A recent report anticipates an exceptional surge in the global outsourcing industry by 2023, positioning it as an extremely promising strategy for businesses to streamline their operations. However, it is also relevant to note that half of the outsourced projects fail to achieve their desired business outcomes.
In light of these facts, it’s best to inform yourself more about outsourcing and how it can help streamline your business operations, so, we have outlined the pros and cons of outsourcing BPO services below to get you started.
What Are The Most Commonly Outsourced Services?
It's common for businesses to outsource different functions to external service providers. Below are the two most common among the usual outsourced processes.
Back-Office Operations
These operations offer essential support services that ensure companies' efficient functioning. The various back-office jobs include accounting, information technology (IT), human resources (HR), quality assurance, and payment processing.
Outsourcing these functions can be a smart move for your team. It allows you to focus on more important tasks and avoid the need to hire additional staff. Plus, it can help save your company money in the long run.
Front-Office Operations
On the other hand, front-office operations involve crucial tasks like addressing customer inquiries, processing orders, and ensuring smooth day-to-day operations. Front office functions primarily include customer services, marketing, and sales.
Outsourcing your front office operations enables your business to focus on core competencies while leaving the intricacies of customer service, marketing, and sales to the capable hands of experienced professionals. This strategic approach streamlines operations, helps optimize resources, and achieves cost savings.
How Can Outsourcing BPO Services Help Streamline Business Operations?
Organizations seek strategic partners in today's highly competitive market to deliver innovative solutions to meet business objectives. Here are the key advantages of outsourcing BPO services in streamlining business operations.
Maximizes Productivity
BPO companies offer specialized knowledge to organizations, saving significant time. For instance, outsourcing accounting tasks to a BPO provider taps into their expertise, technology, and systems, reforming business operations. This partnership reduces manual tasks, empowering businesses to focus on achieving sustainable growth.
Reduces Costs
Businesses can achieve cost savings and maintain quality by outsourcing to BPO providers in countries with lower labor costs, like the Philippines. These vendors offer flexible pricing structures such as pay-per-use or per-project models, allowing organizations to pay only for the services they actively use, reducing expenses. Partnering with BPO providers enables companies to leverage affordable labor without compromising efficiency.
Boosts Efficiency
Leveraging around-the-clock support from BPO providers optimizes business operations. Outsourcing customer care to a different time zone guarantees quick assistance, enhancing client loyalty and efficiency. Prompt and consistent customer service strengthens reputation, relationships, and operational effectiveness, leading to business success.
Better Seasonal Support
Outsourcing contact centers offer a solution for BPO companies facing the challenge of hiring and laying off customer support representatives during the holiday seasons. By outsourcing, businesses can scale up customer service capabilities without additional employees or infrastructure, effectively meeting increased demands and reducing costs at the same time.
Competitive Advantage
Utilizing BPO services enables companies to strengthen their competitive edge. By strategically outsourcing tasks, businesses can provide outstanding customer experiences while efficiently managing internal resources, resulting in increased productivity. Leveraging the potential of BPO services allows organizations to gain a competitive advantage by improving customer satisfaction and optimizing internal efficiency.
Can Outsourcing BPO Services Pose Challenges to Businesses?
Businesses widely recognize outsourcing BPO services as a cost-saving strategy that can benefit them. However, it's essential to be aware of potential challenges that may arise. Here are the common problems to be mindful of.
Diverse Organizational Cultures
When businesses outsource BPO services, they often face corporate disparities resulting from the collaboration between distinct organizations. Aligning corporate cultures, values, work styles, and communication approaches can be challenging which could result in disorganized team interactions, unproductivity, and failed mutual understanding.
Performance and Productivity Measurement
Optimizing performance and productivity in the BPO industry presents unique challenges, especially with remote or offshore contractors in different time zones. Traditional productivity measurement based on output fails to consider service quality. To accurately gauge productivity, identifying relevant metrics, and assessing overall workforce performance is a must. Addressing these hurdles is important for optimal outcomes among companies with outsourced BPO services.
Data Security and Privacy Risks
When partnering with a BPO provider, businesses face potential security and confidentiality challenges regarding sensitive data and intellectual property. Protecting company information and assets and implementing solid cybersecurity measures are fundamental to prevent detrimental consequences.
Unforeseen BPO Costs
Before outsourcing BPO services should be cautious of hidden costs, such as legal expenses and fees. Thoroughly examine pricing structures, understand overage and down-scaling, and consider long-term contractual obligations for a successful outsourcing relationship.
Unreliable Outsourcing Providers
For Businesses planning to outsource BPO services, it is significant to conduct a thorough research prior to signing the agreement. Assessing the outsourcing firm's past performance and seeking references and feedback from previous clients can help prevent partnering with a troubled company that could put your entire business at risk in the long run.
Should Your Business Consider Outsourcing BPO Services?
By entrusting your non-core tasks to external BPO vendors, you can optimize your time and financial resources. However, knowing when to make the right move is of the essence. So, when should you outsource? Here are the signs that it is time to outsource BPO services.
Insufficient Customer Service
Outsourcing can be a viable option if your business is facing challenges in satisfying and exceeding customer expectations. When overwhelmed with other major tasks, it cannot be easy to meet customers' needs for timely and effective responses. However, ensuring that your customers are getting quality service is just as crucial to guarantee your company's success. It is worth considering outsourcing to improve your customer service capabilities and gain a competitive edge in the market.
Struggling with New Services
Expanding and innovating your business operations can be challenging without overburdening your workforce. Outsourcing BPO services can help you achieve this goal while maintaining quality standards and introducing new offerings to your clients. Seeking external assistance is wise to benefit your business.
