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Noah Edis When business are trying to make their processes as time and money efficient as possible, IT-heavy and administrative tasks can get in the way. This is where business process outsourcing (BPO) comes in.
BPO is a business practice in which a company contracts with an external organization to handle some or all of its business processes and functions. These services can include back-office functions such as accounting, human resources, and information technology support; customer service and contact center operations; or manufacturing and production.
BPO delivers value in several ways: by improving process efficiency, reducing costs, freeing up internal resources to focus on strategic initiatives, and enabling companies to enter new markets more quickly.
In this article, we’ll explore the following:
Ready to learn more? Let’s get started.
What is BPO? Definition
If you’re the manager or CEO of a small-to-medium business — or indeed, any business at all — there’s a good chance you’ve run into tasks that are better handled by someone else. You may have wondered if there’s a way to get those tasks done without hiring new employees, expanding your office space, or investing in expensive new equipment.
The answer, believe it or not, is relatively simple: outsource those tasks to a third party. This is what’s known as business process outsourcing, or BPO.
BPO generally involves contracting with an external company to take on specific administrative or operational tasks that your business would otherwise have to handle in-house. These can include anything from payroll and accounting services to customer service and marketing.
The beauty of BPO is that it allows businesses to focus on their core competencies while outsourcing the tasks that are not central to their business. This can be a major cost-saving measure, as well as a way to improve efficiency and productivity.
Types of BPO
When considering BPO, there are three main types of services to choose from:
1. Back-office processes cover activities that are typically administrative in nature, such as accounting, human resources, and data entry.
2. Front-office processes are those that deal directly with customers, such as customer service, marketing, and sales.
3. Middle-office processes involve activities that sit between the back and front offices, such as order processing and procurement.
Of these, the back-office processes are generally the most popular for BPO, as they offer the greatest potential cost savings. However, it’s important to tailor your BPO strategy to your specific business needs and goals.
BPO examples
Still confused about what BPO actually looks like in practice? Here are a few examples:
- You run a small business that sells products online, but you find that you don’t have the time or resources to handle customer service yourself. You could outsource this function to a third party that specializes in providing customer support via phone, email, and chat.
- You’re a doctor’s office that is struggling to keep up with the administrative demands of billing and insurance claims. To help lighten the load, you could outsource these processes to a third party that specializes in medical billing and invoice processing.
- You’re a law firm that’s seeing an increasing number of clients, but you don’t have the staff to handle all the new case work. You could outsource some of your legal research and document review tasks to a third party that specializes in legal services.
As you can see, there are a variety of different BPO scenarios that can be tailored to fit the needs of any business.
Most common BPO services
While BPO is a valuable resource and strategy for businesses of all sizes, it is especially useful for small businesses. Many small businesses do not have the financial resources to hire a full-time employee to manage their finances or to provide customer service. BPO services can help fill in these gaps and allow businesses to focus on what they do best.
There are many types of BPO services that businesses can use. The most common are:
Financial management
Think about all of the processes involved with tracking and managing your company’s finances — bookkeeping, invoicing, accounting, etc. A BPO provider can take care of all of these for you, leaving you with more time to focus on growing your business.
Customer service
Dealing with customer inquiries and complaints can be a full-time job, but with a BPO provider you can outsource this work to someone who is experienced in providing customer service. This can free up your time and allow you to focus on other areas of your business.
Marketing
Do you have a marketing strategy for your business? If not, a BPO provider can help develop one for you. They can also help with things like website design, social media marketing, and email marketing.
HR management
Managing your company’s human resources can be a daunting task, but a BPO provider can help take care of things like payroll, benefits administration, and employee training.
Of course, there are many other BPO services that businesses can use, depending on their specific needs. It’s important to work with a provider who understands your business and can provide the services you need.
The benefits of BPO
Now that we’ve covered the ins and outs of BPO, it’s important to understand why it matters. New business concepts can seem intimidating and too much of a hassle — but rest assured that understanding BPO is well worth your time.
The fundamental value of BPO is that it allows businesses to focus on their core competencies and delegate non-core processes to a specialist provider. This frees up valuable resources within the business and can lead to increased efficiency, quality and scalability.
By outsourcing non-core activities, businesses can concentrate on their strengths and improve their overall performance. There are a number of other benefits that come with BPO, which can be summed up as follows:
Cost savings
By outsourcing non-core activities, businesses can make substantial cost savings. This makes sense when you consider that a specialist provider will have more experience and be able to do the job more efficiently and effectively than an in-house team.
