July 14, 2023
Many organizations turn to Business Process Outsourcing (BPO) as a strategic solution for outsourcing needs to enhance efficiency and reduce costs. Business Process Outsourcing is accomplished by external service providers, allowing companies to focus on their core duties and technological advancement processes. Every business strategy has advantages and disadvantages. Similarly, BPO has many pros and cons that must be carefully evaluated before implementing a solution to your outsourcing needs.
Running a business comes with many responsibilities. How can all of them be fulfilled effectively? The key is BPO (Business Process Outsourcing), i.e., hiring another company or person to perform secondary jobs for you. To understand the advantages and disadvantages of BPO, let us first learn what a BPO is?.
BPO is the process of employing a third-party service vendor on a permanent, temporary or contractual basis to carry out the non-core or secondary activities of the business. These activities include customer support, marketing, IT services, accounting and so on.
Just like plumbers, electricians, house help, etc. make our lives easier, BPOs relieve businesses by assisting them in secondary business operations and lead conversions. Let us discuss the what are the advantages of BPO.
Activities such as customer support, marketing, sales, accounting and finance may take up more time and resources of a business than it can advocate. This deviation from key operations may hamper its growth and profitability. By outsourcing these non-core processes to a third party, it can focus on critical tasks.
One of the main advantage of BPO is time and cost efficiency. Outsourcing service providers have the appropriate task force and specialization at their disposal, which is needed to perform the activities seamlessly in no time. This saves the time and resources of the business, which can be utilized in other areas, thereby increasing overall productivity.
A non-core activity is a core function of the BPO. Therefore, their employees have the knowledge and expertise of that particular operation. They can perform the said activities with striking efficacy and deliver top-quality business process services. A business can thus improve its non-core areas alongside its core competencies.
Another major advantage of a BPO is that it helps scale the business. Suppose a business wants to enter a new market. In that case, it can leverage the services of a BPO to gain knowledge of the local market, customer behaviour, legal requirements and procedures, etc.
Delegating some of your employees' tasks can reduce their burden, improve efficiency, and considerably decrease dissatisfaction and employee turnover. A stress-free work environment boosts morale and provides motivation. Satisfied employees ultimately contribute to the growth and success of the business.
There are two sides to every coin, and BPO is no exception. Certainly, outsourcing your activities to a BPO poses some challenges. However, they can be subdued by taking preventive measures.
The BPO may exercise more control over the outsourced activities, creating friction between the two organizations. It may also disrupt other processes and the organizational goals of the business. The extent of authority must be clearly conveyed and agreed upon by both parties.
Another challenge that outsourcing presents is miscommunication or delays in the transmission of data or information by customer service executives. Moreover, actions that require prompt decision-making may not get attention at the right time. Appropriate communication strategies need to be implemented to avoid slowing down business functions.
A business has a large amount of critical and sensitive information that must be protected. If exposed to the wrong people, it causes great harm to the company. It is essential to adopt strong measures and actions to safeguard the confidentiality and integrity of data so that no outsider can violate the business's privacy.
A business may depend too much on the third-party service provider for its services, which can lead to disturbances if the BPO faces operational failures, financial issues, price hikes or any other hurdles. Businesses must foresee and plan and have a well-planned backup in case of such emergencies.
Unlike an in-house team, it isn't easy to completely monitor and track the performance of the BPO employees. Thus, decreasing inefficiency and laziness among them is not under the control of the business.
With the advancement of technology and businesses striving towards excellence, the BPO industry shows immense scope. Today, it is estimated to be around 339.3 billion USD and is poised to grow at a Compound Annual Growth Rate (CAGR) of 2.8% by 2026. Countries like India, China and Malaysia remain hotspots of cost-efficient and specialized BPO services.
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BPO (Business Process Outsourcing) means hiring a third-party service provider to manage your operations. It helps a business focus on its primary or core competencies by undertaking the non-core processes.
Some prominent features of BPO include specialised services, time and cost-efficient processing, improvement in core and non-core activities, help in global reach and reduced burden on employees.
The primary advantage of BPO is that it is accomplished by external service providers, allowing companies to focus on their core duties and technological advancement processes.
The common types of BPO are Knowledge Process Outsourcing (KPO), Customer Support (Call Center) Outsourcing, Technical Support Outsourcing, Finance and Accounting Outsourcing (FAO), Human Resources Outsourcing (HRO) and Procurement Outsourcing.
BPO has immense scope and a promising future. With the increasing need to deliver high-quality products and services, businesses are leveraging BPO services to grow and succeed, and this trend will continue to increase in the upcoming years.