As businesses increasingly outsource their office functions to outsourced BPO partners, so they can concentrate on their company’s strategic development, they are entrusting more and more of their everyday tasks to the outsourced business process outsourcing companies.
There are companies of all sizes, from startups to multinational corporations, who have discovered that outsourcing is beneficial to both their front and back offices through outsourcing. Despite the BPO industry’s advantages, the industry continues to grow, with the CAGR estimates for this year’s forecast moving from 3.53% to 4% for the forthcoming years.
As a result, the manufacturing industry has made significant progress, with a number of companies having been among the early adopters. BPO – Business Process Outsourcing – provides manufacturers with the opportunity to bring their products to market faster and at lower costs by outsourcing business operations to third parties.
In what ways does Business Process Outsourcing work?
A BPO strategy refers to the process of outsourcing business functions to a third party, and it is a strategy that many companies use in order to propel themselves forward. An example would be hiring third-parties, such as contractors, to perform less-critical business functions on behalf of a company.
You can choose to outsource either the company’s back-office operations or its front-office functions if you would like to receive BPO services. The back-office of the company entails functional areas such as accounting, payroll, human resources, and quality assurance, while the front-office entails functional areas such as customer service, sales, marketing, and the like.
A business process outsourcing (BPO) service is designed to assist you in outsourcing one or more of your day-to-day business operations, namely those that are not core to your business model, but are still essential parts of your operation on a day-to-day basis. This approach has the advantage of allowing your organization to dedicate resources to activities and tasks that will have the greatest impact on the result.
Business Process Outsourcing: Advantages and Disadvantages
There are a number of reasons why outsourcing business process outsourcing could be beneficial, including financial aspects, marketing opportunities, and overall competitiveness for the business. Let us take a closer look at some of the ways in which outsourcing could enhance your business.
It has increased the level of efficiency in the organization
I believe it is a fact that BPOs make the management of operations much easier. The third-party providers are experts in business processes and, as a result, have specialized knowledge or skills that, otherwise, are not available on demand to you.
Experts with years of experience in the field
Generally, the BPO industry employs people who have excellent educational and professional backgrounds, so you can expect an industry workforce that is comprised of industry practitioners. It is our conviction that they possess the right mix of knowledge, skills, and values to satisfy your staffing needs, and we are confident that they will provide excellent service to you.
Upgrading the technology to keep up with the times
In the field of business process outsourcing, a BPO company invests heavily in technologically advanced tools where they hire them to handle these processes, in order to enhance their services. With technology innovations, your business can in turn stay on top of market trends and be more prepared to deal with challenges that may arise in the future by implementing technology innovations.
The development of competitive advantages
By outsourcing less critical processes to BPO services, your company will be able to realize more sales opportunities since you will be able to take ideas from concept to product, and then later turn them into high-demand products and services.
Efficiencies and savings on costs
In an article published in Business Process Outsourcing Worldwide, it was noted that 70% of BPO clients partner with third-party service providers in order to reduce costs. Several BPO firms are based in developing countries where labour costs are lower, and because of that, outsourcing can help reduce overhead expenses in your business. In addition to BPO services, clients of these providers can also use their infrastructure and office space, and this can translate into significant cost savings for their businesses.
International expansion of the company’s business
One of the benefits of business process outsourcing is that it eliminates the challenges that are commonly associated with setting up a business in a new location, market, or setting. In order to establish your company within a new community while adhering to all legal and professional requirements, you would benefit from using a BPO provider.
What are the different types of business process outsourcing?
Based on the type of services being provided by the contractor, there are generally four general types of business process outsourcing.
Knowledge process outsourcing (KPO) is the process of outsourcing knowledge processes
A business process outsourcing (BPO) service is a method of outsourcing services that is purchased from a third-party provider with specialization in a particular field, such as education, finance, healthcare, insurance, or engineering that requires a significant amount of expertise.
It is a type of service that is provided by IT, which is made possible by the use of information technology.
As a part of business process outsourcing, is also referred to as information technology-enabled services (ITES) due to the fact that IT infrastructure plays a major role in the success of the outsourced services. In terms of its business process outsourcing services, its goal is to provide businesses with the support and services needed to work with large volumes of data and to take care of large volumes of data on their own. There are many prominent uses of ITES, some of which include help desks, customer support centers, and data warehouses.
