BPOs, or business process outsourcing, have completely transformed the business environment. Companies are continuously evolving ways to achieve the highest level of efficiency without breaking the bank. Certainly, the advent of BPOs has helped them achieve this goal to a great extent. Because of their support, many organisations offload their burden of handling non-core activities with expertise. They have sufficient time to emphasise core functions and drive growth.
To complement this fact, there are many proven findings. The global BPO market is likely to reach $405.6 billion by 2027, showing a CAGR of 8.5% between 2020 and 2027, according to Grand View Research. Besides, the flourishing of this industry has created significant job opportunities, and the Philippines is its appropriate example, where it employs over 1.3 million people, according to the Philippine Statistics Authority. Also, it helps beneficiary companies optimise their costs by up to 59%, as per the Deloitte Global Outsourcing Survey.
These stunning facts encourage other companies to understand BPO services and leverage their offerings.
Understanding BPO services
BPOs are outsourcing companies that introduce talents to manage specific business operations, especially back office operations. Specifically, these functions can range from customer support, HR boarding processes, managed IT services, data processing, management, etc. Overall, their existence and increasing reach prove that these outsourcing options actually facilitate quality services at a low cost. Also, their assistance enhances the scope for scalability and efficiency.
Now, let’s explore their impact on business operations.
The Impact of BPO on Business Operations
Business Process Outsourcing companies are playing a major role in evolving global businesses. Their impact is visible through the following benefits:
- Cost Reduction
The most significant advantage that these assisting companies bring is expert services at low costs. Businesses hire efficient and qualified talent to manage core functions. But some non-core functions are interwoven with them, which can be the IT infrastructure, technology solutions, and customer support. These are vital services that modern companies leverage. But their handling is considered a non-core activity, especially for companies that are in the manufacturing, retailing, or non-service domain. For them, outsourcing emerges as a cost-saving alternative, which can save up to 70%, according to a study by Deloitte.
2. Access to Specialised Expertise
The next big impact is visible where specialised skills and knowledge are must-haves. These outsourcing companies invest in the latest technologies like artificial intelligence, machine learning, and, of course, training. These efforts appear in deliveries, which represent high quality. Their evolution has brought a smile to the faces of small and medium-sized enterprises (SMEs) that may not be able to hire expensive in-house specialists to manage non-core activities.
Let’s consider a case of medical billing. A healthcare provider will be excellent at providing treatments. But he may not be good at maintaining compliance and effectively securing sensitive patient data. This is where BPOs mark an edge.
3. Scalability and flexibility
Entrepreneurs establish commercial units with the motto of making profit. And scalability can maximise it. Certainly, it needs more resources, investment in innovation, and flexibility to create and meet overwhelming demand. Joining hands with a BPO partner enables them to adjust their operations according to fluctuating demand during peak seasons and off-seasons. With them, making this kind of adjustment is easy.
For example, an e-commerce company experiences overwhelming demand during off-days. Hiring an experienced outsourcing partner can eliminate the burden of handling overwhelming order processing and smoothly administering customers’ queries.
4. Enhanced Efficiency and Focus
Improving efficiency certainly needs special attention. Outsourcing companies protect businesses from distractions. These distractions can emerge while handling non-core functions with expertise. And the condition worsens if those functions complement core tasks. For example, a tech startup can prevent worries and expertise in hiring qualified tech specialists by outsourcing the boarding process to an experienced company. IBM reportedly revealed that companies that employ outsourcing companies see a 43% enhancement in their business efficiency.
5. Improved customer satisfaction
The biggest impact of BPOs can be witnessed in winning customer satisfaction. BPOs provide inbound and outbound calling services. They hire the best calling agents to address customers’ requests with complete satisfaction and loyalty. Many companies employ dedicated customer support agents to solely focus on customer service. Accenture studies found that companies leveraging BPO for customer support witnessed a 35% improvement in customer satisfaction. These companies leave no stone unturned in reducing response times and maximising customer satisfaction scores.
Many case studies prove the impact of BPOs’ existence and efficiency. Let’s explore the best case of all.
Case Study: IBM’s BPO Success
IBM is renowned for its big contribution to the BPO industry. It also provides outsourcing services to internal and offshore customers. This multinational company outsources HR processes so that HR costs can be reduced. Interestingly, it reduced the cost by 40% while simultaneously improving service quality and achieving customers’ satisfaction.
Adverse Impact of BPOs
Unlike the positive side, there is a dark side to these outsourcing companies. Let’s take a look at the challenges that one may face.
- Quality Control
Sometimes, the hired BPO service provider fails to meet quality standards. With sampling beforehand, this problem can be resolved. Besides, ensure regular monitoring and measurement of KPOs to maintain high-quality services.
2. Data Security
Data security is indeed a threat because cyberspies are all around. BPOs claim to take robust security measures and comply with relevant regulations. But actually, they fail to ensure data security. This risk can also be eliminated by examining certifications like ISO and GDPR at the time of signing the SLA, or service level agreement.
3. Time-zone Barriers
Hiring an outsourcing partner from Asian countries to provide back office solutions in the US or the UK won’t be easy. There will be a big difference in their time zones. Also, the communication may not be as smooth as you expect. This problem can be resolved by setting up proper communication channels and email systems.
Conclusion
The impact of BPO services can be seen on various businesses. Cost-effectiveness, increased efficiency, access to a specialised pool of talent, and flexibility to scale are some of the brighter sides that influence businesses to contract with BPOs. However, there are some downsides like security, time-zone barriers, and inadequate quality controls that push you to think twice before hiring a BPO.