What are the fundamentals of business process outsourcing?

What are the fundamentals of business process outsourcing?

Today we take the business process outsourcing (BPO) industry to be a given, a fact of life, much like electricity and buildings and oceans. And we start from there, whether we are a provider who delivers on client requirements or an outsourcer looking for a solution.

Which is not a bad place to be. After all, one cannot always start with first principles. One has to trust other people enough to take many things as given. You are not going to build the internet from scratch, will you? You have to take it as a given resource that you can leverage, like so many millions of others, for your own unique requirements, in this case of running a BPO engagement.

While that may well be the position you adopt as you go about creating value for your company by either exploring opportunities for outsourcing business processes, or identifying potential clients your outsourcing business can support, an understanding of the moving parts of the business equips you to handle various challenges that are bound to arise in any human endeavor.

The same should be the case for participants in the BPO industry, whether client or provider. An understanding of the fundamentals of business process outsourcing will equip you to take the right decision when faced with a challenging situation.

oWorkers has come up the curve in the last eight years since it launched operations, rooted in the fundamentals. It should not be a surprise that it is now, already, recognized as one of the three top providers of data based BPO services in the world.

So, what are these fundamentals?

 

Free Market

We often take it as a given, and we must, but the free market that is prevalent in most societies has unshackled opportunities for large sections of the population. It is often said that the prosperity of the western world is underpinned by the free market that exists in these societies.

What is a free market?

The economic definition of a free market according to Wikipedia is that of “a system in which the prices for goods and services are self-regulated by buyer and sellers negotiating in an open market. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority, and from all forms of economic privilege, monopolies and artificial scarcities.

Of course, this is a theoretical, or ideal, definition. There is some amount of intervention from the government in these societies, mostly for making efforts for uplifting the lot of the underprivileged. But, by and large, it is a free market.

What that means to a business is that it can seek value in any way it wishes to, of course within the boundaries defined by law and society. This has permitted organizations to explore innovative ways of doing business, providing the impetus for BPO to grow and spread across the world.

oWorkers enables free market participants to break their shackles and seek exponential growth by focusing on their core business and letting oWorkers do the rest. The 24×7 support that oWorkers support works has the capacity to magnify outsourcing benefits for its clients.

 

Fundamentals of business process outsourcing include an enforcement framework

Rules are of no use if they cannot be enforced. An enforcement mechanism and a legal framework are necessary for rules to be enforced, otherwise they remain a paper exercise.

Societies that practice a free market, also have a legal and enforcement system in place that creates laws and defines penalties for violation.

From the perspective of business, this creates an environment in which companies can work with other companies, individuals and government entities under the auspices of the legal framework that operates in their jurisdiction, without having to worry about creating a parallel enforcement system that protects their company against the misconduct of the other party.

Business to business (B2B) engagements, which BPO engagements usually are, often rely on a contract between the two parties that defines the responsibilities of each and needs to be agreed by both parties before performance can be initiated.

It is this legal and enforcement framework that gives confidence to the two contracting parties to engage without fear of being cheated by the other party. It is particularly important in the BPO environment because the engagements often happen across countries and continents. They work on creating value for the business with the right to resort to the authorities in case of need.

The leadership team of oWorkers, with over 20 years of hands-on experience between them, takes upon themselves the task of worrying about contracts and enforcement, should something go wrong. They leave the operations staff to do what they can do best, deliver services to the requirements of their clients.

 

Economic differences

Though we have established a free market as one of the enabling fundamentals of business process outsourcing, the truth is that it does not make everyone equal. Far from it. It often tends to exacerbate the gap between the haves and the have nots with their different abilities to leverage the opportunities in the environment.

We know water always flows from higher ground to lower ground.

Similarly, BPO work tends to flow from higher ground to lower ground, or, from greater prosperity to lower prosperity.

What is the reason?

BPO vendors provide operational support. They do not propose to take over the entire business of the client, who continues to handle what he would consider to be their core activities. BPO vendors have excelled in converting client work to small packets of repeatable work. As this work may not require the same kind of education, skills and experience as the core business might, it is often migrated to locations where one can find adequately skilled resources at a lower level of cost.

The result is that work flows from the more expensive location to less expensive locations, creating employment there and taking a step towards reducing the economic disparity between the two. This is one of the great benefits BPO delivers to developing economies and one of the reasons political reasons make efforts to get BPOs to set up shop in their catchment area.

oWorkers locates its delivery centers in some of the most work-conducive cities in the world. With its policy of working with a multicultural and multinational team, it is able to provide multilingual support to its clients, a key concern for growing companies.

