Business Process Outsourcing (BPO) is a rapidly emerging area of information technology that involves contracting specific business processes to a third-party service provider. These providers can be within or outside of the company’s country or region.
The purpose of BPO is to improve an organization’s efficiency and effectiveness by transferring non-core activities to a specialist service provider. This can range from payroll and accounting to customer service and market research. Most businesses find that BPO saves them time and money, as well as improves their overall performance.
As the world continues to grow increasingly connected, the opportunities for BPOs continue to grow. Companies are now able to outsource processes to providers all over the world, which helps to drive down costs and improve quality.
Some of the best BPO providers operate in countries like India, the Philippines, and China, and their quality of service is continually improving.
In this article, we will explore the benefits of BPO and why it is such an important tool for businesses today, by examining:
- What is business process outsourcing?
- Different types of BPO
- The top four benefits of BPO for businesses
- How to choose the correct BPO provider
- The best countries for BPO providers
Ready to learn all about BPO? Let’s get started!
What is Business Process Outsourcing?
Simply put, business process outsourcing (BPO) is contracting specific business processes to a third-party service provider. These providers can be in-house or external companies, and they offer a wide range of services that can help businesses improve efficiency, reduce costs, and focus on their core competencies.
BPO as a concept started in the early 1990s, and it has since become a multi-billion dollar industry.
As countries like India and the Philippines have developed into major outsourcing hubs, the range of services offered by BPO providers has expanded to include everything from customer service and technical support to accounting and legal services.
There are several different BPO arrangements, but the most common is the “shared services” model. In this scenario, the BPO provider becomes a centralized hub for all of the back-office processes for a company or group of companies.
This can include anything from payroll and accounting to HR and marketing. In this way, the BPO provider can help businesses to reduce costs and improve efficiency by streamlining these processes, while the businesses themselves can focus on scaling and growing their core competencies.
Another model is the “business process offshoring” model, which is when a company contracts out specific processes or functions to an external provider. This can be helpful for companies that want to reduce costs or improve efficiency but don’t want to give up control of their core operations.
The business process offshoring model is also the usual choice for small businesses that don’t have the resources to set up and manage their in-house BPO operation.
Lastly, a third model is the “business software outsourcing” model, in which companies utilize software developed in emerging countries to streamline their business processes without breaking the bank.
At Day.io, for example, we provide high-quality time tracking software at a fraction of the cost of most of our competitors. Much of our staff lives and works in Brazil, and many American companies use our services because of the low rate and high quality of software.
Different types of BPO
As we referenced above, there are some staple services offered by BPO providers including HR and IT, but it goes much further than that. Let’s dig down into some of the things BPO can take off your plate:
One of the most popular BPO services is customer service. You’ve likely called a customer service line and spoken with someone who was contracted through a BPO.
These providers can be in charge of managing your company’s entire customer support process from start to finish, or they can simply provide overflow support during high call volume times.
The reason they are so effective is that they free up your in-house team to focus on other tasks while still providing great customer service. This is a huge asset for any business, as a good relationship is essential to maintaining long-term customers.
It’s not just phone calls though. Customer service BPO providers can offer things like email and chat support as well, giving your customers multiple ways to get in touch.
We’ve all been there. You’re on the phone with tech support trying to figure out why your computer won’t work, and you can tell the person on the other end is reading from a script. There’s a good chance they are a technical support BPO provider — probably not a very good one.
Technical support is another one of those necessary services. When something goes wrong for a customer, you need someone who can help fix it fast. A good provider will have more than just a script though, they will have expert knowledge of the products or services they are supporting and can quickly resolve any issues.
The best providers also offer proactive support, which can help prevent problems before they even happen. This is done through things like monitoring systems for errors and providing regular maintenance.
Accounting and finance
For any business, large or small, accounting and finance are essential. These are the processes that keep track of your money and make sure everything is running smoothly. It’s not something you want to trust to just anyone though, and handling it internally can be a challenge for many companies.
When you outsource your accounting and finance functions, you can rest assured that they are being handled by experts. This can free up time for you and your team to focus on other tasks, knowing that your finances are in experienced hands.
The rise of marketing providers has exploded over the last decade, as companies seek to increase their online presence and hone their marketing message. Marketing BPOs can offer a comprehensive solution that handles everything from email campaigns to website design and development.
This is an area where it’s especially important to do your research, as the wrong provider can quickly do more harm than good. Make sure you find a reputable company with a solid track record and plenty of experience in your industry.
