What are the advantages of business process outsourcing

What are the advantages of business process outsourcing

The business process outsourcing industry, BPO in short, has grown and grown and grown. Most analysts with a crystal ball predict the industry to continue its strong growth over the next few years, even as models change and requirements change.

The consistent growth demonstrated by the industry cannot be an accident. It has to be the result of value created for its various constituents. In a world of private enterprise, the primary constituent is perhaps the customer, the one who pays for the services of the industry. It has to be of value to the clients who use BPO. The other constituencies to whom the industry delivers benefits are the regulators and governments of the various geographies they operate in as well as the workforce they employ through whom their services are delivered.

It is quite a varied set that BPO appears to be delivering benefits to. While discussing the advantages of business process outsourcing, we will begin with the difference they are able to make to regulators and governments, as that, perhaps, is not merely an economic benefit but could be classified as a social benefit as well.

Innovative BPO providers like oWorkers are creating value in areas legacy providers have been slow to enter into, like content tagging for AI models and social media moderation. In its eight years of being of service to global clients, oWorkers is already counted as one of the top three providers globally, not a mean achievement.

 

Generating employment

In today’s world, in most cases, economic activity seems to be driven by urban centers. Non-urban centers and communities often get left behind in the development march. The gap appears to be even more acute in developing nations which is where BPO centers get set up in most cases.

Business process outsourcing has the capacity to make a substantial impact on this status quo. BPO has a unique model through which it creates jobs that require limited skills that can be replicated. In other words, these jobs do not require advanced qualifications or skills but the numbers of people required are large. This becomes an almost ideal combination to hire people from disadvantaged communities who do not possess advanced skills and qualifications but, with the training provided by the employer, have the willingness to learn and commit to the job.

While these jobs are not highly paid, they do create employment in large numbers, which is why many administrations and governments seek out BPOs to set up delivery centers in their constituencies.

Working closely with local communities sets oWorkers up as a credible employer and draws a steady stream of candidates looking for a career in BPO. It helps that oWorkers follows a policy of working with employed resources, and not with freelancers and contractors like some of its competitors do. Being a magnet for talent supports a low-cost hiring model as it does not need to spend on advertising to attract applicants.

 

Cost advantages of business process outsourcing

Moving on to the business advantage, every business seeks to increase revenue and decrease cost. No other method has been discovered that increases profits, the final goal of a business, as effectively as increasing revenue and decreasing cost.

While a business has many initiatives it undertakes to enhance revenues, one of the strategic goals business process outsourcing enables it to move towards is cost containment.

How is that?

Revenue being the driver of a business, costs are set up to feed into the revenue generating opportunities the business locates. They may not be geared to be most optimal for the business.

Efficient delivery being the leitmotif of a BPO, it sets itself up in an economical manner. It is nowhere more evident than in its staffing, since most work is handled through people. While the client may be handling delivery through similar highly qualified, and expensive resources that it hires for the revenue side, a provider gets down to the basics and employs people with just enough to deliver effectively.

This, coupled with not needing to locate in downtown areas or even major urban centers, creates a significant cost advantage. Additionally, with outsourcing costs can be handled as variable costs to an extent, and reduced when requirement reduces.

Most clients of oWorkers talk about saving numbers that go all the way up to 80%. This is the saving when measured against their cost pre-outsourcing. The efficient management, like negligible expenditure of advertising for talent, eventually finds its way into the pricing offered to clients.

The pricing choice between dollars per unit of output and dollars per unit of input offered to clients is another unique oWorkers offering that is appreciated by many clients.

 

Focus on core activities

Businesses could be set up because of the skills and interest of a core group of people, or based on the opportunities available, or other reasons. Whether you are a maker of microchips or a retailer, there are many activities your business needs to perform that are not necessarily related to the core business.

Why is that?

There are two main reasons.

One is that the business is a participant in a competitive marketplace and has to put its best foot forward when it needs to interact. For example, it needs to hire resources. Being in a marketplace, there are many other companies who are trying to do the same. Hence, it becomes competitive. To navigate these marketplaces, which may have nothing to do with your core business, requires time, effort and skill.

The second reason is regulation. Most regulated economies will have laws that require you file your tax returns, keep accounts in a certain manner, ensure your workplace is not hazardous for staff members and others, and a host of others.

While the company’s staff may have the skills, or may be able to develop them, it will mean that they are not focusing on their core activities for that much time. Engaging a partner ensures that the focus of key personnel does not waiver from their core business.

With its approach of working with a multicultural and multinational staff, being multilingual is a natural by-product for oWorkers who is able to support clients in over 20 languages, and be a partner as they grow across geographies.

 

Advantages of business process outsourcing include specialization and expertise

Another advantage that is based on the same set of circumstances as described above is the access to expertise for these activities through a BPO provider since engaging in them, hiring of resources, filing tax returns, might not be the core competence of your employees.

