There are many different ways for businesses to boost sales, lower costs, and improve profit margins. One of them is known as Business Process Outsourcing, or BPO. This is when a company outsources supplemental business functions to a third party; in most cases, the company is located in a country where labor is more expensive, and the third party contracts with workers from a country where labor is cheaper. The services could be technical or non-technical, complex or simple. The main thing they have in common is that they usually don’t involve core business functions, as those aren’t typically outsourced.
The beauty of BPO is that it can be used by companies of any size, whether they need to fill multiple departments with thousands of workers, or they just need a part-time accounting team to help out with payroll. It’s common to use services like Tier One Outsourcing, which already have connections with highly skilled workers; that way companies don’t have to recruit, vet, and hire international employees on their own. Instead, they can contract with overseas workers and hit the ground running.
What are the advantages of Business Process Outsourcing?
The most obvious advantage of BPO is saving money; in fact, this is the primary motivation for some businesses. That being said, there are several other benefits as well.
- Improved efficiency
Outsourcing doesn’t just bring access to trained overseas employees; it also brings access to skilled specialists. This has numerous implications for the efficiency of certain tasks, especially technical ones that require a lot of attention to detail. It’s often possible to get employees from within the company to do these jobs, but they may not specialize in those skills – yet they’ll cost the business more compared to international workers.
BPO also improves efficiency by removing the burden of technical tasks from employees who aren’t fully equipped to handle them. With those tasks off the table, they can focus on what they’re good at, increasing capacity and productivity.
- Expanded global presence
Large companies may serve customers across the globe, but if their customer service department is entirely located in the same country, it could be hard to find employees who speak the same languages as all of their customers. Outsourcing customer service functions to different countries typically involves hiring people who speak two or more languages, so by hiring the right people, global consumers will feel better taken care of.
- Increased flexibility
When multiple non-core business functions are outsourced, this can make a company more agile when adapting to unexpected circumstances. Leaders and employees can pour their efforts into core business functions, rather than spreading themselves out too thin by worrying about the details. This also has a positive effect on the allocation of resources; due to the cost savings that usually comes with BPO, there are more funds available to re-allocate if needed.
- Improved non-core functions
For a business that isn’t outsourcing, there will be some positions that require expertise (usually core functions), and others that don’t (usually non-core functions). With BPO organizations, though, every job is considered a core function. From web designers to sales representatives, the workers who contract with BPO organizations are generally trained to be experts at their jobs. This means that when you outsource non-core functions, you’ll be handing them over to people who will make them their top priority.
- Ability to focus on core functions
Businesses in every industry spend a certain amount of effort on mundane, day-to-day tasks. This not only takes up time, but also resources that could be devoted to moving the company forward. When non-core functions are outsourced, this removes a lot of responsibilities that were preventing employees from focusing on what’s really important. Ultimately, this can give the company a competitive edge, help them improve their offerings to clients, and achieve more rapid growth.
- Decreased costs
This is the benefit that everyone talks about with BPO, and for good reason. The simple fact is that labor in the US is quite expensive compared to many other countries, which means that outsourcing non-core functions can save up to 90% on labor costs. This may not have a huge impact for businesses that just outsource a couple of positions, but some companies (like Kellogg’s, for instance) outsource up to half of their workforce. The potential for cost savings is massive, which is an incentive to consider BPO even without the other advantages.
What are the main processes offered with BPO?
It’s possible to outsource pretty much any business process, no matter how big or small. However, there are certain jobs that are more commonly outsourced than others.
- Social media and online marketing
Depending on how robust a company’s online marketing efforts are, this can require an entire team and plenty of expertise. This makes it perfect for BPO, since it can easily be outsourced to overseas experts.
- Procurement
Many companies need access to certain services and products, but finding them requires plenty of time. This job can be done remotely, which makes it another perfect choice for BPO.
- Payment processing and accounting
A company’s financials may not be among their core functions, but they’re still very important to process correctly. A single mistake could land a business in legal hot water, and certified accountants usually charge fairly high rates. Unless they’re in countries where labor is cheaper, that is. BPO organizations are connected to accountants in other countries, who are trained and certified according to US regulations.
- Human resources
The life cycle of employees – recruiting, hiring, training, etc. – takes a lot of resources. Fortunately, the entire process can take place remotely with the help of outsourcing.
- Customer service
This is typically done online or over the phone. Since many overseas workers are well versed in English and US cultural norms, this makes them the perfect fit for outsourcing customer service.
The takeaway
BPO organizations have a lot to offer for almost any company, regardless of industry or size. Businesses can enjoy benefits like cost savings, increased flexibility and focus, access to talented workforces overseas, and more.
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