What Makes Business Process Outsourcing the Right Fit for Your Company?
Business process outsourcing started way back in the early 1990s after companies figured out that outsourcing some business processes would result in cost-saving and better efficiency in business operations. From its early days, the industry reached a mammoth size of $245.91 billion in 2021 and is expected to grow further in the coming years. As an increasing number of businesses choose to outsource their core and non-core functions to vendors that can bring better results at a lower cost, it is expected that the business process outsourcing industry will continue to rise exponentially across the globe.
The major challenge businesses face in outsourcing is a clear picture of the following:
- What to outsource?
- How to outsource?
- Who to partner with?
- At what price should we outsource?
Experts believe that rather than looking at these questions, businesses should focus on identifying if business process outsourcing is the right fit for the company. It is important to set the right foundation and have the right expectations for your outsourcing activity.
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Here is everything you need to know about business process outsourcing, including how to identify if business process outsourcing is the right fit for your company:
What is Business Process Outsourcing?
Business process outsourcing or BPO is an activity under which an organization contacts or outsources one or more than one process of a business to an external organization. Under this process, the third-party organization is usually in another country that may have better systems, a high-skilled workforce, and a lower cost of labor.
There has been a paradigm shift in the business process outsourcing meaning for the global industry over the years. While the industry started as an effort to save costs, it soon transformed into a strategy with which businesses can achieve higher efficiency and better results.
Call center outsourcing or customer service outsourcing is among the most outsourced processes in the world. Other activities like IT support, data recording, legal work, payment processing, web design, etc., are also usually outsourced by companies to an external agency.
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How does Business Process Outsourcing Work?
Business process outsourcing works in different ways for different companies. The roadmap depends on the end objective of the firm.
- A small and medium-sized firm may choose to outsource because of a lack of resources or lack of focus on non-core activities
- A large corporation, however, may like to outsource a business process to improve results or to cut down on costs
Depending on your end objective, you can select a BPO firm that meets your requirements. For the outsourcing activity to work seamlessly, you need to ensure that the outsourcing agency that you select for your business function is on the same page when it comes to the business vision, current state, and the desired state.
Advantages of Business Process Outsourcing
There are several advantages of business process outsourcing. Some key advantages of outsourcing your business processes are as follows:
1. Access to better technology
Hiring an expert firm for your business processes can give you better access to the latest technologies. This is helpful for businesses with limited resources and the objective of providing the best customer service. For instance, as you opt for customer service outsourcing, the firm you select must have the latest customer service software to provide an optimal experience to the customer.
2. Focus on core operations
By deciding to outsource your non-core operations, you can focus on the core operations of the business and drive business growth. This is important for all businesses, irrespective of the size. As you focus on the core operations of the business, you can drive revenue and profits much better as compared to a situation when you do everything in-house.
3. Decreases costs
One of the biggest advantages of business process outsourcing is that it helps you decrease the costs that the business needs to incur to acquire new customers or engage existing ones. By hiring a BPO firm, you can expect the cost allocation towards the processes that are outsourced to go down.
Is Business Process Outsourcing the Right Fit for Your Company?
It is most important to figure out if business process outsourcing is the right fit for your company. Here are the factors that you can consider before you decide if outsourcing is the best fit for your business:
One of the most important factors that you should consider before outsourcing a business process is to have a look at the vision of your business. This would help you categorize between the core and non-core business processes. Once you apply yourself to the business vision, you would be able to identify the business processes that can be outsourced to a third party.
It is important to consider the stage of business at which you plan to outsource your business processes to a third party. The decision at this stage is also dependent on the business size. For instance, if you are a small business that is in the growth phase, you would want to outsource all the non-core business activities that will help you grow fast.
Another important factor that you can consider for your business to decide if business process outsourcing is a good fit is the goals that you see ahead. For instance, if you plan to focus on driving client acquisition and servicing as the major goal for the next year, you can outsource all the other non-core areas, which will help you save on time and energy to focus on the main goals.
It is important to take feedback from your internal stakeholders and even the shortlisted agencies for business process outsourcing before you decide to move ahead with the plan. Both these parties should be on the same page on the expectations and challenges on the way.
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To Sum Up
It is important to have clarity on the basic aspects of the business before you decide to outsource any of the business processes. Once you have a clear picture of the various aspects of the business, you will come to know if outsourcing a business process is the right fit for a company.