Lacking Specialized Expertise
As your business grows, you may find that certain functions require more specialized skills than you or your staff possess. Outsourcing BPO services can be advantageous when it comes to critical functions like finance, IT, web design, graphic design, and marketing. The professional assistance that you can gain from partnering with BPO providers guarantees cost-effective business operations.
Unlocking New Innovations
External experts bring valuable insights and innovative solutions which can revitalize your business operations, therefore outsourcing BPO services can benefit those businesses that seek fresh ideas and need a narrow perspective. Their objective analysis and creative input unlock untapped potential within the organization.
Meeting Increasing Demand
Consider outsourcing to an external company when your onshore staff struggles to meet growing consumer demand. It saves time and resources while enhancing business efficiency and productivity and achieving key targets. Many companies choose to outsource for these benefits.
What Factors Should You Consider Before Integrating BPO Services Into Your Business Strategy?
After making the decision to incorporate BPO services into your business strategy, it becomes crucial to proactively plan and execute the process to guarantee its success and fully capitalize on its advantages. Here are the following approaches that you can take to help you streamline your operations and achieve your desired outcomes.
Understanding Your Business Objectives
Before embarking on a successful outsourcing endeavor, it is crucial to establish the objectives. Determine why you need to outsource and what you hope to achieve.
Objectives may include cost reduction, accessing global skills, adopting new technologies, reallocating internal resources, risk mitigation, expansion, and improved product/service quality. Clearly defining these objectives ensures aligned expectations, facilitates contract framing, prevents misunderstandings, and promotes effective decision-making and communication.
It is advisable to involve the managerial team in discussions to gather diverse perspectives and make informed decisions. Once consensus is reached, you can proceed confidently with the outsourcing plan.
Identifying Outsourcing Needs
Once you have a clear understanding of your outsourcing goals, it's important to identify which activities should be outsourced.
In any small business, managers, and employees are occupied with multiple tasks such as planning, organizing, marketing, and more. It's unrealistic for a company to excel in all areas, so it's crucial to determine departments that can operate more efficiently.
Assess your current infrastructure, considering business performance, cost savings, internal and external capabilities, and service performance. If the existing infrastructure can address identified issues effectively, upgrading internally may be sufficient. Otherwise, outsourcing to specialized agencies becomes a viable option.
Evaluating the Costs
Outsourcing offers undeniable benefits but comes with substantial investments of time and money. Planning and designing service procurement contracts, recruiting skilled offshore team members, and providing them with company policy education and training incur significant costs.
Additionally, restructuring the organization post-outsourcing adds to the expenses. Hence, it is crucial to thoroughly assess outsourcing costs beforehand to make informed decisions and maximize the advantages it brings.
Exploring Challenges and Benefits
Achieving success in outsourcing requires careful consideration and preparation to address the potential constraints that may arise. These challenges encompass a range of factors, such as environmental issues, legal considerations, adherence to country standards, labor laws, political influences, and technological complexities.
However, by engaging in thorough discussions with your team and partners, these obstacles can be transformed into opportunities. It is crucial to assess the current state of your core business and evaluate the effectiveness of existing partnerships.
The level of risk in the outsourcing arrangement is influenced by the stability or volatility of your organization and its processes over time.
Conveying Your Expectations
Effective communication is crucial both internally and externally when outsourcing BPO services. It is essential for all stakeholders to have a shared understanding of the contract's objectives and expected outcomes.
By clearly communicating your expectations to the outsourcing provider, they can provide valuable insights and help improve your operations. Their expertise in delivering services and their knowledge of contractual dynamics, legal considerations, and technological aspects enable them to offer valuable advice.
Simultaneously, it is important to address the concerns of internal employees. The decision to outsource can create insecurity among employees about their positions. Open and transparent communication is key to preventing the spread of unnecessary rumors that could harm the company's reputation. Keeping employees well-informed about the company's decision helps maintain trust and clarity throughout the transition process.
Choosing the Perfect Outsourcing Partner
After making the decision to outsource, the next crucial step is finding the appropriate partner for your business. Since offshore arrangements often involve long-term contracts, it is vital to strike a deal with the right party.
Establishing a successful and mutually beneficial relationship with a supplier requires offering a deal that provides value to both parties. To achieve this, assemble a team of individuals familiar with your business operations and negotiation processes.
Thoroughly research potential suppliers, comparing their service levels, costs, and reputation to identify the ideal fit for your company. These measures contribute to the maintenance of a strong and enduring business relationship.
Measuring Outsourcing Performance
Outsourcing is a long-term commitment, with typical contracts lasting three to five years. Successful partnerships can lead to contract extensions. However, before extending outsourcing contracts, it is vital to evaluate the achieved results.
Regular performance assessments of offshore operations, identification of gaps, and implementation of corrective measures are necessary. Continuous training, upgrading technologies, and staying open to innovations are also crucial. Thorough planning, clear vision, and open communication are essential not only during the initial deal but throughout the partnership.
These steps provide guidance on establishing fruitful outsourcing relationships, highlighting pitfalls to avoid and factors to consider for making an informed decision.
Partner With The Right Outsourcing Provider For Your BPO Needs
Understanding the pros and cons of outsourcing BPO services is vital for streamlining your business operations. To guarantee the success of your strategy, collaborate with an experienced outsourcing provider that is capable of scaling their services along with your needs.
At ManilaPros, we offer full-service, five-star customer care services for retail businesses looking to better manage their BPO operations. We'll provide you with a team of customer service experts and a dedicated account manager that will deliver exceptional service to your customers.
Do you want to know more about our customer care services for retailers? Contact us today to get started!