LPO (Legal Process Outsourcing) is the process of outsourcing legal processes.
It can be said that, according to its name, this service is aimed at handling legal functions for clients such as the preparation of legal documents, legal research, and legal advice. It is highly likely that LPOs will come into play in the back office for tasks such as human resources, compliance with legislation, etc.
The outsourcing of the research process (RPO)
When a BPO specializes in research functions, it is known as a BPO specializing in research. For example, a BPO company might be contracted to provide Reverse Process Outsourcing (RPO) services for clients in the pharmaceutical, investment, and marketing industries.
How to Define Your Business Process Outsourcing Objectives
As with any business endeavor, you need to understand what you intend to accomplish before beginning the process of outsourcing and this applies to every business endeavor as well. Getting the right business process outsourcing company is the first step in making your project a success. The second step is to find out what you expect from the partnership. In order to communicate your expectations to your BPO provider effectively, you will need to be able to clearly explain what you expect them to do and what results you would like to see from them.
In this sense, you should set clear objectives so that you can clearly communicate to your BPO provider the responsibilities they are expected to take on and what you are looking for in them. In other words, your business process outsourcing partner can use these objectives as a guide to set appropriate targets and develop strategies for reaching those targets.
Taking into account just a few of the objectives that businesses consider when considering outsourcing, let’s look at just a few of them:
To reduce operational and labor costs as much as possible
It has been noted that approximately 70% of businesses rank cost reduction as their primary objective when it comes to outsourcing, as reported by Deloitte in its 2020 Global Outsourcing Survey. In spite of the popular belief, however, the cost savings are not primarily due to tax breaks. PolitiFact, on the other hand, explains that while companies can benefit from tax exemptions if they relocate their headquarters to another state or country, the U.S. federal income tax code does not contain any specific exemptions related to outsourcing.
Outsourcing has the advantage that it allows you to optimize processes while saving money at the same time without the need to hire new personnel or spend more money on new infrastructure. In addition, you will have access to a team of professionals who have a wealth of experience with the processes that your internal team may not have any knowledge of. In essence, you will save time and resources on recruiting and training employees. Last but not least, out-sourcing processes to professionals who are familiar with them will enable you to ensure quality and efficiency at all times.
Focus our efforts on the products and services that are core to our business
It can be really difficult for business owners to think of expanding their business as a battle against hydras – as soon as one obstacle is overcome, two more will appear. The expansion of your organization can be both exciting and draining at the same time. On top of that, it cannot help but cause you as well as your employees stress to have to constantly keep up with new business requirements in addition to the needs of your customers.
There is a possibility to outsource some of these tasks so that you can concentrate on your core competencies and this will allow you to increase your efficiency. It is also important to note that this gives your employees the time, energy, and headspace necessary to think about improvements that can be made to critical processes, and in turn can lead to the development of new products and services, which can benefit your clients.
An increase in the number of staff
If your company runs a busy business at the busiest times of the year, especially if it has a peak season, your employees are likely to take on too much work. The number of employees can be increased to offset some of the load, but recruiting and training of new employees can be quite expensive. In the event you refuse to hire new employees, you might end up compromising customer service or productivity.
Through Business Process Outsourcing, scalability in staffing is made possible. As a result, you will be able to have experienced workers available when you need them. Consequently, you will be able to satisfy the needs of your clients and ensure the efficiency of your business operations without needing to hire new employees over the course of a prolonged period of time.
Enhancing the overall experience of the customer
There are many ways to develop wonderful products and offer stellar services, but not all of them translate into equally outstanding customer service. Thus, as a result, ensuring the customer experience – including handling queries, supporting them through the transaction and providing support after they have purchased – is a challenge.
If you find a BPO provider that can provide you with customer service, tech support, and similar services, you can ensure that your customers always have a pleasant time dealing with you. It will definitely improve your customer loyalty and help you increase sales.
Choose the Right BPO Outsourcing Company for Your Business
BPO companies act as an extension of your company, rather than just a service provider for your company. Furthermore, these services will not only be able to access some of your company’s confidential data, but they will also play an integral role in helping you run your company effectively. Considering this, it is imperative that you carefully pick your partners.
