Business Process Outsourcing (BPO) is the practice of hiring a third party provider to run specific functions for your business.
Business Process Outsourcing (BPO) is the practice of hiring a third-party provider to run specific functions for your business.
For example, rather than investing in a new technology platform and hiring a specialist who can run, manage, and maintain it—a business could contract this function out to a BPO partner who would provide these services for them.
This would enable management to reduce overhead costs and focus their resources towards their core business offering. BPO has typically been used for processes that while crucial, are not part of their core business offering. This might include: customer support, payroll, IT administration, etc.
But the way businesses use BPO partners is evolving and now covers more in-depth processes such as scaling up (or up, down, then up again), business process transformation, strategic considerations, and customer experience program design.
1. Understanding Business Process Outsourcing
How does Business Process Outsourcing work?
When a business decides they want to work with a BPO partner, it typically has a goal in mind. For example: to improve customer experience (CX), to reduce business costs, to launch a new product, or to scale their business.
From there, they’ll need to find the best provider for their needs. To do that successfully, you’ll need to consider the following things:
What’s your budget?
Assess the resources you have available so you can determine the level of BPO service that makes sense for your business. This will also help rationalize the extent to which you can achieve the goals you have laid out.
What’s your timeline?
For certain business functions, your timeline will be the most important factor in determining how you approach BPO. For example, if you’re looking for BPO services for the launch of a new product, it’s vital that you choose a BPO provider who can realistically deliver on that.
Which BPO providers cover your needs
It’s important you also consider which BPO providers can cater for the specific needs of your industry. For example, if you’re looking to use a BPO provider to improve your CX, there will be different considerations if you work in heavily regulated sectors such as healthcare, as opposed to eCommerce.
What type of BPO relationship are you looking for?
Each BPO partner will have a different approach. Do you want something more transactional, in which you pay for services solely to cut costs in the short term? Or do you want a relationship-based approach that may offer more ROI upside in the long term?
What is a BPO process?
A BPO process is any function outsourced to a third party that contributes to the smooth running of your business.
For example, say a growing business decided they did not want to build an HR department internally, and instead chose to use an external HR services provider to cover payroll, hiring, staff training, and benefits. These functions would be termed as BPO processes.
While connected, BPO and straight up “outsourcing” are distinct things. Click here to jump to the difference between them.
Examples of BPO services
BPO can be used for a variety of different purposes. Here we outline some of the most typical applications of BPO.
HR
An HR BPO partner might provide functions such as: payroll and tax administration, benefits administration, recruitment, and training.
By working with an HR BPO partner, a business can access deep expertise in these areas without having to shoulder the cost of hiring specialist members of staff.
Customer service and support
Ensuring you have enough customer support and service capacity to keep your customers satisfied, it’s a major business concern. For businesses that are launching new products or have seasonal spikes in customer traffic, working with a BPO can help them deliver great customer experiences without the staffing headaches associated with it.
Technology access and IT administration
Working with a BPO partner, a business can access top tech talent and the latest technology without having to incur the cost of hiring, of maintaining and updating that technology, or ensuring their use of it remains compliant.
This helps businesses remain competitive, especially at a time when there is a worldwide shortage of tech talent (which, according to the International Monetary Fund, is only going to get worse).
Customer Experience
Certain BPO providers offer more than elite customer service and support agents, they also help businesses develop their CX programs. This includes the orchestration of omni-channel user journeys and implementation of rigorous performance tracking through KPIs and metrics
Business process transformation, growth, and scaling
Businesses can work with BPO partners to help deliver transformation initiatives and even scale their operations. In order to make this successful, businesses need to work with a BPO partner with a relationship-based approach. To read more about BPO for transformation, click here.
2. The importance of Business Process Outsourcing
What are the differences between outsourcing and Business Processes Outsourcing?
Outsourcing and Business Process Outsourcing are related but distinct terms.
Outsourcing
covers any circumstance in which suppliers or third-parties are used by a business. For example, if a business uses a specific caterer to provide food for their events, this would be termed as outsourcing. Outsourcing can also cover situations in which a business uses a third party to manufacture their products.
BPO
is specific type of outsourcing, which typically involves using a third party to cover non-core businesses functions such as HR, payroll, etc. Without these processes, the business would not be able to operate but they are not part of the business’s core offering. In recent years, BPO has evolved to cover more core-business functions.
The key difference
While all BPO is outsourcing, not all outsourcing is BPO. BPO covers the specific type of outsourcing that involves using a third party provider to cover processes that help businesses operate day-to-day. BPO has evolved from covering only non-core processes to strategic partnership involving core offerings.
Why is Business Process Outsourcing important?
Overall, BPO is important for businesses in two ways:
1. It allows them to focus more of their efforts and resources on their core-business functions.
2. It can give them access to experience, insight, technology, capacity, geographies, business agility, and go to market speed that the business does not have themselves (and in many cases, would not be able to realistically develop).
What are the main benefits of working with a BPO provider?
We have a dedicated page that covers the advantages (and potential disadvantages) of working with a BPO provider in detail. To check that out, click here.
But as a snapshot, the key benefits of working with a BPO provide are:
Access to expertise
Working with a BPO provider that excels in a particular area of service delivery allows you to benefit from their experience, expertise, and processes.
Better use of resources
Transferring responsibility of non-core business processes to a third party leaves the business with more resources for its core business offering.
Ability to scale
By working with a BPO provider you can quickly and easily increase headcount without incurring additional costs. This speeds up go to market times for new products and reduces the risk involved in scaling up and down.
Access to the latest technology
BPO partners that work in specific areas of service delivery will likely invest in the latest technology to cover that service. Working with a BPO therefore removes the cost of acquiring and maintaining this technology, affords you strategic advice on the best use of it, and removes the need to hire specialists to run it.
3. Why choose Ubiquity as a BPO partner?
Because of our firm in our belief that the only successful and value-driven way to approach BPO service must include:
A CX-first mindset
A bespoke approach
A strategic partnership
Rigourous, data-led performance tracking
That’s why we don’t work with a one-size-fits all approach and instead craft a unique strategy, service design, and KPIs that are molded to your specific requirements and business challenges.
Our agile methods provide a meaningful return on your outsourcing investment, so you can Scale Fearlessly.
Or if you want to find our more about our BPO services for specific industries, you can use links below:
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