What is Business Process Outsourcing and How Does It Work

What is Business Process Outsourcing and How Does It Work

 

Three fairly common words of the English language come together to form a term that has added enormous value to a wide variety of industries and businesses around the world and continues to do so, evolving and mutating to keep pace with changing times, technologies and expectations. The term being referred to is: Business Process Outsourcing.

Another term that has gained currency in the last few years is BPM, which stands for Business Process Management. BPM is considered by some as being a wider term that encompasses managing a process in the most effective way, whether outsourced or not.

 

Business processes outsourcing: wide range of services

We know that supermarket stocks essentials items for customers to buy for their daily needs, and on a day-to-day basis, it ensures that its racks are stacked, shelves labelled correctly, inventories evaluated and orders placed.

We know that a restaurant provides a predictable environment for patrons to dine in, and on a day-to-day basis, makes sure there is adequate raw material, the place is clean, and food and drinks prepared as per customer requirements, and served.

We know that a bank takes deposits, grants loans, transfers money, provides financial advice and responds to customer queries on a day-to-day basis.

We know an insurance company assesses event risk, issues policies, collects premium payments and adjudicates on claims made by policyholders, on a day-to-day basis.

How about a BPO? What does it do on a day-to-day basis?

The amazing thing is that it could be doing any, or all, of the business processes listed above, and many more.

For a telecommunications business, it could be doing provisioning of new orders. For a hospital, it could be doing transcription of oral medical prescriptions. For a bank, it could be attempting to collect overdue loan payments from defaulting customers. For an insurance company, it could be doing adjudication of amounts payable on customer claims. For a car manufacturer, it could be handling customer service calls.

Unbelievable, but true.

Business Processes Outsourcing is a fast-moving, flexible, business, populated by a versatile group of human resources, that is adept at taking the shape of any business or service that it chooses to work for and adding value to the host or client business by doing it more efficiently and effectively.

 

Adding value to other businesses

Sporadic voices have occasionally been raised against the industry, especially where the work is done in another country, on flimsy grounds like ‘taking away jobs.’

We know that outsourcing is a reality in today’s connected world. We don’t grow the food we eat. Others grow it because they can do it better, and we buy it and feed ourselves. A supermarket does not manufacture the cash registers it uses at the checkout counter. It buys them from another company that has the knowledge and skills to do it better. The supermarket buys them and uses them, while keeping focus on their own business. These are examples of outsourcing, which can also be viewed as mutual dependence. Doing the core work ourselves and relying on others where they can do it better than us.

Business processes outsourcing is no different.

Like any business operating under the framework of a free market, it continuously tries to maximise its profits and shareholder value, by taking on processing activities which can be better performed by them. This could be for a variety of reasons like bulk volume, better tools and technology or greater experience. By doing certain processes more efficiently and effectively than another business can, they add value to other businesses.

 

Types of BPO

While they could, theoretically, do anything, as we have just seen, each company chooses the areas in which it would like to operate. It is a competitive world, after all. There are many other organisations that are similar, each trying to outdo the other in providing better value to its clients, winning more business, and earning greater profits for their owners and shareholders.

Knowing what you are good at by typifying your organization within certain boundaries could be beneficial in representing your organization in a sharper and clearer profile to the external world. It will also enable you to focus on business that answers to your areas of strength, instead of running after each new contract that comes up for bidding.

From the perspective of clients as well, it would be difficult to begin their search for a supplier with, say, a million BPO companies in the world, assuming all offer the full menu. It will become an endless evaluation exercise for outsourcing. If the client is a telco and wishes to outsource line order provisioning, it might be a more efficient process for them to limit their evaluation to companies that project themselves as specialists in that area or industry.

There are many ways for Business Process Outsourcing companies to identify themselves. Here are some common parameters around which this is done:

Nature of work done

BPOs can be classified on the basis of the nature of work handled by them.

If the work done by them is only or primarily in the area of providing customer servicing, like answering billing queries for a telco, they could classify themselves as specialists in providing customer service.

If the work done by them is only or primarily in the area of providing technical support to customers for resolving their hardware and software issues, they could classify themselves as specialists in providing technical support.

If the work done by them is only or primarily in the area of doing payroll processing for clients, they could classify themselves as specialists in payroll processing.

This list is not finite. The specialisation could be in HRO (Human Resources Outsourcing), or LPO (Legal Process Outsourcing), or Medical transcription, or Advertising copywriting, or E-publishing, or anything else.

oWorkers provides best-in-class services for data entry, annotation and content moderation services.

Channel of service

Channels through which services are delivered is another common classification.

If the outsourced work is being done only or primarily through Voice, it could be classified as a Voice specialist. A BPO specializing in Voice is also commonly referred to as a Contact Centre or Call Centre.

Voice services could be further broken down into Inbound Voice Services and Outbound Voice Services.

If the work is being done primarily on Email, it could be classified as an Email specialist.

If the work is primarily backoffice processing, it could be classified as a backoffice BPO.

oWorkers, in the eight years of its existence, has focused its efforts on backoffice data related work as its core and continued to build expertise in it. Within backoffice, we offer data entry, data moderation and annotation services.

Industries supported

This is a fairly obvious classification, based on the type of industry for which work is done.

If the work being done is only or mainly for Pharmaceutical companies, it could be considered as a Pharma specialist.

If all or most of the work being done is for companies that offer Insurance, it could be considered as an Insurance specialist.