The process of choosing a BPO company is not as straightforward as simply picking the top companies. There are many factors to consider before choosing one. In deciding on a BPO company, you need to consider the following:
- The ability to understand processes in-depth
The best choice is finding a provider with a specialization. If you need them to help you with customer service, you have to make sure that BPOs can provide support in multiple ways, such as multi-channel support. If you have experienced this before, then you can be sure that they are capable of completing the tasks with efficiency and consistency according to the industry standards.
- Being able to handle multiple types of business processes at the same time
The more your business grows, the more likely you are to need assistance with more and more processes. It is therefore necessary for you to hire a BPO company that can deal with a variety of business processes if you want to partner with one. With the help of a BPO partner, your business will be able to scale as you grow. You may want to verify with the provider you intend to outsource your customer support processes to if they offer multilingual support options, for example, if you intend to outsource your customer support processes. This avoids the need to switch companies if your company takes on customers from other countries as a result of this method.
- Have a team that is dedicated to the company
The BPO partner you choose should be capable of putting together a team that fits your specific business requirements as well as being able to handle their training as well. Moreover, I think it would also be great if they could provide you with a guarantee that the team they assign to you is dedicated to your project and does not bounce from job to job.
- Acknowledged for its close collaboration with its partners
In any BPO outsourcing process, you must keep in mind that your company will be represented by the BPO company. This is especially important if you are outsourcing BPO. In order for a seamless experience to be provided to customers, the customer service team should work closely with you to ensure their needs are met as one team.
- Developing a solid transition plan in case of changes in the future
There is always an element of change in the processes and the partnerships we work with. The process of switching providers may seem difficult, but your BPO provider should implement a protocol that will ease the transition for you, whether your business is restructuring, whether you are looking for a different provider, or if you are simply renegotiating your rates. In this way, it is possible to minimize the disruptions to the operations of your business that may arise as a result of the change.
Business Process Outsourcing: What It Is and How It Works
It’s important to understand that business outsourcing involves a wealth of technical details that extend far beyond the basic concept that one company hires another to cut costs from their operations.
Due to these reasons, outsourcing business processes not only reduces costs, but also gives companies the possibility of acquiring more specialized talent for specific tasks, obtaining highly competent second opinions for no additional charge, and improving internal processes.
There has been considerable progress in the recent years, both in terms of the development of BPO service providers as well as in terms of how these services are sought by clients, leading to the provision of simplified solutions to a wide range of business challenges. There are a number of different types of outsourcing services that are accessed by companies. Examples include:
Offshore Outsourcing
It is one of the most drastic forms of the outsourcing of business processes, since it involves companies contracting the services of companies situated in another country or continent.
Onshore Outsourcing
The companies that choose to resort to offshore BPO, however, tend to limit their options to providers that are located in the same country as their company.
Nearshore Outsourcing
In terms of Nearshore Business Process Outsourcing, it is a method of using services that are exported by companies that are located closer to the recipients than the offshore options. For such a business to be described as outsourcing their customer support functions to a Mexican firm, the term US business outsourcing would be appropriate.
Despite the fact that Business Process Outsourcing can be done in a wide range of different ways depending on the industry, the functions, and the scope of the project, there are some simple concepts a company can apply to ensure that the process runs as smoothly as possible. There are a wide variety of useful resources available to you to learn to benefit from BPO, and you can make the most of them by checking out the links below.
How to Outsource Business Processes: Tips for Success
Make sure that executives are involved in the process of creating a new product.
It is extremely important that executives from your organization participate in the decision-making process if you want to make sure that your outsourcing partnership will be successful. With outsourcing, the top management has a crucial role to play in effectively communicating ways to reduce costs for the company, as well as to achieve the strategic goals of the company and further enhance its competitive advantage. Outsourcing is seen as a true strategic advantage that can easily be purchased by executive management, as these individuals can clearly see the value of outsourcing partners in terms of increased productivity as well as significant overall cost reductions that can be achieved by the organization. In order to make the outsourcing process more effective, you should spend time explaining how outsourcing fits perfectly with your strategic vision and engaging your executive teams in the planning process.
Prepare a list of growth objectives ahead of time.
