What is BPO Outsourcing?

With a projected compound annual growth rate of 9.6 percent – and a market estimated to reach an astounding $586.92 billion by 2030 – more and more startups, small business owners, small and medium-sized enterprises (SMEs), and large multinational corporations are turning to business process outsourcing (BPO). Using third-party BPO service providers to complement a company’s existing in-house staff is quickly becoming the norm.

BPO service providers focus on one or both of the following services: back-office functions or front-office functions. Back-office service providers allow companies to offload tasks and key business functions like accounting, payment processing, payment collections, human resource management, and IT services. Front-office service providers focus on business functions like customer service, sales, business development, branding, and marketing.

Deciding upon which business function to outsource comes down to an honest assessment of your company or business’s strengths and weaknesses, the competencies of your internal resources, how much outsourcing can improve your bottom line, and whether outsourcing these functions risks disruptions to your operations.

Granted, it’s a lot to consider. However, the market is growing at an unprecedented rate for a reason. Every second of every day, a company has decided to outsource its business functions for the benefit of its customers and to the detriment of its competition.

In simple terms, BPO is the process of asking a third-party service provider to manage a portion of your business on your company’s behalf. In this case, you may have identified a business function where your internal resources lack the necessary capabilities to do the job efficiently. You may use BPO for a business function because the costs of having an in-house staff – or the turnover rate and training costs – are too high.

Often, a company will use a BPO service provider to manage a business function because the service provider has the knowledge, know-how, and vast resources to dramatically improve the company’s offering. It’s like hiring a subject-matter expert who can provide invaluable insight you just can’t get from your employees. That’s largely why 24 percent of small businesses use outsourcing to improve operational efficiencies.

Companies don’t just hand over a business function when using BPO; relying upon a knowledgeable third-party BPO service provider is akin to hiring a front-line management consultant. These are specialists who focus on a specific task or responsibility and nothing else. Their entire reason for being is to make the service they provide you the best it can be. In return, you lower costs while improving your operations.

There are numerous benefits to working with BPOs. However, far too many companies see these benefits as being limited to cost reductions only. While reducing costs is most definitely a benefit of BPO, it is hardly the only one. Focusing solely on costs is largely why some companies experience serious operational disruptions, choosing cost control over service quality.

In a constantly changing global marketplace, companies see BPO as their go-to solution to reduce costs, improve service, gain invaluable insight, and grow their business. While these are not the only benefits, it’s the last three that require more understanding.

Improving service doesn’t just involve answering the phone faster or improving response times. It means working with a BPO provider that helps to streamline your operations, while seamlessly integrating with your in-house team. It means having a BPO provider complement your team’s capabilities and freeing up valuable time so that your in-house team can flourish.

Some of the most proactive BPO providers use conversational artificial intelligence (AI) and machine learning to quickly answer common customer questions, helping to reduce the workload of customer service agents.

The best BPO providers help companies grow their business with real-time analytics and data that help them identify important trends and patterns. They’re seen as trusted partners and highly valued for their business acumen, insight, and guidance. For some companies, BPO providers are the all-important difference between winning, losing, or keeping customers.

Multiple industries rely heavily on outsourcing. The banking sector currently outsources 40 percent of its help desk requirements. Government, retail outlets, and e-commerce websites are also big users of outsourcing, as are countless commercial and industrial companies across a broad range of industries.

Manufacturers, distributors, and value-added resellers (VARS) also use outsourcing. Automotive manufacturers and Aerospace Primes rely upon outsourcing – often simply called subcontracting – when working with build-to-print outsourcing manufacturers. Aerospace Primes like Boeing, Airbus, and Bombardier and Automotive companies like GMC, Ford, and Volkswagen have integrated global supply chains where every subcomponent part is strictly controlled, and subcontractors must ensure repeatability of parts.

For BPO providers who work with governments, strict adherence must be taken to ensure the outsourcing company can guarantee data integrity. This requires an impenetrable quality management system with SSL encryption protocols to guard against data and security breaches.

Any company choosing a BPO provider should insist on data protection while ensuring the provider has the means to block vicious malware, phishing emails, viruses, and cookies. The banking and financial sectors are incredibly stringent on whom they choose to outsource their business functions. These industries require BPO providers that guarantee secured communications and top-notch cybersecurity systems.

How do I know which business function to outsource?

Think about how accurate data and real-time analytics can help you and your team make better and more informed decisions. It’s not just about the speed of your response, but about how the right data at the right time can help you and your people. Now think about a portion of your business where that data is lacking. For some businesses, their customer service personnel either don’t have the right intel and data or are overloaded with incoming support requests.

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Are there any drawbacks to outsourcing?

Unfortunately, there are some drawbacks to outsourcing. Becoming highly dependent upon the BPO provider is one issue, as is working with a provider that can’t guarantee data protection and data security. Another potential downside is working with a BPO provider that fails to help your business either by not being able to provide you with actionable intelligence or lacking the means and ability to provide that intelligence.

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How does AI help with outsourcing?

Today’s artificial intelligence systems rely upon language processing and machine learning algorithms that instantaneously decipher customer needs across inbound communications like chat, email, and, soon, even incoming calls.

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What is the most important factor when choosing a BPO partner?

No matter what business function you choose to outsource, always make sure to validate the credentials, skills, and competencies of the BPO firm. This means choosing a partner that can demonstrate how their services will help your business. It means choosing a BPO provider that can ensure data integrity and security, and one that will provide you with the business intelligence you and your team need to succeed.

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Finally, it’s always important to check their credentials and ask for references. Ask them to show you how they worked with a similar company in a market similar or identical to yours — they should have plenty of examples of how they improved their customer’s operations.