, involving close interaction between the customer and the service provider (outsourcer). Unlike task outsourcing, which involves outsourcing individual projects with limited time and budget, business process outsourcing may not have time limits and a fixed budget. Within the framework of BPO, the organization transfers to the outsourcer not just individual tasks but a closed functional area within its business. Many types of activities can be outsourced, such as:
- Data entry
- Third-party verification
- Customer support
- Accounts payable/receivable
In general terms, it is clear: the supplier is integrated into the customer’s management system, taking responsibility for the implementation of the entire business process (in the context of ITSM – the service management process). At the same time, the resources involved in the process can belong to anyone: the same supplier, customer, or third parties. Not all, of course: apparently, the resources that manage the process (primarily the process manager) must belong to the supplier.
How Does Business Process Outsourcing (BPO) Work?
BPO is fairly straightforward. All you need to do is delegate specified functions to a service provider. Now, you do have some options in terms of how you want to organize the outsourcing process:
- Offshore – When a company is outsourcing BPO services to a service provider located in another time zone. For example, if some American company transfers its project to a country in Europe.
- Nearshore – When a business chooses a BPO outsourcing company located in a neighboring country. For example, one European business searches for business process outsourcing companies that are also located in Europe.
- Onshore – This outsourcing BPO option is pretty rare, but nevertheless, it still exists. This is when a company chooses BPO outsourcing services in the exact same country that they are also located.
As we can see, there are many ways you can organize the business outsourcing process. In order to get a better understanding of this, let’s look at the examples in the next section.
Most Common Example of Business Process Outsourcing (BPO)
One of the most common tasks routinely handled by BPO is data entry. Instead of hiring somebody in your local market to perform such a low-level task, you can easily outsource it to a service provider. Why is this the case? Well, according to Indeed, the average annual salary of a data entry specialist in the US is $38,735. You can find qualified offshore and nearshore employees who will perform such tasks for you for a fraction of the cost. This is one of the reasons why cost savings is considered a key driver for outsourcing by most companies.
Another example of outsourcing business processes is when a company offers a certain service and hires a BPO service provider to handle all of the details. For example, Canon offers an integrated services delivery capability that enables tailored solutions to be delivered onsite at the client’s location, as well as offsite and/or offshore. Upon reaching an agreement, a service provider may then manage such tasks as claims or invoice processing, including workforce management responsibilities that span hiring, training, and retaining talent to maintain a team for the client.
Now that we have looked at some examples of the business outsourcing process let’s move on to the benefits of BPO.
Companies across industries can reap the benefits of BPO. Some of the major advantages of outsourcing include:
- Increased Efficiency – Outsource BPO companies are more efficient than in-house departments as they specialize in a particular task/field. Outsourcing companies have many years of experience and knowledge in the relevant field, so the efficiency is much higher than that of full-time employees.
- Cost reduction – One of the main benefits of outsourcing that companies are looking for is the cost of BPO, specifically cost reduction. There is a big difference in currency in western and eastern countries, so companies outsource their work to companies in the country that cost them minimally with high efficiency since this will benefit both them and the supplier companies.
- Focus only on the core task – With business process outsourcing BPO, there is no need to spend additional overhead on all tasks and therefore freeze their energy to focus only on improving the business, creating new customers, and business research and development.
- Highly skilled labor. Outsource BPO services offer highly qualified resources who are experts in their field and therefore provide the best results for the task at hand. They have many years of experience with clients in this field.
- Better Resource Coverage: Outsourcing companies already maintain a pool of resources so that work doesn’t interfere with them if they have overwork or a resource emergency. BPO operations are designed to quickly find the needed candidates to fill vacancies.
- Save on infrastructure. With work outsourcing, there is no need to set up the entire infrastructure and invest unnecessary funds in it, as the external company takes full responsibility for it and charges accordingly.
Having said this, you should also know when outsourcing is not beneficial. We explore this in the next section.
What Are the Downsides of Business Process Outsourcing (BPO)?
Even though BPO offers many benefits, there are some advantages of outsourcing that do not include everything you imagined, but it is possible to work with your service provider to turn things around. For example, knowledge of your product or services. Offshore employees may not have deep knowledge of your product or service offering, but a quality outsourcing provider can give your team members the needed training, so they know your product or service inside out. In fact, the same thing is true for costs. If you choose the wrong provider, you could be spending a lot more money than you initially thought. That’s why you should carefully choose the company you work with.
Trust Pexly With All of Your BPO Needs
Pexly is one of the largest BPO providers in Eastern Europe, with more than seven years of experience in actualizing projects of various sizes and complexities. All of this experience allows us to smoothly implement your project and make sure you get the highest ROI possible. Contact us today to learn more about how we can help you.