If you are seeking to outsource your business, it is imperative to align your company’s long-term business and financial plans with your company’s strategic objectives at the outset of the process and to identify possible outsourcing partners that have the kind of global presence that your company is looking for. An example of this is if a hotel chain anticipates growth and expansion in Eastern Europe over the next five years, a localized call center in Eastern Europe may be the best strategic location to deliver its services based on requisite infrastructure and language requirements.
A company’s IT capabilities shouldn’t be overlooked.
According to IDC, 75 percent of enterprise software vendors and independent software vendors will have included AI functionality in at least one application by the end of 2018. Due to this fact, BPO firms that adopt new technologies are likely to become more future-proof and to have a more stable outlook in the near future. The off-shore vendor should ensure that a senior engineer from the client site is regularly on-site during the design phase in order to ensure that he or she has a clear understanding of the project. Alternatively, if you are outsourcing, you might be able to benefit from visiting your outsourcing provider in person as a way to get a different point of view on your company.
As you consider outsourcing, do not forget that quality needs to be the most important factor in your decisions at all times.
While outsourcing certainly has a lot of advantages, the most important thing is that it is capable of delivering the quality that you expect from such a service. It would be a waste of money if anything less than what you expected from the outsourcing was delivered.
There is no reason why you should not be able to successfully outsource certain tasks, but I think the expectations for the quality of work should be discussed before you assign the work.
The implementation of your BPO strategy should not be rushed. Don’t rush. It’s important.
It is important to gradually expand the work you have outsourced once you have outsourced some of it. The first thing you should do before embarking on a huge outsourcing strategy is to take a step by step approach. By following this approach, you will have the flexibility to adjust as your company’s needs change, as well as a flexible way to scale up or down as necessary.
It is advisable to seek out providers who do not require any babysitting service.
No matter what number of business requirements you may have, it is a given that an outsourcing company will handle everything from scratch when they are hired to work on your account.
In order to achieve the results, one should not allow sloppy or low quality work to exist, and the results should be achievable (There should be no room to tolerate shoddy work).
In order to choose the best vendor, you should choose one that will handle the projects and be in charge of them from the start, so that you can devote a minimal amount of time to each of them and let them handle the rest.
By doing this, you will save time and be able to devote it to your core business functions.
Ensure that the provider you choose possesses expertise in the field in which your business operates.
If you are planning to undertake a project such as the one that you are undertaking, I recommend that you select a provider who has previous experience managing such projects. When it comes to complicated technical projects, such as software development, it is best not to act as the guinea pig for somebody else. Especially when outsourcing operations such as these, such an attitude is vital. It is a good idea to make sure, for example, that the candidate you are considering has developed applications for the iPhone and has previously performed commercial projects on that platform for other clients who were satisfied. You should also follow the same advice in case you are working on other types of projects as well.
When it comes to putting together a business plan for opening a retail store, it is important to hire a consultant who has experience in the retail market. In terms of creating a business plan for a retail store, you will be able to produce the best results.
The first thing we need to make clear is that the savings results are going to fall short of what we have projected.
The reason many businesses choose to outsource is that they expect to save money by doing so, but you should note that it is extremely rare for actual and projected savings to be the same. There is a good chance that you will lose some time and adjust to a new partner’s lifestyle during the first few months of the new partnership. Because of these factors, it is a good idea to save about three quarters of your projected amount.
In order to begin an outsourcing relationship, there are a variety of costs you may not anticipate at first glance. Choosing the wrong vendor will, for example, require you to spend a lot of time searching and you may end up paying a lot of money from network websites or other sources if you choose the wrong one. Negotiating and drafting an agreement will take time, and there may even be travel expenses and legal fees that need to be paid in order to maintain the relationship. –
The use of fixed-cost BPO arrangements should be avoided at all costs.
One of the good things about a fixed-cost project is that they can be planned out with a budget and you won’t have to worry about going over the budget as you are on a fixed budget. In the process of establishing a fixed cost, you can face a number of other challenges as well.
In the case of fixed cost projects, vendors tend to charge up to 50% more in order to cover the possibility of project delays or risks. Also, do not forget that you will have to go through a lengthy and arduous negotiation process every time the scope of the project changes – which of course will happen. There is a third problem with the fixed budget method because once the budget has been established, your vendor will focus on hitting the set price instead of focusing on quality. Long term, fixed-price bids end up being more time-consuming and more expensive than negotiating on a variable price.