Improved quality
When businesses outsource non-core activities, they often enjoy improved quality as a result. Specialists providers are experts in their field and are therefore better equipped to deliver high quality services.
Increased efficiency
Of course, one of the main appeals of BPO is that it can lead to increased efficiency, which is one of the main reasons businesses choose to outsource in the first place. Outsourcing allows businesses to focus on their core activities and leave non-core processes to a specialist, who is better equipped to deal with them.
Scalability
Another key benefit of BPO is that it can lead to scalability. When businesses outsource non-core activities, they can increase or decrease their output as required. This gives businesses the flexibility to scale up or down depending on current needs and future plans.
Greater focus
By outsourcing non-core activities, businesses can free up valuable resources within the business and concentrate on their core competencies. This can lead to increased focus and a better overall performance.
Improved competitiveness
If you are speeding up one of your core processes, you instantly give yourself a competitive edge over businesses that have not outsourced that particular process. BPO allows businesses to focus on their strengths and improve their overall performance, which can give them a competitive edge in the market.
Access to specialist skills
Companies that offer BPO services are equipped with specialist skills and resources that businesses may not have access to in-house. This can be a real advantage for businesses that want to outsource specific activities.
Improved customer service
Imagine how much more attention your customers would receive if you could free up resources within your business to focus on customer service. Outsourcing non-core activities can lead to improved customer service, as businesses are better able to focus on meeting the needs of their customers.
This is not to say that BPO is your only chance to experience the above benefits. Quite the contrary — in fact, any business can enjoy many of these advantages by implementing sound management strategies. BPO definitely gives you a leg up, however.
It is important to note that not all outsourcing providers are created equal, and it is therefore essential to do your homework before selecting a vendor.
How to choose the right BPO partner
Once you’ve decided which BPO service you want to outsource, the next challenge is finding the right partner for you — and this can be a little daunting. There are so many providers out there that making a decision can be overwhelming.
We recognize this, which is why we’ve put together a few tips on how to choose the best BPO provider for your specific needs.
1. Assess your needs
To start, consider what you’re looking for in a partner. What specific services do you need? What’s your budget? Do you want a provider with local or global reach? How important is industry experience to you?
To help with this process, ask yourself a few key questions:
- What business processes do you want to outsource?
- What are your top priorities?
- What are the challenges you’re currently experiencing with your back office operations?
- How much can you afford to spend on BPO services?
2. Do your research
After you feel you have a good understanding of your needs, it’s time to do some research. This doesn’t simply mean reading online reviews (although those can be helpful). It’s important to get a sense of the provider’s overall capabilities by speaking with them directly.
Ask the provider to walk you through their services, and see if they have case studies or references you can review. Make sure to ask lots of questions, so you have a clear understanding of what you’re getting into.
3. Compare providers
Now comes one of the trickiest parts: comparing providers. This can be difficult because there’s no one-size-fits-all answer — each provider has their own strengths and weaknesses.
What’s most important is that you find a provider that aligns with your needs and vision. Take the time to compare different providers and see which ones offer the services you need at a price you’re comfortable with.
If it helps, you can use one of the following methods to compare providers:
- A comparison chart: This is a great way to see all the pertinent information about each provider at a glance.
- A provider profile: This document provides in-depth information about one specific provider.
- A request for proposal (RFP): If you’re looking for a more formal process, an RFP can be helpful. It allows you to solicit proposals from multiple providers and compare them side-by-side.
4. Make the final decision
Ready to make your final decision? Before locking anything in, make sure you’ve collected these key pieces of information:
- The services you’re requesting and the associated costs
- The provider’s experience in your industry or with your specific process
- How the provider will integrate with your current systems
- What the quality assurance process will be
- How and when you can terminate the contract, if needed
Finally, you’re ready to make your decision. Just keep in mind that this is a long-term relationship, so it’s important to choose a provider you feel confident with.
Final thoughts on BPO
If you’re tired of spending all day on the phone or in meetings, it might be time to look into business process outsourcing (BPO). BPO can take care of all your administrative and customer service needs, leaving you free to focus on your core business strategies.
There are a number of different BPO providers out there, so it’s important to do your research before choosing one. Make sure you find a company that has a good track record and can provide the services you need at a price you can afford.
Remember that if you want to optimize your processes, but don’t necessarily want to outsource, you can look into workflow tools and apps like Day.io. These can help automate tasks and improve communication between team members.
BPO is a great way to take your business to the next level. By outsourcing non-essential tasks, you can focus on what you do best and grow your company more efficiently. Hopefully, this article has given you a better understanding of what BPO is and why it matters.