Business Process Outsourcing: What, Why, And How? 11 Feb 2021

Business Process Outsourcing

Technology is progressing at a headlong speed, and it is making communication and work possible in any corner of the world. Similarly, business process outsourcing (BPO) is gaining popularity and is massively growing.

What has been the reason behind the massive growth?

Businesses are embracing and appreciating the BPO model because it is one of the most effective and successful methods of streamlining a business. BPO ensures efficiency, and an efficient business is certainly a successful business.

There are many varieties of BPO services, and every BPO model serves a kind of business. It is not a one-size-fits-all approach. Many business owners do not have knowledge about this, and we are here to explain in detail about BPO, the different kinds of BPO, benefits, and how it will help you in improving your bottom line.

What is Business Process Outsourcing (BPO)?

BPO or Business process outsourcing is a successful business practice where one company hires another company to execute a task that the hiring company requires for its own business to run efficiently and successfully.

It is the contracting of specific business functions like marketing, accounting, and bookkeeping, customer support, back office, etc. The processes outsourced are the core business functions that are related to the company’s success. BPO is different from the entire outsourcing concept.

By outsourcing your business processes, your team can focus on working on other important business functions rather than trying to learn a new skill. At the end of the day, it will be a win-win situation. Instead of setting up a team forms scratch to execute an important business function, you are outsourcing that business process to another specialist who is already known for doing that process successfully. You will end up saving more time and spending less.

BPO is often divided into two main types of services: back office and front office. Back-office services include internal business processes, such as billing or purchasing. Front-office services pertain to the contracting company’s customers, such as marketing and tech support. BPOs can combine these services so that they work together, not independently.

What are the different functions of BPO services?

BPO is often divided into two main types of functions: back office and front office.

Back-office functions

Back-office functions include internal business processes of the company. It is critical and is a great contributor to the success of the front office.

Some back-office functions that can be outsourced include:

  • Human Resource Management: A comprehensive end-to-end solution that manages onboarding, time and attendance, tax processing, payroll inputs, benefits management, and separation, is ideal for larger companies.
  • Data Management: With Big Data and Analytics revolutionizing the industry, businesses have realized the significance of amassing huge data. Nevertheless, handling these sets requires people, processes, and technology.
  • Accounting and Financing Functions: Accounts receivable and accounts payable are the main cost center of any business. Deferred or late payments need to be managed, while completed payments need to be updated.
  • Quality Assurance: Standardized business processes across the company will contribute to enhance scalability, improve performance, and make way for greater flexibility.

Front-office functions

Front office functions deal with facing the customers and end-users. Companies that are growing their customer bases rapidly, and see a need to focus on service quality, usually need the support of the front office to handle their customers well. Some of these functions are:

  • Help Desk Support: Front office services for both customers and internal staff can productively assess issues and also offer technical support. The advantages include customer satisfaction, enhanced support, and better staffing and management.
  • Scheduling: Customer service is highly dependent on having the right team with skills and knowledge to deal with any situation. Managing resources requires accountability and leadership qualities that are quite demanding, and so it can be achieved best when outsourced to established service providers.
  • Customer Service: Handling the business in a better way means customers are at the top of the priority list.
  • Market Survey & Research: Understanding competitors is the primary step to expanding business sustainably. Market behavior is also crucial to making informed and well-thought-out decisions.

BPOs usually unite the front-office and the back-office functions to work together.

The BPO industry can also be categorized into three types based on the location of the vendor. An organization can successfully achieve total business process optimization by binding the three categories:

  • Onshore – The Onshore BPO company’ vendors operate their business in the same country as the contractor. However, they could be located in a different state or city.

For example, a company in Washington, California, could use an onshore outsourcing vendor located in Washington, or in Texas.

  • Offshore – These Business Process Outsourcing companies are situated in a different country from yours.

For example – A company in the United States could outsource their business processes to a BPO company in the Philippines or India.

  • Nearshore – These BPO companies are located in the neighboring country.

For example – A company in the United States outsourcing their work to a Mexican BPO company.

How BPO will help to improve your bottom line?

While the main advantage of BPO is always cited as greater financial savings, the advantages and its purpose stretch beyond that. The benefits of BPO include the following:

  • Financial benefits: Business believes that BPO is a great alternative to get their business processes done at a lower cost. By outsourcing to a BPO vendor, organizations directly slash the costs of onboarding an in-house team, remuneration, training costs, infrastructure costs, and a few more. Instead, they can pay a one-time fee for the services they get from the professional BPO vendors in a more efficient way as opposed to training the staff and waiting for results for a long time. It results in huge tax savings too.
  • Flexibility: BPO contracts allow businesses to enjoy greater flexibility. They adjust to the business’s needs for the delivery of the work. Besides, BPO vendors encourage themselves to better adapt and react to the ever-evolving market dynamics.
  • Competitive advantage: BPO facilitates the business to outsource those business processes that are not core to their organizations or missions. It gives the freedom for organizations to leverage their resources on their niche skills and use them to achieve more business success.
  • Improved performance with high quality: The core business of BPO service providers is to perform specific business processes that they are the master in. Their expertise in that area of business will ultimately benefit the organizations in the output they would receive – greater accuracy, high-quality output, efficiency, faster turnaround, and increased accountability.
  • Quicker access to innovations: BPO service providers are better positioned to keep themselves abreast of innovations and advancements happening in their business area. In order to flourish their business, BPO service providers are certain to invest in new technologies and developments in process automation that will help them to perform better for their clients. Essentially, with advancements, BPO service providers can improve the quality of their work, delivery speed, and cost of their services.
  • Expanded coverage: BPO service providers can stretch their geographical reach and time of an enterprise in an economic manner. For example, a company that needs access to 24/7 call center operations can reach out to a BPO partner that is in the business of serving customers around the clock, maybe even in different geographic areas to facilitate a follow-the-sun business model.

The advantages of BPO are many. The services are unique to every business, and in common, when you opt for a BPO service provider, it is certainly proven to positively impact your business’s bottom line.

Are you ready to use business process outsourcing yet?

The 21st-century global business market is high on energy and dynamism. Exciting competition, disruptive technologies, and an intense focus on customers have fueled the businesses to be nimble and efficient to sustain the competitors and come out successful. And BPO is the fueling rocket.

Now that you know the BPO industry is definitely a boon to your organization, choosing the right vendor can be challenging. You must choose a vendor that uses the right tools and processes, mitigates risks, improves communications, and embraces accountability.

Velan has been a pioneer and the most successful BPO outsourcing partner for clients for more than 14 years. We look beyond short-term solutions and work with our clients in an innovative and transforming way. We ensure every service of ours directly impacts your bottom line. After all, that is the sole objective of a BPO industry.

We follow a holistic approach that is created as a result of our close association with our client. Our custom solutions offer the best support, especially when it comes to customer handling. We understand our client’s business inside-out, to offer the right training to agents, and handle resource management in a streamlined manner to maximize output.

Contact Velan today to uncover our variety of BPO services that provides scalability and flexibility to suit the custom needs of your business.

Jack Manu

Outsourcing Consultant

About the Author:

Jack Manu, an outsourcing consultant at Velan, has more than a decade of experience in assisting real estate companies and real estate agents to improve the operational efficiency. He has been helping real estate agents including many REMAX agents to focus on their core business by offering transaction & listing coordinator services, accounting service and social media marketing assistance.Jack can be reached at jack.manu@velaninfo.com

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