It is very important for you to always be in control of your projects, products and services.
On the other hand, when you hand over your product to a large design firm, you can expect that you will no longer be in control of the end result. The concept you’ve come up with has been around for a while now, and you have spent a great deal of time on it, now you are ready to take the project to the next level. Oftentimes, many people do not realize that unless they remove themselves from the process at this critical moment, they will not get what they envisioned, and they will probably regret it later in life.
Leaders should be able to guide the project in the right direction, push it forward, and keep up-to-date on all of its progress. It is vital that you remember that you do not have to do everything yourself, but to remain in control of every step that you take.
Look for opportunities to form long-term partnerships with your partners.
There are times when it is much more efficient to spend your time working with a company on an ongoing basis instead of continually posting new projects and comparing lots of bids for each one that you find a good quality company that does good quality work, works well with you, and is reasonably priced.
A great deal of caution should be taken when choosing between individual BPO providers or organizations.
It is evident that outsourcing your IT services to an IT outsourcing company comes with many benefits. The good news is that if they don’t meet your expectations, they can easily be replaced as they usually hire highly qualified individuals. In addition to offering ‘checks and balances’, some companies handle the entire process of developing their products in-house, thus minimizing any potential risks. A large number of engineers and managers are actually employed by this company and are responsible for making sure that everything is checked and that any issues are resolved when something goes wrong during the process.
There are two main risks associated with hiring a freelancer. There are two risks involved with hiring the work of just one engineer: the first risk stems from the lack of any means to check the work of this engineer, and the second risk arises from the fact that the contractor may not finish the project on schedule.
It is impossible to expect a ‘jack of all trades’ to be a good developer in all areas. Things just happen, don’t they? Of course, there will be problems. One possibility is that an independent freelancer or a couple of independent freelancers may be able to act as a second opinion. You can save a lot of money by hiring a third party to review a contractor’s work and lower the risk that the contractor will do a poor job.
In order to find the greatest value from BPO, one needs to look beyond savings.
Comparing costs isn’t enough since you may miss out on the opportunity to learn from some of the best in the industry if you outsource purely based on the price. There is no doubt that the fact that outsourcing is a strategic way for you to gain knowledge in the process of developing new products and technologies is something that should not be overlooked.
You should ensure that all the details regarding your partnership are documented in writing.
The business world recognizes the importance of putting every agreement on paper to avoid any misunderstandings in the future. And this is no different. However, in spite of the fact that I do believe you had already told freelancers or agencies what you wanted, there is no legal obligation for them to follow up, and you may encounter some difficulty at some point. Apart from ensuring that all information is documented, it is also important to make sure that all documents are signed and dated (which can be proved later on), so all parties have access to the information.
The importance of avoiding common pitfalls such as poorly designed incentive models and poor corporate governance cannot be overstated.
The following are some of the most common mistakes in outsourcing:
Whenever outsourcing is undertaken, it is vital to identify the motives, the goals, and the objectives before commencing
In comparison to concentrating on benefits or value additions, it is more important to focus on cost reductions
Having an outsourcing program that has substandard corporate governance over a long period of time
An inability to appoint someone who is responsible for managing the relationship and the contract
An inefficient management of communication with staff, clients, and other stakeholders
Incentivising models that fail as a result of insufficient incentives
Make use of the industry’s continued growth to your advantage.
A variety of technological advancements in telecommunications and information technology have led to a rapid increase in outsourcing of human resources within the last 25 years. The economy has slowed down recently as a result of this growth slowing. There are many people who are concerned that the industry is going to experience negative growth owing to the lack of new enterprise clients, as well as the rise of automation and artificial intelligence (AI). It is somewhat surprising to discover that outsourcing is growing at an astonishing rate contrary to what most people assume, which is driven mainly by small and medium-sized businesses that are often overlooked.
Outsourcing offers much more than just lower costs. It also has a great number of competitive advantages that offer greater value to businesses.
There are several reasons behind implementing outsourced services and the primary reason is to be able to reduce the cost of delivery. Additionally, there are a number of valuable advantages that can be taken advantage of, including the availability of better quality resources, continual technological advancement, and moving from fixed to variable costs, as well as improving integration of systems among them.
BPO approaches have many positive aspects, including risk sharing and resource sharing, which are the two main components of BPO.
