Importance of Business Process Outsourcing – A Complete Guide

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In this era of rapid technological advancement, the business world is witnessing a phase of constant dynamism. New technologies, super-focus on users, and intense business competition have resulted in an environment that requires excellent efficiency and agility to thrive here. 

The best solution by which businesses can enhance their focus, productivity, and agility are BPO. Business Process Outsourcing (BPO) shifts business operations or processes from the home office to a different location. Although there are plenty of reasons to adopt a BPO model, the main reason is savings on labor costs. Let’s take a comprehensive look at this subject matter. 

Why Is Business Process Outsourcing So Important For Businesses? 

Business process outsourcing or BPO helps enterprises in many aspects. It has become crucial for enterprises, especially the small-to-mid sized ones, for the following reasons: 

  • It saves a lot of time.
  • It helps them outsource non-core operations while shifting their focus on core business.
  • It allows enterprises to scale up their resources and talent. 
  • It acts as a great economic and cost-cutting tool.
  • It improves service quality if you partner with a trusted vendor. 
  • BPO also enhances productivity while managing the business environment. 
  • When it comes to security aspects, BPO is reliable.
  • It also ensures a broader transformation of business.  

Why Companies Outsource

What are the Benefits of Outsourcing?

Business Process Outsourcing enables businesses to stay ahead of one another. Some of the reasons why companies outsource are:

  • It ensures reduced operational and labor costs.  
  • The core team gets to save their effort, energy, and creativity.
  • It enables businesses to focus more on core competencies.
  • It ensures minimal operational risks while businesses stay busy scaling or expanding. 

Business Process Outsourcing – Checklist

Whether you’re a small-sized business or a big enterprise, ask these questions yourself:

  • What process saves most of the time in your organization and helps you focus on most useful job?
  • Is your business centered around effectiveness and revenue-producing strategies? If not, what activities would it be a good idea for you to rethink?
  • Are there processes in your business needs improvement, yet it’s doing it at any rate on account of time or budget constraints?

Once you answer these questions, proceed to make a checklist for your outsourcing needs. Make sure the business process outsourcing company meets all the criteria in the list. 

  • Resources: Business Process Outsourcing saves a lot of internal resources
  • Innovation: Business Process Outsourcing helps enterprises to come up with new ideas every day
  • Time: Business Process Outsourcing is fast and saves a lot of an organization’s time. 
  • Expertise: Business Process Outsourcing enables enterprises to gain knowledge. 
  • Price: Business Process Outsourcing is designed with small-budget plans.

Risks of Outsourcing & Mitigation Strategies

Risks Outsourcing & Mitigation Strategies

Risk 1: The Long-Run Problem of Having Trust

When wondering whether outsourcing business operations is a good idea, you must’ve thought about how to trust someone who’s located a thousand miles away. 

Solution: Pick the business process outsourcing company depending on the following:

  • The number of their clients and success rate
  • The company website: Whether it’s attractive or not
  • The maturity of their company
  • Their social media activities

Risk 2: Domain Expertise 

If planning to choose an business process outsourcing IT company, their domain expertise becomes a vital criterion. 

Solution: Determine the technologies where the proficiency of the selected vendor lies in. Take a look at their implemented projects while knowing their accomplishments. 

Risk 3: No Expertise With Remote Teams 

Often, clients say they won’t be outsourcing or hiring any remote team and that their staff should be based locally. It mostly happens when the business founders lack expertise in outsourcing and managing remote operations. 

Solution: Pick a BPO company that offers a well-developed model for integrating the remote team. 

What are the Types of Business Process Outsourcing Models?

The various types of pricing models for outsourced projects include: 

  • The Fixed price models
  • Time and Materials (T&M)
  • Incentive-Based pricing model
  • Shared Risk-Reward pricing model

Business Process Outsourcing Engagement Models

The Business Process outsourcing engagement models are classified into the three types depending on the financial aspects and other conditions:

  • Fixed Price Model
  • Dedicated Team Model
  • Time & Materials Model

Business Process Outsourcing Examples

Some examples of business process outsourcing include: 

  • IT Outsourcing: These companies work in two ways: designing new software and maintaining computer equipment in working condition. 
  • Accounting: To outsource the enterprise’s accounting services is to transfer your business’s functions and bookkeep to a third party. 
  • Legal Outsourcing Services: Several businesses require legal services multiple times a year. Having a contract with a law outsourcing company is a great way to get experienced legal aid. 
  • Logistics Outsourcing: In this outsourcing type, you delegate almost every transport operation to another company. They can help you deliver goods via railway ship, car, and air logistics. 

What are the Benefits of Business Process Outsourcing?

There are benefits of business process outsourcing a particular job, task, or process. These benefits include: 

  • Enhanced focus on core business operations 
  • More efficient, productive service of superb quality 
  • Save a lot of money and release capital for inverting in other business areas
  • Enhanced reach and access to facilities and capabilities 
  • Leverage excellent knowledge and skills to get an edge over the business competitors

Business Process Outsourcing: Pros and Cons

Pros:

  • Reduced or minimal project/labor costs
  • Advantage of utilizing a new knowledge base without giving any training to employees
  • Enjoy time management by freeing up your time involving day-to-day task work
  • Enjoy increased speed, agility, and flexibility to manage projects
  • Get the benefit of the time zone factor as your outsource team may be working while you’re sleeping
  • Enjoy complete control over project communication 

Cons

  • Slow response time 
  • Privacy and data security concerns
  • Time zone factors: Things may become challenging to coordinate schedules 
  • Language barriers 

Outsourcing Vs. Insourcing (Inhouse)

  • Outsourcing seeks the services of outside organizations that are not related to the company for completing specific tasks. 
  • Meanwhile, insourcing is a business activity done within the enterprise’s operational infrastructure.
  • Whether the business uses insourcing or outsourcing, the enterprise’s control over decisions and operations will vary. 
  • Outsourcing needs an outside business enterprise that differs from the primary enterprise’s operations, while insourcing usually places new processes and operations in-house within the enterprise. 