 

Technology and telecommunications

The reason BPO today has reached all corners of the world today is the explosion in telecommunications technologies, including the internet and computing devices. There is more computing power in the device in your hand than used to exist in a room full of machines in the sixties and seventies. Advances in digital technology have made BPO the global force that it is today.

Just as it liberates, technology can also create challenges. With increasing volumes of data being transacted over telecommunications networks, the security of data remains a concern for companies, data being a key asset and differentiator in today’s world.

On the one hand, the large complement of clients being technology companies, keeps oWorkers on its toes with regard to technology adoption.

On the other hand, their relationship with technology companies, nurtured over many years, gives them access to the latest technologies which they can even use for client projects.

 

Access to deep talent pools

Eventually, the business needs people to run it.

It is no doubt true that BPO vendors are skilled and resourceful. As BPO work is their source of revenue, they make efforts at improving the underlying processes and technologies. Some vendors have even been successful in creating platforms that clients themselves could not create.

But all said and done, if it could be automated by the client, he has already done it. What he now needs the vendor for is work that needs to be done manually. And this can only be done if the vendor has access to talent pools that are capable enough for doing the work that clients wish to outsource, and inexpensive enough for the client to find value in the outsourcing. This, after many years, has remained one of the fundamentals of business process outsourcing.

A corollary requirement that arises for most BPOs is that of backfill; the requirement to again hire for the same position on account of staff attrition. Attrition continues to be one of the bugbears of the industry and a drain on resources.

With its prominent position in local communities, oWorkers gets a steady stream of applications for jobs. This not only provides them a choice of talent for client projects, but also provides flexibility in covering unexpected spikes in client volumes, with an ability to add almost a hundred additional resources within 48 hours. This creates a big cost advantage for the client who would otherwise need to retain a bench.

 

Ability to train

Having access to the talent pool is one aspect, making it ready for client work is quite another. BPO providers have, over the years, excelled in preparing raw talent to handle the most intricate transactional and operational requirements of clients from across the world.

Training has emerged as an unlikely hero for the BPO industry. Not only does it polish raw talent, it also keeps ensuring that experienced resources keep their saws sharpened at all times.

oWorkers controls resource input by instituting strong screening checks designed to ascertain IQ, EQ and language skills of candidates. The training team then takes over and works on them to make them job ready.

 

Flexibility to work from home

We may not have been talking about it a couple of years back. Work from home may have been on the wish list of many, but never implemented. However, the onset of Covid-19 shook the fundamentals of business process outsourcing and forced the industry to go where it had not gone before. In other words, start working from home, to overcome the lockdowns and restrictions placed by governments worldwide to halt the march of the pandemic.

To the credit of the industry, it turned on a dime and stood tall when most needed. Its readiness to adapt during the stressful times enabled many a supported business to stay connected to its customers. They put together a technology infrastructure that was needed to support people working from home and implemented it, even while the pandemic was raging across the world.

It is now a given.

oWorkers has been at the forefront in the race to equip staff to work from home and ensuring that clients are on board with the approach. The fact that it is ISO certified (27001:2013 & 9001:2015) and GDPR compliant also creates confidence amongst clients.

 

Managing the external environment

While technology and human resources are must-haves without which a BPO business will not survive, there are many other pieces in the jigsaw that need to come together at the right place for the business to be successful. To that extent, these could also be considered as fundamentals of business process outsourcing.

What are these pieces?

Location – A BPO enterprise, with its need for people, works best with the support of the local communities. It is helpful if the community is supportive of the unique requirements of a BPO job, such as a 24×7 shift. It is also helpful to have a community that is supportive of female employment, as that substantially enhances the hiring pool.

Infrastructure – For a business to operate there are many infrastructural elements needed. There is a need for space for setting up an office, grid supplied power to run the computers and cooling or heating devices depending on the climate, food and water for workers, local transport through which people can commute, etc. Some may have alternatives but some may be essential.

oWorkers embeds itself into local communities and works with them for mutual benefit. The results are there for all to see. Kit pays social and local taxes for its staff who, incidentally, are employees, and not freelancers or contractors.

 

Cost saving

All roads lead to the Income Statement.

Fundamentals of business process outsourcing mandate that the client should achieve a cost benefit by doing so.

And he does. While the many other advantages of BPO may be difficult to measure, the cost advantage is not. It emanates from the inexpensive locations that the partner operates from. It emanates from the resources they hire. It emanates from the many operational innovations through process and technology improvement they do that delivers a benefit of cost to the client.

Clients of oWorkers often note saving almost 80% of their original costs once they have outsourced to oWorkers. This is especially true for clients from Western Europe and the US. On top of that, clients are delighted by the pricing choice they get from oWorkers. They can choose to pay by output, or by input. They decide what works better for them.

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