A classic HR function that is often overlooked is recruitment. The war for talent is only getting more fierce, and companies are turning to BPOs to help them find the best candidates.
BPO providers can handle everything from writing job descriptions to conducting initial phone screens. This is a great way to take some of the burden off your internal HR team and make sure you’re seeing the best possible candidates. Some can even handle onboarding once you have found the perfect employee.
Another popular BPO service is lead generation. This is the process of identifying potential customers and then nurturing them until they are ready to buy. It’s a crucial part of the sales process, but it can be very time-consuming.
BPO providers can take over all or part of your lead generation efforts, from research to information capture. This frees up your sales team to focus on closing deals, while still ensuring a steady pipeline of new business.
Need a lot of keystrokes in a short period? Data entry is one of the most commonly outsourced tasks, as it’s relatively simple and doesn’t require a high level of skill.
Data entry BPOs can handle things like transcribing audio files, filling out online forms, and compiling customer lists. This is a great way to free up your team to focus on more important tasks.
This is a specific type of lead generation that involves setting up appointments with potential customers. It’s often done by telemarketers or inside sales reps.
BPO providers can take over this entire process, from generating leads to making the calls and setting up the appointments. This is a great way to free up your sales team so they can focus on other tasks, like landing that huge purchase order.
The legal world is a complex and ever-changing landscape, which can be tough for businesses to keep up with. That’s where legal BPOs come in. These providers can offer a wide range of services, from contract review to compliance consulting.
This is another area where it’s important to find a reputable and experienced provider. The last thing you want is to get caught up in a legal nightmare because your BPO didn’t know what they were doing.
Social Media Management
Social media is a vital part of any modern marketing strategy, but it can be tough to keep up with. That’s where social media management BPOs come in. These providers can help you create and execute a social media strategy that engages your customers and builds your brand.
These BPOs can also help you monitor your online reputation and respond to any negative reviews or comments. This is an important service that can protect your business from reputational damage.
The top four benefits of BPO
The benefits of business process outsourcing are numerous and mostly related to cost savings and improved efficiency. In particular:
BPO can help a company reduce its operating costs
By outsourcing specific tasks or processes that are not a core part of your business, you can save money on personnel, hardware, and software costs. In addition, the outside company will likely have more experience and expertise in performing those processes than you do, so they can do it more efficiently and effectively.
This improved efficiency can lead to faster turnaround times and reduced processing costs for your company.
BPO can improve process efficiency and thereby improve margins
By delegating non-core processes to an external service provider, a company can focus on its strengths and improve overall process efficiency. This improved efficiency often leads to cost savings and/or margin improvements.
Generally, this is the focus of larger BPO engagements, where the cost savings and efficiency improvements are more significant, but even smaller businesses can reap some benefits in this area.
Additionally, many BPO providers have significant experience and expertise in specific process areas, which can add value beyond the cost savings. For example, a BPO provider may be able to improve process quality or reduce cycle times.
BPO can help a company become more agile
Agility is defined as “The ability to rapidly adapt to change or unexpected events.” In business and project management, this rings especially true as companies are increasingly facing fast-changing customer needs, new technologies, and global competition.
Since BPO companies are specialists in specific processes, they can often turn around changes faster than an in-house team. This agility is key to keeping up with the competition and responding to customer needs.
Additionally, internal teams may not have the bandwidth to take on new projects or additional work during peak seasons. An external BPO provider can often ramp up quickly to help meet increased demand.
BPO can enhance customer service
An undervalued benefit of BPO is the potential to improve customer service. Oftentimes, poor customer service is the result of insufficient bandwidth on behalf of the company. By outsourcing non-core functions to an external provider, a company can focus on its strengths and improve overall customer service.
Additionally, companies can also outsource their customer service operations to third-party providers who have a better understanding of the consumer process and how to deliver exceptional customer service.
Many countries like India or the Philippines host massive conglomerates of BPO providers, which allows companies to outsource their customer service needs at a lower cost to professionals with strong experience in that field.
How to choose the best BPO provider
It can be an overwhelming feeling, trying to sort through all of the providers offering similar things. Here are a few factors to consider when narrowing down the abundance of BPO providers.
While they can cover anything, when looking at services provided they will usually be sorted into four categories:
This type of outsourcing involves anything related to information technology, including maintaining and improving hardware, software, and networks. For companies that are expecting rapid growth, this type of outsourcing can be a way to quickly scale up without incurring the high costs of hiring an in-house IT department.