If the work being done is primarily for a Telecom business, it could be a Telecom-specific supplier.

There could be as many types of service-providers as industries using outsourced business process services.

This type of classification can also be called classification based on Verticals.

Services of oWorkers are offered to a wide spectrum of companies across industries including several global unicorn marketplaces. In addition, 85% of our clients are technology companies. 

Location

While business processes outsourcing may have started as local initiatives, with processing work being done in less expensive parts of the same town, with the explosion of communications and internet technology, it has rapidly expanded around the world. Today, work could be outsourced from anywhere to anywhere in the world; in other words, for many outsourced processes, the location of the outsourcer and service provider do not have much relevance; either could be anywhere in the world.

Each individual and organization, however, is subject to the legal framework of the country they operate out of. If the client and supplier are in two different countries, there is a possibility that applicable laws could differ.

A BPO could be classified on the basis of nationality of its clients being the same country or a different one. If the work being done is for a client in the same country, we could call it domestic work and if it mainly, or only does domestic work, it could be called a domestic services provider.

If the work being done is for a different country, we could classify it as ‘international’ which would also create a related classification of ‘export’ as the revenues from the business arise overseas and are remitted to the country of the vendor for work done. These qualify as export revenues which are important for many developing nations and often attract government incentives. Another term used for ‘international’ is ‘offshore’ which signifies that the origin of the work is from outside the ‘shores’ of the country.

A domestic BPO is also often called an onshore supplier to signify that origination of the work is from within the ‘shores’ (boundaries) of the country where it is being serviced from.

With three centers in three geographies recognized as key locations of the industry, oWorkers would be considered to be primarily an export services vendor as most of its clients are located in geographies other than where they do the work from.

Demographics

The industry is recognized for its ability to create jobs in communities that face challenges of development. As a result, it often gets support from governments for setting up centers in such underserved locations.

Thus, delivery units could be identified on the basis of the development index of the town or city they are based in. This is especially true for large delivery provider nations like India, which could have significant variations between locations. It might be possible to classify locations within India as Tier 1, Tier 2 and Tier 3 locations where Tier 1 is the most developed, has access to quality resources and infrastructure and likely to be the most expensive for clients, as a result.

Another method of classification used is urban and rural, where a rural center is likely to be eligible for government benefits in return for contribution to the employment effort in that location.

The two scales can also be combined, with rural sitting somewhere after Tier 3.

oWorkers straddles the development index with its centers in Plovdiv, Bulgaria and Cairo, Egypt which could be considered as Tier 1 centers with reliable infrastructure and availability of well-educated resources, and Antananarivo in Madagascar which requires greater effort in training for resources as well as investments in infrastructure like backup power generation capacity.

Distance from source

This is where some popular terms like nearshore and farshore fit in.

If the work is being done in another country, the term used to define it is offshore.

If the work is being done in another country, but in a location that is somewhat contiguous, it could be referred to as being nearshore.

If the work is being done in another country, in a distant location, it could be referred to as farshore.

If the work is being done in the same country, it is referred to as sameshore. This is also referred to as onshore.

The above notwithstanding, it is not merely distance that determines this classification, else it would be in terms of miles or kilometres between the source and delivery units.

A delivery unit located in San Antonio in Texas for a business located in New York is a greater distance than a delivery unit based in Krakow, Poland, for a business located in Frankfurt, Germany. However, as it is in the same country, we would call it ‘sameshore’ whereas Krakow, in relation to Frankfurt, would be called ‘nearshore’.

oWorkers provides business process outsourcing services to its clients in the US and nearshore services to its clients in Westerm Europe.

Ownership

Ownership of the delivery unit is another method of classification.

It is a binary classification where the delivery unit, if owned by the company seeking the service, but identified as an independent unit for the purpose of specialization, differentiating the working terms and conditions and clear responsibility identification, is known as a captive. A term that has gained acceptance more recently for the same provider set is that of Global Inhouse Center (GIC).

On the other hand, if the company seeking the service is not the owner, it is known as a third-party vendor.

oWorkers is a third-party vendor of data related services to clients around the globe in over 22 languages.

 

Choosing a partner for business process outsourcing

oWorkers has consistently delivered accuracy in excess of 99% despite the difference in measurement scales across clients in over eight years of increasingly complex engagements across data entry, content moderation and annotation projects. Its delivery efforts are watched over by an independent Internal Quality team that reports directly to senior management.

Having a leadership team that has over 20 years hands-on experience in the business and a sound financial position gives oWorkers the ability to invest in the business. It is able to leverage the latest technologies with its partnerships across different partners and enable clients to benefit from them.

Operating from the Eurozone, GDPR compliance is a necessity. In addition, oWorkers is ISO (27001:2013 & 9001:2015) certified.

Our relationship with local communities rewards us with a steady stream of interested applicants that keeps our hiring costs as well as attrition low. It also enables us to cater to peaks of upto 100 resources in 48 hours. We are Covid-19 ready and our employees are able to seamlessly operate from home when required.

oWorkers has been ranked amongst the top 3 data entry companies in the world. Our pricing is transparent and we can offer clients a choice of per unit of time pricing or per unit of output pricing. Several clients have reported savings of upto 80%.

oWorkers operates locally registered entities in all its delivery locations. It pays local taxes as well as social taxes for its employees. The work you outsource to us enables us to hire a few more disadvantaged people and help them become a part of the global digital workforce. 

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