Services Mostly Outsourced

The list of services that are primarily outsourced in the business world includes the following: 

Functions Mostly Outsourced

To keep things simple, let’s just say that businesses primarily outsource some of the non-core functions of their enterprise. These functions include: 

Trends of Business Process Outsourcing in 2022 – Geographics & Challenges

Some latest trends of business process outsourcing in 2022 include four things:

  • Artificial intelligence
  • Robotic automation
  • Enhanced remote working efforts
  • More and more utilization of cloud computing services

While most enterprises are pacing towards digitizing their business operations, organizations are deciding to invest in upskilling their workforce. This is one of the biggest trends in 2022. 

Types of Business Process Outsourcing Providers

The various types of business process outsourcing providers can be classified depending on the types of services. 

  • Professional Outsourcing: It comprises all specialized services like:
    • Purchasing
    • Legal
    • Digital marketing
    • Accounting
    • Computer Aided Design
    • Administration 
  • Multi-Sourcing: It enables you to combine the services you want to outsource. Mostly, it’s a mix of IT and other business aspects. 
  • IT Outsourcing: For your specific IT needs, you can contact a provider just for IT services. 
  • Process-Specific Outsourcing: This type of outsourcing enables you to contact a provider for some specialist service. The process-specific outsourcing is of three types: 
    • Legal Process Outsourcing (LPO)
    • Knowledge Process Outsourcing (KPO)
    • Recruitment Process Outsourcing (RPO)
  • Business Process Outsourcing (BPO): There’s no doubt that it’s the most common and highly demanding type of outsourcing. 

How Do We Measure The Success Of Business Process Outsourcing?

How Do We Measure The Success Of Outsourcing?

To measure the success and value-for-money metrics of business process outsourcing, we consider six areas: quality, relationship, delivery, cost management, strategy, and growth. 

Business Process Outsourcing Contract

A business process outsourcing contract is a type of agreement that takes place between a service provider and a company where the provider ensures specialized services. 

6 Steps To Legally Safeguard Your Company

Legally Safeguard Your Company

If you want to safeguard your company legally, you’ll have to follow six steps: 

  1. Build a solid structure for your business
  2. Make sure you take out commercial liability insurance for your business
  3. Make legal contracts for employees to safeguard their rights
  4. When outsourcing business aspects to another company, make sure that you cannot be held liable for the company’s actions
  5. Use trademark or copyright to protect your intellectual property
  6. Make sure every technology in your organization is protected against cyber-attacks

Business Process Outsourcing Lifecycle

The business process outsourcing lifecycle consists of several phases:

  • Strategy: Here, your business decision to outsource is reviewed and evaluated. 
  • Selection: It is a critical phase where the business defines the work to be outsourced to the vendor
  • Negotiation: This phase consists of two major processes:
    • The signing of the final contract
    • Negotiating contracts and associated agreements 
  • Implementation: In this phase, businesses get involved in the initial activities of transition planning and the implementation of the outsourced contract. 

The four critical processes involved in this implementation include: 

    • Transition planning
    • Vendor engagement 
    • Budget preparations
    • Program launch 
  • Management: This phase involves every ongoing activity needed for managing the project while successfully achieving the results. 
  • Completion: This last phase includes all completion activities for the project. It involves two significant operations:
    • Finishing the contract
    • Closing the project

Business Process Outsourcing Limitations

  • You lose some control over the approaches by which the tasks get monitored and executed.
  • If you don’t read the terms and conditions of the business process outsourcing contract, you can encounter hidden costs.
  • If you outsource operations involving personal data, it may impose security risks. 
  • The work may lack the standard and quality control as some outsourcers only care about the money. 
  • Read the business outsourcing contract’s terms and conditions to avoid any financial burden in the case when they fail or are at fault. 
  • As outsourcers handle several clients at once, your project may not receive as much focus as you want. 

FAQs

Q) How can a BPO service provider help your business to grow and succeed?

By outsourcing your business processes to a BPO service provider, you leverage their experience and expertise to drive growth and success within your business. BPO helps you utilize resources on core business operations to drive immense growth by exploring new revenue streams, designing new products, kick-starting new projects, and diversifying into new markets. In our pervious blog we have covered an exclusive topic on Business Growth With Some Examples

Q) What are the tips to boost your BPO sales?

To boost your BPO sales:

  • Ask the outsourced agents to sell the benefit of your product instead of selling its features.
  • Ask them to be reliable while understanding their clients.
  • Make sure they’re professional but not too pushy like a door-to-door salesman.
  • Most importantly, ask them to improve their response time. 

Q) Is BPO really effective for IT outsourcing needs? 

BPO offers numerous benefits for the IT industry or related operations. It helps lower costs, ensures high efficiency, and enables global expansion. Latest BPO companies have even resolved the issues of security concerns and hidden costs. 

Q) Why Choose Invensis For Your BPO Needs?

At Invensis, we ensure that every BPO project gets separate attention for the best results. We understand that no two outsourcing projects are the same, and every enterprise has different sets of expectations for its outsourcing needs. 

We ensure intense collaboration between the home and off-shore offices to enable seamless communications. Every project at Invensis gets started with proper strategies and efforts. Here, we make sure your business saves a lot while enjoying premium-quality outsourced services. 

Get in touch with our experts today, and know-how efficiently we help businesses to grow and succeed by accelerating their bottom lines. 

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