Engaging a BPO provider gives you access to specialized talent that is geared to that very task. It is their bread and butter. Since it is a source of revenue it receives management attention. They are also likely to keep themselves updated on the latest developments so that the job that is done by them is accurate and compliant.

This instead of having to ‘make do’ with unenthusiastic resources, you get skilled and enthusiastic resources for whom it is core work.

Not only enthusiastic resources, oWorkets will also be able to provide them at short notice, to support unexpected volume peaks for clients. As an example, oWorkers is normally in a position to provide a hundred additional resources in 48 hours.

 

Investments in technology and processes

Not being on the revenue side of a company’s income statement has some disadvantages, the main one, seemingly, of not being able to get adequate attention from senior management. Your non-core function is a core business process for your outsourcing partner and the source of revenue, the reason for their existence.

They want to do their core job in the best possible manner, like any other company. They have the ability to invest in technologies and process improvements that their clients may be loath to. The BPO also has the added advantage of being able to aggregate volumes across clients for the same, or similar processes, which, perhaps, facilitates the investment decisions. In fact, there are examples of providers investing in platforms that have enabled them to win clients and their clients to get the benefit of superior technologies.

oWorkers has nursed relationships with leading technology providers for the purpose of being able to access the latest technologies for client projects, that clients otherwise may not have access to.

 

Business continuity

One of the advantages of business process outsourcing, especially when you work with an established player, is that of business continuity.

Whether the client had a business continuity plan or not, they can certainly ask that the partner provide it to them. Established BPO providers usually operate through a network of delivery centers. For contracts that are critical, they can distribute volumes in a way that the entire business does not need to shut even if one of the centers is unable to operate for reasons of a natural event or a strife of some sort.

The recent Covid-19 epidemic is a stellar example of how BPOs rose to the challenge placed on all businesses because of restriction of meeting and travel. It is thanks to the efforts of BPO providers that many businesses managed to stay afloat during the period and were accessible to customers.

With its geographically distributed delivery centers in some of the most sought-after locations, oWorkers is able to provide business continuity for situations that may impact one of their centers making it inaccessible or inoperative. By splitting volume across sites, clients can be reasonably assured of at least one site being up and running.

Additionally, as a pioneer of ‘work from home’ since the Covid-19 pandemic struck, all oWorkers staff members are able to operate from home or office, as per the situations obtaining at any point in time.

 

TAT improvement

The global delivery model that has bloomed over the last two decades, maybe more, in itself is one of the inherent advantages of business process outsourcing.

One of the advantages is the time difference.

How does that help?

If the time difference is large, it could enable work to be carried out by the partner while the client is sleeping after a day’s work. When they begin work the next morning, they will find that the assigned work has been completed by the partner overnight. Seemingly magically.

Additionally, as a part of their flexible DNA, most vendors are equipped to operate on a 24xy schedule, where client work requires it. Thus, going beyond the time difference advantage, this helps the required work to be completed faster.

While time zone differences might naturally improve response times, oWorkers’ operations machinery is geared to work on a 24×7 schedule, if required by clients. This can significantly reduce cycle times and improve turnaround times.

 

Skilling and opportunity opening

For many people in disadvantaged communities, BPO often turns out to be a gateway to the digital economy of the world. Through its rigorous process of selection and training, BPOs pick out trainable candidates and put them through a training program designed to hone their skills and make them ready for an identified client project.

BPO continues to be one of the highest creators of white-collar jobs around the world. It has made a significant contribution to the GDP of some nations that are popular delivery centers.

oWorkers leads with its best foot forward. It leverages its expertise in data based BPO work to create opportunities for work around the world. Its leadership team, with a combined hands-on experience of over 20 years, are at the forefront whenever new ground is broken.

 

Disadvantages of business process outsourcing

Data security – Business data needs to be shared with the vendor without which many processing activities cannot be completed. Data being compromised is an ever-present risk.

Alignment with brand – Every company has a unique identity. Can employees of a BPO partner ever fully align with the client identity? This becomes important in situations when the vendor interacts with customers of their client.

Hidden costs – Some outsourcers do not give adequate attention to the processes and expenses that might result from their outsourcing decision. Sometimes costs are not adequately factored in, leading to some nasty surprises.

Loss of control – In cases where the complete process has been outsourced, there could be some issues of lack of control. You may want to do something but the partner might push back citing the contract. The partner could also leverage change requests to make the conditions of the contract more difficult.

Though we have discussed several advantages of business process outsourcing, an overview of the disadvantages provides a more complete perspective.

 

The oWorkers advantage

For the security of client data, oWorkers operates out of super secure facilities and protocols and is ISO certified (27001:2013 & 9001:2015). oWorkers is also GDPR compliant. It has a rigorous selection and training process to make employees fit for client projects. It is not a surprise that it is chosen as a partner by large corporations around the world, which includes several unicorn marketplaces as well as a healthy proportion of technology companies. They consider working with leading organizations around the world an honor and privilege.

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