The Outsourcing Institute, a powerful voice in the outsourcing community, has carried out a survey in which they have come up with a list of the top 10 reasons why a company may have to use such services.
Management of costs and operations plays an important role in reducing costs in a company
Ensure that the company’s performance is being improved
The ability to choose from a wide range of options is an advantage
Providing a way for internal resources to be freed up to be used for other purposes
The company does not have the resources required for the job
Accelerate the benefits of reengineering so that it becomes more effective
The cost of driving has been high for some time now
Employee equity becomes available upon the termination of employment
We all share the same criticisms
Injection of capital
Using tools such as the outsourcing decision matrix, one can assess the impact and importance of a specific task.
If you consider outsourcing a task, the following two most important factors should be taken into account. According to the [Outsourcing Decision Matrix], these are the two most important factors to consider.
I believe that the task has a great deal of strategic importance. Does this task provide your company with a competitive advantage? Is it possible that it may?
It is important that you consider how the task will affect the performance of your company in the long run. How does the task contribute to the smooth running of your organization? How do you assess the task’s contribution? What is the potential impact of it if it is not carried out properly? Also, how big is the disruption?
It is also possible for companies that use a method of offshore outsourcing at their own offices to benefit from the benefits of outsourcing.
It will come as no surprise to you that the partnership world is full of many types of partnerships aimed at improving captive performance while maintaining control in the hands of the buyers. When implementing a service chain model, one of the partners will provide complementary services from their own locations to the other partners in the chain. There are other models, such as hybrid or virtual captives, which rely on the integration of external service providers to handle some or all of the work required within the captive center. As a matter of fact, the challenge is to create a partnership that benefits from the expertise of local experts and the resources of the local community. This will create improvements in processes, and help to drive innovation, as well as reduce costs in the process. The result of this is that an organization’s offshore delivery models tend to evolve over the course of time, i.e., there is seldom a clear line of demarcation between one model and another.
In order to best utilize and profit from any company’s growth strategy, it is always helpful to understand the details surrounding the outsourcing arrangement.
The four main aspects of an outsourcing process should be borne in mind: Here are four main aspects to take into account:
The program has been launched
Implementation of the services
Final Agreement
Closure of the program
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It is important to understand the various outsourcing models in order to select the most profitable one.
The term “Tactical Consulting” is a general term that refers to a range of value-added services. In this case, the client’s main driver comes from having access to expertise that is not available in-house, such as UX design, Architecture and Technology advisory, Security assessment, etc. Outsourcing vendors normally provide this service as a fixed price, time bound activity. However, for the sort of work that is uncertain, such as R&D, a T&M basis can also be considered.
BPOs can reduce obstacles through streamlining communication with the use of appropriate tools.
Diverse advantages can be gained by businesses through outsourcing. For many companies, however, managing multiple outsourcing teams can be a challenging task. In order to work effectively with outsourcing teams, companies must be able to communicate, collaborate, and share information effectively. Another challenge is engaging the outsourcing teams personally in order to improve their productivity.
Even if the necessary technology and skills are in place, it is important to keep a close eye on a project’s progress and to keep track of the teams’ tasks by using the right set of tools to manage them.
When you partner with a BPO provider, pay close attention to the legalities of risk management.
It is relatively easy to assume that outsourcing will transfer all risks and responsibilities to the supplier, and that the customer will be fully protected from all the consequences of failure if the outsourcing goes wrong. It is not possible for a customer, irrespective of the nature of the business area and regardless of the terms of the contract, to fully insulate itself against those risks and practical remedies are often insufficient to compensate for those losses. When a supplier fails to deliver outsourced services, the primary remedies are payment (whether this is in the form of indemnity claims, general damages, service credits, or liquidated damages) and termination. Despite the fact that other remedies may be specified in the contract (for example, stepping in) or are generally available as a matter of law (such as specific performance), in practice these additional remedies are rarely practical or effective.
Adopt a vested outsourcing model if you want to maximize the benefits of BPO.