Knowledge Process Outsourcing (KPO)
KPO is a type of outsourcing that focuses on providing high-value, knowledge-based services. These services can include anything from research and analysis to marketing and customer service. KPO is often used by companies to gain a competitive edge by accessing skills and expertise that they wouldn’t be able to otherwise.
For example, a company that needs detailed online shopping habits for their target market to create a more effective marketing strategy would use KPO.
Human Resources Outsourcing (HRO)
HRO is a type of outsourcing that focuses on human resources functions, such as payroll, benefits administration, and recruiting. This type of outsourcing can save companies time and money by allowing them to outsource the management of these complex functions.
HRO can be especially helpful for small businesses that don’t have the resources to invest in an in-house human resources department, or for companies that are going through a period of growth and need help managing their increased workforce.
The next step is to determine what your company’s specific needs are.
- Do you need help with just one aspect of your business, or do you need an all-in-one solution?
- Are you looking for a short-term fix or a long-term partner?
- How much control do you want to have over the process?
Some companies prefer to outsource everything, while others only want to hand off a few select tasks.
Once you have a good understanding of your company’s needs, you can start to look at specific BPO providers. When evaluating them, it’s important to consider their:
- Industry experience: Does the provider have experience working with companies in your industry? If so, they’ll likely be familiar with any unique challenges or processes that are specific to your field.
- Size and scalability: How large is the provider? Will they be able to handle your company’s current needs, as well as any future growth?
- Location: Do you want to work with a local provider, or are you open to working with a provider in another country? There can be benefits to working with a local provider (like easier communication), but there can also be benefits to working with a provider in another country (like lower costs).
- Cost: Are they using a scaling model that charges you based on the number of resources you use, or are they using a flat-rate model? What’s included in their price? Are there any hidden fees?
- Reputation: What do other companies say about them? Do they have any industry awards or accreditations?
- References: Does the provider have any references or case studies that you can review? This can give you a better idea of what it’s like to work with them, and whether or not they’re a good fit for your company.
Once you’ve considered all of these factors, you should have a good idea of which BPO provider is the best fit for your company. Before you go, let’s examine a few of the most common countries that provide BPO services and how they compare to each other.
The best countries for BPO providers
Business process outsourcing has seen an explosion in popularity, mostly due to the advent of new technologies that have made it possible to outsource a wide range of processes. The market for BPO services is now worth over $100 billion and is expected to grow by another 10% in the next year.
This growth has been driven by businesses that are looking for ways to reduce costs and improve efficiency. But with so many different providers in the market, it can be difficult to know which country is the best place to outsource your business processes.
Here are four countries that are currently leading the way in BPO services:
1. The Philippines
The Philippines has long been a popular destination for BPO providers. The country has a well-educated workforce, and its English-speaking population makes it an ideal location for companies looking to outsource their customer service or call center operations.
The Philippines is also home to several leading BPO providers, including Accenture, Sutherland Global Services, and Convergys. These companies have been able to build a strong reputation for quality, and the Philippines is now considered one of the best countries in the world for BPO services.
India is another leading destination for BPO providers. The country has a large population, and its English-speaking workforce is well-educated and highly skilled. India is also home to several leading BPO providers, including Infosys, Wipro, and Tata Consultancy Services.
Indian BPO providers have been able to build a strong reputation for quality, and the country is now considered one of the best countries in the world for BPO services. India is also a cost-effective location, making it an attractive destination for businesses looking to outsource their operations.
China is the world’s largest exporter of BPO services. The country has a large, well-educated workforce and a strong infrastructure that makes it well-suited for outsourcing.
In addition, Chinese providers are known for their high quality and low prices. They’re also one of the most reliable providers in the world, with a very low rate of staff turnover.
In summary, business process outsourcing is rapidly emerging as a cost-effective way for businesses to improve their performance and maximize their profits.
By outsourcing non-core processes, businesses can focus on their core competencies and improve their overall efficiency. Additionally, using BPO can help companies reduce costs, improve customer service, and increase competitiveness.
Increasing globalization and the ever-changing competitive landscape are making business process outsourcing more important than ever before. BPO is only going to become more prevalent in the years to come, so businesses that are looking to stay ahead of the curve should strongly consider utilizing its benefits.
We hope you found this article helpful and informative!