Don’t focus on transactions, but on outcomes. Traditionally, outsourcing agreements are focused on negotiating contracts at a detailed transactional level, paying either for a given task or dividing the cost based on the number of employees. In the case of simple transactions with abundant supply and low complexity, a transaction-based outsourcing business model would be the most efficient choice. Nevertheless, transaction-based approaches have a real weakness as soon as any level of complexity, variability, or mutual dependency is introduced into the transaction. The transactional approach cannot ensure a perfect equilibrium price based on the market in multidimensional or variable business contracts.
Make a list of your priorities and requirements
It is imperative that the company’s objectives and operations are listed out, perhaps the most important step in the quest to find the perfect outsourcing partner. It gives clarity to help decide which processes and operations can be outsourced and more importantly, whether they should be outsourced. An additional advantage of doing this is that talent and resources can be relocated more efficiently.
Research on partner companies
Knowing your partner is crucial to a successful relationship. The next step is to make a list of the service providers in your desired field that are present in the market for your goals and objectives. Ensure that they have a track record, a list of clients that they have worked with, a list of successful projects that they have completed, and an estimate of delivery time.
Don’t just focus on the price
It is a mistake to compromise on quality in order to save money, an error that can prove to be more costly than you even think. Finding the right partner that helps you optimize your goals while providing quality results may not be the most cost-effective option, but you will actually be more cost-effective in the long run if you choose the right partner.
Think about the pros and cons before making a decision
The best approach would always be to compare providers and list out their advantages and disadvantages after you have done your research and understood the costs involved. It is through this process that you are able to clearly see who will be your best business partner.
Make sure you ask for a hands-on demonstration
There is no better way to analyze the capabilities of your outsourcing partner than with a hands-on demonstration that ensures both parties have a clear understanding of the task at hand. In addition, the highlighting of potential problems would also help you evaluate the solutions provided and where improvements can be made.
Ensure that you are aware of the legal requirements
There are certain legal responsibilities that go along with finding an outsourcing partner. One of the most important documents is the Service Level Agreement. All details and responsibilities must be clearly defined in the document so that all parties understand their duties and responsibilities.
Establish a clear scope of work for the project
In addition to defining your priorities, it is essential to draw up a scope of work that is well-defined and comprehensive. Scope of work specifies the division of work that will be performed under a contract or a subcontract in the completion of a project, and is usually broken down into specific tasks along with deadlines.
Make sure that you set realistic deadlines for your tasks
It is important to remember that outsourcing firms cannot be considered as magicians. Despite the fact that outsourcing can be beneficial to businesses, having a realistic timeline is vital to productivity.
Review portfolios, samples, and other related documents
Keep in mind that you are the best person to determine your priorities and projects. It is essential that you review the work produced by potential outsourcing partners that are similar to your project and your goals for the project.
Don’t be afraid to start small
If you want to make sure that you find your perfect fit, you must start small. As you and your partner are comfortable with the pace, you should begin with smaller projects and then expand them at a rate that is comfortable for both of you.
Establish the ownership of tasks from the outset
As a way to avoid confusion between different parties, it is always a good idea to clearly define who is responsible for the task at hand.
A project milestone should be tied to the payment of the project
Payments based on milestones made by your partner may be a way to ensure timely delivery and the growth of the project, depending on the agreement that you reach with them
The communication process
If you fail to maintain proper communication, you can severely damage your outsourcing partnership. If there is a lack of communication between your partners, it is likely you will lose the trust of your consumers.
Choosing a Company over a Freelancer is a wise decision
There is no denying the value of freelancers in certain circumstances, nonetheless, when it comes to outsourcing, finding a partner who is motivated and long-term is crucial.
Find a provider of end-to-end solutions
When it comes to completing tasks, make sure your partner can provide you with end-to-end solutions and a comprehensive process that can cover everything. When you do this, you will be able to improve your business’s health and profitability.
Transfer of accountability
Outsourcing is a way to reduce your employees’ workload by minimizing repetitive tasks that need to be monitored constantly. Ensure that the outsourcing service provider takes over full responsibility and accountability for the project after a certain period of time to eliminate the possibility of overlap of work.
Review of performance
To ensure that the project is resolved quickly if any complications arise during the project, it is necessary to conduct periodic reviews of the service provider.
Technology and the ease of implementation
In order to ensure that your employees and teams are supported during the transition process, you must find a partner that is technologically advanced and that uses easy-to-implement and use software.
Support after the project has been completed
It is easy to iron out any last-minute glitches that may arise if you ensure that your partner supports you after you complete specific tasks.
Develop a set of operational guidelines
Create a document outlining the process in as much detail as possible. Unless you are able to describe your process in detail, you are not going to be able to outsource it. Known as Operational Guidelines, this document is a compilation of the various considerations one should make when trying to accomplish the task at hand.
You should also make sure to explain clearly what the goal of the process is, and why it matters, so that the outsourced reps feel like they are part of something bigger.
There are a few guidelines that will serve as a manual for reps to interiorize and refer to first when in doubt. Your document will be a living, evolving document which you will maintain and evolve as the reps and you find inconsistencies and gaps between your theory and reality.
Preparation of training examples
In the absence of practice, theory becomes meaningless. Having a proper set of guidelines is only half of the battle. You need to compliment it with examples that reps can use to practice what they have learned and self-evaluate their performance.
The examples should include an increasing level of difficulty, and show how the different dos and don’ts of the Operational Guidelines are put into practice. Perhaps you would like to do this in the same document or perhaps in a presentation.
Evaluation of firms based on their expertise
There are many BPO service providers around the world, but most of them tend to specialise in a certain range of tasks, based on the demographics and skillset of their workforce and the ease with which they can recruit.
The following are some aspects to consider:
The following verticals are represented: finance, social media moderating, computer vision, medical imaging, and translation services.
Language, country of residence, age, and other demographic information.
Education: literacy, highest level of education.
Trial more than one firm
You can engage in a pilot period with more than one BPO, with uniform pre-agreed criteria and a time-boxed launch. As part of the engagement, we should establish measurable factors for success evaluation – more about this below.
By assessing both the costs and benefits of successful pilots that meet the criteria, you can select one that will be most beneficial for you in the long run.
Measure
The following metrics should be measured on a systematic basis:
It is the Turnaround Time (TAT) that is generally used as the measure of latency.
The AHT (Average Handling Time) is the standard for efficiency.
Quality: Accuracy measured by the proportion of correct decisions as a percentage of all decisions.
If you would like to learn more about the subject of Operational KPIs and Quality Measurement, we have previously blogged about it.
A penalty system based on SLAs should be established
You will most likely fail to get your outsourced process up to par if you don’t have ‘skin in the game’ with your BPO partner. In order to improve alignment between your incentives and the BPO’s, it is standard practice to set SLAs on the above metrics and to impose penalties in case the metrics aren’t met.
Normally, these penalties come in the form of a percentage discount on the cost of the billed service.
Make economic incentives a priority
In addition to ‘skin in the game’, reward-based incentives are also a viable form of ‘skin in the game. A penalty for failure to meet SLAs helps avoid mediocre results; however, rewards could help move the needle from adequate to outstanding results.
Results of the audit
It will not be enough to put the outsourced process into operation without auditing a sample of the work conducted as a means of quality control. If you have implemented a Quality Assurance process internally, you can do this more formally, or you can simply review random examples of the code in a more informal manner.
It is essential to have an internal expert – this could be you or a colleague – audit this work to ensure that errors aren’t being made. Make sure that you correct every error as soon as possible. There will be some instances where this will need to be corrected due to a gap or point of ambiguity in the Guidelines. Many will be related to a lack of examples in the training material and will need to be reported to the BPO so that they do not occur in the future.
Open dialog
Maintain a dialogue of communication with the BPO throughout the process. Allow questions, feedback and suggestions to flow both ways. It’s in your best interest to make yourself and your team available to avoid blocking reps — if latency matters to you — and to help avoid errors.
If the software supporting the process offers a mechanism to make these comments, then you’re all set. Otherwise you can set up a shared chat group with all stakeholders to also foster frequent communication and collaboration.
Align reps often
A common pitfall of fully operational outsourced processes is how little cross-pollination of knowledge exists between reps. As a result, each reps mental model of the process might diverge from everyone else’s, resulting in increased inconsistencies.
This is especially true in a post-Covid world where everyone who can is working remotely, physically isolated from everyone else.
Hosting joint audit review sessions will help keep everyone aligned with your internal expertise. To make this most productive, everyone should prepare tricky cases they’ve encountered that they would like to discuss with the team.
By investing in business process outsourcing, you can get back to your core functions and focus on growth, development, and other areas of potential.